IS 220 Chapter 2

20. Cost Leadership Strategy is one strategy to gain a competitive advantage?

True

22. There are six (6) characteristics of effective Business-IT Alignment.

True

24. Competitive advantage leads to control of a market

True

48. The music industry is a good example of the extremely low variable costs of digital products.

True

49. The introduction of the ATM in the banking industry is an example of the innovation strategy.

True

51. The bargaining power of suppliers is low when their buyers have many choices.

True

54. The primary activities in the value chain create the value for which customers are willing to pay.

True

15. All of the following are strategies for competitive advantage except: a) Differentiation. b) Innovation. c) Operational effectiveness. d) Customer leadership.

D

6.​ A new Mexican restaurant opens up around the corner from a BBQ restaurant. The owner realizes that he needs to do something to keep his BBQ in his customers' minds when they are going out to eat. Which of the following uses of technology will minimize this rivalry? (a)​ Update BBQ menu on the company's Web site with some new pictures of the inside. (b)​ Send a coupon to the customers who have not been in for the last month. (c) ​Put a netbook on the counter so customers can sign up to receive weekly newsletters via e-mail. (d)​ All of these are correct.

D

65. Producing identical items in large quantities is called: a) strategic systems. b) customer focus. c) continuous improvement. d) mass production. e) mass customization.

D

1. Which of the following is classified as data? (a) Facebook posts. (b) Book purchase. (c) Your name. (d) Surveillance video. (e) All of these answers are considered data.

E

18. According to Michael Porter, the Web ______ competition, which generally _________ a firm's profitability. a) increases/increases b) increases/decreases c) decreases/increases d) decreases/decreases

B

2. According to the videos (a) The more data you have the harder it is to work with. (b) The more data you have the clearer it is to understand what is going on. (c) Less data is better than more data. (d) Data is data no matter how much you have.

B

5.​ Imagine if a BBQ restaurant decides to allow catering customers to order online. Which of Porter's competitive forces is this attempting to minimize? (a)​ Threat of entry of new competitors (b) ​Bargaining power of buyers. (c)​ Threat of substitute products or services. (d)​ Bargaining power of suppliers. (e) ​Rivalry among existing firms.

B

60. Which of the following statements concerning technology pressures on modern businesses is true? a) Technology changes so rapidly that organizations should wait before they release new technology-based products. b) New technologies offer alternative service options. c) New technologies will never replace existing technologies. d) The amount of information on the Internet remains stable from year to year. e) The important information on the Internet is fee-based.

B

63. Which one of the following statements is false? a) Businesses tend to view government regulations as expensive constraints on their activities. b) Government deregulation reduces competition. c) IT support is essential for compliance with many new regulations. d) IT has been used to identify patterns of behavior associated with terrorist activities. e) Information ethics can destroy the morale of a company's employees.

B

70. For most companies, the Web _____ the threat that new competitors will enter the market by _____ traditional barriers to entry. a) decreases/increasing b) increases/decreasing c) increases/increasing d) decreases/decreasing

B

71. _____ is a feature that must be offered by a competing organization in order to survive in the marketplace. a) Competitive advantage b) An entry barrier c) Strategic advantage d) Rapid time-to-market e) One-to-one marketing

B

73. How does the Internet affect the way you purchase your textbooks? a) The Internet gives you fewer choices. b) The Internet increases your bargaining power. c) The Internet provides you with less information. d) The Internet decreases your bargaining power. e) The Internet increases your switching costs.

B

74. Buyer power is _____ when buyers have many choices from whom to buy and _____ when buyers have few choices. a) high/the same b) high/low c) low/low d) low/high e) low/the same

B

76. Porter's competitive forces model helps organizations identify _____, whereas his value chain model helps organizations identify specific _____. a) competitive opportunities/activities b) general strategies/activities c) activities/competitive opportunities d) activities/general strategies e) primary activities/support activities

B

82. Which strategy for competitive advantage involves offering different products, services, or product features? a) cost leadership b) differentiation c) innovation d) operational effectiveness e) customer-orientation

B

84. The introduction of ATM machines by Citibank was a classic example of which strategy for competitive advantage? a) cost leadership b) innovation c) differentiation d) operational effectiveness e) customer-orientation

B

85. Southwest Airlines' low-cost, short-haul strategy is an example of which strategy for competitive advantage? a) cost leadership b) differentiation c) innovation d) operational effectiveness e) customer-orientation

B

16. Which of the following organizational responses to various business pressures? (select all that apply) a) Information Overload b) Strategic Systems c) Social Responsibility d) Mass Customization e) Globalization

B & D

10. Garmin uses its basic technology of GPS for many different purposes. Which of the following do they NOT do to accomplish this? (a) They use different size devices. (b) They use GPS technology in all. (c) They use the same maps in all their units. (d) They use touch screens in all their units. (e) They use different amounts of memory in all their units.

C

11. Business environment pressures can come from which of the following? a) Management restructuring b) Cost reductions. c) Political changes. d) Quality control

C

13. Which of the following pressures do businesses today experience? a) The pressure to contribute to their communities b) The pressure to keep employees. c) Technology pressures such as information overload. d) Pressures to be politically correct

C

17. Which of the following is an example of a technology pressure faced by businesses? a) Globalization b) Powerful Customers c) Information Overload d) Social Responsibility

C

4. If a BBQ restaurant decides to focus on the threat of substitution, which of the following uses of technology will not minimize the threat of substitution? (a) Online ordering (b) Texting daily specials to B's BBQ customers (c) Bar codes on the delivery bags that keep the order warm during delivery (d) Customer's last order recall when a customer calls in an order (e) Accepting online payments for catering orders

C

69. Competitive advantage for an organization manifests itself as all of the following except: a) Lower costs b) Higher quality c) Increased time to market d) Increased profits e) Increased speed

C

83. Which strategy for competitive advantage involves introducing new products and putting new features in existing products? a) cost leadership b) differentiation c) innovation d) operational effectiveness e) customer-orientation

C

88. IT will impact managers' jobs in all of the following ways except: a) managers will have time to get into the field b) managers can spend more time planning c) managers can spend more time "putting out fires" d) managers can gather information more quickly

C

9.​ Alignment means (a) ​Business decisions are made by IT. (b) ​IT sets its own goals and milestones. (c)​ The structure and goals of IT support the business strategy. (d)​ All the VPs are at the same level in the organization chart. (e)​ Managers all agree.

C

90. Which of the following is not an example of business - IT alignment? a) The company goals are clear to every IT and business employee. b) The company ensures that IT employees understand how the company makes money. c) The company views IT as a way to support the business but not as a way to create new revenue streams. d) IT professionals rotate into business departments. e) The company views customer service as extremely important.

C

23. Which of the following is a characteristic of effective business - IT alignment? a) Organizations consider customer service to be a secondary function. b) Organizations create a company culture that makes each department autonomous. c) Organizations want their IT employees to focus on their job rather than the other functional departments. d) Organizations view IT as an engine of innovation that continually transforms the business, often creating new revenue streams.

D

56.) Which of the following statements is false? a) Competitive advantage is based on some measurement such as cost, quality, or speed. b) Competitive advantage enables a company to function effectively within a market. c) Competitive advantage leads to higher-than-average profits. d) Competitive advantage requires the use of technology. e) Competitive advantage applies to companies of all sizes.

D

58. The workforce in developed countries is exhibiting all of the following trends except: a) It is becoming more diversified. b) It includes more women. c) It includes more single parents. d) It includes fewer persons with disabilities. e) It includes more minority-group members.

D

59. Today's customers have ________ . a) less knowledge about products b) less sophistication c) difficulty in finding information about products d) higher expectations e) difficulty in comparing prices

D

61. Which of the following is not an example of the growing initiative called green IT? a) Designing an IT infrastructure to support sustainability. b) Building systems that monitor carbon throughout the organization. c) Asking vendors about compliance on environmental standards. d) Building computer applications that use less energy e) Designing energy-efficient data centers.

D

67. The Bodymetrics body scanner is best characterized as an example of: a) mass production. b) customer focus. c) real-time customer input. d) mass customization. e) continuous improvement.

D

68. Information-based industries are most susceptible to which one of Porter's five forces? a) threat of entry of new competitors b) bargaining power of suppliers c) bargaining power of customers d) threat of substitute products e) rivalry among existing firms in an industry

D

71. The threat of competitors' entering the automobile manufacturing industry is _____ because barriers to entry are so _____. a) low/low b) high/high c) high/low d) low/high

D

77. _____ activities create value for which customers are willing to pay, whereas _____ activities do not add value directly to the firm's products or services. a) Support/primary b) Human resource management/inbound logistics c) Procurement/operations d) Primary/support e) Accounting/outbound logistics

D

79. New technologies can produce new products very _____, which _____ the threat from substitute products. a) slowly/decreases b) slowly/increases c) slowly/does not affect d) quickly/increases e) quickly/does not affect

D

86. Which strategy for competitive advantage involves improving the manner in which an organization executes its internal business processes? a) cost leadership b) differentiation c) innovation d) operational effectiveness e) customer-orientation

D

89. Porter's _____ help(s) companies identify general strategies, whereas his _____ help(s) to identify specific activities where companies can use the strategies for greatest impact. a) value chain model, competitive forces model b) primary activities, support activities c) competitive forces model, primary activities d) competitive forces model, value chain model e) value chain model, support activities

D

56. Business pressures on organizations are created when there are changes in a) Social factors b) Economic factors c) Legal factors d) Political factors e) Changes in all of the above will create business pressures.

E

66. Producing customized items in large quantities is called: a) strategic systems. b) customer focus. c) continuous improvement. d) mass production. e) mass customization.

E

7.​ Which areas of the value chain should the manager of a BBQ restaurant review in order to support an operational effectiveness strategy? (a)​ Procurement. (b)​ Operations. (c) ​Inbound logistics. (d)​ Outbound logistics. (e)​ All of these answers are correct.

E

72. The threat of competitors' entering a market is very high in industries that perform a(n) _____ role and in industries where the primary product or service is _____. a) intermediation/physical b) broker/physical c) sales/financial d) financial/digital e) intermediation/digital

E

75. The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel. a) e-commerce/digital b) digital/e-commerce c) digital/physical d) physical/financial e) physical/digital

E

80. The visibility of Internet applications on the Web makes proprietary systems more difficult to keep secret. This is an example of which of Porter's five forces? a) threat of entry of new competitors b) bargaining power of suppliers c) bargaining power of customers d) threat of substitute products e) rivalry among existing firms in an industry

E

87. When Amazon welcomes you by name back to its Web site on your second visit, it is employing which strategy for competitive advantage? a) cost leadership b) differentiation c) innovation d) operational effectiveness e) customer-orientation

E

91. Which of the following is not a cause of inadequate alignment between IT and business? a) A lack of communication b) Different objectives c) Not understanding each group's expertise d) Lack of IT knowledge on the part of the business executives e) Lack of funds

E

25. The business environment refers to the industry that a company is in.

False

27. The information technology environment is the combination of social, legal, economic, physical, and political factors that affect business activities.

False

31. Internet access in the United States is not particularly related to household income.

False

32. In general, government deregulation decreases competition.

False

34. Build-to-stock is a strategy of producing customized products and services.

False

39. The digital divide is the gap between data and knowledge.

False

42. An information system that helps an organization gain a competitive advantage is called a competitive information system.

False

45. The Internet increases traditional barriers to entry into a market.

False

46. The Internet decreases customers' bargaining power.

False

50. An entry barrier is a long-term competitive advantage.

False

52. When there are many substitute products, a company can create a competitive advantage by increasing fees.

False

53. Porter's value chain model is a variation of his competitive advantage framework.

False

55. It's a good idea for a company to select two competitive advantage strategies.

False

8.​ SAP uses a single ERP (enterprise resource planning) system to support all industries and all solutions.

False

12. Thomas Friedman's flatteners include which of the following? a) The development of work-flow software b) The end of the Cold War c) The invention of the cell phone d) The industrialization of third world countries

A

14. Which of the following is not a government regulation that puts pressure on businesses? a) National Technology Act. b) Gramm-Leach-Bliley Act. c) Health Insurance Portability and Accountability Act. d) Sarbanes-Oxley Act.

A

21. Two strategies that a company can use to gain a competitive advantage are? a) Customer-Orientation and Operational Effective Strategy. b) Protection and Innovation Strategy. c) Mass Customization and Cost Leadership Strategy. d) Compliance and Innovation Strategy.

A

3. According to the videos (a) The whole world is data analytics. (b) The whole world is data capture. (c) The whole world is data storage. (d) The whole world is a data warehouse.

A

57. Market pressures include which of the following? a) the global economy b) weak competition c) a homogeneous workforce d) weak customers e) high-cost offshore labor

A

62. The digital divide is an example of which type of societal pressure? a) social responsibility b) government regulations c) protection against terrorism d) ethics e) information overload

A

64. Which of the following is not a response by organizations to business pressures? a) Delay releases of innovated products. b) Build strategic systems that enable an organization to increase market share or profits. c) Provide tools that satisfy customers so they don't go to a competitor. d) Manufacture customized goods at a lower cost. e) Conduct business electronically with customers and business partners.

A

78. If there are _____ substitutes for an organization's products or services, then the threat of substitutes is _____. a) many/high b) few/low c) few/high d) many/low e) few/negligible

A

81. Walmart's automatic replenishment system, which enables the company to reduce inventory storage requirements, is an example of which strategy for competitive advantage? a) cost leadership b) differentiation c) innovation d) operational effectiveness e) customer-orientation

A

19. According to Porter's Value Chain Model, which of the following are considered support activities? (select all that apply) a) Procurement b) Operations c) Marketing and Sales d) Customer Service e) Product and Technology Development

A & E

26. Globalization is the integration and interdependence of many facets of life made possible by rapid advances in information technology.

True

28. In general, labor costs are higher in developed countries than in developing countries.

True

29. Developed countries usually provide greater fringe benefits than developing countries.

True

30. Information technology is facilitating the entry of a wide variety of employees into the workforce.

True

33. Ethical issues are important because, if handled poorly, they can damage an organization's image.

True

35. In mass production, a company produces a large quantity of identical items.

True

36. In mass customization, companies produce items in large quantity, but they tailor the items to meet the desires and needs of individual customers.

True

37. Customer intimacy is the process whereby a business learns as much as possible about its customers to better anticipate and address their needs.

True

38. A growing IT initiative called green IT is enabling organizations to reduce their carbon footprint.

True

40. The One Laptop per Child project aims to use technology to revolutionize how the world can educate its children.

True

41. Competitive advantage helps a company function effectively within a market and generate larger-than-average profits.

True

43. Every competitive organization is driven by the competitive forces identified by Michael Porter.

True

44. Michael Porter concludes that the overall impact of the Internet is to increase competition, which generally diminishes a firm's profitability.

True

47. Information-based industries face the greatest threat from substitutes.

True