Chapter 4—The Competitive Environment
MULTIPLE CHOICE
1. Companies can establish a competitive advantage by
a.
hiring good employees and effectively managing human resources.
b.
always implementing a hierarchical management scheme.
c.
adopting a universalistic financial strategy.
d.
ignoring the external competitive environment.
e.
all of these.
2. An organization’s mission
a.
specifies how it will achieve its purpose.
b.
affects its human resource practices.
c.
is its basic reason for existence.
d.
describes its unique characteristics and strengths.
e.
all of these.
3. Sri is an executive in the corporate headquarters responsible for strategy formulation and
implementation. She is likely part of a(n)
a.
focus group.
b.
quality circle.
c.
top management team.
d.
operations party.
e.
total quality management team.
4. ____ strategy involves the actions taken by firms to better operate in a relevant industry or market.
a.
Adaptation
b.
Business
c.
Functional
d.
Competitive
e.
Corporate
5. When organizations are downsizing the number of employees in the hierarchy, this usually involves a
____ strategy.
a.
growth
b.
retrenchment
c.
stability
d.
business
e.
diversification
6. When a company decides to own and operate several separate companies, which strategy is being
employed?
a.
Diversification
b.
Stability
c.
Retrenchment
d.
Multifaceted
e.
Branching
7. An organization made up of various businesses similar in the products or services they provide is
pursuing which type of strategy?
a.
Growth
b.
Related diversification
c.
Differentiation
d.
Stability
e.
Prospector
8. Which adaptation model of business strategy is best used when the situation is highly stable with low
uncertainty?
a.
Defender
b.
Prospector
c.
Analyzer
d.
Differentiation
e.
Cost leadership
9. Which adaptation model of business strategy is characterized by ignoring the environment?
a.
Defender
b.
Prospector
c.
Analyzer
d.
Differentiation
e.
Reactor
10. A publisher groups its personnel into different departments on the basis of the customer because the
processes are closely related. This is called the ____ design.
a.
functional
b.
U-form
c.
H-form
d.
divisional
e.
both functional and U-form
11. Prada, creates fashions that convey status and luxury. It follows a differentiation strategy. Therefore,
an important goal of its human resource strategy will likely be to
a.
focus employee training on cost reduction efforts.
b.
hire workers who are flexible and can perform a variety of tasks.
c.
keep the size of the workforce small to increase efficiency.
d.
retrench using layoffs and terminations.
e.
provide minimal compensation and benefits.
12. Which of the following organizational designs is MOST likely to have few managerial levels?
a.
Flat
b.
H-form
c.
M-form
d.
Conglomerate
e.
Divisional
13. Yum Brands began with three businesses: Pizza Hut, Taco Bell, and Kentucky Fried Chicken. Since its
founding, the company has acquired other fast-food firms, including Long John Silver’s and A&W.
Which type of organization design would be most appropriate for Yum’s strategy?
a.
A functional design
b.
A unitary design
c.
A multidivisional design
d.
A holding company
e.
A horizontal corporation design
14. Which of the following was NOT identified as an organizational component affecting the formulation
and implementation of human resource strategy?
a.
Organizational development
b.
Organization culture
c.
The labor force
d.
Organization design
e.
Unionization
15. The process of handling union issues and challenges is called
a.
labor relations.
b.
downsizing.
c.
outsourcing.
d.
rightsizing.
e.
collective bargaining.
16. The principles and beliefs that shape what employees think about a company is called
a.
unionization.
b.
planning.
c.
organizational culture.
d.
focus grouping.
e.
empowerment.
17. The set of factors that prompt people to perform work at high levels is called
a.
motivation.
b.
stress.
c.
interpersonal conflict.
d.
negative attitudes.
e.
executive succession.
18. An individual’s reactions to environmental factors that present excessive demands is called
a.
motivation.
b.
stress.
c.
interpersonal conflict.
d.
attitude.
e.
micromanaging.
19. Amazon is a highly successful online retailer that continues to expand its product selection. Which of the
following actions is Amazon NOT likely to use as it implements its strategy?
a.
It will hire employees in the near future.
b.
It will increase its recruiting efforts.
c.
It will offer early retirement to workers.
d.
It will try to ensure that its current workers stay with the firm.
e.
It will offer extensive training to its staff.
20. What is a psychological contract?
a.
The extent to which people perceive they are being treated equitably by their organization
b.
The set of expectations held by an individual as to what he or she will contribute to the
organization and what the organization will provide in return
c.
The set of psychological attributes or traits that distinguish one individual from another
d.
The attitudes an individual holds toward an organization
e.
A contract for psychological counseling provided by the organization
21. Adam believes that it is fine to spend his lunch time playing games on the company computer. This
involves which part of the psychological contract?
a.
The attitude
b.
The organizational inducements
c.
The personality
d.
The individual contributions
e.
The motivation
22. When the Hershey family financial advisors recommended selling Hershey Foods stock in 2001,
employees were outraged. They felt betrayed and were angry and pessimistic. Which individual or
interpersonal process was interfering with implementation of Hershey’s strategy?
a.
Worker personalities
b.
Worker attitudes
c.
Motivation
d.
Team processes
e.
Communication
23. In the past, evaluations of the effectiveness of the human resource function concentrated mainly on
a.
worker satisfaction.
b.
turnover.
c.
person-job fit.
d.
psychological contracts.
e.
cost.
24. Companies that view their human resource function as a strategic asset should NOT evaluate HR
effectiveness by investigating
a.
costs and benefits.
b.
organizational outcomes such as productivity.
c.
profitability.
d.
costs as the only factor.
e.
utility analysis.
25. Pierre would like to increase the effectiveness of human resources at his firm. What advice would you
give him?
a.
Don’t have formal performance appraisals because workers are upset by criticism.
b.
Carefully control the behavior of teams and don’t let them make their own decisions.
c.
Don’t pay everyone the same. Pay high-performing workers more in order to increase
motivation.
d.
Don’t annoy workers by constantly requiring them to go through a lot of training.
e.
Assume that quiet workers are happy; there’s no reason to bother them with attitude surveys.
26. The organization’s ____ is the basic reason for existence.
a.
contract
b.
inducement
c.
personality
d.
purpose
e.
mission
27. The top management team includes the:
a.
CEO.
b.
COO.
c.
chairperson of the board of directors.
d.
president.
e.
all of these.
28. Functions that add little value are likely to be _______, even if they are not terribly ________, and
functions that add competitive advantage are likely to be _______, even if they are relatively _______.
a.
retained, expensive, retained, expensive
b.
outsourced, inexpensive, outsourced, inexpensive
c.
outsourced, expensive, retained, expensive
d.
retained, inexpensive, outsourced, expensive
e.
retained, inexpensive, retained, expensive
29. All of the following are part of a high-performance work system EXCEPT
a.
self-directed work teams.
b.
contingent pay.
c.
attitude surveys.
d.
no formal performance appraisals.
e.
continuous training.
30. Tax payers have a psychological contract with the governments they pay taxes to. When the General
Services Administration spent hundreds of thousands of tax payer dollars on extravagant trips to Hawaii
and Las Vegas, individuals were outrages. The outrage involves which part of the psychological
contract?
a.
The attitude
b.
The organizational inducements
c.
The personality
d.
The individual contributions
e.
The motivation
Scenario 4.1
LMNO Corporation is a U.S.-based company with four distinct businesses, including a national music
and video store chain, a rap music production company, a talent agency that represents several famous
rap stars, and a digital video disc (DVD) production facility that makes and records music videos on
DVDs. LMNO is in the process of acquiring another company, its major music store rival BeBop
Records. Because its rap stars are so famous, LMNO charges crazed fans a higher price for its music
compact discs and DVD videos. The fans don’t mind, as they often have the opportunity to meet the rap
stars in person at various LMNO music stores throughout the year. LMNO has a policy of promotion
from within as well as a no-layoff policy, and all managers are required to rotate through each business
before they can be promoted.
31. Refer to Scenario 4.1. Which grand strategy does LMNO appear to have chosen at this time?
a.
Cost leadership
b.
Stability
c.
Growth
d.
Analyzer
e.
Prospector
32. Refer to Scenario 4.1. Which corporate-level strategy does LMNO appear to follow?
a.
Related diversification
b.
Unrelated diversification
c.
Retrenchment
d.
Differentiation
e.
Cost leadership
33. Refer to Scenario 4.1. Which competitive strategy does LMNO’s music and video store chain appear to
have adopted?
a.
Focus
b.
Growth
c.
Stability
d.
Cost leadership
e.
Differentiation
34. Refer to Scenario 4.1. Which organizational form or design is LMNO likely to have adopted?
a.
Functional, or U-form
b.
Conglomerate, or H-form
c.
Divisional, or M-form
d.
Horizontal
e.
Vertical
35. Refer to Scenario 4.1. LMNO’s policies of no layoffs and promotion from within are likely to have the
MOST positive effect on
a.
production efficiency.
b.
leadership within the company.
c.
excessive absenteeism, due to the threat of being fired.
d.
employees’ motivation.
e.
employee attrition.
TRUE/FALSE
36. The top management team in a company usually includes all the shareholders.
37. An agency problem occurs when there is a conflict between the interests of managers and the interests of
shareholders.
38. The functional strategies help determine what businesses the firm will operate.
39. The stability strategy essentially maintains the status quo.
40. Union membership in the United States has been growing gradually for the last few decades.
41. Hiring refers to the set of activities used by the organization to determine its future human resource
needs, recruit qualified applicants interested in working for the organization, and select the best of those
applicants as new employees.
42. Attitude is the relatively stable set of psychological attributes or traits that distinguish one person from
another.
43. Leadership is the process by which two or more parties exchange information and share meaning.
44. Whether or not to outsource a function depends on the actual cost of keeping the function in-house.
45. It is be better to have some formal appraisal rather than none at all, but it is also true that different types
of appraisal systems will lead to different outcomes.
SHORT ANSWER
46. Describe the relationship among an organization’s purpose, mission, and top management team and how
this relationship affects its human resource practices.
47. Describe interpersonal processes in organizations.
48. Describe the factors that affect human resource strategy formulation.
49. Compare and contrast related and unrelated diversification.
50. How would an organization conduct an evaluation of its human resource function?