Dessler 03

Chapter 3: Strategic Human Resource Management and the HR Scorecard
Multiple Choice
1. A _____ is the companys plan for how it will match its internal strengths
and weaknesses with external opportunities and threats to maintain a
competitive advantage.
a. strategic plan
b. situation analysis
c. environmental scan
d. SWOT analysis
e. tactical plan
(a; easy; p. 72)
2. Which of the following is not part of strategic planning?

a. evaluating the firms internal and external situation
b. defining the business and developing a mission
c. translating the mission into strategic goals
d. crafting a course of action
e. implementing strategies
(e; moderate; p. 73)
3. The purpose of a strategic plan it to identify ways to create or maintain

a(n) _____.
a. differential advantage
b. competitive advantage
c. instrumental advantage
d. success factor
e. all of the above
(b; moderate; p. 73)
4. What is the first step in the strategic management process?

a. perform external and internal audits
b. define the business and its mission
c. translate the mission into strategic goals
d. formulate a strategy
e. implement the strategy
(b; easy; p. 73)
5. A _____ is a general statement of intended direction that evokes emotional

feelings in organization members.
a. mission
b. strategic plan
c. code of ethics
d. vision
e. none of the above
(d; easy; p. 74)
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6. Vision statements focus on the _____.
a. past
b. present
c. future
d. all of the above
(c; easy; p. 74)
7. A _____ lays out what a business strives to be while the _____ lays out
what it should be now.
a. mission; vision
b. vision; mission
c. dream; vision
d. goal; accomplishment
e. CEO; CFO
(b; easy; p. 74)
8. Defining the business and its mission is the _____ step in the strategic
management process.
a. first
b. second
c. third
d. fourth
e. fifth
(a; moderate; p. 73)
9. Performing external and internal audits is the _____ step in the strategic
management process.
a. first
b. second
c. third
d. fourth
e. fifth
10. The third step in the strategic management process is _____.

(c; easy; p. 75)
43
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?
(c; moderate; p. 75)
12. Last year, General Motors began a company-wide strategy to improve

product quality and customer satisfaction. Recent reports show that GMs
product recalls for the first half of the year are higher than for the entire
previous year. GM explains that the figures support the corporate
commitment to quality and satisfaction. Which step of the strategic
management process is GM currently dealing with?
e. evaluate performance
13. A _____ serves to communicate who a company is, what it does, and
where it is headed.
a. mission
b. strategic plan
c. code of ethics
d. vision
(a; easy; p. 73)
14. The _____ of the California Energy Commission is to assess and act
through public and private partnerships to improve energy systems that
promote a strong economy and a healthy environment.
a. mission
b. strategic plan
c. code of ethics
d. vision
44
15. The _____ of the California Energy Commission is for Californians to
have energy choices that are affordable, reliable, diverse, safe, and
environmentally acceptable.
a. mission
b. strategic plan
c. vision
d. code of ethics
16. The primary tool used in step two of strategic planning, external and
internal audits, is the _____.
a. BCG matrix
b. QSPM matrix
c. SWOT analysis
d. EPS/EBIT analysis
e. all are tools used in step two
17. SWOT is an acronym for _____.

a. success will overcome threats
b. strengths, weaknesses, opportunities, and threats
c. strategic worldwide opportunities terms
d. system-wide organizational tactics
(b; easy; p. 74)
18. A strategy can also be called a _____.

a. plan
b. goal
c. course of action
d. tactic
e. mission
19. A _____ answers the question, how do we get from here to there?
a. goal
b. tactic
c. strategy
d. mission
e. vision
(c; easy; p. 75)
45
20. Translating strategy into action is the essence of the _____ step in the
strategic management process.
d. formulate a strategy to achieve strategic goals
21. A companys _____ strategy identifies the portfolio of businesses that

comprise the company and ways in which these businesses relate to each
other.
a. functional
b. business-level
c. corporate-level
d. vertical integration
e. competitive
22. _____ is the process of assessing progress toward strategic goals and
taking corrective action as needed.
a. Strategic management
b. Strategic planning
c. Consolidation
d. Strategic control
e. Diversification
(d; moderate; p. 76)
23. What does a companys corporate-level strategy identify?

a. how to build and strengthen the businesss long-term competitive
position in the marketplace
b. the portfolio of businesses that comprise the company
c. the basic courses of action that each department will pursue in order to
help the business attain its competitive goals
d. the possibility of becoming a low-cost leader
e. the sources of uniqueness in the industry
24. A companys _____ strategy identifies the how to build and strengthen the
businesss long-term competitive position in the marketplace.
a. functional
b. business-level
c. corporate-level
e. competitive
46
25. What does a companys business-level strategy identify?
26. A companys _____ strategy identifies the basic courses of action that
each department will pursue in order to help the business attain its
competitive goals.
a. functional
b. business-level
c. corporate-level
e. competitive
27. What does a companys functional-level strategy identify?

28. A _____ strategy implies that the firm will expand by adding new product
lines.
a. consolidation
b. diversification
c. geographic expansion
d. integration
e. competitive
47
29. Marriott may acquire a furniture-making business. What type of strategy
is Marriott pursuing?
a. consolidation
b. diversification
d. integration
e. competitive
30. A _____ means the firm is expanding by producing its own materials or
acquiring a retail outlet to sell its own products.
a. consolidation
b. diversification
e. competitive
31. FedEx recently acquired Kinkos. FedEx stations have long existed in
Kinkos stores to provide customers a convenient location. The acquisition
illustrates that FedEx is following a _____ strategy.
a. vertical integration
b. diversification
d. horizontal integration
e. competitive
32. Gateway is closing its retail stores nationwide to reduce its company size.
This is an example of a _____ strategy.
a. consolidation
b. diversification
d. integration
e. competitive
33. Krispy Kreme Doughnuts plans to open stores in Europe in the coming
months. This is an example of _____.
a. consolidation
b. diversification
d. integration
e. competitive
48
34. Wal-Mart differentiates its business by offering the lowest prices. Offering
the lowest prices is Wal-Marts _____.
a. functional strategy
c. distinctive competence
d. corporate strategy
e. all of the above
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 strategy
c. distinctive competence
d. corporate strategy
e. all of the above
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 leaders
b. focusers
c. carvers
d. unique offerings
e. complementary competitors
(b; easy; p. 77)
37. Volvo stresses the safety of its cars. Volvo is following a _____
competitive strategy.
a. cost leadership
b. focus
c. differentiation
d. functional
e. integration
38. Which of the following is a type of competitive strategy?

a. cost leadership
b. vertical integration
c. consolidation
d. horizontal integration
e. expansion
49
39. Which of the following illustrates a focus strategy?
a. K-Mart seeks to offer prices as low as Wal-Mart
b. Target sells upscale brands
c. Mercedes Benz emphasizes status and quality
d. Enterprise Rent-a-Car targets referrals through car dealerships and
insurance agents
e. Charmin toilet paper claims to be the softest on the market
(d; difficult; p. 77)
40. Which of the following illustrates a cost leadership strategy?

b. Target sells upscale brands
insurance agents
e. Charmin toilet paper claims to be the softest on the market
41. Which of the following illustrates a differentiation strategy?

b. Big Lots promotes itself as a way to save
insurance agents
e. Food Lion promises to cut shoppers grocery bills
(c; difficult; p. 77)
42. Michael Porter emphasizes that all a firms activities should be tailored to
its strategy by ensuring that a firms functional strategies support its
corporate and competitive strategies. This is called _____.
a. match
b. leverage
c. fit
d. stretch
e. height
50
43. Southwest Airlines pursues a low-cost leader strategy and then tailors its
activities to that strategy. For instance, it has 15-minute turnarounds at the
gate which results in more flying time for each plane and more departures
with fewer planes. Southwest is an example of the _____ point of view.
a. match
b. leverage
c. fit
d. stretch
e. height
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. match
b. leverage
c. fit
d. stretch
e. height
45. Which of the following basic strategic planning roles is fulfilled by HR

managers?
b. execute strategy
d. formulate strategy
e. both b and d
46. A companys basic _____ is made up of HR professionals, the HR system,

and the resulting employee behaviors.
a. HR architecture
b. structure
c. strategy
d. HR function
(a; easy; p. 83)
47. Human resource policies and practices are part of the ______.
a. HR function
b. HR system
c. HR architecture
d. employee culture
e. company norms
(b; difficult; p. 83)
51
48. Which of the following is not an organizational practice included in High-
Performance Work Systems?
a. job enrichment
b. job enlargement
c. employee development
d. flexible work assignments
e. team-based organizations
(b; difficult; p. 84)
49. Managers use a(n) _____ to measure the HR functions effectiveness and
efficiency in producing employee behaviors the company needs to achieve
its strategic goals.
a. metric
b. HR Scorecard
c. benchmark
d. high performance work system
e. MBO format
(b; easy; p. 87)
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 system
b. HR scorecard
c. appraisal system
d. evaluation benchmark
e. annual report
51. What is the second step in using the HR Scorecard approach?

a. outline the companys value chain
b. identify the strategically-required organizational outcomes
c. define the business strategy
d. design the HR scorecard measurement system
e. evaluate the measurement system
52. What is the first step in using the HR Scorecard approach?

52
53. What is the final step in using the HR Scorecard approach?
54. Identify the Strategically Required Organizational Outcomes is the _____

step in using the HR Scorecard approach.
a. first
b. second
c. third
d. fourth
e. fifth
55. Outline the companys value chain is the _____ step in using the HR
Scorecard approach.
a. first
b. second
c. third
d. fourth
e. fifth
56. Define the business strategy is the _____ step in using the HR Scorecard
approach.
a. first
b. second
c. third
d. fourth
e. fifth
57. Identifying the Required Workforce Competencies and Behaviors is the

_____ step in using the HR Scorecard approach.
a. second
b. third
c. fourth
d. fifth
e. sixth
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58. Identifying the strategically relevant HR system policies and activities is
the _____ step in using the HR Scorecard approach.
a. second
b. third
c. fourth
d. fifth
e. sixth
59. During which step of the HR Scorecard approach are the HR enablers and
deliverables identified?
a. second
b. third
c. fourth
d. fifth
e. sixth
60. During which step of the HR Scorecard approach are the proper metrics
decided upon?
a. second
b. third
c. fourth
d. fifth
e. sixth
61. Which stage of the HR Scorecard approach is repeated periodically to

ensure validity of the measures?
62. A companys _____ identifies the primary activities that create value for
customers and the related support activities.
a. value chain
b. HR scorecard
c. strategy
d. tactical approach
(a; easy; p. 93)
54
63. HR system activities that help produce valuable workforce competencies
and behaviors are called _____.
a. performance drivers
b. HR deliverables
c. HR competencies
d. strategic outcomes
e. both a and b
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 surveys
b. employee turnover
c. number of qualified applicants per position
d. employee commitment survey scores
e. customer complaints
(c; difficult; p.92)
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 appraisal
b. percentage of employees eligible for annual merit plan
c. percentage of difference in incentive pay between the low performing
and high performing employees
d. percentage of retention of high performing employees
e. percentage of jobs filled from within
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 appraisal
b. percentage of employees eligible for annual merit plan
c. percentage of difference in incentive pay between the low performing
and high performing employees
d. employee attitude surveys
e. percentage of jobs filled from within
67. Which of the following is a type of measure for assessing HR enablers?

a. level of cross-cultural teamwork
b. level of organizational learning
c. requests for transfer
d. customer complaints
e. number of hours of training employees receive each year
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68. HR enablers consist of all of the following except _____.
a. selection policies
b. practices
c. employee capabilities
d. reward policies
e. training policies
69. HR performance drivers include all of the following except _____.

a. employee morale
b. reward policies
c. employee commitment
d. employee values
e. employee motivation
70. The _____ scorecard is to the company what the HR scorecard is to the
HR function.
a. corporate
b. business-level
c. competitive
d. balanced
e. functional
True/ False
71. There are six steps in the strategic management process. (T; easy; p. 73)
72. HR managers need to support corporate productivity and performance
improvement efforts. (T; moderate; p. 72)
73. Employees play a minimal role in the performance improvement efforts of
their employers. (F; easy; p. 72)
74. HR is only involved in the execution of a companys strategic plan. (F;
moderate; p. 72)
75. A mission statement is a general statement of a companys intended
direction that evokes emotional feelings in the organizations members. (F;
easy; p. 74)
76. A vision statement is broader and more future-oriented than a mission
statement. (T; easy; p. 74)
77. Mission statements tend to focus on past successes. (F; easy; p. 74)
78. Strategy implementation draws more on the leading management function
than on the functions of planning, organizing, staffing, and controlling. (F;
difficult; p. 75)
79. Consolidation keeps the companys strategy up to date by assessing
progress toward strategic goals and taking corrective action as needed. (F;
moderate; p. 76)
56
80. Managers engage in three levels of strategic planning. (T; moderate; p. 76)
81. Cost leadership, differentiation, and focus strategies all types of corporate-
level strategy. (F; moderate; p. 77)
82. A vertical integration strategy means that the firm will expand by adding
new product lines. (F; easy; p. 76)
83. McDonalds addressed its lagging profitability by first closing stores
operating below its guidelines. McDonalds used a consolidation strategy.
(T; moderate; p. 76)
84. Pizza Huts strategy for competing against Dominos is a business-level
strategy. (T; moderate; p. 77)
85. FedExs acquisition of Kinkos is a corporate-level strategic move. (T;
moderate; p. 76)
86. Dells 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; p. 77)
87. The concept of stretch states that a firms activities must be tailored to its
strategy. (F; easy; p. 77)
88. Leveraging resources is a necessary action for companies stretching to
take advantage of an opportunity. (T; moderate; p. 77)
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; p. 80)
90. A companys HR strategy is a type of competitive strategy. (F; difficult; p.
80)
91. Many executives see HR as a cost center. (T; easy; p. 81)
92. HR managers fulfill the first two steps of the strategic management
process. (F; moderate; p. 82)
93. The basic HR architecture includes three components: the HR system, HR
professionals, and the resulting employee behaviors. (T; moderate; p. 84)
94. HR managers use the HR Scorecard to measure the success of the value
chain throughout an organization. (F; moderate; p. 87)
95. The HR Scorecard measures the HR functions effectiveness and
efficiency in producing desirable employee behaviors. (T; easy; p. 87)
96. A companys specific strategy is irrelevant to the HR Scorecard because
human resources always strives for productive employee behaviors. (F;
moderate; p. 87)
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 organizations performance. (T;
moderate; p. 87)
98. The balanced scorecard does for the company as a whole what the HR
scorecard does for the HR function. (T; easy; p. 96)
99. The balanced scorecard is an accounting tool based on a computerized
model. (F; moderate; p. 96)
100. In a service business, the product is satisfied guests. (T; moderate; p. 93)
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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; p. 72)
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 companys 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; p. 73)
Answer: Strategic management is the process of identifying and executing

the organizations mission, by matching the organizations capabilities
with the demands of its environment. The steps are as follows:
Step 1: Define the Business and Its Mission
Step 2: Perform External and Internal Audits
Step 3: Translate the Mission into Strategic Goals
Step 4: Formulate a Strategy to Achieve the Strategic Goals
Step 5: Implement the Strategy
Step 6: Evaluate Performance
103. Explain the difference between a vision and a mission. Are both necessary
for organizations? (moderate; p. 74)
Answer: A companys vision is a general statement of the companys

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.
58
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; p. 74)
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; p. 76)
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 businesss 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; p. 77)
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.
59
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; p. 77)
Answer: The fit point of view means that all of a firms activities must be
tailored to fit its strategy. This ensures that a firms 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 companys basis HR architecture. (easy; p.

84)
Answer: A companys basic HR architecture is made up of three elements:

HR professionals, the HR system, and the employee behaviors and
competencies required for the companys 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; p. 84)
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.
60
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; p. 87)
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 strategy

Step 2: Outline the companys value chain
Step 3: Identify the strategically required organizational outcomes
Step 4: Identify the required workforce competencies and behaviors
Step 5: Identify the strategically relevant HR system policies and activities
Step 6: Design the HR Scorecard measurement system
Step 7: Periodically evaluate the measurement system
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Chapter 3: Strategic Human Resource Management and the HR Scorecard

2. Which of the following is not part of strategic planning?

3. The purpose of a strategic plan it to identify ways to create or maintain

4. What is the first step in the strategic management process?

5. A _____ is a general statement of intended direction that evokes emotional

10. The third step in the strategic management process is _____.

12. Last year, General Motors began a company-wide strategy to improve

17. SWOT is an acronym for _____.

18. A strategy can also be called a _____.

21. A companys _____ strategy identifies the portfolio of businesses that

23. What does a companys corporate-level strategy identify?

27. What does a companys functional-level strategy identify?

35. A(n) _____ is anything that allows an organization to differentiate its

38. Which of the following is a type of competitive strategy?

40. Which of the following illustrates a cost leadership strategy?

41. Which of the following illustrates a differentiation strategy?

44. Leveraging resources by supplementing what a company has and doing

45. Which of the following basic strategic planning roles is fulfilled by HR

46. A companys basic _____ is made up of HR professionals, the HR system,

50. The concise measurement system used by companies to show the

51. What is the second step in using the HR Scorecard approach?

52. What is the first step in using the HR Scorecard approach?

54. Identify the Strategically Required Organizational Outcomes is the _____

57. Identifying the Required Workforce Competencies and Behaviors is the

61. Which stage of the HR Scorecard approach is repeated periodically to

64. Which of the following is not a type of measure used to assess HR

65. Which of the following is a type of measure for assessing HR performance

67. Which of the following is a type of measure for assessing HR enablers?

69. HR performance drivers include all of the following except _____.

Answer: The three challenges are the need to support corporate

Answer: Strategic management is the process of identifying and executing

Answer: A companys vision is a general statement of the companys

Students should provide an example with this answer.

Answer: The three levels are corporate-level, business-level, and

106. There are three primary forms of business-level or competitive strategies.

Answer: The three forms of competitive strategies are cost leadership,

108. Describe the components of a companys basis HR architecture. (easy; p.

Answer: A companys basic HR architecture is made up of three elements:

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

Answer: A high-performance work system is what managers now expect

Answer: The HR Scorecard is a concise measurement system that shows

Step 1: Define the business strategy

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