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chapter 12
Indicate whether the statement is true or false.
1. The stakeholders of an MNE (employees and world governments) gain confidence in the global aspirations of the MNE
when the upper echelon of management consists largely of one nationality.
a.
True
b.
False
2. Formally, organizational charts specify the scope of responsibilities for various parties.
a.
True
b.
False
3. Transnational strategy aims to capture the best of both worlds by endeavoring to be both cost efficient and locally
responsive.
a.
True
b.
False
4. A hallmark of transnational multinational enterprises is a high degree of interdependence and extensive and bi-
directional flows of knowledge.
a.
True
b.
False
5. Formal structures are easier to observe and imitate than informal structures.
a.
True
b.
False
6. Global product division structure, which is the opposite of the geographic area structure, supports the transnational
strategy.
a.
True
b.
False
7. Tacit knowledge is non-codifiable, and its acquisition and transfer require hands-on practice.
a.
True
b.
False
8. The global standardization strategy maximizes local responsiveness.
a.
True
b.
False
9. Domestic and international competition share the pressure to reduce costs, but only domestic competition feels the
pressure for local responsiveness.
a.
True
b.
False
10. The positioning of the four strategic choices of multinational enterprises is not random. They develop from the
relatively simple international division through either geographic area or global product division structures.
a.
True
b.
False
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chapter 12
11. From a resource-based standpoint, a fundamental basis for competitive advantage is innovation-based firm
homogeneity.
a.
True
b.
False
12. Managers need to actively develop learning and innovation capabilities to leverage multinational presence.
a.
True
b.
False
13. A manager whose approach to knowledge management is to install a sophisticated information technology (IT)
infrastructure is one of the most valuable assets to knowledge management.
a.
True
b.
False
14. When Henry Ford experimented with marketing "world car" designs, he was widely successful.
a.
True
b.
False
15. Centralized research and development guarantees persistent heterogeneity in the solutions generated by a company.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
16. The two sets of pressures that multinational enterprises (MNEs) confront are _____.
a.
formal institutions and informal institutions
b.
cost reduction and local responsiveness
c.
liability of foreignness and investment risk
d.
explicit knowledge and tacit knowledge
17. Multinational enterprises appoint home-country nationals as the head of a foreign subsidiary because the home-
country nationals:
a.
create a fiefdom of their enterprise in the host-country.
b.
can deal effectively with two bosses without any major conflict.
c.
have an understanding of the informal workings of multinational enterprises.
d.
focus on implementing a localization strategy.
18. Frolik Foods Inc., a fast food franchise in the United States, opens a new outlet in Germany. The franchise develops
recipes in the U.S. and then transfers them to its outlets in Germany. Which of the following strategies is being used by
Frolik Foods?
a.
Localization strategy
b.
Home replication strategy
c.
Global standardization strategy
d.
Transnational strategy
19. Which of the following is a disadvantage of a global product division structure?
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chapter 12
a.
It encourages the fragmentation of the multinational enterprises into fiefdoms.
b.
It increases inefficient duplication in multiple countries.
c.
It results in the suffering of local responsiveness.
d.
It is typically used when firms initially expand abroad.
20. In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting
a transnational strategy?
a.
Knowledge is developed at the center and transferred to subsidiaries.
b.
Knowledge is developed and retained within each subsidiary.
c.
Knowledge is mostly developed and retained at key locations.
d.
Knowledge is developed jointly and shared worldwide.
21. From a resource-based standpoint, a fundamental basis for competitive advantage is innovation-based firm
heterogeneity. _____ virtually guarantees that there will be persistent heterogeneity in the solutions generated.
a.
Adding more researchers in centralized R&D units
b.
Decentralized R&D work performed by different teams around the world
c.
Nationalizing R&D functions
d.
Increased interdependence between the headquarters and foreign subsidiaries of a company
22. Which of the following statements is true of a geographic area structure?
a.
It is typically used when firms initially expand abroad.
b.
It reduces inefficient duplication in multiple countries.
c.
It encourages the fragmentation of the multinational enterprises into fiefdoms.
d.
It assigns global responsibilities to each product division across different countries.
23. _______ is an organizational structure often used to alleviate the disadvantages associated with both geographic area
and global product division structures, particularly when adopting a transnational strategy.
a.
Geographic structure area
b.
Subsidiary initiative
c.
Global matrix
d.
Global product division
24. TrinkCan Inc., a soft drink company in Wales, establishes new branches in England, Australia, and the United States.
To minimize its costs, the company uses similar packaging, distribution, and promotion across all the countries.
According to the integration-responsiveness framework, which of the following strategies is used by TrinkCan?
a.
Home replication strategy
b.
Localization strategy
c.
Transnational strategy
d.
Global standardization strategy
25. Which of the following is true of a localization strategy?
a.
It has low costs due to duplication of efforts in multiple countries.
b.
It promotes diffusion of innovation in multiple ways.
c.
It involves the development and distribution of standardized products worldwide.
d.
It is effective when pressures for cost reductions are low.
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chapter 12
26. Which of the following is a disadvantage of adopting a global standardization strategy?
a.
It is organizationally complex.
b.
It leads to local autonomy.
c.
It sacrifices local responsiveness.
d.
It is very difficult to implement.
27. Which of the following is an advantage of adopting a home replication strategy?
a.
It is relatively easy to implement.
b.
It focuses on host country.
c.
It is effective when the pressures for cost reductions are low.
d.
It encourages the fragmentation of a company into fiefdoms.
28. _____ can be defined as the structures, processes, and systems that actively develop, leverage, and transfer knowledge.
a.
Knowledge engineering
b.
Knowledge management
c.
Global standardization
d.
Global product division
29. In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting
a localization strategy?
a.
Knowledge is developed at the center and transferred to subsidiaries.
b.
Knowledge is developed and retained within each subsidiary.
c.
Knowledge is mostly developed and retained at the center and key locations.
d.
Knowledge is developed jointly and shared worldwide.
30. Which of the following is an effect of adopting a local responsiveness strategy?
a.
Standardized products are developed and distributed.
b.
Home-country-based competencies are duplicated in foreign countries.
c.
Regulations on local products are loosened.
d.
Costs of products and services are increased.
31. In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting
a global standardization strategy?
a.
Knowledge is developed at the center and transferred to the various subsidiaries.
b.
Knowledge is developed and retained within each subsidiary.
c.
Knowledge is mostly developed and retained at the center and key locations.
d.
Knowledge is developed jointly and shared worldwide.
32. In the context of strategizing, structuring, and learning around the world, an implication for savvy managers will be to:
a.
understand and be prepared to change the external rules of the game governing multinational enterprise
(MNE) management.
b.
develop learning and innovative capabilities to leverage multinational presence as an asset.
c.
focus on structuring the internal rules of the game for different strategies.
d.
develop the rules of the game and their transitions at both global and regional levels.
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33. The proactive and deliberate pursuit of new opportunities by a subsidiary to expand its scope of responsibility is
known as _____.
a.
Transnational growth
b.
Global standardization strategy
c.
Subsidiary initiative
d.
Opportunity pursuit
34. _____ means reacting to different consumer preferences and host-country demands.
a.
Global integration
b.
Global standardization
c.
Local responsiveness
d.
Home replication
35. Which of the following is a leading problem with the international division organizational structure?
a.
It encourages the fragmentation of the multinational enterprises into fiefdoms.
b.
It does not give sufficient voice to foreign subsidiary managers relative to the heads of domestic divisions.
c.
It treats each product division as a stand-alone entity with full worldwide responsibilities.
d.
It does not allow a firm to focus on its domestic activities because it serves as a silo whose activities are not
coordinated with the rest of the firm.
36. The business leader of a specific country (or a geographic region) is known as a(n) ______:
a.
International division
b.
Locality
c.
Regional executive
d.
Country manager
37. In the context of knowledge management, which of the following is true of multinational enterprises (MNEs) adopting
a home replication strategy?
a.
Knowledge is developed at the center and transferred to subsidiaries.
b.
Knowledge is developed and retained within each subsidiary.
c.
Knowledge is mostly developed and retained at the center and key locations.
d.
Knowledge is developed jointly and shared worldwide.
38. The global matrix structure supports the goal of the transnational strategy, but in practice it is often difficult to deliver
because:
a.
managers have to deal with two bosses who are often in conflict.
b.
managers have to deal with the pressures of both global integration and local responsiveness.
c.
the structure encourages fragmentation of multinational enterprises into fiefdoms.
d.
the structure increases inefficient duplication in multiple countries.
39. Asset Sports, a sports equipment manufacturing company based in India, specializes in cricket equipment. It
establishes a new manufacturing plant in Brazil that specializes in soccer equipment. Based on the integration-
responsiveness framework, the strategy adopted by Asset Sports is called a(n) _____.
a.
home replication strategy
b.
localization strategy
c.
transnational strategy
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chapter 12
d.
acquisition strategy
40. Burger Mart, a fast food franchise in the U.S. is famous for its unique recipes that are a combination of a variety of
spices. Their products are very popular in the U.S. They open a new outlet in Germany. They do not change their menu or
their recipes as their menu and products are already popular in the U.S. Based on the integration-responsiveness
framework, the strategy used by Burger Mart is a(n) _____.
a.
home replication strategy
b.
localization strategy
c.
transnational strategy
d.
acquisition strategy
41. Widget Corp., a manufacturing firm in Lithuania, exports its manufactured tools to Wales. To protect its domestic
firms, the Government of Wales imposes a 20 percent tax on the tools imported from Widget Corp. Therefore, Widget
Corp. is subject to:
a.
formal institutional frameworks erected by the host-country government.
b.
formal institutional frameworks erected by the home-country government.
c.
informal rules of the game erected by the host-country government.
d.
informal rules of the game erected by the home-country government.
42. Unlike a transnational strategy, a global standardization strategy involves:
a.
the development and transfer of knowledge from the center to the subsidiaries.
b.
the joint development and sharing of knowledge worldwide.
c.
the development and retention of knowledge at the center and key locations.
d.
the development and retention of knowledge within each subsidiary.
43. Which of the following statements is true of a global product division structure?
a.
It encourages the fragmentation of multinational enterprises into fiefdoms.
b.
It increases inefficient duplication in multiple countries.
c.
It is typically used when firms initially expand abroad.
d.
It is highly responsive to cost reduction pressures.
44. Multinational enterprises that engage in a _____ strategy promote global learning and diffusion of innovations in
multiple ways.
a.
transnational
b.
home replication
c.
localization
d.
global standardization
45. Altonland Inc., a pharmaceutical company based in the United States, generally appoints a U.S. national as the head of
its foreign subsidiaries for the first few years after a subsidiary is established. The company has been following this
practice from the time it started its overseas operations. The given scenario illustrates:
a.
a global standardization strategy.
b.
the formal rules of the game.
c.
the informal rules of the game.
d.
a localization strategy.
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chapter 12
46. Which of the following is a disadvantage of adopting a home replication strategy?
a.
It often lacks local responsiveness.
b.
It is organizationally complex and difficult to implement.
c.
It focuses on the demands made by the foreign countries.
d.
It involves high costs due to duplication efforts in multiple countries than localization strategy.
47. What did Theodore Levitt argue in his 1983 article "The Globalization of Markets"?
a.
Worldwide consumer tastes are converging
b.
Local responsiveness is increasingly necessary
c.
Firms should stay domestic
d.
Globalization is reducing the need for MNEs
48. In the context of organizational cultures, which of the following is true of a wolf culture?
a.
It centers on relentless pursuit with highly motivated employees working overtime.
b.
It focuses on appointing a host-country national as the head of a foreign subsidiary.
c.
It is the proactive and deliberate pursuit of new opportunities by a subsidiary to expand its scope of
responsibility.
d.
It centers on an organizational structure that assigns global responsibilities.
49. Which of the following is true of the business leader of a specific country (or a geographic region)?
a.
They carry a great deal of weight in their geographic area.
b.
They are less influential than domestic managers.
c.
No geographic area is stand-alone.
d.
They tend to decrease local responsiveness overall.
50. Companies following a localization strategy differ from companies following a home replication strategy in that the
companies following a localization strategy:
a.
develop and retain knowledge within each subsidiary.
b.
develop and retain knowledge at the center and key locations.
c.
develop knowledge at the center and transfer it to subsidiaries.
d.
develop knowledge and share it worldwide.
51. Explain the reciprocal relationship between multinational strategy and structure.
52. Explain how organizational strategies differ in terms of knowledge management.
53. Explain the three actions that savvy managers should implicate to make a multinational firm successful.
54. Explain the global matrix structure and its advantages and disadvantages.
55. Explain the two sets of pressures confronted by multinational enterprises.
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Answer Key
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chapter 12
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chapter 12
Name:
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chapter 12
