Test bank performance management 3rd edition by aguinis chapter 03

Part I: Strategic and General Considerations___________________________________________________

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])

3.2

The only purpose of a strategic plan is to guide employees’ daily activities.
(Suggested points: 2, [3.2])

3.3

The performance management criteria must be linked to the vision, mission,
goals, and strategies of the organization and unit.
(Suggested points: 2, [3.3])

3.4

Environmental analysis is an examination of the external environment where the
organization operates.
(Suggested points: 2, [3.5])

3.5

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

environment analysis.
(Suggested points: 2, [3.5])

3.6

Leverage is a combination of an opportunity in the external environment and a
matching strength in the organization.
(Suggested points: 2, [3.6])

3.7

A problem is a situation where an external threat can be compensated by strengths
in other areas.
(Suggested points: 2, [3.6])

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, [3.6])

3.9

A mission statement is a description of what the organization would like to
become in the future.
(Suggested points: 2, [3.7])
A vision statement provides more specific information on how the mission will be
implemented.
(Suggested points: 2, [3.8])

3.10

3.11

Job descriptions should focus only on an individual’s tasks and responsibilities.
(Suggested points: 2, [3.13])
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Part I: Strategic and General Considerations___________________________________________________

3.12

Well-designed performance management systems define a clear path from
organizational mission, vision, and goals to individual and team performance.
(Suggested points: 2, [3.3])

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 goals.
(Suggested points: 2, [3.3])

3.14

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

(Suggested points: 2, [3.16])

Multiple-Choice Questions
3.15

The main goal of the strategic planning process is to:
A. Write the mission statement to provide direction to the organization
B. Allocate resources to provide the organization with a competitive advantage
C. Form the foundation for the performance management process
D. None of the above
(Suggested points: 2, [3.1])

3.16

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 goals
(Suggested points: 2, [3.4])

3.17

Which of the following external factors should be considered in any
environmental analysis?
A. Organizational culture
B. Organizational politics
C. Competitors
D. Organizational structure
(Suggested points: 2, [3.5])

3.18

Which of the following internal factors should be considered in an environmental
analysis?
A. Organizational culture
B. Competitors
C. Organizational structure
D. A and C
(Suggested points: 2, [3.5])

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Chapter 3

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
(Suggested points: 2, [3.6])

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 the above
(Suggested points: 2, [3.7])

3.21

A good vision statement is all of the following EXCEPT:
A. Focused
B. Detailed
C. Inspiring
D. A statement of future aspirations
(Suggested points: 2, [3.8])

3.22

___________________ are the descriptions of game plans to reach the stated
objectives.
A. Mission statements
B. Strategies
C. Goals
D. Vision statements
(Suggested points: 2, [3.11])

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 the above
(Suggested points: 2, [3.15])

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
(Suggested points: 2, [3.1])
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Part I: Strategic and General Considerations___________________________________________________

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, [3.2])

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 the above
(Suggested points: 2, [3.2])

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. A conscious effort must be made to link the strategic plan with individual
performance.
B. Company executives must mandate that employees follow the plan.
C. Employees must be involved in making the plan.
D. Supervisors must be able to evaluate how well an employee is following the
plan.
(Suggested points: 5, .3[3.3], .4[3.12], .3[3.13])

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
(Suggested points: 2, [3.5])

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
(Suggested points: 2, [3.5])

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
(Suggested points: 2, [3.5])
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Chapter 3

3.31

_______________________ analyzes the external environment vis-à-vis the
internal environment.
A. Business analysis

B. Environmental analysis
C. Gap analysis
D. Opportunity analysis
(Suggested points: 2, [3.6])

3.32

The mission statement summarizes:
A. The organization’s most important reason for existing
B. The mission
C. The organization’s values
D. The organization’s needs
(Suggested points: 2, [3.7])

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
(Suggested points: 2, [3.8])

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, [3.8])

3.35

________________ are what the organization intends to do in the short term, say,
one to three years.
A. Strategies
B. Strategic plans
C. Goals
D. Game plans
(Suggested points: 2, [3.11])

3.36

Strategic consensus occurs when __________agree on a common set of _______.
A. workers; unit-level goals
B. organizational units; strategic priorities
C. firms; industry-wide practices
D. managers; organizational values
(Suggested points: 2, [3.12])

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Part I: Strategic and General Considerations___________________________________________________

3.37

In the early development of strategic management as a field, what was the
dominant approach to achieving strategic consensus?
A. Create strategic priorities and goals simultaneously.
B. Establish strategic priorities before setting goals.
C. Identify the strength and weaknesses of the firm, and then let firm-level
strategic priorities emerge naturally.
D. Focus on goals, and then create strategic priorities on how to compete.
(Suggested points: 2, [3.12])

3.38

Influenced by industrial organization research, a subfield of economics, _______
is a more recent way of thinking about strategic consensus than is the one
promoted as the dominant approach in the early development of strategic
management:
A. creating strategic priorities and goals simultaneously
B. establishing strategic priorities before setting goals
C. identifying the strength and weaknesses of the firm and then letting firm-level
strategic priorities emerge naturally
D. focusing on goals, and then creating strategic priorities on how to compete
(Suggested points: 2, [3.12])

3.39

Which of the following has been shown to be the best predictor of firm
performance?
A. Create strategic priorities and goals simultaneously.
B. Establish strategic priorities before setting goals.
C. Identify the strength and weaknesses of the firm, and then let firm-level
strategic priorities emerge naturally.

D. Focus on goals, and then create strategic priorities on how to compete.
(Suggested points: 2, [3.12])

3.40

Which one of the following is an example of Strategic priorities  Goals?
A. Each salesperson will increase $10,000 in sales by the end of the quarter.
B. Our company must double the number of our product lines to gain greater
diversity and customer satisfaction.
C. Our firm will reduce the price of our items by 20 percent to compete in the
East Asian market within the next five years. To do so, each store must
increase employee productivity by 8 percent and implement a one-year hiring
freeze.
D. Each team is required to propose a set of team goals that will help the
organization achieve its organizational goals.
(Suggested points: 2, [3.12])

Essay-Type Questions
3.41

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
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Chapter 3

Report of the Secretary-General of the United Nations as a source of information

(available at />(Suggested points: 10, [3.5])
[HJ: I inserted a space here.]
3.42 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:
/>Right_MissionBuilder. [HJ: underline the link?]
(Suggested points: 10, [3.10])
3.43

Using the mission statement that you wrote in the previous question, write a
vision statement, goals, and accompanying strategies for how to reach your goals.
Also, list how you will measure your performance.
(Suggested points: 10, [3.10])

3.44

What are the steps in the creation of a successful strategic plan?
(Suggested points: 2, [3.4])

3.45

Define strengths in the context of strategic planning.
(Suggested points: 2, [3.5])

3.46

Define weaknesses in the context of strategic planning.
(Suggested points: 2, [3.5])

3.47

Define leverage in the context of strategic planning.
(Suggested points: 2, [3.6])

3.48

Define constraint in the context of strategic planning.
(Suggested points: 2, [3.6])

3.49

Define vulnerability in the context of strategic planning.
(Suggested points: 2, [3.6])

3.50

Define problem in the context of strategic planning.
(Suggested points: 2, [3.6])

3.51

A good mission statement answers four questions. What are they?
(Suggested points: 2, [3.7])

3.52

List the characteristics of a good vision statement.
(Suggested points: 2, [3.9])

3.53

What is strategic consensus?
(Suggested points: 2, [3.12])
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Part I: Strategic and General Considerations___________________________________________________

3.54

What are the two main ways of achieving strategic consensus?
(Suggested points: 2, [3.12])

3.55

Provide an example of the first way of achieving strategic consensus.
(Suggested points: 2, [3.12])

3.56

Provide an example of the second way of achieving strategic consensus.
(Suggested points: 2, [3.12])

3.57

Which one of the two ways of achieving strategic consensus is better?
Why do you think so?
(Suggested points: 3, [3.12])

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Chapter 3

Answers
3.1
3.2

3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
3.20
3.21

3.22
3.23
3.24
3.25
3.26
3.27
3.28
3.29
3.30
3.31
3.32
3.33
3.34
3.35

T
F: 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.
T
F: Environmental analysis considers internal as well as external trends.
T
T
F: A vulnerability is a situation where an external threat can be compensated for
by strengths in other areas.
T
F: A vision statement is a description of what the organization would like to
become in the future.
F: Goals provide more specific information on how the mission will be

implemented.
F: Job descriptions should include activities that contribute to the mission and
vision of the unit and organization.
T
T
F: HR, employee, and management buy-in are all necessary for successful
performance management systems.
B
B
C
D
B
D
B
B
D
B
D
D
A
B
D
C
C
A
D
D
C
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Part I: Strategic and General Considerations___________________________________________________

3.36
3.37
3.38
3.39
3.40
3.41

B
D
B
B
C
Answers will vary. Possible answers:
A. 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.
B. 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.
C. 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
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Chapter 3

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.”
D. 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
2015 …”
• “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.”
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Part I: Strategic and General Considerations___________________________________________________

3.42

Personal Mission Statement: (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.

3.43

(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.
Goals: 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.
Performance Measurement: I will seek feedback from my team members as to
how my performance is progressing. I will refer back to my mission statement at
least every month to ensure that I am living my life accordingly. I will check
regularly with my wife to ensure that we are both happy and successful. Finally, I
will keep track of my 10K times to ensure that I am staying in shape.

3.44

The steps for creation of a successful strategic plan are:
• Environmental analysis
• Creation of an organizational mission
• Creation of an organizational vision
• Setting goals

3.45

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

3.46

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

3.47

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

3.48

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

3.49

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

3.50

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

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Chapter 3

3.51

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?

3.52

The characteristics of a good vision statement are that it is:
• Brief
• Verifiable
• Bound by a timeline
• Current
• Focused
• Understandable
• Inspiring
• A stretch

3.53

Strategic consensus is the state in which various organizational units agree on a
common set of strategic priorities.

3.54

1) Strategic priorities  Goals and 2) Goals  Strategic priorities

3.55

Sample answer of Strategic priorities  Goals: Within three years, our company
will achieve a 20 percent increase in net revenue in the North American consumer
electronic goods market. To achieve this strategic priority, each creative design
team will create a new product within one year, where the top three products will
be chosen and launched into the targeted market. Each of the members in the top
three teams will be rewarded a 25 percent permanent salary increase, along with
an additional two-week paid vacation.

3.56

Sample answer of Goals  Strategic priorities: Given each department’s current
capacity, we expect that each department will have decreased the amount of
public complaints by 10 percent within the next two years. Cumulatively, this 10
percent decrease from each department will amount to a 12 percent decrease in
public complaints to the entire organization within the next two years.

3.57

The Strategic priorities  Goals sequence is superior in terms of predicting firm
performance. Why? Sample answer: One possible reason is that setting the
broader strategic priorities and then goals allows an organization to think more
freely rather than being tied down to the details of “reality.” As a consequence, the
organization makes more ambitious goals than usual. These ambitious goals force
an organization to challenge its perceived current capacities and perhaps, as a
result, more readily allow the organization to extend its capacities. In contrast,
setting goals first and then strategic priorities may induce an organization to
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Part I: Strategic and General Considerations___________________________________________________

accept the details of “reality” rather than think more freely. As a consequence, the
organization makes goals that are not very ambitious. These not so ambitious
goals do not force an organization to challenge its perceived current capacities
and perhaps, as a result, do not readily allow the organization to extend its
capacities.

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