CHAPTER 2: STRATEGIC USES OF INFORMATION SYSTEMS
A firm gains bargaining power with a supplier when the firm has many competitors.
ANSWER: False
Strategic information systems are defined by their technical features per se, and not by how they are used.
ANSWER: False
The goal of reengineering is to gain small incremental cost savings.
ANSWER: False
The larger the number of companies competing within an industry, the better off each company is.
ANSWER: False
The reengineering process makes it possible to determine how much each change contributed to the organization's improved position.
ANSWER: False
___________ are expenses incurred when a customer stops buying a product or service from one business and starts buying it from another.
ANSWER: Switching costs
A barrier to potential new market entrants is the high expense of entering the particular market.
ANSWER: True
An alliance can be created to enable customers to use the same technology for purchases from different companies.
ANSWER: True
Being on the bleeding edge can mean that implementation costs are significantly higher than anticipated.
ANSWER: True
Companies raise barriers to entrants by obtaining legal protection of intellectual property.
ANSWER: True
For an information system to be an strategic information, one of the conditions is that the information system must serve an organizational goal rather than simply provide information.
ANSWER: True
In a highly competitive industry that traditionally has had a narrow profit margin, JetBlue managed to gain strategic advantage by reducing cost and therefore reducing the price to the customer.
ANSWER: True
Instead of differentiating a product or service, an organization can add to the product or service to increase its value to the consumer.
ANSWER: True
One way to lock in buyers in a free market is to create a situation in which customers fear high switching costs.
ANSWER: True
Practically any mobile-based system that gives a company competitive advantage is a strategic information system.
ANSWER: True
____________ provide customers with cheaper combined service and the convenience of one-stop shopping.
ANSWER: a. Alliances
Which of the following statements is true of explicit switching costs?
ANSWER: a. Explicit switching costs involve a penalty levied for terminating a deal or contract.
On the web, an example of alliances is a(n) ____.
ANSWER: a. affiliate program
The most important metric in the airline industry is________, which is how much it costs to fly a passenger one mile of the journey.
ANSWER: a. cost per available seat-mile (CASM)
One way to increase market share is to lower prices, and the best way to lower prices is to ________.
ANSWER: a. reduce costs
In a highly competitive industry that traditionally has had a narrow profit margin, JetBlue managed to gain strategic advantage by ___________.
ANSWER: a. reducing cost
______________use physical characteristics of people, such as fingerprints and retina scans, for authentication and access to physical places and online information systems.
ANSWER: b. Biometrics
___________ refers to an organization's initiative of adding to a product or service to increase its value to the consumer.
ANSWER: b. Enhancement of existing products or services
___________ refers to the competitive advantage that a company can achieve by persuading customers that its product or service is better than its competitors'.
ANSWER: b. Product differentiation
__________ involves adoption of new machinery and elimination of management layers.
ANSWER: b. Reengineering
Which of the following is considered a strategic advantage of the first-mover?
ANSWER: b. Superior brand name
The word "strategy" originates from the Greek word strategos, meaning "__________."
ANSWER: b. general
JetBlue obtained the strategic advantage of the _____________by implementing the latest available technologies of fast databases, VoIP, and a slick website.
ANSWER: b. late mover
Which of the following patents does Priceline.com hold that prevents competitors from entering its business space?
ANSWER: c. Online reverse auctioning
In a ___________, a market rarely remains the domain of one organization for long; thus, competition ensues almost immediately.
ANSWER: c. free-enterprise society
Companies that are first to adopt advanced systems that reduce labor enjoy __________for as long as their competitors lag behind.
ANSWER: competitive advantage
The essence of strategy is innovation, so _________ is often gained when an organization tries a strategy that no one has tried before.
ANSWER: competitive advantage
__________are expenses incurred when a customer stops buying a product or service from one business and starts buying it from another.
ANSWER: d. Switching costs
Which of the following conditions must exist for an information system to be a strategic information system?
ANSWER: d. The information system must serve an organizational goal.
Which of the following is a result of forming strategic alliances?
ANSWER: d. The same technology is used.
A __________ is a body of clients that is large enough to attract many other clients.
ANSWER: d. critical mass
A system can only help a company sustain competitive advantage if the company continuously modifies and enhances it, creating a(n) ___________for competitors.
ANSWER: d. moving target
A company achieves _____________by using strategy to maximize its strengths, resulting in a competitive advantage.
ANSWER: strategic advantage
Indirect costs in time and money spent adjusting to a new product that competes with the old is an example of implicit _________.
ANSWER: switching costs
Switching costs can be explicit or implicit.
ANSWER: True
