Management Information SystemsChapter 1 Information Systems in Global Business

Today1) Internet advertising is growing at approximately 10 percent a year.Answer:

TRUEDiff: 3 Page Ref: 6AACSB: Reflective ThinkingCASE: ContentObjective: 1.12)
Developing a new product, fulfilling an order, and hiring a new employee are
examples of business processes.Answer: TRUEDiff: 1 Page Ref: 11AACSB:
Reflective ThinkingCASE: ContentObjective: 1.33) A fully digital firm produces
only digital goods or services.Answer: FALSEDiff: 2 Page Ref: 11AACSB:
Reflective ThinkingCASE: ContentObjective: 1.14) A business model describes how a
company produces, delivers, and sells a product or service to create wealth.Answer:
TRUEDiff: 1 Page Ref: 13AACSB: Reflective ThinkingCASE: ContentObjective: 1.35)
Information technology (IT) consists of all the hardware that a firm needs to use
in order to achieve its business objectives, whereas information systems consist of
all the software and business processes needed.Answer: FALSEDiff: 2 Page Ref: 15
AACSB: Use of ITCASE: ContentObjective: 1.3
6) Computers are only part of an information system.Answer: TRUEDiff: 1 Page
Ref: 17AACSB: Use of ITCASE: ContentObjective: 1.37) Information systems
literacy describes the behavioral approach to information systems, whereas computer
literacy describes the technical approach.Answer: FALSEDiff: 1 Page Ref: 17AACSB:
Use of ITCASE: ContentObjective: 1.38) The dimensions of information systems are
management, organizations, and information technology.Answer: TRUEDiff: 2 Page
Ref: 18AACSB: Reflective ThinkingCASE: ContentObjective: 1.39) Knowledge workers
assist with paperwork at all levels of the firm.Answer: FALSEDiff: 1 Page Ref: 18
AACSB: Reflective ThinkingCASE: ContentObjective: 1.210) There are four major
business functions: Sales and marketing; manufacturing and production; finance and
accounting; and information technology.Answer: FALSEDiff: 1 Page Ref: 18-19
AACSB: Reflective ThinkingCASE: ContentObjective: 1.211) In order to understand
how a specific business firm uses information systems, you need to know something
about the hierarchy and culture of the company.Answer: TRUEDiff: 2 Page Ref:
19-20AACSB: Analytic SkillsCASE: AnalysisObjective: 1.3
12) Business processes are logically related tasks for accomplishing tasks that
have been formally encoded by an organization.Answer: FALSEDiff: 2 Page Ref: 19
AACSB: Reflective ThinkingCASE: ContentObjective: 1.313) A substantial part of
management responsibility is creative work driven by new knowledge and information.
Answer: TRUEDiff: 1 Page Ref: 20AACSB: Reflective ThinkingCASE: Content
Objective: 1.214) Intranets allow firms to work easily with third-party suppliers
and vendors.Answer: FALSEDiff: 2 Page Ref: 21AACSB: Use of ITCASE: Content
Objective: 1.215) An IT infrastructure provides the platform on which the firm can
build its information systems.Answer: TRUEDiff: 1 Page Ref: 21AACSB: Use of IT
CASE: ContentObjective: 1.316) UPS's use of Web-based tools that allow customers
to embed UPS functions such as tracking and cost calculations into their own Web
sites was an information systems solution used to achieve customer intimacy.Answer:
TRUEDiff: 3 Page Ref: 13, 22AACSB: Analytic SkillsCASE: AnalysisObjective: 1.2
17) Studies have consistently shown that firms who invest greater amounts in
information technology receive greater benefits than firms that invest less.Answer:
FALSEDiff: 2 Page Ref: 26AACSB: Use of ITCASE: ContentObjective: 1.418)
Government and private sector standards are examples of complementary social assets
required to optimize returns from IT investments.Answer: TRUEDiff: 2 Page Ref: 27
AACSB: Reflective ThinkingCASE: ContentObjective: 1.419) A firm that invests in
efficient business processes is making an investment in organizational
complementary assets.Answer: TRUEDiff: 2 Page Ref: 27AACSB: Reflective Thinking
CASE: ContentObjective: 1.420) The behavioral approach to information systems
leaves aside technical solutions to instead analyze the psychological, social, and
economic impacts of systems.Answer: TRUEDiff: 2 Page Ref: 29AACSB:
Reflective ThinkingCASE: ContentObjective: 1.321) The six important business
objectives of information technology are new products, services, and business
models; customer and supplier intimacy; survival; competitive advantage;
operational excellence; andA) improved flexibility.B) improved decision making.C)
improved business practices.D) improved efficiency.Answer: BDiff: 1 Page Ref: 12
AACSB: Use of ITCASE: ContentObjective: 1.2
22) Dell Computer's use of information systems to improve efficiency and implement
"mass customization" techniques to maintain consistent profitability and an
industry lead illustrates which business objective?A) improved flexibilityB)
improved business practicesC) competitive advantageD) survivalAnswer: CDiff: 3
Page Ref: 14AACSB: Use of ITCASE: SynthesisObjective: 1.223) The use of
information systems because of necessity describes the business objective ofA)
survival.B) improved business practices.C) competitive advantage.D) improved
flexibility.Answer: ADiff: 2 Page Ref: 14AACSB: Use of ITCASE: ContentObjective:
1.224) Which of the following choices may lead to competitive advantage: (1) new
products, services, and business models; (2) charging less for superior products;
(3) responding to customers in real time?A) 1 onlyB) 1 and 2C) 2 and 3D) 1, 2, and
3Answer: DDiff: 3 Page Ref: 14AACSB: Analytic SkillsCASE: Analysis
Objective: 1.2
25) Verizon's implementation of a Web-based digital dashboard to provide managers
with real-time information such as customer complaints is an example ofA) improved
flexibility.B) improved decision making.C) improved efficiency.D) customer and
supplier intimacy.Answer: BDiff: 2 Page Ref: 14AACSB: Use of ITCASE: Analysis
Objective: 1.226) The move of retail banking to use ATMs after Citibank unveiled
its first ATMs illustrates the use of information systems to achieve which business
objective?A) improved efficiencyB) customer and supplier intimacyC) survivalD)
competitive advantageAnswer: CDiff: 2 Page Ref: 14AACSB: Use of ITCASE:
AnalysisObjective: 1.227) Which of the following objectives best describes the
business strategy behind the development of smart grid initiatives by power
companies, as discussed in the chapter case?A) operational excellenceB) new
products and services C) competitive advantageD) customer support Answer: ADiff: 2
Page Ref: 36-37AACSB: Analytic SkillsCASE: AnalysisObjective: 1.228) The
three activities in an information system that produce the information
organizations use to control operations areA) information retrieval, research, and
analysis.B) input, output, and feedback.C) input, processing, and output.D) data
analysis, processing, and feedback.Answer: CDiff: 1 Page Ref: 16AACSB: Use of IT
CASE: ContentObjective: 1.329) Order data for baseball tickets and bar code data
are examples ofA) raw input.B) raw output.C) customer and product data.D) sales
information.Answer: ADiff: 1 Page Ref: 16AACSB: Use of ITCASE: ContentObjective:
1.330) The average number of tickets sold daily online is an example ofA) input.B)
raw data.C) meaningful information.D) feedback.Answer: CDiff: 1 Page Ref: 16AACSB:
Use of ITCASE: AnalysisObjective: 1.331) OutputA) is feedback that has been
processed to create meaningful information.B) is information that is returned to
appropriate members of the organization to help them evaluate the input stage.C)
transfers data to the people who will use it or to the activities for which it will
be used.D) transfers processed information to the people who will use it or to the
activities for which it will be used.Answer: DDiff: 1 Page Ref: 16AACSB: Use
of ITCASE: ContentObjective: 1.332) Converting raw data into a more meaningful
form is calledA) capturing.B) processing.C) organizing.D) feedback.Answer: BDiff:
1 Page Ref: 16AACSB: Use of ITCASE: ContentObjective: 1.3
33) An example of raw data from a national chain of automobile stores would beA) an
average of 13 Toyotas are sold daily in Kentucky.B) 30 percent increase in Toyota
RAV 4 sales during September in Kentucky.C) 1 Toyota RAV4 sold March 3, 2008 in
Louisville, Kentucky.D) all of the above.Answer: CDiff: 3 Page Ref: 16AACSB: Use
of ITCASE: AnalysisObjective: 1.334) The field that deals with behavioral issues
as well as technical issues surrounding the development, use, and impact of
information systems used by managers and employees in the firm is calledA)
information systems literacy.B) information systems architecture.C) management
information systems.D) information technology infrastructure.Answer: CDiff: 2
Page Ref: 17-18AACSB: Reflective ThinkingCASE: ContentObjective: 1.535) In
a hierarchical organization, the upper levels consist ofA) managerial and
professional employees.B) managerial, professional, and technical employees.C)
professional and operational employees.D) managerial, professional, and operational
employees.Answer: BDiff: 2 Page Ref: 18AACSB: Reflective ThinkingCASE: Content
Objective: 1.236) Which of the following business objectives best describes the
strategy behind the use of technology in the new Yankee Stadium?A) competitive
advantageB) improved decision makingC) new products and servicesD) survivalAnswer:
CDiff: 3 Page Ref: 3-4, 12-15AACSB: Analytic SkillsCASE: AnalysisObjective:
1.237) The fundamental set of assumptions, values, and ways of doing things that
has been accepted by most of a company's members is called itsA) culture.B)
environment.C) atmosphere.D) values.Answer: ADiff: 1 Page Ref: 20AACSB:
Reflective ThinkingCASE: ContentObjective: 1.238) Thomas Friedman's declaration
that the world was now "flat" meant thatA) the Internet has reduced the economic
advantages of developed countries.B) globalization is starting to offer less
advantage to large corporations.C) the global economy is increasingly commanded by
fewer and larger corporations.D) global capitalism is homogenizing culture and
business practices throughout the world.Answer: ADiff: 1 Page Ref: 8AACSB:
Reflective ThinkingCASE: ContentObjective: 1.239) Data management technology
consists of theA) physical hardware and media used by an organization for storing
data.B) detailed, preprogrammed instructions that control and coordinate the
computer hardware components in an information system.C) software governing the
organization of data on physical storage media.D) hardware and software used to
transfer data.Answer: CDiff: 2 Page Ref: 20AACSB: Use of ITCASE: Content
Objective: 1.340) The hardware and software used to transfer data in an
organization is calledA) data management technology.B) networking and data
management technology.C) data and telecommunications technology.D) networking and
telecommunications technology.Answer: DDiff: 2 Page Ref: 20AACSB: Use of ITCASE:
ContentObjective: 1.341) Networking and telecommunications technologies, along
with computer hardware, software, data management technology, and the people
required to run and manage them, constitute an organization'sA) data management
environment.B) networked environment.C) IT infrastructure.D) information system.
Answer: CDiff: 2 Page Ref: 21AACSB: Use of ITCASE: ContentObjective: 1.342) An
example of a business using information systems to create new products and services
isA) Wal-Mart's RetailLink system.B) the Mandarin Oriental hotel's customer-
preference tracking system.C) Verizon's Web-based digital dashboard.D) Apple Inc.'s
iPod.Answer: DDiff: 3 Page Ref: 13AACSB: Use of ITCASE: AnalysisObjective: 1.1
43) An example of a business using information systems to attain operational
excellence isA) Wal-Mart's RetailLink system.B) the Mandarin Oriental hotel's
customer-preference tracking system.C) Verizon's Web-based digital dashboard.D)
Apple Inc.'s iPod.Answer: ADiff: 3 Page Ref: 12AACSB: Use of ITCASE: Analysis
Objective: 1.144) An example of a business using information systems for customer
and supplier intimacy isA) Wal-Mart's RetailLink system.B) the Mandarin Oriental
hotel's customer-preference tracking system.C) Verizon's Web-based digital
dashboard.D) Apple Inc.'s iPod.Answer: BDiff: 2 Page Ref: 13-14AACSB: Use of
ITCASE: AnalysisObjective: 1.1
45) Maintaining the organization's financial records is a central purpose of which
main business function?A) manufacturing and accountingB) finance and accountingC)
sales and manufacturingD) finance and salesAnswer: BDiff: 1 Page Ref: 19AACSB:
Reflective ThinkingCASE: ContentObjective: 1.246) Based on the examples in the
chapter, if you were asked to formulate a plan for a regional drive-in restaurant
chain's efforts to use information technology to develop a loyal customer base,
what would be the best use of information technology from the list below?A) Use IT
to increase supplier loyalty.B) Use IT to increase operational efficiency.C) Use IT
to create new products and business models.D) Use IT to help survive government
reporting requirements.E) Use IT to achieve customer intimacy.Answer: EDiff: 3
Page Ref: 12-15AACSB: Use of ITCASE: EvaluationObjective: 1.247) Which of
the following would not be a complementary asset for a solar panel manufacturer?A)
international solar equipment certification standardsB) government funding for
green technologyC) centralized hierarchical decision making D) innovation-driven
management teamAnswer: CDiff: 2 Page Ref: 27AACSB: Analytic SkillsCASE:
SynthesisObjective: 1.4
48) The temp agency that you own is having serious difficulties placing temps
because few of them are familiar with Internet research. Investing in training
software to enhance your workers' skills is an example of using technology to
achieve which business objective?A) customer and supplier intimacyB) survivalC)
competitive advantageD) improved decision-makingAnswer: BDiff: 2 Page Ref: 14
AACSB: Analytic SkillsCASE: EvaluationObjective: 1.249) In a business hierarchy,
the level that is responsible for monitoring the daily activities of the business
isA) middle management.B) service workers.C) production management.D) operational
management.Answer: DDiff: 2 Page Ref: 18AACSB: Reflective ThinkingCASE: Content
Objective: 1.350) Which of the following are environmental actors that interact
with an organization and its information systems?A) customersB) suppliersC)
regulatory agenciesD) all of the aboveAnswer: DDiff: 2 Page Ref: 17AACSB: Use
of ITCASE: ContentObjective: 1.2
51) From a business perspective, raw data is transformed systematically during
various stages, transforming it into valuable information, in a process calledA)
the information value chain.B) the IT value chain.C) information processing.D)
feedback.Answer: ADiff: 2 Page Ref: 24AACSB: Use of ITCASE: ContentObjective:
1.252) A corporation that funds a political action committee, which in turn
promotes and funds a political candidate who agrees with the values of that
corporation, could be seen as investing in which main category of complementary
assets?A) managerialB) governmentalC) socialD) organizationalAnswer: CDiff: 2
Page Ref: 27AACSB: Analytic SkillsCASE: AnalysisObjective: 1.453) Apple
Computer dominates the online legal music sales industry primarily because of a
failure of recording label companies toA) invest in technology.B) adopt a new
business model.C) invest in complementary assets.D) modernize their information
value chain.Answer: BDiff: 2 Page Ref: 26-27AACSB: Use of ITCASE: Content
Objective: 1.1
54) An example of an organizational complementary asset isA) using the appropriate
business model.B) a collaborative work environment.C) laws and regulations.D) all
of the above.Answer: ADiff: 2 Page Ref: 27AACSB: Reflective ThinkingCASE:
ContentObjective: 1.455) An example of a social complementary asset isA)
technology and service firms in adjacent markets.B) training programs.C)
distributed decision-making rights.D) all of the above.Answer: ADiff: 2 Page
Ref: 27AACSB: Reflective ThinkingCASE: ContentObjective: 1.456) Disciplines that
contribute to the technical approach to information systems areA) computer science,
engineering, and networking.B) operations research, management science, and
computer science.C) engineering, utilization management, and computer science.D)
management science, computer science, and engineering.Answer: BDiff: 3 Page
Ref: 28AACSB: Use of ITCASE: ContentObjective: 1.557) The discipline that
focuses on mathematical techniques for optimizing parameters of organizations, such
as transportation and inventory control, isA) management science.B) MIS.C)
operations research.D) utilization management.Answer: CDiff: 3 Page Ref: 29AACSB:
Reflective ThinkingCASE: ContentObjective: 1.558) Sociologists study information
systems with an eye to understandingA) how systems affect individuals, groups, and
organizations.B) how human decision makers perceive and use formal information.C)
how new information systems change the control and cost structures within the firm.
D) the production of digital goods.Answer: ADiff: 2 Page Ref: 29AACSB: Use of IT
CASE: ContentObjective: 1.559) Psychologists study information systems with an
eye to understandingA) how systems affect individuals, groups, and organizations.B)
how human decision makers perceive and use formal information.C) how new
information systems change the control and cost structures within the firm.D) the
production of digital goods.Answer: BDiff: 2 Page Ref: 29AACSB: Use of ITCASE:
ContentObjective: 1.560) The costs for firms operating on a global scale have been
drastically reduced byA) networking technology.B) investments in organizational
complementary assets.C) the Internet.D) the rise of digital content.Answer: CDiff:
2 Page Ref: 11AACSB: Use of ITCASE: ContentObjective: 1.161) Which of the
following are key corporate assets?A) intellectual property, core competencies, and
financial and human assetsB) production technologies and business processes for
sales, marketing, and financeC) knowledge and the firm's tangible assets, such as
goods or servicesD) time and knowledgeAnswer: ADiff: 3 Page Ref: 11AACSB:
Reflective ThinkingCASE: ContentObjective: 1.2
62) Overproduction or underproduction of goods and services, misallocation of
resources, and poor response times are the results of a firm's havingA) poor
relationships with suppliers.B) poor relationships with customers.C) inadequate
information.D) a surplus of information.Answer: CDiff: 3 Page Ref: 14AACSB:
Reflective ThinkingCASE: ContentObjective: 1.263) A firm that must invest in new
information systems capabilities in order to comply with federal legislation can be
said to be investing to achieve which business objective?A) customer intimacyB)
operational excellenceC) survivalD) improved reportingAnswer: CDiff: 2 Page
Ref: 14AACSB: Use of ITCASE: AnalysisObjective: 1.264) Which of the following
would NOT be used as an input for an information system?A) digital dashboardB)
handheld computerC) bar-code scannerD) cell phoneAnswer: ADiff: 2 Page Ref: 16
AACSB: Use of ITCASE: AnalysisObjective: 1.365) Which field of study focuses on
both a behavioral and technical understanding of information systems?A) sociologyB)
operations researchC) economicsD) management information systemsAnswer: DDiff: 2
Page Ref: 17-18AACSB: Use of ITCASE: ContentObjective: 1.566) The three
principal levels within a business organization hierarchy areA) senior management,
operational management, and service workers.B) senior management, middle
management, and operational management.C) senior management, operational
management, and information systems.D) senior management, middle management, and
service workers.Answer: BDiff: 3 Page Ref: 19AACSB: Reflective ThinkingCASE:
ContentObjective: 1.267) Engineers, scientists, or architects, who design new
products or services for a firm, belong to which level of a business hierarchy?A)
middle managementB) production workersC) knowledge workersD) data workersAnswer: C
Diff: 2 Page Ref: 18AACSB: Reflective ThinkingCASE: ContentObjective: 1.268)
Which main business function is responsible for maintaining employee records?A)
sales and marketingB) human resourcesC) finance and accountingD) manufacturing and
productionAnswer: BDiff: 1 Page Ref: 19AACSB: Reflective ThinkingCASE: Content
Objective: 1.269) Which of the following constitutes an organizational element in
the UPS tracking system described in the chapter?A) the specification of procedures
for identifying packages with sender and recipient informationB) monitoring service
levelsC) promoting the company strategy of low-cost, superior serviceD) the use of
handheld computers and networks for managing package deliveryAnswer: ADiff: 3
Page Ref: 22AACSB: Analytic SkillsCASE: SynthesisObjective: 1.2
70) A managerial element in the UPS tracking system described in the chapter isA)
taking inventory.B) providing package status reports to customers.C) the decision
to use automation.D) in-house package tracking software.Answer: CDiff: 2 Page
Ref: 22AACSB: Analytic SkillsCASE: SynthesisObjective: 1.271) ________ is data
that has been shaped into a form that is meaningful to human beings.Answer:
InformationDiff: 1 Page Ref: 15AACSB: Reflective ThinkingCASE: Content
Objective: 1.272) ________ is output returned to appropriate members of the
organization to help them evaluate or correct the input stage.Answer: Feedback
Diff: 2 Page Ref: 16AACSB: Reflective ThinkingCASE: ContentObjective: 1.273)
Computer ________ consists of the detailed, preprogrammed instructions that control
and coordinate the computer hardware components in an information system.Answer:
softwareDiff: 1 Page Ref: 20AACSB: Use of ITCASE: ContentObjective: 1.374)
________ is a global network that uses universal standards to connect millions of
different networks around the world.Answer: The InternetDiff: 1 Page Ref: 21AACSB:
Use of ITCASE: ContentObjective: 1.3
75) The ________ is a service provided by the Internet that uses universally
accepted standards for storing, retrieving, formatting, and displaying information
in a page format.Answer: World Wide Web/Web/WWWDiff: 1 Page Ref: 21AACSB: Use
of ITCASE: ContentObjective: 1.376) ________ are private corporate networks
extended to authorized users outside the organization.Answer: ExtranetsDiff: 1
Page Ref: 21AACSB: Use of ITCASE: ContentObjective: 1.377) The key
elements of an organization are its people, structure, business processes,
politics, and ________.Answer: cultureDiff: 2 Page Ref: 18AACSB: Reflective
ThinkingCASE: ContentObjective: 1.278) In a(n) ________ perspective, the
performance of a system is optimized when both the technology and the organization
mutually adjust to one another until a satisfactory fit is obtained.Answer:
sociotechnicalDiff: 2 Page Ref: 30AACSB: Use of ITCASE: ContentObjective: 1.3
79) ________ makes long-range strategic decisions about the firm's products and
services.Answer: Senior managementDiff: 2 Page Ref: 18AACSB: Reflective
ThinkingCASE: ContentObjective: 1.280) Investments in organization and
management, such as investments in new business models and training, are also known
as ________.Answer: organizational and management capitalDiff: 2 Page Ref: 27
AACSB: Reflective ThinkingCASE: ContentObjective: 1.281) Define operational
excellence. How can information systems help achieve it?Answer: Operational
excellence is the achievement of higher levels of productivity, efficiency,
profitability. Information systems can help achieve operational excellence by
improving communications to suppliers and optimizing the supply chain. Information
systems could help managers communicate with workers more efficiently, enable
technological innovation in products, minimize warehouse overhead, streamline
distribution.Diff: 2 Page Ref: 12AACSB: Analytic SkillsCASE: Evaluation
Objective: 1.282) You work for an auto manufacturer and distributor. How could you
use information systems to achieve greater customer intimacy?Answer: You could
create a Web site that allows customers to customize cars, communicate with support
personnel and other car owners. You could create an automated e-mail service
reminding car owners to take their car in for periodic checkups. You could have an
information system that tracks customer preferences in local areas, so you can
provide cars that reflect local customer needs and desires.Diff: 3 Page Ref:
13-14AACSB: Analytic SkillsCASE: AnalysisObjective: 1.283) What is the
difference between information technology and information systems? Describe some of
the functions of information systems.Answer: Information technology (IT) consists
of all the hardware and software that a firm needs to use to achieve its business
objectives. Information systems are more complex. An information system can be
defined technically as a set of interrelated components that collect (or retrieve),
process, store, and distribute information to support decision making and control
in an organization.An information system:� supports decision making,
coordination, and control� helps employees analyze problems� helps employees
visualize complex subjects� helps create new productsDiff: 2 Page Ref: 15-16
AACSB: Analytic SkillsCASE: EvaluationObjective: 1.3
84) You are a marketing manager for a national movie theater chain. Give an example
of data that your department could use for creating meaningful information. What
type of information could that data produce?Answer: Movie ticket sales from
individual theaters would be an example of raw data. Meaningful information from
this would be: average number of tickets sold to seniors on certain days of the
week.Diff: 3 Page Ref: 16AACSB: Analytic SkillsCASE: SynthesisObjective:
1.385) Define business process. What might be a business process used at a
hospital?Answer: A business process is a set of logically related tasks and
behaviors for accomplishing work. Hiring a new employee, customer intake, and
filing medical records are examples of business processes at a hospital.Diff: 2
Page Ref: 11AACSB: Analytic SkillsCASE: SynthesisObjective: 1.286) You are
starting a small bike messenger company. Given your type of services (hand-
delivering packages within a small geographical area), could your firm be a digital
firm? If so, what would make this a digital firm?Answer: Being a digital firm
doesn't purely rely on having digital goods and services. A digital firm would have
most of its relationships with customers, suppliers, and employees be digitally
enabled. Ordering deliveries, assigning deliveries, managing employees and
assignments could certainly be digitally enabled; using cell phones, information
systems, and handheld devices to connect customers, delivery management, and bike
messengers.Diff: 3 Page Ref: 11AACSB: Analytic SkillsCASE: Synthesis
Objective: 1.187) This chapter discusses how each organization has its own culture
and sets of values shared by most of its members. What kind of shared values might
you find at a law firm?Answer: Shared values at a law firm might be: The legal
system works, the legal system is fair, lawyers help people, and people need help
with the legal system because it is complicated.Diff: 2 Page Ref: 20AACSB:
Analytic SkillsCASE: EvaluationObjective: 1.2
88) You work at the business headquarters for a chain of movie theaters. Describe
this firm's information value chain.Answer: An information value chain adds value
to data at various stages, transforming it into valuable data. At a chain of movie
theaters, data would be gathered from ticket sales and concession sales.
Information systems would help transform this into meaningful information, such as
determining the types of movies popular in certain regions, times and days of the
week that people most often saw movies, what snacks were the most popular. This
information would be valuable in making decisions, such as offering ticket
discounts during less popular time slots, and offering more popular snack items.
Further feedback based on the results of these decisions could determine whether
these decisions were effective.Diff: 3 Page Ref: 24-25AACSB: Analytic Skills
CASE: SynthesisObjective: 1.289) How does a company's use of information systems
affect its corporate strategies? Provide an example. Answer: A firm's ability to
effectively use information technology is interdependent with its ability to
implement corporate strategies and achieve corporate goals. More and more, the
ability to compete and succeed depends on a company's ability to implement
technology. What a business would like to do in the future can depend on what its
systems will be able to do. Examples of this might be a company who invests in
information systems that enable it to create new products or to make its
distribution system more efficient, allowing the company to become the low-cost
producer. Diff: 3 Page Ref: 12AACSB: Analytic SkillsCASE: EvaluationObjective:
1.290) The information systems of Accenture, a global consulting firm, allow for a
highly decentralized organization without a traditional headquarters. Based on your
reading of Chapter 1, which of the six strategic business objectives does
Accenture's information systems contribute to?Answer: Student answers will vary.
The following is an example of a possible answer: Accenture's information systems
allow its mobile workforce to be within easy, constant reach of its customers,
contributing to the business objective of customer and supplier intimacy.
Additionally, the ability of employees to connect to and work with local branch
information systems in standard ways, regardless of their location, contributes to
more efficient processes and operational excellence.Diff: 2Page Ref: 12-15AACSB:
Analytic SkillsCASE: EvaluationObjective: 1.1 1) The interaction between
information technology and organizations is influenced:A) solely by the decision
making of middle and senior managers.B) by the development of new information
technologies.C) by many factors, including structure, politics, culture, and
environment.D) by two main macroeconomic forces: capital and labor.E) by the rate
of growth of the organization.C2) Which of the following statements about
organizations is not true?A) An organization is a stable, formal social structure
that takes resources from the environment and processes them to produce outputs.B)
An organization is a formal, legal entity with internal rules and procedures that
must abide by laws.C) An organization is a collection of people and other social
elements.D) An informal group can be considered to be an organization.E) An
organization is a collection of rights, privileges, obligations, and
responsibilities delicately balanced over a period of time through conflict and
conflict resolution.D3) According to the ________ definition of organizations, an
organization is seen as a means by which capital and labor are transformed by the
organization into outputs to the environment.A) microeconomicB) macroeconomicC)
sociotechnicalD) behavioralE) psychologicalA4) Which of the following statements
about the technical view of organizations is not true?A) It sees information
systems as a way to rearrange the inputs and outputs of the organization.B) It sees
capital and labor as primary production factors.C) It emphasizes group
relationships, values and structures.D) It sees the organization as a social
structure similar to a machine.E) It sees the inputs and outputs, labor and
capital, as being infinitely malleable.E5) Which of the following is not a major
feature of organizations that impacts the use of information systems?A) Business
processesB) EnvironmentsC) GoalsD) Agency costsE) Leadership stylesD6) Which of the
following statements about business processes is not true?A) Business processes
influence the relationship between an organization and information technology.B)
Business processes are a collection of standard operating procedures.C) A business
firm is a collection of business processes.D) Business processes are usually
ensconced in an organization's culture.E) Business processes are typically
unaffected by changes in information systems.E7) Which of the following
technologies disrupted the traditional publishing industry?A) Instant messagingB)
e-mailC) Internet telephonyD) PCsE) World Wide WebE8) Under Mintzberg's
classification of organizational structure, knowledge-based organizations fall
under the category of:A) entrepreneurial structures.B) divisionalized
bureaucracies.C) professional bureaucracies.D) adhocracies.E) machine
bureaucracies.C9) Mintzberg classifies a large bureaucracy existing in a slowly
changing environment that produces standard products and is dominated by
centralized management as a ________ bureaucracy.A) machineB) professionalC)
divisionalizedD) multidivisionalE) ad hoca10) Which of the following is an example
of a divisionalized bureaucracy?A) Startup firmB) UniversityC) Fortune 500 firmD)
Midsize manufacturerE) Consulting firmC11) Along with capital, ________ is the
primary production input that the organization uses to create products and
services.A) structureB) cultureC) politicsD) feedbackE) laborE12) The divergent
viewpoints about how resources, rewards, and punishments should be distributed, and
the struggles resulting from these differences are known as organizational:A)
culture.B) politics.C) structure.D) environments.E) routines.B13) Which of the
following statements about disruptive technologies is not true?A) Disruptive
technologies radically change the business landscape and environment.B) Disruptive
technologies may be substitute products that perform better than other products
currently being produced.C) Disruptive technologies may sometimes simply extend the
marketplace.D) Disruptive technologies may put entire industries out of business.E)
Firms that invent disruptive technologies as first movers always become market
leaders.E14) As discussed in the chapter opening case, which of the following
statements about Verizon is not true?A) Verizon is focusing on satellite-based
television in its competition with AT&T.B) Verizon claims that its wireless network
is the largest and most reliable in the United States.C) Verizon is investing in
upgrading its high-speed networks.D) Verizon sees mobile ads and video as an
investment for the future.E) Verizon offers a standalone video service.A15) All
organizations have bedrock, unquestioned assumptions that define their goals and
products.A) TRUEB) FALSEA16) A professional bureaucracy is a knowledge-based
organization where goods and services depend on the expertise and knowledge of
professionals.A) TRUEB) FALSEA17) Routines are also called standard operating
procedures.A) TRUEB) FALSEA18) How are the technical and behavioral definitions of
an organization different?Short Answer:The behavioral definition of an organization
is that it is a collection of rights, privileges, obligations, and responsibilities
that is delicately balanced over a period of time through conflict and conflict
resolution. The technical definition sees an organization as an entity that takes
inputs from the environment and processes these to create products that are then
consumed by the environment. The technical view sees capital and labor as
interchangeable units, with the ability to rearrange these units at will, whereas
the behavioral view sees that rearranging some aspects of the organization, such as
an information system, will have important consequences and changes for the
organization's other units.19) When a firm buys on the marketplace what it cannot
make itself, the costs incurred are referred to as:A) switching costs.B) network
costs.C) procurement.D) agency costs.E) transaction costs.E20) All of the following
statements are true about information technology's impact on business firms except:
A) it helps firms expand in size.B) it helps firms lower the cost of market
participation.C) it helps reduce internal management costs.D) it helps reduce
transaction costs.E) it helps reduce agency costs.A21) According to agency theory,
the firm is viewed as a(n):A) unified, profit-maximizing entity.B) task force
organization that must respond to rapidly changing environments.C) entrepreneurial
endeavor.D) "nexus of contracts" among self-interested individuals.E)
entrepreneurial structure.D22) According to research on organizational resistance,
the four components that must be changed in an organization in order to
successfully implement a new information system are:A) environment, organization,
structure, and tasks.B) technology, people, culture, and structure.C) organization,
culture, management, and environment.D) tasks, technology, people, and structure.E)
costs, tasks, structure, and management.D23) List three organizational factors that
can prevent a firm in fully realizing the benefits of a new information system, and
provide examples for each.Short Answer:1. Culture: All organizations have a
foundation
of unquestioned assumptions that define their goals and products. These
assumptions include what products should be produced, how they should be produced,
where and for whom they should be produced. Sharing the same cultural assumptions,
agreement on other matters is more likely. Any changes that threaten or undermine
these assumptions will most likely be met with resistance. For example, if a
company stops paying overtime at time and a half, employees might feel undervalued
and be less willing to work extra hours.2. Politics: People in an organizations
occupy different positions with different specialties, concerns, and perspectives.
This means that they naturally have opposing views about how resources, rewards,
and punishments should be distributed. This results in political struggles for
resources, competition, and conflict within every organization.3. Environments:
Organizations reside in environments which they draw resources and to which they
supply goods and services. Organization and environments have a reciprocal
relationship, meaning that organizations are depended on the social and physical
environment and organizations can influence their environment. For example,
business firms form alliances with other businesses to influence the political
process (they advertise to influence customer acceptance of their products.)24)
What is agency theory? How does information technology enable a firm to reduce
agency costs?Short Answer:Agency theory - economic theory that views the firm as a
nexus of contracts among self-interested individuals who must be supervised and
managedInformation technology reduces the costs of acquiring and analyzing
information, which allows organizations to reduces agency costs because it becomes
easier for managers to oversee a greater number of employees. This, overall, lowers
agency costs. In the long run, firms should have fewer middle managers and higher
revenue per employee, if they've invested in IT.25) Which model is used to describe
the interaction of external forces that affect an organization's strategy and
ability to compete?A) Network economics modelB) Competitive forces modelC)
Competitive advantage modelD) Demand control modelE) Agency costs modelB26) Which
of the following industries has the lowest barrier to entry?A) AutomotiveB)
Computer chipC) Solar energyD) AirlineE) Small retailerE27) All of the following
are competitive forces in Porter's model except:A) suppliers.B) new market
entrants.C) external environment.D) customers.E) substitute products.C28) Which of
the following marketplace forces would be of least concern to a manufacturer of
deep-sea oil rigs?A) Product differentiationB) Traditional competitorsC) Low number
of suppliersD) New market entrantsE) Low number of customersD29) Which of the
following substitute products would be of most concern for a cable TV distributor?
A) Satellite TVB) Broadcast TVC) Satellite radioD) The InternetE) Terrestrial radio
A30) Walmart's attempt to increase its online presence is an example of a firm
using information systems to:A) strengthen ties to its customers.B) simplify the
industry value chain.C) develop synergies.D) focus on market niche.E) achieve low-
cost leadership.E31) A firm can exercise greater control over its suppliers by
having:A) more suppliers.B) fewer suppliers.C) global suppliers.D) local suppliers.
E) only a single supplier.A32) Amazon's use of the Internet as a platform to sell
books more efficiently than traditional bookstores illustrates which of the
following strategies?A) Low-cost leadershipB) Marketing effectivenessC) Focusing on
market nicheD) Strengthening supplier intimacyE) Developing synergiesA33) The four
major competitive strategies are:A) low-cost leadership, substitute products and
services, customers; and suppliers.B) low-cost leadership, product differentiation,
focus on market niche, and customer and supplier intimacy.C) new market entrants,
substitute products and services, customers, and suppliers.D) low-cost leadership,
new market entrants, product differentiation, and focus on market niche.E)
customers, suppliers, new market entrants, and substitute products.B34) Walmart's
continuous replenishment system allows it to do all of the following except:A)
provide mass customization.B) transmit orders to restock directly to its suppliers.
C) keep costs low.D) better meet customer demands.E) fine-tune merchandise
availability.A35) Firms use a ________ strategy to provide a specialized product or
service for a narrow target market better than competitors.A) product
differentiationB) market nicheC) mass customizationD) process efficiencyE) low-cost
leadershipB36) The ability to offer individually tailored products or services
using the same production resources as bulk production is known as:A) mass
marketing.B) micromarketing.C) micro customization.D) niche customization.E) mass
customization.E37) In environmental scanning, a firm may use information systems
to:A) transform inputs into products and services.B) analyze the performance of its
intranet.C) identify external events that may affect it.D) keep track of the
temperature within its data centers.E) develop a unified organizational culture.D
38) Which of the following is not a true statement about value webs?A) Value webs
involve a collection of independent firms that use information technology to
coordinate their value chains.B) Value webs are more customer-driven than
traditional value chains.C) Value webs operate in a less linear fashion than
traditional value chains.D) Value webs are inflexible and cannot adapt quickly to
changes in supply and demand.E) Value webs involve highly synchronized industry
value chains.D39) Which of the following best illustrates the use of information
systems to focus on market niche?A) A car manufacturer's Web site that lets you
customize the features on the car you are purchasing.B) A restaurant chain
analyzing local sales figures to determine which menu items to serve.C) A
bookseller selling an e-book reader that reads only the bookseller's books.D) A
department store creating specialized products for preferred customers.E) A clothes
manufacturer expanding its offerings to new styles.D40) All of the following are
IT-enabled products and services providing competitive advantage except:A) Amazon's
one-click shopping.B) Apple's iPod and iTunes.C) Ping's golf club customization.D)
PayPal's online person-to-person payment system.E) Nike's use of celebrities to
market their products.E41) The Internet increases the bargaining power of customers
by:A) creating new opportunities for building loyal customer bases.B) making more
products available.C) making information available to everyone.D) lowering
transaction costs.E) enabling the development of new services.C42) Procter and
Gamble uses InnovationNet for which of the following?A) To enhance its core
competenciesB) To benchmark its progress against competitorsC) To create synergies
with its suppliersD) To take advantage of network economicsE) To establish a
virtual companyA43) Which of the following is a competitive force challenging the
publishing industry?A) Positioning and rivalry among competitorsB) Low cost of
entryC) Substitute products or servicesD) Customers' bargaining powerE) Suppliers'
bargaining powerC44) The value chain model:A) categorizes five related advantages
for adding value to a firm's products or services.B) sees the supply chain as the
primary activity for adding value.C) categorizes four basic strategies a firm can
use to enhance its value chain.D) highlights specific activities in the business
where competitive strategies can best be applied.E) enables more effective product
differentiation.D45) Which of the following represent the primary activities of a
firm?A) Inbound logistics, operations, outbound logistics, sales and marketing, and
serviceB) Inbound logistics, operations, outbound logistics, technology, and
serviceC) Procurement, inbound logistics, operations, technology, and outbound
logisticsD) Procurement, operations, technology, sales and marketing, and services
E) Organization infrastructure, human resources, technology, and procurementA46)
Which of the following is a support activity in a firm's value chain?A) Inbound
logisticsB) OperationsC) Sales and marketingD) ServiceE) TechnologyE47) Which of
the following would a company employ to measure and compare its business processes
to similar processes of other companies within their industry?A) BenchmarkingB)
Best practicesC) Value chain analysisD) Strategic systems analysisE) Secondary
activitiesA48) The most successful solutions or methods for achieving a business
objective are called:A) value activities.B) best processes.C) core competencies.D)
best practices.E) benchmarks.D49) Information systems can be used at the industry
level to achieve strategic advantage by:A) building industrywide, IT-supported
consortia and symposia.B) raising the bargaining power of suppliers.C) encouraging
the entry of new competitors.D) enforcing standards that reduce the differences
between competitors.E) decreasing switching costs.A50) In network economics, the
value of a commercial software vendor's software products:A) increases as more
people use them.B) decreases as more people use them.C) increases due to higher
marginal gain in output.D) decreases according to the law of diminishing returns.E)
is unrelated to the number of people that use them.A51) When two organizations pool
markets and expertise that result in lower costs and generate profits, they are
creating:A) a value web.B) a value chain.C) net marketplaces.D) core competencies.
E) synergies.E52) Which of the following
is an example of synergy in business?A) Amazon's use of the Internet to sell books
B) Bank of America acquiring Countrywide Financial to reach a large pool of new
customersC) Blockbuster combining traditional video rental with online video rental
D) Walmart's order entry and inventory management system to coordinate with
suppliersE) Nike's use of technology to improve its product offeringsB53)
Information systems enhance core competencies by:A) providing better reporting
facilities.B) creating educational opportunities for management.C) allowing
operational employees to interact with management.D) encouraging the sharing of
knowledge across business units.E) fostering synergies among departments.D
54) The idea that the more any given resource is applied to production, the lower
the marginal gain in output, until a point is reached where the additional inputs
produce no additional output, is referred to as:A) the point of no return.B) the
law of diminishing returns.C) supply and demand.D) network inelasticity.E) virtual
economics.B55) Which of the following statements about network economics is not
true?A) Uber is an example of a business model that is based on the principle of
network economics.B) The law of diminishing returns does not always apply to every
situation.C) From a network economics perspective, the value of a community of
people grows as the number of participants in the community increases.D)
Information technology can be strategically useful from a network economics
perspective.E) In network economics, the marginal cost of adding new members to the
network is higher than the marginal gain.E56) A virtual company:A) uses networks to
link people, assets, and ideas.B) uses Internet technology to maintain a virtual
storefront.C) uses Internet technology to maintain a networked community of users.
D) provides entirely Internet-driven services or virtual products.E) is limited by
traditional organizational boundaries.A
57) Which of the following is an example of a keystone firm within a business
ecosystem?A) Apple in the mobile platform ecosystemB) GUESS and the fashion
ecosystemC) Citibank and the ATM ecosystemD) American Airlines and the computerized
reservation ecosystemE) Nike and the athletic apparel ecosystemA58) ________ is a
competitive strategy for creating brand loyalty by developing new and unique
products and services that are not easily duplicated by competitors.A) Product
differentiationB) Low-cost leadershipC) Focusing on market nicheD) Strengthening
customer intimacyE) Strengthening supplier intimacyA59) The expenses incurred by a
customer or company in lost time and resources when changing from one supplier or
system to a competing supplier or system are known as:A) retention costs.B)
preservation costs.C) differentiation costs.D) switching costs.E) variation costs.D
60) The ________ model highlights the primary or support activities that add a
margin of value to a firm's products or services where information systems can best
be applied to achieve a competitive advantage.A) competitive forcesB) value chainC)
bargaining powerD) new entrantE) rivalryB61) The parts of an organization's
infrastructure, human resources, technology, and procurement that make the delivery
of the firm's products or services possible are known as ________ activities.A)
primaryB) auxiliaryC) secondaryD) serviceE) supportE62) A(n) ________ is a
collection of independent firms that use information technology to coordinate their
value chains to collectively produce a product or service for a market.A) value
chainB) support webC) value webD) consortiumE) net marketplaceD
63) A(n) ________ is an activity for which a firm is a world-class leader.A)
expertise areaB) competitive advantageC) growth driverD) efficiencyE) core
competencyE64) Why does Amazon need to worry about competitors in online shopping?
A) E-commerce is affected by the law of diminishing returns.B) Internet
technologies are universal, and therefore usable by all companies.C) Internet
shopping produces cost transparency.D) The Internet enables the production or sales
of substitute products or services.E) The Internet increases switching costs.B65)
Smart products are an example of the Internet of Things.A) TRUEB) FALSEA66) A
company's competitive advantages ultimately translate into higher stock market
valuations than its competitors.A) TRUEB) FALSEA
67) The competitive forces model cannot be used to analyze modern digital firms
which face new competitive forces that are not true of traditional firms.A) TRUEB)
FALSEB68) Customers are one of the competitive forces that affect an organization's
ability to compete.A) TRUEB) FALSEA69) High product differentiation is a sign of a
transparent marketplace.A) TRUEB) FALSEB70) The effect of the Internet has been to
decrease the bargaining power of customers.A) TRUEB) FALSEB71) An efficient
customer response system directly links consumer behavior to distribution and
production and supply chains.A72) Information systems are used to enable new
products and services via product differentiation.A) TRUEB) FALSEA73) Mass
customization offers individually tailored products or services using the same
resources as mass production.A) TRUEB) FALSEA74) Switching costs decrease when
customers are strongly linked to products and platforms.A) TRUEB) FALSEB75) The
value chain model classifies all company activities as either primary or support
activities.A) TRUEB) FALSEA76) In the value chain model, support activities are
most directly related to the production and distribution of the firm's products and
services, which create value for the customer.A) TRUEB) FALSEB
77) When the output of some units in a firm can be used as inputs to other units,
synergies develop, which can lower costs and generate profits.A) TRUEB) FALSEA78)
According to the network economics perspective, the more people offering products
on eBay's site, the greater the value of the site to all who use it.A) TRUEB) FALSE
A79) The term business ecosystem describes the loosely coupled but interdependent
networks of suppliers, distributors, outsourcing firms, transportation service
firms, and technology manufacturers.A) TRUEB) FALSEA80) A firm can be said to have
competitive advantage when it has access to resources that others do not.A) TRUEB)
FALSEA81) The law of diminishing returns only applies to digital products.A) TRUEB)
FALSEB
82) The inventors of a disruptive technology typically benefit the most from the
technology; it is rare that fast followers catch up quickly.A) TRUEB) FALSEB83)
Smart products generally raise switching costs.A) TRUEB) FALSEA84) Mintzberg's
classification identifies five forces in an industry's environment that affect the
strategic position of a firm.A) TRUEB) FALSEB
85) You are advising the owner of ABC Computers, a small local computer shop that
repairs and also builds custom computers to order. What competitive strategies
could ABC Computers employ? Which ones may it have difficulty executing?Short
Answer:Low-cost leadership: ABC Computers may have difficulty competing against the
computer sales and warranty services of major national computer manufacturers, such
as Dell, but may be able to implement low-cost leadership in comparison to any
other local computer stores.Product differentiation: Although many national
computer manufacturers sell customized computers for individuals, ABC Computers may
be able to differentiate its product by using superior components and adding more
services to its product.Focus on market niche: ABC Computers could focus on a being
a local store with in-store technology support and assistance as a market niche
Customer and supplier intimacy: ABC Computers has an advantage in customer
intimacy, in that it can develop relationships with local customers on a face-to-
face basis. This advantage could be augmented to offset the low-cost leadership of
national manufacturers, such as Dell. Because of much smaller production scales,
ABC Computers will probably not be able to exercise as much control over suppliers
as does Dell or other manufacturers.86) You are consulting with the owner of Better
Fitness, a national chain of gyms. What strategies might Better Fitness use in
applying information services to achieve a competitive advantage?Short Answer:
Better Fitness could use computers, smart products and mobile apps to monitor and
evaluate health and fitness of members and customize workouts in product
differentiation strategy. They could use information systems for sales and
marketing data research in order to define a niche market that would bring greater
profits. They could allow customers to review their health data and add additional
information or view statistics to create customer intimacy. If the individual gyms
are franchises, then a network could be used for franchisees to share data and
research new sales tactics, etc.
87) The text describes Michael Porter's view of the Internet as somewhat negative.
What negative influences does Porter see? Describe several positive influences the
Internet has on business. Do these outweigh the negative influences?Short Answer:
Porter sees the Internet as creating ever more intense rivalry, through allowing
new competitors to enter the market, and forcing competition on price alone,
raising the bargaining power of customers, and dampening profits.Positive
influences of the Internet would be lowering telecommunications costs, creating new
opportunities for building brands and loyal customer bases, lowering costs of
globalization. You could also view Porter's negative take on lowering the barrier
to entry as a positive for new companies.The Internet's influence being negative or
positive depends in part on the point of view from which the influence is being
seen. For example, a telephone utility is impacted negatively by the emergence of
Internet telephony, whereas other industries may be impacted positively either
through the use of this technology or through engaging in Internet telephony as a
business.88) Value chain analysis is useful at the business level to highlight
specific activities in the business where information systems are most likely to
have a strategic impact. Discuss this model, identify the activities, and describe
how the model can be applied to the concept of information technology.Short Answer:
The value chain model identifies specific, critical leverage points where a firm
can use information technology most effectively to enhance its competitive
positions. Exactly where can it obtain the greatest benefit from strategic
information systems? What specific activities can be used to create new products
and services, enhance market penetration, lock in customers and suppliers, and
lower operational costs? This model views the firm as a series or chain of basic
activities that add a margin of value to a firm's products or services. These
activities can be categorized as either primary activities or support activities.
Primary activities are most directly related to the production and distribution of
the firm's products and services that create value for the customer. Primary
activities include: inbound logistics, operations, outbound logistics, sales and
marketing, and service.Support activities make the delivery of the primary
activities possible and consist of: organization infrastructure (administration and
management), human resources (employee recruiting, hiring, and training),
technology (improving products and the production process), and procurement
(purchasing input).
89) How is the concept of core competency relevant to ABC Computers, a local
computer store that repairs and builds custom computers? Give examples.Short
Answer:A core competency is an activity for which a company is a world leader, and
from this perspective, ABC Computers does not have a core competency, as there are
thousands of similar firms with longer track records. However, it might be good
business practice for ABC Computers to define its core competencies in ways that
differentiate its products from those of competitors and enable it to provide
superior service or products. In defining a core competency, the business
management can then determine ways to enable employees to understand and reach
higher levels of quality production and service. For example, ABC Computers might
define a core competency as being able to advise customers as to the types of
system they really need, and ABC Computers could engage in knowledge gathering
activities to help employees assess customer need.90) How is Internet technology
useful from a network economics perspective? Give examples.Short Answer:In network
economics, the cost of adding a participant in the network is negligible, while the
gain in value is relatively much larger. The Internet itself is an example of a
successful implementation of network economics�the more people participate, the
more valuable and essential a commodity it is. If a company were to provide a
service through the Internet such as a project management application, the costs to
the company of adding another user are small (as the software infrastructure or
application is already built), and the more users are signed up, the more profit is
made.
91) Define and describe a business ecosystem. Give an example of a business
ecosystem.Short Answer:A business ecosystem is a collection of loosely coupled but
interdependent industries (suppliers, distributors, technology manufacturers, etc.)
that provides related services and products. It is similar to a value web, except
that cooperation takes place across many industries rather than many firms.Business
ecosystems can be characterized as having one or a few keystone firms that dominate
the ecosystem and create the platforms used by other niche firms. Keystone firms in
the Microsoft ecosystem include Microsoft and technology producers such as Intel
and IBM. Niche firms include thousands of software application firms, software
developers, service firms, networking firms, and consulting firms that both support
and rely on the Microsoft products.Another example of a business ecosystem is the
mobile Internet platform. In this ecosystem there are four industries: device
makers (Apple iPhone, Samsung, Motorola, LG, and others), wireless
telecommunication firms (AT&T, Verizon, T-Mobile, Sprint, and others), independent
software applications providers (generally small firms selling games, applications,
and ring tones), and Internet service providers (who participate as providers of
Internet service to the mobile platform).92) Select a popular product or company
that you are familiar with, such as Apple's iPad. Apply Porter's competitive forces
model to that product and/or company. Which of the four generic strategies is the
company using?Short Answer:Competitors to the iPad include the Microsoft Surface
and many others, but few as widely known.New market entrants: There is not a huge
barrier to entry in this field; many other technology companies offer tablet
computers.Substitute products and services: Smartphones are a substitute product or
service.Customers: The iPad still has the highest brand recognition among
consumers, diminishing the bargaining power of customers. However, this advantage
has diminished as other similar products that are as well designed enter the
marketplace.In terms of the iPad, Apple seems to be focused on product
differentiation by creating a product with unique features and capabilities.93) Why
are disruptive technologies "tricky"? Provide examples.Short Answer:Disruptive
technologies can be tricky because firms that invent disruptive technologies as
first movers do not always benefit if they lack the resources to exploit the
technology or fail to see the opportunity. For example, the MITS Altair 8800 is
widely regarded as the first PC, but its inventors did not take advantage of their
first-mover status. Second movers, so-called fast followers such as IBM and
Microsoft, reaped the rewards. Citibank's ATMs revolutionized retail banking, but
other banks copied them. Now all banks use ATMs, and the benefits go mostly to the
consumers.94) Why has the Internet made competitive rivalry more intense?Short
Answer:The Internet has made competitive rivalry more intense because Internet
technology is based on universal standards that any company can use, making it
easier for rivals to compete on price alone and for new competitors to enter the
market. Because information is available to everyone, the Internet also raises the
bargaining power of customers, who can quickly find the lowest-cost provider on the
web, which may dampen profits. The Internet also widens the geographic market,
increasing the number of competitors and reducing differences among competitors,
and makes it more difficult to sustain operational advantages.95) You are
consulting for a natural food products distributor who is interested in determining
the benefits it could achieve from implementing new information systems. What will
you advise as the first step?A) Identify the business ecosystem the distributor is
inB) Implement a strategic transition to the new systemC) Perform a strategic
systems analysisD) Benchmark existing systemsE) Set up a strategic transitionC
96) Sociotechnical changes affecting a firm adopting new information systems
requiring organizational change can be considered:A) organizational adjustments.B)
strategic transitions.C) systems alterations.D) business goal transitions.E)
sociotechnical transitions.B97) Research has shown that a majority of firms are
able to align their information technology with their business goals.A) TRUEB)
FALSEB98) The use of Internet technologies allows companies to more easily sustain
competitive advantage.A) TRUEB) FALSEB 1) All organizations have bedrock,
unassailable assumptions that define their goals and products.Answer: TRUEDiff: 2
Page Ref: 84AACSB: Reflective thinking skillsCASE: ContentObjective: 3.1 2) An
adhocracy is a knowledge-based organization where goods and services depend on the
expertise and knowledge of professionals.Answer: FALSEDiff: 3 Page Ref: 88
AACSB: Reflective thinking skillsCASE: ContentObjective: 3.1 3) From the point
of view of economics, information systems technology can be viewed as a factor of
production that can be substituted for traditional capital and labor.Answer: TRUE
Diff: 3 Page Ref: 89AACSB: Use of information technologyCASE: Content
Objective: 3.1 4) A firm can be said to have competitive advantage when they have
higher stock market valuations than their competitors.Answer: TRUEDiff: 2 Page
Ref: 94AACSB: Reflective thinking skillsCASE: ContentObjective: 3.2 5) The
competitive forces model can be used to analyze today�s digital firm as well as
traditional firms.Answer: TRUEDiff: 1 Page Ref: 94AACSB: Reflective thinking
skillsCASE: ContentObjective: 3.2 6) Customers are one of the competitive forces
that affect an organization�s ability to compete.Answer: TRUEDiff: 1 Page Ref:
95AACSB: Reflective thinking skillsCASE: ContentObjective: 3.27) A transparent
marketplace means that there is high product differentiation.Answer: FALSEDiff: 2
Page Ref: 95AACSB: Reflective thinking skillsCASE: ContentObjective: 3.2 8) The
effect of the Internet has been to raise bargaining power over suppliers.Answer:
TRUEDiff: 2 Page Ref: 101AACSB: Reflective thinking skillsCASE: Content
Objective: 3.2 9) In an efficient customer response system, digital answering
systems are used to monitor and respond to customer inquiries.Answer: FALSEDiff: 2
Page Ref: 96AACSB: Use of information technologyCASE: ContentObjective: 3.2 10)
In the strategy of product differentiation, information systems are used to enable
new products and services.Answer: TRUEDiff: 2 Page Ref: 97AACSB: Use of
information technologyCASE: ContentObjective: 3.2 11) Mass customization is a
form of mass production.Answer: TRUEDiff: 2 Page Ref: 97AACSB: Use of
information technologyCASE: ContentObjective: 3.2 12) Strong linkages to
customers and suppliers decrease switching costs.Answer: FALSEDiff: 2 Page
Ref: 99AACSB: Reflective thinking skillsCASE: ContentObjective: 3.2 13) Business
processes are collections of standard operating procedures.Answer: TRUEDiff: 1
Page Ref: 84AACSB: Reflective thinking skillsCASE: ContentObjective: 3.114) The
value chain model classifies all company activities as either primary or support.
Answer: TRUEDiff: 2 Page Ref: 101AACSB: Reflective thinking skillsCASE:
ContentObjective: 3.3 15) In the value chain model, primary activities are most
directly related to the production and distribution of the firm�s products and
services that create value for the customer.Answer: TRUEDiff: 2 Page Ref: 102
AACSB: Reflective thinking skillsCASE: ContentObjective: 3.3 16) The idea
driving synergies is that when the output of some units can be used as inputs to
other units, the relationship can lower cost and generate profits.Answer: TRUE
Diff: 1 Page Ref: 106AACSB: Reflective thinking skillsCASE: ContentObjective:
3.4 17) In a demonstration of network economics, the more people that use Adobe
software and related products, the greater the value of the software.Answer: TRUE
Diff: 2 Page Ref: 108AACSB: Reflective thinking skillsCASE: ContentObjective:
3.4 18) The term business ecosystem describes the interplay between the various
organizational forces within a firm.Answer: FALSEDiff: 2 Page Ref: 108AACSB:
Reflective thinking skillsCASE: ContentObjective: 3.4 19) Research has shown that
only 25% of firms are able to align their information technology with their
business goals.Answer: TRUEDiff: 3 Page Ref: 111AACSB: Reflective thinking
skillsCASE: ContentObjective: 3.5 20) The use of Internet technologies allows
companies to more easily sustain competitive advantage.Answer: FALSEDiff: 3
Page Ref: 111AACSB: Use of information technologyCASE: ContentObjective: 3.521)
As discussed in the chapter opening case, which of the four generic strategies did
Sears employ to combat the competition offered by Target, Walmart, and Macy�s?
A) low-cost leadership B) focus on market niche C) customer and supplier
intimacy D) product differentiationAnswer: CDiff: 2 Page Ref: 79-80AACSB:
Analytic skillsCASE: AnalysisObjective: 3.2 22) The interaction between
information systems and organizations is influenced A) primarily by the decision
making of middle and senior managers. B) by many factors, including structure,
politics, culture, and environment. C) by two main microeconomic forces: capital
and labor. D) primarily by the organization�s business processes and culture.
Answer: BDiff: 2 Page Ref: 81AACSB: Use of information technologyCASE:
ContentObjective: 3.1 23) An organization is a A) stable, formal social
structure that takes resources from the environment and processes them to produce
outputs. B) formal, legal entity with internal rules and procedures that must
abide by laws. C) collection of social elements. D) B and C E) A, B, and C
Answer: EDiff: 2 Page Ref: 82AACSB: Reflective thinking skillsCASE: Content
Objective: 3.1 24) According to the ________ definition of organizations, an
organization is seen as a means by which primary production factors are transformed
into outputs consumed by the environment. A) microeconomic B) macroeconomic
C) sociotechnical D) behavioralAnswer: ADiff: 3 Page Ref: 82AACSB:
Reflective thinking skillsCASE: ContentObjective: 3.125) How does the technical
view of organizations fall short of understanding the full impacts of information
systems in a firm? A) It sees information systems as a way to rearrange the
inputs and outputs of the organization. B) It sees capital and labor as primary
production factors. C) It sees the inputs and outputs, labor and capital, as
being infinitely malleable. D) It sees the organization as a social structure
similar to a machine.Answer: CDiff: 2 Page Ref: 83AACSB: Analytic skillsCASE:
EvaluationObjective: 3.1 26) All of the following are major features of
organizations that impact the use of information systems except for A) business
processes. B) environments. C) goals. D) agency costs.Answer: DDiff: 2
Page Ref: 84AACSB: Reflective thinking skillsCASE: ContentObjective: 3.1 27)
Business processes are collections of A) informal practices and behaviors. B)
formalized and documented practices. C) routines. D) rights and privileges.
Answer: CDiff: 2 Page Ref: 84AACSB: Reflective thinking skillsCASE: Content
Objective: 3.1 28) Which of the following would not be considered a disruptive
technology? A) instant messaging B) e-mail C) Internet telephony D) PCs
Answer: ADiff: 3 Page Ref: 87AACSB: Analytic skillsCASE: AnalysisObjective:
3.129) Mintzberg�s classification of organizational structure categorizes the
knowledge-based organization where goods and services depend on the expertise and
knowledge of professionals as a(n) A) entrepreneurial structure. B)
divisionalized bureaucracy. C) professional bureaucracy. D) adhocracy.Answer:
CDiff: 2 Page Ref: 88AACSB: Reflective thinking skillsCASE: ContentObjective:
3.1 30) A large bureaucracy existing in a slowly changing environment that produces
standard products and is dominated by centralized management making is classified
by Mintzberg as a ________ bureaucracy. A) machine B) professional C)
divisionalized D) multidivisionalAnswer: ADiff: 2 Page Ref: 88AACSB:
Reflective thinking skillsCASE: ContentObjective: 3.1 31) An example of a
divisionalized bureaucracy is a A) startup firm. B) university. C) Fortune
500 firm. D) midsize manufacturer.Answer: CDiff: 3 Page Ref: 88AACSB:
Reflective thinking skillsCASE: ContentObjective: 3.1 32) The costs incurred when
a firm buys on the marketplace what it cannot make itself are referred to as A)
switching costs. B) transaction costs. C) procurement. D) agency costs.
Answer: BDiff: 2 Page Ref: 89AACSB: Use of information technologyCASE:
ContentObjective: 3.133) Which of the following statements is not true about
information technology�s impacts on business firms? A) It helps firms expand in
size. B) It helps firms lower the cost of market participation. C) It helps
reduce internal management costs. D) It helps reduce transaction costs.Answer:
ADiff: 2 Page Ref: 89-90AACSB: Use
of information technologyCASE: ContentObjective: 3.1 34) According to agency
theory, the firm is viewed as a(n) A) unified, profit-maximizing entity. B)
task force organization that must respond to rapidly changing environments. C)
entrepreneurial endeavor. D) �nexus of contracts� among self-interested
individuals.Answer: DDiff: 3 Page Ref: 90AACSB: Reflective thinking skills
CASE: ContentObjective: 3.1 35) According to Leavitt�s model of organizational
resistance, the four components that must be changed in an organization in order to
successfully implement a new information system are A) environment,
organization, structure, and tasks. B) technology, people, culture, and
structure. C) organization, culture, management, and environment. D) tasks,
technology, people, and structure.Answer: DDiff: 3 Page Ref: 92AACSB: Use of
information technologyCASE: AnalysisObjective: 3.1 36) The ________ model is used
to describe the interaction of external forces that affect an organization�s
strategy and ability to compete. A) network economics B) competitive forces
C) competitive advantage D) demand controlAnswer: BDiff: 2 Page Ref: 94
AACSB: Reflective thinking skillsCASE: ContentObjective: 3.237) Which of the
following industries has a low barrier to entry? A) automotive B) computer
chip C) restaurant D) airlineAnswer: CDiff: 2 Page Ref: 94-95AACSB:
Analytic skillsCASE: AnalysisObjective: 3.2 38) Which of the following is not one
of the competitive forces? A) suppliers B) other competitors C) external
environment D) customersAnswer: CDiff: 2 Page Ref: 94-95AACSB: Reflective
thinking skillsCASE: ContentObjective: 3.2 39) A manufacturer of deep-sea oil
rigs may be least concerned about this marketplace force. A) product
differentiation B) traditional competitors C) low number of suppliers D)
new market entrantsAnswer: DDiff: 3 Page Ref: 94-95AACSB: Analytic skills
CASE: EvaluationObjective: 3.2 40) A substitute product of most concern for a
cable TV distributor is A) satellite TV. B) broadcast TV. C) satellite
radio. D) the Internet.Answer: ADiff: 2 Page Ref: 95AACSB: Analytic skills
CASE: EvaluationObjective: 3.241) Barnes & Noble�s apps for its e-reader, the
Nook, is an example of a firm using information systems to A) strengthen ties to
its customers. B) remove publishers from the industry value chain. C) develop
synergies with publishers. D) focus on market niche.Answer: ADiff: 2 Page
Ref: 117-119AACSB: Analytic skillsCASE: AnalysisObjective: 3.2 42) A firm can
exercise greater control over its suppliers by having A) more suppliers. B)
fewer suppliers. C) global suppliers. D) local suppliers.Answer: ADiff: 1
Page Ref: 95AACSB: Reflective thinking skillsCASE: ContentObjective: 3.2 43)
Amazon�s use of the Internet as a platform to sell books more efficiently than
traditional bookstores illustrates a use of information services for A) low-cost
leadership. B) marketing effectiveness. C) focusing on market niche. D)
strengthening supplier intimacy.Answer: ADiff: 2 Page Ref: 96AACSB: Analytic
skillsCASE: AnalysisObjective: 3.2 44) The four major types of competitive
strategy are A) low-cost leadership; substitute products and services;
customers; and suppliers. B) low-cost leadership; product differentiation; focus
on market niche; and customer and supplier intimacy. C) new market entrants;
substitute products and services; customers; and suppliers. D) low-cost
leadership; new market entrants; product differentiation; and focus on market
niche.Answer: BDiff: 2 Page Ref: 96-98AACSB: Reflective thinking skillsCASE:
ContentObjective: 3.245) Walmart�s continuous replenishment system allows it to
A) provide mass customization. B) provide an efficient customer response system.
C) strengthen customer intimacy. D) achieve economy of scale.Answer: BDiff: 1
Page Ref: 96AACSB: Use of information technologyCASE: ContentObjective: 3.2 46)
When a firm provides a specialized product or service for a narrow target market
better than competitors, they are using a ________ strategy. A) product
differentiation B) market niche C) mass customization D) process
efficiencyAnswer: BDiff: 2 Page Ref: 97AACSB: Reflective thinking skillsCASE:
ContentObjective: 3.2 47) ________ is the ability to offer individually tailored
products or services using the same production resources as bulk production. A)
Mass customization B) Size customization C) Magnitude customization D)
Dimension customizationAnswer: ADiff: 1 Page Ref: 97AACSB: Use of information
technologyCASE: ContentObjective: 3.2 48) In environmental scanning, a firm may
use information systems to A) utilize sensors that track products through the
value chain. B) analyze external Internet traffic to its Web sites. C)
identify external events that may affect it. D) understand its carbon footprint
and energy impacts on the environment.Answer: CDiff: 2 Page Ref: 86AACSB:
Reflective thinking skillsCASE: ContentObjective: 3.249) An information system
can enable a company to focus on a market niche through A) complex trend
forecasting. B) tailoring products to the client. C) intensive product trend
analysis. D) intensive customer data analysis.Answer: DDiff: 3 Page Ref: 97
AACSB: Use of information technologyCASE: ContentObjective: 3.2 50) Which of
the following best illustrates the use of information systems to focus on market
niche? A) A car manufacturer�s Web site that lets you customize the features on
the car you are purchasing. B) A restaurant chain analyzing local sales figures
to determine which menu items to serve. C) A bookseller selling an e-book reader
that reads only the bookseller�s books. D) A department store creating
specialized products for small groups of customers.Answer: DDiff: 2 Page Ref:
98AACSB: Analytic skillsCASE: AnalysisObjective: 3.2 51) As described in the
chapter case, the competitive force of ________ resulted in Starbuck�s downturn in
2008, and it employed information systems in a strategy of ________ to combat this
force. A) traditional competitors; product differentiation B) new market
entrants; product specialization C) substitute products; market niche D)
customers; customer intimacyAnswer: ADiff: 2 Page Ref: 98AACSB: Reflective
thinking skillsCASE: ContentObjective: 3.2 52) The Internet raises the bargaining
power of customers by A) creating new opportunities for building loyal customer
bases. B) making more products available. C) making information available to
everyone. D) lowering transaction costs.Answer: CDiff: 2 Page Ref: 98AACSB:
Reflective thinking skillsCASE: ContentObjective: 3.253) Which of the following
industries has not been disrupted by the Internet? A) encyclopedias B)
newspapers C) clothing D) air travelAnswer: CDiff: 1 Page Ref: 101AACSB:
Reflective thinking skillsCASE: ContentObjective: 3.2 54) What significant
competitive force is challenging the publishing industry? A) positioning and
rivalry among competitors B) low cost of entry C) substitute products or
services D) customer�s bargaining powerAnswer: CDiff: 2 Page Ref: 101AACSB:
Analytic skillsCASE: AnalysisObjective: 3.2 55) The value chain model A)
categorizes five related advantages for adding value to a firm�s products or
services. B) sees the supply chain as the primary activity for adding value.
C) categorizes four basic strategies a firm can use to enhance its value chain.
D) helps a firm identify points at which information technology can most
effectively enhance its competitive position.Answer: DDiff: 1 Page Ref: 101
AACSB: Use of information technologyCASE: ContentObjective: 3.3 56) The primary
activities of a firm include A) inbound logistics, operations, outbound
logistics, sales and marketing, and service. B) inbound logistics, operations,
outbound logistics, technology, and service. C) procurement, inbound logistics,
operations, technology, and outbound logistics. D) procurement, operations,
technology, sales and marketing, and services.Answer: ADiff: 2 Page Ref: 102
AACSB: Reflective thinking skillsCASE: ContentObjective: 3.357) Which of the
following is one of the support activities in a firm�s value chain? A) inbound
logistics B) operations C) sales and marketing D) technologyAnswer: D
Diff: 2 Page Ref: 102AACSB: Reflective thinking skillsCASE: ContentObjective:
3.3 58) Which of the following activities would you perform to measure and compare
your business processes to similar processes of other companies within your
industry? A) benchmarking B) best practices C) value chain analysis D)
strategic systems analysisAnswer: ADiff: 1 Page Ref: 103AACSB: Reflective
thinking skillsCASE: ContentObjective: 3.3 59) The most successful solutions or
methods for achieving a business objective are called A) value activities. B)
best processes. C) core competencies. D) best practices.Answer: DDiff: 1
Page Ref: 103AACSB: Reflective thinking skillsCASE: ContentObjective: 3.3 60)
How are information
systems used at the industry level to achieve strategic advantage? A) by
building industry-wide, IT-supported consortia and symposia B) by raising the
bargaining power of suppliers C) by encouraging the entry of new competitors
D) by enforcing standards that reduce the differences between competitorsAnswer: A
Diff: 1 Page Ref: 103AACSB: Use of information technologyCASE: Content
Objective: 3.361) A collection of independent firms that use information
technology to coordinate their value chains to produce a product or service for a
market collectively is called a(n) A) industry value chain. B) business
ecosystem. C) value web. D) consortia.Answer: CDiff: 2 Page Ref: 105
AACSB: Use of information technologyCASE: ContentObjective: 3.3 62) If two
organizations pool markets and expertise that result in lower costs and generate
profits it is often referred to as creating A) a value web. B) a value chain.
C) synergies. D) core competencies.Answer: CDiff: 1 Page Ref: 106AACSB:
Reflective thinking skillsCASE: ContentObjective: 3.4 63) An example of synergy
in business is A) Amazon�s use of the Internet to sell books. B) JP Morgan
Chase�s mergers with other banks that provided JP Morgan with a network of retail
branches in new regions. C) Blockbuster combining traditional video rental with
online video rental. D) Walmart�s order entry and inventory management system to
coordinate with suppliers.Answer: BDiff: 1 Page Ref: 106AACSB: Analytic
skillsCASE: AnalysisObjective: 3.4 64) An information system can enhance core
competencies by A) providing better reporting facilities. B) creating
educational opportunities for management. C) allowing operational employees to
interact with management. D) encouraging the sharing of knowledge across
business units.Answer: DDiff: 2 Page Ref: 107AACSB: Use of information
technologyCASE: ContentObjective: 3.465) The more any given resource is applied
to production, the lower the marginal gain in output, until a point is reached
where the additional inputs produce no additional output. This is referred to as
A) the point of no return. B) the law of diminishing returns. C) supply and
demand. D) network inelasticity.Answer: BDiff: 1 Page Ref: 107AACSB: Use
of information technologyCASE: ContentObjective: 3.4 66) Network economics A)
applies the law of diminishing returns to communities of users. B) applies
traditional economics to networked users. C) sees the cost of adding new members
as inconsequential. D) balances the high cost of adding new members to a
community against the lower cost of using network infrastructure.Answer: CDiff: 2
Page Ref: 107AACSB: Reflective thinking skillsCASE: ContentObjective: 3.4 67) A
virtual company A) uses the capabilities of other companies without being
physically tied to those companies. B) uses Internet technology to maintain a
virtual storefront. C) uses Internet technology to maintain a networked
community of users. D) provides entirely Internet-driven services, or virtual
products.Answer: ADiff: 1 Page Ref: 108AACSB: Reflective thinking skillsCASE:
ContentObjective: 3.4 68) An example of a keystone firm within a business
ecosystem is A) Apple and software application writers in the mobile platform
ecosystem. B) GUESS and the fashion ecosystem. C) Citibank and the ATM
ecosystem. D) American Airlines and the computerized reservation ecosystem.
Answer: ADiff: 1 Page Ref: 109AACSB: Analytic skillsCASE: AnalysisObjective:
3.469) The emergence, for Amazon.com, of new competitors in the sphere of online
shopping illustrates what disadvantage posed by the use of information systems to
achieve competitive advantage? A) E-commerce is affected by the law of
diminishing returns. B) Internet technologies are universal, and therefore
usable by all companies. C) Internet shopping produces cost transparency. D)
The Internet enables the production or sales of substitute products or services.
Answer: BDiff: 3 Page Ref: 110AACSB: Analytic skillsCASE: Evaluation
Objective: 3.5 70) You are consulting for a beverage distributor who is interested
in determining the benefits it could achieve from implementing new information
systems. What will you advise as the first step? A) Identify the business
ecosystem the distributor is in. B) Implement a strategic transition to the new
system. C) Perform a strategic systems analysis. D) Benchmark existing
systems.Answer: CDiff: 2 Page Ref: 111AACSB: Analytic skillsCASE: Synthesis
Objective: 3.5 71) Capital and ________ are the primary production inputs that the
organization uses to create products and services.Answer: laborDiff: 2 Page
Ref: 82AACSB: Use of information technologyCASE: ContentObjective: 3.1 72)
Organizational ________ describes the divergent viewpoints about how resources,
rewards, and punishments should be distributed, and the struggles resulting from
these differences.Answer: politicsDiff: 1 Page Ref: 84AACSB: Use of
information technologyCASE: ContentObjective: 3.1 73) New technologies that
radically change the business landscape and environment are referred to as
________.Answer: disruptiveDiff: 1 Page Ref: 87AACSB: Use of information
technologyCASE: ContentObjective: 3.174) ________ is a competitive strategy for
creating brand loyalty by developing new and unique products and services that are
not easily duplicated by competitors.Answer: Product differentiationDiff: 1
Page Ref: 96AACSB: Reflective thinking skillsCASE: ContentObjective: 3.2 75)
________ are the expenses incurred by a customer or company in lost time and
resources when changing from one supplier or system to a competing supplier or
system.Answer: Switching costsDiff: 2 Page Ref: 98AACSB: Reflective thinking
skillsCASE: ContentObjective: 3.2 76) The ________ model highlights the primary
or support activities that add a margin of value to a firm�s products or services
where information systems can best be applied to achieve a competitive advantage.
Answer: value chainDiff: 2 Page Ref: 101AACSB: Use of information technology
CASE: ContentObjective: 3.2 77) A(n) ________ activity is a part of the
organization�s infrastructure, human resources, technology, and procurement that
makes the delivery of the firm�s products or services possible.Answer: support
Diff: 2 Page Ref: 102AACSB: Use of information technologyCASE: Content
Objective: 3.3 78) A(n) ________ is a collection of independent firms that use
information technology to coordinate their value chains to collectively produce a
product or service for a market.Answer: value webDiff: 3 Page Ref: 105AACSB:
Use of information technologyCASE: ContentObjective: 3.3 79) A(n) ________ is an
activity at which a firm excels as a world-class leader.Answer: core competency
Diff: 2 Page Ref: 107AACSB: Reflective thinking skillsCASE: ContentObjective:
3.380) Sociotechnical changes affecting a firm adopting new information systems
requiring organizational change can be considered ________.Answer: strategic
transitionsDiff: 3 Page Ref: 112AACSB: Use of information technologyCASE:
ContentObjective: 3.4 81) Differentiate between the technical and behavioral
definitions of an organization.Answer: The behavioral definition of an
organization is that it is a collection of rights, privileges, obligations, and
responsibilities that is delicately balanced over a period of time through conflict
and conflict resolution. The technical definition sees an organization as an entity
that takes inputs from the environment and processes these to create products that
are then consumed by the environment. The technical view sees capital and labor as
interchangeable units, with the ability to rearrange these units at will, whereas
the behavioral view sees that rearranging some aspects of the organization, such as
an information system, will have important consequences and changes for the
organization�s other units.Diff: 2 Page Ref: 82-83AACSB: Analytic skillsCASE:
AnalysisObjective: 3.1 82) List three organizational factors that can prevent a
firm in fully realizing the benefits of a new information system, and provide
examples for each.Answer: Features of organizations include the organization�s
culture, politics, and structure. A new information system might be resisted by end
users or by managers for political reasons because they are concerned about the
political changes the system implies. For example, a new system might lessen the
authority of a manager in overseeing the employees, and he or she may not want to
relinquish this power. A new information system might challenge the organization�s
culture and be resisted for this reason. For example, an information system might
allow students at a university to take self-managed courses, while the university�s
basic cultural assumptions include the concept that professors are the purveyors of
knowledge. An information system, by allowing the distribution of knowledge, may be
better used in a company with a flatter organization. A company with a highly
stratified hierarchy may have difficulty adjusting its business processes and
structures to an information system that does not follow the same business
hierarchy of information.Diff: 3 Page Ref: 91-93AACSB: Analytic skillsCASE:
SynthesisObjective: 3.1 83) You are advising the
owner of Smalltown Computer, a new, local computer repair store that also builds
custom computers to order. What competitive strategies could Smalltown Computer
exert? Which ones will it have difficulty exercising?Answer:Low-cost leadership:
Smalltown Computer may have difficulty competing against the warranty services or
computer sales of major national computer manufacturers, such as Dell, but may be
able to exercise low-cost leadership in comparison to any other local computer
repair stores.Product differentiation: Although many national computer
manufacturers sell customized computers to the individual, Smalltown computer may
be able to differentiate their product by using superior components and adding more
services to their product.Focus on market niche: Smalltown computer could determine
a market niche geared to their advantage in being a local store with in-store
technology support and assistance.Customer and supplier intimacy: Smalltown
computer has an advantage in customer intimacy, in that it can develop
relationships with local customers on a face-to-face basis. This advantage could be
augmented to offset the low-cost leadership of national manufacturers, such as
Dell. Because of much smaller production scales, Smalltown will probably not be
able to exercise as much control over suppliers as Dell or other manufacturers.
Diff: 3 Page Ref: 96-98AACSB: Analytic skillsCASE: EvaluationObjective: 3.2
84) You are consulting with the owner of Better Bodies, a national chain of gyms.
What strategies might Better Bodies use in applying information services to achieve
a competitive advantage?Answer: Better Bodies could use computers to monitor and
evaluate health and fitness of members and customize workouts in product
differentiation strategy. They could use information systems for sales and
marketing data research in order to define a niche market that would bring greater
profits. They could allow customers to review their health data and add additional
information or view statistics to create customer intimacy. If the individual gyms
are franchises, then a network could be used for franchisees to share data and
research new sales tactics, etc.Diff: 2 Page Ref: 96-98AACSB: Analytic skills
CASE: SynthesisObjective: 3.2 85) The text describes Michael Porter�s view of the
Internet as somewhat negative. What negative influences does Porter see? Describe
several positive influences the Internet has on business. Do these outweigh the
negative influences?Answer: Answers will vary. An example of a possible answer is:
Porter sees the Internet as creating ever more intense rivalry, through allowing
new competitors to enter the market, and forcing competition on price alone,
raising the bargaining power of customers, and dampening profits.Positive
influences of the Internet would be lowering telecommunications costs, creating new
opportunities for building brands and loyal customer bases, lowering costs of
globalization. You could also view Porter�s negative take on lowering the barrier
to entry as a positive for new companies.The Internet�s influence being negative or
positive depends in part on the point of view from which the influence is being
seen. For example, a telephone utility is impacted negatively by the emergence of
Internet telephony, whereas other industries may be impacted positively either
through the use of this technology or through engaging in Internet telephony as a
business.Diff: 2 Page Ref: 98-101AACSB: Analytic skillsCASE: Evaluation
Objective: 3.2 86) Value chain analysis is useful at the business level to
highlight specific activities in the business where information systems are most
likely to have a strategic impact. Discuss this model, identify the activities, and
describe how the model can be applied to the concept of information technology.
Answer: The value chain model identifies specific, critical leverage points where
a firm can use information technology most effectively to enhance its competitive
positions. Exactly where can it obtain the greatest benefit from strategic
information systems? What specific activities can be used to create new products
and services, enhance market penetration, lock in customers and suppliers, and
lower operational costs? This model views the firm as a series or chain of basic
activities that add a margin of value to a firm�s products or services. These
activities can be categorized as either primary activities or support activities.
Primary activities are most directly related to the production and distribution of
the firm�s products and services that create value for the customer. Primary
activities include: inbound logistics, operations, outbound logistics, sales and
marketing, and service. Support activities make the delivery of the primary
activities possible and consist of: organization infrastructure (administration and
management), human resources (employee recruiting, hiring, and training, technology
(improving products and the production process), and procurement (purchasing
input).Diff: 2 Page Ref: 101-103AACSB: Analytic skillsCASE: Analysis
Objective: 3.3 87) How is the concept of core competency relevant to Smalltown
computer, a local computer repair store that builds custom computers? Give
examples.Answer: A core competency is an activity for which a company is a world
leader, and from this perspective, Smalltown Computer does not have a core
competency, as there are thousands of similar firms with longer track records.
However, it might be good business practice for Smalltown Computer to define its
core competencies in ways that differentiate its products from those of competitors
and enable it to provide superior service or products. In defining a core
competency, the business management can then determine ways to enable employees to
understand and reach higher levels of quality production and service. For example,
Smalltown Computer might define a core competency as being able to advise customers
as to the types of system they really need, and Smalltown Computer could engage in
knowledge gathering activities to help employees assess customer need.Diff: 2
Page Ref: 107AACSB: Analytic skillsCASE: EvaluationObjective: 3.4 88) How is
Internet technology useful from a network economics perspective? Give examples.
Answer: In network economics, the cost of adding a participant in the network is
negligible, while the gain in value is relatively much larger. The Internet itself
is an example of a successful implementation of network economics�the more people
participate, the more valuable and essential a commodity it is. If a company were
to provide a service through the Internet such as a project management application,
the costs to the company of adding another user are small (as the software
infrastructure or application is already built), and the more users are signed up,
the more profit is made.Diff: 2 Page Ref: 107AACSB: Analytic skillsCASE:
AnalysisObjective: 3.4 89) Define and describe a business ecosystem. Give an
example of a business ecosystem.Answer: A business ecosystem is a collection of
loosely coupled but interdependent industries (suppliers, distributors, technology
manufacturers, etc.) that provides related services and products. It is similar to
a value web, except that cooperation takes place across many industries rather than
many firms.Business ecosystems can be characterized as having one or a few keystone
firms that dominate the ecosystem and create the platforms used by other niche
firms. Keystone firms in the Microsoft ecosystem include Microsoft and technology
producers such as Intel and IBM. Niche firms include thousands of software
application firms, software developers, service firms, networking firms, and
consulting firms that both support and rely on the Microsoft products.Another
example of a business ecosystem is the mobile Internet platform. In this ecosystem
there are four industries: device makers (Apple iPhone, RIM BlackBerry, Motorola,
LG, and others), wireless telecommunication firms (AT&T, Verizon, T-Mobile, Sprint,
and others), independent software applications providers (generally small firms
selling games, applications, and ring tones), and Internet service providers (who
participate as providers of Internet service to the mobile platform).Diff: 2
Page Ref: 108-109AACSB: Analytic skillsCASE: AnalysisObjective: 3.390) Describe
in detail the major factors to determine when performing a strategic systems
analysis.Answer: One major factor is the structure of the industry the firm is in.
For example, what competitive forces are at work in the industry, and what is the
basis for competition? What is the nature and direction of change in the industry,
and how does the industry use IT?A second major factor is determining the firm and
industry value chains. For example, how is the company creating value for the
customer? Are best practices being used and core competencies leveraged? Is the
industry supply chain or customer base changing, and what will the effect be? Can
the firm benefit from strategic partnerships or value webs? And where in the value
chain will information systems provide the greatest value to the firm.The third
major factor to consider is has the firm aligned IT with its business strategy and
goals. Have these goals been correctly stated or defined? Is IT improving the right
business processes and activities in accordance with the firm�s goals? Are we using
the right metrics to measure progress?Diff: 3 Page Ref: 111AACSB: Analytic
skillsCASE: AnalysisObjective: 3.5