Management 301 Ch. 9

Companies that spend a relatively large share of their revenues on research and development (R&D) are likely to be licensees, and those that spend very little on R&D are more likely to be licensors. True

False

An advantage of a global functional division structure is that only the CEO can be held accountable for the profits.

False

An international division structure of an organization puts a great deal of burden on the CEO for monitoring the operations of a series of overseas subsidiaries as well as domestic operations.

False

Multinational companies (MNCs) have found that cross-functional coordination results in people spending more time within their functions and thus becoming more knowledgeable regarding developments that are occurring in their specialized areas.

False

One of the primary advantages of global area division structures is the ease with which product emphasis can be reconciled with a geographic orientation.

False

An advantage of a global area division structure is that it allows the division manager to cater to the tastes of the local market and make rapid decisions to accommodate environmental changes.

True

Centralization is a management system in which important decisions are made at the top.

True

________ can be best defined as the use of defined structures and systems in decision making, communicating, and controlling. Indigenization Localization Acclimatization Formalization

Formalization

The primary reason for the use of wholly owned subsidiaries is a multinational company's (MNC's) desire for total control and the belief that managerial efficiency will be better without outside partners.

True

Franchise agreements typically require payment of a fee up front and then a percentage of the revenues.

True

The global structural arrangement differs from the international division structure because, while both have an international scope, the former focuses on greater expansion and integration among international operations.

True

A ________ is a business arrangement under which one party allows another to operate an enterprise using its trademark, logo, product line, and methods of operation in return for a fee. certificate of proprietary usage franchise joint venture license

franchise

Subsidiaries that are located anywhere in the world where they can benefit the organization are called ________. chaebols keiretsus specialized subunits dispersed subunits

dispersed subunits

A structure that is a combination of a global product, an area, or a functional arrangement is referred to as a(n) ________ organizational structure. transnational mixed team-based assimilated

mixed

Global structures of multinational companies (MNCs) come in three common types: product, area, and functional. mixed, transnational, and nontraditional. vertical, horizontal, and flat. authoritarian, democratic, and socialist.

product, area, and functional

In an international context, the value of centralization will vary according to: the vertical specialization and flatter designs. the local environment and the goals of an organization. the job routinization in a host country. the global market and the universal values.

the local environment and the goals of an organization

In a study of U.S. and Japanese firms in Taiwan, objective formalization was measured by ________. the use of informal controls the use of culturally induced values in getting things done the extent to which goals were vague and unspecified the number of different documents given to employees

the number of different documents given to employees

Pressure by local government for continued growth of international sales encourages on-site ________. safety operations manufacturing operations supply and distribution operations maintenance

manufacturing operations

In a company that has a narrow product line, the export manager usually reports directly to the head of ________. personnel production marketing purchasing

marketing

The output control in which profit responsibility is shared with product and geographic units is characteristic of a(n) ________. transnational network structure global area division structure international division structure matrix structure

matrix structure

Which of the following statements is true about global product divisions? A global product division structure provides a direct line of communication from the customer to those in the organization who have product knowledge and expertise. Managers of a global product division depend heavily on corporate headquarters to run the operation. The products in a global product division are in the maturity stage and require very little promotion and marketing. A global product division structure prevents line and staff managers within the division from gaining expertise in the technical and marketing aspects of the products assigned to them.

A global product division structure provides a direct line of communication from the customer to those in the organization who have product knowledge and expertise

Which of the following is a feature of a global functional division? A lack of centralized control An emphasis on functional expertise Easy management of multiple product lines Easy coordination of manufacturing and marketing

An emphasis on functional expertise

Which of the following statements is true about an international division structure of an organization? Companies still in the development stages of international business involvement are least likely to adopt an international division structure. It prevents the company from developing an overall, unified approach to international operations as well as a cadre of internationally experienced managers. Companies that use an international division structure include those with small international sales, limited geographic diversity, or few executives with international expertise. It puts a great deal of burden on the CEO for monitoring the operations of a series of overseas subsidiaries as well as domestic operations.

Companies that use an international division structure include those with small international sales, limited geographic diversity, or few executives with international expertise

One of the main objectives of developing the structure for joint ventures is to help the partners address and effectively meld their different values and organizational preferences.

True

Identify the two types of joint ventures. Equity and nonequity ventures Statutory and unofficial ventures Proprietary and public ventures External and internal ventures

Equity and nonequity ventures

A franchise is an agreement that allows one party to use an industrial property right in exchange for payment to another party.

False

Specialization is the use of defined structures and systems in decision making, communicating, and controlling.

False

Identify a true statement about export arrangements in the context of initial division structure. If a company has a narrow product line, the export manager will head a separate department and often report directly to the president. If a company has a broad product line, the export manager usually reports directly to the head of marketing and international operations are coordinated by this department. Manufacturing firms with technologically advanced products usually avoid an export arrangement as a first choice. Firms can reduce the risk and size of investment in establishing significant international operations using an export arrangement.

Firms can reduce the risk and size of an investment in establishing significant international operations using an export arrangement.

Which of the following organizes worldwide operations based primarily on function and secondarily on product? Global area division structure Global product division structure Global functional division structure International division structure

Global functional division structure

In which of the following multinational company (MNC) structures is tight process bureaucratic control used to maintain product quality and consistency? Transnational network structure Global area division Global product division Matrix structure

Global product division

Which of the following provides the most benefits when the need for product specification or differentiation is high? Global functional division Global area division International division Global product division

Global product division

Which of the following globalization versus local responsiveness combinations best fits the telecommunications industry? Low pressure for globalization and low pressure for local responsiveness High pressure for globalization and low pressure for local responsiveness High pressure for globalization and high pressure for local responsiveness Low pressure for globalization and high pressure for local responsiveness

High pressure for globalization and high pressure for local responsiveness

Which of the following statements is true about licensing? A license is a very high-cost way of gaining and exploiting foreign markets. In a typical arrangement, the licensor will allow the licensee to use a patent, a trademark, or proprietary information in exchange for a fee. Companies that spend a relatively large share of their revenues on research and development (R&D) are likely to be licensees. Licenses are uncommon among large firms seeking to acquire technology to bolster an existing product.

In a typical arrangement, the licensor will allow the licensee to use a patent, a trademark, or proprietary information in exchange rates for a fee

Which of the following is an advantage of a mixed organization structure? As the matrix design's complexity increases, coordinating the personnel and getting everyone to work toward common goals often become difficult. It allows an organization to create the specific type of design that best meets its needs. Too many groups go their own way. Coordination of manufacturing and marketing often becomes difficult.

It allows an organization to create the specific type of design that best meets its needs

Which of the following is an advantage of a mixed organization structure? Coordination of manufacturing and marketing often becomes difficult. As the matrix design's complexity increases, coordinating the personnel and getting everyone to work toward common goals often become difficult. It allows an organization to create the specific type of design that best meets its needs. Too many groups go their own way.

It allows an organization to create the specific type of design that best meets its needs

Which of the following statements is true about vertical specialization? It assigns jobs so that individuals are given a particular function to perform, and people tend to stay within the confines of this area. When there is a great deal of vertical specialization, personnel will develop functional expertise in one particular area. Examples of vertical specialization include jobs in areas such as customer service, sales, recruiting, training, purchasing, and marketing research. It is characterized by distinct differences between the levels in hierarchy such that those higher up are accorded much more status than those farther down.

It is characterized by distinct differences between the levels in hierarchy such that those higher up are accorded much more status than those farther down

Identify a true statement about a nonequity venture. It involves a financial investment by a multinational company (MNC) in a business enterprise with a local partner. It organizes worldwide operations based primarily on function and secondarily on product. It is characterized by one group's merely providing a service to another. It provides the most benefits when the need for product specification or differentiation is high.

It is characterized by one group's merely providing a service to another

Which of the following statements is true about cultural control mechanism in a global area division? Cultural control mechanism is possible for some companies but not always necessary. Cultural control mechanism is treated like all other multinational company (MNC) structural divisions. Local subsidiary culture is often the most important. Culture must support the shared decision making.

Local subsidiary culture is often the most important

Which of the following globalization versus local responsiveness combinations best fits the cement manufacturing industry? Low pressure for globalization and high pressure for local responsiveness Low pressure for globalization and low pressure for local responsiveness High pressure for globalization and high pressure for local responsiveness High pressure for globalization and low pressure for local responsiveness

Low pressure for globalization and low pressure for local responsiveness

Which of the following routes is a multinational company (MNC) likely to choose in order to quickly expand resources or construct high-profit products in a new market? Mergers and acquisitions Basic export and import operations Franchising Licensing agreements

Mergers and acquisitions

Which of the following statements is true about transnational network structures? They are convoluted integrations of business functions and communications where decisions are made at the local level, but each grouping informs headquarters and sometimes each other. It is easy to draw a transnational network structure in the form of an organization chart because it is simple and constant. They may use more than one strategy to supplement inefficient operations, but they are still fairly centralized in the sense that decisions are balanced between the main headquarters and international subsidiaries. A major drawback of transnational network structures is that they focus on goods that are proven winners and now are marketed conveniently worldwide.

They are convoluted integrations of business functions and communications where decisions are made at the local level, but each grouping informs headquarters and sometimes each other

Identify a true statement about alliances and joint ventures. They have become popular in recent years because of the significant operational benefits they offer to both multinational companies (MNCs) and their local partners. They are likely to be less favored as a means of doing business in emerging countries. They fail to help partners overcome the effects of local collusion or limits being put on foreign competition. They prevent partners from achieving economies of scale and scope that would be easy for a firm operating alone to accomplish.

They have become popular in recent years because of the significant operational benefits they offer to both multinational companies and their local partners

In most companies, mutual adjustment is achieved by assigning people to a specific project and having them meet face to face and work out a plan of action of designing the new product.

True

Advantages of alliances and joint ventures include all of the following except ________. improvement of efficiency mitigation of political factors access to knowledge collusion or restriction in competition

collusion or restriction in competition

All of the following types of companies are likely to adopt an international division structure except: companies with small international sales. companies with limited geographic diversity. companies still in the developmental stage of international business. companies with a large number of executives with international expertise.

companies with a large number of executives with international expertise

Pushing decision making down the line and getting the lower-level personnel involved is referred to as ________. centralization vertical specialization horizontal specialization decentralization

decentralization

Specialized operations are: designed to tap specialized expertise or other resources in a company's worldwide subsidiaries. subsidiaries that are located anywhere in the world where they can benefit the organization. used to share information and resources throughout dispersed and specialized subunits. designed to take advantage of low factor costs.

designed to tap specialized expertise or other resources in a company's worldwide subsidaries

The decision-making control in which local units are given autonomy is characteristic of a(n) ________. international division structure global product division structure global area division structure transnational network structure

global area division structure

A structural arrangement in which domestic divisions are given worldwide responsibility for product groups is referred to as a(n) ________. global functional division structure international division structure global product division structure global area division structure

global product division structure

The assignment of jobs so that individuals are given a particular function to perform, who tend to stay within the confines of this area, is referred to as ________. horizontal specialization parallel specialization vertical specialization diagonal specialization

horizontal specialization

Multinational companies (MNCs) realize there are two dimensions of formality-informality that must be considered: internal and external. horizontal and vertical. functionality and centralization. international and national.

internal and external

A structural arrangement that handles all international operations out of a division created for this purpose is referred to as a(n) ________. global matrix structure overseas network structure worldwide organizational structure international division structure

international division structure

An important feature of an equity joint venture is that: it is characterized by one group's merely providing a service to another. it organizes worldwide operations based primarily on function and secondarily on product. it involves a financial investment by a multinational company (MNC) in a business enterprise with a local partner. it provides the most benefits when the need for product specification or differentiation is high.

it involves a financial investment by a multinational company in a business enterprise with a local partner

An important feature of the global area division structure approach is that: it is generally used by companies that are growing businesses and have broad product lines. it often signals a major change in company strategy because now international operations are put on the same level as domestic operations. it prevents division managers from catering to the tastes of the local market and making rapid decisions to accommodate environmental changes. it focuses on a product set and discovers where it can survive and subsequently distributes it to that region.

it often signals a major change in company strategy because now international operations are put on the same level as domestic operations

A feature of global area division structures is that they: fail to focus on goods that are proven winners and now are being marketed conveniently worldwide. are characterized by strong centralized management and control system. often ignore research and development (R&D) efforts because they are selling goods that have reached the maturity stage. focus on latest technologically superior goods that will win the market in the long run.

often ignore research and development efforts because they are selling goods that have reached the maturity stage

As an organizational characteristic, ________ is the assigning of individuals to specific, well-defined tasks. concentration formalization interpretation specialization

specialization

As an organizational characteristic, ________ is the assigning of individuals to specific, well-defined tasks. formalization specialization concentration interpretation

specialization

Some countries make greater use of formalization than others; in turn, this affects ________. the day-to-day organizational functioning the differences between the levels in hierarchy specialization quality circles

the day-to-day organizational functioning

An important feature of wholly owned subsidiaries is that: they offer higher profits, clearer communications, and shared visions to a multinational company (MNC). they involve reduced risk and involvement for a multinational company (MNC). they are very efficient with entering multiple countries or markets. they face a low risk with large investments in one area.

they offer higher profits, clearer communications, and shared visions to a multinational company

A ________ is designed to help multinational companies (MNCs) take advantage of global economies of scale while also being responsive to local customer demands. worldwide divisional structure global matrix structure cross-cultural matrix structure transnational network structure

transnational network structure

A multinational structural arrangement that combines elements of function, product, and geographic designs while relying on a network arrangement to link worldwide subsidiaries is referred to as a ________. transnational divisional structure cross-cultural matrix structure transnational network structure cross-cultural network structure

transnational network structure

At the center of a ________ are nodes, which are units charged with coordinating product, functional, and geographic information. worldwide divisional structure global product division structure cross-cultural matrix structure transnational network structure

transnational network structure

Interdependent relationships are: subsidiaries that are located anywhere in the world where they can benefit the organization. designed to tap specialized expertise or other resources in a company's worldwide subsidiaries. designed to take advantage of low factor costs. used to share information and resources throughout dispersed and specialized subunits.

used to share information and resources throughout dispersed and specialized subunits