full file at http://testbankeasy.com CHAPTER 10 – STRATEGIZING, STRUCTURING, AND LEARNING AROUND THE WORLD TEST BANK TRUE/FALSE QUESTIONS 1. Home replication strategy emphasizes the home country replication of international based competencies. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Knowledge; Difficulty: Easy 2. Localization strategy is an extension of the home replication strategy. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-; Bloom’s: Knowledge; Difficulty: Easy 3. Transnational strategy supposedly is a trade off between being cost efficient and locally responsive but is really locally responsive. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Comprehension; Difficulty: Moderate 4. Global product division structure is the same as the geographic area structure. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Comprehension; Difficulty: Easy 5. Many MNEs have phased out the geographical area structure. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Knowledge; Difficulty: Easy 6. Strategy drives structure: a misfit, such as combining a global strategy with a geographic area structure, may have grave performance consequences. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Comprehension; Difficulty: Easy 7. The Porter five forces are not helpful in understanding MNE structure. a. True b. False AACSB: BUSPROG: Reflective Thinking; DISC: Strategy full file at http://testbankeasy.com full file at http://testbankeasy.com LO: 10-2; Bloom’s: Comprehension; Difficulty: Easy 8. No one argues that knowledge management is the defining feature of MNEs. a. True b. False AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-3; Bloom’s: Knowledge; Difficulty: Easy 9. It is obviously a lot easier to imitate an intangible philosophy or mentality than to imitate a tangible structure. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-3; Bloom’s: Comprehension; Difficulty: Easy 10. Knowledge management not only depends on IT, but also on informal social relationships within the MNE. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-3; Bloom’s: Comprehension; Difficulty: Easy 11. In a transnational MNE, the role of subsidiaries is to adapt and leverage parent company competencies. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-3; Bloom’s: Comprehension; Difficulty: Moderate 12. The “not invented here” syndrome causes managers to accept ideas invented elsewhere. a. True b. False AACSB: BUSPROG: Reflective Thinking; DISC: Individual Dynamics LO: 10-3; Bloom’s: Knowledge; Difficulty: Easy 13. MNEs often must rely on a great deal of informal integrating mechanisms. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-3; Bloom’s: Knowledge; Difficulty: Easy 14. Overall, the micro, informal interpersonal relationships among managers of various units may create a micro-macro link. a. True b. False AACSB: BUSPROG: Analytic; DISC: Group Dynamics full file at http://testbankeasy.com full file at http://testbankeasy.com LO: 10-3; Bloom’s: Knowledge; Difficulty: Easy 15. It is hard to distinguish between subsidiary initiative and empire building. a. True b. False AACSB: BUSPROG: Analytic; DISC: Group Dynamics LO: 10-4; Bloom’s: Comprehension; Difficulty: Moderate 16. European MNE’s are more likely than Japanese MNE to appoint host-country or third country nationals as head of a foreign subsidiary. a. True b. False AACSB: BUSPROG: Analytic; DISC: Group Dynamics LO: 10-2; Bloom’s: Knowledge; Difficulty: Easy 17. Customer-focused dimensions cut across all three existing mainstream dimensions. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-4; Bloom’s: Comprehension; Difficulty: Easy 18. Transnational strategy aims to capture “the best of both worlds” by endeavoring to be both cost efficient and locally responsive. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Comprehension; Difficulty: Easy 19. An international division serves as a means of coordination with the rest of the firm. a. True b. False AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Knowledge; Difficulty: Moderate 20. The text recommended that firms avoid simplifying both product and geographic scope by downsizing and downscoping. a. True b. False AACSB: BUSPROG: Analytic; DISC: Operations Management LO: 10-1; Bloom’s: Knowledge; Difficulty: Moderate full file at http://testbankeasy.com full file at http://testbankeasy.com MULTIPLE CHOICE QUESTIONS 1. Pressures for cost reductions and local responsiveness include: a. The framework of how to simultaneously deal with these two sets of pressures. b. Host country demands and expectations. c. Being locally responsive makes local customers and governments happy but increase costs. d. All of the above. e. None of the above. AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Comprehension; Difficulty: Moderate 2. Four strategic choices for MNEs do not include: a. Home replication. b. Domestic. c. Multidomestic. d. Transnational. e. Global. AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Comprehension; Difficulty: Moderate 3. Multidomestic strategy involves all of the following except: a. Focuses on a number of foreign countries/regions. b. Each foreign country is regarded as a stand-alone “domestic” market. c. Is effective when there are clear differences among national and regional markets. d. A multidomestic strategy has high costs. e. Global standardization strategy is the same as a multidomestic strategy. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-1; Bloom’s: Analysis; Difficulty: Challenging 4. The structure that is typically set up when firms initially expand abroad is a: a. International division structure. b. Geographic area structure. c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure. AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Knowledge; Difficulty: Easy 5. In which of the following structures are foreign subsidiary managers not given sufficient voice relative to domestic managers? a. International division structure. b. Geographic area structure. full file at http://testbankeasy.com full file at http://testbankeasy.com c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-1; Bloom’s: Analysis; Difficulty: Challenging 6. The most appropriate structure for a multidomestic strategy is a: a. International division structure. b. Geographic area structure. c. Global product division structure. d. Global matrix structure. e. Flexible matrix structure. AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Application; Difficulty: Moderate full file at http://testbankeasy.com full file at http://testbankeasy.com 7. Which of the following is not true of the global matrix structure? a. Is often used to alleviate the disadvantages associated with the geographic area structure. b. Is often used to alleviate the disadvantages associated with the global product division structures. c. Often used for sharing and coordinating responsibilities between product divisions and geographic areas. d. This structure benefits front-line managers who now have only one boss – either a country manager or a product division manager. e. The matrix structure may add layers of management. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-1; Bloom’s: Analysis; Difficulty: Challenging 8. Which are not true in regards to institution-based considerations? a. Externally, MNEs are subject to the formal institutional frameworks erected by various home- and host-country governments. b. Host-country governments often encourage, or coerce MNEs into undertaking certain activities. c. Strategists weigh the informal, backlash against activities which result in domestic job losses. d. Formal organizational charts do not necessarily reveal the informal rules of the game, such as organizational norms, values, and networks. e. To staff the position of the head of a subsidiary, MNEs, in the absence of formal regulations, essentially have only one choice: to use a home-country national as the head of a subsidiary. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-2; Bloom’s: Analysis; Difficulty: Challenging 9. The type of knowledge that is codifiable (that is, it can be written down and transferred without losing much of its richness) is called: a. Explicit. b. Implicit. c. Tacit. d. Lucid. e. Clear. AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-3; Bloom’s: Knowledge; Difficulty: Easy 10. Knowledge management uses “centers of excellence” in which type of MNE? a. Home replication. b. Local (multidomestic). c. Global. d. Transnational. e. All of the above. full file at http://testbankeasy.com full file at http://testbankeasy.com AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-3; Bloom’s: Comprehension; Difficulty: Moderate 11. Which is true of globalized R&D? a. Is often known as innovation-avoidance expense. b. One way to access such a high technology and research-rich cluster is to avoid FDI. c. R&D work performed by different locations and teams around the world virtually guarantees failure. d. For large firms, there are actually diminishing returns for R&D. e. Global virtual teams, which do not meet face to face, may overcome communication and relationship barriers. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-3; Bloom’s: Knowledge; Difficulty: Easy full file at http://testbankeasy.com full file at http://testbankeasy.com 12. This structure is commonly used in professional service firms: a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above. AACSB: BUSPROG: Analytic; DISC: Operations Management LO: 10-4; Bloom’s: Knowledge; Difficulty: Moderate 13. This structure is often used to supply customers (often other MNEs) in a coordinated and consistent way across various countries. a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above. AACSB: BUSPROG: Analytic; DISC: Operations Management LO: 10-4; Bloom’s: Knowledge; Difficulty: Moderate 14. Which of the following is a solution rather than a problem in knowledge management? a. Open innovation. b. Knowledge leakage. c. Not invented here syndrome. d. All of the above. e. None of the above. AACSB: BUSPROG: Reflective Thinking; DISC: Environmental Influence LO: 10-3; Bloom’s: Comprehension; Difficulty: Easy 15. Which of the following is not an argument in favor of centralization in knowledge management but instead is an argument in favor of decentralization? a. Capability to facilitate corporate-wide coordination. b. Consistency in decision-making. c. Permits greater speed, flexibility, and innovation. d. Sufficient power for corporate-level managers to initiate necessary actions. e. None of the above. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-3; Bloom’s: Analysis; Difficulty: Moderate 16. Which of the following is not an argument in favor of decentralization in knowledge management but instead is an argument in favor of centralization? a. Better motivates subsidiary-level managers and employees through empowerment. b. Reduces corporate level overload of responsibilities. full file at http://testbankeasy.com full file at http://testbankeasy.com c. Better motivates subsidiary level managers. d. Sufficient power for corporate-level managers to initiate necessary actions. e. All of the above. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-3; Bloom’s: Analysis; Difficulty: Moderate 17. Which of the following is a customer-focused dimension? a. Global account structure. b. An industry sector structure. c. Solutions-based structure. d. All of the above. e. None of the above. AACSB: BUSPROG: Analytic; DISC: Operations Management LO: 10-4; Bloom’s: Comprehension; Difficulty: Moderate 18. Unique to international competition are the pressures for local responsiveness, which are reflected in: a. Consumer preferences. b. Distribution channels. c. Host country demands. d. A through C above. e. Shareholder demands. AACSB: BUSPROG: Analytic; DISC: Environmental Influence LO: 10-1; Bloom’s: Comprehension; Difficulty: Easy 19. Which of the following is a key idea regarding the reciprocal relationship between strategies and structures within MNEs? a. The fit between strategies and structures is crucial. b. The relationship is two way. c. Strategies and structures are not static. d. All of the above. e. A good strategy cancels the effect of a bad structure. AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Comprehension; Difficulty: Moderate 20. Which is not one of the suggestions for international managersthat can be drawn from this chapter? a. Create a common structure for all MNEs. b. Understand the nature and evolution of your industry. full file at http://testbankeasy.com full file at http://testbankeasy.com c. Actively develop learning and innovation capabilities. d. Masterthe external rules of the game. e. Understand and be prepared to change the internal rules of the game. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-5; Bloom’s: Comprehension; Difficulty: Easy full file at http://testbankeasy.com full file at http://testbankeasy.com SHORT ANSWER ESSAY QUESTIONS 1. To what extent should a firm be committed to a particular strategy versus making frequent changes in the strategy? If a strategy is likely to be changed, what is the point in having one? Strategy is way of being able to anticipate change and respond to it. However, since not all technological, economic, environmental and political changes can always be anticipated, when it becomes obvious that it no longer fits reality, then a change in strategy is appropriate. Although the strategy may need to be changed it does not follow that it is pointless to have one. After all, a strategy is intended to move you toward a goal and you are more likely to reach the goal if you have a plan than if you merely float along. As an analogy, suppose you are driving from Chicago to New York: it might be useful to have a plan as to the route you will take (even though roads may closed or the car may break down) than if one merely got into the car and started driving in whatever direction seemed to feel good. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-1; Bloom’s: Evaluation; Difficulty: Challenging 2. Normally when a firm first expands overseas, it may use an international division and later use a different organizational structure. Under what circumstances might such a firm wish to shift back to the use of an international division? A firm that was involved in a product which reached a market segment with similar characteristics around the world with a standardized product might wish to soon eliminate the use of an international division. However, markets and products sometimes change. If the overseas market declines significantly and the domestic grows but demands a product has been greatly modified from what continues to be sold internationally, the domestic versus international differences might very well justify shifting back to an international division. AACSB: BUSPROG: Analytic; DISC: Strategy LO: 10-1; Bloom’s: Analysis; Difficulty: Challenging 3. Global R&D has pros and cons for the firm that uses that approach. However, suppose you are the leader of the country where that firm is based. How might you view having R&D being conducted by a global team in a matter that is vital to the nation’s economic health/and or security? There is always a risk of knowledge leakage. To a company the benefits in obtaining profitable may offset the risks that competitors may get the results of the R&D and benefit also. However, when an organization is engaged in an activity in which the benefits and risks go far beyond the company and could significantly affect the entire nation, you as a leader might be concerned as to whether the global approach is used for the R&D and if so what type of controls exist to prevent leakage. full file at http://testbankeasy.com full file at http://testbankeasy.com One real world example would the global R&D that was involved during World War II in developing the atomic bomb. There was leakage of vital information that was of immense value to the Soviet Union (Russia) and its bomb development program – thus ultimately creating huge problems for the non-communist world. AACSB: BUSPROG: Reflective Thinking; DISC: Environmental Influence LO: 10-2; Bloom’s: Application; Difficulty: Moderate 4. Suppose you are the leader of a nation which currently has few capabilities other than a well-educated populace that could contribute to economic growth. However, you think you have a bright idea. You are going to encourage MNEs from around the world to locate their headquarters in your country. What might attract them and how might that pay off if you are successful? If your country has capable people, a stable government and economy, a climate friendly to business, a low cost of living, and low taxes, you may be able to attract headquarters from other countries. While companies may not be likely to move if their offices must be staffed totally with local people, to the extent that locals are used it may provide a learning experience that may contribute to their overall capabilities including entrepreneurship. The increased income within the country would help stimulate GDP to higher levels creating expanded local markets for local entrepreneurs. AACSB: BUSPROG: Reflective Thinking; DISC: Environmental Influence LO: 10-2; Bloom’s: Application; Difficulty: Moderate 5. Mega Global Corporation has centralized all of its global operations. The firm’s manager in Lower Slobovia would like to see more decentralization. Her complaint: “We are the experts on what needs to be done in this country but we have to get approval from people who have no idea as to what is going on here. That makes neither sense nor dollars.” Evaluate her statement. Many students will sympathize with the local manager. Some of them may have been employed in an organization in which they had technical expertise in some area but they had to get approval for certain actions from a boss who lacked that expertise. Others may not have been in that situation but have read Dilbert cartoons. The manager probably does indeed know more about the local situation but the challenge for the company seeking solution is to make the Think Global but Act Local more than just a slogan. AACSB: BUSPROG: Reflective Thinking; DISC: Strategy LO: 10-4; Bloom’s: Evaluation; Difficulty: Challenging full file at http://testbankeasy.com