Question 1

A company's organizational structure helps to determine where formal power and authority will be located within the organization.

Accepted Answer

An organization's structure lays out the hierarchy of roles, responsibilities, and decision-making processes. This structure provides clear lines of communication and defines where formal power and authority lie within the organization.

Question 2

Few international companies are organized by function at the top level.

Accepted Answer

Many international companies are organized by function at the top level, such as finance, marketing, and operations, to ensure expertise and efficiency in each area.

Question 3

Two of the concerns that management faces in designing the organizational structure for an international company are (1) finding the most effective way to take advantage of geographic differences and (2) coordinating the activities of departments to enable the firm to meet its overall objectives.

Accepted Answer

False

Question 4

Organizational change refers to the way that an organization formally arranges its various domestic and international units and activities and the relationships among these various organizational components.

Accepted Answer

Organizational change refers to the process through which a company or organization changes its structure, strategies, operational methods, technologies, or organizational culture to effect change within the organization and adapt to new market conditions or internal pressures. The definition provided describes organizational structure, not organizational change.

Question 5

Changes in an international company's strategy may require changes in the organization's design, but not the reverse.

Accepted Answer

Changes in an organization's design can also necessitate changes in its strategy, as the structure of an organization can influence its ability to execute strategies effectively.

Question 6

The product global corporate form eliminates the duplication of product and area specialists.

Accepted Answer

The product global corporate form organizes a company's activities around specific products or product groups, but it does not necessarily eliminate the duplication of product and area specialists. In fact, it can lead to duplication as both product divisions and geographic or functional areas may have specialists focused on similar tasks.

Question 7

An evolving structure for an international organization over time is normal, as the company's involvement in foreign markets increases over time.

Accepted Answer

As a company expands its international presence, it is common for the organizational structure to evolve and adapt to the changing needs of the business. This can include the creation of new departments or subsidiaries focused on specific regions or markets, changes in reporting structures, and increased collaboration across borders. Therefore, it is true that an evolving structure for an international organization over time is normal.

Question 8

Both multinational and global companies use regionalized organizations.

Accepted Answer

Both multinational and global companies use regionalized organizations as a way to adapt to local cultural and business environments, decentralize decision-making, and improve operational efficiency. By dividing the world into geographic regions, these companies can create specialized teams that are better equipped to deal with local market conditions, regulatory requirements, and consumer preferences. Regionalization also allows companies to tap into local talent pools, build closer relationships with customers, and establish a stronger presence in each region they operate in.

Question 9

In designing an international organization, it is essential that the structures and systems being implemented are consistent not merely with each other but also with the strategy the company and its competitors are using.

Accepted Answer

While it's important for an organization's structures and systems to be consistent with each other, they do not necessarily have to align with the strategies used by competitors. Instead, they should be tailored to support the organization's own unique strategy and objectives.

Question 10

The initial choice of organizational structure after discarding the international division is usually a hybrid based on product and market factors.

Accepted Answer

The answer of The initial choice of organizational structure after...

Question 11

Production coordination poses difficult problems in many regionalized organizations, which has led many companies to assign many specialized product managers who have line authority.

Accepted Answer

The answer of Production coordination poses difficult problems in many...

Question 12

Global firms that organize by function at the top level have functional managers that report directly to the area heads.

Accepted Answer

In organizations that organize by function at the top level, functional managers typically report directly to the CEO or the highest-ranking person in the organization, not to area heads. Area heads or regional managers are more common in organizations structured by geographic region.

Question 13

The regionalized organization appears to be popular with companies that manufacture products with a rather low technological content.

Accepted Answer

Companies that manufacture products with a low technological content can benefit from a regionalized organization because it allows them to focus on efficiently distributing their products in specific regions while minimizing costs. This is especially true for companies with products that are sensitive to transportation costs or have short shelf lives. Therefore, the statement is true.

Question 14

Most companies establish worldwide organizations based on product, region, function, or customer classes.

Accepted Answer

This statement is true. Companies can establish worldwide organizations based on various factors such as product lines, regional markets, functional departments, or customer segments to better serve their global operations.

Question 15

A company's international operating environment, both currently and as it is expected to be in the future, is the primary determinant of its organizational structure.

Accepted Answer

While the international operating environment influences a company's organizational structure, it is not the primary determinant. Other factors such as company size, strategy, technology, and culture also play crucial roles in shaping organizational structure.

Question 16

Organizational structure deals with how an international business should be organized in order to ensure that its worldwide business activities are integrated.

Accepted Answer

Organizational structure in international business is concerned with creating a framework for the integration of the various activities of an international business across different countries or regions. This includes the allocation of resources, roles, responsibilities and decision-making processes across different levels and functions of the organization.

Question 17

The disadvantage of an organization divided into geographic regions is that each region must have its own product and functional specialists.

Accepted Answer

When an organization is divided into geographic regions, each region may have unique needs and preferences. Therefore, they may require their own product and functional specialists to cater to those needs. This can lead to duplication of efforts and resources across the organization, resulting in higher costs and lower efficiency.

Question 18

The type of structure that simplifies the task of directing worldwide operations because every country in the world is clearly under the control of someone who is in contact with headquarters is global product.

Accepted Answer

The type of structure described in the statement is a global geographic structure, not a global product structure. In a global geographic structure, the world is divided into regions or countries, each of which is headed by a manager who is in contact with headquarters. In contrast, a global product structure divides the organization by product lines or divisions, and each product line or division has global responsibility for its product or service regardless of location.

Question 19

A structure organized by more than one dimension at the top level is a matrix organization.

Accepted Answer

The answer of A structure organized by more than one...

Question 20

The international division is a division in the organization that is responsible for all non-home-country activities and reports to the domestic division.

Accepted Answer

The international division is a separate division from the domestic division and is responsible for all foreign activities. It usually reports directly to the top management level.

Quiz 10: Organizational Design and Control