International Business: Organization Architecture

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Questions and Answers

What type of structure do firms initially have?

Functional structure

Product divisional structure

No formal structure (correct)

International divisional structure

What type of structure is adopted by firms with low degree of diversification and a domestic structure based on function?

Global matrix structure

Worldwide product divisional structure

Functional structure

Worldwide area structure (correct)

What is the purpose of mechanisms to integrate subunits?

To expand internationally

To adopt a global matrix structure

To coordinate and manage subunits (correct)

To create a new product division

What is a global matrix structure?

A structure that minimizes the limitations of worldwide area and product divisional structures Signup and view all the answers

What is the purpose of cultural controls?

To shape behaviors and attitudes Signup and view all the answers

What happens to firms that continue to expand?

They adopt a worldwide product divisional, worldwide area, or global matrix structure Signup and view all the answers

What is an international divisional structure?

A structure used by firms that expand internationally Signup and view all the answers

What is a typical characteristic of a product divisional structure?

Each division is responsible for a distinct product line Signup and view all the answers

What is the primary goal of organizational architecture?

To be the most profitable Signup and view all the answers

Which of the following is NOT a dimension of organizational structure?

Cultural alignment Signup and view all the answers

What is the primary function of integrating mechanisms?

To facilitate communication among sub-units Signup and view all the answers

What is the primary benefit of decentralized decision-making?

It promotes employee autonomy and motivation Signup and view all the answers

What is the primary reason why an international business needs to change its organization?

To better match its strategy Signup and view all the answers

What is the primary goal of matching organization to strategy?

To improve performance Signup and view all the answers

What is the primary component of organizational architecture?

All of the above Signup and view all the answers

What is the primary benefit of having a consistent organizational architecture?

It ensures internal consistency and alignment with strategy Signup and view all the answers

Study Notes

Organizational Architecture

Organizational architecture refers to the totality of a firm's organization, including organizational structure, control systems and incentives, processes, organizational culture, and people.
The elements of organizational architecture must be internally consistent, fit the strategy, and be consistent with each other and competitive conditions to achieve profitability.

Organizational Structure

Organizational structure has three dimensions: vertical differentiation, horizontal differentiation, and integrating mechanisms.
Vertical differentiation refers to the location of decision-making responsibilities within a structure, which can be centralized or decentralized.
Horizontal differentiation involves the formal division of the organization into sub-units.
Integrating mechanisms are used to coordinate sub-units.

Types of Organizational Structures

Functional structure: a typical structure where sub-units are organized by function (e.g., marketing, finance, HR).
Product divisional structure: a structure where each division is responsible for a distinct product line.
International divisional structure: a structure where all international activities are grouped into an international division.
Worldwide product divisional structure: a structure adopted by firms with a reasonable degree of diversification.
Worldwide area structure: a structure favored by firms with low diversification and a domestic structure based on function.
Global matrix structure: a structure that tries to minimize the limitations of the worldwide area structure and the worldwide product divisional structure.

Integrating Subunits

Firms need a mechanism to integrate subunits, regardless of the type of structure.
Informal integrating mechanisms include knowledge networks.
Formal integrating mechanisms include:
Personal controls
Bureaucratic controls
Output controls
Cultural controls

Organizational Culture

Organizational culture refers to the shared values, beliefs, and norms that shape the behavior of an organization.

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Description

This quiz covers the organization of international business, including organization architecture, organizational choices, and matching organization with strategy.