Chapter 14 : INB
51) Centralization A) gives top management time to focus on critical issues by delegating more routine issues to lower-level managers. B) can give top-level managers the means to bring about needed major organizational changes by concentrating power and authority in one individual or a management team. C) permits greater flexibility because decisions do not have to be "referred up the hierarchy" unless they are exceptional in nature. D) can be used to establish relatively autonomous, self-contained subunits within an organization.
B
52) A firm that needs greater flexibility should choose ________ for its decision making. A) horizontal differentiation B) decentralization C) localization strategy D) control systems
B
55) The emphasis on local responsiveness in firms pursuing a localization strategy creates strong pressures for A) centralizing all decisions regarding marketing, R&D, and human resource management. B) decentralizing operating decisions to foreign subsidiaries. C) centralizing all operating decisions. D) global learning.
B
62) Which of the following is true regarding a worldwide area structure? A) It tends to be favored by firms with a high degree of diversification. B) It inhibits local responsiveness. C) It tends to be favored by firms with a domestic structure based on functions. D) Decision-making responsibilities are centralized.
C
64) ________ tends to be adopted by firms that are reasonably diversified. A) A worldwide area structure B) An international division structure C) A worldwide product division structure D) A global matrix structure
C
59) Regardless of a firm's domestic structure, its international division tends to be organized on A) product. B) geography. C) people. D) economy.
B
6) In a worldwide area structure, each area tends to be a self-contained, largely autonomous entity with its own set of value creation activities. A. True B. False
A
63) A ________ encourages fragmentation of the organization into highly autonomous entities. A) worldwide area structure B) global matrix structure C) worldwide product structure D) global network structure
A
65) The worldwide product division structure A) is weak in local responsiveness. B) inhibits the realization of location economies. C) inhibits the realization of experience curve economies. D) limits the transfer of core competencies between areas.
A
68) The need for coordination between subunits is lowest in firms pursuing A) a localization strategy. B) an international strategy. C) a global strategy. D) a transnational strategy.
A
7) In a worldwide product divisional structure, each division is a self-contained, largely autonomous entity with full responsibility for its own value creation activities. A. True B. False
A
72) Which control system is most widely used by small firms? A) personal B) output C) bureaucratic D) cultural
A
10) The need for coordination between units is greatest in firms pursuing a localization strategy. A. True B. False
B
70) ________ refers to giving a person in each subunit responsibility for coordinating with another subunit on a regular basis. A) Global learning B) Liaison roles C) Knowledge network D) Matrix structures
B
77) What type of control system achieves control through a system of rules and procedures that directs the actions of subunits? A) personal controls B) bureaucratic controls C) cultural controls D) output controls
B
11) Direct contact between subunit managers is the simplest integrating mechanism. A. True B. False
A
13) The basic principle behind incentive systems is to ensure that the incentive scheme for an individual employee is linked to an output target that he or she has some control over and can influence. A. True B. False
A
17) An organizational culture can be strong but bad. A. True B. False
A
80) In Firm A, each division is a self-contained, largely autonomous entity with full responsibility for its own value creation activities. What type of structure does Firm A employ? A) worldwide product division structure B) global matrix structure C) worldwide area structure D) knowledge network structure
A
84) ________ exists when the causes of a subunit's poor performance are not clear. A) Performance ambiguity B) Vertical differentiation C) Output controls D) Horizontal differentiation
A
9) It is difficult to ascertain accountability in the global matrix structure. A. True B. False
A
94) To unfreeze the established culture of an organization, the company A) must take bold steps such as shaking up the management structure in order to implement change. B) is best served by taking incremental steps. C) should employ the existing structural organization to integrate changes. D) implement a rewards or incentive program.
A
81) In the ________, the philosophy is that responsibility for operating decisions pertaining to a particular product should be shared by the product division and the various areas of the firm. A) worldwide product division structure B) classic global matrix structure C) worldwide area structure D) knowledge network structure
B
86) All of the following are strategies that multinational firms pursue except a ________ strategy. A) localization B) domestic C) transnational D) global
B
87) Firms pursuing ________ attempt to create value by transferring core competencies from home to foreign subsidiaries. A) a localization strategy B) an international strategy C) a transnational strategy D) a global strategy
B
88) A firm that operates with matrix-type structures in which both product divisions and geographic areas have significant influence would use which of the following strategies? A) international strategy B) transnational strategy C) global strategy D) localization strategy
B
90) Firms pursuing ________ strategy have a low need for coordination between subunits. A) a global standardization B) a localization C) A transnational D) an international
B
31) By centralizing decision making, a firm A) allows managers to respond to environmental changes more quickly. B) runs the risk of not being able to respond to environmental changes quickly. C) can avoid the duplication of activities that occurs when similar activities are carried on by various subunits within the organization. D) often has issues with duplication of activities that occurs when similar activities are carried on by various subunits within the organization.
C
35) Regardless of a firm's domestic structure, its international division tends to be A) organized on economy. B) decentralized. C) organized on geography. D) centralized.
C
39) The need for coordination is great in A) firms trying to pursue localization strategies. B) international firms. C) firms trying to profit from location and experience curve economies. D) domestic corporations.
C
43) ________ can be defined as the amount of time top management must devote to monitoring and evaluating subunits' performance. A) Performance ambiguity B) The formal matrix C) The costs of control D) Differentiation
C
48) Integration mechanisms are the A) formal division of the organization into subunits. B) mechanisms that enable each subunit to operate independently. C) mechanisms for coordinating subunits. D) location of decision-making responsibilities within a structure.
C
49) Which of the following is one of the four main arguments favoring centralization? A) It permits greater flexibility. B) Motivational research favors it. C) It can avoid the duplication of activities. D) It gives top management time to focus on critical issues by delegating routine issues to lower-level managers.
C
78) Which of the following is a potential drawback of the worldwide area structure? A) This structure discourages division of the organization into autonomous entities. B) This structure makes it difficult to decentralize decisions regarding operations authority. C) This structure makes it difficult to realize location and experience curve economies. D) This structure reduces local responsiveness.
C
82) When the need to integrate subunits is very high and complex, firms may A) use direct contact between subunit managers. B) give a person in each subunit responsibility for coordinating with another subunit on a regular basis. C) institute a matrix structure, in which all roles are viewed as integrating roles. D) use temporary or permanent teams composed of individuals from the subunits that need to achieve coordination.
C
85) Which of the following is a disadvantage of a worldwide area structure? A) Firms that use this structure tend to have a high degree of diversification. B) Decision making is centralized and subsidiaries cannot customize to local marketing needs. C) The structure encourages fragmentation of the organization into highly autonomous entities. D) It does not facilitate local responsiveness.
C
89) Firms pursuing a transnational strategy A) have a low need for coordination. B) require very few integrating mechanisms. C) cultivate a strong culture. D) operate with a worldwide product division structure.
C
91) Firms pursuing ________ strategy are more centralized than enterprises pursuing a localization or international strategy. A) a localization B) an international C) a global standardization D) a transnational
C
27) The manner in which decisions are made and work is performed within the organization is known as the firm's A) organizational culture. B) incentives. C) control systems. D) processes.
D
32) ________ gives top-level managers the power and authority to be able to bring about needed major organizational changes. A) Personal control B) Decentralization C) Bureaucratic control D) Centralization
D
36) The ________ tends to be favored by firms with a low level of diversification whose domestic structures are based on functions. A) global matrix structure B) worldwide product division structure C) performance structure D) worldwide area structure
D
40) In a ________, all roles are viewed as integrating roles. A) worldwide area structure B) process structure C) worldwide product division structure D) global matrix structure
D
44) Firms pursuing a global standardization strategy must cope with a higher level of ________, and this raises their costs of control. A) vertical differentiation B) cultural division C) horizontal differentiation D) performance ambiguity
D
67) In practice, the dual hierarchy in a global matrix structure A) lessens all forms of conflict. B) makes it easy to ascertain accountability. C) results in extremely quick decision making. D) can lead to perpetual power struggles.
D
1) Organizational structure refers to the totality of a firm's organization. A. True B. False
F
2) A manager receives a bonus because the national operating subsidiary that she is in charge of exceeds its performance target. This is an example of an incentive. A. True B. False
T
In firms pursuing _____, some operating decisions are relatively centralized, while others are relatively decentralized.
a transnational strategy
76) ________ refers to the location of decision-making responsibilities within a structure. A) Vertical differentiation B) Integrating mechanisms C) Horizontal integration D) Horizontal differentiation
A
8) The worldwide product division structure may create a lack of local responsiveness. A. True B. False
A
12) A knowledge network is a network for transmitting information within an organization that is based on formal organizational structure. A. True B. False
B
14) Performance ambiguity lowers the cost of control. A. True B. False
B
16) Norms are abstract ideas about what a group believes to be good, right, and desirable. A. True B. False
B
19) Firms pursuing a localization strategy tend to operate with an array of formal and informal integrating mechanisms. A. True B. False
B
21) It is important to realize that organizational change will occur regardless of the commitment of senior managers to it. A. True B. False
B
22) Refreezing an organization should happen quickly. A. True B. False
B
25) Which of the following terms refers to the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits? A) key processes B) control systems C) knowledge networks D) job evaluations
B
29) ________ are the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits. A) Cultural controls B) Control systems C) Output controls D) Incentives
B
30) A firm's ________ determines where in its hierarchy the decision-making power is concentrated. A) organizational architecture B) vertical differentiation C) organizational structure D) horizontal differentiation
B
34) In firms pursuing ________, some operating decisions are relatively centralized, while others are relatively decentralized. A) a global standardization strategy B) a transnational strategy C) a localization strategy D) an international strategy
B
38) In a ________, individual managers belong to two hierarchies (a divisional hierarchy and an area hierarchy) and have two bosses (a divisional boss and an area boss). A) worldwide product division structure B) classic matrix structure C) worldwide area structure D) performance structure
B
28) The norms and values systems that are shared among the employees of a company are referred to as A) processes. B) control systems. C) incentives. D) organizational culture.
D
66) In the classic global matrix structure, horizontal differentiation proceeds along two dimensions. These dimensions are A) hierarchy and overall strategy. B) target returns and sales potential. C) marketing strategy and sales potential. D) product division and geographic area.
D
15) New processes that might lead to a competitive advantage can be developed anywhere within the organization's global network of operations. A. True B. False
A
18) Firm ABC is pursuing a localization strategy that is focused on local responsiveness. Therefore, the need for integration and coordination between self-contained country subsidiaries is low. A. True B. False
A
20) A firm's organizational architecture must be consistent with its strategy. A. True B. False
A
23) A firm's organizational culture refers to the A) norms and value systems that are shared among the employees of an organization. B) formal organizational structure of the company. C) control systems and incentives in place. D) human resources component.
A
24) Organizational structure includes several elements. Which of the following is one of them? A) The establishment of integrating mechanisms to coordinate the activities of subunits. B) The horizontal decision making that occurs daily, for example, on the plant floor to improve operations. C) The manner in which decisions are made and work is performed by individuals. D) The informal division of the organization into cultural groups.
A
26) Historically, Unilever measured the performance of national operating subsidiary companies according to profitability. In this example, profitability is A) a control system. B) a process. C) an integrating mechanism. D) an incentive.
A
3) A decentralized organization allows managers to respond to environmental changes more quickly than in a centralized organization. A. True B. False
A
33) A firm pursuing ________ will have a strong incentive to decentralize decision making. A) a localization strategy B) a transnational strategy C) a global standardization strategy D) an international strategy
A
37) A ________ tends to be adopted by firms that are reasonably diversified and originally had domestic structures based on product divisions. A) worldwide product division structure B) global matrix structure C) worldwide area structure D) performance structure
A
41) ________ control is a type of control that tends to be most widely used in small firms. A) Personal B) Output C) Bureaucratic D) Cultural
A
45) Which of the following is more difficult for a leader? A) to change an established organizational culture B) to import an organizational culture C) to create an organizational culture from scratch in a new venture D) to export an organizational culture
A
5) Beyond the initial functional division of the organization, further horizontal differentiation may be required if the firm significantly diversifies its product offering, which takes the firm into different business areas. A. True B. False
A
57) Which of the following would be a typical responsibility of a product division in a worldwide product divisional structure? A) operating decisions B) overall strategic development of the firm C) financial control of the various divisions D) decisions regarding legal issues
A
74) There is low interdependence, performance ambiguity, and costs of control in firms pursuing A) a localization strategy. B) an international strategy. C) a transnational strategy. D) a global strategy.
A
75) Which of the following is true of a strong corporate culture? A) Almost all managers share a relatively consistent set of values and norms that have a clear impact on the way work is performed. B) A strong culture leads to high performance. C) Outsiders see firms with a strong culture as being autocratic and inflexible. D) A strong culture is always a good culture.
A
4) The choice between centralization and decentralization is absolute. A. True B. False
B
42) In a company using ________, employees tend to control their own behavior, which reduces the need for direct supervision. A) bureaucratic controls B) cultural controls C) personal controls D) output controls
B
46) A firm's ________ determines where in its hierarchy the decision-making power is concentrated. A) integrating mechanism B) vertical differentiation C) knowledge network D) horizontal differentiation
B
47) What is horizontal differentiation? A) the mechanisms that enable each subunit to operate independently B) the formal division of the organization into subunits C) the location of decision-making responsibilities within a structure D) the mechanisms for coordinating subunits
B
61) In which of the following organizational structures are the domestic operations and foreign operations isolated from each other leading to coordination problems? A) global matrix structure B) international division structure C) worldwide product division structure D) worldwide area structure
B
73) ________ control is achieved by comparing actual performance against targets and intervening selectively to take corrective action. A) Personal B) Output C) Bureaucratic D) Cultural
B
53) Centralization and decentralization differ because centralization A) hinders coordination, while decentralization facilitates coordination. B) prevents top-level managers from making required organizational changes, while decentralization gives top-level managers greater power to make organizational changes. C) ensures that decisions are consistent with organizational objectives, while decentralization can result in decisions at variance with organizational goals. D) promotes flexibility, while decentralization reduces flexibility.
C
56) Global learning based on the multidirectional transfer of skills between subsidiaries and the corporate center is a central feature of a firm pursuing ________ strategy. A) a localization B) a global standardization C) a transnational D) an international
C
58) Which of the following statements is true about a product divisional structure? A) In a product divisional structure, the responsibility for the financial control of the firm is typically decentralized. B) A product divisional structure tends to be organized on geography. C) In a product divisional structure, each product division is set up as a self-contained, largely autonomous entity with its own functions. D) In a product divisional structure, the responsibility for operating decisions is typically centralized.
C
60) Which of the following is a problem that arises due to an international division structure? A) In an international division structure, a firm's international division tends to be organized on products. B) The heads of domestic functions are presumed to be able to represent the interests of all countries to headquarters. C) The heads of foreign subsidiaries are not given as much voice in the organization as the heads of domestic functions or divisions. D) The dual-hierarchy structure can lead to conflict and perpetual power struggles between the areas and the product divisions.
C
92) Which of the following is an effective strategy for implementing organizational change? A) Physically move the organization to a new state. B) Keep the organizational structure. C) Refreeze the organizational structure. D) Slowly, through incremental changes, rearrange the organizational structure.
C
50) Which of the following is one of the five main arguments favoring decentralization? A) It can facilitate coordination. B) It can help ensure that decisions are consistent with organizational objectives. C) It can give top-level managers the means to bring about needed major organizational changes. D) It permits greater flexibility.
D
54) Which of the following decisions is typically centralized at a firm's headquarters? A) production decisions B) human resource management C) marketing decisions D) overall firm strategy
D
69) The need for coordination between subunits is greatest in firms pursuing A) a localization strategy. B) an international strategy. C) a global strategy. D) a transnational strategy.
D
71) ________ is valuable because it can be used as a nonbureaucratic conduit for information flows within a multinational enterprise. A) A liaison network B) A matrix structure C) An organizational structure D) A knowledge network
D
79) The establishment of integrating mechanisms that coordinate subunits is a dimension of A) horizontal differentiation. B) organizational culture. C) vertical differentiation. D) organizational structure.
D
83) ________ is achieved by comparing actual performance against targets and intervening selectively to take corrective action. A) Personal control B) Cultural control C) Bureaucratic control D) Output control
D
93) Because of inertia forces, ________ is often no change. A) big bang change B) cultural change C) shock therapy change D) incremental change
D
