Chapter 3 Practice

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Strategic planning primarily benefits a firm’s managers by ________. A) outlining procedures for firing employees B) creating a hierarchy of decision-makers C) establishing goals to be accomplished D) allowing employees to provide input E) clarifying the supply chain network
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C Explanation: Strategic planning benefits a firm’s managers by establishing the goals that need to be accomplished at every level of an organization. A firm’s strategic plan directs the work that occurs within a firm. A hierarchy of goals is established from the top of an organization downward.
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Since most well-run firms utilize a hierarchy of goals to guide major decisions, ________ is especially important to managers at every level to prevent departments from working at cross-purposes. A) strategic planning B) financial auditing C) employee testing D) employee benchmarking E) annual personnel training
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A Explanation: Successful firms use a hierarchy of goals that are established at the top and trickle downward. Such a system enables the strategic plans of a firm to be made clear to each manager and employee. Strategic planning helps guide managers to make decisions in hiring, training, financing, and inventory that benefit the goals of the firm.
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Which of the following is the most significant difference between managerial planning and the basic planning process? A) evaluation of alternative methods B) comparisons of strengths and weaknesses C) establishment of clear objectives D) assessment of long-term goals E) interference from corporate hierarchies
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E Explanation: The basic planning process is the same in all situations whether planning a career, vacation, or sales technique. The planning process involves evaluating alternatives, establishing objectives, and assessing goals. However, managerial planning is hindered by the hierarchy of a corporation, which requires that plans meet budgetary requirements and match the long-term goals of the firm.
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Which of the following provides a comprehensive view of both a firm’s current situation and its goals for the next 3 to 5 years? A) SWOT analysis B) business plan C) value proposition D) financial plan E) operations plan
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B Explanation: A firm’s business plan offers a comprehensive view of the firm’s current situation and its goals for the next 3 to 5 years. Business plans may include financial plans and operations plans within them, and they are also often referred to as long-term or strategic plans.
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The main contents of a typical business plan include all of the following EXCEPT ________. A) political forecast B) business description C) marketing plan D) financial plan E) personnel plan
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A Explanation: While the contents of business plans vary, the minimum contents typically include a business description, such as ownership details and product descriptions, as well as marketing, financial, and personnel plans. Business plans might include information about market trends but not political trends.
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The purpose of the marketing plan that is included within a business plan is to ________. A) clarify the projected profits of a firm’s products B) set long-term objectives for a firm’s middle managers C) assign measurable goals for a firm’s sales team D) specify the features of a firm’s product or service E) describe the benefits of performing an industry analysis
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D Explanation: The marketing plan is the element of a business plan that specifies the nature of a firm’s product or service, such as its variety, quality, design, and features. The marketing plan describes a firm’s intended approach towards the four Ps — product, price, promotion, and place.
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In order to implement a marketing plan, Apple needs a(n) ________ that will address its productive assets like the factories, machines, and facilities required to manufacture and distribute its popular iPods. A) balance sheet B) pricing strategy C) operations plan D) income statement E) personnel plan
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C Explanation: The operations or production plan is the element of a business plan that is required before a marketing plan can be implemented. The operations plan evaluates whether Apple has the factories, machines, and facilities needed to manufacture and distribute the anticipated number of iPods that will be demanded. The personnel plan is an element of the business plan that determines whether the firm has enough human resources.
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SMART goals set by managers are ________. A) specific, measurable, aggressive, required, and tested B) short-term, motivational, attainable, relevant, and total C) standardized, manageable, accurate, restrictive, and tested D) short-term, measurable, aggressive, risky, and timely E) specific, measurable, attainable, relevant, and timely
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E
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Raj and his manager meet for lunch to jointly set Raj’s quarterly sales goals. Raj’s manager will periodically assess the progress Raj makes towards those goals. Raj and his manager are most likely participating in ________. A) strategic planning initiatives B) corporate-level strategizing C) management by objectives D) human resource arbitration E) job instruction training
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C Explanation: Management by objectives (MBO) is a technique that involves a manager and a subordinate working together to set goals for the subordinate. MBO can be done informally, but it is most often used on a formal organization-wide level and involves special forms and regular assessments of an employee’s progress.
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Which of the following is the primary benefit of MBO? A) MBO is an effective method for determining the relationship between an employee’s goals and the goals of supervisors and subordinates. B) Feedback provided by customers who participate in an MBO program enhances a firm’s marketing efforts. C) Implementing an MBO program requires very little time and provides extensive employee motivation. D) MBO is an informal yet highly effective technique of documenting a firm’s long-term goals and objectives. E) An MBO program encourages employee participation during department meetings and company conferences
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A Explanation: Management by objectives (MBO) is an effective method of setting employee goals that align with the goals of a larger unit, the firm, and/or other employees. MBO is a simple process that requires employee participation, but it is extremely time-consuming due to the high demand for documentation.
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All of the following are steps involved in the strategic management process EXCEPT ________. A) evaluating the firm’s 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) offshoring low-skill jobs
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E Explanation: The strategic management process includes seven different steps, which include those described in Choices A, B, C, and D. While offshoring low-skill jobs may be a strategy for some firms to lower expenditures, it is not a specific step involved in the strategic management process.
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What is the first step in the strategic management process? A) formulating a strategy B) defining the current business C) translating a mission into goals D) performing internal and external audits E) implementing an environmental scan
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B Explanation: The first step in the strategic planning process is defining a firm’s current business situation, which involves assessing what products are sold, where the products are sold, and how the products differ from those offered by the competition. This step is followed by performing internal and external audits, which may involve using an environmental scanning worksheet. A firm would then formulate a new mission and translate the mission into strategic goals before developing a strategy to achieve those goals.
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Which of the following is a simple guide used to compile relevant information about economic, competitive, and political trends that may affect a firm? A) organization chart B) workforce requirement matrix C) environmental scanning worksheet D) external resource system table E) potential globalization network
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C Explanation: Environmental scanning worksheets are often used by managers when external and internal audits need to be performed as part of the strategic management process. An environmental scanning worksheet provides a simple format for compiling information about political, economic, and competitive trends that may affect a company. A SWOT chart is another tool frequently used by managers to assess a firm’s strengths, weaknesses, opportunities, and threats.
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The primary tool used by managers who are performing external and internal audits as part of the strategic management process is the ________. A) BCG matrix B) QSPM matrix C) SWOT chart D) EPS/EBIT table E) MBO assessment
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C Explanation: The SWOT chart is a tool frequently used by managers who are responsible for performing external and internal audits. During the strategic management process, a SWOT chart is used to compile and organize a firm’s strengths, weaknesses, opportunities, and threats. MBO (management by objectives) is a process used for setting goals for an organization, department, or individual.
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The sales director at WebMD is calculating annual sales revenue targets and the number of new medical-related content providers that the firm needs to maintain a competitive advantage. In which step of the strategic management process is the sales director involved? A) performing external and internal audits B) defining the business and its mission C) translating a mission into strategic goals D) evaluating strategic decisions E) implementing a strategy
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C Explanation: The sales director is in the process of translating the firm’s mission, which is to maintain a competitive advantage, into strategic goals, which in this case involve sales revenue targets. This step is the fourth one in the strategic process, and it occurs after the firm’s business and mission have been defined and after audits have been performed. Implementation and evaluation occur after strategic goals are developed.
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The ________ of the California Energy Commission indicates that the organization assesses and acts through public and private partnerships to improve energy systems that promote a strong economy and a healthy environment. A) mission statement B) strategic plan C) code of ethics D) vision statement E) organizational code
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A Explanation: A mission statement addresses the question, “What business are we in?” Mission statements explain the scope of an organization’s product or services, and they may also address issues of vertical integration, geographic coverage, and competitive advantage. In this example, the CEC’s scope is improving “energy systems” through “public and private partnerships” in order to “promote a strong economy and a healthy environment.” In contrast, a vision statement addresses an organization’s intended direction and plans for the future.
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Harley-Davidson sells a line of boots, helmets, and leather jackets indicating that the the firm is pursuing which of the following strategies? A) cost leadership B) conglomerate diversification C) geographic expansion D) related diversification E) horizontal integration
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D Explanation: Related diversification means diversifying so that a firm’s lines of business still possess some kind of fit. Harley-Davidson sells apparel worn to ride the motorcycles the firm manufactures, so the firm is involved in related diversification. Conglomerate diversification means diversifying into products not related to the firm’s current businesses, which would be the case if Harley Davidson started manufacturing computers or sewing machines.
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Acquiring control of competitors in the same or similar markets with the same or similar products is known as ________. A) market penetration B) product development C) vertical integration D) geographic expansion E) horizontal integration
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E Explanation: Horizontal integration occurs when a firm gains control of competitors in the same or similar markets. Market penetration refers to boosting sales of current products with aggressive selling and marketing. Product development is a concentration strategy that involves improving current products. Vertical integration is a strategy that involves expansion through raw material production or direct sales.
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Winchester Rugs operates a web site called www.buyrugsdirect.com, so Winchester Rugs is most likely using a strategy of ________. A) consolidation B) conglomerate diversification C) geographic expansion D) vertical integration E) horizontal integration
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D Explanation: A vertical integration strategy means that a firm expands by producing its own raw materials or in the case of Winchester Rugs, selling its products directly instead of using a retailer. Consolidation involves reducing the size of a firm, while geographic expansion involves taking a business overseas. Horizontal integration is a type of concentration strategy that occurs when a firm acquires control of a competitor in the same market.
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Which of the following activities most likely indicates that a firm is implementing a vertical integration strategy? A) selling unprofitable divisions B) offshoring low-skill jobs C) producing raw materials D) aggressively selling a new product E) purchasing a competitor’s firm
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C Explanation: Vertical integration strategies are methods used for expanding a firm that typically include either selling products directly or producing raw materials rather than relying on suppliers. Aggressively selling products and purchasing a competitor’s firm are methods involved in a concentration strategy. Consolidation involves reducing a firm’s size, which may require selling unprofitable divisions.
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The 2008 announcement by Starbucks that it would be closing approximately 600 of its stores suggests the firm was using a ________ strategy. A) consolidation B) diversification C) geographic expansion D) vertical integration E) product development
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A Explanation: Starbucks is trying to reduce its size by eliminating some of its stores, so the firm is using a strategy of consolidation. Diversification and geographic expansion would involve expanding Starbucks with new products or opening stores in new locations rather than closing stores.
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Sweet Leaf Tea, a Texas-based maker of bottled iced tea, is a small but fast-growing firm that has gained a loyal following for its use of fresh, organic ingredients in its beverages. Although beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and honey it uses with less costly high-fructose corn syrup, Sweet Leaf refused because of the company’s mission to provide a high-quality, organic beverage to consumers. The 11-year old company has 50 employees, and its products are available in 30% of the U.S. market. Sweet Leaf Tea recently received multi-million dollar investments which will enable the business to expand its national presence. Which of the following, if true, would best support the argument that Sweet Leaf Tea should implement a corporate-level strategy of market penetration? A) Sweet Leaf Tea can expand its customer base and reduce costs by selling its products directly at Sweet Leaf stores. B) Sweet Leaf Tea can develop a national name by adding new product lines, such as organic snack foods and organic coffee. C) Sweet Leaf Tea’s marketing research indicates that customers would purchase the organic beverages more frequently if the prices were lower. D) Sweet Leaf Tea can achieve growth by aggressively selling its beverages in current markets where loyal customers will help boost word-of-mouth. E) Sweet Leaf Tea’s competitors primarily focus their marketing and distribution efforts on regional grocery-store chains rather than big box national retailers.
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D Explanation: A corporate-level strategy of market penetration means that Sweet Leaf would boost sales of its current products by more aggressively selling and marketing in its current markets. Loyal customers would most likely spread the word about the beverage through word-of mouth. Choice A refers to a strategy of vertical integration, while Choice B involves a strategy of diversification. Price and competitors’ marketing efforts fail to support the argument that Sweet Leaf should implement a market penetration strategy.
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Sweet Leaf Tea, a Texas-based maker of bottled iced tea, is a small but fast-growing firm that has gained a loyal following for its use of fresh, organic ingredients in its beverages. Although beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and honey it uses with less costly high-fructose corn syrup, Sweet Leaf refused because of the company’s mission to provide a high-quality, organic beverage to consumers. The 11-year old company has 50 employees, and its products are available in 30% of the U.S. market. Sweet Leaf Tea recently received multi-million dollar investments which will enable the business to expand its national presence. Which of the following, if true, would most likely undermine the argument that Sweet Leaf Tea should implement a corporate-level strategy of vertical integration? A) Sweet Leaf Tea lacks the facilities or knowledge to produce the raw ingredients for its beverages. B) Market research suggests that Sweet Leaf Tea customers primarily purchase only one flavor of tea. C) Most loyal customers of Sweet Leaf Tea purchase the beverage at neighborhood convenience stores. D) Sweet Leaf Tea has decided to lower its prices by replacing cane sugar with corn syrup in some of its beverages. E) Sugar farmers used by Sweet Leaf Tea have agreed to a fixed price for the next 5 years so that the company can keep prices low.
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A Explanation: A corporate-level strategy of vertical integration would require Sweet Leaf to expand by either producing its own raw materials or selling its products directly. If the company lacks the facilities and knowledge to produce raw materials or the price of sugar is guaranteed to remain stable for 5 years, then vertical integration is a bad idea. If loyal customers purchase the tea at convenience stores, then selling the product through specialized stores would not likely be beneficial.
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Sweet Leaf Tea, a Texas-based maker of bottled iced tea, is a small but fast-growing firm that has gained a loyal following for its use of fresh, organic ingredients in its beverages. Although beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and honey it uses with less costly high-fructose corn syrup, Sweet Leaf refused because of the company’s mission to provide a high-quality, organic beverage to consumers. The 11-year old company has 50 employees, and its products are available in 30% of the U.S. market. Sweet Leaf Tea recently received multi-million dollar investments which will enable the business to expand its national presence. Which of the following, if true, best supports the idea that Sweet Leaf Tea has implemented a competitive strategy of differentiation? A) New Sweet Leaf Tea customers are initially attracted to the unique labels and logo on the bottles. B) Loyal customers of Sweet Leaf Tea seek products that are USDA certified organic despite the associated higher costs. C) Other brands of bottled iced tea compete with Sweet Leaf Tea by offering new flavors at competitive prices. D) Sweet Leaf Tea sells both lemonade and teas in a variety of flavors that appeal to consumers of all ages. E) Sweet Leaf Tea has not raised its prices in several years due to fears of losing regional customers.
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B Explanation: Differentiation is a business-level strategy that occurs when a firm seeks to be unique in its industry along dimensions that are widely valued by buyers. Sweet Leaf has developed a customer base among individuals who only buy organic products and are willing to pay more for them, so it has differentiated itself from other beverage firms.
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Which of the following refers to any factors that allow a company to differentiate its product or service from those of its competitors to increase market share? A) functional strategy B) competitive advantage C) distinctive competence D) competitive focusers E) related diversification
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B Explanation: A competitive advantage refers to the factors that allow a firm to differentiate its product or service from competitors to gain market share. Managers aim to achieve competitive advantages for each of their businesses through cost leadership, differentiation, and focus.
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Companies like Ferrari are known as ________ because they carve out a market niche and compete by providing a product that customers can attain in no other way. A) cost leaders B) focusers C) visionaries D) market leaders E) complementary competitors
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B Explanation: Focusers is a term used to describe firms that carve out market niches and compete by providing unique products or services. Ferrari provides customers with a unique automobile that is not readily available anywhere else.
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A firm’s functional strategies identify the broad activities that each ________ will pursue in order to help the firm accomplish its competitive goals. A) board member B) supplier C) department D) executive E) employee
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C Explanation: Functional strategies stem from a firm’s competitive strategies, and they identify the activities that each department within a firm will pursue in order to help a business accomplish its competitive goals. Departments such as manufacturing, sales, and human resource management would be given directives that correspond with a firm’s business-level strategy.
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Strategic planning expert Michael Porter uses the term ________ to describe how a firm’s departmental strategies and competitive aims should align for the greatest impact. A) strategic objectives B) visionary strategy C) vertical strategy D) strategic management E) strategic fit
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E Explanation: Strategic fit is a term coined by strategic planning expert Michael Porter to describe the concept that each department’s strategy should fit the parent business’s competitive aims. Departmental activities should be developed that match the goals of the firm.
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All of the following are roles that departmental managers would most likely have in the strategic planning process EXCEPT ________. A) assisting top managers in devising a strategic plan B) developing functional, departmental plans C) implementing functional, departmental plans D) deciding the businesses in which a firm will be involved E) providing input to top management about industry trends
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D Explanation: Deciding the businesses in which a company will be involved and on what basis a company will compete are strategic decisions left to top management. However, departmental managers provide top managers with important information such as industry and product trends that assist top managers with their development of a strategic plan. Departmental managers are directly involved with developing and implementing functional plans during the strategic planning process.
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Exporting jobs from developed countries to countries with low labor force costs is known as ________. A) freelancing B) unionizing C) offshoring D) integrating E) networking
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C Explanation: Offshoring is the term used to describe the practice of exporting jobs from developed countries to countries where labor and other costs are lower. Offshoring occurs when a computer manufacturer sets up customer call centers in India or builds manufacturing facilities in China. Offshoring is becoming an increasingly popular competitive strategy.
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Formulating and executing human resource policies and practices that produce the employee competencies and behaviors a company needs to achieve its strategic aims is known as ________. A) strategic human resource management B) human resource performance systems C) strategic human resource metrics D) high-performance personnel management E) personnel management by objectives
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A Explanation: Strategic human resource management is the term for formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims. The idea behind strategic human resource management is to produce the employee skills and behaviors that a company needs to achieve its strategic aims.
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The primary purpose of strategic human resource management is to ________. A) develop human resource policies that align with the industry standard B) link a company’s strategic plan with its human resource strategies C) create stringent appraisal systems that highlight employee weaknesses D) eliminate bonuses for top management and distribute the cost savings among subordinates E) use offshoring to reduce human resource costs and to initiate globalization
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B Explanation: Strategic human resource management is intended to link a firm’s strategic plan with its human resource strategies. When creating human resource management policies and activities, a manager needs to produce the employee skills and behaviors that the firm requires to accomplish its strategic plan.
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In order to generate the desired workforce skills, competencies, and behaviors that a firm needs to achieve its strategic goals, human resource management must first develop ________. A) HR consultants B) HR strategies C) HR databases D) employee cultures E) company norms
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B Explanation: HR strategies refer to the HR policies and practices maintained by a firm. Such strategies are necessary to produce the desired workforce skills, competencies, and behaviors that a firm needs to achieve its strategic goals.
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Which of the following most likely serves as the basis for the HR strategies developed by the majority of firms? A) mission statements B) potential strengths C) supervisory objectives D) competitive advantages E) workforce requirements
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E Explanation: The workforce requirements of the firm guide the policies and practices implemented by the HR department. Such HR strategies help produce the desired workforce with the skills, competencies, and behaviors needed by the firm .
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Which of the following is the final step in the strategic human resource management process? A) formulating HR policies and practices B) identifying a firm’s workforce requirements C) formulating an effective business strategy D) developing detailed HR scorecard measures E) testing current employees for skills and knowledge
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D Explanation: The final step in the strategic human resource management process is developing detailed HR scorecard measures to determine whether the HR strategies are aligning with the business strategies of the firm. The scorecard helps HR assess whether workforce requirements are being met.
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Human resource strategies are the ________ used to support a firm’s strategic goals. A) visions and objectives B) policies and practices C) missions and goals D) plans and evaluations E) theories and tools
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B Explanation: Human resource strategies are the policies and practices developed to support the employee competencies and behaviors that a firm needs to accomplish its strategic aims. For example, if a business strives to develop a reputation for being service-oriented, then its HR policies and practices would include training employees about how to show care and compassion towards customers.
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As with many failed mergers and acquisitions, the Bank of America acquisition of Merrill Lynch was unsuccessful because of problems with ________. A) technology B) financing C) geography D) personnel E) stock prices
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D Explanation: The most cited reason for failed mergers and acquisitions is personnel problems rather than financial or technical issues. Failure to prepare and train employees of both companies for a merger or acquisition may lead to employee resistance, mass exits of high-quality employees, and declining morale and productivity. In the case of Bank of America, dozens of Merrill managers quit within 2 months of the acquisition.
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Which of the following best explains the increased success of mergers and acquisitions in recent years? A) improvements in wireless communication technology B) union support of employee rights in multiple industries C) fewer restrictions regarding corporate globalization D) federal legislation regarding employee wages and rights E) consistent involvement of human resource management
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E Explanation: Since 2000, human resource managers have played greater roles during the merger and acquisition process. As a result, almost 80% of recent mergers and acquisitions have had satisfactory results. Firms are now utilizing their HR managers early in the M&A process in order to ease employee concerns and to foster a spirit of cooperation.
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During a merger or an acquisition, due diligence reviews performed by human resource teams are most likely to assess all of the following EXCEPT ________. A) accounting procedures B) organizational culture C) employee compensation D) employee benefits E) labor relations
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A Explanation: HR teams perform due diligence reviews during mergers and acquisitions to assess various aspects of the two firms that directly affect employees. HR managers will review things like organizational culture and structure, employee compensation and benefits, labor relations, pending employee litigation, human resource policies and procedures, and key employees. Accounting procedures are less likely to be assessed.
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Which of the following is the most important human resource issue to address during the first few months of a merger? A) interviewing and hiring low-level managers B) modifying benefits packages C) identifying and retaining key talent D) modifying employee pay grades E) eliminating annual employee reviews
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C Explanation: Identifying and retaining key talent is critical during the early stages of a merger or acquisition. Successful mergers call for quality employees, so it is important that HR identifies the best people in an organization and works to retain them. During the early months of an M&A, choosing top management teams, communicating changes with employees, and aligning the two cultures are priorities. Details such as benefits, compensation, and reviews are less important to address within the first few months.
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All of the following are services that human resource consulting companies provide during mergers and acquisitions EXCEPT ________. A) aligning compensation programs B) overseeing database recovery systems C) developing change management plans D) designing and implementing staffing models E) managing employee communications strategies
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B Explanation: Human resource consulting companies are often hired by firms during mergers and acquisitions to manage communication, design staffing models, develop management plans, and align compensation programs. HR consulting companies focus only on personnel-related issues, and they are less likely to become involved in technology issues like database integration.
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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
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B Explanation: Managers use HR scorecards to quantify the relationships between HR activities, resulting employee behaviors, and resulting firm-wide strategic outcomes and performance. HR scorecards quantify the strategy map.
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Which of the following is used to manage employee performance and to align all employees with the key objectives a firm needs to achieve its strategic goals? A) functional planning system B) HR Scorecard C) annual HR benchmarks D) high performance work system E) MBO format
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B Explanation: HR scorecards are used to manage employee performance and to align all employees with the key objectives a firm needs to achieve its strategic goals. The HR scorecard process enables managers to assign financial and nonfinancial goals, monitor and assess performances, and quickly take corrective action. Benchmarking is used to make comparisons with comparable companies.
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Which of the following terms refers to a set of human resource management policies and practices that promote organizational effectiveness? A) management by objectives system B) human resource metric C) corporate-level strategy D) high-performance work system E) strategic human resource map
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D Explanation: A high-performance work system is a set of human resource management policies and practices that promote organizational effectiveness. Such HPWSs differ from less productive systems and are often a distinguishing characteristic of high-performing firms.
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High-performance work organizations are most likely characterized by all of the following EXCEPT ________. A) multi-skilled work teams B) empowered front-line workers C) extensive training D) labor management cooperation E) commitment to high production rates
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E Explanation: High-performance work organizations are characterized by multi-skilled work teams, empowered front-line workers, extensive training, labor-management cooperation, commitment to quality, and customer satisfaction. Being committed to high production rates is not necessarily a characteristic of an HPWS.
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High-performance work systems have become necessary for U.S. firms due to ________. A) unemployment rates B) federal regulations C) increased minimum wages D) global competition E) cost leadership
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D Explanation: High-performance work systems became popular in the 1990s when U.S. firms faced increasing competition from global firms, such as Toyota and Honda. U.S. firms needed ways to improve quality, productivity, and responsiveness in order to compete effectively. Federal regulations, minimum wage, and unemployment rates have less if any effect on the need for HPWSs.
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All of the following practices are most likely implemented by companies with high-performance work systems EXCEPT ________. A) hiring employees based on validated selection tests B) filling positions with internal candidates C) utilizing self-managing work teams D) providing extensive training to employees E) providing pay increases based on service years
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E Explanation: In comparison to low-performance companies, high-performance companies are more likely to use validated selection tests when hiring employees, fill jobs internally, use self-managing work teams, and provide extensive amounts of employee training. Pay increases are more likely to be based on job performance rather than the number of years an employee has worked for a firm.
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Reese Enterprises seeks to fill upper-level positions internally whenever possible and uses validated selection tests when considering external hires. This most likely suggests the company is developing a ________. A) high-performance work system B) scorecard management system C) benchmark D) management by objectives strategy E) selection metric
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A Explanation: A firm that attempts to fill upper-level positions internally and uses validated selection tests for external candidates is most likely implementing a high-performance work system. Metrics and benchmarks are frequently used to identify and create the policies and practices of HPWSs, but the manner in which jobs are filled does not necessarily indicate the use of metrics and benchmarks.
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Which of the following is most likely a true statement about high-performance companies? A) Most employees are members of a local labor union. B) Most employees receive regular performance appraisals. C) Employee turnover is extremely high. D) Only executives are eligible for incentive pay. E) The majority of jobs are filled externally.
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B Explanation: In a comparison of low-performance and high-performance companies, 95% of employees at the high-performance companies received regular performance appraisals. With high-performance firms, employee turnover is low, the majority of the workforce is eligible for incentive pay, and most jobs are filled internally.
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Which of the following terms refers to the quantitative measure of a human resource management yardstick such as employee turnover or qualified applicants per position? A) human resource audit B) high-performance work system C) human resource metric D) management by objectives E) human resource scorecard
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C Explanation: A human resource metric is the quantitative measure of a human resource management yardstick such as employee turnover, qualified applicants per position, or hours of training per employee. Such metrics are used to assess a firm’s HR performance and to compare one company’s HR performance with another.
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The use of human resource metrics is essential for ________. A) management by objectives B) emergent employee behaviors C) corporate-level strategies D) related diversification E) evidence-based management
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E Explanation: Using concrete, quantifiable evidence that is available from human resource metrics is essential to evidence-based management. Evidence-based management involves the use of data, facts, analytics, scientific rigor, critical evaluation, and critically evaluated research/case studies to support human resource management proposals, decisions, practices, and conclusions.
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The primary purpose of implementing high-performance practices such as recruiting, screening, and training is to ________. A) foster a strong organizational culture B) eliminate the tendency to hire interns for full-time positions C) create management opportunities for new hires D) develop a trained and self-motivated workforce E) utilize benchmarks to compare personnel skills within an industry
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D Explanation: High-performance practices generally aspire to help workers to manage themselves. The primary purpose of recruiting, screening, training, and other human resource practices is to foster a trained, empowered, self-motivated, and flexible workforce.
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According to studies, combining high-performance HR practices with modern technology most likely leads to increases in all of the following areas EXCEPT ________. A) worker productivity B) media mentions C) annual sales D) product quality E) financial performance
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B Explanation: Studies have shown that combining modern technology with high-performance HR practices leads to increases in productivity, quality, sales, and financial performance. Being mentioned by the media is a less likely result of a firm achieving success than the other options. Media mentions are more likely to be the direct result of a firm’s aggressive marketing.
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Which of the following refers to an analysis by which an organization measures where it currently stands and determines what it has to accomplish to improve its HR functions? A) HR methodology B) HR benchmark C) HR checklist D) HR audit E) HR ratio
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D Explanation: An HR audit is an analysis by which an organization measures where it currently stands and determines what it has to accomplish to improve its HR functions. Compliance audits, best practices audits, strategic audits, and function specific audits are the types of HR audits used by firms. Benchmarking, which involves comparing one firm with another, is an additional tool used by managers who take an evidence-based approach to HR management.
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Which of the following audits is used by HR managers to determine whether a firm is adhering to relevant laws and regulations? A) strategic audit B) compliance audit C) organizational audit D) best practices audit E) function specific audit
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B Explanation: Compliance audits are used to assess the degree to which a firm is complying with relevant laws and regulations. Best practices audits are used to determine if a firm’s recruitment and hiring practices are comparable to those of “best practices” companies. Strategic audits address whether HR management practices are helping a firm achieve strategic goals. Function specific audits focus on a specific HR area such as compensation or training.
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What is the first step of the HR audit process? A) planning the audit budget B) attaining top management support C) drafting an audit team D) determining the scope of the audit E) compiling internal and external checklists
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D Explanation: The first step of the HR audit process is to decide on the scope of the audit, which is followed by drafting an audit team, and compiling checklists. Knowing the audit’s likely costs, considering the legalities of the audit, and getting top management support are additional steps of the process.
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All of the following are commonly used HR metrics EXCEPT ________. A) communication expenses B) absence rate C) cost per hire D) human capital ROI E) health care costs per employee
answer

A Explanation: Absenteeism, costs involved with a new hire, per capital costs of employee benefits, HR expenses in relation to total operating expenses, and return on investment for employees are typical categories used in HR metrics. Communication expenses are less likely to be a factor in assessing the functions, activities, and costs associated with HR. what they do that makes them better.

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