Chapter 3—Performance Management and Strategic Planning

True/False Questions

3.1 Strategic planning is a process that involves describing the organization’s destination, assessing barriers that stand in the way of that destination, and selecting approaches for moving forward.

(Suggested points: 2, [3.1]); Pg. 60 LO: 1

Answer: True

3.2 The only purpose of a strategic plan is to guide employees’ daily activities.

(Suggested points: 2, [3.1]); Pg. 60 LO: 1

Answer:

False. Strategic planning serves several purposes, including defining an organization’s identity, preparing for the future, providing focus, creating a culture of cooperation, and serving as a guide for the daily activities of all organizational members.

3.3 The performance management criteria must be linked to the vision, mission, objectives, and strategies of the organization and unit.

(Suggested points: 2, [3.1]); Pg. 66 LO: 1

Answer: True

3.4 Environmental analysis is an examination of the external environment where the organization operates.

(Suggested points: 2, [3.3]); Pg. 67 LO: 4

Answer:

False. Environmental analysis considers internal as well as external trends.

3.5 An analysis of the economic environment would be included in the external environment analysis.

(Suggested points: 2, [3.3]); Pg. 68 LO: 4

Answer: True

3.6 Leverage is a combination of an opportunity in the external environment and a matching strength in the organization.

(Suggested points: 2, [3.3]); Pg. 70

LO: 5

Answer: True

3.7 A problem is a situation where an external threat can be compensated by strengths in other areas.

(Suggested points: 2, [3.3]); Pg. 71 LO: 5

Answer: False. A vulnerability is a situation where an external threat can be compensated for by strengths in other areas.

3.8 A gap analysis consists of pairing strengths/weaknesses with opportunities/threats and determining whether the situation is conducive to positive outcomes, negative outcomes, or a mixture of both.

(Suggested points: 2, [3.3]); Pg. 70 LO: 5

Answer: True

3.9 A mission statement is a description of what the organization would like to become in the future.

(Suggested points: 2, [3.3]); Pg. 73 LO: 6

Answer: False. A vision statement is a description of what the organization would like to become in the future.

3.10 A vision statement provides more specific information on how the mission will be implemented

(Suggested points: 2, [3.3]); Pg. 76 LO: 7

Answer: False. Objectives provide more specific information on how the mission will be implemented.

3.11 Job descriptions should focus only on an individual’s tasks and responsibilities. (Suggested points: 2, [3.3]); Pg. 79 LO: 7

Answer: False. Job descriptions should include activities that contribute to the mission and vision of the unit and organization.

3.12 Well-designed performance management systems define a clear path from mission, vision, objectives, and strategies at the organizational-level to the unitlevel and to individual job descriptions.

(Suggested points: 2, [3.2]); Pg. 61-62 LO: 2

Answer: True

3.13 Performance management systems allow all employees to understand where the organization stands and where it needs to go and provide tools to employees so that their behaviors will help the organization meet its objectives.

(Suggested points: 2, [3.4]); Pg. 81 LO: 8

Answer: True

3.14 HR support is sufficient for a successful performance management system; employee and top management buy-in is not necessary.

(Suggested points: 2, [3.4]); Pg. 81-82 LO: 8

Answer:

False. HR, employee, and management buy-in are all necessary for successful performance management systems.

3.15 A balanced scorecard allows the HR department to evaluate which employees are contributing the most to the organization’s success.

(Suggested points: 2, [3.2]); Pg. 63 LO: 2

Answer:

False. A balanced scorecard is a way to formalize the link between strategic planning and performance management.

Multiple-Choice Questions

3.16 The main goal of the strategic planning process is to:

A. Establish job descriptions for customer-facing positions

B. Allocate resources to provide the organization with a competitive advantage

C. Form the foundation for the performance management process

D. None of these are correct

Answer: B

(Suggested points: 2, [3.1]); Pg. 60 LO: 1

3.17 The strategic planning process consists of all of the following EXCEPT:

A. An environmental analysis

B. Development of the marketing plan

C. Creation of a mission statement

D. Setting organizational objectives

(Suggested points: 2, [3.3]); Pg. 65-81 LO: 4, 5, 6, 7

Answer: B

3.18 Which of the following external factors should be considered in any external environmental analysis?

A. Organizational culture

B. Organizational politics

C. Competitors

D. Organizational structure

Answer: C

(Suggested points: 2, [3.3]); Pg. 68-69 LO 4

3.19 If a company identifies an external opportunity that it cannot pursue due to an internal weakness, this is considered a:

A. Leverage

B. Constraint

C. Vulnerability

D. Problem

Answer: B

(Suggested points: 2, [3.3]); Pg. 70-71 LO: 5

3.20 A good mission statement contains which of the following?

A. Statement of why the organization exists

B. Description of the organization’s customers

C. List of the organization’s products and services

D. All of these are correct

Answer: D

(Suggested points: 2, [3.3]); Pg. 71-73 LO: 6

3.21 A good vision statement is all of the following EXCEPT:

A. Focused

B. Detailed

C. Inspiring

D. A statement of future aspirations

Answer: B

(Suggested points: 2, [3.3]); Pg. 73-76 LO: 6

3.22 ___________________ are the descriptions of game plans to reach the stated objectives.

A. Mission statements

B. Strategies

C. Goals

D. Vision statements

Answer: B

(Suggested points: 2, [3.3]); Pg. 77 LO: 6

3.23 Which of the following choices must be made when designing a performance management system?

A. Behavioral criteria versus results criteria

B. Low employee participation versus high employee participation

C. Short-term criteria versus long-term criteria

D. All of these are correct

Answer: D

(Suggested points: 2, [3.3]); Pg. 66 LO: 3

3.24 The process of describing the organization’s destination, assessing barriers that stand in the way of that destination, and selecting approaches for moving forward is called ____________________________.

A. organizational planning

B. strategic planning

C. business planning

D. successful planning

Answer: B

(Suggested points: 2, [3.1]); Pg. 60 LO: 1

3.25 Which of the following is a purpose served by strategic planning?

A. Allows an organization to increase profit

B. Allows an organization to reduce overhead cost

C. Allows an organization to find the best employees

D. Allows an organization to produce an organizational culture of cooperation

(Suggested points: 2, [3.1]); Pg. 60-61 LO: 1

Answer: D

3.26 Which of the following is a purpose served by strategic planning?

A. Helps define the organization’s identity

B. Enhances ability to adapt to environmental changes

C. Allows for the consideration of new options and opportunities

D. All of these are correct

Answer: D

(Suggested points: 2, [3.1]); Pg. 60-61 LO: 1

3.27 In order to ensure that strategy cascades down the organization and leads to concrete actions, which of the following must be done?

A. Effort must be made to link the strategic plan with what everyone does in the organization on a daily basis.

B. Company executives must mandate that employees follow the plan or be fired.

C. Employees should not be involved in making the plan.

D. Supervisors should evaluate how well an employee is following the plan.

(Suggested points: 2, [3.2]); Pg. 61 LO: 2

Answer: A

3.28 Characteristics of the external environment that can help the organization succeed are known as ______________________.

A. advantages

B. opportunities

C. good situations

D. expectant situations

Answer: B

(Suggested points: 2, [3.3]); Pg. 68 LO: 4

3.29 Characteristics of the external environment that can prevent the organization from being successful are known as ______________________.

A. disadvantages

B. weaknesses

C. global factors

D. threats

Answer: D

(Suggested points: 2, [3.3]); Pg. 68 LO: 4

3.30 An examination of the internal environment includes a consideration of:

A. Employees and supervisors

B. Supply and demand

C. Strengths and weaknesses

D. Employees and customers

Answer: C

(Suggested points: 2, [3.3]); Pg. 69 LO: 4

3.31 _______________________ analyzes the external environment vis-à-vis the internal environment.

A. Business analysis

B. Environmental analysis

C. Gap analysis

D. Opportunity analysis

Answer: C

3.32 The mission statement summarizes:

(Suggested points: 2, [3.3]); Pg. 70 LO: 5

A. The organization’s most important reason for existing

B. The organization’s future aspiration

C. The organization’s financial objectives

D. The organization’s needs

Answer: A

(Suggested points: 2, [3.3]); Pg. 71 LO: 6

3.33 A description of what the organization would like to become in the future is called:

A. The mission statement

B. The organizational plan

C. The strategic plan

D. The vision statement

Answer: D

(Suggested points: 2, [3.3]); Pg.73 LO: 6

3.34 Which of the following is characteristic of a good vision statement?

A. Controversial

B. Free of a specific timeline to create flexibility

C. Long-lasting

D. Provides a stretch goal

(Suggested points: 2, [3.3]); Pg. 75 LO: 6

Answer: D

3.35 ________________ are what the organization intends to do in the short term, say, one to three years.

A. Strategies

B. Strategic plans

C. Objectives

D. Game plans

Answer: C

(Suggested points: 2, [3.3]); Pg. 76 LO: 6

3.36 Contributions of the HR function to the strategic planning process include all of the following EXCEPT:

A. Communicating knowledge

B. Outlining KSA’s needed

C. Proposing compensation systems

D. Benchmarking functions

Answer: D

Short-Answer and Essay-Type Questions

(Suggested points: 2, [3.3]); Pg. 66 LO: 3

3.38 Conduct an environmental analysis of the United Nations (www.un.org). Make sure your analysis includes a consideration of both internal (strengths and weaknesses) and external (opportunities and threats) trends. See the Millennium Report of the Secretary-General of the United Nations as a source of information (available at http://www.un.org/millennium/sg/report/).

(Suggested points: 10, [3.3.2]); Pg. 68-71 LO: 4

Answer:

Answers will vary. Possible answers: o Opportunity + Strength = Leverage. The best combination of external and internal factors occurs when there is an opportunity in the environment and a matching strength within the organization to take advantage of the opportunity. “The UN’s influence derives not from power, but from the values it represents, its role in helping to set and sustain global norms, its ability to stimulate global concern and action, and the trust inspired by its practical work to improve people’s lives. We must build on those strengths, especially by insisting on the importance of the rule of law.” Doing this will help bring about peace to the many people around the world facing health concerns, including HIV/AIDS, poor nutrition, and unfit living environments. People in poorer countries also need the UN’s help in preventing civil war, enforcing civil rights, and reducing the prevalence of firearms around the world. o Opportunity + Weakness = Constraint. In a constraint situation, the external opportunity is present. However, the internal situation is not conducive to taking advantage of the external opportunity. With the increase of globalization and technology, people around the world are more “connected” than ever before, and they are looking to their leaders to help them face the challenges associated with globalization. Thus, the United Nations has a great opportunity to serve as a model of inclusion. Furthermore, new technology can help developing countries to accelerate through early stages of development. Providing developing countries with access to this information will help business and education networks. The UN can use the new information technology to be more efficient and improve its interaction with the rest of the world. However, the UN is currently change-resistant and will need the help of the information technology industry to help them utilize the vast amount of information available and enable change with this information. o Threat + Strength = Vulnerability. In this situation, an external threat can be contained because of the presence of internal strengths. The presence of war around the globe is a major threat to the UN. However, with the work of the Security Council, the threat can be deterred. The Security Council needs “reforming so it can both work effectively and enjoy unquestioned legitimacy.” Furthermore, the UN must expand its “relationship with civil society organizations, as well as with the private sector and foundations.” Further strengthening the Security Council will ensure that the threat of war across the globe is contained. “In the last decade internal wars have claimed more than 5 million lives, and driven many times that number of people from their homes. At the same time, weapons of mass destruction continue to cast their shadow of fear.” By working with the Security Council and finding strength in the shared values held by the nations in the UN, the UN resolves to lessen the threat of deadly conflict at every stage:

• “Prevention. Conflicts are most frequent in poor countries … and the best way to prevent them is to promote healthy and balanced economic development combined with human rights, minority rights, and political arrangements in which all groups are fairly represented …”

• “Protecting the vulnerable. We must find better ways to enforce international and human rights law, and ensure that gross violations do not go unpunished.”

• “Addressing the dilemma of intervention. National sovereignty must not be used as a shield for those who wantonly violate the rights and lives of their fellow human beings …”

• “Strengthening peace operations.” Operate more effective peace operations.

• “Targeting sanctions. Recent research has explored ways to make sanctions ‘smarter’ by targeting them better. The Security Council should draw on this research when designing and applying sanctions regimes in future.”

• “Pursuing arms reductions. The Secretary-General urges Member States to control small arms transfers more rigorously; and to recommit themselves to reducing the dangers both of existing nuclear weapons and of further proliferation ” o Threat + Weakness = Problem. In the worst of the situations, there is an external threat and an accompanying internal weakness. The global environment is suffering because the UN has not committed to helping keep the environment safe. The security and viability of future generations is at stake. “We have been plundering our children’s heritage to pay for unsustainable practices.” The UN must commit to helping the following areas:

• “Coping with climate change. Reducing the threat of global warming requires a 60 percent reduction in emissions of carbon and other ‘greenhouse gases.’ …”

• “Confronting the water crisis. The report urges endorsement of the World Water Forum Ministerial Conference’s target of cutting by half the proportion of people without access to safe and affordable water before 2025 …”

• “Defending the soil. The best hope of feeding a growing world population from shrinking agricultural land may lie in biotechnology, but its safety and environmental impact are hotly debated …”

• “Preserving forests, fisheries, and biodiversity. In all these areas, conservation is vital. Governments and the private sector must work together to support it.”

• “Building a new ethic of stewardship. The Secretary-General recommends four priorities:” include more education for the public, “integrate the environment into economic policy,” implement “regulations and incentives,” and receive “more accurate scientific data.”

3.39 As with organizations, people can have mission statements. Write a personal mission statement for yourself. Be sure that it includes all of the characteristics of a good mission statement. Use the following tool at the Franklin Covey Web site, and add to it as necessary: https://msb.franklincovey.com/ (Suggested points: 10, [3.3.3]); Pg. 71-73 LO: 6

Answer:

Answers will vary, but here is one example: Throughout each day in my life, I strive to be loyal to my friends and family, lead a successful career that I will enjoy, stay healthy, and take on any challenges that come my way. I value my family members, friends, spiritual fulfillment, sense of accomplishment, and respect for others.

3.40 Using the mission statement that you wrote in the previous question, write a vision statement, objectives, and accompanying strategies for how to reach your goals.

(Suggested points: 10, .3[3.3.4], .3[3.3.5], .4[3.3.6]); Pg. 73-77 LO: 6, 7

Answer:

Answers will vary, but here is an example:

Vision Statement: In five years, I will still be happily married and in contact with friends and family. I will be a manager in my firm and running on a daily basis.

Objectives: Take the lead on a project within one year where I will gain visibility. Plan one family vacation. Run a 10K twice a year.

Strategies: Take a lead on one section of a project this month, and ask the project manager for feedback. Save money and vacation days. Continue to run daily with my friend.

3.41 What are the steps in the creation of a successful strategic plan?

(Suggested points: 2, [3.3]); Pg. 67 LO: 2

Answer:

The steps for creation of a successful strategic plan are:

• Environmental or SWOT analysis

• Creation of an organizational mission

• Creation of an organizational vision

• Setting objectives

• Creation of strategies that allow for fulfillment of mission and vision and achieving objectives

3.42 Define strengths in the context of strategic planning.

(Suggested points: 2, [3.3]); Pg. 69 LO: 4

Answer:

In the context of strategic planning, strengths are internal characteristics that the organization can use to its advantage.

3.43 Define weaknesses in the context of strategic planning.

(Suggested points: 2, [3.3]); Pg. 69 LO: 4

Answer:

In the context of strategic planning, weaknesses are internal characteristics that are likely to hinder the success of the organization.

3.44 Define leverage in the context of strategic planning.

(Suggested points: 2, [3.3]); Pg. 77 LO: 5

Answer:

In the context of strategic planning, leverage is an external opportunity paired with an internal strength.

3.45 Define constraint in the context of strategic planning.

(Suggested points: 2, [3.3]); Pg. 71 LO: 5

Answer:

In the context of strategic planning, a constraint is an external opportunity paired with an internal weakness.

3.46 Define vulnerability in the context of strategic planning. (Suggested points: 2, [3.3]); Pg. 71 LO: 5

Answer:

In the context of strategic planning, a vulnerability is an external threat paired with an internal strength.

3.47 Define problem in the context of strategic planning. (Suggested points: 2, [3.3]); Pg. 71 LO: 5

Answer:

In the context of strategic planning, a problem is an external threat paired with an internal weakness.

3.48 A good mission statement answers four questions. What are they? (Suggested points: 2, [3.3]); Pg. 71 LO: 6

Answer:

A good mission statement answers these questions:

• Why does the organization exist?

• What is the scope of the organization?

• Who are the customers served?

• What are the products or services offered?

3.49 List the characteristics of a good vision statement.

(Suggested points: 2, [3.3]); Pg. 76 LO: 6

Answer:

The characteristics of a good vision statement are that it is:

• Brief

• Verifiable

• Bound by a timeline

• Current

• Focused

• Understandable

• Inspiring

• A stretch