Chapter 9 Entry Strategies and Organizational Structure

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Chapter 9 Entry Strategies and Organizational Structure Which of the following statements are true of the choices of exporting and importing in international business? They are often the only ones available for small and new firms that look to expand their business internationally. They often require both small, new firms and larger firms to make a direct investment in overseas manufacturing facilities. They often ensure a less expensive and sustainable international presence of a firm. They offer an avenue for large firms that want to begin their international expansion with minimum investment and risk. Correct Answer  They are often the only ones available for small and new firms that look to expand their business internationally.  They offer an avenue for large firms that want to begin their international expansion with minimum investment and risk. In the context of the entry strategies used by multinational corporations (MNCs), which of the following are true of the option of having a wholly owned subsidiary? This option is often used by small firms, especially if international or transaction costs are high. MNCs use this as an avenue to begin their international expansion with minimum investment and risk. Initial investments made in the form of a wholly owned subsidiary in a foreign country are also known as "greenfield" or de novo (new) investments. This option is often used by MNCs to quickly expand resources or construct high-profit products in a new market. Correct Answer  This option is often used by small firms, especially if international or transaction costs are high.  Initial investments made in the form of a wholly owned subsidiary in a foreign country are also known as "greenfield" or de novo (new) investments. Which of the following are the typical conditions under which a firm uses licensing as an entry strategy in international business? When the firm spends very little of its revenue on research and development activities When the firm's product is in the growth stage of the product life cycle When a host country requires the newly entering firm to make a substantial direct investment in the country

When the firm is small and lacks financial and managerial resources to enter foreign markets Correct Answer  When a host country requires the newly entering firm to make a substantial direct investment in the country  When the firm is small and lacks financial and managerial resources to enter foreign markets A(n_______________ is a business arrangement under which one party allows another to operate an enterprise using its trademark, logo, product line, and methods of operation in return for a fee. Correct Answer  Blank 1: franchise A(n) global , Correct product , Correct structure Incorrect is a structural arrangement in which domestic divisions are given worldwide responsibility for product groups. Correct Answer  Blank 1: global  Blank 2: product  Blank 3: division In the context of the basic organizational structures of multinational corporations (MNCs), identify the advantages of a global functional division. Combined managerial accountability for the profits Tight centralized control Relatively lean managerial staff Emphasis on functional expertise Coordination of manufacturing and marketing with ease Correct Answer  Tight centralized control  Relatively lean managerial staff  Emphasis on functional expertise A(n) global , Correct area , Correct structure , Incorrect is a structure under which global operations are organized on a geographic rather than a product basis.

Correct Answer  Blank 1: global  Blank 2: area  Blank 3: division In the context of the basic organizational structures, which of the following are true of a transnational network? It is a web of business tasks and transmissions where local-level groups make decisions, but groups inform headquarters and sometimes each other. It is fairly centralized in the sense that decisions are balanced between the main headquarters and the various international subsidiaries. It mixes elements of classic functional, product, and geographic structures while relying on a network structure to link the worldwide subsidiaries. It coordinates geographic and product lines of various international subsidiaries through the use of a matrix design. Correct Answer  It is a web of business tasks and transmissions where local-level groups make decisions, but groups inform headquarters and sometimes each other.  It mixes elements of classic functional, product, and geographic structures while relying on a network structure to link the worldwide subsidiaries. The use of defined structures and systems in decision making, communicating, and controlling is called Specialization Incorrect. Correct Answer  Blank 1: formalization In the context of product integration, which of the following statements are true of cross- functional coordination in a multinational corporation (MNC)? Managers are responsible for coordinating the work of functional specialists and serve as lead designers on projects. Personnel spend less time within their functions and thus are less knowledgeable of the developments in their specialized areas. It leads to product teams becoming independent and thus failing to integrate their overall efforts with the organization at large. It ensures that all members remain dedicated to their primary functional area and that they communicate succinctly with each other. Correct Answer

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 Personnel spend less time within their functions and thus are less knowledgeable of the developments in their specialized areas.  It leads to product teams becoming independent and thus failing to integrate their overall efforts with the organization at large.

Specialization The use of defined structures and systems in decision making, communicating, and controlling is called Specialization , Incorrect. Correct Answer  Blank 1: formalization

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