Test Item File Ch03

Chapter 3: Strategic HRM and the HR Scorecard


Multiple Choice

1. A _____ is the company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats to maintain a competitive advantage.a. strategic planb. situation analysisc. environmental scand. SWOT analysise. tactical plan(a; easy)

2. Which of the following is not part of strategic planning?a. evaluating the firm’s internal and external situationb. defining the business and developing a missionc. translating the mission into strategic goalsd. crafting a course of actione. implementing strategies(e; moderate)

3. The purpose of a strategic plan it to identify ways to create or maintain a(n) _____.a. differential advantageb. competitive advantagec. instrumental advantaged. success factore. all of the above(b; moderate)

4. What is the first step in the strategic management process?a. perform external and internal auditsb. define the business and its missionc. translate the mission into strategic goalsd. formulate a strategye. implement the strategy(b; easy)

5. A _____ is a general statement of intended direction that evokes emotional feelings in organization members.a. missionb. strategic planc. code of ethicsd. visione. none of the above(d; easy)

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Human Resource Management: An Asian Perspective (Second Edition)

6. Vision statements focus on the _____.a. pastb. presentc. futured. all of the abovee. none of the above(c; easy)

7. A _____ lays out what a business strives to be while the _____ lays out what it should be now.a. mission; visionb. vision; missionc. dream; visiond. goal; accomplishmente. CEO; CFO(b; easy)

8. Defining the business and its mission is the _____ step in the strategic management process.a. firstb. secondc. thirdd. fourthe. fifth(a; moderate)

9. Performing external and internal audits is the _____ step in the strategic management process.a. firstb. secondc. thirdd. fourthe. fifth(b; moderate)

10. The third step in the strategic management process is _____.a. perform external and internal auditsb. define the business and its missionc. translate the mission into strategic goalsd. formulate a strategye. implement the strategy(c; easy)

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11. The sales director at WebMD is developing goals regarding sales revenue targets and the number of new medical-related content providers like hospitals and HMOs it must sign up per year. Which step of the strategic management process is WebMD working on?a. perform external and internal auditsb. define the business and its missionc. translate the mission into strategic goalsd. formulate a strategye. implement the strategy(c; moderate)

12. Several years ago, General Motors began a company-wide strategy to improve product quality and customer satisfaction. Reports showed that GM’s product recalls for the first half of that year were higher than for the entire previous year. GM explained that the figures supported the corporate commitment to quality and satisfaction. Which step of the strategic management process was GM dealing with?a. perform external and internal auditsb. define the business and its missionc. translate the mission into strategic goalsd. formulate a strategye. evaluate performance(e; moderate)

13. A _____ serves to communicate who a company is, what it does, and where it is headed. a. missionb. strategic planc. code of ethicsd. visione. none of the above(a; easy)

14. The _____ of a national energy ministry is to improve energy systems that support the economy.a. missionb. strategic planc. code of ethicsd. visione. none of the above(a; moderate)

15. The _____ of a national energy ministry is for the country to have affordable, reliable and safe energy supply.a. missionb. strategic planc. visiond. code of ethicse. none of the above(c; moderate)

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16. The primary tool used in step two of strategic planning, external and internal audits, is the _____.a. 2 x 2 matrixb. 3 x 3 matrixc. SWOT analysisd. break-even analysise. none of the above(c; moderate)

17. SWOT is an acronym for _____.a. success will overcome threatsb. strengths, weaknesses, opportunities, and threatsc. strategic worldwide opportunities termsd. system-wide organizational tacticse. none of the above(b; easy)

18. A strategy can also be called a _____.a. planb. goalc. course of actiond. tactice. mission(c; moderate)

19. A _____ answers the question, “how do we get from here to there?”a. goalb. tacticc. strategyd. missione. vision(c; easy)

20. Translating strategy into action is the essence of the _____ step in the strategic management process. a. perform external and internal auditsb. define the business and its missionc. translate the mission into strategic goalsd. formulate a strategy to achieve strategic goalse. implement the strategy(e; moderate)

21. A company’s _____ strategy identifies the portfolio of businesses that comprise the company and ways in which these businesses relate to each other. a. functionalb. business-levelc. corporate-leveld. vertical integratione. competitive(c; moderate)

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22. _____ is the process of assessing progress toward strategic goals and taking corrective action as needed.a. Strategic managementb. Strategic planningc. Consolidationd. Strategic controle. Diversification(d; moderate)

23. What does a company’s corporate-level strategy identify?a. how to build and strengthen the business’s long-term competitive position

in the marketplaceb. the portfolio of businesses that comprise the companyc. the basic courses of action that each department will pursue in order to

help the business attain its competitive goalsd. the possibility of becoming a low-cost leadere. the sources of uniqueness in the industry(b; moderate)

24. A company’s _____ strategy identifies the how to build and strengthen the business’s long-term competitive position in the marketplace.a. functionalb. business-levelc. corporate-leveld. vertical integratione. competitive(b; moderate)

25. What does a company’s business-level strategy identify?a. how to build and strengthen the business’s long-term competitive position


help the business attain its competitive goalsd. the possibility of becoming a low-cost leadere. the sources of uniqueness in the industry(a; moderate)

26. A company’s _____ strategy identifies the basic courses of action that each department will pursue in order to help the business attain its competitive goals.a. functionalb. business-levelc. corporate-leveld. vertical integratione. competitive(a; moderate)

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27. What does a company’s functional-level strategy identify?a. how to build and strengthen the business’s long-term competitive position


help the business attain its competitive goalsd. the possibility of becoming a low-cost leadere. the sources of uniqueness in the industry(c; moderate)

28. A _____ strategy implies that the firm will expand by adding new product lines.a. consolidationb. diversificationc. geographic expansiond. integration e. competitive(b; moderate)

29. Hotel International may acquire a furniture-making business. What type of strategy is the hotel using?f. consolidationg. diversificationh. geographic expansioni. integration j. competitive(b; moderate)

30. A _____ means the firm is expanding by producing its own materials or acquiring a retail outlet to sell its own products.a. consolidationb. diversificationc. geographic expansiond. vertical integration e. competitive(d; moderate)

31. A few years ago, FedEx acquired Kinko’s. FedEx stations had long existed in Kinko’s stores to provide customers a convenient location. The acquisition illustrated that FedEx was following a _____ strategy.a. vertical integrationb. diversificationc. geographic expansiond. horizontal integration e. competitive(a; moderate)

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32. SuperMart is closing many of its retail stores to reduce its company size. This is an example of a _____ strategy.a. consolidationb. diversificationc. geographic expansiond. integration e. competitive(a; moderate)

33. Tasty Noodle plans to open stores in more Asian cities during the two years. This is an example of _____.a. consolidationb. diversificationc. geographic expansiond. integration e. competitive(c; moderate)

34. Wal-Mart is well known for lowest prices. Offering the lowest prices is its _____.a. functional strategyb. competitive advantagec. distinctive competenced. corporate strategye. all of the above(b; moderate)

35. A(n) _____ is anything that allows an organization to differentiate its products or service from those of its competitors to increase market share.a. functional strategyb. competitive advantagec. distinctive competenced. corporate strategye. all of the above(b; moderate)

36. Companies like Ferrari can be called _____ because they carve out a market niche and compete by providing a product that customers can get in no other way.a. market leadersb. focusersc. carversd. unique offeringse. complementary competitors(b; easy)

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37. Volvo stresses the safety of its cars. Volvo is following a _____ competitive strategy.a. cost leadershipb. focusc. differentiationd. functionale. integration(c; moderate)

38. Which of the following is a type of competitive strategy?a. cost leadershipb. vertical integrationc. consolidationd. horizontal integratione. expansion(a; moderate)

39. Which of the following illustrates a focus strategy?a. Good-Mart offers the lowest prices b. Best-Mart sells upscale brandsc. Mercedes Benz emphasizes status and qualityd. Comfy Rent-a-Car targets referrals through car dealerships and insurance

agentse. Sofy toilet paper claims to be the softest on the market(d; difficult)

40. Which of the following illustrates a cost leadership strategy?a. Good-Mart offers the lowest pricesb. Best-Mart sells upscale brandsc. Mercedes Benz emphasizes status and qualityd. Comfy Rent-a-Car targets referrals through car dealerships and insurance

agentse. Sofy toilet paper claims to be the softest on the market(a; moderate)

41. Which of the following illustrates a differentiation strategy?a. Good-Mart offers the lowest pricesb. Big-Saving Mart promotes itself as a way to savec. Mercedes Benz emphasizes status and qualityd. Comfy Rent-a-Car targets referrals through car dealerships and insurance

agentse. Cut-Price Mart promises to cut shoppers’ grocery bills (c; difficult)

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42. Michael Porter emphasizes that all a firm’s activities should be tailored to its strategy by ensuring that a firm’s functional strategies support its corporate and competitive strategies. This is called _____.a. matchb. leveragec. fitd. stretche. height(c; moderate)

43. Econ Airlines pursues a low-cost leader strategy and then tailors its activities to that strategy. For instance, it has quick turnarounds at the gate which results in more flying time for each plane and more departures with fewer planes. Econ Airlines is an example of the _____ point of view.a. matchb. leveragec. fitd. stretche. height(c; moderate)

44. Leveraging resources by supplementing what a company has and doing more with what it has to take advantage of an opportunity means that the company has a _____ point of view.a. matchb. leveragec. fitd. stretche. height(d; moderate)

45. Which of the following basic strategic planning roles is fulfilled by HR managers?a. perform external and internal auditsb. execute strategyc. translate the mission into strategic goalsd. formulate strategye. both b and d(e; moderate)

46. A company’s basic _____ is made up of HR professionals, the HR system, and the resulting employee behaviors.a. HR architectureb. structurec. strategyd. HR functione. none of the above(a; easy)

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47. Human resource policies and practices are part of the ______.a. HR functionb. HR systemc. HR architectured. employee culturee. company norms(b; difficult)

48. Which of the following is not an organizational practice included in High-Performance Work Systems?a. job enrichmentb. job enlargementc. employee developmentd. flexible work assignmentse. team-based organizations(b; difficult)

49. Managers use a(n) _____ to measure the HR function’s effectiveness and efficiency in producing employee behaviors the company needs to achieve its strategic goals.a. metricb. HR Scorecardc. timed. high performance work systeme. MBO format(b; easy)

50. The concise measurement system used by companies to show the quantitative standards the firm uses to measure HR activities, employee behaviors resulting from the activities, and the strategically relevant organizational outcomes of those employee behaviors is called a(n) _____.a. evaluation systemb. HR scorecardc. appraisal systemd. evaluation benchmarke. annual report(b; moderate)

51. What is the second step in using the HR Scorecard approach?a. outline the company’s value chainb. identify the strategically-required organizational outcomesc. define the business strategyd. design the HR scorecard measurement systeme. evaluate the measurement system(a; moderate)

52. s

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What is the first step in using the HR Scorecard approach?a. outline the company’s value chainb. identify the strategically-required organizational outcomesc. define the business strategyd. design the HR scorecard measurement systeme. evaluate the measurement system(c; moderate)

53. What is the final step in using the HR Scorecard approach?a. outline the company’s value chainb. identify the strategically-required organizational outcomesc. define the business strategyd. design the HR scorecard measurement systeme. evaluate the measurement system(e; moderate)

54. Identify the Strategically Required Organizational Outcomes is the _____ step in using the HR Scorecard approach.a. firstb. secondc. thirdd. fourthe. fifth(c; moderate)

55. Outline the company’s value chain is the _____ step in using the HR Scorecard approach.a. firstb. secondc. thirdd. fourthe. fifth(b; moderate)

56. Define the business strategy is the _____ step in using the HR Scorecard approach.a. firstb. secondc. thirdd. fourthe. fifth(a; moderate)

57. Identifying the Required Workforce Competencies and Behaviors is the _____ step in using the HR Scorecard approach.a. secondb. thirdc. fourthd. fifthe. sixth(c; moderate)

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58. Identifying the strategically relevant HR system policies and activities is the _____ step in using the HR Scorecard approach.a. secondb. thirdc. fourthd. fifthe. sixth(d; moderate)

59. During which step of the HR Scorecard approach are the HR enablers and deliverables identified?a. secondb. thirdc. fourthd. fifthe. sixth(d; moderate)

60. During which step of the HR Scorecard approach are the proper metrics decided upon? a. secondb. thirdc. fourthd. fifthe. sixth(e; moderate)

61. Which stage of the HR Scorecard approach is repeated periodically to ensure validity of the measures?a. outline the company’s value chainb. identify the strategically-required organizational outcomesc. define the business strategyd. design the HR scorecard measurement systeme. evaluate the measurement system(e; moderate)

62. A company’s _____ identifies the primary activities that create value for customers and the related support activities.a. value chainb. HR scorecardc. strategyd. tactical approache. none of the above(a; easy)

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63. HR system activities that help produce valuable workforce competencies and behaviors are called _____.a. performance driversb. HR deliverablesc. HR competenciesd. strategic outcomese. both a and b(e; moderate)

64. Which of the following is not a type of measure used to assess HR performance drivers such as employee motivation and morale?a. employee attitude surveysb. employee turnoverc. number of qualified applicants per positiond. employee commitment survey scorese. customer complaints(c; difficult)

65. Which of the following is a type of measure for assessing HR performance drivers like employee motivation?a. proportion of merit pay determined by formal performance appraisalb. percentage of employees eligible for annual merit planc. percentage of difference in incentive pay between the low performing and

high performing employeesd. percentage of retention of high performing employeese. percentage of jobs filled from within(d; difficult)

66. Which of the following is not a type of measure for assessing HR enablers such as testing, training, and reward policies?a. proportion of merit pay determined by formal performance appraisalb. percentage of employees eligible for annual merit planc. percentage of difference in incentive pay between the low performing and

high performing employeesd. employee attitude surveyse. percentage of jobs filled from within(d; difficult)

67. Which of the following is a type of measure for assessing HR enablers?a. level of cross-cultural teamworkb. level of organizational learningc. requests for transferd. customer complaintse. number of hours of training employees receive each year(e; moderate)

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68. HR enablers consist of all of the following except _____.a. selection policiesb. practicesc. employee capabilitiesd. reward policiese. training policies(c; moderate)

69. HR performance drivers include all of the following except _____.a. employee moraleb. reward policiesc. employee commitmentd. employee valuese. employee motivation(b; moderate)

70. The _____ scorecard is to the company what the HR scorecard is to the HR function.a. corporateb. business-levelc. competitived. balancede. functional(d; moderate)

True/ False

71. There are six steps in the strategic management process. (T; easy)

72. HR managers need to support corporate productivity and performance improvement efforts. (T; moderate)

73. Employees play a minimal role in the performance improvement efforts of their employers. (F; easy)

74. HR is only involved in the execution of a company’s strategic plan. (F; moderate)

75. A mission statement is a general statement of a company’s intended direction that evokes emotional feelings in the organization’s members. (F; easy)

76. A vision statement is broader and more future-oriented than a mission statement. (T; easy)

77. Mission statements tend to focus on past successes. (F; easy)

78. Strategy implementation draws more on the leading management function than on the functions of planning, organizing, staffing, and controlling. (F; difficult)

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79. Consolidation keeps the company’s strategy up to date by assessing progress toward strategic goals and taking corrective action as needed. (F; moderate)

80. Managers engage in three levels of strategic planning. (T; moderate)

81. Cost leadership, differentiation, and focus strategies all types of corporate-level strategy. (F; moderate)

82. A vertical integration strategy means that the firm will expand by adding new product lines. (F; easy)

83. McDonald’s addressed its lagging profitability by first closing stores operating below its guidelines. McDonald’s used a consolidation strategy. (T; moderate)

84. Pizza Hut’s strategy for competing against Domino’s is a business-level strategy. (T; moderate)

85. FedEx’s acquisition of Kinko’s is a corporate-level strategic move. (T; moderate)

86. Dell’s strategy of developing an HR portal on the company website to support its low-cost competitive strategy is an example of an integration strategy. (F; difficult)

87. The concept of stretch states that a firm’s activities must be tailored to its strategy. (F; easy)

88. Leveraging resources is a necessary action for companies stretching to take advantage of an opportunity. (T; moderate)

89. Strategic human resource management means formulating and executing HR systems that produce the employee competencies and behaviors the company needs to achieve its strategic aims. (T; moderate)

90. A company’s HR strategy is a type of competitive strategy. (F; difficult)

91. Many executives see HR as a cost center. (T; easy)

92. HR managers fulfill the first two steps of the strategic management process. (F; moderate)

93. The basic HR architecture includes three components: the HR system, HR professionals, and the resulting employee behaviors. (T; moderate)

94. HR managers use the HR Scorecard to measure the success of the value chain throughout an organization. (F; moderate)

95. The HR Scorecard measures the HR function’s effectiveness and efficiency in producing desirable employee behaviors. (T; easy)

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96. A company’s specific strategy is irrelevant to the HR Scorecard because human resources always strive for productive employee behaviors. (F; moderate)

97. To create an HR Scorecard, the manager should understand the causal links between the HR activities, the employee behaviors, the organizational outcomes, and the organization’s performance. (T; moderate)

98. The balanced scorecard does for the company as a whole what the HR scorecard does for the HR function. (T; easy)

99. The balanced scorecard is an accounting tool based on a computerized model. (F; moderate)

100. In a service business, the product is satisfied guests. (T; moderate)

Essay/ Short Answer

101. What are the three basic challenges HR managers must address in formulating HR strategies? Which of these is the most difficult for HR? (moderate)

Answer: The three challenges are the need to support corporate productivity and performance improvement efforts, to encourage employees to plan an expanded role in employers’ performance improvement efforts, and to be more involved in the design and execution of the company’s strategic plan. The final challenge is key as HR has traditionally been involved more in the execution rather than the design of strategic plans.

102. What is strategic management? Define the term. List and describe the six steps in the strategic management process. (moderate)

Answer: Strategic management is the process of identifying and executing the organization’s mission, by matching the organization’s capabilities with the demands of its environment. The steps are as follows:Step 1: Define the Business and Its MissionStep 2: Perform External and Internal AuditsStep 3: Translate the Mission into Strategic GoalsStep 4: Formulate a Strategy to Achieve the Strategic GoalsStep 5: Implement the StrategyStep 6: Evaluate Performance

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103. Explain the difference between a vision and a mission. Are both necessary for organizations? (moderate)

Answer: A company’s vision is a general statement of the company’s intended direction that evokes emotional feelings in organization members. It is broader than a mission statement. It is future-oriented while mission statements are oriented in the present. Mission statements state what a company is doing right now while vision statements are what a company strives to become. Both are encouraged for organizations but some organizations have only a mission statement. Others may have neither a mission nor a vision.

104. During the strategic management process, managers may use a SWOT analysis. Explain how to use a SWOT analysis and provide an example using a well-known company. (moderate)

Answer: The SWOT analysis is used during the second step of the strategic management process. It facilitates the audit of external and internal situations. SWOT stands for strengths, weaknesses, opportunities, and threats. Managers can create a chart listing the strengths of the company, the weaknesses, and opportunities in the environment and threats in the environment. The chart makes it easy to see where strengths can lead to opportunities or how weaknesses may need to be solved to avoid threats.

Students should provide an example with this answer.

105. Explain the three levels of strategic planning. What is the purpose or focus for each level? Which level do HR strategies represent? (easy)

Answer: The three levels are corporate-level, business-level, and functional-level strategies. Corporate-level strategy identifies the portfolio of businesses that comprise the company and the ways in which these businesses relate to each other. The business-level strategy is the next level. It identifies how to build and strengthen the business’s long-term competitive position in the marketplace. The lowest level is the functional-level strategies. Functional strategies identify the basic course of action that each department will pursue in order to help the business attain its competitive goals. HR strategies are a type of functional strategy.

106. There are three primary forms of business-level or competitive strategies. Describe them and give an example of each one. (moderate)

Answer: The three forms of competitive strategies are cost leadership, differentiation, and focus. Cost leadership means offering the lowest prices and/or emphasizing low costs and efficiency as a source of competitive advantage. Wal-Mart is an example of a company pursuing a cost leadership strategy. Differentiation means emphasizing a source of difference between a company and its competitors. The differential advantage becomes the source of competitive advantage. Target follows a differentiation strategy. A focus strategy means that a company pursues a small niche in the market place. Ferrari follows this strategy.

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107. Some strategic planning experts emphasize fit while others support the use of stretch. Explain these two opposing concepts. Which do you think is best? (difficult)

Answer: The fit point of view means that all of a firm’s activities must be tailored to fit its strategy. This ensures that a firm’s functional strategies support its corporate and competitive strategies. Southwest Airlines is an example of a firm using the fit approach. On the other hand, stretch means leveraging resources to take advantage of opportunities. Stretch is the riskier of the two approaches. Fit is necessary overall to ensure success but stretch allows a firm to grow and better compete in the market place. Ultimately, firms should strive to incorporate fit while considering stretch to take advantage of opportunities.

108. Describe the components of a company’s basis HR architecture. (easy)

Answer: A company’s basic HR architecture is made up of three elements: HR professionals, the HR system, and the employee behaviors and competencies required for the company’s strategy. The HR professionals have the necessary skills to build a strategy-oriented HR system. The HR system is made up of the HR policies and activities such as how the company recruits, selects, trains, and rewards employees.

109. What is a High-Performance Work System? Explain the effects of such a system. (moderate)

Answer: A high-performance work system is what managers now expect from the HR system. It means that the HR system is designed to maximize the overall quality of human capital throughout the organization. Based on ongoing research, firms that use HPWS practices perform at a significantly higher level than those that do not.

110. What is the HR Scorecard approach? Identify the seven steps in using the HR Scorecard approach to create a strategy-oriented HR system. (moderate)

Answer: The HR Scorecard is a concise measurement system that shows the quantitative standards, or “metrics” the firm uses to measure HR activities, and to measure the employee behaviors resulting from these activities, and to measure the strategically relevant organizational outcomes of those employee behaviors. The seven steps are as follows:

Step 1: Define the business strategyStep 2: Outline the company’s value chainStep 3: Identify the strategically required organizational outcomesStep 4: Identify the required workforce competencies and behaviorsStep 5: Identify the strategically relevant HR system policies and activitiesStep 6: Design the HR Scorecard measurement systemStep 7: Periodically evaluate the measurement system

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Test Item File Ch03

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