Chapter 3

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

Technology

A(n) ________ is an activity for which a firm is a world-class leader. core competency competitive advantage efficiency expertise area growth driver

core competency

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

disruptive technologies.

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

it helps firms expand in size.

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

labor

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

politics.

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

professional bureaucracies.

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

provide mass customization.

Sociotechnical changes affecting a firm adopting new information systems requiring organizational change can be considered: systems alterations. strategic transitions. sociotechnical transitions. organizational adjustments. business goal transitions.

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 secondary auxiliary primary service

support

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: differentiation costs. preservation costs. switching costs. retention costs. variation costs.

switching costs.

When two organizations pool markets and expertise that result in lower costs and generate profits, they are creating: synergies. a value web. net marketplaces. core competencies. a value chain.

synergies.

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: organization, culture, management, and environment. technology, people, culture, and structure. tasks, technology, people, and structure. environment, organization, structure, and tasks. costs, tasks, structure, and management.

tasks, technology, people, and structure.

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 value, is referred to as: supply and demand. the point of no return. virtual economics. the law of diminishing returns. network inelasticity.

the law of diminishing returns.

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

transaction costs.

A virtual company: uses networks to link people, assets, and ideas. uses Internet technology to maintain a networked community of users. is limited by traditional organizational boundaries. provides entirely Internet-driven services or virtual products. uses Internet technology to maintain a virtual storefront.

uses networks to link people, assets, and ideas.

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. competitive forces new entrant bargaining power rivalry value chain

value chain

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 rivalry competitive forces new entrant bargaining power

value chain

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 consortium net marketplace support web value chain

value web

Why does Amazon need to worry about competitors in online shopping? The Internet increases switching costs. E-commerce is affected by the law of diminishing returns. Internet technologies are universal, and therefore usable by all companies. The Internet enables the production or sales of substitute products or services. Internet shopping produces cost transparency.

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

Which of the following statements about the technical view of organizations is not true? It sees the organization as a social structure similar to a machine. 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 sees the firm as being infinitely malleable. It emphasizes group relationships, values and structures.

It emphasizes group relationships, values and structures.

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

Low-cost leadership

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

"nexus of contracts" among self-interested individuals.

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

A department store creating specialized products for preferred customers.

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

Agency costs

Which of the following statements about organizations is not true? 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 organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs. 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 is an example of a keystone firm within a business ecosystem? Nike and the athletic apparel ecosystem Apple and the mobile platform ecosystem GUESS and the fashion ecosystem American Airlines and the computerized reservation ecosystem Citibank and the ATM ecosystem

Apple and the mobile platform ecosystem

Which of the following is an example of synergy in business? Walmart's order entry and inventory management system to coordinate with suppliers Bank of America acquiring Countrywide Financial Corporation to reach a large pool of new customers Nike's use of technology to improve its product offerings Blockbuster combining traditional video rental with online video rental Amazon's use of the Internet to sell books

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

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

Benchmarking

Which of the following statements about business processes is not true? Business processes are typically unaffected by changes in information systems. Business processes are usually ensconced in an organization's culture. 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 typically unaffected by changes in information systems.

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

Competitive forces model

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

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

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

Fortune 500 firm

Which of the following statements about network economics is not true? From a network economics perspective, the value of a community of people grows as the number of participants in the community increases. In network economics, the marginal cost of adding new members to the network is higher than the marginal gain. Uber is an example of a business model that is based on the principle of network economics. Information technology can be strategically useful from a network economics perspective. The law of diminishing returns does not always apply to every situation.

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

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

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

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

New market entrants

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

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? Terrestrial radio Broadcast TV On-demand Internet television Satellite radio Streaming music services

On-demand Internet television

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? Identify the business ecosystem the distributor is in Set up a strategic transition Perform a strategic systems analysis Benchmark existing systems Implement a strategic transition to the new system

Perform a strategic systems analysis

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

Substitute products or services

________ is a competitive strategy for creating brand loyalty by developing new and unique products and services that are not easily duplicated by competitors. Strengthening supplier intimacy Low-cost leadership Focusing on market niche Product differentiation Strengthening customer intimacy

Product differentiation

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

Small retailer

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 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 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 planning to sell coffee, branded mugs, and espresso machines on its website.

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

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

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

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

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

World Wide Web

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

achieve low-cost leadership.

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

best practices.

Information systems can be used at the industry level to achieve strategic advantage by: decreasing switching costs. building industrywide, IT-supported consortia and symposia. raising the bargaining power of suppliers. enforcing standards that reduce the differences between competitors. encouraging the entry of new competitors. 1 points

building industrywide, IT-supported consortia and symposia.

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

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

Information systems enhance core competencies by: encouraging the sharing of knowledge across business units. providing better reporting facilities. allowing operational employees to interact with management. creating educational opportunities for management. fostering synergies among departments.

encouraging the sharing of knowledge across business units.

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

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

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

identify external events that may affect it.

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

increases as more people use them.

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. low-cost leadership, new market entrants, product differentiation, and focus on market niche. new market entrants, substitute products and services, customers, and suppliers. customers, suppliers, new market entrants, and substitute products.

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

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 ad hoc divisionalized multidivisional professional

machine

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

making information available to everyone.

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

market niche

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

microeconomic

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

more suppliers.