Quiz 14: International Organization Design and Control

________ is the overall pattern of structural components and configurations used to manage the total organization. A) Organizational design B) Functional design C) Management D) Strategy

What is another name for organizational design? A) functional design B) strategic hierarchy C) management design D) organization structure

A study of design changes found that most firms make major design changes about every ________. A) month B) one to two years C) four to five years D) nine to ten years

Tasks are assigned, resources are allocated and performance expectations are established through ________. A) training objectives. B) organizational design C) strategic hierarchy D) intuitive leadership

Apex Enterprises has recently started to engage in a small amount of direct exporting. As a result, Apex managers have delegated responsibilities for processing international orders to individuals within the production department. Which of the following is most likely used by Apex? A) corollary approach B) export department C) international division D) global product design

The ________ is typical for a firm with only a small level of international activity. A) corollary approach B) export department C) international division D) global product design

The ________ takes responsibility for overseeing international operations, marketing products, processing orders, working with foreign distributors, and arranging financing when necessary. A) corollary approach B) export department C) international division D) global product design

The ________ allows a firm to concentrate resources and create specialized programs targeted on international business activity while simultaneously keeping that activity segregated from the firm's ongoing domestic activities. A) corollary approach B) export department C) international division D) global product design

A firm would most likely establish an international division when ________. A) domestic market sales fluctuate B) decision making becomes decentralized C) foreign and domestic customers are similar D) specialization in foreign market operations becomes essential

The corollary approach is the final evolution a firm takes to become a global organization.

An important characteristic of a successful firm is its ability to match its strategy with a compatible organizational design.

The most complex form of international organizational design is the global matrix design.

There is no one single best form of organizational design for a global business.

What are the four functions of organizational design?

What are the typical levels a firm goes through with regard to its organizational design as it transitions from domestic to international to global? What are the three managerial philosophies that guide organization design? Briefly explain when each philosophy is appropriate.

Area knowledge refers to the idea that managers must ________. A) understand the cultural, commercial, social, and economic conditions in each host country in which the firm does business B) be aware of the competitive forces that have implications for global strategy in each market C) comprehend features such as technological trends, customers needs, and competitive forces affecting the goods the firm produces D) have access to coworkers with expertise in basic business functions such as production, marketing, finance, accounting, human resources management, and information technology

Product knowledge refers to the idea that managers must ________. A) understand the cultural, commercial, social, and economic conditions in each host country in which the firm does business B) be aware of the competitive forces that have implications for global strategy in each market C) comprehend features such as technological trends, customers needs, and competitive forces affecting the goods the firm produces D) have access to coworkers with expertise in basic business functions such as production, marketing, finance, accounting, human resources management, and information technology

Functional knowledge refers to the idea that managers must ________. A) understand the cultural, commercial, social, and economic conditions in each host country in which the firm does business B) be aware of the competitive forces that have implications for global strategy in each market C) comprehend features such as technological trends, customers needs, and competitive forces affecting the goods the firm produces D) have access to coworkers with expertise in basic business functions such as production, marketing, finance, accounting, human resources management, and information technology

Which of the following is one of the managerial philosophies that guide the approach to functions like organizational design and marketing? A) ethnocentric approach B) transnational approach C) supranational approach D) intranational approach

The ethnocentric approach to management is most likely used by firms that ________. A) operate internationally the same way they do domestically B) customize their operations for each foreign market in which they serve C) analyze the needs of their customers worldwide and then adopt standardized operations for all markets they serve D) adapt their marketing strategies for foreign markets, but not their finance strategies

The polycentric approach to management is most likely used by firms that ________. A) operate internationally the same way they do domestically B) customize their operations for each foreign market in which they serve C) analyze the needs of their customers worldwide and then adopt standardized operations for all markets they serve D) adapt their marketing strategies for foreign markets, but not their finance strategies

Scale Systems, an MNE, analyzes the needs of its customers worldwide and then adopts standardized operations for all markets that the firm serves. Which of the following is most likely used by Scale Systems? A) ethnocentric approach B) polycentric approach C) geocentric approach D) transnational approach

Which design is the most common form of organizational design adopted by MNCs? A) global area design B) global product design C) global functional design D) global matrix design

Which design assigns worldwide responsibility for specific products or product groups to separate operating divisions within a firm? A) global area design B) global functional design C) global product design D) global hybrid design

Parker Industries manufactures and sells a variety of goods including carpeting, power tools, and wallpaper. Which form of organization would most likely be appropriate for Parker Industries? A) global product design B) global functional design C) global matrix design D) global hybrid design

Garvey Enterprises, an MNC, uses a global product organizational design. Garvey manufactures and sells boating accessories to customers around the world. Which form does Garvey most likely use? A) C-form B) H-form C) M-form D) U-form

Manix Enterprises, an MNC, uses a global product organizational design. Manix manufactures and sells chemical products and electronics. The firm also owns a financial services company and a small hotel chain. Which form does Manix most likely use? A) C-form B) H-form C) M-form D) U-form

What corporate philosophy is facilitated by a global product design? A) ethnocentric approach B) polycentric approach C) geocentric approach D) transnational approach

Which of the following is a characteristic of the global product design? A) minimizes costly duplication of activities B) simplifies processes for corporate learning C) decreases need for regional market metrics D) facilitates global marketing activities

Which type of organizational design organizes the firm's activities around specific regions of the world? A) global product design B) global area design C) global matrix design D) global hybrid design

Vantage Computers, an MNE, has a multi-domestic corporate philosophy. Which organizational design would be most useful for Vantage? A) global product design B) global area design C) global customer design D) global matrix design

Which of the following is an advantage of global area design? A) a firm may sacrifice cost efficiencies B) diffusion of technology may be slowed C) there may be a duplication of resources D) firms may develop expertise about the local market

Adecco, a temporary employment agency with worldwide clients, has ten regional divisions. Managers in each division handle recruiting, distribution, promotion, and client services for that region. Adecco is a service firm that focuses on marketing. Which organizational design is most likely used by Adecco? A) global product design B) global area design C) global functional design D) global hybrid design

Which of the following is an advantage of using a global area design? A) eliminating duplication of functional areas B) gaining cost efficiencies in manufacturing C) tailoring the product mix in a region D) encouraging global product planning

The ________ calls for a firm to create departments or divisions that have worldwide responsibility for common organizational functions. A) global product design B) global area design C) global functional design D) global matrix design

The ________ is used by MNCs that have relatively narrow or similar product lines. A) global product design B) global functional design C) global matrix design D) global hybrid design

Which of the following is an advantage of the functional design? A) Expertise is transferred with difficulty between functional areas. B) Managers no longer have centralized control over functional operations. C) Attention is focused on key areas of the firm. D) Coordination between divisions is simplified.

British Airways is a single-business firm with company-wide function operations dedicated to marketing and operations, public affairs, human resources, and other basic functions. How could the organizational design of British Airways best be described? A) global product design B) global area design C) global functional design D) global matrix design

Which design is practical only when a firm has relatively few products or customers? A) global product design B) global area design C) global functional design D) global matrix design

The ________ is used when a firm serves different customers or customer groups, each with specific needs calling for special expertise or attention. A) global area design B) global functional design C) global matrix design D) global customer design

Kodak has three divisions. One division focuses on selling high-quality digital equipment to film studios. Another division sells digital cameras to amateur photographers. Finally, its new business division targets emerging markets. What organizational design does Kodak utilize? A) global product design B) global area design C) global customer design D) global matrix design

Which organizational design is appropriate when the various customer groups targeted by a firm are so diverse as to require totally distinct marketing approaches? A) global area design B) global functional design C) global matrix design D) global customer design

A ________ is the result of superimposing one form of organization design on top of a different, existing form. A) global area design B) global functional design C) global matrix design D) global hybrid design

Which organizational design promotes flexibility and fluidity in the firm? A) global area design B) global functional design C) global matrix design D) global hybrid design

Which organization design is inappropriate for firms with few products and relatively stable markets? A) global area design B) global functional design C) global matrix design D) global hybrid design

The global design chosen by a firm reflects the relative importance of the three types of knowledge in the firm's operations.

Since selling to foreign customers is not fundamentally different from selling to domestic ones, a firm's export department can get by knowing only a little about foreign markets.

The global product design discourages duplication of functional-area skills.

Global area design is particularly useful for firms with a transnational corporate philosophy.

British Airways uses the global customer design because it allows the firm to standardize its maintenance and flight procedures regardless of where a flight originates.

The global matrix design is the result of superimposing one form of organizational design on top of a different, existing form.

The global matrix design allows for flexibility.

Most companies use a hybrid of the various organizational designs.

What is the meaning of area knowledge?

Explain the meaning of product knowledge.

What is the meaning of functional knowledge?

What is the difference between an M-form design and an H-form design? When would international firms use each of these?

What are the competitive advantages associated with a global product design?

What types of firms use the functional design?

What are the disadvantages of the global product design? Why is coordination especially problematic?

What is organizational design? What are the different types of organizational design? Describe each one briefly.

Which term refers to the process of linking and integrating functions and activities of different groups, units, or divisions? A) decentralization B) coordination C) subsidizing D) channeling

Active subsidiary boards are most useful in which type of organization? A) an M-form B) a U-form C) an H-form D) an S-form

Which term refers to a group of managers from different parts of the world who are connected to each other in some way? A) liaison B) task force C) informal management network D) formal management network

Empowering a subsidiary's board promotes centralization.

A group of managers from different parts of the world who are connected to one another in some way is called an informal management structure.

Informal management networks are typically powerless when it comes to short-circuiting bureaucracy.

The higher the level of interdependence among divisions and functions in a firm, the more coordination is required.

Responsibility center control tends to follow a centralized decision-making system.

What is coordination?

What strategies can firms implement to achieve desired coordination?

When is a subsidiary board beneficial to an international firm? Why would an MNC appoint prominent local citizens to a subsidiary board?

What is an informal management network? How are they established? Do you think they are useful to an international business? Why or why not?

________ is the process of monitoring ongoing performance and making necessary changes to keep the organization moving toward its performance goals. A) Coordination B) Control C) Implementation D) Execution

The main levels at which control can be implemented includes which one of the following? A) marketing level B) financial level C) organizational level D) economic level

________ is intended to monitor both how well an international business formulates strategy and how well it goes about implementing that strategy. A) Functional control B) Strategic control C) Organizational control D) Operations control

Strategic control focuses on how well the firm defines and maintains its desired strategic alignment with the firm's ________. A) administration B) environment C) subsidiaries D) employees

What is the most critical aspect of strategic control? A) control of firm's financial resources B) control of a firm's marketing plans C) quality control D) control of labor issues

Sarita, a manager at a large international firm, is primarily responsible for the financial resources of the entire organization. Sarita is most likely the firm's ________. A) chief financial officer B) auditor C) controller D) vice president of financial affairs

Derek is the international controller at Cabot Foods, a large MNE. Derek is most likely the most concerned about ________. A) local financial control B) financial forecasts C) monthly budgets D) managing the inventory of currencies

What is the most common type of organizational control system? A) responsibility center control B) generic organizational control C) planning process control D) operations control

At Garmen Industries, each unit has the same control system and the locus of authority resides at the firm's headquarters. Which control system is most likely used at Garmen? A) responsibility center control B) generic organizational control C) planning process control D) operations control

Acme Medical Equipment, an MNC, pursues a similar strategy in each market in which the firm competes and typically experiences very predictable operations. Which control system would most likely be best for Acme Medical Equipment? A) responsibility center control B) generic organizational control C) planning process control D) operations control

United Distillers PLC uses the same strategy in every market. Which type of control method should it use? A) standardized organizational control B) centralized organizational control C) generic organizational control D) responsibility center control

A(n) ________ calls for a firm to concentrate its organizational control system on the actual mechanics the firm uses to develop strategic plans. A) responsibility center control B) generic organizational control C) planning process control D) operations control

________ focuses specifically on operating processes and systems within both the firm and its subsidiaries and operating units. A) Responsibility center control B) Generic organizational control C) Planning process control D) Operations control

How long is the scope of time for operational control typically? A) daily B) weekly C) monthly D) yearly

A controller has the role of handling financial control in an international firm.

Responsibility center control means that the firm creates unique control systems for each SBU.

Operations control systems tend to be less specific and focused than strategic and organizational control systems.

Peak Manufacturing, an MNE, concentrates its organizational control system on the actual mechanics and processes the firm uses to develop strategic plans. Peak Manufacturing is using operations control.

Strategic control often involves time periods of several years.

Operations control usually focuses on the lower levels of a firm such as first-line managers and operating employees.

Why is the control function important to the success or failure of an international business? What factors are necessary to understand before establishing a control system?

What are the three levels of international control?

What is the focus of strategic control?

How is strategic control handled in strategic alliances?

What is the focus of organizational control?

What is the focus of operations control?

What is the primary difference between responsibility center control and generic organizational control? Under what circumstances is each type appropriate for an international business?

Why is it important for an international firm to develop and maintain an effective accounting system? What accounting issues are faced by firms with subsidiaries in multiple countries? How can these problems be addressed?

What are the steps a firm needs to take when establishing an international control system? How can a firm overcome resistance to control systems?

Usually, during the implementation of planning process control, whenever a unit fails to meet its goals ________. A) the head of the unit is terminated B) the head of the unit meets with the firm's executive committee C) the unit is absorbed into the parent entity D) the unit is liberally granted an extension of time

What is the first step in establishing an international control system? A) Set control standards for performance. B) Measure actual performance. C) Compare performance against standards. D) Discuss deviations with employees.

Which element of performance is relatively difficult to measure? A) actual output B) worker productivity C) product quality D) advertising effectiveness

Which element of performance is relatively easy to measure? A) worker productivity B) advertising effectiveness C) ethical managerial conduct D) employee motivation

A(n) ________ is a numerical index of performance that the firm wants to maintain. A) control standard B) performance ratio C) accounting standard D) benchmark

A common performance ratio used by many firms is ________. A) breakeven point B) inventory turnover C) cost of goods sold D) earnings per share

When a firm tries to exert more control over individuals than the individuals think is appropriate, the result is ________. A) authoritarianism B) overcontrol C) undercontrol D) control resistance

Which of the following would most likely reduce resistance to control? A) promoting strategic selection systems B) creating a system that has a flexible focus C) creating a system that creates reasonable accountability D) providing an appeals system overseen by central management

The fourth and final step in establishing an international control system is responding to deviations observed in step 3.

Control standards help provide a road map for managers involved in opening and running a new operation.

Host governments typically require international firms to develop accounting procedures based on local regulations, which is problematic for firms operating in multiple countries with incompatible accounting standards.

Employees of Disneyland Paris felt the company was exercising overcontrol by applying the same grooming standards in Europe as in the United States.

Participation is a common technique used by firms to overcome employee resistance to control systems.

Resistance to control varies across cultures.

Inventory turnover is a common performance ratio used by international firms.

What elements of performance are relatively easy to measure?

Discuss the behavioral aspects of international control and the reasons for resistance to control.