Ch. 10
According to the text, the types of information and IC needs to have reported by subsidiaries include: A. financial. B. organizational structure and systems. C. cultural. D. staffing.
A
Most strategic business units are organized based on __________________. A. geographic region B. functional area C. customer class D. product line E. country level
D
It is sensible for an IC to direct or allocate as much profit as reasonably possible to subsidiaries in countries with: A. problematic labor relations. B. the most currency controls. C. higher taxes. D. the highest rate of inflation. E. the least social unrest.
E
Methods for the IC to maintain control of less than fifty-percent owned organizations that were mentioned in the text included all of the following except: A. control of technology. B. a management contract. C. control of the finances or technology. D. putting people from the IC in important executive positions. E. using its ownership to outvote its partner.
E
Regarding an IC's structure, A. structure follows strategy, but the reverse is not true. B. strategy follows structure, but the reverse is not true. C. if a firm's structure changes, then its strategy must change. D. if a firm's strategy changes, then its structure must change. E. structure is usually an integral part of strategic planning.
E
Which of the following was not stated in the text as being a way that successful companies use controls? A. to put plans into effect. B. to learn if plans are working as intended. C. to make corrections. D. to evaluate and reward or correct performance. E. to limit the authority of senior management.
E
According to the text, one expectation by companies that adopted the global organizational form was that this change may A. permit them to obtain cheaper labor. B. be more capable of avoiding global competition. C. enable them to get lower interest rates to finance expansion. D. enhance technology transfer and the allocation of company resources. E. guarantee them lower production costs by larger market share.
B
According to the text, organizational designers in the IC must be aware that the gain that is achieved from increased specialization of labor may sometimes be nullified by A. the increased cost of geographic expansion. B. the increased cost of coordination. C. the increased cost of product development. D. increased costs from unionization. E. increasing costs of marketing and branding.
B
According to the text, when the IC headquarters decides which subsidiary would get to fill an order for a customer abroad, IC management would consider all of the following except: A. production costs. B. how well they know and have worked with subsidiary managers. C. tax rates. D. comparative order backlogs. E. currency restrictions.
B
The form of organization characterized by lateral decision processes, horizontal networks, and a strong corporate-wide business philosophy is known as a A. modular network. B. horizontal corporation. C. modular corporation. D. virtual network. E. virtual organization.
B
The regionalized organization A. has the advantage that it avoids duplication of product and functional specialists. B. seems to be popular with companies that have diverse products, each with different product requirements, competitive environments, and political risks. C. avoids problems with global product planning. D. has geographic area managers report directly to domestic operating units.
B
A decision to move production factors from one country to another would be: A. unaffected by currency and political stability. B. made cooperatively by subsidiary managers. C. based on tax, labor supply, and market conditions. D. rejected by managers of the host country receiving the new activity.
C
According to the text, the extent to which an IC relies on subsidiary management to make decisions depends on all of the following except: A. how large the IC is. B. how well the executives know company policies. C. how profitable the IC is. D. the distance between the home country and the host country.
C
According to the text, why might ICs adopt the horizontal organization format? A. they reduce costs by eliminating middle management. B. they enhance efficiency by increasing the use of vertical decision processes. C. they spark innovation and new product development. D. they enable top management to control processes through centralized approval systems. E. they have rigorously developed procedures for strict control and supervision, enhancing quality.
C
Control activities: A. are the efforts to develop strategic plans for an organization. B. are needed more by domestic companies than international companies. C. should be linked to evaluation and reward systems. D. are managed independently of taxation and accounting methods.
C
In larger, older organizations: A. more decisions are delegated to the subsidiary headquarters. B. decisions are delegated to empowered, decentralized subsidiary managers. C. more decisions are made at headquarters of parent company. D. decisions regarding local adaptation are made at headquarters.
C
In situations where ICs are setting transfer prices: A. host governments are generally unaware of the actions by ICs operating within their borders. B. management must demonstrate they are not making profits on the sales. C. the IC should show that other companies are charging comparable prices for the same or similar products. D. the home country is usually more concerned than the host country, especially if the home country's tax rates are lower.
C
Pricing established for transactions between members of the enterprise is called: A. internal pricing. B. market pricing. C. transfer pricing. D. conveyance pricing. E. resettlement pricing.
C
Regarding an IC's structures and systems A. management must avoid changing them over time, to avoid disrupting operations. B. they must be designed before a company can develop its strategy. C. they must be consistent with the organization's environmental context. D. they depend on the country in which the IC is headquartered. E. they must ensure that control is dispersed to subsidiaries to compete successfully across international markets.
C
Which of the following are not identified in the text as being variables that determine which decision is made where in an IC? A. product and equipment. B. competence of subsidiary. C. state-of-the-art communication networks. D. size of the IC. E. subsidiary's degree of frustration with its limited power.
C
Which of the following is not a reason mentioned in the text for why an IC may experience of loss of freedom and flexibility in joint ventures? A. the IC's partners have control of the venture. B. the IC's partners can bring legal pressures on the IC to limit its decision making. C. the IC cannot buy out its partners' shares. D. the IC's partners can bring legal pressures on the IC.
C
An organization that coordinates economic activity to deliver value to customers using resources outside the traditional boundaries of the organization is known as a(n) A. modular network. B. horizontal corporation. C. strategic business unit. D. virtual corporation. E. global corporation.
D
According to the text, companies controlled by other companies, but less-than-majority owners may exercise control by a variety of means, both those involving stock ownership and those involving nonownership mechanisms, are known as: A. international companies. B. affiliates. C. virtual organizations. D. networked organizations. E. subsidiaries.
B
The horizontal corporation A. often draws teams from different departments to solve a problem or deliver a product. B. relies extensively on the use of vertical networks. C. puts greater decision-making responsibility in the hands of managers from outside the company. D. is a form of organization characterized by vertical decision processes. E. has been characterized as "virtual organization."
A
Proponents of the horizontal corporation: A. claim that lateral relationships inhibit innovation and new-product development. B. state that this approach to organizing helps to place more decision-making responsibility in the hands of middle managers and other skilled professionals. C. enhances increased control and supervision by upper management. D. enhances efficiency by increasing the use of vertical decision processes.
B
The geographic region structure A. has all managers reporting directly to the chief executive officer. B. has geographic area managers report directly to domestic operating units. C. avoids duplication of area specialists. D. avoids problems with product coordination across regions. E. avoids duplication of functional specialists.
C
The geographic region structure seems to be popular with companies that A. operate in many diverse foreign regions. B. favor licensing as a form of market entry. C. manufacture products with a low technological content requiring strong marketing ability. D. manufacture products incorporating high technology in industrialized regions. E. wish to avoid duplication of product specialists.
C
The use of an international product structure A. represents a sharp move away from pre-export department times. B. has domestic product divisions responsible for the worldwide operations such as marketing and production of products under their control. C. helps to avoid duplication of area experts. D. often suffers from a duplication of product experts. E. often has a group of managerial specialists in an international division, who have authority over the product divisions.
C
The international division structure A. is usually adopted before a firm begins expanding into international markets. B. usually has the international division reporting to the domestic division. C. is only used during the early stages of internationalization; large multinationals change their structure to global, regional, or matrix structures. D. is the most inefficient of the structures. E. usually has the international division responsible for all overseas activity.
E
According to the text, one expectation by companies that adopted the global organizational form was that this change may A. permit them to obtain cheaper labor. B. be more capable of developing strategies to confront new global competition. C. enable them to get lower interest rates to finance expansion. D. enable them to avoid regulation. E. guarantee them lower production costs by larger market share.
B
Price and profit allocation decisions are usually best made: A. at the subsidiary headquarters. B. at the IC headquarters. C. cooperatively by both subsidiary and IC headquarters. D. at the subsidiary headquarters in the host country with the lowest prices.
B
The __________ organization has evolved from management's attempt to mesh product and regional and functional expertise while maintaining clear lines of authority. A. hybrid B. matrix C. global D. functional E. network
B
To facilitate Kraft's goal of enhancing growth prospects within developing-country markets, between 2006 and 2012 the company A. moved an increasing proportion of decisions to the company's Illinois headquarters. B. gave full profit-and-loss accountability to the business units. C. centralized product development activities to enhance new product creation. D. gave headquarters increased control over human and financial resource management. E. diversified away from global snacks and entered into housewares and clothing.
B
Which of the following is not true about horizontal corporations? A. they often draw teams from different departments to solve a problem or deliver a product. B. they rely extensively on the use of vertical networks. C. they have a strong corporate-wide business philosophy. D. they are characterized by lateral decision processes. E. they have been characterized as "anti-organizations."
B
Headquarters is more likely to rely on subsidiary management if: A. subsidiary managers are from another country. B. conditions in the host country are very similar to those in the home country. C. the subsidiary is located far away from headquarters. D. the host country has similar institutions and politics to those in the home country.
C
Virtual corporations are also called A. modular network. B. corporate network. C. modular corporation. D. virtual network. E. anti-organizations.
C
__________ are organizational forms in which product divisions are defined as though they were independent businesses. A. Free-form management units B. Strategic business companies C. Strategic business units D. Matrix overlays E. Virtual corporations
C
According to the text, reengineering of organization forms is the A. redesign of the company's products to improve their quality. B. significant reduction of top management. C. disempowerment of employees. D. movement toward lean, fast, and innovative structures and processes. E. increased use of specialization and added organizational hierarchy.
D
According to the text, the two main issues for management to consider in designing an international company's structure include which of the following? A. Departmentalizing to most effectively take advantage of efficiencies gained from specialization of capital. B. Integrating functions to achieve lowest possible costs. C. Ensuring that policies and procedures can enable continued product innovation. D. Coordinating departments' activities to meet the firm's overall objectives. E. Ensuring that power is dispersed so that dependency on individual units is minimized.
D
As their overseas operations have increased in importance, larger multinationals have felt the need to A. change from a global structure to an international division. B. establish worldwide organizations based on product, process, national subsidiary, or customer classes at the top level. C. eliminate their domestic operations. D. establish worldwide organizations based on product, customer class, function, or region at the top level. E. adopt a matrix structure to improve efficiency and reduce the complexity of global activities.
D
The potential disadvantages of the virtual corporation concept include the following: A. It permits greater flexibility than is associated with more typical corporate structures. B. Virtual corporations form a network of dynamic relationships that allows them to take advantage of the competencies of other organizations. C. This form of organization increases the security of long-term employment for employees. D. Virtual organizations may reduce management's control over the corporation's activities. E. It reduces the potential for opportunistic actions by partners.
D
The use of an international product structure A. represents a return to the international division times. B. has domestic product divisions responsible for the worldwide operations such as marketing and production of products under their control. C. often suffers from an absence of area experts. D. helps to avoid a duplication of product experts. E. often has a group of managerial specialists in an international division who have authority over the product divisions.
D
According to the text, companies controlled by other companies (known as parent companies) through ownership of enough voting stock to elect a majority of the voting members on the company's board of directors are known as: A. international companies. B. affiliates. C. virtual organizations. D. networked organizations. E. subsidiaries.
E
Companies with global structures A. outperform those with international divisions. B. are organized on the basis of geography and not on products or processes. C. are large companies with numerous overseas manufacturing facilities. D. are organized on the basis of products and do not have other organizing dimensions in a pure organization. E. may obtain lower production costs by promoting worldwide product standardization.
E
Disadvantages of the regionalized organization structure include A. the increased complexity of directing worldwide operations. B. its inappropriateness for use in global companies. C. its duplication of area and product specialists. D. the need for placing specialized product managers with line authority onto headquarters' staff. E. product coordination across regions can be challenging.
E
Regarding the international division structure A. conflicts tend to be minimized within the firm. B. by operating separately from the domestic operations, it prevents disagreements from arising regarding product design. C. the challenges of managing the international division diminish as larger size and scale are achieved. D. most companies move away from an international division and adopt a global function structure. E. disagreements may be encountered regarding prices charged to the international division by the domestic unit.
E
According to the text, which of the following dimensions provide the basis for organizational subdivisions at the secondary, tertiary, and still lower levels? A. Size of the company B. Process C. Nation in which headquarters is located D. Nature of competition E. Nationality of management
B
According to the text, which of the following is not one of the developments that is encouraging managers to consider organizational designs such as reengineering, virtual corporations, and horizontal corporations? A. Faster technological change. B. Increased diversity of cultures and countries. C. A growing customer preference for custom-made rather than mass-produced products. D. Pressure to maintain alignment between the organization and its global and hypercompetitive environment. E. The rapidly changing business environment caused by increased global competition.
B
According to the text, which of the following is not typically associated with strategic business units? A. Clearly defined market B. Specialized production technology C. Specific competitors D. Size appropriate for control by a single nation E. Self-contained
B
All the reasons for making decisions at IC headquarters, at subsidiary headquarters, or cooperatively: A. do not apply in joint venture situations. B. apply equally in joint venture situations. C. apply only to a corporate entity between two or more companies that are foreign to the area where the joint venture is located. D. apply only to a corporate entity between an IC and local owners
B
According to the text, the extent to which an IC relies on subsidiary management to make decisions depends on all of the following except: A. how old the IC is. B. how well the executives know one another. C. what country the IC is headquartered in. D. the distance between the home country and the host country.
C
According to the text, the types of information an IC needs to have reported by subsidiaries include: A. meteorological. B. gastronomical. C. technological. D. biological.
C
According to the text, when the IC headquarters decides which subsidiary would get to fill an order for a customer abroad, IC management would consider all of the following except: A. transportation costs. B. comparative tariff rates. C. size of the subsidiary. D. comparative order backlogs. E. governmental pressures.
C
An organization in which top-level divisions are required to heed input from a staff composed of experts of another organizational dimension in an attempt to avoid the double-reporting difficulty of a matrix organization but still mesh two or more dimensions is known as a A. hybrid organization. B. matrix organization. C. matrix overlay. D. network corporation. E. virtual corporation.
C
A division in the organization that is at the same level as the domestic division and is responsible for all non-home-country activities is a(n) A. foreign division. B. global product division. C. regional division. D. international division. E. sales division.
D
The horizontal corporation: A. relies on teams of specialists from within a department to solve a problem or deliver a product. B. relies extensively on the use of vertical networks. C. puts greater decision making responsibility in the hands of executives from headquarters. D. is a form of organization characterized by lateral decision processes. E. has been characterized as "virtual organization."
D
When Kraft's earlier efforts to achieve continued growth and efficiencies were hindered, in 2012 it initiated a major reorganization that included A. acquiring the British confectioner Cadbury. B. selling off brands such as Oreo cookies to a Chinese firm. C. withdrawing from emerging markets. D. splitting the company into two independent companies. E. withdrawing from the grocery business and selling its assets to another food company.
D
Which of the following is not true about organizational structure? A. It refers to the way that an organization formally arranges its various domestic and international units and activities, and the relationships among these organizational components. B. It helps to determine where formal power and authority will be located within the organization. C. It is primarily created and evolved by senior management. D. It refers to the informal organization among an organization's units and activities. E. All of the company's managers work within the context created by this structure.
D
According to the text, in the future managers in many ICs can expect: A. to increase the use of structures based on function in order to gain economies of scale. B. to convert to matrix structures in order to reduce the complexity of running ICs with broad geographic scope of activities. C. to see increasing levels of ownership and integration of activities within the IC in order to achieve consistent global quality and low costs. D. to see expanded headquarters organizations in order to manage increase international scope of operations. E. to make greater use of the dynamic network structure.
E
According to the text, the primary dimensions that need to be considered when designing the structure of an international company include all of the following except A. product and technical expertise. B. functional expertise. C. customer expertise. D. geographical expertise. E. financial and market expertise.
E
According to the text, the types of information an IC needs to have reported by subsidiaries include all of the following except: A. financial. B. market opportunities. C. political and economic events. D. technological. E. cultural.
E
The international structural stages model suggests that a typical evolutional path for an international company's structure would be A. from international division to geographical area division to worldwide product division. B. from international division to worldwide product division to geographical area division. C. from geographical area division to worldwide product division to global matrix. D. from functional division to horizontal company to virtual corporation. E. from international division to worldwide product division to global matrix.
E
A hybrid organization may be used when A. a firm uses SBUs. B. management attempts to mesh product and regional expertise. C. management encounters problems with a matrix organization. D. an IC is selling to a sizable, homogeneous class of customers. E. management believes worldwide functional expertise is more significant to the firm than is product or area knowledge.
A
A hybrid organization may result from A. the firm's acquiring a company with distinct products and distribution channels. B. management's attempt to mesh product and regional expertise. C. management's problems with a matrix organization. D. a firm's use of SBUs. E. management's belief that worldwide functional expertise is more significant to the firm than is product or area knowledge.
A
A structure organized by more than one dimension at the top level is known as a A. hybrid organization. B. matrix organization. C. matrix overlay. D. network corporation. E. virtual corporation.
A
According to the text, companies are now accepting the need for A. eliminating top management. B. less frequent reorganization. C. reducing the size of middle management. D. eliminating structures based on function. E. organizing based first on geography.
A
According to the text, the extent to which an IC relies on subsidiary management to make decisions depends on all of the following except: A. whether the subsidiary managers have degrees in business. B. how well the executives know one another. C. IC management understanding host country conditions. D. the distance between the home country and the host country.
A
According to the text, which of the following dimensions do not provide the basis for organizational subdivisions at the secondary, tertiary, and still lower levels? A. Size of company B. National subsidiary C. Domestic or international D. Function E. Customer class
A
In designing the organizational structure, management know two concerns, __________ and __________, run counter to each other. A. an effective way to departmentalize; coordinating activities B. earning profits; paying taxes C. hiring employees; reducing labor costs D. sales growth; research and design expenditures E. geographic dispersion; profit rate
A
Organizational design A. is a process that deals with how an international business should be organized to ensure that its business activities are integrated globally. B. is not concerned with the size of an organization or the complexity of its business operations. C. must remain stable over time to enable the organization to create and exploit competitive advantage. D. becomes less important as an IC encounters increased environmental and strategic change. E. becomes less important as an IC encounters increased global dispersion.
A
Problems with the matrix structure are as follows: A. two or more managers must agree on decisions, which can lead to slow decision making. B. special divisions often must be established to serve heterogeneous customer segments. C. global branding and production coordination are hindered. D. functional concerns are ignored. E. upper management is no longer involved in key decisions of the IC.
A
Regarding the structure of international companies A. managers have to consider the nature of their company's international operating environment, both currently and how it is expected to change in the future. B. managers have to consider the nationalities of their competitors and how that determines structure. C. gains from increased specialization of labor may at times be magnified by the reduced costs of coordination. D. managers have to identify the best structure and maintain it over time. E. managers must modify their structures if they change strategy.
A
Regarding the way international companies are structured and integrated A. no single structure is best for all companies and contexts. B. managers must consider the nature of their company's international operating environment and their competitors' strategies when deciding when and how to modify the company's organizational structure. C. gains from increased specialization will be nullified by increased benefits of coordination, requiring managers to choose between the two. D. managers have to consider the nationalities of their competitors and of their own company before selecting a structure. E. if the company's strategy changes, then structure must change.
A
The common characteristic of multinationals that are organized by function at the upper level is a narrow A. and highly integrated product mix. B. and highly integrated customer list. C. variation of prices in the product mix. D. research and development effort. E. and highly concentrated regional focus.
A
The potential benefits of the virtual corporation concept include the following: A. It permits greater flexibility than is associated with more typical corporate structures. B. Virtual corporations form a network of static relationships that allow them to take advantage of the competencies of other organizations. C. This form of organization increases management's control over the corporation's activities. D. Virtual organizations reduce management's control over the corporation's activities. E. It enhances the potential for opportunistic actions by partners.
A