Deck 13: Implementing Strategy in Companies That Compete Across Industries and Countries

Question 1

Companies pursue a global diversification and differentiation strategy when they want to minimize costs.

Answer 1

False

Question 2

In the Multidivisional structure, each division typically contains only a partial set of value chain activities.

Answer 2

False

Question 3

The more interdependent the divisions in a multidivisional structure, the greater are the bureaucratic costs associated with obtaining the potential benefits from a particular strategy.

Answer 3

True

Question 4

Companies pursue a localization strategy when they want to maximize responsiveness to the unique needs of customers in each country.

Question 5

A finn that is pursuing a globalization strategy will typically use a worldwide-area structure.

Question 6

Vertical integration is a less expensive strategy to manage than is unrelated diversification.

Question 7

It is important for corporate managers to be able to identify high-performing and underperforming divisions and to take corrective action as necessary.

Question 8

Finns pursuing related diversification typically rely more on output control than on culture control.

Question 9

When a finn implements a global strategy with a worldwide product divisional structure, it will be more responsive to the unique needs of each local country.

Question 10

Few integrating mechanisms are needed between divisions when a company uses a worldwide-area structure.

Question 11

The head of the finance function at Beta LLC.employs a larger staff than is required to reduce work pressures inside the department without adding to productivity.This is an example of organizational slack.

Question 12

The organizational hierarchy is flatter in a Multidivisional structure than in a product or functional structure.

Question 13

Vertical integration is a more expensive strategy to manage than unrelated diversification.

Question 14

Transfer pricing may lead to divisional battles in a multidivisional company.

Question 15

Different divisions in a finn with a Multidivisional structure are not given authority to adopt their own organizational structures.

Question 16

In a related multidivisional structure, the idea of corporate culture is meaningless.

Question 17

In a multidivisional structure, corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates.

Question 18

In a finn with a Multidivisional structure, corporate managers oversee the actions of divisional managers.

Question 19

When implementing an international strategy, many companies create global divisions that they add to their existing divisional structures.

Question 20

Competition for resources is one of the drawbacks of the multidivisional structure.

Question 21

Problems in effectively managing the multidivisional structure include:

A)assessment of divisional profits.
B)coordination.
C)transfer pricing.
D)lack of value chain functions in divisions.
E)lack of corporate fmancial control.

Question 22

In a multidivisional structure:

A)support functions, such as accounting, are centralized at the top of the organization.
B)each division essentially has the same organizational structure.
C)divisional managers have overall corporate strategic responsibility.
D)corporate headquarters is responsible for providing guidance for interdivisional projects.
E)each self-contained division has its own corporate headquarters staff.

Question 23

Corporate managers' capabilities in organizational design are vital in ensuring the success of a merger or acquisition.

Question 24

Which of the following corporate strategies results in the highest bureaucratic costs?

A)Sequential resource integration
B)Vertical integration
C)Independent diversification
D)Related diversification
E)Unrelated diversification

Question 25

A company, EricMotors, has three business units.Each of these business units performs all the value chain functions needed to pursue the business model successfully.What are these business units referred to as?

A)Unilateral division
B)Matrix division
C)Product division
D)Functional division
E)Self-contained division

Question 26

Which of the following statements is tme about transfer pricing in the context of multidivisional organizational structure?

A)It can severely damage coordination and corporate culture.
B)It occurs when one division's products are priced higher than another division's products.
C)It often results in a uniform increase in profitability among all the divisions.
D)It refers to the changes in product prices that occur when certain functions from the divisions are centralized.
E)It helps corporate managers create the maximum profitability out of the multidivisional strategy.

Question 27

Implementation problems can arise in unrelated acquisitions when managers from the acquiring company apply inappropriate structure and controls to manage the new business.

Question 28

Which of the following is an advantage of the multidivisional structure?

A)It prevents the duplication of functional resources.
B)It provides scope for corporate managers to easily allocate skills or resources from one division to another.
C)It eliminates the scope for information distortion.
D)It makes it easier for the corporate office to identify managerial inefficiencies in the finn.
E)It provides a clear and uniform authority relationship between corporate headquarters and the subordinate divisions.

Question 29

Corporate managers must treat the internal new-venturing process as a form of entrepreneurship.

Question 30

Gemini Pharmaceuticals Inc.is a large finn that operates in many industries.The various units of the firm like packaging and chemical laboratories function independently and have their own organizational structures.The operations and strategies of all the units are monitored by the corporate headquarters staff.Gemini Pharmaceuticals Inc.is mostly an example of a:

A)flat organizational hierarchy.
B)product structure.
C)brand structure.
D)matrix structure.
E)multidivisional structure.

Question 31

A joint venture occurs when two equal-sized finns agree to blend their operations, creating one larger firm.

Question 32

Which of the following statements is tme about related diversification in the context of a multidivisional stmcture?

A)It makes it easier for corporate managers to assess the performance of individual divisions.
B)It has the lowest bureaucratic costs.
C)It requires sophisticated integrating devices to ensure coordination among divisions.
D)It involves divisions that operate autonomously, and the company can easily reward managers based upon their division's individual performance.
E)It provides scope for corporate managers to easily use output control.

Question 33

Which of the following statements is true about vertical integration in the context of a multidivisional organizational structure?

A)It is a less expensive strategy to manage than unrelated diversification.
B)It makes delegation of authority easier between corporate and divisional managers.
C)It does not require the exchange of information and skills among managers of different divisions.
D)It is managed through a combination of corporate and divisional controls.
E)It often increases the scope for transfer pricing problems.

Question 34

Which of the following is a disadvantage of the multidivisional structure?

A)It makes it difficult to assess the profitability of the finn.
B)It does not give corporate managers the time they need to contemplate wider long-term strategic issues.
C)It makes it mandatory for corporate managers to allocate equal amounts of resources to all the divisions.
D)It creates more scope for communication problems and information overload compared to other structures.
E)It makes it complex for corporate managers to strike a balance between centralization and decentralization.

Question 35

In a joint venture, sometimes one company insists on having a 51% share or more, giving it the ability to buy out the other party at some point in the future should problems emerge.

Question 36

The multidivisional organization structure offers all of these advantages except:

A)enhanced corporate financial control.
B)enhanced strategic control.
C)enhanced growth.
D)lesser competition for resources.
E)fewer coordination and control problems.

Question 37

A joint venture can be dangerous to a company if its partuer is acquired by a competitor.

Question 38

Sometimes companies can simply realize the joint benefits from collaboration without having to form a new company.

Question 39

Which of the following statements is true about the multidivisional structure?

A)It is found to be creating more coordination and control problems than functional and product structures.
B)It has divisions that are dependent on each other for day-to-day value chain operations.
C)It has a flatter organizational structure compared to functional and product structures.
D)It can have divisions which in tum have a functional, matrix, or a market structure.
E)It is characterized by the absence of a corporate headquarters office.

Question 40

Which of the following statements is true about of unrelated diversification in the context of a multidivisional structure?

A)It is associated with the lowest level of bureaucratic costs.
B)It is the ruost complex strategy to manage.
C)It often leads to inaccurate evaluation of divisional performance.
D)It very rarely gives individual autonomy to the divisions.
E)It fosters a company-wide organizational culture and continuous interaction between various divisional managers.

Question 41

Reasons why a finn might benefit from the creation of a separate new-venture division include all of the following except:

A)better protection of the division's autonomy.
B)less scrutiny from top managers.
C)removal from day-to-day pressures of the firm.
D)ease in developing a culture that fosters innovation.
E)risk-free and stable business operations.

Question 42

Mike Wearhouse, a clothing retail company, decides to pool operations with another retail store, Elliot's, to create a single business unit called Mike and Elliot's.Which of the following strategies is illustrated in the scenario?

A)Harvest strategy
B)Internal new venture
C)Merger
D)Divestiture
E)Joint venture

Question 43

To expand its global sales, Synergy Corp.has purchased a finn in Lanthania.Synergy Corp.plans to manage the new business by allowing it to continue as before, with little integration into the rest of the firm.Based on this information, which entry mode is Synergy Corp.using to enter into Lanthania?

A)Acquisition
B)Internal new venture
C)Joint venture
D)Divestiture
E)Merger

Question 44

Which of the following statements is true about the global matrix structure?

A)It is often clumsy and bureaucratic in practice.
B)It speeds up decision making better than the other structures.
C)It is favored by companies pursuing a global standardization strategy.
D)It does not give equal status to product divisions and geographical areas.
E)It makes ascertaining accountability easier.

Question 45

In a(n) strategy, product development is centralized at horne and other value creation functions are decentralized to national units.

A)international
B)transnational ..
C)msourcmg
D)global standardization
E)localization

Question 46

Which of the following statements is true in the context of the international division structure?

A)Regardless of the finn's domestic structure, its international division tends to be organized functionally.
B)The heads of foreign subsidiaries are usually given more voice in the organization than the heads of domestic functions or divisions.
C)The head of the international division is often presumed to be able to represent the interests of all countries to headquarters.
D)The international division structure eliminates coordination problems between domestic and international subsidiaries.
E)In the international division structure, each country's manager is also a part of the corporate headquarters staff.

Question 47

A structure is a structure in which horizontal differentiation proceeds along two dimensions: product division and geographic area.

A)global matrix
B)international division
C)worldwide product divisional
D)worldwide area
E)functional

Question 48

Which of the following statements is true of a worldwide product divisional structure?

A)It involves the decentralization of the overall strategic development and fmancial control of the finn.
B)It is favored by fmns that are not diversified.
C)It usually more creates scope for coordination problems than the international division structure.
D)It facilitates the transfer of competencies within a division's worldwide operations.
E)It brings area or country managers to the same level as of corporate managers.

Question 49

Implementation of a global matrix provides a company with which of the following advantages?

A)Faster decision making process
B)Centralized decision-making
C)Emphasis on a transnational strategy
D)Reduced conflicts and power struggles.
E)Emphasis on global standardization

Question 50

Supernova Inc.wishes to enter a new market to expand its business.Realizing that the resources within the firm might not be sufficient to establish a new business unit, the company has entered into an agreement with Alba Inc.; both the companies will combine their resources and skills to establish and manage the new unit.Which of the following entry modes has Supernova Inc.adopted?

A)Internal new venture
B)Joint venture
C)Divestment
D)Acquisition
E)Outsourcing

Question 51

When a finn's managers are concerned about the possibility of losing control of proprietary know-how, which entry mode should the firm avoid?

A)Acquisition
B)Internal new venture
C)Joint venture
D)Divestiture
E)Merger

Question 52

Which among the following is most likely to have a global matrix structure?

A)Venus Corp.highly emphasizes customization of products and pursues a localization strategy.
B)Delta Inc.sells standardized products with little emphasis on product customization.
C)Alpha LLC.has recently expanded internationally and has a division that looks after all the international operations.
D)Gravity Corp.requires both an area and a product division to take the responsibility of decision-making.
E)Gamma Inc.has largely autonomous units that are completely responsible for value creation activities.

Question 53

Managers who pioneer and lead new-venture projects or divisions are called:

A)corporate raiders.
B)intrapreneurs.
C)functional managers.
D)line managers.
E)foremen.

Question 54

Nutrimax is a large foods maker firm with subsidiaries in many countries.As the tastes and preferences of customers vary largely, the company has decentralized control to the subsidiaries so that they can customize their products.For example, the company's subsidiary in Selenasia only manufactures dense bread baked with a mixture of grains to meet the needs of its customers.In this scenario, Nutrimax is most likely to be using which of the following strategies?

A)Divestment
B)Stagnation
C)International
D)Global standardization
E)Localization

Question 55

Red Communications and Bull's Eye Media are two large companies operating in different countries.As both the companies wish to enter into different countries, they have decided to come together and operate under a single company name.Which of the following entry modes are the companies most likely using?

A)Harvest strategy
B)Internal new venture
C)Joint venture
D)Divestiture
E)Merger

Question 56

Which of the following statements is true in the context of internal venturing?

A)The managers who pioneer the new venture lack autonomy and decision-making powers.
B)Strict output controls are most appropriate for new venture divisions.
C)Stock options are often used in new venture divisions.
D)Most of the operational functions of the new venture division are centralized.
E)New venture projects are never complete without the involvement of an external company.

Question 57

John is employed at Global Tech, an organization that operates within the technology industry.He is an experienced corporate manager who assumes the responsibility for managing complex transfers between two or more divisions.John has a(n) role in the company.

A)fmancial control
B)functional management
C)strategic
D)line management
E)integrating

Question 58

All of the following strategies can be employed by companies as they begin to market their products and establish production facilities overseas except:

A)Localization
B)International
C)Global
D)Transnational
E)Insourcing

Question 59

Libra Inc.is a large company that wants to enter into a new market.The company has entrusted a team of managers to pioneer and lead the planned business unit.The company has decided to give the unit a certain degree of autonomy so as to foster innovation and creativity.To enter into new markets Libra Inc.has mostly likely adopted
A strategy.

A)internal new venture
B)acquisition
C)joint venture
D)divestiture
E)merger

Question 60

Which of the following statements is true in the context of a worldwide area structure?

A)In a worldwide area structure, strategic direction of the finn and financial control are the responsibility of each area.
B)A worldwide area structure tends to be favored by companies with a high degree of diversification.
C)A worldwide area structure facilitates local responsiveness, which is why companies pursuing a localization strategy favor it.
D)In a worldwide area structure, it is easy to transfer distinctive competencies and skills between areas and to realize operating efficiencies.
E)A worldwide area structure helps a finn gain the benefits associated with global standardization.

Question 61

Which of the following statements is true in the context of mergers and acquisitions?

A)Unrelated acquisitions are easier to implement than unrelated ones.
B)Mergers and acquisitions often do not require strategic analysis.
C)Corporate managers' capabilities ultimately decide the success of mergers and acquisitions.
D)Mergers and acquisitions make it easier to implement output controls and business processes.
E)Mergers and acquisitions often do not require new lines of authority to be established.

Question 62

Which of the following is an advantage of new venture divisions?

A)They acquire the resources and skills from another company.
B)They eventually reduce the costs of the firm.
C)They give more autonomy to managers to pursue exciting product ideas.
D)They require minimal R&D costs.
E)They eliminate the duplication of value chain-activities.

Question 63

Which of the following is an advantage of joint ventures?

A)They are less expensive and easier to implement.
B)They give companies good control over their core technological competencies.
C)They always provide equal amounts of profits to both the parent companies.
D)They involve the pooling of competent managers and resources from both companies.
E)They involve minimal risks and conflicts.

Question 64

Starbucks' Frappuccino is distributed by Pepsi.Nestle and Coca-Cola announced an agreement with Beverage Partners Worldwide through which Coca-Cola will distribute and sell Nestle's Nestea throughout the globe.These are examples of which of the following?

A)Joint venture
B)New-venture division
C)Merger
D)Acquisition
E)Internal venture

Question 65

Consider the information given in the previous question and your answer to that question, and then reconunend an organizational structure for Mohawk to use as it globalizes.Explain why the structure you recommend is the most appropriate one for Mohawk.

Question 66

Which of the following is a disadvantage of new venture divisions?

A)They might eventually increase the cost structure of the company.
B)They require skill and resources from other companies.
C)They cannot have a business model of their own.
D)They are within a company's existing structure under the scrutiny of its corporate managers.
E)They make it mandatory for the firm to use strict output controls.

Question 67

Which of the following is an advantage of mergers and acquisitions?

A)In acquisitions, little emphasis is required on control systems and culture.
B)Mergers and acquisitions ensure equal power and status for all managers.
C)Mergers consisting of related companies have uniform norms and values.
D)Mergers and acquisitions are less risky compared to internal ventures.
E)Mergers and acquisitions can help combine the best of efficiencies and cultures.

Question 68

Explain the benefits of the multidivisional structure for managing a finn that competes in several industries.

Question 69

Which of the following statements is true in the context of joint ventures?

A)In a joint venture, the bigger of the two companies always takes up complete ownership.
B)The purpose of a joint venture could be to just share access to customers.
C)Joint ventures are most appropriate when a parent company wishes to pursue technology development.
D)Joint ventures eliminate the task of creating a new business model.
E)Joint ventures are less expensive and easier to implement than acquisitions.