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1. A company that adopts a stability strategy plans to expand into new products or markets and intends to manage them
using the strategies used for managing its current businesses.
a. True
b. False
2. If an organization uses a differentiation strategy, performance management must be focused on recognizing and
rewarding performance leading to improved quality.
a. True
b. False
3. Managing culture is important for the success of corporate mergers and acquisitions.
a. True
b. False
4. A prospector strategy works best when a business operates in an environment with relatively little uncertainty and risk
and high stability.
a. True
b. False
5. Unrelated diversification occurs when an organization expands into products that are similar to its current products.
a. True
b. False
6. The top management team of a company includes the chief operating officer of the company.
a. True
b. False
7. An agency problem occurs when there is a conflict between the interests of managers and the interests of shareholders.
a. True
b. False
8. The top management team of a firm needs to consult with the human resource management (HRM) team before
deciding to pursue a growth strategy.
a. True
b. False
9. A cost leadership strategy allows a firm to charge the highest possible prices for its products.
a. True
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b. False
10. The adaptation model suggests that a firm should change its strategies to match the basic conditions of its
environment.
a. True
b. False
11. Pierre, the human resource manager at a firm, has been asked by the top management to come up with a strategy to
increase the performance effectiveness of the firm’s employees. In this context, which of the following actions should
Pierre take?
a. He should seldom conduct formal performance appraisals because employees get upset by criticism.
b. He should carefully control the behavior of teams and should not let them make their own decisions.
c. He should pay high-performing employees more than inconsistent performers in order to increase motivation.
d. He should use attitude surveys only when there is a noticeable drop in the performance of employees.
12. Which of the following statements is true of a mission statement?
a. It specifies the basic reason for the existence of an organization.
b. It attempts to identify the weaknesses of an organization and the threats that it is likely to face.
c. It provides subtle cues about the importance that an organization places on its human resources.
d. It is created by the junior employees of an organization.
13. Human resource managers in firms that pursue the analyzer strategy would most likely:
a. recruit employees who like working with specific guidelines in a stable environment.
b. hire employees who are entrepreneurial and flexible.
c. retain employees who are more dedicated to their craft than to the company.
d. retain employees who are completely against taking risks.
14. In the context of the adaptation model, the _____ is a strategic alternative that is seen as a strategic failure and is not
held up as a model that any firm should emulate.
a. defender
b. prospector
c. analyzer
d. reactor
15. _____ refers to the relatively stable set of psychological attributes or traits that distinguish one person from another.
a. Personality
b. Attitude
c. Motivation
d. Reinforcement
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16. _____ is a person’s adaptive response to a stimulus that places excessive psychological or physical demands on that
person.
a. Altruism
b. Stress
c. Conscientiousness
d. Attitude
17. Sandra is the chief operating officer of a fast-moving consumer goods (FMCG) company. She is responsible for the
overall strategic operation of the company and for communicating the company’s vision to the employees. In this case,
Sandra is most likely to be part of the:
a. technical team of the company.
b. labor union of the company.
c. top management team of the company.
d. employee association of the company.
18. Labor relations is the process of dealing with employees who are represented by _____.
a. a task force
b. the board of directors of the firm
c. the government
d. a union
19. In the context of M-form organizations, the primary function of the corporate-level human resource (HR) department
is to:
a. facilitate synergy across businesses.
b. earn higher returns for its stockholders than do its competitors.
c. motivate employees to attain organizational goals.
d. gain a sustained competitive advantage over competition.
20. The basic logic behind using _____ is that a company can shield itself from the adverse effects of business cycles,
unexpected competition, and other economic fluctuations.
a. a prospector strategy
b. unrelated diversification
c. product differentiation
d. a reactor strategy
21. In the context of human resource management, companies can establish a competitive advantage by:
a. hiring the right people and training them to be effective.
b. implementing a hierarchical management scheme.
c. adopting a centralized approach to organizational control.
d. focusing solely on their external environment.
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22. Which of the following is a human resource management (HRM) practice that can lead to improved firm
performance?
a. Having self-directed work teams
b. Having pay secrecy and pay compression policies
c. Using pay inversion to motivate employees
d. Increasing job embeddedness through job enrichment
23. When an organization is using a turnaround strategy, its human resource managers need to be involved in:
a. recruiting entrepreneurial employees who are highly flexible and ambitious.
b. retaining the existing employees when the firm cannot offer any advancement opportunities.
c. decreasing the size of the organization’s workforce.
d. rotating managers across various businesses of the corporation.
24. Which of the following statements is true of the corporate strategy of an organization?
a. It addresses how the organization will manage its basic functional activities, such as marketing, finance,
operations, research and development, and human resources.
b. It should be closely tied to the human resource management practices within the organization.
c. It deals with how the organization will compete in each market where it conducts business.
d. It can be pursued using the adaptation model, which allows managers to match the organization’s strategy with the
basic conditions of the environment.
25. The _____ of an organization refers to the group of senior executives responsible for the overall strategic operation of
the firm.
a. labor union
b. trusteeship council
c. top management team
d. human resources department
26. In the context of a turnaround strategy, the role of human resource managers is to:
a. help optimize the transition process for displaced workers through outplacement counseling.
b. decide how to retain existing employees when the firm cannot offer salary increases or promotions.
c. look for new avenues for geographic and brand expansion of the firm.
d. recruit employees based on intuition rather than using systematic selection techniques.
27. _____ refers to the framework of jobs, positions, groups of positions, and reporting relationships among positions that
are used to construct an organization.
a. Organization design
b. Development strategy
c. Human resource planning
d. Corporate culture
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28. A _____ occurs when an organization finds that its current operations are not effective, and major changes are usually
needed to rectify the problem.
a. diversification strategy
b. turnaround strategy
c. growth strategy
d. stability strategy
29. _____ is one popular approach to business strategy where a business seeks ways to become accustomed to its
environment.
a. Related diversification
b. Retrenchment
c. The identity model
d. The adaptation model
30. _____ is the set of forces that causes people to behave in certain ways.
a. Altruism
b. Motivation
c. Personality
d. Attitude
31. An organization’s _____ refers to the set of values that helps its members understand what the organization stands for,
how it accomplishes what it wants to accomplish, and what it considers important.
a. profile
b. purpose
c. culture
d. design
32. The role of the board of directors in an organization is to:
a. hire successful employees from competitors’ firms to gain advantage in the market.
b. encourage monoculture among employees throughout the organization and create an ethnocentric internal work
environment.
c. hire employees based on intuition rather than using systematic selection techniques.
d. monitor the actions of the top management team to ensure that stockholders’ interests are protected.
33. Regardless of the specific organization design, in recent years many firms have been:
a. taking a hierarchical approach to organizational control.
b. increasing the number of levels of management.
c. increasing bureaucracy.
d. moving toward becoming flat organizations.
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34. Wedding Bells, a company founded in 1910, is the market leader in the bridal gown industry in the United States. It
sells wedding gowns and caters only to this niche market segment. It has never diversified its product line to other
garments or any other business. It concentrates exclusively on guarding its position in the wedding gown market. In the
context of business strategies, which of the following strategies is Wedding Bells following?
a. The defender strategy
b. The analyzer strategy
c. The prospector strategy
d. The retrenchment strategy
35. Which of the following statements is true of the union in an organization?
a. Unionized firms tend to have lesser rules than nonunionized firms.
b. Unionized firms have lesser formal procedures than nonunionized firms.
c. It can play an important role in formulating and implementing the human resource strategy of the organization.
d. It cannot facilitate strategic changes in the organization.
36. Which of the following statements is true of flat organizations?
a. They are highly bureaucratic in structure.
b. They rely heavily on teamwork.
c. They are more rigid than vertical organizations.
d. They cannot adapt easily to changing environments.
37. In the context of the strategic alternatives of the adaptation model, _____ is assumed to work best when a business
operates in an environment with relatively little uncertainty and risk and a high degree of stability.
a. a defender strategy
b. the prospector strategy
c. the analyzer strategy
d. a turnaround strategy
38. When a fast-moving consumer goods (FMCG) company faced bankruptcy, the company decided to encourage its
employees by inviting them to contribute their ideas toward organizational development and growth. The organization
also asked its human resource team to assess the employees’ levels of commitment. In this scenario, the FMCG company
used _____to improve its organizational performance.
a. self-directed work teams
b. attitude surveys
c. pay inversion
d. job embeddedness
39. Which of the following individuals would a company that uses a defender strategy prefer to retain the most?
a. Ron, a sales manager, who is one of the oldest employees of the company and is highly dedicated to his work
b. Marlene, a senior accountant, who seldom adheres to company policies but is good at her work
c. Tyler, a creative writer, who is very passionate about his work and prefers taking calculated artistic risks
d. Lena, a receptionist, who is friendly and approachable but keeps changing jobs
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40. Employees are potentially an excellent source of competitive advantage for an organization because:
a. they cannot refuse to follow the commands of the top executives of the organization.
b. they are difficult to copy or replace.
c. they formulate the organization’s purpose and mission statement.
d. they cannot be hired by the competitors of the organization.
41. Ross Brand Inc., a multinational corporation, began its operations with three businesses in the frozen food industry.
Since its inception, the company has acquired other fast-food companies. Which type of organization design would be
most appropriate for Ross Brand Inc.’s strategy?
a. The functional design
b. The U-form design
c. The M-form design
d. The conglomerate design
42. _____ is most appropriate in relatively stable conditions with a moderate degree of uncertainty and risk.
a. A turnaround strategy
b. The prospector strategy
c. The analyzer strategy
d. A defender strategy
43. Straps Inc. is a leading manufacturer of high-end watches. It is renowned for its reliability and quality and enjoys a
monopoly in its home market. It has now adopted a strategy to expand its business into neighboring countries. Which of
the following human resource strategies should Straps Inc. follow to maintain the same momentum in the new markets?
a. It should exclusively focus on marketing to people from the business industry.
b. It should hire workers who can provide exemplary customer service.
c. It should keep the size of its workforce small to increase efficiency.
d. It should hire employees who would not remain with the company for long.
44. The _____ looks similar to the H-form design except that the businesses are closely related to one another.
a. functional design
b. unitary-form design
c. conglomerate design
d. divisional design
45. A cost leadership strategy is one that:
a. allows a company to charge higher prices for its products.
b. focuses on hiring experienced employees who would remain with the company for long.
c. has reward systems based on quality rather than on the quantity of output.
d. focuses on minimizing the overall costs as much as possible.
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46. _____ tend to have many rules and formal procedures that might limit a firm’s ability to formulate an ideal strategy.
a. Psychological contracts
b. Unionized firms
c. Organizational citizenship behaviors
d. Self-directed work teams
47. Which of the following strategies is frequently used by organizations after a period of retrenchment?
a. Related diversification
b. Unrelated diversification
c. A stability strategy
d. A turnaround strategy
48. Which of the following individuals would a company that uses the prospector strategy prefer to retain the most?
a. Shawn, a sales manager, who makes sure that his team members never exceed the budget allotted to them
b. Marla, a senior accountant, who is very loyal to the organization but is rigid in her approach to work
c. Thomas, a creative writer, who is very passionate about his work and prefers taking artistic risks to meet the
changing industry needs
d. Lisa, a receptionist, who is exceptionally good at her work but is overqualified for the job and has come to dislike
it
49. Which of the following is a critical component that affects how strategies are formulated and how they are
implemented?
a. Performance management
b. Unionization
c. Staffing
d. Salary structure
50. Anyx Inc., an electronics firm, manufactures home appliances as well as automobile engines. It also owns and
operates an insurance firm and a software development firm. Which of the following strategies is Anyx Inc. using in the
given scenario?
a. The diversification strategy
b. The turnaround strategy
c. The retrenchment strategy
d. The stability strategy
51. Which of the following is a difference between the functional design and the divisional design of organizations?
a. The functional design is used by large corporations, whereas the divisional design is used by small and new
organizations.
b. The functional design looks similar to the H-form design, whereas the divisional design looks similar to the U-
form design.
c. In the functional design, senior management usually provides coordination across departments, whereas in the
divisional design, coordination is usually decentralized down to the various operating companies.
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d. In the functional design, each business unit within a firm has its own human resource department, whereas in the
divisional design, a firm has a single corporate-level human resource department to manage all human resource activities.
52. Which of the following is a similarity between an organization using a defender strategy and an organization using the
focus strategy?
a. Both focus on diversifying their products and services.
b. Both ignore the environment in which their businesses operate.
c. Both target a specific segment of the market for their products or services.
d. Both work best in conditions of high uncertainty and risk.
53. The _____ is used when an organization tries to target a specific segment of the marketplace for its products or
services.
a. defender strategy
b. focus strategy
c. analyzer strategy
d. stability strategy
54. In the context of the adaptation model, _____ works best when the business environment is dynamic and growing and
has considerable uncertainty and risk.
a. a defender strategy
b. the prospector strategy
c. the analyzer strategy
d. a retrenchment strategy
55. A company that uses a _____ attempts to develop an image or reputation for its product or service that sets the
company apart from its competitors.
a. diversification strategy
b. differentiation strategy
c. stability strategy
d. defender strategy
56. In the context of the adaptation model, which of the following is a strategic alternative that managers can select to
match their organization’s strategy with the basic conditions of their organization’s environment?
a. The defender strategy
b. The focus strategy
c. Retrenchment
d. Unrelated diversification
57. A _____ is used by companies that are adding new products, product lines, or businesses to their existing core
products, product lines, or businesses.
a. diversification strategy
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b. differentiation strategy
c. retrenchment strategy
d. stability strategy
58. Which of the following statements best defines a stability strategy?
a. It is adopted by a company that plans to stay in its current businesses and intends to manage them as they are
already being managed.
b. It is used by companies that are adding new products, product lines, or businesses to their existing core products,
product lines, or businesses.
c. It occurs when an organization finds that its current operations are not effective.
d. It can be pursued externally through mergers, joint ventures, and the acquisition of other businesses.
59. _____ is a human resource management (HRM) practice that can lead to improved firm performance.
a. Continuous training
b. Pay secrecy
c. Pay inversion
d. Job embeddedness
60. One form of organization design used by many smaller or newer organizations is the _____.
a. functional design
b. M-form design
c. H-form design
d. divisional design
61. Compare related and unrelated diversification.
62. Briefly explain the influence of an organization’s purpose and mission on its human resource practices.
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63. Briefly explain the impact of an organization’s culture on the formulation of its human resource strategies.
64. Describe the factors that affect human resource (HR) strategy formulation.
65. How would an organization conduct an evaluation of its human resource (HR) function?
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