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A) host governments are generally unaware of the actions by ICs operating within their
borders.
B) management must demonstrate they are not making profits on the sales.
C) the IC should show that other companies are charging comparable prices for the
same or similar products.
D) the home country is usually more concerned than the host country, especially if the
home country’s tax rates are lower.
83) While there may be valid reasons for decisions to always be made at an ICs headquarters,
why is it important for some decisions to be delegated to the subsidiary?
A) Managers at the subsidiary must have all decisions approved by the parent company.
B) Managers at the subsidiary may become hostile and disloyal.
C) The subsidiary has more local knowledge.
D) The subsidiary is typically on a lower pay scale.
84) How is the headquarters of an IC affected in a joint venture?
A) Headquarters has more control over activities in a joint venture.
B) The ability to take action in a joint venture is similar to that of a wholly owned
subsidiary.
C) Headquarters does not enjoy as much freedom of action in a joint venture.
D) In a joint venture, the headquarters of a company is not included in decision making
activities.
85) Some ways that an IC can exercise control over a subsidiary’s activities include all of the
following EXCEPT
A) retaining control of technology.
B) writing up a management contract.
C) retaining control of the finances.
D) using its ownership to outvote its partner.
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86) In terms of reporting, it is important that all operating units of an IC provide timely and
complete reports regarding finances, market opportunities, political and economic activities, and
A) culture.
B) economies of scale.
C) factors of production.
D) technology.
87) The types of information an IC needs to have reported by subsidiaries includes
A) financial.
B) organizational structure and systems.
C) cultural.
D) staffing.
88) Caroline works in Asia for an affiliate of Sheppard Electronics based in Oklahoma. She
has learned that a large geographic sector in Asia would benefit from the company’s master
recharging station and shares that information with headquarters in her monthly report. Which
aspect of reporting does this reflect?
A) economics
B) technological
C) market opportunities
D) financial
89) Greenway Farm Equipment Co. is a subsidiary of Tuppin Manufacturing Group.
Recently, the production team at Greenway learned that a developer had automated a faster
process for attaching component parts and advised Tuppin about the innovation. What type of
reporting does this reflect?
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A) economics
B) technological
C) market opportunities
D) financial
90) Connor works at the headquarters of FiberNet Corp. He receives bimonthly reports that
reveal if surplus funds are available. It is then Connor’s job to determine how those funds should
be allocated. What type of report would provide Connor with this information?
A) economics
B) technological
C) market opportunities
D) financial
FILL IN THE BLANK. Write the word or phrase that best completes each statement or
answers the question.
91) ________ refers to the way that an organization formally arranges its various domestic
and international units and activities, and the relationships among these various organizational
components.
92) ________ is a process that deals with how an international business should be organized
in order to ensure that its worldwide business activities are able to be integrated in an efficient
and effective manner.
93) The two main issues management must consider in designing an international company’s
structure are (1) ________ to most effectively take advantage of efficiencies gained from
specialization of labor and (2) ________ the resulting departments’ activities to meet the firm’s
overall objectives.
94) The ________ structure involves a division in the organization that is at the same level as
the domestic division and is responsible for all non-home-country activities.
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95) Companies that use the ________ structure return to pre-export times compared to other
structures.
96) A common problem with the use of an international product structure is that it creates a
duplication of ________ experts.
97) The type of structure that simplifies the task of directing worldwide operations because
every country in the world is clearly under the control of someone who is in contact with
headquarters is called ________ structure.
98) The common factor among the users of the global ________ structure is a narrow and
highly integrated product mix, such as that of aircraft manufacturers or oil refining companies.
99) A structure organized by more than one dimension at the top level is known as a
________ organization.
100) An organizational structure composed of one or more superimposed organizational
structures is called a ________ organization.
101) A business entity with a clearly defined market, specific competitors, the ability to carry
out its business mission, and a size appropriate for control by a single manager is a ________.
102) Most SBUs are organized based on ________.
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103) ________ involves redesigning organizational structure, hierarchy, business systems, and
processes in order to improve organizational efficiency.
104) An organization which coordinates economic activity to deliver value to customers using
resources outside its traditional boundaries is a ________ corporation.
105) A form of organization characterized by lateral decision processes, horizontal networks,
and a strong corporatewide business philosophy is a ________ corporation.
106) Companies controlled by a parent company through ownership of enough voting stock to
elect majorities on the board of directors are ________.
107) Companies controlled by other companies, but where less-than-majority owners may
exercise control by a variety of means, both those involving stock ownership and those involving
nonownership mechanisms are ________.
108) Companies in which the parent firm has 100 percent ownership are known as ________.
109) Pricing that is established for transactions between members of the enterprise is called
________ pricing.
110) As revolutions have become more prevalent in recent years and changed the face of
government in many countries, ________ reporting has multiplied in number and importance.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
111) What is organizational design and why is it an important topic for managers of
international companies to understand?
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112) Compare and contrast three of the most common international company structures.
113) Discuss some of the variables that determine where decision making is made in an
international company.
114) Explain why there is a loss of freedom and flexibility associated with a joint venture.
115) What are the types of information that an international company needs to have reported to
it by its units around the world, and why is each type important for the IC and its control efforts?
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Answer Key
Test name: Module 10
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