Chapter 02 Strategic Human Resource...

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Chapter 02Strategic Human Resource Management

True / False Questions

1. The goal of strategic management in an organization is to deploy and allocate resources in a way that provides the company with a competitive advantage. True False

2. Strategic management is more than a collection of strategic types. It is a process to increase the likelihood of achieving a company's goals. True False

3. The strategic management process includes two distinct yet interdependent phases: strategy formulation and strategy implementation. True False

4. Strategic decision makers often pay less attention to the "how to compete" issue, which results in poor strategic decisions. True False

5. Although one-way linkage does recognize the importance of human resources in implementing the strategic plan, it precludes the company from considering human resource issues while formulating the strategic plan. True False

6. Untapped labor pools are an example of a strategic opportunity in an organization's operating environment. True False

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7. The responsibility of keeping tabs on the external environment for human resource – related opportunities and threats rests with the top management. True False

8. Strategic choice is the way an organization attempts to fulfill its mission and achieve its long-term goals. True False

9. Research has indicated that a majority of companies have fully integrated HRM into the strategy formulation process. True False

10. HRM has the primary responsibility for three of the five implementation variables: task, people, and reward systems. True False

11. Job analysis involves the gathering of detailed information about jobs. True False

12. Historically, narrow job designs have been used to increase innovation. True False

13. Today, with the advent of total quality management methods and a variety of employee involvement programs, such as quality circles, jobs are becoming broader in scope. True False

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14. A company's strategy will have a direct impact upon the firm's recruitment efforts, but only an indirect impact on its selection procedures and the types of employees selected. True False

15. The downside of providing a high level of pay and benefits is that it can lead to employee complacency. True False

16. By tying pay to performance, a company can elicit specific activities and levels of performance from employees. True False

17. According to research, HRM practices and employee performance are positively related. True False

18. Increasing the use of HRM practices will automatically result in increased profitability. True False

19. An overall cost leadership strategy is achieved by creating new product features or unique customer services. True False

20. Differentiation companies will have compensation systems that are geared toward internal rather than external equity. True False

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21. Jobholder actions are behaviors required of an individual in his/her role as a job holder in a social work environment. True False

22. Concentration strategies traditionally include vertical and horizontal integration. True False

23. Research indicates that downsizing has been largely successful in achieving goals of increased productivity and profitability. True False

24. According to research results, early retirement programs are one of the more effective approaches to downsizing. True False

25. Downsizing can lead to feelings of guilt and/or envy among survivors. True False

Multiple Choice Questions

26. _____ is the skillful employment and coordination of tactics. A. StrategyB. HRMC. Business modelD. Structure

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27. What is the name of the process that manages the pattern or plan that integrates an organization's major goals, policies, and action sequences into a cohesive whole? A. Long-range planningB. Strategy implementationC. Management by objectivesD. Strategic management

28. When an organization develops integrated manufacturing systems such as advanced manufacturing technology and just-in-time inventory control, then one of the responsibilities of SHRM is to: A. assess the skills required to run these systems.B. ensure the availability of the physical resources (plant, equipment, and technology) required to implement these systems.C. test the applicability of these systems.D. document the use of these systems within the organization.

29. _____ can be thought of as the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals. A. HRMB. Strategy implementationC. Strategic HRMD. Strategy formulation

30. Company X is a retail firm specializing in menswear. It has identified its main competitors as firms providing formal attire to working males between the ages of 22-35. Company X is at the _____ phase. A. strategy implementationB. strategy formulationC. strategic managementD. strategic planning

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31. Strategy formulation involves all but one of the following. Name the exception. A. Defining the firm's mission and goalsB. Assessing the firm's external opportunities and threatsC. Defining the firm's organizational structureD. Generating various strategic alternatives

32. The process that involves allocating resources, developing structures, hiring skilled employees, and developing appropriate reward systems is known as: A. strategy formulation.B. strategy implementation.C. strategic planning.D. strategic management.

33. All of the following are strategy decisions about competition EXCEPT: A. How long to compete?B. Where to compete?C. How to compete?D. With what to compete?

34. Strategic decision makers often pay less attention to the _____ issue, resulting in poor strategic decisions. A. "when to compete"B. "where to compete"C. "how to compete"D. "with what will we compete"

35. In an organization, a strategic planning group consists of all but one of the following. Name the exception. A. Chief executive officerB. PresidentsC. Regional business headD. Chief financial officer

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36. _____ levels of integration seem to exist between the HRM function and the strategic management function. A. TwoB. FourC. FiveD. Three

37. Which is the lowest level of integration between the HRM function and the strategic management function? A. Administrative linkageB. Two-way linkageC. Integrative linkageD. Executive linkage

38. At which level of integration is HR's attention and time focused solely on day-to-day activities? A. Administrative linkageB. One-way linkageC. Two-way linkageD. Integrative linkage

39. At which level of integration is the HR department simply engaged in regulatory work that is unrelated to the company's core business needs? A. Administrative linkageB. One-way linkageC. Two-way linkageD. Integrative linkage

40. Which of the following often leads to strategic plans that the company cannot successfully implement? A. Congruent linkageB. Integrative linkageC. Two-way linkageD. One-way linkage

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41. Which of the following is NOT a step in two-way linkage? A. The strategic planning team informs the HRM function of the various strategies the company is considering.B. HRM executives analyze the HR implications of the various strategies, presenting the results of this analysis to the strategic planning team.C. After a strategic planning decision has been made, the strategic plan is passed on to the HRM executive, who develops programs to implement it.D. Top management makes decisions about strategies without input from functional managers.

42. Integrative linkage is: A. dynamic, multifaceted, and based on continuing rather than sequential interaction.B. dynamic, multifaceted, and based on sequential rather than continuing interaction.C. simple, based on a single rather than continuing interaction.D. simple, based on a continuing rather than single interaction.

43. In which level of integration are the strategic planning function and the HRM function interdependent? A. Administrative linkageB. One-way linkageC. Two-way linkageD. Integrative linkage

44. The first component in the strategy formulation process is: A. establishment of corporate goals.B. formulation of a statement of mission.C. completion of an external analysis.D. strategic choice.

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45. The _____ is a statement of the organization's reason for being that usually specifies the customers served, the needs satisfied and/or the values received by the customers, and the technology used. A. goalB. missionC. strategyD. vision

46. An organization's _____ is what it hopes to achieve in the medium- to long-term future. A. goalB. missionC. strategyD. vision

47. _____ consists of examining the organization's operating environment to identify the strategic opportunities and threats. A. Strategic formulationB. Internal analysisC. External analysisD. Strategic choice

48. _____ attempts to identify the organization's strengths and weaknesses. A. Strategic formulationB. Internal analysisC. External analysisD. Strategic choice

49. The purpose of the SWOT analysis is to: A. choose the best strategy.B. consider the downside of each strategic alternative.C. generate a large number of strategic alternatives.D. realign HR practices.

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50. The last step in the strategy formulation is: A. establishment of corporate goals.B. formulation of a statement of mission.C. completion of an internal and external analysis.D. strategic choice.

51. HRM is primarily responsible for three of the following variables in the strategy implementation process. Identify the exception. A. Selection, training, and development of peopleB. Task designC. Reward systemsD. Customer awareness

52. Which of the following statements is TRUE regarding strategy implementation? A. HR has an influence over all the variables involved in the strategy implementation process.B. HR is seldom involved in strategy implementation activities.C. HR has primary responsibility for all five of the major components to strategy implementation.D. HR practices are completely independent from strategy implementation.

53. Which process addresses what tasks should be grouped into a particular job? A. Job analysisB. Internal analysisC. External analysisD. Job design

54. _____ is the process through which the organization seeks applicants for potential employment. A. SelectionB. RecruitmentC. ScreeningD. Development

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55. The process by which a firm attempts to identify qualified applicants—those with the knowledge, skills, abilities, and other characteristics necessary to help the firm achieve its goals—is known as: A. selection.B. recruitment.C. interviewing.D. testing.

56. The process that allows employees to improve their ability to meet the challenges of a variety of existing or new jobs is: A. training.B. development.C. learning.D. acquisition.

57. _____ is a planned effort to facilitate the learning of job-related knowledge, skills, and behavior by employees. A. TrainingB. DevelopmentC. LearningD. Acquisition

58. Firms that are diversified are more likely to use performance measures that are: A. selective.B. qualitative.C. quantitative.D. objective.

59. Identify the type of firms which tend to have evaluation systems that call for subjective assessments of performance for evaluating managers. A. Diversified organizationsB. Homogeneous organizationsC. Parallel organizationsD. Steady-state organizations

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60. When executives are unclear about the specific behaviors that lead to effective performance, they tend to focus on evaluating the _____ performance results of their subordinate managers. A. objectiveB. subjectiveC. qualitativeD. perceptive

61. _____ is used to ensure that employee activities and outcomes are congruent with the organization's objectives. A. An incentiveB. TrainingC. Performance managementD. Development

62. High-tech firms in the growth stage tend to use compensation systems that: A. are highly geared toward benefits.B. devote a lower percentage of total pay to incentives.C. are highly geared toward incentive pay.D. devote equal percentages to pay and benefits.

63. Which type of companies tend to use compensation systems devoting a lower percentage of total pay to incentives and a high percentage to benefits? A. Growing companiesB. Mature companiesC. Startup companiesD. Acquired companies

64. Company X wants to become the lowest cost producer in the industry. What should it do? A. Construct efficient large-scale facilities.B. Create a product that is different from others available in the market.C. Invest heavily in branding their product.D. Reduce expenditure on production facilities.

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65. Apple computers come with their own proprietary operating systems. What kind of a strategy is this? A. Overall cost leadershipB. DifferentiationC. ReactorD. Prospector

66. What type of strategy is used by a firm that specifically defines required skills and seeks efficiency through worker participation? A. CostB. DifferentiationC. FocusD. Analyzer

67. IBM has consistently emphasized its brand image and its reputation for superior service while charging a higher price for its computers. This is an example of which one of Porter's generic strategies? A. Overall cost leadershipB. DifferentiationC. FocusD. Prospectors

68. A company engaged in a differentiation strategy is likely to focus on all but one of the following. Name the exception. A. Encourage creativity through broadly defined jobs with general job descriptions.B. Engage in limited socialization of newcomers.C. Promote internally, with internally consistent pay systems.D. Develop results-based performance management systems.

69. Employees in companies with a differentiation strategy would need to be: A. highly concerned with quantity.B. comfortable with stability.C. highly creative and cooperative.D. risk averse.

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70. Company X develops results-based performance management systems and conducts divisional – corporate performance evaluations to encourage risk taking on the part of managers. Which strategy is this company following? A. CostB. External growthC. DirectionalD. Differentiation

71. What type of strategy is used by a firm that focuses on what it does best within established markets? A. ConcentrationB. Internal growthC. External growthD. Divestment

72. What type of strategy attempts to expand a company's resources or to strengthen its market position through acquiring or creating new businesses? A. Internal growth strategyB. Diversification growth strategyC. External growth strategyD. Expansion growth strategy

73. Which one of the following is NOT an internal growth strategy? A. Vertical integrationB. Market developmentC. Joint ventureD. Innovation

74. Firms that seek to scale down their operations are following a(n): A. concentration strategy.B. internal growth strategy.C. external growth strategy.D. divestment strategy.

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75. Company Z's appraisals tend to be more behavioral because the company environment is more certain and the behaviors necessary for effective performance are established. Which strategy is this company following? A. Concentration strategyB. Internal growth strategyC. External growth strategyD. Divestment strategy

76. For companies following a(n) _____ strategy, joint ventures require extensive training in conflict resolution techniques because of the problems associated with combining people from two distinct organizational cultures. A. concentrationB. internal growthC. external growthD. divestment

77. The most prevalent HR problem for firms facing external growth strategies is: A. hiring the right people.B. standardizing practices across the organization.C. finding the right companies to purchase.D. determining the fair-market price of acquisitions.

78. Some companies now heavily weigh a firm's _____ before embarking on a merger or acquisition. A. operational efficiencyB. human capitalC. cultureD. infrastructure

79. Downsizing is likely to result in: A. increased employee trust and commitment.B. avoidance of a takeover.C. increased innovation.D. compensation plans tied to company performance.

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80. Which of the following desired outcomes of downsizing is most likely to be achieved? A. Increased market shareB. Reduced expensesC. Increased productivityD. Reduced bureaucracy

81. Which of the following desired outcomes of downsizing is least likely to be achieved? A. Increased innovationB. Increased customer satisfactionC. Avoidance of a takeoverD. Improved cash flows

82. Which of the following is NOT one of the results that can be achieved by an organization's downsizing? A. Changing an organization's cultureB. Dissolving labor union contractsC. Getting rid of "dead wood"D. Making way for fresh ideas

83. Which of the following is an opportunity that downsizing provides for HRM? A. The HRM function must "surgically" reduce the workforce by cutting only the workers who are less valuable in their performance.B. Boosting the morale of employees who remain after the reduction.C. Building trust and maintaining communication with remaining employees.D. Changing the organization's culture and making way for fresh ideas.

84. _____ strategies are the result of the rational decision-making process used by top managers as they develop a strategic plan. A. EmergentB. IntendedC. DivergentD. Accidental

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85. Most strategies that companies espouse are: A. concentration strategies.B. directional strategies.C. emergent strategies.D. intended strategies.

86. Which of the following strategies evolves from the grassroots of an organization and can be thought of as what organizations actually do? A. ConcentrationB. DirectionalC. EmergentD. Intended

87. Which of the following is essential if a company is to take advantage of emergent strategies? A. A formal organizational structureB. A weak corporate cultureC. An externally-based compensation systemD. An effective communications system

88. Most _____ strategies are identified by those lower in the organizational hierarchy, where it is often the rank-and-file employees who provide ideas for new markets, new products, and new strategies. A. concentrationB. directionalC. emergentD. intended

89. In which type of an organization do employees expand their capacity to achieve the results that they desire? A. Diversified organizationsB. Emergent organizationsC. Learning organizationsD. Strategic organizations

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90. A company is in a constant state of _____ through monitoring the environment, assimilating information, making decisions, and flexibly restructuring to compete in that environment. A. expandingB. learningC. exploringD. evolving

Essay Questions

91. Discuss four ways an HR department can ensure involvement with a firm's strategic management process.

92. List the four levels of integration that can exist between the HR function and the strategic management functions.

93. Discuss the three steps in a two-way linkage between the HR function and the strategic management functions.

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94. Identify and explain the steps in formulating a strategy.

95. List the five variables that determine success in strategy implementation, and indicate those over which HRM has major responsibility.

96. Discuss the six HRM practices from which companies can choose for implementing their strategy.

97. Compare and contrast Porter's generic strategies of cost leadership and differentiation.

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98. Describe two of the four directional strategies that firms have used to meet objectives.

99. Discuss the different challenges faced by HR in firms emphasizing internal vs. external growth.

100. Discuss the challenges and opportunities (advantages) for HR in a downsizing, or right-sizing, effort.

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Chapter 02 Strategic Human Resource Management Answer Key

True / False Questions

1. (p. 72) The goal of strategic management in an organization is to deploy and allocate resources in a way that provides the company with a competitive advantage. TRUE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-1Topic: Introduction

2. (p. 75) Strategic management is more than a collection of strategic types. It is a process to increase the likelihood of achieving a company's goals. TRUE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-1Topic: What is Strategic Management?

3. (p. 75) The strategic management process includes two distinct yet interdependent phases: strategy formulation and strategy implementation. TRUE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-2Topic: Components of the Strategic Management Process

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4. (p. 77) Strategic decision makers often pay less attention to the "how to compete" issue, which results in poor strategic decisions. FALSE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-2Topic: Linkage Between HRM and the Strategic Management Process

5. (p. 79) Although one-way linkage does recognize the importance of human resources in implementing the strategic plan, it precludes the company from considering human resource issues while formulating the strategic plan. TRUE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-4Topic: Role of HRM in Strategy Formulation

6. (p. 80) Untapped labor pools are an example of a strategic opportunity in an organization's operating environment. TRUE

AACSB: Domestic and Global Economic Environments of OrganizationsBT: KnowledgeDifficulty: MediumLearning Objective: 2-4Topic: Strategy Formulation

7. (p. 81) The responsibility of keeping tabs on the external environment for human resource – related opportunities and threats rests with the top management. FALSE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-4Topic: Strategy Formulation

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8. (p. 81) Strategic choice is the way an organization attempts to fulfill its mission and achieve its long-term goals. TRUE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-4Topic: Strategy Formulation

9. (p. 83) Research has indicated that a majority of companies have fully integrated HRM into the strategy formulation process. FALSE

AACSB: Reflective Thinking SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-4Topic: Strategy Formulation

10. (p. 83) HRM has the primary responsibility for three of the five implementation variables: task, people, and reward systems. TRUE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: Strategy Implementation

11. (p. 86) Job analysis involves the gathering of detailed information about jobs. TRUE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-5Topic: HRM Practices

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12. (p. 86) Historically, narrow job designs have been used to increase innovation. FALSE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: HRM Practices

13. (p. 86) Today, with the advent of total quality management methods and a variety of employee involvement programs, such as quality circles, jobs are becoming broader in scope. TRUE

AACSB: Reflective Thinking SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-5Topic: HRM Practices

14. (p. 87) A company's strategy will have a direct impact upon the firm's recruitment efforts, but only an indirect impact on its selection procedures and the types of employees selected. FALSE

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-5Topic: HRM Practices

15. (p. 89) The downside of providing a high level of pay and benefits is that it can lead to employee complacency. FALSE


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16. (p. 89) By tying pay to performance, a company can elicit specific activities and levels of performance from employees. TRUE

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-5Topic: HRM Practices

17. (p. 90) According to research, HRM practices and employee performance are positively related. TRUE

AACSB: Reflective Thinking SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: HRM Practices

18. (p. 90) Increasing the use of HRM practices will automatically result in increased profitability. FALSE


19. (p. 90) An overall cost leadership strategy is achieved by creating new product features or unique customer services. FALSE

AACSB: Value Creation Through the Integrated Production and Distribution of Goods, Services, and InformationBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: Strategic Types

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20. (p. 91) Differentiation companies will have compensation systems that are geared toward internal rather than external equity. FALSE

AACSB: Value Creation Through the Integrated Production and Distribution of Goods, Services, and InformationBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: HRM Needs in Strategic Types

21. (p. 91) Jobholder actions are behaviors required of an individual in his/her role as a job holder in a social work environment. FALSE

AACSB: Group/Individual Dynamics in OrganizationsBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: HRM Needs in Strategic Types

22. (p. 92) Concentration strategies traditionally include vertical and horizontal integration. FALSE

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-6Topic: Directional Strategies

23. (p. 94) Research indicates that downsizing has been largely successful in achieving goals of increased productivity and profitability. FALSE

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-6Topic: Directional Strategies

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24. (p. 95) According to research results, early retirement programs are one of the more effective approaches to downsizing. FALSE


25. (p. 95) Downsizing can lead to feelings of guilt and/or envy among survivors. TRUE


Multiple Choice Questions

26. (p. 74) _____ is the skillful employment and coordination of tactics. A. StrategyB. HRMC. Business modelD. Structure

Webster's New American Dictionary defines strategy as the "skillful employment and coordination of tactics" and as "artful planning and management."


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27. (p. 74) What is the name of the process that manages the pattern or plan that integrates an organization's major goals, policies, and action sequences into a cohesive whole? A. Long-range planningB. Strategy implementationC. Management by objectivesD. Strategic management

Strategic management is a process, an approach to addressing the competitive challenges an organization faces.


28. (p. 75) When an organization develops integrated manufacturing systems such as advanced manufacturing technology and just-in-time inventory control, then one of the responsibilities of SHRM is to: A. assess the skills required to run these systems.B. ensure the availability of the physical resources (plant, equipment, and technology) required to implement these systems.C. test the applicability of these systems.D. document the use of these systems within the organization.

SHRM is a pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-1Topic: What is Strategic Management?

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29. (p. 75) _____ can be thought of as the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals. A. HRMB. Strategy implementationC. Strategic HRMD. Strategy formulation

An example of SHRM is when firms develop integrated manufacturing systems such as advanced manufacturing technology, just-in-time inventory control, and TQM in an effort to increase their competitive position.


30. (p. 75) Company X is a retail firm specializing in menswear. It has identified its main competitors as firms providing formal attire to working males between the ages of 22-35. Company X is at the _____ phase. A. strategy implementationB. strategy formulationC. strategic managementD. strategic planning

Strategy formulation is the process of deciding on a strategic direction by defining a company's mission and goals, its external opportunities and threats, and its internal strengths and weaknesses.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-2Topic: Components of the Strategic Management Process

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31. (p. 75) Strategy formulation involves all but one of the following. Name the exception. A. Defining the firm's mission and goalsB. Assessing the firm's external opportunities and threatsC. Defining the firm's organizational structureD. Generating various strategic alternatives

The task of defining the firm's organizational structure is an aspect of strategy implementation process.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-2Topic: Components of the Strategic Management Process

32. (p. 75) The process that involves allocating resources, developing structures, hiring skilled employees, and developing appropriate reward systems is known as: A. strategy formulation.B. strategy implementation.C. strategic planning.D. strategic management.

Strategy implementation is the process of devising structures and allocating resources to enact the strategy a company has chosen.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-2Topic: Components of the Strategic Management Process

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33. (p. 77) All of the following are strategy decisions about competition EXCEPT: A. How long to compete?B. Where to compete?C. How to compete?D. With what to compete?

The strategy decisions consist of addressing the issues of where to compete, how to compete, and with what to compete to achieve the firm's missions and goals.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-2Topic: Linkage Between HRM and the Strategic Management Process

34. (p. 77) Strategic decision makers often pay less attention to the _____ issue, resulting in poor strategic decisions. A. "when to compete"B. "where to compete"C. "how to compete"D. "with what will we compete"

When firms make decisions without fully understanding what resources would be needed to compete in a particular market, they end up making poor strategic decisions.

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-2Topic: Linkage Between HRM and the Strategic Management Process

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35. (p. 78) In an organization, a strategic planning group consists of all but one of the following. Name the exception. A. Chief executive officerB. PresidentsC. Regional business headD. Chief financial officer

A firm's strategic management decision-making process usually takes place at its top levels, with a strategic planning group consisting of the chief executive officer, the chief financial officer, the president, and various vice presidents.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-3Topic: Role of HRM in Strategy Formulation

36. (p. 79) _____ levels of integration seem to exist between the HRM function and the strategic management function. A. TwoB. FourC. FiveD. Three

The four levels of integration are: administrative linkage, one-way linkage, two-way linkage, and integrative linkage.


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37. (p. 79) Which is the lowest level of integration between the HRM function and the strategic management function? A. Administrative linkageB. Two-way linkageC. Integrative linkageD. Executive linkage

In administrative linkage the HRM function's attention is focused on day-to-day activities and is completely divorced from any component of the strategic management process in both strategy formulation and strategy implementation.


38. (p. 79) At which level of integration is HR's attention and time focused solely on day-to-day activities? A. Administrative linkageB. One-way linkageC. Two-way linkageD. Integrative linkage



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39. (p. 79) At which level of integration is the HR department simply engaged in regulatory work that is unrelated to the company's core business needs? A. Administrative linkageB. One-way linkageC. Two-way linkageD. Integrative linkage



40. (p. 79) Which of the following often leads to strategic plans that the company cannot successfully implement? A. Congruent linkageB. Integrative linkageC. Two-way linkageD. One-way linkage

In one-way linkage, the firm's strategic business planning function develops the strategic plan and then informs the HRM function of the plan.


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41. (p. 79-80) Which of the following is NOT a step in two-way linkage? A. The strategic planning team informs the HRM function of the various strategies the company is considering.B. HRM executives analyze the HR implications of the various strategies, presenting the results of this analysis to the strategic planning team.C. After a strategic planning decision has been made, the strategic plan is passed on to the HRM executive, who develops programs to implement it.D. Top management makes decisions about strategies without input from functional managers.

The two-way linkage integration occurs in three sequential steps: the strategic planning team informs the HRM function of the various strategies the company is considering; then HRM executives analyze the human resource implications of the various strategies, presenting the results of this analysis to the strategic planning team; finally the strategic plan is passed on to the HRM executive, who develops programs to implement it.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-4Topic: Role of HRM in Strategy Formulation

42. (p. 80) Integrative linkage is: A. dynamic, multifaceted, and based on continuing rather than sequential interaction.B. dynamic, multifaceted, and based on sequential rather than continuing interaction.C. simple, based on a single rather than continuing interaction.D. simple, based on a continuing rather than single interaction.

Integrative linkage is dynamic and multifaceted, based on continuing rather than sequential interaction.


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43. (p. 80) In which level of integration are the strategic planning function and the HRM function interdependent? A. Administrative linkageB. One-way linkageC. Two-way linkageD. Integrative linkage

The strategic planning function and the HRM function are interdependent in two-way linkage.


44. (p. 80) The first component in the strategy formulation process is: A. establishment of corporate goals.B. formulation of a statement of mission.C. completion of an external analysis.D. strategic choice.

Organization's mission is the first component in the strategy formulation process.


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45. (p. 80) The _____ is a statement of the organization's reason for being that usually specifies the customers served, the needs satisfied and/or the values received by the customers, and the technology used. A. goalB. missionC. strategyD. vision

The mission statement is often accompanied by a statement of a company's vision and/or values.


46. (p. 80) An organization's _____ is what it hopes to achieve in the medium- to long-term future. A. goalB. missionC. strategyD. vision

An organization's goals are what it hopes to achieve in the medium- to long-term future; they reflect how the mission will be operationalized.


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47. (p. 80) _____ consists of examining the organization's operating environment to identify the strategic opportunities and threats. A. Strategic formulationB. Internal analysisC. External analysisD. Strategic choice

External analysis consists of examining the organization's operating environment to identify the strategic opportunities and threats.


48. (p. 80) _____ attempts to identify the organization's strengths and weaknesses. A. Strategic formulationB. Internal analysisC. External analysisD. Strategic choice

Internal analysis attempts to identify the organization's strengths and weaknesses. It focuses on the quantity and quality of resources available to the organization— financial, capital, technological, and human resources.

AACSB: Domestic and Global Economic Environments of OrganizationsBT: KnowledgeDifficulty: MediumLearning Objective: 2-4Topic: Strategy Formulation

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49. (p. 81) The purpose of the SWOT analysis is to: A. choose the best strategy.B. consider the downside of each strategic alternative.C. generate a large number of strategic alternatives.D. realign HR practices.

After going through the SWOT analysis, the strategic planning team has all the information it needs to generate a number of strategic alternatives.


50. (p. 81) The last step in the strategy formulation is: A. establishment of corporate goals.B. formulation of a statement of mission.C. completion of an internal and external analysis.D. strategic choice.

After generating a number of strategic alternatives, the strategic managers compare these alternatives' ability to attain the organization's strategic goals; then they make their strategic choice.


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51. (p. 83) HRM is primarily responsible for three of the following variables in the strategy implementation process. Identify the exception. A. Selection, training, and development of peopleB. Task designC. Reward systemsD. Customer awareness

HRM has primary responsibility for three of the five implementation variables: task, people, and reward systems.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-5Topic: Strategy Implementation

52. (p. 83) Which of the following statements is TRUE regarding strategy implementation? A. HR has an influence over all the variables involved in the strategy implementation process.B. HR is seldom involved in strategy implementation activities.C. HR has primary responsibility for all five of the major components to strategy implementation.D. HR practices are completely independent from strategy implementation.

HRM has primary responsibility for three of these five implementation variables: task, people, and reward systems. In addition, HRM can directly affect the two remaining variables: structure and information and decision processes.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-5Topic: Strategy Implementation

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53. (p. 86) Which process addresses what tasks should be grouped into a particular job? A. Job analysisB. Internal analysisC. External analysisD. Job design

Job design addresses what tasks should be grouped into a particular job.


54. (p. 86) _____ is the process through which the organization seeks applicants for potential employment. A. SelectionB. RecruitmentC. ScreeningD. Development

Recruitment is the process through which the organization seeks applicants for potential employment.


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55. (p. 86-87) The process by which a firm attempts to identify qualified applicants—those with the knowledge, skills, abilities, and other characteristics necessary to help the firm achieve its goals—is known as: A. selection.B. recruitment.C. interviewing.D. testing.

Selection refers to the process by which it attempts to identify applicants with the necessary knowledge, skills, abilities, and other characteristics that will help the company achieve its goals.


56. (p. 87) The process that allows employees to improve their ability to meet the challenges of a variety of existing or new jobs is: A. training.B. development.C. learning.D. acquisition.

Development involves acquiring knowledge, skills, and behavior that improve employees' ability to meet the challenges of a variety of existing jobs or jobs that do not yet exist.


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57. (p. 87) _____ is a planned effort to facilitate the learning of job-related knowledge, skills, and behavior by employees. A. TrainingB. DevelopmentC. LearningD. Acquisition

Training refers to a planned effort to facilitate the learning of job-related knowledge, skills, and behavior by employees.


58. (p. 88) Firms that are diversified are more likely to use performance measures that are: A. selective.B. qualitative.C. quantitative.D. objective.

Diversified companies are more likely to use quantitative measures of performance to evaluate managers because top managers have less knowledge about how work should be performed by those below them in the hierarchy.


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59. (p. 88) Identify the type of firms which tend to have evaluation systems that call for subjective assessments of performance for evaluating managers. A. Diversified organizationsB. Homogeneous organizationsC. Parallel organizationsD. Steady-state organizations

Companies that are "steady state" (not diversified) tend to have evaluation systems that call for subjective performance assessments of managers.


60. (p. 88) When executives are unclear about the specific behaviors that lead to effective performance, they tend to focus on evaluating the _____ performance results of their subordinate managers. A. objectiveB. subjectiveC. qualitativeD. perceptive

When executives are unclear about the specific behaviors that lead to effective performance, they tend to focus on evaluating the objective performance results of their subordinate managers.


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61. (p. 88) _____ is used to ensure that employee activities and outcomes are congruent with the organization's objectives. A. An incentiveB. TrainingC. Performance managementD. Development

Performance management is used to ensure that employees' activities and outcomes are congruent with the organization's objectives. It entails specifying those activities and outcomes that will result in the firm's successfully implementing the strategy.


62. (p. 89) High-tech firms in the growth stage tend to use compensation systems that: A. are highly geared toward benefits.B. devote a lower percentage of total pay to incentives.C. are highly geared toward incentive pay.D. devote equal percentages to pay and benefits.

High-tech companies in the growth stage used compensation systems that were highly geared toward incentive pay, with a lower percentage of total pay devoted to salary and benefits.

AACSB: Reflective Thinking SkillsBT: KnowledgeDifficulty: HardLearning Objective: 2-5Topic: HRM Practices

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63. (p. 89) Which type of companies tend to use compensation systems devoting a lower percentage of total pay to incentives and a high percentage to benefits? A. Growing companiesB. Mature companiesC. Startup companiesD. Acquired companies

Mature companies (both high-tech and traditional) devoted a lower percentage of total pay to incentives and a high percentage to benefits.


64. (p. 90) Company X wants to become the lowest cost producer in the industry. What should it do? A. Construct efficient large-scale facilities.B. Create a product that is different from others available in the market.C. Invest heavily in branding their product.D. Reduce expenditure on production facilities.

According to Porter, the "overall cost leadership" is achieved by constructing efficient large-scale facilities, by reducing costs through capitalizing on the experience curve, and by controlling overhead costs and costs in such areas as research and development, service, sales force, and advertising.

AACSB: Reflective Thinking SkillsBT: ApplicationDifficulty: MediumLearning Objective: 2-5Topic: Strategic Types

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65. (p. 90) Apple computers come with their own proprietary operating systems. What kind of a strategy is this? A. Overall cost leadershipB. DifferentiationC. ReactorD. Prospector

The "differentiation" strategy, according to Porter, attempts to create the impression that the company's product or service is different from that of others in the industry.


66. (p. 91) What type of strategy is used by a firm that specifically defines required skills and seeks efficiency through worker participation? A. CostB. DifferentiationC. FocusD. Analyzer

Companies engaged in cost strategies tend to specifically define the skills they require and invest in training employees in these skill areas.

AACSB: Value Creation Through the Integrated Production and Distribution of Goods, Services, and InformationBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: HRM Needs in Strategic Types

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67. (p. 90) IBM has consistently emphasized its brand image and its reputation for superior service while charging a higher price for its computers. This is an example of which one of Porter's generic strategies? A. Overall cost leadershipB. DifferentiationC. FocusD. Prospectors

The "differentiation" strategy, according to Porter, attempts to create the impression that the company's product or service is different from that of others in the industry. The perceived differentiation can come from creating a brand image, from technology, from offering unique features, or from unique customer service.


68. (p. 91) A company engaged in a differentiation strategy is likely to focus on all but one of the following. Name the exception. A. Encourage creativity through broadly defined jobs with general job descriptions.B. Engage in limited socialization of newcomers.C. Promote internally, with internally consistent pay systems.D. Develop results-based performance management systems.

Promoting internally, with internally consistent pay systems is an attribute of the companies engaged in cost strategies.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: HardLearning Objective: 2-5Topic: HRM Needs in Strategic Types

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69. (p. 91) Employees in companies with a differentiation strategy would need to be: A. highly concerned with quantity.B. comfortable with stability.C. highly creative and cooperative.D. risk averse.

Employees in companies with a differentiation strategy need to be highly creative and cooperative. Employees in these companies are expected to exhibit role behaviors that include cooperating with others, developing new ideas, and taking a balanced approach to process and results.

AACSB: Group/Individual Dynamics in OrganizationsBT: ComprehensionDifficulty: HardLearning Objective: 2-5Topic: HRM Needs in Strategic Types

70. (p. 91) Company X develops results-based performance management systems and conducts divisional – corporate performance evaluations to encourage risk taking on the part of managers. Which strategy is this company following? A. CostB. External growthC. DirectionalD. Differentiation

Differentiation companies develop results-based performance management system and divisional – corporate performance evaluations to encourage risk taking on the part of managers.

AACSB: Group/Individual Dynamics in OrganizationsBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: HRM Needs in Strategic Types

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71. (p. 92) What type of strategy is used by a firm that focuses on what it does best within established markets? A. ConcentrationB. Internal growthC. External growthD. Divestment

With "concentration" strategy, a company attempts to focus on what it does best within its established markets and can be thought of as "sticking to its knitting."

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: EasyLearning Objective: 2-6Topic: Directional Strategies

72. (p. 92) What type of strategy attempts to expand a company's resources or to strengthen its market position through acquiring or creating new businesses? A. Internal growth strategyB. Diversification growth strategyC. External growth strategyD. Expansion growth strategy

The "external growth" strategy attempts to expand a company's resources or to strengthen its market position through acquiring or creating new businesses.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-6Topic: Directional Strategies

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73. (p. 92) Which one of the following is NOT an internal growth strategy? A. Vertical integrationB. Market developmentC. Joint ventureD. Innovation

Companies attempting to integrate vertically or horizontally or to diversify are exhibiting an "external growth" strategy, usually through mergers or acquisitions.


74. (p. 92) Firms that seek to scale down their operations are following a(n): A. concentration strategy.B. internal growth strategy.C. external growth strategy.D. divestment strategy.

A "divestment," or downsizing, strategy is one made up of retrenchment, divestitures, or liquidation. These strategies are observed among companies facing serious economic difficulties and seeking to pare down their operations.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-6Topic: Directional Strategies

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75. (p. 92) Company Z's appraisals tend to be more behavioral because the company environment is more certain and the behaviors necessary for effective performance are established. Which strategy is this company following? A. Concentration strategyB. Internal growth strategyC. External growth strategyD. Divestment strategy

Appraisals in concentration strategy tend to be more behavioral because the environment is more certain, and the behaviors necessary for effective performance tend to be established through extensive experience.

AACSB: Group/Individual Dynamics in OrganizationsBT: ApplicationDifficulty: MediumLearning Objective: 2-6Topic: Directional Strategies

76. (p. 92) For companies following a(n) _____ strategy, joint ventures require extensive training in conflict resolution techniques because of the problems associated with combining people from two distinct organizational cultures. A. concentrationB. internal growthC. external growthD. divestment

Joint ventures require extensive training in conflict resolution techniques because of the problems associated with combining people from two distinct organizational cultures.

AACSB: Group/Individual Dynamics in OrganizationsBT: ComprehensionDifficulty: MediumLearning Objective: 2-6Topic: Directional Strategies

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77. (p. 93) The most prevalent HR problem for firms facing external growth strategies is: A. hiring the right people.B. standardizing practices across the organization.C. finding the right companies to purchase.D. determining the fair-market price of acquisitions.

Many HRM programs face problems in integrating and standardizing practices across the company's businesses since all the options for external growth consist of acquiring or developing new businesses, and these businesses often have distinct cultures.


78. (p. 93) Some companies now heavily weigh a firm's _____ before embarking on a merger or acquisition. A. operational efficiencyB. human capitalC. cultureD. infrastructure

According to a report by the Conference Board, "people issues" may be one of the major reasons that mergers do not always live up to expectations.

AACSB: Group/Individual Dynamics in OrganizationsBT: KnowledgeDifficulty: MediumLearning Objective: 2-6Topic: Directional Strategies

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79. (p. 95) Downsizing is likely to result in: A. increased employee trust and commitment.B. avoidance of a takeover.C. increased innovation.D. compensation plans tied to company performance.

Companies going through downsizing often develop compensation programs that tie the individual's compensation to the company's success.


80. (p. 95) Which of the following desired outcomes of downsizing is most likely to be achieved? A. Increased market shareB. Reduced expensesC. Increased productivityD. Reduced bureaucracy

According to the table 2.3 Effects of Downsizing on Desired Outcomes, reduced expenses is the most likely desired outcome of downsizing to be achieved.

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: HardLearning Objective: 2-6Topic: Strategy Implementation

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81. (p. 95) Which of the following desired outcomes of downsizing is least likely to be achieved? A. Increased innovationB. Increased customer satisfactionC. Avoidance of a takeoverD. Improved cash flows

According to the table 2.3 Effects of Downsizing on Desired Outcomes, improved cash flows is the least likely desired outcome of downsizing to be achieved.

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: HardLearning Objective: 2-6Topic: Strategy Implementation

82. (p. 95-96) Which of the following is NOT one of the results that can be achieved by an organization's downsizing? A. Changing an organization's cultureB. Dissolving labor union contractsC. Getting rid of "dead wood"D. Making way for fresh ideas

Downsizing often allows the company to "get rid of dead wood" and make way for fresh ideas and is often a unique opportunity to change an organization's culture. In firms characterized by antagonistic labor – management relations, downsizing can force the parties to cooperate and to develop new, positive relationships.

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-6Topic: Directional Strategies

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83. (p. 95-96) Which of the following is an opportunity that downsizing provides for HRM? A. The HRM function must "surgically" reduce the workforce by cutting only the workers who are less valuable in their performance.B. Boosting the morale of employees who remain after the reduction.C. Building trust and maintaining communication with remaining employees.D. Changing the organization's culture and making way for fresh ideas.

Downsizing often allows the company to "get rid of dead wood" and make way for fresh ideas and is often a unique opportunity to change an organization's culture.


84. (p. 96) _____ strategies are the result of the rational decision-making process used by top managers as they develop a strategic plan. A. EmergentB. IntendedC. DivergentD. Accidental

Intended strategies are the result of the rational decision-making process used by top managers as they develop a strategic plan.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-6Topic: Emergent Strategies

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85. (p. 96) Most strategies that companies espouse are: A. concentration strategies.B. directional strategies.C. emergent strategies.D. intended strategies.

Most strategies that companies espouse are intended strategies.


86. (p. 97) Which of the following strategies evolves from the grassroots of an organization and can be thought of as what organizations actually do? A. ConcentrationB. DirectionalC. EmergentD. Intended

Emergent strategies, on the other hand, consist of the strategies that evolve from the grassroots of the organization and can be thought of as what organizations actually do, as opposed to what they intend to do.


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87. (p. 97) Which of the following is essential if a company is to take advantage of emergent strategies? A. A formal organizational structureB. A weak corporate cultureC. An externally-based compensation systemD. An effective communications system

HRM plays an important role in facilitating communication throughout the organization, and it is this communication that allows for effective emergent strategies to make their way up to top management since most emergent strategies are identified by those lower in the organizational hierarchy.

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-6Topic: Emergent Strategies

88. (p. 97) Most _____ strategies are identified by those lower in the organizational hierarchy, where it is often the rank-and-file employees who provide ideas for new markets, new products, and new strategies. A. concentrationB. directionalC. emergentD. intended

However, most emergent strategies are identified by those lower in the organizational hierarchy.

AACSB: Reflective Thinking SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-6Topic: Emergent Strategies

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89. (p. 97) In which type of an organization do employees expand their capacity to achieve the results that they desire? A. Diversified organizationsB. Emergent organizationsC. Learning organizationsD. Strategic organizations

"Learning organization," is the idea in which people continually expand their capacity to achieve the results they desire.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-6Topic: Enhancing Firm Competitiveness

90. (p. 97) A company is in a constant state of _____ through monitoring the environment, assimilating information, making decisions, and flexibly restructuring to compete in that environment. A. expandingB. learningC. exploringD. evolving

For a company to have a unique ability to adapt to an ever-changing environment, it requires to be in a constant state of learning through monitoring the environment, assimilating information, making decisions, and flexibly restructuring to compete in that environment.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: EasyLearning Objective: 2-6Topic: Enhancing Firm Competitiveness

Essay Questions

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91. (p. 72) Discuss four ways an HR department can ensure involvement with a firm's strategic management process.

In the strategic management process, the human resource department should:1. have input into the strategic plan;2. have specific knowledge of the organization's strategic goals;3. know what types of employee skills, behaviors, and attitudes are needed to support the strategic plan; and4. develop programs to ensure that employees possess these skills, behaviors, and attitudes.

AACSB: Reflective Thinking SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-1Topic: Introduction

92. (p. 79-80) List the four levels of integration that can exist between the HR function and the strategic management functions.

1. Administrative linkage2. One-way linkage3. Two-way linkage4. Integrative linkage


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93. (p. 79-80) Discuss the three steps in a two-way linkage between the HR function and the strategic management functions.

1. Strategic planning team informs HR functions of various strategies the firm is considering.2. HR executives analyze HR implications of various strategies, presenting results of analysis to the strategy planning team.3. The strategy plan is passed on to HR executives who develop programs to implement it.

AACSB: Group/Individual Dynamics in OrganizationsBT: KnowledgeDifficulty: MediumLearning Objective: 2-4Topic: Role of HRM in Strategy Formulation

94. (p. 80-81) Identify and explain the steps in formulating a strategy.

Mission—The mission is a statement of the organization's reason for being; it usually specifies the customers served, the needs satisfied and/or the values received by the customers, and the technology used. Goals—Goals are what a company hopes to achieve in the medium- to long-term future; they reflect how the mission will be operationalized. External analysis—The external analysis consists of examining the organization's operating environment to identify the strategic opportunities and threats facing the firm. Internal analysis—The internal analysis attempts to identify the organization's strengths and weaknesses. Strategic choice—The strategic choice is the organization's strategy; it describes the ways the organization will attempt to fulfill its mission and achieve its long-term goals.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-4Topic: Strategy Formulation

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95. (p. 83) List the five variables that determine success in strategy implementation, and indicate those over which HRM has major responsibility.

Five variables include:1. Organizational structure.2. Job analysis and task design. (Major responsibility)3. Selection, training and development of people. (Major responsibility)4. Reward systems. (Major responsibility)5. Information systems.

AACSB: Business Knowledge and Analytic SkillsBT: KnowledgeDifficulty: MediumLearning Objective: 2-5Topic: Strategy Implementation

96. (p. 85-90) Discuss the six HRM practices from which companies can choose for implementing their strategy.

The six HRM practices are job analysis/design, recruitment/selection, training and development, performance management, pay structure/incentives/benefits, and labor/employee relations.1. Job analysis is the process of getting detailed information about jobs. Job design addresses what tasks should be grouped into a particular job.2. Recruitment is the process through which the organization seeks applicants for potential employment. Selection refers to the process by which it attempts to identify applicants with the necessary knowledge, skills, abilities, and other characteristics that will help the company achieve its goals.3. Training refers to a planned effort to facilitate the learning of job-related knowledge. Development involves acquiring knowledge, skills, and behavior that improve employees' ability to meet the challenges of a variety of existing jobs or jobs that do not yet exist.4. Performance management is used to ensure that employee' activities and outcomes are congruent with the organization's objectives.5. Pay systems, incentives, and benefits help a company elicit specific activities and levels of performance from employees.6. Finally, labor unions and employee relations can strongly affect a company's potential for gaining competitive advantage.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: MediumLearning Objective: 2-5Topic: HRM Practices

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97. (p. 90) Compare and contrast Porter's generic strategies of cost leadership and differentiation.

Cost leadership—Emphasizes lowest cost leadership in the industry. The strategy is achieved by constructing efficient, large-scale facilities; capitalizing on the experience curve; and by controlling overhead expenses and costs in such areas as research and development, service, sales force, and advertising.Differentiation—Creates the impression that firm's products or services are different from others in the industry. Offers unique features; creates brand image or offers unique customer services. If a company is successful in differentiating its product, it will achieve above-average returns, and the differentiation may protect it from price sensitivity.

AACSB: Value Creation Through the Integrated Production and Distribution of Goods, Services, and InformationBT: ComprehensionDifficulty: MediumLearning Objective: 2-5Topic: Strategic Types

98. (p. 92) Describe two of the four directional strategies that firms have used to meet objectives.

1. Concentration strategy focuses on what is done the best.2. Internal growth strategies involve channeling company's resources toward building upon existing strengths. Options generally include market development, product development, innovation, and joint venture.3. External growth strategies include integrating horizontally or vertically or diversifying.4. Divestment strategy is one made of retrenchment, divestitures, or liquidation.

AACSB: Business Knowledge and Analytic SkillsBT: ComprehensionDifficulty: EasyLearning Objective: 2-6Topic: Directional Strategies

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99. (p. 92-93) Discuss the different challenges faced by HR in firms emphasizing internal vs. external growth.

Internal growth—Requires a firm to constantly train and promote individuals and to hire their replacements. Appraisals need to be based on knowledge of the new skills needed. Compensation packages must focus on achieving growth targets. If involved with joint ventures, resolving conflicts between different organizational cultures becomes important.External growth—Consists of conflict resolution also, but the major problem is the integration and standardization of HR programs from acquired organizations.


100. (p. 94-96) Discuss the challenges and opportunities (advantages) for HR in a downsizing, or right-sizing, effort.

Challenges include:1. "Surgically" reduce workforce by cutting only the workers who are less valuable in their performance.2. Boosting the morale of employees who remain after the reduction.3. Building trust and maintaining communication with remaining employees.4. Developing a compensation system that ties individual compensation to company performance.5. Establishing ownership and gainsharing plans.Opportunities include:1. Getting rid of dead wood.2. Making way for fresh ideas.3. Changing the organization's culture.4. Demonstrating to top-management decision makers the role HRM plays in managing change effectively.

AACSB: Reflective Thinking SkillsBT: ComprehensionDifficulty: HardLearning Objective: 2-6Topic: Directional Strategies

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Chapter 02 Strategic Human Resource...

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