Chapter 3

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. A bookseller selling an e-book reader that reads only the bookseller's books. A car manufacturer's Web site 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 department store creating specialized products for preferred customers.

Which of the following is an example of a keystone firm within a business ecosystem?

Apple in the mobile platform ecosystem

The value chain model:

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

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

False

Which of the following statements about disruptive technologies is not true?

Firms that invent disruptive technologies as first movers always become market leaders.

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

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

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

Which of the following marketplace forces would be of least concern to a manufacturer of deep-sea oil rigs?

New market entrants

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

Nike's use of celebrities to market their products.

All of the following are competitive forces in Porter's model except:

external environment.

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

market niche

When two organizations pool markets and expertise that result in lower costs and generate profits, they are creating:

synergies.

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

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

"nexus of contracts" among self-interested individuals.

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

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

Competitive forces model

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

Mintzberg's classification identifies five forces in an industry's environment that affect the strategic position of a firm.

False

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

False

The inventors of a disruptive technology typically benefit the most from the technology; it is rare that fast followers catch up quickly.

False

The law of diminishing returns only applies to digital products.

False

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

False

Which of the following is an example of a divisionalized bureaucracy?

Fortune 500 firm

Which of the following statements about network economics is not true?

In network economics, the marginal cost of adding new members to the network is higher than the marginal gain.

Which of the following statements about the technical view of organizations is not true?

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

You are consulting for a natural food products 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

________ 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

Which of the following substitute products would be of most concern for a cable TV distributor?

Satellite TV

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

Technology

Procter and Gamble uses InnovationNet for which of the following?

To enhance its core competencies

A firm can be said to have competitive advantage when it has access to resources that others do not.

True

According to the network economics perspective, the more people offering products on eBay's site, the greater the value of the site to all who use it.

True

All organizations have bedrock, unquestioned assumptions that define their goals and products.

True

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

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

True

Smart products are an example of the Internet of Things.

True

Smart products generally raise switching costs.

True

The value chain model classifies all company activities as either primary or support activities.

True

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

achieve low-cost leadership.

The most successful solutions or methods for achieving a business objective are called:

best practices.

The interaction between information technology and organizations is influenced:

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

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

core competency

In environmental scanning, a firm may use information systems to:

identify external events that may affect it.

In network economics, the value of a commercial software vendor's software products:

increases as more people use them.

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

labor

The four major competitive strategies are:

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

The Internet increases the bargaining power of customers by:

making information available to everyone.

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 organizational:

politics

Under Mintzberg's classification of organizational structure, knowledge-based organizations fall under the category of:

professional bureaucracies.

Walmart's continuous replenishment system allows it to do all of the following except:

provide mass customization.

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

strategic transitions.

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

The idea that 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, is referred to as:

the law of diminishing returns.

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

transaction costs.

Routines are also called standard operating procedures.

true

A virtual company:

uses networks to link people, assets, and ideas.

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

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

Agency Costs

Which of the following is not a true statement about value webs?

Value webs are inflexible and cannot adapt quickly to changes in supply and demand.

A firm can exercise greater control over its suppliers by having:

more suppliers.

Smart products generally raise switching costs.

true

Which of the following statements about business processes is not true?

Business processes are typically unaffected by changes in information systems.

High product differentiation is a sign of a transparent marketplace:

False

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

False

Which of the following industries has the lowest barrier to entry?

Small retailer

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

True

Which of the following technologies disrupted the traditional publishing industry?

World Wide Web

Information systems can be used at the industry level to achieve strategic advantage by:

building industrywide, IT-supported consortia and symposia.

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

Which of the following is an example of synergy in business?

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

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

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

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.

High product differentiation is a sign of a transparent marketplace.

False

Which of the following is a competitive force challenging the publishing industry?

Substitute products or services

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

True

When the output of some units in a firm can be used as inputs to other units, synergies develop, which can lower costs and generate profits.

True

As discussed in the chapter opening case, which of the following statements about Verizon is not true?

Verizon is focusing on satellite-based television in its competition with AT&T.

Information systems enhance core competencies by:

encouraging the sharing of knowledge across business units.

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

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 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.