Q&A Hero

Q: How can a firm protect its proprietary information in a joint venture? A) Share only the technology that is central to the core competence of the firm. B) Hold majority ownership in the venture so that the firm has greater control over the technology. C) Share only the technology of the firm, not the patents and copyrighted information. D) Hold minority ownership in the venture so that the firm does not have to give over control of the technology.

Q: In many countries, political considerations make _____ the only feasible entry mode. A) joint ventures B) franchises C) licensing agreements D) wholly owned subsidiaries

Q: There are several disadvantages of franchising as an entry mode. Which of the following is one of them? A) There is little incentive for the franchisee to build a profitable operation as quickly as possible. B) The firm incurs many of the costs and risks of opening a foreign market on its own. C) Franchising may inhibit the firm s ability to use the profits obtained to open additional businesses in the same country. D) Franchising may inhibit the firm s ability to take profits out of one country to support competitive attacks in another.

Q: _____ agreements enable firms to hold each other hostage, thereby reducing the risk they will behave in an opportunistic manner toward each other. A) Turnkey B) Franchising C) Cross-license D) Integrated license

Q: Which of the following is true of licensing? A) Licensing is used when a firm possesses some tangible property but does not want to pursue a potential application itself. B) The firm does not have to bear the development costs and risks associated with opening a foreign market. C) It is an attractive option when a firm is interested in pursuing a foreign market and is ready to commit substantial resources to a foreign market. D) It is an attractive option for firms that have the capital to open overseas markets.

Q: Which of the following is true of exporting? A) It avoids the often substantial costs of establishing manufacturing operations in the host country. B) It is the best choice if lower-cost manufacturing locations are available abroad. C) Low transportation costs may make exporting uneconomical. D) Tariff barriers may make exporting the most attractive option.

Q: An advantage of _____ with a local partner is the knowledge of the local environment that the local partner contributes to the venture. A) turnkey contracts B) licensing contracts C) joint ventures D) wholly owned subsidiary contracts

Q: By its very nature, _____ limits a firm s ability to coordinate strategic moves across countries. A) licensing B) turnkey contracting C) franchising D) exporting

Q: A disadvantage of _____ is that the firm that enters into such an arrangement usually will have no long-term interest in the foreign country. A) wholly owned subsidiaries B) exporting C) licensing D) turnkey projects

Q: _____ is advantageous because it avoids the cost of establishing manufacturing operations in the host country and it may help a firm achieve experience curve and location economies. A) Licensing B) Exporting C) Franchising D) A turnkey contract

Q: Switching costs may A) drive early entrants out of the market. B) make it easy for later entrants to win business. C) make it difficult for later entrants to win business. D) give later entrants a cost advantage over early entrants.

Q: A _____ is more likely to capture first-mover advantages associated with demand preemption, scale economies, and switching costs. A) large-scale entrant B) joint venture C) small-scale entrant D) turnkey contract

Q: Large-scale strategic commitments may A) have many benefits and few to no risks. B) increase strategic flexibility. C) have many risks and few to no benefits. D) limit strategic flexibility.

Q: _____ are the advantages associated with entering a market early. A) Pioneering advantages B) First-mover advantages C) Core competencies D) Late-mover advantages

Q: According to Bartlett and Ghoshal, how should firms from developing countries approach international expansion? A) They suggest joint ventures to improve the firm s presence in the country while also growing the business opportunities for companies in the developing country. B) They suggest that franchising should be used in order to minimize risk and allow for the maximum expansion in the quickest amount of time. C) They suggest turnkey operations that allow for a rapid startup. D) They suggest that companies should use the entry of foreign multinationals as an opportunity to learn from these competitors by benchmarking their operations and performance against them.

Q: Discuss the advantages of establishing a greenfield venture in a foreign country.

Q: What are first-mover advantages? Discuss these advantages.

Q: What type of control system achieves control through a system of rules and procedures that directs the actions of subunits? A) personal controls B) bureaucratic controls C) cultural controls D) output controls

Q: _____ refers to the location of decision-making responsibilities within a structure. A) Vertical differentiation B) Integrating mechanisms C) Horizontal integration D) Horizontal differentiation

Q: Which of the following is true of a strong corporate culture? A) Almost all managers share a relatively consistent set of values and norms that have a clear impact on the way work is performed. B) A strong culture leads to high performance. C) Outsiders see firms with a strong culture as being autocratic and inflexible. D) A strong culture is always a good culture.

Q: _____ control is achieved by comparing actual performance against targets and intervening selectively to take corrective action. A) Personal B) Output C) Bureaucratic D) Cultural

Q: _____ is valuable because it can be used as a nonbureaucratic conduit for information flows within a multinational enterprise. A) A liaison network B) A matrix structure C) An organizational structure D) A knowledge network

Q: _____ refers to giving a person in each subunit responsibility for coordinating with another subunit on a regular basis. A) Global learning B) Liaison roles C) Knowledge network D) Matrix structures

Q: The need for coordination between subunits is greatest in firms pursuing A) a localization strategy. B) an international strategy. C) a global strategy. D) a transnational strategy.

Q: The need for coordination between subunits is lowest in firms pursuing A) a localization strategy. B) an international strategy. C) a global strategy. D) a transnational strategy.

Q: In practice, the dual hierarchy in a global matrix structure A) lessens all forms of conflict. B) makes it easy to ascertain accountability. C) results in extremely quick decision making. D) can lead to perpetual power struggles.

Q: _____ tends to be adopted by firms that are reasonably diversified. A) A worldwide area structure B) An international division structure C) A worldwide product division structure D) A global matrix structure

Q: A _____ encourages fragmentation of the organization into highly autonomous entities. A) worldwide area structure B) global matrix structure C) worldwide product structure D) global network structure

Q: Which of the following is true regarding a worldwide area structure? A) It tends to be favored by firms with a high degree of diversification. B) It inhibits local responsiveness. C) It tends to be favored by firms with a domestic structure based on functions. D) Decision-making responsibilities are centralized.

Q: Regardless of a firm s domestic structure, its international division tends to be organized on A) product. B) geography. C) people. D) economy.

Q: Which of the following decisions is typically centralized at a firm s headquarters? A) production decisions B) human resource management C) marketing decisions D) overall firm strategy

Q: Centralization and decentralization differ because centralization A) hinders coordination, while decentralization facilitates coordination. B) prevents top-level managers from making required organizational changes, while decentralization gives top-level managers greater power to make organizational changes. C) ensures that decisions are consistent with organizational objectives, while decentralization can result in decisions at variance with organizational goals. D) promotes flexibility, while decentralization reduces flexibility.

Q: A firm that needs greater flexibility should choose _____ for its decision making. A) horizontal differentiation B) decentralization C) localization strategy D) control systems

Q: Which of the following is one of the five main arguments favoring decentralization? A) It can facilitate coordination. B) It can help ensure that decisions are consistent with organizational objectives. C) It can give top-level managers the means to bring about needed major organizational changes. D) It permits greater flexibility.

Q: Which of the following is one of the four main arguments favoring centralization? A) It permits greater flexibility. B) Motivational research favors it. C) It can avoid the duplication of activities. D) It gives top management time to focus on critical issues by delegating routine issues to lower-level managers.

Q: Integration mechanisms are the A) formal division of the organization into subunits. B) mechanisms that enable each subunit to operate independently. C) mechanisms for coordinating subunits. D) location of decision-making responsibilities within a structure.

Q: A firm s _____ determines where in its hierarchy the decision-making power is concentrated. A) integrating mechanism B) vertical differentiation C) knowledge network D) horizontal differentiation

Q: Which of the following is most difficult for a leader? A) to change an established organizational culture B) to import an organizational culture into a new venture C) to create an organizational culture from scratch in a new venture D) to export an organizational culture

Q: _____ can be defined as the amount of time top management must devote to monitoring and evaluating subunits performance. A) Performance ambiguity B) The formal matrix C) The costs of control D) Differentiation

Q: In a company using _____, employees tend to control their own behavior, which reduces the need for direct supervision. A) bureaucratic controls B) cultural controls C) personal controls D) output controls

Q: _____ control is a type of control that tends to be most widely used in small firms. A) Personal B) Output C) Bureaucratic D) Cultural

Q: In a _____, all roles are viewed as integrating roles. A) worldwide area structure B) process structure C) worldwide product division structure D) global matrix structure

Q: The need for coordination is greatest in A) firms trying to pursue localization strategies. B) international firms. C) firms trying to profit from location and experience curve economies. D) domestic corporations.

Q: In a _____, individual managers belong to two hierarchies (a divisional hierarchy and an area hierarchy) and have two bosses (a divisional boss and an area boss). A) worldwide product division structure B) classic matrix structure C) worldwide area structure D) performance structure

Q: A _____ tends to be adopted by firms that are reasonably diversified and originally had domestic structures based on product divisions. A) worldwide product division structure B) global matrix structure C) worldwide area structure D) performance structure

Q: The _____ tends to be favored by firms with a low level of diversification whose domestic structures are based on functions. A) global matrix structure B) worldwide product division structure C) performance structure D) worldwide area structure

Q: In firms pursuing _____, some operating decisions are relatively centralized, while others are relatively decentralized. A) a global standardization strategy B) a transnational strategy C) a localization strategy D) an international strategy

Q: A firm pursuing _____ will have a strong incentive to decentralize decision making. A) a localization strategy B) a transnational strategy C) a global standardization strategy D) an international strategy

Q: _____ gives top-level managers the power and authority to be able to bring about needed major organizational changes. A) Personal control B) Decentralization C) Bureaucratic control D) Centralization

Q: By centralizing decision making, a firm A) allows managers to respond to environmental changes more quickly. B) runs the risk of not being able to respond to environmental changes quickly. C) can avoid the duplication of activities that occurs when similar activities are carried on by various subunits within the organization. D) often has issues with duplication of activities that occurs when similar activities are carried on by various subunits within the organization.

Q: _____ are the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits. A) Cultural controls B) Control systems C) Output controls D) Incentives

Q: Organizational structure includes several elements. Which of the following is one of them? A) The establishment of integrating mechanisms to coordinate the activities of subunits. B) The horizontal decision making that occurs daily, for example, on the plant floor to improve operations. C) The manner in which decisions are made and work is performed by individuals. D) The informal division of the organization into cultural groups.

Q: A firm s organizational culture refers to the A) norms and value systems that are shared among the employees of an organization. B) formal organizational structure of the company. C) control systems and incentives in place. D) human resources component.

Q: What are the basic principles for successful organizational change?

Q: Explain the five reasons a firm should decentralize its decision making.

Q: Why should a firm centralize its decision making?

Q: A firm s organizational architecture must be consistent with its strategy. ⊚ true ⊚ false

Q: Firm ABC is pursuing a localization strategy that is focused on local responsiveness. Therefore, the need for integration and coordination between self-contained country subsidiaries is low. ⊚ true ⊚ false

Q: An organizational culture can be strong but bad. ⊚ true ⊚ false

Q: Performance ambiguity lowers the cost of control. ⊚ true ⊚ false

Q: Direct contact between subunit managers is the simplest integrating mechanism. ⊚ true ⊚ false

Q: It is difficult to ascertain accountability in the global matrix structure. ⊚ true ⊚ false

Q: The worldwide product division structure may create a lack of local responsiveness. ⊚ true ⊚ false

Q: The choice between centralization and decentralization is absolute. ⊚ true ⊚ false

Q: Organizational structure refers to the totality of a firm s organization. ⊚ true ⊚ false

Q: To unfreeze the established culture of an organization, the company A) must take bold steps such as shaking up the management structure in order to implement change. B) is best served by taking incremental steps. C) should employ the existing structural organization to integrate changes. D) implement a rewards or incentive program.

Q: Because of inertia forces, _____ is often no change. A) big bang change B) cultural change C) shock therapy change D) incremental change

Q: Which of the following is a required step for implementing organizational change? A) Physically move the organization to a new state. B) Keep the organizational structure. C) Refreeze the organizational structure. D) Slowly, through incremental changes, rearrange the organizational structure.

Q: Firms pursuing _____ strategyare more centralized than enterprises pursuing a localization or international strategy. A) a localization B) an international C) a global standardization D) a transnational

Q: Firms pursuing _____ strategy have a low need for coordination between subunits. A) a global standardization B) a localization C) A transnational D) an international

Q: Firms pursuing _____ attempt to create value by transferring core competencies from home to foreign subsidiaries. A) a localization strategy B) an international strategy C) a transnational strategy D) a global strategy

Q: All of the following are strategies that multinational firms pursue except a ________ strategy. A) localization B) domestic C) transnational D) global

Q: Which of the following is a disadvantage of a worldwide area structure? A) Firms that use this structure tend to have a high degree of diversification. B) Decision making is centralized and subsidiaries cannot customize to local marketing needs. C) The structure encourages fragmentation of the organization into highly autonomous entities. D) It does not facilitate local responsiveness.

Q: _____ exists when the causes of a subunit's poor performance are not clear. A) Performance ambiguity B) Vertical differentiation C) Output controls D) Horizontal differentiation

Q: _____ is achieved by comparing actual performance against targets and intervening selectively to take corrective action. A) Personal control B) Cultural control C) Bureaucratic control D) Output control

Q: When the need to integrate subunits is very high and complex, firms may A) use direct contact between subunit managers. B) give a person in each subunit responsibility for coordinating with another subunit on a regular basis. C) institute a matrix structure, in which all roles are viewed as integrating roles. D) use temporary or permanent teams composed of individuals from the subunits that need to achieve coordination.

Q: In the _____, the philosophy is that responsibility for operating decisions pertaining to a particular product should be shared by the product division and the various areas of the firm. A) worldwide product division structure B) classic global matrix structure C) worldwide area structure D) knowledge network structure

Q: In Firm A, each division is a self-contained, largely autonomous entity with full responsibility for its own value creation activities. What type of structure does Firm A employ? A) worldwide product division structure B) global matrix structure C) worldwide area structure D) knowledge network structure

Q: The establishment of integrating mechanisms that coordinate subunits is a dimension of A) horizontal differentiation. B) organizational culture. C) vertical differentiation. D) organizational structure.

Q: Which of the following is a potential drawback of the worldwide area structure? A) This structure discourages division of the organization into autonomous entities. B) This structure makes it difficult to decentralize decisions regarding operations authority. C) This structure makes it difficult to realize location and experience curve economies. D) This structure reduces local responsiveness.