Chapter 2 Questions:

1. Discuss the role of top management in setting organizational direction. Be detailed.

The role of top management is to give direction to organizations; to position their organization for
success by establishing goals and strategies that can keep the organization competitive. The process
begins with an assessment of the opportunities and threats in the external and internal environment of
the firm. They next define the firm’s strategic intent. This yields an overall mission and official
goals. Leaders then formulate specific operational goals and strategies. Organizational design reflects
the way goals and strategies are implemented so that the organization’s attention and resources are
consistently focused towards achieving the mission and goals. Finally, managers then evaluate the
effectiveness of organizational efforts.

2. A noted organization theorist once said, Organizational effectiveness can be whatever

top management defines it to be.” Discuss

Effectiveness is a measure of how well the organization meets its mission and goals. Since
management defines the organizations goals and mission, the measure of effectiveness may be any
combination of goals and strategic intent. The firm may be effective under one measure and not under
another set of criteria.

Chapter 3 Questions:

1. What is the definition of Organizational Structure? Does organizational structure

appear on the organization chart? Explain

There are 3 key elements of organization structure. Organizational structure:

1. Designates formal reporting relationships including the levels and span of control of
managers and supervisors.

2. Identifies groupings of individuals into departments and of departments into the total
organization.

3. Includes the design of systems to ensure effective communication, coordination, and

integration of efforts across departments.

The organization chart is a visual representation; however, it isn’t possible to actually see the
internal structure of the organization. It is a representation of a whole set of underlying activities
and processes in an organization.
 2. What are the primary differences between a traditional organization designed for
efficiency and a more contemporary organization designed for learning?
A traditional organization is designed for efficiency and has a vertical structure; there is a hierarchy or chain of command.
These organizations focus on a centralized decision making system, which means problems and decisions are funneled to
top levels of the hierarchy for resolution.

A contemporary organization designed for learning has a horizontal structure. There is coordination, adaptability, and a
team mentality. In this type of organization there is an emphasis on learning and adaption which is associated with shared
tasks, a relaxed hierarchy, few rules, face to face communication, teams, and informal, decentralized decision making.

Article # 1

The abstract of the article, “Wendt India Strategy Marries Organizational Structure,” states: It is often
said that an organization achieving its goals is contingent on whether its internal structure is geared
towards its strategy. The processes, technology, people and culture in an organization are sine qua non
towards predicting the success of the company. The right people with the appropriate responsibilities
predicate the achievements of any organization. Since the opening up of the Indian economy, a number
of multinational companies have established their footprint in India. Reorganizing their structure to
exploit the advantages of geography and establishing an organization level strategy will aid the
achievement of organizational objectives. This article focuses on Wendt India, the Indian arm of the
German technology solution provider to reiterate the importance of marrying organizational structure
with strategy.

The interplay between the strategy, culture and processes as well as the structure of Wendt lends
insight into the reasons for the success of desired goals. And this success has been achieved by
carefully defining the roles of technology and people in the organization.

http://tejas-iimb.org/articles/07.php

INT. MGT.

What opportunities might current IMF lending policies to developing countries create for international
businesses? What threats might they create?
The financial assistance and advice the IMF offers to its poorest members are geared partly to helping
them achieve these goals.

1. Eradicate extreme poverty and hunger

2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria, and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development

However, developing countries face many obstacles to expanding their trade with other countries.
Access to the industrial countries' markets is restricted by barriers such as tariffs and quotas, and
developing countries themselves have barriers that prevent them from trading with each other. Other
challenges include:

1. Convince rising economies to accept multilateral responsibilities beyond their economies

2. Prevent protectionism in U.S. and Europe as Asian economies grow
3. Become action-prone as financial crises become global and more complex
4. Support the process of regionalization of currencies
5. Help financial markets spread risk from ecological issues

FTAA

According to its proponents, the FTAA will bring a number of economic benefits to its members. The
trading bloc promises to make imports from the region cheaper for consumers and expand markets for
exporting firms. Over time, economists expect that countries in the FTAA will begin to specialize in
the materials, goods or services in which they have a comparative advantage and realize gains from that
specialization. For the developing countries of the hemisphere, this agreement offers hopes of increased
foreign direct investment, increased productivity, the sharing of technology, and higher wages and
standards of living.

The FTAA will benefit the economies of all it members, including the U.S. and Canada. It will make
imports from the region cheaper for consumers and expand the markets of exporting forms. North
American firm strategies will be affected because they will begin to specialize in the materials, goods
or services in which they have a comparative advantage and realize gains from that specialization. For
the developing countries of the hemisphere, this agreement offers hopes of increased foreign direct
investment, increased productivity, the sharing of technology, and higher wages and standards of
living. It is one step closer to a world-wide free trade agreement.
INT MGT

You are the CFO of a U.S. firm whose wholly owned subsidiary in Mexico manufactures component
parts for your U.S. assembly operations. The subsidiary has been financed by bank borrowings from in
the U.S. One of your analysts told you that the mexican peso is expected to depreciate by 30 percent
against the dollar on the foreign exchange markets over the next year. what actions, if any, should you
take?

This issue suggests that some interest and principal will have to be repaid in US dollars in the near
future, but the plan was likely to pay this off out of earnings from the Mexican subsidiary. If the
overall amount outstanding were relatively small, simply paying off the entire loan in advance before
the peso depreciates would be a good option. At least funds could be transferred out of Mexico now
and invested in the US to pay off the loan later. Alternately, it may be possible to use a forward rate to
lock in an exchange rate now for future remittances, but unless the analyst has some information that is
not generally available in the market, the efficacy of this approach will be limited since the forward rate
will likely already reflect the expected depreciation. Another option available is to simply pay off the
loan with funds already in the US over time, and retain the pesos in Mexico for reinvestment if needed.
The actual action taken would likely depend upon the size of the loan, any restrictions on the loan, and
where funds are most efficiently available for paying off the loan. In any case it would probably be
unlikely that the best solution would be to wait and exchange pesos for dollars later to pay off the loan.

Because the Mexican subsidiary’s loan is in U.S. dollars, it will have to pay back interest in U.S.
dollars. Most of the plant’s revenues are likely to be pesos. In one year the peso and the plant’s revenue
will depreciate relative to the U.S. dollar, causing a major discrepancy. The first strategy that comes to
mind is that the manager should try to use a forward rate. However, I doubt the manager has
information on the market that the institution doesn’t have already. The only viable solution I have
found is to just go ahead and pay the loan off before the peso depreciates further.