Chapter 11 – Management Decision and Control
business. The ability to change and adapt is essential.
2. To what extent should total quality management and quality control be considered
when establishing an online retail presence or contracting with another firm to
provide it?
Answer: The nature of online retailing implies that there is no direct contact
between the seller and the buyer. Instead, all contact is electronic. Consequently, a
customer that has a bad experience with one company is likely to simply click to
3. What specific decision and control systems or tools would be helpful in overseeing
an online presence (either internal or outsourced)?
Answer: Many students will probably suggest that companies consider
implementing total quality management strategies, empower employees to find
Key Terms
Assessment center―An evaluation tool used to identify individuals with the potential to be
selected for or promoted to higher-level positions
Codetermination―A legal system that requires workers and their managers to discuss major
decisions
Controlling―The process of evaluating results in relation to plans or objectives and deciding
what action, if any, to take
Decision making―The process of choosing a course of action among alternatives
Direct controls―The use of face-to-face or personal meetings for the purpose of monitoring
operations
Empowerment―The process of giving individuals and teams the resources, information, and
authority they need to develop ideas and effectively implement them
Honne―A Japanese term that means “what one really wants to do”
Indirect controls―The use of reports and other written forms of communication to control
operations
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Kaizen―A Japanese term that means “continuous improvement”
Profit―The amount remaining after all expenses are deducted from total revenues
Quality control circle (QCC)―A group of workers who meet on a regular basis to discuss
ways of improving the quality of work
Return on investment (ROI)―Return measured by dividing profit by assets
Ringisei―A Japanese term that means “decision making by consensus”
Tatemae―A Japanese term that means “doing the right thing” according to the norm
Total quality management (TQM)―An organizational strategy and the accompanying
techniques that result in the delivery of high-quality products or services to customers
Review and Discussion Questions
1. A British computer firm is acquiring a smaller competitor located in Frankfurt.
What are two likely differences in the way these two firms carry out the
decision-making process? How could these differences create a problem for the
acquiring firm? Give an example in each case.
Answer: First, the newly acquired German company is likely to have a much more
centralized decision-making process than the British firm. Second, the managers of
2. Which cultures would be more likely to focus on external controls? Which cultures
would you consider direct controls to be more important than indirect controls?
Answer: From an internal control standpoint, an MNC will focus on the things that
it does best. At the same time, management wants to ensure that there is a market
for the goods and services that it is offering. Cultures differ in the control approach
they use. For example, among U.S. multinationals, it is common to find managers
using an internal-control approach. Among Asian firms, an external control
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3. How would you explain a company’s decision to employ centralized decision-
making processes and decentralized control processes, considering the two are so
interconnected? Provide an industry example of where this may occur.
Answer: When decision-making is centralized, most important decisions are made
at the top. Controlling involves evaluating results in relation to plans or objectives,
then taking action to correct deviations. When a company uses centralized decision-
4. How are U.S. multinationals trying to introduce total quality management (TQM)
into their operations? Give two examples. Would a U.S. MNC doing
business in Germany find it easier to introduce these concepts into German
operations, or would there be more receptivity to them back in the United
States? Why? What if the U.S. multinational were introducing these ideas
into a Japanese subsidiary?
Answer: One way in which TQM is being introduced by American multinationals is
through the use of concurrent engineering/interfunctional teams in which designers,
engineers, production specialists, and customers work together to develop new
products. The use of consumer advisory councils is another way in which TQM is
being introduced in the U.S. These councils are being created for the purpose of
requirement for successful TQM programs. Motorola and other successful quality
MNCs utilize effective reward systems. Finally, training that stresses continuous
improvement is important in the introduction of TQM into an operation. Motorola
again is a good example of having a total commitment to training for quality.
The U.S. MNC doing business in Germany or Japan would probably have a more
difficult time introducing the concepts overseas than it would at home. The primary
reason for this is the fact that the U.S. MNC is more familiar with its domestic
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organizational culture.
A TQM program must permeate all levels of the organization and any
misperception about the intentions of those implementing the program will lessen
so, from that standpoint, the introduction of TQM might be easier.
5. In what ways could an accelerated decision-making process harm a company?
Using Figure 11–1, which stage(s) do you think would be most in danger of being
overlooked?
Answer: An accelerated decision-making process could potentially harm a company
if the wrong problem is identified. Also, a rushed process may result in choosing an
inferior solution, or implementing a process for which the company was not
6. A company practices personnel performance evaluation through reviewing financial
decisions management has made, specifically focusing on ROI. How is this
approach beneficial to the company? Which aspects could the company be
neglecting? Which cultures are most likely to employ this method? Which cultures
would avoid this tactic?
Answer: Return on investment is measured by dividing profit by assets. In any case,
the most important part of the ROI calculation is profits, which often can be
manipulated by management. Therefore, the amount of profit directly relates to how
well or how poorly a unit is judged to perform. This can be beneficial if a company
has an operation in two different locations and taxes are lower in one of those. The
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Internet Exercise: Looking at the Best
Suggestion for Using the Exercise
1. Companies often put information about opportunities for employment on their
home pages. Ask your students to revisit the home pages of Shell and BP. How does
each company try to recruit employees? Are their forms of “personnel control” built
into each company’s recruitment techniques? Explain.
In The International Spotlight: Turkey
Questions & Suggested Answers
1. Why did Turkey decide to privatize its economy in 1983?
Answer: Following the collapse of the Ottoman Empire, Turkey’s government-
owned and controlled industries suffered from inefficiencies and large financial
2. What affect has privatization had on Turkey?
Answer: The more-open economy is diversified, and exports include automotive,
construction, and electronic goods. The service sector of the GDP is sharply up,
3. What challenges does Turkey face as it continues to develop and expand?
Answer: Turkey still lags behind its European neighbors, and its membership in the
European Union is uncertain. Inflation is high. Unrest in the Middle East has
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International Management in Action: How the Japanese Do Things
Differently
Summary
1. Some of the things Japanese firms do well are to train their people carefully,
tonremain on the technological cutting edge, and to keep a keen focus on
developing and bringing to market goods that are competitively priced.
Many Japanese companies use a “target cost” approach. After conducting marketing
research and examining the characteristics of the product to be produced, Japanese
manufacturers first determine the price that the consumer most likely will accept,
and then they work with design, engineering, and supply people to ensure that the
product can be produced at this price.
Then, rather than reducing the price over time, the Japanese use a kaizen approach,
getting costs out of the product during the planning and design stage. They look at
profit in terms of product lines rather than just individual goods, so a small product
has a better chance of being manufactured in Japan than it would in the U.S. A side
benefit is that once a product is out there, it may appeal to an unanticipated market.
Coca-Cola in Japan follows this pattern, introducing many new products, some of
which “take”; the company, as a result, is the leading soft drink firm there.
Brief Integrative Case 3.1: Google in China
1. Summary:
While China moves forward as a capitalistic economy, it still carries along the
problems of a political environment that restricts and suppresses dissent and
criticism. Thus, Google, known for its free access to information in the United
States, faces fundamental challenges in China. Google (and the Internet and social
networking in general) represent a uniquely North American business model that
challenges countries and environments with different regulatory regimes, legal
environments, and fundamental values. Periodically, China blocked the site. In
entering the market in China and selling its shares in Baidu (China’s equivalent),
Google.cn agreed to block certain websites and to avoid services that involved
personal or confidential data, like Gmail. One unintended consequence was that
Google was unable to keep up with Baidu. The article explores in more detail the
consequences―foreseen and unintended―for Google.
Another problem for Google is the conflict with the Authors Guild and the
books. The smartphone market also brings challenges for Google.
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2. Questions for discussion:
1. What do you consider the major challenges of censorship on Google and other
Internet services?
2. Do you think it is possible, in reality, to restrict the Internet? Explain.
3. What is your understanding of intellectual property rights? Do you foresee
changes in those rights―tightened or lessened―in the near future? Explain.
4. Which of Google’s newer project do you think has the most promise? Why?
Brief Integrative Case 3.2: Can Sony Regain Its Innovative Edge?
The OLED Project
1. Why did Sony push back introduction of the OLED television? What was the
advantage in waiting? What were the drawbacks? Was there a threat of moving to
market with new technology too fast? How might the delayed introduction affect
Sony’s reputation among consumers, enthusiasts, and Sony’s own R&D personnel?
Answer: Sony’s believes that its OLED technology will be the basis for the next
generation of television. The new technology provides a markedly improved
picture, yet Sony has decided that at least for now, it will put mass production of
OLED televisions on hold. At the moment, the technology is such that even very
small televisions using the new OLED technology are significantly more expensive
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