Chapter 11 - test bank for international business PDF

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International Business: The New Realities, 4e (Cavusgil) Chapter 11 Strategy and Organization in the International Firm1) Strategy is ____. A) a quality of executive management that provides inspirational guidance and motivation to personnel, leading the firm to a better future B) the pattern of sha...

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International Business: The New Realities, 4e (Cavusgil) Chapter 11 Strategy and Organization in the International Firm 1) Strategy is ________. A) a quality of executive management that provides inspirational guidance and motivation to personnel, leading the firm to a better future B) the pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt C) a planned set of actions that managers employ to make the best use of the firm's resources and core competencies to gain competitive advantage D) the procurement of selected value-chain activities, including production of intermediate goods or finished products, from independent suppliers Answer: C Diff: 1: Easy Skill: Concept Objective: 11-1: Describe strategy in international business AACSB: Analytical Thinking 2) When developing strategies, managers start by ________. A) configuring and coordinating the firm's activities around the world B) deciding which customers to target C) analyzing the particular opportunities and challenges that confront the firm D) examining the firm's specific strengths and weaknesses Answer: D Diff: 1: Easy Skill: Concept Objective: 11-1: Describe strategy in international business AACSB: Analytical Thinking 3) Which of the following activities would be considered last by a manager while developing strategies? A) analyzing the particular challenges that confront the firm B) deciding how best to contend with competitors C) examining the firm's specific strengths and weaknesses D) analyzing the particular opportunities for the firm Answer: B Diff: 1: Easy Skill: Concept Objective: 11-1: Describe strategy in international business AACSB: Analytical Thinking

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4) ________ refers to lowering the cost of the firm's operations and activities on a global scale. A) Efficiency B) Protectionism C) Flexibility D) Currency control Answer: A Diff: 1: Easy Skill: Concept Objective: 11-1: Describe strategy in international business AACSB: Analytical Thinking 5) Firms that want to become globally competitive must seek simultaneously three strategic objectives-efficiency, flexibility, and learning. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 11-1: Describe strategy in international business AACSB: Analytical Thinking 6) Efficiency refers to emphasizing consensus-based decision making and problem solving, in which managers readily share their knowledge. Answer: FALSE Diff: 1: Easy Skill: Concept Objective: 11-1: Describe strategy in international business AACSB: Analytical Thinking 7) During the recent global recession, efficiency and flexibility became particularly important to the success of multinational firms. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 11-1: Describe strategy in international business AACSB: Analytical Thinking

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8) Describe the three strategic objectives for creating a competitive advantage in international business as proposed by Bartlett and Ghoshal. Provide an example to illustrate each objective. Answer: a. Efficiency-The firm must build efficient international supply chains. Efficiency refers to lowering the costs of the firm's operations and activities on a global scale. MNEs with multiple value chains around the world must pay special attention to how they organize their R&D, manufacturing, supply chain, product, marketing, and customer service activities. For example, automotive companies such as Toyota strive to achieve scale economies by concentrating manufacturing and sourcing activities in a limited number of locations around the world. b. Flexibility-The firm must develop worldwide flexibility to manage diverse country-specific risks and opportunities. The diversity and volatility of the international environment is a special challenge for managers. Therefore, the firm's ability to tap local resources and exploit local opportunities is critical. For example, managers may opt for contractual relationships with independent suppliers and distributors in one country while engaging in direct investment in another. c. Learning-The firm must create the ability to learn from international exposure and exploit learning on a worldwide basis. The diversity of the environment presents the internationalizing firm with unique learning opportunities. Even though the firm goes abroad to exploit its unique advantages, such as technology, brand-name, or management capabilities, managers can add to the stock of capabilities by internalizing new knowledge gained from international exposure. Thus, the organization can gain new technical and managerial know-how, new product ideas, R&D capabilities, partnering skills, and survival capabilities in unfamiliar environments. As an example, it was Procter & Gamble's research center in Belgium that developed a special capability in water-softening technology, primarily because the water in Europe contains more mineral than in the United States. Diff: 3: Hard Skill: Application Objective: 11-1: Describe strategy in international business AACSB: Analytical Thinking

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9) How can a firm's strategy make the best use of the firm's resources? How does a firm's decision to have a centralized versus a decentralized organizational structure affect its strategy? Answer: Strategy is a planned set of actions that managers employ to make best use of the firm's resources and core competencies to gain competitive advantage. When developing strategies, managers start by examining the firm's specific strengths and weaknesses. They then analyze the particular opportunities and challenges that confront the firm. Once they understand the firm's strengths, weaknesses, opportunities, and challenges, they decide which customers to target, what product lines to offer, how best to contend with competitors, and how generally to configure and coordinate the firm's activities around the world. International strategy is strategy carried out in two or more countries. Managers in experienced MNEs develop international strategies to help the firm allocate scarce resources and configure value-adding activities on a worldwide scale, participate in major markets, implement valuable partnerships abroad, and engage in competitive moves in response to foreign rivals. A fundamental issue in organizational structure is how much decision-making responsibility the firm should retain at headquarters and how much it should delegate to foreign subsidiaries and affiliates. This is the choice between centralization and decentralization. A centralized approach gives headquarters considerable authority and control over the firm's activities worldwide. A decentralized approach means substantial autonomy and decision-making authority are delegated to the firm's subsidiaries around the world. In every company, management tends to devise a structure consistent with its vision and strategies. Thus, MNEs that emphasize global integration tend to have a centralized structure. Those that emphasize local responsiveness generally are decentralized. Planning shared by managers at headquarters and at subsidiaries, with negotiation and give-andtake on both sides, is vital to the design of effective strategies. Diff: 3: Hard Skill: Synthesis Objective: 11-1, 11-5: Describe strategy in international business, Understand organizational structure in international business AACSB: Analytical Thinking; Environments and Reflective Thinking 10) Managers who exemplify an open-minded attitude and who appreciate cultural diversity are described as applying a global ________. A) sensitivity B) standard C) posture D) mindset Answer: D Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking

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11) GramTech Solutions is a software development firm based in the United States. The firm's CEO, David Ghaster, wants to open an outlet in India. Being a visionary leader, he would ________. A) require employees to discover a strategic vision for the firm B) require managers to acquire an openness to, and awareness of, culture in India C) commit minimum resources for international ventures because of the currency risk involved D) cut down on employees' cross-cultural training to save capital to open a firm in India Answer: B Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 12) Which of the following is the most critical asset of any organization? A) goodwill B) computer programs C) human capital D) bonds Answer: C Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 13) Organizational culture is ________. A) the pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt B) an approach in which a firm views international business as separate from, and secondary to, its domestic business C) a reporting structure inside the firm that specifies the links between people, functions, and processes D) an organizational design in which all international activities are centralized within one division in the firm, separate from domestic units Answer: A Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking

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14) Companies that proactively build a global organizational culture will ________. A) promote independent headquarters and subsidiaries to avoid miscommunication B) subscribe to ethical standards developed in the home market to avert misunderstanding C) maintain a global perspective in all major initiatives D) adopt multiple corporate languages for business communications Answer: C Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 15) The managerial routines, behaviors, and mechanisms that allow a firm to function as intended are known as ________. A) organizational designs B) organizational culture C) organizational processes D) organizational structure Answer: C Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 16) Which of the following is a characteristic of a global team? A) culturally diverse B) similarly trained C) domestically based D) constant face-to-face interaction Answer: A Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking; Diverse and Multicultural Work

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17) Which of the following is true about global teams? A) It is a locally distributed group of employees charged with specific problem solving that affects company operations at the domestic scale. B) To develop global strategies, the team should include culturally diverse managers whose business activities span the globe. C) Strategic global teams focus on the efficient and effective operation of the business across the whole network. D) Operational global teams identify or implement initiatives that enhance the long-term direction of the firm in its global industry. Answer: B Diff: 2: Moderate Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 18) A culturally diverse team would ________. A) use diverse languages for business communications across various teams across the globe B) follow country-specific ethical standards across the globe C) use local employees, for accountability, for all major company decisions D) create a global view inside the firm while remaining in touch with local realities Answer: D Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 19) Which of the following is an example of a multidomestic industry? A) chemicals B) telecommunications C) fashion D) aerospace Answer: C Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking

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20) Brogj Inc. is a cosmetics manufacturer based in California, United States. The firm varies its products to suit the different conditions abroad. Brogj is an example of a ________. A) multidomestic industry B) regional industry C) global industry D) globally integrated industry Answer: A Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 21) Which of the following is an example of a global industry? A) automobiles B) beverages C) publishing D) retailing Answer: A Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 22) The computer industry is an example of a ________. A) locally responsive industry B) multidomestic industry C) global industry D) country-by-country competitor Answer: C Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 23) Which of the following is characteristic of a global industry? A) A small number of major players compete head-on in multiple markets. B) Competition is designed on a country-by-country basis. C) Numerous firms compete within the industry worldwide. D) Different marketing activities are designed to meet local needs across the globe. Answer: A Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking

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CEO Hiring Interview (Scenario) The Ace Children's Clothing Company is a mature MNE that has been manufacturing and selling children's clothing in Ace stores around the world for 30 years. Ace has seen a downturn in global sales recently due to trendy adult clothing companies branching out into children's clothing. The Ace board of directors is interviewing candidates to replace the outgoing CEO. The board wants a CEO who will take Ace into the future and pull customers back into Ace stores. Two candidates are being interviewed for the position: Dan Elizarde and Tanya Carson. Tanya and Dan have comparable executive experience with retail clothing companies. Therefore, the board will be basing its final decision on visionary leadership skills. 24) Which of the following characteristics should the winning candidate most likely possess if Ace executives desire a CEO with a global mind-set? A) open-minded about diversity B) subjective ethical standards C) fluency in two languages D) proponent of cultural imperialism Answer: A Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 25) During the interview, Dan states that he expects Ace to surpass the competition in two years if he becomes CEO. Which of the following traits does Dan most likely exhibit with his statement that might appeal to the board of directors? A) commitment to the success of Ace B) arrogance about his abilities to help Ace C) recognition of the homogeneity across communities D) subjective ethical standards Answer: A Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 26) During the interview, Tanya describes her idea of expanding the Ace line into maternity clothes to draw in expecting mothers. Which of the following traits of a visionary leader is Tanya most likely exhibiting? A) subjective morality B) cultural imperialism C) global strategic vision D) dogmatic view Answer: C Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 9 Copyright © 2017 Pearson Education, Inc.

27) Which of the following best supports the decision by the Ace board of directors to hire Tanya as the CEO? A) Tanya's recognition of the homogeneity across communities. B) Tanya's innovative ideas and ability to spot future retail trends. C) Tanya's subjective moral and ethical standards. D) Tanya's competitive personality and dogmatic determination. Answer: B Diff: 2: Moderate Skill: Application Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 28) Visionary leadership is more complex and important in domestic firms than global firms because corporate headquarters is where major decisions are made. Answer: FALSE Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 29) Organizational culture refers to managerial routines, behaviors, and mechanisms that allow the firm to function as intended. Answer: FALSE Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 30) Companies that proactively build a global organizational culture subscribe to subjective ethical and moral standards. Answer: FALSE Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 31) Strategic global teams identify or implement initiatives that enhance the long-term direction of the firm in its global industry. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking

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32) Global IT infrastructure and tools such as intranets, the Internet, and electronic data interchange ensure that distant parts of the global network share knowledge and learn from each other. Answer: TRUE Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 33) A multidomestic industry is one in which competition takes place on a regional or worldwide basis. Answer: FALSE Diff: 1: Easy Skill: Concept Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking 34) Contrast the strategies of multidomestic industries and global industries. Why is there a difference in strategies between the two industries? Provide an example for illustration. Answer: Industries in which competition takes place on a country-by-country basis are known as multidomestic industries. In such industries, each country tends to have a unique set of competitors. Companies in the food and beverage, consumer products, and fashion industries often may cater to the specific needs and tastes of each of the countries where they do business. Multidomestic firms adapt their offerings to suit the culture, laws, income level, and other specific characteristics of each country. For example, Coca-Cola varies the formula of its beverages to suit differing conditions abroad. By contrast, industries such as aerospace, automobiles, telecommunications, metals, computers, chemicals, and industrial equipment are examples of global industries, in which competition is on a regional or worldwide scale. Formulating and implementing strategy is critical. Most global industries are characterized by the existence of a handful of major players that compete head-on in multiple markets. For example, Kodak must contend with the same rivals, Japan's Fuji and the European multinational Agfa-Gevaert, wherever it does business around the world. Diff: 3: Hard Skill: Synthesis Objective: 11-2: Understand building the global firm AACSB: Analytical Thinking; Environments and Reflective Thinking

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35) Describe four traits that characterize visionary leaders, and explain why these traits are especially necessary for a firm that operates within a global matrix structure. Answer: Visionary leaders are characterized by four major traits: International mind-set and cosmopolitan values. Visionary leadership requires managers to acquire an international mind-set-an openness to, and awareness of, diversity across cultures. Dogmatic, close-minded managers who lack vision and have difficulty adapting to other cultures are likely to fail. Those who are open minded, committed to internationalization, and ready to adapt to other cultures are likely to succeed. Willingness to commit resources. The complexities of foreign markets imply that international ventures take more time than domestic ones to become prof...