Deck 8: Developing a Global Management Cadre

Question 1

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.

Answer 1

D

Question 2

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

Answer 2

D

Question 3

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

Answer 3

A

Question 4

What are the major variables that should be taken into account when designing a firm's organizational structure?

Question 5

List the typical ways in which firms organize their international activities.

Question 6

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

Question 7

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

Question 8

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

Question 9

Small firms typically start their international involvement by getting involved in exporting.

Question 10

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.

Question 11

Organization ________ refers to the formal arrangement of roles, responsibilities, and relationships within an organization.

A)structure
B)systems
C)culture
D)strategy

Question 12

Internationalization 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.

Question 13

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

Question 14

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

Question 15

________ 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

Question 16

A firm that uses an international division structure sometimes experiences intra-organizational 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

Question 17

Historically, a firm reorganizes as it internationalizes to ________.

A)inhibit organizational change
B)curb competition
C)boost domestic competition
D)accommodate new strategies

Question 18

A ________ structure is the ideal way to organize work when global integration is more important than local responsiveness and the industry structure encourages cost leadership.

A)decentralized
B)matrix
C)divisional
D)functional

Question 19

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.

Question 20

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.

Question 21

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

Question 22

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 nonexistent.

Question 23

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

Question 24

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

Question 25

Global functional structures are primarily used by small firms with highly centralized systems.

Question 26

Which of the following refers to focusing on and specializing in specific markets?

A)integration
B)implementation
C)differentiation
D)globalization

Question 27

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

Question 28

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

Question 29

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

Question 30

The fundamental limitation of a matrix structure is that it ________.

A)creates a poor organizational culture
B)isolates upper management from operational levels
C)institutes a dual hierarchy that violates the unity-of-command principle
D)introduces more errors in the decision-making process due to the speed of the process

Question 31

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.

Question 32

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

Question 33

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

Question 34

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

Question 35

Which of the following refers to the coordination of specific markets?

A)differentiation
B)globalization
C)diversification
D)integration

Question 36

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

Question 37

A ________ is a hybrid organization of overlapping responsibilities.

A)functional structure
B)divisional structure
C)product structure
D)matrix structure

Question 38

With the geographic structure, the focus is on ________, since products can be adapted to local requirements.

A)marketing
B)innovation
C)divesting
D)importing

Question 39

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

Question 40

The ________ the level of the company at which managers make decisions, the more that organization is ________.

A)higher; decentralized
B)lower; centralized
C)higher; centralized
D)higher; unstructured

Question 41

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

Question 42

For firms with diversified product lines that have different technological bases and are aimed at dissimilar or dispersed markets, a functional structure is far more strategically advantageous than a global product structure.

Question 43

Regardless of the stage of internationalization, a firm's structural choices always involve two opposing forces: globalization and localization.

Question 44

________ 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

Question 45

Globalization is a specific strategy that treats the world as one market by using a standardized approach to products and markets.

Question 46

The fundamental limitation of a matrix structure is that it ________.

A)creates a poor organizational culture
B)isolates upper management from operational levels
C)institutes a dual hierarchy that violates the unity-of-command principle
D)introduces more errors in the decision-making process due to the speed of the process

Question 47

A strategic business unit (SBU)is a self-contained business with its own functional departments and accounting systems.

Question 48

To achieve rationalization, managers choose the manufacturing location for each product based on where the best combination of cost, quality, and technology can be attained.

Question 49

Briefly describe the characteristics of the global geographic structure.

Question 50

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

Question 51

By transitioning to formats such as interorganizational networks, companies are abandoning traditional structures and switching to more rigid organizational structures.

Question 52

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

Question 53

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

Question 54

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

Question 55

A matrix structure is a hybrid organization of overlapping responsibilities.

Question 56

Organizing to facilitate a globalization strategy involves rationalization.

Question 57

________ 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

Question 58

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 Inc.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

Question 59

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.

Question 60

________ 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

Question 61

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

Question 62

The organizational culture has a low impact in a ________ strategy.

A)global
B)transnational
C)multidomestic
D)international

Question 63

The organizational structure for global e-businesses, in particular for physical products, typically involves a network of virtual e-exchanges and "bricks and mortar" services, whether those services are in-house or outsourced.

Question 64

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

Question 65

Intel's "Platformisation" refers to customizing a range of chips in a combination suitable for a particular target market, as a response for the increasing need for speedy adaptation to the market.

Question 66

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

Question 67

Two major variables in choosing the structure and design of an organization are the opportunities and need for differentiation and integration.

Question 68

________ is most likely to reduce the effectiveness of an organizational structure.

A)Low adaptability
B)Fluidity
C)Dynamism
D)High flexibility

Question 69

To address the globalization-localization dilemma, firms that have evolved through the multinational form and the global company seek the advantages of horizontal organization in the pursuit of transnational capability.

Question 70

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

Question 71

The global functional structure typical of the transnational company creates a complex coordination and control system, as it attempts to combine the capabilities and resources of a multinational corporation.

Question 72

Why are global companies increasingly abandoning rigid structures? How are they adapting to the changing global environment?

Question 73

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

Question 74

Describe the organizational structure and characteristics of transnational corporations.

Question 75

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

Question 76

In general, centralized decision making is common for some functions such as ________.

A)sales
B)finance
C)marketing
D)production

Question 77

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

Question 78

In general, decentralized decision making is common for some functions such as ________.

A)finance
B)research and development
C)production
D)strategic management

Question 79

Historically, the geographic division structure is associated with companies pursuing ________ strategies.

A)multidomestic
B)transnational
C)global
D)international

Question 80

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