true/false. write 't' if the statement is true and 'f' if the...
TRANSCRIPT
Exam
Name___________________________________
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) An adhocracy is a knowledge-based organization where goods and services depend on the
expertise and knowledge of professionals.
1) _______
Answer: True False
2) Information systems and organizations influence one another. 2) _______
Answer: True False
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 labour.
3) _______
Answer: True False
4) A Professional bureaucracy is a large bureaucracy existing in a slowly changing environment,
producing standard products.
4) _______
Answer: True False
5) When the Eastman Chemical Company split off from Kodak, it demonstrated that firm size can
stay constant or contract even as the company increases its revenues.
5) _______
Answer: True False
6) One type of competitive advantage Amazon was able to implement in selling books over the
Internet was that of being a new market entrant.
6) _______
Answer: True False
7) A firm can be said to have competitive advantage when they have higher stock market
valuations than their competitors.
7) _______
Answer: True False
8) The competitive forces model was created for today's digital firm. 8) _______
Answer: True False
9) Customers are one of the competitive forces that affect an organization's ability to compete. 9) _______
Answer: True False
10) Lands’ End customers can use the company's Web site to order jeans, dress pants, chino pants,
and shirts custom-tailored to their own specifications. This is an example of mass
customization.
10) ______
Answer: True False
11) A transparent marketplace means that there is high product differentiation. 11) ______
Answer: True False
12) In an efficient customer response system, digital answering systems are used to monitor and
respond to customer inquiries.
12) ______
Answer: True False
13) Mass customization is a form of mass production. 13) ______
Answer: True False
14) Strong linkages to customers and suppliers decrease switching costs. 14) ______
Answer: True False
15) Chapters.Indigo.ca keeps track of user preferences for book and CD purchases and can
recommend titles purchased by others to its customers. This illustrates a firm using a low-cost
leadership strategy.
15) ______
Answer: True False
16) In the strategy of product differentiation, information systems are used to enable new products
and services.
16) ______
Answer: True False
17) The effect of the Internet has been to raise bargaining power over suppliers. 17) ______
Answer: True False
18) In the age of the Internet, Porter's traditional competitive forces model is still at work, but
competitive rivalry has become much more intense.
18) ______
Answer: True False
19) 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.
19) ______
Answer: True False
20) The value chain model classifies all company activities as either primary or support. 20) ______
Answer: True False
21) 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.
21) ______
Answer: True False
22) The law of diminishing returns always applies to digital, as well as traditional companies. 22) ______
Answer: True False
23) In network economics, the more people that use Microsoft Office software and related products,
the greater its value.
23) ______
Answer: True False
24) The term business ecosystem describes the interplay between the various organizational forces
within a firm.
24) ______
Answer: True False
25) The use of Internet technologies allows companies to more easily sustain competitive advantage. 25) ______
Answer: True False
26) eBay derives the bulk of its revenue from fees and commissions associated with its sales
transactions.
26) ______
Answer: True False
27) eBay has had to continually fine-tune its strategy and business processes to remain competitive. 27) ______
Answer: True False
28) As a manager, you do not decide which systems will be developed, what they will do, and how the y will
be
impleme
nted.
28) ___
___
Answer: True False
29) A technical view of organizations encourages us to focus on how inputs are combined to create
outputs when technology changes are introduced into the company.
29) ______
Answer: True False
30) 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.
30) ______
Answer: True False
31) Organizations are formal legal entities with internal rules and procedures that must abide by
laws.
31) ______
Answer: True False
32) Capital and labour are primary production factors provided by the environment. 32) ______
Answer: True False
33) A behavioural view of organizations encourages us to focus on how inputs are combined to
create outputs when technology changes are introduced into the company.
33) ______
Answer: True False
34) Standard operating procedures–are precise rules, procedures, and practices that have been
developed to cope with virtually all expected situations.
34) ______
Answer: True False
35) People in organizations occupy different positions with similar specialties, concerns, and
perspectives.
35) ______
Answer: True False
36) Political resistance is one of the great difficulties of bringing about organizational change. 36) ______
Answer: True False
37) All organizations are composed of individual routines and behaviours, a collection of which
make up a business process.
37) ______
Answer: True False
38) Over the last decade, information systems have fundamentally altered the economics of
organizations and greatly increased the possibilities for organizing work.
38) ______
Answer: True False
39) According to transaction cost theory, firms and individuals seek an increase on transaction costs,
much as they do on production costs.
39) ______
Answer: True False
40) Firms traditionally grew in size to increase transaction costs. 40) ______
Answer: True False
41) Large, bureaucratic organizations, which primarily developed before the computer age, are often inef ficient,
quick to
change,
and
more
competiti
ve than
newly
created
organizat
ions.
41) ___
___
Answer: True False
42) A global sales force can receive nearly instant price product information updates using the Web
or instructions from management sent by e-mail.
42) ______
Answer: True False
43) Businesses are rapidly rebuilding some of their key business processes based on Internet
technology and making this technology a key component of their IT infrastructures.
43) ______
Answer: True False
44) Firms that “do better” than others are said to have a non-competitive advantage over others. 44) ______
Answer: True False
45) Arguably, the most widely used model for understanding competitive advantage is Michael
Porter’s generic strategies model
45) ______
Answer: True False
46) In a free economy with mobile labour and financial resources, new companies are always
entering the marketplace.
46) ______
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
47) As discussed in the chapter opening case, which of the four generic strategies to combat
competitive forces formed the basis of eBay's growth strategy?
47) ______
A) product differentiation B) low-cost leadership
C) focus on market niche D) customer and supplier intimacy
Answer: A
48) Which of the following is an example of a disruptive technology? 48) ______
A) digital photography B) an all-in-one printer
C) a new version of Microsoft Excel D) a third generation iPod
Answer: A
49) Which of the following would NOT be considered a disruptive technology? 49) ______
A) instant messaging B) PCs
C) Internet telephony D) e-mail
Answer: A
50) The interaction between information systems and organizations is 50) ______
A) driven by the microeconomic forces of capital and labour.
B) primarily guided by the decision making of middle- and senior-managers.
C) a complex, two-way relationship mediated by factors such as the environment and
organizational structure.
D) successfully managed when the organization's existing culture and goals are seen as the
driving force.
Answer: C
51) How does the technical view of organizations fall short of understanding the full impacts of
information systems in a firm?
51) ______
A) It sees the inputs and outputs, labour and capital, as being infinitely malleable.
B) It sees the organization as a social structure similar to a machine.
C) It sees information systems as a way to rearrange the inputs and outputs of the
organization.
D) It sees capital and labour as primary production factors.
Answer: A
52) 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.
52) ______
A) macroeconomi
c
B) sociotechnical C) microeconomic D) behavioural
Answer: C
53) All of the following are major features of organizations that impact the use of information
systems EXCEPT for
53) ______
A) agency costs. B) goals.
C) business processes. D) environments.
Answer: A
54) Business processes are collections of 54) ______
A) rights and privileges. B) routines.
C) informal practices and behaviours. D) formalized and documented practices.
Answer: B
55) 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):
55) ______
A) divisionalized bureaucracy. B) professional bureaucracy.
C) entrepreneurial structure. D) adhocracy.
Answer: B
56) 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.
56) ______
A) divisionalized B) machine C) multidivisional D) professional
Answer: B
57) An example of a professional bureaucracy is a 57) ______
A) school system. B) mid-size manufacturing firm.
C) small startup firm. D) consulting firm.
Answer: A
58) The costs incurred when a firm buys on the marketplace what it cannot make itself are referred
to as:
58) ______
A) procurement. B) agency costs.
C) transaction costs. D) switching costs.
Answer: C
59) Which of the following statements is NOT true about information technology's impacts on
business firms?
59) ______
A) It helps reduce internal management costs.
B) It helps reduce transaction costs.
C) It helps firms expand in size.
D) It helps firms lower the cost of market participation.
Answer: C
60) According to agency theory, the firm is viewed as a(n): 60) ______
A) task force organization that must respond to rapidly changing environments.
B) entrepreneurial endeavor.
C) "nexus of contracts" among self-interested individuals.
D) unified, profit-maximizing entity.
Answer: C
61) 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
61) ______
A) environment, organization, structure, tasks.
B) tasks, technology, people, and structure.
C) organization, culture, management.
D) technology, people, culture, and structure.
Answer: B
62) The ________ model is used to describe the interaction of external forces that affect an
organization's strategy and ability to compete.
62) ______
A) competitive forces B) competitive advantage
C) network economics D) demand control
Answer: A
63) Which of the following is NOT one of the competitive forces? 63) ______
A) external environment B) customers
C) other competitors D) suppliers
Answer: A
64) A manufacturer of deep-sea oil rigs may be least concerned about this marketplace force. 64) ______
A) traditional competitors B) low number of suppliers
C) new market entrants D) product differentiation
Answer: C
65) A substitute product of most concern for a cable TV distributor is 65) ______
A) satellite TV. B) the Internet. C) satellite radio. D) broadcast TV.
Answer: A
66) Rogers Cable was the sole supplier of iPhones in Canada for two years, but now Telus and Bell
can market iPhones in Canada, this illustrates the competitive force of ________.
66) ______
A) customers B) new market entrants
C) suppliers D) substitute products and services
Answer: B
67) Jean uses his loyalty rewards program card to buy gas from the Shell Oil Company, he only
needs 300 more points to get a free flight to Calgary. This illustrates Shell Oil dealing with the
competitive force of ________.
67) ______
A) suppliers B) new market entrants
C) customers D) substitute products and services
Answer: C
68) Ontario Iron Works Ltd. has just located a web portal that gives access to many companies from
which they can purchase their raw material from; this illustrates the competitive force of
________.
68) ______
A) substitute products and services B) new market entrants
C) customers D) suppliers
Answer: D
69) John has opened a new web based retail book store. John stocks, sells, and specializes on only
technical engineering books and manuals. John is utilizing which source of competitive
advantage?
69) ______
A) strengthening customer and supplier intimacy
B) focus on market niche
C) low-cost leadership
D) product differentiation
Answer: B
70) Chapters.Indigo.ca keeps track of user preferences for book and CD purchases and can
recommend titles purchased by others to its customers. Strong linkages to customers and
suppliers increase switching costs. Chapters.Indigo.ca is utilizing which source of competitive
advantage?
70) ______
A) focus on market niche
B) low-cost leadership
C) strengthening customer and supplier intimacy
D) product differentiation
Answer: C
71) Marie has developed a unique patented process to manufacture metal picture frames. This
unique process allows Marie to use less raw materials and less labour than her competitors.
Marie is utilizing which source of competitive advantage?
71) ______
A) product differentiation
B) focus on market niche
C) low-cost leadership
D) strengthening customer and supplier intimacy
Answer: C
72) Old Dutch Potato Chips has just installed a new state of the art information system that allows
them to track delivery of their potato chips in real time to all of their customers. This
information system is attempting to add value to which part of their value chain?
72) ______
A) inbound logistics B) outbound logistics
C) procurement D) operations
Answer: B
73) Canadian Tire has just installed a new state of the art information system that allows them
instant information on the status of their orders they have with suppliers. This information
system is attempting to add value to which part of their value chain?
73) ______
A) inbound logistics B) outbound logistics
C) procurement D) operations
Answer: A
74) Which of the following industries has a low barrier to entry? 74) ______
A) computer chip B) airline C) automotive D) restaurant
Answer: D
75) Which of the following can force a business and its competitors to compete on price alone? 75) ______
A) poor process efficiency B) high product differentiation
C) demand control D) transparent marketplace
Answer: D
76) A firm can exercise greater control over its suppliers by having 76) ______
A) global suppliers. B) fewer suppliers.
C) more suppliers. D) local suppliers.
Answer: C
77) Amazon's use of the Internet as a platform to sell books illustrates a tactical use of information
services for
77) ______
A) strengthening customer intimacy. B) low-cost leadership.
C) focusing on market niche. D) product differentiation.
Answer: B
78) The four major types of competitive strategy are 78) ______
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) low-cost leadership; new market entrants; product differentiation; and focus on market
niche.
D) new market entrants; substitute products and services; customers; and suppliers.
Answer: B
79) Wal-Mart's continuous replenishment system allows it to: 79) ______
A) strengthen customer intimacy.
B) provide an efficient customer response system.
C) achieve economy of scale.
D) provide mass customization.
Answer: B
80) A core competency 80) ______
A) is one of Porter’s competitive forces.
B) defines mass customization.
C) is another way to describe benchmarking.
D) is an activity for which a firm is a world-class leader.
Answer: D
81) Amazon.ca has many revenue streams. One of these is their online auctions which brings many
buyers and sellers together. These online auctions attempt to take strategic advantage of
81) ______
A) network economics. B) mass customization.
C) primary activities. D) organizational structures.
Answer: A
82) ________ is another term for these loosely coupled but interdependent networks of suppliers,
distributors, outsourcing firms, transportation service firms, and technology manufacturers.
82) ______
A) Core competencies B) Value chain
C) Business ecosystem D) Synergy
Answer: C
83) The Internet can make competitive advantage 83) ______
A) long term because few companies can use this technology.
B) permanent because virtually all companies can use this technology.
C) disappear very quickly because virtually all companies can use this technology.
D) disappear very quickly because few companies can use this technology.
Answer: C
84) When a firm provides a specialized product or service for a narrow target market better than
competitors, they are using a ________ strategy.
84) ______
A) product differentiation B) mass customization
C) market niche D) process efficiency
Answer: C
85) ________ is the ability to offer individually tailored products or services using the same
production resources as bulk production.
85) ______
A) Dimension customization B) Size customization
C) Mass customization D) Magnitude customization
Answer: C
86) An information system can enable a company to focus on a market niche through 86) ______
A) tailoring products to the client. B) intensive customer data analysis.
C) intensive product trend analysis. D) complex trend forecasting.
Answer: B
87) Hilton Hotels' use of customer information software to identify the most profitable customers to
direct services to is an example of using information systems to
87) ______
A) strengthen customer intimacy. B) increase efficiency.
C) focus on market niche. D) differentiate their service.
Answer: C
88) Which industries did the first wave of e-commerce transform? 88) ______
A) real estate, books, bill payments B) air travel, books, bill payments
C) air travel, books, music D) real estate, air travel, books
Answer: C
89) To what competitive force did the printed encyclopedia industry succumb? 89) ______
A) positioning and rivalry among competitors
B) customer's bargaining power
C) low cost of entry
D) substitute products or services
Answer: D
90) Internet technology 90) ______
A) increases the difference between competitors because of the wide availability of
information.
B) makes it easy to sustain operational advantages.
C) imposes a significant cost of entry, due to infrastructure requirements.
D) makes it easy for rivals to compete on price alone.
Answer: D
91) The Internet raises the bargaining power of customers by 91) ______
A) lowering transaction costs.
B) creating new opportunities for building loyal customer bases.
C) making information available to everyone.
D) making more products available.
Answer: C
92) The value chain model 92) ______
A) categorizes five related advantages for adding value to a firm's products or services.
B) categorizes four basic strategies a firm can use to enhance its value chain.
C) sees the supply chain as the primary activity for adding value.
D) helps a firm identify points at which information technology can most effectively enhance
its competitive position.
Answer: D
93) The primary activities of a firm include 93) ______
A) inbound logistics, operations, outbound logistics, technology, and service.
B) procurement, operations, technology, sales and marketing, and services.
C) procurement, inbound logistics, operations, technology, and outbound logistics.
D) inbound logistics, operations, outbound logistics, sales and marketing, and service.
Answer: D
94) The secondary activities of a firm include 94) ______
A) organization infrastructure, human resources, sales and marketing, and technology.
B) organization infrastructure, human resources, technology, and procurement.
C) inbound logistics, technology, outbound logistics, sales and marketing, and service.
D) inbound logistics, organization infrastructure, outbound logistics, technology, and
procurement.
Answer: B
95) Benchmarking 95) ______
A) allows industry participants to influence industry-wide standards.
B) compares the efficiency and effectiveness of your business processes against strict
standards.
C) synchronizes the business processes of customers, suppliers, and trading partners.
D) is used to measure the speed and responsiveness of information technology.
Answer: B
96) The most successful solutions or methods for achieving a business objective are called 96) ______
A) best processes. B) value activities.
C) core competencies. D) best practices.
Answer: D
97) 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)
97) ______
A) consortia. B) industry value chain.
C) value web. D) business ecosystem.
Answer: C
98) How are information systems used at the industry level to achieve strategic advantage? 98) ______
A) by encouraging the entry of new competitors
B) by raising the bargaining power of suppliers
C) by enforcing standards that reduce the differences between competitors
D) by building industry-wide, IT-supported consortia and symposia
Answer: D
99) If two organizations pool markets and expertise that result in lower costs and generate profits it
is often referred to as creating
99) ______
A) synergies. B) core competencies.
C) a value chain. D) a value web.
Answer: A
100) An example of synergy in business is 100) _____
A) Blockbuster combining traditional video rental with online video rental.
B) Wal-Mart's order entry and inventory management system to coordinate with suppliers.
C) Amazon's use of the Internet to sell books.
D) JP Morgan Chase's merger with Bank One Corporation, which provided JP Morgan with a
network of retail branches in new regions.
Answer: D
101) An information system can enhance core competencies by 101) _____
A) encouraging the sharing of knowledge across business units.
B) allowing operational employees to interact with management.
C) providing better reporting facilities.
D) creating educational opportunities for management.
Answer: A
102) The research on IT and business performance has found that the more successfully a firm can
align information technology with its ________, the more profitable it will be.
102) _____
A) business goals B) value chain
C) competitive forces D) value web
Answer: A
103) One of the questions that should be asked in performing a strategic systems analysis is 103) _____
A) What kind of information systems are currently in use in our firm?
B) what is the structure of the industry in which the firm is located?
C) What are the web values of the industry?
D) how many businesses are in the industry?
Answer: B
104) 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
104) _____
A) supply and demand. B) the point of no return.
C) network inelasticity. D) the law of diminishing returns.
Answer: D
105) Network economics 105) _____
A) applies traditional economics to networked users.
B) balances the high cost of adding new members to a community against the lower cost of
using network infrastructure.
C) sees the cost of adding new members as inconsequential.
D) applies the law of diminishing returns to communities of users.
Answer: C
106) In network economics, the value of a commercial software vendor's software products 106) _____
A) increases as more people use them.
B) decreases as more people use them.
C) decreases according to the law of diminishing returns.
D) increases due to higher marginal gain in output.
Answer: A
107) A virtual company 107) _____
A) uses Internet technology to maintain a virtual storefront.
B) provides entirely Internet-driven services, or virtual products.
C) uses the capabilities of other companies without being physically tied to those companies.
D) uses Internet technology to maintain a networked community of users.
Answer: C
108) AutoNation's analytic software that mines customer data with a goal of enabling the building of
automobiles that customers actually want can be categorized as using information systems for
which competitive strategy?
108) _____
A) low-cost leadership B) customer intimacy
C) focus on market niche D) product differentiation
Answer: B
109) 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?
109) _____
A) E-commerce is affected by the law of diminishing returns.
B) The Internet enables the production or sales of substitute products or services.
C) Internet shopping produces cost transparency.
D) Internet technologies are universal, and therefore usable by all companies.
Answer: D
110) 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?
110) _____
A) Perform a strategic systems analysis.
B) Identify the business ecosystem the distributor is in.
C) Implement a strategic transition to the new system.
D) Benchmark existing systems.
Answer: A
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
111) An ________ is a stable, formal social structure that takes resources from the
environment and processes them to produce outputs.
111) ____________
Answer: organization
112) In the ________ definition of organizations, capital and labour are transformed by the
firm through the production process into products and services.
112) ____________
Answer: microeconomic
113) All organizations, including business firms, become very efficient over time because
individuals in the firm develop ________ for producing goods and services.
113) ____________
Answer: routines
114) According to ________, the firm is viewed as a “nexus of contracts” among
self-interested individuals rather than as a unified, profit-maximizing entity.
114) ____________
Answer: agency theory
115) ________ is another term for these loosely coupled but interdependent networks of
suppliers, distributors, outsourcing firms, transportation service firms, and technology
manufacturers.
115) ____________
Answer: Business ecosystem
116) ________ is a competitive strategy for creating brand loyalty by developing new and
unique products and services that are not easily duplicated by competitors.
116) ____________
Answer: Product differentiation
117) ________ is the ability to offer individually tailored products and services using the
same production resources as mass production.
117) ____________
Answer: Mass customization
118) ________ 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.
118) ____________
Answer: Switching costs
119) The ________ 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.
119) ____________
Answer: value chain model
120) A(n) ________ activity is one that is directly related to the production and distribution of
a firm's products or services.
120) ____________
Answer: primary
121) A(n) ________ activity is a part of the organization's infrastructures, human resources,
technology, and procurement that makes the delivery of the firm's products or services
possible.
121) ____________
Answer: support
122) Sociotechnical changes affecting a firm adopting new information systems requiring
organizational change can be considered ________.
122) ____________
Answer: strategic transitions
123) The ________ 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.
123) ____________
Answer: value web
124) A(n) ________ is an activity at which a firm excels as a world-class leader. 124) ____________
Answer: core competency
125) eBay has been ________ with Internet auctions. 125) ____________
Answer: synonymous
126) eBay derives the bulk of its ________ from fees and commissions associated with its sales
transactions.
126) ____________
Answer: revenue
127) As a manager, you will be the one to decide which ________ will be developed. 127) ____________
Answer: systems
128) In the microeconomic definition of organizations, ________ and labour are transformed
by the firm through the production process into products and services.
128) ____________
Answer: capital
129) ________ are formal legal entities with internal rules and procedures that must abide by
laws.
129) ____________
Answer: Organizations
130) A(n) ________ company uses networks to link people, assets, and ideas, enabling it to
work with other companies to create products and services without being limited by
traditional organizational boundaries or physical locations.
130) ____________
Answer: virtual
131) The technical and behavioural definitions of organizations are not ________. 131) ____________
Answer: contradictory
132) Organizations try to hire and promote employees on the basis of ________ qualifications
and professionalism
132) ____________
Answer: technical
133) ________ resistance is one of the great difficulties of bringing about organizational
change–especially the development of new information systems.
133) ____________
Answer: Political
134) Managers who know how to work with the ________ of an organization will be more
successful than less-skilled managers in implementing new information systems.
134) ____________
Answer: politics
135) All organizations are composed of individual ________ and behaviours. 135) ____________
Answer: routines
136) At the same time, organizational culture is a powerful restraint on change, especially
________ change.
136) ____________
Answer: technological
137) ________ generally change much faster than organizations. 137) ____________
Answer: Environments
138) ________ all have a structure or shape. 138) ____________
Answer: Organizations
139) From the point of view of economics, IT changes both the relative costs of ________ and
the costs of ________.
139) ____________
Answer: capital , information
140) Information technology also can reduce internal management ________. 140) ____________
Answer: costs
141) As firms grow in size and complexity, traditionally they experience rising ________
costs.
141) ____________
Answer: agency
142) Because IT reduces both agency and ________ costs for firms, we should expect firm size
to shrink over time as more capital is invested in IT.
142) ____________
Answer: transaction
143) Large, ________ organizations, which primarily developed before the computer age, are
often inefficient, slow to change, and less competitive than newly created organizations.
143) ____________
Answer: bureaucratic
144) Information systems can ________ the number of levels in an organization by providing
managers with information to supervise larger numbers of workers and by giving
lower-level employees more decision-making authority.
144) ____________
Answer: reduce
145) Post-industrial theories based more on history and sociology than economics also
support the notion that IT should ________ hierarchies.
145) ____________
Answer: flatten
146) Information systems inevitably become bound up in organizational ________ because
they influence access to a key resource–namely, information.
146) ____________
Answer: politics
147) Because information systems potentially change an organization’s structure, culture,
business processes, and strategy, there is often considerable ________ to them when they
are introduced.
147) ____________
Answer: resistance
148) Businesses are rapidly rebuilding some of their key business ________ based on Internet
technology.
148) ____________
Answer: processes
149) Firms that "do better" than others are said to have a ________ over others. 149) ____________
Answer: competitive advantage
150) A profitable company depends in large measure on its ability to attract and ________
customers and charge high prices.
150) ____________
Answer: retain
151) A firm can use information systems to achieve the ________ operational costs and the
________ prices.
151) ____________
Answer: lowest , lowest
152) 7-Eleven improved its competitive position by wringing more ________ out of its
customer data.
152) ____________
Answer: value
153) Dell tries to emphasize low cost as well as the ability to ________ its personal computers. 153) ____________
Answer: customize
154) The Internet can make competitive ________ disappear very quickly because virtually all
companies can use this technology.
154) ____________
Answer: advantage
155) To align IT with the business and use information systems ________ for competitive
advantage, managers need to perform a strategic systems analysis.
155) ____________
Answer: effectively
156) The competitive advantages strategic systems confer do not necessarily last long enough
to ensure long-term ________.
156) ____________
Answer: profitability
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
157) Differentiate between the technical and behavioural definitions of an organization.
Answer: The behavioural 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 labour as interchangeable units, with the ability to rearrange these
units at will, whereas the behavioural 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.
158) Mintzberg’s classification of organizational structure identifies five basic kinds of organizational structures.
List them and give a generic example of each.
Answer: 1. Entrepreneurial structure — a small start-up business
2. Machine bureaucracy — Midsize manufacturing firm
3. Divisionalized bureaucracy — Power Corporation, Hudson Bay Company
4. Professional bureaucracy — Law firms, school systems, hospitals
5. Adhocracy — Consulting firms
159) 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.
160) Explain how IT might flatten an organization’s structure.
Answer: Behavioural researchers have theorized that information technology facilitates flattening of hierarchies
by broadening the
distribution of
information to
empower
lower-level
employees and
increase
management
efficiency. IT
pushes
decision-making rights lower in the organization because lower-level employees receive the
information they need to make decisions without supervision. Because managers now receive so much
more accurate information on time, they become much faster at making decisions, so fewer managers
are required. Management costs decline as a percentage of revenues, and the hierarchy becomes much
more efficient. Information systems can reduce the number of levels in an organization by providing
managers with information to supervise larger numbers of workers and by giving lower-level
employees more decision-making authority. These changes mean that the management span of
control has also been broadened, enabling high-level managers to manage and control more workers
spread over greater distances. Many companies have eliminated thousands of middle managers as a
result of these changes.
161) 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.
162) How can information systems 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
force 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 develop industry-wide, IT-supported consortia, symposia, and
communications networks to coordinate activities concerning government agencies, foreign
competition, and competing industries.
163) 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.
164) 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
telecommunication
s 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.
165) 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).
166) 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.
167) 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.
168) 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 an 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).
169) 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?
1) FALSE
2) TRUE
3) TRUE
4) FALSE
5) TRUE
6) TRUE
7) TRUE
8) FALSE
9) FALSE
10) TRUE
11) FALSE
12) FALSE
13) TRUE
14) FALSE
15) FALSE
16) TRUE
17) TRUE
18) TRUE
19) TRUE
20) TRUE
21) TRUE
22) FALSE
23) TRUE
24) FALSE
25) FALSE
26) TRUE
27) TRUE
28) FALSE
29) TRUE
30) TRUE
31) TRUE
32) TRUE
33) FALSE
34) TRUE
35) FALSE
36) TRUE
37) TRUE
38) TRUE
39) FALSE
40) FALSE
41) FALSE
42) TRUE
43) TRUE
44) FALSE
45) FALSE
46) TRUE
47) A
48) A
49) A
50) C
51) A
52) C
53) A
54) B
55) B
56) B
57) A
58) C
59) C
60) C
61) B
62) A
63) A
64) C
65) A
66) B
67) C
68) D
69) B
70) C
71) C
72) B
73) A
74) D
75) D
76) C
77) B
78) B
79) B
80) D
81) A
82) C
83) C
84) C
85) C
86) B
87) C
88) C
89) D
90) D
91) C
92) D
93) D
94) B
95) B
96) D
97) C
98) D
99) A
100) D
101) A
102) A
103) B
104) D
105) C
106) A
107) C
108) B
109) D
110) A
111) organization
112) microeconomic
113) routines
114) agency theory
115) Business ecosystem
116) Product differentiation
117) Mass customization
118) Switching costs
119) value chain model
120) primary
121) support
122) strategic transitions
123) value web
124) core competency
125) synonymous
126) revenue
127) systems
128) capital
129) Organizations
130) virtual
131) contradictory
132) technical
133) Political
134) politics
135) routines
136) technological
137) Environments
138) Organizations
139) capital , information
140) costs
141) agency
142) transaction
143) bureaucratic
144) reduce
145) flatten
146) politics
147) resistance
148) processes
149) competitive advantage
150) retain
151) lowest , lowest
152) value
153) customize
154) advantage
155) effectively
156) profitability
157) The behavioural 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 labour as
interchangeable units, with the ability to rearrange these units at will, whereas the behavioural 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.
158) 1. Entrepreneurial structure — a small start-up business
2. Machine bureaucracy — Midsize manufacturing firm
3. Divisionalized bureaucracy — Power Corporation, Hudson Bay Company
4. Professional bureaucracy — Law firms, school systems, hospitals
5. Adhocracy — Consulting firms
159) 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.
160) Behavioural researchers have theorized that information technology facilitates flattening of hierarchies by
broadening the distribution of information to empower lower-level employees and increase management efficiency.
IT pushes decision-making rights lower in the organization because lower-level employees receive the information
they need to make decisions without supervision. Because managers now receive so much more accurate
information on time, they become much faster at making decisions, so fewer managers are required. Management
costs decline as a percentage of revenues, and the hierarchy becomes much more efficient. Information systems
can reduce the number of levels in an organization by providing managers with information to supervise larger
numbers of workers and by giving lower-level employees more decision-making authority. These changes mean
that the management span of control has also been broadened, enabling high-level managers to manage and control
more workers spread over greater distances. Many companies have eliminated thousands of middle managers as a
result of these changes.
161) 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.
162) By working with other firms, industry participants can use information technology to develop industry-wide
standards for exchanging information or business transactions electronically, which force 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 develop industry-wide,
IT-supported consortia, symposia, and communications networks to coordinate activities concerning government
agencies, foreign competition, and competing industries.
163) 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.
164) 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.
165) 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).
166) 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.
167) 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.
168) 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 an 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
sellin
g games, applications, and ring tones), and Internet service providers (who participate as providers of Internet
service to the mobile platform).
169) 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?