Global Marketing
Chapter 17 Leadership, Organization, and Corporate Social Responsibility
1) Unilever Group Chief Executive Patrick Cescau wanted to reconnect the company with its
heritage of sustainability and concern for the environment. This and other values reflect
Unilever's philosophy of "doing well by doing good."
Answer: TRUE
Page Ref: 516
2) During his years as chief executive of GE, Jack Welch discovered that many employees
resisted his ideas about the need to globalize the company.
Answer: TRUE
Page Ref: 518
3) At companies with a global orientation, the best person for top executive positions is generally
considered to be a person born in the headquarters country.
Answer: FALSE
Page Ref: 518
4) Although PepsiCo is faced with weak demand in the United States, the snack-and-beverage
giant depends on its fast-growing international division.
Answer: TRUE
Page Ref: 519
5) According to Hamel and Prahalad, the most successful business leaders are those who view
their organizations as a "portfolio of businesses."
Answer: FALSE
Page Ref: 520
6) According to Hamel and Prahalad, the most successful business leaders are those who view
their organizations as a "portfolio of competencies."
Answer: TRUE
Page Ref: 520
7) A Brazilian, Carlos Ghosn, and executive in the company, was required to move aggressively
to cut costs and make drastic changes in Nissan's structure.
Answer: TRUE
Page Ref: 519
.
8) PepsiCo's fast growing international division reported snack sales to be particularly strong in
Mexico and Russia.
Answer: TRUE
Page Ref: 519
9) Even companies with years of experience competing around the globe find it necessary to
adjust their organizational designs in response to environmental change.
Answer: TRUE
Page Ref: 522
10) No single correct organizational structure exists for global marketing.
Answer: TRUE
Page Ref: 522
11) As markets globalize and as Japan opens its own market to more competition from overseas,
more Japanese companies are likely to break from traditional organization patterns.
Answer: TRUE
Page Ref: 522
12) A geographically dispersed company cannot limit its knowledge to product, function, and the
home territory..
Answer: TRUE
Page Ref: 522
13) Suppose a Japanese company has independent subsidiaries in several European nations. As
the need for coordination of planning and control activities increases, a matrix design should be
implemented.
Answer: FALSE
Page Ref: 522
14) Suppose a Japanese company has independent subsidiaries in several European nations. As
the need for coordination of planning and control activities increases, a regional management
center should be established.
Answer: TRUE
Page Ref: 522
15) Successful companies, the real global winners, must have both good strategies and good
execution..
Answer: TRUE
Page Ref: 523
16) New forms of flexibility, efficiency, and responsiveness are required to meet the demands of
globalizing markets.
Answer: TRUE
Page Ref: 523
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17) When business is conducted in a single region that is characterized by differences in
economic, social, geographical, and political conditions, there is both justification and need for a
management center.
Answer: FALSE
Page Ref: 526
18) A major advantage of a regional center is its cost.
Answer: FALSE
Page Ref: 526
19) GE is managing its worldwide organization as a network, not a centralized hub with foreign
appendages.
Answer: TRUE
Page Ref: 528
20) Both Gillette and Ericsson reorganized themselves into matrix organizations.
Answer: TRUE
Page Ref: 528
21) The matrix organization requires a fundamental change in management behavior,
organizational culture, and technical systems.
Answer: TRUE
Page Ref: 528-530
22) There is general agreement that the matrix design is the single best organization structure for
global marketing.
Answer: FALSE
Page Ref: 528-530
23) The lean production techniques that have revolutionized the automobile industry were
pioneered by German auto makers.
Answer: FALSE
Page Ref: 531
.
24) "Build to inventory to reduce unit costs" and "inspect at end of process" are two assumptions
associated with traditional approaches to automobile manufacturing.
Answer: TRUE
Page Ref: 531-532
25) "Minimize inventory to cut costs and waste" and "inspect to prevent defective production"
are two assumptions associated with lean production in automobile manufacturing.
Answer: TRUE
Page Ref: 531-532
26) Toyota Production system (TPS), as the Japanese company's manufacturing methods are
known, achieves efficiencies by following a lean production system.
Answer: TRUE
Page Ref: 531-532
27) The differences between lean producers and U.S. mass producers in the way they deal with
their respective dealers, distributors, and customers are as dramatic as the differences in the way
they deal with their suppliers.
Answer: TRUE
Page Ref: 531-532
28) The U.S. mass producers focus on short-term income and return on investment, whereas
Japanese see the process in terms of the long-term perspective.
Answer: TRUE
Page Ref: 531-532
29) Once a Japanese dealership gets a customer, it is absolutely determined to hang on to that
customer for life.
Answer: TRUE
Page Ref: 533-534
30) Today's chief executive must have good understanding and responding to the concerns and
interests of a variety of stakeholders.
Answer: TRUE
Page Ref: 535-536
31) A stakeholder is any group or individual that is affected by, or takes an interest in, the
policies and practices adopted by an organization.
Answer: TRUE
Page Ref: 535-536
32) Primary stockholders include top management, employees, customers, media, and persons
holding stock in the company.
Answer: FALSE
Page Ref: 535-536
.
33) In developing countries, globalization's opponents accuse companies of placing intellectual
property rights ahead of human rights.
Answer: TRUE
Page Ref: 536
34) Corporate social responsibility (CSR) refers to a company's obligation to pursue goals and
policies that are in a company's best interest.
Answer: FALSE
Page Ref: 536-537
35) Timberland Company unveiled a "nutritional label" on its footwear boxes as a means of
communicating its corporate social responsibility commitment to consumers.
Answer: TRUE
Page Ref: 537
36) A multinational firm must rely on individual country managers to address Corporate Social
Responsibility (CSR) issues on an ad hoc basis.
Answer: TRUE
Page Ref: 537-538
37) As retail gasoline prices soared in the United States following the devastation of Hurricane
Katrina, BP, Royal Dutch Shell, and other companies were accused of gouging.
Answer: TRUE
Page Ref: 539
38) According to one study in 2004, CEOs in the United States were paid 431 times more than
the average worker.
Answer: TRUE
Page Ref: 539
39) Despite the fact that Starbucks is widely admired for forward-thinking management policies,
Global Exchange pressed the company to further demonstrate its commitment to social
responsibility by selling Fair Trade coffee.
Answer: TRUE
Page Ref: 539
40) One of the Corporate Social Responsibility (CSR) initiatives by IKEA's primary carpet
supplier in India is to monitor subcontractors to ensure that they do not employ children.
Answer: TRUE
Page Ref: 540
41) According to Carly Florina, former CEO of Hewlett-Packard, leadership is about:
A) hierarchy.
.
B) title.
C) status.
D) connecting.
E) bragging.
Answer: D
Page Ref: 517-518
42) In addition to "selling" their visions, top management at both Whirlpool and GE face the
formidable task of building:
A) their company stature.
B) physical layout and design.
C) a cadre of globally oriented managers.
D) a cadre of loyal customers.
E) access to distribution channels.
Answer: C
Page Ref: 518
43) Which of the following is true?
A) The number of Japanese businesspersons fluent in English working in the U.S. exceeds the
number of American businesspersons fluent in Japanese working in Japan.
B) The number of American businesspersons fluent in Japanese working in Japan exceeds the
number of Japanese businesspersons fluent in English working in the U.S.
C) The number of Japanese businesspersons working in the U.S. who are fluent in English is
about equal to the number of American businesspersons working in Japan who are fluent in
Japanese.
D) Fewer than 1,000 Japanese businesspersons working in the U.S. are fluent in English.
Answer: A
Page Ref: 518-519
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44) The ability to speak foreign languages is one difference between managers born and raised in
the United States and those born and raised elsewhere. Which is true and reflects the earlier
statement?
A) There are 200 million Chinese children studying English.
B) There are 24 million American children studying Chinese.
C) There are 200 million Indian children studying Chinese.
D) Chinese managers study English as much as Chinese.
E) There are equal numbers of American and Chinese children studying English.
Answer: A
Page Ref: 518-519
45) Marjorie Scardino is chief executive of:
A) Nissan Motor (Japan).
B) Pearson PLC (Great Britain).
C) Ford Motor Company (USA).
D) Pharmacia Corporation (USA).
E) Atlas Copco AB (Sweden).
Answer: B
Page Ref: 519
46) Which of the following has an American woman as the chief executive?
A) Nissan Motor (Japan)
B) Pearson PLC (Great Britain)
C) Ford Motor Company (USA)
D) Pharmacia Corporation (USA)
E) Atlas Copco AB (Sweden)
Answer: B
Page Ref: 519
47) Brazilian Carlos Ghosn is chief executive of:
A) Nissan Motor (Japan).
B) Pearson PLC (Great Britain).
C) Ford Motor Company (USA).
D) Pharmacia Corporation (USA).
E) Atlas Copco AB (Sweden).
Answer: A
Page Ref: 519
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48) Fred Hassan, a native of Pakistan, is chief executive of:
A) Nissan Motor (Japan).
B) Pearson PLC (Great Britain).
C) Ford Motor Company (USA).
D) Schering-Plough (USA).
E) Atlas Copco AB (Sweden).
Answer: D
Page Ref: 519
49) According to Prahalad and Hamel a core competence has all of the following characteristics
except:
A) potential access to a wide variety of markets.
B) a significant contribution to perceived customer benefits.
C) it is easy for competitors to imitate.
D) benefits to customers.
E) it is difficult for competitors to imitate.
Answer: C
Page Ref: 520
50) Indra Nooyi, chairman and chief executive of PepsiCo is faced with all of the following
except:
A) rising prices for raw materials in the United States.
B) a weak demand for carbonated soft drinks in the United States.
C) a rapidly growing international division.
D) a strong snack sales in Mexico and Russia.
E) a decrease in sales in the Middle East and Argentina.
Answer: E
Page Ref: 519
51) According to David Whitwam, former CEO of Whirlpool, one must create an organization
whose people are:
A) adept at exchanging ideas.
B) absolutely free of the 'not-invented here' syndrome.
C) constantly working together to identify best global opportunities.
D) working together to solve the biggest global problems.
E) can adapt to systems across borders.
Answer: D
Page Ref: 522
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52) Which of the following is the best organization structure for global marketing?
A) international division structure
B) matrix
C) geographic structure
D) worldwide product division structure
E) There is no single "best" structure for global marketing.
Answer: E
Page Ref: 522-523
53) In today's dynamic global competitive environment, organizations need to develop new
forms of:
A) ethnocentrism and myopia.
B) flexibility, efficiency, and responsiveness.
C) export department structure.
D) self-reference criterion.
E) geographic structure.
Answer: B
Page Ref: 522-523
54) Which global marketing expert recommends an organization design based on a "global
superstructure" that views the world in terms of 30 regions?
A) Paul Krugman
B) Kenichi Ohmae
C) Tom Peters
D) Michael Porter
E) Kazuo Inamori
Answer: D
Page Ref: 522-523
55) As a company's initial international business involvement becomes too much for a single
manager or export department to handle, the next step is typically to establish a(n):
A) matrix structure.
B) international division structure.
C) geographic structure.
D) worldwide product division structure.
E) regional management center.
Answer: B
Page Ref: 524-526
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56) Which of the following does not contribute to the establishment of an international division?
A) top management commitment that justifies an organizational unit headed by a senior manager
B) complexity of international operations requires unit with authority to make its own decisions
C) Management recognizes the need for internal specialists.
D) Management lacks desire to scan the globe for opportunities and threats.
E) Pressure to assemble a staff that will take the responsibility to coordinate.
Answer: D
Page Ref: 524-526
57) A company with headquarters in the United States and operational units in the Netherlands,
France, Italy, and Spain would be well advised to consider establishing a(n):
A) matrix structure.
B) international division structure.
C) geographic structure.
D) worldwide product division structure.
E) regional management center.
Answer: E
Page Ref: 526
58) A company with headquarters in Europe and operational units in Canada, the United States,
and Mexico would be well advised to consider establishing a(n):
A) matrix structure.
B) international division structure.
C) geographic structure.
D) worldwide product division structure.
E) regional management center.
Answer: E
Page Ref: 526
59) The advantages that a regional management center can offer a company includes all of the
following except:
A) pan-regional decision making.
B) coordinated regional planning.
C) considerable cost saving.
D) coordinated control.
E) coordinated decision making.
Answer: C
Page Ref: 526
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60) One of the potential drawbacks of a regional management center is that:
A) pan-regional coordination efforts can suffer.
B) the cost can be prohibitive.
C) the company may lose its "insider" advantage.
D) regional management may take a one-sided approach when implementing corporate
objectives.
E) lack of coordinated decision making.
Answer: B
Page Ref: 526
61) Under the geographical and product division structures, for the company with French origins,
France is:
A) the headquarter country market.
B) simply another geographic market.
C) European market.
D) divisional market.
E) product market.
Answer: B
Page Ref: 526-527
62) The organization design in which an employee reports to both a country manager and a
functional manager is a(n):
A) matrix structure.
B) international division structure.
C) geographic structure.
D) worldwide product division structure.
E) regional management center.
Answer: A
Page Ref: 528-530
63) Which form of organization design is capable of integrating geographic knowledge, product
knowledge, functional competencies, and customer knowledge?
A) matrix structure
B) international division structure
C) geographic structure
D) worldwide product division structure
E) regional management center
Answer: A
Page Ref: 528-530
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64) Boeing has reorganized its commercial transport design and manufacturing engineers from
functional lines into a matrix organization. This new design is expected to all but one of the
following benefits:
A) lower costs and quicken updates.
B) facilitate problem solving.
C) unite engineering and manufacturing processes.
D) provide customer contacts.
E) enhance product consistency.
Answer: D
Page Ref: 528-530
65) Having established that the matrix is appropriate, management can expect the matrix to
integrate the following competency on a worldwide basis.
A) geographic knowledge
B) product knowledge and know-how
C) functional competence in finance, production and marketing
D) knowledge of customer or industry and its needs
E) all of the above are competencies
Answer: B
Page Ref: 528-530
66) Which global company has dissolved its matrix structure in order to achieve "greater speed
and efficiency by further focusing and flattening the organization?"
A) Whirlpool
B) Levi Strauss
C) Pearson PLC
D) ABB
E) Gillette
Answer: D
Page Ref: 529
67) The key to successful matrix management is ensuring that managers are able to:
A) adopt a matrix design.
B) adhere to matrix structure.
C) maintain technical systems.
D) resolve conflicts and achieve integration.
E) preserve existing organizational culture.
Answer: D
Page Ref: 529
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68) Which of the following does not belong in a list of traditional assumptions about automobile
manufacturing?
A) maximize machine utilization
B) fixed set up times
C) build to inventory to reduce unit cost
D) outsource from supplier specialists
E) inspection at the end of the process
Answer: D
Page Ref: 531
69) Which of the following are traditional assumptions about automobile manufacturing?
A) maximize machine utilization
B) fixed set up times
C) build to inventory to reduce unit cost
D) maximize backwards integration
E) all of the above
Answer: E
Page Ref: 531
70) Which of the following assumptions does not belong in a list of characteristics of lean
production?
A) labor is more costly than machines
B) set up time can be reduced
C) minimize inventory to cut costs, waste
D) maximize backwards integration
E) inspection to prevent defective production
Answer: D
Page Ref: 531
71) In contrast to the lean producers, U.S. mass producers typically maintain operations that
involve all of the following except:
A) less mechanization.
B) greater labor direct content.
C) divide employees with no overlap.
D) limited quality control.
E) employee teamwork.
Answer: E
Page Ref: 532
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72) Concepts such as "assembler value chains" and "downstream value chains" are associated
with:
A) lean production.
B) the matrix structure.
C) polycentric organizational designs.
D) the global marketing audit.
E) traditional assembly designs.
Answer: A
Page Ref: 532-534
73) Which of the following does not describe the Toyota Production System (TPS)?
A) jidoka
B) 'just-in-time'
C) fixed setup time
D) built-in quality
E) visualizing problems
Answer: C
Page Ref: 532
74) Primary stakeholders include all of the following except:
A) top management.
B) employees.
C) media.
D) suppliers.
E) customers.
Answer: C
Page Ref: 535-536
75) Secondary shareholders include all of the following except:
A) media.
B) employees.
C) local community groups.
D) nongovernmental organizations.
E) general business community.
Answer: B
Page Ref: 535-536
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76) In developing countries, globalization's opponents accuse companies of:
A) undermining local cultures.
B) placing intellectual property rights ahead of human rights.
C) promoting unhealthy diets and unsafe food technologies.
D) pursuing unsustainable consumption.
E) all of the above
Answer: E
Page Ref: 536
77) In a socially responsible firm, employees perform all of the following except:
A) conduct business in an ethical manner.
B) pursue goals and policies that are in society's best interest.
C) guided by moral principles.
D) distinguish between right and wrong.
E) develop their own core ideologies on moral principles.
Answer: E
Page Ref: 536-537
78) The universal concerns for global companies established by the United Nations Global
Compact consists of the following three dimensions:
A) factor conditions, demand conditions, industry conditions.
B) human rights, animal rights, and the environment.
C) content domain, human conditions and animal rights.
D) human rights, labor, and the environment.
E) content domains, animal rights, and labor.
Answer: D
Page Ref: 539-540
79) Nike came under fire from critics who alleged poor working conditions in the factories that
make the company's athletic shoes. This is an example of the demand for:
A) labor unions.
B) equal opportunity employment.
C) higher wages.
D) standards for working conditions.
E) corporate social responsibility.
Answer: E
Page Ref: 536-539
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80) The Timberland Company is best known for its popular hiking boots and work boots. It is a
global mission-centered company. Timberland unveiled a sort of "nutritional label" on its
footwear boxes as a means of:
A) showing the strength of work boots.
B) to promote the health benefit of walking.
C) to communicate its CSR commitment.
D) showing the quality of materials used.
E) to communicate the popularity of hiking boots.
Answer: C
Page Ref: 537
81) How important is the nationality of the top management position holder in global businesses?
Answer: Many globally minded companies realize that the best person for a top management job
or board position is not necessarily someone born in the home country. The ability to speak
foreign languages is one difference between managers born and raised in the United States and
those born and raised elsewhere. There are many examples of executives who were from other
than the country where the business is located. Alexander Trotman was born in England and
speaks English, French, and German. Howard Stringer is the chief executive at Sony. Generally
speaking, however, Japanese companies have been reluctant to place non-Japanese nationals in
top positions. For years, only Sony, Mazda, and Mitsubishi had foreigners on their boards. In
March 1999 the French company Renault SA bought a stake in Nissan Motor and installed a
Brazilian, Carlos Ghosn, as president. An outsider, Ghosn was required to move aggressively to
cut costs and make drastic changes in Nissan's structure. He also introduced two new words into
Nissan's lexicon: speed and commitment. His life story and exploits have been so important that
he is celebrated in a big comic that is popular with Japanese.
Page Ref: 518-520
82) As a company's international business grows, the need for having international divisions
become evident. Explain how an international division structure works and what factors
contribute to the establishment of an international division.
Answer: The complexity of coordination and directing activities grows with the growth of
international business. Pressure is created to assemble a staff with the responsibility for
coordination and direction of the growing international activities of the organization. This
demands the creation of the international division as has happened in many of the organizations
such as Wal-Mart, Levi Strauss, Best Buy and Walt Disney Company. Four factors contribute to
the establishment of an international division. First, top management's commitment to global
operations has increased enough to justify an organizational unit headed by a senior manager.
Second, the complexity of international operations requires a single organizational unit whose
management has sufficient authority to make its own determination on important issues such as
which market entry strategy to employ. Third, an international division is frequently formed
when the firm has recognized the need for internal specialists to deal with the special demands of
global operations. A fourth contributing factor is management's recognition of the importance of
strategically scanning the global horizon for opportunities and aligning them with company
resources rather than simply responding on an ad hoc basis to situations as they arise.
Page Ref: 524-526
83) What are Regional Management Centers? What are the advantages of having such centers in
the management of global businesses?
Answer: When business is conducted in a single region that is characterized by similarities in
economic, social, geographical, and political conditions, there is both justification and need for a
management center. Thus, another stage of organizational evolution is the emergence of an area
.
or regional headquarters as a management layer between the country organization and the
international division headquarters. The increasing importance of the EU as a regional market
has prompted a number of companies to change their organizational structures by setting up
regional headquarters there. A regional center typically coordinates decisions on pricing,
sourcing, and other matters. Executives at the regional center also participate in the planning and
control of each country's operations with an eye toward applying country knowledge on a
regional basis and optimally utilizing corporate resources on a regional basis. Regional
management can offer a company several advantages. First, many regional managers agree that
an on-the-scene regional management unit makes sense where there is a real need for
coordinated, pan-regional decision making. Coordinated regional planning and control are
becoming necessary as the national subsidiary continues to lose its relevance as an independent
operating unit. Regional management can probably achieve the best balance of geographical,
product, and functional considerations required to implement corporate objectives effectively. By
shifting operations and decision making to the region, the company is better able to maintain an
insider advantage. The major disadvantage of a regional center is its cost.
Page Ref: 526
84) McDonald's organizational design integrates the international division and geographical
structures. How does the geographical and product division structure work in a global context?
Answer: As a company becomes more global, management frequently faces the dilemma of
whether to organize by geography or by product lines. The geographical structure involves the
assignment of operational responsibility for geographic areas of the world to line managers. The
corporate headquarters retains responsibility for world-wide planning and control, and each area
of the world — including the "home" or base market — is organizationally equal. For the
company with French origins, for example, France is simply another geographic market under
the organizational arrangement. This structure is most common in companies with closely related
product lines that are sold in similar end-use markets around the world. For example, the major
international oil companies utilize the geographical structure. McDonald's U.S. is organized into
five geographical operating divisions and McDonald's International has four. When an
organization assigns regional or worldwide product responsibility to its product divisions,
manufacturing standardization can result in significant economies. One potential disadvantage of
the product approach is that local input from individual country managers may be ignored with
the result that products will not be sufficiently tailored to local markets.
Page Ref: 526-527
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85) At Whirlpool, North American operations are organized in matrix form. What is the key to
successful matrix management?
Answer: The key to successful matrix management is ensuring that managers are able to resolve
conflicts and achieve integration of organization programs and plans. The mere adoption of a
matrix design or structure does not create a matrix organization. The matrix organization requires
a fundamental change in management behavior, organizational culture, and technical systems. In
a matrix, influence is based on technical competence and interpersonal sensitivity, not on formal
authority. In a matrix culture, managers recognize the absolute need to resolve issues and choices
at the lowest possible level and do not rely on higher authority. An important task of the current
day top management is to eliminate a one-dimensional approach to decisions and encourage the
development of multiple management perspectives and an organization that will sense and
respond to a complex and fast-changing world.
Page Ref: 528-530
86) After establishing that the organizational matrix is appropriate for a business, what should
management expect as to the integration of basic competencies on a worldwide basis?
Answer: There are four basic competencies on a worldwide basis that a manager can expect the
matrix to integrate once it is established that it is appropriate for the organization. These are: (1)
geographic knowledge — this is an understanding of the basic economic, social, cultural,
political, and governmental market and competitive dimensions of a country is essential; (2)
product knowledge and know-how — product managers with a worldwide responsibility can
achieve this level of competence on a global basis. Another way of achieving global product
competence is simply to duplicate product management organizations in domestic and
international divisions, achieving high competence in both organizational units; (3) functional
competence in such fields as finance, production, and especially, marketing — corporate
functional staff with worldwide responsibility contributes toward the development of functional
competence on a global basis; (4) a knowledge of the customer or industry and its needs —
certain large and extremely sophisticated global companies have staff with a responsibility for
serving industries on a global basis to assist the line managers in the country organizations in
their efforts to penetrate specific customer markets. Under this arrangement, instead of
designating national organizations or product divisions as profit centers, both are responsible for
profitability.
Page Ref: 528-530
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87) What is a matrix organization? Describe giving examples.
Answer: In the fully developed large-scale global company, product or business, function, area,
and customer know-how are simultaneously focused on the organization's worldwide marketing
objectives. This type of total competence is a matrix organization. Management's task in the
matrix organization is to achieve an organizational balance that brings together different
perspectives and skills to accomplish the organization's objectives. In 1998, both Gillette and
Ericsson announced plans to reorganize into matrix organizations. Ericsson's matrix is focused
on three customer segments: network operators, private consumers, and commercial enterprises.
Gillette's new structure separates product-line management from geographical sales and
marketing responsibility. Likewise, Boeing has reorganized its commercial transport design and
manufacturing engineers into a matrix organization. This is built around five platform or aircraft
model-specific groups. The new design is expected to lower costs and quicken updates and
problem solving. It will also unite essential design, engineering, and manufacturing processes
between Boeing's commercial transport factories and component plants, enhancing product
consistency. The matrix form of organization is well-suited to global companies because it can
be used to establish a multiple-command structure that gives equal emphasis to functional and
geographical departments. Four considerations are suggested regarding the matrix organizational
design. First, the matrix is appropriate when the market is demanding and dynamic. Second,
employees must accept higher levels of ambiguity and understand that policy manuals cannot
cover every eventuality. Third, in country markets where the command-and-control model
persists, it is best to overlay matrices on only small portions of the workforce. Finally,
management must be able to clearly state what each axis of the matrix can and cannot do.
Page Ref: 528
88) What are the assumptions about mass production compared to Toyota Production system?
Answer: Under the traditional assumptions related to mass production there are five major
differences: (1) maximize machine utilization; (2) fixed setup times; (3) build to inventory to
reduce unit cost; (4) inspect at end of process and (5) maximize backwards integration. On the
other hand, in the Toyota Production System these five assumptions are: (1) labor is more costly
than machines; (2) can reduce setup time; (3) minimize inventory to cut costs and waste; (4)
inspect to prevent defective production and (5) outsource from supplier specialists. These
differences are remarkable. To achieve these gains at Toyota, production experts Taiichi Ohno
and Shigeo Shingo challenged above-listed traditional assumptions associated with automobile
manufacturing. They made changes to operations within the auto company itself such as
reducing setup times for machinery. Their innovations have been widely embraced in the
industry as a result, individual producers' value chains have been modified, and interfaces
between producers and suppliers have been optimized to create more effective and efficient
value systems.
Page Ref: 531-532
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89) A joke among the Japanese says that the only way to escape from the salesperson is to leave
the country. Explain this statement highlighting the differences between lean producers and U.S.
mass producers.
Answer: The primary difference between lean producers and U.S. mass producers is in the way
they do business deals with their respective dealers, distributors, and customers. U.S. mass
producers follow the basic industry model and maintain an "arm's-length" relationship with
dealers that is often characterized by a lack of cooperation and even open hostility. There is often
no sharing of information because there is no incentive to do so. All parties try to keep
information about what they really want from the others. The manufacturer uses incentives and
other schemes to persuade the dealers to accept the unpopular models. The dealer then has the
problem of persuading customers to buy the unpopular models. The production process portion
of the value chain is also broken. Thus, there is a compounding of problems all along the way
between manufacturer and dealer. This is very different than what the lean producer business
practices are. In Japan, where lean producers are predominant, the dealer's employees are true
product specialists. They know everything about their products. A customer deals with one
person in the dealership, and that person takes care of everything from the initial contact through
eventual trade-in and replacement and all the problems. The linkages between dealers, marketing
divisions, and product development teams are totally optimized. Once a Japanese dealership gets
a customer, it is absolutely determined to hang on to that customer for life. The difference
between U.S. mass producers and the Japanese lean producers reflect their fundamental
differences in business objectives. The U.S. producers focus on short-term income and return on
investment. Today's sale is a discrete event that is not connected to upstream activities in the
value chain and has no value in tomorrow's activities. The Japanese see the process in terms of
the long-term perspective. There are two major goals of the sales process. The first is to
maximize the income stream from each customer over time and the second is to use the linkage
with the production processes to reduce production and inventory costs and to maximize quality,
and therefore, differentiation.
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90) Leaders of global companies are facing the resistance to globalization in many countries.
How should the executives handle the situation?
Answer: Today's executives must be a proactive steward of the reputation and social standing of
a company he or she is leading. This requires an understanding of the concerns as well as timely
responding to the concerns and interests of a variety of stakeholders. Resistance to globalization
is one of the prominent restraints on the growth of global business and global marketing. The
antiglobalization movement takes a variety of forms and finds expression in various ways. In
developed countries, the movement's concerns and agenda include cultural imperialism. For
example, the French backlash against McDonald's; the loss of jobs due to offshoring and
outsourcing, such as in the furniture industry in the United States; and a distrust of global
institutions as seen by anti-WTO protests in various countries. On the other hand, in developing
countries, globalization's opponents accuse companies of undermining local cultures, placing
intellectual property rights ahead of human rights, promoting unhealthy diets and unsafe food
technologies, and pursuing unsustainable consumption. Environmental degradation and labor
exploitation are also key issues. A company's reputation can very quickly get tarnished if
activists target its policies and practices. Thus, the leaders of global companies must practice
corporate social responsibility (CSR). CSR is a company's obligation to pursue goals and
policies that are in society's best interests. In a socially responsible firm, employees conduct
business in an ethical manner. They are guided by moral principles that enable them to
distinguish between right and wrong. At many companies, a formal statement or code of ethics
summarizes core ideologies, corporate values, and expectations. GE, Boeing, and United
Technologies Corporation are some of the American companies offering training programs that
specifically address ethics issues. At some companies their ethics statement is known as their
credo. For the global company with operations in multiple markets, the issue of CSR becomes
complicated and executives have to take into account factors prevalent in each market into
consideration.
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