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10-1
Module 10 Organizational Design and Control Answer Key
True / False Questions
1.
A company's organizational structure helps to determine where formal power and authority
will be located within the organization.
2.
Organizational structure deals with how an international business should be organized to
ensure that its worldwide business activities are integrated in an efficient and effective
manner.
10-2
Topic: Overview of Organizational Structure and Design
3.
An evolving structure for an international organization over time is normal, as the
company's involvement in foreign markets increases over time.
4.
Changes in an international company's strategy may require changes in the organization's
design, but not the reverse.
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5.
Two of the concerns that management faces in designing the organizational structure for
an international company are (1) finding the most effective way to take advantage of
geographic differences, and (2) coordinating the activities of departments to enable the
firm to meet its overall objectives.
6.
The international division is a division in the organization that is responsible for all
nonhome country activities and reports to the domestic division.
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7.
Most companies establish worldwide organizations based on product, region, function, or
customer classes.
8.
Organization by product is most favored by global companies because this type of
organization guarantees the firm is a global company.
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9.
The international product structure eliminates the duplication of product and area
specialists.
10.
Both multinational and global companies use regionalized organizations.
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11.
Production coordination poses difficult problems in many regionalized organizations, which
has led many companies to assign many specialized product managers who have line
authority.
12.
Few international companies are organized by function at the top level.
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13.
A structure organized by more than one dimension at the top level is a matrix
organization.
14.
Hybrid organizations are often the result of a regionally organized company having
introduced a new and different product from what the regionally organized form is
accustomed to handling.
10-8
15.
In a typical matrix organization based on area and product dimensions, country managers
will be responsible to both the area managers and the product line managers.
16.
An organization in which top-level divisions are required to heed input from a staff
composed of experts of another organizational dimension in an attempt to avoid the
double-reporting difficulty of a matrix organization but still mesh two or more dimensions
is called a hybrid organization.
10-9
Topic: Forms Available for Structuring International Companies
17.
The matrix overlay organizational form attempts to eliminate some of the problems of the
matrix organization.
18.
Strategic business units are an organizational form in which geographic divisions have
been defined as though they were distinct, independent businesses.
10-10
19.
The rapidly changing business environment caused by increased global competition,
customer preference for custom-made rather than mass-produced products, and faster
technological change is pressuring companies to make greater use of global product
structures.
20.
According to the text, an organization that coordinates economic activity to deliver value to
customers using resources outside its traditional boundaries is an integrated corporation.
10-11
21.
Advantages of the virtual corporation concept include that it allows a company to build
competence from the ground up and to increase management's control over the
corporation's activities.
22.
The horizontal organization has been characterized as antiorganization because its
designers try to remove the constraints imposed by the conventional organizational
structure.
10-12
23.
According to the text, every successful company uses procedures to put its plans into
effect, evaluate the plans' effectiveness, and make desirable corrections.
24.
Decisions may be made at parent company headquarters, at the subsidiary headquarters,
or with the cooperation of both.
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25.
In a firm without a global product policy, the preference of the operations management
people in the home office has always been to localize the product, or at least the
production process, in as many overseas plants as possible.
26.
In larger, older organizations more decisions are made at the subsidiaries.
10-14
27.
In some cases, an international company legally can keep more profit after taxes by
allocating work and prices.
28.
All the reasons for making decisions either at IC headquarters, at 100-percent-owned
subsidiary headquarters, or cooperatively do not apply in joint venture situations.
10-15
29.
With less than 50 percent of the voting stock, or even with no voting stock, an IC can still
have control.
30.
For controls to be effective, all operating units of an IC must provide headquarters with
timely, accurate, and complete reports, including those dealing with financial,
technological, market opportunity, and political and economic information.
Multiple Choice Questions
10-16
31.
To facilitate Kraft's goal of enhancing growth prospects within developing-country
markets, between 2006 and 2012 the company
32.
When Kraft's earlier efforts to achieve continued growth and efficiencies were hindered, in
2012 it initiated a major reorganization that included
10-17
33.
Which of the following is not true about organizational structure?
10-18
34.
Organizational design
10-19
35.
Regarding an IC's structures and systems
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36.
Regarding an IC's structure,
