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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.
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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.
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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.
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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.
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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
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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.
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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