Chapter 3 Strategic Human Resource Management

Fundamentals of Human Resource Management (Dessler)
Chapter 3 Strategic Human Resource Management
1) A ________ is the company's plan for how it will match its internal strengths and weaknesses
with external opportunities and threats to maintain a competitive advantage.
A) strategic plan
B) situation analysis
C) environmental scan
D) SWOT analysis
Answer: A
Diff: 1 Page Ref: 51
Objectives: Chapter objective 1
2) Which of the following is not part of strategic planning?

A) defining the business and developing a mission
B) translating the mission into strategic goals
C) crafting a course of action
D) implementing strategies
Answer: D
3) The purpose of a strategic plan it to identify ways to create or maintain a(n) ________.
A) differential advantage
B) competitive advantage
C) success factor
D) all of the above
Answer: B
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) implement the strategy
Answer: B
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Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
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
Answer: D
6) Vision statements focus on the ________.

A) past
B) present
C) future
D) none of the above
Answer: C
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) goal; accomplishment
D) CEO; CFO
Answer: B
Skill: AACSB: Analytical Skills
8) Defining the business is the ________ step in the strategic management process.
A) first
B) second
C) third
D) fifth
Answer: A
9) Performing external and internal audits is the ________ step in the strategic management
process.
A) first
B) second
C) fourth
D) fifth
Answer: B
2
10) The third step in the strategic management process is ________.
C) formulate new business and mission statements
D) formulate a strategy
Answer: C
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) translate the mission into strategic goals
D) formulate a strategy
Answer: C
Skill: AACSB: Reflective Thinking
12) Last year, General Motors began a company-wide strategy to improve product quality and
customer satisfaction. Recent reports show that GM's 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?
A) define the business and its mission
B) translate the mission into strategic goals
C) formulate a strategy
D) evaluate performance
Answer: D
13) A ________ serves to communicate who a company is, what it does, and where it is heading.
A) mission
B) strategic plan
C) code of ethics
D) vision
E) none of the above
Answer: A
Skill: AACSB: Communication
3
14) The assessing and acting through public and private partnerships to improve energy systems
that promote a strong economy and a healthy environment is an example of a(n)
A) mission statement
B) strategic plan
C) code of ethics
D) vision
Answer: A
15) The ________ of WebMD is for people to a Web site supplying everything one might want
to know about medical issues.
A) mission
B) strategic plan
C) vision
Answer: C
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
Answer: C
17) SWOT is an acronym for ________.

A) success will overcome threats
B) strengths, weaknesses, opportunities, and threats
C) strategic worldwide opportunities terms
Answer: B
18) A strategy can also be called a ________.

A) plan
B) goal
C) course of action
D) tactic
Answer: C
4
19) A ________ answers the question, "how do we get from here to there?"
A) goal
B) tactic
C) strategy
D) vision
Answer: C
20) Translating strategy into action is the essence of the ________ step in the strategic
management process.
B) translate the mission into strategic goals
C) formulate a strategy to achieve strategic goals
D) implement the strategy
Answer: D
21) A company's ________ strategy identifies the portfolio of businesses that comprise the
company and ways in which these businesses relate to each other.
A) functional
B) business-level
C) corporate-level
D) competitive
Answer: C
22) What does a company's corporate-level strategy identify?

A) how to build and strengthen the business's long-term competitive position in the marketplace
B) the portfolio of businesses that comprise the company
C) the possibility of becoming a low-cost leader
D) the sources of uniqueness in the industry
Answer: B
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23) A company's ________ strategy identifies the how to build and strengthen the business's
long-term competitive position in the marketplace.
A) functional
B) business-level
C) corporate-level
D) vertical integration
Answer: B
24) What does a company's business-level strategy identify?

C) the basic courses of action that each department will pursue in order to help the business
attain its competitive goals
D) the sources of uniqueness in the industry
Answer: A
25) A company's ________ strategy identifies the basic courses of action that each department
will pursue in order to help the business attain its competitive goals.
A) functional
B) business-level
C) corporate-level
D) competitive
Answer: A
26) What does a company's functional-level strategy identify?

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
Answer: C
27) A ________ strategy implies that the firm will expand by adding new product lines.
A) consolidation
B) diversification
C) geographic expansion
D) competitive
Answer: B
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28) Marriott, a hotel chain, may acquire a furniture-making business. What type of strategy is
Marriott pursuing?
A) consolidation
B) diversification
D) competitive
Answer: B
29) Harley-Davidson also owns a line of recreational vehicles. What type of strategy is Harley-
Davidson pursuing?
A) consolidation
B) diversification
D) competitive
Answer: B
30) Winchester Rugs operates a website called www.buyrugsdirect.com. Winchester is following

a ________ strategy.
A) consolidation
B) geographic expansion
C) vertical integration
D) competitive
Answer: C
31) ________ means the firm is expanding by producing its own materials or acquiring a retail
outlet to sell its own products.
A) Consolidation
B) Geographic expansion
C) Vertical integration
D) Competitive
Answer: C
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32) FedEx recently acquired Kinko's. FedEx stations have long existed in Kinko's stores to
provide customers a convenient location. The acquisition illustrates that FedEx is following a
________ strategy.
A) vertical integration
B) diversification
D) competitive
Answer: A
33) Gateway is closing its retail stores nationwide to reduce its company size. This is an example
of a ________ strategy.
A) consolidation
B) diversification
C) integration
D) competitive
Answer: A
34) Oracle recently purchased Hyperion Solutions. Both companies offered software sales and
support to organizations. The purchase can be classified as execution of a ________ strategy.
A) consolidation
B) integration
D) competitive
Answer: A
35) Strayer University offers courses in a variety of cities and states across the country and
continues to open new facilities. It is pursuing a ________ strategy.
A) consolidation
B) integration
D) diversification
Answer: C
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36) Krispy Kreme Doughnuts plans to open stores in Europe in the coming months. This is an
example of ________.
A) consolidation
B) diversification
D) competitive
Answer: C
37) Wal-Mart differentiates its business by offering the lowest prices. Offering the lowest prices
is Wal-Mart's ________.
A) functional strategy
C) corporate strategy
D) all of the above
Answer: B
38) K-Mart competes on price, while Target competes on style. K-Mart follows a competitive
strategy based on ________ while Target's strategy is based on ________.
A) cost leadership, differentiation
B) differentiation, cost leadership
C) geographic location, cost leadership
D) differentiation, niche leadership
Answer: A
39) 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) corporate strategy
D) all of the above
Answer: B
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40) 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) unique offerings
D) complementary competitors
Answer: B
41) Hamel and Prahalad argue that being too preoccupied with fit can
A) limit growth
B) limit success
C) limit synergy
D) both B and C
Answer: A
42) Volvo stresses the safety of its cars. Volvo is following a ________ competitive strategy.
A) cost leadership
B) focus
C) differentiation
D) integration
Answer: C
43) Devon is in charge of strategic planning at his firm. He decides that to compete with others
in the same industry the firm would have to move from focusing on the qualities their products
possess to selling the products at the lowest cost to the consumer. What level of strategy
planning is Devon engaging in?
A) competitive
B) functional
C) corporate
D) all of these
Answer: A
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44) Which of the following is a type of competitive strategy?
A) cost leadership
B) vertical integration
C) horizontal integration
D) expansion
Answer: A
45) Which of the following illustrates a focus strategy?

A) K-Mart seeks to offer prices as low as Wal-Mart
B) Mercedes Benz emphasizes status and quality
C) Enterprise Rent-a-Car targets referrals through car dealerships and insurance agents
D) Charmin toilet paper claims to be the softest on the market
Answer: C
46) Which of the following illustrates a cost leadership strategy?

B) Target sells upscale brands
C) Mercedes Benz emphasizes status and quality
D) Charmin toilet paper claims to be the softest on the market
Answer: A
47) Which of the following illustrates a differentiation strategy?

B) Big Lots promotes itself as a way to save
C) Mercedes Benz emphasizes status and quality
D) Food Lion promises to cut shoppers' grocery bills
Answer: C
48) Michael Porter emphasizes that all a firm's activities should be tailored to its strategy by
ensuring that a firm's functional strategies support its corporate and competitive strategies. This
is called ________.
A) match
B) leverage
C) fit
D) height
Answer: C
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49) 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
Answer: C
50) ________ refers to the process by which human resource managers design strategies,
policies, and practices that make sense in terms of the company's corporate and competitive
strategies.
A) Strategy formulation
B) Strategy execution
C) Planning
D) Management
Answer: B
51) ________ refers to the process by which human resource managers identify, analyze, and
balance the company's external opportunities and threats with its internal strengths and
weaknesses.
A) Strategy formulation
B) Strategy execution
C) Planning
D) Management
Answer: A
52) Which of the following basic strategic planning roles is fulfilled by HR managers?
B) execute strategy
C) formulate strategy
D) both B and C
Answer: D
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53) When mergers and acquisitions fail it is more often due to
A) personal related issues
B) financial issues
C) technical issues
D) systems issues
Answer: A
54) When human resource experts are involved in a merger and acquisition the success rate has
A) increased
B) decreased
C) remained the same
Answer: A
55) How many stages are there to a successful Merger & Acquisition?
A) one
B) three
C) four
D) six
Answer: B
56) ________ refers to the characteristic values, traditions, and behaviors a company's
employees share.
A) Group culture
B) National culture
C) Cultural interconnectedness
D) Organizational culture
Answer: D
57) All of the following are suggestions to improve the changing or merging of cultures except
A) sit in on a team meeting
B) listen to the language
C) note to whom you are introduced and how they act
D) all of the above
Answer: D
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58) How do you create and sustain the right corporate culture?
A) react appropriately
B) communicate your priorities
C) role model
D) all of the above
Answer: D
59) Which of the following is not an important strategic human resource issue?
A) global competition
B) technological obsolescence
C) improving performance in measurable ways
D) involvement in designing the strategic plan
Answer: B
60) A company that is pursuing a focus strategy will try to sell to

A) a market niche
B) the entire market
C) the rich persons
D) the middle class
Answer: A
61) Fran's pizzeria is selling pizzas made with Kosher ingredients. They are using a(n) strategy.
A) differentiation
B) focus
C) cost leadership
D) focused cost
Answer: B
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62) Departments in an organization have to pursue ________ strategies to help the business
attain its goals.
A) functional
B) differentiation
C) competitive
D) focused
Answer: A
63) Supplementing what you have and doing more with it is referred to as
A) leveraging
B) synergizing
C) maximizing
D) satisficing
Answer: A
64) There are seven steps in the strategic management process.

Answer: TRUE
65) Technical issues are the major reasons for the dismal rate of mergers and acquisition failures.
Answer: FALSE
66) Dell's HRM team delivers most of its services via the Web.
Answer: TRUE
67) Surveys suggest that a large percentage of employers said that HR managers are involved in
developing their companies' business plans.
Answer: FALSE
68) Having local employees abroad do jobs that the firm's domestic employees previously did in-
house is called outsourcing.
Answer: FALSE
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69) The HR manager is in a unique position to provide competitive intelligence.
Answer: TRUE
70) Reacting appropriately to critical incidents is important in creating and sustaining the right
company culture.
Answer: TRUE
71) Role modelling is important in shaping company culture.

Answer: TRUE
72) Signs, symbols and stories are not important in shaping company culture.
Answer: FALSE
73) How you appraise employees communicates your priorities.

Answer: TRUE
74) Managing the deal price is an important service that a HR unit can provide during a merger.
Answer: TRUE
75) Securing the top team and key talent is important to do during a merger or acquisition.
Answer: TRUE
76) The first step in strategic HRM is to decide what the strategic goals are.
Answer: TRUE
77) A SWOT analysis looks only inside the organization.

Answer: FALSE
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78) Aging machinery is an example of a threat in the SWOT analysis.
Answer: FALSE
79) Synergy means cutting costs or boosting revenues or both by combining operations.
Answer: TRUE
80) HR managers need to support corporate productivity and performance improvement efforts.
Answer: TRUE
81) HR is only involved in the execution of a company's strategic plan.

Answer: FALSE
82) A mission statement is a general statement of a company's intended direction that evokes
emotional feelings in the organization's members.
Answer: FALSE
83) A vision statement is broader and more future-oriented than a mission statement.
Answer: TRUE
84) Mission statements tend to focus on past successes.

Answer: FALSE
85) Strategy implementation draws more on the leading management function than on the
functions of planning, organizing, staffing, and controlling.
Answer: FALSE
86) Consolidation keeps the company's strategy up to date by assessing progress toward strategic
goals and taking corrective action as needed.
Answer: FALSE
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87) Managers engage in three levels of strategic planning.
Answer: TRUE
88) Cost leadership, differentiation, and focus strategies all types of corporate-level strategy.
Answer: FALSE
89) A vertical integration strategy means that the firm will expand by adding new product lines.
Answer: FALSE
90) McDonald's addressed its lagging profitability by first closing stores operating below its
guidelines. McDonald's used a consolidation strategy.
Answer: TRUE
91) Pizza Hut's strategy for competing against Domino's is a business-level strategy.
Answer: TRUE
92) Leveraging resources is a necessary action for companies stretching to take advantage of an
opportunity.
Answer: TRUE
93) 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.
Answer: TRUE
94) HR managers play two basic strategic planning roles.

Answer: TRUE
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95) Companies with empowered, highly trained, flexible workforce have a competitive
advantage.
Answer: TRUE
96) What is strategic management? Define the term. List and describe the seven steps in the
strategic management process.
Answer: Strategic management is the process of identifying and executing the organization's
mission, by matching the organization's capabilities with the demands of its environment. The
steps are as follows:
Step 1: Define the Business and Its Mission
Step 2: Perform External and Internal Audits
Step 3: Formulate New Business and Mission Statements
Step 4: Translate the Mission into Strategic Goals
Step 5: Formulate a Strategy to Achieve the Strategic Goals
Step 6: Implement the Strategy
Step 7: Evaluate Performance
97) Explain the difference between a vision and a mission. Are both necessary for organizations?
Answer: A company's vision is a general statement of the company's intended direction that
evokes emotional feelings in organization members. It is broader than a mission statement. It is
future-oriented while mission statements are oriented in the present. Mission statements state
what a company is doing right now while vision statements are what a company strives to
become. Both are encouraged for organizations but some organizations have only a mission
statement. Others may have neither a mission nor a vision.
98) 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.
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.

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99) Explain the three levels of strategic planning. What is the purpose or focus for each level?
Which level do HR strategies represent?
Answer: The three levels are corporate-level, business-level, and functional-level strategies.
Corporate-level strategy identifies the portfolio of businesses that comprise the company and the
ways in which these businesses relate to each other. The business-level strategy is the next level.
It identifies how to build and strengthen the business's long-term competitive position in the
marketplace. The lowest level is the functional-level strategies. Functional strategies identify the
basic course of action that each department will pursue in order to help the business attain its
competitive goals. HR strategies are a type of functional strategy.
Diff: 1 Page Ref: 54-55
100) List four important strategic human resource issues.

Answer: firms build their competitive advantage around their employees, improve employee
performance in measurable ways, human resources must be involved in designing the strategic
plan and HR managers must understand how the firm works.
101) What are the three types of strategies that an organization has available to use?
Answer: Corporate, competitive and functional.
102) Explain how employers create competitive advantage using HRM.

Answer: An answer to this question would mention that there are many ways in which a firm
can gain competitive advantage. The student should argue however that human resources are
sources that cannot be easily copied and therefore are more important. The student should then
talk about using human resource managers in all facets and stages of strategic planning.
Examples form the text could be used as well as student's own examples. An astute student will
point out the increase in the success of mergers and acquisitions that happened once HRM
became more intimately involved.
103) There are three primary forms of business-level or competitive strategies. Describe them
and give an example of each one.
Answer: The three forms of competitive strategies are cost leadership, differentiation, and focus.
Cost leadership means offering the lowest prices and/or emphasizing low costs and efficiency as
a source of competitive advantage. Wal-Mart is an example of a company pursuing a cost
leadership strategy. Differentiation means emphasizing a source of difference between a
company and its competitors. The differential advantage becomes the source of competitive
advantage. Target follows a differentiation strategy. A focus strategy means that a company
pursues a small niche in the market place. Ferrari follows this strategy.
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104) Why is it important to engage in strategic planning?
Answer: Strategic planning is important because the organization needs to have a good idea of
where it is and where it is going. The process forces the organization to analyze its environment
and articulate its premises. It provides a framework to judge subsequent performance.
105) What is offshoring?

Answer: Offshoring is the exporting of jobs form developed countries to countries where labor
and other costs are lower.
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Chapter 3 Strategic Human Resource Management

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Fundamentals of Human Resource Management (Dessler)

Chapter 3 Strategic Human Resource Management

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

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

6) Vision statements focus on the ________.

17) SWOT is an acronym for ________.

18) A strategy can also be called a ________.

22) What does a company's corporate-level strategy identify?

24) What does a company's business-level strategy identify?

26) What does a company's functional-level strategy identify?

30) Winchester Rugs operates a website called www.buyrugsdirect.com. Winchester is following

45) Which of the following illustrates a focus strategy?

46) Which of the following illustrates a cost leadership strategy?

47) Which of the following illustrates a differentiation strategy?

60) A company that is pursuing a focus strategy will try to sell to

64) There are seven steps in the strategic management process.

71) Role modelling is important in shaping company culture.

73) How you appraise employees communicates your priorities.

77) A SWOT analysis looks only inside the organization.

81) HR is only involved in the execution of a company's strategic plan.

84) Mission statements tend to focus on past successes.

94) HR managers play two basic strategic planning roles.

Students should provide an example with this answer.

100) List four important strategic human resource issues.

102) Explain how employers create competitive advantage using HRM.

105) What is offshoring?

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