Management Exam 3

A market structure is a particular kind of divisional structure that groups products into separate divisions according to the needs of different customers.

True

Microsoft (United States), Toyota (Japan), Lenovo, (China), and Petrobras (Brazil) are just a few of the hundreds of large multinational enterprises that are based in one country but own and operate establishments in others.

True

The primary advantage of the divisional structure is that it has very low operating and managing costs.

False

A market structure is also called area structure.

False

A relatively simple approach to diversification is to identify overseas projects that have performance levels that are highly correlated to domestic cash flows or project returns over time.

False

Global businesses that use a functional structure usually have a narrow product line

False

CEOs who rise internally within the company, but who have followed a nontraditional path to the executive suite, (e.g.,, Nancy McKinstry, the CEO of Dutch publishing company Wolters Kluwer NV) are referred to as "outside-insiders."

False

An international division is an advantageous because it allows global businesses to concentrate all international efforts and expertise in one location.

False

Interestingly, licensing and franchising typically leads to the penetration of international markets without significant capital investment abroad by the parent company.

True

Hershey Corporation has expanded and extended its business by developing new products and increasing global reach, but has done so in a very careful manner, avoiding undue risks and protecting its existing business operations. For this reason, it would fall into the category of an analyzer.

True

According to C.K. Prahalad, stateless corporation represents the third stage of globalization.

False

MNEs can never successfully enter foreign markets as traders, licensors, or franchisors.

False

Target Corporation is often accused of being a defender in terms of its market strategies and strategic implementation.

False

A major reason why growth-oriented MNEs establish operations abroad is to diversify and minimize risk so that overall corporate cash flows and earning will be relatively stable.

True

A global defense contractor needs deep functional skills as well as the ability to coordinate across the functions of each contract or project. For this example, the organizational structure that would best suit their needs would be a matrix structure.

True

When MNEs go abroad, they generally do so for two major reasons. There could be massive competition in the home market or firms may genuinely identify new business opportunities abroad based upon the company's competitive advantage in production, technology and management.

True

Organizational culture can be a very effective control mechanism for an organization, particularly when the norms of a given business's culture are fully accepted by that organization's workforce.

True

North American Operations, GM Acceptance Corporation, International Operations, and Hughes Electronics are some of the subsidiaries of General Motors.

False

A key output metric for some global businesses is market share, or the percentage of the business in a certain market that is captured by a product or service the organization provides.

True

The stakeholder model of strategy formulation believes businesses exist to benefit not just their shareholders, but also all the various groups that have a meaningful stake in their operations. Such groups, for example, might include a company's employees, customers, and the community where it operates.

True

The reason why some organizations reject a functional organizational structure is because they believe it renders them unable to respond to environmental changes that requiere coordination between functional areas, and because it offers each employee a restricted view of the organization's primary goal.

True

When it comes to franchising, the parents company's objective is to make sure that when a customer visits it's franchisee in any country, the quality of products and services provided are similar in every store.

False

In the final stage of globalization, global companies produce goods in one country and export them to other countries.

False

Global businesses with a hybrid structure are said to be organized by more than one dimension at the top level.

True

The only profitable way for foreign firms to enter trade-restricted markets is through FDI rather than through exports.

True

Former General Electric CEO Jack Welch was well known for regularly meeting one-on-one with all senior managers and business unit heads. Welch was practicing _____ control.

interpersonal

Some companies are global and so well inter heated into the countries where they have a presence, that it is difficult, if not impossible, to identify one country as the home country for these corporations, such companies are called _______.

stateless

________ controls involve establishing specific goals given metrics and then measuring to what extent these goals are being achieved at certain time intervals.

Output

An operational plan is

less than one year

Of the following, which is NOT an advantage of the functional structure?

It ensure that organizations will engage in socially responsible efforts

A market structure is one where an organization:

groups products into separate divisions according to the needs of different customers.

Which of the following is NOT true about licensing?

It involves slightly more risk to the licensee than licensor.

A(n) ________ is a tool that people use to coordinate to their actions to obtain something they seek or value.

organization

Global business with a narrow product line or a highly integrated product mix, such as aircraft manufacturers or oil and gas firms typically use a(n) _________ organizational structure.

functional

C.K. Prahald would say that Chinese computer manufacturer Lenovo is in which stage of globalization?

Fourth

Determining wether to adopt a shareholder or a stakeholder orientation is a major ________ for a business.

strategic goal formulation

_________ advantages refer to the mode of entry abroad.

internalization

A market structure is also sometimes called ________ structure.

customer

General Electric, Microsoft, Sony, Toyota, and BMW are examples of ________.

multinational enterprises

A firm that has a patent for manufacturing a particular brand-name drug will have monopoly rights to use that brand name abroad to produce goods profitably. This is an example of a(n) _____ advantage.

ownership, or firm specific

C.K. Prahad postulates that stateless corporation represent the _____ stage of globalization.

fourth

Typewriters are in the _____ stage of the product life cycle.

decline

In a free enterprise system, the overriding objective of firms wanting to invest abroad is to _____.

maximize shareholder wealth

According to the text, which of the following entry strategies has the highest degree of risk?

Wholly-owned foreign subsidiary

Of the following, which is NOT true of mergers and acquisitions?

Mergers and acquisitions are relatively low-risk.

According to C.K. Prahalad, the first stage of globalization is _______.

when companies produce goods in one country and export them to other countries

Coca-Cola has built 43 bottling plants and two concentrate manufacturing plants with three separate partners in China since 1979. This is an example of a(n) _____.

international joint venture

A rule that all employees in the organization (including the CEO) must fly coach when they travel on commercial airlines represents a consistent _____ control within an organization.

bureaucratic

An area structure is one where an organization:

groups products into separate divisions according to the needs of the different geographical regions the company serves.

The Coca-Cola company has operation in more than 140 countries and generates more than 55 percent of its profits from its overseas operations. Coca-Cola's annual profits are, therefore, more stable than those of a firm that focuses upon the U.S. market alone. Coca-Cola is engaging in ______.

diversification

Which of the following is NOT true about franchising?

It is the practice in which the parent firm is obligated to provide specialized equipment and/or service, and sometimes to fund some startup costs, to franchisees in return for annual fee.

According to the text, ConocoPhillips placed their ethics office in which part of the organization structure?

Audit and finance department

Altria Group, Inc., may feel that the importance of "fiscal discipline" in its stated mission mandates that it reduce its operations and concentrate upon making its existing U.S.-based Marlboro operations as efficient and profitable as possible. In short, Altria will be most concerned with maintaining its existing strategic position. This is an example of Miles and Snows' _____ typology.

defender

Companies that are ______ take a middle ground between being prospectors and defenders.

analyzers

A company following a shareholder model of strategy formulation would be MOST focused on its _____.

owners

If Dunkin Donuts (DD) were to follow the actions of Starbucks and copy all of their strategies and pricing, DD could be described as a(n) _____.

reactor

A lamp manufacturing company has a written, ten-step process that describes how to put together its best-selling table lamp. This is an example of ______.

explicit knowledge

One output control measure frequently used by global businesses is productivity or ______.

efficiency

The ultimate objective of most joint ventures is ______.

using joint production and sales distribution networks to increase revenue

Limited Clothing Inc. has a corporate headquarters with three divisions: North American Division, European Division, and Asia Division. Limited Clothing Inc. has a _____ structure.

geographical region

According to C.K. Prahalad, a global firm is in the third stage of globalization when it _____.

sets up operations in other countries

Brazil is one of the world's lowest cost producers of ethanol and soybeans. Japanese corporations have heavily invested in Brazil to lease large tracts of land to grow soybeans for export to Japan, where they are used to derive products such as soy sauce and chicken feed. These Japanese companies are cutting costs by _____.

minimizing factor input costs

A top salesperson "just knowns how to sell" but has a difficult time communicating how she does it. Her ability to sell is an example of _____.

tacit knowledge

In a(n) _______, a global business explains why it exists and what it plans to accomplish.

mission statement

At IBM, there are five divisions: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. IBM utilizes a _______ structure.

product

The second stage of the product life cycle is ______.

introduction

Hershey Corporation has assiduously expanded and extended its business by developing new products and increasing global reach, but it has done so in a very careful manner, avoiding undue risks and protecting its existing business operations. This is an example of Miles and Snows' _____ typology.

analyzer

The purchase of established firms abroad with the goal of using the existing production, marketing, and distribution networks and of having instant access to foreign markets that fit the purchasing firm's global strategy is known as a(n) _____.

acquisition

The initial step toward globalization is ______.

exporting

Anadarko Petroleum Corporation may decide that the best long-term way to implement its strategic goal of providing financial returns to its shareholders could be to explore for oil in other parts of the world where it has not yet explored, such as Africa. This is an example of Miles and Snows' _____ typology.

prospector

All of the following are advantages of the matrix structure EXCEPT that it _______.

rarely allows employees the chance to acquire functional skills

A challenge faced by strategic alliances is that

any member could prematurely quit the alliance.

A special case of the divisional structure where products are grouped into separate divisions according to their similarities or differences is called a _________ structure.

product

Of the following, which is NOT listed in the text as a purpose of organizational structure?

It allows the members of an organization to develop a cohesive company culture

An agreement between two or more firms that do not involve the creation of a separate entity with joint ownership and in which the firms stand to gain revenues and maximize profits through cooperation for a given period of time is called a(n) ______.

strategic alliance

A global business is organized into four groups: Manufacturing, Research and Development, Finance, and Sales. This company uses a(n) ______ structure.

functional

Organizations that have basic strategic implementations involving extending their success through global expansions and finding new market opportunities are called ______.

prospectors

The large oil exploration company, Anadarko Petroleum Corporation, takes a(n) ______ toward strategy formulation, upon how its business decisions will help deliver and ongoing and competitive rate of return to its owners.

shareholder

Lenovo, the Chinese computer manufacture, is a corporation where it is difficult to identify one country as the home country. Lenovo can be described as a ____ corporation.

stateless

For generations there has been a norm of "highest quality in journalism" at the New York Times newspaper. In this context, the newspapers reporters don't requiere close supervision to do great journalistic work. This is an example of the organizational _____ at the New York Times.

culture

U.S. Corporations have been pouring investments into Chimal to build manufacturing facilities to produce goods for the local and export markets. Since economist expect the Chinese yuan to appreciate against the dollar in the future, the forthcoming Chinese yuan profits of U.S. MNEs when converted to U.S. dollars will be high. This is an example of U.S. companies cutting costs by ______.

reacting to exchange rate movements

ABC Manufacturing, focuses on implementing a basic market strategy of concentrating upon existing operations and protecting their home turf. ABC can be described as a ______.

defender

A new facility built and operated overseas that requires large investments of capital is an example of a _____.

subsidiary

Which industry is especially well-known for franchising?

fast food industry

Who identified three key economic "advantages" that firms should have for FDI to occur?

Dunning

Of the following, which is NOT a cost of foreign direct investment?

It led to a lapse in job creation and economic flow in the United States.

The combination of medical treatment in a foreign country with rest and recreation is called ____.

medical tourism

To make sure it has enough employees on hand during the busy holiday season, Target plans to hire thousands of temporary, seasonal help for the final three months of the calendar year. This is an example of a(n) _____ plan.

operational

A business that is jointly owned and operated by two or more firms that pool their resources to penetrate host country markets, generate and split profits, and share commercial risk is called a(n) ____.

international joint venture

Knowledge that is codifiable and easy to communicate or write down is called _____ knowledge.

explicit

CEMEX has three divisions: (1) North America; (2) South America and the Caribbean; and (3) Europe, Asia, and the Middle East. CEMEX has a _____ structure.

geographical region

While many major corporations have a global presence, stateless corporations are different because they _____.

attempt to transcend nationality altogether

Of the following, which is NOT true about the export-import business?

Many employees, often 100+, are required for an export-import business to operate.

The practice in which the parent form is obligated to provide its brand name, specialized equipment and/or service, and sometimes to find someone startup costs, to another firm in return for an annual fee is known as ______.

franchising

According to the text, which of the following entry strategies has the lowest degree or risk?

Licensing

Of the following, which is NOT true about knowledge management and systems?

Absorptive capacity refers to systems of rules and regulations promulgated within a global business.

Of the following, which is NOT an advantage of an international division?

It ensures that the company will be more profitable.

The so-called BRIC countries consist of: _____.

Brazil, Russia, India, China

At ExxonMobil, division include Upstream, Downstream, and Chemical. The Upstream division includes exploration, development, production, and gas and power marketing. The Downstream division includes refining and supply, fuels and marketing, and lubricants. ExxonMobil utilizes a _____ structure.

product

Of the following, which is NOT an emerging-market?

Australia