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Chapter 4
Developing a Transnational Organization:
Managing Integration, Responsiveness, and Flexibility
True/ False
1. Installing a matrix structure is the most effective way to transition from an organization
based on multiple regional divisions to one able to manage both geographic and product
diversity.
2. Companies that pursue a multinational strategy are inclined to adopt the decentralized
federation organizational model.
3. In companies with the decentralized federation model, the degree of control and coordination
exercised by the headquarters is greater than it is in companies with the coordinated
federation organizational model.
4. MNEs that adopted a centralized hub organizational model were able to develop competitive
advantage through their ability to transfer knowledge and expertise and adapt it to markets
worldwide.
5. In the transnational organization, capable managers situated in the national subsidiaries act as
the primary source for sensing and analysing worldwide opportunities and threats.
6. In a transnational organization, knowledge is developed at the headquarters and transferred to
foreign units.
7. Summit Corp. is transitioning from a multinational strategy to a transnational strategy. It
would probably be more effective and less costly if the company commenced its
accompanying organizational transition by focusing on changing employees’ attitudes and
mentalities, than it would be if it led its efforts by engaging in structural change.
8. The key strategic capability associated with the coordinated federation organizational model
is global-scale efficiency.
9. A transnational organization integrates its dispersed assets, resources, and capabilities
through flexible processes involving centralization, formalization and rationalization.
10. In a transnational organization, the asset and capability configuration can be described as
dispersed, specialized and interdependent.
11. The key capabilities of national responsiveness, learning and transfer of home country
knowledge abroad, and global-scale efficiency are mutually exclusive. That is, having one
capability inhibits the concurrent possession of others.
12. The transnational organization recognizes that there is a single static management model
which it can apply universally.
13. Examples of micro-structural tools include cross-unit teams, task forces, or committees.
14. An organization’s corporate values and shared beliefs do not influence the way its members
act.
Multiple Choice
15. Which of the following strategy-structure combinations cannot be paired?
a. Coordinated federation and multinational strategy.
b. Decentralized federation and international strategy.
c. Centralized hub and global strategy.
d. Integrated network and transnational strategy.
16. Which of the following is not a core characteristic of the decentralized federation structure?
a. Most key assets and resources are decentralized.
b. Subsidiaries are highly autonomous.
c. Corporate management regards subsidiaries as largely independent national operations.
d. Reporting and oversight conflicts prevail.
17. Which of the following is not a core characteristic of the coordinated federation structure?
a. Most assets and resources are decentralized but well controlled by the headquarters.
b. Subsidiaries are regarded as key sources of knowledge and expertise.
c. Subsidiary control exercised by the headquarters is usually quite formal and rigorous.
d. Corporate managers tend to regard offshore subsidiaries as extensions of domestic
operations.
18. Which of the following is not a characteristic of the companies with centralized hub
structure?
a. Most of the key assets and resources are concentrated in the home country.
b. Tight strategic and operational controls are maintained over the subsidiaries.
c. Most of the manufacturing and product development is executed by the subsidiaries.
d. Corporate management regards its subsidiaries as delivery pipelines to the global market.
19. Which of the following statements regarding knowledge diffusion is correct?
a. In a decentralized federation, knowledge is developed in national subsidiaries and diffused
throughout the organization
b. In a centralized hub, knowledge is developed and retained at the center.
c. In a coordinated federation, knowledge is developed at the center and transferred to overseas
units for local adaptation.
d. Knowledge diffusion is independent of structure, such that knowledge diffuses in a quite
similar manner in all organizational structures.
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20. Which of the following is not characteristic of companies with a transnational strategy?
a. Multiple diverse perspectives are developed and legitimized.
b. Physical assets and management capabilities are internationally distributed, yet
interdependent.
c. Integrative processes are flexible and robust.
d. Knowledge is developed centrally and adapted locally.
21. Isatis Co. has successfully transitioned from a global strategy to a transnational strategy.
Which of the following describes the likely configuration of assets and capabilities that now
most likely prevails at Isatis?
a. Decentralized and nationally self-sufficient.
b. Centralized and globally scaled.
c. Dispersed, specialized, and interdependent.
d. Core competencies are centralized; other assets and capabilities are decentralized.
22. Which of the following describes the preferred sequencing of changes associated with
implementing the typically more effective emerging change process model?
a. Change in individual attitudes and mentalities; then, change in interpersonal relationships and
processes; and finally, change in the formal structure and responsibilities
b. Change in the formal structure and responsibilities; then, change in interpersonal
relationships and processes; and finally, change in individual attitudes and mentalities
c. Change in interpersonal relationships and processes; then, change in the formal structure and
responsibilities; and finally, change in individual attitudes and mentalities.
d. Change in individual attitudes and mentalities; then, change in the formal structure and
responsibilities; and finally, change in interpersonal relationships and processes
23. Which of the following strategic approach and strategic capabilities cannot be paired?
a. Transnational strategy and national responsiveness
b. Transnational strategy and learning
c. Transnational strategy and global efficiency
d. Global strategy and national responsiveness
Essay
24. The CEO of SemChem Co. was considering how to reorganize the company following the
management team’s decision to create four new product divisions, while maintaining
SemChem’s existing three regional divisions. A consultant has recommended a solution that
centers on driving the change by restructuring the organization around a matrix. Briefly
describe the matrix structure and discuss some practical difficulties associated with this
organizational structure?
25. Name and briefly describe three organizational characteristics that distinguish the
transnational organization from multinational, international or global organizations.
26. The CEO of AgiTec Co. has decided to transition his firm into a transnational organization.
What advice would you give to the company about a change process that could avoid the
undesirable outcomes that have often been associated with traditional processes of complex
organizational change?
27. What is the key lesson behind the metaphor that develops a transnational organization model
based on a framework related to anatomy, physiology, and psychology?
28. Briefly discuss the characteristics of the decentralized federation organizational model.
29. Briefly discuss the development and diffusion of knowledge in the decentralized federation,
the coordinated federation and the centralized hub, respectively.
30. Historically, many large Japanese companies used a centralized hub configuration. The 2011
earthquake in Japan resulted in a significant cost to Canon by inhibiting its production
process. In response, the CEO of Canon announced in the 2011 annual report that they will
have three headquarters, instead of one. These will be based in each of the US, Europe, and
Japan. What are the challenges that the company will face during this transition?
31. Describe why the formal structure is not able to capture and manage the complexity of the
strategic tasks facing most MNEs?
32. The implied distribution of roles and responsibilities requires the development of rather
sophisticated and subtle decision-making machinery based on three interdependent
management processes. Discuss the three interdependent management process.