Test bank for Management Information Systems

Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition Chapter 3 Information Systems, Organizations, and Strategy 1) All organizations have bedrock, unassailable assumptions that define their goals and products. Answer: TRUE Diff: 2 Page Ref: 68 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 2) An adhocracy is a knowledge-based organization where goods and services depend on the expertise and knowledge of professionals. Answer: FALSE Diff: 3 Page Ref: 71 AACSB: Reflective thinking skills CASE: Knowledge Objective: 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: 72 AACSB: Use of information technology CASE: Knowledge Objective: 3.2 4) A firm can be said to have competitive advantage when they have higher stock market valuations than their competitors. Answer: TRUE Diff: 2 Page Ref: 76 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 5) Customers are one of the competitive forces that affect an organization's ability to compete. Answer: TRUE Diff: 1 Page Ref: 77 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 6) A transparent marketplace means that there is high product differentiation. Answer: FALSE Diff: 2 Page Ref: 77 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 7) The effect of the Internet has been to raise bargaining power over suppliers. Answer: TRUE Diff: 2 Page Ref: 80 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 8) In the strategy of product differentiation, information systems are used to enable new products and services. Answer: TRUE Diff: 2 Page Ref: 78 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 9) Mass customization is a form of mass production. Answer: TRUE Diff: 2 Page Ref: 79 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 10) Strong linkages to customers and suppliers decrease switching costs. Answer: FALSE Diff: 2 Page Ref: 79 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 11) Business processes are collections of standard operating procedures. Answer: TRUE Diff: 1 Page Ref: 67 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 12) The value chain model classifies all company activities as either primary or support. Answer: TRUE Diff: 2 Page Ref: 40 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 13) 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: TRUE Diff: 2 Page Ref: 83 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 14) 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: 86 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 15) 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: 87 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 16) The term business ecosystem describes the interplay between the various organizational forces within a firm. Answer: FALSE Diff: 2 Page Ref: 88 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 17) Research has shown that only 25% of firms are able to align their information technology with their business goals. Answer: TRUE Diff: 3 Page Ref: 90 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.4 18) The use of Internet technologies allows companies to more easily sustain competitive advantage. Answer: FALSE Diff: 3 Page Ref: 71 AACSB: Use of information technology CASE: Knowledge Objective: 3.4 19) In the macroeconomic definition of organizations, capital and labour are transformed by the firm through the production process into products and services. Answer: FALSE Diff: 2 Page Ref: 66 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 20) The technical and behavioural definitions of organizations are not complementary. Indeed, they contradict each other. Answer: FALSE Diff: 2 Page Ref: 67 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 21) Routines—sometimes called non-standard operating procedures—are precise rules, procedures, and practices that have been developed to cope with virtually all expected situations. Answer: FALSE Diff: 2 Page Ref: 67 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 22) Information systems are key instruments for environmental scanning, helping managers identify external changes that might require an organizational response. Answer: TRUE Diff: 2 Page Ref: 69 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 23) As transaction costs decrease, firm size (the number of employees) should shrink because it becomes easier and cheaper for the firm to contract for the purchase of goods and services in the marketplace rather than to make the product or offer the service itself. Answer: TRUE Diff: 2 Page Ref: 72 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.2 24) 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: B Diff: 2 Page Ref: 65 AACSB: Use of information technology CASE: Knowledge Objective: 3.1 25) 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: E Diff: 2 Page Ref: 66 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 26) 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) behavioral Answer: A Diff: 3 Page Ref: 66 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 27) 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: C Diff: 2 Page Ref: 66 AACSB: Analytic skills CASE: Evaluation Objective: 3.1 28) 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: D Diff: 2 Page Ref: 67 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 29) Business processes are collections of A) informal practices and behaviors. B) formalized and documented practices. C) routines. D) rights and privileges. Answer: C Diff: 2 Page Ref: 67 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 30) Which of the following would not be considered a disruptive technology? A) instant messaging B) e-mail C) Internet telephony D) PCs Answer: A Diff: 3 Page Ref: 70 AACSB: Analytic skills CASE: Analysis Objective: 3.1 31) 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: C Diff: 2 Page Ref: 71 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 32) 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) multidivisional Answer: A Diff: 2 Page Ref: 71 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 33) An example of a divisionalized bureaucracy is a A) startup firm. B) university. C) Fortune 500 firm. D) midsize manufacturer. Answer: C Diff: 3 Page Ref: 71 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 34) 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: B Diff: 2 Page Ref: 72 AACSB: Use of information technology CASE: Knowledge Objective: 3.2 35) 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: A Diff: 2 Page Ref: 72 AACSB: Use of information technology CASE: Knowledge Objective: 3.2 36) 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: D Diff: 3 Page Ref: 72 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.2 37) According to research 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: D Diff: 3 Page Ref: 74 AACSB: Use of information technology CASE: Analysis Objective: 3.2 38) 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 control Answer: B Diff: 2 Page Ref: 76 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 39) Which of the following industries has a low barrier to entry? A) automotive B) computer chip C) restaurant D) airline Answer: C Diff: 2 Page Ref: 76-77 AACSB: Analytic skills CASE: Analysis Objective: 3.3 40) Which of the following is not one of the competitive forces? A) suppliers B) other competitors C) external environment D) customers Answer: C Diff: 2 Page Ref: 76-77 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 41) 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 entrants Answer: D Diff: 3 Page Ref: 76 AACSB: Analytic skills CASE: Evaluation Objective: 3.3 42) 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: A Diff: 2 Page Ref: 76 AACSB: Analytic skills CASE: Evaluation Objective: 3.3 43) 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: A Diff: 2 Page Ref: 79 AACSB: Analytic skills CASE: Analysis Objective: 3.3 44) A firm can exercise greater control over its suppliers by having A) more suppliers. B) fewer suppliers. C) global suppliers. D) local suppliers. Answer: A Diff: 1 Page Ref: 77 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 45) 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: A Diff: 2 Page Ref: 78 AACSB: Analytic skills CASE: Analysis Objective: 3.3 46) 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: B Diff: 2 Page Ref: 78 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 47) 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: B Diff: 1 Page Ref: 78 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 48) 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 efficiency Answer: B Diff: 2 Page Ref: 79 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 49) ________ 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 customization Answer: A Diff: 1 Page Ref: 79 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 50) 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: C Diff: 2 Page Ref: 69 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 51) 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: D Diff: 3 Page Ref: 79 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 52) 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: D Diff: 2 Page Ref: 79 AACSB: Analytic skills CASE: Analysis Objective: 3.3 53) 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 intimacy Answer: A Diff: 2 Page Ref: 80 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 54) 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: C Diff: 2 Page Ref: 89 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 55) Which of the following industries has not been disrupted by the Internet? A) encyclopedias B) newspapers C) clothing D) air travel Answer: C Diff: 1 Page Ref: 70 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.1 56) 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 power Answer: C Diff: 2 Page Ref: 90 AACSB: Analytic skills CASE: Analysis Objective: 3.3 57) 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: D Diff: 1 Page Ref: 82 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 58) 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: A Diff: 2 Page Ref: 82 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 59) 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) technology Answer: D Diff: 2 Page Ref: 82 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 60) 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 analysis Answer: A Diff: 1 Page Ref: 82 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 61) 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: D Diff: 1 Page Ref: 82 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 62) 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 competitors Answer: A Diff: 1 Page Ref: 82 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 63) 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: C Diff: 2 Page Ref: 86 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 64) 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: C Diff: 1 Page Ref: 86 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 65) 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: B Diff: 1 Page Ref: 87 AACSB: Analytic skills CASE: Analysis Objective: 3.3 66) 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: D Diff: 2 Page Ref: 87 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 67) 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: B Diff: 1 Page Ref: 87 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 68) 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: C Diff: 2 Page Ref: 88 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 69) 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: A Diff: 1 Page Ref: 88 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 70) 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: A Diff: 1 Page Ref: 89 AACSB: Analytic skills CASE: Analysis Objective: 3.3 71) 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: B Diff: 3 Page Ref: 90 AACSB: Analytic skills CASE: Evaluation Objective: 3.4 72) 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: C Diff: 2 Page Ref: 90 AACSB: Analytic skills CASE: Synthesis Objective: 3.4 73) Disruptive technologies are tricky. Firms that invent disruptive technologies as ______________________________________________________________. A) as “first movers” always benefit if they lack the resources to exploit the technology or fail to see the opportunity. B) as “first agents” do not always benefit if they lack the resources to exploit the technology or fail to see the opportunity. C) as “first movers” do not always benefit if they lack the resources to exploit the technology or fail to see the opportunity. D) as “first agents” always benefit if they lack the resources to exploit the technology or fail to see the opportunity. Answer: C Diff: 2 Page Ref: 70 AACSB: Analytic skills CASE: Knowledge Objective: 3.1 74) A/An ________________describes a young, small firm in a fast-changing environment. It has a simple structure and is managed by an entrepreneur serving as its single chief executive officer. A) Machine bureaucracy B) Divisionalized bureaucracy C) Entrepreneurial structure D) Adhocracy Answer: C Diff: 2 Page Ref: 71 AACSB: Analytic skills CASE: Knowledge Objective: 3.1 75) Using computer links to external suppliers, the Chrysler Corporation can achieve economies by obtaining more than 70 percent of its parts from the outside. ____________________ make it possible for companies such as Cisco Systems and Dell Inc. to outsource their production to contract manufacturers such as Flextronics instead of making their products themselves. A) Information systems B) Divisionalized systems C) Entrepreneurial systems D) Knowledge systems Answer: A Diff: 2 Page Ref: 72 AACSB: Analytic skills CASE: Knowledge Objective: 3.2 76) Information systems can reduce the number of levels in an organization by providing managers with in- formation to supervise larger numbers of workers and by giving lower-level employees more decision- making authority. This process describes a process of ______________________. A) Flattening Organizations B) Fattening Organizations C) Forming Organizations D) Feeding Organizations Answer: A Diff: 2 Page Ref: 74 AACSB: Analytic skills CASE: Knowledge Objective: 3.2 77) Information systems can reduce the number of levels in an organization by providing managers with in- formation to supervise larger numbers of workers and by giving lower-level employees more decision- making authority. This process describes a process of ______________________. A) Flattening Organizations B) Fattening Organizations C) Forming Organizations D) Feeding Organizations Answer: A Diff: 2 Page Ref: 74 AACSB: Analytic skills CASE: Knowledge Objective: 3.2 78) The availability of Internet and networking technologies have inspired strategies that take advantage of firms’ abilities to create networks or network with each other. Network-based strategies include the use of ___________________________________ ecosystems. A) network economics, a simulated company model, and business B) network economics, a virtual company model, and business C) network economics, a virtual company model, and political D) network economics, a simulated company model, and political Answer: B Diff: 2 Page Ref: 87 AACSB: Analytic skills CASE: Knowledge Objective: 3.3 79) Successfully using information systems to achieve a competitive advantage is challenging and requires precise coordination of ________________________. A) network economics, organizations, and management B) technology, organizations, and management C) technology, organizations, and political D) a simulated company model, technology, and management Answer: B Diff: 2 Page Ref: 87 AACSB: Analytic skills CASE: Knowledge Objective: 3.3 80) _______________________is another term for these loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers. A) Management ecosystem B) Technology ecosystem C) Political ecosystem D) Business ecosystem Answer: D Diff: 2 Page Ref: 88 AACSB: Analytic skills CASE: Knowledge Objective: 3.3 81) Research on project implementation failures demonstrates that the most common reason for failure of large projects to reach their objectives is _______________________________. A) the political resistance to change and also failure of the technology. B) not the political resistance to change but failure of the technology. C) the failure of the technology, and also organizational and political resistance to change. D) not the failure of the technology, but organizational and political resistance to change. Answer: D Diff: 2 Page Ref: 75 AACSB: Analytic skills CASE: Knowledge Objective: 3.2 82) In a ____________________such as a hospital, it is not unusual to find parallel patient record systems operated by the administration, doctors, and other professional staff such as nurses and social workers. A) professional small business B) professional theocracy C) professional adhocracy D) professional bureaucracy Answer: D Diff: 2 Page Ref: 71 AACSB: Analytic skills CASE: Knowledge Objective: 3.1 83) Capital and ________ are the primary production inputs that the organization uses to create products and services. Answer: labor Diff: 2 Page Ref: 66 AACSB: Use of information technology CASE: Knowledge Objective: 3.1 84) Organizational ________ describes the divergent viewpoints about how resources, rewards, and punishments should be distributed, and the struggles resulting from these differences. Answer: politics Diff: 1 Page Ref: 67 AACSB: Use of information technology CASE: Knowledge Objective: 3.1 85) New technologies that radically change the business landscape and environment are referred to as ________. Answer: disruptive Diff: 1 Page Ref: 70 AACSB: Use of information technology CASE: Knowledge Objective: 3.1 86) ________ 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 costs Diff: 2 Page Ref: 79 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 87) 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 chain Diff: 2 Page Ref: 82 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 88) 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: 82 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 89) 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 web Diff: 3 Page Ref: 86 AACSB: Use of information technology CASE: Knowledge Objective: 3.3 90) A(n) ________ is an activity at which a firm excels as a world-class leader. Answer: core competency Diff: 2 Page Ref: 87 AACSB: Reflective thinking skills CASE: Knowledge Objective: 3.3 91) Sociotechnical changes affecting a firm adopting new information systems requiring organizational change can be considered ________. Answer: strategic transitions Diff: 3 Page Ref: 91 AACSB: Use of information technology CASE: Knowledge Objective: 3.4 92) In the ___________________ definition of organizations, capital and labour are transformed by the firm through the production process into products and services. Answer: microeconomic Diff: 2 Page Ref: 66 AACSB: Use of information technology CASE: Knowledge Objective: 3.1 93) _____________________ change requires changes in who owns and controls information, who has the right to access and update that information, and who makes decisions about whom, when, and how. Answer: Technological Diff: 2 Page Ref: 67 AACSB: Use of information technology CASE: Knowledge Objective: 3.1 94) _________________________— sometimes called standard operating procedures—are precise rules, procedures, and practices that have been developed to cope with virtually all expected situations. Answer: Routines Diff: 2 Page Ref: 67 AACSB: Use of information technology CASE: Knowledge Objective: 3.1 95) Information systems are key instruments for_____________________________, helping managers identify external changes that might require an organizational response. Answer: environmental scanning Diff: 2 Page Ref: 69 AACSB: Use of information technology CASE: Knowledge Objective: 3.1 96) As ___________________ costs decrease, firm size (the number of employees) should shrink because it becomes easier and cheaper for the firm to contract for the purchase of goods and services in the marketplace rather than to make the product or offer the service itself. Answer: transaction Diff: 2 Page Ref: 72 AACSB: Use of information technology CASE: Knowledge Objective: 3.2 97) 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: 66 AACSB: Analytic skills CASE: Analysis Objective: 3.1 98) 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: 78-79 AACSB: Analytic skills CASE: Evaluation Objective: 3.3 99) 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: 78-79 AACSB: Analytic skills CASE: Synthesis Objective: 3.3 100) 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: 80-81 AACSB: Analytic skills CASE: Evaluation Objective: 3.3 101) 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: 82-83 AACSB: Analytic skills CASE: Analysis Objective: 3.3 102) 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: 87 AACSB: Analytic skills CASE: Evaluation Objective: 3.3 103) 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: 87-88 AACSB: Analytic skills CASE: Analysis Objective: 3.3 104) 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: 88-89 AACSB: Analytic skills CASE: Analysis Objective: 3.3 105) 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: 90-91 AACSB: Analytic skills CASE: Analysis Objective: 3.4 106) Describe how information systems can be used to achieve strategic advantage at the industry level? Answer: By working with other firms, industry participants can use information technology to develop industry-wide standards for exchanging information or business transactions electronically which forces all market participants to subscribe to similar standards. These efforts increase efficiency, making product substitution less likely and perhaps raising entry costs—thus discouraging new entrants. Also, industry members can build industry-wide, IT-supported consortia, symposia, and communications networks to coordinate activities concerning government agencies, foreign competition, and competing industries. Diff: 2 Page Ref: 83 AACSB: Analytic skills CASE: Analysis Objective: 3.3 107) New information system applications require that individual routines and business processes change to achieve high levels of organizational performance. Why is this change so difficult in an organization? Answer: Organizational Politics -People in organizations occupy different positions with different specialties, concerns, and perspectives. As a result, they naturally have divergent viewpoints about how resources, rewards, and punishments should be distributed. These differences matter to both managers and employees, and they result in political struggles for resources, competition, and conflict within every organization. Political resistance is one of the great difficulties of bringing about organizational change—especially the development of new information systems. Virtually all large information systems investments by a firm that bring about significant changes in strategy, business objectives, business processes, and procedures become politically charged events. Managers who know how to work with the politics of an organization will be more successful than less-skilled managers in implementing new information systems. Organizational Culture is a powerful constraint on change, especially technological change. Most organizations will do almost anything to avoid making changes in basic assumptions. Any technological change that threatens commonly held cultural assumptions usually meets a great deal of resistance. However, there are times when the only sensible way for a firm to move forward is to employ a new technology that directly opposes an existing organizational culture Diff: 2 Page Ref: 67-69 AACSB: Analytic skills CASE: Analysis Objective: 3.1 108) How do disruptive technologies radically change the business landscape and environment? Answer: Due to disruptive technologies, entire industries were put out of business. In other cases, disruptive technologies simply extend the market, usually with less functionality and much less cost, than existing products. Eventually, they turn into low-cost competitors for whatever was sold before. Some firms are able to create these technologies and ride the wave to profits; others learn quickly and adapt their business; still others are obliterated because their products, services, and business models become obsolete Diff: 2 Page Ref: 70 AACSB: Analytic skills CASE: Analysis Objective: 3.1