Ch3 – Flashcard Test Questions
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An adhocracy is a knowledge-based organization where goods and services depend on the expertise and knowledge of professionals. Answer
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FALSE
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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 labor. Answer
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TRUE
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One type of competitive advantage Amazon was able to implement in selling books over the Internet was that of being a new market entrant. Answer
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TRUE
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A firm can be said to have competitive advantage when they have higher stock market valuations than their competitors. Answer
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TRUE
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Customers are one of the competitive forces that affect an organization's ability to compete. Answer
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TRUE
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A transparent marketplace means that there is high product differentiation. Answer
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FALSE
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In an efficient customer response system, digital answering systems are used to monitor and respond to customer inquiries. Answer
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FALSE
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Mass customization is a form of mass production. Answer
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TRUE
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Strong linkages to customers and suppliers decrease switching costs. Answer
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FALSE
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In the strategy of product differentiation, information systems are used to enable new products and services. Answer
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TRUE
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The effect of the Internet has been to raise bargaining power over suppliers. Answer
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TRUE
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In the age of the Internet, Porter's traditional competitive forces model is still at work, but competitive rivalry has become much more intense. Answer
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TRUE
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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. Answer
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TRUE
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The value chain model classifies all company activities as either primary or support. Answer
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TRUE
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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. Answer
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TRUE
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The law of diminishing returns always applies to digital, as well as traditional companies. Answer
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FALSE
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In network economics, the more people that use Microsoft Office software and related products, the greater its value. Answer
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TRUE
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The term business ecosystem describes the interplay between the various organizational forces within a firm. Answer
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FALSE
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The use of Internet technologies allows companies to more easily sustain competitive advantage. Answer
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FALSE
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As discussed in the chapter opening case, which of the four generic strategies to combat competitive forces formed the basis of e-Bay's growth strategy? A) low-cost leadership B) focus on market niche C) customer and supplier intimacy D) product differentiation Answer
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D
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Which of the following would NOT be considered a disruptive technology? A) instant messaging B) e-mail C) Internet telephony D) PCs Answer
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A
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The interaction between information systems and organizations is A) primarily guided by the decision making of middle- and senior-managers. B) a complex, two-way relationship mediated by factors such as the environment and organizational structure. C) driven by the microeconomic forces of capital and labor. D) successfully managed when the organization's existing culture and goals are seen as the driving force. Answer
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B
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An organization is a A) stable, formal social structure that takes resources from the environment and processes them to produce outputs. B) formal, legal entity with internal rules and procedures that must abide by laws. C) collection of social elements. D) b and c E) a, b, and c Answer
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E
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How does the technical view of organizations fall short of understanding the full impacts of information systems in a firm? A) It sees information systems as a way to rearrange the inputs and outputs of the organization. B) It sees capital and labor as primary production factors. C) It sees the inputs and outputs, labor and capital, as being infinitely malleable. D) It sees the organization as a social structure similar to a machine. Answer
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C
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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. A) microeconomic B) macroeconomic C) sociotechnical D) behavioral Answer
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A
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All of the following are major features of organizations that impact the use of information systems EXCEPT for A) business processes. B) environments. C) goals. D) agency costs. Answer
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D
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Business processes are collections of A) informal practices and behaviors. B) formalized and documented practices. C) routines. D) rights and privileges. Answer
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C
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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) A) entrepreneurial structure. B) divisionalized bureaucracy. C) professional bureaucracy. D) adhocracy.
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C
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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. A) machine B) professional C) divisionalized D) multidivisional Answer
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A
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An example of a professional bureaucracy is a A) small startup firm. B) school system. C) mid-size manufacturing firm. D) consulting firm. Answer
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B
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The costs incurred when a firm buys on the marketplace what it cannot make itself are referred to as A) switching costs. B) transaction costs. C) procurement. D) agency costs.
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B
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Which of the following statements is NOT true about information technology's impacts on business firms? 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. Answer
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A
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According to agency theory, the firm is viewed as a(n) A) unified, profit-maximizing entity. B) task force organization that must respond to rapidly changing environments. C) entrepreneurial endeavor. D) "nexus of contracts" among self-interested individuals.
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D
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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 A) environment, organization, structure, tasks. B) technology, people, culture, and structure. C) organization, culture, management. D) tasks, technology, people, and structure. Answer
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D
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The ________ model is used to describe the interaction of external forces that affect an organization's strategy and ability to compete. A) network economics B) competitive forces C) competitive advantage D) demand control Answer
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B
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Which of the following is NOT one of the competitive forces? A) suppliers B) other competitors C) external environment D) customers Answer
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C
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A manufacturer of deep-sea oil rigs may be least concerned about this marketplace force. A) product differentiation B) traditional competitors C) low number of suppliers D) new market entrants Answer
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D
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A substitute product of most concern for a cable TV distributor is A) satellite TV. B) broadcast TV. C) satellite radio. D) the Internet. Answer
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A
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Which of the following industries has a low barrier to entry? A) automotive B) computer chip C) restaurant D) airline Answer
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C
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Which of the following can force a business and its competitors to compete on price alone? A) transparent marketplace B) high product differentiation C) poor process efficiency D) demand control Answer
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A
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A firm can exercise greater control over its suppliers by having A) more suppliers. B) fewer suppliers. C) global suppliers. D) local suppliers. Answer
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A
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Amazon's use of the Internet as a platform to sell books illustrates a tactical use of information services for A) low-cost leadership. B) product differentiation. C) focusing on market niche. D) strengthening customer intimacy. Answer
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A
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The four major types of competitive strategy 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. Answer
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B
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Wal-Mart's continuous replenishment system allows it to A) provide mass customization. B) provide an efficient customer response system. C) strengthen customer intimacy. D) achieve economy of scale.
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B
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When a firm provides a specialized product or service for a narrow target market better than competitors, they are using a ________ strategy. A) product differentiation B) market niche C) mass customization D) process efficiency Answer
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B
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________ is the ability to offer individually tailored products or services using the same production resources as bulk production. A) Mass customization B) Size customization C) Magnitude customization D) Dimension customization Answer
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A
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An information system can enable a company to focus on a market niche through A) complex trend forecasting. B) tailoring products to the client. C) intensive product trend analysis. D) intensive customer data analysis. Answer
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D
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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 A) strengthen customer intimacy. B) differentiate their service. C) focus on market niche. D) increase efficiency. Answer
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C
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Which industries did the first wave of e-commerce transform? A) air travel, books, bill payments B) air travel, books, music C) real estate, air travel, books D) real estate, books, bill payments Answer
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B
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To what competitive force did the printed encyclopedia industry succumb? A) positioning and rivalry among competitors B) low cost of entry C) substitute products or services D) customer's bargaining power Answer
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C
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Internet technology A) makes it easy for rivals to compete on price alone. B) imposes a significant cost of entry, due to infrastructure requirements. C) increases the difference between competitors because of the wide availability of information. D) makes it easy to sustain operational advantages. Answer
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A
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The Internet raises 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. Answer
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C
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The value chain model A) categorizes five related advantages for adding value to a firm's products or services. B) sees the supply chain as the primary activity for adding value. C) categorizes four basic strategies a firm can use to enhance its value chain. D) helps a firm identify points at which information technology can most effectively enhance its competitive position. Answer
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D
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The primary activities of a firm include A) inbound logistics, operations, outbound logistics, sales and marketing, and service. B) inbound logistics, operations, outbound logistics, technology, and service. C) procurement, inbound logistics, operations, technology, and outbound logistics. D) procurement, operations, technology, sales and marketing, and services. Answer
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A
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The secondary activities of a firm include A) inbound logistics, technology, outbound logistics, sales and marketing, and service. B) inbound logistics, organization infrastructure, outbound logistics, technology, and procurement. C) organization infrastructure, human resources, sales and marketing, and technology. D) organization infrastructure, human resources, technology, and procurement. Answer
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D
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Benchmarking A) compares the efficiency and effectiveness of your business processes against strict standards. B) allows industry participants to influence industry-wide standards. C) is used to measure the speed and responsiveness of information technology. D) synchronizes the business processes of customers, suppliers, and trading partners. Answer
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A
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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. Answer
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D
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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) A) industry value chain. B) business ecosystem. C) value web. D) consortia. Answer
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C
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How are information systems used at the industry level to achieve strategic advantage? A) by building industry-wide, IT-supported consortia and symposia B) by raising the bargaining power of suppliers C) by encouraging the entry of new competitors D) by enforcing standards that reduce the differences between competitors Answer
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A
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If two organizations pool markets and expertise that result in lower costs and generate profits it is often referred to as creating A) a value web. B) a value chain. C) synergies. D) core competencies. Answer
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C
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An example of synergy in business is A) Amazon's use of the Internet to sell books. B) JP Morgan Chase's merger with Bank One Corporation, which provided JP Morgan with a network of retail branches in new regions. C) Blockbuster combining traditional video rental with online video rental. D) Wal-Mart's order entry and inventory management system to coordinate with suppliers. Answer
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B
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An information system can 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. Answer
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D
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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 A) the point of no return. B) the law of diminishing returns. C) supply and demand. D) network inelasticity. Answer
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B
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Network economics A) applies the law of diminishing returns to communities of users. B) applies traditional economics to networked 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. Answer
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C
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In network economics, the value of a commercial software vendor's software products A) increases as more people use them. B) decreases as more people use them. C) increases due to higher marginal gain in output. D) decreases according to the law of diminishing returns. Answer
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A
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A virtual company A) uses the capabilities of other companies without being physically tied to those companies. 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. Answer
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A
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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? A) low-cost leadership B) product differentiation C) focus on market niche D) customer intimacy Answer
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D
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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? A) E-commerce is affected by the law of diminishing returns. B) Internet technologies are universal, and therefore usable by all companies. C) Internet shopping produces cost transparency. D) The Internet enables the production or sales of substitute products or services. Answer
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B
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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? 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. Answer
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C
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________ is a competitive strategy for creating brand loyalty by developing new and unique products and services that are not easily duplicated by competitors. Answer
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Product differentiation
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________ is the ability to offer individually tailored products and services using the same production resources as mass production. Answer
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Mass customization
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________ 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. Answer
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Switching costs
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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. Answer
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value chain model
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A(n) ________ activity is one that is directly related to the production and distribution of a firm's products or services. Answer
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primary
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A(n) ________ activity is a part of the organization's infrastructure, human resources, technology, and procurement that makes the delivery of the firm's products or services possible. Answer
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Support activities
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Sociotechnical changes affecting a firm adopting new information systems requiring organizational change can be considered ________. Answer
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strategic transitions
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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. Answer
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value web
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A(n) ________ is an activity at which a firm excels as a world-class leader. Answer
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core competency
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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. Answer
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virtual
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The competitive forces model was created for today's digital firm. Answer:
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FALSE
