1.

Describe the organizational architecture that a transnational firm might adopt to reduce the
costs of control.
Like any multinational corporations, a transnational corporation has some discretion over how
much bureaucratic and output controls to impose. However, the use of output controls is
constrained because of performance difficulties. The development of a powerful culture is a
further crucial component. By encouraging managers to adopt high-performance standards and
value systems, this culture may foster cooperation. If such a culture exists, managers from
interconnected sub-units may be encouraged to look for answers to any problems that arise. A
robust, success-focused culture would reduce control expenses.

2. What is the most appropriate organizational architecture for a firm that is competing in an
industry where a global strategy is most appropriate?
A company that pursues a global strategy assumes that the entire world is its market and that by
creating and producing a standardized product, it can benefit from economies of scale. The
worldwide strategy requires a lot of coordination, several integrating mechanisms, and a strong
culture because working on enterprises globally requires a lot of time and money. Delegating
work to lower or other sub units not only cuts down on the time it takes top management to
make wise decisions, but it also lessens their workload and enables them to concentrate on
other crucial issues.