49) 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.
50) 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.
51) Centralization
A) gives top management time to focus on critical issues by delegating more routine issues to
lower-level managers.
B) can give top-level managers the means to bring about needed major organizational changes by
concentrating power and authority in one individual or a management team.
C) permits greater flexibility because decisions do not have to be “referred up the hierarchy” unless
they are exceptional in nature.
D) can be used to establish relatively autonomous, self-contained subunits within an organization.
52) A firm that needs greater flexibility should choose ________ for its decision making.
A) horizontal differentiation
B) decentralization
C) localization strategy
D) control systems
53) 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.
54) 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
55) The emphasis on local responsiveness in firms pursuing a localization strategy creates strong
pressures for
A) centralizing all decisions regarding marketing, R&D, and human resource management.
B) decentralizing operating decisions to foreign subsidiaries.
C) centralizing all operating decisions.
D) global learning.
56) Global learning based on the multidirectional transfer of skills between subsidiaries and the
corporate center is a central feature of a firm pursuing ________ strategy.
A) a localization
B) a global standardization
C) a transnational
D) an international
57) Which of the following would be a typical responsibility of a product division in a worldwide
product divisional structure?
A) operating decisions
B) overall strategic development of the firm
C) financial control of the various divisions
D) decisions regarding legal issues
58) Which of the following statements is true about a product divisional structure?
A) In a product divisional structure, the responsibility for the financial control of the firm is
typically decentralized.
B) A product divisional structure tends to be organized on geography.
C) In a product divisional structure, each product division is set up as a self-contained, largely
autonomous entity with its own functions.
D) In a product divisional structure, the responsibility for operating decisions is typically
centralized.
59) Regardless of a firm’s domestic structure, its international division tends to be organized on
A) product.
B) geography.
C) people.
D) economy.
60) Which of the following is a problem that arises due to an international division structure?
A) In an international division structure, a firm’s international division tends to be organized on
products.
B) The heads of domestic functions are presumed to be able to represent the interests of all
countries to headquarters.
C) The heads of foreign subsidiaries are not given as much voice in the organization as the heads of
domestic functions or divisions.
D) The dual-hierarchy structure can lead to conflict and perpetual power struggles between the
areas and the product divisions.
61) In which of the following organizational structures are the domestic operations and foreign
operations isolated from each other leading to coordination problems?
A) global matrix structure
B) international division structure
C) worldwide product division structure
D) worldwide area structure
62) 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.
63) 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
64) ________ 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
65) The worldwide product division structure
A) is weak in local responsiveness.
B) inhibits the realization of location economies.
C) inhibits the realization of experience curve economies.
D) limits the transfer of core competencies between areas.
66) In the classic global matrix structure, horizontal differentiation proceeds along two
dimensions. These dimensions are
A) hierarchy and overall strategy.
B) target returns and sales potential.
C) marketing strategy and sales potential.
D) product division and geographic area.
67) 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.
68) 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.