Question 1

What is the primary advantage of operating interdependent subsidiaries?
A) It reduces the need to control subsidiaries and to coordinate their activities.
B) It allows the company to integrate scale-efficient operations and to cross-subsidize subsidiaries when necessary.
C) It provides an opportunity to balance the interests of subsidiaries with the needs of the headquarters. .
D) It prevents subsidiaries from becoming too independent or uncontrolled.

Accepted Answer

(Firms that foster interdependence among their subsidiaries enjoy two important strategic advantages over firms that do not employ a coordinated global approach: (i) the ability to integrate scale-efficient operations; and (ii) the opportunity to cross-subsidize the losses in one market with the funds generated by profitable operations in other markets).

Question 2

What are the challenges associated with managing a center-for-global innovation process and what are some of the measures that can be employed to ensure that the process is efficient?

Accepted Answer

The answer of What are the challenges associated with managing...

Question 3

Vito is a consultant advising a major corporation.His client has requested assistance with improving the effectiveness of its innovation process.Vito noticed that the client's subsidiaries enjoy a high degree of independence.Vito suspects that there may be significant risks associated with this degree of independence.What are these risks and what are some alternatives that can be employed to mitigate these risks?

Accepted Answer

The answer of Vito is a consultant advising a major...

Question 4

Local-for-Local innovative processes can be enhanced through integrating subsidiary functions across different levels.At which level are the control and conflict resolution tasks best concentrated?
A) At the project level (called "article team" at Philips), where relatively junior managers from the commercial and technical functions work together
B) At the product level, where a team of technical and commercial representatives engage in cross-functional coordination
C) At the senior management committee level, where the top commercial, technical, and financial managers in the subsidiary foster subsidiary-level coordination
D) All of the above

Accepted Answer

"At the product level,cross-functional coordination is accomplished through a product group team of technical and commercial representatives,which meets to review
results,suggest corrective actions,and resolve any interfunctional differences.Restraining control and conflict resolution to this level facilitates sensitive and rapid responses to initiatives and ideas generated at the local level." Note that d,while not wrong,is not the best answer because the question asks for the ideal setting.

Question 5

An effective way to exploit the knowledge within an organization with a high complexity of market knowledge and a high complexity of technological knowledge is:
A) Move information about the technology to where the market is
B) Exchange information
C) Move information about the market to where the technology is
D) Move knowledge by rotating people by temporary co-location

Accepted Answer

Moving knowledge by rotating people by temporary co-location is the most effective way to exploit the knowledge within an organization with high complexity in both market and technological knowledge. This approach allows individuals to gain exposure to both the market and technological aspects of the organization, and transfer knowledge between departments. This method also promotes cross-functional collaboration and builds a strong knowledge-sharing culture within the organization. A and C do not address the need for cross-functional knowledge transfer, and exchanging information may not be sufficient for a high complexity organization.

Question 6

Which of the following is not one of the four processes of cross-border innovation and learning?
A) Locally leveraged
B) Globally Linked
C) Center-for-local
D) Local-for-local

Accepted Answer

Although locally leveraged and globally linked are becoming more widespread,they have supplemented rather than replaced the traditional center-for-global and local-for-local innovation processes that are so well embedded in many MNEs.In a competitive environment,most companies recognize the need to engage their resources and capabilities in as many ways as they can.The challenge is to build an organization that can simultaneously facilitate all four processes of cross-border innovation and learning.

Question 7

TechInnovation is a large MNE operating in an environment characterized by rapid changes.During the past 50 years,its subsidiaries have operated independently.Which of the following actions will be least helpful to increase the interdependence across its widely dispersed national organizations?
A) TechInnovation could centralize more decision-making to counter-balance the decentralization that has taken place during the past 50 years.
B) TechInnovation could create regular cross subsidiary meetings to coordinate activities and resolve differences.
C) TechInnovation could break up its value-chain to ensure that subsidiaries perform interrelated activities.
D) TechInnovation could develop career paths to routinely transfer managers across subsidiaries.

Accepted Answer

(To create an effective interdependent organization, an MNE must both: (i) develop a configuration of resources that is neither centralized, nor decentralized, but is both dispersed and specialized.Such a configuration lies at the heart of the transnational company's integrated mode of operations; and, (ii) build inter-unit integration mechanisms (ie., holding regular cross-subsidiary meetings; ensuring that subsidiaries perform interrelated activities; routinely transferring managers across subsidiaries) to ensure that task interdependencies lead to the benefits of synergy rather than the paralysis of conflict).

Question 8

In developing differentiated coordination processes in a transnational organization,which of the following factors would be most important for an MNC manager to consider?
A) How the company sources its raw materials, transfers technologies, and manages scarce resources.
B) How the company is structured and how decision-making authority is assigned.
C) The environment in which the firm operates and the nature of competition in that environment.
D) The portfolio of products that the MNE offers and the markets in which it offers them.

Accepted Answer

In analyzing how managers might develop a coordination system that best fits the needs of various functions and tasks,it is helpful to think about the various flows among the organizational units involved in the execution of each task.Three flows are the lifeblood of any organization,but are of particular importance in a transnational company - the flow of goods,the flow of resources and the flow of valuable information and knowledge that the company must diffuse throughout the worldwide network of national units.

Question 9

Worldwide Consulting Limited is an Italian-based service company with activities in 23 countries.The company operates by embedding a large number of expatriates in foreign subsidiaries,even though the expatriates are not always familiar with the host country to which they are assigned.What is the most important benefit Worldwide Consulting is most likely to achieve through this practice?
A) An exchange of information and knowledge across subsidiaries facilitated by the expatriates.
B) The presence of expatriate employees enhances the prestige of the foreign subsidiaries and increases client satisfaction.
C) The presence of a large number of expatriates improves employee motivation and reduces employee turnover.
D) Having ex-pat employees allows the parent company to keep tighter control of its offshore subsidiaries.

Accepted Answer

One of the most difficult tasks facing a transnational organization is the coordination of the huge flow of strategic information and proprietary knowledge required to operate a transnational organization.The diversity and changeability of the flow make it impossible to coordinate through formal systems and the sheer volume and complexity of the information would overload headquarters if coordination were centralized.The most effective way to ensure that worldwide organizational units analyze their diverse environments appropriately is to sensitize local managers to broader corporate objectives and priorities.One of the best ways to achieve this goal is to transfer personnel with the relevant knowledge.In fact,this socialization process is the classic solution for the coordination of information and knowledge flows across subsidiaries
.

Question 10

Campbell Enterprises is an MNE in which local-for-local innovation is a priority.A new CEO wants to understand the conditions needed to make such innovations more effective,as well as your reasons for making such recommendations.

Accepted Answer

The answer of Campbell Enterprises is an MNE in which...

Question 11

Traditionally,MNEs developed innovation processes that were either very centralized (resulting in center-for-global innovation),or very decentralized (resulting in local-for-local innovation.)More recently,companies have developed two transnational innovation models.Describe the new models and the advantages they have over the older approaches to innovation.

Accepted Answer

The answer of Traditionally,MNEs developed innovation processes that were either...

Question 12

Which of the following is not an appropriate coordination mechanism to be employed by a transnational corporation with worldwide activities?
A) The coordination of information flows through the socialization of employees.
B) The coordination of asset flows through a process of rationalization.
C) The coordination of product flows through formalized management processes.
D) The coordination of resource flows through centralized decision-making.

Accepted Answer

The flow of goods is best achieved through the formalization of management processes.Managing the flow of resources is a prime example of the need for coordination by centralization.Finally,the classic solution for the coordination of information flows is the socialization process.

Question 13

Which of the following management assumptions is most likely to support transnational innovation in MNEs?
A) The roles of different organizational units should be uniform and symmetrical.
B) The headquarter-subsidiary relationship should be based on clear and unambiguous patterns of dependence or independence.
C) Career paths should be structured to give managers cross-border and cross-functional experience.
D) Headquarters should be responsible for exercising decision-making and control uniformly.

Accepted Answer

(In many MNEs, three simplifying assumptions (that were employed to reduce complexity) have effectively blocked the organizational capabilities necessary for supporting and managing transnational innovation processes: (i) the assumption that the roles of different organizational units should be uniform and symmetrical; (ii) the assumption that headquarters-subsidiary relationships should be based on clear and unambiguous patterns of dependence or independence; and, (iii) the assumption that corporate management has a responsibility to exercise decision making and control uniformly).

Question 14

Mr.Smith is the recently appointed CEO of a diversified MNE operating in 22 countries on four continents and in multiple industries ranging from bulk chemicals to consumer packaged goods.He became concerned that in his very decentralized organization,all businesses were managed primarily by the national subsidiaries.With a poor record in innovation,Smith wondered what he could do to improve the innovation process.What two or three changes would you recommend he consider?

Accepted Answer

The answer of Mr.Smith is the recently appointed CEO of...

Question 15

There is no one best way to manage innovation in MNEs.Please comment.

Accepted Answer

The answer of There is no one best way to...

Quiz 5: Creating Worldwide Innovation and Learning: Exploiting Cross-Border Knowledge Management

What is the primary advantage of operating interdependent subsidiaries?

What are the challenges associated with managing a center-for-global innovation process and what are some of the measures that can be employed to ensure that the process is efficient?

Local-for-Local innovative processes can be enhanced through integrating subsidiary functions across different levels.At which level are the control and conflict resolution tasks best concentrated?

An effective way to exploit the knowledge within an organization with a high complexity of market knowledge and a high complexity of technological knowledge is:

Which of the following is not one of the four processes of cross-border innovation and learning?

TechInnovation is a large MNE operating in an environment characterized by rapid changes.During the past 50 years,its subsidiaries have operated independently.Which of the following actions will be least helpful to increase the interdependence across its widely dispersed national organizations?

In developing differentiated coordination processes in a transnational organization,which of the following factors would be most important for an MNC manager to consider?

Campbell Enterprises is an MNE in which local-for-local innovation is a priority.A new CEO wants to understand the conditions needed to make such innovations more effective,as well as your reasons for making such recommendations.

Which of the following is not an appropriate coordination mechanism to be employed by a transnational corporation with worldwide activities?

Which of the following management assumptions is most likely to support transnational innovation in MNEs?

There is no one best way to manage innovation in MNEs.Please comment.