Management Information Systems Chapter 3

According to agency theory, the firm is viewed as a(n)

"nexus of contracts" among self-interested individuals.

Which of the following best illustrates the use of information systems to focus on market niche?

A department store creating specialized products for preferred customers.

An example of a keystone firm within a business ecosystem is

Apple and software application writers in the mobile platform ecosystem

________ technologies radically change the business landscape and environment.

Disruptive

Why does Amazon.com need to worry about competitors in online shopping?

Internet technologies are universal, and therefore usable by all companies.

In a demonstration of network economics, the more people that use eBay's site, the greater the value of the site.

True

Information systems technology can be viewed as a factor of production that can be substituted for traditional capital and labor from the point of view of economics.

True

Routines are also called standard operating procedures.

True

Walmart's continuous replenishment system allows it to

achieve low cost leadership

All of the following are competitive forces except

external environment

A firm can exercise greater control over its suppliers by having

more suppliers

A competitive force challenging the publishing industry is

substitute products or services

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

tasks, technology, people, and structure.

A virtual company

uses networks to link people, assets, and ideas.

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)

value web

A(n) ________ is a collection of independent firms that use information technology to coordinate their value chains to collectively produce a product or service for a market.

value web

An example of synergy in business is

Bank of America acquiring Countrywide Financial to reach a large pool of new customers.

How does the technical view of organizations fall short of understanding the full impacts of information systems in a firm?

It sees the inputs and outputs, labor and capital, as being infinitely malleable.

You are consulting for a cosmetics distributor who is interested in determining the benefits it could achieve from implementing new information systems. What will you advise as the first step?

Perform a strategic systems analysis.

An efficient customer response system directly links consumer behavior to distribution and production and supply chains.

True

Customers are one of the competitive forces that affect an organization's ability to compete.

True

All of the following industries have been disrupted by the Internet except

clothing

Sociotechnical changes affecting a firm adopting new information systems requiring organizational change can be considered

strategic transitions

Which of the following is one of the support activities in a firm's value chain?

technology

The effect of the Internet has been to decrease the bargaining power of customers.

False

The use of Internet technologies allows companies to more easily sustain competitive advantage.

False

High product differentiation is a sign of a transparent marketplace.

False

The value chain model classifies all company activities as primary activities

False

Switching costs increase when customers are strongly linked to products and platforms.

True

How do information systems enhance core competencies?

by encouraging the sharing of knowledge across business units

The four major competitive strategies are

low-cost leadership, product differentiation, focus on market niche, and customer and supplier intimacy.

A manufacturer of deep-sea oil rigs may be least concerned about this marketplace force.

new market entrants

Network economics

sees the cost of adding new members as inconsequential.

________ is a competitive strategy for creating brand loyalty by developing new and unique products and services that are not easily duplicated by competitors.

Product differentiation

A company's competitive advantages ultimately translate into higher stock market valuations than its competitors.

True

Amazon's use of the Internet as a platform to sell books more efficiently than traditional bookstores illustrates a use of information services for

low cost leadership

Under Mintzberg's classification of organizational structure, the knowledge-based organization where goods and services depend on the expertise and knowledge of professionals falls under the category of

professional bureaucracies

Which of the following industries has a low barrier to entry?

restaurant

Some organizations lack bedrock, unassailable assumptions that define their goals and products.

False

What are the most successful solutions or methods for achieving a business objective?

best practices

How are information systems used at the industry level to achieve strategic advantage?

by building industry-wide, IT-supported consortia and symposia

All of the following statements are true about information technology's impact on business firms except

it helps firms to expand in size.

The Internet raises the bargaining power of customers by

making information available to everyone

An organization is seen as a means by which primary production factors are transformed into outputs consumed by the environment according to the ________ definition of organizations.

microeconomic

A substitute product of most concern for a cable TV distributor is

satellite tv

An organization is a

stable, formal social structure that takes resources from the environment and processes them to produce outputs, formal, legal entity with internal rules and procedures that must abide by laws, and a collection of people and other social elements

The parts of an organization's infrastructure, human resources, technology, and procurement that make the delivery of the firm's products or services possible are known as ________ activities.

support

When a firm buys on the marketplace what it cannot make itself, the costs incurred are referred to as

transaction costs

The ________ model highlights the primary or support activities that add a margin of value to a firm's products or services where information systems can best be applied to achieve a competitive advantage.

value chain

An example of a divisionalized bureaucracy is a

Fortune 500 firm

Which of the following represent the primary activities of a firm?

inbound logistics, operations, outbound logistics, sales and marketing, and service

All of the following are considered disruptive technologies except

instant messaging

Research has shown that a majority of firms are able to align their information technology with their business goals.

False

In environmental scanning, a firm may use information systems to

identify external events that may affect it.

Along with capital, ________ is the primary production input that the organization uses to create products and services.

labor

Mintzberg classifies a large bureaucracy existing in a slowly changing environment that produces standard products and is dominated by centralized management as a ________ bureaucracy.

machine

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

the law of diminishing returns

Synergies' occur when the output of some units in a firm can be used as inputs to other units, lowering cost and generating profits.

true

The interaction between information systems and organizations is influenced

by management decisions.

Business processes are collections of

routines

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 are known as

switching costs

The competitive forces model cannot be used to analyze modern digital firms which face new competitive forces that are not true of traditional firms.

False

All of the following are IT-enabled products and services providing competitive advantage except

Walmart's RetailLink system.

Walmart's attempts to increase its online presence is an example of a firm using information systems to

achieve low cost leadership

Which of the following is not a major feature of organizations that impacts the use of information systems?

agency costs

An activity businesses perform to measure and compare business processes to similar processes of other companies within their industry is

benchmarking

Which model is used to describe the interaction of external forces that affect an organization's strategy and ability to compete?

competitive forces model

The value chain model

highlights specific activities in the business where competitive strategies can best be applied.

Firms use a ________ strategy to provide a specialized product or service for a narrow target market better than competitors.

market niche

The ability to offer individually tailored products or services using the same production resources as bulk production is known as

mass customization

The divergent viewpoints about how resources, rewards, and punishments should be distributed, and the struggles resulting from these differences are known as

politics

When two organizations pool markets and expertise that result in lower costs and generate profits, it is referred to as creating

synergies

In the value chain model, support activities are most directly related to the production and distribution of the firm's products and services, which create value for the customer.

false

A(n) ________ is an activity at which a firm excels as a world-class leader.

core competency

A professional bureaucracy is a knowledge-based organization where goods and services depend on the expertise and knowledge of professionals.

True

Information systems are used to enable new products and services via product differentiation.

True

Mass customization offers individually tailored products or services using the same resources as mass production.

True

The term business ecosystem describes the loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers.

True