Global Marketing, 6e (Keegan/Green)



Global Marketing, 6e (Keegan/Green)

Chapter 17 Leadership, Organization, and Corporate Social Responsibility

1) Unilever Group Chief Executive Patrick Cescau wanted to reconnect the company with its heritage of sustainability and concern for the environment. This and other values reflect Unilever's philosophy of "doing well by doing good."

Answer: TRUE

Diff: 2 Page Ref: 516

2) During his years as chief executive of GE, Jack Welch discovered that many employees resisted his ideas about the need to globalize the company.

Answer: TRUE

Diff: 2 Page Ref: 518

3) At companies with a global orientation, the best person for top executive positions is generally considered to be a person born in the headquarters country.

Answer: FALSE

Diff: 2 Page Ref: 518

AACSB: Reflective Thinking

4) Although PepsiCo is faced with weak demand in the United States, the snack-and-beverage giant depends on its fast-growing international division.

Answer: TRUE

Diff: 2 Page Ref: 519

AACSB: Reflective Thinking

5) According to Hamel and Prahalad, the most successful business leaders are those who view their organizations as a "portfolio of businesses."

Answer: FALSE

Diff: 2 Page Ref: 520

AACSB: Reflective Thinking

6) According to Hamel and Prahalad, the most successful business leaders are those who view their organizations as a "portfolio of competencies."

Answer: TRUE

Diff: 2 Page Ref: 520

AACSB: Reflective Thinking

7) A Brazilian, Carlos Ghosn, and executive in the company, was required to move aggressively to cut costs and make drastic changes in Nissan's structure.

Answer: TRUE

Diff: 3 Page Ref: 519

8) PepsiCo's fast growing international division reported snack sales to be particularly strong in Mexico and Russia.

Answer: TRUE

Diff: 2 Page Ref: 519

AACSB: Reflective Thinking

9) Even companies with years of experience competing around the globe find it necessary to adjust their organizational designs in response to environmental change.

Answer: TRUE

Diff: 2 Page Ref: 522

AACSB: Reflective Thinking

10) No single correct organizational structure exists for global marketing.

Answer: TRUE

Diff: 2 Page Ref: 522

AACSB: Reflective Thinking

11) As markets globalize and as Japan opens its own market to more competition from overseas, more Japanese companies are likely to break from traditional organization patterns.

Answer: TRUE

Diff: 2 Page Ref: 522

AACSB: Reflective Thinking

12) A geographically dispersed company cannot limit its knowledge to product, function, and the home territory..

Answer: TRUE

Diff: 2 Page Ref: 522

AACSB: Reflective Thinking

13) Suppose a Japanese company has independent subsidiaries in several European nations. As the need for coordination of planning and control activities increases, a matrix design should be implemented.

Answer: FALSE

Diff: 2 Page Ref: 522

AACSB: Reflective Thinking

14) Suppose a Japanese company has independent subsidiaries in several European nations. As the need for coordination of planning and control activities increases, a regional management center should be established.

Answer: TRUE

Diff: 2 Page Ref: 522

AACSB: Reflective Thinking

15) Successful companies, the real global winners, must have both good strategies and good execution..

Answer: TRUE

Diff: 1 Page Ref: 523

16) New forms of flexibility, efficiency, and responsiveness are required to meet the demands of globalizing markets.

Answer: TRUE

Diff: 2 Page Ref: 523

AACSB: Reflective Thinking

17) When business is conducted in a single region that is characterized by differences in economic, social, geographical, and political conditions, there is both justification and need for a management center.

Answer: FALSE

Diff: 2 Page Ref: 526

AACSB: Reflective Thinking

18) A major advantage of a regional center is its cost.

Answer: FALSE

Diff: 2 Page Ref: 526

19) GE is managing its worldwide organization as a network, not a centralized hub with foreign appendages.

Answer: TRUE

Diff: 2 Page Ref: 528

AACSB: Reflective Thinking

20) Both Gillette and Ericsson reorganized themselves into matrix organizations.

Answer: TRUE

Diff: 2 Page Ref: 528

AACSB: Reflective Thinking

21) The matrix organization requires a fundamental change in management behavior, organizational culture, and technical systems.

Answer: TRUE

Diff: 2 Page Ref: 528-530

AACSB: Analytic Skills

22) There is general agreement that the matrix design is the single best organization structure for global marketing.

Answer: FALSE

Diff: 2 Page Ref: 528-530

AACSB: Reflective Thinking

23) The lean production techniques that have revolutionized the automobile industry were pioneered by German auto makers.

Answer: FALSE

Diff: 2 Page Ref: 531

AACSB: Reflective Thinking

24) "Build to inventory to reduce unit costs" and "inspect at end of process" are two assumptions associated with traditional approaches to automobile manufacturing.

Answer: TRUE

Diff: 2 Page Ref: 531-532

AACSB: Reflective Thinking

25) "Minimize inventory to cut costs and waste" and "inspect to prevent defective production" are two assumptions associated with lean production in automobile manufacturing.

Answer: TRUE

Diff: 2 Page Ref: 531-532

AACSB: Reflective Thinking

26) Toyota Production system (TPS), as the Japanese company's manufacturing methods are known, achieves efficiencies by following a lean production system.

Answer: TRUE

Diff: 2 Page Ref: 531-532

AACSB: Reflective Thinking

27) The differences between lean producers and U.S. mass producers in the way they deal with their respective dealers, distributors, and customers are as dramatic as the differences in the way they deal with their suppliers.

Answer: TRUE

Diff: 3 Page Ref: 531-532

AACSB: Reflective Thinking

28) The U.S. mass producers focus on short-term income and return on investment, whereas Japanese see the process in terms of the long-term perspective.

Answer: TRUE

Diff: 3 Page Ref: 531-532

AACSB: Reflective Thinking

29) Once a Japanese dealership gets a customer, it is absolutely determined to hang on to that customer for life.

Answer: TRUE

Diff: 3 Page Ref: 533-534

AACSB: Reflective Thinking

30) Today's chief executive must have good understanding and responding to the concerns and interests of a variety of stakeholders.

Answer: TRUE

Diff: 2 Page Ref: 535-536

AACSB: Reflective Thinking

31) A stakeholder is any group or individual that is affected by, or takes an interest in, the policies and practices adopted by an organization.

Answer: TRUE

Diff: 2 Page Ref: 535-536

AACSB: Reflective Thinking

32) Primary stockholders include top management, employees, customers, media, and persons holding stock in the company.

Answer: FALSE

Diff: 1 Page Ref: 535-536

AACSB: Reflective Thinking

33) In developing countries, globalization's opponents accuse companies of placing intellectual property rights ahead of human rights.

Answer: TRUE

Diff: 2 Page Ref: 536

AACSB: Reflective Thinking

34) Corporate social responsibility (CSR) refers to a company's obligation to pursue goals and policies that are in a company's best interest.

Answer: FALSE

Diff: 2 Page Ref: 536-537

AACSB: Reflective Thinking

35) Timberland Company unveiled a "nutritional label" on its footwear boxes as a means of communicating its corporate social responsibility commitment to consumers.

Answer: TRUE

Diff: 2 Page Ref: 537

AACSB: Reflective Thinking

36) A multinational firm must rely on individual country managers to address Corporate Social Responsibility (CSR) issues on an ad hoc basis.

Answer: TRUE

Diff: 2 Page Ref: 537-538

AACSB: Reflective Thinking

37) As retail gasoline prices soared in the United States following the devastation of Hurricane Katrina, BP, Royal Dutch Shell, and other companies were accused of gouging.

Answer: TRUE

Diff: 2 Page Ref: 539

AACSB: Reflective Thinking

38) According to one study in 2004, CEOs in the United States were paid 431 times more than the average worker.

Answer: TRUE

Diff: 2 Page Ref: 539

39) Despite the fact that Starbucks is widely admired for forward-thinking management policies, Global Exchange pressed the company to further demonstrate its commitment to social responsibility by selling Fair Trade coffee.

Answer: TRUE

Diff: 2 Page Ref: 539

AACSB: Analytic Skills

40) One of the Corporate Social Responsibility (CSR) initiatives by IKEA's primary carpet supplier in India is to monitor subcontractors to ensure that they do not employ children.

Answer: TRUE

Diff: 2 Page Ref: 540

AACSB: Reflective Thinking

41) According to Carly Florina, former CEO of Hewlett-Packard, leadership is about:

A) hierarchy.

B) title.

C) status.

D) connecting.

E) bragging.

Answer: D

Diff: 2 Page Ref: 517-518

AACSB: Reflective Thinking

42) In addition to "selling" their visions, top management at both Whirlpool and GE face the formidable task of building:

A) their company stature.

B) physical layout and design.

C) a cadre of globally oriented managers.

D) a cadre of loyal customers.

E) access to distribution channels.

Answer: C

Diff: 2 Page Ref: 518

AACSB: Reflective Thinking

43) Which of the following is true?

A) The number of Japanese businesspersons fluent in English working in the U.S. exceeds the number of American businesspersons fluent in Japanese working in Japan.

B) The number of American businesspersons fluent in Japanese working in Japan exceeds the number of Japanese businesspersons fluent in English working in the U.S.

C) The number of Japanese businesspersons working in the U.S. who are fluent in English is about equal to the number of American businesspersons working in Japan who are fluent in Japanese.

D) Fewer than 1,000 Japanese businesspersons working in the U.S. are fluent in English.

Answer: A

Diff: 2 Page Ref: 518-519

AACSB: Multicultural and Diversity

44) The ability to speak foreign languages is one difference between managers born and raised in the United States and those born and raised elsewhere. Which is true and reflects the earlier statement?

A) There are 200 million Chinese children studying English.

B) There are 24 million American children studying Chinese.

C) There are 200 million Indian children studying Chinese.

D) Chinese managers study English as much as Chinese.

E) There are equal numbers of American and Chinese children studying English.

Answer: A

Diff: 2 Page Ref: 518-519

AACSB: Multicultural and Diversity

45) Marjorie Scardino is chief executive of:

A) Nissan Motor (Japan).

B) Pearson PLC (Great Britain).

C) Ford Motor Company (USA).

D) Pharmacia Corporation (USA).

E) Atlas Copco AB (Sweden).

Answer: B

Diff: 2 Page Ref: 519

AACSB: Reflective Thinking

46) Which of the following has an American woman as the chief executive?

A) Nissan Motor (Japan)

B) Pearson PLC (Great Britain)

C) Ford Motor Company (USA)

D) Pharmacia Corporation (USA)

E) Atlas Copco AB (Sweden)

Answer: B

Diff: 2 Page Ref: 519

AACSB: Reflective Thinking

47) Brazilian Carlos Ghosn is chief executive of:

A) Nissan Motor (Japan).

B) Pearson PLC (Great Britain).

C) Ford Motor Company (USA).

D) Pharmacia Corporation (USA).

E) Atlas Copco AB (Sweden).

Answer: A

Diff: 2 Page Ref: 519

AACSB: Reflective Thinking

48) Fred Hassan, a native of Pakistan, is chief executive of:

A) Nissan Motor (Japan).

B) Pearson PLC (Great Britain).

C) Ford Motor Company (USA).

D) Schering-Plough (USA).

E) Atlas Copco AB (Sweden).

Answer: D

Diff: 2 Page Ref: 519

AACSB: Reflective Thinking

49) According to Prahalad and Hamel a core competence has all of the following characteristics except:

A) potential access to a wide variety of markets.

B) a significant contribution to perceived customer benefits.

C) it is easy for competitors to imitate.

D) benefits to customers.

E) it is difficult for competitors to imitate.

Answer: C

Diff: 2 Page Ref: 520

AACSB: Reflective Thinking

50) Indra Nooyi, chairman and chief executive of PepsiCo is faced with all of the following except:

A) rising prices for raw materials in the United States.

B) a weak demand for carbonated soft drinks in the United States.

C) a rapidly growing international division.

D) a strong snack sales in Mexico and Russia.

E) a decrease in sales in the Middle East and Argentina.

Answer: E

Diff: 2 Page Ref: 519

AACSB: Reflective Thinking

51) According to David Whitwam, former CEO of Whirlpool, one must create an organization whose people are:

A) adept at exchanging ideas.

B) absolutely free of the 'not-invented here' syndrome.

C) constantly working together to identify best global opportunities.

D) working together to solve the biggest global problems.

E) can adapt to systems across borders.

Answer: D

Diff: 2 Page Ref: 522

AACSB: Analytic Skills

52) Which of the following is the best organization structure for global marketing?

A) international division structure

B) matrix

C) geographic structure

D) worldwide product division structure

E) There is no single "best" structure for global marketing.

Answer: E

Diff: 2 Page Ref: 522-523

AACSB: Analytic Skills

53) In today's dynamic global competitive environment, organizations need to develop new forms of:

A) ethnocentrism and myopia.

B) flexibility, efficiency, and responsiveness.

C) export department structure.

D) self-reference criterion.

E) geographic structure.

Answer: B

Diff: 2 Page Ref: 522-523

AACSB: Reflective Thinking

54) Which global marketing expert recommends an organization design based on a "global superstructure" that views the world in terms of 30 regions?

A) Paul Krugman

B) Kenichi Ohmae

C) Tom Peters

D) Michael Porter

E) Kazuo Inamori

Answer: D

Diff: 2 Page Ref: 522-523

AACSB: Reflective Thinking

55) As a company's initial international business involvement becomes too much for a single manager or export department to handle, the next step is typically to establish a(n):

A) matrix structure.

B) international division structure.

C) geographic structure.

D) worldwide product division structure.

E) regional management center.

Answer: B

Diff: 2 Page Ref: 524-526

AACSB: Reflective Thinking

56) Which of the following does not contribute to the establishment of an international division?

A) top management commitment that justifies an organizational unit headed by a senior manager

B) complexity of international operations requires unit with authority to make its own decisions

C) Management recognizes the need for internal specialists.

D) Management lacks desire to scan the globe for opportunities and threats.

E) Pressure to assemble a staff that will take the responsibility to coordinate.

Answer: D

Diff: 2 Page Ref: 524-526

AACSB: Reflective Thinking

57) A company with headquarters in the United States and operational units in the Netherlands, France, Italy, and Spain would be well advised to consider establishing a(n):

A) matrix structure.

B) international division structure.

C) geographic structure.

D) worldwide product division structure.

E) regional management center.

Answer: E

Diff: 2 Page Ref: 526

AACSB: Reflective Thinking

58) A company with headquarters in Europe and operational units in Canada, the United States, and Mexico would be well advised to consider establishing a(n):

A) matrix structure.

B) international division structure.

C) geographic structure.

D) worldwide product division structure.

E) regional management center.

Answer: E

Diff: 2 Page Ref: 526

AACSB: Reflective Thinking

59) The advantages that a regional management center can offer a company includes all of the following except:

A) pan-regional decision making.

B) coordinated regional planning.

C) considerable cost saving.

D) coordinated control.

E) coordinated decision making.

Answer: C

Diff: 2 Page Ref: 526

AACSB: Reflective Thinking

60) One of the potential drawbacks of a regional management center is that:

A) pan-regional coordination efforts can suffer.

B) the cost can be prohibitive.

C) the company may lose its "insider" advantage.

D) regional management may take a one-sided approach when implementing corporate objectives.

E) lack of coordinated decision making.

Answer: B

Diff: 2 Page Ref: 526

AACSB: Reflective Thinking

61) Under the geographical and product division structures, for the company with French origins, France is:

A) the headquarter country market.

B) simply another geographic market.

C) European market.

D) divisional market.

E) product market.

Answer: B

Diff: 2 Page Ref: 526-527

AACSB: Reflective Thinking

62) The organization design in which an employee reports to both a country manager and a functional manager is a(n):

A) matrix structure.

B) international division structure.

C) geographic structure.

D) worldwide product division structure.

E) regional management center.

Answer: A

Diff: 2 Page Ref: 528-530

AACSB: Reflective Thinking

63) Which form of organization design is capable of integrating geographic knowledge, product knowledge, functional competencies, and customer knowledge?

A) matrix structure

B) international division structure

C) geographic structure

D) worldwide product division structure

E) regional management center

Answer: A

Diff: 2 Page Ref: 528-530

AACSB: Reflective Thinking

64) Boeing has reorganized its commercial transport design and manufacturing engineers from functional lines into a matrix organization. This new design is expected to all but one of the following benefits:

A) lower costs and quicken updates.

B) facilitate problem solving.

C) unite engineering and manufacturing processes.

D) provide customer contacts.

E) enhance product consistency.

Answer: D

Diff: 2 Page Ref: 528-530

AACSB: Reflective Thinking

65) Having established that the matrix is appropriate, management can expect the matrix to integrate the following competency on a worldwide basis.

A) geographic knowledge

B) product knowledge and know-how

C) functional competence in finance, production and marketing

D) knowledge of customer or industry and its needs

E) all of the above are competencies

Answer: B

Diff: 2 Page Ref: 528-530

AACSB: Reflective Thinking

66) Which global company has dissolved its matrix structure in order to achieve "greater speed and efficiency by further focusing and flattening the organization?"

A) Whirlpool

B) Levi Strauss

C) Pearson PLC

D) ABB

E) Gillette

Answer: D

Diff: 2 Page Ref: 529

AACSB: Reflective Thinking

67) The key to successful matrix management is ensuring that managers are able to:

A) adopt a matrix design.

B) adhere to matrix structure.

C) maintain technical systems.

D) resolve conflicts and achieve integration.

E) preserve existing organizational culture.

Answer: D

Diff: 2 Page Ref: 529

AACSB: Reflective Thinking

68) Which of the following does not belong in a list of traditional assumptions about automobile manufacturing?

A) maximize machine utilization

B) fixed set up times

C) build to inventory to reduce unit cost

D) outsource from supplier specialists

E) inspection at the end of the process

Answer: D

Diff: 2 Page Ref: 531

AACSB: Reflective Thinking

69) Which of the following are traditional assumptions about automobile manufacturing?

A) maximize machine utilization

B) fixed set up times

C) build to inventory to reduce unit cost

D) maximize backwards integration

E) all of the above

Answer: E

Diff: 2 Page Ref: 531

AACSB: Reflective Thinking

70) Which of the following assumptions does not belong in a list of characteristics of lean production?

A) labor is more costly than machines

B) set up time can be reduced

C) minimize inventory to cut costs, waste

D) maximize backwards integration

E) inspection to prevent defective production

Answer: D

Diff: 2 Page Ref: 531

AACSB: Reflective Thinking

71) In contrast to the lean producers, U.S. mass producers typically maintain operations that involve all of the following except:

A) less mechanization.

B) greater labor direct content.

C) divide employees with no overlap.

D) limited quality control.

E) employee teamwork.

Answer: E

Diff: 3 Page Ref: 532

AACSB: Reflective Thinking

72) Concepts such as "assembler value chains" and "downstream value chains" are associated with:

A) lean production.

B) the matrix structure.

C) polycentric organizational designs.

D) the global marketing audit.

E) traditional assembly designs.

Answer: A

Diff: 2 Page Ref: 532-534

AACSB: Reflective Thinking

73) Which of the following does not describe the Toyota Production System (TPS)?

A) jidoka

B) 'just-in-time'

C) fixed setup time

D) built-in quality

E) visualizing problems

Answer: C

Diff: 2 Page Ref: 532

AACSB: Reflective Thinking

74) Primary stakeholders include all of the following except:

A) top management.

B) employees.

C) media.

D) suppliers.

E) customers.

Answer: C

Diff: 2 Page Ref: 535-536

AACSB: Reflective Thinking

75) Secondary shareholders include all of the following except:

A) media.

B) employees.

C) local community groups.

D) nongovernmental organizations.

E) general business community.

Answer: B

Diff: 2 Page Ref: 535-536

AACSB: Reflective Thinking

76) In developing countries, globalization's opponents accuse companies of:

A) undermining local cultures.

B) placing intellectual property rights ahead of human rights.

C) promoting unhealthy diets and unsafe food technologies.

D) pursuing unsustainable consumption.

E) all of the above

Answer: E

Diff: 2 Page Ref: 536

AACSB: Reflective Thinking

77) In a socially responsible firm, employees perform all of the following except:

A) conduct business in an ethical manner.

B) pursue goals and policies that are in society's best interest.

C) guided by moral principles.

D) distinguish between right and wrong.

E) develop their own core ideologies on moral principles.

Answer: E

Diff: 2 Page Ref: 536-537

AACSB: Reflective Thinking

78) The universal concerns for global companies established by the United Nations Global Compact consists of the following three dimensions:

A) factor conditions, demand conditions, industry conditions.

B) human rights, animal rights, and the environment.

C) content domain, human conditions and animal rights.

D) human rights, labor, and the environment.

E) content domains, animal rights, and labor.

Answer: D

Diff: 2 Page Ref: 539-540

AACSB: Ethical Reasoning

79) Nike came under fire from critics who alleged poor working conditions in the factories that make the company's athletic shoes. This is an example of the demand for:

A) labor unions.

B) equal opportunity employment.

C) higher wages.

D) standards for working conditions.

E) corporate social responsibility.

Answer: E

Diff: 2 Page Ref: 536-539

AACSB: Ethical Reasoning

80) The Timberland Company is best known for its popular hiking boots and work boots. It is a global mission-centered company. Timberland unveiled a sort of "nutritional label" on its footwear boxes as a means of:

A) showing the strength of work boots.

B) to promote the health benefit of walking.

C) to communicate its CSR commitment.

D) showing the quality of materials used.

E) to communicate the popularity of hiking boots.

Answer: C

Diff: 2 Page Ref: 537

AACSB: Ethical Reasoning

81) How important is the nationality of the top management position holder in global businesses?

Answer: Many globally minded companies realize that the best person for a top management job or board position is not necessarily someone born in the home country. The ability to speak foreign languages is one difference between managers born and raised in the United States and those born and raised elsewhere. There are many examples of executives who were from other than the country where the business is located. Alexander Trotman was born in England and speaks English, French, and German. Howard Stringer is the chief executive at Sony. Generally speaking, however, Japanese companies have been reluctant to place non-Japanese nationals in top positions. For years, only Sony, Mazda, and Mitsubishi had foreigners on their boards. In March 1999 the French company Renault SA bought a stake in Nissan Motor and installed a Brazilian, Carlos Ghosn, as president. An outsider, Ghosn was required to move aggressively to cut costs and make drastic changes in Nissan's structure. He also introduced two new words into Nissan's lexicon: speed and commitment. His life story and exploits have been so important that he is celebrated in a big comic that is popular with Japanese.

Diff: 2 Page Ref: 518-520

AACSB: Reflective Thinking

82) As a company's international business grows, the need for having international divisions become evident. Explain how an international division structure works and what factors contribute to the establishment of an international division.

Answer: The complexity of coordination and directing activities grows with the growth of international business. Pressure is created to assemble a staff with the responsibility for coordination and direction of the growing international activities of the organization. This demands the creation of the international division as has happened in many of the organizations such as Wal-Mart, Levi Strauss, Best Buy and Walt Disney Company. Four factors contribute to the establishment of an international division. First, top management's commitment to global operations has increased enough to justify an organizational unit headed by a senior manager. Second, the complexity of international operations requires a single organizational unit whose management has sufficient authority to make its own determination on important issues such as which market entry strategy to employ. Third, an international division is frequently formed when the firm has recognized the need for internal specialists to deal with the special demands of global operations. A fourth contributing factor is management's recognition of the importance of strategically scanning the global horizon for opportunities and aligning them with company resources rather than simply responding on an ad hoc basis to situations as they arise.

Diff: 2 Page Ref: 524-526

AACSB: Reflective Thinking

83) What are Regional Management Centers? What are the advantages of having such centers in the management of global businesses?

Answer: When business is conducted in a single region that is characterized by similarities in economic, social, geographical, and political conditions, there is both justification and need for a management center. Thus, another stage of organizational evolution is the emergence of an area or regional headquarters as a management layer between the country organization and the international division headquarters. The increasing importance of the EU as a regional market has prompted a number of companies to change their organizational structures by setting up regional headquarters there. A regional center typically coordinates decisions on pricing, sourcing, and other matters. Executives at the regional center also participate in the planning and control of each country's operations with an eye toward applying country knowledge on a regional basis and optimally utilizing corporate resources on a regional basis. Regional management can offer a company several advantages. First, many regional managers agree that an on-the-scene regional management unit makes sense where there is a real need for coordinated, pan-regional decision making. Coordinated regional planning and control are becoming necessary as the national subsidiary continues to lose its relevance as an independent operating unit. Regional management can probably achieve the best balance of geographical, product, and functional considerations required to implement corporate objectives effectively. By shifting operations and decision making to the region, the company is better able to maintain an insider advantage. The major disadvantage of a regional center is its cost.

Diff: 2 Page Ref: 526

AACSB: Reflective Thinking

84) McDonald's organizational design integrates the international division and geographical structures. How does the geographical and product division structure work in a global context?

Answer: As a company becomes more global, management frequently faces the dilemma of whether to organize by geography or by product lines. The geographical structure involves the assignment of operational responsibility for geographic areas of the world to line managers. The corporate headquarters retains responsibility for world-wide planning and control, and each area of the world — including the "home" or base market — is organizationally equal. For the company with French origins, for example, France is simply another geographic market under the organizational arrangement. This structure is most common in companies with closely related product lines that are sold in similar end-use markets around the world. For example, the major international oil companies utilize the geographical structure. McDonald's U.S. is organized into five geographical operating divisions and McDonald's International has four. When an organization assigns regional or worldwide product responsibility to its product divisions, manufacturing standardization can result in significant economies. One potential disadvantage of the product approach is that local input from individual country managers may be ignored with the result that products will not be sufficiently tailored to local markets.

Diff: 2 Page Ref: 526-527

AACSB: Reflective Thinking

85) At Whirlpool, North American operations are organized in matrix form. What is the key to successful matrix management?

Answer: The key to successful matrix management is ensuring that managers are able to resolve conflicts and achieve integration of organization programs and plans. The mere adoption of a matrix design or structure does not create a matrix organization. The matrix organization requires a fundamental change in management behavior, organizational culture, and technical systems. In a matrix, influence is based on technical competence and interpersonal sensitivity, not on formal authority. In a matrix culture, managers recognize the absolute need to resolve issues and choices at the lowest possible level and do not rely on higher authority. An important task of the current day top management is to eliminate a one-dimensional approach to decisions and encourage the development of multiple management perspectives and an organization that will sense and respond to a complex and fast-changing world.

Diff: 2 Page Ref: 528-530

AACSB: Reflective Thinking

86) After establishing that the organizational matrix is appropriate for a business, what should management expect as to the integration of basic competencies on a worldwide basis?

Answer: There are four basic competencies on a worldwide basis that a manager can expect the matrix to integrate once it is established that it is appropriate for the organization. These are: (1) geographic knowledge — this is an understanding of the basic economic, social, cultural, political, and governmental market and competitive dimensions of a country is essential; (2) product knowledge and know-how — product managers with a worldwide responsibility can achieve this level of competence on a global basis. Another way of achieving global product competence is simply to duplicate product management organizations in domestic and international divisions, achieving high competence in both organizational units; (3) functional competence in such fields as finance, production, and especially, marketing — corporate functional staff with worldwide responsibility contributes toward the development of functional competence on a global basis; (4) a knowledge of the customer or industry and its needs — certain large and extremely sophisticated global companies have staff with a responsibility for serving industries on a global basis to assist the line managers in the country organizations in their efforts to penetrate specific customer markets. Under this arrangement, instead of designating national organizations or product divisions as profit centers, both are responsible for profitability.

Diff: 2 Page Ref: 528-530

AACSB: Reflective Thinking

87) What is a matrix organization? Describe giving examples.

Answer: In the fully developed large-scale global company, product or business, function, area, and customer know-how are simultaneously focused on the organization's worldwide marketing objectives. This type of total competence is a matrix organization. Management's task in the matrix organization is to achieve an organizational balance that brings together different perspectives and skills to accomplish the organization's objectives. In 1998, both Gillette and Ericsson announced plans to reorganize into matrix organizations. Ericsson's matrix is focused on three customer segments: network operators, private consumers, and commercial enterprises. Gillette's new structure separates product-line management from geographical sales and marketing responsibility. Likewise, Boeing has reorganized its commercial transport design and manufacturing engineers into a matrix organization. This is built around five platform or aircraft model-specific groups. The new design is expected to lower costs and quicken updates and problem solving. It will also unite essential design, engineering, and manufacturing processes between Boeing's commercial transport factories and component plants, enhancing product consistency. The matrix form of organization is well-suited to global companies because it can be used to establish a multiple-command structure that gives equal emphasis to functional and geographical departments. Four considerations are suggested regarding the matrix organizational design. First, the matrix is appropriate when the market is demanding and dynamic. Second, employees must accept higher levels of ambiguity and understand that policy manuals cannot cover every eventuality. Third, in country markets where the command-and-control model persists, it is best to overlay matrices on only small portions of the workforce. Finally, management must be able to clearly state what each axis of the matrix can and cannot do.

Diff: 2 Page Ref: 528

AACSB: Reflective Thinking

88) What are the assumptions about mass production compared to Toyota Production system?

Answer: Under the traditional assumptions related to mass production there are five major differences: (1) maximize machine utilization; (2) fixed setup times; (3) build to inventory to reduce unit cost; (4) inspect at end of process and (5) maximize backwards integration. On the other hand, in the Toyota Production System these five assumptions are: (1) labor is more costly than machines; (2) can reduce setup time; (3) minimize inventory to cut costs and waste; (4) inspect to prevent defective production and (5) outsource from supplier specialists. These differences are remarkable. To achieve these gains at Toyota, production experts Taiichi Ohno and Shigeo Shingo challenged above-listed traditional assumptions associated with automobile manufacturing. They made changes to operations within the auto company itself such as reducing setup times for machinery. Their innovations have been widely embraced in the industry as a result, individual producers' value chains have been modified, and interfaces between producers and suppliers have been optimized to create more effective and efficient value systems.

Diff: 2 Page Ref: 531-532

AACSB: Analytic Skills

89) A joke among the Japanese says that the only way to escape from the salesperson is to leave the country. Explain this statement highlighting the differences between lean producers and U.S. mass producers.

Answer: The primary difference between lean producers and U.S. mass producers is in the way they do business deals with their respective dealers, distributors, and customers. U.S. mass producers follow the basic industry model and maintain an "arm's-length" relationship with dealers that is often characterized by a lack of cooperation and even open hostility. There is often no sharing of information because there is no incentive to do so. All parties try to keep information about what they really want from the others. The manufacturer uses incentives and other schemes to persuade the dealers to accept the unpopular models. The dealer then has the problem of persuading customers to buy the unpopular models. The production process portion of the value chain is also broken. Thus, there is a compounding of problems all along the way between manufacturer and dealer. This is very different than what the lean producer business practices are. In Japan, where lean producers are predominant, the dealer's employees are true product specialists. They know everything about their products. A customer deals with one person in the dealership, and that person takes care of everything from the initial contact through eventual trade-in and replacement and all the problems. The linkages between dealers, marketing divisions, and product development teams are totally optimized. Once a Japanese dealership gets a customer, it is absolutely determined to hang on to that customer for life. The difference between U.S. mass producers and the Japanese lean producers reflect their fundamental differences in business objectives. The U.S. producers focus on short-term income and return on investment. Today's sale is a discrete event that is not connected to upstream activities in the value chain and has no value in tomorrow's activities. The Japanese see the process in terms of the long-term perspective. There are two major goals of the sales process. The first is to maximize the income stream from each customer over time and the second is to use the linkage with the production processes to reduce production and inventory costs and to maximize quality, and therefore, differentiation.

Diff: 2 Page Ref: 533-534

AACSB: Reflective Thinking

90) Leaders of global companies are facing the resistance to globalization in many countries. How should the executives handle the situation?

Answer: Today's executives must be a proactive steward of the reputation and social standing of a company he or she is leading. This requires an understanding of the concerns as well as timely responding to the concerns and interests of a variety of stakeholders. Resistance to globalization is one of the prominent restraints on the growth of global business and global marketing. The antiglobalization movement takes a variety of forms and finds expression in various ways. In developed countries, the movement's concerns and agenda include cultural imperialism. For example, the French backlash against McDonald's; the loss of jobs due to offshoring and outsourcing, such as in the furniture industry in the United States; and a distrust of global institutions as seen by anti-WTO protests in various countries. On the other hand, in developing countries, globalization's opponents accuse companies of undermining local cultures, placing intellectual property rights ahead of human rights, promoting unhealthy diets and unsafe food technologies, and pursuing unsustainable consumption. Environmental degradation and labor exploitation are also key issues. A company's reputation can very quickly get tarnished if activists target its policies and practices. Thus, the leaders of global companies must practice corporate social responsibility (CSR). CSR is a company's obligation to pursue goals and policies that are in society's best interests. In a socially responsible firm, employees conduct business in an ethical manner. They are guided by moral principles that enable them to distinguish between right and wrong. At many companies, a formal statement or code of ethics summarizes core ideologies, corporate values, and expectations. GE, Boeing, and United Technologies Corporation are some of the American companies offering training programs that specifically address ethics issues. At some companies their ethics statement is known as their credo. For the global company with operations in multiple markets, the issue of CSR becomes complicated and executives have to take into account factors prevalent in each market into consideration.

Diff: 2 Page Ref: 535-541

AACSB: Ethical Reasoning

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