chapter 8 international management

Diana's, an Illinois-based cosmetics company, manufactures a wide range of natural cosmetics and skin-care products. The company has international divisions located in Singapore and London. The top management at Diana's is currently considering making a change to the company's organizational structure. Which of the following, if true, best supports the argument that Diana's should change its organizational structure? A) Employees at Diana's complain that they are too bogged down with administrative tasks to focus on creating new products and concepts. B) Diana's exports its products to the emerging markets in Asia and Africa. C) Employee attrition is low at Diana's. D) The labor union consisting of Diana's full-time employees successfully negotiated a hike in their annual compensation with management a few months ago.

Employees at Diana's complain that they are too bogged down with administrative tasks to focus on creating new products and concepts.

Sedona Inc. is an American firm that manufactures high-quality handbags, duffel bags, and leather belts at its facility in Arizona. Sedona's products have been featured in various fashion magazines and as a result, consumer demand has increased significantly. Currently, Sedona is organized as a domestic structure plus export department. Executives at Sedona believe the firm is ready to internationalize its operations, and they are considering various organizational structures. Which of the following best supports the argument that Sedona should give its subsidiary managers significant autonomy? A) Praxis Inc., one of Sedona's domestic competitors, has a flat organizational structure. B) Sedona is a family-owned business that began as a subsidiary to Aloha enterprises. C) Sedona has recently reorganized into a domestic structure plus foreign subsidiary. D) Sedona conducts a large percentage of domestic sales through the company's Web site

Sedona has recently reorganized into a domestic structure plus foreign subsidiary

Sedona Inc. is an American firm that manufactures high-quality handbags, duffel bags, and leather belts at its facility in Arizona. Sedona's products have been featured in various fashion magazines and as a result, consumer demand has increased significantly. Currently, Sedona is organized as a domestic structure plus export department. Executives at Sedona believe the firm is ready to internationalize its operations, and they are considering various organizational structures. Which of the following best supports the argument that Sedona should reorganize into a global functional structure? A) Sedona has a highly decentralized system of management. B) Sedona uses a variety of technologies for its numerous and varied product lines. C) Sedona has only a few domestic competitors. D) Sedona serves a narrow spectrum of customers and has a product line that uses similar technology.

Sedona serves a narrow spectrum of customers and has a product line that uses similar technology.

Which of the following is true with regard to information systems in less-developed countries? A) In less-developed countries, the sources of reliable data for decision making is relatively high in number. B) The accuracy and timeliness of information systems are often less than perfect in lessdeveloped countries. C) In less-developed countries, the sources of reliable data for decision making are easy to locate. D) Government information in less-developed countries is rarely fabricated, so it is considered to be the most reliable source of information for headquarters managers.

The accuracy and timeliness of information systems are often less than perfect in lessdeveloped countries.

Which of the following is true of Ueno and Sekaran's study of Japanese and U.S. firms with regard to monitoring and reporting systems? A) U.S. firms tend to use long-term evaluations to a greater extent. B) Compared to U.S. firms, Japanese firms build budget slack to a greater extent. C) U.S. firms tend to use communication and coordination processes more extensively than Japanese firms. D) Japanese managers are more likely to use formal communication and coordination processes

U.S. firms tend to use communication and coordination processes more extensively than Japanese firms

The focus of Selina Inc., an MNC producing a range of products that can be marketed through common channels to similar customers worldwide, is marketing. Its aim is to become an insider in every country it operates. Which of the following organizational forms is most likely to be favored by Selina's management? A) a global geographic structure B) a global functional structure C) a domestic structure plus export department D) a domestic structure plus foreign subsidiary

a global geographic structure

The downside of rationalization is ________. A) high cost of production B) widely varying product design for different markets around the world C) different marketing and sales strategies are adopted for each country D) a lack of differentiation and specialization for local markets

a lack of differentiation and specialization for local markets

Centralized global product responsibility implies that ________. A) a single manager at the headquarters is responsible for a specific product around the world B) a single manager is responsible for a specific product locally C) a group of managers at the headquarters jointly shares product responsibility D) product responsibility rests with subsidiary managers

a single manager at the headquarters is responsible for a specific product around the world

Historically, a firm reorganizes as it internationalizes to ________. A) inhibit organizational change B) curb competition C) boost domestic competition D) accommodate new strategies

accommodate new strategies

To be effective, firms reorganizing into a domestic structure plus foreign subsidiary in one or more countries should ________. A) categorically ignore niche markets B) stop investing in domestic businesses C) refrain from exporting D) allow a great deal of autonomy to subsidiary managers

allow a great deal of autonomy to subsidiary managers

At persistent signs of ineffective work, a company should ________. A) switch from a customer orientation to a product orientation B) implement price skimming C) analyze its organizational design, systems, and work flow for the possible causes of those problems D) acquire smaller born globals to regain lost market share

analyze its organizational design, systems, and work flow for the possible causes of those problems

To be effective, an organizational structure should ________. A) not accommodate overlapping responsibilities B) be rigid C) be highly adaptable to the changing needs of the company D) be the same as that of its competitors

be highly adaptable to the changing needs of the company

Which of the following is true with regard to born globals? A) Born globals cater to a single, narrow market segment. B) In their rush to get on the globalization bandwagon, born globals have categorically ignored domestic market opportunities. C) Born globals operate in the international business arena right from their inception. D) Born globals do not have foreign subsidiaries.

born globals operate in the international business arena right from their inception

Papillion Inc. is a small American high-technology firm that has been successfully competing in the international business arena from its inception two years ago. Instead of internationalizing slowly, Papillion embarked upon an ambitious plan to leverage niche market opportunities worldwide—right from the beginning. Papillion Inc. exemplifies the ________ phenomenon. A) born-global B) subordinateship C) outsourcing D) insourcing

born-global

Organizing for global product standardization requires ________, an especially difficult task for multiproduct companies. A) multibranding B) vertical organizational mobility C) seamless product development D) centralized global product responsibility

centralized global product responsibility

Which of the following refers to focusing on and specializing in specific markets? A) integration B) implementation C) differentiation D) globalization

differentiation

Which of the following is true with regard to direct coordinating mechanisms? A) Expatriates from "headquarters" do not exert control over the foreign affiliate through the expectations of the national and corporate culture of the parent company. B) Even in situations where parent control is considered less important, delegating the control to the local level is ritually avoided. C) Direct coordinating mechanisms that provide the basis for the overall guidance and management of foreign operations include, the design of appropriate organizational structures and the use of effective staffing practices. D) Direct coordinating mechanisms do not include staffing practices.

direct coordinating mechanisms that provide the basis for the overall guidance and management of foreign operations include, the design of appropriate organizational structures and the use of effective staffing practices

Smaller firms are most likely to reorganize into ________ during their internationalization. A) domestic structure plus export department B) domestic structure plus foreign subsidiary C) global product structure D) global functional structure

domestic structure plus export department

Using the Internet to streamline global supply systems ________. A) enhances the efficiency of the supply chain B) eliminates the reliance on local suppliers C) creates a vertical hierarchical structure within organizations D) increases fixed costs

enhances the efficiency of the supply chain

Which of the following refers to a problem that firms with structurally sophisticated global networks are most likely to face? A) environmental volatility B) competition from domestic firms C) low cost savings D) import tariffs

environmental votality

According to the ________ model, as the company becomes larger, more complex, and more sophisticated in its approach to world markets, it may evolve into a transnational corporation. A) four stages of contribution B) crowdsourcing C) matrix D) evolutionary stages

evolutionary stages

Usually, smaller firms start their international involvement by ________. A) exporting B) divesting C) entering into a full-blown global joint venture D) using foreign direct investment

exporting

The best organizational structure is the one that ________. A) does not allow any compromise on the globalization-localization continuum. B) upholds the status quo C) actively resists organizational change D) facilitates the firm's goals and is appropriate to its industry, size, technology, and competitive environment

facilitates the firm's goals and is appropriate to its industry, size, technology, and competitive environment

In general, centralized decision making is common for some functions such as ________. A) sales B) finance C) marketing D) production

finance

Which of the following is true with regard to the global functional structure? A) The global functional structure results in plants that serve widely different markets. B) The global functional structure is most advantageous for firms with diversified product lines that have different technological bases and that are aimed at dispersed markets. C) The global functional structure is used primarily by large firms with highly decentralized systems. D) Foreign operations in a global functional structure are integrated into the activities and responsibilities of each department to economies of scale.

foreign operations in a global functional structure are integrated into the activities and responsibilities of each department to economies of scale

In which of the following is a firm's foreign operations integrated into the activities and responsibilities of each department to gain operative specialization and economies of scale? A) global matrix structure B) global geographic structure C) global divisional structure D) global functional structure

global functional structure

Sigma Inc. is designed on the basis of the company's business activities such as production, finance, and marketing. Foreign operations at Sigma are integrated into the activities and responsibilities of each division to achieve economies of scale and operative specialization. In other words, Sigma has a(n) ________. A) domestic structure with foreign subsidiary B) domestic structure with export department C) global functional structure D) international division structure

global functional structure

Which of the following organizational structures is particularly appropriate for product lines using similar technology and for businesses with a narrow spectrum of customers? A) global functional structure B) international division C) global product structure D) matrix structure

global functional structure

Marketing-oriented companies, such as Nestlé and Unilever, which produce a range of products that can be marketed through similar channels of distribution to similar customers, will usually opt for the ________. A) domestic structure plus foreign subsidiary B) global geographic structure C) matrix structure D) domestic structure plus export department

global geographic structure

Which of the following is the most common form of organizing foreign operations in which divisions are created to cover various regions? A) global functional structure B) global geographic structure C) global product structure D) matrix structure

global geographic structure

A specific strategy that treats the world as one market by using a standardized approach to products and markets is called ________. A) globalization B) localization C) differentiation D) integration

globalization

_______ refers to the ability to manage across national boundaries, retaining local flexibility while achieving global integration. A) Positioning B) Globalization C) Transnational capability D) Filtering capability

globalization

Two major variables in choosing the structure and design of an organization are the opportunities and need for ________. A) globalization and localization B) mass marketing and niche marketing C) vertical mobility and horizontal mobility D) differentiation and integration

globalization and localization

The noncomparability of performance data across countries ________. A) reduces employee empowerment B) hinders the evaluation process C) lowers production D) enhances the overall organizational efficiency

hinders the evaluation process

To address the globalization-localization dilemma, firms that have evolved through the multinational form and the global company seek the advantages of ________ in the pursuit of transnational capability. A) niche marketing B) horizontal organization C) a narrow product line D) vertical organization

horizontal organization

Which of the following is true with regard to indirect coordinating mechanisms? A) Indirect coordinating mechanisms do not include feedback reports. B) Indirect coordinating mechanisms typically include visits by head-office personnel. C) Indirect coordinating mechanisms typically include sales quotas. D) Indirect coordinating mechanisms include regular meetings to allow employees around the world to consult and troubleshoot.

indirect coordinative mechanisms typically include sales quotas

Which of the following refers to a financial variable in MNC reports that complicates financial statements and performance evaluations? A) annual budget B) inflation level C) sales forecast D) overhead costs

inflation level

Which of the following refers to the coordination of specific markets? A) differentiation B) globalization C) diversification D) integration

integration

No matter what the stage of internationalization, a firm's structural choices always involve ________. A) low standardization procedures B) integration and differentiation C) vertical job specialization D) mass marketing and niche marketing

integration and differentiation

A(n) ________ permits managers to allocate and coordinate resources for foreign activities under one roof, and thus enhances the firm's ability to respond, both reactively and proactively, to market opportunities. A) local division B) international division C) export department D) domestic structure plus foreign subsidiary

international division

________ is the process by which a firm gradually changes in response to global competition; domestic market saturation; and the desire for expansion, new markets, and diversification. A) Segmentation B) Integration C) Segregation D) Internationalization

internationalization

Which of the following factors adversely affects the accuracy and the timeliness of information systems in less-developed countries? A) limited sources of data for decision making B) high cost of capital items C) expensive labor D) strict labor laws

limited sources of data for decision making

________ is most likely to reduce the effectiveness of an organizational structure. A) Low adaptability B) Fluidity C) Dynamism D) High flexibility

low adaptability

With the geographic structure, the focus is on ________, since products can be adapted to local requirements. A) marketing B) innovation C) divesting D) importing

marketing

Which of the following is true with regard to the global geographic structure? A) With the geographic structure, the focus is on importing. B) Marketing-oriented companies are most likely to opt for this structure. C) The geographic structure is not an adequate structure for consolidating regional expertise. D) In a geographic structure, problems of coordination across different regions are virtually nonexisten

marketing-oriented companies are most likely to opt for this structure

A ________ is a hybrid organization of overlapping responsibilities. A) functional structure B) divisional structure C) product structure D) matrix structure

matrix structure

Which of the following organizational structures is typical of most transnational companies? A) matrix structure B) bureaucratic structure C) global product structure D) global functional structure

matrix structure

A firm that uses an international division structure sometimes experiences intraorganizational conflict because ________. A) such a structure disallows managers to coordinate resources for foreign activities under one roof B) the international division invariably fails to respond to cultural differences C) more resources and management attention tend to get channeled toward the international division than toward the domestic divisions D) such a structure depresses the firm's ability to respond to market opportunities

more resources and management attention tend to get channeled toward the international division than toward the domestic division

In a ________ strategy, the need to coordinate is low. A) multidomestic B) international C) global D) transnational

multidomestic

The organizational culture has a low impact in a ________ strategy. A) global B) transnational C) multidomestic D) international

multidomestic

Which of the following indicates a need for change in organizational design? A) low turnover B) a decrease in overseas customer complaints C) seamless innovation D) new management with different goals and strategies

new management with different goals and strategies

Customizing a range of products in a combination suitable for a particular target market, as a response for the increasing need for speedy adaptation to the market, is known as ________. A) outsourcing B) diversification C) platformisation D) internationalization

platformisation

In general, decentralized decision making is common for some functions such as ________. A) finance B) research and development C) production D) strategic management

production

Managers choose the manufacturing location for each product based on where the best combination of cost, quality, and technology can be attained in order to achieve ________. A) customer loyalty B) integration C) segregation D) rationalization

rationalization

Which of the following does NOT represent a typical way in which firms organize their international activities? A) domestic structure plus export department B) matrix structure C) domestic structure plus foreign subsidiary D) regional structure

regional structure

In their rush to get on the globalization bandwagon, too many firms have ________. A) opted for niche marketing B) sacrificed the ability to respond to local market structures and consumer preferences C) overly focused on local markets at the cost of losing out on market share abroad D) wrongly overestimated the importance of mass customization for the global market

sacrificed the ability to respond to local market structures and consumer preferences

The feedback from the control process and the information systems should ________. A) point out the most suitable organizational structure for a company at a given point in time B) help employees formulate a plan for personal development C) signal any necessary change in strategy, structure, or operations in a timely manner D) eliminate organizational anarchy

signal any necessary change in strategy, structure, or operations in a timely manner

Which of the following refers to a self-contained business within a company with its own functional departments and accounting systems? A) buying center B) supply chain C) value chain D) strategic business unit

strategic business unit

Nimbus Inc. is a hybrid organization. The organizational structure of the company has been developed to combine geographic support for both global integration and local responsiveness. Nimbus is not a hierarchical organization and uses cross-functional teams to quickly adapt to the dynamic business environment. If the above information is true, which of the following can be fittingly inferred? A) that Nimbus has only a few SBUs B) that Nimbus has a matrix structure C) that Nimbus is a born global D) that Nimbus does not favor standardization of its products

that Nimbus has a matrix structure

Which of the following is true with regard to a global product structure? A) A global product structure is disadvantageous for firms with diversified product lines that are aimed at dissimilar or dispersed markets. B) The advantages of this organizational form are market concentration, innovation, and responsiveness to new opportunities in a particular environment. C) In a global product structure, a cluster of products are grouped into a single division. D) A global product structure does not facilitate diversification and inhibits growth.

the advantages of this organizational form are market concentration, innovation, and responsiveness to new opportunities in a particular environment

________ refers to an organization running its operations and opening subsidiaries worldwide right from the beginning. A) International joint venture B) the subordinateship phenomenon C) the born-global phenomenon D) Outsourcing

the born-global phenomenon

Which of the following forms of organization is particularly appropriate in a dynamic and diverse environment? A) the global functional structure B) the global product structure C) the domestic structure plus export department D) the domestic structure plus foreign subsidiary

the global product structure

________ is described by Miles et al. as a collaborative, multi-firm network along with community-based structures, used by innovative firms such as Taiwan's Acer. A) A cloud database B) A born global C) Platformisation D) The I-form

the i-form

Which of the following is true about the matrix structure of organizational design? A) The matrix structure is developed to combine geographic support for both global integration and local responsiveness. B) Regional managers are solely responsible for the operations and performance of the countries within a given region. C) In the matrix structure, communication problems, confusion, and conflict are minimal. D) Overlapping responsibilities are absent in a matrix structure.

the matrix structure is developed to combine geographic support for both global integration and local responsiveness

Which of the following is true with regard to the structural evolution model? A) Typically, firms that start their internationalization at a higher level of involvement use this model. B) Firms using this model do not export. C) This model has become known as the stages model, resulting from Stopford's research on 187 U.S. multinational corporations. D) All firms follow this model without exception.

this model has become known as the stages model, resulting from Stopford's research on 187 US multinational corporations

To reconcile accounting statements, MNCs usually require ________ different sets of financial statements from subsidiaries. A) two B) three C) five D) seven

three

The degree to which headquarters' practices and goals are transferable most likely depends on whether ________. A) top managers are from the head office, the host country, or a third country B) the organization is product- or service-oriented C) financial performance reports show a positive trend in growth over the past several years D) the production system is standardized

top managers are from the head office, the host country, or a third country

The ________ strategy involves maximizing opportunities for both efficiency and local responsiveness by adopting a structure that uses alliances, networks, and horizontal design formats. A) multidomestic structure B) transnational corporation C) international division structure D) bureaucratic structure

transnational corporation

Meaningful, long-term performance standards can be provided by taking into account nonfinancial measures such as ________. A) union relations B) taxes C) transfer pricing D) exchange-rate fluctuations

union relations

Indirect coordinating mechanisms typically include all of the following EXCEPT ________. A) sales quotas B) budgets C) visits by head-office personnel D) feedback reports

visits by head-office personnel