Exam

Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers

the question.

1) The primary activities of a firm include 1) _______

A) inbound logistics, operations, outbound logistics, sales and marketing, and service.

B) procurement, inbound logistics, operations, technology, and outbound logistics.

C) procurement, operations, technology, sales and marketing, and services.

D) inbound logistics, operations, outbound logistics, technology, and service.

2) A core competency 2) _______

A) is one of Porter’s competitive forces.

B) defines mass customization.

C) is an activity for which a firm is a world-class leader.

D) is another way to describe benchmarking.

3) 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. This is

referred to as 3) _______

A) the point of no return. B) network inelasticity.

C) supply and demand. D) the law of diminishing returns.

4) The emergence, for Amazon.com, of new competitors in the sphere of online shopping

illustrates what disadvantage posed by the use of information systems to achieve competitive

advantage? 4) _______

A) The Internet enables the production or sales of substitute products or services.

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

C) Internet shopping produces cost transparency.

D) E-commerce is affected by the law of diminishing returns.

5) All of the following are major features of organizations that impact the use of information

systems EXCEPT for 5) _______

A) agency costs. B) business processes.

C) goals. D) environments.

6) ________ is another term for these loosely coupled but interdependent networks of suppliers,

distributors, outsourcing firms, transportation service firms, and technology manufacturers. 6)

_______

A) Core competencies B) Synergy

C) Value chain D) Business ecosystem

7) A large bureaucracy existing in a slowly changing environment that produces standard

products and is dominated by centralized management making is classified by Mintzberg as a

________ bureaucracy. 7) _______

A) divisionalized B) multidivisional C) machine D) professional

8) The costs incurred when a firm buys on the marketplace what it cannot make itself are

referred to as: 8) _______

A) agency costs. B) procurement.

C) switching costs. D) transaction costs.

9) Wal-Mart's continuous replenishment system allows it to: 9) _______

A) provide an efficient customer response system.

B) strengthen customer intimacy.

C) provide mass customization.

D) achieve economy of scale.

10) According to the ________ definition of organizations, an organization is seen as a means by

which primary production factors are transformed into outputs consumed by the environment.

10) ______

A) macroeconomic B) microeconomic C) behavioural D) sociotechnical

11) Marie has developed a unique patented process to manufacture metal picture frames. This

unique process allows Marie to use less raw materials and less labour than her competitors.

Marie is utilizing which source of competitive advantage? 11) ______

A) product differentiation

B) strengthening customer and supplier intimacy

C) low-cost leadership

D) focus on market niche

12) The secondary activities of a firm include 12) ______

A) organization infrastructure, human resources, technology, and procurement.

B) inbound logistics, organization infrastructure, outbound logistics, technology, and

procurement.

C) inbound logistics, technology, outbound logistics, sales and marketing, and service.

D) organization infrastructure, human resources, sales and marketing, and technology.

13) An information system can enable a company to focus on a market niche through 13)

______

A) complex trend forecasting. B) intensive customer data analysis.

C) intensive product trend analysis. D) tailoring products to the client.

14) The research on IT and business performance has found that the more successfully a firm

can align information technology with its ________, the more profitable it will be. 14) ______

A) value web B) competitive forces

C) business goals D) value chain

15) Business processes are collections of 15) ______

A) routines. B) formalized and documented practices.

C) rights and privileges. D) informal practices and behaviours.

16) To what competitive force did the printed encyclopedia industry succumb? 16) ______

A) low cost of entry

B) positioning and rivalry among competitors

C) customer's bargaining power

D) substitute products or services

17) The four major types of competitive strategy are 17) ______

A) new market entrants; substitute products and services; customers; and suppliers.

B) low-cost leadership; substitute products and services; customers; and suppliers.

C) low-cost leadership; product differentiation; focus on market niche; and customer and

supplier intimacy.

D) low-cost leadership; new market entrants; product differentiation; and focus on market

niche.

18) The Internet raises the bargaining power of customers by 18) ______

A) lowering transaction costs.

B) making information available to everyone.

C) making more products available.

D) creating new opportunities for building loyal customer bases.

19) If two organizations pool markets and expertise that result in lower costs and generate

profits it is often referred to as creating 19) ______

A) a value web. B) core competencies.

C) a value chain. D) synergies.

20) One of the questions that should be asked in performing a strategic systems analysis is 20)

______

A) What are the web values of the industry?

B) What kind of information systems are currently in use in our firm?

C) how many businesses are in the industry?

D) what is the structure of the industry in which the firm is located?

21) Jean uses his loyalty rewards program card to buy gas from the Shell Oil Company, he only

needs 300 more points to get a free flight to Calgary. This illustrates Shell Oil dealing with the

competitive force of ________. 21) ______

A) substitute products and services B) customers

C) suppliers D) new market entrants

22) Old Dutch Potato Chips has just installed a new state of the art information system that

allows them to track delivery of their potato chips in real time to all of their customers. This

information system is attempting to add value to which part of their value chain? 22) ______

A) procurement B) outbound logistics

C) inbound logistics D) operations

23) Hilton Hotels' use of customer information software to identify the most profitable

customers to direct services to is an example of using information systems to 23) ______

A) differentiate their service. B) increase efficiency.

C) strengthen customer intimacy. D) focus on market niche.

24) Which of the following industries has a low barrier to entry? 24) ______

A) restaurant B) automotive C) airline D) computer chip

25) The ________ model is used to describe the interaction of external forces that affect an

organization's strategy and ability to compete. 25) ______

A) network economics B) competitive forces

C) demand control D) competitive advantage

26) A manufacturer of deep-sea oil rigs may be least concerned about this marketplace force.

26) ______

A) new market entrants B) traditional competitors

C) low number of suppliers D) product differentiation

27) Canadian Tire has just installed a new state of the art information system that allows them

instant information on the status of their orders they have with suppliers. This information

system is attempting to add value to which part of their value chain? 27) ______

A) operations B) procurement

C) inbound logistics D) outbound logistics

28) A substitute product of most concern for a cable TV distributor is 28) ______

A) the Internet. B) satellite radio. C) broadcast TV. D) satellite TV.

29) Chapters.Indigo.ca keeps track of user preferences for book and CD purchases and can

recommend titles purchased by others to its customers. Strong linkages to customers and

suppliers increase switching costs. Chapters.Indigo.ca is utilizing which source of competitive

advantage? 29) ______

A) low-cost leadership

B) strengthening customer and supplier intimacy

C) product differentiation

D) focus on market niche

30) When a firm provides a specialized product or service for a narrow target market better than

competitors, they are using a ________ strategy. 30) ______

A) mass customization B) process efficiency

C) market niche D) product differentiation

31) The most successful solutions or methods for achieving a business objective are called 31)

______

A) best processes. B) core competencies.

C) best practices. D) value activities.

32) Network economics 32) ______

A) applies traditional economics to networked users.

B) applies the law of diminishing returns to communities of users.

C) sees the cost of adding new members as inconsequential.

D) balances the high cost of adding new members to a community against the lower cost of

using network infrastructure.

33) How does the technical view of organizations fall short of understanding the full impacts of

information systems in a firm? 33) ______

A) It sees the organization as a social structure similar to a machine.

B) It sees information systems as a way to rearrange the inputs and outputs of the organization.

C) It sees the inputs and outputs, labour and capital, as being infinitely malleable.

D) It sees capital and labour as primary production factors.

34) You are consulting for a beverage distributor who is interested in determining the benefits it

could achieve from implementing new information systems. What will you advise as the first

step? 34) ______

A) Perform a strategic systems analysis.

B) Implement a strategic transition to the new system.

C) Identify the business ecosystem the distributor is in.

D) Benchmark existing systems.

35) Which of the following is NOT one of the competitive forces? 35) ______

A) suppliers B) external environment

C) customers D) other competitors

36) AutoNation's analytic software that mines customer data with a goal of enabling the

building of automobiles that customers actually want can be categorized as using information

systems for which competitive strategy? 36) ______

A) product differentiation B) customer intimacy

C) low-cost leadership D) focus on market niche

37) Rogers Cable was the sole supplier of iPhones in Canada for two years, but now Telus and

Bell can market iPhones in Canada, this illustrates the competitive force of ________. 37) ______

A) customers B) substitute products and services

C) suppliers D) new market entrants

38) As discussed in the chapter opening case, which of the four generic strategies to combat

competitive forces formed the basis of eBay's growth strategy? 38) ______

A) low-cost leadership B) customer and supplier intimacy

C) focus on market niche D) product differentiation

39) Amazon.ca has many revenue streams. One of these is their online auctions which brings

many buyers and sellers together. These online auctions attempt to take strategic advantage of

39) ______

A) mass customization. B) organizational structures.

C) network economics. D) primary activities.

40) An information system can enhance core competencies by 40) ______

A) providing better reporting facilities.

B) creating educational opportunities for management.

C) encouraging the sharing of knowledge across business units.

D) allowing operational employees to interact with management.

41) The value chain model 41) ______

A) helps a firm identify points at which information technology can most effectively enhance its

competitive position.

B) categorizes four basic strategies a firm can use to enhance its value chain.

C) sees the supply chain as the primary activity for adding value.

D) categorizes five related advantages for adding value to a firm's products or services.

42) ________ is the ability to offer individually tailored products or services using the same

production resources as bulk production. 42) ______

A) Mass customization B) Size customization

C) Dimension customization D) Magnitude customization

43) Benchmarking 43) ______

A) compares the efficiency and effectiveness of your business processes against strict standards.

B) is used to measure the speed and responsiveness of information technology.

C) allows industry participants to influence industry-wide standards.

D) synchronizes the business processes of customers, suppliers, and trading partners.

44) Amazon's use of the Internet as a platform to sell books illustrates a tactical use of

information services for 44) ______

A) strengthening customer intimacy. B) low-cost leadership.

C) product differentiation. D) focusing on market niche.

45) In network economics, the value of a commercial software vendor's software products 45)

______

A) decreases according to the law of diminishing returns.

B) decreases as more people use them.

C) increases as more people use them.

D) increases due to higher marginal gain in output.

46) Internet technology 46) ______

A) increases the difference between competitors because of the wide availability of information.

B) imposes a significant cost of entry, due to infrastructure requirements.

C) makes it easy to sustain operational advantages.

D) makes it easy for rivals to compete on price alone.

47) A virtual company 47) ______

A) uses Internet technology to maintain a networked community of users.

B) provides entirely Internet-driven services, or virtual products.

C) uses Internet technology to maintain a virtual storefront.

D) uses the capabilities of other companies without being physically tied to those companies.

48) A firm can exercise greater control over its suppliers by having 48) ______

A) more suppliers. B) local suppliers.

C) global suppliers. D) fewer suppliers.

49) An example of a professional bureaucracy is a 49) ______

A) mid-size manufacturing firm. B) small startup firm.

C) school system. D) consulting firm.

50) Which industries did the first wave of e-commerce transform? 50) ______

A) air travel, books, music B) real estate, air travel, books

C) air travel, books, bill payments D) real estate, books, bill payments

51) How are information systems used at the industry level to achieve strategic advantage? 51)

______

A) by building industry-wide, IT-supported consortia and symposia

B) by enforcing standards that reduce the differences between competitors

C) by encouraging the entry of new competitors

D) by raising the bargaining power of suppliers

52) Which of the following can force a business and its competitors to compete on price alone?

52) ______

A) demand control B) poor process efficiency

C) transparent marketplace D) high product differentiation

53) Which of the following would NOT be considered a disruptive technology? 53) ______

A) instant messaging B) PCs

C) e-mail D) Internet telephony

54) John has opened a new web based retail book store. John stocks, sells, and specializes on

only technical engineering books and manuals. John is utilizing which source of competitive

advantage? 54) ______

A) strengthening customer and supplier intimacy

B) product differentiation

C) focus on market niche

D) low-cost leadership

55) The Internet can make competitive advantage 55) ______

A) long term because few companies can use this technology.

B) permanent because virtually all companies can use this technology.

C) disappear very quickly because few companies can use this technology.

D) disappear very quickly because virtually all companies can use this technology.

56) Which of the following statements is NOT true about information technology's impacts on

business firms? 56) ______

A) It helps firms expand in size.

B) It helps reduce internal management costs.

C) It helps reduce transaction costs.

D) It helps firms lower the cost of market participation.

57) Ontario Iron Works Ltd. has just located a web portal that gives access to many companies

from which they can purchase their raw material from; this illustrates the competitive force of

________. 57) ______

A) suppliers B) new market entrants

C) substitute products and services D) customers

58) An example of synergy in business is 58) ______

A) Blockbuster combining traditional video rental with online video rental.

B) Wal-Mart's order entry and inventory management system to coordinate with suppliers.

C) Amazon's use of the Internet to sell books.

D) JP Morgan Chase's merger with Bank One Corporation, which provided JP Morgan with a

network of retail branches in new regions.

59) The interaction between information systems and organizations is 59) ______

A) a complex, two-way relationship mediated by factors such as the environment and

organizational structure.

B) successfully managed when the organization's existing culture and goals are seen as the

driving force.

C) primarily guided by the decision making of middle- and senior-managers.

D) driven by the microeconomic forces of capital and labour.

60) According to Leavitt's model of organizational resistance, the four components that must be

changed in an organization in order to successfully implement a new information system are 60)

______

A) environment, organization, structure, tasks.

B) technology, people, culture, and structure.

C) tasks, technology, people, and structure.

D) organization, culture, management.

61) According to agency theory, the firm is viewed as a(n): 61) ______

A) unified, profit-maximizing entity.

B) task force organization that must respond to rapidly changing environments.

C) "nexus of contracts" among self-interested individuals.

D) entrepreneurial endeavor.

62) Mintzberg's classification of organizational structure categorizes the knowledge-based

organization where goods and services depend on the expertise and knowledge of professionals

as a(n): 62) ______

A) entrepreneurial structure. B) professional bureaucracy.

C) adhocracy. D) divisionalized bureaucracy.

63) Which of the following is an example of a disruptive technology? 63) ______

A) a third generation iPod B) digital photography

C) an all-in-one printer D) a new version of Microsoft Excel

64) A collection of independent firms that use information technology to coordinate their value

chains to produce a product or service for a market collectively is called a(n) 64) ______

A) industry value chain. B) consortia.

C) business ecosystem. D) value web.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers

the question.

65) An ________ is a stable, formal social structure that takes resources from the environment

and processes them to produce outputs. 65) _____________

66) ________ are 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. 66)

_____________

67) Businesses are rapidly rebuilding some of their key business ________ based on Internet

technology. 67) _____________

68) eBay has been ________ with Internet auctions. 68) _____________

69) Dell tries to emphasize low cost as well as the ability to ________ its personal computers.

69) _____________

70) As firms grow in size and complexity, traditionally they experience rising ________ costs.

70) _____________

71) Large, ________ organizations, which primarily developed before the computer age, are

often inefficient, slow to change, and less competitive than newly created organizations. 71)

_____________

72) Information systems inevitably become bound up in organizational ________ because they

influence access to a key resource–namely, information. 72) _____________

73) A profitable company depends in large measure on its ability to attract and ________

customers and charge high prices. 73) _____________

74) ________ resistance is one of the great difficulties of bringing about organizational change–

especially the development of new information systems. 74) _____________

75) The technical and behavioural definitions of organizations are not ________. 75)

_____________

76) In the ________ definition of organizations, capital and labour are transformed by the firm

through the production process into products and services. 76) _____________

77) As a manager, you will be the one to decide which ________ will be developed. 77)

_____________

78) All organizations are composed of individual ________ and behaviours. 78)

_____________

79) A(n) ________ company uses networks to link people, assets, and ideas, enabling it to work

with other companies to create products and services without being limited by traditional

organizational boundaries or physical locations. 79) _____________

80) The competitive advantages strategic systems confer do not necessarily last long enough to

ensure long-term ________. 80) _____________

81) Information technology also can reduce internal management ________. 81)

_____________

82) The ________ 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. 82) _____________

83) To align IT with the business and use information systems ________ for competitive

advantage, managers need to perform a strategic systems analysis. 83) _____________

84) A firm can use information systems to achieve the ________ operational costs and the

________ prices. 84) _____________

85) ________ is the ability to offer individually tailored products and services using the same

production resources as mass production. 85) _____________

86) Because information systems potentially change an organization’s structure, culture,

business processes, and strategy, there is often considerable ________ to them when they are

introduced. 86) _____________

87) ________ is another term for these loosely coupled but interdependent networks of

suppliers, distributors, outsourcing firms, transportation service firms, and technology

manufacturers. 87) _____________

88) 7-Eleven improved its competitive position by wringing more ________ out of its customer

data. 88) _____________

89) A(n) ________ activity is one that is directly related to the production and distribution of a

firm's products or services. 89) _____________

90) Firms that "do better" than others are said to have a ________ over others. 90)

_____________

91) ________ is a competitive strategy for creating brand loyalty by developing new and unique

products and services that are not easily duplicated by competitors. 91) _____________

92) All organizations, including business firms, become very efficient over time because

individuals in the firm develop ________ for producing goods and services. 92) _____________

93) ________ all have a structure or shape. 93) _____________

94) In the microeconomic definition of organizations, ________ and labour are transformed by

the firm through the production process into products and services. 94) _____________

95) Information systems can ________ the number of levels in an organization by providing

managers with information to supervise larger numbers of workers and by giving lower-level

employees more decision-making authority. 95) _____________

96) The ________ 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. 96)

_____________

97) According to ________, the firm is viewed as a “nexus of contracts” among self-interested

individuals rather than as a unified, profit-maximizing entity. 97) _____________

98) A(n) ________ is an activity at which a firm excels as a world-class leader. 98)

_____________

99) ________ are formal legal entities with internal rules and procedures that must abide by

laws. 99) _____________

100) Post-industrial theories based more on history and sociology than economics also support

the notion that IT should ________ hierarchies. 100) ____________

101) eBay derives the bulk of its ________ from fees and commissions associated with its sales

transactions. 101) ____________

102) A(n) ________ activity is a part of the organization's infrastructures, human resources,

technology, and procurement that makes the delivery of the firm's products or services possible.

102) ____________

103) The Internet can make competitive ________ disappear very quickly because virtually all

companies can use this technology. 103) ____________

104) From the point of view of economics, IT changes both the relative costs of ________ and the

costs of ________. 104) ____________

105) At the same time, organizational culture is a powerful restraint on change, especially

________ change. 105) ____________

106) Because IT reduces both agency and ________ costs for firms, we should expect firm size to

shrink over time as more capital is invested in IT. 106) ____________

107) Managers who know how to work with the ________ of an organization will be more

successful than less-skilled managers in implementing new information systems. 107)

____________

108) ________ generally change much faster than organizations. 108) ____________

109) Sociotechnical changes affecting a firm adopting new information systems requiring

organizational change can be considered ________. 109) ____________

110) Organizations try to hire and promote employees on the basis of ________ qualifications

and professionalism 110) ____________

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

111) Organizations are formal legal entities with internal rules and procedures that must abide

by laws. 111) _____

112) A firm can be said to have competitive advantage when they have higher stock market

valuations than their competitors. 112) _____

113) Firms that “do better” than others are said to have a non-competitive advantage over

others. 113) _____

114) The law of diminishing returns always applies to digital, as well as traditional companies.

114) _____

115) A technical view of organizations encourages us to focus on how inputs are combined to

create outputs when technology changes are introduced into the company. 115) _____

116) The competitive forces model was created for today's digital firm. 116) _____

117) Large, bureaucratic organizations, which primarily developed before the computer age, are

often inefficient, quick to change, and more competitive than newly created organizations. 117)

_____

118) A Professional bureaucracy is a large bureaucracy existing in a slowly changing

environment, producing standard products. 118) _____

119) In a free economy with mobile labour and financial resources, new companies are always

entering the marketplace. 119) _____

120) The idea driving synergies is that when the output of some units can be used as inputs to

other units, the relationship can lower cost and generate profits. 120) _____

121) From the point of view of economics, information systems technology can be viewed as a

factor of production that can be substituted for traditional capital and labour. 121) _____

122) As a manager, you do not decide which systems will be developed, what they will do, and

how they will be implemented. 122) _____

123) An adhocracy is a knowledge-based organization where goods and services depend on the

expertise and knowledge of professionals. 123) _____

124) eBay has had to continually fine-tune its strategy and business processes to remain

competitive. 124) _____

125) In the value chain model, primary activities are most directly related to the production and

distribution of the firm's products and services that create value for the customer. 125) _____

126) A behavioural view of organizations encourages us to focus on how inputs are combined to

create outputs when technology changes are introduced into the company. 126) _____

127) Chapters.Indigo.ca keeps track of user preferences for book and CD purchases and can

recommend titles purchased by others to its customers. This illustrates a firm using a low-cost

leadership strategy. 127) _____

128) Standard operating procedures–are precise rules, procedures, and practices that have been

developed to cope with virtually all expected situations. 128) _____

129) When the Eastman Chemical Company split off from Kodak, it demonstrated that firm size

can stay constant or contract even as the company increases its revenues. 129) _____

130) Businesses are rapidly rebuilding some of their key business processes based on Internet

technology and making this technology a key component of their IT infrastructures. 130) _____

131) Virtually all large information systems investments by a firm that bring about significant

changes in strategy, business objectives, business processes, and procedures become politically

charged events. 131) _____

132) The effect of the Internet has been to raise bargaining power over suppliers. 132) _____

133) Firms traditionally grew in size to increase transaction costs. 133) _____

134) A transparent marketplace means that there is high product differentiation. 134) _____

135) Information systems and organizations influence one another. 135) _____

136) In the age of the Internet, Porter's traditional competitive forces model is still at work, but

competitive rivalry has become much more intense. 136) _____

137) The use of Internet technologies allows companies to more easily sustain competitive

advantage. 137) _____

138) Arguably, the most widely used model for understanding competitive advantage is

Michael Porter’s generic strategies model 138) _____

139) Political resistance is one of the great difficulties of bringing about organizational change.

139) _____

140) All organizations are composed of individual routines and behaviours, a collection of

which make up a business process. 140) _____

141) In network economics, the more people that use Microsoft Office software and related

products, the greater its value. 141) _____

142) Customers are one of the competitive forces that affect an organization's ability to compete.

142) _____

143) In the strategy of product differentiation, information systems are used to enable new

products and services. 143) _____

144) A global sales force can receive nearly instant price product information updates using the

Web or instructions from management sent by e-mail. 144) _____

145) Mass customization is a form of mass production. 145) _____

146) The value chain model classifies all company activities as either primary or support. 146)

_____

147) Strong linkages to customers and suppliers decrease switching costs. 147) _____

148) Over the last decade, information systems have fundamentally altered the economics of

organizations and greatly increased the possibilities for organizing work. 148) _____

149) One type of competitive advantage Amazon was able to implement in selling books over

the Internet was that of being a new market entrant. 149) _____

150) In an efficient customer response system, digital answering systems are used to monitor

and respond to customer inquiries. 150) _____

151) eBay derives the bulk of its revenue from fees and commissions associated with its sales

transactions. 151) _____

152) The term business ecosystem describes the interplay between the various organizational

forces within a firm. 152) _____

153) People in organizations occupy different positions with similar specialties, concerns, and

perspectives. 153) _____

154) Lands’ End customers can use the company's Web site to order jeans, dress pants, chino

pants, and shirts custom-tailored to their own specifications. This is an example of mass

customization. 154) _____

155) According to transaction cost theory, firms and individuals seek an increase on transaction

costs, much as they do on production costs. 155) _____

156) Capital and labour are primary production factors provided by the environment. 156)

_____

ESSAY. Write your answer in the space provided or on a separate sheet of paper.

157) How is the concept of core competency relevant to Smalltown computer, a local computer

repair store that builds custom computers? Give examples.

158) How is Internet technology useful from a network economics perspective? Give examples.

159) You are consulting with the owner of Better Bodies, a national chain of gyms. What

strategies might Better Bodies use in applying information services to achieve a competitive

advantage?

160) Differentiate between the technical and behavioural definitions of an organization.

161) Define and describe a business ecosystem. Give an example of a business ecosystem.

162) 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?

163) How can information systems be used to achieve strategic advantage at the industry level?

164) Describe in detail the major factors to determine when performing a strategic systems

analysis.

165) Mintzberg’s classification of organizational structure identifies five basic kinds of

organizational structures. List them and give a generic example of each.

166) Explain how IT might flatten an organization’s structure.

167) Value chain analysis is useful at the business level to highlight specific activities in the

business where information systems are most likely to have a strategic impact. Discuss this

model, identify the activities, and describe how the model can be applied to the concept of

information technology.

168) You are advising the owner of Smalltown Computer, a new, local computer repair store

that also builds custom computers to order. What competitive strategies could Smalltown

Computer exert? Which ones will it have difficulty exercising?

169) List three organizational factors that can prevent a firm in fully realizing the benefits of a

new information system, and provide examples for each.

1) A

2) C

3) D

4) B

5) A

6) D

7) C

8) D

9) A

10) B

11) C

12) A

13) B

14) C

15) A

16) D

17) C

18) B

19) D

20) D

21) B

22) B

23) D

24) A

25) B

26) A

27) C

28) D

29) B

30) C

31) C

32) C

33) C

34) A

35) B

36) B

37) D

38) D

39) C

40) C

41) A

42) A

43) A

44) B

45) C

46) D

47) D

48) A

49) C

50) A

51) A

52) C

53) A

54) C

55) D

56) A

57) A

58) D

59) A

60) C

61) C

62) B

63) B

64) D

65) organization

66) Switching costs

67) processes

68) synonymous

69) customize

70) agency

71) bureaucratic

72) politics

73) retain

74) Political

75) contradictory

76) microeconomic

77) systems

78) routines

79) virtual

80) profitability

81) costs

82) value chain model

83) effectively

84) lowest , lowest

85) Mass customization

86) resistance

87) Business ecosystem

88) value

89) primary

90) competitive advantage

91) Product differentiation

92) routines

93) Organizations

94) capital

95) reduce

96) value web

97) agency theory

98) core competency

99) Organizations

100) flatten

101) revenue

102) support

103) advantage

104) capital , information

105) technological

106) transaction

107) politics

108) Environments

109) strategic transitions

110) technical

111) TRUE

112) TRUE

113) FALSE

114) FALSE

115) TRUE

116) FALSE

117) FALSE

118) FALSE

119) TRUE

120) TRUE

121) TRUE

122) FALSE

123) FALSE

124) TRUE

125) TRUE

126) FALSE

127) FALSE

128) TRUE

129) TRUE

130) TRUE

131) TRUE

132) TRUE

133) FALSE

134) FALSE

135) TRUE

136) TRUE

137) FALSE

138) FALSE

139) TRUE

140) TRUE

141) TRUE

142) FALSE

143) TRUE

144) TRUE

145) TRUE

146) TRUE

147) FALSE

148) TRUE

149) TRUE

150) FALSE

151) TRUE

152) FALSE

153) FALSE

154) TRUE

155) FALSE

156) TRUE

157) A core competency is an activity for which a company is a world leader, and from this

perspective, Smalltown Computer does not have a core competency, as there are thousands of

similar firms with longer track records. However, it might be good business practice for

Smalltown Computer to define its core competencies in ways that differentiate its products from

those of competitors and enable it to provide superior service or products. In defining a core

competency, the business management can then determine ways to enable employees to

understand and reach higher levels of quality production and service. For example, Smalltown

Computer might define a core competency as being able to advise customers as to the types of

system they really need, and Smalltown Computer could engage in knowledge gathering

activities to help employees assess customer need.

158) In network economics, the cost of adding a participant in the network is negligible, while

the gain in value is relatively much larger. The Internet itself is an example of a successful

implementation of network economics the more people participate, the more valuable and

essential a commodity it is. If a company were to provide a service through the Internet such as a

project management application, the costs to the company of adding another user are small (as

the software infrastructure or application is already built), and the more users are signed up the

more profit is made.

159) Better Bodies could use computers 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.

160) The behavioural 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 labour as interchangeable units, with the ability

to rearrange these units at will, whereas the behavioural 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.

161) A business ecosystem is a collection of loosely coupled but interdependent industries

(suppliers, distributors, technology manufacturers, etc.) that provides related services and

products. It is similar to a value web, except that cooperation takes place across many industries

rather than many firms.

Business ecosystems can be characterized as having one or a few keystone firms that dominate the ecosystem and

create the platforms used by other niche firms. Keystone firms in the Microsoft ecosystem include Microsoft and

technology producers such as Intel and IBM. Niche firms include thousands of software application firms, software

developers, service firms, networking firms, and consulting firms that both support and rely on the Microsoft products.

Another example of an business ecosystem is the mobile Internet platform. In this

ecosystem there are four industries: device makers (Apple iPhone, RIM BlackBerry, Motorola,

LG, and others), wireless telecommunication firms (AT&T, Verizon, T-Mobile, Sprint, and

others), independent software applications providers (generally small firms selling games,

applications, and ring tones), and Internet service providers (who participate as providers of

Internet service to the mobile platform).

162) 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.

163) By working with other firms, industry participants can use information technology to

develop industry-wide standards for exchanging information or business transactions

electronically, which force all market participants to subscribe to similar standards. These efforts

increase efficiency, making product substitution less likely and perhaps raising entry costs–thus

discouraging new entrants. Also, industry members can develop industry-wide, IT-supported

consortia, symposia, and communications networks to coordinate activities concerning

government agencies, foreign competition, and competing industries.

164) One major factor is the structure of the industry the firm is in. For example, what

competitive forces are at work in the industry, and what is the basis for competition? What is the

nature and direction of change in the industry, and how does the industry use IT.

A second major factor is determining the firm and industry value chains. For example, how is the company

creating value for the customer? Are best practices being used and core competencies leveraged? Is the industry supply

chain or customer base changing, and what will the effect be? Can the firm benefit from strategic partnerships or value

webs? And where in the value chain will information systems provide the greatest value to the firm.

The third major factor to consider is has the firm aligned IT with its business strategy and

goals. Have these goals been correctly stated or defined? Is IT improving the right business

processes and activities in accordance with the firm's goals? Are we using the right metrics to

measure progress?

165) 1. Entrepreneurial structure — a small start-up business

2. Machine bureaucracy — Midsize manufacturing firm

3. Divisionalized bureaucracy — Power Corporation, Hudson Bay Company

4. Professional bureaucracy — Law firms, school systems, hospitals

5. Adhocracy — Consulting firms

166) Behavioural researchers have theorized that information technology facilitates flattening of

hierarchies by broadening the distribution of information to empower lower-level employees and

increase management efficiency. IT pushes decision-making rights lower in the organization

because lower-level employees receive the information they need to make decisions without

supervision. Because managers now receive so much more accurate information on time, they

become much faster at making decisions, so fewer managers are required. Management costs

decline as a percentage of revenues, and the hierarchy becomes much more efficient. Information

systems can reduce the number of levels in an organization by providing managers with

information to supervise larger numbers of workers and by giving lower-level employees more

decision-making authority. These changes mean that the management span of control has also

been broadened, enabling high-level managers to manage and control more workers spread over

greater distances. Many companies have eliminated thousands of middle managers as a result of

these changes.

167) The value chain model identifies specific, critical leverage points where a firm can use

information technology most effectively to enhance its competitive positions. Exactly where can it

obtain the greatest benefit from strategic information systems? What specific activities can be

used to create new products and services, enhance market penetration, lock in customers and

suppliers, and lower operational costs? This model views the firm as a series or chain of basic

activities that add a margin of value to a firm's products or services. These activities can be

categorized as either primary activities or support activities.

• Primary activities are most directly related to the production and distribution of the firm's

products and services that create value for the customer. Primary activities include: inbound

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

• Support activities make the delivery of the primary activities possible and consist of:

organization infrastructure (administration and management), human resources (employee

recruiting, hiring, and training, technology (improving products and the production process),

and procurement (purchasing input).

168) Low-cost leadership: Smalltown Computer may have difficulty competing against the

warranty services or computer sales of major national computer manufacturers, such as Dell, but

may be able to exercise low-cost leadership in comparison to any other local computer repair

stores.

Product differentiation: Although many national computer manufacturers sell customized

computers to the individual, Smalltown computer may be able to differentiate their product by

using superior components and adding more services to their product.

Focus on market niche: Smalltown computer could determine a market niche geared to their

advantage in being a local store with in-store technology support and assistance.

Customer and supplier intimacy: Smalltown computer 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, Smalltown will probably not be able to exercise as

much control over suppliers as Dell or other manufacturers.

169) 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.