Management Information Systems Managing the Digital Firm 15th Edition By Kenneth C. Laudon – Test Bank
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Sample Test
Management Information Systems: Managing the Digital Firm, 15e (Laudon)
Chapter 3 Information Systems, Organizations, and
Strategy
1) The interaction between information technology and
organizations is influenced:
1. A)
solely by the decision making of middle and senior managers.
2. B) by
the development of new information technologies.
3. C) by
many factors, including structure, politics, culture, and environment.
4. D) by
two main macroeconomic forces: capital and labor.
5. E) by
the rate of growth of the organization.
Answer: C
Difficulty: Moderate
AACSB: Information technology
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
2) Which of the following statements about organizations
is not true?
1. A) An
organization is a stable, formal social structure that takes resources from the
environment and processes them to produce outputs.
2. B) An
organization is a formal, legal entity with internal rules and procedures that
must abide by laws.
3. C) An
organization is a collection of people and other social elements.
4. D) An
informal group can be considered to be an organization.
5. E) An
organization is a collection of rights, privileges, obligations, and
responsibilities delicately balanced over a period of time through conflict and
conflict resolution.
Answer: D
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
3) 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.
1. A)
microeconomic
2. B)
macroeconomic
3. C)
sociotechnical
4. D)
behavioral
5. E)
psychological
Answer: A
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
4) Which of the following statements about the technical view of
organizations is not true?
1. A) It
sees information systems as a way to rearrange the inputs and outputs of the
organization.
2. B) It
sees capital and labor as primary production factors.
3. C) It
emphasizes group relationships, values and structures.
4. D) It
sees the organization as a social structure similar to a machine.
5. E) It
sees the inputs and outputs, labor and capital, as being infinitely malleable.
Answer: E
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
5) Which of the following is not a major feature of organizations
that impacts the use of information systems?
1. A)
Business processes
2. B)
Environments
3. C)
Goals
4. D)
Agency costs
5. E)
Leadership styles
Answer: D
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
6) Which of the following statements about business processes
is not true?
1. A)
Business processes influence the relationship between an organization and
information technology.
2. B)
Business processes are a collection of standard operating procedures.
3. C) A
business firm is a collection of business processes.
4. D)
Business processes are usually ensconced in an organization’s culture.
5. E)
Business processes are typically unaffected by changes in information systems.
Answer: E
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
7) Which of the following technologies disrupted the traditional
publishing industry?
1. A)
Instant messaging
2. B)
e-mail
3. C)
Internet telephony
4. D)
PCs
5. E)
World Wide Web
Answer: E
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
8) Under Mintzberg’s classification of organizational structure,
knowledge-based organizations fall under the category of:
1. A)
entrepreneurial structures.
2. B)
divisionalized bureaucracies.
3. C)
professional bureaucracies.
4. D)
adhocracies.
5. E)
machine bureaucracies.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
9) Mintzberg classifies a large bureaucracy existing in a slowly
changing environment that produces standard products and is dominated by
centralized management as a ________ bureaucracy.
1. A) machine
2. B)
professional
3. C)
divisionalized
4. D)
multidivisional
5. E) ad
hoc
Answer: A
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
10) Which of the following is an example of a divisionalized
bureaucracy?
1. A)
Startup firm
2. B)
University
3. C)
Fortune 500 firm
4. D)
Midsize manufacturer
5. E)
Consulting firm
Answer: C
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
11) Along with capital, ________ is the primary production input
that the organization uses to create products and services.
1. A)
structure
2. B)
culture
3. C)
politics
4. D)
feedback
5. E)
labor
Answer: E
Difficulty: Easy
AACSB: Information technology
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
12) The divergent viewpoints about how resources, rewards, and
punishments should be distributed, and the struggles resulting from these
differences are known as organizational:
1. A)
culture.
2. B)
politics.
3. C)
structure.
4. D)
environments.
5. E)
routines.
Answer: B
Difficulty: Easy
AACSB: Information technology
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
13) Which of the following statements about disruptive
technologies is not true?
1. A)
Disruptive technologies radically change the business landscape and
environment.
2. B)
Disruptive technologies may be substitute products that perform better than
other products currently being produced.
3. C)
Disruptive technologies may sometimes simply extend the marketplace.
4. D) Disruptive
technologies may put entire industries out of business.
5. E)
Firms that invent disruptive technologies as first movers always become market
leaders.
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
14) As discussed in the chapter opening case, which of the
following statements about Verizon is not true?
1. A)
Verizon is focusing on satellite-based television in its competition with
AT&T.
2. B)
Verizon claims that its wireless network is the largest and most reliable in
the United States.
3. C)
Verizon is investing in upgrading its high-speed networks.
4. D)
Verizon sees mobile ads and video as an investment for the future.
5. E)
Verizon offers a standalone video service.
Answer: A
Difficulty: Challenging
AACSB: Application of knowledge
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
15) All organizations have bedrock, unquestioned assumptions
that define their goals and products.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
16) A professional bureaucracy is a knowledge-based organization
where goods and services depend on the expertise and knowledge of
professionals.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
17) Routines are also called standard operating procedures.
Answer: TRUE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
18) How are the technical and behavioral definitions of an
organization different?
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 an entity that takes inputs from the environment and processes these to
create products that are then consumed by the environment. 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.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-1: Which features of organizations do managers need
to know about to build and use information systems successfully?
19) When a firm buys on the marketplace what it cannot make
itself, the costs incurred are referred to as:
1. A)
switching costs.
2. B)
network costs.
3. C)
procurement.
4. D)
agency costs.
5. E)
transaction costs.
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 3-2: What is the impact of information systems on
organizations?
20) All of the following statements are true about information
technology’s impact on business firms except:
1. A) it
helps firms expand in size.
2. B) it
helps firms lower the cost of market participation.
3. C) it
helps reduce internal management costs.
4. D) it
helps reduce transaction costs.
5. E) it
helps reduce agency costs.
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 3-2: What is the impact of information systems on
organizations?
21) According to agency theory, the firm is viewed as a(n):
1. A)
unified, profit-maximizing entity.
2. B)
task force organization that must respond to rapidly changing environments.
3. C)
entrepreneurial endeavor.
4. D)
“nexus of contracts” among self-interested individuals.
5. E)
entrepreneurial structure.
Answer: D
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-2: What is the impact of information systems on organizations?
22) 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:
1. A)
environment, organization, structure, and tasks.
2. B)
technology, people, culture, and structure.
3. C)
organization, culture, management, and environment.
4. D)
tasks, technology, people, and structure.
5. E)
costs, tasks, structure, and management.
Answer: D
Difficulty: Challenging
AACSB: Information technology
LO: 3-2: What is the impact of information systems on
organizations?
23) List three organizational factors that can prevent a firm in
fully realizing the benefits of a new information system, and provide examples
for each.
Answer: Features of organizations include the
organization’s culture, politics, and structure. A new information system might
be resisted by end users or by managers for political reasons because they are
concerned about the political changes the system implies. For example, a new
system might lessen the authority of a manager in overseeing the employees, and
he or she may not want to relinquish this power. A new information system might
challenge the organization’s culture and be resisted for this reason. For
example, an information system might allow students at a university to take
self-managed courses, while the university’s basic cultural assumptions include
the concept that professors are the purveyors of knowledge. An information
system, by allowing the distribution of knowledge, may be better used in a
company with a flatter organization. A company with a highly stratified
hierarchy may have difficulty adjusting its business processes and structures
to an information system that does not follow the same business hierarchy of
information.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-2: What is the impact of information systems on
organizations?
24) What is agency theory? How does information technology
enable a firm to reduce agency costs?
Answer: According to agency theory, the firm is viewed as
a “nexus of contracts” among self-interested individuals rather than as a
unified, profit-maximizing entity. A principal (owner) employs “agents”
(employees) to perform work on his or her behalf. However, agents need constant
supervision and management; otherwise, they will tend to pursue their own
interests rather than those of the owners. As firms grow in size and scope,
agency costs or coordination costs rise because owners must expend more and
more effort supervising and managing employees. Information technology, by
reducing the costs of acquiring and analyzing information, permits
organizations to reduce agency costs because it becomes easier for managers to
oversee a greater number of employees. By reducing overall management costs,
information technology enables firms to increase revenues while shrinking the
number of middle managers and clerical workers.
Difficulty: Challenging
AACSB: Application of knowledge; Information technology;
Written and oral communication
LO: 3-2: What is the impact of information systems on
organizations?
25) Which model is used to describe the interaction of external
forces that affect an organization’s strategy and ability to compete?
1. A)
Network economics model
2. B)
Competitive forces model
3. C)
Competitive advantage model
4. D)
Demand control model
5. E)
Agency costs model
Answer: B
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
26) Which of the following industries has the lowest barrier to
entry?
1. A)
Automotive
2. B)
Computer chip
3. C)
Solar energy
4. D)
Airline
5. E)
Small retailer
Answer: E
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
27) All of the following are competitive forces in Porter’s
model except:
1. A)
suppliers.
2. B)
new market entrants.
3. C)
external environment.
4. D)
customers.
5. E)
substitute products.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
28) Which of the following marketplace forces would be of least
concern to a manufacturer of deep-sea oil rigs?
1. A)
Product differentiation
2. B)
Traditional competitors
3. C)
Low number of suppliers
4. D)
New market entrants
5. E)
Low number of customers
Answer: D
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
29) Which of the following substitute products would be of most
concern for a cable TV distributor?
1. A)
Satellite TV
2. B)
Broadcast TV
3. C)
Satellite radio
4. D)
The Internet
5. E)
Terrestrial radio
Answer: A
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
30) Walmart’s attempt to increase its online presence is an
example of a firm using information systems to:
1. A)
strengthen ties to its customers.
2. B)
simplify the industry value chain.
3. C)
develop synergies.
4. D)
focus on market niche.
5. E)
achieve low-cost leadership.
Answer: E
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
31) A firm can exercise greater control over its suppliers by
having:
1. A)
more suppliers.
2. B)
fewer suppliers.
3. C)
global suppliers.
4. D)
local suppliers.
5. E)
only a single supplier.
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
32) Amazon’s use of the Internet as a platform to sell books
more efficiently than traditional bookstores illustrates which of the following
strategies?
1. A)
Low-cost leadership
2. B)
Marketing effectiveness
3. C)
Focusing on market niche
4. D)
Strengthening supplier intimacy
5. E)
Developing synergies
Answer: A
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
33) The four major competitive strategies are:
1. A)
low-cost leadership, substitute products and services, customers; and suppliers.
2. B)
low-cost leadership, product differentiation, focus on market niche, and
customer and supplier intimacy.
3. C)
new market entrants, substitute products and services, customers, and
suppliers.
4. D)
low-cost leadership, new market entrants, product differentiation, and focus on
market niche.
5. E)
customers, suppliers, new market entrants, and substitute products.
Answer: B
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
34) Walmart’s continuous replenishment system allows it to do
all of the following except:
1. A)
provide mass customization.
2. B)
transmit orders to restock directly to its suppliers.
3. C)
keep costs low.
4. D)
better meet customer demands.
5. E)
fine-tune merchandise availability.
Answer: A
Difficulty: Challenging
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
35) Firms use a ________ strategy to provide a specialized
product or service for a narrow target market better than competitors.
1. A)
product differentiation
2. B)
market niche
3. C)
mass customization
4. D)
process efficiency
5. E)
low-cost leadership
Answer: B
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the value
chain model, synergies, core competencies, and network economics help companies
develop competitive strategies using information systems?
36) The ability to offer individually tailored products or
services using the same production resources as bulk production is known as:
1. A)
mass marketing.
2. B)
micromarketing.
3. C)
micro customization.
4. D)
niche customization.
5. E)
mass customization.
Answer: E
Difficulty: Easy
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
37) In environmental scanning, a firm may use information
systems to:
1. A)
transform inputs into products and services.
2. B)
analyze the performance of its intranet.
3. C)
identify external events that may affect it.
4. D)
keep track of the temperature within its data centers.
5. E)
develop a unified organizational culture.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
38) Which of the following is not a true statement about value webs?
1. A)
Value webs involve a collection of independent firms that use information
technology to coordinate their value chains.
2. B)
Value webs are more customer-driven than traditional value chains.
3. C)
Value webs operate in a less linear fashion than traditional value chains.
4. D)
Value webs are inflexible and cannot adapt quickly to changes in supply and
demand.
5. E)
Value webs involve highly synchronized industry value chains.
Answer: D
Difficulty: Challenging
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
39) Which of the following best illustrates the use of
information systems to focus on market niche?
1. A) A
car manufacturer’s Web site that lets you customize the features on the car you
are purchasing.
2. B) A
restaurant chain analyzing local sales figures to determine which menu items to
serve.
3. C) A
bookseller selling an e-book reader that reads only the bookseller’s books.
4. D) A
department store creating specialized products for preferred customers.
5. E) A
clothes manufacturer expanding its offerings to new styles.
Answer: D
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
40) All of the following are IT-enabled products and services
providing competitive advantage except:
1. A)
Amazon’s one-click shopping.
2. B)
Apple’s iPod and iTunes.
3. C)
Ping’s golf club customization.
4. D)
PayPal’s online person-to-person payment system.
5. E)
Nike’s use of celebrities to market their products.
Answer: E
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
41) The Internet increases the bargaining power of customers by:
1. A)
creating new opportunities for building loyal customer bases.
2. B)
making more products available.
3. C)
making information available to everyone.
4. D)
lowering transaction costs.
5. E)
enabling the development of new services.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
42) Procter and Gamble uses InnovationNet for which of the
following?
1. A) To
enhance its core competencies
2. B) To
benchmark its progress against competitors
3. C) To
create synergies with its suppliers
4. D) To
take advantage of network economics
5. E) To
establish a virtual company
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
43) Which of the following is a competitive force challenging
the publishing industry?
1. A)
Positioning and rivalry among competitors
2. B)
Low cost of entry
3. C)
Substitute products or services
4. D)
Customers’ bargaining power
5. E)
Suppliers’ bargaining power
Answer: C
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
44) The value chain model:
1. A)
categorizes five related advantages for adding value to a firm’s products or
services.
2. B)
sees the supply chain as the primary activity for adding value.
3. C)
categorizes four basic strategies a firm can use to enhance its value chain.
4. D)
highlights specific activities in the business where competitive strategies can
best be applied.
5. E)
enables more effective product differentiation.
Answer: D
Difficulty: Easy
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
45) Which of the following represent the primary activities of a
firm?
1. A)
Inbound logistics, operations, outbound logistics, sales and marketing, and
service
2. B)
Inbound logistics, operations, outbound logistics, technology, and service
3. C)
Procurement, inbound logistics, operations, technology, and outbound logistics
4. D)
Procurement, operations, technology, sales and marketing, and services
5. E)
Organization infrastructure, human resources, technology, and procurement
Answer: A
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
46) Which of the following is a support activity in a firm’s
value chain?
1. A)
Inbound logistics
2. B)
Operations
3. C)
Sales and marketing
4. D)
Service
5. E)
Technology
Answer: E
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
47) Which of the following would a company employ to measure and
compare its business processes to similar processes of other companies within
their industry?
1. A)
Benchmarking
2. B)
Best practices
3. C)
Value chain analysis
4. D)
Strategic systems analysis
5. E)
Secondary activities
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
48) The most successful solutions or methods for achieving a
business objective are called:
1. A)
value activities.
2. B)
best processes.
3. C)
core competencies.
4. D)
best practices.
5. E)
benchmarks.
Answer: D
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the value
chain model, synergies, core competencies, and network economics help companies
develop competitive strategies using information systems?
49) Information systems can be used at the industry level to
achieve strategic advantage by:
1. A)
building industrywide, IT-supported consortia and symposia.
2. B)
raising the bargaining power of suppliers.
3. C)
encouraging the entry of new competitors.
4. D)
enforcing standards that reduce the differences between competitors.
5. E)
decreasing switching costs.
Answer: A
Difficulty: Easy
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
50) In network economics, the value of a commercial software
vendor’s software products:
1. A)
increases as more people use them.
2. B)
decreases as more people use them.
3. C)
increases due to higher marginal gain in output.
4. D)
decreases according to the law of diminishing returns.
5. E) is
unrelated to the number of people that use them.
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
51) When two organizations pool markets and expertise that
result in lower costs and generate profits, they are creating:
1. A) a
value web.
2. B) a
value chain.
3. C)
net marketplaces.
4. D)
core competencies.
5. E)
synergies.
Answer: E
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
52) Which of the following is an example of synergy in business?
1. A)
Amazon’s use of the Internet to sell books
2. B)
Bank of America acquiring Countrywide Financial to reach a large pool of new
customers
3. C) Blockbuster
combining traditional video rental with online video rental
4. D)
Walmart’s order entry and inventory management system to coordinate with
suppliers
5. E)
Nike’s use of technology to improve its product offerings
Answer: B
Difficulty: Easy
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
53) Information systems enhance core competencies by:
1. A)
providing better reporting facilities.
2. B)
creating educational opportunities for management.
3. C)
allowing operational employees to interact with management.
4. D)
encouraging the sharing of knowledge across business units.
5. E)
fostering synergies among departments.
Answer: D
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
54) 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:
1. A)
the point of no return.
2. B)
the law of diminishing returns.
3. C)
supply and demand.
4. D)
network inelasticity.
5. E)
virtual economics.
Answer: B
Difficulty: Easy
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
55) Which of the following statements about network economics
is not
true?
1. A)
Uber is an example of a business model that is based on the principle of
network economics.
2. B)
The law of diminishing returns does not always apply to every situation.
3. C)
From a network economics perspective, the value of a community of people grows
as the number of participants in the community increases.
4. D)
Information technology can be strategically useful from a network economics
perspective.
5. E) In
network economics, the marginal cost of adding new members to the network is
higher than the marginal gain.
Answer: E
Difficulty: Challenging
AACSB: Application of knowledge
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
56) A virtual company:
1. A)
uses networks to link people, assets, and ideas.
2. B)
uses Internet technology to maintain a virtual storefront.
3. C)
uses Internet technology to maintain a networked community of users.
4. D)
provides entirely Internet-driven services or virtual products.
5. E) is
limited by traditional organizational boundaries.
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
57) Which of the following is an example of a keystone firm
within a business ecosystem?
1. A)
Apple in the mobile platform ecosystem
2. B)
GUESS and the fashion ecosystem
3. C)
Citibank and the ATM ecosystem
4. D)
American Airlines and the computerized reservation ecosystem
5. E)
Nike and the athletic apparel ecosystem
Answer: A
Difficulty: Easy
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
58) ________ is a competitive strategy for creating brand
loyalty by developing new and unique products and services that are not easily
duplicated by competitors.
1. A)
Product differentiation
2. B)
Low-cost leadership
3. C)
Focusing on market niche
4. D)
Strengthening customer intimacy
5. E)
Strengthening supplier intimacy
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
59) 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:
1. A)
retention costs.
2. B)
preservation costs.
3. C)
differentiation costs.
4. D)
switching costs.
5. E)
variation costs.
Answer: D
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
60) 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.
1. A)
competitive forces
2. B)
value chain
3. C)
bargaining power
4. D)
new entrant
5. E)
rivalry
Answer: B
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
61) 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.
1. A)
primary
2. B)
auxiliary
3. C)
secondary
4. D)
service
5. E)
support
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
62) 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.
1. A)
value chain
2. B)
support web
3. C)
value web
4. D)
consortium
5. E)
net marketplace
Answer: C
Difficulty: Challenging
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
63) A(n) ________ is an activity for which a firm is a
world-class leader.
1. A)
expertise area
2. B)
competitive advantage
3. C)
growth driver
4. D)
efficiency
5. E)
core competency
Answer: E
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
64) Why does Amazon need to worry about competitors in online
shopping?
1. A)
E-commerce is affected by the law of diminishing returns.
2. B)
Internet technologies are universal, and therefore usable by all companies.
3. C)
Internet shopping produces cost transparency.
4. D)
The Internet enables the production or sales of substitute products or
services.
5. E)
The Internet increases switching costs.
Answer: B
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
65) Smart products are an example of the Internet of Things.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
66) A company’s competitive advantages ultimately translate into
higher stock market valuations than its competitors.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
67) The competitive forces model cannot be used to analyze
modern digital firms which face new competitive forces that are not true of
traditional firms.
Answer: FALSE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
68) Customers are one of the competitive forces that affect an
organization’s ability to compete.
Answer: TRUE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
69) High product differentiation is a sign of a transparent
marketplace.
Answer: FALSE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
70) The effect of the Internet has been to decrease the bargaining
power of customers.
Answer: FALSE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
71) An efficient customer response system directly links
consumer behavior to distribution and production and supply chains.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
72) Information systems are used to enable new products and
services via product differentiation.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
73) Mass customization offers individually tailored products or
services using the same resources as mass production.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
74) Switching costs decrease when customers are strongly linked
to products and platforms.
Answer: FALSE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
75) The value chain model classifies all company activities as
either primary or support activities.
Answer: TRUE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
76) 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.
Answer: FALSE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
77) 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.
Answer: TRUE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
78) 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.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
79) The term business
ecosystem describes the loosely coupled but interdependent
networks of suppliers, distributors, outsourcing firms, transportation service
firms, and technology manufacturers.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
80) A firm can be said to have competitive advantage when it has
access to resources that others do not.
Answer: TRUE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
81) The law of diminishing returns only applies to digital
products.
Answer: FALSE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
82) The inventors of a disruptive technology typically benefit
the most from the technology; it is rare that fast followers catch up quickly.
Answer: FALSE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
83) Smart products generally raise switching costs.
Answer: TRUE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
84) Mintzberg’s classification identifies five forces in an
industry’s environment that affect the strategic position of a firm.
Answer: FALSE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
85) You are advising the owner of ABC Computers, a small local
computer shop that repairs and also builds custom computers to order. What
competitive strategies could ABC Computers employ? Which ones may it have
difficulty executing?
Answer: Low-cost leadership: ABC Computers may have
difficulty competing against the computer sales and warranty services of major
national computer manufacturers, such as Dell, but may be able to implement
low-cost leadership in comparison to any other local computer stores.
Product differentiation: Although
many national computer manufacturers sell customized computers for individuals,
ABC Computers may be able to differentiate its product by using superior
components and adding more services to its product.
Focus on market niche: ABC
Computers could focus on a being a local store with in-store technology support
and assistance as a market niche.
Customer and supplier intimacy: ABC Computers has an advantage
in customer intimacy, in that it can develop relationships with local customers
on a face-to-face basis. This advantage could be augmented to offset the
low-cost leadership of national manufacturers, such as Dell. Because of much
smaller production scales, ABC Computers will probably not be able to exercise
as much control over suppliers as does Dell or other manufacturers.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
86) You are consulting with the owner of Better Fitness, a
national chain of gyms. What strategies might Better Fitness use in applying
information services to achieve a competitive advantage?
Answer: Better Fitness could use computers, smart products
and mobile apps to monitor and evaluate health and fitness of members and
customize workouts in product differentiation strategy. They could use
information systems for sales and marketing data research in order to define a
niche market that would bring greater profits. They could allow customers to
review their health data and add additional information or view statistics to
create customer intimacy. If the individual gyms are franchises, then a network
could be used for franchisees to share data and research new sales tactics,
etc.
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter’s competitive forces model, the
value chain model, synergies, core competencies, and network economics help
companies develop competitive strategies using information systems?
87) The text describes Michael Porter’s view of the Internet as
somewhat negative. What negative influences does Porter see? Describe several
positive influences the Internet has on business. Do these outweigh the
negative influences?
Answer: Answers will vary. An example of a possible answer
is:
Porter sees the Internet as creating ever more intense rivalry,
through allowing new competitors to enter the market, and forcing competition
on price alone, raising the bargaining power of customers, and dampening
profits.
Positive influences of the Internet would be lowering
telecommunications costs, creating new opportunities for building brands and
loyal customer bases, lowering costs of globalization. You could also view
Porter’s negative take on lowering the barrier to entry as a positive for new
companies.
The Internet’s influence being negative or positive depends in
part on the point of view from which the influence is being seen. For example,
a telephone utility is impacted negatively by the emergence of Internet
telephony, whereas other industries may be impacted positively either through
the use of this technology or through engaging in Internet telephony as a
business.
Difficulty: Moderate
AACSB: Analytical thinking
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