International Business, 14e (Daniels et al.)
Chapter 15 The Organization of International Business
1) Johnson & Johnson distributes decision-making power among departments and divisions. This policy
provides managers with a sense of ownership and control at the company. Johnson & Johnson is best
described as a(n) ________ organization.
A) vertical
B) centralized
C) horizontal
D) decentralized
2) Johnson & Johnson embodies its organizational culture in “The Credo,” which is the firm’s ________.
A) code of conduct
B) vision statement
C) strategic plan
D) mission statement
3) Historically, managers built organizations by focusing on the boxes and lines of a(n) ________
structure.
A) formal
B) innovative
C) collaborative
D) flexible
4) Which of the following is the LEAST likely reason that global firms are shifting away from formal
organizational structures?
A) advancements in communication systems
B) changes in managerial standards
C) opportunities in new markets
D) demands of stockholders
5) Concord Foods, an international firm based in the U.S., is in the process of transitioning from a
classical organizational structure to a neoclassical structure. Which of the following tools would most
likely enable Concord to make this change?
A) annual performance appraisals
B) cross-functional task forces
C) flexible benefits plans
D) merit awards
6) The concept of organization includes how a company does all of the following EXCEPT ________.
A) specifies the framework for work
B) develops systems that coordinate and control tasks
C) cultivates a common workplace culture among employees
D) plans leadership and training programs to develop the managerial staff
7) Organization ________ refers to the formal arrangement of roles, responsibilities, and relationships
within an organization.
A) structure
B) systems
C) culture
D) strategy
8) The balance between centralization and decentralization of authority in a company is known as
________.
A) systemic differentiation
B) horizontal differentiation
C) schematic differentiation
D) vertical differentiation
9) The ________ the level of the company at which managers make decisions, the more that
organization is ________.
A) higher; decentralized
B) lower; centralized
C) higher; centralized
D) higher; unstructured
10) Tyrone is a production manager at Penderhall Electronics, an MNE with operations in Asia, Europe,
and the U.S. Tyrone has very little decision-making authority at Penderhall, since most decisions are
made at headquarters and distributed downward. Which structure is most likely used by Penderhall?
A) centralized
B) systematic
C) decentralized
D) multidomestic
11) ________ is the matter of how the company balances centralization versus decentralization of
decision making, whereas ________ is the matter of how the company opts to divide itself into specific
units to do specific jobs.
A) Horizontal differentiation; vertical differentiation
B) Vertical differentiation; systemic differentiation
C) Schematic differentiation; schematic differentiation
D) Vertical differentiation; horizontal differentiation
12) Which of the following statements is most likely true regarding vertical differentiation?
A) MNEs with decentralized structures are more appealing to foreign workers.
B) Most MNEs balance authority between headquarters and subsidiaries because of globality.
C) MNEs with many organizational levels are less likely to perform well in emerging markets.
D) Most MNEs implement centralized authority structures due to the complexity of globalization.
13) In general terms, we see the principles of horizontal differentiation in the design logic of ________.
A) vertical differentiation
B) decentralization
C) the value chain
D) the unity-of-command principle
14) The idea of ________ involves how a company specifies organizational tasks; divides those tasks
into jobs, departments, subsidiaries, and divisions; and then assigns authority and authority relationships.
A) systemic differentiation
B) horizontal differentiation
C) vertical differentiation
D) schematic differentiation
15) A ________ structure is the ideal way to organize work when global integration is more important
than local responsiveness and the industry structure encourages cost leadership.
A) decentralized
B) matrix
C) divisional
D) functional
16) At Tyson Manufacturing, departments and units are organized around discrete business activities,
such as finance, production, marketing, and human resources. Tyson most likely has a ________
structure.
A) network
B) matrix
C) functional
D) divisional
17) Decision making in a functional structure tends to be ________.
A) decentralized
B) centralized
C) horizontal
D) collaborative
18) Functional structures for international operations are most likely found among those companies that
________.
A) have a narrow range of products that rely on economies of scale
B) multiple products that share few common technologies
C) rely on differentiated marketing methods
D) compete in unstable industries
19) Whereas executives specify roles and relationships in a functional structure in terms of ________,
they use the divisional structure format to specify them according to ________.
A) inputs; outputs
B) buyers; suppliers
C) markets; countries
D) politics; economics
20) A major benefit of the international division structure is ________.
A) outsourcing distribution and shipping tasks
B) responding quickly to foreign events
C) diversifying most product groups
D) hiring low-cost, local workers
21) In which of the following situations would a company most likely benefit from using the
international division structure?
A) when the company’s different foreign markets pose significantly different opportunities and threats
B) when the company relies on local managers in foreign operations to make strategic decisions
C) when the company’s domestic market activity is much more important than its international business
activity
D) when the company’s domestic business activity has reached its full market potential
22) A major benefit of the international division structure is ________.
A) the elimination of conflicts of interest among domestic and foreign operations
B) the integration of domestic and foreign operations
C) deemphasis of economies of scale
D) cost effectiveness
23) Chapman Enterprises is an MNE that markets a diverse portfolio of products including jewelry,
luggage, and furniture. Which structure would most likely be used by Chapman?
A) international division
B) functional division
C) geographic division
D) product division
24) Avery Designs is an MNE with a diverse portfolio of products including cookware and clothing.
Both the foreign and domestic operations for the firm’s cookware products report to the same manager.
Which structure is most likely used by Avery?
A) matrix division
B) product division
C) international division
D) geographic division
25) The primary limitation with the product division structure is the ________.
26) Historically, the geographic division structure is associated with companies pursuing ________
strategies.
A) multidomestic
B) transnational
C) global
D) international
27) Which of the following factors increasingly encourages MNEs to install a geographic division
structure?
A) growth of emerging markets
B) diversification of products
C) rise of social networking
D) global recession
28) Gary is a manufacturing manager at Forman Enterprises. Gary works at the MNE’s headquarters in
the U.S. Before Gary can implement any major changes or decisions, he must communicate and
coordinate his plans with Raj, a sales manager at Forman’s facility in India. Which structure is most
likely used by Forman Enterprises?
A) global
B) matrix
C) product division
D) geographic division
29) The fundamental limitation of a matrix structure is that it ________.
A) creates a poor organizational culture
B) isolates upper management from operational levels
C) institutes a dual hierarchy that violates the unity-of-command principle
D) introduces more errors in the decision-making process due to the speed of the process
30) In reality, the organizational charts of ________ MNEs neatly depict a functional, divisional, or
matrix structure.
A) no
B) few
C) most
D) all
31) IBM puts investments, people, and work anywhere in the world based on the best mix of costs,
skills, and environment and uses sophisticated strategies and technologies to support and coordinate
activities. IBM most likely uses a ________ structure.
A) classical
B) product
C) neoclassical
D) locational
32) Neoclassical structures aim to support organizations ________.
A) in which the location of control in a network alliance is evident
B) that centralize decision-making authority to those who can make informed decisions
C) that dismantle horizontal, vertical, or external boundaries that block ideas and relationships
D) that create predictable workplaces with minimal collaboration among subsidiaries
33) Which of the following is the LEAST likely characteristic of neoclassical structures?
A) few barriers between people
B) extensive collaborative efforts
C) higher capacity for change and learning
D) centralized decision making
34) The neoclassical structure implemented by Cisco primarily enables the firm to ________.
A) respond quickly to new opportunities
B) thoroughly assess new competitors
C) assign leaders to new products
D) clarify managers’ duties
35) Vertical and horizontal constraints that segment employees and their tasks within an organization are
generally referred to as ________.
A) structures
B) networks
C) boundaries
D) classifications
36) Neoclassical structures attempt to minimize boundaries between all of the following EXCEPT
________.
A) vertical ranks and functions
B) horizontal units in different areas
C) the firm and its suppliers
D) the firm and its competitors
37) Which of the following is promoted by a neoclassical structure?
A) innovation of ideas
B) information control
C) project competition
D) minimal relationships
38) Which of the following is the most likely benefit of a network structure?
A) encouraging competition among members for resources
B) facilitating supplier changes anywhere in the value chain
C) developing core competencies in a broad range of value activities
D) maintaining a strong sense of organization in the face of dynamic partnerships
39) A Japanese keiretsu is best described as a ________.
A) family business
B) product division
C) network structure
D) centralized control system
40) A virtual organization is ________ of a traditional vertical hierarchy.
A) an elaboration
B) the antithesis
C) the latest interpretation
D) a selective application
41) The temporary arrangement of independent companies, suppliers, and free agents for the purpose of
completing a task or project is best known as a(n) ________ organization.
A) virtual
B) independent
C) decentralized
D) international
42) Some MNEs that have tried contemporary structures have run into problems, most notably
________.
A) frequent managerial intervention in decision making
B) relentless centralization of decision making
C) employees too motivated by bonuses
D) resource competition
43) A hyperarchy is ________.
A) a form of structure with precise superior and subordinate relationships
B) a form of structure that relies on extensive centralization
C) a large-scale, self-organizing community
D) analogous to a hierarchy
44) Coordination refers to ________.
A) linking various value activities within an organization
B) identifying the span of control within an organization
C) portioning the performance of specific tasks
D) assigning tasks to qualified managers
45) Which of the following is NOT one of the three prevalent approaches to coordination?
A) standardization
B) mutual adjustment
C) adaptation
D) planning
46) Patrons of McDonald’s can enter the restaurant located in any part of the world and expect to see
employees wearing the same uniforms and menus offering the same products. McDonald’s most likely
uses which system of coordination?
A) standardization
B) consensus
C) plan
D) adaptation
47) Which of the following begins with a company defining critical success factors and specifying
objective targets and hard deadlines?
A) coordination by standardization
B) coordination by consensus
C) coordination by plan
D) coordination by intervention
48) Abel Enterprises has implemented a system based on coordination by mutual adjustment. Which of
the following would most likely be used by Abel Enterprises?
A) strict scheduling
B) social networking
C) synchronized training
D) centralized decision making
49) Three types of control systems are used in MNEs. These are ________.
A) market control, bureaucratic control, and clan control
B) standardization control, adjustment control, and clan control
C) market control, adjustment control, and clan control
D) planning control, market control, and clan control
50) Falcon Enterprises is an MNE that uses price competition and relative market share to establish
internal performance benchmarks and standards. The firm is most likely applying a system of ________.
A) bureaucratic control
B) market control
C) standardization control
D) clan control
51) Martin Manufacturing is an MNE that centralizes authority to implement an extensive set of rules
and procedures to govern a broad range of activities. Martin Manufacturing is most likely applying a
system of ________.
A) market control
B) adjustment control
C) bureaucratic control
D) clan control
52) Grover Enterprises is an MNE that relies on shared values among all employees to idealize the
preferred behaviors and identify performance measures within the company. Grover is most likely
applying a system of ________.
A) market control
B) bureaucratic control
C) planning control
D) clan control