Chapter 2 Competing with Information Technology

All of the following are competitive forces in the marketplace except. A: Alliances B: Competition C: Substitues D: Bargaining

A: Alliances

A(n) ___________ strategy is a competitive strategy by which a firm seeks to become a low-cost producer of products and services in the industry. A: cost leadership B: differentiation C: innovation D: alliance

A: Cost leadership

Becoming a low-cost producer of products and services in an industry is an example of a(n): A: Cost leadership strategy B: Differentiation strategy C: Innovation strategy D: Growth strategy

A: Cost leadership strategy

When a firm develops ways to differentiate their products and services from their competitors', it is pursuing a ______________ strategy: A: differentiation B: alliance C: innovation D: marketing

A: Differentiation

All the following are competitive strategies except: A: New entries into the market B: Innovation C: Cost leadership D: Alliances

A: New entries into the market

According to the text, competition is a __________ characteristic in business that _______________. A: positive, is natural and healthy B: negative, can consume significant resources C: neutral, can help a firm meet strategic enterprise objectives D: none of the choices are correct.

A: Positive, is natural and healthy

Using an information system to make customers and/or suppliers reluctant to change to another competitor is called: A: Growth strategy B: Building switching costs C: Creating alliances D: Raising barriers to entry

B: Building switching costs

Which of the following is a competitive force in the marketplace? A: Cost leadership B: Competition C: Differentiation D: Alliances

B: Competition

A(n) ____________ strategy is a competitive strategy by which a firm significantly expands its capacity to produce goods and services, expanding and diversifying in the market. A: alliance B: growth C: differentiation D: innovation

B: Growth

According to the text, the Internet: A: Has limited competition world-wide B: Has created many ways to enter the market quickly, with relatively low cost C: Has created new entry barriers to competition D: Has decreased prices world-wide

B: Has created many ways to enter the market quickly, with relatively low cost

Which of the following is a competitive strategy? A: New entries into the market B: Innovation C: Bargaining power D: Substitutes

B: Innovation

Developing a relationship with a customer such that the customer cannot afford to switch suppliers is an example of: A: Monopolistic enterprise B: Locking in the customer C: Growth strategies D: None of the above is correct

B: Locking in the customer

Companies like Wal-Mart extended their networks to their customers and suppliers in order to build innovative continuous inventory replenishment systems that would lock in their business. This creates a(n) _________ information system. A: leveraged B: inter-enterprise C: Intra-enterprise D: locked-in

B: inter-enterprise

A firm can survive and succeed in the long run if it successfully develops strategies to confront the __________ that shape the structure of a competition in its industry. A: technological innovations B: competitive business processes C: competitive forces D: competitive strategies

C: Competitive forces

When a firm strives to find ways to help its suppliers and customers reduce their costs or to increase the costs of their competitors, it is pursuing a strategy of ____________. A: innovation B: alliance C: cost leadership D: growth

C: Cost leadership

In addition to the five basic competitive strategies, the text describes several key strategies implemented with information technology. Which of the following is not one of those strategies? A: Locking in customers B: Building switching costs C: Creating alliances D: Raising barriers to entry

C: Creating alliances

A(n) ___________ strategy is a competitive strategy by which a firm develops ways to differentiate its products and services from those of its competitors. A: low cost leadership B: innovation C: differentiation D: growth

C: Differentiation

Expanding a company's product offering into global markets is an example of a(n) _____________ strategy: A: cost leadership B: differentiation C: growth D: alliance

C: Growth

When customers become dependent on mutually beneficial inter-enterprise information systems, they become reluctant to switch to a company's competitors because they would incur all of the following costs except: A: Time B: Money C: Innovation D: Effort

C: Innovation

According to the text, in the world of the Internet, a firm's biggest competitor: A: Usually exists and is close in the physical world B: Usually does not exist but will emerge close in the physical world C: May not yet exist but could emerge almost overnight D: Probably exists in an oversea location

C: May not yet exist but could emerge almost overnight

A sales company such as eBay would be most likely to use information technology to promote __________________. A: online stock trading B: point-of-sale inventory tracking C: online auctions D: virtual manufacturing alliances

C: online auctions

A serious problem of competitive advantage is that: A: It normally doesn't last very long and it isn't sustainable over the long term B: Competitors figure out how it was done and do the same thing C: A competitive advantage can become a competitive necessity D: All of the choices are correct.

D: All of the choices are correct.

A strategic information system can be any kind of information system that uses information technology to help an organization. A: gain a competitive advantage B: reduce a competitive disadvantage C: meet strategic enterprise objectives D: all of the choices are correct.

D: All of the choices are correct.

Investments in information technology that build valuable new relationships allow a firm to: A: Lock in the supplier B: Lock in the customer C: Lock out competition D: All the above

D: All the above

A(n) ___________ strategy is a competitive strategy by which a firm establishes new business linkages with customers, suppliers, competitors, and other companies. A: growth B: low cost leadership C: differentiation D: alliance

D: Alliance

All of the following can be used to counter competitive forces in the marketplace except: A: Alliances B: Growth C: Innovation D: Bargaining

D: Bargaining

All of the following are basic competitive forces discussed in the text except: A: Rivalry of competitors B: Threat of substitutes C: Bargaining power of suppliers D: Bargaining power of competitors

D: Bargaining power of competitors

A(n) ___________ strategy is a competitive strategy by which a firm develops unique products or services from those of its competitors, or makes radical business changes that may alter the fundamental nature of the industry. A: alliance B: growth C: differentiation D: innovation

D: Innovation

The practice of becoming the largest purchaser of products from a given supplier is an example of: A: Cost leadership B: Growth strategies C: Differentiation D: Locking in the supplier

D: Locking in the supplier

All of the following are basic competitive strategies discussed in the text except: A: Cost leadership B: Innovation C: Product differentiation D: Strategic dominance

D: Strategic dominance

A company that places a strategic focus on customer value recognizes that __________ ,rather than __________ , has become a primary determinant in a customer's perception of value. A: service, price B: price, quality C: quality, service D: quality, price.

D: quality, price.

Competition is a negative characteristic in business that can require significant resources to overcome.

FALSE

The threat of new entrants is often at its strongest during periods of rising costs or inflation.

FALSE

An innovation strategy may allow a firm to focus its products or services and gain an advantage in a particular segment or niche of a market.

FALSE: A differetniation strategy may allow a firm to focus its products or services and gain an advantage in a particular segment or niche of a market.

Companies that consistently offer the best value from the customer's perspective must provide two key services: keeping track of their individual customers' preferences and selling products or services at the lowest price

FALSE: Companies that consistently offer the best value from the customer's perspective (a) keep track of their customers' individual preferences, (b) keep up with market trends, (c) supply products, services, and information anytime, anywhere, and (d) provide customer services tailored to individual needs.

All the employees within a marketing department, from clerical staff to top managers, form a cross-functional team.

FALSE: A cross-functional team includes employees from several different departments or specialities.

According to the value chain concept, primary processes include such things as the procurement of resources and human resource management that are directly related to the manufacturing of products or delivering of services to the customer.

FALSE: Human resource management is a support process, not a primary process.

When using the value chain concept, managers should seek to develop strategic information systems for those activities that they view as the "weakest link" in the value chain.

FALSE: Manager should try to focus on the basic processes that add the most value to a company's products or services.

When a firm develops ways to differentiate its products from a competitor's, it is pursuing a cost leadership strategy.

FALSE: When a firm develops ways to differentiate its products from a competitor's it is pursuing a differentiation strategy.

When a firm uses IT to create virtual organizations of business partners, it is pursuing a growth strategy.

FALSE: When a firm uses IT to create virtual organization of business partners, it is pursuing an alliance strategy.

When a firm makes such radical changes to its business processes for producing products and services that it alters the fundamental structure of an industry, it is pursuing an innovation strategy.

TRUE

When an organization uses information technology to develop products, services and capabilities in order to gain a strategic advantage over competitive forces in the global marketplace, it is using information systems in a strategic role.

TRUE

The value chain concept can help managers decide where and how to apply the strategic capabilities of information technology.

TRUE: Business process reengineering (BPR) is most often called streamlining.

A company that places a strategic focus on customer value recognizes that quality, rather than price, has become a primary determinant in a customer's perception of value.

TRUE

A given activity can fall into one or more of the categories of competitive strategy.

TRUE

A strategic use of information technology would be to leverage investment in information system specialists, hardware, software, databases, and networks from operational uses into strategic applications.

TRUE

Although the potential payback of reengineering is high, so is the risk of failure and level of disruption to the organizational environment of the firm.

TRUE

Business process reengineering (BPR) combines a strategy of promoting business innovation with a strategy of making major improvements to business operations so that a company can become a much stronger and more successful competitor in the marketplace.

TRUE

Companies like Wal-Mart use information technology to implement competitive strategies for strategic advantage.

TRUE

If a key supplier's bargaining power gets too strong, it can force the price of goods and services to unmanageably high levels.

TRUE

If an organization offers it online package tracking system in a manner that allows its customers to access shipment information not only via computer, but via a mobile phone as well, then such an action could fall into both the differentiation and innovations strategy categories.

TRUE

In the Internet world, a firm's biggest competitor may be one that is not yet in the marketplace but could emerge almost overnight.

TRUE

Information technology plays a major role in the business process reengineering of most business processes.

TRUE

Internet technologies can make customers the social point of customer relationship management (CRM) and other e-business applications.

TRUE

Investments in information technology can allow a business to lock in customers and suppliers, and lock out competitors, by building valuable new relationships with them.

TRUE

Many companies have found that organizational redesign approaches are an important enabler of business process reengineering.

TRUE

Most products and services have some sort of substitute available to the consumer

TRUE

Not everything innovative will serve to differentiate one organization from another.

TRUE

The value chain framework can be used to view a firm as a series, a chain, or a network of basic activities that add value to its products and services, and thus add a margin of value to the firm.

TRUE

When a business effectively builds in switching costs, its customers and/or suppliers become reluctant to switch to another competitor.

TRUE