Deck 12: Making Alliances and Acquisitions Work

Question 1

The global standardization strategy, despite its complexity, is still the best option at being cost effective and locally responsive.

Answer 1

False

Question 2

The global product division structure seeks to balance local responsiveness with efficiency while an MNE using a global matrix aims to provide the world with standardized products to reach their full market potential.

Answer 2

False

Question 3

One of the disadvantages of the geographic area structure is that country and regional managers are not given sufficient voice relative to the heads of the domestic divisions.

Answer 3

False

Question 4

Transnational strategy is usually the easiest strategy for an MNE to implement and the first one adopted when the firm ventures abroad.

Question 5

From a resource perspective, tacit knowledge is ultimately more valuable than explicit knowledge.

Question 6

All firms evolve in the same direction from relatively simple international division, through either geographic area or global product division structures, and may finally reach the more complex global matrix stage.

Question 7

In home replication strategy, knowledge flow is multidirectional, while in transnational strategy, it is one-way.

Question 8

A disadvantage to the global standardization strategy is that often one size does not fit all, and MNEs who adopt this strategy tend to experience a lack of local responsiveness.

Question 9

Explicit knowledge is codifiable and can be transmitted by IT. Tacit knowledge is non-codifiable and requires hands-on communication.

Question 10

Because of the popularity of the global standardization strategy, many firms have changed their organization to the global product division.

Question 11

In the eyes of stakeholders, a top echelon consisting of largely one nationality bodes well for an MNE aspiring to globalize everything it does.

Question 12

A localization strategy is best adopted when an MNE is willing to give full attention to foreign market adaptation and there are minimal pressures to keep cost low.

Question 13

International division structure is an organizational structure typically set up when a firm first engages in a home replication strategy.

Question 14

Regarding knowledge flow in MNEs, firms adopting the transnational strategy experience the highest knowledge interdependence while firms adopting the localization strategy experience the lowest.

Question 15

The framework that addresses the pressures MNEs confront is commonly referred to as the integration-responsiveness framework.

Question 16

Strategy usually drives structure, but structure does not usually drive strategy.

Question 17

The top executives at the highest level of an MNE are usually host-country nationals.

Question 18

The phrase think global, act local is a winning formula when it comes to leveraging multinational presence.

Question 19

A localization strategy is best adopted when an MNE is willing to give full attention to foreign market adaptation and there are minimal pressures to keep cost low.

Question 20

The unique part of international competition is the pressure for cost reduction.

Question 21

Which is an economic result when an MNE acts locally responsive?

A) The local government is unhappy.
B) Regulations are loosened.
C) Innovations are limited.
D) Costs are increased.

Question 22

If an MNE wishes to maintain innovation-based firm heterogeneity (being different from other firms), which of the following best describes a potentially successful strategy?

A) Invest much more in a centralized, close-knit R D
B) Spread R D work across different locations and teams around the world
C) Outsource R D to other firms
D) Make alliances with other firms that have strong R D departments

Question 23

Which is one of the disadvantages of the home replication strategy?

A) It focuses too much on the home country.
B) It is organizationally complex and difficult to implement.
C) It focuses too much on the foreign country.
D) It has higher costs due to duplication efforts in multiple countries.

Question 24

Which of the following best describes the strength and weakness of the geographic area structure?

A) Cost of business.
B) Cost of equity.
C) Level of local responsiveness.
D) Management control.

Question 25

Which strategy for MNEs is best for environments where there are clear differences between the home and foreign markets and there is a low pressure for cost reduction?

A) Home replication strategy
B) Localization strategy
C) Global standardization
D) Asset allocation

Question 26

Which best describes the weakness behind enterprise resource planning (ERP) packages and MNE strategy?

A) ERPs only help a firm beginning home replication strategy, so they have low levels of local responsiveness
B) ERPs help a firm compete as efficiently as possible, but they are designed for widespread use by many MNEs so they do not help a firm achieve strong rarity.
C) The cost of ERPs usually does not outweigh its benefits.
D) ERPs help with organization and limitability, but are rarely able to help a firm establish more value.

Question 27

____ is the structures, processes, and systems that actively develop, advance, and transfer knowledge.

A) Absorptive capacity
B) Tacit knowledge
C) Explicit knowledge
D) Knowledge management

Question 28

Which of the following is NOT part of the reciprocal relationship between strategy and structure?

A) Strategy usually drives structure.
B) Structure also usually drives strategy.
C) Strategies and structures have to be ready to change all the time.
D) All of these answers.

Question 29

The prediction that people around the world would be drinking Coke, wearing Levi jeans, and watching MTV on their Sony TVs was based on which idea?

A) Worldwide increase in GDP
B) Worldwide increase in money used for luxuries
C) Worldwide convergence of consumer tastes
D) Worldwide connectivity with communication technology

Question 30

Which best describes what is meant by the phrase value of innovation ?

A) It is important for a firm to add concrete value.
B) Structural changes are focused on finding new value.
C) Not all innovation is valuable, so finding profitable innovation is crucial.
D) How an organization is structured is directly related to how valuable it is.

Question 31

Why is the flexible global matrix a popular organizational structure right now?

A) Because formal structures are easier to observe and imitate than informal structures, and it is more of a management mentality than an organizational structure.
B) Because it balances local responsiveness and cost efficiency.
C) Because it allows efficiency and simplicity in management levels.
D) Because it takes everything global and efficiently creates standardized products and marketing.

Question 32

Which of the following best describes the motive for appointing a host-country national as head manager in a MNE subsidiary?

A) They are familiar with the intricate workings of the MNE.
B) They are independent of the local traditions and MNE so act as a neutral leader.
C) They are familiar with the local informal institutions and market.
D) Host-country nationals are never appointed as head manager.

Question 33

Which strategy is most difficult to implement and is the most organizationally complex?

A) Localization strategy
B) Transnational strategy
C) Home replication strategy
D) Global standardization

Question 34

Which of the following best exemplifies how informal institutions govern MNEs?

A) The US has few laws limiting US firms from creating subsidiaries overseas, but there is often a vocal backlash from the public over domestic job loss.
B) MNEs coming into the US have relatively few restrictions, as long as they do not practice illegal dumping or price setting.
C) MNEs based in the US must advance quickly into foreign markets to beat competitors and take care of opportunities, but these moves are often slowed by legal regulations and entry barriers.
D) The laws governing MNEs based in the US are always changing.

Question 35

Which strategy for MNEs entering foreign markets is best described as the development and distribution of standardized products worldwide to reap maximum benefits from low cost advantages?

A) Asset allocation
B) Localization strategy
C) Home replication strategy
D) Global standardization

Question 36

Which of the following is a leading problem with the international division organizational structure?

A) It encourages the fragmentation of the MNE into fiefdoms.
B) Foreign subsidiary managers are not given sufficient voice relative to domestic division managers.
C) It is too locally responsive.
D) The management team is duplicated, creating organizational confusion.

Question 37

Which of the following best describes how the transnational strategy uniquely differs in regard to its communication relationship between home country and foreign market?

A) The home country has one-way communication with the foreign market, providing innovation and direction to it.
B) The subsidiaries in the home country and foreign country do not communicate.
C) It seeks to eventually allow the foreign subsidiary to be autonomous, so communication is one-sided.
D) Innovations not only flow from the home country to host countries, but also flow from host countries to the home country and flow among subsidiaries in multiple host countries.

Question 38

Which are the two primary pressures MNEs confront?

A) Ethics and governance
B) Cost reductions and local responsiveness
C) Liability of foreignness and investment risk
D) Local and foreign government

Question 39

Which of the following is NOT one of the four strategic choices for MNEs?

A) Localization
B) Global standardization
C) Home replication
D) Asset allocation

Question 40

What is the drawback to the global matrix approach?

A) The complex levels of management often have conflicting incentives, which require valuable time to align.
B) While teamwork is realized, it is difficult to know whom to blame or praise when things go poorly or well.
C) The management complexity creates slow decision making.
D) All of these answers

Question 41

Explain the issues underlying the nationality of the head of management and the directing board of a company.

Question 42

Explain the reciprocal relationship between multinational strategy and structure.

Question 43

Explain the dilemma central management faces regarding subsidiary initiatives.

Question 44

Explain the prediction made by Theodore Levitt, and determine whether or not it was accurate.

Question 45

Identify three of the four strategic choices for MNEs and list their advantages and disadvantages.

Question 46

Which best describes the tension between central control and subsidiary initiative in a large firm?

A) The central management must realize social capital in order to take advantages of the complex subsidiary relationships.
B) The central management s main motivation is value for the firm, so it will only give subsidiaries greater responsibility if they create value.
C) The central management may want to give subsidiaries control and encourage entrepreneurship and innovation, but it is difficult to distinguish between good faith subsidiary initiative and opportunism.
D) All of the answers

Question 47

Describe how two of the four organizational structures align with their strategic counterparts.

Question 48

Which of the following is NOT one of the major management strategies?

A) Understand and be prepared to change the internal rules of the game governing MNE management.
B) Understand and carefully control subsidiaries and minimize autonomous and locally dependent teams.
C) Understand and master the external rules of the game governing MNEs and home/host country environments.
D) Develop learning and innovation capabilities to leverage multinational presence as an asset.