Chapter 12: Strategizing, Structuring, and Learning around the World

The business leader of a specific country (or a geographic region) is known as a(n) ______:

Country manager

From a resource-based standpoint, a fundamental basis for competitive advantage is innovation-based firm heterogeneity. _____ virtually guarantees that there will be persistent heterogeneity in the solutions generated.

Decentralized R&D work performed by different teams around the world

TF: A manager whose approach to knowledge management is to install a sophisticated information technology (IT) infrastructure is one of the most valuable assets to knowledge management.

False

TF: Centralized research and development guarantees persistent heterogeneity in the solutions generated by a company.

False

TF: Domestic and international competition share the pressure to reduce costs, but only domestic competition feels the pressure for local responsiveness.

False

TF: From a resource-based standpoint, a fundamental basis for competitive advantage is innovation-based firm homogeneity.

False

TF: Global product division structure, which is the opposite of the geographic area structure, supports the transnational strategy.

False

TF: The global standardization strategy maximizes local responsiveness.

False

TF: The stakeholders of an MNE (employees and world governments) gain confidence in the global aspirations of the MNE when the upper echelon of management consists largely of one nationality.

False

TF: When Henry Ford experimented with marketing "world car" designs, he was widely successful.

False

_______ is an organizational structure often used to alleviate the disadvantages associated with both geographic area and global product division structures, particularly when adopting a transnational strategy.

Global matrix

TrinkCan Inc., a soft drink company in Wales, establishes new branches in England, Australia, and the United States. To minimize its costs, the company uses similar packaging, distribution, and promotion across all the countries. According to the integration-responsiveness framework, which of the following strategies is used by TrinkCan?

Global standardization strategy

In the context of organizational cultures, which of the following is true of a wolf culture?

It centers on relentless pursuit with highly motivated employees working overtime.

Which of the following is a leading problem with the international division organizational structure?

It does not give sufficient voice to foreign subsidiary managers relative to the heads of domestic divisions.

Which of the following statements is true of a geographic area structure?

It encourages the fragmentation of the multinational enterprises into fiefdoms.

Which of the following is true of a localization strategy?

It is effective when pressures for cost reductions are low.

Which of the following statements is true of a global product division structure?

It is highly responsive to cost reduction pressures.

Which of the following is a disadvantage of adopting a home replication strategy?

It often lacks local responsiveness.

In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting a localization strategy?

Knowledge is developed and retained within each subsidiary.

In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting a home replication strategy?

Knowledge is developed at the center and transferred to subsidiaries.

In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting a transnational strategy?

Knowledge is developed jointly and shared worldwide.

In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting a global standardization strategy?

Knowledge is mostly developed and retained at the center and key locations.

_____ can be defined as the structures, processes, and systems that actively develop, leverage, and transfer knowledge.

Knowledge management

_____ means reacting to different consumer preferences and host-country demands.

Local responsiveness

The proactive and deliberate pursuit of new opportunities by a subsidiary to expand its scope of responsibility is known as _____.

Subsidiary initiative

Which of the following is true of the business leader of a specific country (or a geographic region)?

They carry a great deal of weight in their geographic area.

TF: A hallmark of transnational multinational enterprises is a high degree of interdependence and extensive and bi-directional flows of knowledge.

True

TF: Formally, organizational charts specify the scope of responsibilities for various parties.

True

TF: Managers need to actively develop learning and innovation capabilities to leverage multinational presence.

True

TF: Tacit knowledge is non-codifiable, and its acquisition and transfer require hands-on practice.

True

TF: The positioning of the four strategic choices of multinational enterprises is not random. They develop from the relatively simple international division through either geographic area or global product division structures.

True

TF: Transnational strategy aims to capture the best of both worlds by endeavoring to be both cost efficient and locally responsive.

True

What did Theodore Levitt argue in his 1983 article "The Globalization of Markets"?

Worldwide consumer tastes are converging

The two sets of pressures that multinational enterprises (MNEs) confront are _____.

cost reduction and local responsiveness

Companies following a localization strategy differ from companies following a home replication strategy in that the companies following a localization strategy:

develop and retain knowledge within each subsidiary.

In the context of strategizing, structuring, and learning around the world, an implication for savvy managers will be to:

develop learning and innovative capabilities to leverage multinational presence as an asset.

Widget Corp., a manufacturing firm in Lithuania, exports its manufactured tools to Wales. To protect its domestic firms, the Government of Wales imposes a 20 percent tax on the tools imported from Widget Corp. Therefore, Widget Corp. is subject to:

formal institutional frameworks erected by the host-country government.

Multinational enterprises appoint home-country nationals as the head of a foreign subsidiary because the home-country nationals:

have an understanding of the informal workings of multinational enterprises.

Burger Mart, a fast food franchise in the U.S. is famous for its unique recipes that are a combination of a variety of spices. Their products are very popular in the U.S. They open a new outlet in Germany. They do not change their menu or their recipes as their menu and products are already popular in the U.S. Based on the integration-responsiveness framework, the strategy used by Burger Mart is a(n) _____.

home replication strategy

Asset Sports, a sports equipment manufacturing company based in India, specializes in cricket equipment. It establishes a new manufacturing plant in Brazil that specializes in soccer equipment. Based on the integration-responsiveness framework, the strategy adopted by Asset Sports is called a(n) _____.

localization strategy

The global matrix structure supports the goal of the transnational strategy, but in practice it is often difficult to deliver because:

managers have to deal with two bosses who are often in conflict.

Multinational enterprises that engage in a _____ strategy promote global learning and diffusion of innovations in multiple ways.

transnational