MIS CH 3

Which of the following industries has the lowest barrier to entry? - Automotive - Computer chip - Solar energy - Airline - Small retailer

Small retailer easy to enter this market, where computer chip market has a high barrier to entry.

All organizations have bedrock, unquestioned assumptions that define their goals and products. True or False?

True

Routines are also called standard operating procedures. True or False

True Routines (standard operating procedures)-Precise rules, procedures, and practices developed to cope with virtually all expected situations Business Processes: collections of routines Business Firm: Collection of Business Processes

Which of the following technologies disrupted the traditional publishing industry? - Instant messaging - e-mail - Digital photography - PCs - World Wide Web

World Wide Web

Information systems can be used at the industry level to achieve strategic advantage by: - building industrywide, IT-supported consortia and symposia. - raising the bargaining power of suppliers. - encouraging the entry of new competitors. - enforcing standards that reduce the differences between competitors. - decreasing switching costs.

building industrywide, IT-supported consortia and symposia. an association and a collection of contributors

The interaction between information technology and organizations is influenced: - solely by the decision making of middle and senior managers. - by the development of new information technologies. - by many factors, including structure, politics, culture, and environment. - by two main macroeconomic forces: capital and labor. - by the rate of growth of the organization.

by many factors, including structure, politics, culture, and environment.

All of the following statements are true about information technology's impact on business firms except: - it helps firms expand in size. - it helps firms lower the cost of market participation. - it helps reduce internal management costs. - it helps reduce transaction costs. - it helps reduce agency costs.

it helps firms expand in size.

Mintzberg classifies a large bureaucracy existing in a slowly changing environment that produces standard products and is dominated by centralized management as a(n) ________ bureaucracy. - machine - professional - divisionalized - multidivisional - ad hoc

machine Mintzberg's Classification of organization structure include: entrepreneurial, machine bureaucracy, professional, divisional, innovative aka "adhocracy" Machine bureaucracy are in a large, slow changing environment. Dominated by centralized management and decision making

A firm can exercise greater control over its suppliers by having: - more suppliers. - fewer suppliers. - global suppliers. - local suppliers. - only a single supplier.

more suppliers

The divergent viewpoints about how resources, rewards, and punishments should be distributed, and the struggles resulting from these differences are known as organizational: - culture. - politics. - structure. - environments. - business processes.

politics. Each person in an organization ultimately has his own goals. Those goals may be aligned very well with organizational goals but perhaps they aren't. The bottom line is each person comes into an organization with different concerns and perspectives. When those viewpoints clash with others the end result is organizational politics. And, politics can essentially kill organizational changes necessary for incorporating new information systems.

Under Mintzberg's classification of organizational structure, knowledge-based organizations fall under the category of: - entrepreneurial structures. - divisionalized bureaucracies. - professional bureaucracies. - adhocracies. - machine bureaucracies.

professional bureaucracies. Mintzberg's Classification of organization structure include: entrepreneurial, machine bureaucracy, professional, divisional, innovative aka "adhocracy" Professional bureaucracy are knowledge based organizations dependent on expertise and knowledge of professionals. Dominated with department heads and weak centralized authority such as law firms, school systems, hospitals

Walmart's continuous replenishment system allows it to do all of the following except: - provide mass customization. - transmit orders to restock directly to its suppliers. - keep costs low. - better meet customer demands. - fine-tune merchandise availability.

provide mass customization.

Which of the following statements about disruptive technologies is not true? - Disruptive technologies radically change the business landscape and environment. - Disruptive technologies may be substitute products that perform better than other products currently being produced. - Disruptive technologies may sometimes simply extend the marketplace. - Disruptive technologies may put entire industries out of business. - Firms that invent disruptive technologies as first movers always become market leaders.

Firms that invent disruptive technologies as first movers always become market leaders. •Substitute products that perform as well as or better than existing product •Technology that brings sweeping change to businesses, industries, markets •Examples: personal computers, smartphones, Big Data, artificial intelligence, the Internet •First movers—inventors of disruptive technologies •Fast followers—firms with the size and resources to capitalize on that technology

Which of the following is an example of a divisionalized bureaucracy? - Startup firm - University - Fortune 500 firm - Midsize manufacturer - Consulting firm

Fortune 500 firm Mintzberg's Classification of organization structure include: entrepreneurial, machine bureaucracy, professional, divisional, innovative aka "adhocracy" Divisionalized bureaucracy are fortune 500 firms with machine bureaus producing different products, topped by one central headquarters like GM

Which of the following is not a true statement about value webs? - Value webs involve a collection of independent firms that use information technology to coordinate their value chains. - Value webs are more customer-driven than traditional value chains. - Value webs operate in a less linear fashion than traditional value chains. - Value webs are inflexible and cannot adapt quickly to changes in supply and demand. - Value webs involve highly synchronized industry value chains.

Value webs are inflexible and cannot adapt quickly to changes in supply and demand. value webs enhance their core competencies and improve the entire supply chain.

All of the following are competitive forces in Porter's model except: - suppliers. - new market entrants. - Disruptive technologies. - customers. - substitute products.

Disruptive technologies. Competitive Forces in Porter's Model: New Market Entrants, Substitute products, suppliers, and customers.

Firms use a ________ strategy to provide a specialized product or service for a narrow target market better than competitors. - product differentiation - market niche - mass customization - process efficiency - low-cost leadership

market niche

According to agency theory, the firm is viewed as a(n): - unified, profit-maximizing entity. - task force organization that must respond to rapidly changing environments. - entrepreneurial endeavor. - "nexus of contracts" among self-interested individuals. - entrepreneurial structure.

"nexus of contracts" among self-interested individuals. Agency Theory •Firm is nexus of contracts among self-interested parties requiring supervision •Firms experience agency costs (the cost of managing and supervising) which rise as firm grows •IT can reduce agency costs, making it possible for firms to grow without adding to the costs of supervising, and without adding employees

Which of the following statements about the technical view of organizations is not true? - It focuses on how inputs are combined to create outputs when technology changes are introduced into a company. - It sees capital and labor as being easily substituted for one another. - It emphasizes group relationships, values and structures. - It sees the organization as a social structure similar to a machine. - It sees the firm as being infinitely malleable.

- It emphasizes group relationships, values and structures.

Which of the following represent the primary activities of a firm? -Inbound logistics, operations, outbound logistics, sales and marketing, and service - Inbound logistics, operations, outbound logistics, technology, and service - Procurement, inbound logistics, operations, technology, and outbound logistics - Procurement, operations, technology, sales and marketing, and services - Organization infrastructure, human resources, technology, and procurement

-Inbound logistics, operations, outbound logistics, sales and marketing, and service Primary Activities include, inbound logistics (automated warehousing systems), operations (computer controlled machining systems), sales and marketing (computerized ordering systems), service (equipment maintenance systems), outbound logistics (automated shipment scheduling systems)

List three organizational factors that can prevent a firm in fully realizing the benefits of a new information system, and provide examples for each. (short answer)

1. Culture: All organizations have a foundation of unquestioned assumptions that define their goals and products. These assumptions include what products should be produced, how they should be produced, where and for whom they should be produced. Sharing the same cultural assumptions, agreement on other matters is more likely. Any changes that threaten or undermine these assumptions will most likely be met with resistance. For example, if a company stops paying overtime at time and a half, employees might feel undervalued and be less willing to work extra hours. 2. Politics: People in an organizations occupy different positions with different specialties, concerns, and perspectives. This means that they naturally have opposing views about how resources, rewards, and punishments should be distributed. This results in political struggles for resources, competition, and conflict within every organization. Self-serving behaviors could lead to bypassing supervision to get approvals for projects or going through improper channels to obtain special favors. 3. Environments: Organizations reside in environments which they draw resources and to which they supply goods and services. Organization and environments have a reciprocal relationship, meaning that organizations are depended on the social and physical environment and organizations can influence their environment. For example, business firms form alliances with other businesses to influence the political process (they advertise to influence customer acceptance of their products.)

Which model is used to describe the interaction of external forces that affect an organization's strategy and ability to compete? - Network economics model - Competitive forces model - Competitive advantage model - Demand control model - Agency costs model

Competitive forces model Substitute products and services-Substitutes customers might use if your prices become too high, for example, i Tunes substitutes for C D s •Customers -Can customers easily switch to competitor's products? Can they force businesses to compete on price alone in transparent marketplace? •Suppliers-Market power of suppliers when firm cannot raise prices as fast as suppliers

A machine bureaucracy is a knowledge-based organization where goods and services depend on the expertise and knowledge of professionals. True or False

False. Professional bureaucracy are knowledge based organizations dependent on expertise and knowledge of professionals. Dominated with department heads and weak centralized authority such as law firms, school systems, hospitals Where: Machine bureaucracy are in a large, slow changing environment. Dominated by centralized management and decision making

The value chain model: - categorizes five related advantages for adding value to a firm's products or services. - sees the supply chain as the primary activity for adding value. - categorizes four basic strategies a firm can use to enhance its value chain. - highlights specific activities in the business where competitive strategies can best be applied. - enables more effective product differentiation.

Highlights specific activities in the business where competitive strategies can best be applied. Value chains help an organization focus on support and primary activities (HR, Tech, Purchasing, Sales, Logistics) and Customer Relationship management systems, and determine where to focus their efforts the most.

How are the technical and behavioral definitions of an organization different? (Short Answer)

The behavioral definition of an organization is that it is a collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution. The technical definition sees an organization as a formal entity that takes inputs from the environment and processes these to create products that are then consumed by the environment (outputs). The technical view sees capital and labor as interchangeable units, with the ability to rearrange these units at will, whereas the behavioral view sees that rearranging some aspects of the organization, such as an information system, will have important consequences and changes for the organization's other units. A formal legal entity with internal rules and procedures, as well as a social structure

The most successful solutions or methods for achieving a business objective are called: - value activities. - best processes. - core competencies. - best practices. - benchmarks.

best practices do research of other businesses alike to decide if they should fine tune their business processes to wring even more resources from the production process

In environmental scanning, a firm may use information systems to: - transform inputs into products and services. - analyze the performance of its intranet. - identify external events that may affect it. - keep track of the temperature within its data centers. - develop a unified organizational culture.

identify external events that may affect it. (acts as a lens for the company)

In network economics, the value of a commercial software vendor's software products: - increases as more people use them. - decreases as more people use them. - increases due to higher marginal gain in output. - decreases according to the law of diminishing returns. - is unrelated to the number of people that use them.

increases as more people use them. In network economics: firm's take advantage of abilities to network with one another which benefits: •Marginal cost of adding new participant almost zero, with much greater marginal gain •Value of community grows with size •Value of software grows as installed customer base grows •Compare to traditional economics and law of diminishing returns

Along with capital, ________ is the primary production input that the organization uses to create products and services. - structure - culture - politics - feedback - labor

labor

Amazon's use of the Internet as a platform to sell books more efficiently than traditional bookstores illustrates which of the following strategies? - Low-cost leadership - Marketing effectiveness - Focusing on market niche - Strengthening supplier intimacy - Developing synergies

low-cost leadership The Internet allows traditional competitors to introduce new products and services and lure customers away. It provides a low-cost avenue for new market entrants. Consumers can easily and quickly find substitute products and services through the Internet. Customers can use information provided on the Internet to create new competition among companies while suppliers can increase their market power.

The four major competitive strategies are: - low-cost leadership, substitute products and services, customers; and suppliers. - low-cost leadership, product differentiation, focus on market niche, and customer and supplier intimacy. - new market entrants, substitute products and services, customers, and suppliers. - low-cost leadership, new market entrants, product differentiation, and focus on market niche. - customers, suppliers, new market entrants, and substitute products.

low-cost leadership, product differentiation, focus on market niche, and customer and supplier intimacy. Four strategies for dealing with competitive forces, enabled by using IT: -Low-cost leadership: Produce products and services at a lower price than competitors -Product differentiation-Enable new products or services, greatly change customer convenience and experience. Mass customization. Google, Nike, Apple. -Focus on market niche: Use information systems to enable a focused strategy on a single market niche; specialize -Strengthen customer and supplier intimacy: Use information systems to develop strong ties and loyalty with customers and suppliers

The Internet increases the bargaining power of customers by: - creating new opportunities for building loyal customer bases. - making more products available. - making information available to everyone. - lowering transaction costs. - enabling the development of new services.

making information available to everyone. Customers can quickly compare information, reviews, and prices on the internet before making a purchasing decision.

The ability to offer individually tailored products or services using the same production resources as bulk production is known as: - mass marketing. - micromarketing. - micro customization. - niche customization. - mass customization.

mass customization.

According to the ________ definition of organizations, an organization is seen as a means by which capital and labor are transformed by the organization into outputs to the environment. - microeconomic - macroeconomic - sociotechnical - behavioral - psychological

microeconomic

According to research on organizational resistance, the four components that must be changed in an organization in order to successfully implement a new information system are: - environment, organization, structure, and tasks. - technology, people, culture, and structure. - organization, culture, management, and environment. - tasks, technology, people, and structure. - costs, tasks, structure, and management.

tasks, technology, people, and structure.

When a firm buys on the marketplace what it cannot make itself, the costs incurred are referred to as: - switching costs. - network costs. - procurement. - agency costs. - transaction costs.

transaction costs. Transaction Cost Theory •Firms seek to economize on transaction costs (the costs of participating in markets) -Vertical integration, hiring more employees, buying suppliers and distributors •IT lowers market transaction costs, making it worthwhile for firms to transact with other firms rather than grow the number of employees

Which of the following is not a major feature of organizations that impacts the use of information systems? - Business processes - Environments - Structure of the organization - Agency costs - Leadership style

Agency Costs Features of Organizations: Routines and business processes Politics: Each person in an organization ultimately has his own goals. Those goals may be aligned very well with organizational goals but perhaps they aren't. When those viewpoints clash with others the end result is organizational politics. And, politics can essentially kill organizational changes necessary for incorporating new information systems. Culture: reflects cultural values such as language, dress, and food Environment: Companies must continually adapt and change or go out of business. It's almost that simple. Structure: entrepreneurial (small start up, fast changing environment), machine bureaucracy (large in slow changing environment. Dominated by centralized mgmt and decision making), divisionalzed bureaucracy (fortune 500 firms with machine bureaus producing different products topped by one central headquarters like GM), professional (Knowledge based org dependent on expertise and knowledge of professionals. Dominated with dept heads and weak centralized authority like law firms, school systems, hospitals) adhocracy (task force org in rapidly changing environments. large groups of specialists in short-lived teams and has weak central mgmt like consulting firms)

Which of the following marketplace forces would be of least concern to a manufacturer of deep-sea oil rigs? - Product differentiation - Traditional competitors - Low number of suppliers - New market entrants - Low number of customers

New market entrants high barrier of entry to this market.

All of the following are IT-enabled products and services providing competitive advantage except: - Amazon's one-click shopping. - Apple's iTunes. - Ping's golf club customization. - PayPal's online person-to-person payment system. - Nike's use of celebrities to market their products.

Nike's use of celebrities to market their products.

Which of the following substitute products would be of most concern for a cable TV distributor? - Streaming music services - Broadcast TV - Satellite radio - On-demand Internet television - Terrestrial radio

On-demand Internet television

As discussed in the chapter opening case, which of the following statements about Starbucks is not true? - Starbucks strives to offer customers high-quality coffee, friendly servers, and customer friendly stores. - Starbucks plans to increase its online sales of coffee products using new technology. - Starbucks plans to use IT innovations to enhance the customer experience. - Starbucks is trying to create a unique customer experiences in stores. - Starbucks is planning to sell coffee, branded mugs, and espresso machines on its website.

Starbucks is planning to sell coffee, branded mugs, and espresso machines on its website. Starbucks is focusing on their brick and mortar sales, for enhanced customer experience. They are using online sales, such as their app, to sell their products, but the customer still goes to their shop to pick up their to-go order.

Which of the following is a competitive force challenging the publishing industry? - Positioning and rivalry among competitors - Low cost of entry - Substitute products or services - Customers' bargaining power - Suppliers' bargaining power

Substitute products or services

Which of the following is a support activity in a firm's value chain? Inbound logistics Operations Sales and marketing Service Technology

Technology Support activities include: admin and mgmt, HR, technology, procurement. Primary activities include: inbound logistics, operations, sales and marketing, service, outbound logistics

Hilton Hotels uses its OnQ system for which of the following purposes? - To lower its operating costs - To benchmark its progress against competitors - To create synergies with its suppliers - To take advantage of network economics - To estimate each guest's profitability and give additional privileges to profitable customers

To estimate each guest's profitability and give additional privileges to profitable customers

Which of the following best illustrates the use of information systems to focus on market niche? - A car manufacturer's website that lets you customize the features on the car you are purchasing. - A restaurant chain analyzing local sales figures to determine which menu items to serve. - A bookseller selling an e-book reader that reads only the bookseller's books. - A department store creating specialized products for preferred customers. - A clothes manufacturer expanding its offerings to new styles.

A department store creating specialized products for preferred customers.

Walmart's continuous replenishment system is an example of a firm using information systems to: - strengthen ties to its customers. - simplify the industry value chain. - develop synergies. - focus on market niche. - achieve low-cost leadership.

Achieve low-cost leadership Efficient customer response systems provide a company and its suppliers with an integrated view of customers. These systems provide instantaneous information to the company and its suppliers. Every staff member can have access to the information in the system to help reduce costs and prices well below that of the competition. Processes such as supply replenishment are automated between companies and suppliers. When products reach a certain re-order point, the system automatically sends a message to the supplier who can quickly send out new stock.

What is agency theory? How does information technology enable a firm to reduce agency costs? (short answer)

Agency theory - economic theory that views the firm as a nexus of contracts among self-interested individuals who must be supervised and managed. Information technology reduces the costs of acquiring and analyzing information, which allows organizations to reduces agency costs because it becomes easier for managers to oversee a greater number of employees. This, overall, lowers agency costs. In the long run, firms should have fewer middle managers and higher revenue per employee, if they've invested in IT.

Which of the following statements about organizations is not true? - An organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs. - An organization is a formal, legal entity with internal rules and procedures that must abide by laws. - An organization is a collection of people and other social elements. - An informal group can be considered to be an organization. - An organization is a collection of rights, privileges, - obligations, and responsibilities delicately balanced over a period of time through conflict and conflict resolution.

An informal group can be considered to be an organization.

Which of the following would a company employ to measure and compare its business processes to similar processes of other companies within their industry? - Benchmarking - Best practices - Value chain analysis - Strategic systems analysis - Secondary activities

Benchmarking Benchmarking provides a way for businesses to determine how they stand up against their competitors within the same industry.

Which of the following statements about business processes is not true? - Business processes influence the relationship between an organization and information technology. - Business processes are a collection of standard operating procedures. - A business firm is a collection of business processes. - Business processes are usually ensconced (established) in an organization's culture. - Business processes are typically unaffected by changes in information systems.

Business processes are typically unaffected by changes in information systems.