Comparative Management Chapters 8-11
The ______ refers to a worldwide strategy based on cost leadership, differentiation, and segmentation.
economic imperative
In an organizational context, the process of giving individuals and teams the resources, information, and authority they need to develop ideas and effectively implement them is known as _____
empowerment
In the context of strategic management, _____ refers to the production and distribution of products and services of a homogeneous type and quality on a worldwide basis.
global integration
A(n) ____ is a structural arrangement in which domestic divisions are given worldwide responsibility for product groups.
global product division
What is the focus of the global area division structure?
goods that are proven winners and now are being marketed conveniently worldwide
Firms in ______ can benefit from strategies of both low cost and differentiation, while firms in ______ require specific strategies for different types of firms.
quadrants 2 and 3; quadrants 4 and 1
Arrange the stages involved in the life cycle of a firm's alliance with foreign partners in the correct order of occurrence. (Place the stage that occurs first at the top.)
1. Conception and strategic development, planning team development, internal signoff, creation of operating plan, and launch and startup 2. Growth and achievement of initial growth or success-related milestones 3. Professionalizing of the alliance activity and metrics 4. Maturing stage of alliance life and restructuring of goals and milestones 5. Conflict resolution and redefinition of success 6. Alliance termination or complete remediation
Arrange the steps involved in the direct-sales model of personal computer (PC) manufacturing in the correct order of occurrence. (Place the first step at the top.)
1. Manufacturers place orders for a small number of computer parts from their supplies 2. Individual customers and businesses place orders for completed products over the internet or by phone 3. Manufacturers build computers to the exact specifications of customers
Which of the following are true of a mixed organization structure?
A firm that employs this arrangement manages geographic and product lines through the use of a matrix design. A firm that uses this arrangement combines elements of function, product, and geographic designs.
Arrange the steps involved in the hybrid model of personal computer (PC) manufacturing in the correct order of occurrence. (Place the first step at the top.)
1. Manufacturers ship the PC shells to distributors, and component suppliers establish a parts inventory with, or near, that of distributors 2. Customers order computers directly from manufacturers or through retailers, and orders are forwarded to distributors 3. Distributors gather the PC parts to assemble computers to the specifications of customers 4. Distributors ship computers directly to customers on behalf of dealers, and the dealers provide setup for a separate fee
Arrange the steps involved in the traditional model of personal computer (PC) manufacturing in the correct order of occurrence. (Place the first step at the top.)
1. Manufacturers warehouse the PC parts until they need them 2. Manufacturers build the PCs and store them in warehouses 3. Distributors order the PC units and get them shipped to their warehouses 4. Retailers order the PC units and get them shipped 5. Customers purchase the PCs and are assisted in setting up the entire system
Match the types of investments made by firms (in the left column) with their descriptions (in the right column).
A conglomerate investment: It is a type of high-risk investment in which goods or services produced are not similar to those produced at home. A vertical investment: It includes the production of raw materials or intermediate goods that are to be processed into final products. A horizontal investment: It involves the production of goods or services that are the same as those produced at home.
Match the types of investments made by firms (in the left column) with their features (in the right column).
A conglomerate investment: It is rated as high risk as foreign governments view them as providing fewer benefits to their country and greater benefits to multinational corporations (MNCs) than other investments. A vertical investment: It has the risk of being taken over by the government because it is export-oriented, and governments like a business that assists them in generating foreign capital. A horizontal investment: It is typically created with an eye toward satisfying the host country's market demands, and the firm making the investment is not very likely to be takeover targets.
Identify the true statements about the decision-making process used in Japan called ringisei.
A firm's decision is made at the top level after a detailed examination of the proposal through successively higher levels in the management hierarchy. A proposed decision is rejected or accepted through consensus at every level of the structure of management. Any alterations in a firm's routines and procedures, strategies, and tactics are organized by those directly concerned with those changes.
Match the basic strategies adopted by multinational corporations (MNCs) (in the left column) with their features (in the right column).
A global strategy: It is best suited for MNCs that face high cost pressures and low demand for localized product offerings. A transnational strategy: It is best suited for MNCs that face high cost pressures and high demands for local responsiveness.
Which of the following is the first step in the manufacturing of personal computers (PCs) according to the traditional model?
A manufacturer orders parts for the PCs based on sales forecasts.
Which of the following views of management set forth by Trompenaars and Hampden-Turner about how a control strategy should be devised and implemented establishes a link between an external-directed strategy and an inner-directed one?
A master strategy should be created from proven successful attempts by motivating and combining the best.
Identify a strategy often adopted by multinational corporations to meet the demand for global integration.
A strategy that focuses on globalization and mass customization
Which of the following is a possible example of a macro consideration of political risk by firms?
A study of what would happen to a firm's investment if opposition government leaders were to take control
In the context of setting up operations in a host country, which of the following are factors that attract a multinational corporation (MNC) to a specific locale? (Check all that apply.)
Access to transportation facilities and electric power Easy access to markets
Identify the key factors that influence the export involvement levels of born-global firms. (Check all that apply.)
Advanced technologies Global orientation of decision makers
Why do multinational corporations (MNCs) adopt various proactive political strategies?
Because government policies are likely to have a notable impact on business operations and many governments face competing pressures from stakeholders
Identify the first step in the manufacturing of personal computers (PCs) according to the hybrid model.
Computer manufacturers build shells: a case, power supply, USB ports, and basic circuitry.
According to Trompenaars and Hampden-Turner, which of the following is a management view regarding how a control strategy should be implemented?
An innovative strategy should be devised by using all the experience and intelligence that can be mobilized and then cascaded down the hierarchy.
Match the basic strategies adopted by multinational corporations (MNCs) (in the left column) with their descriptions (in the right column).
An international strategy: MNCs possess valuable core competencies that host-country competitors do not have and face minimal pressures for local responsiveness and cost cutting. A multi-domestic strategy: MNCs face high pressure for local responsiveness and low pressures for reductions in cost. A global strategy: MNCs use this strategy in order to benefit from scale economies in production, distribution, and marketing. A transnational strategy: MNCs use this strategy when they face strong demands for differentiation and integration.
Why do multinational corporations (MNCs) adopt various proactive political strategies?
As government policies are likely to have a notable impact on business operations and many governments face competing pressures from stakeholders
Match the groups of firms (in the left column) with the corresponding basic values (in the right column).
Asian firms - Group, trust, compromising, and fluid Western firms - Individual, legal, confrontational, and analytic
Match the groups of firms (in the left column) with the descriptions of their organization preferences (in the right column).
Asian firms - They tend to be informal, generalist, integrated, and cooperative. Western firms - They tend to be formal, fragmented, hierarchical, and competitive.
In the context of international management, an evaluation tool that is used for identifying individuals with the potential to be promoted to or selected for higher-level positions is known as a(n) _____ _____
Assessment Center
Which of the following are involved in the environmental scanning stage of strategic planning? (Check all that apply.)
Awareness of demographic shifts including age, education, and income, teamed with extensive knowledge of consumer attitudes Knowledge of different political systems and the current state of affairs in specific areas Knowledge of laws and regulatory guidelines within an area Monitoring technological changes Studying the role of all potential competitors and the relationships surrounding those competitors
In the context of first-mover strategies, which of the following are the significant economies that are associated with being the first to enter a market in a particular industry and economic environment? (Check all that apply.)
Being able to form alliances with the most attractive local partners Being able to attain scale economies that arise from opportunities for obtaining a greater market share Being able to capture learning effects that are key to increasing market share
Identify the integrative techniques that are used by a multinational corporation (MNC) to respond to political risk. (Check all that apply.)
Building good relations with the host government and other local political groups Developing joint ventures and hiring local people to manage and run the operation
How can a multinational corporation (MNC) minimize its chances of expropriation? (Check all that apply.)
By associating with local partners By acquiring an affiliate that relies on the parent firm for key areas of the operation
_____ is an organizational management system in which important decisions are made at the top.
Centralization
Match the types of decision making (in the left column) with the levels of hierarchy at which decision making takes place (in the right column).
Centralized decision making - Most critical decision making occurs at the top management level. Decentralized decision making - Operating personnel are assigned the responsibility of making decisions.
Many host governments require investors in alliances to share ownership of their subsidiaries with local partners. Match the regions (in the left column) with their requirements (in the right column).
China: Investors are required to select local state-owned firms. Central and Eastern Europe: Investors are required to form joint ventures to satisfy local regulatory requirements where restrictions or local-content rules are applicable.
Identify the true statements about the differences in control between U.S. multinational companies (MNCs) and European multinational companies (MNCs) according to a comparative study.
Control in European MNCs favors short vertical spans or reporting channels from a foreign subsidiary to responsible positions in the parent. Control in European MNCs requires more decentralization of operating decision making than does control in U.S. MNCs.
Identify the differences between U.S. multinational companies (MNCs) and their European counterparts based on a comparative study.
Control in U.S. MNCs emphasizes more the quantifiable, objective aspects of a foreign subsidiary, whereas control in European MNCs is generally used to measure more qualitative aspects. Control in U.S. MNCs needs more precise plans and budgets in generating suitable standards for comparison, whereas control in European MNCs involves a high level of companywide understanding of what constitutes appropriate behavior. Control in U.S. MNCs needs centralized information-processing capability and large central staffs, whereas control in European MNCs requires capable expatriate managers who are willing to spend long periods of time abroad.
Two researchers, utilizing data from both U.S. and German MNCs, concluded which of the following?
Control mechanisms have to be harmonized with the main characteristics of management corporate structure to meet situational needs. Control mechanisms have to be harmonized with the main characteristics of management corporate structure to become an integrated part of the global organization concept.
Which of the following are the key characteristics of top management control in Great Britain identified by Horovitz?
Control was used more for general guidance than for surveillance. Top management tended to lay an emphasis on major problem areas. Financial records were heavily emphasized and sophisticated.
In the context of combining country-specific and firm-specific factors in international strategy, match the types of advantages for multinational corporations (in the left column) with their descriptions (in the right column).
Country-specific advantages (CSAs): These can be based on natural resource endowments, the labor force, education and skills, institutional protections of intellectual property, entrepreneurial dynamism, and so on. Firm-specific advantages (FSAs): These may include unique abilities proprietary to a firm that may be based on product or process technology, marketing or distributional skills, or managerial know-how.
In deciding which form of control to use, MNCs must determine whether they want a more bureaucratic or a more ____ ____ approach
Cultural Control
What are the examples of protective and defensive techniques that are used by a multinational corporation (MNC) to respond to political risk? (Check all that apply.)
Curbing the responsibility of local personnel and hiring only those who are vital to the operation Raising capital from local banks and the host government as well as outside sources Carrying out as little local manufacturing as possible and conducting all research and development outside the country
____ involves pushing decision making down the line and getting the low-level personnel of an organization involved.
Decentralization
Which is the least corrupt nation according to the 2018 of the Corruption Perceptions Index?
Denmark
Match the areas that are examined by the International Standards Organization (ISO) certification team (in the left column) with their descriptions (in the right column).
Design - Service or product specifications Process control - Instruction for service functions or manufacturing Service - Instructions for carrying out after-sales service
Which of the following statements are true about the organizational mechanisms used by Toyota in the worldwide integration of product development?
Design engineers remain in their functional area and usually interact through written messages.
Identify the various forms of direct controls in the context of international management.
Designing an overseas unit that promptly responds to communications and home-office requests Finding out whom to send overseas to run units better Visits by top executives to overseas subsidiaries or affiliates Monthly management meetings held at office headquarters
Match the parts of a firm's transnational network (in the left column) with their descriptions (in the right column).
Dispersed subunits - They are subsidiaries that are located anywhere in the world where they can add value to the firm. Specialized operations - They involve activities carried out by worldwide subsidiaries that focus on specific product lines, research areas, and marketing areas. Interdependent relationships - They are used to share resources and information throughout the other components of the network.
What are the primary factors motivating firms to enter into international strategic alliances (ISAs) with foreign partners? (Check all that apply.)
Economies of scale and rationalization Complementary technologies and patents
End of Chapter 10
End
End of Chapter 8
End
End of Chapter 9
End
Identify the simulation exercises that a typical assessment center would involve.
Exercises on business decisions in which participants compete in the same market A letter-writing exercise and preparation of a business plan In-basket exercises that require the attention of managers A committee exercise that requires candidates to work as a team in decision making
True or false: Cultural differences between home- and host-country managers do not lead to basic philosophic disagreements about the objectives and policies of international operations.
False
True or false: Decentralization is an organizational management system in which important decisions are made at the top.
False
True or false: Exporting and importing are sustainable long-term business strategies that guarantee a firm permanent access to overseas markets with minimal direct investment and limited risks.
False
True or false: Financial performance evaluation of a foreign subsidiary or affiliate is usually not based on profit.
False
True or false: Host governments are active in prohibiting investors in alliances from taking on partners.
False
True or false: In the present day, most companies consider middle management responsible for devising and implementing strategies.
False
True or false: Multinational corporations that have an exclusive focus on economies of scale and standardize their products and services across the globe use transnational strategies for production and marketing.
False
True or false: Research proves that incremental adaptation of existing technologies and products help multinational corporations (MNCs) to fit the needs of the base of the pyramid.
False
True or false: Small firms often are more likely targets of expropriation than large firms.
False
True or false: The internationalization of the marketplace and the increasing number of entrepreneurial firms in the global economy have limited the prospects of internationalization available to small and new-venture businesses.
False
True or false: Total quality management (TQM) criticizes the empowerment of employees.
False
Identify the examples of indirect controls in the context of international management.
Financial statements, such as cash budgets, financial ratios, balance sheets, and income statements Monthly operating reports sent to the home office
Identify the components of the financial goals of multinational corporations (MNCs) that are emphasized in strategy formulation. (Check all that apply.)
Foreign exchange management Taxation
A(n) _____ is a business arrangement under which one party allows another to operate an enterprise using its trademark, logo, product line, and methods of operation in return for a fee.
Franchise
What are the examples of political risk factors for a multinational firm in a host country? (Check all that apply.)
Freezing the movement of assets out of the host country Appropriating assets
In the context of the study of decision making conducted on German teams, which of the following are true of German teams as opposed to Swedish team? (Check all that apply.)
German teams were identified to be faster in decision making than Swedish teams. German teams had clearly marked responsibilities for individuals than Swedish teams.
Identify a finding of the study of decision making in teams composed of Germans and Swedes.
Germans were seen to be more willing to accept an unpopular decision or change than Swedish teams.
Match the multinational organizational structures (in the left column) with the associated descriptions of cultural control (in the right column).
Global area division - The local subsidiary culture is usually considered the most important. Global product division - Cultural control is achievable for some firms though it is not always necessary. Matrix structure - The culture is required to support shared decision making. Transnational network structure - The organization culture has to rise above national cultures and support sharing and learning.
Arrange the types of industries starting from the industries that have the highest risk factor to the ones that have the lowest risk factor.
Primary Sector Industries Service Sector Industries Industrial Sector Industries
In the context of organizational characteristics, match the types of specialization (in the left column) with their features (in the right column).
Horizontal specialization - Employees tend to develop functional expertise in a specific area. Vertical specialization - Employees at higher management positions are given much more status than those in lower levels.
In the context of organizational characteristics, match the types of specialization (in the left column) with their descriptions (in the right column).
Horizontal specialization - The assignment of jobs so that individuals are given a particular function to perform and tend to stay within the confines of this area Vertical specialization - The assignment of work to groups or departments where individuals are collectively responsible for performance
When are proactive political strategies adopted by multinational corporations (MNCs) especially important?
In unstable and transitional policy environments.
In the context of the entry strategies used by multinational corporations (MNCs), which of the following are true of the option of having a wholly owned subsidiary?
Initial investments made in the form of a wholly owned subsidiary in a foreign country are also known as "greenfield" or de novo (new) investments. This option is often used by small firms, especially if international or transaction costs are high.
Identify the ways in which multinational corporations (MNCs) can reduce the risk of terrorist attacks in host countries. (Check all that apply.)
Installing modern security systems Thoroughly assessing the political environment Creating a crisis handbook
Match the types of networks created by a multinational corporation (MNC) (in the left column) with the corresponding managerial dimensions (in the right column).
Internal networks - Presence of shared vision and clear organizational mandates External networks - Absence of shared vision and ambiguous organizational mandates
Match the multinational organizational structures (in the left column) with the associated descriptions of their decision-making control (in the right column).
International division structure - There is typically some centralization in decision making. Global area division - Local units have autonomy in decision making. Matrix structure - Decision making is balanced between global area and product units. Transnational network structure - Most of the decisions are centralized in the key network nodes, and few decisions are centralized at headquarters.
In the context of the conflicting demands for global integration and national responsiveness, identify the strategy adopted by multinational corporations when the requirement for differentiation is high and the need for integration is low.
Multi-domestic strategy
Identify the advantages of an international division structure adopted by a firm.
It allows the firm to develop an overall, integrated approach to international operations, as well as a team of internationally experienced managers. The clustering of international actions under one senior executive makes sure that the international focus gains the top management's attention.
Which of the following is true of a multi-domestic strategy in relation to the conflicting needs for global integration and national responsiveness?
It emphasizes local adaptation.
Identify the true statements about International Standards Organization (ISO) certification.
It examines testing and inspection, purchasing, and training. ISO 9000 certification is employed as a screening criterion for getting business in the U.S. It guarantees quality services and products.
Which of the following are true of franchising?
It gives the franchisor a new stream of income and the franchisee an established concept and products that can be quickly marketed. It involves an up-front payment of a fee and then a percentage of the revenues by the franchisee to the franchisor.
Identify the true statements about total quality management (TQM).
It has a major impact in the area of manufacturing. It is critical for achieving world-class competitiveness. Multinational companies taking a TQM approach today are customer-driven.
Which of the following is true of internal resource analysis conducted by a firm as part of strategic planning?
It helps assess the firm's current managerial, technical, material, and financial resources and capabilities to analyze its strengths and weaknesses.
Identify the common advantages of multinational corporations (MNCs) forming an alliance or a joint venture.
It improves the efficiency of both parties involved in the alliance or joint venture. It helps mitigate political risk factors. It gives access to knowledge and skills of both parties involved in the alliance or joint venture. It helps surmount the effects of local collusion.
In the context of the basic organizational structures, which of the following are true of a transnational network?
It is a web of business tasks and transmissions where local-level groups make decisions, but groups inform headquarters and sometimes each other. It mixes elements of classic functional, product, and geographic structures while relying on a network structure to link the worldwide subsidiaries.
In the context of the conflicting demands for global integration and national responsiveness, which of the following is true of a multinational corporation's (MNC's) global strategy?
It is an integrated strategy mainly based on price competition.
In the context of strategic management, which of the following is true of national responsiveness?
It is associated with the need to adapt tools and techniques for the management of the local workforce.
Identify a true statement about a multinational corporation's international strategy in relation to the conflicting demands for global integration and national responsiveness.
It is characterized by standardization of products and services across countries.
Which of the following is true of the specialized operations component of a firm's transnational network?
It is designed to tap particular expertise or other resources in a firm's worldwide subsidiaries.
In the context of the basic organization structure of multinational corporations (MNCs), identify the true statements about an international division structure.
It is often adopted by firms that are in the developmental stages of international business involvement. It takes most of the burden off the CEO for monitoring the operations of a series of overseas subsidiaries as well as domestic operations. It is likely to be used by firms that have small international sales, limited geographic diversity, or few executives with international expertise.
Identify true statements about the typical conditions under which licensing is used as an entry strategy in international business.
It is often used by firms that spend a relatively large part of their revenues on research and development (R&D). It is often used when a firm's product is in the mature stage of the product life cycle and the firm faces strong competition and falling profits.
Identify the true statements about the use of the economic imperative approach by firms in the formulation and implementation of strategy.
It is used by firms that sell products for which a considerable part of value is created in the upstream activities of the industry's value chain. It is often used when a firm's product is viewed as a generic good and hence does not have to be sold based on name brand or support service.
In an organizational context, which of the following Japanese terms means continuous improvement?
Kaizen
An internal resource analysis helps identify ____(KSFs) that are necessary for a firm to compete effectively in a market niche.
Key Success Factor
What are the factors that benefit a multinational corporation (MNC) when choosing a country for setting up its operations? (Check all that apply.)
Lack of restrictions on foreign investment Tax exemptions and other financial benefits offered by the host country High level of industrialization
Which of the following factors encourage the decentralization of decision making in subsidiary operations?
Large geographic distance between home office and subsidiary and more highly competent managers in host country Low interdependence between units and little experience in international business
A(n) ____ is an agreement that allows one party to use an industrial property right in exchange for payment to the owning party.
License
Identify the factors that encourage the decentralization of decision making in subsidiary operations.
Little importance attached to brand name, heterogeneous product lines, and high level of product diversification Stable environment, moderate to low degree of technology, and weak volume-to-unit-cost relationship Small capital investment, small size, and relatively low importance to multinational companies
Identify a recent trend in the use of the production function by multinational corporations (MNCs) to implement strategy.
MNCs are increasingly emphasizing the global coordination of their operations.
Identify a true statement about the common considerations multinational corporations (MNCs) have when selecting a specific locale to set up operations.
MNCs choose areas where the cost of running a small enterprise is much lower than that of running a large one.
Identify the types of multinational corporations (MNCs) that typically use a global functional division structure.
MNCs that transport products and raw materials from one geographic area to another MNCs that require tight, centralized coordination and control of integrated production processes
Match the types of political risk analyses (in the left column) with their descriptions (in the right column).
Macro political risk analysis: Analysis that reviews major political decisions likely to affect all business conducted in a country Micro political risk analysis: Analysis directed toward government policies and actions that influence selected sectors of the economy or specific foreign businesses in a country
Match the types of political risk analyses (in the left column) with their examples (in the right column).
Macro political risk analysis: China's decision regarding bans on foreign exchange transactions Micro political risk analysis: China's government policies related to investment in the telecommunications industry
When competition increases, select which of the following actions that management takes.
Management decentralizes authority. Management gives the local manager greater decision-making authority.
Which of the following are the drawbacks of a multinational corporation (MNC) adopting a global functional division structure?
Management of multiple product lines can be difficult because of the separation of production and marketing into different departments. The chief executive officer is solely held accountable for the profits. Coordination of manufacturing and marketing tends to be challenging in this arrangement.
Identify the true statements about the decision-making process.
Managerial involvement in this process depends on the locus of decision making. Managerial involvement in this process depends on the structure of subsidiaries. It is often linear by nature.
Match the views of management set forth by Trompenaars and Hampden-Turner about how a control strategy should be devised and implemented (in the left column) with their characteristics (in the right column).
Managers should determine the strategies that work and those that do not. - It strongly emphasizes an external-directed approach. Leaders should formulate an innovative strategy and then pass it down the hierarchy. - It focuses most strongly on an internal control option.
Which of the following management views regarding how a control strategy should be devised and implemented have been set forth by Trompenaars and Hampden-Turner?
Managers should find the strategies that work and try to understand why certain strategies do not work. A master strategy should be created from proven successful attempts by motivating and combining the best. broad thrust should be created using all the intelligence, experience, and information that can be mobilized.
Identify the true statements about the managerial system in German multinational companies.
Managers stress more on services and productivity than on managing subordinates. Companies tend to be fairly autocratic. Management education is highly technical.
Identify the final step in the direct-sales model of personal computer (PC) manufacturing.
Manufacturers ship the PCs straight to customers.
Which of the following is the stage of the life cycle of a firm's alliance with foreign partners that typically involves potential termination and reorganizing of team members and composition?
Maturing
The cross-border purchase or exchange of equity involving two or more companies is known as a(n) ____ or a(n) ____
Merger / Acquisition
What are the disadvantages of the global area division structure?
New R&D efforts often are ignored by division groups because they are selling goods that have reached the maturity stage Difficulty is encountered in reconciling a product emphasis with a geographic orientation.
Match the types of alliances and joint ventures (in the left column) with their examples (in the right column).
Nonequity venture - Dream Home International, a multinational construction company, is hired by the Department of Social Welfare in Iridia to build eco-sustainable houses for the homeless and other disadvantaged groups. Equity joint venture - Stellar Vision, an entertainment company, and Trident Group, an information technology company, form a limited liability company to develop and market virtual reality games together for mobile devices.
Match the types of alliances and joint ventures (in the left column) with their descriptions (in the right column).
Nonequity ventures - They involve one group merely providing a service for another. Equity joint ventures - They involve financial investment by all the firms involved in alliances and joint ventures.
Match the categories of formalization identified in a study of U.S. and Japanese firms in Taiwan (in the left column) with the ways in which they were measured (in the right column).
Objective formalization - It was measured by things such as the number of various documents given to employees, organizational charts, information booklets, operating instructions, written job descriptions, procedure manuals, written policies, and work-flow schedules and programs. Subjective formalization - It was measured by the extent to which goals were left unspecific and vague, informal controls were used, and culturally induced values facilitated getting things done.
In the context of the use of the finance function to implement strategy, identify a true statement about transferring funds from one place in the world to another.
One of an MNC's biggest problems when implementing strategies in the financial dimension has been the revaluation of currencies. Countertrade is a popular form of international business, especially in less developed countries and those with nonconvertible currencies.
Which of the following was identified by Horovitz in top management control in Great Britain?
Operating units enjoyed a large amount of marketing autonomy.
Why are profitability and marketing goals more important in strategic planning than the other goals of multinational corporations (MNCs)? (Check all that apply.)
Overseas operations comprise greater risks and efforts, and hence, MNCs expect better returns from them than they do from domestic operations. These goals are highly responsive to the external environment.
In the context of product integration, which of the following statements are true of cross-functional coordination in a multinational corporation (MNC)?
Personnel spend less time within their functions and thus are less knowledgeable of the developments in their specialized areas. It leads to product teams becoming independent and thus failing to integrate their overall efforts with the organization at large.
According to a study, the extent to which a firm carries out strategic planning is an important variable in determining performance. In the context of the international strategy of multinational corporations (MNCs), this extent is known as ______.
Planning intensity
Match the areas (in the left column) with the corresponding criteria that a multinational corporation (MNC) can use to quantify political risks (in the right column).
Political and economic environment: Constitutional guarantees and effectiveness of public administration Domestic economic conditions: Prospective growth during next three years and inflation during previous two years External economic relations: Restrictions on exports and development of the balance of payments
Match the areas (in the left column) with the associated criteria that a multinational corporation (MNC) can utilize to quantify political risks (in the right column).
Political and economic environment: Labor relations and social peace Domestic economic conditions: Possibility of employing foreign nationals External economic relations: Legal protection for products and brands
In the context of the "four Ps" of marketing, ______ is largely a function of market demand.
Price
In the context of international management, identify the first step of the managerial decision-making process.
Problem perception
What are the typical forms of total quality management? (Check all that apply.)
Process reengineering that helps find and get rid of redundant and wasteful tasks and efforts Cross-training employees to fulfill the jobs of all members in their work group Rewards systems that reinforce quality performance by employees
What are the "four Ps" of marketing? (Check all that apply.)
Product Price Place Promotion
_____ and loss (P&L) is the amount remaining after all expenses are deducted from total revenues.
Profit
Which of the following common goals dominates the strategic plans of multinational corporations?
Profitability and marketing goals
Match the common areas of goal formulation for multinational corporations (MNCs) (in the left column) with their components (in the right column).
Profitability: Yearly earnings per share growth Marketing: Growth in sales volume Operations: Quality and cost control Finance: Optimum capital structure Human resources: Compensation and benefits
The most significant part of the return on investment (ROI) calculation is ____
Profits
Match the MNC in the quadrant (in the left column) with their descriptions (in the right column) according to the CSA-FMC matrix.
Quadrant 1: These firms tend to emphasize cost leadership; they are likely to be resource-based and/or mature, internationally oriented firms producing a commodity-type product. Quadrant 2: These firms represent less efficient firms with few intrinsic CSAs or FSAs. They also represent domestically based small and medium-sized firms with little global exposure. Quadrant 3: These firms generally can choose either the cost or differentiation strategies, or perhaps combine them because of the strength of both their CSAs and FSAs. Quadrant 4: These are generally differentiated firms with strong FSAs in marketing and customization. These firms usually have strong brands.
In an organizational context, a group of workers who meet on a regular basis to discuss ways of improving the quality of work is known as a(n) ____ ____ ____ (QCC)
Quality Control Circle
A(n) ____ approach to management involves strategic formulation and implementation using strategies of total quality management to meet or exceed the expectations of customers and continuously improve products or services.
Quality Imperative
In the context of the basic organizational structures of multinational corporations (MNCs), identify the advantages of a global functional division.
Relatively lean managerial staff Emphasis on functional expertise Tight centralized control
Identify the forms of the micro risk issues that businesses face. (Check all that apply.)
Restrictive local laws Taxes on specific kinds of business activity Industry regulation
Return measured by dividing profit by assets is referred to as ____ ____ ____ (ROI)
Return on Investment
Identify the examples of the macro risk issues faced by businesses. (Check all that apply.)
Russia tightening controls on the flow of foreign currencies India's legal system being hindered by a labyrinth of laws and bureaucratic red tape
Match the types of industries based on the levels of technological sophistication (in the left column) with their descriptions (in the right column).
Science-based industry: It requires the continuous introduction of new products or processes. Non-science-based industry: It does not require the continuous introduction of new products or processes.
In the managerial decision-making process, six steps follow problem perception, problem identification, and problem formulation. Arrange these steps in the correct order of occurrence. (Place the first step at the top.)
Search for alternatives Evaluation of alternatives Choice of alternatives Start of operation Implementation Control
Which of the following factors encourage the centralization of decision making in subsidiary operations? (Check all that apply.)
Small geographic distance between home office and subsidiary and high interdependence between units Fewer highly competent managers in host country and much experience in international business
Which of the following financial statements are required from subsidiaries for home offices to exert indirect controls on them?
Statements put together to meet the national accounting standards and procedures prescribed by law in the host country Statements put together to adhere to the accounting principles and standards needed by the home country Statements put together to meet the financial consolidation requirements of the home country
Identify the factors that encourage the centralization of decision making in subsidiary operations. (Check all that apply.)
Strong volume-to-unit-cost relationship, high degree of technology, and highly competitive environment Large capital investment, large size, and relatively high significance given to multinational companies Low level of product diversification, homogeneous product lines, and strong importance attached to brand name, patent rights, name, etc.
In the context of the decision-making process in Japanese organizations, match the Japanese terms (in the left column) with their meanings (in the right column).
Tatemae - It means following norms and doing the right thing. Honne - It means what an individual really wants to do.
In the context of international business management, which of the following are typical characteristics of terrorist attacks? (Check all that apply.)
Terrorists typically target business areas or businesses that have high status. A majority of the attacks on private businesses are either driven by amateur terrorists or those who are religiously motivated.
What is the theory behind the relative bargaining power of a multinational corporation (MNC)?
The MNC operates to have a bargaining power position stronger than that of its host country.
Identify the findings of a study of decision making in teams composed of Swedes and Germans.
The Swedish teams had flatter organizational hierarchies than the German teams. The Swedish teams had more open-minded work attitudes than the German teams. The Swedish teams displayed higher team orientation than the German teams.
Identify the main reasons why multinational corporations (MNCs) use wholly owned subsidiaries.
The belief that managerial efficiency will be better without outside partners MNCs' preference for total control
Which of the following are the control problems that may arise when companies attempt to control their overseas operations to become coordinated and integrated units?
The differences in degrees of competence and experience in planning among overseas managers The discord between the goals of corporate management and joint-venture partners The conflict between the objectives of a corporation and its overseas operation
Identify the models of personal computer (PC) manufacturing business that are the most common at present.
The direct-sales model The Hybrid model
Which of the following common themes of the best global firms have been identified by the consultants at the Hay Group?
The firms believe that the best people are attracted by success. The firms see the development of one's career as an investment.
Identify the common themes of the best global firms as recognized by the consultants at the Hay Group.
The firms promote from within whenever possible and reward performance. The firms show genuine interest in what their employees think. The top firms have precise knowledge of what they are looking for. The managers of the top firms take their mission statements seriously.
Which of the following are true of licensing?
The licensor usually restricts licensee sales to a specific geographic locale. The licensor often limits the time frame covered by the arrangement.
Match the sectors of economic activity (in the left column) with their descriptions (in the right column).
The primary sector: It includes agriculture, forestry, and mineral exploration and extraction. The industrial sector: It includes manufacturing operations. The service sector: It includes transportation, finance, insurance, and related industries.
In the context of the conflict between the demands for global integration and national responsiveness, which of the following statements is true about the situation that requires multinational corporations (MNCs) to adopt global strategies?
There is a strong need for integration and a low awareness of differentiation.
In the context of the choice of location for setting up a multinational corporation's (MNC's) operations, identify the features of frontier markets. (Check all that apply.)
These markets are less likely to face drastic effects of global economic fluctuations than those in developed countries. These markets involve high risks and high rewards for investors.
In the context of the choice of location for setting up a multinational corporation's (MNC's) operations, identify a true statement about frontier markets.
They are a peculiar subset of emerging economies.
Identify the opportunities available to multinational corporations (MNCs) that employ first-mover strategies in emerging economies that are going through rapid changes. (Check all that apply.)
They are able to anticipate and prepare for competition. They are able to establish beachhead positions.
Which of the following statements are true of the choices of exporting and importing in international business?
They are often the only ones available for small and new firms that look to expand their business internationally. They offer an avenue for large firms that want to begin their international expansion with minimum investment and risk.
What is a similarity between the global structural arrangement and the international division structure?
They both have an international scope.
In the context of international management, identify the true statements about German managers as examined by Horovitz.
They emphasized operational efficiency and placed heavy control on the production area. They made use of a large central staff for measuring performance. They focused attention on both large and small variances and employed very detailed control.
Identify a true statement about the Swedish teams who were part of a study of decision making on German teams and Swedish teams.
They exhibited informal work attitudes unlike the German teams.
In the context of international management, which of the following are true of French managers?
They expend a lot of time searching for and evaluating alternatives and exhibit rationality and intelligence in each option. They exhibit a tendency to become quite emotionally charged rather quickly if challenged and exert a lot of control at every level.
In the context of international management, identify a true statement about Danish managers.
They refrain from expending time on searching or analyzing alternatives to optimize production.
Which of the following is true of multinational corporations that use the political imperative approach to strategic management?
They sell products that have a large part of their value added in the downstream activities of the value chain.
Which of the following are true of the multinational companies in Germany?
They tend to be autocratic by nature. They have a tendency to be fairly centralized. They tend to be hierarchical.
Why do multinational corporations (MNCs) often opt for advanced industrialized countries to make investments? (Check all that apply.)
They tend to have legal restrictions related to imports that encourage a local presence. They offer the largest markets for goods and services.
In the context of international management, identify the true statements about Danish managers.
They tend to take a straightforward approach and are less emotionally responsive. They opt for alternatives that can be initiated and implemented quickly and still bring about the relative desired results. They avoid spending much time analyzing or searching alternatives for optimizing production.
Which of the following is true of global product divisions?
They typically operate as profit centers.
Which of the following is a true statement about German managers as examined by Horovitz in the context of international management?
They used the control process as a surveillance and policing instrument.
In the context of the basic organization structures, identify the features of a global area division.
This arrangement is typically used by firms that are in mature businesses and have geographically differentiated narrow product lines. This arrangement allows division managers to fulfill the demands of the local market and make quick decisions to accommodate environmental changes.
Identify the benefits of a firm's global product structure.
This structure allows line and staff managers within a division to achieve expertise in the technical and marketing aspects of products assigned to them. This structure offers a direct line of communication from the customer to those in the firm who have product knowledge and expertise. This structure maintains product emphasis and promotes product planning on a global basis.
Identify the disadvantages of a firm using a product division structure.
This structure necessitates the duplication of facilities and staff personnel within each division. This structure tends to encourage managers to pursue currently attractive geographic prospects for products and neglect areas with better long-term potential.
Identify the disadvantages of an international division structure adopted by a firm.
This structure separates the domestic and international managers, which can lead to two different camps with different objectives. Ideas for new processes in the international market are given low priority as most research and development (R&D) efforts are domestically oriented.
How does the state and its various institutions and agencies pose a direct threat to MNCs? (Check all that apply.)
Through policy shifts in taxation or regulation. Through outright or de facto expropriation. By allowing the exploitation of assets by local firms.
What are the most pervasive barriers when multinational corporations expand through mergers/acquisitions?
Time constraints Differences in culture
Which of the following are part of the ultimate goal of the violence created by terrorism? (Check all that apply.)
To make government and citizens yield to the beliefs of the terrorist group To make government and citizens change policies
Why do multinational corporations require strategic management?
To monitor their increasingly diversified operations in a constantly changing environment To offer the right combination of price and financing to a carefully identified market segment
____ _____ ____ (TQM) is an organizational strategy and accompanying techniques that result in delivery of high-quality products or services to customers.
Total Quality Management
Match the categories of political risks faced by businesses (in the left column) with their causes (in the right column).
Transfer risks: Government policies that limit the movement of capital, payments, production, people, and technology in and out of a country Operational risks: Government policies and procedures that directly constrain the management and performance of local functions Ownership-control risks: Government policies or actions that inhibit ownership or regulation of local operations
Match the categories of political risks faced by businesses (in the left column) with their examples (in the right column).
Transfer risks: Tariffs on exports and imports, restrictions on exports, dividend remittance, and capital repatriation Operational risks: Price controls, export commitments, financing restrictions, taxes, and local sourcing requirements Ownership-control risks: Foreign-ownership limitations, confiscation, expropriation, pressure for local participation, and abrogation of proprietary rights
An area of consideration for MNCs regarding macro political risks is government corruption, such as the prevalence of bribery and government rules and regulations that require the inclusion of certain locals in lucrative business deals.
True
Because of micro risk issues, some MNCs are treated differently than others, which increases the cost of doing business.
True
MNCs face hazards that originate directly from variation and unpredictability in political and governance systems around the world.
True
The "strength" or "weakness" of FSAs and CSAs is a relative notion.
True
There is no definitive evidence that strategic planning in the international arena always results in higher profitability.
True
True or false: A subsidiary is a typical organizational arrangement for handling finance-related businesses or other operations that need an on-site presence from inception.
True
True or false: For a multinational corporation (MNC), gaining bargaining power relies on factors such as the host country's perception of the MNC's size, legitimacy, and experience.
True
True or false: In an international context, the value of centralization will differ based on the local environment and the goals of an organization.
True
True or false: In international management, controlling and decision making are often interlinked functions.
True
True or false: In order to achieve the layering of competitive advantage, multinational corporations (MNCs) should create extensive internal networks of international subsidiaries in major national or regional markets and build external networks of strategic alliances with firms around the world.
True
True or false: In the French managerial system, middle managers contend to receive the praise of the upper management.
True
True or false: In the context of a finding on international management, the Japanese effectively used quality control circles (QCCs).
True
True or false: In the context of the decision-making process in Japan, most managers know how to respond to suggestions from the top and act accordingly.
True
True or false: Managing operations with partners from different national cultures is a fundamental challenge of alliances.
True
True or false: Multinational corporations require strategic management to discard unprofitable ventures to create capital for expansion into higher-growth product and/or geographic markets.
True
True or false: The three general areas that international management considers in strategy implementation are location of the operations, entry and ownership, and functions.
True
Arrange the categories of the special nature of foreign direct investment (FDI), starting from the category that includes the lowest-risk venture to the one that includes the highest-risk venture.
Type V Type IV Type III Type II Type I
What are the most important business strategies adopted by born-global firms? (Check all that apply.)
Unique-products development Global technological competence Quality focus Leveraging of foreign distributor competences
Match the types of activities involved in a firm's alliance with foreign partners (in the left column) with their elements (in the right column).
Value-claiming activities: Competitive, distributive negotiation Value-creating activities: Collaborative, integrative negotiation
Which of the following are the typical conditions under which a firm uses licensing as an entry strategy in international business?
When a host country requires the newly entering firm to make a substantial direct investment in the country When the firm is small and lacks financial and managerial resources to enter foreign markets
Identify the situation in which the use of an administrative coordination approach to formulating and implementing strategy is ideal for a multinational corporation (MNC).
When the MNC is required to make rapid, flexible decisions in order to close the sale
When do firms choose the entry and ownership strategy of mergers/acquisitions?
When the firms want quick expansion of resources When the firms want to construct high-profit products in a new market
Identify the disadvantages of using wholly owned subsidiaries as an entry strategy by multinational corporations (MNCs).
Wholly owned subsidiaries cause low international integration or multinational involvement. Wholly owned subsidiaries are not very efficient with entering several countries or markets. Wholly owned subsidiaries encounter a high risk with a large investment in one area. Home-country unions are likely to oppose the creation of foreign subsidiaries.
A(n) ____ approach to management involves strategic formulation and implementation in which a multinational corporation makes strategic decisions based on the merits of the individual situation rather than using a predetermined economically or politically driven strategy.
administrative coordination
A(n) ____ is any type of cooperative relationship among two or more different firms.
alliance
What do MNCs regard as individuals who will respond to their directives?
an extension of the central management staff
In international management, in comparison to indirect controls, direct controls ______.
are used annually or semiannually
In international management, unlike direct controls, indirect controls ______.
are used to track performance on a monthly basis
A multinational corporation's strategy that targets low-income customers in developing countries is known as the ____ ____ ____ ____ strategy. (Enter one word in each blank.)
base of the pyramid
Firms that engage in significant international activities shortly after being established are called ____ ____ ____
born global firms
What are the steps that contribute to determining if a corporation's alliance with foreign partners would succeed or fail? (Check all that apply.)
carrying out due diligence selecting the right partners specifying the scope and limit of the alliance
Who are many upper-level operating decisions made by when competition is high?
central management
Larger organizations may choose to ____ authority for critical decisions in order to ensure efficiency through greater coordination and integration of operations.
centralize
In the context of international management, the process of evaluating results in relation to plans or objectives and deciding what action, if any, to take is known as ____
controlling
In the context of the study of decision making, unlike in German teams, in Swedish teams ______.
decision making appeared less formal and more transparent
In the context of international management, the use of face-to-face or personal meetings for the purpose of monitoring operations is known as ____ ____
direct controls
The process of providing management with accurate forecasts of trends related to external changes in geographic areas where the firm currently is doing business or is considering setting up operations is known as ___
environmental scanning
In the context of the initial division structure of a firm, a(n) ______ lets the firm reduce the risk and size of investment in instituting significant international operations while testing the size of international markets.
export arrangement
The seizure of businesses by a host country with little, if any, compensation to the owners is called ______.
expropriation
True or false: A drawback of a firm using a product division structure is that it leads division managers to focus their time and efforts on tapping the international market, and thus the domestic market is often neglected.
false
The use of defined structures and systems in decision making, communicating, and controlling is called ___
formalization
A(n) ____ is a structure under which global operations are organized on a geographic rather than a product basis.
global area division
In the context of the use of the finance function to implement strategy, the overseas operation commonly relies on ______.
global financing
An ____ is an organization structure that organizes worldwide operations primarily based on function and secondarily on product.
global functional division
One of the most commonly cited advantages of multinational corporations (MNCs) forming a joint venture or an alliance is that it ______.
helps overcome restrictions on foreign competition by becoming part of an insider group
In the context of mergers/acquisitions, a major challenge in the post-merger environment involves ______.
high transition costs
Some takeovers in the old days were caused by _____ laws, which required that nationals hold a majority interest in the operation.
indigenization
In the context of international management, ____ ____ involve the use of reports and other written forms of communication to control operations.
indirect controls
Techniques that help the overseas operation of a multinational corporation (MNC) become a part of the host country's infrastructure are known as ____ techniques
integrative
A(n) ____ is a structural arrangement that handles all international operations of a business out of a division created for this purpose.
international division structure
____ is defined as a combination of innovative, proactive, and risk-seeking behavior that crosses national boundaries and is intended to create value for organizations.
international entrepreneurship
In the context of the conflicting needs for global integration and local responsiveness, a(n) ____ refers to a mixed strategy that combines low demand for integration and responsiveness.
international strategy
A(n) _____ _____ (JV) is a specific type of alliance agreement under which two or more partners own or control a business.
joint venture
A(n) ____ is a combination of a global product, area, or functional arrangement into an MNC that supplements its primary structure with a secondary one and, perhaps, a tertiary one. (Enter one word in each blank.)
mixed organizational structure
____ is the need to understand the different consumer tastes in segmented regional markets and respond to different national standards and regulations imposed by autonomous governments and agencies.
national responsiveness
The ____ approach to strategic planning involves strategic formulation and implementation utilizing strategies that are country-responsive and designed to protect local market niches.
political imperative
The unanticipated likelihood that a business's foreign investment will be constrained by a host government's policy is called ____ _____
political risk
Lobbying, campaign financing, advocacy, and other political interventions designed to shape and influence the political decisions prior to their impact on a firm are termed _____ _____ strategies
proactive political
Global structures come in three common types. Which of the following are included in the 3 common types?
product, area, function
Techniques that are designed to discourage the host government from interfering in operations of a multinational corporation (MNC), mainly by avoiding complex ties to the host country's economy, are called _____ and _____ techniques
protective and defensive
A decision-making process that is used in Japan where decisions are made by consensus is known as ______.
ringisei
The process of determining an organization's basic mission and long-term objectives and then implementing a plan of action for pursuing this missionand attaining these objectives is known as ______
strategic management
The process of providing goods and services in accord with a plan of action is known as ____
strategy implementation
When multinational companies implement kaizen, they ______.
strive to attain continual improvement by using ongoing training
At present, personal computer (PC) firms must be more advanced than any other industry because ______.
technological changes occur at a relentless pace
It is common for MNCs to centralize operations when dealing with sophisticated levels of ______
technology
The use of force or violence against others to promote political or social views is termed ____
terrorism
In the context of the use of the production function in the implementation of strategies, when the products offered by multinational corporations are labor-intensive, they tend to move manufacturing to locations ______.
that offer low-cost labor and sufficient infrastructure
A benefit of a firm's global product structure is that ______.
the creation of specialized product sets results in effective alterations
In the context of the study of decision making conducted on Swedish and German teams, unlike in Swedish teams, in German teams ______.
the decision authority of an expert in the field largely dominates the decision-making process
The _____ is a multinational structural arrangement that combines elements of function, product, and geographic designs, while relying on a network arrangement to link worldwide subsidiaries.
transnational network structure
A(n) ___ is an integrated business strategy that emphasizes the demands for both global integration and local responsiveness.
transnational strategy
When is a company likely to centralize decision-making processes?
when there are patent rights involved when there are important brand names
A(n) ____ ____ ____is an overseas operation that is totally owned and controlled by a multinational corporation (MNC).
wholly owned subsidiary