Chapter 10 – Organizational Design and Control
Answers to End of Chapter Questions
1. Why is organizational structure an important issue for international companies?
Organizational structure integrates the organization. It is the way jobs are grouped and their
2. What are the main strengths and weaknesses of the use of an international division as
part of a company’s organizational structure? Under what circumstances might such a
structure be an appropriate choice for a company?
An international division takes control of the IC’s international involvement. After beginning
with an international division, most companies move on to organize their international
3. Compare and contrast geographic and product structures for international companies.
Geographic structures bring marketing issues such as distribution and localization to the fore,
4. Your company’s matrix organization isn’t working; decisions are taking too long, and it
seems to you that instead of best solutions, you’re getting compromises. What can your
company’s CEO do to address this problem?
Set up an organization based on product or region and install a matrix overlay. Establish a
5. You are the CEO of Mancon Incorporated, and you have just acquired Pozoli, the Italian
small-appliance maker (electric shavers, small household and personal care appliances).
It has been in business for more than 40 years and has manufacturing plants in Italy,
Mexico, Ireland, and Spain. Its output is sold in more than 100 markets worldwide,
including the United States. Your company is now organized into two product groups—
shaving and personal care—along with an international division at the top level. How are
you going to include Pozoli in your organization? Explain your rationale.
10-1
Chapter 10 – Organizational Design and Control
6. It is obvious that in formulating new strategies, management may uncover a need to
change its organization. Can you describe some situations in which the reverse may be
true?
The reverse is instead of strategic planning driving change, another force drives organizational
change. Let’s say the firm makes an acquisition whose business is significantly different from
7. In determining whether decisions will be made by the parent company or by its
subsidiaries, what are the considerations when equipment and products are standardized
worldwide rather than tailored to individual national circumstances and markets?
If the subsidiary’s market is large and different enough, it may make economic sense to design
and produce equipment and products for that one market. Management of the subsidiary would
8. Regarding issues of control in an international company:
a. What are some decisions that could result in detriment for a subsidiary but greater
benefit for the enterprise as a whole?
Decisions to channel business through a low tax country subsidiary rather than a high tax
b. In such circumstances, where will the decision be made—at IC headquarters or at the
affected subsidiary?
.What measures can be utilized to control subsidiaries that are less than 100 percent
owned by the firm or joint venture partners in which the firm has no ownership?
10. Some companies use standardized organizational controls across their entire
organization, in that the same control systems are used for each unit or operation
worldwide. For example, companies such as Starbucks, Kentucky Fried Chicken, or
McDonald’s apply the same rigid quality controls throughout all aspects of their
organizations, even as they expand internationally. Why would a company such as these
impose rigorous corporate quality standards, regardless of the country in which it
operates? What modifications in these quality standards, if any, should the company
permit because of differences across nations or regions of the world? Why is the company
allowing these modifications to occur?
Companies might implement rigorous quality standards, regardless of country of operation, if
10-2
Chapter 10 – Organizational Design and Control
the company operates. The decision on whether to permit modifications to quality standards
1 GlobalEDGE Answers
Exercise One
1. You work at a U.S.-based food and beverage company that is currently planning to
expand operations to other parts of the world. To design the structure of the international
organization, management has requested additional information on the food and beverage
sector abroad. Use the Industry Profiles in the globalEDGE website to prepare a risk
assessment of the Food and Beverage industry that can help management gain a better
understanding of the external environment in foreign markets.
Answer:
http://globaledge.msu.edu
Exercise Two
2. Fortune magazine conducts an annual survey and publishes the rankings of the “World’s
Most Admired Companies.” Locate the most recent publicly available ranking, follow the
link to the best and worst companies, and focus on the nine factors highlighted by Fortune
magazine. Based on these data, prepare an executive summary of the strategic and
organizational success factors of a company of your choice.
Answer:
http://globaledge.msu.edu
10-3