Which of the following statements about international division structure is NOT true?

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BlackTom AI · Accepted Answer

Question restatement: Which of the following statements about international division structure is NOT true?

Option 1: 'It constrains knowledge sharing between international units and domestic units.' This statement reflects a common criticism of an isolated international division: separation can create silos and hinder cross-border knowledge transfer between overseas units and the home-country functions. In many models, this constraint is indeed observed, so this option can be considered plausible as a true statement.

Option 2: 'It facilitates large-scale global expansion of multinational enterprises.' The international division is often designed to handle foreign operations and coordinate overseas activities, which can support rapid or large-scale expansion by providing a dedicated structure for international activity. This aligns with the intended role of the division, so this option tends to be true.

Option 3: 'It discourages managers of foreign subsidiaries from pursuing further international expansion.' Centralization of decision-making and the separation of the international division from domestic units can limit the autonomy of foreign subsidiaries, potentially dampening their initiative for additional expansion. This is a plausible effect of the structure, making this option a candidate for a true statement.

Option 4: 'It facilitates early-stage internationalization by separating the international division from domestic divisions.' The presence of a distinct international division can help a firm begin international activities without overhauling the domestic structure, which is often cited as a benefit for early-stage internationalization. This is typically considered true.

Analysis of each option leads to:
- Option 1: plausible constraint on knowledge sharing; true as a characteristic of some international divisions.
- Option 2: supports expansion; true as a goal and effect of the division.
- Option 3: potential dampening of subsidiary initiative due to centralized control; plausible and thus true in many cases.
- Option 4: aids early internationalization by isolating international operations; true.

Note on potential ambiguity: In some organizational designs, the degree to which each statement holds can vary with context, such as the presence of cross-border integration mechanisms or matrix elements that mitigate silos. However, none of the options clearly depicts a scenario that contradicts the typical role and effects of an international division in most common explanations. The wording of the question seeks the statement that is NOT true, which would be the one least aligned with standard characteristics. Consideration of the above suggests that the claim about discouraging further expansion (Option 3) is less universally inherent to the standard description of an international division, since some firms empower their foreign subsidiaries to pursue expansion under decentralized or hybrid governance. If a student is debating, they might focus on whether decentralization is present in a given case; in generic theory, centralization is more typical, making Option 3 a less universally true statement compared to the others.

In sum, the reasoning compares each option against what international division structures are commonly understood to do: enable or constrain knowledge sharing, support expansion, influence subsidiary initiative, and aid early internationalization. The option that deviates most from a universally supported characterization is the one about discouraging subsidiaries from expanding, given that organizational designs vary and sometimes empower subsidiaries to act autonomously under certain governance models.

Which of the following statements about international division structure is NOT true?

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