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Indicate whether the statement is true or false.
1. Global businesses that use a functional structure usually have a narrow product line.
a.
True
b.
False
2. The reason why some organizations reject a functional organizational structure is because they believe it
renders them unable to respond to environmental changes that require coordination between functional areas,
and because it offers each employee a restricted view of the organization's primary goal.
a.
True
b.
False
3. A market structure is a particular kind of divisional structure that groups products into separate divisions
according to the needs of different customers.
a.
True
b.
False
4. The organizational structure that results from combining functional and divisional structures is called a
geographic region structure.
a.
True
b.
False
5. Under a matrix structure, the functional managers and the divisional managers have equal authority within the
organization.
a.
True
b.
False
6. North American Operations, GM Acceptance Corporation, International Operations, and Hughes Electronics
are some of the subsidiaries of General Motors.
a.
True
b.
False
7. A global defense contractor needs deep functional skills as well as the ability to coordinate across the
functions of each contract or project. For this example, the organizational structure that would best suit their
needs would be a matrix structure.
a.
True
b.
False
8. According to C.K. Prahalad, stateless corporations represent the third stage of globalization.
a.
True
b.
False
9. An international division is advantageous because it allows global businesses to concentrate all international
efforts and expertise in one location.
a.
True
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b.
False
10. In the final stage of globalization, global companies produce goods in one country and export them to other
countries.
a.
True
b.
False
11. A market structure is also called area structure.
a.
True
b.
False
12. According to Carol Bartz, former CEO of Yahoo!, organizational structure can sometimes get in the way of
innovation.
a.
True
b.
False
13. The first step a domestic firm takes when entering an international arena is usually to create an international
division.
a.
True
b.
False
14. The primary advantage of the divisional structure is that it has very low operating and managing costs.
a.
True
b.
False
15. Global businesses with a hybrid structure are said to be organized by more than one dimension at the top
level.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
16. There are typically _____ organizational structures for global business.
a.
two
b.
three
c.
four
d.
five
e.
six
17. Global businesses with a narrow product line or a highly integrated product mix, such as aircraft
manufacturers or oil and gas firms typically use a(n) _____ organizational structure.
a.
functional
b.
product
c.
geographical region
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d.
matrix
e.
hybrid
18. The initial step toward globalization is ______.
a.
domestication
b.
creating a statelessness
c.
creating a wholly owned subsidiary
d.
exporting
e.
developing foreign manufacturing base through joint venture
19. C.K. Prahalad would say that Chinese computer manufacturer Lenovo is in which stage of globalization?
a.
First
b.
Second
c.
Third
d.
Fourth
e.
Fifth
20. A market structure is also sometimes called ______ structure.
a.
functional
b.
product
c.
geographical region
d.
customer
e.
hybrid
21. All of the following are advantages of the matrix structure EXCEPT that it _____.
a.
allows the company to meet multiple demands from the environment
b.
facilitates innovation and creativity
c.
permits the company to allocate resources flexibly
d.
rarely allows employees the chance to acquire functional skills
e.
fosters cooperation among employees with different functional expertise
22. At IBM, there are five divisions: Global Technology Services, Global Business Services, Software, Systems
and Technology, and Global Financing. IBM utilizes a _____ structure.
a.
matrix
b.
product
c.
geographical region
d.
market
e.
hybrid
23. Some companies are global and so well integrated into the countries where they have a presence, that it is
difficult, if not impossible, to identify one country as the home country for these corporations. such companies
are called _____.
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a.
domestic
b.
stateless
c.
divided
d.
hybrid
e.
matrix-based
24. Of the following, which is NOT an advantage of the functional structure?
a.
It promotes economies of scale.
b.
It can help the organization to acquire the latest and most scale-intensive machinery.
c.
It promotes in-depth skill development of employees.
d.
It ensures that organizations will engage in socially responsible efforts.
e.
It encourages collaboration, efficiency, and quality within the function.
25. Limited Clothing Inc. has a corporate headquarters with three divisions: North American Division, European
Division, and Asia Division. Limited Clothing Inc. has a _____ structure.
a.
global
b.
multinational
c.
geographical region
d.
continental
e.
hybrid
26. An area structure is one where an organization:
a.
groups people together because they hold similar positions in a company, perform a similar set of
tasks, or use the same kind of skills.
b.
groups products into separate divisions according to their similarities or differences.
c.
groups products into separate divisions according to the needs of the different geographical regions
the company serves.
d.
groups products into separate divisions according to the needs of different customers.
e.
is said to be organized by more than one dimension at the top level.
27. While many major corporations have a global presence, stateless corporations are different because they
_____.
a.
have no board of directors
b.
are socially responsible
c.
are more concerned with human rights
d.
are usually more profitable
e.
attempt to transcend nationality altogether
28. According to C.K. Prahalad, a global firm is in the third stage of globalization when it _____.
a.
sets up operations in other countries
b.
produces goods in one country and exports them to other countries
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c.
establishes a foreign subsidiary to handle the exports from its home country
d.
locates its core corporate functions and top executives in different countries
e.
is headquartered in its home country
29. According to the text, ConocoPhillips placed their ethics office in which part of the organization structure?
a.
Research and development department
b.
Manufacturing department
c.
Maintenance department
d.
Audit and finance department
e.
Human resources department
30. A defense contractor may need deep functional skills as well as the ability to coordinate across the functions
for each contract or project. This contractor ought to use a _____ structure.
a.
functional
b.
product
c.
geographical region
d.
market
e.
matrix
31. C.K. Prahalad postulates that stateless corporations represent the _____ stage of globalization.
a.
first
b.
second
c.
third
d.
fourth
e.
fifth
32. A(n) ______ is a tool that people use to coordinate their actions to obtain something they seek or value.
a.
union
b.
subunit
c.
stateless corporation
d.
structure
e.
organization
33. Of the following, which is NOT an advantage of an international division?
a.
It permits global businesses to concentrate all international efforts in one location.
b.
If the international division is at the same organizational level as domestic operations, it signals to
international customers their importance to the company.
c.
It ensures that the company will be more profitable.
d.
It fosters a global mindset in the people working within the division.
e.
It facilitates the key process of designing products that cater to local tastes.
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34. A special case of the divisional structure where products are grouped into separate divisions according to
their similarities or differences is called a _____ structure.
a.
matrix
b.
product
c.
geographical region
d.
divisional
e.
hybrid
35. A global business is organized into four groups: Manufacturing, Research and Development, Finance, and
Sales. This company uses a(n) ______ structure.
a.
geographic region
b.
functional
c.
area
d.
market
e.
product
36. Lenovo, the Chinese computer manufacturer, is a corporation where it is difficult to identify one country as
the home country. Lenovo can be described as a _____ corporation.
a.
domesticated
b.
stateless
c.
divided
d.
hybrid
e.
matrix
37. At ExxonMobil, divisions include Upstream, Downstream, and Chemical. The Upstream division includes
exploration, development, production, and gas and power marketing. The Downstream division includes
refining and supply, fuels and marketing, and lubricants. ExxonMobil utilizes a _____ structure.
a.
matrix
b.
product
c.
geographical region
d.
market
e.
hybrid
38. A basic problem of the _____ structure is it is difficult to determine the responsibility and authority
relationships between the functional and divisional managers.
a.
divisional
b.
functional
c.
matrix
d.
product
e.
hybrid
39. Of the following, which is NOT a disadvantage of an international division?
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a.
Managers in the international division may feel like “second class” citizens.
b.
Designing products with both domestic and international appeal may be difficult.
c.
Core competencies and knowledge may not be shared.
d.
It may be difficult to capture learning-curve savings.
e.
It fosters a global mindset in the people working within the division.
40. A business subunit that consists of a collection of functions or departments that share responsibility for
producing a particular product or service is known as a(n) _____.
a.
partition
b.
division
c.
structure
d.
union
e.
formation
41. A market structure is one where an organization:
a.
groups people together because they hold similar positions in a company, perform a similar set of
tasks, or use the same kind of skills.
b.
groups products into separate divisions according to their similarities or differences.
c.
groups products into separate divisions according to the needs of the different geographical regions
the company serves.
d.
groups products into separate divisions according to the needs of different customers.
e.
is said to be organized by more than one dimension at the top level.
42. Of the following, which is NOT listed in the text as a purpose of organizational structure?
a.
It allows the members of the organization to perform a wide variety of activities based upon a
division of labor that leads to specialization of functions.
b.
It permits the organization members the coordination of their activities.
c.
It permits the organization members to create hierarchical supervision.
d.
It determines the boundaries of the organization and regulates its interfaces with the environment and
its interactions with other organizations.
e.
It allows the members of an organization to develop a cohesive company culture.
43. CEMEX has three divisions: (1) North America; (2) South America and the Caribbean; and (3) Europe,
Asia, and the Middle East. CEMEX has a _____ structure.
a.
continental
b.
geographical region
c.
global
d.
hybrid
e.
multinational
44. According to C.K. Prahalad, the first stage of globalization is _____.
a.
when global firms set up operations in other countries
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b.
when companies produce goods in one country and export them to other countries
c.
when global businesses establish foreign subsidiaries to handle the exports from their home countries
d.
when stateless corporations locate their core corporate functions and top executives in different
countries
e.
when multinational companies headquarter in their home country
45. A product structure is one where an organization:
a.
groups people together because they hold similar positions in a company, perform a similar set of
tasks, or use the same kind of skills.
b.
groups products into separate divisions according to their similarities or differences.
c.
groups products into separate divisions according to the needs of the different geographical regions
the company serves.
d.
groups products into separate divisions according to the needs of different customers.
e.
is said to be organized by more than one dimension at the top level.
Enter the appropriate word(s) to complete the statement.
46. The geographic region structure is sometimes referred to as _________ structure.
47. _________ is an organizational structure that groups people together because they hold similar positions in a
company, perform a similar set of tasks, or use the same kind of skills.
48. ________ is a particular kind of divisional structure that groups products into separate divisions according to
their similarities or differences.
49. A(n) ______ is a tool that people use to coordinate their actions to obtain something they seek or value.
50. Also called customer structure or customer class structure, a ______ is a particular kind of divisional
structure that groups products into separate divisions according to the needs of different customers.
51. A(n) ________ refers to one type of organizational structure in which functions are grouped together to
serve the needs of products, markets, or geographical regions.
52. A(n) ______ is a business subunit that consists of a collection of functions or departments that share
responsibility for producing a particular product or service.
53. The formal system of task and authority relationships that control how people coordinate their actions and
use resources to achieve organizational goals is referred to as the _______.
54. A(n) _______ is a new phase in the evolution of the multinational corporation, where work is sourced
wherever it is most efficient and the corporation transcends nationality altogether.
55. ______ structures are used only by companies that depend upon rapid product development for their
survival.
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Scenario – Windmere Technologies
Windmere Technologies has been in operation since 1984. Today, Windmere is actually considered to be a
globally-based firm with corporate offices in thirteen foreign nations. There is not one office of this company
with higher authority or more decision making power than any other of the thirteen in operation. Windmere
Technologies is recognized as a business leader in all thirteen nations in which it has corporate
offices. According to the CEO of the company, “Windmere considers the world to be its home base.” The
management has done a good job of creating its organizational structure where people are grouped
simultaneously by function and by division.
Windmere is best known for its work in creating alternative energy sources. As this is of vital concern to all
nations of the world today, Windmere’s ideas and products are welcomed by all nations. This business takes in
revenues in excess of $8 billion per year and expects it to substantially increase in the future.
56. Which one of the following best describes Windmere Technologies claim that the world is its home base?
a.
A hybrid structure
b.
A functional structure
c.
A divisional structure
d.
A stateless corporation
e.
A geographical regional structure
Scenario – Mirkhani Mining Supplies
Mirkhani Mining Supplies is the industry leader in the production of underground mining equipment. The
company has its headquarters in South Africa and has been in operation there since its inception in
1987. Mirkhani is known worldwide for the safety features it incorporates in its equipment. This company
conducts its operations with the safety of the underground miner as its guiding objective.
Mirkhani Mining was recently called in to respond to the latest mine accident in China. Mirkhani not only
provides safe mining equipment, it also makes superior mine rescue equipment. The company will be receiving
a global award for freely rendering the use of its rescue equipment to China during a mine collapse. Mirkhani
Mining Supplies will be recognized around the globe as saving the lives of forty underground miners in
China. The company states, “Saving those lives is better than receiving a billion dollars for mining machinery.”
57. All of the following characteristics would be seen if Mirkhani Mining Supplies was considered a stateless
corporation except which one?
a.
It is almost impossible to identify the home country of the company
b.
It requires the company to maintain its own individuality within the host country
c.
It represents a new phase in the evolution of multinational companies
d.
It sends work to wherever it is performed most efficiently
e.
It allows the company to transcend international boundaries without difficulty
Scenario – Windmere Technologies
Windmere Technologies has been in operation since 1984. Today, Windmere is actually considered to be a
globally-based firm with corporate offices in thirteen foreign nations. There is not one office of this company
with higher authority or more decision making power than any other of the thirteen in operation. Windmere
Technologies is recognized as a business leader in all thirteen nations in which it has corporate
offices. According to the CEO of the company, “Windmere considers the world to be its home base.” The
management has done a good job of creating its organizational structure where people are grouped
simultaneously by function and by division.
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Windmere is best known for its work in creating alternative energy sources. As this is of vital concern to all
nations of the world today, Windmere’s ideas and products are welcomed by all nations. This business takes in
revenues in excess of $8 billion per year and expects it to substantially increase in the future.
58. Which one of the following would Windmere Technologies not claim as a purpose of its organizational
structure?
a.
Serves as a barrier to interactions with other organizations
b.
Determines the boundaries of the organization
c.
Regulates its interactions with the environment
d.
Utilizes a division of labor system that leads to departmentalization
e.
Integrates mechanisms such as formal rules and procedures
59. Which one of the following organizational structures best identifies the one currently used by Windmere
Technologies?
a.
Functional structure
b.
Matrix structure
c.
Divisional structure
d.
Market structure
e.
Geographical region structure
Scenario – Mirkhani Mining Supplies
Mirkhani Mining Supplies is the industry leader in the production of underground mining equipment. The
company has its headquarters in South Africa and has been in operation there since its inception in
1987. Mirkhani is known worldwide for the safety features it incorporates in its equipment. This company
conducts its operations with the safety of the underground miner as its guiding objective.
Mirkhani Mining was recently called in to respond to the latest mine accident in China. Mirkhani not only
provides safe mining equipment, it also makes superior mine rescue equipment. The company will be receiving
a global award for freely rendering the use of its rescue equipment to China during a mine collapse. Mirkhani
Mining Supplies will be recognized around the globe as saving the lives of forty underground miners in
China. The company states, “Saving those lives is better than receiving a billion dollars for mining machinery.”
60. As the growth of Mirkhani Mining Supplies has taken place, which one of the following is least likely to be
a step it has taken in its international advancement?
a.
Development of an export division
b.
Collaboration between the sales department and the export division
c.
Use of advanced marketing techniques for its products within its home country of
South Africa
d.
Adaptation of its products to better fit the needs of its customers
e.
Development of an international division
61. Which of the following structure type best identifies the structure Mirkhani Mining Supplies would be using
if it grouped its products and services into separate divisions based on the needs of different areas served by the
company?
a.
Matrix structure
b.
Hybrid structure
c.
Globalized structure
d.
Market structure
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e.
Geographical region structure
62. “For a global business, organizational structure is not important.” Do you agree with this statement? Defend
your position.
63. Explain the advantages and disadvantages of the divisional structure.
64. Differentiate between functional and divisional organizational structures. Provide an example of each.
65. Are export departments important for global businesses? How do they differ from international divisions?
Explain.
66. How are hybrid structures different from matrix structures? Explain.
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Answer Key
1. True
2. True
3. True
4. False
5. True
6. False
7. True
8. False
9. True
10. False
11. False
12. True
13. False
14. False
15. True
16. c
17. a
18. d
19. d
20. d
21. d
22. b
23. b
24. d
25. c
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26. c
27. e
28. a
29. d
30. e
31. d
32. e
33. c
34. b
35. b
36. b
37. b
38. c
39. e
40. b
41. d
42. e
43. b
44. b
45. b
46. area
47. Functional structure
48. Product structure
49. organization
50. market structure
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51. divisional structure
52. division
53. organizational structure
54. stateless corporation
55. Matrix
56. d
57. b
58. a
59. b
60. c
61. e
62. Student answers will vary.
63. Student answers will vary.
64. Student answers will vary.
65. Student answers will vary.
66. Student answers will vary.
