Solution Manul For Management Information SystemsManaging the Digital Firm, 18th edition Kenneth C.

Solution Manual For Management Information SystemsManaging the Digital Firm, 18th edition Kenneth C. Laudon Jane P. Laudon Carol Guercio Traver Chapter 1-15

Chapter 1 – Instructor Manual Chapter Summary This chapter explores the foundational role of information systems in modern organizations and the ways that they radically transform business operations, strategies, and careers. It introduces key concepts such as the essential nature of information systems, different types of business processes, and their integration with technology to achieve organizational goals. Several current trends are highlighted, including the increased importance of big data, cloud computing, artificial intelligence (AI), and the Internet of Things (IoT). The chapter addresses how these developments create both opportunities and challenges, requiring organizations to adapt to globalization, refine their decision-making, and develop new products, services, and business models. It emphasizes that technology alone will not guarantee success; rather, organizations need complementary assets, including a supportive culture, effective management, and robust organizational structures. The chapter also encourages learners to adopt a sociotechnical view, recognizing how social, managerial, and technical components must all align to deliver the full potential of information systems.

Learning Objectives These are the chapter objectives: 1.1 Understand how information systems transform business and careers.

1.2 Describe key challenges and opportunities created by new MIS technologies.

1.3 Describe key features of a digital firm.

1.4 Describe the business objectives of information systems.

1.5 Explain what an information system is and how it works.

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1.6 Describe organizational, management, and technology dimensions of information systems.

1.7 Understand the importance of IoT, big data, cloud computing, and AI. 1.8 Understand why complementary assets are essential.

1.9 Describe different approaches used to study information systems.

1.10 Understand how this book prepares you for the future.

1.11 Understand how the information in this chapter can help your career.

MIS Headline Article (eText Only) "Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what‘s happening today.

Use the provided discussion questions in class."

MyLab MIS "If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to it will be removed from the overall score."

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

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Key Points to Cover 1.1 Understand How Information Systems Transform Business and Careers   

Highlight how internet connectivity and mobile applications have fundamentally changed customer interactions and daily operations.

Emphasize the role of e-commerce, social media, and digital marketing in business transformation and job opportunities.

Discuss the rapid growth in demand for digital skills in the labor market and its implications for career development.

1.2 Describe Key Challenges and Opportunities Created by New MIS Technologies   

Show how emerging technologies such as cloud computing, AI, and big data offer new possibilities for process optimization and decision-making.

Identify the organization, management, and technology challenges related to data privacy, security, and ROI measurement.

Discuss the concept of globalization and how technological advances create both global competition and worldwide market opportunities.

1.3 Describe Key Features of a Digital Firm   

Define what a digital firm is, focusing on its reliance on digitally enabled processes, communication, and decision-making.

Explain how digital transformation initiatives can position a firm for agility, competitiveness, and real-time responsiveness to market changes.

Explore the concept of time shifting (24/7 operations) and space shifting (global presence) as integral attributes of a digital firm.

1.4 Describe the Business Objectives of Information Systems  

Examine how organizations leverage Information Systems to achieve operational excellence, product/service innovation, and customer/supplier intimacy.

Demonstrate how information systems play a critical role in enhancing decisionmaking, maintaining competitive advantage, and ensuring organizational survival.

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

Address the importance of environmental sustainability, proper governance, and responsible use of AI as emerging strategic business imperatives tied to IS.

1.5 Explain What an Information System Is and How It Works   

Clarify the difference between data and information, as well as between computer literacy and information systems literacy.

Illustrate the three core activities in an information system: input, processing, and output, with feedback loops for continual improvement.

Stress that information systems are more than just technology; they are integrated solutions encompassing people, processes, and technology.

1.6 Describe Organizational, Management, and Technology Dimensions of Information Systems   

Show how organizational structures, cultures, and politics influence the adoption and effectiveness of information systems.

Emphasize management‘s responsibility for setting strategy, supervising implementations, and controlling outcomes.

Review the main components of IT infrastructure: hardware, software, data management, and networking/telecommunications, including the Internet.

1.7 Understand the Importance of IoT, Big Data, Cloud Computing, and AI   

Define the Internet of Things and how embedded sensors generate wide-ranging data streams (―big data‖).

Describe how cloud computing offers scalable, on-demand computing power to manage and analyze enormous data sets and advanced AI workloads.

Discuss the transformative potential of AI and machine learning in predictive analytics, automation, and decision support, as well as generative AI‘s unique capabilities.

1.8 Understand Why Complementary Assets Are Essential 

Define complementary assets and explain how they amplify the returns on technology investments.

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

Explore the importance of organizational and managerial changes, such as supportive culture, incentivized innovation, and well-designed processes, to fully realize IT‘s value.

Illustrate how lacking sufficient complementary assets can lead to poor returns on otherwise sound technology investments.

1.9 Describe Different Approaches Used to Study Information Systems 

 

Contrast the technical and behavioral approaches to studying IS, noting the disciplines that inform each (computer science vs. sociology, psychology, and economics).

Highlight the sociotechnical view, which encourages joint optimization of both social/organizational and technical/IT elements.

Illustrate that effective IS solutions emerge from a holistic approach addressing technology, people, culture, and structure.

1.10 Understand How This Book Prepares You for the Future   

Stress the importance of broad-based problem-solving skills, including communication, analytical reasoning, and collaborative work.

Relate the content of the text to real-world career needs in both IT-specific and non-IT job positions.

Emphasize ways students can leverage their knowledge of IS to identify and solve business problems, creating value and advancing in their careers.

1.11 Understand How the Information in This Chapter Can Help Your Career   

Showcase how the critical thinking and IS literacy concepts in this chapter apply directly to workplace challenges.

Provide examples of jobs (both technical and non-technical) that increasingly rely on utilizing information systems effectively.

Encourage long-term skill development in digital tools, analytics, and strategic thinking around technology to adapt and grow professionally.

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Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.                                 

Artificial intelligence (AI) (1.7) Big data (1.7) Business functions (1.6) Business model (1.4) Business processes (1.3) Cloud computing (1.2) Computer hardware (1.6) Computer literacy (1.5) Computer software (1.6) Complementary assets (1.8) Culture (1.6) Data (1.5) Data management technology (1.6) Data workers (1.6) Digital firm (1.3) Digital transformation (1.3) Extranet (1.6) Feedback (1.5) Generative AI (GenAI) (1.7) Globalization (1.2) Information (1.5) Information system (IS) (1.5) Information systems literacy (1.5) Information technology (IT) (1.5) Information technology infrastructure (IT infrastructure) (1.6) Input (1.5) Internet (1.6) Internet of Things (IoT) (1.7) Intranet (1.6) Knowledge workers (1.6) Machine learning (ML) (1.7) Management information systems (MIS) (1.5) Middle management (1.6)

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        

Network (1.6) Networking and telecommunications technology (1.6) Operational management (1.6) Output (1.5) Processing (1.5) Production and service workers (1.6) Senior management (1.6) Sociotechnical view (1.9) World Wide Web (web) (1.6)

Case Studies Opening Case Study: ConocoPhillips Drills Down with Digital Technology SUMMARY: ConocoPhillips operates an extensive oil and gas exploration business and faces unique challenges in remote, harsh environments. The Kuparuk River oil field in Alaska provided a testing ground for innovations such as 3D printing of replacement parts and AI/ML-driven data analytics to optimize operations. By leveraging these technologies, ConocoPhillips slashed production delays, lowered inventory costs, and laid the groundwork for further digital transformations.

1. Identify the problem described in this case. What areas of the business did it affect?

Suggested Answer: ConocoPhillips‘s problem was the difficulty of reliably procuring spare parts and maintaining operations in remote areas such as the Kuparuk oil field in Alaska. Long lead times, expensive shipping, harsh weather conditions, and limited suppliers significantly raised operational costs and risks of downtime. These issues affected multiple areas of the business, including supply chain management, inventory control, production efficiency, maintenance processes, and sustainability goals. Because parts had to be manufactured and shipped from distant locations, production could stall when older parts wore out, quickly raising expenses. Additionally, storing large quantities of extra parts cluttered facilities and added unnecessary warehousing costs.

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ConocoPhillips needed a solution that ensured timely and cost-effective delivery of critical components while reducing its environmental footprint.

2. How did ConocoPhillips benefit from using 3D printing and AI/ML? Suggested Answer: 3D printing enabled ConocoPhillips to create replacement parts in weeks rather than months, cutting lead times dramatically. It also allowed for on-demand production, reducing unnecessary storage costs while ensuring the immediate availability of essential items. Additionally, 3D printing supported design enhancements, making certain parts more efficient and less prone to wear. AI/ML further optimized operations by analyzing big data generated from sensors and machinery. These algorithms provided insights into machine performance, predicting equipment failures or inefficiencies before they caused costly downtime. Automated analytics and modeling tools improved decision making, accelerated problem resolution, guided maintenance schedules, and helped reduce energy consumption. Collectively, these digital technologies helped ConocoPhillips save money, maintain production levels, and shrink its carbon emissions footprint.

3. How did these new technologies change the way ConocoPhillips ran its business?

Suggested Answer: The introduction of 3D printing and AI/ML fundamentally shifted ConocoPhillips‘s operational and maintenance model. Instead of relying on lengthy procurement procedures and maintaining large warehouses of spare parts, the company transitioned to manufacturing parts on demand through additive manufacturing. AI/ML tools also transformed business processes, enabling predictive maintenance and real-time monitoring. Teams were re-trained to utilize data-driven insights from sensors, analytics platforms, and AI bots, which informed more strategic allocation of resources.

Management processes became more agile, as decisions could be made using timely, accurate data rather than best guesses. Overall, these technologies encouraged a more innovative culture geared toward continuous improvement, efficiency, and sustainability, transforming ConocoPhillips into a more resilient, tech-driven organization.

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Spotlight on Technology Case Study: UPS Competes Globally with Information Technology SUMMARY: UPS leverages a range of information technologies, including bar codes, Delivery Information Acquisition Devices, wireless networks, and sophisticated AI solutions, to run its global delivery operation. Through real-time package tracking, automated logistics planning, and predictive analytics, UPS delivers millions of packages daily while containing costs and improving service quality.

1. What are the inputs, processing, and outputs of UPS‘s package tracking system?

Suggested Answer: The inputs include a scannable bar-coded label with shipper details, recipient information, and the desired delivery time. Drivers use handheld devices to scan packages at every stage, capturing signatures, delivery confirmations, and pickup details. This information is then processed by the UPS central computer system, which matches package data against the company‘s databases, generating tracking updates and routing instructions. AI-driven logistics tools analyze these data streams to optimize route efficiency. The outputs consist of real-time tracking updates made available to customers, dispatchers, and delivery personnel. These outputs appear as notifications to end users for proof of delivery, shipping status, and any updated routing if issues arise. This fully integrated cycle keeps operations efficient, ensures packages are delivered on time, and provides transparency for both internal and external stakeholders.

2. What technologies are used by UPS? How are these technologies related to UPS‘s business strategy? What role is played by AI? Suggested Answer: UPS uses handheld DIADs (Delivery Information Acquisition Devices), barcode scanners, wireless networks, mainframe computers, and specialized software like ORION to coordinate and track packages. Additionally, AI-driven tools, such as DeliveryDefense and Network Planning Tools, identify at-risk deliveries and reroute packages to handle disruptions or large shipment volumes. These technologies satisfy UPS‘s core strategy of cost leadership combined with first-rate customer service. By leveraging real-time data, UPS can optimize delivery routes, reduce operation costs, and minimize errors, all of which strengthen its customer promise of reliable and timely delivery. AI provides deeper analytics and autonomous decisions—for instance,

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predicting potential theft targets or helping with advanced route optimization—making UPS more agile, competitive, and customer-focused in the global marketplace.

3. What strategic business objectives do UPS‘s information systems address?

Suggested Answer: UPS‘s information systems help achieve several strategic objectives: operational excellence, customer intimacy, and competitive advantage. Operational excellence stems from streamlined processes—route optimization, real-time package tracking, and data analytics—enabling cost efficiencies and improved productivity. Customer intimacy is addressed by providing convenient online tracking tools, personalized delivery statuses, and automated alerts for delays or reroutes, resulting in reliable customer relationships. Further, these innovations create a robust competitive advantage by reducing dependence on older, manual processes and consistently delivering superior service at scale. Enhanced data analytics, AI-driven capabilities, and integrated workflows help UPS stand out in a crowded logistics industry.

4. What would happen if UPS‘s information systems were not available?

Suggested Answer: Without its comprehensive information systems, UPS‘s end-to-end logistics chain would slow drastically and lose transparency. Packages would be tracked manually, leading to inefficiencies and delayed deliveries. Route planning would be suboptimal, causing excess mileage and fuel consumption, with higher operational costs passed on to customers. Customer satisfaction would plummet as lost or late packages increased and real-time updates disappeared. Managers could not easily measure performance, optimize scheduling, or detect operational bottlenecks. Ultimately, UPS would struggle to maintain its reputation for reliability, risking market share losses to more technologically advanced competitors. The intricate orchestration of international deliveries relies heavily on data-driven decision-making tools—removing these systems would be disastrous for the firm‘s competitive position.

Chapter Case Study: Capital One: A Digital Transformation in the Making SUMMARY:

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Capital One is a large financial holding company that has pioneered using data analytics and AI to offer personalized financial products and services. The firm embraced cloud computing and in-house software development, shifting from outsourcing most of its technology to building an internal IT workforce for agile, customer-driven innovation. These changes facilitated an ambitious digital transformation that aligns every step of the business with technology.

1. Why was Capital One a good candidate for digital transformation?

Suggested Answer: Capital One was already a significant innovator in financial services, using data analytics to tailor credit offerings. This data-driven approach, combined with a rapidly evolving financial environment, made it ripe for further transformation. As new technologies emerged—especially AI and mobile banking—management saw that delivering real-time, customized options to customers was critical to stand out in a crowded marketplace. Given Capital One‘s history of analyzing customer behavior and offering specialized credit products, integrating cloud-based infrastructure and agile development processes was a natural next step for modernizing its operations.

Additionally, the company‘s competitive environment, featuring major banks and fintech startups, incentivized bold moves to remain ahead. Together, these factors primed Capital One to leverage cutting-edge tools and reshape its fundamental business model around digital solutions.

2. How did Capital One change its business model to make it technology-driven?

What management, organizational, and technology issues did it address?

Suggested Answer: Capital One redesigned its business model by emphasizing software engineering, cloud computing, and data analytics as core competencies. Rather than fully outsourcing, it developed in-house capabilities for building and customizing applications, including mobile and customer portals. Management dedicated resources to hiring specialized technical talent, reorganizing teams for agile workflows, and fostering a culture centered on innovation and iteration. Organizationally, it dismantled traditional silos between IT and business, encouraging collaboration so every department could leverage real-time data insights. On the technology side, the shift to cloud-based platforms provided flexible and scalable computing power, enabling rapid experimentation and deployments. Security and compliance—crucial in the heavily regulated financial sector—were integrated into these processes from the outset. By focusing on big data analytics and AI, Capital One confidently launched new products and personalized services faster than its less-digitized competitors.

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3. What role does AI play at Capital One? Suggested Answer: AI is intrinsic to almost every facet of Capital One‘s decision making and customer engagement. At a rudimentary level, it powers credit risk and fraud detection, generating real-time alerts and assessments. More advanced applications include chatbots like Eno, which uses natural language processing to handle personalized customer inquiries, detect irregular spending, and even lock credit cards for suspected fraud. AI also underpins predictive analytics for new product development, mining large data sets to forecast consumer needs in real time. Machine learning algorithms glean insights from massive transaction records, helping Capital One refine marketing messages and identify emerging trends in financial services. Through these tailored offerings and enhanced scripting, AI gives the company a persuasive way to stand out in digital banking, yielding consistent productivity and revenue gains.

4. How does Capital One differ from a traditional bank?

Suggested Answer: Where traditional banks might rely on legacy processes and extensive physical branches, Capital One operates primarily as a ―digital-first‖ institution. It has relatively few traditional branches, choosing instead to invest in technology, mobile banking applications, and data-driven customer insights. While many large financial institutions talk about digitalization, Capital One reorganized its workforce to become a technology innovator, prioritizing in-house software development and large-scale use of cloud computing. It runs agile teams that continuously experiment with new digital products, quickly iterating and improving. Its customer interactions revolve around real-time data analytics, delivering personalized financial recommendations, specialized credit card offers, and intuitive mobile services. Thanks to flexible, scalable IT infrastructure, Capital One can consistently roll out updated features and harness advanced AI tools— traits not commonly found at banks still anchored in legacy systems.

5. Visit the Capital One website and identify all the personalization options that are available for Capital One credit cards.

Suggested Answer: Upon visiting capitalone.com, students will discover an array of personalization paths for credit cards, such as tailoring offers based on credit score range, lifestyle preferences (e.g., rewards for travel, cash back on groceries or restaurants, and secured cards for credit-building), and specialized products like student cards or business offerings. A

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prospective customer typically sees a pre-qualification tool that suggests credit lines and interest rates according to their financial data. The website pairs individuals with reward structures they care about—like miles, points, or no annual fees—and highlights each offer‘s unique benefits. Students might also see real-time AI-driven recommendations about how to earn the most from each card. Once selected, the credit card can be managed entirely online, including autopay, mobile alerts, and easy dispute handling. These personalized details exemplify how Capital One integrates data analytics into seamless, customer-centric experiences.

Review Questions 1.1 Understand how information systems transform business and careers 1. Identify three ways information systems are transforming business.

Suggested Answer: Information systems reshape how organizations operate by enabling greater connectivity, data analytics, and efficiency. First, online platforms and mobile applications change how businesses reach and serve customers: nearly any product or service can be delivered or managed via digital channels. This fosters deeper, ongoing interactions and real-time updates on consumer preferences. Second, advanced data analytics let firms respond quickly to market dynamics, automate supply chains, and develop personalized marketing strategies. This capability lowers operational costs and shortens the feedback loop necessary for product improvements. Third, social media integration accelerates brand awareness and allows companies to engage with customers directly in a more personal and interactive way. Together, these factors yield a dynamic business environment where companies can anticipate trends, customize offerings, and stay competitive globally. Such transformations also demand a workforce skilled in data handling, user experience design, omnichannel marketing, and strategic IT management—reshaping both job roles and career paths.

2. Describe the demand for digital skills in the U.S. labor market.

Suggested Answer: The U.S. labor market has seen a surge in demand for digital skills across nearly every industry, from entry-level to specialized professional roles. In today‘s data-driven

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environment, even fundamental job tasks often require proficiency in productivity software, basic data analytics, and cloud-based collaboration tools. Numerous positions seek employees adept at handling complex digital platforms—like CRM systems or advanced spreadsheet functions—to manage customer data and streamline processes.

Additionally, coding and software development abilities can command significantly higher wages in fields such as AI, cybersecurity, and software engineering. Government research and private sector reports consistently show that among in-demand skills, digital fluency ranks high, and job seekers lacking these competencies often face lower earning potential. As businesses pursue cloud-based transformations and explore emerging technologies such as machine learning or big data analytics, the demand for workers with strong digital aptitudes continues to grow, making these relevant skills a strategic asset for career advancement.

1.2 Describe key challenges and opportunities created by new MIS technologies 1. Describe the key challenges created by new technologies used in management information systems.

Suggested Answer: Emerging technologies such as AI, big data, IoT devices, and cloud computing generate several challenges for organizations. First, they require significant investment in specialized staff and retraining for existing employees, creating pressure on HR and management. Second, organizations must address security, privacy, and compliance concerns when handling massive volumes of potentially sensitive data, ensuring adherence to legal and ethical standards. Third, choosing among countless technology platforms requires careful cost-benefit analyses—companies risk investing in expensive solutions that might not align with their operational goals. On top of that, acceptance among employees can be mixed, especially if they fear automation could displace jobs or complicate established processes. Additionally, setting up and maintaining robust AI or IoT infrastructures can be technologically complex, demanding new skill sets in data handling and predictive analytics. Overall, these technologies promise transformative benefits but come with challenges necessitating strategic planning, cultural readiness, training, and a strong governance framework.

2. Define globalization, and describe challenges and opportunities it creates.

Suggested Answer:

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Globalization is the flow of goods, services, people, capital, and ideas across national boundaries, creating highly interdependent global markets. From a business standpoint, globalization offers vast new markets for expansion and potential cost savings through international labor sourcing or cross-border supply chains. For businesses, the primary advantage is reaching billions of potential consumers worldwide, while simultaneously tapping a broad talent pool to create more innovative products and services. However, it also poses challenges. Heightened competition from foreign firms may threaten domestic markets, forcing businesses to adapt quickly or risk losing market share.

Companies must navigate different cultures, regulatory environments, and infrastructures, which can complicate marketing strategies, supply chains, and product design. In addition, labor shifts can lead to offshoring and outsourcing, affecting workforce dynamics at home. Ultimately, effective use of digital networks and systems is crucial for capitalizing on globalization‘s myriad opportunities while also mitigating associated risks in intellectual property, data protection, and cultural sensitivity.

1.3 Describe key features of a digital firm 1. Describe the characteristics of a digital firm.

Suggested Answer: A digital firm is an organization in which nearly every business process is electronically enabled and mediated, bolstering efficiency and responsiveness to environmental changes. Core operations—like supply chain management, customer relations, and employee collaboration—are accomplished through digital networks that integrate seamlessly with external stakeholders. In a digital firm, information flows in real time, ensuring constant visibility of inventory levels, customer interactions, or financial metrics.

This connectivity often extends globally, allowing the firm to coordinate distributed resources and operations 24/7. An essential characteristic is the reliance on digital assets—such as intellectual property, data, and analytics—which form the backbone of strategic planning and execution. Additionally, digital firms tend to adopt flexible structures, rapid feedback, and continuous iterative improvement, enabling them to pivot swiftly in competitive or disruptive environments. Collectively, these traits result in greater agility, deeper customer engagement, and potentially better profitability than traditional companies.

2. Describe digital transformation.

Suggested Answer:

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Digital transformation is the large-scale initiative undertaken by organizations to leverage digital technologies and data in fundamentally changing how they operate and deliver value to customers. Rather than a single project, it is an ongoing process, encompassing rethinking business models, redesigning workflows, and continually integrating new technologies such as cloud computing, AI, IoT, or advanced analytics.

Transformation efforts focus on digitizing core processes for greater efficiency, harnessing real-time data to inform managerial decisions, and fostering an organizational culture of agility and innovation. The transformation extends beyond technology implementation—management structures change, internal collaboration methods evolve, and employees often get reskilled to handle emerging roles.

Companies that successfully transition reap benefits including optimized customer experiences, a faster pace of innovation, and a stronger competitive position in an increasingly digital market landscape.

1.4 Describe the business objectives of information systems 1. List and describe six reasons why information systems are so important for businesses today.

Suggested Answer: First, operational excellence refers to technology‘s role in optimizing internal processes, driving down costs, and enhancing productivity. Second, new products, services, and business models arise when companies use information systems to innovate offerings, as exemplified by music streaming services. Third, customer or supplier intimacy focuses on data-driven personalization and tight coordination with suppliers to boost loyalty and reduce operating friction. Fourth, improved decision making emerges from sophisticated analytics that enable managers to respond quickly and accurately to realtime data. Fifth, competitive advantage is gained by outperforming rivals through smarter IT deployments—leading to lower costs or higher-quality products. Lastly, survival becomes urgent when regulatory changes or industry practices make certain technologies a must-have. Together, these imperatives highlight how effective systems align technology directly with the firm‘s growth and continuity.

2. Explain what governance relates to, and why it has become important for a company to show leadership with respect to governance issues, as well as sustainability and environmental impact.

Suggested Answer:

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Governance generally refers to the set of rules, processes, and practices that dictate how a company is controlled, managed, and held accountable to stakeholders, including shareholders, employees, customers, and the broader community. It includes executive oversight, ethical conduct, transparency, and fiduciary responsibilities. This concept has become crucial for modern corporations since mismanagement can lead to public distrust, legal repercussions, and significant financial losses. Moreover, societal pressure and regulations increasingly encourage businesses to reduce negative environmental consequences, monitor carbon footprints, adopt sustainable business strategies, and responsibly manage AI-driven processes. Demonstrating leadership in governance underscores a company‘s commitment to ethical, transparent, and accountable operations, especially in an era when social media quickly exposes corporate misdeeds. Strong governance not only helps mitigate risk but also builds brand reputation and customer loyalty, and it ensures that investments in technology or sustainability will truly align with the overall values and strategy of the firm.

1.5 Explain what an information system is and how it works 1. Define an information system and describe the activities it performs.

Suggested Answer: An information system is a set of interrelated components that collect, process, store, and distribute data for decision making, coordination, and control in an organization. Its core activities are input, processing, output, and feedback. During the input stage, raw data from inside or outside the organization is captured—for instance, scanner data from a retail checkout. In processing, this data is organized and transformed into meaningful information, such as sales trends or inventory reports. Output delivers the processed information to various stakeholders including managers, employees, and customers who can then act upon it. Finally, feedback loops this output back to the organization‘s relevant participants, enabling them to refine processes, correct errors, or improve strategies. As a result, information systems play a critical role in guiding business decisions and facilitating efficient operations.

2. Explain how data differs from information.

Suggested Answer: Data consists of raw, unorganized facts or measurements—such as a list of customer transactions, sensor readings, or web traffic logs—awaiting interpretation. By itself, data may hold little meaning unless structured or processed. Information, in contrast, is the Copyright © 2026 Pearson Education, Inc.

result of shaping that data into a format that is comprehensible and useful for humans, often by categorizing, calculating, or contextualizing. For example, daily sales figures for a retail store are merely data until compiled into a report showing best-selling items, peak sales hours, or profitability margins. Information thus adds a layer of insight that guides better decisions, making it integral to any process that depends on timely, accurate understanding. In business, bridging the gap between data and information can lead to more informed strategic planning, improved day-to-day operations, and a sustained competitive edge.

3. Define information system literacy and explain how it differs from computer literacy.

Suggested Answer: Information system literacy involves understanding not only the technical components of hardware and software but also the organizational and managerial dimensions that shape systems. It includes knowledge of how people interact with technology, how data is used in decision making, and how processes and structures are impacted. Computer literacy, on the other hand, is concerned largely with technical proficiency in operating systems, software applications, and the basic principles of computing hardware.

Someone with strong computer literacy might be adept at programming or navigating an operating system but still lack a broader perspective on how technological systems fit within an organization‘s strategy or culture. In today's world, information system literacy is especially critical because executing technology projects successfully depends on leadership, planning, and stakeholder engagement—not just mastery of code or hardware.

1.6 Describe organizational, management, and technology dimensions of information systems 1. List and describe the organizational, management, and technology dimensions of information systems.

Suggested Answer: From an organizational perspective, information systems are embedded in company hierarchies, business processes, and cultures. Rules, roles, and organizational politics can directly influence how effectively a system is adopted. From a management viewpoint, leaders are tasked with defining strategy, allocating resources, and making

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decisions about the implementation and goals of new technologies. They set the vision and must create policies that encourage adoption, training, and employee buy-in. Finally, the technology dimension includes hardware, software, data management capabilities, and networking/telecommunications infrastructure, including the Internet. These tools support data capture, storage, and dissemination, but their success depends on integration with business needs and user acceptance. For information systems to deliver real value, all three dimensions must be aligned and consistently nurtured.

2. Explain how the Internet and the World Wide Web are related to the other technology components of information systems.

Suggested Answer: The Internet is a vast global network that interconnects millions of smaller networks, allowing for the transfer of data, voice, video, and more. The World Wide Web (web) is a service running on top of the Internet, using standardized protocols like HTTP to present rich, linked, multimedia content. Hardware devices—including servers, routers, and client computers—come together to transmit and store information across this network, while software such as browsers and web servers helps users navigate and retrieve online resources. Data management technology ensures that the enormous volume of web-based data is stored efficiently, and networking/telecommunication systems enable high-speed, reliable data movement. The synergy of these elements forms a technology infrastructure that underpins nearly all significant business processes, making global communication and distributed resources accessible to organizations of all sizes and sectors.

3. Describe the role IT infrastructure plays in a firm.

Suggested Answer: IT infrastructure is the foundational platform of hardware, software, networking tools, and data storage that supports an organization‘s information systems. It allows both internal and external stakeholders to capture, process, and share information, ensuring critical business operations can be run and scaled efficiently. For example, servers and virtualized cloud environments handle company databases and websites, whereas networking hardware and protocols facilitate secure communication between employees, suppliers, and customers. Properly maintaining and updating the IT infrastructure is essential for business continuity, as downtime in servers or networks can disrupt daily operations. Moreover, a well-structured infrastructure gives firms the flexibility to adopt cutting-edge applications—like machine learning or advanced analytics—enabling them to innovate quickly. Without a robust, reliable, and scalable IT infrastructure, even the most strategic technology investments can fall short of generating real business impact.

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1.7 Understand the importance of IoT, big data, cloud computing, and AI 1. Define the Internet of Things (IoT) and explain why it is important.

Suggested Answer: The Internet of Things (IoT) is a network of physical ―things‖—whether devices, sensors, or appliances—that are equipped with software, electronics, or connectivity enabling them to exchange data via the Internet. IoT is important because it allows real-time monitoring, automation, and decision-making across countless environments. For instance, production machinery can self-report maintenance needs, wearable sensors in healthcare can monitor patient vitals remotely, and smart household appliances can adjust energy consumption patterns or reorder supplies. This granular, interconnected data feeds into larger analytics engines, enabling both predictive and prescriptive strategies. By linking and digitalizing every facet of operations, IoT can reveal inefficiencies and optimize resource usage, creating competitive advantages in cost, productivity, customer engagement, and product innovation.

2. Define big data and explain why it is important.

Suggested Answer: Big data typically describes extremely large and diverse datasets that stream in at high velocity from sources like social media, e-commerce transactions, or IoT sensors.

These datasets exceed the processing capabilities of traditional data management tools.

Big data is important because it underpins advanced analytics and AI, allowing organizations to uncover patterns or insights that were previously hidden. When managed properly, big data can reveal consumer behavior trends, increase operational efficiencies, and inform predictive models. Retail giants use big data apps to predict inventory needs based on real-time buying patterns, while healthcare firms crunch big data from electronic medical records to enhance patient care and identify at-risk populations. In short, data volume, variety, and velocity are now recognized as strategic assets—if organizations can harness them effectively.

3. Define cloud computing and explain why it is important.

Suggested Answer:

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Cloud computing is a model where computing resources—servers, storage, and applications—are delivered as services over the Internet on a pay-per-use or subscription basis. Instead of investing heavily in on-premises hardware and fixed infrastructure, organizations can dynamically scale resources up or down as needed.

Cloud computing is important because it democratizes access to advanced computing power and sophisticated software without requiring huge capital outlays. This flexibility supports rapid innovation cycles, enabling businesses to prototype ideas quickly, process large data sets, or handle sudden surges in web traffic. Moreover, security, backup, load balancing, and software updates are often managed by cloud providers, freeing internal IT teams to focus on strategic projects rather than routine maintenance.

Overall, cloud services can accelerate growth, reduce operational costs, and foster agile development in both large and small enterprises.

4. Define artificial intelligence (AI) and explain why it is important.

Suggested Answer: Artificial intelligence (AI) involves developing computer systems capable of performing tasks that typically require human intelligence, including recognizing patterns, interpreting language, and learning from data. AI is transforming industries by automating repetitive functions, detecting fraud, enabling personalized marketing, and even powering self-driving cars. Companies of all sizes now use AI in chatbots for customer support, advanced analytics for supply chain management, and machine learning algorithms to detect complex patterns in vast datasets. It is important because AI can improve decision-making speed and accuracy, increase operational efficiency through predictive analysis, and free employees to focus on more creative or interpersonal work. As AI technologies evolve, they enable entirely new business models, reduce operational errors, and help organizations gain a competitive advantage in an increasingly data-centric world.

1.8 Understand why complementary assets are essential 1. Define complementary assets and describe their relationship to information technology.

Suggested Answer: Complementary assets are additional organizational or social resources necessary to receive the full value from a primary investment, such as an information system. For instance, simply installing advanced software does not inevitably lead to better Copyright © 2026 Pearson Education, Inc.

productivity if organizational practices and employee skills fail to align. Assets like a supportive corporate culture, effective business processes, staff training programs, and strong governance structures must accompany the IT investment. When deployed together, these elements enhance system utilization and improve results. Without complementary assets, technology implementations often underperform, as employees resist unfamiliar interfaces, or outdated processes limit the software‘s potential. By blending the right mix of cultural, managerial, and technical resources in conjunction with new technology, companies can transform processes, adapt more flexibly, and mitigate common pitfalls.

2. Describe the complementary social, managerial, and organizational assets required to optimize returns from information technology investments.

Suggested Answer: To unlock the highest possible value from an IT investment, businesses must develop social, managerial, and organizational assets to support usage. Socially, this can include an external environment that supports stable market regulations, widespread computing standards, and a reliable Internet infrastructure. Internally, a supportive organizational culture that champions efficiency, knowledge sharing, and continuous innovation ensures that employees see the system as a key tool for daily success.

Managerial assets play a pivotal role here, including strong leadership alignment on technology goals, a reward system that fosters innovation, and readiness to train or reskill staff so that they can master new tools. At the organizational level, well-designed business processes, decentralized authority structures that encourage quick decisions, and agile project management teams are crucial. Together, these complementary assets align around the technology, boosting collaboration, resilient processes, and an environment that continuously refines itself for higher returns.

1.9 Describe different approaches used to study information systems 1. List and describe each discipline that contributes to a technical approach to information systems.

Suggested Answer: Technical approaches to information systems heavily rely on quantitative and formal models to analyze how systems function from a computational standpoint. Three major disciplines inform this perspective. Computer science provides the fundamental theory of computing, algorithmic design, and system architecture. These help define what Copyright © 2026 Pearson Education, Inc.

computers can and cannot do, forming the backbone of software development.

Management science applies mathematical modeling and optimization techniques to solve business problems like resource allocation, logistics, and schedule planning.

Operations research delivers methods to optimize specific operational variables, such as minimizing transportation costs or maximizing throughput in production lines.

Together these disciplines illuminate the technological limits, algorithmic possibilities, and mathematical underpinnings crucial for designing and implementing information systems.

2. List and describe each discipline that contributes to a behavioral approach to information systems.

Suggested Answer: A behavioral approach frames information systems within the social context of the organization. Psychology explores how individual users perceive, learn, and react to technology, guiding user-centric designs and change management strategies. Sociology studies group-level dynamics, power structures, and organizational processes, revealing how technology adoption emerges—or is stifled—by cultural norms, roles, and social interactions. Economics, meanwhile, focuses on incentives, costs, benefits, and market impacts of technology, illuminating how digital systems can shift balance sheets and competitive landscapes. Together, these behavioral disciplines emphasize that maximizing technology‘s benefits requires understanding human factors, policy implications, and broader social trends. Only by integrating these perspectives can firms address real-world complexities like employee resistance, customer engagement, and ethical considerations, ensuring that systems are accepted and have a meaningful impact on performance.

3. Describe the socio-technical perspective on information systems.

Suggested Answer: The sociotechnical perspective posits that optimized organizational performance stems from harmonizing both the social and technical dimensions of a system. Technically, an effective design of hardware, software, databases, and networks is vital, but organizations must equally consider the human elements: training, workflows, leadership styles, and cultural attitudes toward innovation. When both aspects work in tandem, employees readily adopt technology, remain productive, and contribute to ongoing refinements. For instance, implementing advanced data analytics tools will not succeed if the corporate culture is resistant to data-driven decision making. Conversely, a highly collaborative team with minimal technology may remain limited in performance if they lack the computing resources to scale their operations. Thus, the sociotechnical Copyright © 2026 Pearson Education, Inc.

view stresses iterative feedback, where social and technical adjustments occur in parallel, refining processes and maximizing the system‘s overall value creation.

Discussion Questions 1.10 Information systems are too important to be left to computer specialists. Do you agree? Why or why not?

Suggested Answer: It is reasonable to argue that information systems are indeed too critical to be constrained solely within the tech team. In modern organizations, technology underpins every major function, from operations to marketing, and shapes how decisions get made at the highest levels. Consequently, limiting decision-making about systems and data strategies to only the IT department can miss broader business insights, such as customer needs, market trends, and revenue objectives. A purely technical view may focus exclusively on system performance metrics—like response time or uptime—while overlooking alignment with corporate strategy or user adoption challenges. Likewise, nontechnical managers and employees bring invaluable contexts, such as product knowledge, customer pain points, or compliance considerations, which can lead to a more comprehensive and effective technology roadmap. When organizations integrate cross-functional perspectives on IT investments, they typically see stronger returns and more agile responses to market or regulatory changes. Thus, while technical specialists are vital for the system‘s performance, the broader organization should also shape its development and usage.

1.11 If you were setting up the website for a new minor league baseball team, what management, organizational, and technology issues might you encounter?

Suggested Answer: From a management angle, you‘d first need alignment on the website‘s strategic goals—whether those include ticket sales, fan engagement, merchandise revenue, or local community outreach. Additionally, there may be budgeting constraints to address, along with deciding how marketing, promotions, and day-to-day content approvals will

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be handled. Organizationally, the baseball team‘s staff must be prepared to handle increased user interactions, such as responding to fan inquiries, posting frequent updates, or coordinating with third-party vendors for online ticketing and merchandise fulfillment. This might require training staff to manage content and customer data while ensuring robust communication channels across departments like marketing, finance, and operations. On the technology side, challenges could include selecting a reliable hosting platform that can handle sudden traffic peaks, ensuring secure payment processing, and integrating real-time scoring or scheduling components. Additionally, the site would need to be mobile-friendly and built to accommodate potential expansions, like live streaming or a loyalty rewards program. Handling these factors effectively would help foster a stable online presence capable of engaging fans and driving revenue.

1.12 What are some of the organizational, managerial, and social complementary assets that help make UPS’s information systems so successful?

Suggested Answer: UPS‘s organizational assets feature well-defined processes and robust training for thousands of drivers, ensuring consistent data capture and on-time deliveries. The firm operates within a culture that values efficiency, reliability, and continuous improvement—practices that complement its technology investments. On the managerial side, UPS leadership dedicates sizeable budgets to IT research and development, aligns AI initiatives with business goals, and emphasizes ongoing metrics analysis. Managers also empower employees by providing intuitive handheld devices (DIADs) and advanced applications like ORION, delivering real-time routing suggestions and automated alerts. Socially, UPS benefits from global networking standards, widely adopted data security practices, and supportive regulatory and technical infrastructures (like universal broadband access and established shipping routes). These external conditions help integrate UPS‘s technology platform seamlessly with partners and customers in over 200 countries. Together, such complementary organizational, managerial, and social assets reinforce UPS‘s strategic technology vision, thereby amplifying returns on each new digital application or system upgrade.

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AI Project 1.13 AI Project: Selecting a Business Name ―You have been hired as a consultant by two friends who want to open a retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They have asked you to advise them on a good name for their business.

Using Microsoft‘s Copilot, Google‘s Gemini, or ChatGPT, develop a prompt that suggests some appropriate names for the business. Select the name that you believe to be the best and explain why this is a good choice. Save a copy of your prompt, the output of the chat session, and your decision and rationale with respect to your choice of name. Submit to your instructor as requested.‖ Suggested Answer: A well-thought-out prompt might ask the AI tool not just for generic ideas but for names that connote health, sustainability, and the friendly nature of pets. For instance, the prompt might mention key brand values—such as ―organic,‖ ―eco-friendly,‖ and ―pet wellness‖—and request multiple ideas. Assuming the AI output includes names like ―GreenPaws Market,‖ ―EcoFetch Organics,‖ ―WholesomeWag,‖ or ―PurelyPet Naturals,‖ you could select ―GreenPaws Market‖ due to its clear suggestion of environmentally responsible products (―Green‖) plus a direct connection to pet care (―Paws‖). This name would be memorable, easy to pronounce, and does well in brief digital contexts (e.g., a social media handle). Additionally, ―Market‖ implies a range of offerings and evokes a welcoming space where pet owners can shop confidently. The choice aligns with the brand‘s emphasis on natural goods, resonates with both returning and first-time customers, and can be accompanied by an appealing brand logo or tagline. Such a name also leaves room for potential expansion into items like grooming services or broader pet health accessories in the future.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

1.14 Management Decision Problem ―The Brooklyn Navy Yard (BNY) is a shipyard and industrial complex located in Brooklyn, New York. It encompasses a 300-acre waterfront site for more than 450

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businesses employing more than 11,000 people and generating more than $2.5 billion per year in economic impact for New York City. The BNY needed to keep track of its thousands of visitors and nearly 10,000 employees per day, but it had been unable to do so efficiently and safely. Its internally hosted web portal for managing visitors was slow and not very user-friendly and was unable to scale to handle the many thousands more visitors projected for the future. Most BNY tenants were not pre-registering their visitors or delivery drivers, causing long lines and traffic at the security gates. Security checks were performed manually by checking IDs against a printed watch list. BNY was unable to create a welcoming experience for visitors and employees. Identify BNY‘s problem and analyze its business impact. What business functions were affected? Is it a management problem, an organizational problem, or a technology problem? Suggest an information system solution and identify some implementation challenges that the solution would have to address.‖ Suggested Answer: BNY‘s core problem is its inadequate visitor management system: the platform cannot scale effectively while most tenants do not utilize the existing pre-registration tools. This leads to congestion at the security checkpoints, manual ID verification, and a poor enduser experience for both visitors and employees. The business impact includes operational inefficiency (long waits, traffic, and scheduling delays), which could discourage potential clients, investors, or vendors from partnering with the facility. The business functions affected range from security (needing robust ID verification) to facilities management (coordinating space usage) to public relations (visitor impressions). In many respects, this is a combination of management, organizational, and technology issues. Management must set more rigorous policy enforcement, ensuring tenants register visitors appropriately; organizationally, employees need training and standard procedures; technologically, a modern, cloud-based visitor management system with automated ID scanning could expedite check-ins while addressing scaling issues. Potential implementation challenges include ensuring data security, especially when scanning driver‘s licenses or other identification. Another consideration is integrating any new system with the site‘s broader infrastructure, training both staff and tenants, and introducing mobile-friendly pre-registration to eliminate manual bottlenecks.

1.15 Using Spreadsheet Software to Create a Payroll Register ―Spreadsheet software skills: Formulas, absolute and relative addressing, worksheet formatting, SUM, AVERAGE. Business skills: Payroll accounting. In this project, you will

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create a payroll register for the eight senior executives of a machine tool company with 8,500 employees. All employees are paid through the firm‘s automated payroll system except for these executives, forming a confidential payroll. Develop a worksheet that creates a payroll register report for the first month of the year (January 2025). Include columns for monthly gross pay, year-to-date gross pay, deductions, and net pay. Use an ‗Assumptions‘ section for all deduction rates and references. Include totals for each category and an AVERAGE function for annual salary.‖ Suggested Answer: The solution begins by labeling columns for Employee Name, Social Security Number, Annual Salary, Monthly Gross Pay, Year-to-Date Gross Pay, and each deduction type (federal income tax, state tax, FICA, Medicare, health insurance, profit-sharing), followed by Net Pay. Under an ―Assumptions‖ section, reference cells contain the deduction rates or amounts (e.g., ―Federal Income Tax Rate: 25%‖). Use absolute cell referencing (e.g., $A$2) when calculating monthly gross pay to avoid accidental changes if the formulas are dragged. By dividing the annual salary by 12, students can compute the monthly salary. Then, year-to-date can be computed as identical to monthly gross in January, though the formula can be extended for subsequent months.

For each deduction category, multiply monthly gross pay by the rate or add in a static cost, referencing the ―Assumptions.‖ Summation formulas (SUM) create a row for total deductions. Subtotal net pay emerges by subtracting total deductions from monthly gross pay. At the bottom, use the SUM function for each deduction column and net pay.

Finally, the AVERAGE function in a suitable cell calculates the average annual salary among these eight executives, providing a concise managerial view of total compensation costs.

1.16 Using The Internet to Research Jobs ―Software skills: Online research. Business skills: Job searching. Visit a job search website/app such as Monster.com or Indeed.com. Spend some time examining jobs for accounting, finance, sales, marketing, and human resources. Find two or three descriptions of jobs that require some information systems knowledge. What information systems knowledge do these jobs require? What do you need to do to prepare for these jobs? Write a one- to two-page report summarizing your findings.‖ Suggested Answer:

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Using a major job site like Indeed.com, a student might find, for example, a ―Financial Analyst‖ role requiring knowledge of SQL or Microsoft Power BI for structuring and interpreting large datasets. Another example might be a ―Marketing Coordinator‖ position that calls for experience using CRM platforms like Salesforce to track leads and worthwhile marketing campaigns. A ―Human Resources Generalist‖ ad could list proficiency in HRIS (Human Resource Information System) as a plus, ensuring accurate onboarding, payroll, and benefits administration. Beyond the functional knowledge of these systems, the postings may mention data analytics, spreadsheet modeling, or cloud-based collaboration tools.

To prepare, students can build skills in relevant areas such as database querying, advanced spreadsheet functions, or specialized vendor training courses in platforms like SAP, Oracle, or Workday. Additionally, completing online certifications—e.g., Microsoft Power BI certification or Salesforce Administrator credentials—often appears advantageous to prospective employers. Demonstrating practical experience (through internships or volunteer projects) can further enhance job readiness. In summary, these job listings highlight that even in non-IT roles, the ability to gather, manipulate, and derive insights from digital information is a key competitive advantage in today‘s market.

1.17 Collaboration and Teamwork Project: Selecting Team Collaboration Tools ―Form a team with two or more of your classmates and review the capabilities of Google Drive and Google Sites for your team collaboration work. Compare the capabilities of these two tools for storing team documents, project announcements, source materials, work assignments, illustrations, presentations, and web pages of interest. Learn how each works with Google Docs. Explain why Google Drive or Google Sites is more appropriate for your team. If possible, use Google Docs to brainstorm and develop a presentation of your findings for the class. Organize and store your presentation using the Google tool you have selected.‖ Suggested Answer: Students will find that Google Drive excels at file storage and seamless integration with Google Docs, Slides, and Sheets, making it ideal for collaborative authoring, version control, and real-time editing. Team members can organize files into folders, set sharing permissions, and quickly comment on each document. Google Sites, in contrast, is specialized for building an internal or external website, which can be used as a centralized hub to display or embed project assets, calendars, or web-based information.

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While it also integrates with Google Docs, Sites focuses more on offering a visually structured, navigable interface, rather than day-to-day file management. For a group project requiring frequent iterative document editing—like drafting a research paper or preparing slides—Google Drive is typically more appropriate. However, if the team wants to present a polished final product, or house all resources (links, videos, docs) in one well-organized web location, Google Sites may suit better. Practical steps involve creating a shared folder or site, inviting team members, testing the real-time collaboration features, and developing a short sample project to understand which service best meets the team‘s needs.

Suggested Assignments 1. Analyze a Global Logistics Challenge Present students with a mock scenario where a local company expands to overseas markets. Have them propose how information systems (e.g., cloud-based ERPs, AI demand forecasting) can address shipping logistics, customs documentation, and realtime product tracking. Students will identify the complementary assets required for success.

2. Design a Digital Firm Readiness Survey Ask students to create a survey instrument that measures an organization‘s readiness for digital transformation. This survey should include questions about culture, management support for innovation, IT infrastructure maturity, and employee tech skills.

Students present results and propose next steps for improvement.

3. IoT Implementation Proposal Have students prepare a plan for incorporating IoT sensors into a small manufacturing operation or service process—e.g., a café tracking equipment usage and energy consumption. The plan should detail potential steps, technology choices, data privacy considerations, and complementary organizational changes necessary to see real ROI. 4. Dashboards for Finance or Marketing Students choose either a finance or marketing context and design a simple dashboard using spreadsheet or BI tools (e.g., Microsoft Excel, Google Data Studio). They must specify the key performance indicators (KPIs) relevant to their chosen function, discuss

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how these data are captured, and demonstrate how managers might use the dashboard to make data-driven decisions.

5. Developing IT Governance Guidelines Ask students to draft a high-level IT governance policy for a fictitious company. This includes establishing roles (CIO, IT steering committee), decision rights (budgets, vendor selection), guidelines for responsible AI use, security measures, and processes for continuous reevaluation of IT investments. The assignment encourages them to think about managerial oversight in technology deployments.

Chapter 2 – Instructor Manual Chapter Summary This chapter explores how organizations use information systems to support and streamline their business operations, enhance decision-making, and encourage effective teamwork. It begins by explaining the relationship between business processes and information systems, emphasizing that well-designed processes can offer competitive advantages. The chapter then discusses systems that serve operational, managerial, and strategic levels—ranging from transaction processing systems (TPS) to business intelligence (BI) solutions such as management information systems (MIS), decision-support systems (DSS), and executive support systems (ESS). Readers learn how enterprise applications like enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM), and knowledge management systems improve firm performance. The chapter also underscores the significance of collaboration and social business, highlighting how tools such as email, instant messaging, videoconferencing, enterprise social networking, and AI-driven services can boost innovation and productivity. The role of knowledge management systems in storing, distributing, and leveraging organizational knowledge is detailed.

Finally, students are introduced to the information systems function, highlighting key IT roles and governance considerations for ensuring that technology supports overall organizational goals.

Learning Objectives These are the chapter objectives: 2.1 Understand how business processes relate to information systems.

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2.2 Explain how information systems serve different management groups.

2.3 Explain how enterprise applications improve firm performance.

2.4 Understand the importance of collaboration and social business systems.

2.5 Describe collaboration tools.

2.6 Describe social business tools.

2.7 Understand how to evaluate collaboration and social business tools.

2.8 Describe knowledge management systems.

2.9 Describe the role of the information systems function.

2.10 Understand how the information in this chapter can help your career.

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what's happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

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Key Points to Cover 2.1 Understand How Business Processes Relate to Information Systems   

Emphasize how business processes structure the flow of information and tasks across functional areas.

Illustrate that well-designed processes can be a source of competitive advantage, while poorly designed processes hinder efficiency.

Show how information systems automate or transform these processes, impacting speed, accuracy, and quality of work.

2.2 Explain How Information Systems Serve Different Management Groups   

Highlight the differences between TPS, MIS, DSS, and ESS in terms of the types of decisions and information needs they support.

Discuss how business intelligence solutions draw from operational data to produce meaningful insights for management.

Illustrate how each system provides information essential for different levels (operational, middle, and senior managers).

2.3 Explain How Enterprise Applications Improve Firm Performance    

Review the purpose of enterprise systems (ERP) in integrating data across finance, manufacturing, sales, and HR. Show how SCM systems help manage relationships with suppliers to optimize inventory, production, and distribution.

Explain how CRM systems capture and analyze customer data to improve sales, marketing, and service.

Introduce knowledge management systems as tools for creating, storing, and disseminating organizational knowledge.

2.4 Understand the Importance of Collaboration and Social Business Systems 

Make clear that collaboration drives innovation, productivity, and quality when business processes and culture support teamwork.

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 

Demonstrate how social business uses social network platforms to engage employees, customers, and suppliers.

Highlight the role of organizational culture and leadership in fostering successful collaboration.

2.5 Describe Collaboration Tools   

Describe how email, instant messaging, and virtual meeting systems (e.g., Zoom, Teams) support synchronous and asynchronous communication.

Explain cloud collaboration services such as Google Drive, Microsoft OneDrive, and SharePoint for file sharing and co-authoring.

Introduce the concept of human-AI collaboration, showing how AI can assist with tasks such as scheduling and data analysis.

2.6 Describe Social Business Tools  

Show how enterprise social networking tools (e.g., Salesforce Chatter, Viva Engage) can link employees through profiles, feeds, and groups.

Introduce virtual worlds and the emerging metaverse as potential collaboration platforms for meetings, training, and presentations.

2.7 Understand How to Evaluate Collaboration and Social Business Tools   

Present the time/space matrix to help identify whether tools support users in the same or different times/places.

Emphasize the importance of organizational readiness (culture, management support, etc.) in making collaboration and social tools effective.

Outline steps to evaluate risks, benefits, and implementation considerations for collaboration solutions.

2.8 Describe Knowledge Management Systems  



Define knowledge management and its importance for leveraging an organization‘s collective expertise.

Show how enterprise-wide knowledge management systems (e.g., ECM systems, wikis, learning management systems) help capture, store, and share structured, semi-structured, and unstructured knowledge.

Introduce knowledge work systems (KWS) for specialized users, such as engineers or scientists, and the concept of intelligent techniques.

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2.9 Describe the Role of the Information Systems Function   

Summarize how the information systems department is organized: from programmers to systems analysts to senior IT executives.

Emphasize the key responsibilities of the CIO, CSO, CPO, CKO, CDO, and CAIO in an organization.

Introduce the concept of IT governance and how it affects decisions about the use of technology.

2.10 Understand How the Information in This Chapter Can Help Your Career   

Reinforce the variety of systems that graduates will likely encounter in the workplace.

Highlight ways to leverage collaboration, teamwork, and knowledge work tools to stand out in a professional setting.

Emphasize the career potential of understanding IT governance and organizational responses to technology change.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.               

BI dashboard (2.2) Business intelligence (BI) (2.2) Chief AI officer (CAIO) (2.9) Chief data officer (CDO) (2.9) Chief information officer (CIO) (2.9) Chief knowledge officer (CKO) (2.9) Chief privacy officer (CPO) (2.9) Chief security officer (CSO) (2.9) Collaboration (2.4) Customer relationship management system (CRM system) (2.3) Decision-support system (DSS) (2.2) End users (2.9) Enterprise applications (2.3) Enterprise content management system (ECM system) (2.8) Enterprise system (2.3)

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                        

Enterprise-wide knowledge management systems (2.8) Explicit knowledge (2.8) Human-AI collaboration (2.5) Information systems managers (2.9) Intelligent techniques (2.8) Interorganizational system (2.3) IT governance (2.9) Knowledge management (2.8) Knowledge management system (KMS) (2.3) Knowledge work system (KWS) (2.8) Learning management system (LMS) (2.8) Management information systems (MIS) (2.2) Portal (2.2) Programmers (2.9) Social business (2.4) Structured knowledge (2.8) Supply chain management system (SCM system) (2.3) Systems analysts (2.9) Tacit knowledge (2.8) Taxonomy (2.8) Team (2.4) Telepresence (2.5) Transaction processing system (TPS) (2.2) Virtual worlds (2.6) Wiki (2.8)

Case Studies Opening Case Study: Microsoft Teams and AI Help Toyota Motor North America Do Even Better Summary: Toyota Motor North America consolidated sales and manufacturing operations into one headquarters in Plano, Texas, overseeing thousands of employees. To adapt to the Covid-19 pandemic, the company deployed Microsoft Teams to maintain productivity and foster collaboration across its workforce. Integrating AgentAsk, an AI tool for rapid problem-solving, boosted efficiency and knowledge sharing. Toyota‘s culture of

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continuous improvement was reinforced via remote communication, making the organization more cohesive while saving costs.

Case Study Questions and Suggested Answers 1. How did Microsoft Teams make it possible for TMNA workers to work remotely?

Suggested Answer: Microsoft Teams offered features such as videoconferencing, file sharing, and chat channels that enabled TMNA employees to perform critical job activities remotely. By providing a unified platform for communication and collaboration, Teams replaced multiple ad hoc tools, standardizing remote meetings and project coordination. As a result, workers could access documents, hold discussions, and coordinate tasks from disparate locations. This continuity was especially critical during the pandemic, ensuring that daily operations and plant inspections could continue, often with real-time video interaction on the factory floor.

2. How effective was Teams in promoting collaboration and employee engagement?

Suggested Answer: Teams facilitated interactive and inclusive discussions, file-sharing, and screen-sharing, creating opportunities for workers across geographically dispersed locations to weigh in on issues and initiatives. It also offered a more uniform security environment, reducing complexity. By integrating features like Teams Phone, TMNA provided a reliable way for employees to connect quickly. This consistency in communication fostered a sense of belonging and timely engagement, leading to efficiency improvements and increased cross-functional learning.

3. How has AgentAsk improved productivity at TMNA? Suggested Answer: AgentAsk uses generative AI to provide quick answers to employee questions, such as IT and finance-related queries. This tool significantly reduces the average time to resolve issues—often from days to minutes—by automating parts of the diagnostic and problem-solving process. Through a voice or text prompt in Teams, employees quickly receive relevant information or resolution steps, saving thousands of employee hours. It supports Toyota‘s primary goal of continuous improvement by liberating time that can be spent on more complex, value-added tasks.

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Spotlight on Technology Case Study: AI Accelerates Drug Discovery and Development Summary: Drug discovery is expensive and time-consuming, often requiring extensive lab work that results in low success rates. AI helps streamline this process by predicting compound properties, analyzing large datasets, and identifying new molecule candidates with fewer side effects. Pharmaceutical companies such as Johnson & Johnson and Merck use AI to expedite clinical trial recruitment, personalize treatments, and develop more targeted therapies. These human-AI collaborations accelerate innovation and reduce costs in the drug pipeline.

Case Study Questions and Suggested Answers 1. Why is drug discovery appropriate for AI applications?

Suggested Answer: Drug discovery relies on analyzing vast amounts of data on molecular structures, disease mechanisms, and clinical trial outcomes. AI technologies excel at detecting complex patterns within large datasets and can help synthesize new insights far faster than traditional manual methods. By processing millions of possibilities, AI systems reduce the time and cost needed to filter out ineffective compounds and focus on those more likely to succeed. This aligns with a central challenge in drug discovery: sifting through enormous volumes of chemical and biological data to isolate promising leads.

2. Describe how AI applications have improved drug discovery.

Suggested Answer: Through machine learning and predictive analytics, researchers can rapidly identify molecules with optimal therapeutic properties, potentially accelerating the earliest stages of drug development. AI can simulate how compounds interact with biological targets, enabling scientists to quickly discard less promising candidates and refine viable compounds. Systems like AgentAsk (in Toyota‘s case) are paralleled in pharmaceutical contexts with generative AI tools that can ―suggest‖ new chemical structures suited to desired properties, reducing the need for human trial-and-error. AI also aids in hyperspecific tasks, like identifying subpopulations of patients likely to

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benefit from certain drugs, ultimately making the entire process more efficient, costeffective, and personalized.

Chapter Case Study: How Much Do Virtual Meetings Help Collaboration?

Summary: As remote and hybrid work models proliferate, companies rely heavily on platforms such as Zoom and Microsoft Teams. While these tools have helped sustain operations and reduce travel, issues of diminished nonverbal cues, ―Zoom fatigue,‖ and managerial surveillance have raised concerns. Researchers find that an overabundance of virtual meetings can be counterproductive. Organizations that have introduced ―meeting-free‖ days show reduced stress and better outcomes, suggesting that balancing virtual meetings with other communication methods is vital.

Case Study Questions and Suggested Answers 1. How do virtual meeting technologies enhance collaboration?

Suggested Answer: Virtual meeting platforms like Zoom, Microsoft Teams, and collaborative chat tools bring distributed teams together in real time. People can exchange information almost instantly, share screens, co-edit documents, and hold video conferences that replicate some in-person conversational cues. This ease of connection supports rapid decisionmaking and can expand participation by removing geographical barriers. Employees working from anywhere can align goals, brainstorm ideas, and resolve problems quickly.

As a result, global teams and remote workers become more integrated, improving an organization‘s overall agility in a rapidly changing environment.

2. How do virtual meeting technologies hinder collaboration? Identify the management, organization, and technology factors that contribute to this problem.

Suggested Answer: From a management perspective, scheduling too many meetings or lacking structured agendas can obstruct productivity. Organizationally, employees can experience isolation if virtual interactions replace essential face-to-face connections. Frequent online sessions also yield ―meeting fatigue,‖ as continuous camera use demands

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increased cognitive effort with fewer nonverbal cues to interpret. Technologically, the quality of internet connections, unfamiliarity with collaboration tools, and excessive monitoring features may erode trust among participants. Together, these factors can reduce willingness to share ideas freely, inhibit relationship-building, and undermine productive interactions.

3. What can organizations do to improve the effectiveness of collaboration technology?

Suggested Answer: First, they can institute robust meeting guidelines—defining clear objectives, scheduling fewer but more productive meetings, and incorporating breaks or asynchronous channels where appropriate. Second, providing training resources or quick reference guides helps ensure employees understand how to navigate chat features, breakout rooms, or file-sharing seamlessly. Third, employees should have the option to disable self-view or limit camera usage to reduce fatigue. Fourth, establishing explicit policies around data tracking and employee privacy helps maintain trust. Finally, no-meeting days or time blocks can enable focused work while preserving high-quality interactions when employees do convene online.

4. If a company with 500 employees wants to implement virtual meeting technology to support remote work and collaboration, what issues should be considered?

Suggested Answer: First, management must identify specific collaboration objectives—whether for internal teamwork, client-facing communication, or hybrid scenarios. Second, leadership should evaluate costs and scalability, selecting a platform that offers robust security and data privacy features, especially if sensitive information is exchanged. Next, user training is critical: employees must be comfortable with fundamental features like screen-sharing, chat, and supporting multiple devices. Fourth, IT infrastructure support is essential, including sufficient bandwidth and reliable connectivity. Fifth, cultural readiness, such as encouraging balanced camera usage and minimal surveillance, helps avoid ―Zoom fatigue‖ and fosters trust. Finally, adopting flexible policies for meeting scheduling or asynchronous collaboration can ensure employees remain productive and engaged.

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Review Questions 2.1 Understand how business processes relate to information systems 1. Define business processes and describe the role they play in organizations.

Suggested Answer: Business processes are structured sets of activities that define how an organization creates products, delivers services, or accomplishes specific tasks. Each process incorporates inputs, outputs, and various tasks or workflows involving people and technology. These processes are central to an organization‘s functioning, enabling it to coordinate work activities, share information efficiently, and standardize routines. Welldesigned processes can help firms achieve cost savings, quality improvements, and faster response times. Conversely, poorly structured processes can lead to errors, delays, or wasteful resource use. Information systems play a pivotal role by automating manual steps, connecting disparate units, and consolidating information flows. The data captured and stored by information systems allow for performance monitoring and incremental improvement. In short, processes bring order to business operations, and information systems support every step of these processes through automation, data analytics, and improved communication.

2. Describe the relationship between information systems and business processes.

Suggested Answer: Information systems and business processes share a reciprocal relationship. On one hand, well-designed information systems reflect and reinforce the logic of a firm‘s processes, enabling smooth workflow across different tasks and departments. On the other hand, information systems can reshape and optimize how a process is performed, often by automating routine steps or making real-time data available to employees. For cross-functional processes, a single platform (like an ERP system) can ensure that data about an order placed in sales automatically updates inventory and triggers payment workflows in accounting. Likewise, managers can use reports from the system to identify process bottlenecks or inefficiencies. Ideally, the alignment of information systems and processes yields greater quality, speed, and adaptability, making the entire organization more productive and responsive to customer needs.

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2.2 Explain how information systems serve different management groups 1. Define business intelligence systems.

Suggested Answer: Business intelligence (BI) systems are a set of technologies and practices that collect, integrate, analyze, and present data to support better decision-making within an organization. Their primary goal is to transform raw operational data into meaningful insights. By consolidating data from multiple sources—such as transaction processing systems, customer interactions, or external market data—BI tools help managers identify patterns, trends, and relationships that may otherwise be hidden. The end result is a more informed and data-driven approach to strategic, tactical, and operational decisions, often presented in formats like reports, dashboards, and visual analytics.

2. Describe the characteristics of transaction processing systems (TPS) and the role they play in a business.

Suggested Answer: Transaction processing systems (TPS) accurately capture the detailed, day-to-day operational data for an organization. For example, when a customer places an order, a TPS records the order number, price, and customer information, and eventually updates inventory, shipping logs, and accounting records. TPS operate continuously, focusing on reliability, speed, and data integrity because these systems process high volumes of repetitive tasks such as payroll transactions, order entries, or banking deposits. Their role extends beyond simple record-keeping; they serve as the foundation upon which higher-level management systems draw their data. By delivering immediate, accurate information about fundamental business activities, TPS ensure that decision-makers at all levels have a solid factual basis for planning, analysis, and control.

3. Describe the characteristics of management information systems (MIS), decisionsupport systems (DSS), and executive support systems (ESS) and explain how each type of system helps managers make decisions.

Suggested Answer: Management information systems (MIS) typically transform raw transactional data into summarized, structured reports. By scheduling regular output—weekly, monthly, or quarterly—MIS informs middle managers about performance trends and highlights routine variances. In contrast, decision-support systems (DSS) aid in solving more

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complex, rapidly changing problems. They rely on analytical models and simulations, often integrating data from multiple sources, which empowers managers to test various ―what-if‖ scenarios. Meanwhile, executive support systems (ESS) provide senior leaders with tailored dashboards and visualizations connecting operational insight with external information. Such systems emphasize strategic issues, enabling top executives to quickly assess market trends, performance indicators, and potential risks. Collectively, MIS, DSS, and ESS offer unique decision-support capabilities, targeting the different managerial levels—operational, analytical, and strategic—that exist within an organization.

2.3 Explain how enterprise applications improve firm performance 1. Explain how enterprise applications improve firm performance.

Suggested Answer: Enterprise applications enhance integration and coordination across multiple business functions—such as sales, finance, HR, and operations—creating a consolidated flow of information. Because they standardize data and processes, they reduce duplication, minimize errors, and speed up workflows. For instance, an ERP system can automatically update inventory data once a sales order is placed, triggering production and shipment tasks. This seamless link increases operational efficiency and supports informed decision-making. Furthermore, these systems enable better collaboration with suppliers and customers and allow real-time insights into business metrics. As a result, organizations can respond more quickly to market changes, reduce costs, and boost customer satisfaction, ultimately improving overall performance.

2. Define enterprise systems, supply chain management (SCM) systems, customer relationship management (CRM) systems, and knowledge management systems (KMS), and describe their business benefits.

Suggested Answer: Enterprise systems (often called enterprise resource planning or ERP systems) integrate core processes like manufacturing, finance, and HR into a single data repository. They unify information flows, improve accuracy, and enable data to be used more effectively across the firm.

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Supply chain management (SCM) systems coordinate planning, sourcing, manufacturing, and delivery by sharing data with suppliers and logistics partners, thereby reducing inventory holding costs, forecasting errors, and delivery delays.

Customer relationship management (CRM) systems help a firm manage all interactions with existing and potential customers. By consolidating customer information, CRM ensures better sales strategies, targeted marketing, and more personalized service— boosting loyalty and revenue.

Knowledge management systems (KMS) focus on creating, storing, and disseminating organizational knowledge. They make it easier for employees to share best practices, access expertise, and foster innovation. Collectively, each type of enterprise application drives process efficiencies and strategic advantages.

2.4 Understand the importance of collaboration and social business systems 1. Define collaboration and social business, and explain why they have become so important in business today.

Suggested Answer: Collaboration is the practice of working with others to achieve shared goals, whether in teams or cross-functional environments. Social business leverages social networking platforms—internal or external—to engage employees, customers, and suppliers in open communication. They have become critical due to the increasingly global reach of organizations, the decentralized nature of decision-making, and the prominence of knowledge-based work. As markets shift quickly, collaborative platforms help teams pool expertise, respond swiftly to changes, and build stronger relationships with stakeholders. Social business further amplifies this by tying diverse, geographically dispersed parties into a closer network of interactions, fueling innovation and problemsolving through better use of collective knowledge.

2. List and describe the business benefits of collaboration and social business.

Suggested Answer: Collaboration and social business provide numerous advantages. First, they boost productivity by facilitating quick knowledge-sharing and problem-resolution, eliminating redundant tasks. Second, quality improves because errors are identified and corrected

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through the input of multiple team members. Third, heightened collaboration promotes innovation—as diverse minds contribute unique perspectives for new products or services. Fourth, better teamwork results in faster, more satisfying customer service, given that employees have immediate access to shared knowledge and peer support.

Fifth, all these gains combine to strengthen profitability, as businesses operate with greater efficiency and competitiveness.

3. Describe a supportive organizational culture for collaboration.

Suggested Answer: A collaboration-friendly culture encourages shared ownership of outcomes, open communication, and proactive knowledge exchange across different ranks. In such organizations, senior leadership sets the tone by rewarding team-based achievements alongside individual accomplishments. This often includes open office designs (for inperson collaboration) or robust virtual platforms (for hybrid or remote teams), welldefined roles that foster trust rather than competition, and recognition of employees who contribute ideas and resources to collective goals. Transparent management of information and top-level leaders modeling collaborative behaviors—like seeking input from junior colleagues or cross-functional experts—strengthen this culture further, making it more likely that employees will see collaboration as an intrinsic aspect of their day-to-day work.

2.5 Describe collaboration tools 1. List and describe the various types of collaboration tools and technologies.

Suggested Answer: Common collaboration tools include email, instant messaging, and chat platforms, which allow quick, text-based communication for brief updates. Videoconferencing and web conferencing technologies (such as Zoom and Microsoft Teams) enable real-time audio and video interaction, screen-sharing, and virtual whiteboarding, bridging distances. Cloud storage services (Google Drive, OneDrive) enhance file-sharing and co-authoring, allowing multiple users to edit documents simultaneously from any device.

Specialized collaboration suites, e.g., Microsoft SharePoint, combine document management, version control, and team portals. These integrated systems may also have social networking elements, like group feeds, microblogging features, or enterprise chat, which broaden the scope of communication beyond one-to-one interactions.

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2. Explain how AI technology is being used to aid collaboration.

Suggested Answer: AI can support collaboration in numerous ways. Chatbots and virtual assistants schedule meetings, send automatic reminders, or even transcribe and summarize discussions, saving employees valuable time. Intelligent analytics tools gather information from large data sets, picking out patterns or insights for collective review.

More advanced applications facilitate real-time language translation, bridging linguistic divides among global teams. Furthermore, AI-driven recommendation engines help find relevant colleagues or knowledge within a firm by analyzing profiles and conversation histories. Over time, human-AI collaboration may enable co-creation of designs or documents, with AI suggesting improvements as team members build upon each other‘s input.

2.6 Describe social business tools 1. List and describe the various types of social business tools and technologies.

Suggested Answer: Social business platforms often mirror public social media but are tailored to enterprises.

Tools like Salesforce Chatter or Microsoft Viva Engage provide news feeds, group discussions, and profile pages, enabling employees to connect over shared interests, projects, or expertise areas. Crowdsourcing platforms allow organizations to solicit ideas or solutions from internal or external communities, while blogs and wikis facilitate knowledge sharing in a more fluid, conversational style. Virtual worlds or metaverse platforms offer immersive environments where employees or customers interact with avatars, attend 3D events, or jointly develop prototypes. File-sharing capabilities and tagging features often accompany these social tools, ensuring rich content finds the right audience.

2.7 Understand how to evaluate collaboration and social business tools 1. Describe the time/space collaboration and social business tool matrix.

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The time/space matrix categorizes collaborative activities along two dimensions: whether participants are communicating synchronously (same time) or asynchronously (different times), and whether they are co-located (same place) or distributed (different places). For instance, same time/same place solutions include face-to-face meeting rooms with digital shared displays, while different place/same time might involve videoconferencing. Different time/same place could be continuous task team rooms, and different time/different place typically relies on email, wikis, and discussion boards.

Understanding these categories helps firms choose appropriate tools to fit both the geographical distribution of users and the nature of their collaboration needs.

2. Identify the process that should be followed to help decide which collaboration or social business tool should be evaluated.

Suggested Answer: First, an organization determines its collaboration challenges and maps them onto the time/space matrix. Next, a comprehensive list of candidate tools is constructed, matching the identified needs. The organization then estimates the costs and benefits of each tool and evaluates associated risks—such as data privacy, vendor stability, or user acceptance. Engaging potential end users helps reveal training and implementation considerations. Finally, the organization selects a shortlist of suitable tools, hosts vendor presentations, and decides which solution aligns best with business requirements. This process ensures that the chosen technology meets both technical criteria and cultural acceptance.

2.8 Describe knowledge management systems 1. Describe how knowledge management systems help organizations make better use of their structured, semi-structured, and unstructured knowledge, as well as their tacit knowledge assets.

Suggested Answer: Knowledge management systems (KMS) unify and organize content from multiple sources—databases of formal documents, email archives, videos, and the specialized expertise residing in employees‘ heads. Such systems often embed search, taxonomy, and tagging features, enabling staff to locate relevant information quickly. By capturing tacit knowledge (e.g., through expert directories or Q&A forums), a KMS allows employees to tap into insights that were previously personal or localized. The result is a dynamic knowledge repository that not only preserves the organization‘s intellectual Copyright © 2026 Pearson Education, Inc.

capital but also fosters continuous learning. As decisions draw on broader, more precise knowledge, the firm can solve problems faster, generate new ideas, and respond more effectively to changes in the external environment.

2. List and describe the three types of systems for knowledge management.

Suggested Answer: First, enterprise-wide knowledge management systems manage digital content—both structured and unstructured—across the entire firm, often including collaboration and learning tools. Second, knowledge work systems (KWS) are specialized platforms that support the creation of new knowledge through advanced modeling, simulation, or design, used heavily by engineers and scientists. Third, intelligent techniques encompass AI-based tools—like data mining, machine learning, neural networks, and expert systems—that help discover patterns, automate tasks, propose solutions, or replicate the decision logic of experts. Together, these three categories address different phases in a knowledge lifecycle: from broad distribution in enterprise-wide systems, to specialized creation in KWS, to automated reasoning via intelligent techniques.

2.9 Describe the role of the information systems function 1. Describe how the information systems function supports a business.

Suggested Answer: The information systems (IS) function manages the infrastructure that underpins daily operations—networks, data storage, hardware, and software—and also works strategically with other departments. IS teams ensure data integrity, security, and compliance; develop new applications; and constantly evaluate emerging technologies.

They collaborate with business units to tailor solutions (like ERP, CRM, or analytics) for evolving needs. Moreover, the IS function designs governance structures to guide technology investment and manages interactions with external technology providers.

Essentially, it serves as both a technical backbone and a driving force for innovation, aligning IT initiatives with the firm‘s broader strategic goals.

2. Describe the roles that programmers, systems analysts, information systems managers, chief information officers (CIOs), chief security officers (CSOs), chief data officers (CDOs), chief privacy officers (CPOs), chief AI officers (CAIOs), and chief knowledge officers (CKOs) play.

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Suggested Answer: Programmers write and maintain the code for software applications or system utilities.

Systems analysts bridge business requirements and technical design, identifying how systems can meet organizational needs. Information systems managers oversee dayto-day IS operations, from infrastructure maintenance to project execution. The CIO, a top-level strategist, aligns IT initiatives with business goals and coordinates the entire IS team. The CSO focuses on safeguarding data and systems from security threats. The CDO manages data assets strategically—ensuring data quality, availability, and analytics. The CPO assures compliance with privacy regulations and addresses consumer concerns about data handling. The CAIO steers the company‘s artificial intelligence roadmap, focusing on the acquisition, deployment, and monitoring of AI tools. Finally, the CKO advances how knowledge is created, captured, and reused across the organization‘s workforce. Together, they form a leadership ecosystem crucial to leveraging technology for competitive advantage.

Discussion Questions 2.10 How could information systems be used to support the order fulfillment process illustrated in Figure 2.1? What are the most important pieces of information these systems should capture?

Explain your answer.

Suggested Answer: Information systems can automate each step of order fulfillment, beginning with an online ordering module for sales data creation. This module should pass payment details directly to accounting for credit checks or invoicing, and it should signal manufacturing to adjust inventory or schedule production. The warehouse management application can then generate pick lists and shipping labels, subsequently notifying logistics partners. Finally, customer service can track status updates and handle postdelivery issues. The most critical data elements include customer identity, product specifications (e.g., item number, quantity), shipping details, payment status, and realtime inventory updates. Such data are vital for completing orders efficiently, verifying customer creditworthiness, scheduling shipments, and remaining responsive to any post-sale inquiries or returns. By integrating financial, operational, and customer-facing data, the entire fulfillment pipeline becomes more accurate and less prone to errors.

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2.11 Identify the steps that are performed in the process of selecting and checking out a book from your college library and the information that flows among these activities. Diagram the process. Are there any ways this process could be adjusted to improve the performance of your library? Diagram the improved process.

Suggested Answer: When a student searches for a book online or at a library kiosk, the system queries its catalog database for availability. If found, the student locates the book on the shelf or places a hold request. At checkout, the library system logs the book as borrowed under the student‘s account, updates availability, and creates a due date. This triggers automatic notifications (e.g., email reminders). If the book is returned before the due date, the system updates the record and notifies the student. Potential improvements might involve self-checkout stations with RFID scanners to reduce wait times, or an instant hold/reservation system that alerts the student immediately when the book becomes available. Implementing an app for scanning barcodes, storing digital IDs, or sending push notifications can further streamline the process. The improved process flow could integrate these technologies, reducing manual steps and improving convenience for both staff and patrons.

2.12 Use the Time/Space Collaboration and Social Business Tool Matrix to classify the collaboration and social technologies Toyota Motor North America uses.

Suggested Answer: Toyota Motor North America (TMNA) adopted Microsoft Teams for its workforce as a core synchronous, different-place tool, enabling real-time video meetings and chats.

Teams also supports asynchronous collaboration (through persistent discussion channels and file sharing), so it fits both ―same time/different place‖ and ―different time/different place‖ quadrants in the matrix. Additionally, TMNA integrated AgentAsk, an AI service that can operate asynchronously—employees can pose queries anytime, receiving responses without needing everyone present simultaneously. Meanwhile, for collaborative tasks on shared documents, Teams channels or SharePoint function under the ―different time/different place‖ model as well. If in-person standup meetings

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are still held at factories or offices, those are ―same place/same time.‖ Thus, TMNA‘s set of tools and processes illustrate the usefulness of solutions that cover more than one quadrant of the time/space matrix, addressing the complexities of distributed operations across multiple geographies.

AI Project 2.13 AI Project: Selecting a Brand Image ―You believe the retail pet store described in the AI Project in Chapter 1 will be even more appealing and memorable if it has a brand image. Using Microsoft Copilot, Google Gemini, or ChatGPT, create a prompt or series of prompts to generate a brand image for the store using the name you selected in Chapter 1. Save a copy of your prompts and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: A suitable starting prompt for an AI generative model is to provide a concise overview of the store‘s brand essence, desired color palette, and target audience. For instance: ―Create a warm and friendly brand logo featuring [pet store name], with playful fonts in pastel blues and greens, aimed at families seeking pet supplies. The design should include subtle paw prints or silhouettes of common pets.‖ After generating initial designs, refine the prompt by specifying additional brand attributes, such as ―emphasize trustworthiness and modern simplicity‖ or ―include a smiling cat and dog silhouette.‖ Documentation for the assignment would include screenshots of the iterative AI conversation, any intermediate logos suggested, and a final output that best fits the store‘s identity. Throughout, the student should assess whether the AI captures the store‘s community-focused atmosphere and welcoming tone, guiding the model with clarifications on style or color. This cyclical human-AI collaboration process ensures a compelling, relevant brand image emerges that reflects the pet store‘s values.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

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2.14 Management Decision Problem ―The U.S. Census, conducted every 10 years, counts every resident in the United States. The results of the census are used to determine the number of seats each state has in the U.S. House of Representatives, Electoral College votes, and an estimated $1.5 trillion each year in federal funding for the states for healthcare, education, infrastructure improvements, and more.

In the past, all census data were collected by paper surveys, transported to the U.S. Census Bureau, and input manually into the Bureau‘s information systems. The 2020 census was primarily conducted online, with about 60 percent of the U.S. population of 330 million filling out a form on their Internet-linked smartphones, tablets, or personal computers. The Bureau also collected census responses over the phone and on paper forms. An unprecedented amount of data had to be collected, stored, secured, and interpreted. What are some of the management, organizational, and technology issues that the Census Bureau had to address in modernizing a massive, important paperbased system?‖ Suggested Answer: The Census Bureau‘s shift from a paper-based approach to a primarily digital process entails significant considerations. From a management standpoint, leadership had to handle an extensive project plan, ensuring employees were trained on new software and data collection methods. They also needed robust stakeholder communication, particularly regarding data privacy and the confidentiality of online submissions.

Organizationally, new roles and responsibilities emerged. The Bureau might have created or expanded teams devoted to cybersecurity, cloud-based data management, and real-time analytics. Coordinating different departments was crucial as manual tasks like scanning paper forms became replaced or supplemented by digital systems.

Technologically, the addition of an online platform introduced complexities, such as selecting secure hosting services, designing mobile-friendly forms, safeguarding personally identifiable information, and constructing analytics pipelines to process responses efficiently. Data validation checks for incomplete or fraudulent responses had to be developed. Ultimately, the challenges stretch beyond simple IT upgrades: ensuring operational continuity, addressing potential user hesitancy, and providing equal access to technology for remote or underserved communities all factor into a successful online census program.

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2.15 Using a Spreadsheet to Create a Town Budget ―In this exercise, you will learn how to use spreadsheet software to improve management decisions about a budget and budget projections, in this case for a town.

The town of ClearSkies, with a population of 9,042, is located in Oklahoma. Each November, the town manager works with the mayor and the board of trustees to develop the town‘s budget for the forthcoming year. The town‘s main source of revenue is the local property tax, but it also receives some aid from the state government and some revenue from miscellaneous licenses and fees.

The town leaders limit tax increases to 3 percent or less. They fear revenues may be declining because the state wants to cut the state aid it provides to local governments.

Anticipating continued cutbacks in state aid, the town manager would like to develop preliminary budgets for the next two years to see if they can be supported by anticipated revenues. If planned expenditures exceed revenues, the town manager, the mayor, and the trustees must develop an alternative budget that is balanced.

The MIS18_Project 2.15_Student File shows the receipts and disbursements for the town in 2025. The 2025 budget can be used as the basis for projecting the town budget for the next two years. In projecting the next two years‘ budgets, the town manager wants to use the following assumptions: She expects the state will reduce its aid to the town by 6 percent each year. Historically, expenditures for employee salaries and benefits have been rising 5 percent annually. She expects all other expenditures to rise at a rate of 6 percent annually and miscellaneous receipts to rise 4 percent annually.

Tax increases should be 3 percent per year. The town‘s expenditure for debt service to pay off previous loans will remain constant. Can the town balance its budget if it keeps its promise not to raise taxes beyond 3 percent or go further into debt?

In developing the town‘s budget projections, create an Assumptions section of the worksheet to identify factors in your calculations of receipts and disbursements. Make sure formulas reference cells in the Assumptions section wherever possible. Calculate the receipts and disbursements for each of the categories on the worksheet for 2025 through 2027. Calculate total receipts and total disbursements. The problem has been simplified so that all revenue is collected in the year it is due. Complete the worksheet by subtracting total receipts from total disbursements in 2025 through 2027.

Then, write a brief analysis of the projected budgets. If these budgets don‘t balance, what steps would you recommend be taken by the town? Revise your worksheet to incorporate your recommendations and save it under another name. Keep revising the worksheet until you have developed a balanced budget. Is there some way for the town to come up with a balanced budget without raising taxes?

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The town manager wants to highlight the portion of salary expenditures represented by the town court, and the best way to do that is visually in a pie chart. Create a pie chart showing the various categories of salary disbursements for 2025.‖ Suggested Answer: A balanced approach may involve reducing expenditures in certain areas and exploring new revenue sources—not just raising taxes. For instance, the town could reduce nonessential operating expenses or explore local business development to grow the tax base. Using the spreadsheet, one would first insert a summary table of ―assumptions‖— like inflation rate, salary growth, or tax increase caps—linked by cell references. If the state aid shortfall is especially pronounced, scheduling infrastructure projects for later years or renegotiating service contracts might be prudent. Considering a moderate tax increase smaller than the shortfall, combined with tighter controls on discretionary spending, can also fill the gap. Providing visuals (like pie charts showing the percentage of each budget category) helps stakeholders identify where cuts are viable. By iterating through budget scenarios—changing assumptions about annual increases or adjusting departmental spending—the town can find a mix of cost reductions, slight revenue enhancements, or phased local initiatives that achieve a balanced budget in compliance with policy goals. Saving each version under a new name highlights how adjustments affect year-over-year projections.

2.16 Getting to Know Tableau ―This chapter introduced you to various systems for business intelligence, including Tableau, a popular business intelligence and analytics software tool available from Salesforce. In this project, you will start to become familiar with Tableau. You will begin by researching the following versions of Tableau: Tableau Public, Tableau Desktop, and Tableau Cloud. Gather information about the key features, unique functionalities, similarities and differences, target audiences, pricing models, and advantages and disadvantages of each of these versions, and when it might be better to use one version as compared to another. Then, write a report or create a presentation that summarizes your research. Use Tableau to create at least three data visualizations to illustrate your findings and integrate them into your report or presentation. If you don‘t have access to Tableau Desktop, ask your instructor, or alternatively, you can create a free Tableau Public account.‖ Suggested Answer:

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In researching Tableau Desktop, Tableau Public, and Tableau Cloud, students would note similarities such as drag-and-drop creation of dashboards, robust data visualization libraries, and integration with a range of data sources. Differences include cost, data security, and support for private vs. public data. In a sample visualization comparing the product capabilities, one chart might show subscription price ranges, another could illustrate user-limit or compute-limit thresholds, and a third might display typical use cases. Each also has distinct advantages: Tableau Public is free and suited for sharing non-confidential visualizations, Tableau Desktop supports advanced analytics offline, and Tableau Cloud facilitates real-time collaboration. A recommended approach is choosing the product that best aligns with the organization‘s budget, data privacy needs, and user expertise. Through hands-on experimentation, students learn how to build interactive dashboards, refine color coding, and add filters or calculated fields, thus demonstrating how quickly Tableau can transform raw data into actionable insights.

2.17 Using Google Maps to Plan Efficient Transportation Routes ―In this exercise, you will use Google Maps to map out transportation routes for a business and select the most efficient route. You have just started working as a dispatcher for Cross-Country Transport, a new trucking and delivery service based in Cleveland, Ohio. Your first assignment is to plan a delivery of office equipment and furniture from Elkhart, Indiana (at the corner of E. Indiana Ave. and Prairie Street), to Hagerstown, Maryland (corner of Eastern Blvd. N. and Potomac Ave.). To guide your trucker, you need to know the most efficient route between the two cities. Use Google Maps to find the route that is the shortest distance between the two cities and also to find the route that takes the least time. Compare the results. Which route should CrossCountry use?‖ Suggested Answer: Using Google Maps, one identifies at least two main routes: the shortest by distance and the fastest by estimated driving time. Shorter mileage often suggests lower fuel consumption, yet significant traffic or geography closures can cause longer delays. If the difference in travel times is small, Cross-Country might select the route minimizing tolls or offering more convenient rest stops for drivers. They must also consider load types—some roads may have weight restrictions. After factoring in real-time factors such as weather forecasts and typical congestion patterns, the route with the fewest high-traffic bottlenecks and permissible weigh stations is the better choice. The final recommendation could favor speed over minimal distance if timely deliveries are critical to maintaining customer satisfaction. However, if a slightly longer path avoids steep toll

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fees and remains within the client‘s delivery window, that might be optimal for cost savings. Ultimately, management should maintain route records in a shared repository, so future shipping decisions can reference driver feedback and performance data.

2.18 Collaboration and Teamwork Project: Identifying Management Decisions and Systems ―With a team of two or more other students, search business publications on the web to find a description of a manager of a corporation. Gather information about what the manager does and the role the manager plays in the company. Identify the organizational level and business function where this manager works. Make a list of the kinds of decisions this manager has to make and the kind of information that the manager would need for those decisions. Suggest how information systems could supply this information. If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: After identifying a corporate manager in a business publication, the students might note that this individual is responsible for, for example, devising operations strategies. Next, they parse the manager‘s typical decisions: whether to expand production lines, enhance marketing campaigns, or adopt new warehouse technology. For each decision, the group pinpoints which specialized information systems could help gather data and provide analysis—such as DSS for scenario modeling or a CRM system for gauging consumer feedback. The manager‘s role within the organization‘s hierarchy also suggests how comprehensive or consolidated the data might have to be. By verifying the manager‘s reporting lines, the group sees how MIS or TPS reports might feed into monthly operational reviews, or how ESS dashboards could be crucial for real-time monitoring. A mock presentation might highlight how a single integrated ERP system keeps the manager informed of inventory levels, shipments, and financial metrics, providing the intelligence needed to decide on expansions or resource allocations confidently.

Suggested Assignments 1. Mapping Business Processes: Assign students to observe a department within the institution (such as the library or cafeteria) and create a detailed process map.

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Students then suggest technology solutions that streamline this process, evaluating the impact on efficiency and user experience.

2. Social Business SWOT Analysis: Have students explore one social networking platform (e.g., Slack, Teams, or Salesforce Chatter) within a real organization.

They conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of how social business tools enhance or hinder collaboration, culminating in a group presentation.

3. Collaboration Technology Implementation Plan: Students form teams and develop a fictitious small business needing a collaboration overhaul. In a short research paper or presentation, they propose specific tools (cloud storage, IM, asynchronous boards) along with a budget, training schedule, and metrics for success.

4. Data Privacy Policy Project: Ask students to craft a concise policy for handling employee and customer data in a mid-sized enterprise. They should address regulatory compliance, user consent, data sharing, retention policies, and the roles/responsibilities of the CPO and other IT staff.

5. Knowledge Capture Interview: Students interview a faculty member or a local industry expert to elucidate their specialized knowledge. They then propose how a knowledge management system could capture, tag, and disseminate this expertise to others in an organization, illustrating the system design and potential benefits in a short report or demonstration.

Chapter 3 – Instructor Manual Chapter Summary This chapter examines how organizations and information systems interact to shape business performance in today‘s competitive environment. First, it introduces different perspectives on what an organization is: a technical view—focused on how resources are transformed into outputs—and a behavioral view—emphasizing social interactions, culture, and politics. It then explores how organizational features such as routines, business processes, and culture influence the way information technology is embraced or resisted. The chapter delves into the significance of strategic information systems and underscores how businesses can leverage technology to achieve operational excellence, product differentiation, or market focus, while also building customer and supplier intimacy. Students learn about Michael Porter‘s competitive forces model, along with other strategic frameworks—including the value chain model and the concept

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of business ecosystems—to understand where and how technology can create value.

The chapter also describes how artificial intelligence can transform an organization‘s operations, from helping identify promising market opportunities to designing new products and services. Finally, it highlights the challenges of implementing strategic systems, showing that good alignment between IT and business goals is crucial for sustaining any competitive advantage.

Learning Objectives These are the chapter objectives: 3.1 Discuss technical and behavioral views of organizations.

3.2 Discuss features of organizations that affect information systems.

3.3 Describe the impact of information systems on organizations.

3.4 Discuss Porter‘s competitive forces model.

3.5 Discuss the value chain model.

3.6 Discuss synergies, core competencies, and network economics.

3.7 Understand how AI can be used in competitive strategy.

3.8 Describe the challenges posed by strategic information systems.

3.9 Understand how the information in this chapter can help your career.

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what's happening today.

Use the provided discussion questions in class.

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MyLab MIS "If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to it will be removed from the overall score."

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 3.1 Discuss Technical and Behavioral Views of Organizations    

Organizations in a technical sense: Emphasize the transformation of inputs into outputs and the importance of efficiency.

Organizations in a behavioral sense: Describe the focus on social structures, culture, and politics.

Show how each view affects choices for IT implementation.

Stress the need to combine technical and behavioral insights for understanding organizations fully.

3.2 Discuss Features of Organizations that Affect Information Systems    

Illustrate how solidified routines shape how IT is used.

Demonstrate how internal politics and shared values influence the acceptance of new technology.

Underscore the reciprocal relationship between firms and their surroundings.

Explain how sudden tech shifts can upend entire industries.

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3.3 Describe the Impact of Information Systems on Organizations    

Highlight transaction cost theory and agency theory, and how IT reduces costs.

Consider how IT flattens hierarchies and broadens spans of control.

Identify why organizational inertia and politics lead to resistance.

Stress the importance of matching technology with organizational needs and structure.

3.4 Discuss Porter’s Competitive Forces Model    

Provide an overview of the threat of new entrants, substitutes, buyers‘ power, suppliers‘ power, and rivalry.

Show examples of low-cost leadership, product differentiation, focus on market niche, and building strong ties.

Discuss how the Internet intensifies competition yet opens new markets.

Emphasize creating more personalized, data-driven interaction with customers.

3.5 Discuss the Value Chain Model    

Explain how each activity adds value and how to identify leverage points for IT. Detail how to extend the chain beyond the firm‘s boundaries.

Describe a more flexible, networked view of cooperating firms.

Stress the need to measure performance and adopt proven methods.

3.6 Discuss Synergies, Core Competencies, and Network Economics    

Illustrate how new IT can tie business units together for greater efficiency.

Explain how IT helps leverage what a firm does best across multiple markets.

Describe how networks derive value from many participants. the power of alliances and platforms that extend across industries.

3.7 Understand How AI Can Be Used in Competitive Strategy   

Show how AI can drive improvements in inbound logistics, operations, marketing, and service.

Note that AI can enable rapid, data-driven decisions and more sophisticated analytics.

Provide examples of AI in automation, personalization, and idea generation.

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

Highlight the need for proper datasets, computational resources, and organizational adoption methods.

3.8 Describe the Challenges Posed by Strategic Information Systems    

Discuss difficulties integrating disruptive IT. Note that rivals can copy or catch up quickly.

Emphasize that unclear strategy leads to suboptimal use of IT. Demonstrate the need to consider industry forces, value chain, and organizational alignment.

3.9 Understand How the Information in This Chapter Can Help Your Career    

Point out that knowledge of how IT interacts with the firm opens many doors.

Show how to apply these frameworks in your own field or job.

Emphasize the advantage of being comfortable with data-driven decision-making.

Encourage ongoing learning to keep pace with evolving technology.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.              

Agency theory (3.3) Benchmarking (3.5) Best practices (3.5) Business ecosystem (3.6) Competitive forces model (3.4) Core competency (3.6) Customer experience management (3.4) Disruptive technologies (3.2) Efficient customer response system (3.4) Mass customization (3.4) Network economics (3.6) Organization (3.1) Platform (3.6) Primary activities (3.5)

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        

Product differentiation (3.4) Routines (3.2) Support activities (3.5) Switching costs (3.4) Transaction cost theory (3.3) Transaction costs (3.3) Value chain model (3.5) Value web (3.5) Virtual company (3.6)

Case Studies Opening Case Study: PepsiCo Tames the Doritos Crunch SUMMARY: PepsiCo, a global leader in food and beverages, found that Doritos‘ appealing crunch sound annoyed gaming enthusiasts who preferred quieter playing sessions. When PepsiCo tried removing the crunchy texture, consumer backlash ensued. PepsiCo then used AI to create Doritos Silent, a crunch-cancellation software that mutes chip-eating noises while preserving the user‘s voice. This technology enabled Doritos to remain a top snack in a lucrative market segment without compromising the product‘s signature crunch.

1. What competitive strategies is PepsiCo using for its Doritos brand?

Suggested Answer: PepsiCo is pursuing product differentiation using AI tools that add value to Doritos by improving the user experience. It is also focusing on customer experience management by addressing a very specific market niche—gamers—who crave Doritos‘ flavor but dislike the crunching sound during gameplay. By integrating technology that silences crunch noise, PepsiCo is strengthening its brand‘s appeal, reducing potential substitutes, and developing customer loyalty through innovation.

2. Why is managing the customer experience important for those strategies?

Suggested Answer: Managing the customer experience helps PepsiCo align its product attributes with consumers‘ changing needs and preferences. In this case, it ensures Doritos‘ trademark crunch remains appealing while mitigating complaints from the gaming community—an influential group that can sway brand perception.

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Maintaining a superior experience can raise switching costs, bolster brand loyalty, and preserve PepsiCo‘s competitive edge by differentiating Doritos from rival snacks.

3. What role did AI play in making Doritos more competitive?

Suggested Answer: AI enabled PepsiCo to customize the Doritos experience without changing the chips themselves. By training an AI model to recognize and isolate crunch sounds, PepsiCo delivered a novel solution—Doritos Silent—pleasing both gamers who want quiet and fans who love crunch. This underscores how AI can be leveraged to refine products or services, address niche consumer pains, and ultimately sustain market leadership.

Spotlight on Management Case Study: Spotify’s Podcasting Strategy Stumbles SUMMARY: Spotify built a dominant position in music streaming by using AI to drive personalization and discovery. Desiring growth, Spotify poured significant resources into original podcasting content and exclusive celebrity deals. However, some partnerships did not generate expected returns, and Spotify‘s internal podcast studios struggled.

Management discovered that success in podcasting requires more than brand names— it also requires targeted marketing, effective content curation, and deep alignment of strategy with user needs.

1. Analyze Spotify‘s business strategy using the value chain and competitive forces models.

Suggested Answer: Spotify excels at inbound logistics and operations by partnering with music labels for content, then using AI to tailor playlists and recommendations. Its outbound logistics and service activities likewise benefit from data-driven personalization. In competitive forces terms, Spotify leverages product differentiation and focus on market niche—particularly through hyper-personalized recommendations.

However, its move into exclusive podcasts altered supplier relationships, introduced new rivals, and showed that strengths in music streaming may not automatically transfer to podcasting.

2. What is the role of information technology and AI in Spotify‘s business strategy?

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Suggested Answer: Information technology, especially AI, underpins Spotify‘s capacity to analyze vast pools of user data in real time, generating personalized music or audio recommendations. This personalization helps Spotify differentiate itself from rivals, creating richer user experiences and strong brand loyalty. AI also drives automated decision-making about what content to promote or how to structure playlists. However, when Spotify branched out into in-house podcasts, it needed not just IT infrastructure but also the right strategic vision and marketing approach.

3. Why did Spotify‘s focus on podcasting initially stumble? What management, organization, and technology factors were involved?

Suggested Answer: Management overinvested in celebrity-driven or exclusive podcast content without fully evaluating what resonates with podcast audiences.

Organizationally, the internal studios did not receive adequate alignment or marketing resources. From a technology viewpoint, Spotify‘s data analysis capabilities did not seamlessly translate to the editorial and promotional needs of original podcasts.

Additionally, restricting certain podcasts exclusively to Spotify reduced their audience.

These factors combined to undermine the initial strategy.

4. Spotify Chief Executive Daniel Ek has said he wants Spotify to evolve from a music streaming company to being the world‘s largest audio company, with content including audiobooks, education, sports, and news. According to Ek, podcasting has helped make the company a major podcasting platform despite its rocky start. Do you think Spotify will be able to achieve this goal? Why or why not?

Suggested Answer: Spotify has powerful AI-based personalization and an enormous user base, which give it a solid foundation to expand beyond music. Its technology infrastructure, brand recognition, and membership scale are all assets. Yet significant hurdles remain: competition from other streaming platforms with deep pockets, the difficulty of promoting and monetizing diverse audio content, and ensuring both user satisfaction and partner support. Whether Spotify succeeds depends on its ability to manage costs, maintain user engagement, and keep innovating in a market where clients have many audio options.

Chapter Case Study: AI Redesigns the Fashion Industry SUMMARY:

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AI is increasingly integral to the fashion industry, steering everything from trend forecasting to textile recycling. Companies analyze data gleaned from social media and online transactions to anticipate style preferences, reduce waste, and personalize user experiences. AI is also improving supply chain efficiency, helping retailers and brands like Zara and H&M streamline operations and manage inventory. Innovative tools— ranging from smarter design assistants to body-scanning tech—are reshaping how fashion is produced and sold.

1. Identify the points in the fashion industry value chain that could benefit from AI. Suggested Answer: AI can benefit every major step—starting with inbound logistics through automated inventory management and materials procurement optimized by predictive analytics. Operations can be enhanced by real-time quality checks, while outbound logistics can be perfected with route-planning algorithms and shipping notifications. On the marketing side, AI is enabling hyper-personalized recommendations, user-specific sizing advice, and targeted promotions. Finally, in aftersales service, AI chatbots handle queries, and data analytics reveal patterns like product return rates that prompt product improvements.

2. How has AI changed operations and decision making at the organizations discussed in this case study?

Suggested Answer: AI has shifted decision making from top-down guesswork toward data-driven precision. For instance, H&M‘s AI systems match store-level inventory with anticipated local demand, minimizing waste and stockouts. Fast fashion labels like Zara feed real-time data from their retail operations directly into short production runs, accelerating the design-to-shelf cycle. Meanwhile, advanced analytics forecast emerging trends by analyzing social media and online behaviors, directly refining marketing offers. At the same time, AI-based supply chain monitoring ensures timely deliveries and can reduce environmental impact through better resource allocation.

3. What strategic business objectives is AI helping the companies in this case pursue? Explain your answer.

Suggested Answer: AI supports operational excellence by reducing costs and improving speed, particularly in supply chain management. It enables product differentiation—a central strategic objective—through personalized styling recommendations and unique design. Enhanced customer and supplier intimacy arises from more accurate inventory and shipping data, along with direct consumer feedback loops. Lastly, AI fosters innovation, letting manufacturers and retailers experiment with new business models—like 3D body scanning or digital design assistants—that drive customer engagement and brand loyalty.

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Review Questions 3.1 Discuss technical and behavioral views of organizations 1. Define organization and compare the technical and behavioral views of organizations.

Suggested Answer: An organization can be defined as a social structure through which individuals coordinate efforts to accomplish common goals. The technical view of organizations sees them as formal arrangements of resources and processes that convert inputs (like capital and labor) into outputs (products or services). This perspective focuses on efficiency and productivity, often treating the organization as malleable given the right mix of technology and resources. In contrast, the behavioral view emphasizes the social and human elements. Here, organizations are collections of values, norms, people, and relationships. Behavior, conflict, and power struggles are highlighted. Resistance to new systems often arises from this behavioral dimension, because introducing new technology alters the long-standing routines and power balances that people have grown accustomed to. Taken together, the two views remind us that implementing an information system is never just a technical upgrade; it has cultural and structural consequences as well. Successful implementation usually requires understanding both perspectives.

3.2 Discuss the features of organizations that affect information systems 1. Identify and describe the features of organizations that help explain differences in organizations‘ use of information systems.

Suggested Answer: Organizations are characterized by their routines (standard operating procedures), hierarchical structures, cultures, and political dynamics.

Routines build efficiency yet can make the firm slow to adapt if they become entrenched.

Hierarchies clarify authority but can lead to layers of middle management resistant to change. Additionally, each organization has its own culture—a shared system of beliefs and values—affecting openness to adopting technology. Politics, referring to competing interests and power struggles, can determine whether attempts at innovation succeed or fail. Demographic and environmental factors also matter: An organization operating in

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a fast-changing industry with complex products may adopt IT differently than one in a stable sector. Disruptive technologies can upend business models, and the extent to which management recognizes and invests in them will also vary. Thus, all these features—routines, culture, hierarchy, politics, and external environment—shape not just how an organization uses information systems but also whether it leverages them effectively.

2. Define and describe disruptive technologies and how they affect organizations.

Suggested Answer: Disruptive technologies are innovations that significantly alter the competitive landscape by enabling entirely new products or services, or by drastically reconfiguring existing products, processes, or business models. They often start at the fringes, offering lower performance at a lower cost but evolve until they replace older methods. Examples include digital photography, smartphones, and streaming services.

These technologies can swiftly render established products outdated, forcing organizations to adapt or be swept away. Incumbent firms may struggle to embrace disruptive technologies because doing so demands cannibalizing their existing product lines and rethinking how they create value. For example, a firm specializing in printed materials must rethink everything from production to sales when digital versions render printed formats less essential. Organizations able to harness disruptive technologies early can gain significant competitive advantages, yet success often hinges on a culture willing to accept new directions and not remain locked in past success.

3.3 Describe the impact of information systems on organizations 1. Describe the major economic theories that help explain how information systems affect organizations.

Suggested Answer: Two primary economic theories explain the intersection of IT and organizations: transaction cost theory and agency theory. Transaction cost theory argues that firms seek to minimize the costs of exchanging goods and services with the environment. Information technology can reduce transaction costs—such as searching for suppliers, contracting, coordinating delivery, and monitoring compliance—by providing faster communication and greater reach. Agency theory views the firm as a collection of contracts between principals (owners) and agents (employees). Since agents may not always align with owners‘ interests, firms incur monitoring costs.

Information systems reduce these monitoring costs by providing real-time information and automation, enabling managers to supervise larger spans of control. Consequently, organizations can flatten their structures and outsource more easily. Both theories

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underscore how cost savings from IT can transform a firm‘s size, shape, and span of operations, often improving efficiency and profitability.

2. Describe the major behavioral theories that help explain how information systems affect organizations.

Suggested Answer: Behavioral theories spotlight the roles of people, routines, and politics within organizations. One key insight is that introducing new technology reshapes an organization‘s established norms and dynamics, potentially provoking resistance from those who fear a loss of status, control, or jobs. Behavioral perspectives see organizations as collections of informal and formal arrangements, where decisions often align with cultural beliefs and hidden interests. Changes like adopting a new information system can disrupt social ties and established routines. Consequently, successfully implementing IT involves more than technical integration—it is a change management process requiring new training, communication, and often a reexamination of incentives and leadership styles. When the tension between existing behaviors and the new technology is too large, organizations might resist adoption or sabotage the system, diminishing potential benefits.

3. Explain why there is considerable organizational resistance to the introduction of information systems.

Suggested Answer: Organizational resistance frequently arises because information systems can redistribute power, redefine jobs, and alter well-established routines.

Employees may have spent years perfecting specific procedures and forging alliances—elements that new systems can upend. Middle managers, for instance, might feel threatened if technology compresses layers of authority, reducing control. Moreover, staff must invest time and effort to learn and adapt to new tools, sometimes receiving no immediate reward. Cultural norms also play a role: if an initiative challenges widely held core values, resistance will be fiercer. Politically, groups that benefit from the old ways may block or stall implementation. Consequently, successful IT adoption usually requires leadership support, clear incentives for employees, substantial training, and an approach that addresses both the technical and human sides of change.

3.4 Discuss Porter’s competitive forces model 1. Define Porter‘s competitive forces model and explain how it works.

Suggested Answer: Porter‘s competitive forces model identifies five forces shaping a firm‘s strategic environment: (1) direct competitors; (2) potential new market entrants; Copyright © 2026 Pearson Education, Inc.

(3) substitute products and services; (4) the bargaining power of customers; and (5) the bargaining power of suppliers. By examining each force, the model helps companies understand threats and opportunities in their environment. Firms use this analysis to assess how industry profitability, competitive advantage, and market position are affected by factors like ease of entry, price sensitivity, or availability of alternative offerings. Management then formulates strategies, potentially leveraging information systems to optimize their position—lowering costs, differentiating products, or forging strong customer relationships. The model remains helpful even as digital technologies and globalization intensify rivalry and shifts in market power.

2. Describe what the competitive forces model explains about competitive advantage.

Suggested Answer: The competitive forces model clarifies the various pressures a firm faces and reveals ways the company can respond to gain an edge. First, it shows that competition is not exclusively about direct rivals—forces such as substitutes, new market entrants, and powerful buyers or suppliers also matter. Second, the model guides firms to differentiate themselves, lower operational costs, or lock in customers and suppliers through better experiences or loyalty programs. Through analyzing industry structure, companies learn to develop capabilities that make them more profitable or less vulnerable than peers. For example, a firm that can reduce incoming threats from new entrants or control supplier relationships may maintain higher margins.

Information systems often strengthen these moves by automating key processes, gathering customer insights, or building digital channels that are hard to replicate quickly.

3. Describe four competitive strategies enabled by information systems that firms can pursue.

Suggested Answer: Four commonly pursued strategies include low-cost leadership, product differentiation, focus on market niche, and building strong ties with customers and suppliers. Low-cost leadership aims to be the cheapest producer by leveraging technology for efficiency—Walmart‘s sophisticated inventory systems are a prime example. Product differentiation uses information systems to create unique experiences, as Apple does with new iPhone features or custom watch designs. Focusing on a market niche pinpoints specialized segments, tailoring products or ads based on detailed data analytics, while strong ties (customer and supplier intimacy) are built through integrated systems involving quick replenishment times or personalized recommendations. Each approach can be supported by enterprise software that automates processes, harnesses data, and fosters innovation.

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4. Describe how information systems can support each of these competitive strategies and give examples.

Suggested Answer: 

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

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Low-Cost Leadership: By optimizing supply chain processes, continuously tracking sales, or automating production lines. E.g., Walmart‘s inventory replenishment system lowers overhead, enabling reduced prices.

Product Differentiation: Through advanced design tools or interactive ecommerce features. Apple‘s ecosystem, or Nike‘s customizable online store, sets them apart.

Focus on Market Niche: With targeted marketing campaigns and customer analytics. Hilton Hotels uses CRM to deliver personalized promotions to frequent travelers.

Customer and Supplier Intimacy: Using integrated platforms that link all parties, ensuring smooth transactions and high loyalty. Toyota grants suppliers direct access to its production schedule, strengthening ties and lowering coordination costs.

These systems ensure operational excellence, real-time data usage, and quicker strategic pivots.

5. Describe how the Internet has changed competitive forces and competitive advantage.

Suggested Answer: The Internet has amplified competition, enabling new entrants to launch products or services with fewer barriers—such as capital or physical storefronts.

Customers can research prices instantly, intensifying price-based rivalry. Digital marketplaces also broaden the reach of substitutes, which can appear globally.

Nonetheless, the Internet creates possibilities for building large user communities, enhancing brand, and analyzing customer data at scale. Companies harness online tools for mass customization, deep personalization, and global supply chain optimization. While rivalry is fiercer, the upside is substantial for those who innovate, such as Amazon with e-commerce or Google with digital advertising, by exploiting the Internet‘s vast networking and data-collection capabilities.

3.5 Discuss the value chain model 1. Define and describe the value chain model.

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Suggested Answer: The value chain model portrays a firm as a series of interconnected activities—both primary and support—that collectively add value to a product or service. Primary activities are directly involved in production and distribution (inbound logistics, operations, outbound logistics, marketing and sales, and service).

Support activities (infrastructure, human resources, technology, and procurement) enable these primary functions. By dissecting each stage, the model helps managers see where efficiency can be improved or differentiation created. This systematic approach highlights synergy among processes and pinpoints opportunities where better information systems might yield strategic benefits—such as real-time tracking in logistics or data-driven marketing for sales.

2. Explain how the value chain model can be used to identify opportunities for information systems.

Suggested Answer: By mapping out each value-adding activity, a firm can spot inefficiencies, bottlenecks, or information gaps. For example, in inbound logistics, a robust system might streamline inventory replenishment. In marketing, data analytics might better segment customers, enabling more targeted campaigns. The model also highlights points in the chain where faster communication or improved data accuracy could trim costs or boost customer satisfaction. For instance, combining inbound and outbound logistics data with sales forecasts can reduce overstocking and expedite shipping. The specificity of the value chain framework ensures that IT investments target high-impact areas, creating maximum return on effort.

3. Define the value web and show how it is related to the value chain.

Suggested Answer: A value web is a collection of firms using digital networks and shared systems to coordinate their value chains in a more fluid, adaptive manner.

Unlike a linear chain, the value web encourages each organization to cooperate with multiple partners dynamically, rather than being locked into a single set of tiered relationships. By integrating processes and information across different businesses, participants can rapidly respond to market changes or new customer demands. This approach connects seamlessly with the value chain concept: each participant‘s internal chain links to others‘ chains through information systems, creating a broader network of shared value-add.

4. Explain how the value web helps businesses identify opportunities for strategic information systems.

Suggested Answer: The flexibility of a value web allows companies to continually reconfigure partners, suppliers, and distributors. Using robust networking technology, a business can gather real-time data about supply-and-demand fluctuations across the Copyright © 2026 Pearson Education, Inc.

web. This reveals gaps where a new system could automate ordering, expedite payments, or personalize offerings. Because each link in the web relies on shared data, introducing a strategic system—say, an AI module that optimizes shipping routes— benefits multiple parties beyond the focal firm. By collaborating in a synchronized network, businesses become more efficient, handle disruptions better, and treat data as a strategic resource for competitive advantage.

3.6 Discuss synergies, core competencies, and network economics 1. Describe how promoting synergies and core competencies enhance competitive advantage.

Suggested Answer: Synergies occur when the output or expertise of one unit can be leveraged by another, lowering costs or improving service. Mergers often aim to create synergies—e.g., combining product lines or pooling distribution networks. Information systems automate data sharing and collaboration, ensuring these synergies become tangible. Core competencies comprise a firm‘s specialized expertise—like advanced engineering skills or a robust brand identity. By sharing knowledge or technology across various business units via internal networks and collaborative systems, the business as a whole can innovate faster and more effectively. Ultimately, this synergy and competency-sharing promotes unique value offers, which can repel competitors and lock in customers.

2. Explain how businesses benefit from using network economics and business ecosystems.

Suggested Answer: Network economics recognizes that a product or service grows more valuable as more people use it. Classic examples include social platforms or communication tools—each additional user boosts the utility for all others. Businesses can support networks through user-friendly platforms, often creating barriers to exit and discouraging newcomers that lack a critical mass of participants. Business ecosystems extend the notion further, encouraging interconnected relationships among firms that share technology, standards, or platforms. A platform leader (like Microsoft or Facebook) provides a framework that other companies use to develop complementary products. This web of mutual dependence expands total market size and encourages innovation, as each participant invests in the platform‘s growth, benefiting the entire ecosystem.

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3. Define and describe a virtual company and the benefits of pursuing a virtual company strategy.

Suggested Answer: A virtual company links people, assets, and ideas from multiple organizations through digital networks rather than consolidating them internally. By outsourcing resource-intensive operations—like manufacturing or logistics—it can move quickly to exploit evolving opportunities. This reduces both capital outlay and the need for large workforces. One example is a business that subcontracts its entire production to specialized factories worldwide but maintains brand design and marketing in-house.

Benefits include reduced overhead, access to best-in-class capabilities, and scalability.

The trade-off is relinquishing direct control, which demands smooth communication and robust contract management systems to ensure quality and timely results.

3.7 Understand how AI can be used in competitive strategy 1. Describe how AI has impacted organizational performance and decision making.

Suggested Answer: AI simplifies data processing at scale, unveiling patterns humans might miss and enabling faster, more accurate decisions. For day-to-day operations, AI can automate repetitive tasks—like responding to routine customer queries with chatbots—freeing employees for higher-level work. The technology also assists in forecasting demand, detecting anomalies, and creating predictive models that guide product development. Strategic decisions improve because senior leaders can rely on data-driven insights to identify emerging market trends, optimize resource allocations, and spot potential disruptions. However, harnessing AI requires access to quality data, specialized expertise, and a willingness to adapt organizational processes so that AI findings lead to actionable outcomes.

2. Describe how AI can add value at various steps in the value chain.

Suggested Answer: AI can enhance inbound logistics by automating warehousing tasks and detecting quality issues early. In operations, real-time monitoring can minimize production glitches and improve throughput. AI-assisted marketing campaigns target individual preferences, boosting sales conversions. Customer service benefits from chatbots and predictive maintenance alerts, which raise satisfaction and cut response times. Even support areas like human resources can use AI for better recruitment through automated CV scanning and workforce analytics. AI‘s broad application across the value chain creates systemic gains in efficiency and

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personalization, often yielding a clear competitive advantage through data-driven innovation.

3. Describe how AI has impacted the competitive forces identified in Porter‘s model.

Suggested Answer: AI can intensify rivalry among firms, pushing each competitor to adopt advanced analytics or risk losing market share. It creates new barriers to entry for companies unable to afford large-scale data and computational resources, while also lowering them for well-funded newcomers that use external AI platforms. Customers may gain power by demanding ever-more personalized products, but companies can also reduce buyer churn by building deeper loyalty through hyper-personalization.

Similarly, suppliers that integrate AI to improve efficiency or add specialized value might command greater pricing control. Additionally, AI can produce new substitute products—such as sophisticated digital tools that threaten legacy products. Overall, while AI offers opportunities for differentiation, it also raises the stakes of competition.

3.8 Describe the challenges posed by strategic information systems 1. List and describe the management challenges posed by strategic information systems.

Suggested Answer: First, many strategic systems require significant organizational change, which can be painful when people resist new processes or job redefinitions.

Second, sustaining competitive advantage is tricky, as rivals typically adopt similar innovations, narrowing the original advantage. Third, aligning IT with business objectives is challenging—poor alignment means technology investments might not address top business needs. Fourth, ensuring ongoing funding can be problematic, especially if systems demand continual enhancements or staff training. Finally, measuring tangible returns on strategic systems is not always straightforward; intangible benefits, like brand enhancement, can be tough to quantify, potentially causing underinvestment or oversight by leadership.

2. Explain how to perform a strategic systems analysis.

Suggested Answer: A strategic systems analysis begins by examining the industry‘s competitive landscape—identifying the main rivals, reasons for price pressure, or the likelihood of disruptive entrants. Next, assess the firm‘s value chain to pinpoint where global or IT-driven efficiencies might pay off—looking for cost drivers, sources of differentiation, or synergies among business units. This step should include evaluating the firm‘s core competencies and leveraging them across different segments. A Copyright © 2026 Pearson Education, Inc.

mismatch between IT capabilities and the firm‘s strategic goals signals where to invest or redesign systems. Using tools like Porter‘s five forces or the value chain helps managers align proposed systems with desired outcomes—such as cost leadership, unique offerings, or deeper customer ties. The final step is to assess how the environment and internal culture will affect adoption, ensuring realistic guidance for implementation.

Discussion Questions 3.9 It has been said that there is no such thing as a sustainable strategic advantage. Do you agree? Why or why not?

Suggested Answer: Some argue that fast-paced technology changes, market globalization, and swift imitation by rivals render any advantage short-lived. Once a firm demonstrates an effective IT-based solution—like online order tracking or AI-powered personalization—competitors can replicate those solutions, neutralizing the initial advantage. However, sustainability can exist if companies continually innovate and build upon their tools, adjusting for new conditions. A strong corporate culture of adaptation is crucial, as is robust resource allocation to maintain that lead. For instance, Amazon‘s continued investment in AI-driven logistics, advanced analytics, and shopper personalization has kept it ahead, at least so far, despite many e-commerce companies offering similar services. Hence, while an individual technological edge may be copied, the combination of capabilities, data, partnerships, and business processes can be difficult to emulate, potentially leading to a more enduring advantage.

3.10 It has been said that the advantage that leading-edge retailers such as Amazon and Walmart have over their competition isn‘t technology; it‘s their management. Do you agree? Why or why not?

Suggested Answer: While technology is integral to Amazon and Walmart‘s strategies, it is indeed their leadership philosophies and management execution that keep them ahead. Technology by itself is often available on the market—competitors can purchase or license comparable enterprise software or cloud services. However, the ability to implement that technology effectively, push continuous innovation, scale operational

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improvements, and anticipate market movements rests on well-honed management practices. Walmart excels at managing supplier relationships and optimizing store operations through real-time sales data. Amazon operates a highly agile business model and invests heavily in R&D, bolstered by a leadership team that encourages experimentation. Thus, technology forms the infrastructure, but management fosters the culture, processes, and strategic decision-making that harness that technology for sustained competitive growth.

3.11 What are some of the issues to consider in determining whether the Internet would provide your business with a competitive advantage?

Suggested Answer: First, consider the nature of your product or service and whether it can thrive online—commodities may struggle to differentiate purely on the Internet unless operational excellence sets them apart. Second, assess customer profiles: do they habitually shop or research on digital channels? Third, ensure the business has the internal tech expertise or budget to operate robust e-commerce, logistics, and security systems. Fourth, factor in the intense online competition where market leaders often have brand recognition and advanced fulfillment capabilities. Creating a niche or specialized offering could help. Additionally, check regulatory constraints, as data protection or licensing laws can complicate an online strategy. Finally, consider how the Internet might transform your supply chain, marketing, or distribution processes. If done well, the Internet can reduce transaction costs, reach new audiences, and cultivate relationships through personalization. If done poorly, it can become an expensive project without delivering true advantage.

AI Project 3.12 AI Project: Assessing Impact of Geographic and Demographic Factors ―You have been hired as a consultant by two friends who want to open a retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They have asked you to help them understand the most important geographic and demographic factors that might affect the success of their prospective business, such as proximity to good roads and parking, or the average age and income of the population near the store location. Using Microsoft‘s Copilot, Google‘s Gemini, or

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ChatGPT, develop a prompt that you can use to help advise them as to the most important geographic and demographic factors for a small retail pet store business featuring organic products. Save a copy of your prompt and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: A detailed and comprehensive response would cover how large the population is in the targeted retail area, average household incomes, the presence of pet-ownership-friendly neighborhoods, and local competition. For example, the answer might include prompt text that requests ―an analysis of potential store locations that ranks average household incomes, traffic flow data, competition from other pet stores, proximity to busy roads, and population density.‖ It might also specify any relevant zoning regulations and consumer preferences for organic products. Moreover, the AI‘s output should recommend analyzing local consumer spending patterns on premium pet products, or mention whether new developments are expected in the area.

By having the AI weigh these variables, your friends can prioritize potential store locations that match their core demographic: pet-loving, environmentally conscious, higher-income urban or suburban communities. A final note would be to cross-reference city planning documents, ensure local parking, and consider the traffic impact for potential footfall.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon

3.13 Management Decision Problem ―Entrust Corporation, formerly Datacard Group, produces hardware and software for establishing trusted identities and the issuance of personalized financial cards, passports, driver‘s licenses, identification cards, and mobile devices. Entrust is one of the world‘s leading suppliers of payment cards. As a part of doing business with Entrust, customers—which include financial institutions and credit card bureaus, government agencies, and major corporations—supply the Shakopee, Minnesota-based company with large volumes of business data. Entrust had a predominantly manual process for distribution pricing for its secure identification and card issuance products to about 250 partners quarterly by emailing a price book of multiple spreadsheets. Creating the book involved hours of manual input by people in marketing and sales. The process of changing a price was complex, time-consuming, and people-dependent. People who received the price books had to manually type them into their own systems and check

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the data—a process that could take up to two days. Assess the impact of this process on Entrust‘s business performance, and suggest some management, organization, and technology issues that would need to be addressed by a solution.‖ Suggested Answer: The manual process used by Entrust likely inflates operational costs, extends turnaround times, and risks data-entry errors in pricing. There is a significant productivity loss when staff in both Entrust and partner organizations manually input or verify data. As a result, partners waiting for updated pricing might delay product orders, affecting revenue flow and jeopardizing long-term relationships.

From a management perspective, a new automated solution would require prioritizing resource allocation, championing process changes, and coordinating the marketing and sales teams. Organizationally, employees would need guidance on adopting the new tools to ensure consistent data accuracy and buy-in. Technologically, properly designing a centralized database with secure access, automated workflows, and integration into partner systems is essential. It may involve using a secure portal or e-commerce platform that partners can access in real time, eliminating manual compilation and reentry. Overall, the solution must address performance bottlenecks, maintain data integrity, and elevate Entrust‘s reputation as a reliable, efficient supplier.

3.14 Using Data Analytics to Analyze Sales Performance ―Software skills: Database querying and reporting; database design Business skills: Sales trend analysis In this exercise, you will start out with raw transactional sales data and then use Microsoft Access database software to develop queries that help managers make better decisions about product pricing, sales promotions, and inventory replenishment. The MIS18_Project3.14_StudentFile contains a Store and Regional Sales Database developed in Microsoft Access. The database provides raw data on weekly store sales of computer equipment in various sales regions. The database includes fields for store identification number, sales region, item number, item description, unit price, units sold, and the weekly sales period when the sales were made. Use Access to develop some queries to make this information more useful for running the business. This information includes the following: • All 24-inch monitor sales by Sales Region for Week Ending December 29, 2024, sorted within region from highest to lowest number of units sold.

• All 24-inch monitor sales by store for the East Sales Region, sorted by Store No. and Week Ending in ascending order.

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• All sales of all products for the East Sales Region, sorted from highest to lowest total number of units sold by item number.

Then describe how the information in these queries could be used for management decision making.‖ Suggested Answer: By creating specific queries in Access, the company can quickly compare 24-inch monitor sales across different regions for a particular week, highlighting which regions may need extra stock or promotional effort. Segmenting data by store in the East Sales Region provides insight into localized performance, potentially revealing differences in consumer preferences or store management.

Identifying the top-selling items helps in allocating marketing budgets toward popular products, adjusting prices when demand spikes, or transferring inventory from weaker markets to stronger ones. For instance, a query revealing that a certain store in the East Region consistently sells a higher volume of a particular monitor size could prompt targeted bundling offers or expansions of related accessories. These data-driven insights foster more effective inventory decisions, ensure timely promotions, and enhance overall profitability by focusing on what the data shows is working well in each region or store.

3.15 Getting to Know Tableau ―In this project, you will learn how you can use Tableau to develop a competitive strategy based on identifying market niches. Access the Superstore data set, which is a sample data set available on the Tableau Public website and also within Tableau Desktop. The data set includes data about sales, profits, and other metrics from an online retailer. Use Tableau to create a dashboard with at least four data visualizations, such as bar charts, line charts, scatter plots, and/or maps, to analyze sales and profit data across the following dimensions: Segment; Product category and subcategory; Region, State, and Zip code. Use the dashboard to help you identify one or more specific market niches that the retailer should focus on. Write a report or create a presentation summarizing your findings and explaining how the visualizations helped you to reach your conclusions. If you don‘t have access to Tableau Desktop, ask your instructor, or alternatively, you can create a free Tableau Public account.‖ Suggested Answer: The creation of a Tableau dashboard starts by connecting to the Superstore data and analyzing sales or profit margins across various segments or product categories. For instance, a bar chart displaying ―Profit by Segment‖ might spotlight a niche—like home office products for small businesses—where returns

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appear robust. A scatter plot of ―Sales vs. Profit by State‖ may uncover geographic pockets of opportunity or highlight states with simultaneous high sales and strong profit margins. Mapping data by ZIP code can refine local strategies, enabling the retailer to concentrate marketing on profitable micro-regions. The process fosters data-centered decisions: if charts reveal that mid-range office supplies in the southern region exhibit an unexpectedly high profit ratio, the retailer can pivot to stock more items in that category or design specialized offers. This methodology ensures any recommended strategy about focusing on a niche is evidence-based, maximizing business impact.

3.16 Using Online Tools to Configure and Price a Product ―Software skills: Online research tools Business skills: Researching product information and pricing In this exercise, you will use online research tools to find product information about a car of your choice and use that information to make a purchase decision. You will also evaluate two of these tools.

You are interested in purchasing a lightly used low mileage Honda CR-V (or some other car of your choice). Go to the website of CarsDirect.com and begin your investigation.

Research the various used CR-V models, and choose one you prefer in terms of price, features, and safety ratings. Locate and read at least two reviews. Then visit the Carvana.com website or app. Compare the information on pricing and available inventory for the car at the Carvana website or app with that at CarsDirect. Try to locate the lowest price for the car you want in inventory along with financing and vehicle pickup and delivery. Compare the Carsdirect.com customer experience to that provided by Carvana. Which do you prefer for this type of purchase? Explain your answer.‖ Suggested Answer: While CarsDirect.com generally provides a wide array of search filters, Carvana focuses on delivering an all-online purchasing experience, offering financing options and detailed 360-degree vehicle imaging. CarsDirect offers ample resources such as expert reviews, user ratings, and localized inventories. In contrast, Carvana assures a straightforward, user-friendly checkout process with direct delivery and a short return window if the buyer is dissatisfied. Determining which platform is better depends on personal priorities: those who value in-depth editorial content and flexible dealership visits might favor CarsDirect. Shoppers wanting a hassle-free, purely online process might lean toward Carvana, especially if they live near a Carvana ―vending machine.‖ Ultimately, by comparing price quotes, warranties, and the

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transparency of each site, a prospective buyer can weigh whether the somewhat broader research at CarsDirect compensates for Carvana‘s streamlined e-commerce approach. The answer might differ based on the user‘s time constraints, comfort with digital transactions, and desire for try-before-you-buy test drives.

3.17 Collaboration and Teamwork Project: Identifying Opportunities for Strategic Information Systems ―With a team of two or more other students, select a company described in The Wall Street Journal, Fortune, Forbes, or another business publication available on the web.

Visit the company‘s website to find additional information about that company and to see how the firm is using the web. On the basis of this information, analyze the business. Include a description of the organization‘s features, such as important business processes, culture, structure, and environment as well as its business strategy.

Suggest strategic information systems appropriate for that particular business, including those based on Internet technology, if appropriate. If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: A well-rounded approach involves investigating how the company handles online presence, marketing, logistics, and supply chain. The team might start by mapping the firm‘s current value chain and identifying pain points—like inefficient dashboards or disconnected customer communication channels. The recommended strategic systems could involve a new CRM to boost user engagement or analytics tools for predictive maintenance if the company is manufacturing-focused. For instance, an AI-based recommendation engine might be proposed to help the firm differentiate its products through personalization. Another possibility is constructing a robust ecommerce platform to reduce operating costs and enhance customer convenience.

Documenting these findings in a shared Google Sheet or Drive folder ensures that all team members can iterate, refine data, and compile results efficiently. Presenting the final recommendations will illustrate how well-chosen information systems, strategically aligned, can transform the business‘s competitive position.

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Suggested Assignments 1. Industry Ecosystem Mapping: Have students pick a company operating in a business ecosystem (e.g., a ride-sharing or streaming service) and map its key partners, suppliers, and complementors. Ask them to describe a strategic information system that could strengthen network effects among these participants.

2. AI Trend Report: Assign students to research a disruptive AI tool (such as ChatGPT or a specialized AI for logistics) relevant to a particular industry. They should summarize how the tool works, potential benefits or risks, and how an organization might integrate it without causing undue resistance.

3. Value Chain Redesign Workshop: Form student teams and present them with a fictional company‘s current value chain. Instruct them to identify 1–2 major bottlenecks and propose strategic IT solutions—like an automated ordering system or advanced analytics—to address those issues. Students should explain how their proposals align with the company‘s overall strategy.

4. Competitive Forces Analysis Presentation: Have each student select a realworld business and perform a Porter‘s five forces analysis. They should emphasize how the Internet and AI have affected each force. Students then present recommended strategic actions the firm could take to maintain or strengthen its competitive position.

5. Sustainability and IT Project: Ask students to find a company that uses information systems to reduce waste or environmental impact (for instance, a fashion brand applying AI to streamline supply chains). Students should detail the technology‘s role, how it improves sustainability metrics, and whether this sustainability practice also grants any competitive advantages.

Chapter 4 – Instructor Manual Chapter Summary This chapter explores how the power and pervasiveness of information technologies can create ethical, social, and political issues for organizations and individuals. It examines multiple dimensions of these issues, including privacy, property rights, responsibility, accountability, liability, and the overall quality of life. The chapter begins by introducing a framework for thinking about ethical dilemmas in information systems,

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emphasizing that such challenges often arise when traditional norms and laws fail to keep pace with rapid technological change. It then describes key ethical principles and regulatory approaches to protect personal data and intellectual property in an online environment. Specific attention is paid to privacy concerns, focusing on regulatory frameworks like the European Union‘s General Data Protection Regulation (GDPR), and on pressing topics such as the proper use of artificial intelligence. The chapter also addresses debates over system liability, computer crime, computer abuse, and related legal ambiguities. Finally, it discusses how information technologies may alter the nature of work, concentrate economic and political power for large technology firms, and create health and sociocultural challenges, concluding with guidance on how understanding these issues can benefit one‘s career in management information systems.

Learning Objectives These are the chapter objectives: After completing this chapter, you will be able to: 4.1 Describe IT/IS-related ethical, social, and political issues.

4.2 Describe principles for ethical conduct.

4.3 Discuss information rights and privacy issues.

4.4 Discuss intellectual property issues.

4.5 Discuss system quality issues.

4.6 Discuss accountability and control issues.

4.7 Discuss quality of life issues.

4.8 Understand how the information in this chapter can help your career.

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MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what‘s happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 4.1 Describe IT/IS-related Ethical, Social, and Political Issues   

Discuss how rapidly evolving information technologies outpace existing rules and laws, creating new ethical dilemmas.

Emphasize that ethical, social, and political issues are interconnected, requiring careful analysis and balanced solutions.

Illustrate how technological trends such as increased computing power, artificial intelligence, and mobile device proliferation create opportunities for both beneficial and harmful uses.

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4.2 Describe Principles for Ethical Conduct   

Define responsibility, accountability, liability, and due process, highlighting how each concept applies to MIS professionals.

Present a five-step process for conducting ethical analysis—identify facts, define conflict, identify stakeholders, weigh options, and project consequences.

Review the core ethical principles (the golden Rule, the categorical imperative, the slippery slope rule, the utilitarian principle, the risk aversion principle, and the ethical no-free-lunch rule) that guide decision-making.

4.3 Discuss Information Rights and Privacy Issues   

Explore the legal foundations for privacy protections in the United States, Europe, and elsewhere, noting differences such as the GDPR. Examine the techniques used for online tracking (cookies, web beacons), the debate over first- and third-party data collection, and the challenges posed by AI. Analyze methods for protecting individual privacy, including informed consent, opt-in versus opt-out, privacy by design, and data anonymization.

4.4 Discuss Intellectual Property Issues   

Define intellectual property and distinguish among trade secrets, copyrights, patents, and trademarks.

Discuss why traditional copyright and patent laws are strained by digital technologies and the Internet.

Examine how developments in AI challenge existing frameworks for copyright and patent protection, especially regarding generative AI.

4.5 Discuss System Quality Issues   

Introduce the concept of acceptable versus perfect system quality and whether a zero-defect standard is realistic.

Discuss sources of system error, including software bugs, hardware failures, and poor data quality.

Stress that system quality not only has financial implications but can also result in operational risks with social and ethical dimensions.

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4.6 Discuss Accountability and Control Issues   

Examine liability and accountability with respect to harm caused by defective information systems or software.

Explore the difficulties in assigning blame for AI ―black box‖ decisions or for usergenerated content on social media platforms.

Clarify how laws vary regarding computer crime, computer abuse, and spam, highlighting key gray areas.

4.7 Discuss Quality of Life Issues   

Address the concentration of economic and political power among ―Big Tech‖ and the challenges it raises.

Discuss the digital divide and the potential for increased bias from AI training data.

Emphasize potential negative consequences of ubiquitous computing, including job displacement, blurred boundaries between work and leisure, and health risks (RSI, CVS, etc.).

4.8 Understand How the Information in This Chapter Can Help Your Career   

Underscore the importance of ethical and legal compliance for business success and reputation.

Show how awareness of data privacy, intellectual property, system accountability, and employee well-being can affect managerial decisions.

Stress the value of understanding these topics for students who plan to work with or manage information systems.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.    

Accountability (4.2) Carpal tunnel syndrome (CTS) (4.7) Computer abuse (4.6) Computer crime (4.6)

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                              

Computer vision syndrome (CVS) (4.7) Cookies (4.3) Copyright (4.4) Digital divide (4.7) Digital Millennium Copyright Act (DMCA) (4.4) Due process (4.2) Ethical no-free-lunch rule (4.2) Ethics (4.1) Fair Information Practices (FIP) (4.3) General Data Protection Regulation (GDPR) (4.3) Golden Rule (4.2) Immanuel Kant‘s categorical imperative (4.2) Informed consent (4.3) Intellectual property (4.4) Liability (4.2) Nonobvious relationship awareness (NORA) (4.1) Opt-in (4.3) Opt-out (4.3) Patent (4.4) Privacy (4.3) Profiling (4.3) Repetitive stress injury (RSI) (4.7) Responsibility (4.2) Risk aversion principle (4.2) Safe harbor (4.3) Slippery slope rule (4.2) Spam (4.6) Trade secret (4.4) Trademarks (4.4) Utilitarian principle (4.2) Web beacon (4.3)

Case Studies Opening Case Study: “Apps That Track: A Double-Edged Sword” SUMMARY:

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This case describes how seemingly benign mobile apps, like weather apps, collect and sell detailed location data that can be traced back to individuals. Although some argue the data is used for legitimate purposes such as online advertising or fraud prevention, the case highlights the potential for user privacy violations. It also presents the complexities around consent, as many users, prompted by ―dark patterns,‖ routinely click ―Yes‖ to enable location tracking.

Case Study Questions 1. Does analyzing location data create an ethical dilemma? Why or why not?

Suggested Answer: A potential ethical dilemma arises because location data can be used in beneficial ways—like delivering relevant ads or improving fraud detection—yet it also reveals sensitive personal details that could be exploited. Collecting and analyzing location data without meaningful user consent poses questions about privacy rights, transparency, and user autonomy. From an ethical standpoint, firms must consider whether they are balancing a legitimate business interest with the need to protect user data. If the data are sold, repackaged, and transferred repeatedly, individuals may lose any control over how it is used. This tension reflects the overarching conflict between organizational objectives—such as monetizing data—and the individual‘s right to privacy and data protection, a conflict that is amplified by technological trends that make real-time tracking inexpensive and ubiquitous.

2. Should there be new privacy laws to protect personal data collected from mobile device users? Why or why not?

Suggested Answer: Many observers argue in favor of new or updated privacy legislation to address the specific challenges posed by location tracking. Existing frameworks, such as the GDPR in Europe, underscore the need for strict consent and data minimization, but in the United States, there is no single comprehensive federal privacy law. Proponents of stronger laws caution that relying on user consent alone is inadequate because most people do not read or understand privacy policies, and ―dark patterns‖ can nudge users into granting access. On the other hand, opponents might argue that the existing patchwork of laws and industry self-regulation are sufficient, and that overly strict laws might stifle innovation or hamper businesses. Ultimately, there is a consensus that at minimum, improved transparency and stronger opt-in or informed consent mechanisms would help protect users, especially as data brokers become more active in buying and selling sensitive information.

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Spotlight on Organizations Case Study: “Section 230 Under Fire” SUMMARY: Section 230 of the 1996 Communications Decency Act furnishes internet platforms with strong protections against liability for user-posted content. Though it effectively fostered the growth of social media by minimizing moderation-related legal risks, Section 230 now faces scrutiny from conservatives who believe it enables censorship of certain viewpoints, and from others who say it permits the spread of harmful content.

Lawmakers continue to debate how to balance free speech with platforms‘ responsibility.

Case Study Questions 1. What are the ethical, social, and political issues that Internet platforms face with respect to user content?

Suggested Answer: Internet platforms are contending with multiple layers of responsibility. Ethically, they must decide whether to prioritize open expression or user safety when problematic content is posted. Socially, platforms may unintentionally foster divisions and spread disinformation if they do not moderate effectively, but harsh moderation could limit legitimate speech. Politically, platforms risk being drawn into partisan battles, as each side may see the platform‘s content decisions as biased. Section 230 was designed to clarify the legal liability of these platforms, but it has come under heavy criticism for the ways it grants immunity. The net result is an ongoing tension between free expression as a social good and the societal harm that can derive from hate speech, misinformation, or harassment. Balancing competing value systems—freedom of speech, inclusivity, and public safety—creates the crux of the ethical, social, and political struggle.

2. Do you think Section 230 should be repealed or amended? Why or why not?

Suggested Answer: Views on Section 230 differ widely. Proponents of repeal argue that platforms should be held more accountable for user-generated content, especially regarding harmful or misleading material, whereas supporters caution that removing the safe harbor could force platforms to over-censor or even limit their operations. Amending Section 230 might allow more nuance. For instance, some suggest limiting protections only when algorithms amplify specific types of content. However, precisely defining ―harmful‖

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content or ―algorithmic amplification‖ is difficult and could generate an endless series of legal battles, plus hamper smaller services or start-ups. Any decision should weigh the chilling effect on speech if platforms risk constant litigation, as well as the user harm that results from unregulated postings in areas such as disinformation, hate speech, and incitement to violence.

3. In what ways does the controversy over Section 230 illustrate the difficulties of creating laws governing the use of new digital technologies?

Suggested Answer: The Section 230 controversy highlights how legislation often lags behind technology and can have unanticipated consequences when applied to new digital innovations.

Passed in the early days of the Internet, Section 230 was intended to promote a nascent industry by shielding it from liability. Today, many of these ―start-ups‖ have become powerful global players able to shape political discourse, elevate or suppress social movements, and disseminate both factual and false information instantly. This demonstrates the challenge of writing technology-agnostic laws that can accommodate evolving business models and content distribution methods. Moreover, any change can have broad ripple effects—potentially censoring legitimate content or harming smaller newcomers while failing to curb problematic behavior. Striking the right balance involves ethical, social, and legal considerations—each of which changes with new digital platforms and norms.

Chapter Case Study: “Meta’s Many Ethical Challenges” SUMMARY: Meta, formerly Facebook, owns some of the largest social platforms (Facebook, Instagram, WhatsApp), generating vast revenue through data-driven advertising. Over time, Meta has faced repeated controversies involving user privacy, data-sharing agreements, and allegations of ignoring harmful content for profit. The company also confronts legal challenges in Europe and the United States over personal data usage and anti-competitive conduct. As it pivots into AI and the ―metaverse,‖ Meta must navigate a new wave of ethical complexities.

Case Study Questions 1. Choose an ethical dilemma discussed in this case and perform an ethical analysis of it.

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Suggested Answer: A prominent ethical dilemma arises from Meta‘s data-sharing practices. On one hand, Meta uses personal data extensively to fuel targeted advertising and power new features, arguing that this approach helps maintain largely free services and fosters innovation. On the other hand, it exposes users to risks such as inadvertent data disclosures or manipulative commercial/political advertising. An ethical analysis would identify key stakeholders, including Meta‘s investors, advertisers, and billions of users.

The higher-order values in conflict include respect for individual privacy versus corporate profit. Observers might claim that Meta‘s repeated privacy violations suggest the company rarely errs on the side of user protection. Reform proposals center on user-informed consent, data minimization, and transparent data usage, all of which would bring the company closer to established norms such as the GDPR. The moral question is whether Meta should prioritize user well-being or revenue—a dilemma that strikes at the heart of big data monetization.

2. Will Meta be able to have a successful business model without invading users‘ privacy? Explain your answer.

Suggested Answer: Meta‘s revenue has historically depended on leveraging highly granular user data for targeted ads, so pivoting to a privacy-centric model poses challenges. However, a viable business model could be built around aggregated or anonymized data, subscription fees, or premium services that do not rely on excessive personal data.

Large-scale technology companies have explored less aggressive forms of ad targeting—such as contextual advertising—that avoid extensive personal profiling.

Critics point to Apple‘s privacy enhancements as evidence that some users will pay for greater privacy. Nonetheless, scaling these changes might reduce Meta‘s profitability, at least initially. Success would hinge on whether the brand could foster user trust and sustain engagement with a less intrusive approach. Ultimately, Meta‘s massive network effect and strong brand recognition might help it transition if user sentiment overwhelmingly shifts toward privacy protection. Yet its short-term growth targets—and investor expectations—may require a fundamental restructuring of how Meta monetizes relationships.

3. What ethical issues are involved in Meta‘s development and use of Meta AI? Suggested Answer: Meta‘s broader embrace of AI raises concerns about privacy, data provenance, and algorithmic fairness. Training large language models typically involves scraping vast Copyright © 2026 Pearson Education, Inc.

amounts of data—much of which may be copyrighted or contain sensitive information— raising intellectual property and informed consent questions. Moreover, AI-driven personalization can amplify misinformation or harmful content if algorithmic curation is not carefully managed. Meta also runs the risk of perpetuating bias, especially if the underlying training datasets lack diverse representation. Transparency becomes essential: If AI output or moderation processes are opaque, users have limited recourse.

Should these AI systems deliver incorrect, offensive, or discriminatory outcomes, accountability can be difficult to assign. These dilemmas highlight the complexity of training robust AI systems while respecting user rights, balancing corporate profit with social responsibility, and abiding by evolving regulations like the EU AI Act. 4. Investigate the ESG movement. How might it impact Meta‘s future?

Suggested Answer: Environmental, Social, and Governance (ESG) considerations increasingly shape how investors and the public judge corporations. Historically, Meta‘s controversy-laden reputation, especially regarding data privacy and the spread of harmful or manipulable content, has clouded its social and governance credentials. As ESG investing grows, companies with lower ESG ratings may find it harder to attract top talent, secure favorable lending terms, or maintain consumer loyalty. If investors and regulators set stricter benchmarks for data protection, transparent algorithms, and ethical content moderation, Meta will need to show genuine corporate change. New governance practices could include robust oversight boards, independent audits of AI systems, and measurable progress in privacy protections. While pivoting to a stronger ESG posture could yield reputational benefits and investor confidence, it might also force Meta to incur higher compliance costs and reduce certain data-driven revenue streams.

Ultimately, if Meta cannot align with ESG principles, it risks losing trust among regulators, advertisers, and its global user base.

Review Questions 4.1 Describe IT/IS-related ethical, social, and political issues 1. Define ethics.

Suggested Answer:

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Ethics refers to the principles of right and wrong that guide individual behavior in a free society. In an information systems context, it involves deciding whether certain uses of technology are acceptable, responsible, and in accordance with laws or social norms.

By establishing standards that shape the moral quality of actions (like whether to track someone‘s browsing habits or share sensitive data), ethics serve as a framework to determine what individuals and organizations should do versus what they can do. A focus on ethics extends beyond the technical aspects to consider the real-world implications, enforcing a sense of responsibility for decisions that may have widespread impacts on users, employees, and other stakeholders.

2. Explain how ethical, social, and political issues are connected, and give some examples.

Suggested Answer: Ethical, social, and political issues around information technology often intersect because any ethical dilemma—such as the collection and use of personal data—tends to ripple into broader social debates on fairness, power, and justice. At the same time, these concerns can prompt new or revised legislation, highlighting the political dimension. For example, a company implementing facial recognition systems raises ethical concerns (user consent, bias), social implications (privacy expectations, discrimination), and political questions (regulations or bans). Another example is the question of filtering or blocking user-generated content, which can evolve into a national-level policy debate about ―free speech‖ rights. When technology changes rapidly, society and legislative systems struggle to keep pace, leaving gray areas where ethical choices must be made without comprehensive legal guidance.

3. Describe the key technological trends that heighten ethical concerns.

Suggested Answer: Several major computing trends intensify ethical challenges. First, rapid increases in computing power mean organizations can leverage deep analytics on massive data sets, creating questions about data quality, system reliability, and the potential for catastrophic failure. Second, the plummeting cost of data storage makes it cost-effective to keep virtually limitless records about individuals permanently, prompting heightened privacy concerns. Third, advances in data analysis techniques, including artificial intelligence, allow the identification of highly sensitive personal details—often gleaned from aggregated and de-identified data. Fourth, the widespread availability of networking and mobile technologies extends the reach of data collection, tracking users‘ locations around the clock and blurring lines between public and private spaces. Fifth, the explosive growth of AI-based decision making raises questions about accountability, Copyright © 2026 Pearson Education, Inc.

as systems make critical determinations without transparent reasoning. Lastly, the prevalence of always-on devices and social media fosters ample opportunities to gather data and potentially misuse it in ways that existing laws haven‘t fully addressed.

4.2 Describe principles for ethical conduct 1. Define responsibility, accountability, liability, and due process.

Suggested Answer: Responsibility is the idea that individuals (or organizations) are answerable for the consequences of their decisions and actions. If you choose to implement a particular technology, you also bear the obligation to handle any possible fallouts. Accountability ensures that systems and social institutions have mechanisms to identify who performed an action and who bears ultimate responsibility. Without clearly assigned accountability, unethical behavior and errors often go unchecked. Liability means that individuals and organizations can be held legally responsible for damage or harm caused by their actions (or inaction). This concept traditionally applies to defective physical products, and it remains contentious for intangible products like software. Due process is the legal principle requiring that laws be applied fairly and that accused parties have a chance to challenge charges if they believe laws were misapplied.

Together, these concepts ensure an environment of trust—one in which game-changing questions about data usage, consumer privacy, or system failures can be addressed in a transparent and just manner.

2. Describe the five steps in an ethical analysis.

Suggested Answer: First, one must identify and describe the facts: Clarify the who, what, when, where, and how of the situation, ensuring that all information is accurate and that relevant parties agree on the baseline. Second, define the conflict and the higher-order values at stake—often involving competing principles like privacy, efficiency, free speech, or profit.

Third, identify stakeholders such as customers, employees, and other affected groups, noting each group‘s potential gains or losses. Fourth, enumerate the options that balance these interests—often, no perfect solution exists, but multiple workable paths do. Fifth, evaluate the consequences of each option to ascertain both short-term and long-term impacts. Decisions can then be made in a manner that is transparent, considerate of different viewpoints, and ethically consistent. This ethical ―checklist‖

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helps decision-makers remain methodical and ensures that emotional or purely financial considerations do not overwhelm moral imperatives.

3. Describe six ethical principles.

Suggested Answer: The Golden Rule states you should treat others as you wish to be treated. Immanuel Kant‘s categorical imperative implies that if an action is not right for everyone, it is not right for anyone. The slippery slope rule advises denial of any action that, if taken repeatedly, would lead to undesirable consequences. The utilitarian principle recommends choosing the option that delivers the greatest overall value or benefit for all stakeholders. The risk aversion principle says to pick the course of action that causes the least harm when confronted with decisions having potentially high failure costs. Lastly, the ethical no-free-lunch rule posits that virtually all intangible and tangible objects are owned by someone, and permission or compensation should be obtained before taking advantage of another‘s intellectual property. Each principle helps individuals and organizations justify decisions in complex scenarios by highlighting fairness, universality, outcome maximization, and respect for ownership rights.

4.3 Discuss information rights and privacy issues 1. Define information rights, privacy, and Fair Information Practices.

Suggested Answer: Information rights define the exclusive privileges and claims individuals or organizations maintain regarding data that identify or relate to them. Privacy is the right of individuals to be free from surveillance or interference from other individuals, organizations, or the government—particularly with regard to personal information gathering and use. Fair Information Practices (FIP) is a set of guidelines initially outlined in the 1970s that address how data about individuals should be collected, maintained, used, and disclosed. These principles rest on the assumption that people must be able to understand and control how their personal information is handled. Key components include openness about data collection, giving consumers a choice to consent to data usage (opt-in or opt-out), granting a right to access data about themselves, and enforcing quality and security measures to prevent misuse. Together, these concepts aim to balance legitimate organizational needs to collect data with an individual‘s desire for confidentiality and control over personal information.

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2. Discuss how the regulation of privacy in Europe differs from that in the United States.

Suggested Answer: Europe traditionally enforces more comprehensive, stringent privacy protections. The leading example is the General Data Protection Regulation (GDPR), which applies to all organizations processing the personal data of EU citizens, regardless of company location. It mandates clear user consent, explicit purpose limitations on data collection, data minimization, data portability, and a ―right to be forgotten.‖ It also includes substantial fines for non-compliance—up to 4% of global revenue or €20 million, whichever is higher. In contrast, the United States historically employs a sector-bysector approach with a patchwork of privacy laws (for example, HIPAA for healthcare, GLBA for financial services, COPPA for children‘s online privacy) and places much of the oversight on the Federal Trade Commission (FTC). U.S. state-level initiatives further complicate the landscape. The U.S. focuses more on consumer welfare and selfregulation by the private sector. Generally, U.S. law does not mandate comprehensive data protection officers, data retention limits, or broad-based user consent.

Consequently, data collection is more permissive unless specifically prohibited. This discrepancy often leads to conflicts for global businesses needing to reconcile compliance across jurisdictions.

3. Discuss the challenges to the protection of individual privacy posed by the Internet.

Suggested Answer: The Internet allows data to be collected and transmitted at scale with unprecedented speed and global reach, creating several privacy challenges. First, technologies such as cookies, web beacons, and increasingly sophisticated analytics tools enable websites and ad networks to track users‘ browsing habits, building detailed personal profiles— often without explicit authorization. Second, user data can be monetized through data brokers or shared with third parties for targeted marketing, which many users do not fully comprehend. Third, online platforms rely heavily on default settings that nudge individuals into sharing more data than they might realize. Fourth, cross-border data flows complicate legal frameworks, since privacy laws differ widely from one country or region to another. Additionally, large Internet platforms wield disproportionate influence over content moderation and data collection practices. Finally, the rise of personal mobile devices coupled with location tracking means individuals are at risk of pervasive surveillance, with few existing controls that effectively limit secondary uses of the data.

4. Discuss the challenges to the protection of individual privacy posed by AI. Copyright © 2026 Pearson Education, Inc.

Suggested Answer: AI raises novel privacy complexities linked to the scale and sophistication of data usage.

Large language models, for instance, are trained on colossal datasets scraped from the Internet, often containing personally identifiable or copyrighted works. Users may be unaware that their content is included, challenging traditional consent-based standards.

Broad or ambiguous data collection by AI systems makes it difficult to track exactly what personal information has been stored or how it might be used. Additionally, powerful AI analytics can ―re-identify‖ individuals from de-identified data or discover sensitive inferences about a user‘s health, politics, or relationships. When AI is applied to surveillance tasks, such as facial recognition or geolocation monitoring, it amplifies the risk of continuous tracking. Further, black-box algorithms produce decisions—on loans, jobs, or policing—with minimal transparency or avenues for redress if individuals are harmed by misclassification or bias. Together, these factors create intricate dilemmas around accountability, fairness, legal compliance, and the extent to which individuals can meaningfully control their personal data.

5. Explain how informed consent, legislation, industry self-regulation, and technology tools help protect the individual privacy of Internet users.

Suggested Answer: Informed consent requires that websites and apps disclose data collection and usage practices, giving users control over whether to participate. Legislative measures—like the GDPR or sector-specific U.S. laws—provide a regulatory framework, mandating data minimization, explicit consent, and notification of data breaches. Industry selfregulation involves code-of-conduct initiatives that advertising networks and technology firms collectively develop to set baseline standards for fair information usage. Although enforcement can be uneven, these codes can nudge members to adopt privacy-friendly practices or face reputational harm. Technological solutions, such as cookie managers, encryption, and anonymous remailers, empower users to block invasive tracking and maintain confidentiality. Emerging concepts like differential privacy add ―noise‖ to data to reduce the likelihood of re-identification. Nonetheless, these measures are only partially effective because they often rely on user activation or user understanding of complex practices. Thus, consistent oversight, user education, and robust cooperation among governments, consumer advocacy groups, and industry participants are essential to ensure meaningful privacy protection.

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4.4 Discuss intellectual property issues 1. Define intellectual property.

Suggested Answer: Intellectual property is any intangible work or creation of the human mind that can be owned and potentially protected by law from unauthorized use, duplication, or distribution. This encompasses creative expressions like books, music, film, art, inventions, formulas, logos, designs, business processes, and software code. In the information age, intangible creations often lead to tangible value. Therefore, laws such as copyrights, patents, trademarks, and trade secrets were developed to provide legal recognition of ownership, thereby incentivizing innovation and preserving economic value for creators.

2. Describe the four types of laws that protect intellectual property rights.

Suggested Answer: Copyright grants authors or creators of original works exclusive rights to reproduce, distribute, or perform their works for a specified period (often the life of the creator plus additional years). Patents confer exclusive rights to inventors for novel, useful, and nonobvious inventions, typically lasting 20 years. Trademarks protect distinctive signs, logos, or symbols that identify goods or services, preventing consumer confusion in the marketplace. Finally, trade secrets protect confidential business information that provides a competitive edge, as long as the information remains undisclosed and efforts are made to keep it secret. While each form of protection can overlap in practice, they serve different purposes. For instance, copyright is well-suited to creative works, whereas patents act as legal monopolies for technical inventions. Trademarks ensure brand distinctiveness and trade secrets shield proprietary know-how. Balancing these rights with public benefit—such as access to information and promotion of competitive markets—often generates complex debates, especially in the digital economy.

3. Discuss the challenges to intellectual property rights posed by the Internet.

Suggested Answer: The Internet allows millions of users to copy and share digital media—videos, music, software, e-books—instantly, making traditional enforcement mechanisms less effective.

Placing copyrighted content on peer-to-peer networks, file-sharing sites, and streaming platforms means unauthorized copies multiply quickly, crossing national borders where laws may differ. Search engines enable users to locate infringing material easily; thus,

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detection and removal become an endless game of whack-a-mole. Content owners attempt technological safeguards, like digital rights management (DRM), which can be circumvented. The global nature of the Internet also creates issues for jurisdiction: even if one nation has strong anti-piracy laws, infringing websites can be hosted elsewhere, complicating enforcement. Piracy undermines revenue streams for industries like music, film, and software, while also diminishing the perceived value of legitimate digital products. Although legislative efforts like the Digital Millennium Copyright Act (DMCA) or EU copyright reforms have helped, critics note that these laws can be outpaced by technology, leaving intellectual property vulnerable to mass online infringement.

4. Discuss the challenges to intellectual property rights posed by AI. Suggested Answer: AI complicates intellectual property protections in several ways. First, training advanced AI systems generally entails scraping vast amounts of text, images, or other copyrighted content without explicit authorization—raising questions of fair use and potential infringement. Second, AI-generated works that emulate existing artistic styles spark trademark and copyright disputes if they too closely mimic the original. Third, determining ownership of AI-created content remains unclear if no human inventor or author is directly involved. Courts and copyright registries have thus far refused to grant full copyright to purely AI-generated work. Fourth, patent law is unsettled regarding inventions that AI conceives, potentially limiting the ability of companies to protect AIdriven innovations. Additionally, trade secrets may become vulnerable if employees inadvertently feed critical proprietary information into public AI systems, risking unauthorized disclosure. As AI technology rapidly evolves, policy gaps emerge that test the boundaries of intellectual property frameworks originally devised for human creators and conventional digital works.

4.5 Discuss system quality issues 1. Discuss the issues involved in determining an acceptable level of system quality.

Suggested Answer: Determining an acceptable level of system quality involves balancing the risks, costs, and benefits of an information system. On the one hand, striving for zero-defect software can be prohibitively expensive or time-consuming, hindering product releases and innovation. On the other hand, releasing a system with too many defects can cause economic loss, reputational harm, and even physical injury, depending on the industry Copyright © 2026 Pearson Education, Inc.

(e.g., aviation or healthcare). Neither the market nor legal frameworks have definitively resolved how to measure that threshold. Historically, industries have employed accepted norms of ―best efforts,‖ but as systems become vital for daily operations, even minor bugs can produce significant harm. Additionally, accountability is murky: is it the developers, managers, or end-users who decide enough testing is done? For AI-based systems, the standards are even less clear because errors are not always predictable.

Determining acceptable system quality thus means weighing the potential magnitude of harms against the societal and organizational desire for cost-efficiency, rapid deployment, and continuous updates—resulting in ongoing debate about how best to reconcile these competing demands.

2. List and describe the principal causes of system quality problems.

Suggested Answer: The first major cause of quality problems is software bugs and coding errors—a common issue in complex systems where complete debugging is nearly impossible.

Second, hardware malfunctions and facility failures (for instance, power outages, cooling problems, or natural disasters) can bring down critical systems unexpectedly.

Third, poor input data quality leads to inaccurate outputs or failures in data processing; organizations may store incomplete, outdated, or inconsistent data. Fourth, inadequate testing or design oversight can allow hidden flaws to exist undetected, especially when tight timelines limit thorough validation. Fifth, in an AI environment, insufficient or biased training data sets can degrade system performance or produce skewed results for particular user groups. Lastly, user errors—due to poor training or system design that is unintuitive—create operational messiness that some might interpret as a system flaw.

Each factor highlights that system quality is not solely a technology concern but also an organizational issue requiring robust project management, training, and maintenance practices.

4.6 Discuss accountability and control issues 1. Explain why it is so difficult to hold software vendors and service providers liable for failure or injury.

Suggested Answer: First, software is often treated by courts as intangible intellectual property rather than a physical product, which means strict product liability rules usually do not apply. Legal systems typically require proof of negligence to hold software publishers accountable, a Copyright © 2026 Pearson Education, Inc.

difficult burden if problems stem from complex code or unpredictable software interactions. Second, end-user license agreements (EULAs) frequently include broad disclaimers that significantly limit or completely waive vendor liability. Users agree to these conditions, sometimes unknowingly, effectively releasing providers from most legal risk. Third, establishing causation can be complex: a software issue might be triggered by system incompatibilities or user misuse, complicating efforts to assign blame. Fourth, global distribution of digital software crosses multiple jurisdictions with conflicting laws, further complicating litigation. Finally, service providers argue that imposing full liability could stifle the fast-paced nature of technological innovation, disincentivizing them from releasing or updating software. Although proposals exist for revised standards of care, the legal framework lags in setting uniform rules that balance consumer protection with industry viability.

2. Discuss the issues that AI raises with respect to the question of liability for harm.

Suggested Answer: AI systems, particularly those with machine learning or deep-learning algorithms, introduce a ―black box‖ challenge: it is not always clear why the system made a particular decision or how it arrived at incorrect conclusions. This opacity complicates assigning liability when harm occurs—did the developer fail to provide a properly trained model, or did biases in the training data cause the error? Moreover, AI decisions may involve levels of autonomy once reserved for humans, raising questions of ―who is in control‖ if the system independently adjusts parameters. In the European Union, updated product liability guidelines classify AI providers as manufacturers, potentially exposing them to more direct liability. However, in many other jurisdictions, statutes remain ambiguous. Additionally, as AI systems aggregate and learn from anonymized or public data, errors could lead to systemic biases, with no single event or person to blame. Laws balancing caution for potential victims and the need to promote AI-driven research remain under development, leaving a patchwork environment of accountability.

3. Describe the difference between computer crime and computer abuse.

Suggested Answer: Computer crime generally entails unlawful acts in which a computer or network serves as the primary tool or target. Typical offenses encompass hacking into systems or stealing data. If it violates explicit legal statutes—like fraud, identity theft, or disabling an organization‘s network—then it is classed as a crime. By contrast, computer abuse might not violate criminal law but is viewed as unethical or harmful. Spam is a classic example; blanketing people‘s inboxes might not always be illegal (subject to certain regulations), but it imposes costs in both time and resources. Other examples of abuse Copyright © 2026 Pearson Education, Inc.

include unauthorized workplace web browsing that is not necessarily outlawed but could be against company policy or otherwise irresponsible. The distinction matters because crime subjects offenders to penal codes, while abuse often falls under organizational disciplinary measures or civil disputes. Nonetheless, as technology evolves, the boundary between crime and abuse can shift, with legislators enacting new laws in response to emerging abuses.

4. How should such occurrences be handled by the legal system (computer crime and abuse)?

Suggested Answer: The legal system must distinguish between willful, malicious activities and lesser infractions. When actions deliberately violate criminal laws—like hacking or major data theft—strong enforcement, including fines and potential imprisonment, is warranted to deter future attacks and protect victims. When activities border on unethical but not illegal (e.g., spam or workplace misuse), civil remedies or organizational sanctions may suffice, contingent on organizational policy. Governments often enact frameworks encouraging corporations to collaborate with law enforcement on breach reporting and rapid responses. Overly broad or vague legislation, however, can chill legitimate research and hamper security innovators. Ideally, laws balance punishment for destructive actors with allowances for good-faith security testing. Effective strategies also encompass global cooperation to address cross-border cybercrime. Ultimately, legal and regulatory measures must accompany technical solutions like firewalls, intrusion detection systems, and user education in building a robust defense. A calibrated approach ensures that both strong deterrence and innovation coexist for the digital economy‘s benefit.

4.7 Discuss quality of life issues 1. Name and describe four quality-of-life impacts of information technologies and systems.

Suggested Answer: First, large technology firms can concentrate economic and political power, using dominant market positions to limit smaller competitors or shape public discourse.

Second, the ―digital divide‖ can exacerbate existing inequalities if broadband and devices remain unaffordable for certain groups, leaving them unable to benefit from digital educational or employment opportunities. Third, on-demand, always-on work Copyright © 2026 Pearson Education, Inc.

environments blur boundaries between personal and professional life. Employees may feel compelled to respond to messages at all hours, adding stress and reducing family time. Fourth, advanced technologies, including AI, can generate job disruptions—either by fully automating roles or by fundamentally changing job requirements, leaving some workers with outdated skills. Together, these developments can create a sense of societal displacement, requiring individuals and institutions to adapt quickly to the new digital realities in order to maintain both economic well-being and psychological health.

2. Explain how AI may potentially contribute to the development of bias.

Suggested Answer: AI systems often learn from data that reflect societal biases, inadvertently perpetuating or amplifying them in automated decisions. For instance, if historical hiring data is disproportionately skewed toward certain demographic groups, an algorithm trained on it may rank job applicants from underrepresented groups lower, even if they are equally qualified. Likewise, predictive policing tools—built on patterns showing higher arrest rates in specific neighborhoods—may intensify over-policing in similar communities, perpetuating a cycle of unjust scrutiny. The opaque nature of many AI models compounds the issue, as organizations may not fully understand how an algorithm is making judgments, making it harder to detect bias or correct mistakes. Additionally, algorithms can pick up subtle proxies for protected characteristics (like zip code or speech patterns), inadvertently discriminating. Such forms of bias threaten fairness, undermine public trust, and risk running afoul of anti-discrimination laws. Addressing bias requires intentional data curation, diverse development teams, and postdeployment audits to ensure models align with both ethical and legal standards.

3. Describe RSI, CTS, and CVS, and explain their relationship to information technology.

Suggested Answer: Repetitive stress injury (RSI) involves the overuse of muscle groups through highimpact or frequent low-impact actions, often seen in office work where employees perform repetitive keystrokes. Carpal tunnel syndrome (CTS) is a specific kind of RSI caused by pressure on the median nerve in the wrist, frequently linked to repetitive keyboard or mouse usage. Symptoms include pain, numbness, and difficulties grasping small objects. Computer vision syndrome (CVS) refers to eyestrain and irritation from prolonged viewing of screens, impacting users of desktop computers, smartphones, or e-readers. These conditions highlight the importance of ergonomics in the workplace: prolonged or improperly set up computer stations can strain muscles and vision, resulting in lost productivity, medical expenses, and morale issues. Addressing these Copyright © 2026 Pearson Education, Inc.

concerns requires thoughtful design of workstations—like adjustable monitors, wrist supports, software-based reminders to take breaks, or anti-glare screens. As technology continues to pervade daily life, preventive measures to mitigate health risks have come to the forefront for both individuals and employers.

Discussion Questions 4.8 Should cloud service providers be held liable for economic injuries suffered when their systems fail?

Suggested Answer: Liability for cloud service outages is complicated, as many provider contracts contain clauses that limit liability to service credits rather than financial damages. Critics argue that these providers play such a central role in the global economy that they should be held to higher standards of reliability. If a major provider goes down, retailers, airlines, financial institutions, and other clients can lose significant revenue, tarnish brand reputations, and disappoint customers. From a fairness standpoint, it seems logical that the entity controlling the infrastructure should bear some cost when systems fail— particularly when the failure is linked to negligence or inadequate investment in redundancy. However, imposing heavy liability burdens may drive up costs and stifle innovation, especially for smaller providers unable to absorb large payouts. A balanced approach might require providers to maintain transparent business continuity practices and clear incident reporting. Regulators could step in to set guidelines for service-level standards with proportionate penalties for negligence while still allowing for the uncertain nature of technology.

4.9 Should companies be responsible for unemployment that their information systems cause? Why or why not?

Suggested Answer: Information systems, automation, and AI can displace workers by making specific roles obsolete or less labor-intensive. Some argue that companies deploying such systems gain a competitive edge while shifting the social costs—lost jobs, disrupted communities, and reskilling requirements—onto society. They say that if companies reap the

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economic benefits, they owe assistance to displaced workers, whether in retraining programs or transitional support. However, a contrary viewpoint holds that market forces inherently drive efficiencies, and it is not solely the responsibility of an individual firm to safeguard employment when it invests in new technology. Firms might survive only by innovating, and punishing them for success could reduce competitiveness and hamper overall economic growth. Lawmakers, educators, and labor institutions can share responsibility for ensuring adequate social safety nets. Approaches vary: from government-backed unemployment benefits and incentives for upskilling to publicprivate partnerships that promote workforce development. In essence, assigning responsibility for automation-related unemployment depends on one‘s stance regarding corporate social responsibility, labor mobility, and the role of public policy in responding to technological shifts.

4.10 Discuss the pros and cons of allowing companies to amass personal data for behavioral targeting.

Suggested Answer: Behavioral targeting—the practice of using personal data to tailor products and advertisements—has advantages such as more relevant ads, improved user experience, and higher marketing efficiency. Some businesses can offer free content, funded by these targeted ads, while users may discover products they actually need or prefer.

Moreover, advanced analytics can reduce irrelevant messaging and boost overall economic activity by matching supply to demand more precisely. However, the cons revolve around user privacy and the potential misuse of personal data. Consumers may feel uneasy about being monitored and experience a loss of autonomy if they don‘t fully understand or consent to data sharing. Data aggregators can also construct highly detailed user profiles, raising identity theft or discrimination risks. Data errors might lead to wrongful assumptions or suboptimal decisions. Additionally, targeted ads can reinforce narrow viewpoints or interests—sometimes called a filter bubble—limiting exposure to broader ideas. A middle ground could involve transparent opt-in policies, strong data security, and robust regulatory oversight to ensure fair play and data stewardship.

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AI Project Below is the AI Project prompt and question from the end of the chapter, followed by a suggested answer.

4.11 AI Project: Business Use of Social Media ―You have been hired as a consultant by two friends who want to open a retail pet shop selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They have asked you to advise them about the ethical, social, and legal issues they need to consider if they establish an online presence on Facebook and Instagram.

Using Microsoft‘s Copilot, Google‘s Gemini, or ChatGPT, develop a prompt to help you advise them about these issues. Save a copy of your prompt and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: When setting up a retail pet shop presence on Facebook and Instagram, several key concerns arise. Ethically, the primary question is how customer data—likes, comments, purchase history—will be collected and utilized for marketing. Your friends should respect consumer privacy through clear disclaimers and avoid sharing data with third parties without consent. From a social perspective, they should anticipate challenges such as negative or misleading reviews, providing guidelines to address inappropriate user comments in a respectful manner. Legally, they must comply with each platform‘s terms of service, relevant privacy regulations (which could be GDPR if they sell to EU residents), and truth-in-advertising laws mandating accurate product claims. Additionally, they should keep store branding distinct from official Facebook and Instagram logos to avoid infringement issues. Intellectual property law matters for any custom graphics they use, so they should confirm the licensing of images and fonts. Finally, it‘s prudent to implement social media policies detailing how they will moderate content, respond to complaints, safeguard personal data, and handle influencer partnerships or promotions.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

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4.12 Management Decision Problem ―InfoFree‘s website is linked to massive databases that consolidate personal data on millions of people. Users can purchase marketing lists of consumers broken down by location, age, gender, income level, home value, home ownership, and length of residence. Do data brokers such as InfoFree raise privacy issues? Why or why not? If your name and other personal information were in this database, what limitations on access would you want in order to preserve your privacy? Consider the following data users: government agencies, your employer, private business firms, and other individuals.‖ Suggested Answer: Data brokers like InfoFree magnify privacy challenges because they gather and sell personal details that users may not realize are being compiled. They often do so from public records or third-party sources, but consumers rarely have the ability to opt out or check for accuracy. In the example of InfoFree, marketing professionals can piece together remarkably specific demographic profiles for targeted campaigns. While beneficial to businesses, such consolidation makes consumers wary of how and where their data might be used, whether for mere advertising or more problematic profiling. If your personal information is in such a database, you may want strict access controls to protect against malicious or intrusive inquiries. Government agencies potentially use it for investigations or surveillance; your employer could use it to screen hiring or promotion decisions; private businesses may bombard you with marketing messages or differential pricing; and malicious individuals could attempt identity theft. A robust privacy policy with opt-in consent, data minimization, transparency on data sources, and clear recourse to correct inaccuracies is essential to protect users‘ rights.

4.13 Creating a Simple Blog ―Software skills: Blog creation Business skills: Blog and web page design In this project, you‘ll learn how to build a simple blog of your own design using the online blog creation software available at Blogger.com or Squarespace. Pick a sport, hobby, or topic of interest as the theme of your blog. Name the blog, give it a title, and choose a template for the blog. Post at least four entries to the blog, adding a label for each posting. Edit your posts if necessary. Upload an image, such as a photo from your

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computer or the web, to your blog. Add capabilities for other registered users, such as team members, to comment on your blog. Briefly describe how your blog could be useful to a company selling products or services related to the theme of your blog. List the tools available in Blogger that would make your blog more useful for business, and describe the business uses of each. Save your blog and show it to your instructor.‖ Suggested Answer: A simple blog on a specialized topic—such as organic cooking or mountain biking—can serve as a marketing vehicle for companies whose products align with that niche. Once created, the blog can showcase product reviews, tutorials, and personal experiences, establishing authenticity and credibility for the brand. For instance, a mountain biking blog might leverage features like integrated social sharing buttons, enabling faster distribution and engagement. Blogger or Squarespace templates also allow adding contact forms so companies can easily gather feedback and leads. Built-in analytics tools help track visitor demographics or post popularity, guiding more tailored advertising and product positioning. By uploading images that highlight product usage, visitors can visualize how the goods fit into real scenarios, increasing trust. Allowing user comments or guest posts fosters community, which business owners can later direct toward special offers or a newsletter. Together, these functionalities provide costeffective ways for businesses to interact with passionate audiences and strengthen their relationship with potential customers.

4.14 Analyzing Web Browser Privacy ―Software Skills: Web browser software Business Skills: Analyzing web browser privacy protection features This project will help develop your skills in using the privacy protection features of leading web browser software. Examine the privacy protection features and settings for two leading web browsers, such as Microsoft Edge, Mozilla Firefox, or Google Chrome.

Make a table comparing the features of two of these browsers in terms of functions provided and ease of use.   

How do these privacy protection features protect individuals?

How do these privacy protection features affect what businesses can do on the Internet?

Which browser does a better job of protecting privacy? Why?‖

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Suggested Answer: When researching privacy controls in Microsoft Edge and Mozilla Firefox, for example, you might find both block third-party tracking cookies but differ in default configurations.

Edge‘s ―Tracking Prevention‖ modes categorize trackers by severity, while Firefox‘s ―Enhanced Tracking Protection‖ automatically blocks certain known ad trackers. For users, both approaches guard against hidden scripts that compile behavioral data, thus limiting targeted ads and potential misuse of personal details. For businesses reliant on tracking or data analytics, these privacy safeguards restrict data harvesting. They must either request user consent or rely on first-party interactions to gather information.

Overall, many would argue that Firefox is historically more aggressive in default blocking, but Edge has been steadily enhancing its privacy controls, including strict tracker-blocking modes and built-in security checks. The best choice ultimately depends on user preference for built-in strict modes versus flexible custom settings. Both browsers reflect how marketplace pressures to bolster consumer privacy can shape business approaches to online data collection.

4.15 Collaboration and Teamwork Project: Developing a Corporate Code of Ethics ―With two or more of your classmates, develop a corporate ethics code on privacy that addresses both employee privacy and the privacy of customers and users of the corporate website. Be sure to consider email privacy and employer monitoring of worksites as well as corporate use of information about employees concerning their offthe-job behavior (e.g., lifestyle, marital arrangements, and so forth). If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: A comprehensive corporate ―Privacy Code of Ethics‖ could involve separate sections addressing employee data, client/customer data, and vendor relationships. In the employee realm, the policy would clarify permissible monitoring: for instance, real-time email scanning might be restricted to detecting malware or legal compliance issues, while personal communications remain confidential unless explicit consent or suspicion of wrongdoing arises. Off-the-job behavior should remain private, with exceptions only if it poses a legal or reputational risk to the firm. Regarding customer/user data from the corporate website, the code could mandate transparent data collection, opt-in consent for marketing, and limiting data usage strictly to stated business purposes. Regular

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audits of data storage locations and encryption practices would assure compliance.

Finally, vendor relationship clauses ensure that third-party partners adhere to the same data practices, preventing ―backdoor‖ privacy violations. Tools like Google Docs facilitate real-time collaboration, enabling group editing while capturing revision histories for accountability. Once complete, the group could present the final code to show how technology can align moral commitments and operational constraints in practice.

Suggested Assignments Below are five practical assignments to help students apply key concepts from this chapter: 1. Privacy Impact Assessment (PIA) Exercise: Ask students to pick a real or hypothetical company that collects customer data (e.g., an online retailer or an educational website). Have them conduct a privacy impact assessment, identifying what data are collected, how they are used, potential risks, and strategies to protect users‘ rights.

2. AI Bias Investigation: Provide students with a mock dataset or direct them to an open-source dataset. Have them run a simple AI/machine learning analysis to explore potential biases or skewed outcomes. Students then propose how to mitigate any detected biases in data collection or algorithm design.

3. Creating a Corporate Social Responsibility (CSR) Briefing: Students roleplay as a management team proposing a new AI-driven product. They must include a clear plan for ensuring data privacy, user consent, and an ethics review board process. Encourage them to consider relevant regulations such as the GDPR and how they might comply.

4. Designing a “Responsible Tech” Training Module: Assign students to build an in-house training module for new employees on key ethical principles (like those from the chapter). This module should show how everyday tasks—such as handling user requests for data deletion—align with corporate policies and legal obligations.

5. Digital Divide Community Outreach Project: Have students design an outline for a community workshop or nonprofit program aimed at reducing the digital divide. They should identify resources needed, partners (e.g., local libraries, tech companies), and lesson plans on using the internet safely, applying for jobs online, or learning digital literacy skills.

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Chapter 5 – Instructor Manual Chapter Summary This chapter explains the fundamental concepts and components of IT infrastructure. It begins by defining IT infrastructure and tracing its evolution across five major eras, illustrating how developments in hardware, software, and networking have driven significant changes in business technology. Readers learn about key infrastructure components—such as computer hardware and operating system platforms, enterprise and data management software, networking and telecommunications platforms—and the vital role of consulting and system integration services. Mobile computing, apps, and BYOD are explored, emphasizing benefits as well as concerns. Quantum computing and green computing illustrate emerging issues shaping technology adoption and corporate responsibility. The chapter covers virtualization and cloud computing, clarifying different cloud service models and deployment models, including edge computing. It delves into contemporary software platforms—open source, Java, HTML5, and web services—and discusses alternative ways of obtaining software. The role of specialized infrastructure for artificial intelligence is also introduced. Finally, the chapter highlights the management challenges of implementing and maintaining a coherent and scalable IT infrastructure, underscoring strategic considerations and the total cost of ownership.

Learning Objectives These are the chapter objectives: 5.1 Discuss IT infrastructure and its evolution.

5.2 Describe the components of IT infrastructure.

5.3 Discuss the mobile platform, apps, and BYOD. 5.4 Discuss quantum computing and green computing.

5.5 Discuss virtualization and cloud computing.

5.6 Describe contemporary software platforms.

5.7 Discuss alternative ways of obtaining software.

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5.8 Describe IT infrastructure for AI. 5.9 Discuss IT infrastructure management challenges.

5.10 Understand how the information in this chapter can help your career.

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what‘s happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 5.1 Discuss IT Infrastructure and Its Evolution   

Explain the definition of IT infrastructure, emphasizing both technology and services views.

Trace the five key eras of infrastructure evolution, demonstrating how computing power has changed.

Illustrate how mainframes paved the way for personal computing, client/server architectures, enterprise computing, and cloud/mobile computing.

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

Discuss how client/server computing distributes processing across smaller, more affordable machines.

5.2 Describe the Components of IT Infrastructure 

  

Outline the seven major components: hardware platforms, operating systems, enterprise software, data management and storage, telecommunications, Internet platforms, and consultants.

Cover hardware trends, including specialized chips (such as GPUs) for AI workloads.

Show how operating system platforms are evolving to accommodate mobile and cloud.

Emphasize the roles of data management software and networking/telecommunications platforms.

5.3 Discuss the Mobile Platform, Apps, and BYOD    

Overview how mobile devices (smartphones, tablets, wearables) now serve as integral computing platforms.

Describe the rise and variety of apps, many of which leverage web services or cloud features.

Define BYOD and discuss the associated benefits, risks, and management challenges.

Explain how consumerization of IT forces businesses to adapt their infrastructure management.

5.4 Discuss Quantum Computing and Green Computing    

Define quantum computing and explain its ability to handle data at subatomic levels for vast increases in processing power.

Describe the benefits and limitations of quantum computers for commercial and scientific tasks.

Introduce green computing as strategies to reduce environmental impact; explain how data centers are adapting to save energy.

Emphasize current environmental challenges: e-waste, high energy use for cooling, and how cloud computing factors into sustainability.

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5.5 Discuss Virtualization and Cloud Computing     

Explain virtualization as software creating virtual representations of physical resources.

Clarify how virtualization underpins cloud computing by promoting resource pooling and flexible allocations.

Define cloud computing, describing on-demand resources accessed over a network, with rapid elasticity and measured service.

Break down major cloud services (IaaS, SaaS, PaaS) and cloud deployment models (public, private, hybrid).

Introduce the notion of edge computing, reducing traffic and latency by processing data near its source.

5.6 Describe Contemporary Software Platforms    

Present open-source software and Linux as key building blocks, highlighting benefits such as flexibility and low cost.

Review Java and its platform independence for developing web and enterprise applications.

Note the importance of HTML5 for embedding images, audio, and video without external plug-ins.

Explain web services and XML to link disparate applications, clarifying how they enable systems to communicate regardless of platform.

5.7 Discuss Alternative Ways of Obtaining Software   

Compare buying commercial software packages versus renting cloud-based software services.

Discuss software outsourcing, including offshoring, for custom development or maintenance.

Highlight the concept of the service level agreement (SLA) to ensure software availability, security, and performance.

5.8 Describe IT Infrastructure for AI  

Summarize specialized hardware for AI workloads, such as GPUs and TPUs, plus large memory and data storage.

Present software for AI—including Linux-based operating systems, open-source AI frameworks, and cloud platforms.

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

Illustrate how edge AI can shift certain computations closer to devices, optimizing performance and reducing network loads.

5.9 Discuss IT Infrastructure Management Challenges    

Stress the need to cope with rapid shifts in platform technologies (mobile, cloud, AI) and ensure future scalability.

Explain management/governance concerns over IT standardization, cost allocation, and policy making.

Discuss the total cost of ownership (TCO) and using competitive forces to guide wise IT investments.

Emphasize solutions including centralization, standardization, and leveraging cloud services for cost savings and flexibility.

5.10 Understand How the Information in This Chapter Can Help Your Career 

Stress how understanding the hardware and software vocabulary used in business is important for both interviewing and being productive within a firm.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.              

Android (5.2) App (5.3) Application server (5.1) BYOD (5.3) Chrome OS (5.2) Client (5.1) Client/server computing (5.1) Cloud computing (5.5) Consumerization of IT (5.3) Data center (5.4) E-waste (electronic waste) (5.4) Edge artificial intelligence (Edge AI) (5.8) Edge computing (5.5) Green computing (5.4)

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                                     

HTML5 (5.6) Hypertext Markup Language (HTML) (5.6) Hybrid cloud (5.5) Infrastructure as a service (IaaS) (5.5) iOS (5.2) Industry cloud platform (5.5) Java (5.6) JavaScript (5.6) Legacy system (5.2) Linux (5.2) Mainframe (5.1) Microsoft Windows operating system (5.2) Microsoft Windows Server (5.2) Mobile device management (MDM) (5.9) Multitiered client/server architecture (5.1) Multitouch (5.2) Network operating system software (NOS software) (5.2) On-demand computing (5.5) Open-source software (5.6) Operating system (5.2) Platform as a service (PaaS) (5.5) Private cloud (5.5) Public cloud (5.5) Quantum computing (5.4) Scalability (5.9) Server (5.1) Service level agreement (SLA) (5.7) Software as a service (SaaS) (5.5) Software-defined storage (SDS) (5.5) Software outsourcing (5.7) Software package (5.7) Total cost of ownership (TCO) (5.9) UNIX (5.2) Virtualization (5.5) Web browser (5.6) Web hosting service (5.2) Web server (5.1) Web services (5.6)

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Case Studies Opening Case Study: QRyde Rides High with the Cloud and AI SUMMARY: QRyde is a cloud-based transportation management system that helps organizations provide safe, low-cost, and reliable transportation options to people with diverse needs, including those who require medical care or education. The platform uses artificial intelligence, automated scheduling, and dispatching to streamline operations. QRyde switched to Oracle Cloud Infrastructure to handle an increasing number of ride bookings across large geographical areas.

Case Study Questions 1. How did using cloud computing help QRyde serve its customers better?

Suggested Answer: By adopting cloud computing, QRyde significantly increased its capacity to handle large numbers of trips daily and connect stakeholders—residents, caretakers, and transportation providers—from a central portal. The cloud provided the flexibility to manage AI route optimization, automated dispatching, and data security without running into hardware limitations. This approach also supported convenient web and mobile access, allowing QRyde to deliver real-time information and cost tracking for a broad community of riders needing safe, affordable transportation.

2. What were the business benefits for QRyde of using a cloud computing infrastructure?

Suggested Answer: The benefits included cost savings by paying only for the resources used, improved scalability, and the ability to focus on business growth rather than on maintaining onpremise servers. The Oracle Cloud Infrastructure gave QRyde on-demand computing power and seamless data storage to support rapid expansions and new AI features. In addition, QRyde‘s staff could engage more in high-value tasks, optimizing logistics and expanding service offerings to new regions, rather than troubleshooting hardware issues.

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Spotlight on Technology Case Study: AI Chips SUMMARY: Nvidia‘s Graphics Processing Units (GPUs) are critical for AI workloads that must handle vast quantities of data in parallel. As AI applications have grown in scale, Nvidia now dominates the specialized AI chip market. Major cloud providers often use Nvidia hardware, but some companies—like Google—are designing custom AI chips to gain more control and potentially reduce costs. The U.S. government also seeks to boost domestic chip production, given the importance of AI capabilities to national security and the economy.

Case Study Questions 1. Why are Nvidia chips so useful for AI applications?

Suggested Answer: Nvidia GPUs excel at parallel computing, which is essential for training large AI models requiring millions or billions of computations simultaneously. Traditional CPUs process data sequentially, whereas GPUs have hundreds or thousands of cores that can compute in parallel. This design significantly speeds up tasks such as image recognition, language model training, and video processing. Nvidia‘s expertise, software ecosystem, and specialized hardware improvements also allow AI developers to implement cuttingedge algorithms that might be too slow on a standard CPU. 2. Nvidia has a near-monopoly on specialized AI chips. Discuss the impact of this situation.

Suggested Answer: Nvidia‘s dominance has repercussions for cost, supply chain reliability, and innovation.

Companies depending on Nvidia might pay premium prices for GPUs and face shortages during high demand. Having to rely largely on a single vendor raises geopolitical and business risks, especially if that vendor experiences manufacturing or supply disruptions. On the other hand, Nvidia‘s leadership has standardized AI development environments, accelerating breakthroughs and driving an ecosystem of complementary software tools, which can foster continued AI adoption.

3. Should companies develop their own custom AI chips or use those produced by Nvidia? Explain your answer.

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Choosing to develop custom chips can offer greater optimization, improved efficiency for a specific AI model, and reduced or controlled costs in the long run. However, it requires massive up-front investments and deep hardware engineering expertise.

Smaller firms may not be able to afford chip R&D or secure advanced fabrication facilities. Leveraging Nvidia‘s GPUs generally remains the faster path to market because of ready-made hardware architectures and mature software libraries.

Ultimately, the decision hinges on the company‘s scale, financial resources, and strategic requirements.

Chapter Case Study: Are AI and Cloud Computing Sustainable?

SUMMARY: This case explores the environmental impact of cloud computing and AI. While cloud computing consolidates resources and can lower costs, data centers require continuous energy and water to run and cool servers. AI‘s computing demands are substantial and growing, contributing to higher energy usage. On the other hand, cloud providers are investing in renewable energy sources, and AI can be deployed to optimize energy consumption, logistics, and supply chains. The debate centers on balancing technological benefits with long-term sustainability.

Case Study Questions 1. How green is cloud computing? How much does it help or hurt the environment?

Explain your answer.

Suggested Answer: Cloud computing improves resource utilization by consolidating servers and sharing computing power among multiple clients. Well-managed cloud data centers often achieve energy savings and reduce carbon footprints compared with organizations operating unoptimized servers on their premises. Nevertheless, cloud infrastructure expansion continues, and the overall global data center footprint grows. Data centers also consume significant amounts of electricity and water for cooling. Thus, while cloud computing is greener than many on-premise deployments, its net environmental effect depends heavily on the energy sources used and the efficiency practices adopted by providers.

2. What solutions have been proposed to make data centers greener? How effective are they?

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Suggested Answer: Various measures include advanced cooling technologies, using renewable energy supplies (wind, solar, hydro), and designing hyperscale data centers to optimize energy use. Some companies employ AI to monitor data center temperatures and automatically adjust cooling loads for more efficient operation. Others choose geographic locations with cooler climates or access to low-carbon energy grids. These initiatives can substantially reduce power consumption and carbon emissions, and some organizations claim net-zero emissions goals. However, their efficacy can be limited by local water availability, the reliability of clean energy infrastructure, and the difficulty of balancing redundancy with energy optimization.

3. Is AI harmful for the environment? Explain your answer.

Suggested Answer: AI can be both a source of large carbon emissions and, paradoxically, a tool for reducing them. Training large language models requires massive computing resources, which causes higher power usage and e-waste. Expanding data centers to meet AI‘s increasing demands may stress local ecosystems. At the same time, AI helps optimize logistics, manage energy grids, and reduce waste in manufacturing and agriculture— often offsetting some of its environmental cost. Whether AI is ―harmful‖ depends on how responsibly organizations use, power, and scale these computationally intense applications.

Review Questions 5.1 Discuss IT infrastructure and its evolution.

1. Define IT infrastructure from both a technology and a services perspective.

Suggested Answer: From a technology perspective, IT infrastructure consists of all the shared hardware, software, and networking resources supporting enterprise-wide computing needs.

These technology elements include mainframes, servers, mobile devices, operating systems, and applications. From a services perspective, infrastructure provides firmwide capabilities such as data management, enterprise software, IT standards, and user training. The idea is that IT infrastructure creates a digital foundation on which an organization runs its operational, collaborative, and strategic processes. Over time, IT infrastructure has evolved from mainframe-centric architectures to personal computing,

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client/server networks, enterprise networking, and, more recently, cloud and mobile computing. These changes have greatly expanded the availability, scalability, and costeffectiveness of computing resources, enabling firms to operate across geographies and innovate more rapidly.

2. List each of the eras in IT infrastructure evolution and describe its distinguishing characteristics.

Suggested Answer: The mainframe/minicomputer era (1959–present) featured large, centralized computer systems under the control of specialized staff. A subsequent personal computer era (1981–present) introduced stand-alone desktops with improved user productivity. The client/server era (1983–present) distributed processing across multiple machines, benefiting from lower-cost servers and desktop clients. Enterprise computing (1992– present) integrated business-wide systems and services using TCP/IP and network standards. Finally, the cloud and mobile computing era (2000–present) delivers computing resources and data storage over the Internet from remote data centers, while mobile devices have become primary tools for accessing information. Each era brought greater power, lower costs, and more flexible computing options to organizations.

3. Define and describe the following: web server, multitiered client/server architecture.

Suggested Answer: A web server is software (and sometimes the associated hardware) that handles requests from clients for web pages and data. It interprets these requests, locates the appropriate files, and sends them back to the client‘s browser for display. Multitiered (Ntier) client/server architecture splits processing tasks across multiple server layers, often including a web server for handling HTTP requests and an application server for executing back-end processes. By distributing workloads, multitiered architecture can improve network efficiency and permit more scalable web-based applications, but it also adds complexity to system design and integration.

5.2 Describe the components of IT infrastructure.

1. List and describe the components of IT infrastructure that firms need to manage.

Suggested Answer:

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Seven key infrastructure components include: (1) computer hardware platforms such as servers, mainframes, desktops, and mobile devices, often leveraging AI-capable processors; (2) operating system platforms—Windows, Linux, macOS, iOS, Android; (3) enterprise software applications—ERP, CRM, and supply chain solutions; (4) data management and storage solutions—database management systems, data warehouses, and cloud storage; (5) networking/telecommunications platforms—wireless, LANs, WANs, and communication services; (6) Internet platforms—web hosting, web hardware/software, and development tools; and (7) consulting services and system integrators to manage complex projects and stand up new systems. Managing these components effectively involves balancing costs, security, flexibility, and organizational requirements for innovation.

5.3 Discuss the mobile platform, apps, and BYOD. 1. Describe the mobile platform.

Suggested Answer: The mobile platform includes smartphones, tablets, wearables, and other lightweight devices that operate with wireless connectivity. These devices have rapidly advanced to handle many of the tasks once performed on desktop computers—such as email, online research, social media, multimedia, and partially offline operations. Mobile users also run specialized business apps, access shared documents, and coordinate real-time data. The widespread availability and portability of mobile hardware have fundamentally transformed when and where employees and customers can use technology.

2. Define and give examples of apps.

Suggested Answer: Apps are software applications often designed for mobile devices; they are typically downloaded from an online store (e.g., Apple App Store or Google Play) or used in a web browser. Examples include map navigation, gaming, social networking, online banking, health monitoring, document editing, and media streaming. Many apps leverage web connectivity to deliver cloud-based functionality, while others can operate offline, storing and syncing data when a network is available. Apps have extended the capabilities of mobile devices, turning them into versatile computing tools.

3. Define BYOD and explain why it is a management challenge.

Suggested Answer:

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BYOD, or Bring Your Own Device, is a policy allowing employees to use personal devices for work. This can increase satisfaction, reduce hardware costs, and enable flexibility in working locations. However, management faces multiple challenges, such as ensuring consistent security standards across personally owned devices, controlling unauthorized apps, addressing data privacy issues, and supporting a wide range of operating systems. Poorly managed BYOD policies may lead to data breaches, productivity drops (if personal use goes unregulated), and confusion over ownership of business-critical data.

5.4 Discuss quantum computing and green computing.

1. Define quantum computing and explain why it is so powerful.

Suggested Answer: Quantum computing uses quantum-mechanical phenomena such as superposition and entanglement in quantum bits (qubits), allowing them to represent 0 and 1 simultaneously. This architecture offers exponential increases in computing power for certain tasks, like simulating molecules or training advanced AI models. Conventional computers process one state at a time, whereas quantum computers can handle many states concurrently, significantly reducing processing times for highly complex computations. However, quantum hardware is still experimental, expensive, and requires extremely low temperatures to maintain stability.

2. Define and provide examples of green computing.

Suggested Answer: Green computing (or green IT) encompasses designing, producing, using, and disposing of IT equipment in ways that minimize environmental damage. Data centers, which consume large amounts of energy for both processing and cooling, are a major focus. Initiatives include optimizing server utilization with virtualization, migrating to renewable energy to power data centers, and improving cooling efficiency. Electronics recycling programs, sustainable software engineering, and remote work policies (to lessen commuting) are further examples. Collectively, these practices reduce carbon footprints, conserve resources, and address e-waste challenges.

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5.5 Discuss virtualization and cloud computing.

1. Define virtualization and explain its relationship to cloud computing.

Suggested Answer: Virtualization uses software to separate computing resources—servers, storage, networks—from the underlying physical hardware. Multiple virtual machines can run on a single physical server, boosting resource utilization and reducing costs. This transformation is crucial for cloud computing because providers can dynamically allocate and pool virtualized infrastructures on demand, scaling up or down based on client needs. By abstracting physical resources, virtualization makes the elasticity, modularity, and on-demand capabilities of cloud computing possible.

2. Define cloud computing and describe the features of cloud computing.

Suggested Answer: Cloud computing refers to delivering on-demand computer services (e.g., servers, storage, applications) over a network, typically the Internet. Key features include ondemand self-service, where users can provision resources automatically; ubiquitous network access supporting various devices; location-independent resource pooling; rapid elasticity to scale services up or down; and measured service, where usage can be tracked for billing. This model eliminates the need for significant in-house hardware investment and shifts resource management to cloud providers.

3. Describe the three major types of cloud services.

Suggested Answer: Infrastructure as a service (IaaS) grants access to virtualized hardware—servers, storage, and networking—on which organizations can set up their own software.

Software as a service (SaaS) hosts and delivers applications such as CRM or productivity tools via the provider‘s servers; users pay a subscription fee instead of installing it themselves. Platform as a service (PaaS) offers not only the infrastructure but also a development environment and middleware, enabling users to create, test, and deploy their own custom applications more easily.

4. Distinguish between a public cloud, private cloud, and hybrid cloud.

Suggested Answer:

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A public cloud is owned and operated by a third-party provider, making services broadly available over the Internet. A private cloud is dedicated to one organization, giving greater control over data and security, although it may be managed internally or by a third party. A hybrid cloud combines both models, often using private clouds for sensitive or critical workloads while tapping into public clouds for scalability and less sensitive computing tasks. This hybrid approach maximizes flexibility and cost efficiency.

5. Explain how edge computing can enhance cloud computing.

Suggested Answer: Edge computing brings processing power closer to the data source by placing servers at the ―edge‖ of the network, reducing the distance and time for data travel. This cuts network latency, making it ideal for real-time processing needs (e.g., autonomous vehicles, IoT sensors). By handling smaller, localized workloads at the edge, an organization avoids overloading cloud data centers with routine or high-velocity data.

Edge computing thus complements cloud infrastructures by optimizing performance and reducing bandwidth usage.

5.6 Describe contemporary software platforms.

1. Define and describe open-source software and Linux, and explain their business benefits.

Suggested Answer: Open-source software is created and maintained collaboratively by a global community of developers, released under licenses permitting free access to source code. Users can modify and redistribute it under similar terms. Linux, an open-source derivative of UNIX, is a prime example: stable, versatile, and cost-effective, it runs on everything from supercomputers to smartphones. For businesses, open source typically reduces licensing fees and vendor dependence while encouraging rapid innovation and customization. Linux‘s ability to handle diverse workloads and hardware environments makes it especially beneficial for web servers, cloud infrastructures, and AI development.

2. Define Java and HTML5 and explain why they are important.

Suggested Answer:

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Java is an object-oriented programming language designed to run on any hardware and operating system via a Java Virtual Machine. This ―write once, run anywhere‖ principle has made it popular for enterprise and Android development. HTML5 is the latest evolution of Hypertext Markup Language, enabling web pages to incorporate rich multimedia (images, audio, video) without external plug-ins. HTML5 standardizes crossdevice functionality, from desktops to smartphones, and supports offline data storage.

Both Java and HTML5 drive much of the modern web and cross-platform application development.

5.7 Discuss alternative ways of obtaining software.

1. Name and describe the three external sources for software.

Suggested Answer: First, organizations can purchase software packages: commercial solutions typically licensed from vendors such as SAP or Oracle. Second, firms can use cloud-based software services, often called software as a service (SaaS). This approach allows subscribers to access software online, paying monthly or per transaction, without installing the software in-house. Third, software outsourcing lets a firm contract custom software development or maintenance to an external organization—often offshore in regions with lower development costs. Deciding which method to adopt depends on cost, speed, functionality requirements, and the need for customization.

5.8 Describe IT infrastructure for AI. 1. Describe important hardware technologies used in AI applications.

Suggested Answer: AI workloads often involve very large datasets that require GPUs (graphics processing units) or TPUs (tensor processing units) to handle parallel computations efficiently.

GPUs provide hundreds or thousands of cores for simultaneous processing, accelerating tasks such as model training and image recognition. TPUs, pioneered by Google, are specialized to speed up machine learning operations. Additionally, large memory capacity and robust data storage solutions are essential for holding training data, while advanced cooling systems maintain performance and reduce hardware failures.

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2. Describe important software technologies used in AI applications.

Suggested Answer: Most AI implementations rely on robust operating systems (commonly Linux) and specialized programming frameworks or libraries like TensorFlow, PyTorch, or Keras, which simplify machine learning model building and deployment. Open-source repositories such as GitHub enable code sharing and collaboration. Many organizations use cloud-based AI services from Microsoft Azure, Google Cloud, Amazon Web Services, or Salesforce to quickly provision infrastructure and specialized AI tools.

These platforms support tasks like data ingestion, training model pipelines, and deployment to production while offering scalability and often built-in security features.

5.9 Discuss IT infrastructure management challenges.

1. Name and describe the management challenges posed by IT infrastructure.

Suggested Answer: Major challenges include keeping up with changing technology—balances among mobile devices, cloud models, and AI hardware. Firms must scale infrastructure appropriately, devise standards to manage complexity (especially with BYOD), and control costs. Management and governance issues surface because divisions may prefer local autonomy, but centralizing IT can improve security and reduce redundancy.

Companies also need robust policies for data protection and integration. Lastly, executives must ensure TCO remains reasonable while continuously upgrading hardware and software to sustain strategic capabilities.

2. Explain how using a competitive forces model and calculating the TCO of technology assets helps firms make good infrastructure investments.

Suggested Answer: The competitive forces model prompts organizations to align technology expenditures with prevailing market conditions, internal strategic goals, and competitor benchmarks.

By investigating areas like customer needs, future business demands, and competitor infrastructure, the firm clarifies where to invest. Simultaneously, total cost of ownership (TCO) analysis uncovers not just acquisition costs but maintenance, operations, upgrades, support, and space/utilities. This all-in calculation prevents cost overruns and

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identifies opportunities for consolidation or outsourcing. Together, these tools guide balanced, strategic infrastructure decisions that meet performance needs without waste.

Discussion Questions 5.10 Why is selecting computer hardware and software for the organization an important management decision? What management, organization, and technology issues should be considered when selecting computer hardware and software?

Suggested Answer: Selecting hardware and software affects the organization‘s core operations, workflows, and ability to innovate. Management must ensure that chosen technologies align with the firm‘s strategic goals (e.g., scaling to support future growth, handling AI workloads, or enabling remote work). From an organizational perspective, adopting a new platform changes processes, and employees need adequate training and support. On the technology side, firms must consider the hardware‘s compatibility, security, performance, reliability, and vendor policies. Hardware and software choices can lock a company into certain ecosystems or shape costs for years. Managers also need to evaluate TCO, integration requirements with legacy systems, sustainability implications (like energy usage), and security compliance. A poor choice could hamper competitive advantage, cause employee resistance, or incur hidden costs, underscoring the significance of careful decision-making.

5.11 Should organizations use software service providers for all their software needs? Why or why not?

Suggested Answer: Relying wholly on software service providers (e.g., SaaS) can reduce capital expenditures, speed up initial deployment, and offload maintenance. Service providers typically offer continuous upgrades, ensuring users access the latest features. However, adopting external services for every application may not suit all organizations. Some require more control over sensitive data or prefer tailoring software deeply. In-house or specialized software could preserve unique competitive capabilities. Security, regulatory compliance, and integration with proprietary systems might also be concerns. Costs can escalate with large user counts or extensive usage in pay-as-you-go models. Ultimately, the best approach often blends service providers for common applications with

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internally developed or on-premise solutions for mission-critical, highly customized needs.

5.12 What are the advantages and disadvantages of cloud computing?

Suggested Answer: Cloud computing advantages include elasticity—scaling resources up or down as needed—and reduced capital investment in hardware and data center infrastructure.

Businesses pay for what they use, enabling cost-effective access to extensive computing power, storage, and advanced AI services. Maintenance, upgrades, and security patching become the responsibility of the provider, easing the IT burden on the organization. However, disadvantages arise from potential vendor lock-in, where migrating away can be difficult and costly. Security, data sovereignty, and outages in the provider‘s infrastructure can disrupt operations. Firms must also carefully watch usage and sprawl to avoid unexpected expenses. In a hybrid approach, organizations integrate the best parts of cloud computing (flexibility, cost optimization) while retaining critical services in-house for strategic or security reasons.

AI Project 5.13 AI Project: Selecting Information Systems ―You have been hired as a consultant by two friends who want to open a small retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They would like to know what kinds of information systems would be most important for a small retail store with 1 full-time employee and 3 part-time employees. They have a budget of $7000 to spend on information systems hardware, software, and implementation. They would also like to know which information system should be installed first.

Using Microsoft Copilot, Google‘s Gemini, or Chat- GPT, develop a series of prompts to assist you in providing them with this information. Save a copy of your prompts and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: A small retail store typically needs a few essential systems: a point-of-sale (POS) system that can efficiently manage sales, track inventory, and handle customer payments in real time; a basic accounting or finance system to record sales transactions Copyright © 2026 Pearson Education, Inc.

and maintain budgets; and perhaps a simple CRM or marketing tool to gather customer data (e.g., email addresses, special requests) for targeted promotions. The first priority should be implementing a reliable POS system because it directly captures revenue data and tracks inventories. With only four employees, a user-friendly POS with integrated stock management helps keep labor costs low. Off-the-shelf software solutions—some of which are cloud-based—allow fast setup, while requiring minimal IT expertise. They can also subscribe to an online accounting system, such as QuickBooks Online or similar options, for a modest monthly fee. This approach stays within a limited budget, preserves the flexibility to grow or experiment with new products, and can be scaled up later if the business expands.

H2 Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

5.14 Management Decision Problem ―EasyJet is the second-largest airline in the United Kingdom, operating more than 1,100 routes across more than 35 countries. A reliable and robust system for booking and managing reservations while keeping costs low is a key business requirement.

EasyJet‘s legacy reservation system lacked the capability for customers to select their seats on a given flight when they made their reservations online. Adding this new service would require investing in an additional data center and software and modifying EasyJet‘s IT infrastructure. How could cloud computing services provide a solution?

What management, organization, and technology factors and management decisions need to be considered when designing the solution?‖ Suggested Answer: Cloud computing services can provide EasyJet with on-demand scalability to accommodate seat-selection functionality and large spikes in booking volume, without requiring a full data center build. Management aspects include evaluating the cost model (pay-as-you-go or dedicated infrastructure) and negotiating SLAs for 24/7 availability, as customers expect uninterrupted access. On the organizational side, employees need training to integrate cloud-based reservation processes into daily operations, and the company‘s IT governance model should adapt to third-party hosting.

From a technology perspective, seat-selection modules must reliably interface with EasyJet‘s main reservation platform, possibly through APIs. Proper data protection, system security, and compliance with industry and government regulations (e.g., data privacy laws) must be built into the new architecture. By offloading routine maintenance

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to a reputable cloud provider, EasyJet can free its IT staff to focus on future automation or expansions, positioning the airline to respond rapidly to changes in customer service demands.

5.15 Using a Spreadsheet to Evaluate Total Cost of Ownership (TCO) ―Software skills: Spreadsheet formulas, SUM Business skills: Technology pricing This project provides an opportunity to determine the total cost of ownership (TCO) of investing in new PC desktop systems over a three-year period. You‘ll use spreadsheet software to compare the total three-year cost of purchasing and maintaining new PC desktop systems with Windows 11 Pro and Microsoft 365 Business for 40 employees.

Use your spreadsheet software to calculate TCO for investing in 40 new desktop productivity systems over a three-year period. The cost of Windows Pro is included in the desktop price. Management wants you to compare the TCO of HP and Dell desktop systems. Complete the worksheet by entering and calculating the values for one-time and recurring costs. Calculate the TCO over a three-year period and the TCO per user.

What other factors should the company consider besides cost in determining the PC system option to select? Explain your answer.‖ Suggested Answer: Creating a spreadsheet with line items for acquisition (hardware, OS software), installation, training, support, maintenance, and upgrades reveals the true costs. For example, hardware might represent only 20% of TCO. The organization should add real estate costs for storing the machines, utilities, and possible downtime expenses.

Summing these up over three years helps clarify each option‘s cost-effectiveness. After comparing alternatives (e.g., HP or Dell), leadership may standardize by using one vendor to reduce variability and lower support overhead. Finally, the TCO calculation guides decisions on whether to buy additional warranty coverage or skip certain ―niceto-have‖ features, aligning technology spending with budget constraints.

5.16 Using Online Research Tools to Create a Budget ―Software skills: Online research tools Business skills: Researching transportation and lodging costs

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The Foremost Composite Materials Company is planning a two-day sales conference for October 19–20, starting with a reception on the evening of October 18. The conference consists of all-day meetings that the entire sales force, numbering 120 sales representatives and their 16 managers, must attend. The company needs a hotel room for each sales representative and two common meeting rooms, one large enough to hold the entire sales force plus a few visitors (200 total) and the other able to hold half the sales force. Management has set a budget of $330,000 for the representatives‘ room rentals. The company would like to hold the conference in either Miami or Marco Island, Florida, at a Hilton- or Marriott-owned hotel.

Use the Hilton and Marriott websites to select a hotel in whichever of these cities would enable the company to hold its sales conference within its budget and meet its sales conference requirements. Then locate flights arriving the afternoon prior to the conference. Your attendees will be coming from Los Angeles (51), San Francisco (30), Seattle (22), Chicago (19), and Pittsburgh (14). Determine the costs of each round-trip airline ticket from these cities. When you are finished, create a budget for the conference. The budget will include the cost of each airline ticket and the room cost.‖Suggested Answer: Students would start by researching group room rates, meeting room options, and flight costs from Los Angeles, San Francisco, Seattle, Chicago, and Pittsburgh. Putting these details into a spreadsheet reveals the total cost for lodging, conference space, flights, and additional fees (taxes, resort fees). An important factor is seat availability and group booking discounts for flights. They must compare quotes from different hotel chains in both Miami and Marco Island to see if the total meets the $330,000 budget. This exercise highlights real-world budgeting steps: validating flight routes, comparing room blocks, and factoring in all-inclusive vs. pay-per-item rates.

5.17 Collaboration and Teamwork Project: Evaluating Server and Mobile Operating Systems ―Form a group with two or more of your classmates. Choose server or mobile operating systems to evaluate. If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: A collaborative approach allows team members to gather data on each operating system‘s core features, security patches, supported hardware, market share, ease of management, and cost of ownership. For server OS, the group might compare Linux distributions (e.g., Ubuntu Server or Red Hat) with Windows Server for enterprise

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deployment. For mobile OS, discuss iOS vs. Android in terms of app ecosystems, hardware control, or security. Leveraging shared docs fosters real-time collaboration, letting everyone contribute research findings and reflections on performance, licensing, integration possibilities, and how each OS aligns with business goals. The final presentation can address best-fit scenarios, offering recommendations for particular industries or use cases.

Suggested Assignments 1. Assign each student or small group to research one leading cloud computing provider. Have them investigate that provider‘s pricing, service portfolio, and service level agreements. Ask them to outline key lessons regarding what organizations must consider before moving infrastructure to the cloud.

2. Ask students to write a proposal for improving green computing initiatives at a local organization, focusing on data centers, hardware purchases, e-waste disposal, or productivity software selection. Encourage them to discuss the business and environmental gains of these proposals.

3. Have students conduct a TCO analysis for upgrading a small business‘s personal computers or moving to virtual desktops in a cloud environment. They should present their cost models, show the break-even points, and discuss any hidden costs.

4. Assign a mini-project where small groups interview a local firm or campus department about its BYOD policy. Students should evaluate the impacts on security, costs, and productivity, and then make policy recommendations based on the textbook‘s analysis.

5. Ask students to plan a simple mobile app design for an on-campus service (e.g., library seat availability, campus transit). Their assignment is to identify the required cloud computing resources, any network constraints, plus data security considerations. This helps them apply knowledge of mobile apps, data management, and cloud integration in a practical scenario.

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Chapter 6 – Instructor Manual Chapter Summary This chapter addresses the essential aspects of managing data in organizations, beginning with how a traditional file environment leads to data redundancy, data inconsistency, and a lack of flexibility. It discusses how database management systems (DBMS) and relational database technologies create a more efficient structure for storing and managing corporate data. The chapter then highlights best practices for designing well-structured relational databases, focusing on normalization and ensuring referential integrity. It also explores contemporary solutions, such as non-relational (NoSQL) databases, cloud databases, and the benefits of blockchain for secure and transparent transactions. Readers learn about ―big data,‖ business intelligence frameworks like data warehouses and data marts, and advanced data analysis tools, including data mining, text mining, and web mining. The chapter emphasizes how data governance policies help organizations maintain data accuracy and consistency. Finally, it underscores how these concepts can enhance one‘s career by providing the necessary background to work effectively with organizational data.

Learning Objectives These are the chapter objectives: 6.1 Describe traditional file environment data management problems.

6.2 Describe DBMS and relational DBMS capabilities.

6.3 Discuss relational database design principles.

6.4 Describe non-relational, cloud, and blockchain database capabilities.

6.5 Describe tools used to analyze data in databases.

6.6 Discuss data governance, data quality assurance, and data management.

6.7 Understand how the information in this chapter can help your career.

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MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what's happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 6.1 Describe Traditional File Environment Data Management Problems   

Highlight how computer systems organize data in a hierarchy, progressing from bits and bytes to fields, records, files, and databases.

Emphasize the problems created by scattered or redundant data, such as data inconsistency, poor security, and high maintenance costs.

Illustrate program–data dependence, along with inflexibility and lack of ability to share data across multiple applications.

6.2 Describe DBMS and Relational DBMS Capabilities 

Explain the purpose and function of a DBMS in centralizing and managing data across the organization.

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 

Describe relational databases, including tables (relations), rows (records), columns (fields), primary keys, and foreign keys.

Introduce the three basic operations of a relational DBMS (select, join, project) and how they help retrieve and combine data.

6.3 Discuss Relational Database Design Principles   

Outline the difference between a logical (conceptual) and a physical design of a database.

Present the concepts of normalization and referential integrity, demonstrating how they reduce data redundancy and maintain consistent relationships.

Show how entity-relationship diagrams map out relationships among database entities, ensuring a stable design.

6.4 Describe Non-Relational Database, Cloud Database, and Blockchain Capabilities   

Compare traditional relational databases to non-relational (NoSQL) approaches used for large, flexible data sets.

Discuss cloud databases, their managed services (e.g., AWS, Oracle Cloud, Microsoft Azure), and benefits in scaling and cost-effectiveness.

Introduce blockchain as a distributed database providing security, transparency, and tamper-proof transaction records.

6.5 Describe Tools Used to Analyze Data in Databases   

Explain big data and its ―3Vs‖ (volume, variety, velocity) plus value and veracity.

Introduce data warehousing, data marts, and data lakes for comprehensive data storage and agile analysis.

Cover OLAP for multidimensional data analysis, data mining for discovering hidden patterns, and other techniques like text mining, web mining, and AI-driven solutions.

6.6 Discuss Data Governance, Data Quality Assurance, and Data Management 

Define data governance as the set of policies for sharing, acquiring, and maintaining information consistently across the enterprise.

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 

Emphasize the necessity of data quality audits and data cleansing to correct errors and ensure data reliability.

Show how AI can automate classification, cataloguing, security, integration, and analysis to optimize data management processes.

6.7 Understand How the Information in This Chapter Can Help Your Career   

Remind students that organizations rely on properly structured and wellmanaged data for key decision-making and operational success.

Stress the importance of learning database concepts, data visualization, and data analytics skills relevant to multiple career paths.

Highlight how data management experience, including mastery of data governance and quality assurance, bolsters career growth.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.                   

Attribute (6.1) Bit (6.1) Blockchain (6.4) Byte (6.1) Cloud database (6.4) Data analytics platform (6.5) Data cleansing (6.6) Data definition (6.2) Data dictionary (6.2) Data governance (6.6) Data inconsistency (6.1) Data lake (6.5) Data manipulation language (6.2) Data mart (6.5) Data mining (6.5) Data quality audit (6.6) Data redundancy (6.1) Data warehouse (6.5) Database (6.2)

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                        

Database management system (DBMS) (6.2) Database server (6.5) Distributed database (6.4) Entity (6.1) Entity-relationship diagram (6.3) Field (6.1) File (6.1) Foreign key (6.2) Hadoop (6.5) In-memory computing (6.5) Key field (6.2) Non-relational database management system (6.4) Normalization (6.3) Online analytical processing (OLAP) (6.5) Primary key (6.2) Program-data dependence (6.1) Query (6.2) Record (6.1) Referential integrity (6.3) Relational database (6.2) Relational DBMS (6.2) Sentiment analysis (6.5) Structured Query Language (SQL) (6.2) Text mining (6.5) Web mining (6.5)

Case Studies Opening Case Study: Australia’s Royal Flying Doctor Service Flies with Oracle Autonomous Database Summary: Australia‘s Royal Flying Doctor Service (RFDS) operates in remote outback regions where Internet connectivity and on-site care are often limited. It previously relied on manual patient records that were difficult to update and share. With Oracle Cloud Infrastructure and Oracle Autonomous Database, RFDS consolidated patient data, enabled offline access via replication tools, and significantly improved speed and

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accuracy in patient care—resulting in more efficient operations and enhanced medical decision-making.

Case Study Questions and Suggested Answers: 1. What problems did using a manual patient record system create for RFDS? Suggested Answer: RFDS employees struggled with having data stored in paper forms that were both time-consuming and prone to error. They needed to fill up to 600 data fields manually, and then re-enter those details into standalone systems—or maintain them on paper—making it difficult to share updated patient data. This fragmentation meant that healthcare staff could be working with incomplete or outdated data, especially in remote areas with shaky internet connections. The end result was an elevated risk for poor patient outcomes due to a lack of timely, accurate records.

2. How did switching to Oracle Autonomous Database improve how RFDS delivered healthcare?

Suggested Answer: By moving to Oracle‘s cloud platform, RFDS established a single, enterprise-wide system for consolidating all patient records in real time. Oracle Autonomous Database automated routine maintenance, reducing the database administration workload as well as costs. The addition of Oracle GoldenGate supported offline replication, ensuring that patient data entered using a tablet in the outback would synchronize once connectivity was restored. With high-performance data access, RFDS staff could make faster, more informed decisions, leading to improved patient treatment and efficiency.

Spotlight on Technology Case Study: Facial Databases: Do You Know Who’s Using Your Face?

Summary: Facial databases store countless images used for facial recognition technology, commonly applied in areas like law enforcement and customer authentication. Although they enhance security and aid investigations, concerns arise about privacy infringement, misidentification, and the unauthorized use of personal biometric data. Many face datasets are created by scraping social sites or surveillance footage without consent, prompting questions about ethical data handling and regulation worldwide.

Case Study Questions and Suggested Answers:

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1. What are the benefits of using facial databases? How do they help organizations improve operations and decision making? What problems can they help solve?

Suggested Answer: Facial databases can accelerate real-time facial recognition for security checkpoints, law enforcement, and daily consumer interactions such as smartphone access. Organizations use them to identify suspect individuals more quickly and reliably, reduce fraud, and improve customer service with fast authentication. The technology can help solve large-scale policing issues and even track missing persons.

In corporate settings, it streamlines operations when integrated with security systems, replacing or supplementing traditional passkeys. These benefits reduce human error and save time by automating identity checks.

2. What are the disadvantages of facial databases?

Suggested Answer: While useful, facial databases pose challenges including privacy breaches, unauthorized data sharing, racial or gender bias, and the risk of misidentification. Their accuracy decreases in low lighting, obscure angles, and nonideal conditions. False positives can lead to wrongful arrests, denied services, or broader discrimination. Additionally, breaches of biometric data are especially harmful because one‘s facial attributes cannot simply be changed like a password. The rapid proliferation of face databases often happens without user consent, introducing ethical and legal complications.

3. Should businesses and individuals be allowed to use facial databases? Why or why not?

Suggested Answer: Opinions differ, but a balanced approach is likely beneficial.

Proponents argue that facial databases can reduce fraud and crime, and improve user experiences with efficient authentication. However, the right to privacy and autonomy is significant. Strict regulations and enforceable data protection standards are essential to mitigate misuse. Without legal oversight, businesses or individuals could collect images indiscriminately and track people without their permission. Whether to allow or restrict these databases hinges on maintaining personal freedoms while capitalizing on the technology‘s legitimate advantages.

Chapter Case Study: Pursuing Sustainability with Blockchain Summary:

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Unilever, a major consumer goods company, is applying blockchain to track its supply chain for palm oil, reducing deforestation and improving sustainability. Blockchain records transactions in a tamper-proof ledger, giving stakeholders visibility and assurance about sources, production processes, and certifications. This technology supports environmental objectives, including regulatory compliance. However, it faces challenges like scalability, a lack of standardization, and coordination with suppliers.

Case Study Questions and Suggested Answers: 1. Why is supply chain traceability so important for sustainability?

Suggested Answer: Supply chain traceability helps address environmental and social impacts associated with raw materials, from deforestation to labor practices. Companies like Unilever need accurate, real-time data on how ingredients like palm oil are sourced and processed. Traceability ensures consumers and regulators can trust a company‘s claims regarding ethical practices, greenhouse gas reductions, or fair labor. Ultimately, it underpins responsible business operations and upholds brand reputation in an era of heightened consumer and governmental scrutiny.

2. Why is blockchain a useful technology for traceability?

Suggested Answer: Blockchain‘s distributed ledger is secure, tamper-proof, and transparent, recording each transaction detail in a way that cannot be retrospectively altered. Once a new block is verified by the network, the transaction is there permanently. This creates a single source of truth across all involved parties. For traceability, it means companies can confidently track the movement and characteristics of goods (e.g., palm oil) from source to shelf, ensuring sustainability requirements are met.

3. What management, organizational, and technology challenges should Unilever anticipate as it deploys blockchain for supply chain management?

Suggested Answer: Unilever will need to align internal processes and structure so that data is captured consistently, with staff and suppliers trained on how to record new events in the ledger. Organizationally, it must cultivate trust and buy-in from all partners, many of whom are unaccustomed to sharing data openly. Integrating blockchain with existing information systems requires technical know-how, plus standardization and interoperability solutions. On the management side, leaders must coordinate diverse stakeholders under new governance rules while ensuring data quality and accurate tracking.

4. Should all businesses use blockchain? Explain your answer.

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Suggested Answer: Blockchain can offer remarkable benefits where validity, trust, and permanence of records are priorities—particularly in finance, logistics, and high-stakes supply chains. However, it may not be the best fit for smaller organizations or simple processes. Implementing a distributed ledger can be costly, require specialized expertise, and necessitate rethinking data standards. Each organization should weigh the value of using blockchain against the complexity of setup, along with any regulatory or market demands for heightened transparency.

Review Questions Below are the Review Questions exactly as they appear in the text, followed by suggested answers.

6.1 Describe traditional file environment data management problems.

1. List and describe each of the components in the data hierarchy.

Suggested Answer: The data hierarchy proceeds from bits to bytes, fields, records, files, and, ultimately, databases. A bit is the smallest unit in this hierarchy and can be 0 or 1. A collection of bits forms a byte, representing a single character like a letter or number. A field is a grouping of related characters, representing an attribute such as an employee‘s name or ID. Multiple fields describing one entity form a record, which can include numerous attributes. When similar records are grouped together, they form a file, for instance, all employee records. Finally, an organization can combine multiple files to create a single database. By structuring data in this hierarchical manner, it becomes more organized for various processing tasks. An understanding of the hierarchy ensures data can be easily located, updated, and retrieved. It also provides the foundation for designing relational databases, since fields correspond to columns, records to rows, and files to tables within the database environment.

2. Define and explain the significance of entities, attributes, and key fields.

Suggested Answer: An entity refers to a person, place, thing, or event on which the organization needs to store and maintain data. Attributes are the specific details or characteristics describing an entity—for instance, a ―Student‖ entity might have attributes for name, ID number, phone number, or major. Key fields, sometimes called key attributes, identify a single record in a data set so it can be retrieved or managed without confusion. A primary key

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is a special staff- or system-chosen field that uniquely identifies the record. For example, Student_ID can be a key field for a student record, ensuring no duplication. These concepts create an underlying structure so that data can be accurately linked in relational database tables, enabling processes ranging from simple lookups to complex queries. Key fields also help prevent errors and data redundancy, allowing for clear, consistent references in enterprise systems.

3. List and describe the problems of the traditional file environment.

Suggested Answer: First, there is an issue of data redundancy, where data are repeated in multiple files and can become inconsistent if changes are not uniformly applied. This leads to data inconsistency, wherein the same piece of data might have varying values in different files. A second problem is program–data dependence, meaning updates to application software require changes to the underlying data. The traditional file environment also proves inflexible. Generating ad hoc reports is time-consuming, requiring specialized programming each time. Additionally, security suffers because it is difficult to track who accesses or modifies which piece of information among the scattered systems. Lastly, data sharing remains limited, impeding a holistic view of the organization‘s resources.

Collectively, these problems diminish the organization‘s ability to make well-informed, efficient decisions.

6.2 Describe DBMS and relational DBMS capabilities.

1. Define a database and a database management system (DBMS).

Suggested Answer: A database is a collection of data organized for efficient storage, retrieval, and updating.

Rather than storing data in separate files for each application, it centralizes the data so that different parts of the organization can access consistent information. A Database Management System (DBMS) is software enabling the creation and operation of databases. It serves as an interface between application programs and the physical data files, letting users and programs retrieve or manipulate data without needing to understand how data is structured on disk. This separation of logical and physical data views reduces program–data dependence. With a DBMS, organizations can better control data redundancy, enforce data integrity, and administer security.

2. Name and briefly describe the capabilities of a DBMS.

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Suggested Answer: One key capability is data definition: administrators specify database structure, including tables, fields, and relationships. This ensures consistency when data are added or removed. A second capability is the data dictionary, which stores metadata such as field names, sizes, and permissible data types, providing a single reference point. A third major feature is the data manipulation language (DML)—for example, SQL—which supports tasks like inserting, updating, and querying data. Together, these features simplify data management and reduce the complexity of maintaining large-scale, multiuser databases. Beyond these, modern DBMS often include reporting tools, security mechanisms, backup utilities, and capabilities that streamline data administration and auditing.

3. Define a relational DBMS and explain how it organizes data.

Suggested Answer: A relational DBMS (RDBMS) arranges data into two-dimensional tables called ―relations,‖ with rows (often referred to as records or tuples) and columns (fields or attributes). Each row holds data about a single instance of an entity, such as a supplier or product, while each column stores a specific attribute about that entity. Tables in a relational database can be linked by a common field. A primary key uniquely identifies each row, and a foreign key in one table references the primary key of another table to create relationships. This design allows for flexible queries and minimal duplication of data. Since it is straightforward to combine data from multiple tables by matching shared data elements, relational databases have become a standard in many organizations for structured data storage and retrieval.

4. List and describe the three operations of a relational DBMS. Suggested Answer: The select operation retrieves rows that meet specified criteria. For example, it can extract records of sales where volume exceeds a certain threshold. The join operation relates two or more tables by matching their common fields, letting users view related data as if they reside in one table. Finally, the project operation gathers specific columns to create new tables with only the attributes needed for a given analysis. Used in combination, these operations allow analysts or application programs to find, merge, and isolate data quickly and flexibly. By separating how data is organized physically from how it is perceived logically, the relational DBMS meets a wide range of organizational requirements.

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6.3 Discuss relational database design principles.

1. Define and describe normalization and referential integrity, and explain how they contribute to a well-designed relational database.

Suggested Answer: Normalization is a process for cleaning up data models by dividing complex and large tables into smaller, more manageable ones, eliminating redundant data. This practice avoids insertion, deletion, and update anomalies. For example, storing supplier addresses repeatedly raises the risk of storing them inconsistently. Referential integrity ensures that relationships between tables remain consistent—for instance, if a PART record references a certain supplier number, that supplier must exist in the SUPPLIER table. These principles ensure accurate, consistent data, prevent anomalies, and reduce unnecessary repetition, leading to efficient query performance. Well-normalized, properly linked tables mean the database can adapt more easily to changing business needs.

2. Define and describe an entity-relationship diagram and explain its role in database design.

Suggested Answer: An entity-relationship (E-R) diagram illustrates how entities (e.g., SUPPLIER, PART) connect to each other within a database. Each box in the diagram represents an entity, and lines indicate associations (one-to-one, one-to-many, or many-to-many). The diagram explicitly shows which fields function as primary and foreign keys, and how those fields tie tables together. In design projects, an E-R diagram forces participants to clarify data definitions and relationships. It is a collaboration tool for technical staff and system users to confirm the logic of data structures. Pinpointing relationships early reduces future rework and ensures that the final physical database meets organizational information needs.

6.4 Describe non-relational, cloud, and blockchain database capabilities.

1. Define and describe the capabilities of non-relational databases and cloud databases.

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Suggested Answer: Non-relational databases, often referred to as NoSQL, move away from rigid tablebased structures, using more flexible data models to handle large volumes of unstructured or semi-structured data. They scale horizontally across distributed networks of computers, operating effectively for real-time analytics, social media data, or sensor data. They are excellent at rapid reads and writes, such as in gaming or ecommerce. Cloud databases are hosted and maintained by service providers, letting businesses leverage a pay-as-you-go model. They offer convenience, reduced operational burden, and potentially massive elasticity. Examples include Amazon RDS, Oracle Cloud Database, and Microsoft Azure SQL. This approach minimizes up-front hardware costs and can make advanced DBMS features available without large capital investments in on-premises infrastructure.

2. Define blockchain, explain how it works, and describe why it is helpful for managing data.

Suggested Answer: Blockchain is a distributed ledger system where data are stored in linked ―blocks‖ and validated across a peer-to-peer network. Each block typically contains a timestamp, a cryptographic hash of the previous block, and transaction data. Once verified, blocks cannot be tampered with retroactively. This immutability fosters trust among participants, minimizing reliance on a central authority. In data management, blockchain‘s advantage resides in streamlining and securing transactions. It enhances traceability—an especially critical requirement in supply chains where multiple nodes and organizations need to share and verify information in a transparent manner.

6.5 Describe tools used to analyze data in databases.

1. Define big data and describe the technologies for managing and analyzing it.

Suggested Answer: Big data refers to data sets too large or complex for traditional DBMS to process efficiently, often characterized by volume, variety, and velocity—plus value and veracity.

Technologies that handle big data include non-relational databases (NoSQL), Hadoop, data lakes, cloud storage services, and specialized data analytics platforms. Hadoop is a flagship open-source framework that distributes stored data across multiple servers (via HDFS) and processes large data sets in parallel (via MapReduce). Data lakes store

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raw, often unstructured data in native formats for flexible retrieval and analysis. Inmemory computing frameworks such as Spark or SAP HANA let large data sets be analyzed much faster than disk-based methods.

2. Describe the relationship between AI and big data.

Suggested Answer: AI systems, particularly machine learning, thrive on large quantities of varied data for model training. Big data streams supply that volume, providing a broad foundation for spotting patterns, refining algorithms, and boosting predictive accuracy. In turn, AI techniques can uncover relationships in massive data sets that humans or simpler statistical methods might miss. Natural language and image processing further expand the range of data—like social media feeds or scanned documents—that can be analyzed. This synergy drives deeper business insights, powering real-time recommendation engines, sentiment analysis, fraud detection, and other advanced analytic tasks at scale.

3. List and describe the components of a contemporary business intelligence technology infrastructure.

Suggested Answer: First, data warehouses consolidate historical and current data from various operational and external systems, providing a consistent, standardized data store. Data marts are smaller, specialized repositories focusing on a specific business need or department.

Data lakes store large volumes of mostly unstructured or raw data until further processing is determined. Hadoop is an open-source framework that manages distributed processing and storage, valuable for big data. In-memory computing (e.g., Apache Spark, SAP HANA) uses RAM to help speed queries and complex business calculations. Finally, data analytics platforms layer on top of these infrastructure components, offering specialized tools and preconfigured solutions for data visualization, advanced analytics, and AI. 4. Describe the capabilities of online analytical processing (OLAP).

Suggested Answer: OLAP enables users to slice, dice, and pivot data interactively, viewing it from multiple dimensions (e.g., region, product line, or time). This multidimensional approach contrasts with traditional queries, which might yield a limited, two-dimensional view.

With OLAP cubes, decision makers can easily compare numbers—for example, actual

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vs. forecasted sales—across regions and time periods, or run trend analyses. Because OLAP multidimensional data is pre-aggregated, summarizing large volumes is quick, letting analysts produce real-time insights for strategic or operational needs.

5. Define data mining, describing how it differs from OLAP and the types of information it provides.

Suggested Answer: Data mining is regarded as a discovery-driven approach, revealing hidden patterns and relationships in large data sets without an initial hypothesis—whereas OLAP often starts with a specific question or comparison. Data mining can uncover associations (e.g., product bundles), sequences (events linked over time), classification (group membership based on patterns), clustering (grouping data where classes are not predetermined), and forecasting (predicting future values based on historical trends).

These insights are valuable for tasks ranging from targeted marketing campaigns to predictive maintenance in manufacturing.

6. Explain how text mining and web mining differ from conventional data mining.

Suggested Answer: Text mining focuses on unstructured, natural language data such as emails, social media posts, or call-center transcripts. Tools extract key concepts, relationships, or sentiments, thereby transforming freeform text into structured insights. Web mining applies data mining methodologies to the structure, content, and usage of web data. It can analyze how visitors navigate a website, identify relationships among different web pages, and examine user behavior or social network patterns. In contrast, conventional data mining is often performed on structured data in relational tables or data warehouses. Text and web mining both expand the scope of possible data sources and glean insights unavailable from purely numeric data.

7. Describe how users can access information from a company‘s internal databases through the web.

Suggested Answer: A typical setup involves a user connecting via a web browser or mobile app to a web server, which processes the incoming request. That request is passed to an application server or middleware layer that translates it into a database query (often SQL). The DBMS returns results to the application server, which in turn formats the data for the user‘s browser or app. This setup leverages standard HTML, web protocols, and

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sometimes application programming interfaces (APIs), masking the complexity of direct database interactions. The approach also scales easily, allowing many simultaneous requests and enabling organizations to share data widely without direct file-based sharing.

6.6 Discuss data governance, data quality assurance, and data management.

1. Define data governance and explain how it helps organizations manage their data.

Suggested Answer: Data governance is a system of policies, procedures, and guidelines for acquiring, standardizing, securing, using, and sharing data in an organization. It clarifies how data integrity is upheld and who may modify or view sensitive information. A robust governance framework ensures that disparate business units do not undermine data quality by defining multiple standards for the same dataset. Examples include deciding how employee records are maintained across HR, payroll, and benefits. By establishing explicit rules, data governance promotes consistency, prevents misuse, and locks in accountability for data handling.

2. List and describe the most important data quality problems.

Suggested Answer: Data inaccuracy is a principal problem, where some records contain incorrect values due to human typing errors, inconsistent coding, or duplicative entries. An out-of-date record is another challenge, such as when addresses or phone numbers are not updated as people relocate. Data redundancy can appear in siloed systems that do not cross-verify changes, leading to multiple versions of the same item. When external web entries feed directly into enterprise systems, the likelihood rises for invalid or incomplete data. Lastly, hidden data issues—like inconsistent naming conventions or missing fields—can hamper data analytics. These quality concerns reduce the reliability of any downstream processes or decisions.

3. List and describe the most important tools and techniques for ensuring data quality.

Suggested Answer:

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First, enterprise-wide data standards set uniform definitions for key fields and mandate consistent validation rules, preventing mismatches. Second, thorough database design (including normalization) minimizes duplicates and inconsistencies. Third, data quality audits involve structured surveys, random checks, or user feedback to discover error rates and data completeness. Fourth, data cleansing identifies and corrects or removes any syntactically or logically incorrect entries—sometimes automatically—and unifies data under consistent formats. AI-based systems can also detect anomalies in real time, reducing the chance of flawed data being used in analytics. In combination, these measures build trust in the organization‘s information.

4. Describe how AI can improve data management.

Suggested Answer: AI automates many labor-intensive aspects of data oversight, such as detecting duplicate entries, classifying document types, or identifying security threats. Machine learning algorithms can compare records across different databases, spot anomalies, and automatically unify or cleanse data. Advanced natural language processing methods can parse unstructured text—like contracts or social media—to integrate that content into an organization‘s analytics platform. In security, AI helps predict suspicious activity, mitigating the risk of data breaches. For integration, AI-based mastering systems can remain more agile than static rule-based processes, saving time and improving consistency. AI thus enhances data cataloguing, lowers downtime, and increases accuracy, alleviating human staff of repetitive tasks.

Discussion Questions 6.7 It has been said, “There is no bad data, just bad management.”

Discuss the implications of this statement.

Suggested Answer: This statement highlights that the root cause of ―bad data‖ is typically a lack of oversight, inadequate policies, and gaps in procedures rather than the data itself. In a wellmanaged organization, each stage of data handling—from entry to storage and retrieval—incorporates validation rules, user training, and governance oversight to ensure data accuracy. If data is incomplete, inconsistent, or out of date, the real fault lies in how it is collected, updated, or integrated. For example, errors creep in when employees in different business units define the same data elements differently, or when older records are never purged or updated. Good data management invests in

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frameworks that correct or prevent erroneous entries, ensuring that data sets remain reliable. Without these measures, ―bad data‖ undermines analytics and day-to-day operations, leading to poor decisions and inefficiencies. Thus, emphasizing data governance is crucial because it addresses the structural reasons why bad data persists.

6.8 To what extent should end users be involved in the selection of a database management system and database design?

Suggested Answer: End users bring invaluable insight into real-world business processes and the data they need for daily tasks. Their involvement early on ensures that the final system meets functional requirements, including data fields, search and reporting capabilities, and interfaces. For instance, marketing might need robust analytics that slice by demographics, while manufacturing might focus on part IDs, safety records, and supplier performance. By contributing to the requirements phase, end users clarify the meaning and relevance of data attributes, reducing the likelihood of redesign later.

However, user feedback must be balanced with technical feasibility, cost constraints, and data governance standards. IT staff typically guide decisions on matters such as platform security or DBMS performance requirements, but user perspectives prevent a purely technical solution that fails to address day-to-day workflows. Overall, actively involving functional stakeholders is essential to ensure buy-in, usability, and data completeness.

6.9 What are the consequences of an organization not having an information policy?

Suggested Answer: Without a clear information policy, decisions about data ownership, sharing rights, and access tend to be made haphazardly, leading to confusion and inconsistencies across departments. Absent policy guidelines, teams may duplicate efforts, define data points differently, or fail to update records in a standardized manner. This fosters data silos and inconsistent data definitions, undermining data quality. Security also suffers because no authoritative set of procedures dictates who may view or change sensitive information. When crises arise—like a data breach or urgent system integration—there may be no swift means to reconcile conflicting data practices. In the long term, these problems can result in non-compliance with industry regulations, hamper analytics or business intelligence efforts, and corrode trust in the data. Clear guidelines for how

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information travels across the organization, who can alter it, and how it is monitored are fundamental to stable and secure operations.

AI Project 6.10 AI Project: Performing Sentiment Analysis ―You have been asked to analyze online reviews of a nearby Italian restaurant to see if there is anything it can do to improve the customer experience and attract more customers. Use Microsoft Copilot, Google Gemini, or ChatGPT to perform a sentiment analysis of the following review for the restaurant: ―The food we ordered came out at once, with everyone passing dishes to the ends of the table to ensure each of us was able to try everything we ordered. The most memorable dishes were ravioli with spinach and cheese, linguine with seafood, and veal marsala. The restaurant gets very busy on weekends, so the service is slower at that time. When the restaurant is fully occupied, the noise level can be high. Outdoor dining is available during the warmer months but will be too cold to enjoy in winter. I personally would only come here for special occasions or a holiday because it‘s quite expensive.

There is free parking on Sundays and holidays. I recommend making reservations or arriving at the restaurant before it opens so you don‘t have to wait.‖ Then answer the following questions:    

State how the sentiment analysis has evaluated the review. Is the overall impression positive, negative, or somewhere in between?

Is there anything the restaurant can do to improve the customer experience?

Is there anything the restaurant is doing that increases negative sentiment?

What changes would you recommend for the restaurant?‖

Suggested Answer: Overall, the review conveys a mostly positive sentiment about the taste of the food— especially the ravioli, seafood linguine, and veal marsala—while pointing out areas for improvement. The AI engine might detect a favorable tone regarding the flavors, variety, and memorable quality of dishes; however, the mention of ―quite expensive‖ and ―service is slower‖ at busy times would reduce the sentiment score slightly, reflecting mixed feelings. The review also highlights that weekend congestion leads to high noise levels, which can be off-putting for customers seeking a relaxed atmosphere.

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To enhance customer experience, the restaurant could better manage peak times, perhaps by increasing staffing or offering a reservation-only policy during weekends to reduce wait times and crowding. Since the cost is noted as high, introducing selective promotions or a loyalty program might mitigate the negative perception. The mention of free parking is a plus, but ensuring adequate marketing around that and highlighting any seasonal dining experiences would help. Overall, sentiment analysis shows a positive impression with a few caveats that management can address through strategic measures.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

6.11 Management Decision Problem ―Your industrial supply company wants to create a data warehouse from which management can obtain a single, corporate-wide view of critical sales information to identify best-selling products, key customers, and current sales trends. Your sales and product information are stored in several systems: a divisional sales system running on a UNIX server and a corporate sales system running on an IBM mainframe. You would like to create a single, standard format that consolidates these data from both systems.

Review the proposed format along with sample files from the two systems that would supply the data for the data warehouse, which can be found in the MIS18_Project 6.11_Student File. Then answer the following questions:  

 

What business problems are created by not having these data in a single, standard format?

How easy would it be to create a database with a single, standard format that could store the data from both systems? Identify the problems that would have to be addressed.

Should the problems be solved by database specialists or general business managers? Explain.

Who should have the authority to finalize a single, companywide format for this information in the data warehouse?‖

Suggested Answer: Each department or division storing data differently creates major inconsistencies when trying to analyze across multiple systems. This duplication or misalignment of data fields can lead to partial or inaccurate insights on product performance or customer

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profitability. Converting data into a single, standard format is challenging because files from various platforms (UNIX vs. mainframe) may have dissimilar data types, field lengths, or naming conventions. IT teams must address technical hurdles (e.g., redesigning data structures, performing field mappings) and also collaborate with business stakeholders to confirm that structured data truly reflects day-to-day operations. In most organizations, database experts handle the design, but business managers must specify precise data definitions, usage contexts, and reporting requirements. As for finalizing the single, companywide format, it should be determined jointly. A cross-functional data governance committee is well-suited to weigh all departments‘ needs, ensuring the unified format enables accurate enterprise-wide analysis. This structure prevents siloed decisions and locks in accountability at the highest level.

6.12 Building a Relational Database for Inventory Management ―Software skills: Database design, querying, and reporting Business skills: Inventory management In this exercise, you will use database software to design a database for managing inventory for a small business. Morgan‘s Skateboard Shop, located in Santa Cruz, California, sells skateboards for various skateboarding styles, including freestyle skateboarding, street skateboarding, park skateboarding, downhill skateboarding, and cruising. Currently, Morgan‘s purchases skateboards from three suppliers but plans to add new suppliers in the near future. Using the information found in the MIS18_Project 6.12 Student File, build a simple relational database to manage information about Morgan‘s suppliers and products.

Once you have built the database, perform the following activities. 





Prepare a report that identifies the five skateboards that are the most expensive.

The report should list the skateboards in descending order from most expensive to least expensive, the quantity on hand for each, and the markup percentage for each.

Prepare a report that lists each supplier, its products, the quantities on hand, and associated reorder levels. The report should be sorted alphabetically by supplier.

Within each supplier category, the products should be sorted alphabetically.

Prepare a report listing only the skateboards that are low in stock and need to be reordered. The report should provide supplier information for the identified items.

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

Write a brief description of how the database could be enhanced to improve management of the business further. What tables or fields should be added?

What additional reports would be useful?‖

Suggested Answer: Successful completion involves designing a relational structure with at least two tables: SUPPLIER and PRODUCTS (or SKATEBOARDS). The SUPPLIER table may include supplier ID, name, contact info, and address, while the PRODUCTS table could carry product ID, skateboarding style, cost, price, markup, stock quantity, and reorder level.

Setting a one-to-many relationship from SUPPLIER to PRODUCTS ensures each product references its supplier via a foreign key.

For the first report, students should create a query ordering skateboards by descending price, retrieving the top five. The second report requires a join on SUPPLIER → PRODUCTS if separate tables are used, sorted by supplier name and then by product name. For the low-stock list, a simple criterion ―Quantity on hand < Reorder level‖ can isolate items needing replenishment.

To improve capabilities, a table for sales transactions or promotional discounts might be added. Additional fields, such as supplier lead time or product color/size, would help meet day-to-day operating needs. Future queries could integrate monthly sales outcomes, supplier performance data, or reorder cost analysis to optimize stock management.

6.13 Searching Online Databases for Business Resources ―Software skills: Online databases Business skills: Researching services for overseas operations This project develops skills in searching online, web-enabled databases for information about products and services in faraway locations.

Your company is located in Greensboro, North Carolina, and manufactures office furniture of various types. You are considering opening a facility to manufacture and sell your products in Australia. You would like to contact organizations that offer many services necessary for you to open your Australian office and manufacturing facility, including attorneys, accountants, import-export experts, and telecommunications equipment and support firms. Access the following online databases to locate

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companies that you would like to meet with during your upcoming trip: ShowMeLocal Australia, Austrade.gov.au, and the Nationwide Business Directory of Australia. If necessary, use search engines such as Bing or Google. 



List the companies you would contact on your trip to determine whether they can help you with these and any other functions you think are vital to establishing your office.

Rate the databases you used for accuracy of names, completeness, ease of use, and general helpfulness.‖

Suggested Answer: By searching in ShowMeLocal Australia, one might identify local law offices in major Australian cities specializing in international trade or business contracts.

Austrade.gov.au offers further insights into accredited exporters, import partners, and logistic consultancies. Meanwhile, the Nationwide Business Directory of Australia helps find major telecommunications or IT service providers. An illustrative list could include a Brisbane-based law firm, a Melbourne-based accounting and payroll group, and a Sydney-based logistics consultant specializing in inbound shipments of manufacturing equipment.

Students should evaluate each database on key factors. For instance, ShowMeLocal might be user-friendly but occasionally incomplete if smaller companies are unlisted.

Austrade.gov.au may be thorough but more geared to official trade resources and partnered organizations. The Nationwide Business Directory is often an excellent source for direct contact info, albeit needing additional checks for reliability. Combining these results—and supplementing them with quick checks on Google for reviews or references—ensures a more comprehensive contact list.

6.14 Getting to Know Tableau "In this exercise, you will create a report or presentation about the various types of data sources (structured, semi-structured, unstructured, etc.) that can be used when working with Tableau. Begin by identifying the different types of data that fall within each of these categories of data sources (for example, data within an Excel spreadsheet is an example of structured data) and then find an example public dataset of each type of data source that is available online. Describe which data sources can be used with which versions of Tableau, and the challenges of working with each type. Use Tableau to create at least two visualizations to illustrate your findings and integrate them into

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your report or presentation. (If you don‘t have access to Tableau Desktop, ask your instructor, or alternatively, you can create a free Tableau Public account.)"

Suggested Answer: Students‘ reports should illustrate how structured data (e.g., CSV or Excel from data.gov) differs from semi-structured JSON logs or unstructured PDFs. They might note that Tableau Desktop supports direct connections to Excel, text files, SQL databases, and certain cloud data sources, whereas Tableau Public also accepts Excel and CSV but has limitations in connecting to live databases.

Example practice data sets might include:   

A structured U.S. census dataset (Excel format).

A semi-structured JSON feed of city weather data.

An unstructured PDF file drawn from certain government whitepapers or health studies.

Key challenges for semi- or unstructured data lie in cleaning or structuring the content for easy ingestion. Visualizations could include a bar chart analyzing a numeric variable from the structured file or a line graph mapping changes in the JSON weather data. This hands-on exercise should highlight data-prep challenges, the user-friendly features of Tableau‘s interface, and the differences in data handling across Tableau product tiers.

6.15 Collaboration and Teamwork Project: Identifying Entities and Attributes in an Online Database "With a team of two or more other students, select an online database to explore, such as Planespotters.net, Thomasnet, or the Internet Movie Database. Explore one of these websites to see what information it provides. Then, list the entities and attributes that the company running the website must keep track of in its databases. Diagram the relationship between the entities you have identified. If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class."

Suggested Answer: For example, examining the IMDb site might reveal key entities, including MOVIE, PERSON (actors, directors), GENRE, and RATINGS. Attributes for MOVIE might be Title, Release Year, and Director, while PERSON could have Name, Birthdate, and Copyright © 2026 Pearson Education, Inc.

Role Type. Students should also note that relationships exist (e.g., a person acts in many movies; a movie has many actors). The E-R diagram might show a many-to-many link between PERSON and MOVIE, with an intersection table that outlines the specifics of each role.

Working through Google Docs or Google Sites fosters real-time teamwork, enabling easy updates to the entity-relationship diagram. Each participant can adopt a different perspective, such as focusing on user reviews or industry references. Conclusively, the group presentation could highlight how well-structured data is required to power website functionalities, from searching for an actor by name to sorting filmographies by release date or rating.

Suggested Assignments 1. Ask students to identify a real or fictional organization that aims to use big data for customer insights. Have them outline a data governance policy that addresses personal data privacy, data consistency, and security measures. They should present how these policies would be enforced.

2. Provide students with a small dataset that includes common data quality errors (misspellings, repeated records, mismatched codes). Have them use spreadsheet functions (or a dedicated data cleansing tool) to identify, correct, and document each error, then produce a report on lessons learned from the process.

3. Assign a research project on different blockchain platforms. Ask students to compare how each platform handles transactions, consensus, scalability, and data privacy. Students create short presentations on which platforms might be suitable for supply chain applications, focusing on the pros and cons.

4. Have students develop a short case study simulating a hospital or clinic scenario.

They must propose how a move from paper-based patient records to a cloudbased database system would be implemented, specifying cost, security, training, and data migration concerns.

5. Ask students to pick a non-relational database solution such as MongoDB or Cassandra. In small teams, they draft a short application scenario—e.g., a webbased game leaderboard or a streaming media service. They must model the data (e.g., JSON documents), then illustrate at least two queries or data operations. Have them explain why a NoSQL approach beats a relational approach for this scenario.

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Chapter 7 – Instructor Manual Chapter Summary This chapter examines how telecommunications networks, the Internet, and wireless technologies interconnect individuals, organizations, and systems. It begins with an overview of simple network components, illustrating how firms can link computer systems, employees, customers, and suppliers. The chapter then explores how digital networking technologies, notably packet switching and TCP/IP, have influenced the design and functionality of both private corporate networks and the Internet. Readers learn how various network types differ based on scope and how transmission media and bandwidth considerations shape network performance. The chapter reviews the Internet‘s infrastructure, addressing, and governance, showcasing the ways Internet services—email, instant messaging, and especially the web—have transformed modern business. Students discover how the web operates, how to search for information, and the essential role of search engines in advertising and commerce. The chapter ends with an in-depth discussion of wireless technologies, from cellular systems to RFID and the Internet of Things. These technologies have powerful applications for business, fueling real-time data collection, process efficiencies, and new services that benefit organizations, workers, and society.

Learning Objectives These are the chapter objectives: 7.1 Describe key components of telecommunications networks.

7.2 Describe key digital networking technologies.

7.3 Describe the different types of networks.

7.4 Understand what the Internet is and how it works.

7.5 Explain how Internet services support business.

7.6 Discuss how the web works and how it can be used in business.

7.7 Describe the principal wireless technologies and standards.

7.8 Understand how the information in the chapter can help your career.

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MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what‘s happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don‘t plan to cover, and the questions related to them will be removed from the overall score.

H2 Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 7.1 Describe Key Components of Telecommunications Networks 

 

Emphasize how a simple network is composed of two or more connected computers, NICs, a connection medium, a network operating system, and devices like routers and switches.

Discuss the difference between a hub and a switch, highlighting how each contributes to routing data within a local network.

Introduce the concept of SDN (software-defined networking) and how it centralizes network management.

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7.2 Describe Key Digital Networking Technologies   

Outline the role of packet switching in slicing digital messages into packets that travel independently over diverse routes.

Explain TCP/IP as a universal standard enabling communication between different computers and networks.

Differentiate between analog and digital signals, clarifying why modems are required to convert signals for specific media.

7.3 Describe the Different Types of Networks   

Define different network scopes: LAN, CAN, MAN, and WAN, emphasizing how distance and purpose vary.

Illustrate how bandwidth (bits per second) influences data transfer capacity over twisted wire, coaxial cable, fiber optics, and wireless media.

Introduce peer-to-peer and client/server network structures, and how each is suitable in particular settings.

7.4 Understand What the Internet Is and How It Works   

Provide a high-level overview of Internet evolution, focusing on its client/server nature and the role of backbone networks.

Show how unique IP addresses and the Domain Name System (DNS) facilitate data transmission.

Discuss how organizations and individuals connect to the Internet via broadband services (e.g., cable Internet, DSL, FiOS, T lines).

7.5 Explain How Internet Services Support Business   

Cover the major Internet services: email, instant messaging, file transfer, voice transmission (VoIP), and the web.

Clarify how VoIP and unified communications systems can reduce costs and improve collaboration.

Describe the concept of VPNs and how businesses use them for secure communications over public networks.

7.6 Discuss How the Web Works and How It Can Be Used in Business 

Illustrate how the web is built on HTTP, HTML, and URLs, making hyperlinks and multimedia content accessible.

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  

Examine the role of search engines, noting search engine marketing, SEO, and emerging AI-powered search.

Highlight user-generated platforms—blogs, RSS, wikis, and social networks— and how they support collaboration.

Mention future Internet/web directions (e.g., metaverse, Web3, Internet of Things, 3D visualization, and app ecosystems).

7.7 Describe the Principal Wireless Technologies and Standards    

Explain the evolution of cellular standards from 3G, 4G, to 5G, and the significance for mobile data and IoT. Explore local wireless networking (Wi-Fi, WiMax, Bluetooth, NFC, and hotspots) and their significance in modern settings.

Introduce RFID and NFC as ways to track items and pay through tap-and-go solutions.

Discuss wireless sensor networks (WSNs) and how embedded devices gather environmental or product-related data.

7.8 Understand How the Information in the Chapter Can Help Your Career   

Emphasize how knowledge of telecommunications, network architectures, and wireless technologies makes professionals more versatile.

Show that network specialists and other IT personnel who understand cloud computing, RFID, and IoT are in high demand.

Summarize how these concepts apply to real-world challenges and innovation within various industries.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.      

3G network (7.7) 4G network (7.7) 5G (7.7) Bandwidth (7.3) Blog (7.6) Bluetooth (7.7)

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                                     

Broadband (7.1) Cable Internet connections (7.4) Campus area network (CAN) (7.3) Dark web (7.6) Digital subscriber line (DSL) (7.4) Domain name (7.4) Domain Name System (DNS) (7.4) Email (7.5) Hotspot (7.7) Hub (7.1) Hypertext Transfer Protocol (HTTP) (7.6) Instant messaging (7.5) Internet2 (7.6) Internet Protocol address (IP address) (7.4) IPv6 (7.4) Local area network (LAN) (7.3) Metaverse (7.6) Metropolitan area network (MAN) (7.3) Modem (7.2) Near field communication (NFC) (7.7) Network operating system (NOS) (7.1) Packet switching (7.2) Peer-to-peer (7.3) Personal area network (PAN) (7.7) Predictive search (7.6) Protocol (7.2) Radio frequency identification (RFID) (7.7) Router (7.1) RSS (7.6) Search engine (7.6) Search engine marketing (7.6) Search engine optimization (SEO) (7.6) Semantic search (7.6) Smartphone (7.7) Social networks (7.6) Software-defined networking (SDN) (7.1) Switch (7.1) T1 line (7.4)

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              

T3 line (7.4) Transmission Control Protocol/Internet Protocol (TCP/IP) (7.2) Unified communications (UC) (7.5) Uniform resource locator (URL) (7.6) Virtual private network (VPN) (7.5) Visual search (7.6) Voice over IP (VoIP) (7.5) Voice search (7.6) Web page (7.6) Website (7.6) Web3 (7.6) Wide area network (WAN) (7.3) Wi-Fi (7.7) WiMax (7.7) Wireless sensor network (WSN) (7.7)

Case Studies Opening Case Study: From the Football Field to the Cloud and Back Again: The NFL Partners with AWS Summary: This case shows how the NFL harnessed RFID tags embedded in player shoulder pads and cloud-based analytics through AWS to revolutionize real-time player performance measurements. Comprehensive data capture and analytics generate insights on speed, position, and acceleration. The NFL also uses AI/ML for biomechanical analysis and player safety initiatives. This advanced technology has cut dashboard creation time from hours to minutes and allows evidence-driven decisions to maintain player safety.

Case Study Questions 1. Describe the way the technology described in the case has changed the way the NFL obtains and uses data from its games.

Suggested Answer: The NFL‘s use of RFID tags in shoulder pads, combined with an array of receivers installed throughout stadiums, fundamentally shifted data collection from manual methods to continuous, real-time digital tracking. As players move, RFID signals

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transmit precise location data—field position, speed, acceleration—into AWS‘s cloud infrastructure for near-instant processing and immediate availability. This provides coaches, teams, and the league with detailed insights, enabling them to analyze player performance with far greater speed and granularity than ever before. By making complex data quickly accessible, dashboards that once took hours to compile can now be generated in minutes and are easier to synthesize. Additionally, these real-time statistics power new broadcast features such as Amazon‘s Prime Vision, creating a richer, more interactive experience. Overall, the shift has transformed game analysis, decision-making, and fan engagement, elevating the league‘s strategic capabilities.

2. How is the NFL using AI and ML to enhance player safety?

Suggested Answer: AI and ML enable the NFL to leverage its massive dataset, captured via RFID tags and high-speed cameras, to identify injury risks and study the exact contexts in which injuries occur. Through the Digital Athlete platform, the league employs machine learning to detect patterns—such as specific body positions or acceleration rates linked to injuries—and to proactively address how practices and gameplay can be modified to lessen risk. AI-driven analyses reconstruct conditions under which injuries happen, enabling deeper insight into the causes of concussions and other harms. The platform can recommend personalized training regimens designed to protect players. Moreover, 3D Pose Estimation is under development to show how a player‘s physical motion could escalate injury likelihood. By applying these AI/ML tools, the NFL focuses on preventive measures and rule changes that foster a safer environment, as illustrated by the new kickoff fair catch rule informed by Digital Athlete data.

Spotlight on Technology Case Study: Cleveland Clinic Turns to Private 5G Networks for Its Newest Hospital Summary: Cleveland Clinic‘s Mentor Hospital is the first US hospital designed from the ground up with a private 5G network. Working with telecom partners, the 5G network delivers reliability, low latency, and higher data rates than typical Wi-Fi. This setup supports continuous connectivity for clinical applications, helps scale future technologies, and aims to build a fully digital hospital model that improves patient care, caregiver experiences, and operational efficiency.

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Case Study Questions 1. How does a private 5G network differ from a public 5G network?

Suggested Answer: Whereas public 5G networks serve the general population and are managed by mobile carriers for nationwide coverage, private 5G networks are dedicated to a single organization—like the Cleveland Clinic—and are customized for that entity‘s facilities and needs. Private 5G allows organizations to have tighter control over data, security, and network configuration. It can allocate bandwidth more specifically, limit right-of-way to authorized users, and deliver guaranteed service levels within a defined area. Unlike public networks, which share spectrum among thousands or millions of concurrent customers, private 5G networks can prioritize safety and mission-critical traffic first. This facilitates low latency, reliable coverage, and rapid data handling. The enterprise or institution using it can also scale capacity as needed without general traffic congestion issues that hamper typical public mobile communications.

2. Why did the Cleveland Clinic choose to create a private 5G network for Mentor Hospital rather than a traditional Wi-Fi network?

Suggested Answer: The Cleveland Clinic valued the higher performance characteristics and security that private 5G provides. Traditional Wi-Fi, while capable, can become congested as it must share limited bandwidth across many devices. By deploying a separate, private 5G network, the clinic gains coverage over a larger area, reduced latency, and a structure that prioritizes clinical tasks rather than competing with guest Internet usage. Private 5G can handle thousands of devices simultaneously—important for an environment with many connected devices such as patient monitors, tablets, and emerging augmentedreality training tools. Additionally, 5G‘s SIM-based authentication and built-in encryption add layers of security. As the clinic expands data-intensive applications (e.g., highresolution imaging), it believes 5G will seamlessly scale to meet those needs.

3. In what ways will the implementation of a private 5G network advance Cleveland Clinic‘s long-term vision for a fully digital hospital infrastructure?

Suggested Answer: A private 5G infrastructure supports real-time data sharing that is critical to digitally enabled hospitals, from patient monitoring via wearables to AI-driven clinical decision support systems. Because private 5G scales more readily than Wi-Fi, it can stay ahead

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of data-intensive applications like high-resolution imaging transfers, virtual or augmented reality training modules for practitioners, and telemedicine tools for remote patient consultations. The hospital‘s operations benefit from reduced latency in communications, helping provide physicians with up-to-the-second data on patient status or diagnostic tests. Security is also enhanced, crucial for safeguarding our most sensitive health data. Over time, 5G can unify multiple clinical systems—emergency, outpatient, surgical, and administrative—making it easier to integrate new telemetry devices and sensor-based applications. Overall, it delivers a robust backbone for emerging technologies, enabling Cleveland Clinic to refine innovative healthcare services while improving patient experiences.

Chapter Case Study: AI and the Future of Search Summary: Generative AI tools like ChatGPT are reshaping the search landscape, offering conversational capabilities rather than simply returning lists of links. This could radically shift how people discover and evaluate information online. AI-powered search engines differ from traditional ones in that they synthesize data, raising concerns about reliability, bias, copyright issues, and the revenue models of web publishers. Despite the promise of direct, personalized answers, the technology faces challenges like ―AI hallucinations‖ and uncertain effects on the broader web ecosystem.

Case Study Questions 1. How does genAI search differ from traditional search?

Suggested Answer: GenAI search does more than retrieve links to relevant websites. Instead, it synthesizes or ―creates‖ text-based responses to user queries in a conversational format. Traditional search tools operate by indexing webpages and matching a query to a set of relevant pages. Users must then click on those links to explore content. GenAI, by contrast, produces an immediate ―answer‖ drawn from large language models that are trained on extensive text corpora—often including entire websites. This approach transforms search from an information retrieval activity into an interactive dialogue. It may reduce the need for extra clicks, but it can also obscure the underlying sources of information because the generative system is combining text from multiple locations. Furthermore, while standard search engines clearly show where data originates, genAI may blend

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factual material and guesswork, occasionally inventing ―hallucinated‖ answers that are not verifiable, highlighting the trade-off between convenience and reliability.

2. What issues does genAI search raise for the future of search?

Suggested Answer: GenAI search raises fundamental questions about content credibility, revenue for content creators, and bias. Large language models rely on broad swaths of data scraped from the web, sometimes without explicit permission, generating potential copyright disputes. Moreover, because genAI can present synthesized results, individuals might skip visiting original sources, depriving web publishers of the traffic that funds much of the free content on the Internet. Content accuracy is also a concern, given that genAI models can produce authoritative-sounding answers underpinned by incomplete or biased training data. The phenomenon of ―AI hallucinations‖—fabricated facts or citations—further complicates trust. This newly emerging form of search might foster convenience but also run the risk of spreading disinformation. Lastly, widespread adoption could disrupt how we approach knowledge verification and hamper publishers‘ ability to monetize content if end users no longer need to ―click through‖ to original sites.

3. How might genAI search impact the web ecosystem as it currently exists?

Suggested Answer: The current web ecosystem depends heavily on advertisers, content creators, and a cycle of user clicks that generate ad revenue for publishers. GenAI search threatens to upend that model by presenting ―answers‖ in a summarized format, reducing the need to click on individual websites. Publishers, especially smaller ones reliant on search traffic, could see drops in site visits and advertising income. If generative AI engines train on-site content without returning direct user traffic, the incentives for producing high-quality content or in-depth journalism may be undermined. There is also the possibility of reinforcing biases if the model‘s training data are skewed or lack diverse perspectives. Over time, the entire financial structure supporting free online content, along with user trust in digital information, could be reshaped as generative AI tools proliferate, necessitating new approaches in content distribution, partnerships, and compensation for creators.

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Review Questions 7.1 Describe key components of telecommunications networks.

1. Describe the features of a simple network and the network infrastructure for a large company.

Suggested Answer: A simple network links two or more computers, each equipped with a network interface controller (NIC). They use some type of connection medium (cable, fiber optics, or wireless) and a network operating system (NOS) to coordinate data transmission and manage resources. Common devices include switches for directing data within a local environment and routers for connecting to external networks, such as the Internet. In a small office, a single server running the NOS may handle tasks and store resources. By contrast, large companies have more complex network infrastructures that integrate many local area networks (LANs) with wide area networks (WANs) across multiple physical locations. This kind of setup involves powerful servers that run intranets and extranets, plus specialized high-speed connections to link different geographic regions.

The organization might rely on different network mediums: twisted copper wire within buildings, fiber optics for connecting high-traffic segments, and wireless standards for mobility. Together, these components offer employees access to shared data, applications, and voice communications. Network management involves ensuring adequate bandwidth, addressing security concerns, and integrating multiple communication channels into a single coherent system that supports enterprise-wide connectivity.

7.2 Describe key digital networking technologies.

1. Define an analog signal and a digital signal.

Suggested Answer: Analog signals are continuous waveforms, commonly used in older telephone systems and other audio communication tools. They fluctuate within a range and mirror the variations in voice or music. Digital signals, on the other hand, are binary sequences of discrete on/off pulses that represent bits (0s and 1s). Computers inherently process digital data, so digital signals are essential for any computer-based communications.

Converting between analog and digital requires a modem (short for modulatordemodulator) to translate analog waveforms from a phone line or cable system into digital bits a computer can process, or vice versa. Although analog transmission once Copyright © 2026 Pearson Education, Inc.

dominated voice communication, the shift toward digitization enables higher-quality, faster, and more versatile data transmissions. Digital signals allow for advanced error correction, compression, and encryption. They also facilitate packet switching, which is how most data on the Internet is transmitted. This capability to switch and route packets efficiently has become a cornerstone of today‘s telecommunications networks.

2. Name and describe the principal technologies and trends that have shaped contemporary telecommunications systems.

Suggested Answer: Several key elements define today‘s telecommunications landscape. First is the client/server computing model, which redistributes some processing power to clients (PCs, mobile devices) while servers handle heavier tasks. Second is packet switching: data is cut into discrete packets that traverse various routes, reassembling only once at their destination. This process uses bandwidth efficiently by allowing multiple data streams on common transmission channels. Third is TCP/IP (Transmission Control Protocol/Internet Protocol), a universal standard that ensures any device or network using it can communicate, enabling the global Internet to operate seamlessly. Another trend is the ongoing shift from analog to digital signals, encouraging more robust, reliable, and faster data flows. Additionally, the increasing adoption of broadband, including cable, fiber, and wireless, underpins higher-capacity voice, video, and data offerings. Cloud computing infrastructures have introduced on-demand scalability and integration with AI/ML-based tools. Finally, software-defined networking (SDN) centralizes traffic management, allowing administrators to configure hardware more flexibly. All of these factors transform how businesses and individuals connect, collaborate, and leverage information on a worldwide scale.

7.3 Describe the different types of networks.

1. Distinguish among a LAN, a CAN, a MAN, and a WAN. Suggested Answer: Local area networks (LANs) typically span a small geographic area (up to around 500 meters), such as an office floor or a home, allowing connected devices to share data, printers, or applications. A campus area network (CAN) extends over a limited geographic space—about a mile—and might link buildings on a corporate or educational campus. Metropolitan area networks (MANs) typically serve a city or large urban area, supporting communication across multiple LANs and possibly linking local organizations or government offices. Wide area networks (WANs), finally, stretch across

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broad geographic regions—regional, national, or even global in scope. The Internet itself is the largest example of a WAN. In business, WANs often connect multiple regional offices using leased lines, satellite connections, or other high-speed links, enabling data sharing and central control. Each type offers different cost and performance benefits. LANs are lower-cost and faster but have limited range, while WANs rely on diverse infrastructure and can scale worldwide, often with higher complexity and expense.

2. Identify the principal physical transmission media and describe their basic characteristics.

Suggested Answer: Physical media for data transmission range from twisted pair copper wire and coaxial cable to fiber-optic strands and wireless channels. Twisted pair wiring, such as CAT6 or CAT8, is cost-effective and commonly used within building LANs. It carries signals through two twisted copper wires that help reduce electromagnetic interference. Coaxial cable, traditionally employed for cable television, transmits data at higher speeds and greater shielding than twisted pair, though it is bulkier and more expensive. Fiber-optic cable uses light pulses along strands of glass or plastic, offering the highest transmission rates and resistance to interference, commonly supporting the Internet backbone and long-distance data needs. Wireless media—radio or microwave frequencies—bypass cables entirely, facilitating mobile connectivity for phones, tablets, or laptops, though subject to signal interference, security concerns, and certain distance limitations. Each technology differs in capacity, cost, speed, distance, and interference susceptibility. Organizations weigh these factors—along with reliability and expansion requirements—when selecting the medium for voice and data transmission in various environments.

7.4 Understand what the Internet is and how it works.

1. Define the Internet and describe how it works.

Suggested Answer: The Internet is a massive, interconnected network of networks linking millions of private, public, government, and corporate computing devices globally using the TCP/IP protocol suite. It began as a US Department of Defense project to facilitate research collaboration among geographically dispersed universities and laboratories. Today, it spans continents via high-speed backbone networks operated by telecommunications firms, known as Tier 1 Internet service providers. At the local level, individuals and

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organizations typically connect to the Internet through Tier 3 ISPs—companies like AT&T, Verizon, or Charter Spectrum—using broadband technology (cable, DSL, fiber, or sometimes satellite). Each Internet-enabled device is assigned a unique IP address, which can be represented in numeric IPv4 or expanded IPv6 form. Requests from a user‘s computer pass through routers that read packet headers and choose the best route. Packets travel potentially diverse paths before reassembling at the target device.

This packet switching architecture allows data to flow efficiently even if certain paths are congested or offline. The Internet‘s common standards (e.g., TCP/IP, DNS) ensure interoperability among the vast range of operating systems, networks, and hardware found worldwide.

2. Explain how the Domain Name System (DNS) and the IP addressing system work.

Suggested Answer: Each device on the Internet must have a numeric IP address to route data accurately.

An IPv4 address comprises 32 bits, typically formatted as four sets of numbers (e.g., 192.168.1.10). Because the world is running low on IPv4 addresses, IPv6 was introduced, expanding addressing to 128 bits and accommodating more unique IPs than needed for the foreseeable future. Remembering long numeric strings can be cumbersome, so the Domain Name System (DNS) simplifies access. DNS servers maintain vast databases mapping readable domain names (like example.com) to their corresponding IP addresses. When a user types a domain name into a browser, the local DNS resolver queries a chain of DNS servers until it obtains the correct IP address.

Once retrieved, data packets use that address to locate the hosting server. The DNS structure is hierarchical, featuring top-level domains such as .com or .org, and secondlevel domains that identify specific organizations, ensuring that each domain name carefully aligns with an IP record.

7.5 Explain how Internet services support business.

1. List and describe the principal Internet services.

Suggested Answer: Several core services exemplify how businesses and individuals use the Internet. Email remains one of the most widespread, enabling fast, cost-effective transmission of messages, attachments, and files among linked accounts worldwide. Instant messaging (IM) supports real-time text-based chat, used both informally and in corporate contexts to speed collaboration. File transfer capabilities, historically managed by FTP, let users

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upload and download documents securely, now often integrated into cloud storage services. Voice over IP (VoIP) allows organizations to carry telephone calls over IPbased data networks at lower costs than traditional telephony, supporting advanced features like call routing and call recording. Finally, the World Wide Web provides a hyperlinked multimedia environment for delivering information, e-commerce, and interactive experiences. Each service capitalizes on the unifying TCP/IP framework, letting businesses communicate with partners, customers, and remote workers with minimal friction, drastically transforming everyday organizational operations.

2. Define and describe VoIP and explain how it provides value to businesses.

Suggested Answer: Voice over IP (VoIP) systems digitize and packetize voice communications so they can traverse existing IP networks (including the Internet) rather than dedicated telephone lines. Essentially, voice calls are broken into data packets and routed to their destination, where they are decoded back into an audio format. Because VoIP rides on top of an organization‘s broadband or data infrastructure, it avoids many fees associated with traditional telephone network usage. This can result in significantly reduced phone bills, especially for long-distance or international calls. Beyond cost savings, VoIP integrates well with a company‘s email, messaging, and video-conferencing services. Employees can initiate voice or video calls directly from their computers or mobile devices, regardless of physical location. VoIP also simplifies network management by letting IT teams oversee a single infrastructure for both voice and data, leading to more unified communications setups. These benefits make VoIP particularly attractive for businesses seeking flexible, scalable options for communications strategies.

3. Define and describe a virtual private network (VPN) and explain how it provides value to business.

Suggested Answer: A virtual private network (VPN) is a securely encrypted ―tunnel‖ created within a public network—such as the Internet—to provide private connectivity for remote users or branch offices. Organizations configure VPNs so that data passing between endpoints remains hidden from unauthorized observers, effectively mimicking a dedicated leased line. VPN protocols such as PPTP wrap data in encrypted packets, preventing eavesdropping, interception, or tampering during transit. By using secure authentication measures, businesses ensure that only authorized individuals or devices can access internal resources. VPNs provide considerable cost savings compared to dedicated WAN links, especially for widely dispersed teams. Remote workers can securely connect to their office networks from home, hotels, or client sites, accessing email Copyright © 2026 Pearson Education, Inc.

servers, corporate intranets, or specialized applications as though they were onsite.

Ultimately, VPNs enable flexible work arrangements, more timely collaboration, and better data confidentiality, all while leveraging the expansive reach of the Internet rather than building new lines from scratch.

7.6 Discuss how the web works and how it can be used in business.

1. List and describe alternative ways of locating information on the web.

Suggested Answer: Internet users can find content through various channels. Search engines, like Google or Bing, index billions of webpages, letting users enter keywords or phrases and receive relevant links. Directories such as Yahoo originally offered curated lists of sites but are less common today. Social networks, like LinkedIn or Facebook, allow for the discovery of both personal and professional content through shared posts, group discussions, and recommendations. Hashtags on social media tools (e.g., X/Twitter, Instagram) help cluster topics for quick searches on trending discussions. Additionally, specialized apps like Pinterest or YouTube supply visual or video-driven results that standard engines might not prioritize. Another emerging method involves generative AI chatbots, such as ChatGPT, that let individuals pose questions and receive direct conversational responses. Each method offers a different experience—either broad-based or niche— so users often combine them to find exactly what they need. Businesses must remain aware of different avenues, optimizing their web presence so users can discover them efficiently.

2. Describe how online search technologies are used for marketing.

Suggested Answer: Online search engines are vital marketing platforms because they closely match consumer intent to advertiser offerings. When users enter specific keywords, search engines can serve relevant sponsored links at the top or side of results. Known as search engine marketing (SEM), brands pay the engine each time a user clicks. This pay-per-click model targets consumers most likely to act on relevant ads, driving more qualified leads. Meanwhile, organic or ―natural‖ results appear based on website optimization factors. Through search engine optimization (SEO), website creators refine their structure, content, and metadata to rank higher for particular keywords. The higher the rank, the more traffic a site typically receives. SEO requires producing quality, keyword-rich content and building link authority to demonstrate a site‘s relevance. When done successfully, search marketing can yield high returns on investment—small

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businesses especially benefit by paying only for clicks that lead potential customers to their sites. Overall, SEM fuses user convenience with targeted exposure, enhancing both consumer experience and business ROI. 3. Identify the major ways information is shared on the web.

Suggested Answer: Modern web platforms enable a high degree of interactivity, allowing users to both consume and generate content. Blogs (web-based journals) let individuals or companies share ideas, news, opinions, or product updates, frequently inviting reader comments. RSS (Really Simple Syndication) automatically delivers updates from selected websites or feeds to subscribers. Wikis expand on collaboration by enabling users to add, edit, or refine shared content—Wikipedia is the best-known example.

Social networks facilitate personal and professional connections, supporting posts, media sharing, group discussions, and real-time messaging. Additionally, ―mashups‖ combine data or functionality from multiple sources (e.g., combining a map service with local property listings). The explosion of user-generated content on video-hosting platforms (e.g., YouTube), short-form posts (TikTok), and microblogging (X/Twitter) has further diversified how information flows. Collectively, these sites exemplify the social nature of today‘s web, where peer-to-peer engagement, conversation, and knowledge diffusion shape the digital landscape and enrich the user experience.

4. Discuss the features of the future Internet/web ecosystem.

Suggested Answer: The Internet‘s evolution encompasses faster connectivity, increased mobility, and more integrated data streams. Technologies like 5G—and eventually 6G—promise highspeed and high-capacity connections to support advanced interactive applications, including immersive 3D environments and the metaverse, where users can interact in persistent virtual spaces. Concurrently, artificial intelligence and machine learning are making search, recommendation engines, and automation more adaptive, weaving new capabilities like predictive analytics into daily web use. Another aspect is the rapid growth of the Internet of Things (IoT), embedding intelligence into devices—from wearables to city infrastructure—unlocking real-time data flows and responsive personalization. Blockchain-related endeavors have sparked work on ―Web3,‖ a decentralized model that might challenge the dominance of centralized platforms.

Mobile apps, the prevalent means by which most people access online content, are bridging traditional browsing experiences with frictionless, single-purpose interactions.

Ultimately, the future web will likely emphasize interconnectivity, hyper-personalization, and potentially new economic systems that redistribute control and monetization of data.

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7.7 Describe the principal wireless technologies and standards.

1. Define 3G, 4G, and 5G networks.

Suggested Answer: Cellular networks have advanced in ―generational‖ steps—3G, 4G, and 5G—each improving speed and capacity. Third-generation (3G) networks offered transmission rates supporting email and basic web browsing, typically in the range of 144 Kbps to around 2 Mbps for stationary devices, but were limited for high-bandwidth activities such as streaming video. 4G networks introduced significantly higher rates (up to 100 Mbps for downloads), enabling high-definition video streaming and advanced multimedia.

They also expanded coverage and improved reliability. The newest generation, 5G, can move data at multi-gigabit speeds, fueling real-time IoT applications on a massive scale.

5G technology is designed with ultra-low latency, meaning signals travel from device to network to server and back in mere milliseconds. This opens possibilities for remote medical procedures, advanced self-driving vehicles, and thousands of sensors at once—illustrating a leap in capacity far beyond previous cellular standards.

2. Describe the various technologies that can be used for wireless computer networks and Internet access.

Suggested Answer: A number of wireless standards underlie modern data connectivity. Wi-Fi (802.11 variants) is common for local area networks, offering devices connectivity to the broader Internet through an access point. It‘s found in homes, offices, and public ―hotspots.‖ WiMax (802.16) extends wireless access over miles, bridging broader metropolitan or rural areas. Bluetooth (802.15) supports short-range communication among personal devices—headsets, keyboards, or smartphones—forming a small personal area network (PAN). Cellular data networks, from 3G up through 5G, allow phones and tablets to connect to the Internet virtually anywhere cell coverage exists. In scenarios where standard wired broadband is impractical, satellite services provide connectivity; for example, rural or remote regions where laying cable is cost-prohibitive. Each approach balances coverage, data speed, cost, and ease of deployment. As more workplaces embrace mobile and remote operations, these wireless technologies become crucial to ensuring seamless, always-on business communication.

3. Define RFID, explain how it works, and describe how it provides value to businesses.

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Radio frequency identification (RFID) uses tiny tags embedded with microchips containing data (e.g., product identifiers) and antennas that transmit via radio waves. A nearby RFID reader sends out signals that energize these tags, causing them to respond with the stored data. The reader then forwards that data to a host system for analysis. Unlike barcodes, RFID does not require line-of-sight scanning; multiple tagged items may be automatically detected within proximity. This allows businesses to track inventory through supply chains accurately and in real time, reducing manual checks.

Retailers, for instance, know exactly which goods arrive and when they‘re moved to the sales floor, preventing out-of-stock situations while minimizing excess. RFID also speeds up shipping and receiving, reduces labor, and improves accuracy. Some organizations deploy advanced analytics with RFID data to optimize operations or personalize customer experiences. Implementing RFID involves acquiring tags, readers, and configuring enterprise software to integrate the data. Once established, businesses can see streamlined workflows, fewer errors, and improved customer satisfaction.

4. Define near field communication (NFC) and explain how it works.

Suggested Answer: Near field communication (NFC) is a short-range wireless connectivity standard enabling two devices to exchange data when brought within a few centimeters of each other. One device, such as a smartphone, typically includes an active NFC chip that can transmit and receive data, while the second device (for instance, a payment terminal or passive NFC tag) may primarily respond with stored information. When the devices are close, the NFC radio frequency signal creates a current in the passive chip, which transmits data back to the active device. NFC is widely used in contactless payment systems like Apple Pay or Google Wallet, where tapping or waving a phone near a reader triggers a secure transaction. Retailers also embed NFC tags in smart posters or product packaging to deliver additional information to shoppers upon a tap. By removing the need for separate scanning steps or cables, NFC offers convenience and speed, further enhancing digital interactions and commerce.

5. Define WSN, explain how they work, and describe the kinds of applications that use them.

Suggested Answer: Wireless sensor networks (WSNs) connect numerous low-power sensor nodes that measure and transmit data about their surrounding environment. Each node contains a sensor, an antenna for sending/receiving signals, some onboard processing, and power management—often run on a battery or energy harvesting. Nodes pass data to each other or to higher-level cluster nodes. This hierarchical structure ensures efficient Copyright © 2026 Pearson Education, Inc.

transmission: lower-level nodes communicate with cluster heads that forward aggregated data to a central server for analysis. WSNs see broad application in environmental monitoring—tracking temperature, humidity, or air quality across wide areas. Organizations deploy them in machine or warehouse settings to gauge equipment performance or stock levels in real time. Agriculture uses WSN to optimize irrigation by detecting soil moisture fluctuations. Cities can measure traffic patterns or structure integrity. Because the sensors are wireless and potentially battery-operated, WSNs are deployed where running cables would be costly or impractical. This yields enhanced visibility into operations, enabling data-driven decision-making.

Discussion Questions 7.8 It has been said that smartphones have become the single-mostimportant digital device we own. Discuss the implications of this statement.

Suggested Answer: Smartphones serve as more than just communication tools; they are personal hubs managing productivity apps, social media, finances, and even health monitoring. As app ecosystems flourish, smartphones can fulfill a range of tasks previously requiring desktops, specialized devices, or in-person visits (banking, emailing, ordering products).

This consolidation drives convenience but also magnifies dependency. People rely on smartphones to navigate roads, schedule daily appointments, image documents, or track wellness goals. Organizations see employees using their phones for remote collaboration, customer relationship management, and quick data lookup. This alwayson connectivity can blur boundaries between personal and professional life, raising issues of well-being and work-life balance. Meanwhile, security becomes paramount, as sensitive data from healthcare to finances are stored on or accessed via these handheld devices. The smartphone‘s ubiquity also positions it as a cultural equalizer, connecting communities that previously had limited technology access. However, not everyone bears equal data costs or network availability, leading to the digital divide conversation.

Overall, our reliance on smartphones shapes how we engage with everyday life—often for the better, but with notable considerations around privacy, equity, and mental health.

7.9 Should all major retailing and manufacturing companies switch to RFID? Why or why not?

Suggested Answer:

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RFID delivers clear benefits around automating inventory tracking, reducing manual scans, and improving supply chain transparency. High-volume retailers gain immediate efficiency, as RFID allows them to see instantly what merchandise arrives in warehouses and stores. This cuts labor costs and ensures shelves remain stocked, boosting customer satisfaction and sales. However, it‘s important to weigh the initial investments in tagging, purchasing readers, and integrating back-end software solutions.

Smaller companies or those with less complex logistics might find the capital outlay excessive. They might not handle enough inventory turnover to justify the technology‘s complexity and expenses. Additionally, implementing RFID requires training workers, revamping processes to capture and interpret large amounts of real-time data, and securing digital systems against data breaches. If an organization does not plan to leverage the analytics or cannot handle new data streams, ROI could be minimal. In short, RFID is a powerful modernizing tool for organizations with high-volume or intricate supply chains, but it may be an unnecessary burden where simpler tracking works sufficiently and budgets are tight.

7.10 What are some of the issues to consider in determining how the Internet can provide your business with a competitive advantage?

Suggested Answer: When evaluating how the Internet can confer a competitive edge, one must consider elements such as market reach, cost efficiency, and operational improvements. First, the Internet expands an organization‘s geographic presence: e-commerce enables potential sales without the constraints of physical store hours or location. Second, companies should reflect on whether delivering services or goods online lowers overhead enough to price competitively or offer more value to consumers. Third, an effective Internet strategy involves usability: websites must be navigable, visually appealing, and optimized for mobile devices, reflecting the shift in consumer browsing patterns. Fourth, establishing robust online customer support—through web chat, FAQs, or integrated helpdesks—can set a company apart via enhanced convenience. However, security and reliability are also crucial, as data breaches or downtime can undermine trust. Lastly, organizations need to ensure adequate backend integration so that site updates, order management, and real-time inventory sync smoothly with their internal systems. By addressing these considerations, businesses can adopt an approach that fosters differentiation, customer loyalty, and ongoing operational savings—a true competitive advantage.

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AI Project 7.11 AI Project: Researching ISPs ―You have been hired as a consultant by two friends who want to open a retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They have asked you to advise them on Internet service provider (ISP) alternatives for Internet service in the area where they wish to locate the bakery (zip code 53716). They would also like to see a PowerPoint presentation comparing two of the ISPs that were identified.

Using Microsoft‘s Copilot, Google‘s Gemini, or ChatGPT, develop a series of prompts to assist you in responding to their request. Save a copy of your prompts and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: One way to approach this project is to begin formulating prompts that outline the specific details needed for a thorough ISP comparison. The first prompt might specify the precise requirements: ―List and compare broadband ISP options for zip code 53716, including speeds, pricing, promotional offers, contract terms, and reliability.‖ A second prompt could be a request to ―Generate a short summary with benefits/drawbacks for each ISP for a new small retail business.‖ This ensures the AI model addresses how each option might align with business needs such as credit card processing, point-ofsale systems, or e-commerce. A third prompt could focus on presentation design: ―Create a draft PowerPoint outline comparing the top two ISP options, highlighting cost, speed, reliability, and scalability.‖ As the AI responds, refine prompts by asking for clarifications, e.g., ―Re-check the availability of fiber connections and confirm if monthto-month plans exist without early termination fees.‖ Finally, ensure you store the chat output and any references for the final deliverable. Using these steps, the business owners would receive clear guidance on the best ISP for their location and an easy-tointerpret presentation to aid decision-making.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

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7.12 Management Decision Problem ―San Juan, the capital of Puerto Rico, includes the Old San Juan historic district, parts of which date back 500 years. The city was unable to provide broadband connectivity to tourists and to residents of this special district. Digging restrictions limited the amount of fiber-optic cable that could be laid down, and Old San Juan‘s network infrastructure was very outdated. However, the city was able to solve this problem by implementing a broadband Wi-Fi network that included technology supplied by Facebook Terragraph.

Visit Terragraph.com to learn more about Facebook Terragraph and explain why it provided a good solution for Old San Juan. Additionally, describe the management, organization, and technology issues that the city had to address when selecting a solution.‖ Suggested Answer: Terragraph leverages millimeter-wave wireless technology, designed to meet the bandwidth requirements of dense urban setups without relying extensively on new cabling under historical streets. For Old San Juan, Terragraph bypasses the burdensome digging constraints by installing small nodes on rooftops or lampposts, creating a network that carries large amounts of data wirelessly. This was likely more cost-effective and less disruptive to historic architecture.

From a management perspective, city authorities had to examine how best to collaborate with technology providers and ensure that end users, including tourists and residents, would benefit from high-speed access. Organizationally, they needed buy-in from property owners, local businesses, and government agencies responsible for heritage preservation. Additionally, city leadership had to weigh the trade-offs between purely private, large-scale providers and an innovative but relatively new technology approach. On the technology side, integration with existing wired backhaul was crucial—ensuring the system had stable power, robust performance in tropical weather, and strong security protocols. Ultimately, Terragraph‘s design suited Old San Juan, providing stable broadband connectivity while preserving the historical environment.

7.13 Using Spreadsheet Software to Evaluate Wireless Services ―Software skills: Spreadsheet formulas, formatting Business skills: Analyzing wireless services and costs In this project, you‘ll use the web to research alternative wireless services and use spreadsheet software to calculate wireless service plan and smartphone costs.

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You would like to provide your sales force of 20, based in St. Paul, Minnesota, with smartphones that have wireless service plans that include unlimited talk, text, and data.

You would like to equip each sales force member with a new iPhone 15 (with 128 gigabytes of storage). Use the web to research the smartphone and service plans offered by Verizon, AT&T, and T-Mobile. Use your spreadsheet software to determine the wireless service plan and smartphone plan (purchase outright or pay monthly installments) that will offer the best pricing per user over a two-year period. For the purposes of this exercise, you do not need to consider corporate discounts.‖ Suggested Answer: When setting up the spreadsheet, first list each carrier (Verizon, AT&T, T-Mobile) in rows and include columns for monthly plan charges, installment fees (if any), and the phone‘s outright purchase cost. Calculate totals for two scenarios: (a) outright phone purchase plus monthly service, and (b) lower monthly device payments plus service.

Insert a formula to multiply the monthly cost by 24 (months in two years) to reveal total spending over the period. Another column can capture any activation or upgrade fees.

Summarize final costs for all 20 employees by multiplying the per-user total by 20. Also note intangible factors such as network coverage in St. Paul or additional perks like streaming subscriptions. If available, break down statements for each user on a separate spreadsheet tab for easy review. Finally, highlight the lowest total cost with conditional formatting. By combining these tactics, you can definitively compare multiple plan structures, clarifying which carrier‘s combination of service plan and device purchase method is most cost-friendly for your team.

7.14 Using Online Search Tools for Business Research ―Software skills: Online search tools Business skills: Researching new technologies This project will help develop your online search skills for business research.

Use Google and Bing to obtain information about biofuels as alternative fuels for motor vehicles. If you wish, try some other search engines or generative AI chatbots as well.

Compare the volume and quality of information you find using each search tool. Which tool is the easiest to use? Which produced the best results for your research? Why?‖ Suggested Answer: Begin by selecting consistent search queries, such as ―biofuels for motor vehicles‖ or ―advanced biofuel industry trends.‖ Record how many results each platform offers (often

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displayed at the top of the page) and note the variety of sources—for instance, academic articles, news pieces, government websites, or business trade journals.

Observe any differences in the first-page results. One search engine may present more regional perspectives, while another highlights global analysis or peer-reviewed studies.

Google often retrieves up-to-date news articles and scientific sources, while Bing‘s research aggregator might display side panels summarizing key facts. Evaluate the clarity of search result summaries and the presence of ads or sponsored results. Test advanced features, like image or news tabs. If you explore generative AI tools, gauge how well they synthesize sources or give direct answers. Ultimately, the ―best‖ platform can depend on your topic approach: if you need comprehensive numeric data, you might find one engine superior, while for policy or market trends, the other might yield more specialized content. Make sure to check for reliability, dates of publication, and site authority. Conclude by reflecting on responsiveness, ease of filtering, and the overall user experience in fulfilling your research needs.

7.15 Collaboration and Teamwork Project: Evaluating Smartphones "Form a group with two or more of your classmates. Choose an Apple iPhone model that is currently available and compare its capabilities to the capabilities of a similar model smartphone from another vendor. Your analysis should consider the purchase cost of each device, the wireless networks where each device can operate, the plan costs, and the services available for each device. You should also consider other capabilities of each device, including available software, security features, and the ability to integrate the device with existing corporate or PC applications. Which device would you select? On what criteria would you base your selection? If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class."

Suggested Answer: A logical first step is to gather device specifications, brand-new pricing, and plan compatibility. If you choose the iPhone 15 from Apple, compare it to, say, a Samsung Galaxy S23 with similar storage. Record the retail price, but also whether promotions or trade-in discounts apply. Next, check which carriers each device runs on—most modern smartphones support a range of frequencies but might differ in 5G band coverage.

Consider battery life, screen resolution, camera performance, and the presence of specialized features (like ultra-wideband, stylus support, or advanced security chips). If your team‘s workplace uses large cloud storage or a suite of productivity apps, explore how each phone handles those. Apple iOS and Android have distinct app stores and ecosystem tie-ins that can impact a company‘s existing IT environment. For collaboration, create a shared spreadsheet summarizing hardware specs, cost of Copyright © 2026 Pearson Education, Inc.

ownership, and possible intangible factors such as brand reputation or user preference.

Conclude by rating each device on your agreed-upon criteria (e.g., cost, functionality, security). Use the final presentation to propose a recommended choice—demonstrating your alignment with the group‘s analysis and the organization‘s unique needs.

Suggested Assignments 1. Network Architecture Comparison Assign students to investigate two distinct network architectures (a peer-to-peer LAN in a small office versus a large corporate client/server WAN). Have them develop charts that compare hardware, software, security needs, and approximate costs for each scenario. Students present findings and recommend which architecture suits an imaginary growing startup.

2. Broadband Internet Service Plan Audit Ask learners to identify three local ISPs, including cable, DSL/fiber, or a 5G home broadband solution. Students should outline speeds, monthly fees, and any data caps.

Have them analyze the pros and cons regarding cost, reliability, and contractual terms.

3. Wi-Fi Security Protocols Activity Students set up a simulated Wi-Fi network (either physically or via a software simulator) and configure WEP, WPA2, or WPA3. They document how to enable secure passwords, discuss vulnerabilities, and provide recommendations to a hypothetical business that needs robust wireless security for remote staff.

4. Search Engine Optimization Case Assign learners a fictional company website. Task them with conducting keyword research, writing meta descriptions, and creating a short SEO improvement plan. They explain how these steps might enhance the site‘s search ranking, referencing chapter discussions of search engine marketing.

5. IoT Sensors Field Project Encourage students to propose an IoT solution for a real-world challenge—for example, monitoring campus parking lot occupancy, or tracking soil moisture for a community garden. They specify which sensors, network protocols, data analytics approach, and cost range might work. The assignment culminates in an informal proposal describing

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how IoT devices would communicate data and how those data would be used for decision-making or efficiency gains.

Chapter 8 – Instructor Manual Chapter Summary This chapter focuses on the critical importance of securing information systems in organizational settings. It begins by exploring the various vulnerabilities and threats that put information systems at risk, including malware, social engineering, and attacks by malicious threat actors. The chapter underscores how software bugs and security flaws expose organizations to financial and reputational loss, and it reflects on the growing scope of cybercrime—particularly the risks posed by ransomware and insider threats. It also addresses the difficulties of safeguarding the Internet of Things, mobile platforms, and cloud-based services. Key regulatory mandates are outlined, illustrating the legal obligations organizations face in maintaining electronic records and protecting sensitive data. The chapter then presents a framework for effective organizational security, discussing both general and application controls, security policies, and risk assessment strategies. Readers learn how specific technologies—including firewalls, intrusion detection and prevention systems, encryption, and multifactor authentication—can help secure information assets. Ultimately, the chapter shows how tying security measures to overall business objectives adds value, ensuring that organizations remain resilient and prepared to respond to emerging security challenges.

Learning Objectives These are the chapter objectives: 8.1 Understand why information systems are vulnerable.

8.2 Describe the most prevalent and dangerous types of malware.

8.3 Understand the dangers posed by threat actors.

8.4 Describe the security issues raised by software vulnerabilities.

8.5 Describe the security issues raised by artificial intelligence.

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8.6 Describe the business value of security and control.

8.7 Describe an organizational framework for security and control.

8.8 Discuss technologies for safeguarding information resources.

8.9 Understand how the information in this chapter can help your career

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what's happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 8.1 Understand Why Information Systems Are Vulnerable  

Explain how interconnected networks expand the threat surface for systems of all sizes.

Emphasize that vulnerabilities may stem from poor management decisions, environmental factors, or system complexity.

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 

Show how hackers and threat actors can target client, server, and network layers.

Discuss the added challenge of wireless security and how Wi-Fi networks are especially prone to eavesdropping (e.g., war driving).

8.2 Describe the Most Prevalent and Dangerous Types of Malware    

Define malware broadly, including viruses, worms, Trojan horses, ransomware, and bots.

Highlight current trends, such as the rise of ransomware-as-a-service and the continued prevalence of Trojan horses.

Show how keyloggers and spyware can steal sensitive information.

Address the growing threat posed by mobile malware.

8.3 Understand the Dangers Posed by Threat Actors    

Clarify the different motivations of cybercriminals, nation-states, hacktivists, and malicious insiders.

Outline common tactics: spoofing, phishing, pharming, and Living off the Land (LOTL) attacks.

Demonstrate how denial-of-service and distributed denial-of-service attacks disable networks and impede e-commerce.

Highlight the significance of data breaches and identity theft, as well as cyberwarfare and cyberterrorism.

8.4 Describe the Security Issues Raised by Software Vulnerabilities    

Explain how software bugs and complexity create security gaps.

Define zero-day vulnerabilities and their risk.

Describe software patches and patch management.

Discuss the threat of software supply chain attacks, where malware is injected during development or updates.

8.5 Describe the Security Issues Raised by Artificial Intelligence   

Show how AI-based phishing can generate more convincing and personalized attacks.

Introduce deepfakes and the risks they pose for impersonation, fraud, and disinformation.

Explain the concept of jailbreaking Large Language Models (LLMs) to override built-in safeguards.

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

Note the availability of malicious AI tools that create tailored malware campaigns.

8.6 Describe the Business Value of Security and Control    

Emphasize the importance of protecting valuable data assets and ensuring business continuity.

Connect security efforts to reduced financial/legal risks and improved brand reputation.

Highlight laws and regulations, such as HIPAA, Gramm-Leach-Bliley, and Sarbanes-Oxley.

Explore the role of electronic records management and digital forensics in addressing legal and compliance issues.

8.7 Describe an Organizational Framework for Security and Control    

Distinguish between general controls and application controls, and how each set of measures mitigates risk.

Demonstrate the role of risk assessment in prioritizing resources for security.

Illustrate the importance of developing a security policy and acceptable use policy (AUP).

Incorporate disaster recovery planning and business continuity planning.

8.8 Discuss Technologies for Safeguarding Information Resources     

Identify authentication technologies, including passwords, security tokens, biometrics, and multifactor authentication.

Explain how firewalls, intrusion detection/prevention systems, anti-malware software, and unified threat management (UTM) tools function.

Describe encryption, public key infrastructures, digital certificates, and blockchain approaches to security.

Underscore strategies for protecting IoT devices, cloud-based services, and the mobile platform.

Note how organizations can achieve digital resiliency through continuous monitoring, security operations centers, and managed security services.

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8.9 Understand How the Information in This Chapter Can Help Your Career   

Stress how familiarity with contemporary threats and controls is essential for future professionals.

Relate how security measures align with business value, compliance, and ethical considerations.

Showcase that practical skills in risk assessment, auditing, or encryption tools are in high demand.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.                       

Acceptable use policy (AUP) (8.7) Advanced persistent threat attack (APT attack) (8.3) Anti-malware software (8.8) Application controls (8.7) Authentication (8.8) Biometric authentication (8.8) Bot (8.2) Botnet (8.2) Bug (8.4) Business continuity planning (8.7) Controls (8.1) Credential stuffing attack (8.3) Cryptocurrencies (8.8) Cyberterrorism (8.3) Cybervandalism (8.3) Cyberwarfare (8.3) Data breach (8.3) Deepfake (8.5) Denial-of-service attack (DoS attack) (8.3) Digital certificate (8.8) Digital forensics (8.6) Digital resiliency (8.8) Disaster recovery planning (8.7)

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                                     

Distributed denial-of-service attack (DDoS attack) (8.3) Downtime (8.8) Drive-by download (8.2) Encryption (8.8) Evil twin (8.3) Fault-tolerant computer system (8.8) Firewall (8.8) General controls (8.7) Hacker (8.3) Hacktivist (8.3) HTTPS (8.8) Identity and access management (IAM) (8.8) Identity theft (8.3) Information systems audit (8.7) Intrusion detection system (IDS) (8.8) Intrusion prevention system (IPS) (8.8) Keylogger (8.2) Living off the Land attack (LOTL attack) (8.3) Malvertising (8.2) Malware (8.2) Managed security service provider (MSSP) (8.8) Multifactor authentication (MFA) (8.8) Password (8.8) Patch (8.4) Pharming (8.3) Phishing (8.3) Potentially unwanted program (PUP) (8.2) Public key encryption (8.8) Public key infrastructure (PKI) (8.8) Ransomware (8.2) Risk assessment (8.7) Security (8.1) Security operations center (SOC) (8.8) Security policy (8.7) Security token (8.8) Smart card (8.8) Sniffer (8.1) Social engineering (8.3)

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            

Software supply chain attack (8.4) Spoofing (8.3) SQL injection attack (8.4) Threat actors (8.1) Transport Layer Security (TLS) (8.8) Trojan horse (8.2) Two-factor authentication (2FA) (8.8) Unified threat management systems (UTM systems) (8.8) Virus (8.2) War driving (8.1) Worm (8.2) Zero-day vulnerability (8.4) Zero trust (8.8)

Case Studies Opening Case Study: Ransomware Attack Paralyzes U.S. Healthcare Payment Systems Summary A high-profile ransomware attack in 2024 targeted Change Healthcare, a critical healthcare payment processing firm. The attackers gained access through a remote access application without multifactor authentication enabled. They encrypted the company‘s systems, exfiltrated sensitive healthcare data, and demanded ransom for decryption keys. The disruption halted claims processing and healthcare services, affecting hospitals, pharmacies, and millions of patients. This incident highlights how weak IT security can impact vital infrastructure nationwide.

1. In what ways did the impact of the Change Healthcare ransomware attack extend beyond Change Healthcare‘s immediate clients?

Suggested Answer: The attack went beyond causing harm to Change Healthcare itself and reverberated across the entire healthcare ecosystem. By shutting down claims processing and payment systems, it disrupted hospitals, physician practices, and pharmacies, halting vital financial transactions and casting doubt on patient data integrity. Providers lost access to key billing, eligibility checking, and authorizations, creating a bottleneck for patient services and reimbursement. Patients were also deeply affected, finding delays Copyright © 2026 Pearson Education, Inc.

in medication dispensing and treatment approvals. Moreover, economic repercussions were felt as healthcare institutions incurred extra costs for manual processes and temporary financial assistance to keep operations afloat.

2. How could the ransomware attack against Change Healthcare have been prevented?

Suggested Answer: Prevention efforts center on proactive security policies, thorough risk assessment, and strong technical safeguards. First, mandating multifactor authentication (MFA) for remote access applications and critical accounts could have blocked unauthorized entry.

Second, routine patch management and vulnerability scans would have helped seal potential software weaknesses. Third, frequent data backups and robust incident response plans would allow for faster recovery. Finally, fostering a culture of security awareness—training staff to recognize phishing and social engineering attempts— further reduces the risk of any single security lapse leading to an enterprise-wide compromise.

3. Is paying ransomware attackers an effective solution? Why or why not?

Suggested Answer: Paying ransom can appear expedient for swiftly regaining access to encrypted data, but it presents many risks. It may fund future criminal activities, encouraging more ransomware attempts. Payment does not guarantee the return of data or an absence of further exploitation; attackers sometimes keep copies of stolen information or carry out further attacks. Additionally, relying on payment sidesteps the fundamental need to improve system defenses and implement comprehensive backup strategies. From both ethical and strategic standpoints, robust prevention and incident response are more sustainable solutions than capitulating to ransom demands.

Spotlight on Organizations Case Study: Uptime Institute: Understanding and Preventing System Outages Summary Uptime Institute (UI) studies data center performance worldwide, focusing on reliability and resiliency. UI‘s Annual Outage Analysis provides insights into the root causes of critical IT failures, highlighting trends such as configuration errors, software issues, and

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network connectivity problems. Frequent findings point to human error as a persistent cause of wide-scale outages. Through the Management and Operations (M&O) assessment program, UI helps data centers minimize downtime by improving staffing, procedures, and resource allocation.

1. Why is digital resiliency so important for data centers?

Suggested Answer: Data centers are essential infrastructure for running critical applications, managing huge volumes of data, and providing continuous digital services. As organizations worldwide rely on real-time transactions, cloud-based services, and global connectivity, even a brief outage can threaten revenue, reputation, and customer satisfaction. Digital resiliency ensures that data centers can withstand hardware malfunctions, software failures, and human errors, reducing both the frequency and duration of outages. This, in turn, preserves business continuity, protects sensitive data, and guarantees reliable access to services—from healthcare operations to financial transactions—that underpin modern life.

2. Why are system outages likely to have a more significant impact today?

Suggested Answer: As digital technology has embedded itself into nearly every industry, the consequences of an IT outage cascade widely. Organizations run mission-critical processes online, and even small disruptions can halt vital workflows, e-commerce transactions, or data analyses. Furthermore, the interconnectedness of supply chains means that one outage can trigger additional downtime at reliant partners. Social media amplifies public awareness, escalating the reputational damage. This shift in critical dependencies, combined with 24/7 customer expectations, makes modern businesses far more vulnerable to widespread harm from IT system failures.

3. How does UI‘s Management and Operations (M&O) assessment program help make an organization‘s digital infrastructure more resilient?

Suggested Answer: UI‘s M&O assessment looks beyond hardware and software, focusing on the people and processes responsible for data center operations. By examining staffing levels, training, maintenance practices, and managerial oversight, the assessment identifies gaps that increase the likelihood of human error—still a leading cause of downtime.

Through recommended best practices, UI guides organizations on efficient resource

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management, consistent procedures, and improved team coordination. When properly implemented, these measures mitigate risks tied to poor documentation, inadequate scheduling, or lack of accountability, thereby boosting overall digital resiliency.

Chapter Case Study: Social Engineering Creates Chaos for MGM Resorts Summary: MGM Resorts suffered a significant cyberattack after a hacker impersonated an employee over the phone. Exploiting the company‘s lax identity verification protocols, the attackers gained administrator-level access and encrypted key servers, ultimately disrupting hotel services and casino operations. MGM Resorts refused to pay the ransom, choosing instead to restore systems from backups, costing tens of millions of dollars. The breach also exposed customers‘ personal information and underscored how social engineering can override technical defenses.

1. What steps could MGM Resorts have taken that might have prevented this attack?

Suggested Answer: A more robust identity verification process would be a first line of defense. For instance, requiring multifactor authentication to reset administrator passwords might have foiled the social engineer. The company could also impose strict role-based privileges, limiting the scope of super administrator accounts. Ongoing security training for help desk employees—teaching them to recognize signals of social engineering—would detect suspicious calls. Additionally, complaint or incident-response hotlines would spur quick escalation for unusual password resets. Overall, well-considered security policies combined with frequent trainings can protect against the single point of failure that social engineering exploits.

2. Do you think MGM Resorts‘ management made the correct decision to not pay the ransom the hackers demanded? Why or why not?

Suggested Answer: From one perspective, not paying ransom undercuts the profitability of such attacks and signals that the organization refuses to fund criminal activity. It can also reduce the likelihood of future extortion attempts. However, this path imposes a heavier short-term

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burden of technical cleanup, restored backups, and lost revenues. Ultimately, a no-pay stance appears ethically aligned and may yield stronger long-term cybersecurity improvements, but it requires both excellent preparation—complete backups and incident response plans—and a tolerance for immediate financial losses.

3. Why are social engineering attacks so hard to prevent?

Suggested Answer: Social engineering exploits human trust and innate willingness to assist, bypassing technological defenses. Attackers skillfully gather personal or organizational details to appear legitimate. Employees may not suspect something is amiss, particularly if the request seems routine (e.g., resetting an account password). No matter how tightly systems are secured, a single person‘s momentary lapse can unravel these safeguards.

Equipping personnel with regular training, layered verification practices, and strict escalation policies is thus vital—but the ingenuity and adaptability of social engineers makes such attacks especially persistent and challenging.

Review Questions 8.1 Understand why information systems are vulnerable 1. Define security and controls.

Suggested Answer: Security refers to the policies, procedures, and technical measures used to guard digital and physical assets from unauthorized access, alteration, theft, or damage. Controls are methods, policies, and organizational procedures guaranteeing the integrity and reliability of an enterprise‘s data, systems, and technology operations. Together, they create and support a protective framework. Security addresses external and internal threats—everything from hacking attempts to employee misuse—while controls focus on ensuring adherence to organizational standards, accuracy of data, and appropriate usage of systems.

2. List and describe the most common threats against contemporary information systems.

Suggested Answer:

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(a) Malware includes viruses, worms, and trojans designed to damage or disrupt systems. (b) Unauthorized access often occurs via weak passwords, social engineering, or phishing. (c) Insider threats occur when employees or partners misuse privileges, intentionally or accidentally. (d) Network vulnerabilities, including unprotected Wi-Fi, enable eavesdropping and data theft. (e) Hardware/software failures and downtime can also cripple operations. (f) Natural disasters, such as floods or earthquakes, pose physical risk to computing infrastructure. (g) Advanced threats like ransomware or denial-of-service attacks can bring critical systems offline.

8.2 Describe the most prevalent and dangerous types of malware 1. Define malware and distinguish among a virus, a worm, a Trojan horse, ransomware, a bot, and a PUP. Suggested Answer: Malware is malicious software designed to harm or exploit features of target systems. A virus attaches itself to other programs or data files to spread; a worm propagates autonomously across networks; a Trojan horse appears to be legitimate software but delivers hidden malicious functions. Ransomware locks users out of their data until a ransom is paid. A bot is malicious code that creates a remotely controlled ―zombie‖ computer, and PUPs (potentially unwanted programs) are often adware or spyware that install without a user‘s informed consent.

2. Explain how malware can be spread.

Suggested Answer: Malware commonly enters systems via attachments in phishing emails, drive-by downloads from compromised websites or ads (malvertising), instant messaging,

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infected USB devices, or vulnerabilities in network protocols. Trojans often masquerade as legitimate downloads. Worms spread over network connections without user interaction. Attackers may also upload malicious files to peer-to-peer platforms or exploit unpatched software to install malware. Mobile devices face similar risks, such as malicious apps on third-party app stores or embedded links in text messages.

8.3 Understand the dangers posed by threat actors 1. Describe the different types of threat actors and explain how they can create security problems and damage systems.

Suggested Answer: Cybercriminals seek financial gain by stealing data or extorting victims through ransomware. Nation-states may sponsor espionage or sabotage to gain geopolitical advantage. Hacktivists, motivated by ideology, aim to deface or disrupt systems.

Malicious insiders exploit their own credentials to commit theft, sabotage, or fraud.

Hackers may also be ―ethical‖ when authorized to identify an organization‘s vulnerabilities. Most threat actors use sophisticated methods—social engineering, phishing, exploit kits, or vulnerabilities in hardware and software—to infiltrate networks and cause significant damage.

2. Define spoofing and explain why phishing, evil twins, and pharming are forms of spoofing.

Suggested Answer: Spoofing disguises the attacker by presenting false data or redirecting traffic, thereby deceiving the target. Phishing spoofs legitimate businesses to trick users into revealing personal data or login credentials. Evil twins, or fraudulent Wi-Fi networks, spoof legitimate wireless access points to intercept sensitive data. Pharming diverts users from legitimate websites to fake sites, spoofing web addresses and impersonating trusted destinations. In all cases, the attacker masquerades as a trustworthy entity to facilitate unauthorized activities.

3. Define a LOTL attack and explain how it differs from a DDoS attack.

Suggested Answer:

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A Living off the Land (LOTL) attack exploits already installed, legitimate software tools— like Windows PowerShell or network administration utilities—to compromise systems.

The threat actors avoid introducing new malicious files, making detection harder. In contrast, a distributed denial-of-service (DDoS) attack typically overloads a target‘s network or servers with massive traffic from compromised machines (botnets), causing service outages. LOTL focuses on stealth and persistent infiltration; DDoS focuses on overwhelming the targeted system‘s capacity.

4. Explain why data breaches and identity theft are such big problems today.

Suggested Answer: Massive troves of sensitive data are stored online including credit cards, social security numbers, and medical records. Data breaches expose these details, enabling criminal misuse for identity theft or fraud. In a world connected by e-commerce and digital services, stolen credentials can be used to open fake accounts, apply for loans, or claim benefits, causing financial and reputational harm. Widespread data breaches erode public trust in companies and require costly remediation efforts, including legal, regulatory, and technical safeguards.

5. Describe the security issues that insiders can create.

Suggested Answer: Insiders—employees or contractors—can unintentionally open the door to malware by clicking suspicious links or sharing passwords. Some insiders act maliciously, exploiting their system privileges to steal sensitive data or sabotage IT infrastructure. Because employees already have authorized access, insider wrongdoing may be harder to detect, especially if it occurs over an extended period. Poor security culture, lack of training, and insufficient controls—like system audits or privilege restrictions—compound insider risk.

6. Define computer crime and provide two examples of crime in which computers are targets and two examples in which computers are used as instruments of crime.

Suggested Answer: Computer crime involves violations of law requiring knowledge of computer technology.

When computers are targets, attackers aim to disrupt or harm computer systems directly—e.g., planting viruses to damage software, or carrying out a DDoS to knock a site offline. When computers are instruments, they facilitate criminal activity such as

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stealing credit card numbers, launching phishing campaigns, or committing extortion through ransomware. In both cases, technology either becomes the victim or the enabler of illegal acts.

8.4 Describe the security issues raised by software vulnerabilities 1. Explain how software defects affect system reliability and security.

Suggested Answer: Each software bug or defect offers a potential entry point for unauthorized users or malicious code. Flaws might allow elevated privileges, data corruption, or the bypassing of security controls. Because modern systems contain numerous interactions among applications, a single bug can escalate into widespread vulnerabilities. Complex code typically has thousands or millions of lines, rendering zero defects almost impossible.

Consequently, unpatched software can undermine reliability, exposing the organization to disruptions and potential data loss.

2. Explain how software supply chain attacks threaten security.

Suggested Answer: In a software supply chain attack, hackers infiltrate the development or update processes of legitimate software. Once the compromised software is distributed or updated, unsuspecting customers install malicious code in enterprise systems, granting attackers broad access. This method is especially potent because it targets trust in recognized vendors or open-source services. A single successful attack can cascade rapidly, impacting thousands of client organizations before the compromise is discovered. It challenges conventional perimeter security, emphasizing the need for strict vendor oversight and code inspections.

8.5 Describe the security issues raised by artificial intelligence 1. Explain how AI tools are being used by cybercriminals for phishing attacks.

Suggested Answer:

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Traditional phishing emails often show grammatical errors or obvious red flags, but AIbased systems can generate well-crafted, personalized messages at scale, eliminating telltale linguistic cues. AI can also comb through publicly available data to create highly effective spear-phishing efforts, referencing authentic personal or organizational information. This not only boosts the success rate of scams but also floods potential victims with realistically disguised messages, making robust spam filters and user training more vital than ever.

2. Define a deepfake and describe the security issues it creates.

Suggested Answer: Deepfakes use artificial intelligence to generate highly realistic but fabricated video or audio recordings—e.g., a politician appearing to say things they never said. Criminals can employ deepfakes to impersonate executives, enter secure video-conferencing calls, or commit fraud. The technology undermines trust, as one can no longer fully rely on visual or verbal ―proof.‖ For businesses, fake directives to transfer funds can be extremely costly. Managing this threat requires updated verification processes and AIbased detection tools.

3. Describe how cybercriminals are trying to subvert LLMs. Suggested Answer: Cybercriminals experiment with jailbreaking or prompt injection, feeding specialized requests to Large Language Models (LLMs) that override safety filters or produce disallowed content, such as malicious code. Some criminals train their own LLM-based tools, like WormGPT, that lack ethical limitations. Released on underground forums, these models automate tailored phishing campaigns or craft new malware.

Consequently, standard guardrails from mainstream LLM services are bypassed or disabled, making it harder to detect and stop malicious output at scale.

8.6 Describe the business value of security and control 1. Explain how security and control provide value for businesses.

Suggested Answer: Effective security and controls protect an organization‘s data, systems, and operations, preventing costly breaches, reputational harm, and potential regulatory fines. They help

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maintain customer trust and ensure uninterrupted service, allowing companies to build robust digital experiences without fear of malicious interference. A stable IT environment also enables innovation as managers can launch new features and services more confidently. On balance, sound security is indispensable to success in high-competition markets where data privacy and resilience are critical.

2. Describe the relationships among security and control, recent US government regulatory requirements, and digital forensics.

Suggested Answer: Laws such as HIPAA, Gramm-Leach-Bliley, and Sarbanes-Oxley mandate rigorous data protection and retention. Firms must ensure privacy, reliability, and compliance, requiring ongoing security monitoring and internal controls. Digital forensics ties into these obligations by offering structured procedures for collecting and preserving electronic evidence in court. If a security breach triggers potential litigation, precise digital forensics is necessary for presenting valid evidence that meets legal standards, from chain-of-custody protocols to retrieving deleted files while maintaining evidential integrity.

8.7 Describe an organizational framework for security and control 1. Define general controls and describe each type.

Suggested Answer: General controls address the overall environment of hardware, software, and procedures.     

Software controls manage access and usage of systems/software.

Hardware controls focus on protecting equipment from malfunction or theft.

Computer operations controls regulate job scheduling, backups, and error handling.

Data security controls ensure data confidentiality and integrity in storage.

Administrative controls formalize the organization‘s security standards, ensuring compliance.

Together, these measures safeguard the entire IT infrastructure, transcending specific applications.

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2. Define application controls and describe each type.

Suggested Answer: Application controls are unique to each software program. They ensure that authorized data is fully and accurately processed. Input controls check incoming data quality, verifying that fields are correct before entry. Processing controls monitor computations for consistency, detecting or halting suspicious activity. Output controls confirm that the final results—reports, documents, transactions—accurately match underlying data and that they are properly distributed. Because application controls relate to specific functionalities, they can be more narrowly tailored than general controls.

3. Describe the function of risk assessment and explain how it is conducted for information systems.

Suggested Answer: Risk assessment determines the level of potential harm if a system is compromised. By evaluating the probability of various threats (e.g., natural disasters, hacking attempts, human error) and the likely damage, managers can prioritize controls. Disaster scenarios, cost-benefit analyses, and probability matrices are common tools. This systematic investigation helps allocate resources wisely—spending more on highimpact areas while employing simpler measures for lower-risk concerns. Ultimately, risk assessment ensures that security investments align with actual organizational exposures.

4. Define and describe the following: security policy, acceptable use policy, and identity and access management.

Suggested Answer: A security policy outlines the organization‘s strategy for safeguarding assets, ranking risks, and specifying the mechanisms to address them. An acceptable use policy (AUP) stipulates permissible and impermissible actions by users, clarifies device usage and data handling, and states enforcement measures for violations. Identity and access management (IAM) automates user identity lifecycle tasks—provisioning unique accounts, specifying permissions, and verifying credentials—so that each individual only accesses resources aligned with their role. Together, these policies and tools preserve data ownership and reinforce organizational accountability.

5. Explain how information systems auditing promotes security and control.

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Information systems audits systematically evaluate the effectiveness of an organization‘s security practices and controls, confirming adherence to policies and regulations. By reviewing hardware, software, network settings, and event logs, auditors identify vulnerabilities like weak authentication or uninstalled patches. The audit also tests compliance with government standards (like Sarbanes-Oxley) or contractual obligations. Findings specify the severity of each gap and recommend fixes, enabling leadership to address weaknesses prescriptively, prioritizing resources to the most critical issues.

8.8 Discuss technologies for safeguarding information resources 1. Name and describe three authentication methods.

Suggested Answer: • Passwords are secret codes known only to the user, but are easily guessed or stolen if weak.

• Security tokens are small hardware devices generating dynamic passcodes for stronger two-step verification.

• Biometric authentication uses unique physical or behavioral traits (fingerprints, voice, facial recognition) to verify identity. Each method aims to confirm user legitimacy, though biometrics are often preferred for convenience and reduced vulnerability to knowledge-based attacks.

2. Describe the roles of firewalls, intrusion detection and prevention systems, and anti-malware software in promoting security.

Suggested Answer: A firewall inspects incoming and outgoing network traffic based on set rules, blocking access from unauthorized sources. Intrusion detection systems (IDS) continuously monitor for suspicious behavior—unexpected login attempts, file access anomalies— and alert administrators. Intrusion prevention systems (IPS) take automated actions to block or quarantine these threats. Anti-malware software scans for known malicious signatures and suspicious behavior to detect and remove viruses, worms, trojans, or spyware. Together, they offer layered defense, helping seal off external and internal attack vectors.

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3. Explain how encryption protects information.

Suggested Answer: Encryption transforms plain text into unreadable cipher text using an algorithm and an encryption key. Only authorized parties holding the appropriate key can decrypt the data back into its original form. This ensures privacy during transmission (e.g., over the Internet), storage in files, or when sharing across unsecured networks. By making stolen or intercepted data unintelligible to outsiders, encryption reduces the risk of unauthorized disclosure and helps organizations meet regulatory requirements for data protection.

4. Describe the roles of encryption and digital certificates in a public key infrastructure.

Suggested Answer: Public key infrastructure (PKI) uses asymmetric encryption with paired public and private keys. Individuals share their public keys so others can send them encrypted data that only the corresponding private key can decipher. Digital certificates act as digital ID cards, binding a public key to a trusted entity. Certificate authorities issue these certificates, vouching that the named owner of a public key is authentic. Such trust frameworks are vital for secure e-commerce and broad network communications.

5. Distinguish between disaster recovery planning and business continuity planning.

Suggested Answer: Disaster recovery planning focuses on regaining technical functionality—restoring servers, networks, and data backups—after a catastrophic event such as a flood or power outage. Business continuity planning deals more broadly with resuming essential business processes and operations during or immediately after a disruption. It looks at locating backup work sites, establishing manual procedures, and identifying missioncritical functions. Both plans are complementary, though the former is more technologycentric and the latter is more process- and strategy-centric.

6. Define digital resiliency and describe its benefits for an organization.

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and maintain customer trust. A resilient ecosystem supports continuous innovation and agility. Instead of waiting for disasters to occur, companies manage risks proactively, refining staff training, system backups, vendor arrangements, and cloud configurations.

Overall, digital resiliency fosters stability, adaptability, and the capability to thrive under adverse conditions.

7. Identify and describe the security challenges posed by Internet of Things (IoT) devices.

Suggested Answer: IoT devices—including sensor and smart appliances—often operate on minimal operating systems that lack robust security features. They are deployed in large numbers, creating a widespread ―attack surface.‖ Many are hard to patch or go unpatched, allowing old vulnerabilities to linger. Also, physical tampering is easier for widely distributed IoT endpoints. Their data streams become points of compromise, potentially enabling attackers to pivot into larger networks. To be secure, IoT deployments require custom controls and standardized policies.

8. Describe measures for improving software quality and reliability.

Suggested Answer: Organizations can adopt rigorous testing strategies—walkthroughs, pilot runs, code reviews—to scale down bugs before going live. Software metrics track error rates, response times, and throughput, guiding improvement efforts. Patch management ensures that discovered vulnerabilities are quickly fixed. Using secure coding practices mitigates injection attacks and logic errors. Regular code audits by external parties or automated scanning tools also reduce hidden defects. Ultimately, methodical development cycles and continuous improvement raise overall system reliability.

9. Describe how AI is being used to safeguard information resources.

Suggested Answer: AI-driven anomaly detection sifts through massive system logs and network traffic to identify unusual patterns or deviations that might indicate an attack. Machine learningbased anti-malware tools can detect zero-day exploits by analyzing suspicious behaviors. In authentication, biometric systems harness AI to verify biometric signals more accurately and adapt to changes over time. AI also helps automate security operations centers, prioritizing alerts and orchestrating swift countermeasures. Such applications reduce human error and enhance proactive defense.

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Discussion Questions 8.9 Security isn’t simply a technology issue; it’s a business issue.

Discuss.

Suggested Answer: Security intertwines with all aspects of an organization—from day-to-day operations to long-term strategic positioning. Viewing it solely as ―an IT concern‖ neglects the management, organizational, and cultural dimensions. For instance, if employees are unaware of phishing red flags or do not comply with acceptable use policies, even the strongest technical controls can be undermined. Moreover, security breaches jeopardize brand reputation, legal compliance, and revenue streams. Therefore, security must be approached as a strategic priority, aligning with corporate goals and stakeholder interests. It requires cross-departmental buy-in, continuous training, and upto-date governance. By embedding security into corporate policies, companies foster an environment that is resilient, reputable, and trustworthy—thereby driving business success as well as operational continuity.

8.10 If you were developing a business continuity plan for your company, where would you start? What aspects of the business would the plan address?

Suggested Answer: Establishing a business continuity plan often begins with a business impact analysis, identifying which functions are most critical and assessing the potential operational, financial, and reputational losses if they are disrupted. Next, define key recovery time objectives—how quickly each function must be restored. The plan coordinates alternative facilities or backup sites to house operations should a primary site go offline.

It also defines team roles, communicates chain-of-command procedures, and designates incident response teams. Beyond technical disaster recovery, it covers how to maintain customer contacts, pay employees, and coordinate with vendors when usual processes fail. Testing and drills are also built in to validate the plan‘s real-world effectiveness and refine it as needed. Regular reviews ensure the plan evolves as the

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business—which may incorporate new technologies, third-party providers, or product lines—grows or changes.

8.11 Your business is about to launch an e-commerce website where it will sell goods and accept credit card payments. Discuss the major security threats to this website and their potential impacts. What can be done to minimize these threats?

Suggested Answer: Threats include malware targeting customers or servers, denial-of-service attacks aimed at overwhelming site capacity, and data breaches stealing sensitive cardholder information. Hackers can exploit vulnerabilities in web applications or payment gateways, sabotage inventory data, or deface the site. The impacts range from immediate revenue loss (when the site goes offline) and large-scale customer distrust should credit card details be exposed, to long-term brand damage. Minimizing threats involves securing the platform with up-to-date patches, deploying adequate firewalls and intrusion detection/prevention systems, enforcing TLS/HTTPS for all transactions, and regularly scanning for vulnerabilities (including SQL injection). Implementing PCI DSS standards further ensures safe handling of credit card data, while strong authentication practices reduce the risk of unauthorized system access. Continual monitoring, backups, and staff training complete a robust defense strategy.

AI Project 8.12 AI Project: Devising an Information Systems Security Plan "You have been hired as a consultant by two friends who want to open a retail store selling organic pet food and treats as well as pet toys and clothing made from organic materials. They have asked you to advise them on potential information systems security problems they might face. They also want you to devise an information systems security plan that would be appropriate for a small retail business with less than 10 employees. Using Microsoft‘s Copilot, Google‘s Gemini, or ChatGPT, develop a series of prompts to assist in providing this advice and devising such a security plan. Save a copy of your prompts and the output of the chat session. Submit to your instructor as requested."

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Suggested Answer: A small retail operation will likely rely on point-of-sale software, customer contact databases, a website or e-commerce portal, and potentially cloud-based accounting.

Because staff have many overlapping duties, a crucial first step is to define user roles, ensuring that each role has only the access required for essential tasks. Simple security lapses—like weak Wi-Fi passwords or missing OS updates—pose serious risks. The plan should start with strong password guidelines, routine patch management policies for all devices, and encryption of financial transactions. Cloud services must be configured properly, with multifactor authentication for logins and regular backups stored securely off-site. An incident response template ensures swift action if a breach or malware outbreak occurs. The business should also adopt an acceptable use policy regulating how employees handle store devices and access social media at work.

Employee training in phishing awareness is vital since small businesses are often targeted via deceptive emails. Finally, scheduling a quarterly audit helps confirm that the security measures are in place and functioning, ensuring the store‘s data and operations remain protected.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

8.13 Management Decision Problem ―Scopely is a leading online gaming company offering a variety of popular games such as Scrabble Go, Star Trek Fleet Command, and Looney Tunes World of Mayhem.

Although Scopely primarily focuses on the mobile platform, with Apple iOS and Android versions of its games, some games are also available for play on desktop/laptop computers. Scopely also has a corporate website and a social media presence on Facebook, Instagram, X, TikTok, and LinkedIn. Prepare a security analysis for Scopely.

What kinds of threats should it anticipate? What would be their impact on the business?

What steps can it take to prevent damage to its operations?‖ Suggested Answer: Scopely should expect threats at multiple levels. First, games operating on the mobile platform might be susceptible to malware, user impersonation, and exploit-modified app versions. Second, the corporate site and social media presence introduce the possibility of phishing campaigns, brand impersonations, or distributed denial-of-service attacks.

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Scopely‘s large player community could also tempt hackers with data theft—stealing account credentials, personal details, or payment information. Potential impacts include game downtime, loss of user trust, regulatory fines for data mishandling, and reputational damage among gamers.

To mitigate these risks, Scopely should implement secure coding practices, regular patching, and continuous security assessments. Multifactor authentication and encryption for player accounts further strengthens user defenses. Web application firewalls and intrusion prevention systems protect public-facing sites, while real-time monitoring spots unusual spikes in traffic. Monitoring social media channels for imposter content is also crucial. Finally, ensuring robust data privacy and compliance procedures meets both legal standards and fosters gamer confidence.

8.14 Using Spreadsheet Software to Analyze Security Events ―Software skills: Spreadsheet sorting and data filtering Business skills: Monitoring and analyzing security events Events that occur in computer systems are commonly recorded in log files. Each operating system, including Windows, uses its own log files, and applications and hardware devices also generate logs. Security teams can use security logs to track users on the corporate network, identify suspicious activity, and detect vulnerabilities.

The security log lists events related to security, including login attempts or file deletions.

System administrators use their organization‘s audit policy to determine which events to enter into their security log.

Your company‘s Information Systems Department has compiled a list of security events from the company‘s Windows security event log that merit special attention from the organization. You will find further information in the MIS18_Project 8.14_Student File, which shows the Security Event, Event ID, and Potential Criticality of each event on that list and also additional information.

The ―Event ID‖ is the code Windows assigns to each particular security event. The ―Potential Criticality‖ column identifies whether the event should be considered to have Low, Medium, or High criticality in detecting attacks. A potential criticality of High means that even one occurrence of the event should be investigated. Potential criticality of Medium or Low means that these events should be investigated only if they occur unexpectedly or in numbers that significantly exceed the expected baseline in a measured period of time. All organizations should test these recommendations in their Copyright © 2026 Pearson Education, Inc.

environments before creating alerts that require mandatory investigative responses.

Every environment is different, and some of the events ranked with a potential criticality of High may occur because of other harmless events.   

Sort the data by Potential Criticality from High to Low. Filter the data to display all events of High Potential Criticality.

Select one event of High Potential Criticality and use the web to find out more about the event‘s importance and significance. Write a paragraph to explain why businesses should pay close attention to this type of security event.‖

Suggested Answer: After opening the provided spreadsheet, you would begin by sorting the dataset by the ―Potential Criticality‖ field, sorting from ―High‖ to ―Low.‖ Then, using the filter function, you would display only rows labeled as High Potential Criticality. Suppose you select an event code like ―4625‖ (failed account login). This event is significant because multiple failed login attempts in short succession may indicate a brute force or credential stuffing attack. High-frequency appearances of Event ID 4625 can signal a looming threat to user accounts or indicate that malicious actors are testing passwords. Consequently, an organization using such logs should set up automated alerts that trigger when login failures exceed a set threshold. Quick intervention—locking accounts or investigating suspect IPs—prevents large-scale breaches. This example demonstrates the importance of log analysis to detect anomalies and enhance security posture.

8.15 Evaluating Security Outsourcing Services ―Software skills: Web browser and presentation software Business skills: Evaluating business outsourcing services This project will help develop your skills in using the web to research and evaluate security outsourcing services. 

You have been asked to help your company‘s management decide whether to outsource security or keep the security function within the firm. Search the web to find information to help you decide whether to outsource security and to locate security outsourcing services.

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 

Present a brief summary of the arguments for and against outsourcing computer security for your company.

Select two firms that offer computer security outsourcing services and compare them and their services. Prepare a PowerPoint or other form of presentation for management, summarizing your findings. Your presentation should address whether your company should outsource computer security. If you believe your company should outsource, the presentation should identify which security outsourcing service you selected and justify your decision. If you believe the company should not outsource, you should identify the security tools it should use to ensure appropriate security.‖

Suggested Answer: When determining whether to outsource security, begin by listing the pros and cons.

Outsourcing can bring specialized expertise, economy of scale (since security providers serve multiple clients), and continuous coverage, including advanced monitoring tools managed by experts. However, it can raise concerns about losing direct control over security procedures, placing trust in a vendor‘s reliability, and risking vendor lock-in.

Researching two well-known providers—say, Company A (focused on cloud-based managed security) and Company B (offering on-premises security solutions)—would include comparing their feature sets and track records. Company A might offer 24/7 SOC monitoring, advanced machine learning-based threat detection, and flexible month-to-month contracts, while Company B could excel at customized firewall configurations and on-site support for compliance audits. The decision would hinge on the organization‘s size, regulatory needs, budget constraints, and in-house expertise. A presentation to management could highlight the cost comparisons, reliability metrics, and alignment with the firm‘s existing IT environment. The final recommendation might lean toward an outsourced solution for round-the-clock coverage, or an internal approach if robust internal IT skill sets exist.

8.16 Collaboration and Teamwork Project: Evaluating Security Software Tools ―With a group of two or more students, use the web to research and evaluate two competing vendors‘ security products, such as anti-malware software, firewalls, or intrusion detection and prevention software. For each product, describe its capabilities, for what types of businesses it is best suited, and its cost to purchase and install. Which

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is the best product? Why? If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: Suppose you compare Vendor X‘s anti-malware suite with Vendor Y‘s. Vendor X may advertise multi-layer protection, real-time machine learning threat detection, and minimal system resource usage—suitable for mid-sized offices requiring easy configuration and auto-updates. Vendor Y might boast advanced sandboxing to catch ―zero-day‖ threats, plus an integrated firewall, albeit at a higher learning curve and cost.

You would note that Vendor X‘s speed and lower cost might be ideal for smaller organizations, while Vendor Y‘s comprehensive feature set fits enterprises handling more sensitive data. In presenting to classmates, highlight each product‘s system requirements, subscription fees, patching schedule, and effectiveness ratings from reputable test labs. Conclude by emphasizing which suite aligns best with your hypothetical organization‘s goals—often balancing budget constraints with the need for robust protection.

Suggested Assignments 1. Current Event Malware Review: Ask students to choose a recent malwarerelated incident in the news. Have them investigate the nature, spread, and impact of the malware, and propose at least three measures that might have prevented or mitigated the attack.

2. Security Policy Simulation: Have students draft a security policy and acceptable use policy for a small business with up to 20 employees. They should incorporate device usage, confidentiality guidelines, and an incident escalation process. Students will present their policies in class and debate consistency and clarity.

3. IoT Vulnerability Analysis: Provide students with a scenario of a local hospital implementing smart medical devices. Ask them to list the potential vulnerabilities and outline a plan to ensure network segmentation, firmware updates, and data encryption. Students should give a short presentation on their recommendations.

4. Penetration Testing Proposal: Students will assemble a mini-penetration testing plan for a mid-sized retailer‘s e-commerce site. They must identify at least five specific tests (like SQL injection checks, social engineering, or Wi-Fi infiltration) and articulate the resources needed, plus ethical and legal considerations.

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5. Disaster Recovery Drill: Assign students to develop a tabletop exercise simulating a data center outage caused by a natural disaster. The exercise should specify steps for maintaining essential services, delegating tasks, alerting stakeholders, and restoring operations. Students will discuss their approach and reflect on possible improvements post-exercise.

Chapter 9 – Instructor Manual Chapter Summary This chapter explores how organizations use enterprise applications—specifically Enterprise Resource Planning (ERP), Supply Chain Management (SCM), and Customer Relationship Management (CRM) systems—to improve efficiency, reduce costs, and enhance customer satisfaction. It details how ERP systems integrate numerous business processes with a central database, helping firms standardize their operations and make more informed decisions. Additionally, the chapter examines how firms leverage SCM systems to manage and coordinate the sourcing of raw materials, production scheduling, and product distribution across global networks. It covers important SCM concepts, including just-in-time strategy, the bullwhip effect, and how internet-based supply chain tools and AI-driven analytics can reduce uncertainty while improving forecasting. The discussion of CRM systems focuses on how organizations use operational and analytical CRM to nurture customer relationships, develop marketing campaigns, and automate sales and customer service. Finally, the chapter delves into the challenges of implementing large-scale enterprise applications, highlights the growing role of AI in these systems, and outlines how these technologies shape careers for students entering the realm of Management Information Systems.

Learning Objectives These are the chapter objectives: 9.1 Understand ERP systems.

9.2 Understand SCM systems.

9.3 Describe global supply chain management challenges.

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9.4 Understand CRM systems.

9.5 Discuss enterprise application challenges.

9.6 Describe how enterprise applications are using AI. 9.7 Understand how the information in this chapter can help your career

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what‘s happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don‘t plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at: https://www.pearson.com/laudon

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Key Points to Cover 9.1 Understand ERP Systems    

Emphasize how ERP consolidates data from multiple business processes (finance, HR, production) into one centralized database.

Discuss the importance of best-practice business processes built into ERP systems and the potential organizational changes required.

Explore examples of ERP-driven efficiency gains, such as reduced data redundancy and faster decision-making.

Introduce AI-integrated ERP solutions and how they leverage predictive analytics to enhance forecasting.

9.2 Understand SCM Systems    

Define a supply chain, highlighting the upstream (supplier-facing) and downstream (distribution-facing) segments.

Demonstrate how SCM software, including planning and execution systems, reduces inefficiencies and alleviates the bullwhip effect.

Explain just-in-time strategies and the importance of accurate information flows to match supply with actual demand.

Link AI capabilities, such as route optimization and anomaly detection, to improving supply chain operations.

9.3 Describe Global Supply Chain Management Challenges   

Show how global supply chains span multiple countries/regions, subject to varying performance standards and regulations.

Stress how internet technology can coordinate complex logistics networks and increase supply chain visibility.

Present examples of AI use in global supply chains, such as predictive demand forecasting and real-time disruptions monitoring.

9.4 Understand CRM Systems  

Define CRM as a system to capture and integrate customer data across sales, marketing, and service.

Differentiate between operational CRM (front-office processes) and analytical CRM (data analysis for better decision-making).

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 

Highlight CRM capabilities, such as sales force automation, marketing automation, and customer service support.

Introduce AI-driven CRM features that automate repetitive tasks and personalize interactions with chatbots and predictive lead scoring.

9.5 Discuss Enterprise Application Challenges    

Discuss the complexity and expense of enterprise applications and the deep organizational changes they often require.

Raise the importance of thorough planning and realistic expectations to avoid budget overruns and operational disruptions.

Present how enterprise systems now include cloud-based options for enhanced scalability and lower initial investment.

Introduce composable ERP as an emerging technology strategy for greater flexibility and modular adoption.

9.6 Describe How Enterprise Applications Are Using AI   

Share how AI augments traditional ERP, SCM, and CRM with advanced analytics for real-time decision-making.

Identify major AI capabilities, such as machine learning for anomaly detection, predictive maintenance, or generative AI for content.

Illustrate how AI helps unify large volumes of data, enabling deeper insights for managers across the organization.

9.7 Understand How the Information in This Chapter Can Help Your Career   

Link course concepts to career growth, emphasizing how experience with ERP, SCM, and CRM systems enhances employability.

Discuss the demand for skilled professionals who can implement and manage enterprise systems.

Show how understanding the challenges of enterprise application integration prepares students for practical workplace scenarios.

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Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.

1. Analytical CRM (9.4) 2. Bullwhip effect (9.2) 3. Churn rate (9.4) 4. Composable ERP (9.5) 5. Cross-selling (9.4) 6. Customer lifetime value (CLTV) (9.4) 7. Demand planning (9.2) 8. Just-in-time strategy (9.2) 9. Operational CRM (9.4) 10. Pull-based model (9.2) 11. Push-based model (9.2) 12. Sales force automation modules (SFA modules) (9.4) 13. Supply chain (9.2) 14. Supply chain execution system (9.2) 15. Supply chain planning system (9.2) 16. Touch point (9.4)

Case Studies Opening Case Study: TrueBlue Speeds Ahead with Enterprise Applications Summary: TrueBlue, a rapidly expanding staffing and workforce management company, struggled with 20 fragmented legacy systems that created conflicting information and required manual workarounds. By choosing Oracle Cloud ERP and HCM, the firm unified its financial and HR data on a single platform. This streamlined operations, saved time, reduced infrastructure expenses, and opened up new ways to grow and analyze talent needs, leveraging AI to improve efficiency and decision-making.

1. How did legacy systems affect TrueBlue‘s business performance?

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Suggested Answer: TrueBlue‘s disparate legacy systems hindered business performance by producing inconsistent information, causing heavy reliance on manual reconciliation and workarounds. Employees had to gather data from multiple systems to make routine decisions such as payroll processing. This fragmentation increased operational costs, prolonged data-related tasks, and limited the company‘s agility.

Without a unified view of enterprise data, TrueBlue struggled with inefficiencies and slow processes, all of which impeded sustainable growth.

2. Why were cloud ERP, HCM, and financial applications a good solution for TrueBlue?

Suggested Answer: Implementing Oracle Cloud solutions eliminated the need for costly, time-consuming integrations among multiple on-premises systems. A single platform offered consolidated, real-time employee and financial data, streamlining HR and finance workflows. By unifying these processes, TrueBlue reduced errors and gained valuable analytics capabilities. Additionally, the flexible cloud infrastructure enabled the company to scale up or down easily, cutting infrastructure costs and simplifying updates and maintenance.

3. How did implementing cloud enterprise applications change operations and decision making at TrueBlue?

Suggested Answer: After migrating to Oracle Cloud, TrueBlue standardized core processes and data across finance and HR. Employees saved time by avoiding repetitive reconciliations and manual reporting steps, freeing them to focus on strategic initiatives such as optimizing branch operations. The AI-driven analytics allowed deeper visibility into processes, enabling more accurate forecasting and risk management.

Managers accessed real-time insights for quicker, evidence-based decisions, accelerating TrueBlue‘s agility in a competitive market.

Spotlight on Organizations Case Study: BYK Tames Its Supply Chains Summary: BYK, a major global supplier of specialty chemicals, previously operated with disconnected legacy demand planning systems. It turned to SAP Integrated Business Planning and SAP Supply Chain Control Tower for a single source of data and real-time analytics across multiple production sites. By streamlining sales, operations, and demand planning, BYK improved forecast accuracy, achieved more efficient

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collaboration, and gained the ability to manage supply chain data and processes more proactively.

1. Assess the importance of supply chain management for BYK. Suggested Answer: Supply chain management is critical for BYK because the company‘s complex global network includes suppliers, manufacturing sites, and customers spanning different locations and markets. With diverse product lines, effective supply chain processes ensure timely material availability, maintain production flow, control costs, and foster reliable order fulfillment. Fine-tuning the supply chain yields better utilization of resources, enhances agility, and positions BYK to meet demanding customer needs while preserving its competitive edge.

2. Identify and describe BYK‘s problems in supply chain management.

Suggested Answer: BYK operated legacy demand planning systems that did not integrate well, causing limited visibility and challenges in forecasting. Its data resided in disparate repositories, preventing company-wide alignment of information about inventory, production capacities, and demand. This fragmentation increased errors and constrained the firm‘s ability to collaborate effectively across sites. Ultimately, BYK found it difficult to manage growth and remain competitive without a unifying supply chain solution and standardized processes.

3. Describe how the SAP solutions BYK implemented changed the way BYK ran its business.

Suggested Answer: The SAP Integrated Business Planning suite and Supply Chain Control Tower provided BYK with a cloud-based single source of truth, aligning sales, operations, and demand planning. This synchronization allowed all stakeholders to work from current, accurate data in real time, streamlining decision-making and boosting forecast precision. BYK moved from fragmented processes toward a more holistic approach, with automated alerts and ―what-if‖ analyses that enabled proactive, datadriven responses to supply chain disruptions and evolving market demand.

Chapter Case Study: MillerKnoll Uses Salesforce and AI to Transform Its Business Strategy Summary:

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MillerKnoll, formerly Herman Miller, redesigned its business strategy and digital store to provide seamless, personalized experiences for diverse customer segments. By implementing Salesforce solutions—Marketing Cloud, Sales Cloud, Service Cloud, and Commerce Cloud—MillerKnoll gained a unified view of each customer and a more agile online service. AI tools helped track and analyze carbon footprints for sustainability efforts and automate marketing journeys, driving improved customer engagement across multiple channels.

1. What is MillerKnoll‘s business strategy? What is the role of customer relationship management in that strategy?

Suggested Answer: MillerKnoll‘s core strategy is to offer high-quality, design-centric home and office furnishings while delivering a seamless omni-channel experience. As part of this strategy, CRM is crucial for unifying data on customer preferences, past interactions, and product history so that the company can provide personalized engagement. By collecting data across marketing, sales, and service, MillerKnoll can tailor user experiences, anticipate needs, and foster brand loyalty, all while scaling globally.

2. How did using Salesforce change the way MillerKnoll ran its business?

Suggested Answer: Salesforce brought together MillerKnoll‘s sales, marketing, and service functions on a single cloud-based platform. This integration replaced formerly disjointed processes with real-time visibility into customers‘ journeys, streamlined marketing campaigns, and automated key sales tasks such as lead prioritization.

Service teams benefited from single-view client profiles and AI support, improving response times and personalization. Overall, Salesforce enabled consistent, data-driven workflows and laid the groundwork for a frictionless omni-channel customer experience.

3. What is the role of AI in MillerKnoll‘s business model?

Suggested Answer: AI supports both operational excellence and sustainability at MillerKnoll. Tools like Salesforce Einstein and Net Zero Cloud analyze massive data sets—from e-commerce transactions to carbon emission tracking—and generate insights for proactive decision-making. For instance, generative AI features power personalized product recommendations, while advanced analytics optimize carbon data collection and help the company monitor suppliers‘ footprints. This approach reinforces MillerKnoll‘s commitment to sustainability and strengthens customer relationships with relevant, timely information.

4. Give examples of two business decisions at MillerKnoll.

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Suggested Answer: One decision involves real-time adjustments to online merchandise displays, ensuring product offerings align with trending styles and customer demand. Another pertains to carbon emissions management, where the company decides how to invest effort and capital to reduce supply chain or productionrelated emissions. Both decisions rely on AI-powered insights: digital commerce data helps refine product placements and marketing, while Net Zero Cloud analytics identify opportunities across suppliers and processes for sustainable improvements.

Review Questions 9.1 Understand ERP systems 1. Explain what an ERP system is and how it works.

Suggested Answer: An ERP (Enterprise Resource Planning) system centralizes and integrates data from multiple functional areas of a business—such as finance, manufacturing, sales, and human resources—into a single database. This unified data model ensures that any information entered by one area is accessible across the organization in real time, thereby reducing redundancy and improving the consistency of records. By introducing best-practice business processes, ERP systems enforce standardized methods of doing work, leading to fewer errors and more efficient operations. When, for example, an order is placed, the finance department instantly sees the invoicing and payment needs, while inventory and production planning automatically adjust to real demand.

Additionally, ERP systems may track important metrics like order status, profitability, and resource usage, offering comprehensive visibility to managers. Recognizing the need for timely information, modern ERP systems also often integrate AI, allowing for predictive analytics that help with resource forecasting, anomaly detection, and process automation. All of these features make ERP systems integral for enterprise-wide strategic decision-making.

2. Describe how ERP systems provide value for a business.

Suggested Answer: ERP systems deliver value through the standardization of processes, unification of data, and real-time availability of information. On an operational level, they streamline tasks such as order fulfillment, procurement, and financial close processes, which reduces

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cycle times and errors. Standardization also heightens accountability—employees clearly see their roles and how each action influences other departments. Because all modules draw from the same database, duplication of data entry is minimized, lowering labor costs and decreasing opportunities for mistakes. From a strategic perspective, companies can instantly assess financial health, spot inefficiencies, and pivot quickly in response to market changes. Additionally, the data ERP systems collect can serve advanced analytics, feeding AI models that forecast supply requirements, detect fraud, or predict customer demand. As a result, ERP-equipped firms benefit not only from dayto-day efficiency but also from stronger competitive positions driven by data-informed decision-making.

3. Discuss how AI applications are being used in ERP systems.

Suggested Answer: Enterprise software vendors increasingly embed AI into ERP systems to provide predictive insights, automate repetitive tasks, and optimize business processes. For instance, machine learning algorithms can forecast demand more accurately by analyzing historical sales information alongside environmental factors like seasonality or macroeconomic indicators. AI also aids in anomaly detection, notifying finance teams of irregular transactions or unusual patterns in vendor invoices. Chatbot-based digital assistants improve user interactions with the ERP, handling questions from staff about inventory levels, scheduling, or order statuses. AI-driven analytics contribute to continuous improvement by scanning large data sets to discover previously hidden correlations that can guide strategic adjustments. Some ERP systems can even suggest operational tweaks or highlight potential resource constraints before they become problems. Overall, AI capabilities allow ERP systems to become more proactive, evolving from static, data-tracking tools to dynamic platforms that learn and adapt in support of better business performance.

9.2 Understand SCM systems 1. Explain what a supply chain is and identify each of its components.

Suggested Answer: A supply chain is a network of organizations and facilities involved in procuring raw materials, transforming them into finished products, and delivering the products to customers. Its primary components include upstream suppliers who provide the raw materials, production facilities that convert materials into intermediate or finished goods, Copyright © 2026 Pearson Education, Inc.

and downstream distributors and retailers who deliver final products to customers. The extended network also includes logistics providers for transportation, warehouses for storage, and focal firms that manage global chains. Each player contributes to moving products along varying stages—initial extraction of raw resources, assembly, packaging, and distribution—until they reach the consumer. Additionally, information, payments, and returned items flow both upstream and downstream in a supply chain. These flows help participants coordinate schedules, manage inventory effectively, and adjust to realtime shifts in demand or supply constraints. An overarching supply chain aims to align these processes efficiently so that goods are available at the right place, right time, and right cost.

2. Explain how SCM systems help reduce the bullwhip effect and how they provide value for a business.

Suggested Answer: The bullwhip effect refers to the amplification of demand fluctuations as orders travel upstream in the supply chain, often leading to overstocking or severe shortages. SCM software mitigates this by enabling all stakeholders— manufacturers, distributors, retailers, and suppliers—to share real-time data about inventory levels, production capacity, sales forecasts, and actual customer demand. Access to a single, accurate data source reduces guesswork and reactionary ordering, which in turn dampens oscillations of inventory levels. Beyond bullwhip mitigation, SCM systems integrate detailed planning and execution modules. Demand-planning tools fine-tune production schedules so companies can respond quickly to changes, while execution systems coordinate the logistics of shipment and delivery. By minimizing stockouts and oversupply, organizations can achieve lower inventory costs, improved coordination with partners, and enhanced customer satisfaction. Overall, streamlined communication and demand transparency save resources, optimize capacity utilization, and boost profitability.

3. Define and compare supply chain planning systems and supply chain execution systems.

Suggested Answer: Supply chain planning systems focus on forecasting demand and determining optimal production, procurement, and distribution strategies. They combine data on sales trends, inventory levels, supplier capabilities, and projected needs to create coordinated plans that guide manufacturing and inventory placement. These planning applications enable businesses to model various scenarios, such as a sudden spike in demand, and reallocate resources or reschedule production accordingly.

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By contrast, supply chain execution systems manage the movement of materials and products along the chain, ensuring planned activities are carried out optimally. They track shipments, handle warehouse operations, and coordinate real-time adjustments as orders are fulfilled. These systems route goods along efficient paths, process customer returns, and facilitate cross-docking or just-in-time deliveries. Together, planning and execution systems provide end-to-end visibility and control, from forecasting and scheduling to delivering finished products to the final consumer.

4. Distinguish between a push-based and a pull-based model of supply chain management and explain how contemporary supply chain management systems facilitate a pull-based model.

Suggested Answer: In a push-based model, also called build-to-stock, companies rely heavily on demand forecasts or ―best guesses‖ to determine production and stocking levels. Because of possible forecast inaccuracies, this model risks excess inventory or shortages across the chain. Manufacturers ―push‖ products down to distributors and retailers, hoping the final customer demand aligns with the forecasted levels.

The pull-based model, by contrast, is demand-driven or build-to-order. Companies only produce or ship items once they have real customer orders or new demand signals, dramatically lowering idle inventory and reducing waste. This model requires timely, transparent information sharing. Contemporary SCM systems enable it by providing real-time demand data from point-of-sale terminals, e-commerce activity, and upstream supply availability. These systems connect production schedules and distribution logistics to actual purchase orders and sales, removing guesswork and letting the entire chain react quickly to fluctuations in customer demand. As a result, businesses achieve leaner operations, more accurate order fulfillment, and improved customer satisfaction.

9.3 Describe global supply chain management challenges 1. Describe the challenges of global supply chains.

Suggested Answer: Global supply chains span vast distances, multiple time zones, and often dozens of countries. Managing this complexity requires coordinating logistics, customs documentation, and payments across varying legal and regulatory environments.

Communication hurdles can arise due to different local cultures, languages, and

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technology platforms. Moreover, political factors or events like trade disputes can disrupt established routes. Unexpected pandemics or environmental disasters add another layer of risk, further complicating production and shipping. Demand forecasting becomes more uncertain as businesses draw on transnational supplier networks with differing performance standards, shipping times, or labor costs. Firms must also deal with currency exchange rate fluctuations that can influence supplier contracts and final product prices. These variables, taken together, require robust systems to track shipments, align schedules, and handle compliance, which is much more intricate than domestic supply chains.

2. Explain how Internet technology can help companies manage global supply chains.

Suggested Answer: Internet technology connects suppliers, manufacturers, distributors, and retailers worldwide, enabling real-time sharing of data about inventory, demand forecasts, and production schedules. Through web-based portals and electronic data interchange, managers can optimize transactions that would otherwise be plagued by delays in communication. Advanced analytics systems seamlessly pull data from scattered global sources to provide management dashboards or ―control towers‖ that offer holistic views of inventory and shipment status across continents. Additionally, cloud-based platforms foster collaboration by letting teams in different time zones modify schedules, handle digital documents, and share performance metrics—often on mobile devices. These synchronized data flows mitigate delivery disruptions, improve forecasting accuracy, and facilitate near-immediate responses to currency shifts, raw material shortages, or other supply chain disruptions. Overall, internet-enabled transparency and automation elevate the responsiveness and resilience of globally distributed supply networks.

3. Discuss how AI applications can help improve global supply chain planning, management, and operations.

Suggested Answer: AI can detect patterns within the vast flow of supply chain data, thereby optimizing numerous facets of global logistics. Machine learning algorithms offer improved demand forecasting by combining internal data—like historical sales or production metrics—with external data, such as weather events or geopolitical factors. Intelligent route planning and transportation coordination reduce fuel use and optimize delivery times. AI also scans for anomalies, highlighting supplier risks or irregularities in shipment volumes.

Meanwhile, AI-infused platforms can predict potential disruptions—such as supplier bankruptcies or port closures—allowing organizations to shift sourcing or reevaluate Copyright © 2026 Pearson Education, Inc.

inventory strategies. In real-time settings, advanced analytics help managers track goods, calculate accurate estimated times of arrival, and automate decisions about rerouting shipments. This higher predictive power translates into fewer shortages and lower costs, giving global supply chains the agility to adapt promptly under volatile conditions.

9.4 Understand CRM systems 1. Define customer relationship management and explain why customer relationships are so important today.

Suggested Answer: Customer Relationship Management (CRM) entails capturing and analyzing a company‘s interactions with current and prospective customers across different channels—such as phone, email, web interactions, social media, and in-person visits— to deliver consistent, personalized experiences. This holistic perspective is increasingly vital as brand loyalty becomes more fragile, competition intensifies, and product offerings rapidly commoditize. Firms have recognized that an enduring competitive advantage often lies in their customer relationships. Cultivating satisfied, loyal customers translates to repeat business, positive word-of-mouth, and cross-selling opportunities. CRM thus helps businesses understand customer histories, identify highvalue segments, and meet or exceed expectations in real time. As a result, it fosters strong, long-term relationships—leading not only to immediate revenue but also to sustained customer retention, which increases profitability over time.

2. Describe the tools and capabilities of CRM systems for sales, marketing, and customer service.

Suggested Answer: CRM systems integrate modules for sales, marketing, and service. Sales force automation tools help sales teams manage leads, track deals, and automate tasks like quote generation and follow-up so reps spend more time closing deals. Marketing modules handle campaign management—everything from segmenting customer lists to automated email marketing, social media content scheduling, and measuring response rates. For customer service, CRM systems include call center solutions and case management tools that log service requests or complaints and route them to the most qualified representatives. They may also support web-based self-service and chatbots for round-the-clock assistance. All modules draw from a shared database, ensuring that Copyright © 2026 Pearson Education, Inc.

each department has real-time, centralized information about a customer‘s history, preferences, or issues. This way, actions in one module—like a sales transaction—are visible to the others, for seamless coordination and consistent messaging.

3. Distinguish between operational and analytical CRM. Suggested Answer: Operational CRM focuses on front-office interactions; it‘s the suite of applications that directly interface with customers (or leads) day-to-day. This includes sales force automation, marketing campaign management, and customer service support such as call center management and ticketing. By contrast, analytical CRM centers on backend data analysis to yield insights that guide strategic decisions. It aggregates and mines the data that operational modules generate, often using data warehouses, online analytical processing (OLAP), or data mining tools. The results might reveal valuable findings, such as which customer segments are most profitable, what cross-selling opportunities exist, or how to refine marketing offers for better conversions. Operational CRM supports the ―doing,‖ while analytical CRM supports the ―thinking,‖ yet both feed into one another for a complete understanding of the customer lifecycle.

4. Discuss how AI applications are being used to automate, enhance, and optimize CRM processes.

Suggested Answer: AI-driven automation streamlines repetitive tasks, such as entering data, updating records, or answering routine customer queries via conversational chatbots. Natural language processing allows these chatbots to understand and respond to questions more efficiently, offering immediate troubleshooting or account information. Beyond automation, predictive analytics helps sales teams prioritize leads and forecast sales pipelines, and it offers next-best-action recommendations for up-selling or cross-selling.

Machine learning models can identify patterns in service calls, guiding allocation of resources or preemptively flagging product quality issues. Meanwhile, generative AI can tailor marketing emails or highlight the most impactful product recommendations based on the user‘s behavioral data. As a whole, AI in CRM drives more personalized, scalable, and data-informed customer engagement, boosting satisfaction and profitability.

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9.5 Discuss enterprise application challenges 1. List and describe the challenges that enterprise applications pose.

Suggested Answer: Enterprise applications such as ERP, SCM, and CRM systems are large, complex, and typically involve reengineering business processes across multiple organizational units.

First, they demand significant up-front costs and lengthy implementation timelines, which can exceed budgets if not properly managed. Second, these technologies require broad organizational change—employees must learn new skills, redefine job responsibilities, and adapt to standardized processes embedded in the software. Third, integrating with legacy systems or external partner systems can be difficult, especially when multiple technology platforms are in play. Fourth, ongoing maintenance and vendor dependency pose long-term costs and can limit flexibility if customization is extensive. Finally, any mismatch between the enterprise system design and actual business activities can lead to confusion and operational disruptions. These hurdles necessitate thorough planning, robust leadership support, and attention to data governance to ensure success.

2. Explain how these challenges can be addressed.

Suggested Answer: Organizations can address challenges by starting with a clear vision and scope: Begin by gathering requirements from multiple stakeholders to ensure strong alignment between the enterprise system‘s capabilities and the actual business needs. Deep engagement with an implementation partner or consultant helps mitigate technology risks, especially if the partner is adept at customizing best-practice modules. Change management is crucial: leadership can communicate the reasons and benefits of the shift, involve employees in decisions, and deliver sustained training programs. It is also wise to limit customizations so that the core system remains stable, while carefully planning any extensive system changes in discrete phases to control costs. Finally, establishing robust project governance—including milestone checks, pilot tests, and clear success metrics—helps keep the rollout on track. Once implemented, organizations should perform continuous improvement, using real-time data from the new system to refine operational processes over time.

3. Describe how enterprise applications are taking advantage of cloud computing.

Suggested Answer:

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Cloud-based enterprise applications run through internet-based services instead of onsite servers, offering instant scalability, flexible cost structures, and quicker updates.

Organizations avoid significant capital expense linked to on-premises hardware, as the cloud vendor manages infrastructure and security patches. Deployment times shorten, and cross-geographic collaboration improves—teams located in various regions can access centralized applications with minimal latency. Cloud computing also makes integration easier, as vendors often provide APIs that seamlessly connect one cloud system to another. Updates and patches are pushed automatically, helping companies adopt new features, including AI-driven tools, without large-scale reimplementation projects. This dynamic provisioning of resources also supports real-time analytics as module usage surges or recedes, matching computational power to actual need.

Altogether, cloud-based enterprise solutions foster agility, cost-effectiveness, and the ability to remain technologically current with less IT overhead.

4. Define composable ERP and explain why companies might want to use it.

Suggested Answer: Composable ERP is a modular approach to enterprise resource planning in which a firm adopts different best-of-breed components or microservices from potentially different vendors, knitting them together into a unified whole. Unlike monolithic ERP deployments, composable implementations can be piecemeal—organizations select the needed modules (e.g., finance, HR, supply chain) rather than one massive all-in-one platform.

This process reduces project risk and allows firms to scale incrementally. With composable ERP, companies can choose specialized functions, thereby gaining more flexibility and innovation, as well as attacking pain points one by one. If new market demands arise, or certain features become obsolete, organizations can swap out modules with relative ease. This approach mitigates vendor lock-in, supporting agile systems that can adapt to changing business models and emerging technologies without massive overhauls.

9.6 Describe how enterprise applications are using AI 1. Explain the advantages of using AI for enterprise applications.

Suggested Answer: By analyzing vast amounts of data at high speed and with complex pattern recognition, AI enhances the agility and intelligence of enterprise software. Traditional systems are primarily transactional, capturing and organizing data for humans to review. AI, however, Copyright © 2026 Pearson Education, Inc.

processes data in real time and can spot anomalies automatically, predict trends, and even generate sophisticated content (e.g., personalized marketing materials) with minimal human intervention. Combined with sensor data in the Internet of Things (IoT), AI tools infer operational insights—such as anticipating machine breakdowns or adjusting a supply chain route preemptively. Meanwhile, natural language interfaces let employees or customers interact with corporate systems more intuitively, saving time and reducing friction. Overall, AI enables a shift from reactive to proactive operations, helping organizations optimize production schedules, personalize service, and discover new growth opportunities that might otherwise be missed by conventional analytics.

2. Provide examples of AI functionality being provided by major enterprise application vendors.

Suggested Answer: Major ERP and CRM vendors like SAP, Oracle, Microsoft, and Salesforce embed AI throughout their products. SAP‘s Business AI can detect financial anomalies in payables and generate insights for more accurate forecasting. Oracle‘s Fusion Cloud includes AIpowered modules for automating complex tasks such as invoice processing and customer scoring, allowing finance and sales professionals to concentrate on high-value activities. Microsoft‘s Dynamics 365 Copilot provides natural language assistance for marketing campaigns, sales forecasting, and field service optimization. Meanwhile, Salesforce Einstein GPT applies generative AI to craft dynamic content, recommend next-best actions for service agents, and analyze multi-channel campaign effectiveness.

These offerings commonly incorporate pre-built machine learning models and APIs, making it easier for organizations to integrate AI into their existing processes for improved insights, efficiency, and personalization.

Discussion Questions 9.7 Supply chain management is less about managing the physical movement of goods and more about managing information. Discuss the implications of this statement.

Suggested Answer: Supply chain management still fundamentally involves moving goods, but the timely flow of accurate information has become the deciding factor in orchestrating these physical movements efficiently. Without precise data on demand forecasts, production Copyright © 2026 Pearson Education, Inc.

capacity, or inventory levels, even abundant transport resources and storage facilities can lead to misalignment—too much stock in one place and shortages in another. Data management ensures organizations sense real shifts in demand and reallocate resources before inefficiencies balloon. Having advanced visibility of supplier lead times and potential disruptions enables quick rerouting or tactical procurement decisions. This shift emphasizes that supply chain management is as reliant on robust IT infrastructures and data analytics as it is on logistical assets. In practice, managers who have full transparency can reduce waiting times, forecast more accurately, and set just-in-time schedules. Consequently, the ability to process and interpret data in real time translates directly into cost savings, better customer service, and more resilient supply chains.

9.8 If a company wants to implement an enterprise application, it had better do its homework. Discuss the implications of this statement.

Suggested Answer: Enterprise applications require large investments of time, funding, and human capital.

Failing to carefully research vendor offerings, determine business requirements, and map out organizational changes can prove catastrophic—leading to implementation delays, budget overruns, or severe operational chaos post-launch. ―Doing your homework‖ means understanding how current workflows may need to be redesigned, what data quality issues must be addressed, and which stakeholders should be part of the decision-making process. It also involves ensuring top management commitment and establishing detailed project governance that sets milestones and metrics for success. In addition, thorough preparation includes evaluating potential hidden costs— such as user training, long-term software support, or the risk of vendor lock-in. Without systematic research and preparation, organizations can wind up forcing their processes to fit the software rather than finding a solution that enhances performance. Ultimately, good preparation is essential to deliver the intended benefits of improved integration, timely data, and streamlined processes.

9.9 Which enterprise application should a business install first: ERP, SCM, or CRM? Explain your answer.

Suggested Answer: The best answer often depends on a firm‘s strategic needs and operational gaps. If the primary issue is inconsistent data spread across multiple departments, an ERP system might be the optimal foundation, providing unified internal processes and a single source of truth. On the other hand, if competition centers on supply chain agility—

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ensuring products reach customers faster or maintaining low inventory—SCM might deliver a more direct improvement. Meanwhile, organizations locked in fierce battles for market share or heavily reliant on repeated customer interactions could look to CRM for a competitive edge in personalized engagement. Moreover, some companies implement more than one system but do so in phases. As an example, a manufacturer might choose ERP to standardize internal processes, followed closely by SCM to connect with business partners, and eventually integrate CRM to maximize the benefits of the unified data environment. The key is to evaluate which application brings the greatest immediate and strategic return on investment aligned with the company‘s priorities.

AI Project 9.10 AI Project: Improving Customer Experience ―You have been hired as a consultant by two friends who want to open a small retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They have asked you to advise them on the various customer touchpoints for such a store and how to provide the best customer experience at each of those touchpoints.

Using Microsoft Copilot, Google‘s Gemini, or ChatGPT, develop a series of prompts to assist you in providing them with this information. Save a copy of your prompts and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: An effective first step involves mapping out the typical touchpoints, including in-store visits, a user-friendly website, social media interactions, and local community events or farmer‘s markets where samples might be offered. At each stage, AI can enhance engagement. For instance, an automated chatbot can handle basic product inquiries online, freeing staff to focus on in-store consultations. A recommendation engine could tailor emails or social media ads to highlight newly introduced treats or advanced nutritional options for specific breeds, based on customers‘ previous purchases. In-store, capturing loyalty data with a mobile POS system helps track customer preferences and automatically trigger follow-up messages about new products or nutritional advice. As these two friends scale up, a more detailed AI-powered analysis can reveal which promotions resonate most strongly in certain neighborhoods or demographics. Overall, an AI-supported CRM approach ensures each touchpoint—whether digital or face-toCopyright © 2026 Pearson Education, Inc.

face—provides relevant, convenient, and personalized experiences that build lasting trust and loyalty.

Hands-On MIS Projects Download data files at https://www.pearson.com/laudon.

9.11 Management Decision Problem ―Office Depot sells a wide range of office supply products and services in the United States and internationally. The company tries to offer a wider range of office supplies at a lower cost than other retailers by using just-in-time replenishment and tight inventory control systems. It uses information from a demand forecasting system and point-ofsale data to replenish its inventory in its more than 1,000 retail stores. Explain how these systems help Office Depot minimize costs and any other benefits they provide.

Identify and describe other supply chain management applications that would be especially helpful to Office Depot.‖ Suggested Answer: Office Depot‘s just-in-time replenishment strategy means it only stocks items based on real or anticipated demand, informed by forecasts and point-of-sale (POS) insights.

Demand forecasting tools parse historical sales patterns alongside emerging trends to determine which items to ship to various locations, reducing excess stock and lowering storage costs. Meanwhile, POS data conveys real-time sales activity, so each store‘s inventory tuning is dynamic, ensuring that customers find products in stock without the company holding large buffers of unused inventory. Additional benefits include streamlined logistics, as Office Depot can fine-tune shipping schedules and truck routing to cut transit expenses. These systems also enhance responsiveness to local events—such as back-to-school or holiday surges—so that managers can prepare well in advance. Looking beyond baseline processes, the company might adopt SCM applications for supplier collaboration, letting suppliers see in-store data directly. Tools like warehouse management systems (WMS) and advanced transportation management systems (TMS) further optimize the flow of goods, supporting multiwarehouse coordination and consolidation. Office Depot could also benefit from AIdriven demand sensing for sharper short-term projections and quick adjustments to stock levels.

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9.12 Analyzing Data to Select Suppliers ―Software skills: Spreadsheet date functions, data filtering, AVERAGE function Business skills: Analyzing supplier performance and pricing In this exercise, you‘ll analyze data to improve management decisions about selecting suppliers. You will use spreadsheet software to filter transactional data about suppliers based on several criteria to select the best suppliers for your company.

You work for a company that manufactures aircraft components. The company has many competitors that are trying to offer lower prices and better service to customers, and you are trying to determine whether the company can benefit from better supply chain management. The MIS18 Project 9.12_Student File for this chapter contains a list of all the items that the firm has ordered from its suppliers during the past five months.

The fields in the spreadsheet file include vendor name, vendor identification number, purchaser‘s order number, item identification number, item description (for each item ordered from the vendor), cost per item, number of units of the item ordered (quantity), total cost of each order, vendor‘s accounts payable terms, order date, and actual arrival date for each order.

Prepare a recommendation of how you can use the data in this spreadsheet file to improve decisions about selecting suppliers. Calculate the delivery days (days required to deliver each order). Some criteria to consider for identifying preferred suppliers include the suppliers taking the least amount of time to deliver a product, the suppliers offering the best accounts payable terms, all suppliers producing a specific component such as gaskets and their pricing, and the average number of days for all suppliers to deliver. How can these reports help your company manage its supply chain?‖ Suggested Answer: You can start by inserting spreadsheet formulas to compute each order‘s delivery days (actual arrival date minus order date). Filtering out or sorting fastest to slowest deliveries highlights which vendors can reliably meet production schedules, an essential factor for just-in-time inventory. Next, evaluate total costs, cost per unit, and possible discounts or credits associated with each supplier‘s accounts payable terms— sometimes a marginally higher unit price might be offset by favorable terms. Grouping items by description (e.g., all gasket orders) shows which vendors offer consistent quality and competitive prices in key product categories, guiding decisions about whether to concentrate volumes with a single supplier or distribute them for risk mitigation. Averaging delivery days across all orders from the same vendor can expose patterns in shipping reliability, as can variance analysis. By generating these supplier Copyright © 2026 Pearson Education, Inc.

performance reports, procurement managers gain robust data for negotiations—such as asking poorly performing vendors to align with timeliness benchmarks. Overall, these measures optimize the supply chain by consolidating orders with dependable, costeffective suppliers who can deliver on schedule.

9.13 Evaluating Supply Chain Management Services ―Software skills: Online research tools and presentation software Business skills: Evaluating supply chain management services In addition to carrying goods from one place to another, some trucking companies provide supply chain management services and help their customers manage their information. In this project, you‘ll use online research tools to investigate and evaluate two of these business services, UPS and Schneider International. Examine how these companies‘ services can be used for supply chain management. Then prepare a presentation that responds to the following questions:   

What supply chain processes can each of these companies provide for their clients?

How can customers use the websites of each company to help with supply chain management?

Compare the supply chain management services that these companies provide.

Which company would you select to help your firm manage its supply chain?

Why?‖

Suggested Answer: When comparing UPS with Schneider International, begin by looking at their logistics outsourcing solutions. UPS offers broad services, including freight, customs brokerage, and last-mile delivery, alongside integrated technology for tracking parcels and managing returns. Schneider International equally provides freight transport and dedicated logistics teams, with specialized offerings for truckload shipping and solutions that combine intermodal and cross-docking. From a supply chain perspective, both offer visibility tools—such as real-time shipment tracking portals and data dashboards—to help clients manage inventories, forecast inbound arrivals, and plan distribution. By exploring their websites, potential customers can locate shipping schedules, request quotes, learn about specialized services (e.g., temperature-controlled freight), and use their route optimization. Additionally, white papers or case studies posted online inform

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customers of best practices. In making a choice, companies with slower-moving, smaller packages might find UPS‘s infrastructure more beneficial, while those that need heavy freight shipping or long-haul solutions might favor Schneider for its trucking network. Ultimately, the selection depends on the match between each provider‘s core logistics strengths and the complexity, routes, and volume of the requesting firm‘s supply chain.

9.14 Collaboration and Teamwork Project: Analyzing Enterprise Application Vendors ―With a group of two or more other students, use online research tools to investigate and evaluate the products of two vendors of enterprise application software. You could compare, for example, the SAP and Oracle ERP systems, the SCM systems from Blue Yonder and SAP, or the CRM systems from Oracle and Salesforce. Use what you have learned to compare the software products you have selected in terms of business functions supported, technology platforms, cost, and ease of use. Which vendor would you select? Why? Would you select the same vendor for a small business (50–300 employees) as for a large one? If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: A practical approach is to build an evaluation matrix that includes factors like the scope of modules offered, industry focus, and integration requirements. Suppose you compare SAP S/4HANA with Oracle Cloud ERP. Both cover core finance, procurement, and human resources, but SAP may be stronger for global manufacturing, while Oracle might excel in streamlined financial analytics. Look closely at technology platforms— SAP‘s in-memory HANA engine can accelerate real-time reporting, while Oracle Cloud ERP offers a continuous update cycle with AI features for anomaly detection and forecasting. Price structures vary; you might find that SAP licenses can be more complex, whereas Oracle‘s subscription model is more straightforward. In terms of ease of use, both are robust but have learning curves, requiring thorough training. For smaller businesses, specialized SME editions or other solutions might be more cost-effective.

Concluding the choice demands matching each vendor‘s strong points with the specific business goals, budget constraints, and complexity of operations. The same vendor might not be optimal for both a small local firm and a global enterprise with intricate supply chains.

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Suggested Assignments 1. Mapping ERP Constraints: Ask students to pick a real or hypothetical organization and list its key internal processes (e.g., order management, inventory replenishment). In a short report, have them determine how an ERP system might require those processes to change.

2. Supply Chain Simulation: Have students use a basic bullwhip simulation (either an online tool or a spreadsheet) to experience how small demand variations can escalate. Students write a reflection on how to mitigate bullwhip effects using SCM software.

3. CRM Customization Exercise: Provide a scenario of a small business launching an email marketing campaign. Have students create a CRM workflow chart showing how leads, contact records, and marketing emails would flow through the system.

4. Exploring AI-Driven Analytics: Assign students to research one AI-enabled enterprise application (e.g., Salesforce Einstein GPT or Oracle‘s AI for ERP).

They present a short guide on how that AI component could add value to typical company processes.

5. Enterprise System ROI Analysis: Have students choose any enterprise application (ERP, SCM, or CRM) and develop a cost-benefit outline, highlighting possible returns such as operational savings, revenue enhancement, or risk reduction. Students should account for training, change management, and hardware or software investments in their plans.

Chapter 10 – Instructor Manual Chapter Summary This chapter explores the fundamental concepts associated with e-commerce, examining its evolution, unique features, and the many ways it influences contemporary business practices. It begins by tracing how e-commerce has evolved since its inception, emphasizing the increasing importance of social, mobile, and local dimensions. It then examines the unique technological features that set e-commerce apart from traditional commerce, including its low barriers to market entry and the capacity for digital goods distribution. The chapter delves into multiple e-commerce business models and revenue

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models, highlighting how the Internet disrupts and reinvents entire industries. Readers also learn how e-commerce has transformed marketing through digital, social, and behavioral targeting methods, culminating in the rise of social marketing and social ecommerce networks. Business-to-business transactions, via private networks, marketplaces, and emerging technologies, receive thorough attention. The chapter concludes by exploring mobile commerce (m-commerce), location-based services, mobile payment systems, and best practices for developing an e-commerce presence across diverse platforms. Finally, it discusses how this information can boost learners‘ career prospects.

Learning Objectives These are the chapter objectives: 10.1 Discuss the evolution of e-commerce.

10.2 Describe the unique features of e-commerce.

10.3 Describe digital markets and digital goods.

10.4 Describe types of e-commerce and e-commerce business models.

10.5 Describe e-commerce revenue models.

10.6 Explain how e-commerce has transformed marketing.

10.7 Describe social networks, social marketing, and social e-commerce.

10.8 Understand how e-commerce has affected business-to-business transactions.

10.9 Describe m-commerce and m-commerce applications.

10.10 Discuss how to build an e-commerce presence.

10.11 Understand how the information in this chapter can help your career.

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MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what's happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 10.1 Discuss the Evolution of E-commerce   

Emphasize the historical milestones leading to modern e-commerce, starting in 1995 with emerging internet portals.

Explain how social, mobile, and local aspects have transformed online buying experiences and marketing strategies.

Highlight key changes, including advanced AI tools, smartphones, and social networks, that have driven continuous e-commerce growth.

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

Illustrate how the exponential expansion of social media and mobile devices has shifted consumer interactions online.

10.2 Describe the Unique Features of E-commerce    

Cover how e-commerce is ubiquitous, allowing near-constant access to goods and services.

Explain universal standards and how they lower market entry costs and search costs.

Illustrate interactivity, richness, and information density, showing how these enhance e-commerce‘s impact on buyers and sellers.

Discuss personalization/customization and social technology, and how usergenerated content defines the modern e-commerce landscape.

10.3 Describe Digital Markets and Digital Goods    

Define ―digital markets‖ and note how the internet impacts transaction costs, menu costs, and price transparency.

Explain information asymmetry and why it is diminished in digital markets.

Describe digital goods, their near-zero marginal cost of production, and how this disrupts traditional industries.

Show how disintermediation brings major changes in distribution channels by removing layers of intermediaries.

10.4 Describe Types of E-commerce and E-commerce Business Models   

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Review business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C) e-commerce examples.

Note the influence of mobile platforms and social networks on e-commerce classifications.

Identify the principal e-commerce business models: online retailer, transaction broker, market creator, content provider, service provider, community provider, and portal.

Illustrate how companies may combine multiple models to gain unique advantages.

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10.5 Describe E-commerce Revenue Models    

Discuss how revenue models drive profitability and differ among advertising, sales, and subscription approaches.

Explain free/freemium models and how firms convert free users into paying subscribers.

Identify transaction fees and affiliates, and how these models create new ways to earn money.

Show how businesses often blend multiple strategies for greater revenue potential.

10.6 Explain How E-commerce Has Transformed Marketing    

Emphasize the ways digital marketing allows precise targeting, including long tail marketing.

Cover main advertising formats: search engine ads, display ads, rich media, and classified ads.

Explore behavioral targeting and programmatic ad buying, noting growing consumer privacy concerns.

Introduce the role of native advertising in social media feeds and digital editorial content.

10.7 Describe Social Networks, Social Marketing, and Social Ecommerce    

Describe online social networks, their features, and the large audiences they attract.

Expand on social marketing techniques, user sentiment analysis (social listening), and collaboration in brand building.

Explain crowdsourcing and the ―wisdom of crowds,‖ focusing on how firms leverage collective input for market insight.

Highlight social e-commerce and the concept of the social graph in shaping consumer purchasing decisions.

10.8 Understand How E-commerce Has Affected Business-toBusiness Transactions 

Show how firms use electronic data interchange (EDI) for the automatic exchange of invoices, orders, and other transactions.

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  

Explore private B2B networks and how they link buyers, suppliers, and partners for procurement and supply chain efficiency.

Compare and contrast B2B e-commerce marketplaces and exchanges, clarifying procurement of direct vs. indirect goods.

Discuss how online linking of producers and suppliers lowers transaction costs and boosts efficiency.

10.9 Describe M-commerce and M-commerce Applications    

Examine retail m-commerce trends and sectors such as mass market retailing and on-demand services.

Spotlight location-based services, including geosocial, geoadvertising, and geoinformation applications.

Discuss mobile advertising growth, app-based payments (NFC, QR codes, P2P), and the significance of user location data.

Illustrate how convenience and personalization drive the ongoing expansion of m-commerce.

10.10 Discuss How to Build an E-commerce Presence    

Emphasize the importance of understanding strategic business objectives and choosing suitable technologies.

Highlight the e-commerce presence map, covering websites/apps, email, social media, and offline marketing.

Provide guidance on creating timelines or milestones to plan, implement, and monitor one‘s online strategy.

Show how integrated marketing across multiple channels fosters greater customer engagement.

10.11 Understand How the Information in This Chapter Can Help Your Career   

Stress the importance of e-commerce skills as it is the fastest-growing form of commerce.

Show how familiarity with basic e-commerce concepts, mobile platforms, and social marketing enhances employability.

Illustrate how AI, behavioral targeting, and data analytics are particularly soughtafter skill sets in digital roles.

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Encourage continuous learning to keep pace with industry and technological changes in the e-commerce environment.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.                             

Advertising revenue model (10.5) Affiliate revenue model (10.5) B2B e-commerce marketplace (10.8) Behavioral targeting (10.6) Business-to-business (B2B e-commerce) (10.4) Business-to-consumer (B2C e-commerce) (10.4) Community provider (10.4) Consumer-to-consumer (C2C e-commerce) (10.4) Content provider (10.4) Cost transparency (10.3) Crowdsourcing (10.7) Customization (10.2) Digital goods (10.3) Direct goods (10.8) Disintermediation (10.3) Download (10.4) Dynamic pricing (10.3) E-commerce (10.1) Electronic data interchange (EDI) (10.8) Exchange (10.8) Fintech (10.4) Free/freemium revenue model (10.5) Geoadvertising services (10.9) Geoinformation services (10.9) Geosocial services (10.9) Indirect goods (10.8) Information asymmetry (10.3) Information density (10.2) Interactivity (10.2)

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                            

Location-based services (10.9) Long tail marketing (10.6) Market creator (10.4) Market entry costs (10.2) Marketspace (10.2) Menu costs (10.3) Mobile commerce (m-commerce) (10.9) Native advertising (10.6) Online retailer (10.4) Online social network (10.7) Personalization (10.2) Portal (10.4) Price discrimination (10.3) Price transparency (10.3) Private B2B network (10.8) Revenue model (10.5) Richness (10.2) Sales revenue model (10.5) Search costs (10.2) Service provider (10.4) Social e-commerce (10.7) Social graph (10.7) Social listening (10.7) Streaming (10.4) Subscription revenue model (10.5) Transaction broker (10.4) Transaction costs (10.2) Transaction fee revenue model (10.5) Wisdom of crowds (10.7)

Case Studies Opening Case Study: “Chewy Blends B2C and B2B E-commerce” Summary:

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Chewy, initially recognized for its business-to-consumer online pet products, confronted intense competition. To foster growth, it founded pet healthcare service solutions and Practice Hub for veterinarians, combining business-to-business and business-toconsumer e-commerce. By integrating personal touches and strong digital infrastructure, Chewy remained committed to premium customer service and cultivated new partnerships with veterinary practices as it diversified its offerings.

Case Study Questions and Suggested Answers: 1. What management, organization, and technology issues did Chewy need to address in expanding into, first, services and then into B2B e-commerce?

Suggested Answer: Chewy needed strong leadership to guide its diversification strategy and allocate resources effectively (management), a clear organizational structure facilitating collaboration between customer-focused teams and new B2B teams, and robust technology supporting online portals for prescriptions and telehealth solutions. For instance, expanding from direct consumer retail to pet healthcare required new digital infrastructure to manage client data, handle prescription fulfillment online, and integrate with partner software in veterinary practices.

2. What are the potential advantages and disadvantages of Chewy‘s decision to do so?

Suggested Answer: Advantages include tapping into new revenue streams and expanding Chewy‘s brand beyond e-commerce pet supplies. By leveraging existing digital infrastructure, Chewy can enrich its offerings, differentiate its brand, and deepen customer loyalty.

Disadvantages may involve greater complexity arising from B2B relationships, regulatory hurdles in telehealth and prescription sales, possible strain on customer service resources, and risks associated with investing capital in unfamiliar markets.

3. How does offering veterinary services fit with Chewy‘s strategy and business model?

Suggested Answer: Providing veterinary services extends Chewy‘s personalized experience in the pet market by creating an end-to-end solution. It merges B2C and B2B e-commerce, unlocking revenue from both. This approach is consistent with Chewy‘s overall emphasis on relationship-building: connecting with customers at more life stages, Copyright © 2026 Pearson Education, Inc.

strengthening the brand‘s loyalty factor, and using digital platforms that handle everything from selling pet supplies to managing prescriptions and telehealth consultations.

Spotlight on Organizations Case Study: “Social Listening with Sprout Social” Summary: Sprout Social specializes in social listening services, enabling businesses to monitor mentions of their brands, gather marketing insights, and engage in real-time with customers. With powerful features such as AI-assisted query building and data analysis, companies can identify key trends, measure share of voice, and glean rich demographic information about their audiences. This process helps firms improve brand awareness, customer service, and marketing campaigns.

Case Study Questions and Suggested Answers: 1. Assess the management, organization, and technology issues for using social media technology to engage with customers.

Suggested Answer: Management must set clear goals and allocate staff for continuous monitoring, while the organizational structure should facilitate collaboration between departments such as marketing, PR, and customer support. Technologically, businesses need robust platforms that collect social data, parse it meaningfully, and integrate with other systems (e.g., CRM). Leadership buy-in is key for resourcing the people and tools necessary to thoroughly analyze findings and promptly respond to emerging issues.

2. What are the advantages and disadvantages of using social media for advertising, brand building, market research, and customer service?

Suggested Answer: Advantages include low costs, potentially vast reach, near-instant feedback, and insights into evolving consumer preferences. Social networks also create opportunities for micro-targeting. However, disadvantages can include difficulty controlling brand image once content is shared widely, real-time criticisms, and privacy concerns over data collection. The volume of data can be challenging to manage, demanding

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specialized analytics tools. Poorly handled social media interactions can harm brand reputation swiftly.

3. What kinds of companies are best suited to using social network platforms for marketing and customer service?

Suggested Answer: Businesses engaging heavily in B2C interactions, especially those targeting younger and tech-savvy demographics, are likely to see strong benefits. Retailers, consumer goods, hospitality, entertainment, and fast-moving consumer product markets often excel with social platforms. Additionally, companies in niche markets that rely on building tight-knit communities can benefit from forging direct relationships. Success requires consistent interaction, brand authenticity, and enough organizational resources to maintain real-time responsiveness.

Chapter Case Study: “Lemonade Seeks to Disrupt the Insurance Industry with AI” Summary: Lemonade uses an AI-first approach to transform insurance. Founded in 2015, it collects extensive data during onboarding and processes claims with chatbots, accelerating claim resolution. Its platform relies on AI bots and in-house systems for seamless customer experiences, rapid code updates, and advanced fraud identification.

Although it faced controversies regarding how it uses biometric or facial recognition data, Lemonade continues to expand its insurance offerings and reduce losses.

Case Study Questions and Suggested Answers: 1. What distinguishes the ―insurtech‖ services described in this case from traditional insurers? Explain your answer.

Suggested Answer: These insurtech services are built on a fully digital infrastructure, relying heavily on AI and chatbots to onboard customers, detect risk factors, and expedite claims. Unlike traditional insurers with decades-old legacy systems and in-person agent processes, insurtech models minimize paperwork, automate underwriting with big data, and

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emphasize rapid iteration of software updates. This customer-centric approach uses data analytics to refine policy decisions and deliver immediate interactions.

2. How has Lemonade used artificial intelligence to innovate?

Suggested Answer: Lemonade‘s AI chatbots (AI Maya, AI Jim, and CX.AI) manage everything from quoting policies and verifying details to instantly paying claims. By collecting thousands of data points in short interactions and correlating them to claims outcomes, Lemonade can tailor risk assessments, streamline onboarding, and detect fraud. Its proprietary applications simultaneously conduct real-time checks and produce frequent code updates, making the entire insurance process more agile and personalized.

3. What issues are raised by Lemonade‘s use of artificial intelligence?

Suggested Answer: Its heavy reliance on AI-driven facial recognition and data analysis calls into question potential violations of biometric and privacy laws. Regulators in different regions vary in what data can be collected and how it may be used. There are ethical challenges around inclusion, ensuring algorithms do not perpetuate unfair biases, and ensuring customers fully understand how their data shapes underwriting decisions. If trust is eroded, consumer backlash may occur.

4. What factors would you consider in deciding whether to use an ―insurtech‖ service such as Lemonade‘s?

Suggested Answer: One should weigh cost, convenience, security, and data privacy. Comparing premiums, coverage limits, and policy features versus traditional insurers is crucial. Individuals might also verify whether they are comfortable with minimal human interaction and extensive data collection. Evaluating the reliability of the underwriting process and claims settlement influence trust. Compliance with regional regulations and frameworks for addressing potential AI-driven biases also factor into the decision, particularly for buyers valuing ethical data use.

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Review Questions 10.1 Discuss the evolution of e-commerce 1. Define e-commerce and discuss how it has evolved.

Suggested Answer: E-commerce refers to using the internet, web, and mobile apps and browsers to conduct business transactions digitally. Though the internet‘s potential was recognized in the early 1990s, e-commerce truly began in 1995 when portals started hosting advertisements and online sales. After initial surges and a temporary slowdown around 2008–2009, growth resumed. Today, e-commerce is driven by social, mobile, and local factors. Smartphone penetration, social networks, and AI-powered personalization have significantly shaped buyer behavior, while location-based services connect online activities to offline needs. As markets shift, e-commerce continues expanding across national borders, offering 24/7 shopping and forging new ways for firms to interact with customers.

2. Describe how social, mobile, and local e-commerce are connected.

Suggested Answer: Social, mobile, and local e-commerce operate as an interdependent triad. Social ecommerce leverages user-generated content and network relationships to influence purchasing decisions, while mobile devices enable anytime, anywhere shopping.

Location-based features, such as geosocial and geoadvertising services, connect digital offerings with a consumer‘s physical location—helping merchants deliver contextrelevant promotions. Together, these factors drive real-time engagement, foster deeper personalization, and create immediate purchase opportunities for on-the-go users.

3. Name and describe four business trends and three technology trends shaping ecommerce today.

Suggested Answer: Business trends include: a. Transformation of traditional retail with omnichannel strategies. b. Broadening e-commerce offerings, including on-demand services. c. Small businesses leveraging cloud-based infrastructures. d. Diversification of e-commerce models to ensure profitability.

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Technology trends include: e. Widespread use of smartphones and mobile apps. f. Expanding wireless (Wi-Fi, 4G, 5G) and broadband connectivity. g. Growing role of AI technologies for personalization, analytics, and marketing.

4. Discuss how companies are using AI in e-commerce.

Suggested Answer: AI is employed to automate supply chains, optimize pricing models, personalize marketing, and improve search functionality. Recommendation engines—powered by AI—help tailor products to individual consumer preferences. Chatbots manage 24/7 customer service, including returns and inquiries, reducing response times and costs.

Large language models (LLMs) and generative AI can generate product descriptions and content for social media. Additionally, advanced analytics detect fraud and refine marketing strategies, increasing overall profitability and streamlining consumer experiences.

10.2 Describe the unique features of e-commerce 1. List and describe the eight unique features of e-commerce.

Suggested Answer: a. Ubiquity: available nearly everywhere, any time. b. Global Reach: crosses national boundaries seamlessly. c. Universal Standards: shared technical standards lower barriers to entry. d. Richness: integrates audio, video, and text in marketing messages. e. Interactivity: allows two-way merchant-consumer communication. f. Information Density: provides abundant, accurate, and timely information. g. Personalization/Customization: tailors messages and offerings to specific users. h. Social Technology: enables user-generated content and social networks.

10.3 Describe digital markets and digital goods 1. Define information asymmetry and explain how it has been reduced by the Internet.

Suggested Answer:

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Information asymmetry arises when one party in a transaction has more essential knowledge than the other, creating unequal bargaining power. The internet counters this by making product details, pricing, and reviews readily visible. Consumers can easily compare offerings and discover actual costs, while businesses gain insight into customer behavior. As a result, negotiations become more balanced, often lowering prices or boosting quality in competitive markets.

2. Define a digital market, describe its distinguishing features, and explain the benefits it provides.

Suggested Answer: A digital market is an online forum where buyers and sellers exchange goods, services, or information. Its distinguishing features include reduced transaction and search costs, lower menu costs (the cost of changing prices), and improved price transparency. It may also allow dynamic pricing and global reach. For buyers, digital markets increase choice, convenience, and resource-saving. For sellers, it opens access to a broader consumer base, enables faster product updates, and can dramatically reduce distribution overhead.

3. Define digital goods and explain how the Internet changes the market for digital goods.

Suggested Answer: Digital goods are easily distributed products such as music, news, videos, or software, stored and delivered in digital format. Once developed, the marginal cost of duplicating these items is nearly zero. They can be transmitted instantly across geographies at little cost, bypassing many traditional constraints. The internet facilitates widespread access, driving down production and inventory expenses, reshaping how businesses generate revenue, and often challenging traditional distribution channels such as physical media.

10.4 Describe types of e-commerce and e-commerce business models 1. Describe the principal types of e-commerce.

Suggested Answer: The three primary e-commerce types are:

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a. Business-to-consumer (B2C), where firms sell products/services directly to individuals. b. Business-to-business (B2B), focusing on inter-firm trade and procurement. c. Consumer-to-consumer (C2C), where individuals sell, trade, or share goods among themselves, often on auction or community platforms.

Mobile e-commerce and social e-commerce augment these by adding new transactional channels and social interactions.

2. Describe the principal e-commerce business models.

Suggested Answer: Major models include: a. Online retailer (e-tailer) – selling physical goods online. b. Transaction broker – processing online transactions (travel, finance). c. Market creator – providing digital platforms for buyers and sellers (auctions, on-demand services). d. Content provider – offering digital content (news, music, video). e. Service provider – delivering digital services (fintech, SaaS). f. Community provider – creating social networks for user interaction (Facebook). g. Portal – an initial gateway to the web with search, email, and news.

10.5 Describe e-commerce revenue models 1. Describe the principal e-commerce revenue models and give an example of each.

Suggested Answer: a. Advertising revenue model: websites generate revenue by displaying ads (e.g., Google). b. Sales revenue model: income from selling goods or services (e.g., Wayfair). c. Subscription revenue model: users pay periodic fees for access (e.g., Netflix). d. Free/freemium revenue model: basic services at no charge, premium for advanced functionality (e.g., Spotify). e. Transaction fee revenue model: platforms take a fee for each transaction (e.g., eBay). f. Affiliate revenue model: sites refer users to purchases and earn commissions (e.g., influencers steering traffic to Amazon).

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10.6 Explain how e-commerce has transformed marketing 1. Describe the leading marketing and advertising formats used in e-commerce.

Suggested Answer: Popular formats include:        

Search engine marketing (placing text ads tied to user queries), Display ads (banner ads, pop-ups), Video ads (often behaviorally targeted), Classifieds (job or service listings), Rich media ads (animations and interactive content), Lead generation (gathering sales leads for marketing follow-up), Sponsorships (brands funding and integrating into content), Email campaigns (targeted promotions sent directly to users‘ inboxes).

2. Define behavioral targeting and explain how it works at individual websites and on advertising networks.

Suggested Answer: Behavioral targeting uses an individual‘s online actions—visited pages, clicks, search terms—to present relevant advertisements. On a single website, clickstream data helps customize ads and content. Across advertising networks, third-party cookies or beacons track user behavior on multiple sites, building a profile of interests. Advertisers then pay to display targeted ads, often through real-time bidding, to users who fit desired customer profiles. This approach increases ad efficiency but raises privacy considerations.

10.7 Describe social networks, social marketing, and social ecommerce 1. Describe the primary features of social networks.

Suggested Answer:

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Social networks typically include newsfeeds for updates, timelines of user posts, social sign-on options for quick account logins, and collaborative shopping or shared conversations about products. Users can engage in network notifications (likes, checkins) and social searches, receiving advice from friends. These features collectively nurture interactive communities, enabling brands or sites to leverage user-shared content for communication and brand building.

2. Describe the wisdom of the crowds concept and discuss how it impacts social marketing.

Suggested Answer: The wisdom of the crowds theory posits that large groups can collectively reach better decisions than individual experts. In social marketing, brands harness diverse user input via reviews, votes, or open innovation, generating valuable insights and a sense of community ownership. By inviting real-time feedback, organizations adjust products, refine campaigns, and craft authentic messages. Tapping consumer wisdom can result in greater trust and loyalty, reinforcing a sense of shared brand direction.

3. Explain how the concept of the social graph impacts social e-commerce.

Suggested Answer: The social graph maps the personal relationships linking individuals online. When these connections drive recommendations and product discussions, the social graph becomes a powerful marketing tool. A single purchase or endorsement can swiftly reverberate through one‘s network—enhancing product visibility or reinforcing brand loyalty. Hence, social e-commerce thrives on these interconnected spheres, as users trust peer opinions and buy items influenced by social ties.

10.8 Understand how e-commerce has affected business-to-business transactions 1. Describe electronic data interchange (EDI) and discuss how it is used for ecommerce.

Suggested Answer: EDI enables computer-to-computer exchange of standard business forms (e.g., bills, invoices, purchase orders). It was an early form of automating inter-firm transactions.

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EDI reduces manual data entry, lowering human errors and speeding up payments or shipments. Although previously reliant on private networks, many firms now use webbased EDI, broadening their pool of trading partners to collaborate more flexibly and cost-effectively in the digital environment.

2. Define and describe B2B private networks and explain how they differ from B2B e-commerce marketplaces.

Suggested Answer: B2B private networks are internet-enabled collaboration spaces owned by a single large buyer (or potentially multiple partners), linking suppliers, distributors, and strategic partners for procurement and supply chain tasks. By contrast, B2B e-commerce marketplaces serve multiple buyers and sellers on a shared, often public, digital platform. Private networks emphasize long-term, customized relationships, whereas public marketplaces allow spot purchasing, typically focusing on matching demand and supply among many participants.

10.9 Describe m-commerce and m-commerce applications 1. Describe important types of location-based services and applications.

Suggested Answer: Location-based services include geosocial (friend-finding, check-ins), geoadvertising (serving ads based on user proximity to businesses), and geoinformation (providing location-specific data like local attractions, property prices, or traffic updates). These rely on GPS and other tracking methods. Common examples include Waze (social navigation), Shopkick (store-based coupons), and on-demand services like Uber or Lyft that dynamically match users to the nearest available resource.

2. Describe three types of mobile app payment systems.

Suggested Answer: a. NFC-based systems (e.g., Apple Pay) use near-field communication chips to complete in-person contactless payments at compatible registers. b. QR code payment systems (e.g., certain retailer apps) scan a displayed two-dimensional barcode to authenticate payment.

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c. Peer-to-peer platforms like Venmo or Zelle rely on a third-party app linked to bank accounts or cards for fast money transfers between individuals.

10.10 Discuss how to build an e-commerce presence 1. Describe four types of e-commerce presence and the platforms and activities associated with each.

Suggested Answer: The four presence types are websites/apps, email, social media, and offline media.

Websites focus on search engine marketing, display ads, and digital platforms. Email campaigns provide newsletters and updates. Social media presence typically occurs on sites like Facebook, Instagram, TikTok, and X (formerly Twitter), aiming for engagement, conversation, and brand exposure. Offline media (print ads, TV) tie into digital channels by driving users to online offerings and reinforcing brand messaging.

Discussion Questions 10.11 How does the Internet change consumer and supplier relationships?

Suggested Answer: The internet diminishes traditional barriers—geographic boundaries and time constraints—that once limited communication between buyers and sellers. Consumers gain near-instant access to vast product information such as costs, specifications, and competitor prices, reducing information asymmetry. Suppliers can target individuals more precisely with dynamic pricing. Social media also allows consumers to voice opinions publicly, potentially influencing brands to adapt swiftly. Overall, the Internet fosters more transparent, interactive, and data-driven buyer‐ seller relationships.

10.12 Marketers defend the use of behavioral targeting as a method to expose people to advertising that is uniquely suited to them. Do you agree? Why or why not?

Suggested Answer: Behavioral targeting can be useful for both consumers and firms by providing ads relevant to individual preferences, saving time, and potentially improving user Copyright © 2026 Pearson Education, Inc.

experience. On the other hand, privacy critics argue many consumers are unaware of how their data are tracked or sold to outside parties. Some worry that such practices can lead to intrusive profiling or data misuse. Therefore, one‘s stance may hinge on balancing personalization benefits with the consumer‘s right to privacy and transparency.

10.13 How is AI changing e-commerce?

Suggested Answer: AI provides tools for personalized recommendation systems, real-time dynamic pricing, advanced search functions, and automated customer service chatbots. Retailers can carry out fine-grained analyses of consumer behavior to predict demand or optimize inventory. Generative AI supports content creation for product descriptions, marketing campaigns, and chat interactions. AI attempts to customize experiences to individual users while reducing human labor. However, ethical dilemmas regarding bias, privacy, and accountability remain.

AI Project 10.14 AI Project: Using AI to Create an E-commerce Presence ―You have been hired as a consultant by two friends who want to open a small retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They have asked you to assist them in helping to establish an ecommerce presence for their store on Facebook and Instagram.

Using Microsoft Copilot, Google‘s Gemini, or ChatGPT, develop a series of prompts to help you create prototypes for a Facebook page, Facebook banner image, and Instagram avatar. Save a copy of your prompts and the output of the chat session.

Submit to your instructor as requested.‖ Suggested Answer: A detailed answer would begin by outlining specific goals for customer engagement and brand awareness. First, define your brand story—underscoring the ethical sourcing of organic ingredients—so AI-driven content creation reflects these principles consistently.

Then generate prompts for AI tools to develop Facebook page mock-ups, banners featuring pet-friendly visuals, and short, appealing messages that underscore product benefits. For Instagram, prompts should focus on image-forward content, with product

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staging that resonates with pet owners seeking sustainability. Additionally, ask AI to craft sample captions with relevant hashtags targeting ecological-minded pet communities. Closing steps would include a social media calendar, aligning AIgenerated graphics or posts with promotional campaigns or seasonal events. By reviewing each stage‘s outputs and iterating on style, voice, and consistency, the two friends can refine a cohesive, high-quality presence on both platforms.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

10.15 Management Decision Problem ―T.J. Maxx, the giant off-price clothing retailer with nearly 1,300 stores around the world, has experienced problems implementing an e-commerce site for online sales. An offprice store like T.J. Maxx buys excess inventory and last year‘s fashions from a vast network of department stores and manufacturers. However, it buys these items in much smaller lots than traditional retailers such as Nordstrom or Walmart do, with much of its inventory consisting of one-time items in small quantities. T.J. Maxx has new brandname and designer fashions arriving every week. The inventory varies a great deal from one store to the next, and you never know what you‘ll find when you visit a T.J. Maxx store. Shoppers are lured into the stores in the hope that they might find a really hot bargain that might be available for only a few days, and that is part of T.J. Maxx‘s special appeal. An online storefront can also cannibalize in-store sales. On the other hand, ignoring e-commerce can mean losing market share to competitors. Define the problem for T.J. Maxx and suggest a solution. What management, organization, and technology factors should be considered?‖ Suggested Answer: T.J. Maxx faces the challenge of maintaining its ―treasure hunt‖ store experience while embracing online channels that consumers increasingly expect. The firm must find ways to reconcile fast turnover, low quantities, and uncertain stock with an e-commerce site.

Management should define clear goals—deciding if the goal is brand expansion or sales growth—and allocate resources for both in-store and online demands. Organizationally, T.J. Maxx needs to centralize and digitize inventory controls, possibly setting up a dedicated e-commerce team to coordinate digital marketing and manage workflow for frequently changing stock. It also entails investing in tech platforms capable of real-time inventory updates. A pilot website, featuring select items and short-term flash sales, Copyright © 2026 Pearson Education, Inc.

could preserve the bargain allure while preventing major in-store cannibalization. Finally, T.J. Maxx‘s digital strategy must stay agile, leveraging analytics to gauge consumer response and optimize the site for shifting product assortment.

10.16 Using a Spreadsheet to Analyze an E-commerce Business ―Software skills: Spreadsheet downloading, formatting, and formulas; online research tools; presentation tools Business skills: Financial statement analysis Pick an e-commerce company that is publicly traded in the United States—for example, Wayfair, Carvana, or Etsy. Visit the company‘s website and review the web pages that describe the company and explain its purpose and structure. Use the web to find articles that comment on the company. Then visit the Securities and Exchange Commission‘s website at Sec.gov to access the company‘s 10-K (annual report) form showing income statements and balance sheets. Select only the sections of the 10-K form containing the desired portions of financial statements that you need to examine and download them into your spreadsheet. Create simplified spreadsheets of the company‘s balance sheets and income statements for the past three years. 

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Is the company a success, borderline business, or failure? What information provides the basis for your decision? Why? When answering these questions, pay special attention to the company‘s three-year trends in revenues, costs of sales, gross margins, operating expenses, and net margins.

Prepare a presentation (with a minimum of five slides), including appropriate spreadsheets or charts, and present your work to your professor and classmates.‖

Suggested Answer: Begin by locating the chosen company‘s most recent 10-K from the SEC‘s EDGAR database. Filter out relevant portions of the balance sheet and income statement, adding them to a spreadsheet. Forms often detail revenue, cost of goods sold, gross margin, operational expenses, and net profits. Once compiled, calculate year-over-year changes in revenue, operating margin, and net margin. Interpret whether upward or downward trends suggest strong, moderate, or weak business performance. Look for stable vs. volatile earnings, expansions in product lines, or changes in marketing spend.

Next, create charts summarizing those trends. During the presentation, highlight whether the firm invests in research and expansion, show context from credible business articles, and provide reasoned conclusions (e.g., strong growth indicates Copyright © 2026 Pearson Education, Inc.

success, but heavy losses might mean unprofitability). By connecting financial metrics to strategic moves, you demonstrate how well the company positions itself in the competitive e-commerce landscape.

10.17 Evaluating E-commerce Hosting Services ―Software skills: Online research tools Business skills: Evaluating e-commerce hosting services You would like to set up a website to sell towels, linens, pottery, and tableware from Portugal and are examining services for hosting small-business website storefronts.

Your website should be able to take secure credit card payments and calculate shipping costs and taxes. Initially, you would like to display photos and descriptions of 40 products. Visit Wix, GoDaddy, and Squarespace, and compare the range of ecommerce hosting services they offer to small businesses, their capabilities, and their costs. Examine the tools they provide for creating an e-commerce site. Compare these services and decide which you would use if you were actually establishing an online store. Write a brief report indicating your choice and explaining the strengths and weaknesses of each service.‖ Suggested Answer: Begin by reviewing each platform‘s subscription fees, payment processing partnership, shipping calculator options, and tax tools. Wix might offer easy drag-and-drop site building with a robust image gallery, but you should also consider which advanced ecommerce plugins it supports. GoDaddy provides quick site assembly solutions and domain registration but might have fewer specialized templates. Meanwhile, Squarespace excels in aesthetics and user-friendly site design, though it may offer fewer shipping integrations. Pay close attention to ongoing transaction fees, design flexibility, and customer support. After comparing relevant details, you might select Squarespace for professional site designs, or you might lean toward Wix for its wide range of integrations. Outline your decision in a concise table or bullet format: itemize cost tiers, integrated payment gateways, design features, or marketing analytics, culminating in a recommendation aligned with your business‘s greatest needs—such as a visually appealing product display and secure checkout.

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10.18 Collaboration and Teamwork Project: Performing a Competitive Analysis ―Form a team with two or more of your classmates. Select two businesses that are competitors in the same industry and that use their websites for e-commerce. Visit these websites. You might compare, for example, the websites for Pandora and Spotify, PetSmart and Chewy, or E*Trade and Charles Schwab. Prepare an evaluation of each business‘s website in terms of its functions, user-friendliness, and ability to support the company‘s business strategy. Which website does a better job? Why? Can you make some recommendations to improve these websites? If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: After forming your group, begin by identifying each site‘s primary market and mission.

Evaluate site layout, product or service listings, navigational clarity, load times, mobile responsiveness, and checkout/payment workflows—for instance, does the site incorporate intuitive design or advanced personalization features? Compare the alignment between each site‘s design approach and the parent company‘s strategy (premium vs. cost saving, wide vs. niche product selection). Next, note how well each brand fosters trust: Are product details accurate, is pricing transparent, and do they highlight membership or loyalty programs? Conclude with which site meets user expectations more effectively, backing it up with references to user flow experiences.

Suggest improvements such as simplified navigation, clearer calls-to-action, or more robust search mechanisms. Summarize your analysis in a shared Google Doc or Slide deck, ensuring all group members‘ perspectives on design, strategy fit, and competitive advantages are reflected.

Suggested Assignments 1. E-commerce Business Model Comparison Have students research two different e-commerce companies (e.g., an online retailer vs. a marketplace). Ask them to compare how each firm‘s business and revenue models produce profit, paying attention to market positioning, target demographics, and sources of added value.

2. Social Media Marketing Plan Copyright © 2026 Pearson Education, Inc.

Assign students to design a social media marketing plan for a small local business.

They should outline which social channels to focus on, what content they would produce, and how often. Emphasize different techniques such as influencer marketing, partner cross-promotion, and ethical data usage.

3. M-commerce Usability Test Require students to test an existing retail app‘s mobile payment process. They will then write a brief report assessing user experience, including navigation ease, loading speed, and checkout friction. Encourage them to include interviews or surveys of peers to capture broad feedback.

4. B2B Network Proposal Direct students to assume the role of an analyst at a mid-sized manufacturing company.

Their assignment is to propose a private B2B network to streamline procurement processes, explaining how EDI, supplier portals, or marketplace connections might reduce operating costs.

5. AI Ethics in E-commerce Debate Ask students to form debate teams regarding AI-based personalization and data collection. One side represents e-commerce companies, highlighting the benefits of user profiling for marketing. The opposing side represents consumer privacy advocates.

They must research laws, regulations, and ethical frameworks to systematically argue their case, concluding with a summary of middle-ground solutions.

Chapter 11 – Instructor’s Manual Chapter Summary This chapter provides a comprehensive survey of artificial intelligence (AI), outlining its historical development, core concepts, and practical applications. It introduces the key branches of AI, including machine learning, neural networks, natural language processing, computer vision systems, robotics, and genetic algorithms. The material underscores both the significant opportunities that AI affords businesses, such as improved decision-making, automation of repetitive tasks, and enhanced analytics, as well as the challenges it presents. These challenges include bias in algorithms, energy

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consumption, disinformation, privacy issues, and potential job displacement. The chapter also discusses the evolution of AI-driven technologies and the complex relationship between human intelligence and AI‘s sometimes extraordinary, yet still limited, capabilities. Readers learn how AI can mimic certain human functions—like pattern recognition and language comprehension—while lacking deeper human traits such as intuition and emotional intelligence. Lastly, the chapter details recommendations for ―responsible AI,‖ stressing the importance of transparency, security, and ethics with the goal of harnessing AI‘s power to benefit both business and society in genuinely sustainable and inclusive ways.

Learning Objectives These are the chapter objectives: 11.1 Understand artificial intelligence.

11.2 Describe machine learning.

11.3 Describe neural networks and deep learning.

11.4 Discuss generative AI. 11.5 Discuss intelligent agents.

11.6 Understand natural language processing.

11.7 Understand computer vision systems.

11.8 Describe robotics.

11.9 Discuss genetic algorithms.

11.10 Discuss expert systems.

11.11 Describe fuzzy logic systems.

11.12 Understand the challenges of AI. 11.13 Understand how the information in this chapter can help your career.

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H2 MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what‘s happening today.

Use the provided discussion questions in class.

H2 MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

H2 Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

H2 Key Points to Cover 11.1 Understand Artificial Intelligence   

Emphasize how AI refers to systems performing tasks normally done by human intelligence, such as speech or image recognition.

Clarify how AI‘s theoretical foundation rests on algorithms trained to solve problems and learn from data.

Compare AI‘s strengths in speed and pattern detection with humanity‘s adaptability, creativity, and emotional intelligence.

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11.2 Describe Machine Learning   

Introduce machine learning (ML) as a subset of AI that identifies patterns in data with minimal explicit programming.

Distinguish between supervised learning, which relies on labeled data, and unsupervised learning, which uncovers hidden patterns in unlabeled data.

Illustrate how ML is used in applications like recommendation systems and predictive analytics.

11.3 Describe Neural Networks and Deep Learning   

Define neural networks and how they mimic basic features of the human brain to recognize complex patterns in large datasets.

Highlight deep learning‘s arrangement of many hidden layers, enabling more sophisticated problem-solving.

Provide real-world examples such as language translation, facial recognition, and advanced image processing.

11.4 Discuss Generative AI   

Explain how generative AI (GenAI) models produce new content—text, images, or even music—by learning from vast training data.

Examine large language models (LLMs) and transformers that enable chatbots and content creation tools.

Discuss both the creative opportunities and risks of GenAI, including hallucinations and intellectual property concerns.

11.5 Discuss Intelligent Agents   

Clarify that intelligent agents are software tools with built-in or learned knowledge to perform tasks or automate services on users‘ behalf.

Differentiate between chatbots and virtual assistants, and describe their various capabilities and practical uses.

Show how bots can facilitate or streamline tasks, like product searches or data monitoring.

11.6 Understand Natural Language Processing 

Define NLP as the capability of computers to interpret and respond to human language.

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 

Highlight use cases in sentiment analysis, language translation, and interactive voice assistants.

Stress that NLP‘s capacity to interpret jargon, cultural nuances, and context is evolving rapidly.

11.7 Understand Computer Vision Systems   

Discuss how computer vision emulates human sight to identify objects, faces, or patterns in images and video.

Provide examples such as self-driving cars, medical imaging for cancer detection, and automated manufacturing quality checks.

Emphasize the importance of large training datasets for accurately recognizing visual patterns.

11.8 Describe Robotics   

Highlight robotics as the design and deployment of machines that can substitute for or assist human actions.

Examine different types: industrial robots, service robots, collaborative robots (―cobots‖), humanoids, and drones.

Discuss how AI enhances robotics by providing adaptability and greater autonomy, as seen in warehouse automation or surgical robots.

11.9 Discuss Genetic Algorithms   

Introduce genetic algorithms as optimization tools using evolutionary concepts: selection, crossover, and mutation.

Show how they search large sets of possible solutions to find near-optimal outcomes.

Point to real-world applications in manufacturing optimization, logistics, and automated design.

11.10 Discuss Expert Systems   

Show that expert systems capture experienced human knowledge as if-then rules, enabling decisions without continuous human involvement.

Note their traditional role in tasks such as medical diagnosis or credit approval.

Address how newer AI approaches have partly supplanted expert systems due to scalability and data-driven capabilities.

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11.11 Describe Fuzzy Logic Systems   

Emphasize that fuzzy logic handles imprecise or approximate data rather than binary true/false values.

Illustrate everyday examples like washing machines, thermostats, or car speed controls that adjust automatically.

Contrast fuzzy logic‘s approach—based on ranges of values—with precise cutoffbased logic.

11.12 Understand the Challenges of AI   

Raise concerns about AI bias, data privacy, deepfakes, and job displacement.

Discuss issues of ―AI hallucination,‖ difficulty in achieving full transparency, and cybersecurity vulnerabilities.

Introduce concepts of responsible AI, focusing on fairness, accountability, and the safe deployment of AI technology.

11.13 Understand How the Information in This Chapter Can Help Your Career   

Encourage students to develop AI literacy and practical ML or NLP skills that align with shifting job market demands.

Highlight how a strong AI foundation can lead to competitive job advantages, from AI prompt engineering to business analytics.

Stress the importance of ethical considerations and lifelong learning to remain adaptable in a rapidly evolving field.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.      

AI bias (11.12) Autonomous car (11.8) Bot (11.5) Chatbot (11.5) Collaborative robot (cobot) (11.8) Computer vision system (11.7)

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                          

Deep learning neural network (11.3) Disinformation (11.12) Drone (11.8) Expert system (11.10) Foundation model (11.4) Fuzzy logic (11.11) Generative AI (GenAI) (11.4) Hallucination (11.12) Humanoid robot (11.8) Industrial robot (11.8) Inference engine (11.10) Intelligent agent (11.5) Knowledge base (11.10) Large language model (LLM) (11.4) Machine learning (ML) (11.2) Medical robot (11.8) Misinformation (11.12) Natural language processing (NLP) (11.6) Neural network (11.3) Responsible AI (11.12) Robotics (11.8) Service robot (11.8) Supervised learning (11.2) Transformer (11.4) Unsupervised learning (11.2) Virtual assistant (11.5) Web scraping (11.12)

Case Studies Opening Case Study: “Computer Vision AI Helps Reddit Become More Accessible” Summary: This case illustrates how Reddit implemented Microsoft Azure AI Vision to generate high-quality image captions, or alt text, for millions of user-posted images. By adding alt

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text, Reddit expanded the platform‘s accessibility to people with visual impairments or unreliable Internet connections, while also improving its search engine visibility.

Accuracy, speed, and multi-language support were pivotal in boosting Reddit‘s user engagement and the overall user experience.

Case Study Questions: 1. Why is Reddit concerned about accessibility?

Suggested Answer: Reddit‘s user base includes individuals with diverse abilities and technical constraints.

By not providing sufficient tools such as alt text, Reddit potentially excludes people with visual impairments or low-bandwidth connections from accessing and engaging with the platform‘s image-based content. This both reduces Reddit‘s audience reach and impedes the principle of inclusive design. Addressing accessibility is socially responsible and economically beneficial, as it can lead to broader user adoption and community building.

2. What are the business and social benefits of using Microsoft Azure Vision AI to generate captions for images?

Suggested Answer: From a business standpoint, generating accurate alt text enhances Reddit‘s search engine optimization, creating greater visibility and potentially driving more traffic to the site. It expands Reddit‘s user base by making images accessible to those with visual impairments, further boosting engagement. On a social level, it demonstrates a commitment to inclusive design, enabling users of all abilities to participate more fully.

This inclusivity fosters stronger community ties and extends the platform‘s knowledge base to a larger audience.

Spotlight on Management Case Study: “Apple’s AI Strategy: AI in Every Pocket” Summary: Apple‘s AI approach focuses on integrating ―Apple Intelligence‖ features into its product ecosystem. By enabling on-device processing, Apple emphasizes user privacy while bringing real-time AI capabilities to iPhones, iPads, and Macs with dedicated neural

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chips. This strategic pivot aims to democratize AI through familiar applications and contexts, allowing customers to leverage advanced generative tools, improved Siri assistance, and dynamic on-device data processing in a seamless manner.

Case Study Questions: 1. What is the role of AI in Apple‘s business strategy?

Suggested Answer: AI serves as a key differentiator for Apple devices, allowing them to deliver advanced personalization, intuitive user experiences, and privacy-preserving functionality. By embedding AI into products, Apple can expand its ecosystem‘s appeal and sustain industry leadership. This includes building specialized hardware to handle algorithms locally, minimizing the reliance on cloud-based computation. Apple‘s strategy relies on making AI accessible to everyday users for routine tasks—such as generating text messages, automating shared calendars, or suggesting photos to share—while emphasizing security and user trust. This holistic approach aims to maintain user loyalty and spur further device adoption.

2. Describe the most important capabilities of Apple Intelligence.

Suggested Answer: Apple Intelligence introduces advanced real-time AI features that run locally on a device‘s processing chip. These capabilities include improved natural language understanding through an enhanced Siri, on-device generative options like personalized text creation, and more robust image generation or editing. In keeping with Apple‘s privacy commitment, Apple Intelligence processes user data without sending it all to cloud-based servers, thus limiting data exposure. Seamless integration with Apple‘s operating systems supports application developers to embed AI-driven functionalities— like real-time speech-to-text or image transformations—directly into their apps.

3. Should everyone have an Apple device with Apple Intelligence? Explain your answer.

Suggested Answer: Whether Apple Intelligence is beneficial for all users depends on individual preferences regarding ecosystem loyalty, budget, and comfort level with AI. For users who strongly value privacy with robust on-device capabilities, Apple‘s approach is compelling. It can streamline tasks, support creativity, and augment everyday workflows. However, AI‘s performance still varies, and model ―hallucinations‖ or incomplete coverage may Copyright © 2026 Pearson Education, Inc.

occasionally occur. Moreover, some users might prefer open or more customizable systems. Ultimately, individuals weigh the trade-offs—cost, platform constraints, and reliance on Apple‘s ecosystem—when deciding if Apple Intelligence is the right fit.

Chapter Case Study: “Is AI Coming for Your Job?” Summary: This case highlights growing concerns about AI-driven job losses, citing real-world examples such as copywriters replaced by automated content generators and fast-food workers displaced by AI-powered ordering tools. While some statistics point to the elimination of millions of positions, others suggest that AI also creates new jobs and productivity gains. The discussion emphasizes how the future job market will increasingly require ongoing adaptation, upskilling, and collaboration with intelligent machines.

Case Study Questions: 1. How does automating jobs using AI pose an ethical dilemma? Who are the stakeholders? Identify the options that can be taken and the consequences of each.

Suggested Answer: Automating jobs with AI pits efficiency and cost savings against concerns for worker displacement and socioeconomic inequality. Stakeholders include employers aiming to stay competitive, employees worried about job security, and communities affected by changing labor markets. Options range from full-scale automation, partial automation, or a measured approach coupled with retraining and education programs. Complete automation might cut costs dramatically but could foster unemployment and social disruption, disproportionately affecting marginalized groups. Partial automation preserves some human oversight, balancing productivity with job stability. A path emphasizing upskilling, job transition resources, and AI augmentation fosters ethical workforce development, though it demands managers, governments, and educational institutions to invest jointly in new training infrastructures. Ultimately, the decision shapes trust in organizations, labor market health, and social equity.

2. If you owned a factory and were considering using AI, what management, organizational, and technological factors should you consider?

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Suggested Answer: Managers would look at cost-benefit analyses to see if AI-driven automated equipment yields productivity improvements exceeding the costs of acquisition, system integration, and employee training. Organizationally, leadership must plan job redesign and ensure staff readiness; AI can shift skill requirements and job content. Ethically, management policy should address potential layoffs or transitions through robust retraining or reassignments. Technologically, ensuring data quality for training AI is essential, along with robust cybersecurity to protect operational and proprietary data. Leaders may also need agile change management processes for continuous adaptation. Highlighting transparency and communication with workforce stakeholders can smooth adoption and maintain morale. Compatibility with existing systems and alignment with strategic objectives—such as expanding production capacity or improving quality control—also come into play.

3. What role has AI technology played in job losses? Explain your answer.

Suggested Answer: AI has accelerated the automation of low-skill, routine tasks—like data entry, order processing, and repetitive assembly-line work—but it is also reaching into higher-skill fields such as copywriting, law research, and analytics. It reduces labor costs for employers and can boost productivity but raises fears of widening inequality by decreasing certain categories of jobs more drastically. Nonetheless, job loss statistics are nuanced, with some reports indicating that while AI eliminates certain positions, it also stimulates demand for AI-literate roles (e.g., data scientists and prompt engineers).

Net outcomes can vary by region, industry, and how quickly companies move from partial automation to advanced AI solutions. Thus, AI‘s role in job losses is significant yet interwoven with new opportunities and the potential for labor market recalibration.

Review Questions 11.1 Understand artificial intelligence 1. Define artificial intelligence.

Suggested Answer:

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Artificial intelligence (AI) refers to computer-based systems or algorithms that can perform tasks that typically require human intelligence. These tasks might include understanding natural language, diagnosing medical conditions, recognizing patterns in images, and making decisions. AI is built upon models and algorithms that process data and learn iteratively to improve performance. Rather than following strict instructions as with traditional software, AI systems can act based on patterns they detect in past data or experiences. By leveraging techniques such as machine learning and deep learning, AI ―learns‖ over time how best to handle new instances within a problem domain.

Though AI can perform specific functions rapidly—such as analyzing thousands of images in seconds—it lacks the emotional intelligence, creativity, or contextual awareness inherent to humans. Hence, while it can replicate or surpass some discrete skills, AI‘s ongoing challenge is to mimic the broader complexity of the human mind and adapt seamlessly to dynamic or open-ended situations. This gap highlights both AI‘s power and its limitations.

2. Compare artificial intelligence with human intelligence.

Suggested Answer: Although AI can match or exceed human performance in specialized tasks, it remains fundamentally different from human intelligence in scope and adaptability. Human intelligence encompasses creativity, intuition, emotional depth, and contextual judgment—none of which AI replicates comprehensively. For instance, a human artist can be inspired by personal experiences to create something entirely novel, while AIbased generative models rely on large datasets of historical examples. Humans can quickly adapt to ambiguous contexts and unexpected circumstances. AI needs training data and measurable feedback loops to learn tasks and often struggles when confronted with unstructured or unprecedented scenarios. Further, humans possess emotional intelligence that shapes empathy, interpersonal skills, and cultural awareness.

AI systems, on the other hand, usually lack that intrinsic human element, even if they can simulate empathy to some degree by analyzing language patterns. Therefore, while AI can handle immense data volumes with speed and consistency, human intelligence remains unique for its expansive, multi-layered cognition, creativity, and capacity for abstract, ethical decision-making.

11.2 Describe machine learning 1. Explain what machine learning is and how it works.

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Suggested Answer: Machine learning (ML) is a subset of artificial intelligence that focuses on enabling computer systems to learn from data and improve performance with minimal explicit programming. To train an ML model, data relevant to a certain task—like identifying fraudulent transactions or predicting product demand—are gathered and split into training and test sets. The training set is processed by an algorithm that discerns patterns or relationships and adjusts its internal parameters (weights) until it can accurately categorize or predict outcomes. Different ML approaches exist: supervised learning uses labeled data, where correct answers or classifications are known, while unsupervised learning uses unlabeled data, relying on the model to identify hidden structures. Another approach is reinforcement learning, where the system learns optimal actions through trial and error, guided by rewards or penalties. Once trained, an ML model can then generalize to new data. This cycle of training, testing, and refining is how systems ―learn,‖ making ML an increasingly powerful technique that underpins numerous applications, from recommendation engines to autonomous vehicles.

2. Compare supervised and unsupervised learning.

Suggested Answer: Supervised learning trains a model on labeled datasets, where each example is paired with the correct output. This method effectively ―supervises‖ the learning process by providing explicit examples of the desired solution. For instance, an email spam filter might be trained with labeled emails—spam versus non-spam—so the model learns which characteristics indicate spam. Once trained, the model can recognize spam emails it has never seen before. In contrast, unsupervised learning deals with unlabeled data. The system strives to discover underlying patterns, structures, or clusters without explicit guidance. An example is customer segmentation, where algorithms group customers based on behavioral similarities even if no prior labels exist. Because unsupervised learning does not rely on predefined categories, it can deliver insights such as unknown groupings and anomalies. However, it often requires more careful interpretation to deduce meaning. Both supervised and unsupervised methods are crucial in extracting value from massive datasets, but they cater to different types of problems and objectives.

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11.3 Describe neural networks and deep learning 1. Explain what a neural network is and how it works.

Suggested Answer: A neural network is an AI model inspired by the structure of the human brain—though not an exact replica—consisting of interconnected nodes or ―neurons.‖ These nodes process input data, passing signals through weighted connections. In a typical network, data enter an input layer, pass through one or more hidden layers, and produce an output like a classification or prediction. Each neuron linearly combines inputs and applies an activation function that introduces non-linearity, thus enabling the network to represent complex turns in the data. The network learns by adjusting the weights of these connections using a technique like backpropagation, which calculates error and ―pushes‖ corrections backward through the layers. After many training iterations, the network can generalize from patterns in the training set to make predictions on new, unseen data. Common applications include image recognition, language translation, and fraud detection, leveraging neural networks‘ power to detect subtle or complicated patterns that are often missed by simpler algorithms.

2. Define deep learning and explain why it is so powerful.

Suggested Answer: Deep learning is an advanced type of neural network architecture featuring multiple hidden layers, each layer learning increasingly abstract and complex representations of the data. In contrast to shallower models, which may detect only basic patterns, deeper networks can capture layered features—such as edges and shapes in an image, then faces, and eventually the distinct identity of a person. This hierarchical feature extraction allows deep learning systems to excel at processing unstructured data like images, sound, text, and videos. It is powerful largely because of the availability of huge amounts of data (big data) and the emergence of more capable hardware, such as graphics processing units (GPUs). These resources enable deep networks to handle billions of parameters, thus better modeling the complexity of real-world tasks. However, deep learning models often require extensive training data and can be opaque in their decision-making process, which presents challenges related to explainability, bias, and resource intensity.

3. Provide examples of three neural network and deep learning applications.

Suggested Answer:

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First, in health care, neural networks are widely used for medical imaging diagnostics— helping detect tumors from MRI scans by learning to spot minute patterns that may signal cancer. Second, speech recognition platforms like end-to-end voice assistants rely on deep learning to decipher spoken language in real time, turning audio waves into meaningful text and responding to users‘ requests. Third, automotive companies employ deep learning in autonomous vehicles for object detection and sensor data fusion—camera footage, radar, and LiDAR readings feed into neural networks that identify pedestrians, lanes, and other vehicles. Each of these examples showcases how deep learning can handle complex, high-volume data, such as pixel-level image input or waveforms in audio, yielding practical, real-world solutions. Beyond those areas, deep networks also power recommendation engines for e-commerce, language translation platforms, and generative AI tools capable of creating text, art, or even music.

11.4 Discuss generative AI 1. Define GenAI. Suggested Answer: Generative AI (GenAI) is a category of machine learning models designed to produce new content—such as text, images, or even software code—rather than just analyzing existing data. These models learn patterns and relationships within the training set and then leverage that knowledge to create original outputs. For example, a GenAI model could write essays, compose music, or generate labeled imagery. Words like ―disruption‖ and ―creativity‖ often show up when discussing GenAI because it can mimic human-like originality in contexts ranging from marketing copy to software debugging. Instead of following strict if-then logic, GenAI can simulate or approximate creativity by blending learned patterns in novel ways. While generative systems can be remarkably versatile, they still depend heavily on the quality and scope of their training data. Problems such as misinformation can occur when the models generate inaccurate or ―hallucinated‖ outputs. Despite such challenges, GenAI offers vast potential in domains including design, research, education, and artistic expression.

2. Explain the role of transformers and large language models in GenAI. Suggested Answer: Transformers are a type of neural network architecture integral to many GenAI systems.

They process data—in particular text sequences—in parallel, analyzing relationships among input pieces through a mechanism known as ―attention.‖ This attention Copyright © 2026 Pearson Education, Inc.

architecture enables them to handle long-range dependencies well, making them exceptionally good at tasks like translating entire paragraphs and summarizing lengthy documents. Large language models (LLMs) are transformer-based models trained on massive text corpuses, allowing them to learn statistical patterns of language. They can generate coherent text answers, pass standardized tests, translate languages, and even write software code. By absorbing patterns from billions of words, LLMs can mimic a wide range of writing styles. However, because such models rely on correlation rather than human reasoning, they may produce incorrect or nonsensical outputs. Nonetheless, transformers and LLMs remain the foundational building blocks for modern generative services, from ChatGPT to code generation platforms.

3. List and describe the capabilities of GenAI tools such as ChatGPT, Microsoft Copilot, Google Gemini, and DALL-E. Suggested Answer: 







ChatGPT: A text-based chatbot developed by OpenAI, known for producing human-like responses to a range of prompts and performing tasks like writing stories or summarizing documents. It uses a large language model to handle natural language queries and generate coherent paragraphs.

Microsoft Copilot: An AI-driven assistant integrated with Bing and other Microsoft products that provides contextual feedback, can generate code snippets, handle content creation, and assist with problem-solving tasks. It also includes image creation features by integrating with DALL-E 3.

Google Gemini: A family of large language models trained on extensive data to enable a variety of tasks, from text generation and research assistance to visual recognition. Gemini processes different data types—text, image, video—and zeros in on advanced reasoning in real time.

DALL-E: Another product of OpenAI, DALL-E generates images from textual prompts. It can be used for rapid prototyping of ads, digital art, or concept designs by translating natural language descriptions into original graphics, including highly detailed and stylized visuals.

11.5 Discuss intelligent agents 1. Explain what an intelligent agent is.

Suggested Answer:

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An intelligent agent is a software program designed to act on a user‘s behalf or perform predefined tasks smartly and autonomously. It has or acquires a knowledge base, enabling it to make decisions based on learned or programmed rules. These agents can be found in email filters sorting spam, recommendation engines suggesting products, or chatbot interfaces answering customer queries with minimal human intervention.

Depending on the complexity, agents might adapt their behavior through machine learning, refining their decision-making over time. The technology uses triggers (events or data changes) to initiate actions—a spam filter agent scans for suspicious keywords, while a digital assistant agent might automatically schedule appointments based on emails. Some intelligent agents, like Siri or Alexa, also incorporate natural language processing, letting them interpret and respond to voice commands. Their goal is to reduce user workload, accelerate information retrieval, and handle tasks more efficiently than purely manual processes.

2. Compare the capabilities of a virtual assistant and a chatbot.

Suggested Answer: Chatbots and virtual assistants are both conversational AI technologies but differ in scope and complexity. A chatbot is typically designed for focused, often scripted interactions—like answering FAQs or assisting with order status checks. Once it identifies keywords in a query, it retrieves a matching response from its database or uses AI to generate an answer. While advanced chatbots employ machine learning and natural language processing, many are still rule-based, limiting them to specific contexts, such as customer service or e-commerce help. Virtual assistants, on the other hand, can handle broader tasks such as scheduling appointments, setting reminders, controlling smart home devices, or delivering personalized recommendations. They often integrate more robust AI frameworks, pulling data from multiple apps or cloud services to respond to user needs. Virtual assistants also tend to utilize voice recognition, supporting a hands-free experience. Thus, while chatbots tackle basic interactions, virtual assistants offer an expanded range of capabilities, frequently acting as personal digital concierges.

3. Explain what a bot is and provide examples of three types of bots.

Suggested Answer: A bot is a software tool that performs automated, repetitive tasks over the Internet or within a controlled digital environment. Bots can operate without human intervention and often work through predefined rules or newly learned behaviors. Examples include:

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 



Shopping bots: These scan multiple e-commerce sites for product details, prices, and availability, helping users find deals.

Web crawlers: Also called spiders, these systematically browse the web for search engines, indexing the content of websites so users can find them more easily.

Monitoring bots: Used by IT teams to detect anomalies or track uptime. They repeatedly check system health metrics or URL statuses, sending alerts if something deviates from normal ranges.

Other commonly known bots include malicious ones, such as malware that automates hacking tasks, or scrapers that bulk-extract data from target sites. Overall, bots streamline or accelerate certain processes—either for beneficial tasks, like aggregating data, or harmful ones, like spam distribution.

11.6 Understand natural language processing 1. Define natural language processing.

Suggested Answer: Natural language processing (NLP) enables computer systems to understand, interpret, and generate human language in written or spoken forms. These systems rely on algorithms—often powered by machine learning or deep learning—to parse sentences, identify linguistic cues, and derive meaning. Specifically, NLP can involve automatic text translation, named entity recognition, sentiment analysis, and question-answering. By combining pattern recognition with grammatical rules, applications like Siri or Google Translate can transform speech to text, interpret user intent, and craft relevant responses. The complexity arises because human language is replete with ambiguities, idioms, slang, and social context. NLP attempts to capture these layers of meaning through comprehensive training on large linguistic datasets. Key steps can include tokenizing text into words or subwords, tagging parts of speech, and analyzing semantic relationships. Although NLP has advanced significantly in recent years—particularly with the arrival of large language models—complete mastery of human-like comprehension remains elusive.

2. Provide examples of three natural language processing applications.

Suggested Answer:

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First, sentiment analysis systems scan social media content and product reviews, determining whether the overall sentiment is positive, negative, or neutral. Businesses such as hotels or restaurants use this information to respond more effectively to customer feedback. Second, automated customer service chatbots—like those in banking or e-commerce—process a user‘s typed or spoken questions and can offer meaningful, real-time assistance without direct human intervention. They often rely on NLP to identify queries about account balances, order follow-ups, or return policies.

Third, language translation applications—such as Google Translate—exemplify how NLP can break down linguistic barriers by automatically converting content from one language to another. Machine translation technology continually improves as neural networks analyze more bilingual texts. In each case, NLP democratizes access to information and reduces friction in communication, showing how machines can coordinate effectively with humans using more natural forms of interaction.

11.7 Understand computer vision systems 1. Explain what a computer vision system is.

Suggested Answer: A computer vision system combines cameras or other sensing devices with AI-based analysis—often machine learning or deep learning—to interpret images or video in a way that simulates human sight. These systems might detect objects, identify facial features, or track movement patterns. By transforming raw pixels or sensor signals into structured data, a computer vision model can label a cat in a photo or detect whether a worker on an assembly line is wearing required protective gear. To achieve these tasks, vision systems are typically trained on vast, annotated image datasets. The training process involves learning characteristic features—for example, edges, textures, and shapes—that become progressively complex through layered neural networks.

Computer vision underpins a wide array of applications, including medical imaging for radiology, warning a car to brake if it detects a pedestrian, or sorting produce by quality and ripeness in an agricultural setting.

2. Provide three examples of computer vision applications.

Suggested Answer: First, self-driving cars rely on cameras and computer vision software to classify and respond to objects like traffic lights, lane markers, and pedestrians, enabling semiautonomous or autonomous driving. Second, in manufacturing, computer vision helps Copyright © 2026 Pearson Education, Inc.

identify product flaws in real time—for instance, scanning for tiny cracks in smartphone glass or alignment mismatches in automotive parts—thereby reducing waste and rework. Third, in medical diagnostics, systems can interpret radiographs or CT scans to highlight irregularities such as tumors. Trained on thousands of annotated medical images, these models often catch anomalies at a stage where human oversight might take far longer or be less consistent. Beyond these, companies are extending computer vision ideas to everything from inventory management drones to security camera analytics able to detect suspicious activity in crowded environments.

11.8 Describe robotics 1. Define robotics.

Suggested Answer: Robotics is the interdisciplinary domain concerned with designing, building, and operating machines that can perform tasks traditionally requiring human labor. Robotics integrates mechanical engineering for physical structures, electrical engineering for powering and controlling actuators, and computer science for programming and sensing.

Some robots perform repetitive tasks with high precision, like welding on an assembly line or picking objects in a warehouse. Others are more adaptive, leveraging AI for realtime decision-making, such as self-driving cars or drones. Because robots can function in hazardous environments—handling toxic chemicals or performing disaster rescue— they often reduce risks for human workers. While basic robotic systems follow prescripted tasks, advanced prototypes use machine learning to refine their behavior on the fly. Robotics can significantly improve efficiency, safety, and accuracy, but the technology also sparks debates about job displacement and ethical concerns, especially in scenarios involving lethal autonomous weapons or the privacy implications of surveillance robotics.

2. List and describe the different kinds of robots.

Suggested Answer: Robots may be categorized by form or function. Industrial robots often feature a single mechanical arm or multi-axis configuration used in factories for tasks like welding, painting, or packaging. Collaborative robots—called cobots—work side by side with humans, assisting with less ergonomic or high-precision duties while a person handles the more nuanced elements of an operation. Service robots address day-to-day tasks, such as vacuuming floors, delivering food, or assisting hospital staff by carrying linens.

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Humanoid robots adopt anthropomorphic designs, enabling them to interact in settings designed for human bodies. Medical robots include surgical systems that assist surgeons, boosting precision in minimally invasive procedures. Drones, also known as unmanned aerial vehicles, fly autonomously or semi-autonomously for mapping, photography, or deliveries. Finally, autonomous cars handle tasks typically done by human drivers. Each category aims to automate or augment specific human functions in varied environments, from assembly lines to public roads.

11.9 Discuss genetic algorithms 1. Explain what a genetic algorithm is and how it works.

Suggested Answer: A genetic algorithm (GA) is a computational method that models natural biological evolution to solve optimization and search problems. A population of candidate solutions (analogous to organisms) is created, each represented by a ―chromosome‖ specifying its traits. The algorithm assesses each candidate‘s ―fitness‖ level—how close it comes to an optimal solution. Fit candidates are retained or even ―mated‖—their parameters combined—to produce ―offspring‖ that inherit traits from both parents. GAs also employ random ―mutations‖ to introduce fresh variations. This process repeats for many generations. Over time, the population‘s solutions improve, converging nearer to an ideal. For instance, a company might use a GA to develop optimal factory schedules or supply chain routes. Because they systematically search large solution spaces and escape local optima better than simpler search algorithms, GAs are particularly effective in scenarios where variables or constraints change frequently. However, they can be computationally intensive, especially with complex or massive datasets.

2. Provide examples of three applications that use genetic algorithms.

Suggested Answer: First, Boeing has famously used GAs to optimize aircraft wing design. Engineers define variables like wing shape or angle, and the algorithm tests thousands of variations to identify those offering ideal lift, drag, and stability. Second, financial analysts sometimes leverage GAs to optimize investment portfolios, searching among many assets to maximize returns and minimize risks amid changing market conditions. Third, in scheduling and logistics, major shipping or online retail companies rely on GAs to arrange shipping routes or distribution center workflows, factoring in delivery times, fuel usage, and labor constraints. By harnessing GA-based solutions, organizations reduce Copyright © 2026 Pearson Education, Inc.

operational costs and improve efficiency. The advantage across these cases lies in GAs‘ ability to handle large, dynamic solution spaces—refining potential answers from generation to generation without requiring a mathematically perfect or purely rigid approach.

11.10 Discuss expert systems 1. Explain what an expert system is and how it works.

Suggested Answer: An expert system encodes the expertise of human specialists into a rule-based software program that can diagnose or make decisions in a narrowly defined domain. It typically consists of a knowledge base, which stores facts and if-then rules, and an inference engine that applies these rules to user-input data to generate recommendations or solutions. For example, a credit approval expert system might ask the user about income, debt, and assets, then use embedded rules—if mortgage payment is below 20% of income, approve credit—to deliver a result. The system‘s reliability hinges on the thoroughness of human experts in inputting the relevant knowledge and relationships. Though expert systems can provide consistent, rapid recommendations once set up, they lack the ability to handle novel situations outside their rules. Updating systems with fresh knowledge can be challenging, particularly in fields evolving quickly.

Because of their rigidity, many businesses have shifted toward machine learning solutions that glean insights directly from data.

2. Describe the limitations of expert systems.

Suggested Answer: Expert systems often face difficulties scaling because they rely on explicit, predefined rules crafted by domain experts. As the number of rules grows, conflicts and complexity may overwhelm the system, making it difficult to maintain. They also do not adapt automatically to changing conditions; updating rules can be labor-intensive and costly.

Another limitation is their inability to handle unstructured or ambiguous problems beyond their knowledge scope. Unlike machine learning models that learn from data, expert systems remain static unless new rules are programmed. Moreover, experts themselves might not be able to articulate all their reasoning processes—some knowledge is tacit. In dynamic domains like medical research, rules can become outdated quickly. Finally, expert systems are typically narrow, focusing on specialized tasks, rather than providing broad or creative solutions that require human intuition or Copyright © 2026 Pearson Education, Inc.

emotional contexts. These constraints have propelled many organizations toward datadriven AI that updates itself more fluidly when conditions shift.

11.11 Describe fuzzy logic systems 1. Explain what a fuzzy logic system is and how it works.

Suggested Answer: Fuzzy logic systems mimic human reasoning by handling approximate or ―fuzzy‖ concepts such as ―warm,‖ ―cool,‖ or ―mostly true,‖ rather than purely binary categories of 0 or 1. This approach relies on mathematical ―membership functions‖ mapping input variables (like temperature or humidity) onto a continuum between 0 (completely false) and 1 (completely true). Fuzzy rules—if temperature is ―somewhat hot‖ and humidity is ―very high,‖ then reduce ventilation—govern system responses. Each rule is assigned a degree of confidence, and conflicting rules are combined to produce a final output. This incremental approach produces smooth variations in system decisions, allowing for better control in uncertain or continuously changing environments. For instance, a fuzzy-enabled washing machine can subtly adjust water temperature or spin speed based on approximate load size or fabric type, whereas a purely binary machine would rely on a set of rigid thresholds. Thus, fuzzy logic manages real-world nuance gracefully.

2. Provide examples of three fuzzy logic applications.

Suggested Answer: Consumer electronics frequently leverage fuzzy logic for better user experiences. For instance, air conditioners can make small, continuous adjustments to temperature or fan speed, rather than abruptly switching on or off, thus keeping a house at more stable comfort levels. Automobiles use fuzzy logic in transmission systems to decide when to shift gears smoothly, factoring in speed, engine load, and driving style. Likewise, advanced camera autofocus systems adjust lens position by weighting multiple fuzzy conditions—how sharply an edge is captured or how strongly an object is contrasted against a background—to achieve clearer images. These examples show that fuzzy logic excels when dealing with real-world input, which can be ambiguous or partially true.

The technology‘s strength lies in bridging the gap between crisp, digital logic and everything that‘s fluid or approximate in human environments, from driving habits to indoor comfort preferences.

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11.12 Understand the challenges of AI 1. List and describe the challenges posed by AI technology.

Suggested Answer: A significant concern is AI ―hallucination,‖ where models produce results that sound plausible but are inaccurate or even fabricated. Second, AI bias can arise from training data that unequally represents different groups, leading to discriminatory outcomes.

Third, the technology‘s opacity—often described as black-box decision-making— impedes transparency and accountability. On a broader scale, AI can facilitate the creation and dissemination of misinformation or disinformation, exacerbating societal polarization. There are also privacy issues; individuals may not know how systems gather or process their personal data. AI may disrupt labor markets, displacing certain jobs and potentially accelerating economic inequality. Cybersecurity poses worries too—criminals can use AI to produce convincing phishing attacks, and AI systems themselves can be targets for hacking attempts. Additionally, the environmental cost of training and running large AI systems is non-trivial, supercharging data center electricity use. Without robust regulations and ethical frameworks, the power and influence of AI could spiral beyond society‘s ability to mitigate the risks.

2. Define responsible AI and explain how it can help mitigate AI‘s challenges.

Suggested Answer: Responsible AI is a framework of principles and practices aimed at ensuring AI systems are developed, deployed, and managed ethically, fairly, and transparently. It seeks to hold organizations and individuals accountable for their AI‘s impact, making bias detection, privacy safeguards, and explainable algorithms a priority. For instance, widely publicizing how data is collected and used can reduce unethical tracking, while standardized testing for bias checks helps manage unwanted discrimination. Frequent auditing and compliance measures can help keep hallucinations or malicious manipulations in check. Designing AI models for minimal resource consumption—either through more efficient architectures or localized processing—addresses environmental stresses. Meanwhile, fairness policies encourage training sets that include diverse perspectives, reducing harmful stereotypes. By encouraging collaboration between industry leaders, policymakers, and other stakeholders, responsible AI frameworks encourage guidelines that balance innovation with public trust. If widely adopted, these principles can mitigate negative outcomes such as job displacement, privacy violations, and the spread of misinformation while reinforcing AI‘s benefits to society.

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Discussion Questions 11.13 How “intelligent” is artificial intelligence today?

Suggested Answer: AI systems excel at narrowly defined tasks, often surpassing human capabilities in speed, accuracy, or capacity to parse large datasets. For instance, AI can detect tumors from imaging with high precision or run speech recognition quickly. Nevertheless, AI lacks broad contextual understanding across multiple domains, empathy, and emotional intelligence—key hallmarks of human thinking. Large language models, though seemingly ―knowledgeable,‖ primarily rely on pattern matching and can generate incorrect or fabricated responses (hallucinations). While these systems can appear ―intelligent,‖ they do not possess true self-awareness or consciousness. Their achievements rest on learning correlations from massive data sets, not on a holistic comprehension of the world. Moreover, AI typically stumbles with tasks requiring deep creativity or common sense. In short, today‘s AI is powerful but remains specialized, lacking the broad cognitive adaptability and emotional depth found in humans.

Understanding these strengths and limitations helps set realistic expectations for AI‘s role in society, guiding both the development of next-generation models and the regulatory frameworks that govern their use.

11.14 What is the relationship between AI and big data?

Suggested Answer: AI and big data form a complementary cycle. AI systems, particularly machine learning and deep learning models, thrive on large quantities of data to uncover patterns, correlations, and anomalies that might be invisible to human analysts. The more data an AI has to work with, the better it can refine its internal parameters and yield accurate predictions or classifications. Big data‘s vital characteristics—volume, variety, velocity, and sometimes veracity—require robust AI techniques to manage them effectively. For instance, analyzing millions of log files can detect security threats faster than a manual approach. On the other hand, the existence of advanced AI encourages more data collection, because organizations recognize that such data can be monetized or harnessed for deeper insights. This synergy can lead to exponential benefits but also significant challenges: handling sensitive information raises privacy concerns, while the scale of data demands substantial computational power, potentially impacting sustainability. In essence, big data fuels AI, and AI gives meaning to big data.

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11.15 How should AI technology and AI systems be regulated?

Suggested Answer: Regulating AI presents a complex balancing act between fostering innovation and safeguarding the public interest. One approach involves establishing transparency requirements: developers or businesses could be mandated to disclose how AI makes decisions, especially in sensitive areas like healthcare or finance. Industry standards might also require routine audits for bias and accuracy, ensuring that algorithms do not systematically disadvantage a protected group. Policy frameworks could stipulate data privacy protections, setting limits on data use and retention. Independent oversight organizations—whether governmental or third-party—could monitor compliance, much as how financial institutions are regulated, imposing fines or restrictions on misuse.

Another regulatory focus is ensuring accountability: who is liable if an AI decision leads to harm or if an autonomous vehicle malfunctions? Finally, governments could invest in workforce transition programs, mitigating job displacement and encouraging new skill development. These measures, taken together, enable AI to evolve responsibly, balancing potential economic benefits with ethical imperatives for fairness, reliability, and privacy.

AI Project 11.16 AI Project: Writing a Press Release ―You have been hired as a consultant by two friends who want to open a retail store selling 100 percent organic pet food and treats, as well as pet toys and clothing made from 100 percent organic materials. Everything the store will sell is 100 percent organic.

They have asked you to prepare a press release announcing the opening of the store.

For the purpose of this exercise, the store name is the 100 Percent Organic Pet Shop.

Write a press release announcing that this store will open on November 1, 2024, and will be open Monday through Saturday from 9:30 AM to 5:30 PM, closed on holidays.

Include contact information: The store‘s address is 100 Silver Maple Lane, Ithaca, New York. Telephone: 607-111-1111. The press release should be dated November 1, 2024.

Using Microsoft‘s Copilot, Google‘s Gemini, or ChatGPT, develop a series of prompts to help you with this task. Save a copy of your prompts and the output of the chat session.

Submit to your instructor as requested.‖ Suggested Answer:

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A sample 150–200 word press release might read: ―FOR IMMEDIATE RELEASE – November 1, 2024 Ithaca, NY – The 100 Percent Organic Pet Shop is thrilled to announce the grand opening of its brand-new retail location at 100 Silver Maple Lane, proudly serving the local community beginning November 1. Catering exclusively to conscientious pet parents, The 100 Percent Organic Pet Shop will offer premium all-organic pet foods, wholesome treats, and eco-friendly toys and clothing for furry companions. Doors will be open Monday through Saturday from 9:30 AM to 5:30 PM, with closure on public holidays to honor both employees‘ and customers‘ time. With an unwavering commitment to health and sustainability, the store vows transparency in every product, ensuring thoughtful, responsibly sourced ingredients and materials. Shoppers will also find a well-trained staff ready to provide insights on nutritional benefits and environmental impact. For further information, feel free to call 607-111-1111 or stop by.

Give your pets the gift of top-tier organic essentials combined with our warm, community-minded service.‖

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

11.17 Management Decision Problem ―In November 2023, the online magazine Futurism reported that Sports Illustrated was publishing articles generated by AI. According to Futurism, anonymous sources were involved in creating content, and Sports Illustrated published a lot of fake authors, with some articles under those fake authors‘ bylines generated by AI as well. Futurism also found that the author headshots in question were listed on a site that sells AI-generated portraits. The Arena Group, publisher of Sports Illustrated, said the articles in question were licensed content from a third party, AdVon Commerce. Arena Group said that it continually monitors its partners and that AdVon had assured the company that all of the articles in question were written and edited by humans. Arena Group further stated that AdVon writers used pen names or pseudonyms in certain articles, and that Arena Group doesn‘t condone those actions. Arena Group removed the articles in question from the Sports Illustrated website. Define the problem here and identify the management, organization, and technology factors that contributed to the problem. How could this problem be avoided?‖

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Suggested Answer: From a management perspective, the lack of direct oversight and robust qualityassurance protocols allowed questionable content to be published under fake bylines.

Managers at Arena Group relied on a third party to verify author authenticity and AI involvement. Organizationally, there was likely insufficient coordination or explicit guidelines on content sourcing, identity disclosure, and ethical considerations for AImade or AI-assisted work. Technology factors include the ease of creating AI-generated images or text, with minimal traceability, and the reliance on externally produced AIdriven content. These conditions collectively fostered an environment where pseudonymous or fabricated authors could slip through. A stronger editorial review process, systematic authentication of freelance contributors, and explicit usage guidelines for AI-based content are critical preventive measures. Organizations might also benefit from an internal or industrywide code of conduct addressing transparency in AI-generated writing. Ultimately, to avoid such incidents, media companies should thoroughly vet partner agencies, implement transparent labeling of AI content, and train editorial staff to recognize potential indicators of AI-generated work.

11.18 Using GenAI Software ―Software skills: GenAI and traditional search software Business skills: Improving web searches You want to learn how to search for topics using GenAI tools such as Google Gemini and Microsoft Copilot and how this differs from using traditional search tools such as Google or Microsoft Bing. Choose a topic to search on, such as parallelogram, Order of the Arrow, spotted lanternfly, or a topic of your choice. Search on the topic you have selected using Microsoft Bing and then Microsoft Copilot or using Google Gemini and then Google search. Compare the output from using the two types of search. How did they differ? Write several paragraphs on what you found—the differences in output, which was more comprehensive, which had more detail, which was easier to use. Print out the output to show your instructor.‖ Suggested Answer: Performing the same query on both a traditional search engine and a GenAI tool generally exhibits clear differences. Traditional search engines like Microsoft Bing or Google typically present a list of ranked links along with short text snippets indicating how relevant each result is to the query. These results often lean on established Copyright © 2026 Pearson Education, Inc.

websites, academic journals, or news articles, giving the user direct references to further investigate. Meanwhile, using GenAI-based platforms like Copilot or Gemini can yield a more succinct, conversation-style answer. Instead of a simple list of links, the GenAI tool synthesizes information from multiple sources into paragraphs of text. If asked elaborative or follow-up questions, the GenAI can maintain context and refine its previous answer.

In practice, the GenAI results might seem more immediate and user-friendly for quick, high-level summaries. However, the responses can sometimes contain inaccuracies (―hallucinations‖) not tied to specific references. By contrast, the search engine yields more traceable results, each linked to a credible source. Students and researchers seeking in-depth verification may prefer the direct citations offered by traditional search.

On the other hand, a quick overview or ―plain language‖ explanation may be best served by a generative model. Understanding these differences is essential for selecting the right method—factual reliability or immediate summarization—for any given research task.

11.19 Using Shopping Bots ―Software skills: Web browser and shopping bot software Business skills: Product evaluation and selection This project will give you experience using shopping bots to search online for products, find product information, and find the best prices and vendors. Select a digital camera you might want to purchase, such as the Canon PowerShot V10 or the Olympus Tough TG-7. Visit PriceGrabber, BizRate.com, and Google Shopping to do price comparisons for you. Evaluate these shopping sites in terms of their ease of use, number of offerings, speed in obtaining information, thoroughness of information offered about the product and seller, and price selection. Which site or sites would you use and why? Which camera would you select and why? How helpful were these sites in making your decision?‖ Suggested Answer: Shopping bots streamline product research by enabling quick price comparisons and feature summaries. PriceGrabber, for instance, typically excels in swiftly collating multiple vendor listings, including shipping costs and user ratings. BizRate.com similarly compares pricing but also provides ―store satisfaction‖ scores, helpful for judging

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shipping reliability and customer service. Google Shopping often shows multiple results from large retailers and local shops, also pulling in user feedback.

In terms of ease of use, all three platforms are relatively intuitive, though users may find Google Shopping‘s layout simpler—since it integrates with the familiar Google interface.

While PriceGrabber might present more granular search refinements, BizRate‘s store ratings are handy for customers who care about vendor reputation. Suppose the Canon PowerShot V10 had a better price range across multiple sites and offered decent specs, whereas the Olympus had fewer vendors but specialized rugged features. One might pick the Canon for cost-effectiveness if they rarely need waterproof performance.

Ultimately, these platforms were fairly comprehensive for shortlisting price ranges, features, and brand trustworthiness. After cross-checking camera reviews and ensuring vendor reliability, students could confidently pick the model that aligns with their budget and usage requirements.

11.20 Collaboration and Teamwork: Investigating the Use of AI ―With two or more of your classmates, select an industry, such as the healthcare industry, financial services industry, legal industry, or one chosen by your group. Use the web to research how various companies in the industry are using AI. If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: The automotive industry, for example, provides fertile ground for AI research. Many companies incorporate machine learning in driver-assistance features, enabling automatic braking, lane-keeping, and adaptive cruise control. Other automotive firms utilize AI-driven quality control in factories, employing computer vision to detect minute flaws in vehicle components. In your team‘s collaborative document, you could list major players like Tesla, GM, and Toyota, comparing how each integrates AI into product design or supply chain management. Document references or hyperlinks to company press releases and trade journal articles providing evidence of real-world impact. As you compile findings, track how AI not only innovates the engineering process but also shapes user experience—such as voice assistants or over-the-air software updates.

Once the data is assembled, the final presentation might highlight the differences between purely software-driven AI efforts versus hardware-based approaches.

Encouraging each team member to contribute sources, analyses, and commentary will

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illustrate how AI adoption differentiates brand strategies and possibly redefines consumer expectations in the chosen industry.

Suggested Assignments 1. AI and Workplace Transformation Ask students to choose an industry (e.g., retail, automotive, or healthcare) and research how AI might change the types of jobs available. Have them outline strategies companies could adopt to reskill or upskill employees to adapt to the transformation.

2. Ethics and AI Bias Audit Have students select a real or fictional AI application (e.g., a hiring algorithm or loan approval system). In small groups, they should draft an audit checklist designed to identify bias in training data, possible disparate impacts, and transparent procedures for redress.

3. Designing a Chatbot for University Services Ask students to create a simple project plan for an AI chatbot that could help fellow students with questions about registration, financial aid, or course enrollment. They should include potential data sources, essential features, and steps for pilot testing with real users.

4. AI Energy Consumption Analysis Have students investigate how AI impacts energy use in data centers and propose strategies for making AI more sustainable (e.g., advanced cooling solutions, more efficient training methods, or on-device computing). Students should prepare a short written policy recommendation.

5. Fuzzy Logic for Everyday Controls Challenge students to examine a common device in their household (e.g., air conditioning, coffee maker) and explain how fuzzy logic could improve or simplify its controls. They should outline what membership functions and rules might look like, then present possible user benefits.

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Chapter 12 – Instructor Manual Chapter Summary This chapter explores how organizations enhance decision making through data analytics and business intelligence (BI). It begins by examining different types of business decisions—structured, semistructured, and unstructured—and how these decision types map to various levels of the firm. The chapter then discusses the multistage decision-making process, including intelligence, design, choice, and implementation. Readers learn about classical and behavioral models of management and how managers use information systems to facilitate different roles, such as interpersonal, informational, and decisional. The chapter presents the value of improved decision making, highlighting that even small daily operational decisions can add up to significant organizational benefits. While information systems can foster better decisions, factors like information quality, managerial filters, and organizational inertia can undermine outcomes. The chapter provides an overview of BI, data analytics, and artificial intelligence (AI), describing how they support managerial and operational decision processes. It also covers analytic capabilities like predictive and prescriptive analytics, big data analytics, operational intelligence, and location analytics. Finally, it addresses how different user groups—ranging from executives to lower-level employees—leverage BI and analytics tools to make faster, more informed decisions.

Learning Objectives These are the chapter objectives: 12.1 Describe the different types of business decisions.

12.2 Describe the decision-making process.

12.3 Describe the different roles managers play.

12.4 Understand the value of improved decision making.

12.5 Understand why information systems do not always result in better decisions.

12.6 Discuss how data analytics, BI, and AI support decision making.

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12.7 Describe the capabilities of BI systems.

12.8 Understand the different types of BI users.

12.9 Understand how the information in this chapter can help your career.

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what's happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

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Key Points to Cover 12.1 Describe the Different Types of Business Decisions    

Emphasize how decisions in businesses can be structured, unstructured, or semistructured.

Discuss how structured decisions are routine and often found at the operational level.

Highlight the importance of unstructured decisions at higher levels of management for novel and complex problems.

Show examples of semistructured decisions that have both routine and judgment-based elements.

12.2 Describe the Decision-Making Process    

Introduce the four stages of decision making: intelligence, design, choice, and implementation.

Explain that intelligence involves diagnosing the problem and gathering information.

Stress how choice involves selecting among alternatives and implementation requires putting that choice into practice.

Note that managers may need to cycle back to earlier stages if the solution does not work.

12.3 Describe the Different Roles Managers Play    

Review the classical model of management versus the behavioral model.

Define Mintzberg‘s managerial role categories: interpersonal, informational, and decisional.

Show how information systems support these varying roles, such as through dashboards, reports, and communication tools.

Illustrate how managers juggle multiple tasks and rely on timely information.

12.4 Understand the Value of Improved Decision Making  

Emphasize that better decisions can yield significant cost savings and revenue gains.

Provide an example of how many small routine decisions can accumulate large financial impact.

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 

Underscore the ripple effects of good decisions on competitiveness and profitability.

Connect improved decision making to increased managerial and employee accountability.

12.5 Understand Why Information Systems Do Not Always Result in Better Decisions    

Discuss information quality issues and how inaccurate data can undermine decisions.

Define confirmation bias and its impact on interpreting data.

Note organizational inertia and management filters that prevent change.

Address the emergence of high-velocity automated decision making and the risks of relying solely on AI without oversight.

12.6 Discuss How Data Analytics, BI, and AI Support Decision Making    

Differentiate between data analytics, BI, and BA (business analytics).

Emphasize the integration of AI, such as machine learning and natural language processing, in BI tools.

Provide examples of how data analytics platforms underpin all levels of management reporting.

Stress how AI can automate tasks like data cleansing and advanced modeling.

12.7 Describe the Capabilities of BI Systems    

Outline key BI functions: production reports, parameterized reports, dashboards, ad hoc queries, drill-down, and modeling.

Discuss predictive analytics for anticipating future trends, and prescriptive analytics for recommending actions.

Show how big data analytics can yield insights from large data streams.

Highlight location analytics and GIS for geographical insights.

12.8 Understand the Different Types of BI Users  

Identify casual users, who consume BI outputs, and power users, who create them.

Connect managers at the operational level with MIS, while middle managers often rely on DSS.

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 

Describe how ESS with balanced scorecards and business performance management tools aids senior executives.

Provide illustrations of pivot tables for semistructured decision support.

12.9 Understand How the Information in This Chapter Can Help Your Career    

Reinforce that knowledge of data analytics and BI can enhance performance in various business roles.

Discuss how understanding the decision-making process prepares students for managerial responsibilities.

Stress that organizations value employees who can interpret and apply insights from analytics tools.

Encourage exploration of career paths as data analysts, BI specialists, or related roles.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.                 

Augmented reality (AR) (12.6) Balanced scorecard method (12.8) Behavioral model of management (12.3) Business performance management (BPM) (12.8) Choice (12.2) Classical model of management (12.3) Confirmation bias (12.5) Data analytics (12.6) Data visualization (12.6) Decisional role (12.3) Design (12.2) Geographic information system (GIS) (12.7) Implementation (12.2) Informational role (12.3) Intelligence (12.2) Interpersonal role (12.3) Key performance indicators (KPIs) (12.8)

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Location analytics (12.7) Managerial roles (12.3) Operational intelligence (12.6) Pivot table (12.8) Predictive analytics (12.7) Prescriptive analytics (12.7) Semistructured decision (12.1) Sensitivity analysis (12.8) Structured decision (12.1) Unstructured decision (12.1) Virtual reality (VR) (12.6)

Case Studies Opening Case Study: Fulton County Schools Power Up Data-Driven Decision Making with Power BI Summary: Fulton County Schools (FCS) used a labor-intensive balanced scorecard process that made it challenging to obtain reliable, near real-time data. By consolidating data into a warehouse and deploying Microsoft Power BI, FCS developed an interactive digital dashboard. Stakeholders—from principals to board members—can now make quicker, more confident decisions while engaging the community with transparent performance data.

Case Study Questions 1. How is business intelligence changing decision making and the way FCS provides information to its stakeholders?

Suggested Answer: Business intelligence (BI) at FCS modernizes and streamlines decision making. Instead of waiting for yearly, static PDF reports with inconsistent data, administrators, educators, and community members now have centralized, real-time data. Power BI enables visualizations and dashboards that reveal current enrollment trends, budgeting details, and facilities information. This near real-time view facilitates more proactive decisions about resource allocation and academic initiatives. Moreover, FCS‘s open, interactive

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format fosters community trust by communicating dynamic insights for public scrutiny.

As business intelligence integrates data from various systems, FCS leaders can respond faster to educational challenges, driving improvements in staffing, curriculum strategies, and student performance. The result is a data-driven culture that supports evidence-based decisions across all levels of the school district.

2. Give an example of a type of decision that educators at FCS might make that could be improved by using business intelligence.

Suggested Answer: One likely example is adjusting intervention programs for struggling learners. Using BI, a teacher or school administrator could analyze trending attendance, test scores, and demographic data to target which students need additional reading or tutoring support.

Rather than relying on broad assumptions or waiting until end-of-year evaluations, the educator could identify early warning signs of disengagement or drops in performance.

With real-time dashboards, an educator can see if specific intervention methods need immediate changes (e.g., shifting from group tutoring to individualized coaching). This refined and accessible data lets school leadership adjust strategies promptly and measure outcomes faster, delivering a more efficient, responsive approach to student achievement.

Spotlight on Technology Case Study: Land O’Lakes Seeks to Reshape the Future of Farming with Predictive Analytics and AI Summary: Land O‘Lakes leverages predictive analytics and AI to improve agricultural decision making—from identifying the best seeds for specific soil types to developing sustainability solutions. By processing data gathered through test plots, simulations, and on-farm sensors, the cooperative empowers agronomists and farmers to apply precise planting, feeding, and harvesting techniques. Although connectivity and sensor adoption remain challenges, Land O‘Lakes sees data-driven insights as pivotal for modern, efficient, and more sustainable farming.

Case Study Questions 1. How is Land O‘Lakes helping farmers make better decisions?

Suggested Answer:

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Land O‘Lakes uses predictive and prescriptive analytics, deploying AI tools that integrate data from test plots, weather simulations, and field sensors. By blending these diverse data sets, Land O‘Lakes can forecast which seed varieties and farming practices perform best in specific plots, soil conditions, and climates. The company shares these tailored insights through local agronomists or digital platforms, enabling farmers to optimize planting schedules, manage fertilizers, and mitigate weed or pest threats quickly and efficiently. Additionally, Land O‘Lakes‘ sustainability initiatives reward farmers who adopt environmentally conscious methods, offering a data-driven framework for tracking carbon sequestration. This holistic approach, combining advanced modeling with real-time feedback, supports farmers in making confident, evidence-based decisions that reduce risks, hone resource allocation, and boost crop yields.

2. What are some of the challenges that farmers face in using data and technology?

Suggested Answer: A primary challenge is the uneven availability of digital infrastructure: many rural areas lack dependable high-speed internet connections, limiting the data transfer and realtime analytics farmers can perform. Another obstacle is the cost and complexity of adopting new technologies, such as upgraded sensors and AI-equipped machinery.

Older equipment often lacks connectivity, hampering data collection. Even when data exist, maintaining data quality and organizing vast, diverse data streams can be daunting. Furthermore, farmers accustomed to more traditional, experience-based decision making may initially resist shifting toward highly automated, algorithm-driven approaches. They need education, training, and proven success stories to embrace data as a reliable partner in agriculture. Overcoming these hurdles—connectivity, training, budgetary constraints, and data quality—ultimately determines how well technology adoption can transform modern farming.

Chapter Case Study: Big Data Analytics and AI: A New Way of Combating Natural Disasters Summary: Natural disasters, such as wildfires, earthquakes, and hurricanes, are increasing in frequency and severity. Many government agencies now rely on real-time data from satellites, IoT sensors, and social media crowdsourcing. AI algorithms quickly analyze these data streams, improving predictions and speeding response measures. Despite

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challenges like data integration and user trust, big data analytics and AI are emerging as critical tools to help mitigate devastation and save lives.

Case Study Questions 1. How does real-time analysis of big data help combat natural disasters?

Suggested Answer: Real-time analysis of big data is crucial because it provides emergency responders and government agencies with immediate insights into changing conditions in disaster zones.

By tapping into satellite imagery, sensor feeds, and even social media updates, analysts can detect shifting fire lines, floods, or storm surges as they happen. This timeliness allows for on-the-spot reallocation of resources—such as rerouting rescue crews away from blocked roads or reinforcing vulnerable flood barriers. Moreover, continuous intelligence enables predictive modeling, estimating the disaster‘s next likely move. For example, officials can foresee whether a wildfire might shift direction due to sudden wind changes. The ability to harness and integrate large data streams in real time can ensure that evacuation notices and relief efforts are more accurately targeted, significantly reducing property damage and loss of life.

2. How does using AI enhance real-time analysis of big data?

Suggested Answer: AI algorithms, especially machine learning models, excel at sifting through immense data volumes and identifying hidden signals or anomalies that human analysts may struggle to spot. By recognizing patterns—like seismic precursors to earthquakes or intensifying wind patterns that fuel wildfires—AI can trigger immediate alerts. It can also process disparate sources, from IoT sensor measurements to satellite-based temperature readings, and integrate them into a cohesive picture of developing threats.

Moreover, AI-driven systems can ―learn‖ from previous disasters and historical data, steadily improving at forecasting the trajectory of a storm or the spread of a fire. This heavily automated approach allows experts to focus on interpreting results and planning responses, rather than manually parsing thousands of data points. Ultimately, AI supercharges big data processing, enabling faster, more accurate responses in natural disaster scenarios.

3. What are some of the challenges in using big data analysis and AI for these purposes?

Suggested Answer:

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One key challenge is consolidating diverse data sources—satellite feeds, drone footage, GPS coordinates, and social media posts—into a unified system that supports timely analysis. Each source has unique formats, quality levels, and update intervals. Another obstacle is ensuring quality: AI models trained on incomplete or erroneous data will produce flawed predictions that can undermine trust or lead to poor response decisions.

Addressing privacy and security concerns is also critical, as sensitive geolocation data about citizens or infrastructure might be exposed. Beyond the technology, there is the cultural challenge of persuading emergency responders to fully trust AI-driven insights when they have historically relied on field experience or simpler models. Finally, the cost and complexity of deploying advanced analytics infrastructure—especially in underresourced or remote areas—can limit the consistency of these life-saving tools.

Review Questions 12.1 Describe the different types of business decisions.

1. List and describe the different types of business decisions.

Suggested Answer: Business decisions typically fall into three broad categories: structured, semistructured, and unstructured. Structured decisions are routine and repetitive, often carrying wellestablished rules or procedures. For instance, calculating payroll taxes or processing insurance claims can be automated because the procedures are known. Semistructured decisions contain elements of both structure and flexibility—for example, budgeting decisions that follow certain guidelines but also require judgment in allocating funds.

Unstructured decisions, by contrast, are unique, complex, or novel. These often occur in higher-level, strategic contexts such as entering new markets or launching major new initiatives. In these cases, managers rely on creativity, experience, and intuition because a standardized decision-making procedure may not exist. By classifying decisions along this spectrum, organizations can determine the kinds of tools and data they need to support employees and managers. Automated systems handle structured decisions well, whereas semistructured and unstructured problems call for interactive tools and platforms that can integrate both data analysis and expert judgment, allowing for more nuanced, often strategic insights.

2. Describe the different levels of decision making and decision-making constituencies in an organization and how their decision-making requirements differ.

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Suggested Answer: Business decisions span strategic, managerial (middle), and operational levels. At the strategic level, senior executives tackle unstructured decisions that shape long-term policies or organizational direction—such as setting market entry or exit strategies.

Because answers lack a clear ―formula,‖ executives often require summarized data from across the firm, external market analyses, and input from key advisors. Middle managers focus on semistructured decisions, combining performance reports or program budgets with interviews or personal judgment. These decisions might include diagnosing product line dips or investigating departmental inefficiencies. Managers typically desire both standard reports from enterprise systems and interactive analysis tools to see underlying causes. Finally, operational managers and frontline staff handle structured decisions—such as approving merchandise returns based on established policies or monitoring daily factory output. They benefit most from transaction processing systems and routine MIS reports. This tiered approach illustrates how information needs and the level of managerial discretion shift with each layer in the enterprise.

12.2 Describe the decision-making process.

1. List and describe the stages in decision making.

Suggested Answer: Herbert Simon famously articulated four stages in the decision-making process: intelligence, design, choice, and implementation. Intelligence involves identifying a problem or opportunity—scanning the environment, collecting data, and diagnosing the scope of an issue. During design, decision makers devise potential solutions or responses. They might brainstorm strategies, create models or simulations, and weigh alternative courses of action. Choice narrows down the design options by assessing feasibility, cost, and expected impacts. The most promising solution is selected at this stage. Finally, implementation puts the choice into action: managers communicate expectations, allocate resources, and train teams as necessary. Equally important is evaluating whether the solution is successful. If the solution underperforms, the decision-making loop loops back to intelligence or design for corrective measures. In practice, these steps often overlap, and real-world decisions can be fluid. However, understanding this structured framework clarifies how problems are explored and ultimately resolved in an organizational context.

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12.3 Describe the different roles managers play.

1. Compare the descriptions of managerial behavior in the classical and behavioral models.

Suggested Answer: The classical model of management, derived from theorists like Henry Fayol, characterizes managers by their formal functions—planning, organizing, leading, coordinating, and controlling. This viewpoint imagines methodical, systematic executives executing long-term strategies with precision. In contrast, the behavioral model suggests that managers‘ days are hectic and fragmented. Studies have documented hundreds of short, varied tasks daily, showing that managers rely heavily on oral communication, adapt spontaneously to urgent demands, and navigate continuous interruptions. Managerial work also depends on building networks, forging relationships, and communicating with multiple stakeholders. The behavioral model emphasizes the informal, ad hoc nature of a manager‘s typical day—quick calls, impromptu meetings, check-ins with staff—and acknowledges the role of intuition, personal judgment, and organization politics. Therefore, where the classical model focuses on prescribed roles and responsibilities, the behavioral model highlights real-life complexity, the interplay of information flows, and the need for rapid, often intuitive, decision-making processes.

2. Identify the specific managerial roles that can be supported by information systems.

Suggested Answer: Information systems readily support Minztberg‘s interpersonal, informational, and decisional roles. In interpersonal roles—such as figurehead or leader—managers can rely on communication platforms like email, video conferencing, and social media to quickly involve employees or external audiences. For the informational role, dashboards and BI tools help managers gather, filter, and disseminate performance updates or competitor analyses, often in real time. Systems deliver management reports through web-based interfaces, freeing managers from wading through multiple spreadsheets.

Decision-support systems and analytics provide vital backup for the decisional role, enabling scenario planning, forecasting, and risk assessment. Managers can quickly compare ―what-if‖ models or pivot tables that incorporate data from multiple sources.

Furthermore, business intelligence alerts and AI-driven recommendations help

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managers identify and respond to emerging threats. By offering integrated data channels and collaboration features, information systems ensure that managers‘ responsibilities—from leading teams to negotiating resources—are grounded in up-todate, accessible information.

12.4 Understand the value of improved decision making.

1. Explain how the value of improved decision making can be determined.

Suggested Answer: Improved decision making translates into tangible and intangible benefits for the organization. Tangibly, one can measure value by examining cost savings or revenue gains achieved when managers make better choices. For instance, a single wellinformed purchasing decision that leverages bulk discounts could save thousands of dollars in procurement—scaled over hundreds of daily decisions, this aggregate saving can become huge. On the revenue side, improved customer targeting can enhance sales volume and reduce customer churn. Additionally, intangible benefits include stronger morale through fairer processes, increased confidence among stakeholders, and strategic agility. A structured approach to calculating value might involve identifying high-impact decision areas—like supply chain or marketing—and quantifying expected changes in metrics such as order fulfillment times or conversion rates. Even seemingly small improvements, repeated at scale, may yield substantial returns. Ultimately, establishing clear key performance indicators and collecting reliable before-and-after data help organizations systematically ascertain whether better decisions are indeed paying off.

12.5 Understand why information systems do not always result in better decisions.

1. Discuss the main reasons why information systems do not always result in better decisions.

Suggested Answer: Despite their potential, information systems do not guarantee superior decisions for several reasons. First, inaccuracies or inconsistencies in the underlying data degrade decision quality: if the system‘s data fails to meet dimensions like accuracy or Copyright © 2026 Pearson Education, Inc.

completeness, it can mislead managers. Second, management filters and cognitive biases like confirmation bias can cause leaders to disregard conflicting evidence in favor of preconceptions; no matter how advanced the tool, such biases can filter out or distort relevant data. Third, organizational inertia and politics often stifle adoption of new insights. Established routines, power structures, or cultural norms can create resistance, leading employees to underutilize or mistrust system outputs. Finally, high-velocity automated systems can remove human judgment altogether, causing rapid, large-scale mistakes if the algorithm or data is flawed. Thus, technology by itself cannot overcome flawed processes, outdated cultures, or questionable data. Organizations must marry solid data governance and training with open-minded leadership to ensure that information systems truly enhance decisions.

2. Describe some of the risks introduced by using AI for decision making.

Suggested Answer: While AI can automate time-consuming tasks and broaden analytical scope, it also raises critical risks. One is ingrained bias: if an AI model is trained on biased data— such as data primarily reflecting certain demographics—it can produce outcomes favoring those groups or ignoring others. Another risk is lack of transparency or explainability. Many AI systems, especially black-box models, do not readily reveal how they weigh input data to arrive at a conclusion. This can pose challenges for accountability, regulatory compliance, or diagnosing errors. Accuracy is also a concern: AI‘s predictions are only as robust as the patterns it has learned, and unexpected conditions can yield incorrect outputs. Furthermore, ethical dilemmas can surface, for instance when AI-based decisions affect hiring, lending, or criminal justice. Overreliance on AI may reduce human oversight and hamper creative thinking. Overall, organizations implementing AI must focus on data governance, frequent audits, clear ethical frameworks, and user training to mitigate these potential pitfalls.

12.6 Discuss how data analytics, BI, and AI support decision making.

1. Explain the role that data analytics plays in BI systems.

Suggested Answer: Data analytics underpins BI by providing the methods and tools to collect, process, interpret, and model increasingly large, complex datasets. Without data analytics, raw data from transactions, social media, sensors, or cloud applications would be unwieldy.

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trustworthy and consistent, forming a solid base for BI. Next, analytics uses descriptive, diagnostic, predictive, or prescriptive approaches to reveal trends, detect anomalies, and forecast outcomes. For instance, a retail chain might apply data analytics to identify sales patterns across locations, enabling the BI system to generate dashboards for inventory planning and staffing. Ultimately, the analytics layer filters out noise and synthesizes insights, presenting them in user-friendly forms—graphs, reports, or recommendations—that support more efficient decisions. Thus, data analytics is the engine that converts data into actionable intelligence, fueling real-time visibility and evidence-based planning across multiple organizational functions.

2. Define and describe BI and BA. Suggested Answer: Business intelligence (BI) is a broad term for the processes, technologies, and tools that convert raw data into actionable insights, supporting informed decision making.

Traditional BI systems often generate standard reports, dashboards, and scorecards.

These solutions emphasize usability for managers who need to see historical or current metrics—for example, monthly sales or market share. Business analytics (BA), sometimes portrayed as a subset or extension of BI, places heavier emphasis on exploring, testing, and forecasting with data. Techniques in BA include statistical modeling, data mining, and advanced analytics, enabling deeper insight into why trends occur and how they might evolve. While BI is often focused on offering easy-toconsume, descriptive insights, BA delves further into predictive or prescriptive analysis, such as identifying the likelihood of customer churn or recommending optimal pricing strategies. In practice, many vendors integrate both BI and BA features, with BA delivering more adaptive, scenario-based decision capabilities.

3. Describe how AI is being used for data analytics and BI tools.

Suggested Answer: AI has begun automating or enhancing many aspects of data analytics and BI. Machine learning algorithms assist in everything from data cleaning—spotting anomalies in huge datasets—to advanced modeling and pattern recognition. For instance, AI-powered chatbots let users pose queries in natural language; the system retrieves crisp, contextaware answers. Deep learning models can sift through unstructured data—such as images or social media posts—and generate intelligence that older systems could not.

Furthermore, AI integration provides advanced predictive capabilities by forecasting outcomes based on prior trends, and prescriptive guidance to suggest actionable next steps. For example, AI can monitor internal data and external signals (like social media sentiment) to flag potential supply chain disruptions. AI can even dynamically tailor Copyright © 2026 Pearson Education, Inc.

dashboards, surfacing the most relevant metrics. As a result, managers and analysts spend less time wrestling with data prep and more time interpreting high-level insights, accelerating strategic and operational decisions.

4. List and describe the elements of a business intelligence environment.

Suggested Answer: A robust business intelligence (BI) environment commonly comprises six elements. First, data from the business environment—structured and unstructured streams from sensors, social media, and transactions—feeds the systems. Second, the BI infrastructure includes the underlying storage and processing platforms: databases, data warehouses, or data lakes. Third, a business analytics toolset consists of software for analytics, data mining, and reporting. Fourth, managerial users and methods define how analytics are filtered through strategy and performance frameworks to align with organizational goals. Fifth, the delivery platform ensures that information reaches people who need it via MIS, DSS, or executive support systems. Finally, user interfaces—like dashboards, interactive charts, or augmented reality—allow managers to visualize key findings. Together, these components convert raw data into timely insights. They also offer a feedback loop, ensuring that solutions stay relevant to organizational strategies and that business users at every level can access meaningful, actionable information.

12.7 Describe the capabilities of BI systems.

1. List and describe the analytic functionalities provided by BI systems.

Suggested Answer: Business intelligence (BI) systems typically feature six core analytic functionalities.

Production reports are built-in, predefined summaries that focus on critical operational measures, like weekly sales or inventory levels. Parameterized reports let users input parameters—like region or time period—tailoring the generated report. Dashboards and scorecards supply visual, at-a-glance metrics for performance tracking, often aligned with key performance indicators. Ad hoc query tools empower individuals to craft onthe-fly queries and generate custom reports without extensive database knowledge.

Drill-down capabilities allow zooming from high-level metrics into granular data, such as viewing total sales, then isolating regional or product-level detail. Lastly, predictive modeling and ―what-if‖ analyses handle scenarios, forecasting future trends, and making recommendations. These functionalities collectively enable organizations to Copyright © 2026 Pearson Education, Inc.

glean both immediate operational insights and long-range strategic intelligence from raw data streams.

2. Define predictive analytics and prescriptive analytics and explain how they differ.

Suggested Answer: Predictive analytics uses statistical algorithms and historical data to forecast future events—such as predicting which customers might switch to a competitor based on past purchase patterns. Prescriptive analytics goes further by recommending specific courses of action based on predicted outcomes, effectively bridging data insights with decision-making guidance. While predictive analytics might forecast a 30% chance of stockouts next quarter for a certain product, prescriptive analytics proposes exactly how many units to reorder and which supplier timelines will minimize that risk. In other words, predictive analytics answers ―What might happen?‖ whereas prescriptive analytics answers ―What should we do?‖ The latter typically relies on optimization models, scenario testing, and AI-based recommendations to guide managers through choosing the best course of action to achieve desired objectives. This deeper integration can automate some decision steps, but it also requires robust data, strong modeling, and organizational trust in AI systems.

3. Discuss how companies are using big data analytics and provide two examples.

Suggested Answer: Big data analytics leverages large, complex datasets—often from sensors, social media, and transaction logs—to discover patterns or correlations that might otherwise remain hidden. For example, Rolls-Royce collects massive volumes of sensor data from jet engines to assess performance and forecast maintenance. By examining real-time flight conditions and driver usage patterns, the company can proactively schedule servicing, extending engine lifespans and reducing unplanned downtimes. Meanwhile, retailers like Levi Strauss use analytics to match product inventory to specific consumer demand signals. Mining sales histories, social sentiment, and store-level data help forecast which product sizes, colors, and styles are most likely to sell in a given region. This approach diminishes overstocking and improves customer satisfaction. Thus, big data analytics can optimize operations, reveal untapped customer segments, and sharpen a firm‘s competitive edge when it seamlessly integrates into day-to-day decisions.

4. Explain the purpose of location analytics and GIS. Suggested Answer:

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Location analytics aims to harness the geographical aspect of data to uncover new insights and patterns. By adding a spatial dimension—such as latitude and longitude— decision makers can observe how key metrics vary across neighborhoods or market territories. Geographic information systems (GIS) support this by visually mapping data points, lines, or shapes. For instance, a utility might layer outage incidents over city maps to identify clusters of failures, guiding faster repairs or infrastructure upgrades. A retail franchise may overlay demographic and traffic data to decide on new store locations or regional marketing campaigns. Location analytics not only conveys where activities occur, but also how they intersect with surrounding features—like roads, supply routes, or population densities. The end result is a holistic view that can reveal geographic-driven opportunities, risks, and relationships that chart-based data alone cannot illustrate.

12.8 Understand the different types of BI users.

1. List each of the major decision-making constituencies in an organization and describe the types of decisions each makes.

Suggested Answer: Four main decision-making constituencies are typically identified: senior managers, middle managers, operational management, and frontline employees/teams. Senior managers shape the company‘s strategic path—decisions like entering new markets or investing in major technologies. Middle managers make semistructured choices about resource allocation and staff deployment, adjusting to performance data or short-term forecasts. Operational management tackles mostly structured decisions: scheduling shifts, approving refunds, or restocking common items. Lastly, frontline employees handle daily tasks, using set procedures for answering customer queries or checking inventory availability. Each of these constituencies requires tailored information.

Executives value summaries, key performance indicators, and predictive dashboards, while operational workers rely on transaction-level detail or immediate alerts.

Understanding the distinct decision methods within each group ensures that business intelligence tools can generate relevant output—ranging from in-depth analytics for middle managers to user-friendly, automated reports for frontline tasks.

2. Describe how MIS, DSS, or ESS provides decision support for each of these groups.

Suggested Answer:

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Management information systems (MIS) generate routine reports and exception summaries primarily for operational and middle managers. These systems help keep track of day-to-day processes—like sales, production, or budget usage—and often feed standardized dashboards. Decision-support systems (DSS) offer deeper modeling and analytical capabilities that empower middle managers and analysts to perform what-if scenarios, sensitivity tests, and specialized queries. DSS can handle semistructured decisions by pairing data from MIS with relevant external sources, giving managers a more holistic perspective. Executives use Executive Support Systems (ESS), also called Executive Information Systems (EIS), for high-level strategic oversight. ESS aggregates internal data—possibly from MIS and DSS—and external intelligence (e.g., market forecasts or competitor activities) to provide an at-a-glance view of organizational health and future trajectories. In short, MIS addresses routine reporting for everyday tasks, DSS focuses on advanced analytics for more complex managerial choices, and ESS offers a strategic vantage point for organizational leadership.

3. Define and describe the balanced scorecard method and business performance management.

Suggested Answer: The balanced scorecard method is a strategic planning technique that translates a firm‘s overarching objectives into specific metrics spanning four perspectives: financial, customer, business processes, and learning and growth. By aligning initiatives with these dimensions, businesses ensure that performance isn‘t measured on financial outcomes alone but also on how well they satisfy customer needs, manage internal operations efficiently, and cultivate employee competencies. Business performance management (BPM) augments this process by specifying key performance indicators (KPIs) and linking them tightly to the firm‘s strategic goals. BPM establishes a structured routine where organizations measure progress toward these KPIs, identify shortfalls or emerging opportunities, and adjust tactics as needed. Together, the balanced scorecard and BPM offer a unified, holistic framework that focuses day-to-day management on the strategic levers that matter most—everything from product cycle times to employee engagement—enabling consistent, evidence-based improvement.

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Discussion Questions 12.9 As a manager or user of information systems, what would you need to know to participate in the design and use of a DSS or an ESS? Why? Suggested Answer: Managers and users require a clear grasp of both the organization‘s strategic objectives and the operational details that drive day-to-day performance. For a DSS, you should understand what data is captured by your transaction systems and how it relates to relevant business processes. You also need a basic familiarity with modeling methods—like predictive analytics or sensitivity analysis—to interpret outputs accurately.

Knowing the firm‘s data quality, structures, and limitations helps identify potential weak points in the system. For an ESS, conceptualizing top-level performance metrics is critical. Managers must be able to articulate which KPIs matter—revenue growth, market share, customer satisfaction—so that designers can bake them into dashboards.

It‘s equally important to comprehend how external data sources (e.g., industry trends or competitor activity) might integrate with internal data. By tying system design to real organizational concerns, managers can ensure that the DSS or ESS yields actionable insights rather than extraneous, distracting statistics. Ultimately, engaged managers become adept at championing the system and interpreting its outputs in strategy discussions.

12.10 If businesses used DSS and ESS more widely, would managers and employees make better decisions? Why or why not?

Suggested Answer: In theory, broader DSS and ESS adoption can equip managers and employees with richer, more timely information, enhancing decision accuracy. These tools centralize relevant data, reduce manual effort in gathering insights, and allow quick scenario testing. Consequently, individuals can spot trends, weigh trade-offs, and foresee outcomes more readily. However, improved information alone does not automatically produce better decisions. For instance, if managers ignore data that conflicts with their instincts (confirmation bias) or if an organization lacks a culture that values evidencebased reasoning, even the best tools will be underutilized. Data quality is also a prerequisite—outdated or inaccurate data yields questionable results. Additionally,

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successful deployment involves training users to interpret dashboards correctly.

Otherwise, employees could misinterpret correlations as causation or put too much faith in an oversimplified metric. Social, cultural, and organizational influences also shape outcomes. Thus, while DSS and ESS can significantly raise the potential for wellinformed decisions, genuine improvement depends on user acceptance, data governance, leadership support, and the capacity to act on system-generated insights.

12.11 How much can business intelligence and business analytics help companies refine their business strategy? Explain your answer.

Suggested Answer: Business intelligence and business analytics can significantly refine a company‘s strategy by revealing patterns, streamlining operations, and highlighting new market opportunities. For instance, an analytics platform can track competitor moves in real time and detect shifts in consumer preferences through social media sentiment analysis.

These insights feed into strategic planning, helping leaders anticipate demand or pivot focus before competitors react. Prescriptive analytics can even recommend which product lines to expand or abandon. More robust data ultimately reduces guesswork, letting strategic planning rest on evidence. However, such gains demand alignment between technology investments and leadership priorities. The trustworthiness of data sources and the capability of analytics tools also matter. If your system is incomplete or biased, flawed strategy might result. Executives need to interpret the results and decide which new directions to pursue. So, while BI and analytics can play a crucial catalytic role in refining strategy—providing timely, deeper insights—the final outcome hinges on proactive leadership, accurate data, and the organization‘s readiness to respond effectively to what the data reveals.

AI Project 12.12 AI Project: Identifying Business Decisions ―You have been hired as a consultant by two friends who want to open a small retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They would like to know the kinds of decisions they will need to make in order to operate the store. They would also like to know which of these decisions are

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likely to be structured (routine with clear-cut procedures for making them) and which are likely to be unstructured (complex and without clear-cut procedures).

Using Microsoft‘s Copilot, Google‘s Gemini, or ChatGPT, develop a prompt to assist you in answering their questions. Save a copy of your prompt and the output of the chat session. Submit it to your instructor as requested.‖ Suggested Answer: Opening an organic pet supply store requires decisions spanning operations, marketing, and strategic direction. Structured decisions include routine matters such as purchasing, inventory control, and setting store hours. For example, reordering dried treats or shelving instructions can follow predetermined thresholds, like restocking when quantities dip below a preset number. Determining store hours might draw on simple rules of analyzing foot traffic and competitor schedules. On the other hand, unstructured decisions involve selecting the product mix for new lines, shaping brand identity, or deciding whether to expand to e-commerce. These have no single, ―correct‖ solution and often draw on market research, competitor data, and personal vision. In your prompt to an AI assistant, you might specify the store‘s target niche, relevant operational details (like budgets and expected inventory size), and long-term business goals. Ask the system for an organized chart or bullet points delineating which decisions can be easily automated or systematized, and which ones require deeper strategic leadership and creativity. This approach helps classify tasks based on complexity and guides your friends in understanding the store‘s operational and strategic demands.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

12.13 Management Decision Problem ―Samsung sells around 80 million new mobile phones every quarter. Samsung has marketing and analytics teams with access to the massive quantities of complex customer data flowing into its systems from millions of active devices. The team was using standard business intelligence (BI) and dashboarding tools. However, these traditional business intelligence tools couldn‘t keep up with the volume and complexity of Samsung‘s data. It took too long to analyze these data with hundreds of variables in order to understand user preferences across demographics, location, mobile device profiles, carrier loyalty, past interactions, and customers to be targeted by a new Copyright © 2026 Pearson Education, Inc.

product launch. Which customers are likely to upgrade to a new device? What factors influence an upgrade decision? It might take weeks to answer a single question. There was no way the team could reliably check every possible factor in the data. Identify Samsung‘s problem and suggest a solution. Identify the management, organizational, and technology issues to be addressed by the solution.‖ Suggested Answer: Samsung‘s underlying problem is that traditional BI tools are not scalable enough to manage or interpret its vast, complex data in a timely manner. The analytics team wants deep insights rapidly, yet the existing infrastructure cannot absorb real-time data from multiple streams or run hundreds of potential variables through sophisticated models.

On the management side, leadership must articulate specific goals: Are they optimizing targeted marketing campaigns or focusing on forecasting device upgrade cycles?

Organizationally, Samsung needs an analytics culture that embraces advanced, possibly AI-driven methods and devotes resources to training. This shift might involve reorganizing data-science roles or promoting cross-functional collaboration between IT, marketing, and business units. Technologically, the solution could involve a big data analytics platform—integrating cloud-based services, distributed processing (e.g., Hadoop or Spark), and advanced modeling tools (machine learning or AI). By deploying these technologies, Samsung can swiftly parse multifaceted data, produce predictive insights, and fine-tune marketing outreach. Ultimately, the solution should emphasize real-time data ingestion, robust analytics engines, and management buy-in to adopt changed processes that capitalize on the resulting intelligence.

12.14 Data Analytics: Using Pivot Tables ―Software skills: Pivot tables Business skills: Analyzing sales data This project gives you an opportunity to learn how to use Excel‘s PivotTable feature to analyze a database or data list. Use the MIS18_Project 12.14 Student File, which contains a list of the sales transactions for Online Management Training Inc. (OMT) for one day. Use Excel‘s PivotTable feature to help you answer the following questions: 

Where are the average purchases higher? The answer might tell managers where to focus marketing and sales resources, or pitch different messages to different regions.

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 



What form of payment is the most common? The answer could be used to emphasize in advertising the most preferred means of payment.

Are there any times of day when purchases are most common? Do people buy more products while at work (likely during the day) or at home (likely in the evening)?

What‘s the relationship between region, type of product purchased, and average sales price?‖

Suggested Answer: First, import the data into Excel and create a PivotTable to slice and dice the daily sales.

Start by analyzing purchase geography: drag ―Region‖ to the row labels and ―Average of Purchase Amount‖ to the values field. You might discover that the West region has a higher average purchase, possibly indicating strong interest or higher disposable income. Next, add ―Payment Method‖ to a column label to see which stands out—credit card or PayPal, for instance—so the marketing team can plan promotional content around the favored method. For time-of-day analysis, ensure the data includes timestamps. Group your pivot by hour brackets (e.g., 9 AM–12 PM, 12 PM–3 PM) to see whether purchasing spikes occur during work hours or evenings. Finally, filter by ―Product Type‖ or place it in columns. Compare average sales prices across ―Region‖ rows to confirm whether certain product categories generate more revenue in specific areas. Summarizing these findings in a single PivotTable or nested PivotCharts allows management to refine advertising, schedule marketing campaigns, or adjust product emphasis by region and timeframe.

12.15 Using Tableau for Data Visualization ―Software skills: Tableau software Business skills: Data visualization You have been hired as a consultant to develop data-driven insights about local government employment and payroll. Access the MIS18_Project 12.15 Student File for data about local government employment and payroll by function in the United States on a state-by-state as well as regional basis. The file also contains aggregated data for the United States as a whole. Using Tableau, create a series of at least five visualizations, such as bar charts, pie charts, scatter plots, heat maps, tree maps, or others of your own choosing that you combine into a dashboard that will help you develop insights into the data. For example, what are the top 25 states in terms of total

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local government employment? What are the bottom 25 states? Is there any correlation to the region and regional division in which those states are located? Across the United States, which ten functions have the highest total payroll costs? How do the metrics for each region for those functions compare to the national average? Are they higher or lower, and if so, what might be some potential reasons?‖ Suggested Answer: Begin by importing the local government employment data into Tableau. Create a bar chart ranking each state by total local government employment to see which states top the list. A second visualization might be a treemap comparing different functional services (e.g., public safety, education) by total payroll costs across regions. Next, build a heat map that visually highlights the differences between per-capita employment levels in each state, color-coded by region, revealing pockets of unusually high or low staffing. A fourth chart might be a line graph showing how payroll costs vary across essential services region by region, letting you spot correlations (like increased education spending in the Northeast). For deeper insight, a bubble chart or scatter plot can compare ratio of employees to population with total payroll, indicating efficiency.

Collect them on a dashboard for at-a-glance summaries. Interactivity—such as region drop-down filters—empowers stakeholders to drill down to a single state or service for more detail. These combined data visualizations reveal imbalances or resource hubs, guiding policy recommendations or strategic planning.

12.16 Collaboration and Teamwork Project: Data-Driven Analytics in Sports ―With two or more of your classmates, select a sport, such as football, baseball, basketball, soccer, or another of your own choice. Use online research tools to examine how the sport uses data analytics to improve team performance or increase ticket sales to events. If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: In your group, begin by deciding which sport—baseball, soccer, basketball, or another— best showcases data analytics. Distribute research tasks: one person could explore player performance metrics (like basketball‘s player efficiency rating), while another investigates ticket sales strategies using dynamic pricing or fan engagement analytics.

Perhaps you‘ll discover that Major League Baseball teams rely heavily on sabermetrics

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to identify undervalued players and optimize lineups. Meanwhile, clubs might track fans‘ purchasing trends through loyalty apps or social media sentiment to offer targeted promotions. Then, consolidate these findings into a shared online document where everyone can refine the outline and visuals. Prepare a succinct set of slides or a short video presenting how analytics are used for recruiting, game strategy, and marketing.

Conclude by evaluating results: do teams see measurable Return on Investment (ROI) from data-driven decisions, or are internal obstacles preventing full success? By pooling your collective research, you‘ll reveal how analytics shape the competitive and commercial landscape of modern sports.

Suggested Assignments 1. Retail BI Dashboard Instruct students to design a simple BI dashboard for a fictional retail chain, selecting at least three KPIs, such as daily sales, inventory turnover, and customer feedback scores.

Have them compile data in a spreadsheet, then use a dashboard tool (Excel or free software) to visualize the KPIs with charts and color-coded alerts.

2. Data-Driven Marketing Proposal Ask students to pick a product or service and propose a marketing strategy supported by data analytics. They should outline the kinds of data to gather (social media metrics, transaction logs, or demographic info) and demonstrate how to use that data to target specific customer segments.

3. Decision-Making Simulation Present students with a scenario involving a complex decision—e.g., expanding a small e-commerce business into a second country—where partial data is provided. Students form teams to discuss semistructured, unstructured, and structured aspects of the decision and recommend next steps based on the data.

4. BI Implementation Case Study Assign a short paper comparing two companies‘ BI implementations (students can research real-world examples). They should assess the specific tools each company employed, the types of decisions supported, and the resulting benefits or challenges.

Include references to evidence-based outcomes.

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5. Predictive Analytics Experiment Provide a small dataset (e.g., housing prices with variables like square footage, location, and style). Students apply a basic regression or machine learning tool to predict outcomes (e.g., price). The assignment requires them to interpret model results, consider data quality issues, and suggest potential improvements to the predictive model.

Chapter 13 – Instructor Manual Chapter Summary This chapter focuses on how organizations design, build, and acquire information systems to improve performance, manage processes, and adapt to changing needs. It begins by showing how new or redesigned systems can enable different degrees of organizational change—ranging from small, incremental steps in productivity to transformational paradigm shifts. Next, the chapter explores how business process management (BPM) techniques help firms analyze existing processes, identify inefficiencies, and design optimal workflows, including the use of process mining.

Readers are introduced to the systems development process—encompassing analysis, design, programming, testing, conversion, production, and maintenance—and to various methods for creating or acquiring systems, such as the traditional systems development life cycle (SDLC), prototyping, using packages or cloud software, and outsourcing. The chapter also covers rapid development methods, including objectoriented design, RAD, agile, and DevOps. A key theme is the expanding role of opensource software, low-code and no-code platforms, and ―citizen developers,‖ which collectively broaden participation in—and speed—software development. Finally, readers learn about AI‘s growing impact on software engineering and approaches for developing mobile applications.

Learning Objectives These are the chapter objectives: 13.1 Explain how new information systems can promote organizational change.

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13.2 Understand how IT can be used to manage and redesign business processes.

13.3 Describe the core activities in the systems development process.

13.4 Discuss methods for building and acquiring information systems.

13.5 Describe methods that enable rapid systems development.

13.6 Discuss the increasing democratization of software development.

13.7 Understand the impact of AI on software development.

13.8 Discuss approaches for building mobile applications.

13.9 Understand how the information in this chapter can help your career.

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what‘s happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

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Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 13.1 Explain How New Information Systems Can Promote Organizational Change 

 

New systems are one form of planned organizational change; highlight automation, rationalization of procedures, business process redesign, and paradigm shifts.

Emphasize that each type of change involves different levels of risk and rewards.

Show how incremental changes (like automation) can build the path toward more radical redesign and paradigm shift over time.

13.2 Understand How IT Can Be Used to Manage and Redesign Business Processes   

Stress the role of business process management (BPM) in analyzing inefficiencies and redesigning workflows.

Illustrate each step of BPM: Identify processes, analyze them, design improvements, implement changes, and measure results.

Introduce process mining as an approach to leverage event logs and identify process bottlenecks or variations.

13.3 Describe the Core Activities in the Systems Development Process   

Clarify the six major phases: systems analysis, systems design, programming, testing, conversion, and production/maintenance.

Emphasize the importance of identifying correct information requirements and conducting a feasibility study.

Discuss the various testing methods (unit, system, acceptance) and the significance of change management during conversion.

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13.4 Discuss Methods for Building and Acquiring Information Systems   

Compare the traditional systems development life cycle (SDLC) ―waterfall‖ approach with faster, more flexible alternatives.

Introduce prototyping, highlighting its benefits for clarifying requirements and potential limitations if rushed.

Show how firms acquire systems via software packages, cloud software (SaaS), or outsourcing, including the trade-offs involved in each.

13.5 Describe Methods That Enable Rapid Systems Development   

Introduce object-oriented design (OOD), which focuses on creating reusable objects that combine data and processes.

Present rapid application development (RAD), joint application development (JAD), agile methods, and DevOps as ways to shorten construction timelines.

Note how these methods rely on iterative prototyping, frequent user input, continuous testing, and collaboration.

13.6 Discuss the Increasing Democratization of Software Development   

Explain open-source software (OSS), its benefits (collaboration and customization), and its risks (potential security and compatibility challenges).

Show how low-code and no-code tools empower more people to build apps with minimal or no traditional programming.

Define the concept of citizen developers and how organizations can harness broader in-house talent while maintaining IT oversight.

13.7 Understand the Impact of AI on Software Development   

Emphasize AI‘s role in code generation, automated testing, and bug detection.

Clarify how AI can optimize software performance, reduce repetitive tasks, and better secure applications.

Discuss the challenges of AI in software engineering, such as the need for large training data sets, specialized talent, and resource-intensive processing.

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13.8 Discuss Approaches for Building Mobile Applications   

Differentiate mobile websites, mobile web apps, native apps, and hybrid apps.

Highlight the use of responsive web design (RWD) and adaptive web design (AWD) for tailoring layouts to device size.

Stress usability challenges, limited screen size, and the significance of a streamlined interface for mobile users.

13.9 Understand How the Information in This Chapter Can Help Your Career   

Emphasize how knowledge of BPM, systems development methodologies, and newer tools (e.g., low-code platforms) can improve employability.

Show how experiencing or contributing to system-building projects develops marketable organizational and technological skills.

Underline how AI-driven tools and mobile solutions are rapidly changing the nature of IT roles and opportunities.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.               

Acceptance testing (13.3) Adaptive web design (AWD) (13.8) Agile development (13.5) AI as a Service (AIaaS) (13.7) Automation (13.1) Business process management (BPM) (13.2) Business process redesign (BPR) (13.1) Citizen developer (13.6) Conversion (13.3) Customization (13.4) DevOps (13.5) Direct cutover strategy (13.3) Documentation (13.3) End-user interface (13.4) Feasibility study (13.3)

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                                    

Hybrid app (13.8) Information requirements (13.3) Iterative approach (13.4) Joint application development (JAD) (13.5) Low-code development (13.6) Maintenance (13.3) Mobile web app (13.8) Mobile website (13.8) Native app (13.8) No-code development (13.6) Object (13.5) Object-oriented design (OOD) (13.5) Offshore outsourcing (13.4) Paradigm shift (13.1) Parallel strategy (13.3) Phased approach strategy (13.3) Pilot study strategy (13.3) Post-implementation audit (13.3) Process mining (13.2) Production (13.3) Programming (13.3) Prototype (13.4) Prototyping (13.4) Rapid application development (RAD) (13.5) Rationalization of procedures (13.1) Request for proposal (RFP) (13.4) Responsive web design (RWD) (13.8) Six Sigma (13.1) System testing (13.3) Systems analysis (13.3) Systems design (13.3) Systems development (13.3) Systems development life cycle (SDLC) (13.4) Test plan (13.3) Testing (13.3) Total quality management (TQM) (13.1) Unit testing (13.3)

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Case Studies Opening Case Study: “Signet Jewelers Sparkles with New Virtual Sales System” Summary: Signet Jewelers transformed its traditionally high-touch, in-store sales experience by implementing virtual and online tools to let customers purchase fine jewelry remotely.

During the pandemic, this pivot proved essential for continuing revenue generation.

Through revamped processes and digital technology, Signet offers customers virtual consultations, high-quality digital imaging of diamonds, and seamless collaboration with sales consultants. The result is an omnichannel business model that integrates online and in-person engagement.

Case Study Questions 1. Describe Signet‘s traditional business strategy and business model. How did they change when the company embraced e-commerce and a virtual sales process?

Suggested Answer: Signet‘s traditional business strategy relied heavily on physical store sales, personal interactions, and a people-intensive approach, allowing customers to inspect or try on jewelry items. By focusing on physical locations for brands like Kay Jewelers and Jared, Signet‘s pre-pandemic business model favored direct store traffic and traditional marketing such as television advertising. Once Signet embraced e-commerce and virtual selling, the organization pivoted toward an omnichannel strategy, optimizing digital consultations, high-resolution product images, and user-friendly online ordering.

This let customers shop anytime, anywhere, and engage with sales consultants via chat or video. The new approach expanded Signet‘s revenue streams beyond brick-andmortar stores and enabled it to adapt to rapid shifts in consumer behavior.

2. Compare the in-store process of buying a diamond ring with Signet‘s virtual sales process. Diagram or list the steps in each process.

Suggested Answer: In-store, a customer walks in, reviews products in display cases, consults with staff, selects a ring, and typically waits for resizing or customization. Payment happens at the store or upon ring pickup. In contrast, the virtual process involves customers booking an

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online consultation, choosing products via Signet‘s digital showroom or website, receiving virtual guidance from a sales consultant, finalizing transactions online, and having jewelry shipped directly. Fewer in-person steps are required, the process is more flexible, and it accommodates customers who cannot easily visit a store. The virtual flow also provides high-quality digital imaging and real-time collaboration that replicates aspects of the in-store experience while adding online convenience.

Spotlight on Management Case Study: “Meet the Citizen Developers” Summary: Several organizations, including Chevron, ING, AT&T, and Shell, have embraced citizen developers to power digital transformation using low-code and no-code platforms.

These employees, not part of the formal IT group, apply business expertise to build applications that streamline processes like pump maintenance or machine learning analytics. By supporting these grassroots efforts while maintaining oversight, these companies reduce IT backlogs, speed innovation, and unlock new operational efficiencies.

Case Study Questions 1. What is the difference between shadow IT and citizen development?

Suggested Answer: Shadow IT occurs when employees create or deploy technology solutions outside the awareness or control of the corporate IT function, often using unauthorized apps or data storage. Citizen development, by contrast, occurs with proper endorsement and governance from IT. Citizen developers have access to IT-approved low-code or nocode tools, and their efforts align with organizational objectives. The difference underscores accountability: shadow IT poses risk through lack of oversight, while citizen development fosters innovation securely and in line with enterprise standards.

2. Why were the organizations described in this case so successful with their citizen development projects? Explain your answer.

Suggested Answer: The companies invested in strong training, provided user-friendly low-code/no-code platforms, and established governance frameworks that balance creativity with oversight.

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Employees have deep insights into their departmental processes and can quickly spot inefficiencies or new opportunities. By aligning citizen projects with broader enterprise goals—such as improved maintenance systems at Chevron or advanced machine learning models at ING—these organizations fostered impactful projects. They also supplied support resources (coaches, data standards, security guidelines) to ensure each initiative was successful and manageable.

3. How might citizen development differ between a small and a large organization?

Suggested Answer: Small organizations typically have fewer layers of approval, so citizen development can rapidly yield new apps or process automations with minimal bureaucracy. However, limited resources may hinder robust training or oversight. In large enterprises, citizen development can scale more broadly and potentially generate larger returns, but it requires systematic governance, including data policies and security measures. That said, bigger firms can provide employees with extensive training, specialized support, and structured communities of practice to help them collaborate and learn.

4. What management problems can citizen development help solve?

Suggested Answer: Citizen development helps alleviate the IT backlog by distributing app-building tasks among knowledgeable in-house users. It bridges the gap between business stakeholders and technical teams, ensuring solutions align closely with operational needs. It encourages on-the-spot innovation, reducing reliance on time-consuming formal project pipelines. By empowering employees to solve department-specific inefficiencies, it fosters agility, responsiveness to changing market conditions, cost savings, and improved morale within teams that directly see the benefits of their development work.

Chapter Case Study: “Process Mining with Celonis” Summary: Celonis provides process mining software that analyzes event logs to uncover inefficiencies in business processes, helping organizations optimize workflows in real time. Clients such as Deutsche Telekom Services Europe and Avnet have used Celonis to identify process bottlenecks and save millions of dollars. Celonis is extending its

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capabilities beyond process mining to execution management, harnessing AI and machine learning to diagnose issues instantly and recommend or automate solutions.

Case Study Questions 1. How can using Celonis provide a competitive advantage for a business?

Suggested Answer: By continuously monitoring process data, Celonis quickly pinpoints inefficiencies in core operations like procure-to-pay or order management. This real-time insight allows businesses to standardize or restructure processes, save costs, eliminate rework, and respond more effectively to changing market demands. The foresight gained from process mining fosters proactive decision-making, reducing errors and improving customer satisfaction. Companies with streamlined processes can handle orders faster, manage supply chains more effectively, and ultimately boost profitability and competitiveness.

2. What kinds of companies would benefit from using Celonis tools? What management, organizational, and technology factors should be addressed when making this decision?

Suggested Answer: Any firm with complex, repetitive processes—such as manufacturing, supply chain, finance, or telecommunications—can benefit from Celonis. Management should assess whether they have high-volume transactional data from ERP or CRM systems that Celonis can analyze. Organizationally, a culture open to data transparency and continuous improvement is vital, alongside teams able to interpret process insights.

Technologically, the firm must ensure robust data quality, proper integration with existing enterprise systems, and readiness for ongoing analytics.

3. How does a business benefit from using Celonis process mining tools with AI? Suggested Answer: AI extends Celonis process mining by interpreting large datasets more rapidly, spotting anomalies, and predicting outcomes even more accurately. Automated intelligence can identify hidden patterns in workflows, highlight early warning signs, and propose solutions or next steps. This AI-assisted approach streamlines routine tasks, mitigates risks in real time, and supports data-driven decisions. The synergy of process mining and AI means continuous optimization: once a process is remediated, the system keeps monitoring and can detect evolving areas for improvement.

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Review Questions 13.1 Explain how new information systems can promote organizational change.

1. Describe each of the four kinds of organizational change that can be promoted with information technology.

Suggested Answer: The four kinds of technology-enabled organizational change are (1) Automation, which uses IT to improve the efficiency of tasks employees perform; (2) Rationalization of procedures, which streamlines standard procedures for greater efficiency; (3) Business process redesign (or reengineering), which involves rethinking and radically redesigning core business processes to achieve major improvements in performance; and (4) Paradigm shifts, which transform both the nature of the business and the organization, such as changing a conventional brick-and-mortar operation into a digital platform model. By varying degrees, these changes can make entire workflows faster, more accurate, and more responsive to customer needs. While automation and procedural rationalization often yield incremental improvements, business process redesign and paradigm shifts can be transformative, enabling leaps in productivity and entirely new ways of creating value. However, these latter initiatives also have higher risks— especially if not managed carefully or if organizational culture is resistant to radical changes. Understanding where an organization stands and matching the scope of change to strategic goals helps ensure success.

13.2 Understand how IT can be used to manage and redesign business processes.

1. Define business process management (BPM) and describe the steps required to carry it out.

Suggested Answer: BPM refers to a structured approach for continuously analyzing, designing, and improving an organization‘s processes. Firms begin by identifying processes that either need change or are strategically significant. Next, they analyze current workflows, Copyright © 2026 Pearson Education, Inc.

searching for redundancies or bottlenecks. The third step is designing a new process or refining it, followed by implementing the revised workflow through updated procedures and possibly new technologies. Finally, BPM requires ongoing measurement to ensure the modifications truly improve performance. This cyclical approach encourages organizations to respond dynamically to changes in their market or internal operations.

2. Define process mining and explain how businesses can use it to extract more value from business processes.

Suggested Answer: Process mining involves extracting data from event logs maintained by enterprise systems like ERP or CRM. By mapping out every step, variation, or anomaly in a process, process mining reveals inefficiencies that may otherwise remain hidden, such as excessive rework or bottlenecks. Companies gain a clear, data-driven perspective on actual workflow performance rather than assumptions. With these insights, they can standardize best practices across the business, reduce costs, optimize resource allocation, and tighten up process compliance. Over time, process mining also offers a benchmark for continuous improvement, pinpointing precisely which changes yield the greatest gains.

13.3 Describe the core activities in the systems development process.

1. Distinguish between systems analysis and systems design and describe the activities for each.

Suggested Answer: Systems analysis involves identifying and understanding the organizational problem or opportunity driving a need for an IT solution and specifying in detail the requirements for a system to address that need. Activities include feasibility studies, examining existing processes, and formalizing necessary data and functionality. Systems design then takes those requirements and formulates how the solution will be structured or implemented— covering everything from user interfaces, data schemas, and hardware requirements to security controls and organizational procedures. Essentially, analysis is ―what‖ the system must do, whereas design is ―how‖ it will do it.

2. Define information requirements and explain why they are difficult to determine correctly.

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Suggested Answer: Information requirements describe who needs what data, when, and where, for effective decision-making or operational activities. Requirements must be precise and complete, but this is challenging because users may have difficulty articulating their needs, or they may only discover them after testing prototypes or seeing an early version of the system.

Complex organizations have many stakeholders with varied perspectives and possibly conflicting objectives. Moreover, business processes and regulations can evolve frequently. All these factors can make gathering comprehensive, precise requirements a difficult process.

3. Explain why the testing stage of systems development is so important, and name and describe the three stages of testing for an information system.

Suggested Answer: Testing ensures that a system meets its specified requirements and operates as intended under real conditions. It is essential because undiscovered errors can disrupt business processes, compromise data, or cause system failures. There are three main stages: (1) Unit testing, which checks individual software modules for correctness, (2) System testing, which verifies that all modules function together properly within the intended environment, and (3) Acceptance testing, typically performed by end users, to confirm the system meets organizational needs before the system is fully rolled out.

Proper testing reduces costs and risk, as errors found later in production can be extremely expensive to fix.

4. Describe the role of programming, conversion, production, and maintenance in systems development.

Suggested Answer: Programming transforms the system design specifications into working software code.

Conversion is the process of moving from the old system to the new one, which can be done in four ways: parallel operation, direct cutover, pilot study, or phased approach.

Production begins once the system goes live in daily operations, where end users rely on it for real tasks. Maintenance is the continuous process of fixing bugs, adapting the system to changing requirements, or improving performance. Maintenance consumes a significant share of information systems resources and is vital for ensuring that a system remains valuable over its operational lifetime.

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13.4 Discuss methods for building and acquiring information systems.

1. Define the traditional systems development life cycle (SDLC) and describe its advantages and disadvantages for systems building.

Suggested Answer: The SDLC organizes systems development into sequential stages—systems analysis, design, programming, testing, conversion, and production/maintenance—each of which must be completed before moving on to the next. It provides structure, thorough documentation, and clear approvals, making it suited to large, complex projects that need tight control. However, SDLC can be time-consuming and inflexible. If requirements change mid-project (which they often do), major rework may be needed, delaying deployment and driving up costs. Thus, SDLC‘s strengths in rigor can become limitations in agile or rapidly changing business environments.

2. Define information system prototyping and describe its benefits and limitations.

List and describe the steps in the prototyping process.

Suggested Answer: Prototyping involves building a quick, preliminary working model of an information system or component for user feedback. Its key benefits include improved communication of requirements—users see a tangible example instead of abstract descriptions—and faster iterations to refine functionality. The process typically has four steps: identify basic requirements, develop an initial prototype, use/evaluate the prototype, and revise it until acceptable. However, if rushed, prototyping may skip documentation or thorough testing, leading to systems that do not scale well or that contain hidden flaws. Additionally, users might keep demanding changes, extending development and complicating the final rollout.

3. Discuss the advantages and disadvantages of developing information systems based on software packages and cloud software services.

Suggested Answer: Acquiring systems via software packages or cloud services lets organizations save on in-house development time and costs, leverage vendor expertise, and reduce maintenance responsibilities. Cloud-based solutions can further decrease upfront hardware investments and provide on-demand scalability. However, organizations might need to adapt their processes to fit the package‘s capabilities or pay for customization.

Vendor lock-in can become a risk if the software requires specific platforms or if

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switching solutions proves complex. In some cases, heavy customization can erode the original time and cost advantages.

4. Describe the advantages and disadvantages of using outsourcing for building information systems.

Suggested Answer: Outsourcing can help companies lacking internal skills or resources to develop or operate a system. It can improve cost control, speed up development, and free internal staff for strategic tasks. Yet complexities include hidden costs, such as vendor management and transitioning to an external provider. Communication, cultural, or timezone differences can slow coordination, particularly for offshore outsourcing. There is also the risk of over-dependence on a vendor, potential quality issues, and security or intellectual property concerns. To succeed, an organization should define project objectives clearly and monitor vendor deliverables consistently.

13.5 Describe methods that enable rapid systems development.

1. Define object-oriented design (OOD) and explain how it enables more rapid systems development.

Suggested Answer: OOD views a system as a collection of objects—encompassing data along with the methods operating on that data. Objects are grouped into classes, and new classes can ―inherit‖ properties from existing ones. This reusability shortens development time because existing objects can be borrowed, modified, or extended instead of coding from scratch. In turn, design changes can be localized in the related object(s), reducing the ripple effects through the system. Ultimately, OOD‘s modularity and inheritance features accelerate development and maintenance.

2. Define rapid application development (RAD) and joint application development (JAD) and explain how they enable more rapid systems development.

Suggested Answer: RAD comprises several strategies—like visual programming tools, iterative prototyping, and code generation—to deliver workable systems rapidly. This quick turnaround is possible because developers use prebuilt components and user feedback occurs early

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and often. JAD fosters close collaboration among clients, IT specialists, and other stakeholders during development, typically through structured workshops. As a result, the process of gathering requirements is more efficient and accurate. Users help clarify business rules early on, reducing rework and miscommunication. Both RAD and JAD emphasize prototype-based user feedback cycles, continuous refinement, and speed of deployment.

3. Define agile development and explain how it enables more rapid systems development.

Suggested Answer: Agile development divides a project into small ―sprints‖ completed in short cycles, each delivering potentially shippable functionality. This approach depends on frequent user input, continuous testing, and adaptation. Rather than fully specifying requirements upfront, agile welcomes changing needs throughout the project. Cross-functional teams—often including developers, testers, product owners, and business stakeholders—work closely together, communicating daily. Agile is well-suited to dynamic environments where incremental releases, iterative design, and ongoing collaboration produce better outcomes than traditional, linear project methods.

4. Define DevOps and explain how it enables more rapid systems development.

Suggested Answer: DevOps extends agile ideas by uniting software development teams with IT operations staff. The objective is rapid, reliable software releases with fewer production issues. By breaking down silos, developers and operations share responsibility for the full application life cycle, from planning to deployment to monitoring. DevOps encourages continuous integration of code changes, automated testing, and fast feedback loops. It leverages powerful development pipelines and collaboration tools, enabling multiple updates daily. As a result, organizations enhance software quality and expedite releases, responding swiftly to changing business requirements.

13.6 Discuss the increasing democratization of software development.

1. Define open-source software (OSS) and discuss the advantages and disadvantages of open-source software development.

Suggested Answer:

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OSS is distributed with its source code freely modifiable by anyone under license terms, enabling widespread collaboration and innovation. Advantages include cost savings, flexibility, and a large community for ongoing improvements and support. Drawbacks can include limited ease-of-use, uncertain warranties, and potential compatibility or security vulnerabilities if insufficiently curated. While open-source tools accelerate development and reduce vendor lock-in, organizations must still have adequate expertise to implement, secure, and maintain them properly.

2. Define low-code and no-code software development and discuss how it has accelerated the process by which software can be created.

Suggested Answer: Low-code platforms let users build applications quickly by visually dragging and dropping features, with minimal coding. No-code tools operate similarly but aim for zero traditional programming, offering prebuilt modules configured via a user interface. Both significantly reduce development time and allow non-IT employees to prototype or create full solutions that solve day-to-day business process needs. These solutions can handle simpler use cases rapidly. Although this democratizes development, complex enterprise projects may still require skilled coders for advanced custom logic or data integrations.

3. Define citizen developers and describe how today‘s citizen development is different from end-user development in the past.

Suggested Answer: Citizen developers are business staff who create or customize applications within ITapproved frameworks, typically using low-code or no-code tools. In the past, end-user development often happened under ―shadow IT,‖ escaping formal IT supervision and leading to potential risks in data governance, security, and consistency. Now, citizen developers collaborate with IT for guidelines and platforms, ensuring compliance with organizational standards. This shift means citizen solutions have broader support, better integration, and can be scaled or maintained more sustainably compared to older, ad hoc approaches.

13.7 Understand the impact of AI on software development.

1. Describe how the use of AI has impacted software development.

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Suggested Answer: AI-driven tools enhance software development by automating the generation of code, identifying bugs more quickly, and even assisting with security testing. Through machine learning, these tools learn patterns from existing codebases and user inputs, suggesting optimal ways to solve specific problems. For developers, it reduces mundane tasks, enabling them to focus on higher-level design and logic. The net result is faster delivery, improved reliability, and more complex solution capabilities, because AI-based software can adapt more dynamically based on real-time conditions.

2. Discuss the challenges of developing AI software.

Suggested Answer: One hurdle is the steep requirement for specialized AI knowledge—there is strong demand for data scientists, AI engineers, and advanced programmers who understand machine learning frameworks. Another challenge is the volume and quality of data needed to train effective models. In addition, AI often requires extensive computational resources, which can strain budgets or technical infrastructure. Many firms rely on pretrained models or cloud-based AI as a Service to ease that burden. Ethical and governance factors also arise, where organizations must validate AI decisions and ensure compliance with regulatory requirements regarding data privacy and bias in models.

13.8 Discuss approaches for building mobile applications.

1. Explain the features of mobile application development and responsive web design.

Suggested Answer: Mobile application development must account for a smaller screen size, touchscreen interfaces, and bandwidth constraints. Apps should prioritize simplicity, speed, and intuitive navigation. Responsive web design (RWD) automatically adjusts layouts, images, and font sizes for different device types so a website displays well on a range of screen sizes. However, RWD might not always optimize performance on mobile networks. Adaptive web design (AWD) serves a variation of the site specifically tailored to the user‘s device attributes, further improving user experience and speed.

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2. Define and compare a mobile website, native app, mobile web app, and hybrid app.

Suggested Answer: A mobile website is a scaled-down version of a desktop website designed to be viewed on small screens, typically accessed within a phone‘s web browser. A native app is installed directly on a device and built specifically for its operating system, offering excellent performance and integration with hardware features but requiring separate development for different platforms. A mobile web app resides on the server and is accessed via a browser, negating installation but sometimes lacking device-specific capabilities offline. A hybrid app combines web components with some native code, potentially leveraging device features more fully than a pure web app while still being easier to develop across multiple platforms than a fully native application.

Discussion Questions 13.9 Why is selecting a systems development approach an important business decision? Who should participate in the selection process?

Suggested Answer: Choosing a systems development approach—such as the SDLC, prototyping, agile, or acquiring a packaged solution—impacts costs, time, and the overall success of a project.

An inappropriate choice could lead to missed deadlines or wasted resources if requirements evolve or if users need the new system quickly. Conversely, a well-chosen approach supports accurate requirement gathering, iterative testing, flexible adjustments, and timely delivery. Project stakeholders, including IT representatives, end users, and managers from affected business units, should all contribute to the selection.

Each group provides insights: IT and project managers about technical feasibility, budget, and timelines; users about practical needs and constraints; and senior executives about corporate strategy, risk tolerance, and resource allocation. This inclusive approach encourages broader acceptance and ensures the chosen method aligns with the firm‘s environment. Ultimately, selecting the right methodology is not a purely technical matter—it is a strategic decision that shapes how a firm meets change, responds to competitors, and leverages its internal capabilities.

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13.10 Some have said that the best way to reduce systems development costs is to use application software packages, SaaS, or user-friendly tools, such as low-code or no-code tools. Do you agree?

Why or why not?

Suggested Answer: Software packages, SaaS, and low-code/no-code platforms certainly can expedite development and reduce the specialized coding tasks otherwise required. Organizations can benefit by implementing standard functionalities out-of-the-box, shrinking upfront coding and testing overhead. Additionally, user-friendly tools empower non-IT staff to create smaller-scale applications. However, these approaches might not always produce the perfect fit when requirements are highly specialized, necessitating extensive customization. In these cases, costs can creep up significantly due to custom development or reconfiguration needed to align with unique workflows. There may also be risk of vendor lock-in or limitations around integration with certain enterprise systems.

Consequently, while prebuilt software or low-code tools can dramatically cut costs for simpler, standardized efforts, a blended strategy might be optimal. Key considerations include the complexity of business processes, the organization‘s reliance on legacy or specialized technologies, data security needs, and the availability of staff skilled in alternative approaches. Each situation should be evaluated on its merits rather than assuming one universal solution.

13.11 Why is it so important to understand how a business process works when trying to develop a new information system?

Suggested Answer: A new information system should accurately reflect and support the underlying business activities it‘s meant to enable. Without a clear grasp of the current process flow— including inputs, outputs, decision points, and inefficiencies—developers risk creating software that fails to meet practical needs. This often leads to functionality gaps, incompatible data formats, or overlooked stakeholders. Moreover, a poorly aligned system can perpetuate inefficient tasks or add new complexities, undermining productivity gains. By fully mapping and analyzing a business process early on, developers can spot tasks that can be automated or eliminated, identify the best points for data capture, and ensure that data outputs support decision-making. This alignment not only saves rework costs, but also ensures a level of ownership and acceptance from

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end users who see the system solving real-world problems. Hence, deciphering process details is crucial whether the intent is to enhance existing routines or engineer major organizational change.

AI Project 13.12 AI Project: Identifying Business Processes and Process Efficiencies ―You have been hired as a consultant by two friends who want to open a retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. You have advised them to implement a point of sale (POS) system that has online ordering functionality. Previous retailers that they have worked at have not had such a system, so they would like to know how the system would change business processes and how these changes would create value for the business.

Using Microsoft Copilot, Google‘s Gemini, or ChatGPT, develop a series of prompts to assist you in providing them with this information. Save a copy of your prompts and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: Implementing a modern POS with online ordering affects processes surrounding sales, inventory, and order fulfillment. Internally, tasks like inventory management become more efficient because the system can automatically deduct stock levels after every instore or online sale, triggering alerts for reorders. It also expedites checkout workflows with barcoded scanning, digital payment options, and integrated loyalty programs. For customers, online functionality expands reach beyond the physical store, enabling purchases at any time and direct shipping to their homes or convenient pickup in-store.

The centralized data gathered by the POS offers real-time sales analytics, which facilitate timely product restocking decisions and targeted marketing to high-value customers. Furthermore, by eliminating manual data re-entry, the new system lowers errors and accelerates financial reconciliation. Long term, the business gains more consistent sales information and can shift personnel from manual tasks to customeroriented ones, strengthening satisfaction. All these improvements—time saved, fewer mistakes, enhanced customer service—create value that helps a small organic pet supply shop stand out and grow.

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Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

13.13 Management Decision Problem ―Management at your cosmetic products company has been dissatisfied with production planning. Production plans are created using best guesses of demand for each product, which are based on how much of each product has been ordered in the past. If a customer places an unexpected order or requests a change to an existing order after it has been placed, there is no way to adjust production plans. The company may have to tell customers it can‘t fill their orders, or it may run up extra costs maintaining additional inventory to prevent stock-outs.

At the end of each month, orders are totaled and manually keyed into the company‘s production planning system. Data from the past month‘s production and inventory systems are manually entered into the firm‘s order management system. Analysts from the sales department and the production department analyze the data from their respective systems to determine what the sales targets and production targets should be for the next month. These estimates are usually different. The analysts then get together at a high-level planning meeting to revise the production and sales targets to take into account senior management‘s goals for market share, revenues, and profits.

The outcome of the meeting is a finalized production master schedule.

The entire production planning process takes 17 business days to complete. Nine of these days are required to enter and validate the data. The remaining days are spent developing and reconciling the production and sales targets and finalizing the production master schedule.   

Draw a diagram of the existing production planning process.

Analyze the problems this process creates for the company.

How could an enterprise system solve these problems? In what ways could it lower costs? Diagram what the production planning process might look like if the company implemented enterprise software.‖

Suggested Answer: An instructor could first ask students to note that the current system relies on manual data entry from multiple departments, resulting in delays, errors, and misaligned production and sales forecasts. A process-flow diagram should clarify the numerous handoffs, such as monthly data transfer between sales and production and the 9-day Copyright © 2026 Pearson Education, Inc.

effort spent validating numbers. Major problems include a lack of real-time visibility and no automatic link between order changes and production scheduling. Inventory may become inaccurate, and customers risk fulfillment delays.

An enterprise system with integrated modules for order management, inventory, and production scheduling could solve these issues by linking relevant data in real time.

Once a sale or order change is entered, the data would be instantly reflected in production and inventory modules. This synergy would reduce manual tasks, accelerate the planning cycle, and permit more flexible responses to unexpected orders. The new diagram might feature a single system that updates order, inventory, and scheduling data continuously, eliminating redundant entry steps and alignment meetings. The result: fewer errors, a compressed planning timeline, and enhanced responsiveness to customers, ultimately lowering costs and improving service.

13.14 Using a Database to Clarify Business Strategy ―Software skills: Database querying and reporting; querying a multi-table database Business skills: Reservation systems; customer analysis In this exercise, you‘ll use database software to analyze the reservation transactions for a hotel and use that information to fine-tune the hotel‘s business strategy and marketing activities.

The MIS18_Project 13.14 Student File contains a database for hotel reservation transactions with information about Fair Winds Inn in Sanibel, Florida. At the Inn, 10 rooms overlook side streets, 10 rooms have windows with limited views of the ocean, and the remaining 10 rooms in the front of the hotel face the ocean. Room rates are based on the type of room.

The owners currently use a manual reservation and bookkeeping system, which cannot provide management with immediate data about the hotel‘s daily operations and revenue. They need to know which room and type of room has been assigned to each guest along with the guest‘s name and start and end dates for that guest‘s stay; the average number of visitors per room type; and the average length of visit per room type.

Create queries and reports from the database to answer these questions. Then write a brief report on how the new database system solves some of the problems created by the old, manual reservation system and how the database can help Fair Winds Inn refine its business strategy.‖

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Suggested Answer: Students can build queries that group records by room type to calculate average stay lengths or total nights booked. Another query might show which rooms have the highest occupancy rates and yield additional metrics, such as seasonal variations in ocean-view occupancy. Students can output a report listing which guests stayed in which rooms, their dates, and total charges.

A short report could highlight that immediate reporting helps managers quickly spot booking trends—like extended stays in sea-facing rooms—and tailor pricing or marketing. The automated database cuts down on double bookings or clerical errors caused by manual record-keeping. Because staff now have quick insight into occupancy by room type, they can adjust room rates or promotions more effectively. Additionally, the new data helps forecast busy periods and plan staffing. This refined strategy targets higher-revenue room types, reevaluates underperforming options, and enables improved guest satisfaction by anticipating preferences.

13.15 Analyzing Website Design and Information Requirements ―Software skills: Web browser software Business skills: Information requirements analysis, website design Visit a website of your choice and explore it thoroughly. Prepare a report analyzing the various functions provided by that website and its information requirements. Your report should answer these questions: What functions does the website perform? What data does it use? What are its inputs, outputs, and processes? What are some of its other design specifications? Does the website link to any internal systems or systems of other organizations? What value does the website provide for the firm?‖ Suggested Answer: Students can focus on an e-commerce site (e.g., an online clothing store) or a servicebased platform (e.g., airline booking). The site might provide functionalities such as account creation, search, product display, shopping cart maintenance, payment processing, customer reviews, or real-time chat. Inputs include user credentials, product queries, shipping addresses, and payment details. Outputs encompass personalized product recommendations, price totals, or confirmation emails. The website‘s processes involve retrieving inventory data, calculating taxes, and integrating with external payment gateways or shipping partners. Students may note layout considerations,

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whether the site uses responsive web design or separate mobile versions, page loading times, or interactive features like recommended items. The final assessment could examine how the site brings value—e.g., boosting sales by allowing 24/7 access to products, capturing consumer data for targeted promotions, or supporting brand recognition. Students might also mention potential linkages to internal inventory systems or third-party shipping APIs that confirm package tracking details.

13.16 Collaboration and Teamwork Project: Preparing Website Design Specifications "With two or more of your classmates, select a system described in this text that uses the web. Review the website for the system you select. Use what you have learned from the website and the description in this book to prepare a report describing some of the design specifications for the system you select. If possible, use Google Docs, Google Drive, or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class."

Suggested Answer: In large part, the project fosters team-based discussions on core design elements—like user interface layout, navigation structure, input forms, database connectivity, and required security measures. If the chosen site is an e-commerce platform, for example, teams might specify user-friendly search bars, product categories, secure payment workflows, and a dynamic cart. They could also note device responsiveness, site analytics, or integration with a marketing email system. The exercise culminates in a short group presentation or written specifications document that details how the website should handle visitors, manage records, ensure data security, and achieve business goals. By using collaborative cloud tools, students track version histories, share documents easily, and divide tasks (like design mockups, site flowcharts, or data models). This approach mirrors real-world development processes where clarity in specifications is essential to align stakeholders and expedite development.

Suggested Assignments 1. Process Documentation Workshop: Ask students to select a simple organizational process (like checking out books from a library or logging a customer support request) and document each step. They should identify Copyright © 2026 Pearson Education, Inc.

potential points for IT integration, such as a mobile app for quick logging or automated notifications, and then propose a small prototype or flowchart.

2. Data Modeling Exercise: Have students design a mini-database schema for a fictitious small business (e.g., a coffee shop), identifying key entities such as customers, sales, products, and suppliers. They then create simple queries showing how the database might produce daily sales reports and detect low inventory items.

3. Low-Code App Development: Provide students with access to a low-code tool (like Microsoft Power Apps or a free no-code platform). Instruct them to build a task-management or scheduling application for classroom use. They should emphasize user-friendly design, roles/permissions, and simple workflow automation.

4. Open-Source Software Evaluation: Assign students to research and compare two open-source tools relevant to a business domain—e.g., a CRM system or a content management system. They should consider factors like community support, customization potential, and security updates. Then, they write a brief recommendation report on the most appropriate software for a small enterprise.

5. Mobile App Design Proposal: Students pick a local service business—like a fitness center or a nonprofit—and propose a native or hybrid mobile app that addresses a real user need (e.g., scheduling gym classes or listing volunteer opportunities). Their proposal should outline major functionality, data flow, and how the app integrates with existing systems or a web platform.

Chapter 14 – Instructor Manual Chapter Summary This chapter explains how organizations make well-grounded decisions about which information systems initiatives to pursue and why strong project management is pivotal for success. It begins by examining how to craft a solid business case, highlighting the importance of estimating costs and benefits—both tangible and intangible. Next, it explores various methods for evaluating IT investments, including capital budgeting, portfolio analysis, and scoring models, emphasizing that financial rationales alone may not capture all the benefits or complexities of the proposed systems. The chapter then presents the fundamentals of project management, comparing waterfall and agile

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methodologies, and explains how each approach deals with core variables: scope, time, cost, quality, and risk. Readers learn about the high failure rate of projects without effective project oversight and discover strategies to mitigate risk, manage organizational change, and involve end users. Key topics include handling ―technical debt,‖ designing systems that integrate well with organizational processes, and employing formal planning tools. By the end of the chapter, learners understand how thorough planning, evaluation, and ongoing oversight contribute to systems that deliver real business value.

Learning Objectives These are the chapter objectives: 14.1 Explain how to build a business case.

14.2 Describe methods for evaluating IT investments.

14.3 Describe project management methodologies and variables.

14.4 Understand the importance of effective project management.

14.5 Discuss project risk factors.

14.6 Understand how project risks can be managed.

14.7 Understand how the information in this chapter can help your career.

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what's happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to Copyright © 2026 Pearson Education, Inc.

be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover 14.1 Explain How to Build a Business Case    

Highlight what a business case is and why it is key to justifying an IT investment.

Discuss tangible and intangible benefits, and how both can factor into project value.

Emphasize the importance of aligning projects with the overall information systems plan.

Describe how a business case aligns with long-term strategic goals.

14.2 Describe Methods for Evaluating IT Investments    

Introduce portfolio analysis and scoring models as ways to systematically compare options.

Explain capital budgeting methods (e.g., ROI, net present value, internal rate of return).

Discuss the potential pitfalls of focusing solely on financial metrics.

Address the role of IT financial management tools (ITFM) and technology business management (TBM).

14.3 Describe Project Management Methodologies and Variables    

Compare waterfall project management with agile project management approaches.

Outline the core project management variables: scope, time, cost, quality, and risk.

Discuss ―technical debt‖ and how short-term trade-offs can cause long-term maintenance issues.

Show how project managers coordinate team tasks, resources, and deadlines.

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14.4 Understand the Importance of Effective Project Management   

Examine high failure rates of information systems projects and the reasons for project overruns.

Explore the consequences of poor planning (e.g., budget overruns, system not meeting needs).

Illustrate how effective management can avert system underperformance or abandonment.

14.5 Discuss Project Risk Factors   

Highlight how project size, project structure, and technology experience affect risk levels.

Examine user involvement and change management as critical components of project success.

Emphasize the difficulties encountered with large-scale implementations, enterprise apps, and M&A.

14.6 Understand How Project Risks Can Be Managed   

Explain how formal planning and control tools (Gantt charts, PERT charts, Kanban boards) help.

Discuss strategies for enhancing user acceptance (e.g., training, communication, addressing resistance).

Explore organizational impact analysis and sociotechnical design as frameworks for success.

14.7 Understand How the Information in This Chapter Can Help Your Career   

Connect key chapter concepts—business case building, risk management, project success—to career outcomes.

Emphasize how knowledge of project management aids in professional development.

Identify examples of how organizations measure and value IT project contributions.

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Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.                             

agile project management (14.3) business case (14.1) capital budgeting models (14.2) change agent (14.6) change management (14.5) counterimplementation (14.6) ergonomics (14.6) external integration tools (14.6) Gantt chart (14.6) implementation (14.6) information systems plan (14.1) intangible benefits (14.2) IT financial management tools (ITFM tools) (14.2) Kanban board (14.6) organizational impact analysis (14.6) PERT chart (14.6) portfolio analysis (14.2) project (14.1) project management (14.3) project portfolio management software (PPM software) (14.6) scope (14.3) scoring model (14.2) sociotechnical design (14.6) tangible benefits (14.2) technical debt (14.3) technology business management (TBM) (14.2) user-designer communications gap (14.5) user interface (14.4) waterfall project management (14.3)

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Case Studies Opening Case Study: BigCommerce Turns to Wrike for Better Project Management Tools Summary BigCommerce, a global e-commerce technology company, needed a more sophisticated project management solution to handle a growing portfolio of large-scale development and professional services projects. Using spreadsheets and email became too unwieldy. By selecting Wrike, a cloud-based SaaS tool, BigCommerce standardized processes, improved reporting, and enhanced collaboration with customers in real time.

These improvements helped it allocate resources more effectively, gain visibility into projects, and boost customer satisfaction.

1. What were the challenges that BigCommerce faced in project management?

Suggested Answer: BigCommerce struggled with a lack of interrelatedness among spreadsheets, emails, and collaboration tools, creating difficulties in tracking the status of over 100 global projects. There was insufficient visibility into scheduling and metrics, as well as inefficiencies in resource allocation and customer communication. The company wished to scale up for larger clients and needed a single platform to provide a holistic view of project progress, timelines, and anticipated costs.

2. Why did BigCommerce choose Wrike instead of other project management tools?

Suggested Answer: BigCommerce chose Wrike because it is an integrated SaaS solution capable of handling complex portfolios while offering real-time reporting and analytics. Unlike other platforms, Wrike proved flexible enough to accommodate agile or waterfall approaches, scaling easily with BigCommerce‘s wide-ranging needs. Wrike also offered user-friendly features for assigning tasks, tracking resources, analyzing team efficiency, and integrating seamlessly with existing workflow tools such as Slack and Salesforce.

3. How did Wrike help BigCommerce solve the project management challenges it was facing?

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Wrike enabled BigCommerce to manage its project portfolio through a consolidated platform. By providing a real-time, comprehensive view of projects, Wrike allowed for better resource planning and increased accountability among project teams. Its robust reporting capabilities improved decision making, as managers could assess project progress, spot bottlenecks early, and measure time spent versus billing more accurately.

Overall, Wrike‘s customer-facing dashboards enhanced communication and transparency, leading to higher satisfaction levels.

Spotlight on Management Case Study: Happy Feet International Overcomes Change Management and Implementation Issues Summary Happy Feet International, a luxury vinyl flooring distributor, grappled with outdated inhouse systems, shipping inefficiencies, and employee reluctance toward new technology. By integrating the Kuebix TMS platform and a new Oracle NetSuite ERP system, Happy Feet realized key operational improvements. Change management proved challenging, but the company‘s willingness to promote user participation and provide extensive training led to greater efficiency, streamlined workflows, and significant cost savings in shipping operations.

1. What management, organization, and technology challenges did Happy Feet face?

Suggested Answer: From a management standpoint, Happy Feet had to address leaders and employees who preferred familiar processes. Organizationally, the company‘s rapid growth resulted in widespread manual tasks that made it difficult to manage inventory, shipping, and back-office workflows. On a technology level, outdated in-house ERP software created data inaccuracies and disruptions. Legacy industry practices further complicated modernization efforts, contributing to higher freight costs and slower customer service responses.

2. How did Happy Feet address those challenges?

Suggested Answer: Happy Feet introduced the cloud-based Kuebix TMS for more accurate, cost-effective freight decisions and Oracle NetSuite ERP to handle core business processes,

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including inventory. Management prioritized open communication about new procedures, set clear expectations for employees, and provided ample training to ease barriers to adoption. By integrating the two platforms, Happy Feet eliminated manual data entry steps, reduced errors, and gained real-time insights, thereby boosting responsiveness to customers and improving fulfillment.

3. Why was change management one of the biggest issues that Happy Feet faced in implementing its new systems?

Suggested Answer: Employees had entrenched habits and were initially skeptical about switching from a familiar in-house ERP. Some processes were not thoroughly documented, making it difficult to determine the best way to structure new workflows. To overcome these barriers, Happy Feet implemented multiple training sessions, dedicated resources to user support, and emphasized dialogue and listening. These efforts helped employees see the benefits of the new technology, reduced resistance, and smoothed the transition.

Chapter Case Study: Southwest Airlines Invests in Digital Transformation to Navigate Future Turbulence Summary: Southwest Airlines was widely regarded for customer satisfaction, but severe operational disruptions exposed outdated crew scheduling software and significant ―technical debt.‖ Unable to handle massive flight reassignments during extreme weather, the legacy system forced manual workarounds, stranding passengers and costing Southwest millions. Acknowledging the error, Southwest launched major IT modernization efforts—migrating to the cloud and investing in new scheduling and integration tools—to make the airline more resilient, faster, and better prepared.

1. Why did Southwest Airlines have such a hard time recovering from the disruptions caused by winter storm Elliot?

Suggested Answer: Southwest‘s reliance on a decades-old crew scheduling application, SkySolver, was at the core of its failure to deal with large-scale disruptions. While storms triggered flight cancellations industry-wide, Southwest had minimal means to automate or optimize crew assignments once the initial schedule was upended. Lacking real-time data

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integration and an enterprise-wide scheduling approach, the crew schedulers were overwhelmed. This technical debt, compounded by underinvestment in process updates, left the airline ill-prepared for storms of that magnitude.

2. What actions did Southwest Airlines take to deal with its technical debt issues in 2023 and 2024?

Suggested Answer: Southwest committed significant capital to update critical internal systems, allocating over a billion dollars to modernize its technology architecture. The airline accelerated the move to cloud-based solutions by partnering with Amazon Web Services, aiming to integrate its scheduling tools for real-time, enterprise-wide visibility. Southwest‘s leadership formed a dedicated project team to develop the Crew and Aircraft Integrated Recovery and Optimizer (CAIRO) tool, enhancing the automation and responsiveness of crew and flight assignments. These initiatives represented a targeted effort to ―pay down‖ years of technical debt and rebuild operational resilience.

Review Questions 14.1 Explain how to build a business case.

1. Describe types of information systems projects.

Suggested Answer: Information systems projects can range from installing small-scale applications to massive enterprise transformations. Small-scale projects often address a single department or process, such as deploying a new software module or automating tasks like invoice generation. Enterprise-wide projects, such as implementing an ERP system, can affect multiple business units and involve comprehensive organizational change. In some cases, projects focus on upgrading infrastructure (e.g., servers and networks).

Other common types include enhancements of existing systems to add functionality, integrate new modules, or improve performance. A project might also aim to replace outdated legacy technology in order to keep pace with competitors or meet new regulatory requirements. Regardless of scope, each project should align with the organization‘s strategic goals. Clearly articulating the problem, anticipating benefits, and confirming alignment with broader objectives are essential steps to justify the investment and ensure stakeholder buy-in.

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2. Define and describe the components of a business case for a proposed investment.

Suggested Answer: A business case outlines why a particular information systems project is an attractive investment for the organization. It starts by clearly defining the problem or opportunity, emphasizing how the proposed system can solve or address it. The business case includes tangible and intangible benefits, listing expected cost savings, efficiency improvements, or revenue enhancements. It then catalogs the various costs: direct purchase, installation, training, and ongoing operational expenses. A business case also discusses alignment with strategic goals, explaining how the system supports broader corporate objectives, such as revenue growth, competitive differentiation, or compliance. Organizations frequently include a risk assessment, evaluating potential pitfalls such as disruptions or user resistance. Finally, the business case compares alternative solutions and justifies the selected option. This ensures that decision makers are informed about the trade-offs, allowing them to commit resources with confidence.

3. List and describe the major components of an information systems plan.

Suggested Answer: An information systems plan is a framework ensuring that all IT initiatives align with the organization‘s broader strategies. Key components typically include:       

Purpose of the plan: A statement of the organization‘s vision for IT and how it supports the business mission.

Current state assessment: An overview of existing systems, infrastructure, and skill sets.

Strategic business plan rationale: Explanation of how various business goals— like expansion, new product lines, or cost savings—will be supported by IT. New developments: Proposed projects and technologies slated for future deployment.

Management strategy: Governance structures, organizational changes, and policies needed to carry out the plan.

Implementation plan: Practical steps, timelines, milestones, and resource allocation details.

Budget requirements: Financial forecasts, including total cost of ownership, potential ROI, and funding sources.

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Together, these components help ensure technology investments and projects are chosen and deployed effectively.

14.2 Describe methods for evaluating IT investments.

1. Explain the difference between tangible and intangible benefits.

Suggested Answer: Tangible benefits are quantifiable and can typically be measured in monetary terms.

They often appear as cost reductions, direct increases in revenue, or measurable productivity gains—such as a reduction in labor hours or a decline in error rates. In contrast, intangible benefits are more difficult to quantify immediately, as they relate to improvements in areas like decision quality, customer satisfaction, or employee morale.

These intangible benefits may become tangible over time, for instance, if better decision making leads to new services or products that yield higher revenue. Despite not appearing on balance sheets in the short run, intangible benefits can be crucial drivers of an organization‘s long-term value and competitiveness. By recognizing both types, businesses gain a complete picture of a system‘s true potential.

2. List six tangible benefits and six intangible benefits of an IT investment.

Suggested Answer: • Tangible benefits: 1. Reduced operational costs (e.g., labor and materials) 2. Decreased cycle times for production or service delivery 3. Lowered IT infrastructure expenses (via automation or consolidation) 4. Reduced facility costs (smaller footprint due to digital operations) 5. Increased sales or revenue streams 6. Lowered outside vendor expenses (less reliance on third-party service providers) • Intangible benefits: 1. Enhanced decision making 2. Boosted employee morale and job satisfaction 3. Improved organizational flexibility and adaptability 4. Stronger brand image or corporate reputation 5. More efficient customer or supplier interactions

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6. Greater organizational learning and collaboration 7. Describe how portfolio analysis, scoring models, and capital budgeting models can be used to establish the worth of systems.

Suggested Answer: Portfolio analysis inventories all current and proposed IT initiatives to see how they align with risk and reward objectives, similar to managing a financial portfolio. By mapping proposed projects onto risk-benefit dimensions, organizations can balance safer but lower-return projects with riskier, higher-return endeavors. Scoring models assign weights to key decision criteria, systematically evaluating how well each project meets the organization‘s strategic objectives. This approach helps teams compare solutions on factors beyond cost alone, such as functionality or user-friendliness. Capital budgeting models focus on financial considerations, measuring the projected monetary return from a project and comparing it to the costs of the investment. Techniques include net present value (NPV), internal rate of return (IRR), and payback period. In combination, these methods provide a more comprehensive evaluation of a prospective system‘s financial, strategic, and operational value.

4. Discuss the limitations of using financial models to evaluate IT investments.

Suggested Answer: Financial models, while useful, can miss significant aspects of an IT project‘s value.

They tend to emphasize quantifiable metrics such as cost savings or immediate revenue gains, leaving out longer-term or intangible factors like improved user satisfaction, better decision making, or the organization‘s strategic readiness for future technologies. Certain costs—for example, those arising from temporary disruption or staff retraining—can be overlooked if they are not easily translated into a budget item.

Moreover, intangible benefits like brand reputation or knowledge sharing may be critical to competitiveness but are difficult to capture with strict financial discounting. As a result, solely relying on financial metrics may undervalue projects that are transformative for an organization‘s future viability.

5. Describe software that is available to help make technology investment decisions.

Suggested Answer: A growing number of enterprise solutions exist to help quantify, track, and manage the financial aspects of IT. IT financial management (ITFM) tools, such as IBM Apptio, can unify data on procurement, maintenance costs, and resource allocations. These systems automate the tracking of hardware expenses, software licenses, and labor

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costs while linking spending to business outcomes. They often integrate with project management platforms, incorporating metrics like net present value (NPV), total cost of ownership (TCO), and ROI. Some solutions also employ technology business management (TBM) frameworks, which reframe IT spending in terms of business services. By offering real-time dashboards, analytics, and scenario modeling, they enable organizations to evaluate competing investment priorities more transparently and guide decision-making on new technology.

14.3 Describe project management methodologies and variables.

1. Define project management.

Suggested Answer: Project management is the systematic application of knowledge, tools, and techniques to fulfill specific objectives within cost, time, scope, and quality constraints. It entails a structured approach—planning tasks, coordinating resources, and evaluating outcomes.

In the context of IT, project management also includes designing or acquiring technology, testing solutions, and ensuring seamless integration with the organization‘s processes. Effective project management maintains clear communication channels among stakeholders, monitors risk, and anticipates potential roadblocks. Through formal methods like agile or waterfall frameworks, teams can efficiently collaborate, track progress, and adapt to changes in requirements or organizational priorities.

2. List and describe the project management activities and variables addressed by project management.

Suggested Answer: Project management involves a variety of coordinated activities, beginning with the planning stage, where goals, timelines, and tasks are established. Teams assess potential risks and determine needed resources—including team members‘ skill sets and technological tools. Once execution begins, managers oversee daily or weekly progress, resolving issues, and adjusting schedules if requirements shift. Monitoring and controlling follow, with metrics used to gauge performances against baselines.

Finally, a formal project closure reviews lessons learned.

The five major project variables include: 

Scope: Defines project boundaries—what is included or excluded.

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   

Time: Schedules or deadlines, often outlined by milestones.

Cost: The overall budget, influenced by resource needs (labor, tools, etc.).

Quality: Measures how well the deliverable meets stated requirements and standards.

Risk: All potential issues that could derail or slow the project, managed through mitigation strategies.

3. Define technical debt and explain how it arises.

Suggested Answer: Technical debt describes the future expense incurred by shortcuts or ―quick fixes‖ in systems development that prioritize speed or low cost over robust, carefully planned code. For instance, a team under pressure might skip comprehensive testing to hit a deadline. These shortcuts can cause bigger issues down the road, requiring extensive rework, complicated patches, or even system replacements. Over time, if not addressed, technical debt accumulates, rendering the system fragile or more expensive to maintain.

Organizations seeking rapid results face a dilemma: invest significant resources up front for solid engineering or scramble with temporary solutions, which eventually escalate into technical debt as the system ages.

14.4 Understand the importance of effective project management.

1. Describe some of the problems that can arise as a result of poor project management when developing an information system.

Suggested Answer: Projects lacking robust management often face cost overruns and extended timelines.

With unclear deadlines or scope, tasks can spiral, leading to ―scope creep.‖ Limited communication and inadequate risk analysis result in a lack of coordination, causing duplicative or incompatible work. End-user needs may be overlooked if their input is not solicited early and often, leaving the final product misaligned with business goals.

Technical outputs could look polished but fail due to insufficient testing or inaccurate data. In extreme instances, user resistance can stall adoption, if they feel blindsided by sweeping changes to workflows. Ultimately, the organization risks having a solution that is either underutilized or abandoned altogether, squandering significant investments of

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time and money. Effective project management addresses these challenges holistically—not just the technology, but also the people and processes.

14.5 Discuss project risk factors.

1. Identify and describe each of the principal risk factors in information systems projects.

Suggested Answer: 





Project size: Larger projects with many stakeholders, higher budgets, or multiple organizational units typically present more complexity. Schedules are harder to manage, and small setbacks can cascade.

Project structure: Projects that are not well-defined from the outset, or that allow for shifting goals, are inherently more vulnerable to miscommunication.

Frequently, new requirements emerge mid-project, compounding difficulties.

Experience with technology: Teams lacking familiarity with particular tools, platforms, or programming languages experience steeper learning curves and higher error rates. Even well-defined projects can flop if the staff lacks the required expertise.

These factors intersect with the organizational environment—such as managerial support and user involvement—to influence project success or failure. Additionally, resisting changes in workflow or job responsibilities intensifies the risk, especially if stakeholders view the new system as a threat to their established routines.

2. Explain why builders of new information systems need to address implementation and change management.

Suggested Answer: When a new system is introduced, employees may have to alter their tasks, adapt to new procedures, or learn different software tools—changes that can feel imposing.

Effective implementation and change management prepare the organization for these shifts through communication, training, and leadership support. If planners fail to manage the transition carefully, employees might resist adoption or find workarounds, limiting the system‘s effectiveness. Worse, morale could suffer and key staff might leave if the new processes anger or frustrate them. Proactive change management identifies stakeholders early and ensures that they are part of decision-making, mitigating resistance. This organizational dimension is as critical as the technical work since new Copyright © 2026 Pearson Education, Inc.

system success depends on ongoing user acceptance and alignment with enterprise operations.

14.6 Understand how project risks can be managed.

1. Explain why eliciting support of management and end users is so essential for successful implementation of information systems projects.

Suggested Answer: Management support ensures vital resources—staff time, budget, and attention—are prioritized for the project. Leaders at all levels can facilitate user acceptance by clearly stating how the project supports strategic objectives, reinforcing policies that encourage or mandate adoption, and intervening to resolve departmental conflicts. Without senior managers‘ endorsement, new systems might not receive maintenance or recognition, dooming them to irrelevance. End users, meanwhile, serve as the ultimate testers, ensuring the system‘s features align with their day-to-day needs. Their engagement fosters a sense of ownership, heightening motivation to use and refine the system.

Involving both management and users promotes greater trust and positive feedback loops, minimizing disruptions and smoothing the path for successful implementation across the organization.

2. Identify and describe the strategies for controlling project risk.

Suggested Answer: Risk control typically begins with early and frequent communication among stakeholders, enabling quick identification of problems. Formal planning tools—such as Gantt or PERT charts—delineate task dependencies and maintain accountability. Crossfunctional teams, known as external integration tools, ensure every facet of organizational requirements is reflected in system design. For highly volatile or untested technology, assigning experienced team members or third-party specialists can reduce uncertainty. Pilot rollouts, phased deployments, and iterative user testing all limit disruptions by catching defects early. Finally, robust training and documentation help manage the human side of risk, ensuring staff members feel confident adapting to new processes or technologies.

3. Identify the organizational considerations that should be addressed by project planning and implementation.

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Suggested Answer: Project planning should assess potential shifts in job roles, lines of authority, and workflows. Changes in responsibilities may create friction if employees fear downgrades or job losses. Organizational culture—especially attitudes toward risk, data sharing, and cross-functional collaboration—can accelerate or hinder successful adoption. Planners should consider addressing potential ergonomic concerns, especially when user work routines change or new interfaces are introduced. In addition, a robust communication plan is essential, ensuring employees understand project goals and methods to voice concerns. The project‘s timeline, training needs, and cost constraints hinge on these organizational realities, and ignoring them can derail even a technically sound project.

4. Explain how project management software tools contribute to successful project management.

Suggested Answer: Software tools such as Microsoft Project, Wrike, Asana, or Jira enable managers to break down large endeavors into smaller tasks, assign responsibilities, and monitor timelines in real time. Gantt and PERT chart generation is often automated, aiding in quickly spotting bottlenecks and adjusting schedules. Collaborative features allow team members to share updates, documents, and feedback within the same environment, eliminating version-control headaches. Project portfolio management (PPM) software extends these capabilities across multiple initiatives, aligning them with strategic objectives. Overall, these tools bolster transparency and accountability by keeping all participants on the same page, lessening misunderstandings, and ensuring swift responses to unexpected delays or costs.

Discussion Questions 14.7 How much does project management impact the success of a new information system?

Suggested Answer: Project management can make or break an information system initiative. By establishing clear goals, prioritizing tasks, and setting realistic budgets, project managers provide the organizational scaffolding that keeps teams productive. Often, new systems flounder not solely due to technical issues, but because of poor alignment

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with end users or shifting corporate priorities—areas a project manager monitors constantly. Effective project managers also anticipate risks, from skill gaps to scheduling conflicts, and develop contingency plans to avert problems. This foresight significantly raises the likelihood that an IT project will finish on time, within budget, and aligned with strategic goals. Conversely, subpar project management breeds confusion and misallocation of resources. Teams risk ―scope creep,‖ missing deadlines, or duplication of work. Ultimately, strong project management ensures the technology introduced actually solves the intended business issues and is embraced by the people meant to benefit from it.

14.8 It has been said that most systems fail because systems builders ignore organizational behavior problems. Why might this be so?

Suggested Answer: Technology issues like coding bugs or network failures often come to mind when considering system collapse, yet a system can be technically flawless and still fail if it is poorly integrated into the social fabric of work. Organizational behavior encompasses power structures, employee motivation, communication patterns, and established norms.

If a new system undercuts someone‘s responsibility or job satisfaction, that individual may resist, sometimes covertly. Failing to consider how daily routines must adapt causes frustration and confusion, decreasing the likelihood that workers will use the system actively or provide accurate data. Moreover, top management may not fully champion the system if they do not acknowledge employees‘ concerns. The result is often half-hearted adoption and eventual relegation to ―shelfware.‖ By recognizing organizational behavior upfront, project teams can harness stakeholder buy-in, mitigate resistance, and craft systems that genuinely complement users‘ needs.

14.9 What is the role of end users in information systems project management?

Suggested Answer: End users are crucial participants in the success of systems design, development, and implementation. They provide domain-specific knowledge—insights into the precise functionalities and data flows that can optimize everyday work. As the primary consumers of the new solution, their sustained feedback at each stage (from requirements gathering to prototype evaluation) guides product refinements. Engaging end users early generates ownership and acceptance, encouraging them to champion the system among peers. Without such involvement, the project risks mismatched

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features or workflows that add complexity without offering real benefits. Additionally, end users help test the system in real-world scenarios—an invaluable final checkpoint before widespread rollout. In many cases, they become the system‘s internal ―experts,‖ aiding others and acting as catalysts for acceptance, training, and future improvements.

AI Project 14.10 AI Project: Identifying Change Management Problems ―You have been hired as a consultant by two friends who want to open a small retail store selling organic pet food and treats, as well as pet toys and clothing made from organic materials. They have asked you to help prepare them for challenges associated with implementing a Point of Sale (POS) system. They are particularly concerned about employee resistance to using the system.

Using Microsoft Copilot, Google‘s Gemini, or ChatGPT, develop a series of prompts to identify and describe these change management problems. Save a copy of your prompts and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: A robust answer might begin by outlining the reasons employees could resist a new POS system: limited confidence using technology, concerns over job security, or reluctance to abandon familiar processes. The AI prompts could focus on these potential hurdles. For instance, a consultant might first request the AI‘s advice on framing questions that uncover employee apprehensions: ―How can we investigate whether staff feel the new POS threatens their job stability?‖ Follow-up prompts could inquire: ―Suggest best practices for training part-time hires who have minimal tech experience.‖ The model might then propose real-life scenarios for role-based training sessions, communication plans to reassure staff, and motivational tactics to promote adoption. Following each AI-generated solution, the user can refine prompts to ensure the output captures essential business considerations—inventory tracking, staff scheduling, and daily reconciliation. The discussion would likely culminate in a set of steps, from establishing open forums for concerns, to scheduling hands-on training, to celebrating employee successes with the new system. Such structured guidance addresses fluctuations in workforce readiness, ensuring the rollout meets the store‘s performance targets.

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Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

14.11 Management Decision Problems ―Caterpillar is the world‘s leading maker of earth-moving machinery and supplier of agricultural equipment. Caterpillar wants to end its support for its Dealer Business System (DBS), which it licenses to its dealers to help them run their businesses. The software in this system is becoming outdated, and senior management wants to transfer support for the hosted version of the software to Accenture Consultants so it can concentrate on its core business. Caterpillar never required its dealers to use DBS, but the system had become a de facto standard for doing business with the company. The majority of the 50 Cat dealers in North America use some version of DBS, as do about half of the 200 or so Cat dealers in the rest of the world. Before Caterpillar turns the product over to Accenture, what factors and issues should it consider? What questions should it ask? What questions should its dealers ask?‖ Suggested Answer: In transitioning support for the Dealer Business System (DBS) to Accenture, Caterpillar should consider how the dealers depend on DBS for core processes like inventory, orders, CRM, and after-sales services. The potential complexities of vendor lock-in and the system‘s legacy elements are key factors. Caterpillar must verify Accenture‘s capabilities in handling version upgrades, data migration, and ongoing customizations.

Questions to ask include whether Accenture‘s vision aligns with Caterpillar‘s strategic goals, how future updates will be rolled out, and the degree of user training or transition assistance. Intellectual property rights around DBS need clarification to prevent disruptions. Caterpillar‘s dealers should ask how the support transition affects their licensing terms, whether they must invest in hardware or integration upgrades, and whether they have viable alternatives without losing integration points essential for direct collaboration with Caterpillar. Ultimately, both the manufacturer and dealers should assess the project‘s technological, cost, and operational impacts. This is especially important given the global scale of operations and the particular challenge of supporting a system that has become an industry standard for many Cat dealers.

14.12 Using Spreadsheets for Capital Budgeting ―Software skills: Spreadsheet formulas and functions Copyright © 2026 Pearson Education, Inc.

Business skills: Capital budgeting This project provides you with an opportunity to use spreadsheet software to use the Return on Investment (ROI) profitability model to analyze the return on an investment for a new computer-aided design (CAD) system.

Your company would like to invest in a CAD system that requires purchasing hardware, software, and networking technology as well as expenditures for installation, training, and support. The MIS18_Project 14.12 Student File provides you with tables showing each cost component for the new system as well as annual maintenance costs over a five-year period. You believe the new system will reduce the amount of labor required to generate designs and design specifications, thereby increasing your firm‘s annual cash flow.

Using the data provided in these tables, create a worksheet that calculates the costs and benefits of the investment over a five-year period and analyzes the Return on Investment (ROI). The ROI ratio helps measure the amount of return from an investment in relation to its overall cost. The higher the ROI, the more profitable the project. To calculate ROI, divide the investment‘s net benefit (Total Benefits minus Total Costs) by the total cost of the investment. You should consider one-time and recurring benefits and costs from Year 0 and Years 2021 to 2025. For purposes of this exercise, you do not have to consider depreciation. Is this investment worthwhile? Why or why not?‖ Suggested Answer: Your spreadsheet would first list each one-time cost, including the hardware, software licensing, and installation fees, labeled under ―Year 0.‖ Next, it would capture recurring costs, such as annual support fees, licensing renewals, and any additional training, categorized by each of the five years (2021 to 2025). To detail the benefits, you might estimate labor savings through fewer design hours or lower error rates, plus any anticipated revenue upticks due to faster product development cycles. Summarizing total costs and total benefits per year provides the net benefit for each period. Summing over five years yields the project‘s net benefit, which is then divided by the total cost of the investment to calculate ROI. If the ROI is significantly positive, or above your organization‘s required threshold, it indicates the project is worthwhile. If labor reductions and time-to-market gains are substantial, it would likely show an attractive payback, justifying the CAD system. However, if projected savings are modest, you may need to reevaluate assumptions or consider additional intangible improvements (e.g., design quality).

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14.13 Using Online Research Tools for Buying and Financing a Home ―Software skills: Online research tools Business skills: Financial planning This project will develop your skills using online research tools for searching for a home and calculating mortgage financing for that home.

You would like to purchase a home in Fort Collins, Colorado. Ideally, it should be a single-family house with at least three bedrooms and one bathroom that costs between $350,000 and $450,000 and can be financed with a 30-year fixed-rate mortgage. You can afford a down payment that is 20 percent of the value of the house. Before you purchase a house, you would like to find out what homes are available in your price range, find a mortgage, and determine the amount of your monthly payment. Use the Realtor.com site or app to help you with the following tasks:   

Locate homes in Fort Collins, Colorado that meet your specifications.

Find a mortgage for 80 percent of the list price of the home. Compare rates from at least three potential lenders.

After selecting a mortgage, calculate your closing costs and the monthly payment.

When you are finished, evaluate the whole process. For example, assess the ease of use of the site or app and your ability to find information about houses and mortgages, the accuracy of the information you found, and the breadth of choice of homes and mortgages.‖ Suggested Answer: First, on Realtor.com (or a similar platform), filter by region, bedroom/bath criteria, and price range to generate a list of candidate properties. Examine each for suitability— location, recently updated amenities, or overall condition. Next, collect mortgage quotes from multiple lenders to identify current interest rates on a 30-year fixed mortgage for 80% of the chosen property‘s price. Tools like mortgage calculators can estimate interest, principal, property tax, and homeowner‘s insurance costs. Once you have approximate rates, you can determine projected closing costs (including points, title fees, and appraisals) using the lender‘s online estimate or a standard calculator. Finally, verify your monthly mortgage payment (principal and interest), bundling in approximate escrow for property taxes and insurance. Conclude by reflecting on the user-friendliness of the shipping cart or platform approach—how quickly you found properties in Fort Collins abiding by your exact filters, and whether mortgage rates were displayed transparently. Did you discover an abundance of lender choices, or were you limited to Copyright © 2026 Pearson Education, Inc.

only a few? This reflection helps gauge your comfort with online property searches and financing decisions.

14.14 Collaboration and Teamwork Project: Identifying Implementation Problems ―With two or more of your classmates, select a system described in one of the case studies in the text. Write a description of the problems you might expect to encounter in implementing the system and an analysis of the steps you would take to solve or prevent these problems. If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: A group might choose the Southwest Airlines modernization project as an example. The main challenges likely include integrating new scheduling software with outdated systems, securing buy-in from crew schedulers, and mitigating short notice changes for large numbers of flights. The team would propose a phased rollout—ensuring smaller test groups generate feedback that is used to refine solutions before scaling up.

Additional steps include specifying training programs to prepare crew schedulers and flight coordinators for new procedures. Addressing technical debt can involve carefully mapping all interfacing applications to pinpoint potential bottlenecks. The group might also propose ensuring executive backing and frequent pilot tests to reduce staff discomfort and limit disruption. In presenting findings, the collaborative approach could highlight bullet points of each problem, along with the recommended solution, in a format easily shared with classmates through a cloud-based platform.

Suggested Assignments 1. Develop a Business Case Presentation: Ask students to choose a proposed IT project, such as a new HR information system, and prepare a concise five-minute business case pitch. Students should include cost estimates, tangible and intangible benefits, and how the system aligns with strategic corporate goals.

2. Risk Management Plan: Have students analyze a hypothetical IT project by listing its most prominent risk factors (size, structure, technology familiarity).

Then require them to write a plan detailing how these risks can be monitored, mitigated, or transferred.

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3. Project Management Software Exploration: Assign students to experiment with a free project management platform (e.g., Trello or a trial version of Microsoft Project). They should create a mock project, input tasks, set deadlines, and examine the software‘s ability to generate schedules or highlight dependencies.

4. Change Management Simulation: Place students in small groups and have them role-play introducing a new system to employees of varied backgrounds and attitudes. Each group should plan a communication strategy, training outline, and methods to overcome skepticism or resistance.

5. Sociotechnical Design Proposal: Require students to craft a short paper outlining both technical requirements and organizational adaptations for an enterprise application (e.g., a supply chain management tool). Emphasize role definitions, job redesign, and user support for both the ―technical‖ and ―social‖ dimensions of the project.

Chapter 15 – Instructor Manual Chapter Summary This chapter explores the critical role that information systems play in supporting organizations as they expand and operate across national borders. It begins by examining the global environment that has enabled the rise of multinational business— namely, changes in technology, trade policy, and cultural dynamics leading to global markets and global production networks. Next, the chapter discusses how to design an effective international information systems architecture that accounts for different corporate strategies, organizational structures, and diverse cultural, legal, and political conditions. A key emphasis is on identifying which systems and business processes require uniformity across all locations, and which can be adapted to local needs. The chapter also highlights the challenges that managers face—such as dealing with fragmented legacy systems and overcoming local resistance—and strategies to address them. Finally, it looks at the technological issues involved in building global systems, including hardware choices, connectivity, security, software localization, and cloud platforms. By understanding these elements, organizations can better harness technology to support global growth, coordination, and competitiveness.

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Learning Objectives These are the chapter objectives: 15.1 Discuss factors impacting development of global information systems.

15.2 Discuss how to develop effective global information systems architecture.

15.3 Discuss strategies and organizational structures for global businesses and information systems.

15.4 Discuss management challenges in developing global information systems.

15.5 Discuss management solutions for global information systems development challenges.

15.6 Discuss technology issues and alternatives in developing global information systems.

15.7 Understand how the information in this chapter can help your career.

MIS Headline Article (eText Only) Each chapter opens with an MIS Headline Article that is Updated monthly during the semester to keep your course content current and relevant. Use the article to:   

Start a lecture.

Engage students to demonstrate how what they are learning applies to what's happening today.

Use the provided discussion questions in class.

MyLab MIS If you are using the MyLab, you can assign the Chapter Reading Assignment. This includes each learning objective Broken into a reading activity followed by a question to be answered. The full activity is scored in the gradebook. You can remove learning objectives you don't plan to cover, and the questions related to them will be removed from the overall score.

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Dirt Bikes Running Case The Dirt Bikes Running Case is used throughout the text. Data files related to this case can be found at https://www.pearson.com/laudon.

Key Points to Cover Below are the primary [H1] sections in the chapter, each aligned with the corresponding Learning Objective. Under each heading, you‘ll find 3–5 major points an instructor may wish to cover.

15.1 Discuss Factors Impacting Development of Global Information Systems 

 



Emphasize how global communications technology and changes in national trade policies have facilitated cross-border trade and the rise of multinational enterprise.

Explore ―global business drivers‖ such as global markets, global production operations, and economies of scale that push firms to integrate internationally.

Highlight the cultural, social, and political/legal challenges (e.g., data privacy laws and language barriers) that impede the straightforward adoption of global systems.

Note recent trends of ―deglobalization‖ and ―regionalization,‖ underlining how external shocks can alter a company‘s approach to global markets.

15.2 Discuss How to Develop Effective Global Information Systems Architecture   

Define the concept of ―international information systems architecture,‖ focusing on the coordination of global trade, production, and managerial control.

Stress the importance of examining the global environment, corporate strategies, and organizational structure before selecting any specific technology.

Show how strategic planning and organizational design inform the choice of technology platforms, including networks, hardware, and software.

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

Highlight the significance of aligning the architecture with both central control and local autonomy.

15.3 Discuss Strategies and Organizational Structures for Global Businesses and Information Systems    

Compare four basic global business strategies: domestic exporter, multinational, franchiser, and transnational.

Demonstrate how each strategy leads to different approaches to systems development: centralized, duplicated, decentralized, or networked.

Discuss why transnational organizations often require coordinated systems that balance global efficiency with local responsiveness.

Guide learners on linking business strategies to the design and configuration of information systems in an international setting.

15.4 Discuss Management Challenges in Developing Global Information Systems    

Examine how cultural, political, and language diversity complicate the creation of uniform global systems.

Explore the problems arising from fragmented legacy systems that have evolved piecemeal across distinct locations.

Address the complexities of gaining consensus on user requirements and standardizing business processes globally.

Warn about conflicting local incentives and how they can undermine central efforts to implement unified solutions.

15.5 Discuss Management Solutions for Global Information Systems Development Challenges    

Describe how to identify and focus on ―core systems‖ that truly need to be standardized across the enterprise.

Illustrate how clearly defining core, regional, and local business processes can help prioritize systems development.

Review strategies for involving diverse local units in design processes—a tactic often described as ―co-optation.‖ Emphasize the evolutionary approach (―one slice at a time‖) to implementing global systems, rather than attempting a sweeping ―grand design.‖

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15.6 Discuss Technology Issues and Alternatives in Developing Global Information Systems   



Note the importance of hardware and software integration when bridging multiple operating units on different platforms.

Highlight connectivity challenges, especially managing service levels, network security, and reliability of Internet-based communication in varied regions.

Stress how enterprise systems (e.g., ERP, supply chain management) can unify global operations but must be adapted for language, currency, and local reporting.

Address software localization requirements for user interfaces and data management in multiple languages.

15.7 Understand How the Information in This Chapter Can Help Your Career   

Tie global information systems knowledge to real-world career opportunities in multinational and transnational organizations.

Show how familiarity with cultural differences, global supply chains, and connectivity architectures can expand your qualifications.

Link practical skills in cloud computing, enterprise resource planning, and cybersecurity to valuable roles in global IT teams.

Key Terms The Learning Objective in which the terms are covered appears in parentheses after the term.          

co‐ optation (15.5) core systems (15.5) domestic exporter strategy (15.3) franchiser strategy (15.3) global culture (15.1) international information systems architecture (15.2) legitimacy (15.5) multinational strategy (15.3) particularism (15.1) software localization (15.6)

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 

transborder data flow (15.1) transnational strategy (15.3)

Case Studies Opening Case Study: Hormel Foods Implements Oracle Cloud Applications to Unify Its Systems Worldwide Summary: Hormel Foods grew significantly through acquisitions, leading to a patchwork of diverse information systems that limited organizational visibility and agility. By implementing Oracle Fusion Cloud solutions for finances, human resources, supply chain management, and analytics, Hormel integrated data and reporting worldwide. This allowed the company to coordinate global operations, streamline decision-making, and gain better insights into vendor relationships and product lines.

1. What issues did Hormel Foods have in dealing with its legacy systems?

Suggested Answer: Hormel‘s acquisitions over several decades resulted in a disjointed assortment of local systems that did not communicate effectively with each other. The company struggled with inconsistent data, system redundancies, and limited visibility across brands, making it difficult to see an organization-wide view of financial performance or optimize resources. Moreover, reliance on specialized knowledge in isolated locations created vulnerabilities, as maintenance depended on a few individuals familiar with each legacy system.

2. How did Hormel Foods use information technology to improve operations and management decision making?

Suggested Answer: By adopting Oracle Cloud applications, Hormel standardized its processes across finance, human resources, and supply chain management. The unified platform provided real-time, enterprise-wide data, allowing managers to make informed decisions and quickly identify issues such as price discrepancies and singlesource relationships in procurement. Increased transparency enabled more efficient operations, while analytics tools delivered deeper insights into product profitability and market opportunities.

3. How did Hormel Foods‘ new Oracle Cloud applications help it become a more global organization?

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Suggested Answer: The Oracle Cloud platform supported Hormel‘s transition from an export-focused company to a dynamic, multinational enterprise. With standardized operational and financial data, Hormel could more easily coordinate activities among its global facilities, reduce dependency on any single region, and explore alternative suppliers. This uniform perspective helped the organization expand and manage worldwide operations, aligning strategies across multiple countries and brands.

Spotlight on Technology Case Study: The Rise of Digital Nationalism Summary: Countries around the world are increasingly regulating the flow of internet-based services and data across borders—a growing trend known as ―digital nationalism.‖ This includes creating national data repositories, restricting foreign web services, and implementing data localization laws. While such approaches are sometimes framed as privacy, economic, or security measures, they also threaten the unified nature of the Internet and complicate global business operations by introducing regional or domestic barriers to data access.

1. What is digital nationalism? Give two examples.

Suggested Answer: Digital nationalism refers to policies and actions by nation-states aimed at regulating or restricting internet-based content, services, and data flows to exert sovereignty. One example is China‘s ―Great Firewall,‖ which censors outside information and technology platforms and promotes local alternatives. Another example is Russia‘s ―Runet‖ initiative designed to route domestic internet traffic within Russian borders, potentially severing global internet access in times of conflict or political tension.

Both efforts illustrate a broader push for government control over digital services.

2. What problems does digital nationalism pose for conducting business globally?

Suggested Answer: Digital nationalism disrupts seamless communication and data flows across international boundaries. Companies operating in multiple markets may be forced to create expensive, localized data centers to comply with varying data governance rules. This can hinder real-time collaboration and raise costs related to redundancy, security, and compliance. Policies that isolate citizens behind national firewalls may also bar entry to international services, limiting customer reach and competitive positioning. Collectively, these barriers introduce complexities for multinational firms hoping to integrate operations, expand customer bases, and maintain consistent brand strategies worldwide.

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Chapter Case Study: Wyndham Centralizes Its Information Systems to Better Serve Its Worldwide Hotels Summary: Wyndham Hotels & Resorts, a global hospitality company with a franchise business strategy, had multiple redundant platforms and systems following years of acquisitions under various brands. By consolidating its reservations, property management, and franchise owner engagement systems onto standardized, cloud-based platforms (like Oracle‘s OPERA Cloud and Salesforce technologies), Wyndham improved efficiency, reduced costs, and laid the foundation for automated tools such as artificial intelligencedriven messaging.

1. Identify the business challenges that Wyndham Hotels & Resorts faced. How did it use technology to address those challenges?

Suggested Answer: Wyndham encountered complexity from a patchwork of reservation systems and property management platforms, which made it difficult for corporate teams and franchisees to share information and deliver a consistent guest experience. Additionally, supporting aging, on-premise, or scattered systems was costly.

By adopting cloud-based solutions (OPERA Cloud, Salesforce‘s Wyndham Community, and AI-driven platforms), Wyndham standardized processes across its portfolio, enabling real-time reporting, seamless collaboration with franchisees, and better insight into guest preferences. This modernization allowed Wyndham to coordinate brand standards globally while simultaneously supporting local franchise operations.

2. What benefits does the OPERA Cloud platform provide for Wyndham and its franchisees?

Suggested Answer: The OPERA Cloud platform centralizes core functions such as reservations, billing, inventory, and reporting into a standardized system accessible from multiple locations. It reduces the need for on-site hardware, leading to lower maintenance and support costs. Franchisees benefit from real-time data on property performance and simple integrations with other systems like revenue management. As an enterprise-wide solution, OPERA Cloud ensures that new features and upgrades, such as streamlined check-in or room upselling, can be rolled out more uniformly across the worldwide network of hotels.

3. How is Wyndham using AI?

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Suggested Answer: Wyndham leverages AI primarily in two ways: real-time coaching for call center agents and enhanced guest engagement. For call center agents, AI tools offer immediate feedback on delivery and communication speed, helping them tailor their approach for improved customer satisfaction. On the guest engagement side, Wyndham uses AI-based messaging to provide quick responses to common questions and to suggest room upgrades or other premium features. By analyzing data from millions of loyalty members, Wyndham gains insights into travelers‘ preferences, guiding strategic decisions related to in-room amenities, Wi-Fi—including potential investments—and other service enhancements.

Review Questions 15.1 Discuss factors impacting development of global information systems 1. Describe the general cultural factors leading to growth in global business and the four specific business factors. Also, describe the interconnection among these factors.

Suggested Answer: The general cultural factors include worldwide communication technologies, global transportation, and the emergence of an international community sharing expectations and knowledge on a larger scale. These advances break down distance barriers, enabling businesses to envision product markets that transcend national borders.

Additionally, four key business factors support this expansion. First, global markets drive organizations to seek new customers worldwide. Second, global production and operations provide an opportunity to optimize costs and leverage local specialties within different regions. Third, global coordination helps firms manage supply chains, human resources, and accounting across multiple time zones in real time. Fourth, creating economies of scale across product lines or distribution channels leads to cost efficiencies no longer limited by geographic constraints. All these factors overlap and reinforce one another. For instance, advanced communications boost a firm‘s ability to coordinate multiple plants in different countries, which then lowers operational costs and encourages further international expansion—tightening the interplay of each factor and creating a self-reinforcing cycle of global engagement.

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2. List and describe the major challenges to the development of global information systems.

Suggested Answer: Major challenges include cultural, social, and political/legal differences that can affect everything from organizational culture to regulatory compliance. Particularism, such as a strong nationalistic or religious identity, can undercut the vision of uniform global processes. Language barriers may complicate collaboration among international teams.

Political and legal issues introduce further difficulties, such as varying data privacy laws and transborder data flow restrictions. Technical complexities arise from differing telecommunication infrastructures, bandwidth limitations, and possibly outdated local hardware or software. Additionally, the Covid-19 pandemic and regional conflicts have illustrated supply chain vulnerabilities, driving a trend of ―regionalization‖ or ―deglobalization.‖ Firms must navigate these obstacles while balancing central coordination against the local autonomy required to adapt to cultural preferences and regional legislation. Overall, success depends on carefully strategizing around these challenges while still leveraging the gains offered by global systems.

15.2 Discuss how to develop effective global information systems architecture 1. Explain why some firms have not planned for the development of international systems.

Suggested Answer: Many organizations expand internationally in an opportunistic or reactive manner, acquiring foreign divisions or licensing arrangements to capture new markets but leaving technology as an afterthought. This informal approach leads to a patchwork of incompatible local systems. In addition, leadership might view standardizing technology globally as expensive, complex, or disruptive to established local practices. Managers also underestimate the cultural and political complexities, such as translating software into multiple languages or navigating local regulations. Rapid changes in the competitive landscape and technology can make a unified global plan seem obsolete before it is fully implemented. As a result, many companies wind up with fragmented solutions lacking a cohesive framework or architecture. Moreover, the absence of immediate perceived benefits to local business units undermines the impetus for an integrated strategy. Without strong executive sponsorship and a clear vision for global

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synergies, companies allow their systems to evolve ad hoc, leading to higher long-term costs and inefficiencies.

2. List and describe the five major steps for developing an international information systems architecture.

Suggested Answer: First, managers need to understand the global environment, including cultural differences, regulatory constraints, and the firm‘s industry drivers toward global operations. This step frames the organizational, technical, legal, and cultural boundaries within which solutions must fit. Second, managers assess possible corporate strategies (such as domestic exporter, multinational, and so on) to guide how much standardization or localization is needed for the organization‘s systems. Third, they determine an appropriate organizational structure—whether centralized, decentralized, or coordinated across regions—to manage production, finance, marketing, and HR. Fourth, managers resolve implementation challenges by addressing questions of business process redesign and user ownership. Finally, they select the technology platform, identifying standards for hardware, software, and connectivity that unify diverse stakeholders. This phased approach ensures that the firm‘s global strategy, organizational requirements, and local realities all align with the technology framework, leading to coherent and effective information systems worldwide.

15.3 Discuss strategies and organizational structures for global businesses and information systems 1. Describe the four main strategies for global business and organizational structure.

Suggested Answer: A domestic exporter centralizes most operations in the home country and exports goods or services abroad, typically using local distributors. A multinational strategy centralizes financial control while splitting production, marketing, and other functions across different foreign subsidiaries. A franchiser retains product design and initial production at home but licenses local entities (franchisees) to manage day-to-day operations, especially with perishable or country-specific goods. Finally, a transnational strategy treats the entire world as the firm‘s domain, distributing value-adding activities across locations that provide comparative advantages. Each strategy reflects the degree of

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central control versus local autonomy and drives how a firm structures its management hierarchy, supply chain, and collaboration tools.

2. Describe the four different systems configurations that can be used to support different global strategies.

Suggested Answer: Centralized systems place development and operation at the home base, aligning with domestic exporters whose operations revolve around a single headquarters. Duplicated systems develop in the home base but are run independently in local offices, complementing organizations that push standardization with some localized operation.

Decentralized systems let each unit build and operate its own applications, as often seen in purely multinational firms balancing local independence with minimal global oversight. Finally, networked systems integrate global development and operations, ideal for transnational companies that require seamless data-sharing and collaboration across multiple geographic locations. Each configuration influences how technology platforms, software, and processes are deployed, reflecting the interplay between local responsiveness and global efficiency.

15.4 Discuss management challenges in developing global information systems 1. List and describe the major management issues in developing international systems.

Suggested Answer: One central issue is agreeing on common user requirements across diverse cultural and regulatory environments. Achieving consensus on data definitions, reporting formats, and process specifications can be contentious because local managers are accustomed to their own standards and may fear losing autonomy. A second issue is introducing changes in business processes. Transforming entrenched local ways of working to conform to standardized global processes often meets resistance unless incentives and leadership commitment are clear. Coordinating applications development is another hurdle—teams are typically spread across time zones, subject to different resource constraints, and operate within unique organizational cultures. Aligning software release cycles so that new versions roll out uniformly, while minimizing disruptions, also presents a challenge. Finally, local users need to feel a sense of ownership and shared benefits, or they may sabotage or underuse the new system. Addressing these

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obstacles demands thoughtful leadership, diplomatic communication, and inclusive governance.

15.5 Discuss management solutions for global information systems development challenges 1. Identify and describe three principles to follow when organizing the firm for global business.

Suggested Answer: First, companies should organize value-adding activities by leveraging comparative advantage. For instance, locate production in places with favorable costs or supply, and build marketing teams near target consumer bases. Second, create systems units at multiple organizational levels—local, regional, and transnational—to manage both centralized tasks (e.g., enterprise-wide data standards) and region-specific tasks (e.g., local language interfaces). Third, assign overall responsibility to a high-level global CIO or similar executive position. This leadership ensures alignment of technology with strategic goals and enforces consistent data handling and security standards. Adhering to these principles balances global coordination with local adaptations for maximum efficiency and effectiveness.

2. Identify and describe three steps of a management strategy for developing and implementing global information systems.

Suggested Answer: Managers typically begin by defining a small set of core business processes that truly require global standardization, simplifying the path to agreement. Once core systems are identified, they choose an incremental approach—sometimes referred to as the ―salami strategy‖—implementing one piece at a time. This steadier pace can reduce friction and foster user buy-in. Finally, managers clarify the benefits of the new systems, ensuring local stakeholders understand improved visibility, efficiency, and reach. A thorough communication plan helps address legitimate fears and fosters collaboration.

This interplay of selective focus, phased rollout, and continuous communication sets the stage for successful global information system deployment.

3. Define co‐ optation and explain how it can be used in building global information systems.

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Co‐ optation is a strategy of inviting potential opponents or skeptics into the decisionmaking process, offering them a genuine role in planning while retaining overall oversight of the project‘s direction. In global systems development, local managers or IT personnel who might otherwise resist centralized control become active collaborators, sharing insights about their markets or expertise in their own processes. When each regional team sees that their perspectives are integrated into the new system‘s design, they‘re more likely to accept the changes. This approach reduces pushback, builds trust, and boosts the sense of shared ownership, thereby increasing the likelihood of a successful system rollout.

15.6 Discuss technology issues and alternatives in developing global information systems 1. Describe the main technical issues involved in the development of global information systems.

Suggested Answer: Integration complexity is a top concern, given the wide variety of operating systems, hardware standards, and legacy software in different countries or divisions. Network connectivity poses additional problems because certain regions may lack reliable broadband, or nations may impose strict policies on data usage. Ensuring consistent quality of service can be challenging when bandwidth or infrastructure quality varies.

Another key issue is security: implementing robust encryption and access controls across international networks and cross-border data flows can be complicated by differences in legal frameworks. Finally, software localization is often necessary to accommodate multiple languages, currencies, time zones, and local regulations. Each of these technical factors must be balanced against cost and feasibility as companies build or upgrade systems to function seamlessly across the globe.

2. Identify some technologies that can help firms develop global information systems.

Suggested Answer: Cloud computing platforms and software-as-a-service (SaaS) solutions enable organizations to access shared infrastructure and standardized tools that offer scalable global support. Virtual private networks (VPNs) help secure data transmissions across geographically dispersed offices with fewer concerns about regional internet variability.

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Enterprise resource planning (ERP) systems unify supply chain, financial, and personnel management processes. Collaboration tools, including online meeting platforms, enterprise social networks, and distributed versioning systems, allow realtime teamwork irrespective of distance. Finally, artificial intelligence tools—like machine learning for real-time translation—can break down language barriers. Collectively, these technologies facilitate secure, integrated, and efficient operations, easing the shift toward transnational business endeavors.

Discussion Questions 15.7 If you were a manager in a company that operates in many countries, what criteria would you use to determine whether an application should be developed as a global application or as a local application?

Suggested Answer: Candidates for global applications typically involve processes core to the firm‘s overall mission—finance, enterprise resource planning, global supply chains, or branding—and demand consistent data definitions and metrics. If standardization provides clear cost efficiencies, compliance benefits, or synergy across regions, a global system may be warranted. Additionally, the complexity of local variations—such as regulatory differences or cultural nuances—shapes the decision. A high level of local tailoring might push the organization to adopt local applications. Conversely, if a function is strategic but can readily be uniform across most markets—like human resources data input or centralized inventory management—globalization may bring economies of scale without undermining local autonomy. Security and data privacy are also considerations; solutions that must meet rigid, region-specific data protection laws could require at least partial localization. Ultimately, the balancing act revolves around trusting local leadership to adapt where it truly matters while unifying wherever best practices and consistent reporting standards can drive overall organizational performance.

15.8 Describe ways the Internet can be used in global information systems.

Suggested Answer:

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First, the Internet acts as a backbone for collaboration, allowing personnel in different regions to communicate via email, messaging platforms, and enterprise social networks.

Cloud-based services can host applications—finance, inventory, CRM—that seamlessly deliver updates to users around the world on demand. Multinational firms benefit from extranet portals that securely connect suppliers, partners, and distributors, streamlining supply chains and order processing. In certain sectors, the Internet enables crossborder e-learning programs, training employees without requiring expensive travel. The public web can also provide a marketplace for global customers to browse, pay, and track orders, with back-end systems personalized to regional currencies and languages.

Virtual private networks (VPNs) further secure data in transit, and content delivery networks (CDNs) help optimize performance for end users across different geographies.

Overall, the Internet underpins real-time global connectivity, fosters consistent branding, and strengthens coordination among far-flung company units, suppliers, and customers.

AI Project 15.9 AI Project: Understanding the Impact of Global Supply Chain Issues ―You have been hired as a consultant by two friends who want to open a retail store selling organic pet food and treats as well as pet toys and clothing made from organic materials. They have asked you to advise them on whether they need to be concerned about the possibility of global supply chain issues, given that they primarily sell products made in the United States and if so, what steps they can take to mitigate those issues.

Using Microsoft‘s Copilot, Google‘s Gemini, or ChatGPT, develop a prompt to help you provide advice on this topic. Save a copy of your prompt and the output of the chat session. Submit to your instructor as requested.‖ Suggested Answer: Even domestically sourced supplies can be influenced by global market fluctuations. For instance, certain ingredients in organic pet food or raw materials for toys might be indirectly tied to international trade, making them vulnerable to severe weather events, geopolitical tensions, or transportation disruptions in other regions. Therefore, your friends should diversify suppliers, maintain adequate safety stock where possible, and cultivate relationships with backup vendors. They can also invest in technology platforms that track inventory in real time, so they can pivot quickly if a core material

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becomes scarce. Communicating with suppliers about lead times and exploring local or regional alternatives are other important strategies. By establishing these contingency measures, they can minimize risk, protect their brand reputation, and continue offering products despite unexpected global supply constraints.

Hands-On MIS Projects Download Data Files at https://www.pearson.com/laudon.

15.10 Management Decision Problem ―United Parcel Service (UPS) has been expanding its package delivery and logistics services in mainland China, serving both multinational companies and local businesses.

UPS drivers in China need to use UPS systems and tools, such as its handheld DIAD (Delivery Information Acquisition Device), for capturing package delivery data. UPS wants to make its WorldShip and other shipping-management services accessible to Chinese and multinational customers via the web. What are some of the global information systems issues UPS must consider in order to operate successfully in China?‖ Suggested Answer: UPS must account for regulatory constraints unique to China, including data localization or requirements to store certain customer information on servers within the country.

Language considerations require localizing interfaces and shipping labels so Chinese customers can navigate the platform easily. Network infrastructure reliability can vary, meaning UPS might assess dedicated lines or virtual private networks to ensure consistent availability. Cultural preferences in technology use—for example, widespread reliance on smartphones—may require mobile-optimized sites and apps. UPS should also verify compliance with Chinese cybersecurity laws, clarify how data flows across borders, and implement robust security against hacking or unauthorized intrusion.

Finally, forming partnerships with regional carriers could be critical for last-mile delivery in remote areas. By navigating these multifaceted challenges, UPS can enhance its prospects of keeping Chinese customers satisfied and meeting service-level commitments.

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15.11 Building a Job Database and Web Page for an International Consulting Firm ―Software skills: Database and web page design Business skills: Human resources internal job postings Companies with many overseas locations need a way to inform employees about available job openings in these locations. In this project, you‘ll use database software to design a database for posting internal job openings and a web page for displaying this information.

KTP Consulting operates in various locations around the world. KTP specializes in designing, developing, and implementing enterprise systems for medium- to large-sized companies. KTP offers its employees opportunities to travel, live, and work in various locations throughout the United States, Europe, and Asia. The firm‘s human resources department has a simple database that enables its staff to track job vacancies. When employees are interested in relocating, they contact the human resources department for a list of KTP job vacancies. KTP also posts its employment opportunities on the company website.

What type of data should be included in the KTP job vacancies database? What information should not be included in this database? Based on your answers to these questions, build a job vacancies database for KTP. Populate the database with at least 20 records. You should also build a simple web page that incorporates job vacancy data from your newly created database. Submit a copy of the KTP database and web page to your professor.‖ Suggested Answer: The KTP job database should include essential fields such as job title, department, location, job description, required qualifications, application deadline, and a unique job ID. Including fields for region-specific considerations—like language requirements or visa sponsorship details—makes sense for global postings. In contrast, sensitive personal data (e.g., a social security number or health records) should not be part of the public jobs database. Once the fields are finalized, you can create a table within a database management system (such as Microsoft Access) and add 20 sample records that span various global locations and roles (e.g., project manager in the U.S., systems analyst in Germany, business consultant in Japan). Then design a simple HTML or server-based web page that fetches the records dynamically, displaying each opening‘s title, department, location, and link to expand for the full job description. This approach

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keeps the site user-friendly. Finally, you would refine site navigation, ensuring employees can sort positions by region or functional area before connecting them with HR or an online application form.

15.12 Conducting International Marketing and Pricing Research ―Software skills: Online research tools Business skills: International pricing and marketing In this project, you‘ll use online research tools to learn about overseas distributors and customs regulations and to calculate prices in foreign currencies.

You are in charge of marketing for a U.S. manufacturer of furniture that has decided to enter the international market. You want to test the market by contacting office furniture retailers located in the UK to offer a specific desk that you wish to sell at about $195.

Using the web, identify an office furniture retailer in the UK and then find out how much you would get for the chair in the current market. Consider using a universal currency converter website, which determines the value of one currency expressed in other currencies. Obtain both the information needed to contact the firm you selected and the price of your chair in its local currency. Then locate and obtain customs and legal restrictions on the products you will export from the United States and import into the UK. Finally, locate a company that can represent you as a customs agent and gather information on shipping costs.‖ Suggested Answer: First, identify a UK-based office furniture retailer such as a regional chain or an onlinefocused company. Note its address and import contact details, typically found under a ―Business‖ or ―Contact‖ page. Next, convert $195 into British pounds (GBP)—for example, if £1 is equivalent to $1.25, the desk might be priced around £156. Use a universal currency converter for up-to-date rates. Consult relevant UK government sites (e.g., HM Revenue & Customs or gov.uk) for details on import tariffs, value-added tax (VAT), or product safety standards, such as fire-retardant materials. Ensure that shipping is cost-effective by speaking with freight forwarders that have experience handling furniture, and inquire whether specialized packaging or certificates of origin are needed. Finally, pick a customs agency with a proven track record in the furniture industry and gather quotes covering customs duties, brokerage fees, and shipping insurance. Compile this information into a concise export plan that addresses final retail price, incoterms, and timeline for door-to-door delivery.

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15.13 Collaboration and Teamwork Project: Identifying Technologies for Global Business Strategies ―With two or more of your classmates, identify an area of information technology and explore how this technology might be useful for supporting global business strategies.

For instance, you might choose email, smartphones, virtual private networks, enterprise systems, collaboration software, or the web. It will be necessary to identify a business scenario to discuss the technology. You might choose an automobile parts franchise or a clothing franchise, such as Express, as example businesses. Which applications would you make global, which core business processes would you choose, and how would the technology be helpful? If possible, use Google Docs, Google Drive, or Google Sites to brainstorm, organize, and develop a presentation of your findings for the class.‖ Suggested Answer: Suppose your group chooses collaboration software for a clothing franchise with branches on multiple continents. First, decide which functions are universally shared— product design approvals, marketing campaign coordination, and sales analytics—and designate these as ―global‖ business processes requiring standardized tools. Next, identify processes that are locally adapted, such as local promotional offers or store openings. Collaboration software (like Microsoft Teams paired with a project management tool) could unify the design and marketing teams, ensuring that new product launches stay aligned despite time zone differences. Real-time messaging and shared file editing reduce operational friction and help teams collectively refine branding to suit local markets. Meanwhile, a global knowledge repository, built with a wiki platform, preserves best practices from each regional team—further driving synergy.

Using Google Docs or Sites, your group can document these insights and demonstrate how a carefully chosen technology fosters operational consistency while giving local franchise locations flexibility to serve their markets effectively.

Suggested Assignments 1. Global Process Mapping Exercise: Assign learners to map a critical business process (e.g., order fulfillment) for a company that operates across multiple countries. In groups, they identify potential bottlenecks introduced by crossborder regulations or cultural distinctions and propose process improvements.

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2. Transnational Systems Prototyping: Have students design a simple blueprint for a transnational ERP module—detailing data fields, user-interface language considerations, and local customization needed for different regions. This assignment allows them to practice capturing requirements across cultures and legal environments.

3. Global Data Privacy Debate: Divide students into teams to research distinct data privacy regulations, such as the EU‘s GDPR, China‘s cybersecurity law, and U.S. state laws. Each team explores how these regulations affect global businesses, and they collaboratively develop a compliance checklist for multinational organizations.

4. Regional Tech Infrastructure Analysis: Ask students to pick a developing region (e.g., parts of Africa or Southeast Asia) and outline the telecommunications environment there, including bandwidth availability, mobile device usage, and local e-commerce trends. Students then recommend strategies for a global firm to navigate infrastructure constraints.

5. Case Write-Up on Localization vs. Standardization: Provide students with a hypothetical multinational wanting to launch a new product worldwide. Students argue for or against adapting marketing software, websites, and supply chain systems for local markets, weighing cost efficiency, brand consistency, and local responsiveness.

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