Deck 8: Organization Structure and Control Systems

Question 1

Sedona Industries is a U.S. firm that manufactures high-quality handbags, luggage, and belts from 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 domestic structure plus foreign subsidiary?

A) Sedona executives want to open numerous subsidiaries in both Europe and Asia.
B) Sedona is a family-owned business which began as an entrepreneurial enterprise.
C) Sedona executives are prepared to give subsidiary managers significant autonomy.
D) Sedona conducts a large percentage of domestic sales through the company's website.

Answer 1

C

Question 2

A firm that uses an international division structure may experience conflict among all of its divisions because ________.

A) the structure type is not very efficient
B) the international division fails to respond to cultural differences
C) more resources tend to be provided to the international division
D) fewer resources tend to be provided to the international division

Answer 2

C

Question 3

Which of the following is NOT a stage in Stopford's stages model?

A) global product structure
B) matrix structure
C) international division
D) regional structure

Answer 3

D

Question 4

Firms typically internationalize in response to all of the following EXCEPT ________.

A) need for diversification
B) affects of governmentalism
C) increased global competition
D) domestic market saturation

Question 5

What led Samsung to reorganize in 2009?

A) failed joint ventures
B) foreign trade restrictions
C) global economic conditions
D) emerging market competition

Question 6

Small firms typically begin their international involvement by ________.

A) exporting
B) franchising
C) outsourcing
D) forming joint ventures

Question 7

Which of the following forms of organization is particularly appropriate for product lines using similar technology and for businesses with a narrow spectrum of customers?

A) global functional structure
B) global product structure
C) global geographic structure
D) global market structure

Question 8

The stages model is best described as the stages of change in an organizational structure that ________.

A) link markets within cultural regions
B) identify the risks faced by firms that are globalizing
C) follow the evolution of the internationalization process
D) control the strategic decisions made by global managers

Question 9

Company XYZ is a small firm with a highly centralized system and a narrow spectrum of customers. It most likely has a ________ structure.

A) global geographic
B) global product
C) global functional
D) global cultural

Question 10

Sedona Industries is a U.S. firm that manufactures high-quality handbags, luggage, and belts from 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 uses a decentralized system of management.
B) Sedona uses a variety of technologies for its products.
C) Sedona has a limited number of domestic competitors.
D) Sedona has a narrow spectrum of customers that it serves.

Question 11

The creation of a(n) ________ facilitates the beginning of a global strategy by allowing managers to coordinate resources for foreign activities from one location.

A) local division
B) international division
C) transnational division
D) matrix division

Question 12

An international division may be organized along what lines?

A) vertical and horizontal
B) differentiated and integrated
C) centralized and decentralized
D) functional, product, geographic

Question 13

An international division with an integrated global structure can be organized along all of the following lines EXCEPT ________.

A) functional lines
B) product lines
C) geographic lines
D) cultural lines

Question 14

Which of the following is the LEAST relevant variable to consider in organizational design?

A) corporate strategy
B) business size
C) labor market
D) business practices

Question 15

________ is the process by which a firm gradually changes in response to the imperatives of international competition, domestic market saturation, and desire for expansion.

A) Organizing
B) Strategy
C) Localizing
D) Internationalization

Question 16

Structure must fit an organization's ________, or it will not work.

A) environment
B) traditions
C) culture
D) strategy

Question 17

Based on Samsung's 2009 reorganization, which of the following best describes the firm's new strategy?

A) decreasing political risk
B) controlling and improving cash flow
C) increasing bureaucratic controls and levels
D) competing aggressively in the electronics market

Question 18

In which of the following are a firm's foreign operations integrated into the activities and responsibilities of each department to gain functional specialization and economies of scale?

A) matrix structure
B) international division
C) global divisional structure
D) global functional structure

Question 19

What was the primary aspect of Samsung's 2009 reorganization?

A) consolidating business operations into two operating divisions
B) outsourcing all of its semiconductor manufacturing
C) reducing its international work force by half
D) forming an alliance with Motorola

Question 20

Which of the following structures represents the most common way that small firms enter the global market?

A) domestic structure plus export department
B) domestic structure plus foreign subsidiary
C) international division
D) matrix structure

Question 21

Which of the following is a true statement about the matrix structure of organizational design?

A) Personnel skills and experience are maximized.
B) Personnel responsibilities and accountability are clarified.
C) Communication problems, confusion, and conflict are minimal.
D) Lines of responsibility are drawn only in a vertical direction.

Question 22

Which organizational form is a hybrid structure with overlapping responsibilities?

A) international division
B) divisional structure
C) area structure
D) matrix structure

Question 23

The primary advantage of a global geographic structure is the firm's ability to ________.

A) ensure economies of scale in production
B) adapt products to local needs and demands
C) implement international policies and procedures
D) coordinate marketing across many geographic regions

Question 24

What is the primary disadvantage of rationalization?

A) too much emphasis on centralized decision making
B) potential profit loss due to different product designs
C) too many different marketing and sales programs
D) lack of differentiation and specialization for local markets

Question 25

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

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

Question 26

What is the most common form of organizing foreign operations?

A) global functional structure
B) global geographic structure
C) global product structure
D) matrix structure

Question 27

In a global product division, each strategic business unit (SBU) is responsible for ________ and ________.

A) marketing; sales
B) production; sales
C) human resources; production
D) risk management; accounting

Question 28

The organizational structure of Levi Strauss is best described as a ________.

A) domestic structure plus export department with multiple products
B) global-local format that allows local managers to act independently
C) global product structure that produces a single product from one facility
D) matrix structure that seeks unification among all of its products and marketing

Question 29

Regardless of the stage of internationalization, a firm's structural choices always involve which two opposing forces?

A) strategy and operations
B) integration and differentiation
C) globalization and localization
D) procedures and implementation

Question 30

By selecting the manufacturing location for each product based on where the best combination of cost, quality, and technology can be obtained, a firm will most likely achieve ________.

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

Question 31

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

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

Question 32

Marketing-oriented companies like Nestle and Unilever are more likely to use a ________ structure because products can be adapted to local requirements.

A) global functional
B) global geographic
C) matrix
D) domestic

Question 33

Infosys, Lenovo, and Tata Motors are examples of ________.

A) emerging market companies
B) strategic business units
C) maquiladoras
D) SMEs

Question 34

In a global geographic structure, decisions are primarily made by ________.

A) local managers
B) home country executives
C) product line managers
D) regional marketing teams

Question 35

The advantages of the ________ structure are market concentration, innovation, and responsiveness to new opportunities in a particular environment.

A) global functional
B) global product
C) global geographic
D) global cultural

Question 36

Which of the following is NOT one of proctor & Gamble's Four Pillars?

A) Global Business Units
B) Global Business Services
C) International Technology Units
D) Market Development Organizations

Question 37

What is the greatest risk for firms that have structurally sophisticated global networks?

A) environmental volatility
B) competition from domestic firms
C) shortages of experienced personnel
D) implementation of corporate policies

Question 38

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

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

Question 39

Which of the following terms refers to a self-contained business within a company with its own functional departments and accounting systems?

A) subsidiary
B) product division
C) corporate division
D) strategic business unit

Question 40

The purpose of proctor & Gamble's Four Pillars organizational structure is to enable it to ________.

A) form four international joint ventures
B) establish subsidiaries on four continents
C) think locally and act globally
D) think globally and act locally

Question 41

Which of the following is a characteristic of Intel's organizational structure?

A) rigidly formal hierarchy
B) fairly autonomous divisions
C) highly centralized system
D) global divisional structure

Question 42

All of the following are characteristics of a firm with transnational capability EXCEPT ________.

A) local flexibility
B) global integration
C) centralized vertical structure
D) ability to manage across borders

Question 43

Dell Computer uses the Internet to streamline the global supply system, which has the result of ________.

A) improving the efficiency of the supply chain
B) eliminating the reliance on local suppliers
C) creating a vertical hierarchical structure
D) eliminating the use of brick and mortar services

Question 44

Royal Phillips Electronics' structure would best be described as a(n) ________.

A) domestic structure plus export department
B) international division
C) global functional structure
D) network structure

Question 45

Many emerging market companies are avoiding the traditional method of internationalization and instead capitalizing on the ________.

A) opportunities in China and Russia
B) reduction in trade barriers
C) born global phenomenon
D) offshoring opportunities

Question 46

What was the origin of most emergent market companies?

A) family businesses
B) multinational firms
C) franchises
D) joint ventures

Question 47

In most international organizations, decisions regarding ________ functions are centralized.

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

Question 48

As a company becomes larger, more complex, and more sophisticated in its approach to world markets, it will most likely evolve into a(n) ________.

A) matrix corporation
B) domestic corporation
C) international corporation
D) transnational corporation

Question 49

With a globalization strategy, the need for complex integrating mechanisms is ________, and in a multi-domestic strategy, the need is ________.

A) high; low
B) low; high
C) high; medium
D) medium; very high

Question 50

With a transnational strategy, the need for complex integrating mechanisms is ________, and in an international strategy, the need is ________.

A) very high; very low
B) very low; high
C) very high; medium
D) medium; very high

Question 51

Which of the following organizational structures is typical of most transnational companies?

A) matrix structure
B) international division
C) global product structure
D) global functional structure

Question 52

All of the following are signs of international organizational malaise EXCEPT ________.

A) clashes among divisions, subsidiaries, and individuals
B) duplication of administrative personnel and services
C) greater demands for information systems
D) unclear lines of reporting

Question 53

Which of the following is most likely NOT an indication that changes need to be made to a firm's organizational design?

A) customer service complaints
B) overlapping responsibilities
C) morale problems
D) tight budgets

Question 54

With a transnational strategy, the role of organizational culture is ________, and in a multidomestic strategy, the role of organizational culture is ________.

A) not important; slightly important
B) not important; very important
C) very important; not important
D) slightly important; very important

Question 55

The organizational structure at Intel which involves customizing a range of chips in a combination suitable for a particular target market is known as ________.

A) I-form
B) integration
C) platformisation
D) specialization

Question 56

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
B) transnational
C) international
D) globalization

Question 57

Which of the following is an essential element of the transnational structure of Asea-Brown Boveri (ABB)?

A) reliable system of suppliers
B) lateral communication network
C) top-down decision-making process
D) hierarchical communication network

Question 58

Contingency theory proposes that the best organizational structure is that which ________.

A) enables a firm to globalize quickly
B) leads to a high-efficiency work system
C) provides for balanced control of subsidiaries
D) allows the firm to carry out its strategic goals

Question 59

What are the two major variables that determine the structure and design of an organization?

A) globalization and localization
B) localization and nationalization
C) nationalization and rationalization
D) rationalization and globalization

Question 60

Which of the following is a major structural changes occurring within many emerging market companies, such as Lenovo and Mittal Steel?

A) expanding family ownerships
B) establishing foreign franchises
C) simplifying traditional hierarchies
D) decreasing the powers of subsidiaries

Question 61

Which of the following variables will most likely affect the appropriateness of monitoring systems?

A) management practices
B) infrastructure stability
C) employee skills
D) exchange rates

Question 62

Describe the structural evolution presented by Stopford. Does every firm need to follow the structural evolution proposed by Stopford? Why or why not?

Question 63

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

Question 64

The problem regarding noncomparability of performance data across countries is primarily caused by all of the following variables EXCEPT ________.

A) taxes
B) market share
C) political upheaval
D) currency devaluation

Question 65

Which of the following is NOT one of the direct control mechanisms used by McDonald's in Russia?

A) financial performance reports
B) visits by headquarters personnel
C) extensive management training
D) construction of a food processing plan

Question 66

What are the most common structural forms of organizations? How does an organization know when it needs to consider a new structure?

Question 67

Which of the following is NOT necessarily a characteristic of the best organizational structure for a firm?

A) dynamic
B) global
C) adaptable
D) flexible

Question 68

The two primary means of direct control for foreign operations are ________.

A) financial statements and performance appraisals
B) currency transactions and currency repatriation
C) structure and staffing procedures
D) sales quotas and budgets

Question 69

How many sets of financial statements from subsidiaries are usually required to reconcile an MNC's accounting statements?

A) one
B) three
C) five
D) seven

Question 70

Explain the use of the international division structure and the different ways in which that division may be organized.

Question 71

What are the advantages of the global product structure?

Question 72

Which of the following is a financial variable in MNC reports that complicates financial statements and performance evaluations?

A) global structures
B) inflation levels
C) sales quotas
D) political systems

Question 73

Which of the following terms refers to the ability to gather timely and accurate information necessary for international management, especially in less developed countries?

A) direct control
B) MIS adequacy
C) PCN analysis
D) indirect control

Question 74

Which of the following terms refers to the control of foreign operations through the use of reports, budgets, and financial controls?

A) direct controls
B) internal analysis
C) indirect controls
D) resource management

Question 75

According to the author, the future for MNC structure most likely lies in a ________.

A) global web of networked companies
B) global functional structure
C) global product structure
D) centralized hierarchy

Question 76

Which of the following is suggested by the research on monitoring systems by Ueno and Sekaran?

A) U.S. firms use long-term evaluations to a greater extent than Japanese firms.
B) Japanese firms build slack into budget calculations more often than U.S. firms do.
C) U.S. firms use communication and coordination processes more extensively than Japanese firms.
D) Japanese managers are more likely to use formal communication procedures than U.S. managers.

Question 77

According to research by Neghandi and Welge, ________ firms require the greatest number of functional reports not including performance reviews.

A) U.S.
B) German
C) Japanese
D) Italian

Question 78

Those who design organizational structures must account for the relationships among the three interdependent factors of ________.

A) structure, human resources, and financing
B) differentiation, integration, and alliances
C) strategy, structure, and staffing
D) culture, politics, and economics

Question 79

Organix Cosmetic Company manufactures all-natural cosmetics and skin-care products. Organix is based in the U.S. with international divisions located in Singapore and London. Executives at Organix are considering making a change to the firm's organizational structure. Which of the following best supports the argument that Organix should change its organizational structure?

A) Employees at Organix complain that they are too bogged down with administrative tasks to focus on creating new products and concepts.
B) Organix managers recently attended a cosmetics trade show in Europe and were dismayed to learn that few attendees knew of the firm.
C) Line managers at Organix are required to give employee performance appraisals semi-annually.
D) The human resource department at Organix is overwhelmed by the flood of job applicants.

Question 80

Which of the following is a non-financial measure for the performance evaluation of a subsidiary?

A) transfer pricing
B) union relations
C) public image
D) employee morale