Question 1

Which structure has been adopted by most large,complex U.S.companies?

Accepted Answer

Most large and complex U.S. companies have adopted a multidivisional structure, which is also known as the M-form or M-structure. In this structure, the company is divided into autonomous divisions, each with its own profit-and-loss responsibility and functional departments such as marketing, finance, and operations. The corporate headquarters provides strategic guidance, sets overall goals, and coordinates activities among the divisions. This structure allows for greater flexibility, accountability, and responsiveness to customer needs.

Question 2

In a multidivisional structure,which form of control is used to compare the relative performances of different divisions?

Accepted Answer

Financial control is used to compare the relative performances of different divisions within a multidivisional structure. This involves comparing financial metrics such as revenue, costs, profits, and return on investment across divisions to identify areas of strength and weakness.

Question 3

To expand its global sales,the U.S.-based foods maker ConAgra purchased a firm that processes grains in the United Kingdom.ConAgra plans to manage the new business by allowing it to continue as before,with little integration into the rest of the firm.Based on this information,which strategy is ConAgra pursuing?

Accepted Answer

ConAgra is pursuing a localization strategy by allowing the acquired firm to continue operating independently, which suggests an adaptation to local markets rather than integrating it into a global or standardized approach.

Question 4

The multidivisional organization structure offers all of these advantages except:

Accepted Answer

The multidivisional structure actually can lead to weaker competition for resources because each division operates independently and may prioritize their own goals over overall corporate goals. However, the other options are all advantages of the multidivisional structure.

Question 5

A camera manufacturer that has separate divisions for making personal cameras,movie cameras,and film acquired a small film developer and a car battery supplier.Which of the following structures is most appropriate for this firm?

Accepted Answer

The most appropriate structure for this firm would be a multidivisional structure, also known as a divisional structure. This structure groups business units by product, geography, or customer, and each division operates as a separate entity with its own functional teams (such as marketing, finance, and operations). This would allow the camera manufacturer to efficiently manage its diverse operations, as each division can focus on their specific products and markets. The recent acquisitions of a film developer and a car battery supplier are further evidence of the need for a multidivisional structure, which would enable the company to integrate these new businesses into their operations while maintaining focus on their core products.

Question 6

To foster the development of the matrix-in-the-mind concept and promote cooperation,companies are increasingly making use of the integrating capabilities of information technology (IT).

Accepted Answer

The statement suggests that companies are using IT to promote cooperation and develop the matrix-in-the-mind concept.

Question 7

The head of the finance function at ABC International employs a larger staff than is required for efficiency to reduce work pressures inside the department and to bring the manager higher status.This is known as organizational slack.

Accepted Answer

This statement describes the concept of organizational slack, which refers to deliberate overstaffing or excess resources within an organization in order to provide a buffer against unforeseen events or to increase the manager's power and status.

Question 8

Implementation problems can arise in unrelated acquisitions when managers from the acquiring company apply inappropriate structure and controls to manage the new business.

Accepted Answer

When managers from the acquiring company try to apply their existing structure and controls to a new business, it may not be appropriate for that specific business. This can lead to implementation problems and hinder the success of the acquisition.

Question 9

One problem with a mishandled merger is that skilled managers who feel they have been demoted will work together to sabotage the organization.

Accepted Answer

The answer of One problem with a mishandled merger is...

Question 10

Transfer pricing is used most commonly in a

Accepted Answer

Transfer pricing is used most commonly in a multidivisional structure, where different divisions or business units may have to transact with each other, and transfer pricing ensures that each division is appropriately compensated for the goods or services that it provides to other divisions. This helps ensure that divisions are incentivized to operate efficiently and profitably, even when they are providing inputs to other parts of the organization. Transfer pricing is less commonly used in product team or geographic structures, which may be more focused on integrated, cross-functional teams rather than separate divisions or business units.

Question 11

Historically,car companies such as Ford and GM used global-area structures to manage their overseas operations.

Accepted Answer

Historically, car companies such as Ford and GM used global-area structures to manage their overseas operations.

Question 12

A joint venture can be dangerous to a company if its partner is acquired by a competitor.

Accepted Answer

If a company's joint venture partner is acquired by a competitor, it can lead to a situation where the competitor gains access to the company's confidential information, trade secrets or technology, thereby risking the company's interests and competitive advantage. It can also lead to a strained business relationship or even termination of the joint venture, causing financial losses and damage to the company's reputation. Therefore, a joint venture can be dangerous to a company if its partner is acquired by a competitor.

Question 13

Which of the following structures results in the creation of an office of corporate headquarters staff?

Accepted Answer

The multidivisional structure creates an office of corporate headquarters staff to oversee and coordinate the activities of different divisions.

Question 14

A company pursuing unrelated diversification

Accepted Answer

Unrelated diversification involves operating in various industries with little to no connection, reducing the need for integration among divisions.

Question 15

The wasteful duplication of functional resources is most likely to arise with a

Accepted Answer

In a multidivisional structure, each division operates as a separate entity with its own resources, which can lead to duplication of functions across divisions.

Question 16

A major impact of information technology (IT)on strategic implementation has been its effects on a company's ability to pursue strategic outsourcing to strengthen its business model.

Accepted Answer

IT has made it easier for companies to outsource some functions of their business operations to specialized companies, both domestically and internationally. This allows them to concentrate on their core business and increase efficiency while reducing costs.

Question 17

Often global companies use the services of foreign intermediaries or brokers to find suppliers that best fit their input requirements.

Accepted Answer

Global companies often do rely on foreign intermediaries or brokers to connect them with suppliers that meet their input needs. These intermediaries may have local knowledge and expertise that can be helpful for finding the best suppliers in a particular market.

Question 18

Which of the following strategies results in the highest bureaucratic costs?

Accepted Answer

Transnational strategy involves high coordination and integration across multiple countries, leading to increased bureaucratic costs.

Question 19

In a multidivisional structure

Accepted Answer

In a multidivisional structure, corporate headquarters is responsible for overseeing the company's long-term multibusiness model and providing guidance for interdivisional projects. Divisional managers have operational responsibility for their respective divisions, and support functions like accounting may be decentralized to each division. Financial controls may vary depending on the degree of autonomy given to each division.

Question 20

The two main innovations in a multidivisional structure (over a functional or product structure)are

Accepted Answer

The two main innovations in a multidivisional structure are the organization of business units or companies in each industry in which it competes into one or more divisions and the creation of corporate-level positions to oversee the activities of divisional managers. This structure allows for greater focus and specialization within each division while still providing a centralized corporate oversight.

Quiz 13: Implementing Strategy in Companies That Compete Across Industries and Countries