BM1917

QUIZ ON THE ORGANIZATION OF INTERNATIONAL BUSINESS

Questions (2 items x 5 points)

1. Describe the organizational architecture that a transnational firm might adopt to
reduce the costs of control.
The Organizational Architecture integrates the human activities and capital
resource utilization within a structure of task allocation and coordination to achieve
desired outcomes and performance for both the short run and the strategic long run. In
addition, Organizational Architecture refers to the totality of a firm’s organization,
including formal organizational structure, control systems and incentives, organizational
culture, processes, and people. Cost cutting is an effective way to improve the finances
of your business, provided the cuts actually save you money. A transnational firm can
use control systems in order to reduce the costs of systems. Control systems are the
metrics used to measure the performance of subunits and make judgments about how
well managers are running those subunits. Efficient and effective processes can lower
the costs of value creation and add additional value to a product.

2. What is the most appropriate organizational architecture for a firm that is competing
in an industry where a global strategy is most appropriate?
The global strategy is adopted in an organization in situations where production
and manufacturing costs are not competitive in the home country. That is, there is no
cost efficiency. Thus, when the organization invests in the global market, it is a better
competitive position because it will access to more resources and labor which are vital
in realizing cost efficiency. The firm will also be able to get more competitive than its
rivals. The appropriateness of each strategy depends on the pressures for cost reduction
and local responsiveness in the industry. There are four basic strategies to compete in
the international environment: global standardization, localization, transnational and
International. The global standardization strategy focuses on increasing profitability and
profit growth by reaping the cost reductions that come from economies of scale,
learning effects, and location economies. The strategic goal is to pursue a low-cost
strategy on a global scale. The global standardization strategy makes sense when
there’re strong pressures for cost reductions and demands for local responsiveness are
minimal.

09 Quiz 1 *Property of STI

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