MHR 403 Final Exam study guides Questions & Answers 100% Correct!!
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Organizational Design - ANSWERhow organizations structure subunits and use coordination and control mechanisms to achieve their strategic goals
2 basic questions involved in designing an organization - ANSWER1.) How shall we divide the work among the organization's subunits
2)How shall we coor...
MHR 403 Final Exam study guides
Questions & Answers 100% Correct!!
Organizational Design - ANSWERhow organizations structure subunits and use coordination and
control mechanisms to achieve their strategic goals
2 basic questions involved in designing an organization - ANSWER1.) How shall we divide the work
among the organization's subunits
2)How shall we coordinate and control the efforts of the units we create?
How shall we coordinate and control the efforts of the units we create? - ANSWER1)*Centralize
decision making*: some companies monitor their subunits very closely and centralize decisions at
headquarters to make sure products adhere to rigid standards
2)*Decentralize*: give subunits greater flexibility
Why should MNC worry about organizational design? - ANSWER-multinationals must contend with
new competition as well as changes in how it approaches markets
-Companies are also facing demands to explore new markets while exploring existing markets --
>MNC are constantly facing questions as to if their design can adequately fulfill their intended
business strategy
Organizational structure - ANSWERDivide work into departments or divisions based on functions,
geography, products, or a combination of these criteria
Functional structure - ANSWERhas departments or subunits based on separate business functions,
such as marketing or manufacturing
-*simplest form and typical of small businesses*
Pros of Functional structure - ANSWER-chosen primarily for efficiency
-gets efficiency from economies of scale in each function because there are cost savings when a large
number of people do the same job in the same place
,Cons of functional structure - ANSWER-functional subunits are *separated* from each other and
serve functional goals
-coordination among them can be difficult
-responses to changes in the environment can be slow
Functional Structure is most beneficial when - ANSWER-orgs have few products, few locations, or few
types of customers
-when the org faces a stable environment in which the need for adaptation is minimal
Product structure - ANSWERhas departments or subunits based on different product groups
When do managers choose product structures - ANSWERwhen they believe that a product or a group
of products are *unique* enough to require specialized functional efforts
-This structure best supports strategies that emphasize *global products* and *rationalization*
(worldwide products using worldwise low-cost source of raw materials and worldwide marketing
strategies)
Geographic structure - ANSWERhas departments or subunits based on geographical regions
-can serve the unique needs of the local customer
What types of strategies support geographic structures? - ANSWERstrategies that emphasize local
adaptation (managers are often local nationals and are sensitive to local needs)
Pros and cons of geographic structure - ANSWER*PROS*: managers can more easily and quickly
identitfy customer needs and adapt products accordingly
*CONS*: expensive to operate in several country subsidiaries
Product and geographic structures must still perform the functional tasks of a business (marketing,
accounting, ect.) - ANSWER-they do not concentrate functions into dedicated subunits
-functional tasks are *Duplicated* for each product or geographic area department
-The duplication of these functional tasks usually requires more managers and more people
Greatest weakness of product and geographic structures - ANSWER*DUPLICATION*
,-loss of economies of scale = less efficient
Why accept this loss?
-customer groups and products proliferate, the cost of coordination and control across function
grows, offsetting basic functional efficiencies
Customer focused organizational structure - ANSWERUses groups of customers related by industry or
application as a basis for designing the organizational structure
-necessary because of the consolidation of customers
-some MNC see the need to develop closer relationships with important customers as more critical
that responding to their needs
hybrid structures - ANSWERmix functional, geographic, and product units
-the nature of the product determines whether the emphasis is given to the product or geographic
side of the company (how global the products are) as well as the nature of the markets
matrix organizational structure - ANSWERA symmetrical organization, with equal lines of authority
for product groups and for geographic divisions
-a firm can pursue both global and local strategies at the same time
-produces high quality decisions because two or managers reach a consensus on how to balance
local and worldwide needs
-requires extensive communication between managers
When does a matrix structure work well - ANSWERwhen there are nearly equal demands from the
enviornment for local adaptation and for product standardization, with its associated economies of
scale
export department - ANSWER.Export department managers have the responsibility to deal with
export management companies, with foreign distributors, and with foreign customers
-managers create this when *exports contribute a significant percentage of sales* and the company
wishes to increase its control over export operations
foreign subsidiaries - ANSWERsubunits of the multinational company located in another country
, Why use a foreign subsidiary? - ANSWER-Take advantage of the opportunities the new countries
offer
-Because of the uncertainty associated with a host country's level of risk, a firm might need to
implement measures to minimize the related effects
-Use subsidiaries to learn about markets and conditions in more developed countries
-Multinationals can use subsidiaries to improve home operations
Minireplica Subsidiary - ANSWERfor companies pursuing a multidomestic strategy, the foreign
subsidiary often becomes a scaled-down version of the parent company
-Uses the same technology and produces the same products as the parent company, but runs on a
smaller scale
-Usually a profit center, seldom do mini replicas contribute to corporation-wide goals
Advantages of Mini-replica subsidiary - ANSWERBy producing products or services strictly for the
local market, the mini-replica can adapt to local conditions and support the multidomestic strategy
-use few expatriate managers, local managers run the organization, often with little influence from
headquarters
transnational subsidiary - ANSWERhas no company-wide form or function; each subsidiary does what
it does best or most efficiently anywhere in the world
-supports a multinational firm strategy based on location advantages
-does its best to help achieve corporate goals
benefits of transnational sub - ANSWERTo increase organizational learning, transnational subsidiaries
can provide information to the parent company about local markets, help solve problems for another
unit elsewhere in the world, or develop new technologies
-take advantage of factor costs (e.g., cheap labor or raw materials), to capitalize on other resources
(e.g., an educated workforce or unique skills), or to gain access to the country
What do MNC consider to decide the mix of functions for their foreign subsidiaries - ANSWER(1) the
firm's multinational strategy or strategies
(2) the subsidiaries' capabilities and resources
(3) the economic and political risk of building and managing a subunit in another country,
(4) how the subsidiaries fit into the overall multinational organizational structure.
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