Difficulty: 1 Easy
Learning Objective: 14-04 Discuss what is required for an international business to change its organization so that it better
matches its strategy.
Topic: Organizational Change
40.
It is important to realize that organizational change will occur regardless of
the commitment of senior managers to it.
FALSE
It is important to realize that change will not occur unless senior managers
are committed to it. Senior managers must clearly articulate the need for
change so employees understand both why it is being pursued and the
benefits that will flow from successful change.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Discuss what is required for an international business to change its organization so that it better
matches its strategy.
Topic: Organizational Change
Multiple Choice Questions
41.
Organizational structure means all of the following, EXCEPT:
A.
the establishment of integrating mechanisms to coordinate the activities
of subunits.
B.
the location of decision-making responsibilities with a structure.
C.
the manner in which decisions are made and work is performed by
individuals.
D.
the formal division of the organization into subunits such as product
divisions and functions.
By organizational structure refers to three things: First, the formal division
of the organization into subunits; second, the location of decision-making
responsibilities within that structure; and third, the establishment of
integrating mechanisms to coordinate the activities of subunits.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain what is meant by organization architecture.
Topic: Organizational Architecture
42.
Which of the following terms refers to the metrics used to measure the
performance of subunits and make judgments about how well managers are
running those subunits?
A.
B.
Control systems
C.
Knowledge networks
D.
Job assignments
Control systems are the metrics used to measure the performance of
subunits and make judgments about how well managers are running those
subunits.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain what is meant by organization architecture.
Topic: Organizational Architecture
43.
Historically, Unilever measured the performance of national operating
subsidiary companies according to profitability. In this example, profitability
is a(n):
A.
control system.
B.
process.
C.
integrating mechanism.
D.
incentive.
Control systems are the metrics used to measure the performance of
subunits and make judgments about how well managers are running those
subunits. For example, historically Unilever measured the performance of
national operating subsidiary companies according to profitability—
profitability was the metric.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain what is meant by organization architecture.
Topic: Organizational Architecture
44.
The manner in which decisions are made and work is performed within the
organization is known as the firm’s:
A.
organizational culture.
B.
incentives.
C.
control systems.
D.
processes.
Processes are the manner in which decisions are made and work is
performed within the organization.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain what is meant by organization architecture.
Topic: Organizational Architecture
45.
The norms and values systems that are shared among the employees of a
company are referred to as:
A.
processes.
B.
control systems.
C.
incentives.
D.
organizational culture.
Organizational culture refers to the norms and value systems that are
shared among the employees of an organization. Just as societies have
cultures, so do organizations.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain what is meant by organization architecture.
Topic: Organizational Architecture
46.
A firm’s _____ determines where in its hierarchy the decision-making power
is concentrated.
A.
integrating mechanism
B.
vertical differentiation
C.
knowledge network
D.
horizontal differentiation
A firm’s vertical differentiation determines where in its hierarchy the
decision-making power is concentrated.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
47.
What is horizontal differentiation?
A.
The mechanisms that enable each subunit to operate independently
B.
The formal division of the organization into subunits
C.
The location of decision-making responsibilities within a structure
D.
The mechanisms for coordinating subunits
Horizontal differentiation refers to the formal division of the organization
into subunits.
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
48.
Integration mechanisms are:
A.
the formal division of the organization into subunits.
B.
the mechanisms that enable each subunit to operate independently.
C.
the mechanisms for coordinating subunits.
D.
the location of decision making responsibilities within a structure.
Integrating mechanisms are mechanisms for coordinating subunits.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
49.
Which of the following is an argument 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.
Centralization can avoid the duplication of activities that occurs when
similar activities are carried on by various subunits within the organization.
For example, many international firms centralize their R&D functions at one
or two locations to ensure that R&D work is not duplicated.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
50.
Which of the following is an argument 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.
Decentralization permits greater flexibility—more rapid response to
environmental changes—because decisions do not have to be “referred up
the hierarchy” unless they are exceptional in nature.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
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.
By concentrating power and authority in one individual or a management
team, centralization can give top-level managers the means to bring about
needed major organizational changes.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
52.
A firm that needs greater flexibility should choose _____ for its decision–
making.
A.
horizontal differentiation
B.
decentralization
C.
localization strategy
D.
control systems
Decentralization permits greater flexibility—more rapid response to
environmental changes—because decisions do not have to be “referred up
the hierarchy” unless they are exceptional in nature.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
53.
Centralization and decentralization differ because:
A.
centralization hinders coordination, while decentralization facilitates
coordination.
B.
centralization prevents top-level managers from making required
organizational changes, while decentralization gives top-level managers
greater power to make organizational changes.
C.
centralization ensures that decisions are consistent with organizational
objectives, while decentralization can result in decisions at variance with
organizational goals.
D.
centralization promotes flexibility, while decentralization reduces
flexibility.
Centralization can help ensure that decisions are consistent with
organizational objectives. When decisions are decentralized to lower-level
managers, those managers may make decisions at variance with top
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
Decisions regarding overall firm strategy are typically centralized at the
firm’s headquarters. Operating decisions, such as those relating to
production, marketing, R&D, and human resource management, may or may
not be centralized depending on the firm’s strategy.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
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.
The emphasis on local responsiveness in firms pursuing a localization
strategy creates strong pressures for decentralizing operating decisions to
foreign subsidiaries.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
56.
Global learning based on the multidirectional transfer of skills between
subsidiaries and the corporate center is a central feature of a firm pursuing
a(n) _____ strategy.
A.
localization
B.
global standardization
C.
transnational
D.
international
Global learning based on the multidirectional transfer of skills between
subsidiaries, and between subsidiaries and the corporate center, is a
central feature of a firm pursuing a transnational strategy.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
57.
Which of the following would be a typical responsibility of a product division
in a 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
With a product divisional structure, each division is responsible for a
distinct product line (business area). The responsibility for operating
decisions is typically decentralized to product divisions, which are then held
accountable for their performance.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
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.
With a product divisional structure, each division is responsible for a
distinct product line (business area). The responsibility for operating
decisions is typically decentralized to product divisions, which are then held
accountable for their performance.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
59.
Regardless of a firm’s domestic structure, its international division tends to
be organized on:
A.
product.
B.
geography.
C.
people.
D.
economy.
When firms initially expand abroad, they often group all their international
activities into an international division. Regardless of the firm’s domestic
structure, its international division tends to be organized on geography.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe the different organizational choices that can be made in an international business.
Topic: Organizational Structure
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.
Despite its popularity, an international division structure can give rise to
problems. The dual structure it creates contains inherent potential for
conflict and coordination problems between domestic and foreign
operations.
AACSB: Analytic
Blooms: Understand