Chapter 3 Review Questions

Information Systems, Organizations, and Strategy

1) The interaction between information technology and organizations is influenced:

A) solely by the decision making of middle and senior managers.
B) by the development of new information technologies.
C) by many factors, including structure, politics, culture, and environment.
D) by two main macroeconomic forces: capital and labor.
E) by the rate of growth of the organization.
2) Which of the following statements about organizations is not true?
A) An organization is a stable, formal social structure that takes resources from the environment
and processes them to produce outputs.
B) An organization is a formal, legal entity with internal rules and procedures that must abide by
laws.
C) An organization is a collection of people and other social elements.
D) An informal group can be considered to be an organization.
E) An organization is a collection of rights, privileges, obligations, and responsibilities delicately
balanced over a period of time through conflict and conflict resolution.
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.
A) microeconomic
B) macroeconomic
C) sociotechnical
D) behavioral
E) psychological
4) Which of the following statements about the technical view of organizations is not true?
A) It focuses on how inputs are combined to create outputs when technology changes are
introduced into a company.
B) It sees capital and labor as being easily substituted for one another.
C) It emphasizes group relationships, values and structures.
D) It sees the organization as a social structure similar to a machine.
E) It sees the firm as being infinitely malleable.
5) Which of the following is not a major feature of organizations that impacts the use of
information systems?
A) Business processes
B) Environments
C) Structure of the organization
D) Agency costs
E) Leadership styles
6) Which of the following statements about business processes is not true?
A) Business processes influence the relationship between an organization and information
technology.
B) Business processes are a collection of standard operating procedures.
C) A business firm is a collection of business processes.
D) Business processes are usually ensconced in an organization's culture.
E) Business processes are typically unaffected by changes in information systems.
7) Which of the following technologies disrupted the traditional publishing industry?
A) Instant messaging
B) e-mail
C) Digital photography
D) PCs
E) World Wide Web
8) Along with capital, ________ is the primary production input that the organization uses to
create products and services.
A) structure
B) culture
C) politics
D) feedback
E) labor
9) True or False. All organizations have bedrock, unquestioned assumptions that define their
goals and products.
10) True or False. A machine bureaucracy is a knowledge-based organization where goods and
services depend on the expertise and knowledge of professionals.
11) True or False. Routines are also called standard operating procedures.
12) When a firm buys on the marketplace what it cannot make itself, the costs incurred are
referred to as:
A) switching costs.
B) network costs.
C) procurement.
D) agency costs.
E) transaction costs.
13) All of the following statements are true about information technology's impact on business
firms except:
A) it helps firms expand in size.
B) it helps firms lower the cost of market participation.
C) it helps reduce internal management costs.
D) it helps reduce transaction costs.
E) it helps reduce agency costs.
14) Which of the following industries has the lowest barrier to entry?
A) Automotive
B) Computer chip
C) Solar energy
D) Airline
E) Small retailer
15) Which of the following marketplace forces would be of least concern to a manufacturer of
deep-sea oil rigs?
A) Product differentiation
B) Traditional competitors
C) Low number of suppliers
D) New market entrants
E) Low number of customers
16) A firm can exercise greater control over its suppliers by having:
A) more suppliers.
B) fewer suppliers.
C) global suppliers.
D) local suppliers.
E) only a single supplier.
17) The four major competitive strategies are:
A) low-cost leadership, substitute products and services, customers; and suppliers.
B) low-cost leadership, product differentiation, focus on market niche, and customer and supplier
intimacy.
C) new market entrants, substitute products and services, customers, and suppliers.
D) low-cost leadership, new market entrants, product differentiation, and focus on market niche.
E) customers, suppliers, new market entrants, and substitute products.
18) Firms use a ________ strategy to provide a specialized product or service for a narrow target
market better than competitors.
A) product differentiation
B) market niche
C) mass customization
D) process efficiency
E) low-cost leadership
19) The ability to offer individually tailored products or services using the same production
resources as bulk production is known as:
A) mass marketing.
B) micromarketing.
C) micro customization.
D) niche customization.
E) mass customization.
20) In environmental scanning, a firm may use information systems to:
A) transform inputs into products and services.
B) analyze the performance of its intranet.
C) identify external events that may affect it.
D) keep track of the temperature within its data centers.
E) develop a unified organizational culture.
21) Which of the following best illustrates the use of information systems to focus on market
niche?
A) A car manufacturer's website that lets you customize the features on the car you are
purchasing.
B) A restaurant chain analyzing local sales figures to determine which menu items to serve.
C) A bookseller selling an e-book reader that reads only the bookseller's books.
D) A department store creating specialized products for preferred customers.
E) A clothes manufacturer expanding its offerings to new styles.
22) The Internet increases the bargaining power of customers by:
A) creating new opportunities for building loyal customer bases.
B) making more products available.
C) making information available to everyone.
D) lowering transaction costs.
E) enabling the development of new services.
23) Which of the following would a company employ to measure and compare its business
processes to similar processes of other companies within their industry?
A) Benchmarking
B) Best practices
C) Value chain analysis
D) Strategic systems analysis
E) Secondary activities
24) The most successful solutions or methods for achieving a business objective are called:
A) value activities.
B) best processes.
C) core competencies.
D) best practices.
E) benchmarks.
25) Information systems enhance core competencies by:
A) providing better reporting facilities.
B) creating educational opportunities for management.
C) allowing operational employees to interact with management.
D) encouraging the sharing of knowledge across business units.
E) fostering synergies among departments.
26) A virtual company:
A) uses networks to link people, assets, and ideas.
B) uses Internet technology to maintain a virtual storefront.
C) uses Internet technology to maintain a networked community of users.
D) provides entirely Internet-driven services or virtual products.
E) is limited by traditional organizational boundaries.
27) ________ is a competitive strategy for creating brand loyalty by developing new and unique
products and services that are not easily duplicated by competitors.
A) Product differentiation
B) Low-cost leadership
C) Focusing on market niche
D) Strengthening customer intimacy
E) Strengthening supplier intimacy
28) 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:
A) retention costs.
B) preservation costs.
C) differentiation costs.
D) switching costs.
E) variation costs.
29) 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.
A) competitive forces
B) value chain
C) bargaining power
D) new entrant
E) rivalry
30) A(n) ________ is an activity for which a firm is a world-class leader.
A) expertise area
B) competitive advantage
C) growth driver
D) efficiency
E) core competency
31) True or False. A company's competitive advantages ultimately translate into higher stock
market valuations than its competitors.
32) True or False. Customers are one of the competitive forces that affect an organization's
ability to compete.
33) True or False. The effect of the Internet has been to increase the bargaining power of
customers.
34) True or False. An efficient customer response system directly links consumer behavior to
distribution, production, and supply chains.
35) True or False. Mass customization offers individually tailored products or services using the
same resources as mass production.
36) True or False. The value chain model classifies all company activities as either primary or
support activities.
37) True or False. 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.
38) True or False. The term business ecosystem describes the loosely coupled but interdependent
networks of suppliers, distributors, outsourcing firms, transportation service firms, and
technology manufacturers.
39) True or False. A firm can be said to have competitive advantage when it has access to
resources that others do not.
40) 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?
A) Identify the business ecosystem the distributor is in
B) Implement a strategic transition to the new system
C) Perform a strategic systems analysis
D) Benchmark existing systems
E) Set up a strategic transition