Chapter 14
The Organization of International Business
True / False Questions
1. Organizational structure refers to the totality of a firm's organization.
True False
2. A manager receives a bonus because the national operating subsidiary, that she is in
charge of, exceeds its performance target. This is an example of an incentive.
True False
3. A decentralized organization allows managers to respond to environmental changes
more quickly than in a centralized organization.
True False
4. The choice between centralization and decentralization is not absolute.
True False
5. Beyond the initial functional division of the organization, further horizontal differentiation
may be required if the firm significantly diversifies its product offering, which takes the
firm into different business areas.
True False
6. In a worldwide area structure, each area tends to be a self-contained, largely
autonomous entity with its own set of value creation activities.
True False
7. In a worldwide product divisional structure, each division is a self-contained, largely
autonomous entity with full responsibility for its own value creation activities.
True False
8. The worldwide product division structure facilitates local responsiveness.
True False
9. It is difficult to ascertain accountability in the global matrix structure.
True False
,10. The need for coordination between units is greatest in firms pursuing a localization
strategy.
True False
11. Direct contact between subunit managers is the simplest integrating mechanism.
True False
12. A knowledge network is a network for transmitting information within an organization
that is based on formal organizational structure.
True False
13. Bureaucratic control involves personal contact with subordinates.
True False
14. The basic principle behind incentive systems is to ensure that the incentive scheme for
an individual employee is linked to an output target that he or she has some control over
and can influence.
True False
15. Performance ambiguity lowers the cost of control.
True False
16. New processes that might lead to a competitive advantage can be developed anywhere
within the organization's global network of operations.
True False
17. Norms are abstract ideas about what a group believes to be good, right, and desirable.
True False
18. An organizational culture can be strong but bad.
True False
19. Firms pursuing a localization strategy tend to operate with an array of formal and
informal integrating mechanisms.
True False
20. National regulations including local content rules and policies pertaining to layoffs might
act as a source of inertia.
True False
21. It is important to realize that organizational change will occur regardless of the
commitment of senior managers to it.
True False
,22. Refreezing an organization should happen quickly.
True False
Multiple Choice Questions
23. A firm's organizational culture refers to the:
A. norms and value systems that are shared among the employees of an
organization.
B. formal organizational structure of the
company.
C. control systems and incentives in
place.
D. human resources
component.
24. A firm's _____ determines where in its hierarchy the decision-making power is
concentrated.
A. organizational
architecture
B. vertical
differentiation
C. organizational
structure
D. horizontal
differentiation
25. By centralizing decision making, a firm:
A. allows managers to respond to environmental changes
more quickly.
B. runs the risk of not being able to respond to environmental
changes quickly.
C. can avoid the duplication of activities that occurs when similar activities are carried on
by various subunits within the organization.
D. often has issues with duplication of activities that occurs when similar activities are
carried on by various subunits within the organization.
, 26. _____ gives top-level managers the power and authority to be able to bring about needed
major organizational changes.
A. Personal
control
B. Decentralizati
on
C. Bureaucratic
control
D. Centralizati
on
27. A firm pursuing a(n) _____ will have a strong incentive to decentralize decision-making.
A. localization
strategy
B. transnational
strategy
C. global standardization
strategy
D. international
strategy
28. In firms pursuing a(n) _____, some operating decisions are relatively centralized, while
others are relatively decentralized.
A. global standardization
strategy
B. transnational
strategy
C. localization
strategy
D. international
strategy
29. Regardless of a firm's domestic structure, its international division tends to be:
A. organized on
economy.
B. decentralize
d.
C. organized on
geography.
D. centralize
d.
The Organization of International Business
True / False Questions
1. Organizational structure refers to the totality of a firm's organization.
True False
2. A manager receives a bonus because the national operating subsidiary, that she is in
charge of, exceeds its performance target. This is an example of an incentive.
True False
3. A decentralized organization allows managers to respond to environmental changes
more quickly than in a centralized organization.
True False
4. The choice between centralization and decentralization is not absolute.
True False
5. Beyond the initial functional division of the organization, further horizontal differentiation
may be required if the firm significantly diversifies its product offering, which takes the
firm into different business areas.
True False
6. In a worldwide area structure, each area tends to be a self-contained, largely
autonomous entity with its own set of value creation activities.
True False
7. In a worldwide product divisional structure, each division is a self-contained, largely
autonomous entity with full responsibility for its own value creation activities.
True False
8. The worldwide product division structure facilitates local responsiveness.
True False
9. It is difficult to ascertain accountability in the global matrix structure.
True False
,10. The need for coordination between units is greatest in firms pursuing a localization
strategy.
True False
11. Direct contact between subunit managers is the simplest integrating mechanism.
True False
12. A knowledge network is a network for transmitting information within an organization
that is based on formal organizational structure.
True False
13. Bureaucratic control involves personal contact with subordinates.
True False
14. The basic principle behind incentive systems is to ensure that the incentive scheme for
an individual employee is linked to an output target that he or she has some control over
and can influence.
True False
15. Performance ambiguity lowers the cost of control.
True False
16. New processes that might lead to a competitive advantage can be developed anywhere
within the organization's global network of operations.
True False
17. Norms are abstract ideas about what a group believes to be good, right, and desirable.
True False
18. An organizational culture can be strong but bad.
True False
19. Firms pursuing a localization strategy tend to operate with an array of formal and
informal integrating mechanisms.
True False
20. National regulations including local content rules and policies pertaining to layoffs might
act as a source of inertia.
True False
21. It is important to realize that organizational change will occur regardless of the
commitment of senior managers to it.
True False
,22. Refreezing an organization should happen quickly.
True False
Multiple Choice Questions
23. A firm's organizational culture refers to the:
A. norms and value systems that are shared among the employees of an
organization.
B. formal organizational structure of the
company.
C. control systems and incentives in
place.
D. human resources
component.
24. A firm's _____ determines where in its hierarchy the decision-making power is
concentrated.
A. organizational
architecture
B. vertical
differentiation
C. organizational
structure
D. horizontal
differentiation
25. By centralizing decision making, a firm:
A. allows managers to respond to environmental changes
more quickly.
B. runs the risk of not being able to respond to environmental
changes quickly.
C. can avoid the duplication of activities that occurs when similar activities are carried on
by various subunits within the organization.
D. often has issues with duplication of activities that occurs when similar activities are
carried on by various subunits within the organization.
, 26. _____ gives top-level managers the power and authority to be able to bring about needed
major organizational changes.
A. Personal
control
B. Decentralizati
on
C. Bureaucratic
control
D. Centralizati
on
27. A firm pursuing a(n) _____ will have a strong incentive to decentralize decision-making.
A. localization
strategy
B. transnational
strategy
C. global standardization
strategy
D. international
strategy
28. In firms pursuing a(n) _____, some operating decisions are relatively centralized, while
others are relatively decentralized.
A. global standardization
strategy
B. transnational
strategy
C. localization
strategy
D. international
strategy
29. Regardless of a firm's domestic structure, its international division tends to be:
A. organized on
economy.
B. decentralize
d.
C. organized on
geography.
D. centralize
d.
