Chapter 13

A joint venture can be dangerous to a company if its partner is acquired by a competitor.

t

A firm that is pursuing a localization strategy will typically use a global-area structure.

t

Which structure has been adopted by most large, complex U.S. companies? A. Multidivisional B. Product C. Product team D. Market E. Functional

a

A company that makes and sells the same product in many different countries often groups its overseas divisions into ____ to simplify the coordination of products across countries. A. world regions B. horizontal areas C. six areas D. local regions E. none of these choices

a

An international strategy A. centralizes only the research and development (R&D) and marketing functions. B. centralizes all functions. C. involves an appropriate mix of centralization and decentralization. D. is the most complex strategy. E. maximizes local responsiveness.

a

In its U.S. operations, Japanese-based Sony has decentralized almost all of its tasks to an independent firm that it created and which it owns. Based on this information, which entry mode is Sony using in the United States? A. Internal new venture B. Acquisition C. Joint venture D. Divestiture E. Merger

a

The most widely used vehicles that companies can use to enter new industries or countries are A. mergers and acquisitions. B. joint ventures and strategic alliances. C. mergers and joint ventures. D. acquisitions and strategic alliances. E. product development and market penetration.

a

The set of strategic alliances that an organization creates with suppliers, manufacturers, and distributors to produce and market a product is called a(n) A. network structure. B. outsourcing network. C. structure alliance. D. oligopoly. E. suppliers' network.

a

To expand its global sales, U.S.-based Miller Brewing Company purchased a firm that processes grains in Brazil. Miller plans to manage the new business by allowing it to continue as before, with little integration into the rest of the firm. Based on this information, which entry mode is Miller using in Brazil? A. Acquisition B. Internal new venture C. Joint venture D. Divestiture E. Merger

a

When a company uses a network structure to implement outsourcing, A. many firms along the value chain can easily cooperate. B. bureaucratic costs are increased. C. the cost of the outsourced functions increases. D. organizational culture is an important control mechanism. E. many firms along the value chain can easily cooperate and bureaucratic costs are increased.

a

A global strategy A. involves an appropriate mix of centralization and decentralization. B. centralizes all functions at the optimal global locations. C. centralizes only the research and development (R&D) and marketing functions. D. is the most complex strategy. E. maximizes local responsiveness.

b

For its South American operations, Caterpillar performs most functions at its U.S. headquarters but markets through cooperative relationships with local distributors. Based on this information, which entry mode is Caterpillar using in South America? A. Internal new venture B. Joint venture C. Merger D. Acquisition E. Intrapreneurship

b

In a multidivisional structure, which form of control is used to compare the relative performances of different divisions? A. Output control B. Financial control C. Control through culture D. Bureaucratic control E. Adaptive control

b

In its African operations, Sony Corporation performs most functions at its Japanese headquarters but markets through cooperative relationships with local distributors. In the United States, Sony has decentralized almost all of its tasks to an independent firm that it owns. Based on this information, which strategy is Sony pursuing? A. Localization B. Transnational C. International D. Global standardization E. Stuck in the middle

b

Ownership of the company created by a joint venture A. is split 50/50 between the two joint-venturing companies. B. is usually a matter to be negotiated between the companies engaged in the venture. C. automatically goes to the largest company engaged in the venture. D. automatically goes to the smallest company engaged in the venture. E. none of these choices.

b

The U.S. firm Hewlett-Packard (HP) built twelve worldwide manufacturing facilities in several different countries, but its research and development (R&D) and marketing are centralized in the United States. Based on this information, which entry mode is HP using in its various locations? A. Acquisition B. Internal new venture C. Joint venture D. Divestiture E. Merger

b

The easiest and cheapest type of diversification strategy for a company to manage is A. related diversification. B. unrelated diversification. C. vertical integration. D. horizontal diversification. E. none of these choices.

b

When Toyota first decided to manufacture and market cars in the United States, it entered into a ____ with General Motors. A. strategic alliance B. joint venture C. global partnership D. trade agreement E. contingency plan

b

Which of the following is not a consequence of the increased ability of managers to use information technology as they implement strategies? A. Flatter hierarchies B. Greater centralization C. More timely information D. Increased use of outsourcing E. Enhanced innovation capabilities

b

A company pursuing unrelated diversification A. relies more on output controls than on bureaucratic controls. B. needs to create an internal transfer pricing scheme. C. has a low need for integration among divisions. D. should have a product team structure. E. should use a centralized decision-making process.

c

America Online blended its operations with those of Time Warner to create AOL Time Warner. America Online is using which entry mode to enter the broadcast industry? A. Acquisition B. Internal new venture C. Merger D. Divestiture E. Joint venture

c

In joint venturing, two or more companies typically agree to A. merge within twelve months. B. divide their lists of customers. C. pool specific resources and capabilities. D. divide a specific market between the two companies. E. pool the results of entrepreneurship at each company.

c

PepsiCo bought many of its bottlers. Which entry mode is PepsiCo using to enter the bottling industry? A. Joint venture B. Internal new venture C. Acquisition D. Divestiture E. Merger

c

The U.S. firm Intel, a maker of semiconductor chips, built twelve worldwide manufacturing facilities in several different countries, but its research and development (R&D) and marketing are centralized in the United States. Based on this information, which strategy is Intel pursuing? A. Localization B. Transnational C. International D. Global standardization E. Stuck in the middle

c

The global-product strategy is weak when it comes to A. manufacturing of products. B. distribution of products. C. responsiveness to customers. D. all of these choices. E. none of these choices.

c

The two main innovations in a multidivisional structure (over a functional or product structure) are A. a matrix structure at the divisional level and a flat structure at the corporate level. B. a product structure at the divisional level and a functional structure at the corporate level. C. the organization of business units or companies in each industry in which it competes into one or more divisions and the creation of corporate-level positions to oversee the activities of divisional managers. D. self-contained divisions with operating responsibility and a group of divisional managers with collective strategic responsibility. E. a matrix structure at the divisional level and a functional structure at the corporate level.

c

Transfer pricing is used most commonly in a A. functional structure. B. product team structure. C. multidivisional structure. D. matrix structure. E. geographic structure.

c

When a firm's managers are very concerned about the possibility of losing control of proprietary know-how, which entry mode should the firm avoid? A. Acquisition B. Internal new venture C. Joint venture D. Divestiture E. Merger

c

A camera manufacturer that has separate divisions for making personal cameras, movie cameras, and film acquired a small film developer and a car battery supplier. Which of the following structures is most appropriate for this firm? A. Functional B. Matrix C. Geographic D. Multidivisional E. Product team

d

In a multidivisional structure A. support functions, such as accounting, are centralized at the top of the organization. B. corporate headquarters staff have operating responsibility. C. divisional managers have overall corporate strategic responsibility. D. corporate headquarters is responsible for overseeing the company's long-term multibusiness model and for providing guidance for interdivisional projects. E. financial controls are necessarily weak.

d

In general, the choice of structure and control systems for managing a global business is a function of which of the following factors? A. The decision of how to distribute and allocate responsibility between managers at home and managers abroad B. The selection of the organizational structure that groups divisions both at home and abroad and that allows for the best use of resources C. The selection of the right kinds of integration and control mechanisms D. All of these choices E. None of these choices

d

Joint ventures are best suited for projects that A. are small in size. B. each company could undertake by itself. C. are routine in nature. D. neither company could do on its own. E. none of these choices.

d

Problems in effectively managing the multidivisional structure include A. distortion of information. B. competition for resources. C. transfer pricing. D. all of these choices. E. none of these choices.

d

The control issue in managing the multidivisional structure is A. how much authority should be centralized at corporate headquarters. B. how much authority should be decentralized to the divisions. C. how much authority should be given to each functional unit. D. how much authority should be centralized at corporate headquarters and decentralized to the divisions. E. how much authority should be given to corporate division heads.

d

The purpose of a joint venture between two or more companies is often to A. share and develop technology. B. distribute and market brands and products. C. share access to customers. D. all of these choices. E. none of these choices.

d

The wasteful duplication of functional resources is most likely to arise with a A. functional structure. B. product team structure. C. matrix structure. D. multidivisional structure. E. geographic structure.

d

Which of the following companies is the best example of an organization that formally encourages and supports entrepreneurship? A. Toyota B. Smith & Wesson C. General Motors D. 3M E. Nestlé

d

Which of the following strategies results in the highest bureaucratic costs? A. Localization B. International C. Global standardization D. Transnational E. Unrelated diversification

d

Which structure is the best for sharing information and learning across countries? A. Global-area B. International division C. Global product group D. Global matrix E. Simple

d

A localization strategy A. involves an appropriate mix of centralization and decentralization. B. centralizes all functions. C. centralizes only the research and development (R&D) and marketing functions. D. is the most complex strategy. E. is oriented toward local responsiveness.

e

At the level of organizational structure, control, and culture, ____ has given strategic managers many new options in implementing strategies. A. research and development B. marketing research C. outsourcing D. benchmarking E. information technology

e

Business-to-business (B2B) networks link firms to A. buyers. B. suppliers. C. regulators. D. competitors. E. buyers and suppliers.

e

Implementation of a global matrix provides a company with which of the following advantages? A. Decentralizes control to overseas managers B. Provides overseas managers with considerable flexibility C. Allows overseas managers the flexibility to manage local issues D. Allows corporate executives to exercise control when needed E. All of these choices

e

Information technology facilitates A. output control. B. behavior control. C. integration between divisions. D. integration between divisions and corporate headquarters. E. all of these choices.

e

Reasons why a firm might benefit from the creation of a separate new-venture division include all of the following except A. better protection of the division's autonomy. B. less scrutiny from top managers. C. removal from day-to-day pressures of the firm. D. ease in developing a culture that fosters innovation. E. development of a science-based business model.

e

The multidivisional organization structure offers several advantages, including A. enhanced corporate financial control. B. enhanced strategic control. C. enhanced growth. D. stronger pursuit of internal efficiency. E. all of these choices.

e

To expand its global sales, the U.S.-based foods maker ConAgra purchased a firm that processes grains in the United Kingdom. ConAgra plans to manage the new business by allowing it to continue as before, with little integration into the rest of the firm. Based on this information, which strategy is ConAgra pursuing? A. Stuck in the middle B. Transnational C. International D. Global standardization E. Localization

e

Which of the following factors must be considered in choosing the structure and control systems for managing a global business? A. How to distribute and allocate responsibility and authority between managers at home and abroad B. The selection of the organizational structure that groups divisions both at home and abroad C. The selection of the right kinds of integration and control mechanisms D. The selection of the right kinds of organizational culture E. All of these choices

e

Which of the following strategies can companies use as they begin to market their products and establish production facilities overseas? A. Localization B. International C. Global D. Transnational E. All of these choices

e

Which of the following strategies is most likely to facilitate the transmission of a company's norms and values and, hence, the development of a global corporate culture? A. Focus B. Localization C. International D. Global standardization E. Transnational

e

Which of the following structures results in the creation of an office of corporate headquarters staff? A. Functional B. Product team C. Geographic D. Matrix E. Multidivisional

e

A joint venture occurs when two equal-sized firms agree to blend their operations, creating one larger firm.

f

An approach to internal new venturing that has been championed by those who believe that the best way to encourage new-product development is to integrate this effort into the rest of the organization is the creation of a new-venture division.

f

Different divisions in a firm with a multidivisional structure are not given authority to adopt their own organizational structures.

f

Firms pursuing related diversification typically rely more on output control than on culture control.

f

In September 2006, Ford Motor Company announced a plan to sell both its U.S. and global operations.

f

One problem with a mishandled merger is that skilled managers who feel they have been demoted will work together to sabotage the organization.

f

SAP is the world's leading supplier of software for the videogame industry.

f

The organizational hierarchy is flatter in a multidivisional structure than in a product or functional structure.

f

Vertical integration is a less expensive strategy to manage than is unrelated diversification.

f

When a firm implements a global strategy with a global product group structure; it will be more responsive to the unique needs of each local country.

f

A major impact of information technology (IT) on strategic implementation has been its effects on a company's ability to pursue strategic outsourcing to strengthen its business model.

t

Companies pursue a global standardization strategy when they want to minimize costs.

t

Companies pursue a localization strategy when they want to maximize responsiveness to the unique needs of customers in each country.

t

Competition for resources is one of the drawbacks of the multidivisional structure.

t

Divisional battles may lead to battles over transfer pricing.

t

Few integrating mechanisms are needed when a company uses a global-area structure.

t

Implementation problems can arise in unrelated acquisitions when managers from the acquiring company apply inappropriate structure and controls to manage the new business.

t

In a firm with a multidivisional structure, corporate managers oversee the actions of divisional managers.

t

In a multidivisional structure, corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates.

t

In an unrelated multidivisional structure, the idea of corporate culture is meaningless.

t

In the multidivisional structure, each division typically contains only a partial set of value chain activities.

t

It is important for corporate managers to be able to identify high-performing and underperforming divisions and to take corrective action as necessary.

t

Nestlé, the world's biggest food company, has been pursuing an ambitious program of global expansion, acquiring companies such as Perrier and Rowntree.

t

Often global companies use the services of foreign intermediaries or brokers, such as Li & Fung, to find suppliers that best fit their input requirements.

t

Oracle experienced difficulty in understanding its customers' needs and problems because Oracle was not using the very software it sold to other companies.

t

The more interdependent the divisions in a multidivisional structure, the greater are the bureaucratic costs associated with obtaining the potential benefits from a particular strategy.

t

To foster the development of the matrix-in-the-mind concept and promote cooperation, companies are increasingly making use of the integrating capabilities of information technology (IT).

t

When implementing an international strategy, many companies create global divisions that they add to their existing divisional structures.

t