International Business Mod10 Under What Circumstances Might Such Structure Appropriate Choice For Company International Division

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International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–15

ENGAGEMENT & APPLICATION

BOXED TEXT DISCUSSION QUESTIONS WITH SUGGESTED ANSWERS

IB IN PRACTICE: Working in a Global Virtual Organization

1. What do you think might be the greatest strengths and weaknesses of working in a virtual

organization like Automattic?

Answers here might vary, but some students might suggest that a virtual organization approach

would allow the company to be flexible and responsive, allowing employees to go to where the

greatest need may be. It can reduce costs of brick-and-mortar office space and also allow

employees to have great flexibility of where they wish to live (which might be of great value to

those employees who might not want to relocate on a longer term basis to wherever a national

2. Based on Automattic’s success, why might companies like IBM choose the traditional face–

to-face hiring process and in-office structure? What differences among the companies could

be attributed to this?

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–16

3. Would you enjoy working in a virtual organization like Automattic? Why or why not?

Again, answers may vary on this question. Some students might suggest that they would enjoy

the freedom and stimulation of being able to work in multiple locations, to be able to self

GLOBAL DEBATE: Should Companies Be Allowed to Profit from International Transfer Pricing?

Transfer pricing in international companies has recently received increasing attention in the

business and popular press, and this Global Debate is intended to help shed some light on why

transfer pricing has become the focus of so much attention. The discussion provides a vignette

1. If you were a shareholder in BigSoft, would you support the company’s approach to

transfer pricing? Why or why not?

The answers to this question will vary, and it is intended to help people think through the issues

from various perspectives. From a perspective of strict shareholder value maximization,

International Business

Instructor Guide to Module 10

10–17

Education.

“work the system” to its advantage and to the detriment of other stakeholders (such as the

citizens of BigSoft’s home country). These competing perspectives can make for a lively debate

and, properly managed, it can produce substantive depth and insight, opening students up to

the harsh reality of melding national and corporate values, financial theory, and related issues

and concerns.

2. If you represented the government of Ireland, would you support BigSoft’s approach to

transfer pricing? Why or why not?

This question raises an issue that almost always generates strong opinions and a variety of

perspectives. In general, the government of Ireland would support this approach, as it may help

3. If you represented the U.S. government, or the government of one of the other nations in

Europe, would you support BigSoft’s approach to transfer pricing? Why or why not?

GET THAT JOB! FROM BACKPACK TO BRIEFCASE: Sarah Wartinger in Peru: Embracing the

Challenges of New Environments

The focus of this box explores Sarah Wartinger’s challenges as she goes through culture shock

during an internship in Peru. Even though she spent a semester abroad in Costa Rica and spoke

Spanish, her experience in Peru was quite different and she experienced severe culture shock.

To overcome this, she took moments of mindfulness throughout the day in which she would

focus on the now.

1. Sarah Wartinger talks about getting culture shock despite learning the language and having

spent a semester in Costa Rica. Can you prepare so that you avoid culture shock, or is it

inevitable when you live abroad?

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–18

Education.

are different in Peru compared to Costa Rica. But culture shock is a very individual experience.

For some, Wartinger’s experience in Costa Rica would have been enough to avoid significant

culture shock in Peru, but for others returning to the same place in Peru a year or two later

would cause culture shock again. Nevertheless, the more training and exposure one has to a

culture and language before moving abroad, the less intense the culture shock will be.

2. Wartinger recommended taking moments of mindfulness and to focus on the now in order

to work through her culture shock. Do you agree with this? Do you have an experience with

culture shock? If so, what did you do to get over culture shock?

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–19

END OF MODULE EXERCISES

CRITICAL THINKING QUESTIONS

1. Why is organizational structure an important issue for international companies?  

2. What are the main strengths and weaknesses of using 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?

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 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?

5.You are the CEO of Mancon Incorporated, and you have just acquired Pozoli, an 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.

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–20

Education.

a separate division on the same level as the international division and the two product

divisions.

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?

7. In choosing whether decisions will be made by the parent company or by its subsidiaries,

what should management consider when equipment and products are standardized

worldwide? What about when they are tailored to individual national circumstances and

markets?

8. Regarding issues of control in an international company:

a. What are some decisions that could result in detriment for a subsidiary but greater

benefits for the enterprise as a whole?

b. In such circumstances, where will the decision be made—at IC headquarters or at the

affected subsidiary?

9. 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 the same control systems for each unit or operation worldwide. For

example, Starbucks, Kentucky Fried Chicken, or McDonald’s apply the same rigid quality

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–21

controls throughout all aspects of their organizations, even as they expand internationally.

Why would a company 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

they are developing standardized products for global markets. There may also be a preference

GLOBALEDGE RESEARCH TASK

Exercise 1

Search for ‘global manufacturing competitiveness’ in globalEDGE. The results will take you to the

Indices of the countries where the Global Manufacturing Competitiveness Index (GMCI) is listed.

Use the external link to visit the source and click on the ‘Regional Clusters’ link on the first

Exercise 2

globalEDGE ‘Global Insights’ is where profiles of trade blocs, countries, U.S. states, and industries

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–22

MINICASE: Eleconnect, Inc.—Must It Reorganize?

1. How should the company be organized to handle the new foreign production facilities?

How can Connect All reduce the time needed to bring new designs to market?

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–23

BONUS ACTIVITIES

This section provides you with support of your course above and beyond what is found in the

text. We have developed these resources to support your course, to support your traditional,

hybrid, online, or flipped class.

VIDEO SUGGESTIONS

McGraw Hill’s collection of international business videos is available at

“Making the Matrix Work,” defines what a matrix organization structure is, and what makes it

different and challenging.

An interesting lecture by Nick Kitchen on organizational structure and design, which also

includes the role of globalization and international factors, can be found in the video,

TEAM EXERCISES

These may be done individually or in groups or teams, either in or out of class, for later class

presentation. Some are also appropriate for use in hybrid/flipped classroom and online courses.

1. Decisions, Decisons

We have had good response from students when we have asked them to analyze why certain

2. Operating Environment Key Elements

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–24

Education.

Then you can ask the students to identify how these elements of the operating environment

and strategy are affecting the way these organizations are structuring their activities, with

particular emphasis on understanding how and why there may be differences in the

organizational structures being used. These analyses can be shared in class to help initiate a

discussion on the design of organizational structures in international business.

3. Reporting Information

Have students report on the types of information that needs to be reported by IC units to the

4. Analyze an IC

Have students analyze an IC to identify its organizational structure, strategic control issues and

methods used in the company. The merger of high end Daimler-Benz and the more popular-

SUPPLEMENTAL ACTIVITIES

Case Studies

Case studies that focus on intercultural issues and their effects in business environments are

available through Ivey Publishing and Harvard Business School. Ivey’s catalog is available for

Harvard Cases

“United Cereal: Lora Brill’s Eurobrand Challenge,” examines the strategic and organizational

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–25

Education.

“Philips versus Matsushita: The competitive battle continues,” examines the evolution of

international strategies and structures of two firms battling in the same sector, showing the

challenges of developing, leveraging, and evolving the organizational structures and strategies

of IC within a changing international competitive context, including balancing organizational

design with pressures for local responsiveness versus global standardization.

CONTROVERSIAL ISSUES

1. Global Debate: Should Companies Be Allowed to Profit from International Transfer Pricing?

The boxed element described earlier in this module’s Instructor Guide provides an excellent

foundation for debating some of the issues raised in the text, including issues about transfer

pricing.

2. IB in Practice: Working in a Global Virtual Organization

This boxed element described earlier in this module’s Instructor Guide can be an interesting

tool for generating discussion and debate. We find that students often have a broad range of

perspectives regarding the nature of work within a virtual organization and whether, how, and

3. Current Events for Sources of Content on Organizational Design-Related Controversy

A focus on current events that are relevant to the module’s topics is a good way to bring home

the concepts, review their application, and build news-review habits. Ask everyone to come

prepared with an article for every meeting. If a meaningful percentage of the final grade is

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–26

Education.

allocated to discussion (10-15), motivation is there. Devote five minutes at the beginning of class

to discussion of current events. Recent relevant current events include Volkswagen’s global

controversy about using software to produce misleading reports during environmental

emissions testing and how company management might have been able to more effectively

structure and control activities to prevent such a debacle from occurring. Depending on the

online interface, this activity may be done in chat forums (Blackboard) or discussion boards,

before class begins. This activity also works well in large lecture classes.

TEACHING SUGGESTIONS

1. This module involves what can be abstract, “big picture” content, so helping learners

appreciate the nature and influence of design and control decisions within international

companies can provide them with a new approach to thinking about business. The use of the

2. Analyze the relationship between where certain types of decisions are made within the

3. To point out the importance for an IC to control activities of its units and efforts around the

world, review the control issues Nike faced in its outsourcing, with child labor and worker abuse

4. Guest Lecturer possibilities. Some people who could contribute to the material in this

module would be:

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–27

CONNECT TOOLS FOR ASSESSEMENT OF LEARNING

CONNECT CONTENT MATRIX

For every chapter, please refer to the Connect Content Matrix to see what application exercises

are available and what Learning Objectives they help reinforce/assess.

Title

Assignment

Type

Topic(s)

Learning

Objective(s)

AACSB

Accreditation

Tagging

Bloom’s

Taxonomy

Alternative

Organizational

Structures for

International

Companies

Click and Drag

Overview of

Organizational

Structure and

Design

10–02

Reflective

Thinking

Understand

Organizational

Design: Potential

Merger of Hershey

and Cadbury

Case Analysis

Forms Available for

Structuring

International

Companies

10-03; 10-04

Analytical

Thinking

Understand

Control in Wholly-

and Jointly-Owned

Subsidiaries

Case Analysis

Where Decisions are

Made in Joint

Ventures and

Subsidiaries less

than 100% Owned

10-03; 10-04

Analytical

Thinking

Understand

Control, Decision

Making, and

Reporting

Case Analysis

Reporting of

Information

10–05

Analytical

Thinking

Understand

Reporting in the

International

Business

Click and Drag

Organizational

Design and Control

10–05

Analytical

Thinking;

Reflective

Thinking

Remember;

Understand

CONNECT ACTIVITIES

1. Alternative Organizational Structures for ICs

Activity Summary: This is a click and drag activity in which students must match boxes of

International Business

Geringer, McNett, Ball

Instructor Guide to Module 10

10–28

2. Organizational Design: Potential Merger of Hershey and Cadbury

Activity Summary: In this case analysis, Hershey is considering bidding for Cadbury because

3. Control in Wholly- and Jointly-Owned Subsidiary

Activity Summary: This is a case in which Global Wirecom, Inc is considering a joint venture

4. Control, Decision Making, and Reporting

Activity Summary: In this case analysis, students are presented with a company that has an

5. Reporting in International Business

Activity Summary: This is a click and drag activity in which students match boxes about types of