Agrestal Cosmetics, Inc

question 47

Multiple Choice

Agrestal Cosmetics, Inc. is a leading U.S. manufacturer of natural, herb-based cosmetic products. It started out purely as a domestic company but in 1983 established operations in India primarily to gain access to that country's abundant supply of hibiscus, a plant that provided important raw materials to the company's products. In 2009, Agrestal did business in 29 countries around the world. It has factories in Malaysia and Taiwan to use the low labor cost in those countries in making its labor-intensive products. In the late 1990s, it had to close it operations in a foreign country when, due to a change in the country's leadership, all foreign companies had to cease doing business there. During the Brazilian financial crisis, Agrestal adopted the practice of using revenues generated in Brazil to buy orange concentrate locally and sell that concentrate in the United States. Agrestal's corporate finance department aggressively uses hedging in all the countries where it operates. In a few select countries, Agrestal licenses its brand names and know-how to local licensees. Currently, Agrestal is organized whereby all strategic and operational decisions are made at its Princeton, New Jersey headquarters.
-Agrestal's use of licensing in certain countries is an example of ________ governance organizing option.

• A) market
• B) corporate
• C) hierarchical
• D) intermediate market

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Definitions:

Order Fulfillment Department

The division of a company responsible for processing and delivering orders to customers.

Unused Capacity

The portion of a company's production capability that is not being utilized at a given time.

Capacity Analysis

Capacity analysis is the assessment of the maximum output level that an organization can sustainably achieve within a given period.

Time-Driven Activity-Based Costing

An accounting method that assigns costs to products based on the estimated time and resources required for activities.