TEST BANK for Management Information Systems: Managing the Digital Firm, 15th Edition by Laudon Kenn

Test Bank for: Management Information Systems: Managing the Digital Firm, 16th Edition By Kenneth C. Laudon, Jane P. Laudon.

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 1 Information Systems in Global Business Today 1) Which of the following is not one of the six strategic business objectives of information systems?

A) New products and services B) Improved decision making C) Competitive advantage D) Improved employee morale E) Survival Answer: D Difficulty: Challenging AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

2) Verizon's use of a web-based digital dashboard to provide managers with precise real-time information enabled it to improve which of the following?

A) Compliance with regulations B) Managerial decision making C) Efficiency in creation of new products D) Employee morale E) Intimacy with its suppliers Answer: B Difficulty: Challenging AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

3) Which of the following may lead to competitive advantage?

1. New products, services, and business models; 2. Charging less for superior products; 3. Responding to customers in real time A) 1 only B) 1 and 2 C) 2 and 3 D) 1 and 3 E) 1, 2, and 3 Answer: E Difficulty: Challenging 1

AACSB: Analytical thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

4) A firm that invests in an information system because it is a necessity of doing business does so because it is seeking to achieve which of the following business objectives?

A) Operational excellence B) Improved decision making C) Competitive advantage D) Customer intimacy E) Survival Answer: E Difficulty: Moderate AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

5) The Mandarin Oriental's use of computer systems to keep track of guests' preferences is an example of which of the following?

A) Improved flexibility B) Improved decision making C) Improved efficiency D) Customer intimacy E) Operational excellence Answer: D Difficulty: Moderate AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

6) Competitors were seeking which of the following business objectives when they rushed to provide ATMs after Citibank introduced the first ATMs in New York?

A) Improved efficiency B) Customer and supplier intimacy C) Survival D) Competitive advantage E) Improved decision making Answer: C Difficulty: Moderate AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

2

7) Which of the following is the key business metric behind the technologies implemented by Kroger, as discussed in the chapter-opening case?

A) Higher customer satisfaction levels B) Survival C) Improved employee morale D) Improved decision making E) Reduced cost of supplies Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

8) Which of the following is an example of a business using information systems to create a new product?

A) Walmart's RetailLink system B) The Mandarin Oriental's use of computers to keep track of guest preferences C) Verizon's use of a web-based digital dashboard to provide real-time company information for managers D) Apple's creation of the iPod E) Kroger's use of sensors to monitor cold food storage temperatures Answer: D Difficulty: Challenging AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

9) Walmart exemplifies the power of information systems coupled with state-of-the-art business practices and supportive management to achieve which of the following?

A) New products and services B) Operational efficiency C) Survival D) Customer intimacy E) Competitive advantage Answer: B Difficulty: Challenging AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

3

10) How much did American businesses spend on information systems hardware, software, and telecommunications equipment in 2015?

A) About $100 million B) About $1 billion C) About $100 billion D) About $1 trillion E) About $10 trillion Answer: D Difficulty: Moderate AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

11) To make sure they stock clothes that their customers will purchase, a department store implements a new application that analyzes spending levels at their stores and cross-references this data to popular clothing styles. Which of the following business objectives is this information intended to support?

A) Customer intimacy B) Survival C) Operational excellence D) Improved decision making E) New products and services Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

12) Approximately what percent of U.S. businesses have some form of remote work program?

A) About 15 percent B) About 25 percent C) About 35 percent D) About 60 percent E) About 75 percent Answer: D Difficulty: Moderate AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

4

13) All of the following are new technology-related trends in MIS except: A) cloud computing.

B) big data.

C) IoT. D) the mobile digital platform.

E) co-creation of business value.

Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

14) Which of the following statements about digital firms is not true?

A) In digital firms, time shifting and space shifting are the norm.

B) Today, most firms are fully digital.

C) Digital firms offer extraordinary opportunities for flexible global organization and management.

D) Digital firms sense and respond to their environments more rapidly than traditional firms.

E) Digital firms have more flexibility to survive in turbulent times.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

15) A firm that must invest in new information systems capabilities in order to comply with federal legislation is investing to achieve which business objective?

A) Customer intimacy B) Operational excellence C) Survival D) Creation of new products E) Improved decision making Answer: C Difficulty: Moderate AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

5

16) The enormous volume of data generated by Internet activity, such as web traffic, email, and social media is referred to as: A) IoT. B) big data.

C) the mobile digital platform.

D) cloud computing.

E) business intelligence.

Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

17) Which of the following is not one of the current changes taking place in information systems technology?

A) Growing business use of big data B) Growth in cloud computing C) Growth in the PC platform D) Emerging mobile digital platform E) Increased usage of data generated by the Internet of Things Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

18) Thomas Friedman's description of the world as "flat" refers to: A) the flattening of economic and cultural advantages of developed countries.

B) the use of the Internet and technology for instantaneous communication.

C) the reduction in travel times and the ubiquity of global exchange and travel.

D) the growth of globalization.

E) the increased use of global currencies.

Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

6

19) In 2015, what percent of the U.S. economy resulted from foreign trade?

A) 10 percent B) 25 percent C) 30 percent D) 50 percent E) 66 percent Answer: C Difficulty: Challenging AACSB: Information technology LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

20) All of the following describe the effects of globalization except: A) significant decreases in operating costs.

B) reduction of labor costs through outsourcing.

C) ability to find low-cost suppliers.

D) increases in transaction costs.

E) replication of business models in multiple countries.

Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

21) How many service jobs move offshore to lower-wage countries in a typical year?

A) 3,000 B) 30,000 C) 300,000 D) 3 million E) 30 million Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

7

22) Which of the following statements is not true?

A) In 2015, American businesses invested about $1 trillion in information systems hardware, software, and telecommunications equipment.

B) In 2015, American businesses spent $500 billion on business and management consulting and information technology services.

C) Private business investment in information technology has grown from 21 percent of total invested capital in 1999 to 37 percent of all invested capital in 2015.

D) Most of the business value of IT investment derives from organizational, management, and cultural changes inside firms.

E) Much of the money spent by American businesses on business and management consulting involves redesigning firms' business operations to take advantage of new technologies.

Answer: B Difficulty: Challenging AACSB: Application of knowledge LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

23) Approximately how many Americans access the Internet using a smartphone or tablet?

A) 118 million B) 172 million C) 194 million D) 220 million E) 258 million Answer: C Difficulty: Challenging AACSB: Application of knowledge LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

24) Which of the following statements is not true?

A) Many Fortune 500 U.S. firms derive more than half their revenues from foreign operations.

B) Most PCs manufactured in China use microprocessor chips manufactured in Korea.

C) Eighty percent of the toys sold in the United States are manufactured in China.

D) In 2015, 60 percent of Apple's revenue was generated outside of the United States.

E) Technology companies are particularly dependent on offshore revenue.

Answer: B Difficulty: Challenging AACSB: Application of knowledge LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

25) Internet advertising is growing at approximately 5 percent a year.

Answer: FALSE Difficulty: Challenging AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

8

26) Creating a marketing plan is an example of a business process.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

27) In order to be considered a digital firm, all of the firm's significant business relationships and core business processes must be digitally enabled.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

28) A business model describes how a company produces, delivers, and sells a product or service to create wealth.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

29) Private business investment in information technology constituted 37 percent of all invested capital in 2015.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

30) You are starting a small bike messenger company. Given your type of services (handdelivering packages within a small geographical area), could your firm be a digital firm? If so, what would make this a digital firm?

Answer: Yes, your firm could be a digital firm. Being a digital firm doesn't mean that you just offer digital goods and services. A digital firm would have most of its relationships with customers, suppliers, and employees be digitally enabled. Ordering deliveries, assigning deliveries, managing employees and assignments could certainly be digitally enabled; using cell phones, information systems, and handheld devices to connect customers, delivery management, and bike messengers.

Difficulty: Challenging AACSB: Analytical thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

9

31) What are the main changes taking place in organizational use of information systems?

Which of these do you think is having the greatest impact on businesses?

Answer: The main organizational changes taking place are: 1. businesses using social networking platforms to deepen interactions with employees, customers, and suppliers, 2. telework gaining momentum in the workplace, with growing numbers of people working away from a traditional office, and 3. co-creation of business value, with the sources of business value shifting from products to solutions and experiences and from internal sources to networks of suppliers and collaboration with customers.

Student answers as to the greatest impact will vary. An example answer is: The increase in collaboration is having the greatest impact, as customers are essentially gaining greater control in determining the end product; businesses who are flexible enough to listen to and respond to customer demand will be more successful.

Difficulty: Moderate AACSB: Analytical thinking LO: 1-1: How are information systems transforming business, and why are they so essential for running and managing a business today?

32) The three activities in an information system that produce the information organizations use to control operations are: A) information, research, and analysis.

B) input, output, and feedback.

C) data, information, and analysis.

D) data analysis, processing, and feedback.

E) input, processing, and output.

Answer: E Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

33) RFID sensor-generated data on stored food items such as storage location is an example of: A) raw input.

B) raw output.

C) customer and product data.

D) sales information.

E) information systems.

Answer: A Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

10

34) The total number of food items with storage temperatures problems is an example of which of the following?

A) Input B) Raw data C) Meaningful information D) Feedback E) Processing Answer: C Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

35) Output: A) is feedback that has been processed to create meaningful information.

B) is information that is returned to appropriate members of the organization to help them evaluate the input stage.

C) transfers data to the people who will use it or to the activities for which it will be used.

D) transfers processed information to the people who will use it or to the activities for which it will be used.

E) converts raw input into a meaningful form.

Answer: D Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

36) Converting raw data into a more meaningful form is called: A) capturing.

B) processing.

C) organizing.

D) feedback.

E) analysis.

Answer: B Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

11

37) Which of the following is an example of raw data from an automobile manufacturer?

A) An average of 120 Subarus sold daily in New York in 2016 B) 1,200 Subaru Outbacks sold during the first quarter 2016 in New York C) One Subaru Outback sold July 27, 2016 in Mohegan Lake, New York for $24,000 D) Annual sales of Subaru Outbacks increased 5.3 percent E) An average sale price of $25,500 for all Subaru Outbacks sold during July 2016 in Mohegan Lake, New York Answer: C Difficulty: Challenging AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

38) In a hierarchical organization, the upper level consists of: A) scientists.

B) senior management.

C) professional employees.

D) data workers.

E) knowledge workers.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

39) The fundamental set of assumptions, values, and ways of doing things that has been accepted by most of a company's members is called its: A) culture.

B) environment.

C) atmosphere.

D) business process.

E) mission.

Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

12

40) Data management technology consists of which of the following?

A) Physical hardware and media used by an organization for storing data B) Detailed, preprogrammed instructions that control and coordinate the computer hardware components in an information system C) Two or more computers to share data or resources D) Hardware and software used to transfer data E) Software governing the organization of data on physical storage media Answer: E Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

41) Which of the following statements best describes organizational culture?

A) It encompasses the sum of beliefs and assumptions by all members.

B) It enables the organization to transcend the different levels and specialties of its employees.

C) It reflects the senior management's perspective on the organization and goals.

D) It allows a company to achieve greater operational efficiency.

E) It is a fundamental set of assumptions, values, and ways of doing things that has been accepted by most members of the organization.

Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

42) Networking and telecommunications technologies, along with computer hardware, software, data management technology, and the people required to run and manage them, constitute an organization's: A) data management environment.

B) networked environment.

C) information technology (IT) infrastructure.

D) information system.

E) culture.

Answer: C Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

13

43) Maintaining the organization's financial records is a central purpose of which main business function?

A) Manufacturing and accounting B) Finance and accounting C) Sales and manufacturing D) Finance and sales E) Human resources Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

44) All of the following are examples of environmental actors in an information system except: A) competitors.

B) regulatory agencies.

C) customers.

D) suppliers.

E) sales force.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

45) Which of the following best describes the primary reason for implementing a new information system, from a business perspective?

A) The system enables the firm to create new products and services.

B) The system will create new value for the firm, beyond its costs.

C) The system will automate key business processes.

D) The system is in use by our primary competitors.

E) The system integrates well with the Web. Answer: B Difficulty: Moderate AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

14

46) Which of the following would not be a complementary asset for a solar panel manufacturer?

A) International solar equipment certification standards B) Government funding for green technology C) Centralized hierarchical decision making D) Innovation-driven management team E) Subsidies for adoption of solar energy Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

47) In a business hierarchy, which of the following levels is responsible for monitoring the daily activities of the business?

A) Middle management B) Service workers C) Production management D) Operational management E) Knowledge workers Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

48) In ________, raw data is systematically acquired and transformed during various stages that add value to that information.

A) an information value chain B) the firm value chain C) information processing D) the feedback process E) the dissemination process Answer: A Difficulty: Moderate AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

15

49) A corporation that funds a political action committee, which in turn promotes and funds a political candidate who agrees with the values of that corporation, could be seen as investing in which main category of complementary assets?

A) Managerial B) Governmental C) Social D) Organizational E) Auxiliary Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

50) Which of the following is an example of an organizational complementary asset?

A) Using the appropriate business model B) A collaborative work environment C) Laws and regulations D) The Internet and telecommunications infrastructure E) Strong senior management Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

51) Which of the following is an example of a social complementary asset?

A) Technology and service firms in adjacent markets B) Training programs C) Distributed decision-making rights D) Incentives for management innovation E) A strong IS development team Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

16

52) Which of the following roles in a firm would be least affected by using mobile devices to access firm information systems?

A) Senior executives B) Sales executives C) Production workers D) Operational managers E) Knowledge workers Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

53) Which of the following would not be used as an input for an information system?

A) Digital dashboard B) Tablet computer C) Bar code scanner D) Smartphone E) RFID reader Answer: A Difficulty: Moderate AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

54) The three principal levels within a business organization hierarchy are: A) senior management, operational management, and service workers.

B) senior management, middle management, and operational management.

C) senior management, operational management, and information systems.

D) senior management, middle management, and service workers.

E) senior management, data workers, and service workers.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

17

55) Personnel who design new products or services for a firm belong to which level of a business hierarchy?

A) Middle management B) Production workers C) Knowledge workers D) Data workers E) Service workers Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

56) Which main business function is responsible for maintaining employee records?

A) Sales and marketing B) Human resources C) Finance and accounting D) Manufacturing and production E) Middle management Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

57) Which of the following constitutes an organizational element in the UPS tracking system described in the chapter?

A) The specification of procedures for identifying packages with sender and recipient information B) Monitoring service levels C) Promoting the company strategy of low-cost, superior service D) The use of handheld computers and networks for managing package delivery E) A web-based Post Sales Order Management System Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

18

58) Which of the following constitutes a managerial element in the UPS tracking system described in the chapter?

A) Taking inventory B) Providing package status reports to customers C) The decision to use automation D) In-house package tracking software E) Ability to embed UPS functions in external sites Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

59) Which of the following is a global network that uses universal standards to connect millions of different networks around the world?

A) An extranet B) The World Wide Web C) The Internet D) An intranet E) Verizon Answer: C Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

60) Which of the following is a service provided by the Internet that uses universally accepted standards for storing, retrieving, formatting, and displaying information in a page format?

A) HTML B) The World Wide Web C) E-mail D) An extranet E) FTP Answer: B Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

19

61) Which of the following is a private corporate network extended to authorized users outside the organization?

A) An intranet B) The World Wide Web C) The Internet D) An extranet E) FTP Answer: D Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

62) Which of the following deals with behavioral issues as well as technical issues surrounding the development, use, and impact of information systems used by managers and employees in the firm?

A) Information systems literacy B) Information systems architecture C) Business processes D) Information technology infrastructure E) Management information systems Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

63) Which field of study focuses on both a behavioral and technical understanding of information systems?

A) Sociology B) Operations research C) Economics D) Behavioral computing E) Management information systems Answer: E Difficulty: Moderate AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

20

64) Information technology (IT) consists of all hardware and software that a firm needs to use in order to achieve its business objectives.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

65) Computers and programs are the only things required to produce the information an organization needs.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

66) Information systems literacy focuses primarily on knowledge of information technology.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

67) The three main dimensions of information systems are management, organizations, and information technology.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

68) Knowledge workers make long-range strategic decisions about products and services.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

21

69) There are four major business functions: human resources; manufacturing and production; finance and accounting; and information technology.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

70) You need to know something about the hierarchy and culture of the company in order to understand how a specific business firm uses information systems.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

71) All business processes are formally documented by an organization.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

72) Creative work driven by new knowledge and information is a significant part of management responsibility.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

73) Intranets link different systems and networks within a firm.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

22

74) UPS's use of web-based tools that allow customers to embed UPS functions such as tracking and cost calculations into their own Web sites is an information systems solution used to achieve customer intimacy.

Answer: TRUE Difficulty: Challenging AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

75) There is little variation in returns on IT investment across firms.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

76) Laws and regulations creating fair, stable market environments are examples of complementary social assets required to optimize returns from IT investments.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

77) A firm that invests in a strong IS development team is making an investment in organizational complementary assets.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

78) Data is information that has been shaped into a form that is meaningful to human beings.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

23

79) Feedback is output returned to appropriate members of the organization to help them evaluate or correct the input stage.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

80) The key elements of an organization are its structure, business processes, politics, culture, and people.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

81) Middle managers make long-range strategic decisions about the firm's products and services.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

82) Detailed, programmed instructions that control computer hardware components in an information system are known as computer software.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

83) Define operational excellence. How can information systems help achieve it?

Answer: Operational excellence is the achievement of higher levels of productivity, efficiency, and profitability. Information systems can help achieve operational excellence by improving communications to suppliers and optimizing the supply chain. Information systems could help managers communicate with workers more efficiently, enable technological innovation in products, minimize warehouse overhead, and streamline distribution.

Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

24

84) You work for an auto manufacturer and distributor. How could you use information systems to achieve greater customer intimacy?

Answer: You could create a website that allows customers to customize cars, communicate with support personnel and other car owners. You could create an automated e-mail service reminding car owners to take their car in for periodic checkups. You could have an information system that tracks customer preferences in local areas, so you can provide cars that reflect local customer needs and desires.

Difficulty: Challenging AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

85) What is the difference between information technology and information systems? Describe some of the functions of information systems.

Answer: Information technology (IT) consists of all the hardware and software that a firm needs to use to achieve its business objectives. Information systems are more complex. An information system can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization.

An information system: • supports decision making, coordination, and control.

• helps employees analyze problems.

• helps employees visualize complex subjects.

• helps create new products.

Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

86) You are a marketing manager for a national movie theater chain. Give an example of data that your department could use for creating meaningful information. What type of information could that data produce?

Answer: Movie ticket sales from individual theaters would be an example of raw data.

Meaningful information from this would be: average number of tickets sold to seniors on certain days of the week.

Difficulty: Challenging AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

25

87) Define business process. What might be a business process used at a hospital?

Answer: A business process is a set of logically related tasks and behaviors for accomplishing work. Hiring a new employee, customer intake, and filing medical records are examples of business processes at a hospital.

Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

88) This chapter discusses how each organization has its own culture and sets of values shared by most of its members. What kind of shared values might you find at a law firm?

Answer: Shared values at a law firm might be: The legal system works, the legal system is fair, lawyers help people, and people need help with the legal system because it is complicated.

Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

89) You work at the business headquarters for a chain of movie theaters. Describe this firm's information value chain.

Answer: An information value chain adds value to data at various stages, transforming it into valuable data. At a chain of movie theaters, data would be gathered from ticket sales and concession sales. Information systems would help transform this into meaningful information, such as determining the types of movies popular in certain regions, times and days of the week that people most often saw movies, and what snacks were the most popular. This information would be valuable in making decisions, such as offering ticket discounts during less popular time slots and offering more popular snack items. Further feedback based on the results of these decisions could determine whether these decisions were effective.

Difficulty: Moderate AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

26

90) How does a company's use of information systems affect its corporate strategies? Provide an example.

Answer: A firm's ability to effectively use information technology is interdependent with its ability to implement corporate strategies and achieve corporate goals. More and more, the ability to compete and succeed depends on a company's ability to implement technology. What a business would like to do in the future can depend on what its systems will be able to do.

Examples of this might be a company who invests in information systems that enable it to create new products or to make its distribution system more efficient, allowing the company to become the low-cost producer.

Difficulty: Challenging AACSB: Analytical thinking LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

91) Why is the building of a house an appropriate analogy for the building of an information system?

Answer: Houses are built with hammers, nails, and wood, but these do not make a house. The architecture, design, setting, landscaping, and all of the decisions that lead to the creation of these features are part of the house and are crucial for solving the problem of putting a roof over one's head. Computers and programs are the hammer, nails, and lumber of computer-based information systems, but alone they cannot produce the information a particular organization needs. To understand information systems, you must understand the problems they are designed to solve, their architectural and design elements, and the organizational processes that lead to these solutions.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

92) What is the single most important theme of the book?

Answer: The single most important theme of the book is that managers need to consider the broader organization and management dimensions of information systems to understand current problems as well as to derive substantial above-average returns from information technology investments.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

27

93) What are complementary assets and how does investment in them impact returns on technology investments?

Answer: Complementary assets are those assets required to derive value from a primary investment. Research indicates that firms that support their technology investments with investments in complementary assets, such as new business models, new business processes, management behavior, organizational culture, or training, receive superior returns, whereas those firms failing to make these complementary investments receive less or no returns on their information technology investments.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 1-2: What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

94) Disciplines that contribute to the technical approach to information systems include: A) computer science, engineering, and networking.

B) operations research, management science, and computer science.

C) engineering, utilization management, and computer science.

D) management science, computer science, and engineering.

E) economics, sociology, and psychology.

Answer: B Difficulty: Challenging AACSB: Information technology LO: 1-3: What academic disciplines are used to study information systems and how does each contribute to an understanding of information systems?

95) Which of the following disciplines focuses on mathematical techniques for optimizing parameters of organizations, such as transportation and inventory control?

A) Management science B) MIS C) Computer science D) Utilization management E) Operations research Answer: E Difficulty: Challenging AACSB: Reflective thinking LO: 1-3: What academic disciplines are used to study information systems and how does each contribute to an understanding of information systems?

28

96) Sociologists study information systems with an eye to understanding: A) how systems affect individuals, groups, and organizations.

B) how human decision makers perceive and use formal information.

C) how new information systems change the control and cost structures within the firm.

D) the production of digital goods.

E) mathematically based models and physical technology.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 1-3: What academic disciplines are used to study information systems and how does each contribute to an understanding of information systems?

97) Psychologists study information systems with an eye to understanding: A) how systems affect individuals, groups, and organizations.

B) how human decision makers perceive and use formal information.

C) how new information systems change the control and cost structures within the firm.

D) the production of digital goods.

E) mathematically based models and physical technology.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 1-3: What academic disciplines are used to study information systems and how does each contribute to an understanding of information systems?

98) The behavioral approach to information systems focuses on analyzing the psychological, social, and economic impacts of systems rather than the technical aspects.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 1-3: What academic disciplines are used to study information systems and how does each contribute to an understanding of information systems?

99) Describe the sociotechnical view of management information systems.

Answer: In the sociotechnical view of management information systems, optimal organizational performance is achieved by jointly optimizing both the social and technical systems used in production. Adopting a sociotechnical system's perspective helps to avoid purely technological approach to information systems.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 1-3: What academic disciplines are used to study information systems and how does each contribute to an understanding of information systems?

29

100) Which academic disciplines contribute to the behavioral approach to information systems?

Answer: Sociologists study information systems with an eye toward how groups and organizations shape the development of systems and also how systems affect individuals, groups, and organizations. Psychologists study information systems with an interest in how human decision makers perceive and use formal information. Economists study information systems with an interest in understanding the production of digital goods, the dynamics of digital markets, and how new information systems change the control and cost structures within the firm.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 1-3: What academic disciplines are used to study information systems and how does each contribute to an understanding of information systems?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 2 Global E-business and Collaboration 1) Producing a bill of materials is a business process in which of the following functional areas?

A) Finance and accounting B) Human resources C) Manufacturing and production D) Research and development E) Sales and marketing Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 2-1: What are business processes? How are they related to information systems?

2) Which of the following is an example of a cross-functional business process?

A) Identifying customers B) Transporting the product C) Creating a new product D) Assembling a product E) Paying creditors Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 2-1: What are business processes? How are they related to information systems?

3) Order fulfillment involves all of the following business processes except: A) checking the customer's credit.

B) assembling the product.

C) submitting the order.

D) making customers aware of the product.

E) shipping the product.

Answer: D Difficulty: Moderate 30

AACSB: Reflective thinking LO: 2-1: What are business processes? How are they related to information systems?

4) The ________ function is responsible for identifying customers.

A) finance and accounting B) human resources C) manufacturing and production D) sales and marketing E) distribution and logistics Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 2-1: What are business processes? How are they related to information systems?

5) According to the chapter case, ABB decided to switch from its existing corporate intranet for all of the following reasons except: A) the intranet was too expensive to maintain.

B) the intranet was too static and outmoded to meet its current needs.

C) the intranet had poor capabilities for searching for information.

D) the intranet lacked collaboration tools.

E) the intranet was confusing and inefficient.

Answer: A Difficulty: Challenging AACSB: Reflective thinking LO: 2-1: What are business processes? How are they related to information systems?

6) Identifying customers is a business process handled by the human resources function.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 2-1: What are business processes? How are they related to information systems?

7) One example of a business process is shipping a product to a customer.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking LO: 2-1: What are business processes? How are they related to information systems?

8) What is the connection between organizations, information systems, and business processes?

Answer: Business processes refer to the manner in which work activities are organized, coordinated, and focused to produce a specific business result. They also represent unique ways in which organizations coordinate work, information, and knowledge and the ways in which management chooses to coordinate work. Managers need to pay attention to business processes because they determine how well the organization can execute, and thus are a potential source for strategic success or failures. Although each of the major business functions has its own set of business processes, many other business processes are cross functional. Information systems can help organizations achieve great efficiencies by automating parts of these processes or by 31

helping organizations rethink and streamline them. Firms can become more flexible and efficient by coordinating and integrating their business processes to improve management of resources and customer service.

Difficulty: Moderate AACSB: Analytical thinking LO: 2-1: What are business processes? How are they related to information systems?

32

9) What are cross-functional business processes? Give an example.

Answer: Cross-functional processes are those that require input, cooperation, or coordination between the major business functions in an organization. For instance, when a salesman takes an order, the major business functions of planning, production, inventory control, shipping, accounting, and customer relations will all be involved before the order is completed.

Difficulty: Moderate AACSB: Analytical thinking LO: 2-1: What are business processes? How are they related to information systems?

10) Your aunt has asked you for your suggestions to make her business, a local sandwich shop, more efficient. Describe at least three types of business processes that a sandwich shop has.

Can any be better coordinated through the use of information systems?

Answer: The business processes of a sandwich shop include: Taking orders, making sandwiches, selling to the customer, ordering supplies, opening the store, closing the store, cleaning the store, paying employees, hiring employees, paying creditors and vendors, creating financial statements, paying taxes, managing cash. Many of these processes could be helped by better information systems, specifically those that require recorded data, such as any financial processes (payments, cash management, taxes, salaries) and information gathered from and distributed to employees.

Difficulty: Moderate AACSB: Analytical thinking LO: 2-1: What are business processes? How are they related to information systems?

11) If your main supplier was late in delivering goods, which type of system would you use to update your production schedule?

A) ESS B) TPS C) MIS D) DSS E) BIS Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

33

12) You have been hired by a non-profit agency to implement a system to handle their donations. The system must be able to handle and record telephone, SMS, and Internet donations, provide up-to-the-minute reports, and create highly customizable mailing lists. In addition, event fundraisers need to be able to quickly access a donor's information and history.

Which of the following systems will best meet these needs?

A) TPS B) TPS with DSS capabilities C) TPS with MIS capabilities D) TPS with ESS capabilities E) DSS with MIS capabilities Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

13) To monitor the status of internal operations and the firm's relations with the external environment, managers need which of the following types of system?

A) DSS B) KWS C) TPS D) MIS E) BIS Answer: C Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

14) A(n) ________ is typically a major source of data for other systems.

A) TPS B) MIS C) ESS D) DSS E) KMS Answer: A Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

34

15) The term management information systems refers to a specific category of information systems serving: A) integrated data processing throughout the firm.

B) transaction process reporting.

C) employees with online access to historical records.

D) the information technology function.

E) middle management functions.

Answer: E Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

16) Which of the following would you use in order to determine which of your suppliers has the best and worst records for keeping to your production schedule?

A) MIS B) TPS C) UPS D) DSS E) CRM Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

17) A relocation control system that reports summaries on the total moving, house hunting, and home financing costs for employees in all company divisions falls into which of the following categories?

A) KMS B) TPS C) ESS D) MIS E) DSS Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

35

18) Non-typical business problems with causes and effects that are rapidly changing are typically handled by which of the following types of information system?

A) MIS B) TPS C) ESS D) DSS E) KMS Answer: D Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

19) Which of the following types of information systems are especially suited to situations in which the procedure for arriving at a solution may not be fully defined in advance?

A) MIS B) TPS C) DSS D) KMS E) RPS Answer: C Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

20) Which type of information system would you use to forecast the return on investment if your firm planned to switch to a new supplier that offered products at a lower cost?

A) ESS B) TPS C) MIS D) CRM E) DSS Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

36

21) Which level of the organization is an ESS specifically designed to serve?

A) Operational B) End-user C) Middle management D) Senior management E) Knowledge workers Answer: D Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

22) An ESS supports which of the following?

A) Long-range planning activities of senior management B) Knowledge and data workers in an organization C) Decision making and administrative activities of middle managers D) Day-to-day processes of production E) Transactional needs of the organization Answer: A Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

23) Which of the following systems would you expect to deliver integrated, personalized business content through a web-based interface?

A) TPS B) ESS C) MIS D) DSS E) SCM Answer: B Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

37

24) Which of the following would you use to forecast trends in your supplier's industry that could affect your firm over the next five years?

A) ESS B) TPS C) MIS D) DSS E) KMS Answer: A Difficulty: Easy AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

25) Which of the following is a highly structured decision?

A) Creating a new product B) Estimating the effect of changing costs of supply materials C) Calculating the best trucking routes for product delivery D) Granting credit to a customer E) Forecasting new industry trends Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

26) Using the Internet to buy or sell goods is called: A) e-commerce.

B) e-business.

C) an intranet.

D) an extranet.

E) e-government.

Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

38

27) All of the following are examples of business intelligence systems except a system that: A) summarizes and reports on a company's basic operations.

B) tracks the flows of materials in a factory.

C) focuses on problems that are unique and rapidly changing.

D) compares total annual sales figures for specific products to planned targets.

E) addresses nonroutine decisions.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

28) Which of the following types of systems typically use a digital dashboard to display an array of charts and graphs of a business's key performance indicators?

A) MIS B) TPS C) ESS D) CRM E) SCM Answer: C Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

29) What is the most important function of an enterprise application?

A) Increasing speed of communicating B) Enabling business functions and departments to share information C) Enabling a company to work collaboratively with customers and suppliers D) Enabling cost-effective e-business processes E) Enabling inventory and supply chain management Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

39

30) Which of the following systems is designed to support organization-wide process coordination and integration?

A) DSS B) MIS C) CRM D) Enterprise applications E) SCM Answer: D Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

31) A(n) ________ system collects data from various key business processes and stores the data in a single, comprehensive data repository, usable by other parts of the business.

A) transaction processing B) enterprise C) automatic reporting D) management information E) knowledge management Answer: B Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

32) The four major types of enterprise applications are: A) SCM, CRM, DSS, and KMS. B) SCM, CRM, ESS, and KMSs. C) ERP, SCM, DSS, and CRM. D) ERP, SCM, CRM, and KMS. E) TPS, MIS, DSS, and ESS. Answer: D Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

40

33) ________ systems are also known as enterprise systems.

A) Resource planning B) Enterprise resource planning C) Enterprise support D) Management information E) Decision-support Answer: B Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

34) Which of the following types of system enables management to make better decisions regarding organizing and scheduling sourcing, production, and distribution?

A) SCM B) TPS C) KMS D) ERP E) MIS Answer: A Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

35) Which type of system integrates supplier, manufacturer, distributor, and customer logistics processes?

A) Collaborative distribution system B) Supply chain management system C) Reverse logistics system D) Enterprise planning system E) Transaction processing system Answer: B Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

41

36) Which of the following types of system would you use to manage relationships with your customers?

A) CRM B) MIS C) CLE D) CLU E) KMS Answer: A Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

37) Which of the following would you use to consolidate the relevant knowledge and experience in the firm and make it available to improve business processes and management decision making?

A) TPS B) An extranet C) KMS D) CRM E) MIS Answer: C Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

38) You have been hired by BizCom, a business communications consultancy that services many clients in different industries throughout the United States, to help it improve its profit margin. BizCom provides customized recommendations for the best use of a client's existing resources for improving internal communications, typically delivered via documentation in different media. The company has approximately 50 consultants, all of whom are located in its central headquarters in Alexandria, Virginia. What type of system do you recommend that BizCom install to improve its business processes and increase its profit margin?

A) An extranet, to enable quick collaboration over the Internet, minimize the time spent communicating with the client, and minimize the amount of paperwork needed B) A CRM, to maintain easily accessible customer records to minimize the time spent looking for client data C) A KMS, for minimizing redundant work on similar clients D) A marketing system, for improving sales levels E) A TPS, to help manage all daily activities and transactions Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

42

39) You manage the IT department at a small startup Internet advertiser. You need to set up an inexpensive system that allows customers to see real-time statistics such as views and clickthroughs about their current banner ads. Which type of system will most efficiently provide a solution?

A) CRM B) Enterprise system C) Extranet D) Intranet E) MIS Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

40) Which of the following types of system helps coordinate the flow of information between the firm and its suppliers and customers?

A) Intranet B) Extranet C) KMS D) TPS E) DSS Answer: B Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

41) Using ________ to enable government relationships with citizens, businesses, and other arms of government is called e-government.

A) the Internet and networking technologies B) e-commerce C) e-business D) any computerized technology E) telecommunications Answer: A Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

43

42) In ________, digital technology and the Internet are used to execute the major business processes in the enterprise.

A) e-commerce B) e-business C) enterprise applications D) MIS E) SCM Answer: B Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

43) Which of the following statements about Plan International's new human resources system, as described in the chapter case, is not true?

A) It took six months to implement a working system at Plan International's international headquarters.

B) The new system helps manage grants and donations received by Plan International.

C) The new system is cloud-based and delivers information on a secure mobile platform.

D) The new system enables employees to update their own personal information.

E) The new system provides a bird's-eye view of the entire Plan workforce.

Answer: A Difficulty: Moderate AACSB: Analytical thinking; Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

44) Transaction-level information is essential for operational management to be able to direct the day-to-day operations of the business.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

45) Cross-functional systems are being phased out in favor of systems that support business processes within a single functional group, such as human resources.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

44

46) A DSS is most commonly used by the operations management level of an organization.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

47) You would use an MIS to help determine if your business should introduce a new product line.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

48) For nonroutine decision making, senior managers rely on management information systems.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

49) Most transaction processing systems use sophisticated mathematical models or statistical techniques.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

50) Managers can use DSS to make decisions about problems that are unusual and not easily specified in advance.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

51) A DSS uses internal information as well as information from external sources.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

45

52) An organization's MIS and DSS supply an ESS with summarized information.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

53) Operational managers use ESS primarily to solve specific problems.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

54) A web interface used to present integrated personalized business content to users is called a portal.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

55) Enterprise applications integrate information from multiple functions and business processes to enhance the performance of the organization as a whole.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

56) An SCM is considered to be an intraorganizational system because it manages information that flows between different companies.

Answer: FALSE Difficulty: Challenging AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

57) Supply chain management systems are more externally oriented than enterprise systems.

Answer: TRUE Difficulty: Challenging AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

46

58) A TPS is an information system that keeps track of all of the daily routine transactions of a business.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

59) An inventory control system is an example of an MIS. Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

60) The pet products chain you work for, Pets Galore, has noticed that one of its brands of dog food is not selling nearly as well as anticipated. What information systems of the business will you use to determine the reason for the poor sales? Discuss what information you will retrieve from which system. Which of the information systems will be most important for your analysis? Which of the systems will be least important?

Answer: You might query operational level TPS to make sure that the product is actually getting to the stores and being restocked. You could query MIS to see average sales levels according to geography, location, and other factors to see if there are any specific factors affecting the sales. You might query ESS to see if the same dog food is being sold by competitors and what these prices are. You might use DSS to see what factors could increase sales.

Assuming that the dog food is being properly stocked at the stores, the most important systems to query are the managerial-level systems: MIS for summaries of sales records to help pinpoint any other factors; ESS to check competition, and DSS for higher-level analysis to forecast possible solutions.

Difficulty: Challenging AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

47

61) Identify and discuss the major types of information systems that serve the main management groups within a business. What are the relationships among these systems?

Answer: The four major categories of information systems are: 1. Transaction processing systems, such as payroll or order processing, track the flow of the daily routine transactions that are necessary to conduct business.

2. Management information systems (MIS) provide the management control level with reports and access to the organization's current performance and historical records. Most MIS reports condense information from TPS and are not highly analytical.

3. Decision-support systems (DSS) support management decisions when these decisions are unique, rapidly changing, and not specified easily in advance. They have more advanced analytical models and data analysis capabilities than MIS and often draw on information from external as well as internal sources.

4. Executive support systems (ESS) support senior management by providing data of greatest importance to senior management decision makers, often in the form of graphs and charts delivered via portals. They have limited analytical capabilities but can draw on sophisticated graphics software and many sources of internal and external information.

The various types of systems in the organization exchange data with one another. TPS are a major source of data for other systems, especially MIS and DSS. ESSs primarily receive data from lower-level systems.

Difficulty: Moderate AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

62) Zoom Vacuum, a family-owned manufacturer of high-end vacuums, has grown exponentially over the last few years. However, the company is having difficulty preparing for future growth. The only information system used at Zoom is an antiquated accounting system.

The company has one manufacturing plant located in Iowa; and three warehouses, in Iowa, New Jersey, and Nevada. The Zoom sales force is national, and Zoom purchases about 25 percent of its vacuum parts and materials from a single overseas supplier. You have been hired to recommend the information systems Zoom should implement in order to maintain their competitive edge. However, there is not enough money for a full-blown, cross-functional enterprise application, and you will need to limit the first step to a single functional area or constituency. What will you choose, and why?

Answer: Student answers will vary. E.g. A TPS focusing on production and manufacturing to keep production costs low while maintaining quality, and for communicating with other possible vendors. The TPS would later be used to feed MIS and other higher level systems.

Difficulty: Moderate AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

48

63) Describe at least two benefits of using enterprise systems.

Answer: Enterprise systems integrate the firm's key business processes in sales, production, finance, logistics, and human resources into a single software system so that information can flow throughout the organization, improving coordination, efficiency, and decision making.

These systems help create a more uniform organization in which everyone uses similar processes and information, and measures their work in terms of organization-wide performance standards. The coordination of the firm's key business processes allows the firm to respond more rapidly to customer demands.

Difficulty: Easy AACSB: Analytical thinking LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

64) How have the technologies associated with e-business impacted government?

Answer: Governments on all levels are using Internet technology to deliver information and services to citizens, employees, and businesses with which they work. The term e-government refers to the application of the Internet and networking technologies to enable government and public sector agencies' relationships with citizens, businesses, and other arms of government digitally. In addition to improving delivery of government services, e-government can make government operations more efficient and empower citizens by giving them easier access to information and the ability to network digitally with other citizens. For example, citizens in some states can renew their driver's licenses or apply for unemployment benefits online, and the Internet has become a powerful tool for instantly mobilizing interest groups for political action and fund-raising.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

65) What is a digital dashboard, and why are they becoming an increasingly popular tool?

Answer: A digital dashboard displays graphical information and charts of key performance indicators on a single screen. They are becoming increasingly popular because they provide comprehensive and accurate information for decision making that helps managers quickly spot areas that need attention.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

49

66) How can a good CRM system increase profits for a company?

Answer: Customer relationship management uses information systems to coordinate all of the business processes surrounding the firm's interactions with its customers. The systems consolidate customer information from multiple sources - telephone, e-mail, wireless devices, traditional sales and marketing systems, and the web - so that the firm can obtain a unified view of a customer. Understanding the customer allows a firm to increase the effectiveness of their marketing campaigns.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication LO: 2-2: How do systems serve the different management groups in a business and how do systems that link the enterprise improve organizational performance?

67) SVF uses which of the following collaboration tools?

A) EMC Documentum eRoom B) IBM Notes C) Microsoft SharePoint Online D) Microsoft Yammer E) Salesforce Chatter Answer: C Difficulty: Moderate AACSB: Information technology LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

68) Which of the following is the greatest obstacle in enabling collaboration between employees at different, distant corporate locations?

A) Privacy B) Permissions C) Time zones D) Language E) Corporate culture Answer: C Difficulty: Moderate AACSB: Information technology LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

50

69) A(n) ________ social networking tool creates business value by connecting the members of an organization through profiles, updates, and notifications that are tailored to internal corporate uses.

A) cloud-based B) social-commerce C) collaborative D) remote, asynchronous E) enterprise Answer: E Difficulty: Moderate AACSB: Information technology LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

70) Which of the following statements about collaboration is not true?

A) In business, a collaboration can last as little as a few minutes.

B) Business collaboration relies on the formation of teams that are assigned a specific task or goal.

C) Successful collaboration can be achieved through technology regardless of the organization's culture or structure.

D) One business benefit of collaboration is improved innovation.

E) Businesses need special systems for collaboration.

Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

71) Which of the following tools would you use to evaluate and choose a collaboration tool for your organization?

A) Virtual meeting system B) Cloud collaboration C) IBM Notes D) The collaboration matrix E) The time/space collaboration and social tool matrix Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

51

72) Which of the following decisions requires knowledge based on collaboration and interaction?

A) How long will it take to manufacture this product?

B) Should we work with outside vendors on new products and services?

C) In which geographical locations are our products garnering the most sales?

D) Which product design is the most efficient for the user in terms of energy use?

E) How can we produce this product more cheaply?

Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

73) Which of the following is not a business benefit of collaboration?

A) Improved quality B) Improved financial performance C) Improved customer service D) Improved innovation E) Improved compliance with government regulations Answer: E Difficulty: Easy AACSB: Analytical thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

74) ________ allows you to communicate with avatars using text messaging.

A) A virtual world B) Screen sharing C) Collaborative writing D) A large audience Webinar E) Telepresence Answer: A Difficulty: Easy AACSB: Information technology LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

52

75) All of the following are reasons for the increased business focus on collaboration and teamwork, except for: A) the need for creating innovative products and services.

B) growth of "interaction" jobs.

C) greater global presence.

D) the need for more efficient work hierarchies.

E) the need to reduce communication costs.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

76) Which of the following statements regarding IBM Notes is not true?

A) It began as an e-mail and messaging client.

B) It is a widely used collaboration tool at larger firms.

C) It provides capabilities for wikis and microblogging.

D) It provides tools for full version control of all company documentation.

E) It is designed to provide security for sensitive corporate information.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

77) Which of the following is not one of the four main classifications for collaboration tools identified by the space/time matrix?

A) Synchronous/colocated B) Same time/remote C) Different time/remote D) Remote/colocated E) Same time/same place Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

53

78) ________ is a collaboration tool that supports remote (different place), synchronous (same time) collaboration.

A) Video conferencing B) E-mail C) A MUD D) A wall display E) A virtual world Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

79) According to the chapter case, which of the following statements about Cisco's IX5000 telepresence system is not true?

A) No special changes to a room are required to install the IX5000 system.

B) A six-seat IX500 system costs about $500,000.

C) The IX5000 system is able to capture an entire room in fine detail.

D) The IX5000 system needs only half the power, installation time, and data transmission capacity (bandwidth) as Cisco's previous telepresence systems.

E) Produban was the first company to deploy the IX5000 system.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

80) Production tasks are coordinated through the use of social networks in social business.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

81) A key word in social business is "conversations."

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

54

82) An example of a remote, synchronous collaboration tool is a Skype conference call using VOIP and webcams.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

83) Global firms can collaborate from different locations at the same time using synchronous collaboration tools.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

84) You have been hired to work with 8 employees from different branches of a national business to help create a web application to be used to train new sales employees. Identify six collaboration tools that are available to help the team work together. Which single tool would be the most helpful for the project, in your opinion, and why?

Answer: Collaboration tools include e-mail and instant messaging; social networking; wikis; virtual worlds, collaboration platforms such as virtual meeting systems, Google Apps/Google Sites. The most helpful of these might be a collaboration platform because it would enable people to have discussions, calendars, conferences, and share documents.

Difficulty: Moderate AACSB: Analytical thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

85) A website that allows citizens to file taxes online is a form of ________.

Answer: e-government Difficulty: Challenging AACSB: Analytical thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

55

86) You have been hired by an international architectural firm, with offices in Singapore, Paris, and Mumbai. The firm would like architects and draftspeople from different teams to be able to collaborate efficiently. How will you determine what the best collaboration tools are for their needs?

Answer: The first step in evaluation is to determine what the collaboration challenges are and to locate the firm in the time/space matrix. Secondly, for each block of the matrix that the firm is in, determine what solutions are available from which vendors. Third, analyze the products in terms of their costs and benefits to the firm. Next, identify any risks involved with using the product. Then, seek the help of potential users to identify implementation and training issues.

Finally, make a shortlist of tools and invite vendors to make presentations.

Difficulty: Challenging AACSB: Analytical thinking LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

87) How do collaborative business culture and business processes differ from "command-andcontrol" firms?

Answer: In command-and-control organizations, the top leaders determine all the really important matters and then order lower-level employees to execute senior management plans.

The job of middle management is to pass messages back and forth up and down the hierarchy.

Command-and-control firms require lower-level employees to carry out orders without asking too many questions, with no responsibility to improve processes, and with no rewards for teamwork or team performance. If workgroups need help from another work group, that is something for the bosses to figure out. Employees never communicate horizontally, always vertically, so management can control the process.

A collaborative business culture and business processes are very different. Senior managers are responsible for achieving results but rely on teams of employees to achieve and implement the results. Policies, products, designs, processes, and systems are much more dependent on teams at all levels of the organization to devise, to create, and to build. Teams are rewarded for their performance, and individuals are rewarded for their performance in a team. The function of middle managers is to build the teams, coordinate their work, and monitor their performance.

The business culture and business processes are more social. In a collaborative culture, senior management establishes collaboration and teamwork as vital to the organization, and it actually implements collaboration for the senior ranks of the business as well.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

56

88) Why are "conversations" relevant to social business?

Answer: Customers, suppliers, employees, managers, and even oversight agencies continually have conversations about firms, often without the knowledge of the firm or its key actors (employees and managers). Supporters of social business assert that if firms could tune into these conversations, they will strengthen their bonds with consumers, suppliers, and employees, increasing their emotional involvement in the firm.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 2-3: Why are systems for collaboration and social business so important, and what technologies do they use?

89) The principal liaison between the information systems groups and the rest of the organization is a(n): A) programmer.

B) information systems manager.

C) systems analyst.

D) CTO. E) CIO. Answer: C Difficulty: Easy AACSB: Information technology LO: 2-4: What is the role of the information systems function in a business?

90) A ________ is a senior manager who oversees the use of IT in the firm.

A) CEO B) CFO C) CIO D) CTO E) CKO Answer: C Difficulty: Easy AACSB: Information technology LO: 2-4: What is the role of the information systems function in a business?

91) An information systems manager: A) writes software instructions for computers.

B) acts as liaison between the information systems group and the rest of the organization.

C) translates business problems into information requirements.

D) manages data entry staff.

E) oversees the company's security policy.

Answer: D Difficulty: Challenging AACSB: Information technology LO: 2-4: What is the role of the information systems function in a business?

57

92) The ________ helps design programs and systems to find new sources of knowledge or to make better use of existing knowledge in organizational and management processes.

A) CTO B) CSO C) CKO D) CPO E) CEO Answer: C Difficulty: Easy AACSB: Information technology LO: 2-4: What is the role of the information systems function in a business?

93) Which of the following is a firm's CPO responsible for?

A) Ensuring that the company complies with existing data privacy laws B) Making better use of existing knowledge in organizational and management processes C) Enforcing the firm's information security policy D) Overseeing the use of information technology in the firm E) Acting as liaison between the information systems group and the rest of the company Answer: A Difficulty: Easy AACSB: Information technology LO: 2-4: What is the role of the information systems function in a business?

94) All of the following job categories are expected to grow over the next eight years except: A) computer support specialists.

B) software engineers.

C) systems analysts.

D) computer programmers.

E) database administrators.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 2-4: What is the role of the information systems function in a business?

95) Which of the following job categories is expected to experience the most growth over the next eight years?

A) Computer support specialists B) Software engineers C) Systems analysts D) Computer programmers E) Database administrators Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 2-4: What is the role of the information systems function in a business?

58

96) Which of the following statements is not true?

A) In 2016, the median wage for IT/MIS jobs is about $80,000.

B) In the next eight years to 2024, IS/MIS will add about 500,000 jobs.

C) Out of 114 occupations, MIS is ranked 15th in terms of salaries.

D) In general, the technical occupations in IT are showing faster expansion than occupations involved with the management of IT. E) The growth of online software services and cloud computing is impacting the job prospects for computer programmers.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 2-4: What is the role of the information systems function in a business?

97) The number of IS/MIS jobs is projected to grow 50% faster than the average job growth for the economy as a whole in the next eight years.

Answer: TRUE Difficulty: Challenging AACSB: Information technology LO: 2-4: What is the role of the information systems function in a business?

98) In 2016, the median wage for IT/MIS jobs is about twice the level for all occupations.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 2-4: What is the role of the information systems function in a business?

99) IT governance refers to the overall decision-making that guides the IT strategy of a firm.

Answer: TRUE Difficulty: Challenging AACSB: Information technology LO: 2-4: What is the role of the information systems function in a business?

100) Describe the role of IT governance within the firm.

Answer: IT governance is the management of how the information systems function is organized and handled within the firm. IT governance includes the strategy and policies for using information technology within an organization. It specifies the decision rights and framework for accountability to ensure that the use of information technology supports the organization's strategies and objectives. For example, IT governance decides how decisions implementing and evaluating new systems are made, whether the IT function should be decentralized or centralized, who has power to create and manage systems, and what kind of ROI is expected from systems.

Difficulty: Moderate AACSB: Analytical thinking LO: 2-4: What is the role of the information systems function in a business?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 3 Information Systems, Organizations, and Strategy 59

1) The interaction between information technology and organizations is influenced: A) solely by the decision making of middle and senior managers.

B) by the development of new information technologies.

C) by many factors, including structure, politics, culture, and environment.

D) by two main macroeconomic forces: capital and labor.

E) by the rate of growth of the organization.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

2) Which of the following statements about organizations is not true?

A) An organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs.

B) An organization is a formal, legal entity with internal rules and procedures that must abide by laws.

C) An organization is a collection of people and other social elements.

D) An informal group can be considered to be an organization.

E) An organization is a collection of rights, privileges, obligations, and responsibilities delicately balanced over a period of time through conflict and conflict resolution.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

3) According to the ________ definition of organizations, an organization is seen as a means by which capital and labor are transformed by the organization into outputs to the environment.

A) microeconomic B) macroeconomic C) sociotechnical D) behavioral E) psychological Answer: A Difficulty: Challenging AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

60

4) Which of the following statements about the technical view of organizations is not true?

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

B) It sees capital and labor as primary production factors.

C) It emphasizes group relationships, values and structures.

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

E) It sees the inputs and outputs, labor and capital, as being infinitely malleable.

Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

5) Which of the following is not a major feature of organizations that impacts the use of information systems?

A) Business processes B) Environments C) Goals D) Agency costs E) Leadership styles Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

6) Which of the following statements about business processes is not true?

A) Business processes influence the relationship between an organization and information technology.

B) Business processes are a collection of standard operating procedures.

C) A business firm is a collection of business processes.

D) Business processes are usually ensconced in an organization's culture.

E) Business processes are typically unaffected by changes in information systems.

Answer: E Difficulty: Challenging AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

61

7) Which of the following technologies disrupted the traditional publishing industry?

A) Instant messaging B) e-mail C) Internet telephony D) PCs E) World Wide Web Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

8) Under Mintzberg's classification of organizational structure, knowledge-based organizations fall under the category of: A) entrepreneurial structures.

B) divisionalized bureaucracies.

C) professional bureaucracies.

D) adhocracies.

E) machine bureaucracies.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

9) Mintzberg classifies a large bureaucracy existing in a slowly changing environment that produces standard products and is dominated by centralized management as a ________ bureaucracy.

A) machine B) professional C) divisionalized D) multidivisional E) ad hoc Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

62

10) Which of the following is an example of a divisionalized bureaucracy?

A) Startup firm B) University C) Fortune 500 firm D) Midsize manufacturer E) Consulting firm Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

11) Along with capital, ________ is the primary production input that the organization uses to create products and services.

A) structure B) culture C) politics D) feedback E) labor Answer: E Difficulty: Easy AACSB: Information technology LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

12) The divergent viewpoints about how resources, rewards, and punishments should be distributed, and the struggles resulting from these differences are known as organizational: A) culture.

B) politics.

C) structure.

D) environments.

E) routines.

Answer: B Difficulty: Easy AACSB: Information technology LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

63

13) Which of the following statements about disruptive technologies is not true?

A) Disruptive technologies radically change the business landscape and environment.

B) Disruptive technologies may be substitute products that perform better than other products currently being produced.

C) Disruptive technologies may sometimes simply extend the marketplace.

D) Disruptive technologies may put entire industries out of business.

E) Firms that invent disruptive technologies as first movers always become market leaders.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

14) As discussed in the chapter opening case, which of the following statements about Verizon is not true?

A) Verizon is focusing on satellite-based television in its competition with AT&T. B) Verizon claims that its wireless network is the largest and most reliable in the United States.

C) Verizon is investing in upgrading its high-speed networks.

D) Verizon sees mobile ads and video as an investment for the future.

E) Verizon offers a standalone video service.

Answer: A Difficulty: Challenging AACSB: Application of knowledge LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

15) All organizations have bedrock, unquestioned assumptions that define their goals and products.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

16) A professional bureaucracy is a knowledge-based organization where goods and services depend on the expertise and knowledge of professionals.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

64

17) Routines are also called standard operating procedures.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

18) How are the technical and behavioral definitions of an organization different?

Answer: The behavioral definition of an organization is that it is a collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution. The technical definition sees an organization as an entity that takes inputs from the environment and processes these to create products that are then consumed by the environment. The technical view sees capital and labor as interchangeable units, with the ability to rearrange these units at will, whereas the behavioral view sees that rearranging some aspects of the organization, such as an information system, will have important consequences and changes for the organization's other units.

Difficulty: Challenging AACSB: Analytical thinking LO: 3-1: Which features of organizations do managers need to know about to build and use information systems successfully?

19) When a firm buys on the marketplace what it cannot make itself, the costs incurred are referred to as: A) switching costs.

B) network costs.

C) procurement.

D) agency costs.

E) transaction costs.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 3-2: What is the impact of information systems on organizations?

20) All of the following statements are true about information technology's impact on business firms except: A) it helps firms expand in size.

B) it helps firms lower the cost of market participation.

C) it helps reduce internal management costs.

D) it helps reduce transaction costs.

E) it helps reduce agency costs.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 3-2: What is the impact of information systems on organizations?

65

21) According to agency theory, the firm is viewed as a(n): A) unified, profit-maximizing entity.

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

C) entrepreneurial endeavor.

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

E) entrepreneurial structure.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 3-2: What is the impact of information systems on organizations?

22) According to research on organizational resistance, the four components that must be changed in an organization in order to successfully implement a new information system are: A) environment, organization, structure, and tasks.

B) technology, people, culture, and structure.

C) organization, culture, management, and environment.

D) tasks, technology, people, and structure.

E) costs, tasks, structure, and management.

Answer: D Difficulty: Challenging AACSB: Information technology LO: 3-2: What is the impact of information systems on organizations?

23) List three organizational factors that can prevent a firm in fully realizing the benefits of a new information system, and provide examples for each.

Answer: Features of organizations include the organization's culture, politics, and structure. A new information system might be resisted by end users or by managers for political reasons because they are concerned about the political changes the system implies. For example, a new system might lessen the authority of a manager in overseeing the employees, and he or she may not want to relinquish this power. A new information system might challenge the organization's culture and be resisted for this reason. For example, an information system might allow students at a university to take self-managed courses, while the university's basic cultural assumptions include the concept that professors are the purveyors of knowledge. An information system, by allowing the distribution of knowledge, may be better used in a company with a flatter organization. A company with a highly stratified hierarchy may have difficulty adjusting its business processes and structures to an information system that does not follow the same business hierarchy of information.

Difficulty: Challenging AACSB: Analytical thinking LO: 3-2: What is the impact of information systems on organizations?

66

24) What is agency theory? How does information technology enable a firm to reduce agency costs?

Answer: According to agency theory, the firm is viewed as a "nexus of contracts" among selfinterested individuals rather than as a unified, profit-maximizing entity. A principal (owner) employs "agents" (employees) to perform work on his or her behalf. However, agents need constant supervision and management; otherwise, they will tend to pursue their own interests rather than those of the owners. As firms grow in size and scope, agency costs or coordination costs rise because owners must expend more and more effort supervising and managing employees. Information technology, by reducing the costs of acquiring and analyzing information, permits organizations to reduce agency costs because it becomes easier for managers to oversee a greater number of employees. By reducing overall management costs, information technology enables firms to increase revenues while shrinking the number of middle managers and clerical workers.

Difficulty: Challenging AACSB: Application of knowledge; Information technology; Written and oral communication LO: 3-2: What is the impact of information systems on organizations?

25) Which model is used to describe the interaction of external forces that affect an organization's strategy and ability to compete?

A) Network economics model B) Competitive forces model C) Competitive advantage model D) Demand control model E) Agency costs model Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

26) Which of the following industries has the lowest barrier to entry?

A) Automotive B) Computer chip C) Solar energy D) Airline E) Small retailer Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

67

27) All of the following are competitive forces in Porter's model except: A) suppliers.

B) new market entrants.

C) external environment.

D) customers.

E) substitute products.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

28) Which of the following marketplace forces would be of least concern to a manufacturer of deep-sea oil rigs?

A) Product differentiation B) Traditional competitors C) Low number of suppliers D) New market entrants E) Low number of customers Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

29) Which of the following substitute products would be of most concern for a cable TV distributor?

A) Satellite TV B) Broadcast TV C) Satellite radio D) The Internet E) Terrestrial radio Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

68

30) Walmart's attempt to increase its online presence is an example of a firm using information systems to: A) strengthen ties to its customers.

B) simplify the industry value chain.

C) develop synergies.

D) focus on market niche.

E) achieve low-cost leadership.

Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

31) A firm can exercise greater control over its suppliers by having: A) more suppliers.

B) fewer suppliers.

C) global suppliers.

D) local suppliers.

E) only a single supplier.

Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

32) Amazon's use of the Internet as a platform to sell books more efficiently than traditional bookstores illustrates which of the following strategies?

A) Low-cost leadership B) Marketing effectiveness C) Focusing on market niche D) Strengthening supplier intimacy E) Developing synergies Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

69

33) The four major competitive strategies are: A) low-cost leadership, substitute products and services, customers; and suppliers.

B) low-cost leadership, product differentiation, focus on market niche, and customer and supplier intimacy.

C) new market entrants, substitute products and services, customers, and suppliers.

D) low-cost leadership, new market entrants, product differentiation, and focus on market niche.

E) customers, suppliers, new market entrants, and substitute products.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

34) Walmart's continuous replenishment system allows it to do all of the following except: A) provide mass customization.

B) transmit orders to restock directly to its suppliers.

C) keep costs low.

D) better meet customer demands.

E) fine-tune merchandise availability.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

35) Firms use a ________ strategy to provide a specialized product or service for a narrow target market better than competitors.

A) product differentiation B) market niche C) mass customization D) process efficiency E) low-cost leadership Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

70

36) The ability to offer individually tailored products or services using the same production resources as bulk production is known as: A) mass marketing.

B) micromarketing.

C) micro customization.

D) niche customization.

E) mass customization.

Answer: E Difficulty: Easy AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

37) In environmental scanning, a firm may use information systems to: A) transform inputs into products and services.

B) analyze the performance of its intranet.

C) identify external events that may affect it.

D) keep track of the temperature within its data centers.

E) develop a unified organizational culture.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

38) Which of the following is not a true statement about value webs?

A) Value webs involve a collection of independent firms that use information technology to coordinate their value chains.

B) Value webs are more customer-driven than traditional value chains.

C) Value webs operate in a less linear fashion than traditional value chains.

D) Value webs are inflexible and cannot adapt quickly to changes in supply and demand.

E) Value webs involve highly synchronized industry value chains.

Answer: D Difficulty: Challenging AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

71

39) Which of the following best illustrates the use of information systems to focus on market niche?

A) A car manufacturer's Web site that lets you customize the features on the car you are purchasing.

B) A restaurant chain analyzing local sales figures to determine which menu items to serve.

C) A bookseller selling an e-book reader that reads only the bookseller's books.

D) A department store creating specialized products for preferred customers.

E) A clothes manufacturer expanding its offerings to new styles.

Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

40) All of the following are IT-enabled products and services providing competitive advantage except: A) Amazon's one-click shopping.

B) Apple's iPod and iTunes.

C) Ping's golf club customization.

D) PayPal's online person-to-person payment system.

E) Nike's use of celebrities to market their products.

Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

41) The Internet increases the bargaining power of customers by: A) creating new opportunities for building loyal customer bases.

B) making more products available.

C) making information available to everyone.

D) lowering transaction costs.

E) enabling the development of new services.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

72

42) Procter and Gamble uses InnovationNet for which of the following?

A) To enhance its core competencies B) To benchmark its progress against competitors C) To create synergies with its suppliers D) To take advantage of network economics E) To establish a virtual company Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

43) Which of the following is a competitive force challenging the publishing industry?

A) Positioning and rivalry among competitors B) Low cost of entry C) Substitute products or services D) Customers' bargaining power E) Suppliers' bargaining power Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

44) The value chain model: A) categorizes five related advantages for adding value to a firm's products or services.

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

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

D) highlights specific activities in the business where competitive strategies can best be applied.

E) enables more effective product differentiation.

Answer: D Difficulty: Easy AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

73

45) Which of the following represent the primary activities of a firm?

A) Inbound logistics, operations, outbound logistics, sales and marketing, and service B) Inbound logistics, operations, outbound logistics, technology, and service C) Procurement, inbound logistics, operations, technology, and outbound logistics D) Procurement, operations, technology, sales and marketing, and services E) Organization infrastructure, human resources, technology, and procurement Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

46) Which of the following is a support activity in a firm's value chain?

A) Inbound logistics B) Operations C) Sales and marketing D) Service E) Technology Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

47) Which of the following would a company employ to measure and compare its business processes to similar processes of other companies within their industry?

A) Benchmarking B) Best practices C) Value chain analysis D) Strategic systems analysis E) Secondary activities Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

74

48) The most successful solutions or methods for achieving a business objective are called: A) value activities.

B) best processes.

C) core competencies.

D) best practices.

E) benchmarks.

Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

49) Information systems can be used at the industry level to achieve strategic advantage by: A) building industrywide, IT-supported consortia and symposia.

B) raising the bargaining power of suppliers.

C) encouraging the entry of new competitors.

D) enforcing standards that reduce the differences between competitors.

E) decreasing switching costs.

Answer: A Difficulty: Easy AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

50) In network economics, the value of a commercial software vendor's software products: A) increases as more people use them.

B) decreases as more people use them.

C) increases due to higher marginal gain in output.

D) decreases according to the law of diminishing returns.

E) is unrelated to the number of people that use them.

Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

75

51) When two organizations pool markets and expertise that result in lower costs and generate profits, they are creating: A) a value web.

B) a value chain.

C) net marketplaces.

D) core competencies.

E) synergies.

Answer: E Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

52) Which of the following is an example of synergy in business?

A) Amazon's use of the Internet to sell books B) Bank of America acquiring Countrywide Financial to reach a large pool of new customers C) Blockbuster combining traditional video rental with online video rental D) Walmart's order entry and inventory management system to coordinate with suppliers E) Nike's use of technology to improve its product offerings Answer: B Difficulty: Easy AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

53) Information systems enhance core competencies by: A) providing better reporting facilities.

B) creating educational opportunities for management.

C) allowing operational employees to interact with management.

D) encouraging the sharing of knowledge across business units.

E) fostering synergies among departments.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

76

54) The idea that the more any given resource is applied to production, the lower the marginal gain in output, until a point is reached where the additional inputs produce no additional output, is referred to as: A) the point of no return.

B) the law of diminishing returns.

C) supply and demand.

D) network inelasticity.

E) virtual economics.

Answer: B Difficulty: Easy AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

55) Which of the following statements about network economics is not true?

A) Uber is an example of a business model that is based on the principle of network economics.

B) The law of diminishing returns does not always apply to every situation.

C) From a network economics perspective, the value of a community of people grows as the number of participants in the community increases.

D) Information technology can be strategically useful from a network economics perspective.

E) In network economics, the marginal cost of adding new members to the network is higher than the marginal gain.

Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

56) A virtual company: A) uses networks to link people, assets, and ideas.

B) uses Internet technology to maintain a virtual storefront.

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

D) provides entirely Internet-driven services or virtual products.

E) is limited by traditional organizational boundaries.

Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

77

57) Which of the following is an example of a keystone firm within a business ecosystem?

A) Apple in the mobile platform ecosystem B) GUESS and the fashion ecosystem C) Citibank and the ATM ecosystem D) American Airlines and the computerized reservation ecosystem E) Nike and the athletic apparel ecosystem Answer: A Difficulty: Easy AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

58) ________ is a competitive strategy for creating brand loyalty by developing new and unique products and services that are not easily duplicated by competitors.

A) Product differentiation B) Low-cost leadership C) Focusing on market niche D) Strengthening customer intimacy E) Strengthening supplier intimacy Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

59) The expenses incurred by a customer or company in lost time and resources when changing from one supplier or system to a competing supplier or system are known as: A) retention costs.

B) preservation costs.

C) differentiation costs.

D) switching costs.

E) variation costs.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

78

60) The ________ model highlights the primary or support activities that add a margin of value to a firm's products or services where information systems can best be applied to achieve a competitive advantage.

A) competitive forces B) value chain C) bargaining power D) new entrant E) rivalry Answer: B Difficulty: Moderate AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

61) The parts of an organization's infrastructure, human resources, technology, and procurement that make the delivery of the firm's products or services possible are known as ________ activities.

A) primary B) auxiliary C) secondary D) service E) support Answer: E Difficulty: Moderate AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

62) A(n) ________ is a collection of independent firms that use information technology to coordinate their value chains to collectively produce a product or service for a market.

A) value chain B) support web C) value web D) consortium E) net marketplace Answer: C Difficulty: Challenging AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

79

63) A(n) ________ is an activity for which a firm is a world-class leader.

A) expertise area B) competitive advantage C) growth driver D) efficiency E) core competency Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

64) Why does Amazon need to worry about competitors in online shopping?

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

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

C) Internet shopping produces cost transparency.

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

E) The Internet increases switching costs.

Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

65) Smart products are an example of the Internet of Things.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

66) A company's competitive advantages ultimately translate into higher stock market valuations than its competitors.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

80

67) The competitive forces model cannot be used to analyze modern digital firms which face new competitive forces that are not true of traditional firms.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

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

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

69) High product differentiation is a sign of a transparent marketplace.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

70) The effect of the Internet has been to decrease the bargaining power of customers.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

71) An efficient customer response system directly links consumer behavior to distribution and production and supply chains.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

81

72) Information systems are used to enable new products and services via product differentiation.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

73) Mass customization offers individually tailored products or services using the same resources as mass production.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

74) Switching costs decrease when customers are strongly linked to products and platforms.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

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

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

76) In the value chain model, support activities are most directly related to the production and distribution of the firm's products and services, which create value for the customer.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

82

77) When the output of some units in a firm can be used as inputs to other units, synergies develop, which can lower costs and generate profits.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

78) According to the network economics perspective, the more people offering products on eBay's site, the greater the value of the site to all who use it.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

79) The term business ecosystem describes the loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

80) A firm can be said to have competitive advantage when it has access to resources that others do not.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

81) The law of diminishing returns only applies to digital products.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

83

82) The inventors of a disruptive technology typically benefit the most from the technology; it is rare that fast followers catch up quickly.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

83) Smart products generally raise switching costs.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

84) Mintzberg's classification identifies five forces in an industry's environment that affect the strategic position of a firm.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

84

85) You are advising the owner of ABC Computers, a small local computer shop that repairs and also builds custom computers to order. What competitive strategies could ABC Computers employ? Which ones may it have difficulty executing?

Answer: Low-cost leadership: ABC Computers may have difficulty competing against the computer sales and warranty services of major national computer manufacturers, such as Dell, but may be able to implement low-cost leadership in comparison to any other local computer stores.

Product differentiation: Although many national computer manufacturers sell customized computers for individuals, ABC Computers may be able to differentiate its product by using superior components and adding more services to its product.

Focus on market niche: ABC Computers could focus on a being a local store with in-store technology support and assistance as a market niche.

Customer and supplier intimacy: ABC Computers has an advantage in customer intimacy, in that it can develop relationships with local customers on a face-to-face basis. This advantage could be augmented to offset the low-cost leadership of national manufacturers, such as Dell.

Because of much smaller production scales, ABC Computers will probably not be able to exercise as much control over suppliers as does Dell or other manufacturers.

Difficulty: Challenging AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

86) You are consulting with the owner of Better Fitness, a national chain of gyms. What strategies might Better Fitness use in applying information services to achieve a competitive advantage?

Answer: Better Fitness could use computers, smart products and mobile apps to monitor and evaluate health and fitness of members and customize workouts in product differentiation strategy. They could use information systems for sales and marketing data research in order to define a niche market that would bring greater profits. They could allow customers to review their health data and add additional information or view statistics to create customer intimacy.

If the individual gyms are franchises, then a network could be used for franchisees to share data and research new sales tactics, etc.

Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

85

87) The text describes Michael Porter's view of the Internet as somewhat negative. What negative influences does Porter see? Describe several positive influences the Internet has on business. Do these outweigh the negative influences?

Answer: Answers will vary. An example of a possible answer is: Porter sees the Internet as creating ever more intense rivalry, through allowing new competitors to enter the market, and forcing competition on price alone, raising the bargaining power of customers, and dampening profits.

Positive influences of the Internet would be lowering telecommunications costs, creating new opportunities for building brands and loyal customer bases, lowering costs of globalization.

You could also view Porter's negative take on lowering the barrier to entry as a positive for new companies.

The Internet's influence being negative or positive depends in part on the point of view from which the influence is being seen. For example, a telephone utility is impacted negatively by the emergence of Internet telephony, whereas other industries may be impacted positively either through the use of this technology or through engaging in Internet telephony as a business.

Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

88) Value chain analysis is useful at the business level to highlight specific activities in the business where information systems are most likely to have a strategic impact. Discuss this model, identify the activities, and describe how the model can be applied to the concept of information technology.

Answer: The value chain model identifies specific, critical leverage points where a firm can use information technology most effectively to enhance its competitive positions. Exactly where can it obtain the greatest benefit from strategic information systems? What specific activities can be used to create new products and services, enhance market penetration, lock in customers and suppliers, and lower operational costs? This model views the firm as a series or chain of basic activities that add a margin of value to a firm's products or services. These activities can be categorized as either primary activities or support activities.

• Primary activities are most directly related to the production and distribution of the firm's products and services that create value for the customer. Primary activities include: inbound logistics, operations, outbound logistics, sales and marketing, and service.

• Support activities make the delivery of the primary activities possible and consist of: organization infrastructure (administration and management), human resources (employee recruiting, hiring, and training), technology (improving products and the production process), and procurement (purchasing input).

Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

86

89) How is the concept of core competency relevant to ABC Computers, a local computer store that repairs and builds custom computers? Give examples.

Answer: A core competency is an activity for which a company is a world leader, and from this perspective, ABC Computers does not have a core competency, as there are thousands of similar firms with longer track records. However, it might be good business practice for ABC Computers to define its core competencies in ways that differentiate its products from those of competitors and enable it to provide superior service or products. In defining a core competency, the business management can then determine ways to enable employees to understand and reach higher levels of quality production and service. For example, ABC Computers might define a core competency as being able to advise customers as to the types of system they really need, and ABC Computers could engage in knowledge gathering activities to help employees assess customer need.

Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

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

Answer: In network economics, the cost of adding a participant in the network is negligible, while the gain in value is relatively much larger. The Internet itself is an example of a successful implementation of network economics—the more people participate, the more valuable and essential a commodity it is. If a company were to provide a service through the Internet such as a project management application, the costs to the company of adding another user are small (as the software infrastructure or application is already built), and the more users are signed up, the more profit is made.

Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

87

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

Answer: A business ecosystem is a collection of loosely coupled but interdependent industries (suppliers, distributors, technology manufacturers, etc.) that provides related services and products. It is similar to a value web, except that cooperation takes place across many industries rather than many firms.

Business ecosystems can be characterized as having one or a few keystone firms that dominate the ecosystem and create the platforms used by other niche firms. Keystone firms in the Microsoft ecosystem include Microsoft and technology producers such as Intel and IBM. Niche firms include thousands of software application firms, software developers, service firms, networking firms, and consulting firms that both support and rely on the Microsoft products.

Another example of a business ecosystem is the mobile Internet platform. In this ecosystem there are four industries: device makers (Apple iPhone, Samsung, Motorola, LG, and others), wireless telecommunication firms (AT&T, Verizon, T-Mobile, Sprint, and others), independent software applications providers (generally small firms selling games, applications, and ring tones), and Internet service providers (who participate as providers of Internet service to the mobile platform).

Difficulty: Moderate AACSB: Analytical thinking LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

92) Select a popular product or company that you are familiar with, such as Apple's iPad. Apply Porter's competitive forces model to that product and/or company. Which of the four generic strategies is the company using?

Answer: Student answers will vary. One example answer using Apple's iPad is: • Competitors to the iPad include the Microsoft Surface and many others, but few as widely known.

• New market entrants: There is not a huge barrier to entry in this field; many other technology companies offer tablet computers.

• Substitute products and services: Smartphones are a substitute product or service.

• Customers: The iPad still has the highest brand recognition among consumers, diminishing the bargaining power of customers. However, this advantage has diminished as other similar products that are as well designed enter the marketplace.

In terms of the iPad, Apple seems to be focused on product differentiation by creating a product with unique features and capabilities.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

88

93) Why are disruptive technologies "tricky"? Provide examples.

Answer: Disruptive technologies can be tricky because firms that invent disruptive technologies as first movers do not always benefit if they lack the resources to exploit the technology or fail to see the opportunity. For example, the MITS Altair 8800 is widely regarded as the first PC, but its inventors did not take advantage of their first-mover status. Second movers, so-called fast followers such as IBM and Microsoft, reaped the rewards. Citibank's ATMs revolutionized retail banking, but other banks copied them. Now all banks use ATMs, and the benefits go mostly to the consumers.

Difficulty: Challenging AACSB: Application of knowledge; Information technology; Written and oral communication LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

94) Why has the Internet made competitive rivalry more intense?

Answer: The Internet has made competitive rivalry more intense because Internet technology is based on universal standards that any company can use, making it easier for rivals to compete on price alone and for new competitors to enter the market. Because information is available to everyone, the Internet also raises the bargaining power of customers, who can quickly find the lowest-cost provider on the web, which may dampen profits. The Internet also widens the geographic market, increasing the number of competitors and reducing differences among competitors, and makes it more difficult to sustain operational advantages.

Difficulty: Challenging AACSB: Application of knowledge; Information technology; Written and oral communication LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems?

95) You are consulting for a natural food products distributor who is interested in determining the benefits it could achieve from implementing new information systems. What will you advise as the first step?

A) Identify the business ecosystem the distributor is in B) Implement a strategic transition to the new system C) Perform a strategic systems analysis D) Benchmark existing systems E) Set up a strategic transition Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 3-4: What are the challenges posed by strategic information systems and how should they be addressed?

89

96) Sociotechnical changes affecting a firm adopting new information systems requiring organizational change can be considered: A) organizational adjustments.

B) strategic transitions.

C) systems alterations.

D) business goal transitions.

E) sociotechnical transitions.

Answer: B Difficulty: Challenging AACSB: Information technology LO: 3-4: What are the challenges posed by strategic information systems and how should they be addressed?

97) Research has shown that a majority of firms are able to align their information technology with their business goals.

Answer: FALSE Difficulty: Challenging AACSB: Reflective thinking LO: 3-4: What are the challenges posed by strategic information systems and how should they be addressed?

98) The use of Internet technologies allows companies to more easily sustain competitive advantage.

Answer: FALSE Difficulty: Challenging AACSB: Information technology LO: 3-4: What are the challenges posed by strategic information systems and how should they be addressed?

99) What are the major factors to consider when performing a strategic systems analysis?

Answer: One major factor is the structure of the industry the firm is in. For example, what competitive forces are at work in the industry, and what is the basis for competition? What is the nature and direction of change in the industry, and how does the industry use IT? A second major factor is determining the firm and industry value chains. For example, how is the company creating value for the customer? Are best practices being used and core competencies leveraged? Is the industry supply chain or customer base changing, and what will the effect be? Can the firm benefit from strategic partnerships or value webs? And where in the value chain will information systems provide the greatest value to the firm?

The third major factor to consider is has the firm aligned IT with its business strategy and goals. Have these goals been correctly stated or defined? Is IT improving the right business processes and activities in accordance with the firm's goals? Are we using the right metrics to measure progress?

Difficulty: Challenging AACSB: Analytical thinking LO: 3-4: What are the challenges posed by strategic information systems and how should they be addressed?

90

100) Research has shown that the more successfully a firm can align its IT with its business goals, the more profitable it will be. What practical steps should a firm use in aligning IT with its goals?

Answer: Steps to align IT with your organization's goals include: identifying your business strategy and goals and breaking these goals into concrete activities and processes; identifying how you measure progress toward these goals; determining how IT can help achieve these goals and improve business processes and activities; and measuring the actual performance of the business.

Difficulty: Challenging AACSB: Application of knowledge; Information technology; Written and oral communication LO: 3-4: What are the challenges posed by strategic information systems and how should they be addressed?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 4 Ethical and Social Issues in Information Systems 1) Which of the following best describes how new information systems can result in legal gray areas?

A) They work with networked, digital data, which are more difficult to control than information stored manually.

B) They result in new situations that are not covered by old laws.

C) They are implemented by technicians rather than managers.

D) They are created from sets of logical and technological rules rather than social or organizational mores.

E) They are little understood by politicians or lawyers.

Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-1: What ethical, social, and political issues are raised by information systems?

2) Which of the following best describes the effect that new information technology has on society?

A) It has a dampening effect on the discourse of business ethics.

B) It has a ripple effect, raising new ethical, social, and political issues.

C) It is beneficial for society as a whole, while raising dilemmas for consumers.

D) It has a waterfall effect in raising ever more complex ethical issues.

E) It has a magnifying effect, creating increasing numbers of ethical issues.

Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-1: What ethical, social, and political issues are raised by information systems?

3) The obligations that individuals and organizations have concerning rights to intellectual property involve which of the following moral dimensions of the information age?

A) Property rights and obligations B) System quality C) Accountability and control 91

D) Information rights and obligations E) Quality of life Answer: A Difficulty: Easy AACSB: Ethical understanding and reasoning LO: 4-1: What ethical, social, and political issues are raised by information systems?

92

4) The obligations that individuals and organizations have regarding the preservation of existing values and institutions fall within which of the following moral dimensions of the information age?

A) Family and home B) Property rights and obligations C) System quality D) Accountability and control E) Quality of life Answer: E Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-1: What ethical, social, and political issues are raised by information systems?

5) Which of the following is not one of the current key technology trends that raises ethical issues?

A) Data storage improvements B) Data analysis advancements C) Increase in data quality D) Increase in use of mobile devices E) Advances in networking technology Answer: C Difficulty: Easy AACSB: Ethical understanding and reasoning LO: 4-1: What ethical, social, and political issues are raised by information systems?

6) Which of the five moral dimensions of the information age do the central business activities of DoubleClick involve?

A) Property rights and obligations B) System quality C) Accountability and control D) Quality of life E) Information rights and obligations Answer: E Difficulty: Challenging AACSB: Ethical understanding and reasoning LO: 4-1: What ethical, social, and political issues are raised by information systems?

93

7) The use of computers to assemble data from different sources to create digital dossiers of detailed information about individuals is known as which of the following?

A) Profiling B) Phishing C) Spamming D) Targeting E) Spyware Answer: A Difficulty: Easy AACSB: Information technology LO: 4-1: What ethical, social, and political issues are raised by information systems?

8) Which of the following is a data analysis technology that finds hidden connections between data in disparate sources?

A) HIPAA B) FIP C) NORA D) COPPA E) Spyware Answer: C Difficulty: Easy AACSB: Information technology LO: 4-1: What ethical, social, and political issues are raised by information systems?

9) Which of the following is not an example of the potential dark side of big data?

A) Police visits to individuals whom a computer system identified as likely to commit a crime in the future.

B) Use of a device installed in a car to analyze driving habits.

C) Use of a predictive modeling system that predicts life expectancy by using data about individual consumers' buying habits as well as personal and family medical histories.

D) Use of computerized systems to filter and hire job applicants.

E) Analyzing data from sensors installed in local parks to monitor soil moisture.

Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 4-1: What ethical, social, and political issues are raised by information systems?

10) Routine violations of individual privacy are made more difficult by advances in data storage.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 4-1: What ethical, social, and political issues are raised by information systems?

94

11) In today's legal environment, managers who are convicted for the misuse of information systems are still unlikely to be given a prison sentence.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 4-1: What ethical, social, and political issues are raised by information systems?

12) Ethics describes the principles of right and wrong that can be used by individuals to make choices to guide their behavior.

Answer: TRUE Difficulty: Easy AACSB: Ethical understanding and reasoning LO: 4-1: What ethical, social, and political issues are raised by information systems?

13) Identify the five moral dimensions that are involved in political, social, and ethical issues and briefly describe each. Of these, which do you think is the most difficult for society to deal with? Support your opinion.

Answer: The five moral dimensions are: (1) Information rights and obligations. What rights do individuals and organizations have with respect to information pertaining to them?

(2) Property rights and obligations. How can intellectual property rights be protected when it is so easy to copy digital materials?

(3) Accountability and control. Who will be held accountable and liable for the harm done to individual and collective information and property rights?

(4) System quality. What standards of data and system quality should we demand to protect individual rights and the safety of society?

(5) Quality of life. What values should be preserved? What institutions must we protect? What cultural values can be harmed?

Individual answers for determining the most difficult for society to deal with will vary. One answer might be: Quality of life issues will be most difficult for society to deal with in societies that are comprised of many different cultural and ethnic groups, such as the United States. It is difficult to regulate concerns that are based on subjective values.

Difficulty: Moderate AACSB: Written and oral communication LO: 4-1: What ethical, social, and political issues are raised by information systems?

95

14) Describe three technology trends that pose ethical issues, giving an example for each of its ethical or moral impact.

Answer: Key technology trends include the following: (1) Computer power doubling every 18 months: ethical impact—because more organizations depend on computer systems for critical operations, these systems are vulnerable to computer crime and computer abuse; (2) Data storage costs are rapidly declining: ethical impact—it is easy to maintain detailed databases on individuals—who has access to and control of these databases?; (3) Data analysis advances: ethical impact—vast databases full of individual information may be used to develop detailed profiles of individual behavior; (4) Networking advances and the Internet: ethical impact—it is easy to copy data from one location to another. Who owns data? How can ownership be protected?; (5) Mobile device growth impact: ethical impact—individual cell phones may be tracked without user consent or knowledge.

Difficulty: Moderate AACSB: Written and oral communication LO: 4-1: What ethical, social, and political issues are raised by information systems?

15) What is NORA and how does it work?

Answer: NORA stands for nonobvious relationship awareness. NORA has given both the government and the private sector even more powerful profiling capabilities. NORA can take information about people from many disparate sources, such as employment applications, telephone records, customer listings, and wanted lists, and correlate relationships to find obscure connections that might help identify criminals or terrorists. NORA technology scans data and extracts information as the data are being generated so that it could, for example, instantly discover a man at an airline ticket counter who shares a phone number with a known terrorist before that person boards an airplane. The technology is considered a valuable tool for homeland security but does have privacy implications because it can provide such a detailed picture of the activities and associations of a single individual.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 4-1: What ethical, social, and political issues are raised by information systems?

16) ________ means that you accept the potential costs and obligations for the decisions you make.

A) Responsibility B) Accountability C) Liability D) Due process E) Duty Answer: A Difficulty: Easy AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

96

17) ________ is a feature of social institutions that means mechanisms are in place to determine responsibility for an action.

A) Due process B) Accountability C) The courts of appeal D) The judicial system E) Liability Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

18) ________ is a feature of law-governed society and involves having laws that are known and understood, along with the ability to appeal to higher authorities to ensure that the laws are applied correctly.

A) Liability B) Due process C) Responsibility D) Accountability E) The judicial system Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

19) All of the following are steps in the process for analyzing an ethical issue except: A) assigning responsibility.

B) identifying the stakeholders.

C) identifying the options you can reasonably take.

D) identifying and clearly describing the facts.

E) identifying the potential consequences of your options.

Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

97

20) A colleague at work takes small amounts of office supplies for her own personal use, saying that this is a tiny loss to the company. You tell her that if everyone were to take office supplies, then the loss would no longer be minimal. Your rationale expresses which of the following ethical principles?

A) Kant's Categorical Imperative B) The Golden Rule C) The Risk Aversion Principle D) The "No free lunch" rule E) The slippery-slope rule Answer: A Difficulty: Challenging AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

21) A man steals from a grocery store in order to feed his starving family. Which of the following best expresses the utilitarian principle in evaluating this situation?

A) His action is acceptable, because the grocer suffers the least harm.

B) His action is acceptable, because the higher social value is the survival of the family.

C) His action is wrong, because the man would not want the grocer to steal from him.

D) His action is wrong, because if everyone were to do this, the concept of personal property is defeated.

E) His action is wrong, because the grocery store owner is harmed.

Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

22) Which of the following best describes Immanuel Kant's categorical imperative?

A) If an action cannot be taken repeatedly, then it is not right to be taken at any time.

B) One should take the action that produces the least harm or incurs the least cost.

C) One can put values in rank order and understand the consequences of various courses of action.

D) If an action is not right for everyone to take, it is not right for anyone to take.

E) You should act towards others as you would like them to act towards you.

Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

98

23) The ethical "no free lunch" rule states that: A) if an action cannot be taken repeatedly, then it is not right to be taken at any time.

B) one should take the action that produces the least harm or incurs the least cost.

C) one can put values in rank order and understand the consequences of various courses of action.

D) if something someone else has created is useful to you, it has value, and you should assume the creator wants compensation for this work.

E) if an action is not right for everyone to take, it is not right for anyone to take.

Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

24) According to ________, you should take the action that produces the least harm.

A) Kant's categorical imperative B) the risk aversion principle C) the utilitarian principle D) the Golden Rule E) the "no free lunch" rule Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

25) Which ethical rule states that if an action cannot be taken repeatedly, it is not right to take at all?

A) Slippery-slope rule B) Lemming rule C) High-failure cost rule D) Utilitarian principle E) Golden Rule Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

26) Which of the following ethical guidelines suggests that you put yourself in the place of others, and think of yourself as the object of the decision?

A) Kant's categorical imperative B) the risk aversion principle C) the utilitarian principle D) the Golden Rule E) the "no free lunch" rule Answer: D Difficulty: Easy AACSB: Ethical understanding and reasoning 99

LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

27) Identifying the stakeholders—people who have a vested interest in the outcome of the decision—is the last step in analyzing an ethical issue.

Answer: FALSE Difficulty: Easy AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

28) Because of their special claims to knowledge, wisdom, and respect, professionals take on special rights and obligations.

Answer: TRUE Difficulty: Easy AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

29) Liability is a feature of political systems and allows individuals to recover damages done to them by others.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

30) What are the steps in conducting an ethical analysis?

Answer: The steps are: (1) Identify and describe clearly the facts; (2) define the conflict or dilemma and identify the higher-order values involved; (3) identify the stakeholders; (4) identify the options that you can reasonably take; and (5) identify the potential consequences of your options.

Difficulty: Easy AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

31) Identify and discuss the six ethical principles discussed in the chapter.

Answer: The six ethical principles are the Golden Rule, Kant's categorical imperative, the slippery slope rule, the utilitarian principle, the risk aversion principle, and the "no free lunch" rule. The Golden Rule proposes: do unto others as you would have them do unto you.

Immanuel Kant's categorical imperative proposes that if an action is not right for everyone to take, it is not right for anyone. The slippery slope rule says: If an action cannot be taken repeatedly, it is not right to take at all. The utilitarian principle is: Take the action that achieves the higher or greater value. The risk aversion principle is: Take the action that produces the least harm or the least potential cost. The "no free lunch" rule says: Assume that virtually all tangible and intangible objects are owned by someone else unless there is a specific declaration otherwise. Tangible objects are owned by someone else unless there is a specific declaration otherwise.

Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

100

32) Define the basic concepts of responsibility, accountability, and liability as applied to ethical decisions. How are these concepts related?

Answer: Responsibility is the first key element of ethical action. Responsibility means that an individual, group, or organization accepts the potential costs, duties, and obligations for decisions made. Accountability is a feature of systems and social institutions. It means that mechanisms are in place to determine who took responsible action; i.e., who is responsible for the action. Liability is a feature of political systems in which a body of law is in place that permits individuals to recover the damages done to them by others.

These concepts are related as follows: I will assume the blame or benefit for the actions I take (responsibility); this blame or benefit accrues to me through the requirement that I be able to explain why I have taken the actions I have (accountability) for actions traceable to me by defined mechanisms in the organization, and if those actions result in harm to another, I will be held by law to reparations for those actions (liability).

Difficulty: Challenging AACSB: Ethical understanding and reasoning LO: 4-2: What specific principles for conduct can be used to guide ethical decisions?

33) In 2010, the FTC added all of the following recommendations to its privacy guidelines except: A) firms should build products and services that protect privacy.

B) firms should increase the transparency of their data collection.

C) firms should require consumer consent and provide clear options to opt out of data collection.

D) firms should limit the length of time that any personal data is stored to six months or less.

E) consumers should be able to review and contest the accuracy and completeness of data.

Answer: D Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

34) Which of the following restricts the information that the U.S. federal government can collect about an individual and regulates what it can do with the information?

A) The Privacy Act B) The Gramm-Leach-Bliley Act C) The Freedom of Information Act D) COPPA E) HIPPA Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

101

35) FIP principles are based on a belief in which of the following?

A) Accountability of the record holder B) Responsibility of the record holder C) Mutuality of interest between the record holder and the individual D) Privacy of the individual E) Difference between the interests of the individual and commercial organizations Answer: C Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

36) The FIP principle of Notice/Awareness states that: A) customers must be allowed to choose how their information will be used for secondary purposes other than the supporting transaction.

B) data collectors must take responsible steps to assure that consumer information is accurate and secure from unauthorized use.

C) there must be a mechanism in place to enforce FIP principles.

D) consumers should be able to review the data collected about them.

E) websites must disclose their information practices before collecting data.

Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

37) Which of the following U.S. laws gives patients access to personal medical records and the right to authorize how this information can be used or disclosed?

A) HIPAA B) Gramm-Leach-Bliley Act C) Privacy Protection Act D) Freedom of Information Act E) COPPA Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

102

38) Which of the following is not a U.S. federal law affecting private institutions?

A) COPPA B) HIPAA C) Gramm-Leach-Bliley Act D) Video Privacy Protection Act E) Computer Matching and Privacy Protection Act Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

39) All of the following laws apply to actions by the federal government except the: A) Freedom of Information Act. B) Privacy Act. C) Computer Security Act. D) Children's Online Privacy Protection Act. E) E-Government Act. Answer: D Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

40) When a cookie is created during a website visit, it is stored: A) on the website's server.

B) on the hard drive of the visitor's computer.

C) on the ISP's servers.

D) in the browser's application settings.

E) nowhere, because they are only used during a visit and are discarded once a visitor leaves the Web site.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

103

41) The U.S. Department of Commerce developed a ________ framework in order to enable U.S. businesses to legally use personal data from EU countries.

A) COPPA B) P3P C) PGP D) FIP E) safe harbor Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

42) The Online Privacy Alliance: A) encourages self-regulation to develop a set of privacy guidelines for its members.

B) protects user privacy during interactions with websites.

C) has established technical guidelines for ensuring privacy.

D) is a government agency regulating the use of customer information.

E) is a safe harbor program established by the U.S. government.

Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

43) In the ________ model of informed consent, personal information can be collected until the consumer specifically requests that his or her data not be collected.

A) opt-in B) opt-out C) P3P D) PGP E) safe harbor Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

104

44) What percent of global Internet users use Google Search and other Google services?

A) Less than 10 percent B) Around 25 percent C) About 50 percent D) Nearly 80 percent E) Over 90 percent Answer: D Difficulty: Moderate AACSB: Information technology LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

45) Which of the following forms of protection of intellectual property requires that the property be the subject of a nondisclosure agreement?

A) Copyright B) Patent C) All forms of intellectual property protection D) Trademark E) Trade secret Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

46) All of the following are technical solutions to protecting user privacy except: A) e-mail encryption.

B) anonymous surfing.

C) anonymous email.

D) preventing client computers from accepting cookies.

E) data use policies.

Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

105

47) Which of the following protects the authors of a book from having their work copied by others?

A) Patent protection B) Due process C) Copyright law D) Fair Use Doctrine E) Trade Secret law Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

48) "Look and feel" copyright infringement lawsuits are concerned with: A) the distinction between tangible and intangible ideas.

B) the distinction between an idea and its expression.

C) using the graphical elements of another product.

D) using the creative elements of another product.

E) violation of a monopoly on the ideas behind a product.

Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

49) The NAI is an industry association formed to help with which of the following?

A) Copyright protection B) Online privacy issues C) Patent protection D) Trademark protection E) Trade secret protection Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

106

50) Which of the following is not protected by copyright law?

A) Musical compositions B) Motion pictures C) Maps D) Artwork E) Machines Answer: E Difficulty: Easy AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

51) Which of the following adjusts copyright laws to the Internet age by making it illegal to circumvent technology-based protections of copyrighted materials?

A) Digital Millennium Copyright Act B) Privacy Act C) Freedom of Information Act D) Electronic Communications Privacy Act E) Computer Software Copyright Act Answer: A Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

52) Which of the following statements about Flash cookies is not true?

A) Flash cookies are installed only at the user's request.

B) Flash cookies are stored on the user's computer.

C) Flash cookies cannot be easily detected or deleted.

D) Flash cookies are sometimes called super cookies.

E) Flash cookies can be installed whenever a person clicks a Flash video.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

107

53) Advertisers use ________ in order to display more relevant ads based on a user's search and browsing history.

A) behavioral targeting B) Web bugs C) NORA D) intelligent agents E) FIP principles Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

54) ________ prohibits an organization from collecting any personal information unless the individual specifically takes action to approve information collection and use.

A) A safe harbor B) The opt-in model C) FIP principles D) P3P E) The opt-out model Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

55) ________ grants the owner exclusive ownership of the ideas behind an invention for 20 years.

A) Copyright law B) Trademark law C) Patent law D) Trade secret protection E) Privacy law Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

108

56) TRUSTe is an example of which of the following?

A) Web beacon B) Behavioral targeting program C) Opt-out program D) Spyware E) Online seal program Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

57) Which of the following is not a difficulty in establishing patent protection?

A) Length of time required to receive protection B) The requirement that the work reflect some special understanding and contribution C) The requirement that the work must be original D) The requirement that the work must be novel E) The requirement that the work must be a secret Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

58) Which of the following is not true about the changes to EU data protection rules proposed in 2012?

A) The new rules would require Internet companies to obtain explicit consent from consumers for the use of their personal data.

B) The new rules would require Internet companies to delete information at the user's request.

C) The new rules would require Internet companies to retain information only as long as absolutely necessary.

D) The new rules would reject the right to be forgotten.

E) The new rules would apply only to all companies providing services in Europe.

Answer: D Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

109

59) Digital media differs from a physical book in all of the following ways except: A) ease of replication.

B) ease of alteration.

C) ease of transmission.

D) ease of global distribution.

E) ease of establishing uniqueness.

Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

60) Which of the following were involved in what has been called the patent trial of the century?

A) Apple and Microsoft B) Apple and Hewlett-Packard C) Microsoft and Symantec D) Microsoft and Facebook E) Apple and Samsung Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

61) Which of the following is not a file-sharing service?

A) The Pirate Bay B) Megaupload C) Morpheus D) Pandora E) Grokster Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

62) The European Parliament has banned unsolicited commercial messaging.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

110

63) A Facebook user's visit to a website can be tracked even if they do not click a Like button.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

64) Malicious software that is installed secretly on your computer by other applications and that tracks your online movements is called spyware.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

65) Most Internet businesses do very little to protect the privacy of their customers.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

66) The rate of global software piracy in 2015 was approximately 50%.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

67) Any intellectual work product that isn't based on public knowledge can be classed as a trade secret.

Answer: TRUE Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

68) Copyright is a legal protection given to creators of certain types of intellectual property.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

111

69) Software programs were unprotected by copyright law until the early 1990s.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

70) The problem with web browsers' Do Not Track options is that websites aren't obligated to honor these settings.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

71) European countries do not allow businesses to use personally identifiable information without consumers' prior consent.

Answer: TRUE Difficulty: Challenging AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

72) One of the key concepts in patent law is novelty.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

73) Some forms of illegal sharing of music files have declined as legitimate online music stores have expanded.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

74) COPPA is a set of five principles developed by the FTC that most American and European privacy law is based on.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

112

75) Although online tracking gathers an enormous amount of information on individual users, it is anonymous and can't be tied to a specific person.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

76) Web beacons are tiny, invisible software programs hidden in e-mail messages and web pages that are used to track and report a user's online behavior.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

77) What are the major issues concerning privacy in the information age? Do you believe the need for homeland security should overrule some of the personal privacy and information rights we have previously taken for granted? Why or why not?

Answer: One answer might be that we should depend upon the Federal Trade Commission Fair Information Practice Principles and that as long as these principles are not ignored or overset, personal privacy does not conflict with homeland security. This is a weak argument. Other issues involve online privacy, employee monitoring, tradeoffs between security and privacy and good business results versus privacy.

Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

78) Describe how a cookie works.

Answer: A cookie works as follows: A user opens a web browser and selects a website to visit.

The user's computer sends a request for information to the server running the website. At the same time the server sends a cookie—a data file containing information like an encrypted user ID and information about when the user visited and what he did on the site. The user's computer receives the cookie and places it in a file on the hard drive. Whenever the user goes back to the website, the server running the site retrieves the cookie to help identify the user.

Difficulty: Moderate AACSB: Information technology LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

113

79) How does protection of privacy in Europe differ from the United States?

Answer: In Europe, privacy protection is much more stringent than in the United States. Unlike the United States, European countries do not allow businesses to use personally identifiable information without consumers' prior consent. On October 25, 1998, the European Commission's Directive on Data Protection went into effect, broadening privacy protection in the European Union (EU) nations. The directive requires companies to inform people when they collect information about them and disclose how it will be stored and used. Customers must provide their informed consent before any company can legally use data about them, and they have the right to access that information, correct it, and request that no further data be collected. Informed consent can be defined as consent given with knowledge of all the facts needed to make a rational decision. EU member nations must translate these principles into their own laws and cannot transfer personal data to countries, such as the United States, that do not have similar privacy protection regulations. In 2009, the European Parliament passed new rules governing the use of third-party cookies for behavioral tracking purposes. These new rules were implemented in May 2011 and require website visitors to give explicit consent to be tracked by cookies. Websites are required to have highly visible warnings on their pages if third-party cookies are being used. In January 2012, the EU issued significant proposed changes to its data protection rules, the first overhaul since 1995. The new rules would apply to all companies providing services in Europe and require Internet companies such as Amazon, Facebook, Apple, Google, and others to obtain explicit consent from consumers about the use of their personal data, delete information at the user's request (based on the right to be forgotten), and retain information only as long as absolutely necessary. In 2014, the European Parliament gave strong support to significant changes in privacy policies by extending greater control to users of the Internet. Although the privacy policies of United States firms (in contrast to the government's) are largely voluntary, in Europe, corporate privacy policies are mandated and more consistent across jurisdictions. Among the changes being discussed are a requirement for firms to inform users before collecting data, every time they collect data, and how it will be used. Users would have to give consent to any data collection. Other proposals call for users to have a right of access to personal data, and the right to be forgotten. The right to be forgotten was upheld by a European Union court in 2014, and since then, Google has had to respond to more than 200,000 requests to remove personal information from its search engine.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

114

80) Discuss the history of Apple's and Samsung's patent battle against each other.

Answer: In 2011, Apple sued Samsung for violating its patents for iPhones, iPads, and iPods.

On August 24, 2012, a California jury in federal district court delivered a decisive victory to Apple and a stunning defeat to Samsung. The jury awarded Apple $1 billion in damages. The decision established criteria for determining just how close a competitor can come to an industry-leading and standard-setting product like Apple's iPhone before it violates the design and utility patents of the leading firm. The same court ruled that Samsung could not sell its new tablet computer (Galaxy 10.1) in the United States. In a later patent dispute, Samsung won an infringement case against Apple. In June 2013, the United States International Trade Commission issued a ban for a handful of older iPhone and iPad devices because they violated Samsung's patents from years ago. In 2014, Apple sued Samsung again, claiming infringement of five patents. The patents cover hardware and software techniques for handling photos, videos, and lists used on the popular Galaxy 5. Apple sought $2 billion in damages. In 2015, the U.S. Court of Appeals reaffirmed that Samsung had copied specific design patents but dropped the damages, Apple was granted to $930 million. To make matters more complicated, Apple has been one of Samsung's largest customers for flash memory processors, graphic chips, solid-state drives, and display parts that are used in Apple's iPhones, iPads, iPod Touch devices, and MacBooks. The Samsung and Apple patent cases are indicative of the complex relationships among the leading computer firms.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 4-3: Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?

81) ________ are not held liable for the messages they transmit.

A) Regulated common carriers B) Private individuals C) Organizations and businesses D) Elected officials E) European ISPs Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

82) Which of the following resulted in an outage for Netflix customers on Christmas Eve 2012?

A) A failure of Amazon's cloud computing service B) A failure of Netflix's recommendation engine software C) A blackout at Netflix's primary data center D) A hacking attack E) A bug in Netflix's credit card processing system Answer: A Difficulty: Challenging AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, 115

and the quality of everyday life?

83) Which of the following is the most common reason that business systems fail?

A) Software bugs B) Software errors C) Hardware failures D) Facilities failures E) Data quality Answer: E Difficulty: Moderate AACSB: Information technology LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

84) Which of the following is a primary drawback to the "do anything anywhere" computing environment?

A) It makes work environments less pleasant.

B) It creates a digital divide.

C) It centralizes power at corporate headquarters.

D) It blurs the traditional boundaries between work and family time.

E) It leads to employees being paid less for the total amount of work performed.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

85) Which of the following statements about spam is not true?

A) Most spam originates from bot networks.

B) Cell phone spam usually comes in the form of SMS text messages.

C) Spam costs for business are very high.

D) Spamming has mushroomed because it is so inexpensive and can reach so many people.

E) Spamming is more tightly regulated in Europe than in the United States.

Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

116

86) The U.S. CAN-SPAM Act: A) makes spamming illegal.

B) requires commercial email senders to identify themselves.

C) has dramatically cut down spamming.

D) does not override state anti-spamming laws.

E) does not outlaw the use of fake return addresses.

Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

87) Which of the five moral dimensions of the information age does spamming involve?

A) Quality of life B) System quality C) Accountability and control D) Information rights and obligations E) Property rights and obligations Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

88) Redesigning and automating business processes can be seen as a double-edged sword because: A) increases in efficiency may be accompanied by job losses.

B) increases in efficiency may be accompanied by poor data quality.

C) support for middle-management decision making may be offset by poor data quality.

D) reliance on technology results in the loss of hands-on knowledge.

E) it can concentrate power in the hands of senior executives.

Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

117

89) Which of the following terms refers to significant disparities in access to computers and the Internet among different social groups and different locations?

A) CVS B) Technostress C) Digital divide D) RSI E) CTS Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

90) CVS refers to: A) eyestrain related to computer display screen use.

B) a business practice that attempts to evaluate the intangible values of computer systems.

C) carpal vision syndrome.

D) a type of antivirus protection software.

E) wrist injuries brought about by incorrect hand position when using a keyboard.

Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

91) Which of the following occurs when muscle groups are forced through tens of thousands of repetitions under low-impact loads?

A) CTS B) CVS C) RSI D) Technostress E) RSS Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

92) Gaining unapproved access to a computer is not a federal crime.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

118

93) Spam is legally defined as any e-mail that is unsolicited.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

94) Some experts believe that exposure to computers reduces intelligence and makes people dumb.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

95) Computer abuse refers to acts involving a computer that may not be illegal but are considered unethical.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

96) One of the capabilities of Internet communication is the ability of the individual to appear essentially anonymous by using made-up user names. Is anonymity the same thing as privacy, and should it be a right? What ethical issues are raised by increased anonymity?

Answer: Student answers will vary, but should include a definition of privacy and an attempt to differentiate between anonymity and privacy, as well as an understanding that anonymity can result in a breakdown of clear accountability or responsibility for actions. A sample answer is: Privacy is the claim to be left alone, free from surveillance. This is different from anonymity, in which nobody knows who you are or what actions you take even in a public arena. Some individuals, if they feel they are anonymous, may have lapses in ethical behavior because anonymity means they are no longer accountable for their actions. I don't know if anonymity should be a right, but perhaps anonymity should not be permissible for some types of communication.

Difficulty: Challenging AACSB: Ethical understanding and reasoning LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

119

97) What do you consider to be the primary ethical, social, and political issues regarding the quality of a software product?

Answer: Student answers will vary, but should include a description of the software manufacturer's responsibility in software quality and an understanding of the difference between social concerns (culture, lifestyle effects) and political concerns (legal, institutional effects). A sample answer is: The central quality-related ethical issue that software quality raises is what responsibility does a software manufacturer have in the performance of its software? At what point can the manufacturer conclude that its software achieves an adequate level of quality? The leading social issue raised by quality is: how is our society affected by low-quality software and is this a concern? And how much accountability should the software manufacturer have? The central political concern raised by software quality is whether and how to enforce software quality minimums and standards, and what institutions are thus also held accountable.

Difficulty: Moderate AACSB: Ethical understanding and reasoning LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

98) How does the use of electronic voting machines act as a "double-edged sword?" What moral dimensions are raised by this use of information technology?

Answer: Electronic voting machines can be seen as beneficial by making voting easy to accomplish and tabulate. However, it may be easier to tamper with electronic voting machines than with countable paper ballots. In terms of information rights, it seems possible that methods could be set up to determine how an individual has voted and to store and disseminate this knowledge. Manufacturers of voting machines claim property rights to the voting software, which means that if the software is protected from inspection, there is no regulation in how the software operates or how accurate it is. In terms of accountability and control, if an electronic voting system malfunctions, will it be the responsibility of the government, of the company manufacturing the machines or software, or the programmers who programmed the software?

The dimension of system quality raises questions of how the level of accuracy of the machines is to be judged and what level is acceptable? In terms of quality of life, while it may make voting easier and quicker, does the vulnerability to abuse of these systems pose a threat to the democratic principle of one person, one vote?

Difficulty: Challenging AACSB: Ethical understanding and reasoning LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

120

99) What is the digital divide and how does it impact society?

Answer: The digital divide relates to the fact that information, knowledge, computers, and access to digital and information resources through educational institutions and public libraries are inequitably distributed along ethnic and social class lines. Several studies have found that poor and minority groups in the United States are less likely to have computers or online Internet access even though computer ownership and Internet access have soared in the past five years. Although the gap in computer access is narrowing, higher-income families in each ethnic group are still more likely to have home computers and broadband Internet access than lower-income families in the same group. Moreover, the children of higher-income families are far more likely to use their Internet access to pursue educational goals, whereas lower-income children are much more likely to spend time on entertainment and games. Left uncorrected, this digital divide could lead to a society of information haves, computer literate and skilled, versus a large group of information have-nots, computer illiterate and unskilled. Public interest groups want to narrow this digital divide by making digital information services—including the Internet—available to virtually everyone, just as basic telephone service is now.

Difficulty: Challenging AACSB: Ethical understanding and reasoning; Written and oral communication; Information technology LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

100) What are some of the potential health risks associated with use of computers?

Answer: A common occupational disease today is repetitive stress injury (RSI). RSI occurs when muscle groups are forced through repetitive actions often with high-impact loads (such as tennis) or tens of thousands of repetitions under low-impact loads (such as working at a computer keyboard). The incidence of repetitive stress syndrome is estimated to be as much as one-third of the labor force and accounts for one-third of all disability cases. The single largest source of RSI is computer keyboards. The most common kind of computer-related RSI is carpal tunnel syndrome (CTS), in which pressure on the median nerve through the wrist's bony structure, called a carpal tunnel, produces pain. The pressure is caused by constant repetition of keystrokes. Symptoms of carpal tunnel syndrome include numbness, shooting pain, inability to grasp objects, and tingling. Millions of workers have been diagnosed with carpal tunnel syndrome. It affects an estimated 3 percent to 6 percent of the workforce. RSI is not the only occupational illness computers cause. Back and neck pain, leg stress, and foot pain also result from poor ergonomic designs of workstations. Computer vision syndrome (CVS) refers to any eyestrain condition related to display screen use in desktop computers, laptops, e-readers, smartphones, and handheld video games. CVS affects about 90 percent of people who spend three hours or more per day at a computer. Its symptoms, which are usually temporary, include headaches, blurred vision, and dry and irritated eyes.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 4-4: How have information systems affected laws for establishing accountability, liability, and the quality of everyday life?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 5 IT Infrastructure and Emerging Technologies 121

1) Which type of infrastructure service provides data, voice and video connectivity to employees, customers, and suppliers?

A) Networking B) Telephone C) VOIP D) Telecommunications E) Data management Answer: D Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

2) Which of the following is not an IT infrastructure service component?

A) Operating system software B) Computing platforms to provide a coherent digital environment C) Physical facilities management to manage the facilities housing physical components D) IT management services to plan and develop the infrastructure and provide project management E) IT education services that provide training to employees Answer: A Difficulty: Challenging AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

3) Specifications that establish the compatibility of products and the ability to communicate in a network are called: A) network standards.

B) telecommunications standards.

C) technology standards.

D) Internet standards.

E) compatibility standards.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

122

4) A(n)________ is used to communicate between a user and an organization's back-end systems.

A) public server B) private server C) legacy server D) application server E) blade server Answer: D Difficulty: Easy AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

5) Place the following eras of IT infrastructure evolution in order, from earliest to most recent: 1. Cloud Computing Era; 2. Client/Server; 3. Enterprise Era; 4. Personal Computer; and 5.

Mainframe and Minicomputer.

A) 5, 2, 3, 4, 1 B) 5, 4, 2, 3, 1 C) 4, 5, 2, 3, 1 D) 5, 4, 2, 1, 3 E) 4, 5, 3, 2, 1 Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

6) The introduction of the minicomputer: A) allowed computers to be customized to the specific needs of departments or business units.

B) strengthened centralized computing.

C) offered new, powerful machines at higher prices than mainframes.

D) represented the rise of Microsoft.

E) was dominated by IBM. Answer: A Difficulty: Challenging AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

123

7) A client computer networked to a server computer, with processing split between the two types of machines, is called a(n): A) service-oriented architecture.

B) on-demand architecture.

C) multi-tiered client/server architecture.

D) two-tiered client/server architecture.

E) divided architecture.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

8) In a multi-tiered network: A) the work of the entire network is centralized.

B) the work of the entire network is balanced over several levels of servers.

C) processing is split between clients and servers.

D) processing is handled by multiple, geographically-remote clients.

E) processing is located in the cloud.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

9) Interpretations of Moore's law assert that: A) computing power will eventually level off.

B) transistors decrease in size 50% every two years.

C) data storage costs decrease by 50% every 18 months.

D) PCs decrease in market share by 9% every 5 years.

E) computing power doubles every 18 months.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

124

10) Today's nanotechnology-produced computer transistors are roughly equivalent in size to: A) the width of a fingernail.

B) a human hair.

C) a virus.

D) an atom.

E) a grain of sand.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

11) Which of the following is a multitasking, multi-user, operating system developed by Bell Laboratories that operates on a wide variety of computing platforms?

A) Unix B) Linux C) OS X D) COBOL E) DOS Answer: A Difficulty: Challenging AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

12) Which of the following is the network standard for connecting desktop computers into local area networks that enabled the widespread adoption of client/server computing and local area networks and further stimulated the adoption of personal computers?

A) TCP/IP B) COBOL C) Ethernet D) ASCII E) Linux Answer: C Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

125

13) The development of TCP/IP occurred during the ________ era.

A) cloud and mobile computing B) general-purpose mainframe and minicomputer C) client/server era D) personal computer E) enterprise computing Answer: E Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

14) Which of the following became the standard PC in the Personal Computer Era? A) Wintel PC B) DOS PC C) MITS PC D) Altair E) Apple II Answer: A Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

15) ________ uses individual atoms and molecules to create computer chips and other devices.

A) Virtualization B) Nanotechnology C) Quantum computing D) A minicomputer E) On-demand computing Answer: B Difficulty: Easy AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

126

16) ________ states that the value or power of a network grows exponentially as a function of the number of network members.

A) Metcalfe's Law B) Moore's Law C) Law of scalability D) Law of outsourcing E) Law of networks Answer: A Difficulty: Challenging AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

17) Which of the following factors does not help explain why computing resources today are even more available than in previous decades?

A) Network economics B) Law of mass digital storage C) Moore's law D) Declining communications costs and the Internet E) Widespread rejection of technology standards Answer: E Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

18) Client/server computing is a primary example of centralized processing.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

19) In N-tier computing, significant parts of website content, logic, and processing are performed by different servers.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

20) Application server software is responsible for locating and managing stored webpages.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

127

21) IT infrastructure consists of only those physical computing devices required to operate the enterprise.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

22) An application server may reside on the same computer as a web server or on its own dedicated computer.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

23) Enterprise infrastructure requires software that can link disparate applications and enable data to flow freely among different parts of the business.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

24) It is much easier to eliminate a cloud service than to remove functionality from a company's core internal systems.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

25) In financial services firms, investments in IT infrastructure represent more than half of all capital invested.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

26) Microsoft is the market leader in client/server networking.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

128

27) Cloud computing is the fastest growing form of computing.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

28) Exponential growth in the number of transistors and the power of processors is expected to increase for the foreseeable future.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

29) List and describe four services that comprise IT infrastructure, beyond physical devices and software applications.

Answer: • The service components of IT infrastructure include: • Telecommunications services that provide data, voice, and video connectivity.

• Data management services to store, manage, and analyze data.

• Application software services that provide enterprise-wide capabilities.

• Physical facilities management services, to develop and manage physical installations of technology.

• IT standards services that establish and monitor the firm's policies.

• IT education services that provide training in use of the systems.

• IT research and development services that research potential projects, products, and investments.

Difficulty: Challenging AACSB: Analytical thinking LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

129

30) Explain why standards are so important in information technology. What standards have been important for the growth of Internet technologies?

Answer: Standards are important because they result in different manufacturers creating products that can be used either with each other or to communicate with each other. For example, without standards, each light-bulb manufacturer would have to also create specific light-bulb sockets for use with their light bulbs. In the same way, computers and computer technology have been enabled through standards. Standards have allowed many different manufacturers to contribute to the same, standardized definitions of a technological application.

For example, the ASCII data standards made it possible for computer machines from different manufacturers to exchange data, and standardized software languages have enabled programmers to write programs that can be used on different machines.

The standards that have been important for the growth of the Internet include TCP/IP, as a networking standard, and WWW standards for displaying information as web pages, including HTML. Difficulty: Challenging AACSB: Analytical thinking LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

31) Have mainframes disappeared?

Answer: Mainframes have not disappeared. They continue to be used to reliably and securely handle huge volumes of transactions, for analyzing very large quantities of data, and for handling large workloads in cloud computing centers. The mainframe is still the digital workhorse for banking and telecommunications networks that are often running software programs that are older and require a specific hardware platform. Currently, mainframes process 30 billion business transactions per day, and 80 percent of the world's corporate data also originates on the mainframe.

Difficulty: Moderate AACSB: Information technology LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure evolution?

32) Which of the following is a leading networking hardware provider?

A) Dell B) Intel C) Seagate D) IBM E) Cisco Answer: E Difficulty: Easy AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

130

33) Software that manages the resources of the computer is called: A) operating system software.

B) application software.

C) data management software.

D) network software.

E) web services software.

Answer: A Difficulty: Easy AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

34) A SAN is a ________ network.

A) server area B) storage area C) scalable architecture D) service-oriented architecture E) software arrangement Answer: B Difficulty: Moderate AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

35) Which of the following is an example of a legacy system?

A) Transaction processing system running on a mainframe B) Scalable grid computing system C) Web services running on a cloud computing platform D) MDM software E) Quantum computing system Answer: A Difficulty: Challenging AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

36) Which of the following is not an example of a wearable computing device?

A) Smartwatch B) Smart glasses C) Smartphones D) Activity trackers E) Smart ID badges Answer: C Difficulty: Challenging AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

131

37) ________ are computers consisting of a circuit board with processors, memory, and network connections that are stored in racks.

A) Mainframes B) Rack servers C) Cloud servers D) Hybrid servers E) Blade servers Answer: E Difficulty: Moderate AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

38) ________ interfaces allow users to employ one or more fingers to manipulate objects on a screen without a mouse or keyboard.

A) Hypertouch B) Nanotech C) Multitouch D) Linux E) Scalable Answer: C Difficulty: Moderate AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

39) The operating system is used to manage the computer's activities.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

40) SANs maintain a series of servers and provide fee-paying subscribers with space to maintain their websites.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 5-2: What are the components of IT infrastructure?

41) Which of the following is not an example of the mobile digital platform?

A) Tablets B) Kindle C) Cell phones D) CRM E) Apps Answer: D Difficulty: Easy AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

132

42) All of the following are current hardware platform trends except: A) green computing.

B) virtualization.

C) cloud computing.

D) Unix.

E) quantum computing.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

43) The ability to be in multiple states at once, dramatically increasing processing power, is a hallmark of: A) co-location.

B) edge computing.

C) grid computing.

D) utility computing.

E) quantum computing.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

44) Which of the following is a recent addition to the mobile digital platform?

A) Quantum computing devices B) Wearable computing devices C) Cloud computing devices D) Grid computing devices E) Green computing devices Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 5-3: What are the current trends in computer hardware platforms?

45) At what percent of capacity do most servers operate?

A) 100% B) 80-90% C) approximately 70 percent D) 40-50% E) 15-20% Answer: E Difficulty: Challenging AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

133

46) Which of the following enables a single physical resource (such as a server or a storage device) to appear to the user as multiple logical resources?

A) Cloud computing B) Autonomic computing C) Virtualization D) Multicore processing E) Ubiquitous computing Answer: C Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

47) Which of the following types of computing involves purchasing computing power from a remote provider and paying only for the computing power used?

A) On-demand B) Grid C) Edge D) Autonomic E) Quantum Answer: A Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

48) All of the following are cloud computing services except: A) infrastructure as a service.

B) platform as a service.

C) software as a service.

D) on-demand computing.

E) virtualization as a service.

Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 5-3: What are the current trends in computer hardware platforms?

49) Firms that allow employees to use their own devices are embracing which of the following?

A) Wearable computing B) Mobile consolidation C) Cloud computing D) BYOD E) Self computing Answer: D Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

134

50) The marketplace for computer hardware: A) has become increasingly concentrated in top firms.

B) has expanded to include a wide variety of start-up and mobile-computing firms.

C) has moved significantly to Asian firms.

D) has been decimated by mobile and cloud computing.

E) has begun moving away from blade servers.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

51) Which of the following is the most popular mobile operating system?

A) Linux B) Android C) Chrome OS D) iOS E) Unix Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 5-3: What are the current trends in computer hardware platforms?

52) Which of the following is not one of the NIST defined characteristics of cloud computing?

A) Ubiquitous network access B) Location-independent resource pooling C) On-demand self service D) Measured service E) Reduced elasticity Answer: E Difficulty: Challenging AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

53) Which of the following is not an example of the consumerization of IT? A) Google Apps B) Dropbox C) Facebook D) Gmail E) Amazon Web Services Answer: E Difficulty: Challenging AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

135

54) A(n) ________ is an integrated circuit to which two or more processors have been attached for enhanced performance and reduced power consumption.

A) multicore processor B) legacy processor C) scalable processor D) aggregate circuit E) green circuit Answer: A Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

55) SaaS refers to: A) supplying online access over networks to storage devices and storage area network technology.

B) managing combinations of applications, networks, systems, storage, and security as well as providing Web site and systems performance monitoring to subscribers over the Internet.

C) self-contained services that communicate with each other to create a working software application.

D) easy-to-use software tools for displaying Web pages.

E) hosting and managing access to software applications delivered over the Internet to clients on a subscription basis.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

56) Which of the following involves practices and technologies to minimize the environmental effects of manufacturing and managing computing devices?

A) Capacity planning B) Cloud computing C) Green computing D) Utility computing E) On-demand computing Answer: C Difficulty: Easy AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

57) In green computing, reducing computer power consumption is a top priority.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

136

58) Quantum computing is implemented primarily with enterprise or ISP servers.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

59) Quantum computing is not yet available to the general public.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 5-3: What are the current trends in computer hardware platforms?

60) Distinguish between cloud computing, green computing, and quantum computing.

Answer: In cloud computing, technology services are provided over a network, primarily the Internet. These may be infrastructure services, such as storage or networking, or platform services, such as IBM's application development and test service, or software services, such as salesforce.com. Green computing refers to practices and technologies for designing computer equipment to minimize impact on the environment. Quantum computing refers to emerging technology that uses the principles of quantum physics to dramatically boost computer processing power.

Difficulty: Challenging AACSB: Analytical thinking LO: 5-3: What are the current trends in computer hardware platforms?

61) An ad-hoc group of oceanographers needs to set up a system to analyze massive amounts of data on ocean temperatures. The technology and hardware for gathering the data and transmitting the data to a central computer is in place. What additional hardware might they need? What techniques might they use to make their research more efficient and lower costs?

Answer: To store their data they may want to use a SAN. To process their data, they will need a supercomputer. To lower costs, they could look at on-demand computing as well as virtualization and implementing multicore processors.

Difficulty: Challenging AACSB: Analytical thinking LO: 5-3: What are the current trends in computer hardware platforms?

137

62) What are the drawbacks of cloud computing? Do you think these ever outweigh the benefits, and if so, in what cases?

Answer: Students should be able to identify at least two drawbacks. Drawbacks include: 1. placing data storage and control in another firm's hands, 2. security risks in having critical systems and data entrusted to a firm that does business with other firms, 3. loss of business capability if cloud infrastructures malfunction, 4. dependence on cloud computing provider and switching costs.

Student answers regarding the relative weight will vary, an example is: The disadvantages of cloud computing outweigh the advantages, except if any data lost is irreplaceable or creates harm to others. For example, a database of financial information should remain the responsibility of the original firm so that they can be held accountable.

Difficulty: Challenging AACSB: Analytical thinking LO: 5-3: What are the current trends in computer hardware platforms?

63) What are the essential characteristics of cloud computing?

Answer: As defined by the U.S. National Institute of Standards and Technology, cloud computing is characterized by on-demand self-service, ubiquitous network access, locationindependent resource pooling, rapid elasticity, and measured service. On-demand self-service means that consumers can use server time and network storage as they need it on their own.

Ubiquitous network refers to the ability to access cloud resources across all devices and platforms, including mobile. Location independent resource pooling describes the ability to allocate resources to any part of the world without a dip in service quality. Rapid elasticity is the capacity for resources to be increased or decreased as needed to meet demand. Lastly, measured service refers to the payment technique whereby users are charged based on the resources they use, as opposed to monthly or yearly rates.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 5-3: What are the current trends in computer hardware platforms?

138

64) What is virtualization and how and why is it used?

Answer: Virtualization is the process of presenting a set of computing resources (such as computing power or data storage) so that they can all be accessed in ways that are not restricted by physical configuration or geographic location. Virtualization enables a single physical resource (such as a server or a storage device) to appear to the user as multiple logical resources. For example, a server or mainframe can be configured to run many instances of an operating system (or different operating systems) so that it acts like many different machines.

Each virtual server "looks" like a real physical server to software programs, and multiple virtual servers can run in parallel on a single machine. Server virtualization is a common method of reducing technology costs by providing the ability to host multiple systems on a single physical machine. Most servers run at just 15 to 20 percent of capacity, and virtualization can boost utilization server utilization rates to 70 percent or higher. Higher utilization rates translate into fewer computers required to process the same amount of work, reduced data center space to house machines, and lower energy usage. Virtualization also facilitates centralization and consolidation of hardware administration. Virtualization also enables multiple physical resources (such as storage devices or servers) to appear as a single logical resource, as in software-defined storage (SDS), which separates the software for managing data storage from storage hardware. Using software, firms can pool and arrange multiple storage infrastructure resources and efficiently allocate them to meet specific application needs. SDS enables firms to replace expensive storage hardware with lower-cost commodity hardware and cloud storage hardware. There is less under- or over-utilization of storage resources.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 5-3: What are the current trends in computer hardware platforms?

65) ZipRealty, which combines Google Maps with real estate data, is an example of: A) cloud computing.

B) SOA. C) a widget.

D) a mashup.

E) a web service.

Answer: D Difficulty: Moderate LO: 5-4: What are the current computer software platforms and trends?

66) Which type of software is created and updated by a worldwide community of programmers and available for free?

A) Software packages B) Mashups C) Outsourced D) Open source E) Closed source Answer: D Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

139

67) Which of the following is not one of the current software platform trends?

A) Web services and service-oriented architecture B) Open-source software C) HTML5 D) Software outsourcing E) Multicore processors Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 5-4: What are the current computer software platforms and trends?

68) Linux is: A) primarily concerned with the tasks of end users.

B) designed for specific machines and specific microprocessors.

C) an example of open-source software.

D) especially useful for processing numeric data.

E) poorly suited to power fast computers.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

69) Which of the following statements about Linux is not true?

A) It plays a major role in the back office running local area networks.

B) It is available in free versions downloadable from the Internet.

C) It has garnered 20 percent of the server operating system market.

D) Linux applications are embedded in cell phones, smartphones, netbooks, and other handheld devices.

E) Linux works on all the major hardware platforms.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

70) Running a Java program on a computer requires: A) a Java Virtual Machine to be installed on that computer.

B) a Java Virtual Machine to be installed on the server hosting the Java applet.

C) a miniature program to be downloaded to the user's computer.

D) no specialized software, as Java is platform-independent.

E) the Mozilla Firefox browser and no other browsers.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

140

71) A software program with a graphical user interface for displaying web pages and for accessing the web and other Internet resources is called a web: A) service.

B) client.

C) browser.

D) app.

E) beacon.

Answer: C Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

72) Sets of loosely coupled software components that exchange information with each other using standard web communication standards and languages are referred to as: A) web services.

B) EAI software.

C) SOA. D) SOAP. E) SaaS. Answer: A Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

73) Which of the following is the foundation technology for web services?

A) XML B) HTML C) SOAP D) UDDI E) SCSI Answer: A Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

74) Which of the following refers to a set of self-contained services that communicate with each other to create a working software application?

A) Web services B) EAI software C) SOA D) SOAP E) Prepackaged software Answer: C Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

141

75) Prewritten, commercially available sets of software programs that eliminate the need for a firm to write its own software programs for certain functions, are referred to as: A) software packages.

B) mashups.

C) outsourced software.

D) open-source software.

E) service level agreements.

Answer: A Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

76) ________ are created by combining and customizing components from different online software applications.

A) Apps B) Web browsers C) SaaS D) Web services E) Web mashups Answer: E Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

77) The practice of contracting custom software development to an outside firm is commonly referred to as: A) outsourcing.

B) scaling.

C) service-oriented architecture.

D) application integration.

E) utility computing.

Answer: A Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

78) A formal contract between customers and their service providers that outlines the specific responsibilities of the service provider and to the customer is called a(n): A) SOA. B) SLA. C) TCO. D) RFQ. E) SaaS. Answer: B Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

142

79) ________ provides a standard format for data exchange, enabling web services to pass data from one process to another.

A) HTML B) HTML5 C) Java D) Chrome OS E) XML Answer: E Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

80) Java software is designed to run on any computing device, regardless of the specific microprocessor or operating system it uses.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

81) Web services can exchange information between two different systems only if the operating systems and programming languages upon which the systems are based are identical.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

82) Whereas HTML is limited to describing how data should be presented in the form of Web pages, XML can perform presentation, communication, and data storage tasks.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

83) Hypertext markup language specifies how text, graphics, video, and sound are placed on a webpage.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

84) A service-oriented architecture is set of self-contained services that communicate with each other to create a working software application.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

143

85) Today, many business firms continue to operate legacy systems because they meet a business need and would be costly to replace.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 5-4: What are the current computer software platforms and trends?

86) Briefly explain why corporations are increasingly interested in using Unix or Linux for their operating systems.

Answer: Linux is an inexpensive and robust open-source relative of Unix. Unix and Linux constitute the backbone of corporate infrastructure throughout much of the world because they are scalable, reliable, and much less expensive than mainframe operating systems. They can also run on many different types of processors. The major providers of Unix operating systems are IBM, HP, and Sun with slightly different and partially incompatible versions.

Although Windows continues to dominate the client marketplace, many corporations have begun to explore Linux as a low-cost desktop operating system provided by commercial vendors such as RedHat Linux and Linux-based desktop productivity suites such as Sun's StarOffice. Linux is also available in free versions downloadable from the Internet as opensource software. The rise of open-source software, particularly Linux and the applications it supports at the client and server level, has profound implications for corporate software platforms: cost, reduction, reliability and resilience, and integration, because Linux works on all the major hardware platforms from mainframes to servers to clients. Linux has the potential to break Microsoft's monopoly on the desktop. Sun's StarOffice has an inexpensive Linuxbased version that competes with Microsoft's Office productivity suite.

Difficulty: Moderate AACSB: Analytical thinking LO: 5-4: What are the current computer software platforms and trends?

144

87) Identify and describe five or more of the current trends in contemporary software platforms.

Answer: 1. Growing use of Linux and open-source software—Open-source software is produced and maintained by a global community of programmers and is downloadable for free. Linux is a powerful, resilient open-source operating system that can run on multiple hardware platforms and is used widely to run Web servers.

2. HTML5—This is the next evolution of HTML which simplifies embedding multimedia, rich media, and animation in the browser.

3. Cloud-based services—In cloud-based services and software, users rent applications or storage space from online providers rather than running these applications or themselves or using local storage.

4. Web services and service-oriented architecture—Web services are loosely coupled software components based on open web standards that are not product-specific and can work with any application software and operating system. They can be used as components of Web-based applications linking the systems of two different organizations or to link disparate systems of a single company.

5. Software outsourcing—Companies are purchasing their new software applications from outside sources, including application software packages, by outsourcing custom application development to an external vendor (that may be offshore), or by renting software services from an application service provider.

6. Cloud-based services—Companies are leasing infrastructure, hardware, and software from vendors, paying on a subscription or per-transaction basis.

7. Mashups and apps—Mashups are programs created by combining two or more existing Internet applications. Apps are small programs developed for mobiles and handhelds, turning them into more robust computing tools.

Difficulty: Challenging AACSB: Analytical thinking LO: 5-4: What are the current computer software platforms and trends?

88) Define outsourcing and explain some of the computing tasks that are well suited to outsourcing.

Answer: Outsourcing is the shift of IT infrastructure and systems development to external vendors. This is a good option for companies without the resources or technical capability to perform certain computing tasks. Tasks well suited to outsourcing include Web site hosting, Web design, development of custom software, and software maintenance. More basic tasks such as data entry and call center operation is often outsourced as well. Outsourcing often requires firms to enter into a service level agreement (SLA) that defines the specific responsibilities of the service provider.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 5-4: What are the current computer software platforms and trends?

145

89) Which of the following refers to the ability of a computer, product, or system to expand to serve a larger number of users without breaking down?

A) Modality B) Scalability C) Expandability D) Disintermediation E) Customizability Answer: B Difficulty: Easy AACSB: Information technology LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

90) Hardware and software acquisition costs account for about ________ percent of TCO. A) 20 B) 40 C) 50 D) 75 E) 90 Answer: A Difficulty: Moderate AACSB: Information technology LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

91) Which model can be used to analyze the direct and indirect costs to help firms determine the actual cost of specific technology implementations?

A) Supply and demand B) Return on investment C) Breakeven point D) Cost-benefit analysis E) Total cost of ownership Answer: E Difficulty: Easy AACSB: Information technology LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

92) How would you determine the market demand for your firm's IT services?

A) Perform a TCO analysis B) Benchmark your services C) Hold focus groups to assess your services D) Analyze sales returns on key investments E) Perform a stress test Answer: C Difficulty: Easy AACSB: Information technology LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

146

93) Which of the following is not one of the main six factors to consider when evaluating how much your firm should spend on IT infrastructure?

A) Your firm's business strategy B) The IT investments made by competitor firms C) Market demand for your firm's services D) Your firm's organizational culture E) Information technology assessment Answer: D Difficulty: Moderate AACSB: Information technology LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

94) The decision to purchase your own IT assets or rent them from external providers is also referred to as the rent-versus-buy decision.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

95) Scalability refers to the ability of a computer, product, or system to expand to serve a large number of users without breaking down.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

96) TCO refers to the original cost of purchased technology: both hardware and software.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

97) What is scalability? Why is it essential to the success of the modern business firm?

Answer: Scalability is the ability of the computer, product, or system to expand to survey larger numbers of users without breaking down. It is important because as firms grow, they can quickly outgrow their infrastructure. As firms shrink, they can get stuck with excessive infrastructure purchased in better times. Any modern company must be able to make plans for the future, even though that future may be different than what was expected. Computer equipment is expensive, though dropping in price, and budgets must be planned to allow for new purchases, upgrades, and training. It is generally assumed that a successful company will need more computer capacity for more people as it follows a path to continued success.

Difficulty: Challenging AACSB: Analytical thinking LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

147

98) A small design agency you are consulting for will be creating client websites and wants to purchase a web server so they can host the sites themselves. How will you advise them on this purchase?

Answer: They need to understand total cost of ownership: the costs will go beyond the cost of the server, but they will also need to purchase the server software and any application software they will be using. They will also need someone in their IT department to manage and maintain the computers. They will also incur facilities costs for running the computer. They need to have a backup plan should the server fail. The design agency will need to add up all the potential costs and risks. Additionally, they need to prepare for their plan if they need more servers. Will they eventually have to run and maintain their own server farm? What if one of their clients' sites is more popular than anticipated and the server has difficulty handling the load? How quickly can they add servers or processing power? The company should look at colocation, Web hosting services, and ASPs to see if their needs will be better met this way.

Difficulty: Challenging AACSB: Analytical thinking LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

99) You are starting a market research company with a single business partner and are planning the hardware and software needs for the two of you. Which factors should play into your decision of how much to spend on these investments?

Answer: Using the competitive forces model for IT infrastructure investment, the most relevant factors in this decision are: • The firm's business strategy. What capabilities will we want to have over the next five years?

• Alignment of IT strategy. How does our IT strategy match up with the business plan?

• IT assessment. What are the current technology levels for the services we are offering and our business type? We would probably not need to be at the bleeding edge, but not behind the times either.

• Competitor firm services. What technology-enabled capabilities do our competitors have?

We would want to match services with our competitors.

• Competitor firm IT investments. How much are competitor firms investing in their technology?

Because this is a startup, one other factor may not play such a large role: that of market demand for services. However, finding out the market demand for competitor's services may uncover ways that this new company could have a competitive advantage.

Difficulty: Challenging AACSB: Analytical thinking LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

148

100) What are the components that must be considered in a TCO analysis?

Answer: TCO cost components include hardware acquisition, which includes the purchase price of computer hardware equipment, including computers, terminals, storage, and printers; software acquisition, which includes the purchase or license of software for each user; installation, which includes the cost to install computers and software; training, which includes the cost to provide training to information systems specialists and end users; support, which includes the cost to provide ongoing technical support; maintenance, which includes the cost to upgrade hardware and software; infrastructure, which includes the cost to acquire, maintain, and support related infrastructure, such as networks and specialized equipment; downtown, which includes the cost of lost productivity if hardware or software failures cost the system to be unavailable; and space and energy, such as real estate and utility costs.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 6 Foundations of Business Intelligence: Databases and Information Management 1) Which of the following best illustrates the relationship between entities and attributes?

A) The entity CUSTOMER with the attribute PRODUCT B) The entity CUSTOMER with the attribute PURCHASE C) The entity PRODUCT with the attribute PURCHASE D) The entity PRODUCT with the attribute CUSTOMER E) The entity PURCHASE with the attribute CUSTOMER Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 6-1: What are the problems of managing data resources in a traditional file environment?

2) All of the following are issues with the traditional file environment except: A) data inconsistency.

B) inability to develop specialized applications for functional areas.

C) lack of flexibility in creating ad-hoc reports.

D) poor security.

E) data sharing.

Answer: B Difficulty: Challenging AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

3) A characteristic or quality that describes a particular database entity is called a(n): A) field.

B) tuple.

C) key field.

D) attribute.

E) relationship.

Answer: D 149

Difficulty: Easy AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

4) A ________ is an example of pre-digital data storage that is comparable to a database.

A) library card catalog B) cash register receipt C) doctor's office invoice D) list of sales totals on a spreadsheet E) schedule of due dates on a project outline Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 6-1: What are the problems of managing data resources in a traditional file environment?

5) ________ creates confusion that hampers the creation of information systems that integrate data from different sources.

A) Batch processing B) Data redundancy C) Data independence D) Online processing E) Data quality Answer: B Difficulty: Easy AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

6) Data ________ occurs when the same data is duplicated in multiple files of a database.

A) redundancy B) repetition C) independence D) partitions E) discrepancy Answer: A Difficulty: Easy AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

7) Which of the following occurs when the same attribute in related data files has different values?

A) Data redundancy B) Data duplication C) Data dependence D) Data discrepancy E) Data inconsistency Answer: E Difficulty: Challenging 150

AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

8) Which of the following is a grouping of characters into a word, a group of words, or a complete number?

A) File B) Table C) Entity D) Field E) Tuple Answer: D Difficulty: Easy AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

9) The fact that a traditional file system cannot respond to unanticipated information requirements in a timely fashion is an example of which of the following issues with traditional file systems?

A) Program-data dependence B) Lack of flexibility C) Poor security D) Lack of data sharing E) Data redundancy Answer: B Difficulty: Moderate AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

10) A record is a characteristic or quality used to describe a particular entity.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

11) Program-data dependence refers to the coupling of data stored in files and the specific programs required to update and maintain those files such that changes in programs require changes to the data.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 6-1: What are the problems of managing data resources in a traditional file environment?

12) You have been asked to design a new contracts database for a small publishing company.

What fields do you anticipate needing? Which of these fields might be in use in other databases used by the company?

Answer: Author first name, author last name, author address, agent name and address, title of book, book ISBN, date of contract, amount of money, payment schedule, date contract ends.

151

Other databases might be an author database (author names, address, and agent details), a book title database (title and ISBN of book), and financial database (payments made).

Difficulty: Moderate AACSB: Analytical thinking LO: 6-1: What are the problems of managing data resources in a traditional file environment?

152

13) List at least three conditions that contribute to data redundancy and inconsistency.

Answer: Data redundancy occurs when different divisions, functional areas, and groups in an organization independently collect the same piece of information. Because it is collected and maintained in so many different places, the same data item may have: 1. different meanings in different parts of the organization, 2. different names may be used for the same item, and 3. different descriptions for the same condition.

In addition, the fields into which the data is gathered may have different field names, different attributes, or different constraints.

Difficulty: Moderate AACSB: Analytical thinking LO: 6-1: What are the problems of managing data resources in a traditional file environment?

14) Which of the following enables a DBMS to reduce data redundancy and inconsistency?

A) Ability to enforce referential integrity B) Ability to couple program and data C) Use of a data dictionary D) Ability to create two-dimensional tables E) Ability to minimize isolated files with repeated data Answer: E Difficulty: Challenging AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

15) A DBMS makes the: A) physical database available for different logical views.

B) relational database available for different logical views.

C) physical database available for different analytic views.

D) relational database available for different analytic views.

E) logical database available for different analytic views.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

153

16) The logical view of a database: A) displays the organization and structure of data on the physical storage media.

B) includes a digital dashboard.

C) allows the creation of supplementary reports.

D) enables users to manipulate the logical structure of the database.

E) presents data as they would be perceived by end users.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

17) Which of the following is a DBMS for desktop computers?

A) DB2 B) Oracle Database C) Microsoft SQL Server D) Microsoft Access E) Microsoft Exchange Answer: D Difficulty: Challenging AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

18) A(n) ________ represent data as two-dimensional tables.

A) non-relational DBMS B) mobile DBMS C) relational DBMS D) hierarchical DBMS E) object-oriented DBMS Answer: C Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

19) Microsoft SQL Server is a(n): A) DBMS for both desktops and mobile devices.

B) Internet DBMS. C) desktop relational DBMS. D) DBMS for midrange computers.

E) DBMS for mobile devices.

Answer: D Difficulty: Challenging AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

154

20) In a table for customers, the information about a single customer resides in a single: A) field.

B) row.

C) column.

D) table.

E) entity.

Answer: B Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

21) In a relational database, a record is referred to in technical terms as a(n): A) tuple.

B) table.

C) entity.

D) field.

E) key.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

22) A field identified in a table as holding the unique identifier of the table's records is called the: A) primary key.

B) key field.

C) primary field.

D) unique ID. E) primary entity.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

155

23) A field identified in a record as holding the unique identifier for that record is called the: A) primary key.

B) key field.

C) primary field.

D) unique ID. E) key attribute.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

24) In a relational database, the three basic operations used to develop useful sets of data are: A) select, project, and where.

B) select, join, and where.

C) select, project, and join.

D) where, from, and join.

E) where, find, and select.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

25) The select operation: A) combines relational tables to provide the user with more information than is otherwise available.

B) creates a subset consisting of columns in a table.

C) identifies the table from which the columns will be selected.

D) creates a subset consisting of all records in the file that meet stated criteria.

E) creates a subset consisting of rows in a table.

Answer: D Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

156

26) The join operation: A) combines relational tables to provide the user with more information than is otherwise available.

B) identifies the table from which the columns will be selected.

C) creates a subset consisting of columns in a table.

D) organizes elements into segments.

E) creates a subset consisting of rows in a table.

Answer: A Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

27) The project operation: A) combines relational tables to provide the user with more information than is otherwise available.

B) creates a subset consisting of columns in a table.

C) organizes elements into segments.

D) identifies the table from which the columns will be selected.

E) creates a subset consisting of rows in a table.

Answer: B Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

28) Microsoft Access's data dictionary displays all of the following information about a field except the: A) size of the field.

B) format of the field.

C) description of the field.

D) type of the field.

E) the organization within the organization that is responsible for maintaining the data.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

157

29) Which of the following is an automated or manual file that stores information about data elements and data characteristics such as usage, physical representation, ownership, authorization, and security?

A) Data dictionary B) Data definition diagram C) Entity-relationship diagram D) Relationship dictionary E) Data table Answer: A Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

30) Which of the following is a specialized language that programmers use to add and change data in the database?

A) Data access language B) Data manipulation language C) Structured query language D) Data definition language E) DBMS Answer: B Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

31) Which of the following is the most prominent data manipulation language today?

A) Access B) DB2 C) SQL D) Crystal Reports E) NoSQL Answer: C Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

158

32) DBMSs typically include report generating tools in order to: A) retrieve and display data.

B) display data in an easier-to-read format.

C) display data in graphs.

D) perform predictive analysis.

E) analyze the database's performance.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

33) The process of streamlining data to minimize redundancy and awkward many-to-many relationships is called: A) normalization.

B) data scrubbing.

C) data cleansing.

D) data defining.

E) optimization.

Answer: A Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

34) A schematic of the entire database that describes the relationships in a database is called a(n): A) data dictionary.

B) intersection relationship diagram.

C) entity-relationship diagram.

D) data definition diagram.

E) data analysis table.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

159

35) A one-to-many relationship between two entities is symbolized in a diagram by a line that ends with: A) one short mark.

B) two short marks.

C) three short marks.

D) a crow's foot.

E) a crow's foot topped by a short mark.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

36) You are creating a database to store temperature and wind data from various airports.

Which of the following fields is the most likely candidate to use as the basis for a primary key in the Airport table?

A) Address B) City C) Airport code D) State E) Day Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

37) A one-to-one relationship between two entities is symbolized in a diagram by a line that ends: A) in two short marks.

B) in one short mark.

C) with a crow's foot.

D) with a crow's foot topped by a short mark.

E) with a crow's foot topped by two short marks.

Answer: A Difficulty: Challenging AACSB: Application of knowledge LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

160

38) The logical and physical views of data are separated in a DBMS. Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

39) Every record in a file should contain at least one key field.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

40) NoSQL technologies are used to manage sets of data that don't require the flexibility of tables and relations.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

41) CGI is a DBMS programming language that end users and programmers use to manipulate data in the database.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

42) Complicated groupings of data in a relational database need to be adjusted to eliminate awkward many-to-many relationships.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

43) A physical view shows data as it is actually organized and structured on the data storage media.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

161

44) DBMS have a data definition capability to specify the structure of the content of the database.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

45) Relational DBMSs use key field rules to ensure that relationships between coupled tables remain consistent.

Answer: FALSE Difficulty: Challenging AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

46) The small publishing company you work for wants to create a new database for storing information about all of their author contracts. What factors will influence how you design the database?

Answer: Student answers will vary, but should include some assessment of data quality, business processes and user needs, and relationship to existing IT systems. Key points to include are: Data accuracy when the new data is input, establishing a good data model, determining which data is important and anticipating what the possible uses for the data will be, beyond looking up contract information, technical difficulties linking this system to existing systems, new business processes for data input and handling, and contracts management, determining how end users will use the data, making data definitions consistent with other databases, what methods to use to cleanse the data.

Difficulty: Moderate AACSB: Analytical thinking LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

162

47) List and describe three main capabilities or tools of a DBMS. Answer: A DBMS includes capabilities and tools for organizing, managing, and accessing the data in the database. Its most important capabilities and tools are data definition, data dictionary, and data manipulation language. The data definition capability enables a user to be able to specify the structure of the content of the database. This capability is used to create database tables and to define the characteristics of the fields in each table. The data dictionary is used to store definitions of data elements and their characteristics in the database. In large corporate databases, the data dictionary may capture additional information, such as usage; ownership; authorization; security; and the individuals, business functions, programs, and reports that use each data element.

A data manipulation language, such as SQL, that is used to add, change, delete, and retrieve the data in the database. This language contains commands that permit end users and programming specialists to extract data from the database to satisfy information requests and develop applications.

Difficulty: Moderate AACSB: Analytical thinking LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

48) Identify and describe three basic operations used to extract useful sets of data from a relational database.

Answer: The select operation creates a subset consisting of all records (rows) in the table that meets stated criteria. The join operation combines relational tables to provide the user with more information than is available in individual tables. The project operation creates a subset consisting of columns in a table, permitting the user to create new tables that contain only the information required.

Difficulty: Moderate AACSB: Information technology LO: 6-2: What are the major capabilities of database management systems (DBMS) and why is a relational DBMS so powerful?

49) The term big data refers to all of the following except: A) datasets with fewer than a billion records.

B) datasets with unstructured data.

C) machine-generated data (i.e. from sensors).

D) data created by social media (i.e. tweets, Facebook Likes).

E) data from Web traffic.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

163

50) Which of the following technologies would you use to analyze the social media data collected by a major online retailer?

A) OLAP B) Data warehouse C) Data mart D) Hadoop E) DBMS Answer: D Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

51) Which of the following is not one of the techniques used in web mining?

A) Content mining B) Structure mining C) Server mining D) Usage mining E) Data mining Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

52) You work for a retail clothing chain whose primary outlets are in shopping malls and are conducting an analysis of your customers and their preferences. You wish to find out if there are any particular activities that your customers engage in, or the types of purchases made in the month before or after purchasing select items from your store. To do this, you will want to use the data mining software you are using to do which of the following?

A) Identify associations B) Identify clusters C) Identify sequences D) Classify data E) Create a forecast Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

164

53) You work for a car rental agency and want to determine what characteristics are shared among your most loyal customers. To do this, you will want to use the data mining software you are using to do which of the following?

A) Identify associations B) Identify clusters C) Identify sequences D) Classify data E) Create a forecast Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

54) A data warehouse is composed of: A) historical data from legacy systems.

B) current data.

C) internal and external data sources.

D) historic and current internal data.

E) historic external data.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

55) All of the following are technologies used to analyze and manage big data except: A) cloud computing.

B) noSQL. C) in-memory computing.

D) analytic platforms.

E) Hadoop.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

165

56) A household appliances manufacturer has hired you to help analyze its social media datasets to determine which of its refrigerators are seen as the most reliable. Which of the following tools would you use to analyze this data?

A) Text mining tools B) Sentiment analysis software C) Web mining technologies D) Data mining software E) Data governance software Answer: B Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

57) Which of the following tools enables users to view the same data in different ways using multiple dimensions?

A) Predictive analysis B) SQL C) OLAP D) Data mining E) Hadoop Answer: C Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

58) OLAP enables: A) users to obtain online answers to ad-hoc questions in a rapid amount of time.

B) users to view both logical and physical views of data.

C) programmers to quickly diagram data relationships.

D) programmers to normalize data.

E) users to quickly generate summary reports.

Answer: A Difficulty: Easy AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

166

59) Data mining allows users to: A) quickly compare transaction data gathered over many years.

B) find hidden relationships in data.

C) obtain online answers to ad-hoc questions in a rapid amount of time.

D) summarize massive amounts of data into much smaller, traditional reports.

E) access the vast amounts of data in a data warehouse.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

60) In the context of data relationships, the term associations refers to: A) events linked over time.

B) patterns that describe a group to which an item belongs.

C) occurrences linked to a single event.

D) undiscovered groupings.

E) relationships between different customers.

Answer: C Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

61) ________ tools are used to analyze large unstructured data sets, such as e-mail, memos, and survey responses to discover patterns and relationships.

A) OLAP B) Text mining C) In-memory D) Clustering E) Classification Answer: B Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

167

62) Which of the following enables you to create a script that allows a web server to communicate with a back-end database?

A) CGI B) HTML C) Java D) SQL E) NoSQL Answer: A Difficulty: Easy AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

63) Which of the following is software that handles all application operations between browserbased computers and a company's back-end business applications or databases?

A) Database server software B) Application server software C) Web browser software D) Data mining software E) Web server software Answer: B Difficulty: Easy AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

64) In data mining, which of the following involves using a series of existing values to determine what other future values will be?

A) Associations B) Sequences C) Classifications D) Clustering E) Forecasting Answer: E Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

168

65) In data mining, which of the following involves recognizing patterns that describe the group to which an item belongs by examining existing items and inferring a set of rules?

A) Associations B) Sequences C) Classifications D) Clustering E) Forecasting Answer: C Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

66) In data mining, which of the following involves events linked over time?

A) Associations B) Sequences C) Classifications D) Clustering E) Forecasting Answer: B Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

67) MongoDB and SimpleDB are both examples of: A) open source databases.

B) SQL databases.

C) NoSQL databases.

D) cloud databases.

E) big data databases.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

169

68) Which of the following would you use to find patterns in user interaction data recorded by a web server?

A) Web usage mining B) Web server mining C) Web structure mining D) Web content mining E) Web protocol mining Answer: A Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

69) HTML has become the preferred method of communicating with back-end databases because it is a cross-platform language.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

70) Legacy systems are used to populate and update data warehouses.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

71) Multiple data marts are combined and streamlined to create a data warehouse.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

72) You can use OLAP to perform multidimensional data analysis.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

170

73) OLAP is unable to manage and handle queries with very large sets of data.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

74) In-memory computing relies primarily on a computer (RAM) for data storage.

Answer: TRUE Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

75) Middleware is an application that transfers information from an organization's internal database to a web server for delivery to a user as part of a web page.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

76) Implementing a web interface for an organization's internal database usually requires substantial changes to be made to the database.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

77) You can manipulate data on a web server by using a CGI script.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

78) You can use text mining tools to analyze unstructured data, such as memos and legal cases.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

171

79) In a client/server environment, a DBMS is located on a dedicated computer called a web server.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

80) Associations are occurrences linked to multiple events.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

81) High-speed analytic platforms use both relational and non-relational tools to analyze large datasets.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

82) You have been hired by a furniture leasing company to implement its first business intelligence systems and infrastructure. To prepare for your initial report, describe the types of data the firm can use to support business intelligence and the systems that you will implement to support both power users and casual users, and explain how these systems or tools work together.

Answer: All types of data can be used for their business intelligence systems, including operational, historical, machine-generated, Web/social data, audio and video data, and external data. The large datasets can be collected in a Hadoop cluster and used by an analytic platform to support power user queries, data mining, OLAP, etc. A data warehouse can be used to house all data, including smaller data sets and operational data, and be used to support casual use, for queries, reports, and digital dashboards, as well as support the analytic platforms. Smaller data marts can be created from the data warehouse to enable faster querying and typical queries from casual users.

Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

172

83) Describe the ways in which database technologies could be used by an office stationery supply company to achieve low-cost leadership.

Answer: Sales databases could be used to make the supply chain more efficient and minimize warehousing and transportation costs. You can also use sales databases, as well as text mining and sentiment analysis, to determine what supplies are in demand by which customers and whether needs are different in different geographical areas. Business intelligence databases could be used to predict future trends in office supply needs, to help anticipate demand, and to determine the most efficient methods of transportation and delivery.

Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

84) Describe the ways in which database technologies could be used by a toy manufacturer to achieve product differentiation.

Answer: Product databases could be made available to customers for greater convenience and ordering online. Databases could be used to track customer preferences and to help anticipate customer desires. Sales databases could also help clients such as toy stores anticipate when they would need to re-supply, providing an additional service. Data mining, Web mining, and sentiment analysis of big data could help anticipate trends in sales or other factors to help determine new services and products to sell to clients.

Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

173

85) What makes data mining an important business tool? What types of information does data mining produce? In what type of circumstance would you advise a company to use data mining?

Answer: Data mining is one of the data analysis tools that helps users make better business decisions and is one of the key tools of business intelligence. Data mining allows users to analyze large amounts of data and find hidden relationships between data that otherwise would not be discovered. For example, data mining might find that a customer that buys product X is ten times more likely to buy product Y than other customers.

Data mining finds information such as: • Associations or occurrences that are linked to a single event.

• Sequences, events that are linked over time.

• Classification, patterns that describe the group to which an item belongs, found by examining existing items that have been classified and by inferring a set of rules.

• Clusters, unclassified but related groups.

I would advise a company to use data mining when they are looking for new products and services, or when they are looking for new marketing techniques or new markets. Data mining might also be helpful when trying to analyze unanticipated problems with sales whose causes are difficult to identify.

Difficulty: Challenging AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

86) What are the differences between data mining and OLAP? When would you advise a company to use OLAP? Answer: Data mining uncovers hidden relationships and is used when you are trying to discover data and new relationships. It is used to answer questions such as: Are there any product sales that are related in time to other product sales?

In contrast, OLAP is used to analyze multiple dimensions of data and is used to find answers to complex, but known, questions, such as: What were sales of a product—broken down by month and geographical region, and how did those sales compare to sales forecasts?

Difficulty: Moderate AACSB: Information technology LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

87) What are the similarities and differences between a data warehouse and a data mart?

Answer: A data warehouse stores current and historical data of potential interest throughout a company. Data warehouses gather data from multiple operational systems inside the organization. Data warehouses make data available, but do not allow that information to be altered. Data marts are subsets of data warehouses, in which a highly focused portion of an organization's data is placed in a separate database for specific users. Data marts are decentralized, whereas data warehouses are enterprise-wide, central locations for data.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication LO: 6-3: What are the principal tools and technologies for accessing information from databases 174

to improve business performance and decision making?

88) Explain what the term big data refers to. What benefits does it have, and what challenges does it pose?

Answer: The term big data is used to describe datasets with volumes so huge that they are beyond the ability of typical DBMS to capture, store, and analyze. Big data is created by the explosion of data coming from the Web, such as Web traffic, e-mail, Twitter, and Facebook, as well as information from other electronic and networked devices such as sensors and meters.

Businesses are interested in big data because it contains more patterns and interesting anomalies than smaller data sets, with the potential to provide new insights into customer behavior, weather patterns, financial market activity, or other phenomena. However, to derive business value from big data, organizations need new technologies and tools capable of managing and analyzing non-traditional data along with their traditional enterprise data. They also need to know what questions to ask of the data and the limitations of big data. Capturing, storing, and analyzing big data can be expensive, and information from big data may not necessarily help decision-makers.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 6-3: What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?

89) An organization's rules for sharing, disseminating, acquiring, standardizing, classifying, and inventorying information is called a(n): A) information policy.

B) data definition file.

C) data quality audit.

D) data governance policy.

E) data policy.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

90) In a large organization, which of the following functions would be responsible for physical database design and maintenance?

A) Data administration B) Database administration C) Information policy administration D) Data auditing E) Database management Answer: B Difficulty: Easy AACSB: Information technology LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

175

91) Which common database challenge is illustrated by a person receiving multiple copies of an L.L. Bean catalog, each addressed to a slightly different variation of his or her full name?

A) Data normalization B) Data accuracy C) Data redundancy D) Data inconsistency E) Data duplication Answer: D Difficulty: Challenging AACSB: Information technology LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

92) Detecting and correcting data in a database or file that are incorrect, incomplete, improperly formatted, or redundant is called: A) data auditing.

B) defragmentation.

C) data scrubbing.

D) data optimization.

E) data normalization.

Answer: C Difficulty: Easy AACSB: Information technology LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

93) Data cleansing not only corrects errors but also: A) establishes logical relationships between data.

B) structures data.

C) normalizes data.

D) removes duplicate data.

E) enforces consistency among different sets of data.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

176

94) Which of the following is not a method for performing a data quality audit?

A) Surveying entire data files B) Surveying samples from data files C) Surveying data definition and query files D) Surveying end users about their perceptions of data quality E) Surveying managers about their perceptions of data quality Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

95) In a large organization, which of the following functions would be responsible for policies and procedures for managing internal data resources?

A) Data administration B) Database administration C) Information policy administration D) Data auditing E) Database management Answer: A Difficulty: Moderate AACSB: Information technology LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

96) The term data governance refers to the policies and processes for managing the integrity and security of data in a firm.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

97) Data scrubbing is a more intensive corrective process than data cleansing.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

177

98) List three ways that a business's data can become redundant or inconsistent.

Answer: Data redundancy and inconsistency can occur because of (1) employing different names and descriptions for the same entities or attributes; (2) multiple systems feeding a data warehouse; (3) incorrect data entry.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

99) Distributors for a furniture manufacturer are complaining that the billing for goods they order is frequently not correct, and sometimes are sent to the wrong e-mail and postal addresses. What steps would you take to improve the quality of data in the manufacturer's databases?

Answer: The first step is to perform a data quality audit, a survey of the accuracy and level of completeness in all the firm's major databases. Once issues are identified, initiate a program for data cleansing to correct data that is incomplete, improperly formatted, redundant, or just plain wrong.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

100) What is an information policy and why is it needed in a firm?

Answer: An information policy specifies the organization's rules for sharing, disseminating, acquiring, standardizing, classifying, and inventorying information. Information policy lays out specific procedures and accountabilities, identifying which users and organizational units can share information, where information can be distributed, and who is responsible for updating and maintaining the information.

An information policy is needed in firms because data are an important resource, and you don't want people doing whatever they want with them. You need to have rules on how the data are to be organized and maintained and who is allowed to view the data or change them.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication LO: 6-4: Why are information policy, data administration, and data quality assurance essential for managing a firm's data resources?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 7 Telecommunications, the Internet, and Wireless Technology 1) Which of the following is a device that acts as a connection point between computers and can filter and forward data to a specified destination?

A) Hub B) Switch C) Router D) NIC E) Modem Answer: B 178

Difficulty: Easy AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

2) The Internet is based on which three key technologies?

A) TCP/IP, HTML, and HTTP B) TCP/IP, HTTP, and packet switching C) Client/server computing, packet switching, and the development of communications standards for linking networks and computers D) Client/server computing, packet switching, and HTTP E) E-mail, instant messaging, and newsgroups Answer: C Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

3) Which of the following involves slicing digital messages into parcels, transmitting them along different communication paths, and reassembling them at their destinations?

A) Multiplexing B) Packet shifting C) Packet routing D) ATM E) Packet switching Answer: E Difficulty: Easy AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

179

4) The telephone system is an example of a ________ network.

A) peer-to-peer B) wireless C) packet-switched D) circuit-switched E) client/server Answer: D Difficulty: Easy AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

5) Which of the following is not a characteristic of packet switching?

A) Packets travel independently of each other.

B) Packets are routed through many different paths.

C) Packet switching requires point-to-point circuits.

D) Packets include data for checking transmission errors.

E) Packets are reassembled into the original message when they reach their destinations.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

6) In TCP/IP, IP is responsible for which of the following?

A) Disassembling and reassembling packets during transmission B) Establishing an Internet connection between two computers C) Moving packets over the network D) Sequencing the transfer of packets E) Breaking messages down into packets Answer: A Difficulty: Challenging AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

180

7) Which of the following is the best description of a protocol in a telecommunications network architecture?

A) A device that handles the switching of voice and data in a local area network B) A standard set of rules and procedures for control of communications in a network C) A communications service for microcomputer users D) The main computer in a telecommunications network E) A pathway through which packets are routed Answer: B Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

8) What are the four layers of the TCP/IP reference model?

A) Physical, application, transport, and network interface B) Physical, Application, Internet, and Network Interface C) Application, Transport, Internet, and Network Interface D) Application, Hardware, Internet, and Network Interface E) Software, Hardware, Network Interface, Internet Answer: C Difficulty: Challenging AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

9) On which of the following protocols is the Internet based?

A) TCP/IP B) FTP C) IMAP D) HTTP E) DNS Answer: A Difficulty: Easy AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

181

10) A(n) ________ is a device that forwards packets of data through different networks, ensuring that the data gets to the right address.

A) modem B) router C) packet D) telnet E) hub Answer: B Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

11) Computer networks are fundamentally different from telephone networks.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

12) A NOS must reside on a dedicated server computer in order to manage a network.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

13) A hub is a networking device that is used to filter and forward data to specified destinations on the network.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

14) In a client/server network, a network server provides every connected client with an address so it can be found by others on the network.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

182

15) A computer network consists of at least three computers.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

16) Central large mainframe computing has largely replaced client/server computing.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

17) Circuit switching makes much more efficient use of the communications capacity of a network than does packet switching.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

18) Two computers using TCP/IP can communicate even if they are based on different hardware and software platforms.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

19) In a large company today, you will often find an infrastructure that includes hundreds of small LANs linked to each other as well as to corporate-wide networks.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

20) TCP/IP was developed during the early 1970s to support efforts to help scientists transmit data among different types of computers over long distances.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

183

21) How does packet switching work?

Answer: Packet switching is a method of slicing digital messages into parcels called packets, sending the packets along different communication paths as they become available, and then reassembling the packets once they arrive at their destinations. Packet switching makes much more efficient use of the communications capacity of a network than did circuit-switching. In packet-switched networks, messages are first broken down into small fixed bundles of data called packets. The packets include information for directing the packet to the right address and for checking transmission errors along with the data. The packets are transmitted over various communication channels using routers, each packet traveling independently. Packets of data originating at one source will be routed through many different paths and networks before being reassembled into the original message when they reach their destinations.

Difficulty: Moderate AACSB: Analytical thinking LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

22) Identify the layers of the Department of Defense reference model for TCP/IP, and describe how this model works.

Answer: The application layer enables client application programs to access the other layers and defines the protocols that applications use to exchange data. One of these application protocols is the Hypertext Transfer Protocol (HTTP), which is used to transfer Web page files.

The transport layer is responsible for providing the application layer with communication and packet services. This layer includes TCP and other protocols. The Internet layer is responsible for addressing, routing, and packaging data packets called IP datagrams. The Internet Protocol is one of the protocols used in this layer. The network interface layer is responsible for placing packets on and receiving them from the network medium, which could be any networking technology.

Data sent from one computer to the other passes downward through all four layers, starting with the sending computer's application layer and passing through the network interface layer.

After the data reach the recipient host computer, they travel up the layers and are reassembled into a format the receiving computer can use. If the receiving computer finds a damaged packet, it asks the sending computer to retransmit it. This process is reversed when the receiving computer responds.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

184

23) How are modern telephone and computer networks different from what firms used in the past?

Answer: Modern telephone and computer networks are converging into a single digital network using shared Internet-based standards and technology. Telecom companies offer full suites of telecommunication and Internet service. In the past, these two types of networks were distinct—telephone networks and computer networks performed completely different services and were not affiliated with one another. Additionally, modern communication networks are much faster and more cost effective than they were in the past.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 7-1: What are the principal components of telecommunications networks and key networking technologies?

24) Which signal types are represented by a continuous waveform?

A) Laser B) Optical C) Digital D) RFID E) Analog Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

25) To use the analog telephone system for sending digital data, you must also use: A) a modem.

B) a router.

C) DSL. D) twisted wire.

E) TCP/IP. Answer: A Difficulty: Easy AACSB: Information technology LO: 7-2: What are the different types of networks?

26) Which type of network is used to connect digital devices within a half-mile or 500-meter radius?

A) Wi-Fi B) LAN C) WAN D) MAN E) SAN Answer: B Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

185

27) Which type of network treats all processors equally and allows peripheral devices to be shared without going to a separate server?

A) MAN B) Wireless C) LAN D) Windows domain network E) Peer-to-peer Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

28) Which type of network would be most appropriate for a business comprised of three employees and a manager located in the same office space, whose primary need is to share documents?

A) MAN B) Domain-based LAN C) Peer-to-peer network D) WAN E) SAN Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 7-2: What are the different types of networks?

29) A network that spans a city, and sometimes its major suburbs, as well, is called a: A) CAN. B) MAN. C) LAN. D) WAN. E) WSN. Answer: B Difficulty: Easy AACSB: Information technology LO: 7-2: What are the different types of networks?

30) A network that covers entire geographical regions is most commonly referred to as a(n): A) local area network.

B) intranet.

C) peer-to-peer network.

D) wide area network.

E) metropolitan area network.

Answer: D Difficulty: Easy AACSB: Information technology LO: 7-2: What are the different types of networks?

186

31) Bandwidth is the: A) number of frequencies that can be broadcast through a medium.

B) number of cycles per second that can be sent through a medium.

C) difference between the highest and lowest frequencies that can be accommodated on a single channel.

D) total number of bytes that can be sent through a medium per second.

E) geographical distance spanned by a network.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

32) The total amount of digital information that can be transmitted through any telecommunications medium is measured in: A) bps.

B) Hertz.

C) baud.

D) gigaflops.

E) RPMs. Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

33) A(n) ________ signal is a discrete, binary waveform that transmits data coded into two discrete states such as 1-bits and 0-bits.

A) modulated B) broadband C) T1 D) analog E) digital Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

34) Coaxial cable is similar to that used for cable television and consists of thickly insulated copper wire.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

187

35) Fiber-optic cable is more expensive and harder to install than wire media.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

36) The number of cycles per second that can be sent through any telecommunications medium is measured in kilobytes.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 7-2: What are the different types of networks?

37) You have been hired by a small new web design firm to set up a network for its single office location. The network is primarily needed for exchanging files, accessing and managing beta websites on their web server, and connecting to the Internet. The firm hires many freelancers who come into the office on an ad-hoc basis and it does not have a lot of money to spend on infrastructure. What type of network will you recommend?

Answer: Student answers will vary. An example answer is: I would recommend a mixed wired and wireless network. The wired LAN would connect the web servers and primary workstations and connect via cable service to the Internet. Freelancers could connect wirelessly via access points.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-2: What are the different types of networks?

38) What are the two types of signals used to communicate a message in a network and how are they different? What device converts one type to the other type?

Answer: The two ways to communicate a message in a network are analog signals and digital signals. An analog signal is represented by a continuous waveform that passes through a communications medium and is used for voice communication. Examples include the telephone handset and other types of speakers that generate analog sound. On the other hand, digital signals are binary waveforms (not continuous) that communicate information as strings of two discrete states: one bit or zero bits (often depicted as strings of zeroes and ones). Computers use these types of signals and use modems to convert digital signals to analog signals.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 7-2: What are the different types of networks?

188

39) What are some of the common types of physical transmission media and what differentiates them from one another?

Answer: Common types of physical transmission media include twisted pair wire, coaxial cable, fiber-optic cable, and wireless transmission media. Twisted pair wire consists of strands of copper wire twisted in pairs for voice and data communications. Coaxial cable consists of thickly insulated copper wires capable of high-speed data transmission and resistance to interference. Fiber-optic cable consists of strands of clear glass fiber that transmit data as pulses of light generated by lasers. Wireless transmission media is based on radio signals and involves satellite microwave systems and cellular networks.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 7-2: What are the different types of networks?

40) Which of the following is not one of the top five search engines?

A) Facebook B) Yahoo C) Microsoft Bing D) Ask E) Google Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

41) Digital subscriber lines: A) operate over existing telephone lines to carry voice, data, and video.

B) operate over coaxial cable lines to deliver Internet access.

C) are very-high-speed data lines typically leased from long-distance telephone companies.

D) have up to twenty-four 64-Kbps channels.

E) are assigned to every computer on the Internet.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

189

42) T1 lines: A) operate over existing telephone lines to carry voice, data, and video.

B) operate over coaxial lines to deliver Internet access.

C) do not provide guaranteed service levels, but simply "best effort."

D) have up to twenty-four 64-Kbps channels.

E) are high-speed, leased data lines providing guaranteed service levels.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

43) What service converts IP addresses into more recognizable alphanumeric names?

A) HTML B) FTP C) IP D) HTTP E) DNS Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

44) The child domain of the root is called the: A) top-level domain.

B) second-level domain.

C) host name.

D) domain extension.

E) mid-tier domain.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

190

45) In the domain name "http://books.azimuth-interactive.com", which element is the secondlevel domain?

A) books B) azimuth-interactive.com C) com D) none; there is no second-level domain in this name E) books.azimuth-interactive Answer: B Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

46) Which organization helps define the overall structure of the Internet?

A) none (no one "owns" the Internet) B) W3C C) ICANN D) The Department of Commerce (U.S.) E) IAB Answer: E Difficulty: Challenging AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

47) IPv6 has been developed in order to: A) update the packet transmission protocols for higher bandwidth.

B) create more IP addresses.

C) allow for different levels of service.

D) support Internet2.

E) reduce excess IP addresses.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

191

48) Predictive search in Google's search engine: A) maintains a history of your searches and then predicts what you will search on next.

B) uses a tracking service and cookies on your browser to predict search results.

C) uses a knowledge graph of what similar people searched on to predict your search interests.

D) uses a semantic approach to predict what you are looking for.

E) predicts what you are looking for as you enter words into the query box.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

49) Instant messaging is a type of ________ service.

A) chat B) cellular C) e-mail D) wireless E) network Answer: A Difficulty: Easy AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

50) ________ integrate disparate channels for voice communications, data communications, instant messaging, e-mail, and electronic conferencing into a single experience.

A) Wireless networks B) Intranets C) Virtual private networks D) Modems E) Unified communications Answer: E Difficulty: Easy AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

192

51) A VPN: A) is an encrypted private network configured within a public network.

B) is more expensive than a dedicated network.

C) provides secure, encrypted communications using Telnet.

D) is an Internet-based service for delivering voice communications.

E) is a proprietary networking service technology developed by individual corporations.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

52) Web browser software requests web pages from the Internet using which of the following protocols?

A) URL B) HTTP C) DNS D) HTML E) FTP Answer: B Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

53) Together, a protocol prefix, a domain name, a directory path, and a document name, are called a(n): A) uniform resource locator.

B) IP address.

C) third-level domain.

D) root domain.

E) child domain.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

193

54) The most common web server today is: A) Microsoft IIS. B) WebSTAR. C) IBM HTTP Server.

D) Netscape Server.

E) Apache HTTP Server.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

55) Which of the following pulls content from websites and feeds it automatically to a user's computers?

A) FTP B) RSS C) HTTP D) Bluetooth E) IPv6 Answer: B Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

56) Which of the following can be used to help a website achieve a higher ranking with the major search engines?

A) VPN B) IAB C) SEM D) SEO E) RSS Answer: D Difficulty: Easy AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

194

57) Which of the following statements is not true about search engines?

A) They are arguably the Internet's "killer app."

B) They have solved the problem of how users instantly find information on the Internet.

C) They are monetized almost exclusively by search engine marketing.

D) There are hundreds of search engines vying for user attention, with no clear leader having yet emerged.

E) Users are increasingly using search engines on mobile devices.

Answer: D Difficulty: Easy AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

58) Which process is used to protect transmitted data in a VPN? A) Tunneling B) PPP C) VOIP D) Packet-switching E) Chaining Answer: A Difficulty: Challenging AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

59) ________ monetizes the value of the data stored by search engines.

A) TCP/IP B) RSS C) WiMax D) IoT E) Search Engine Marketing Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

195

60) Shopping bots use ________ software for searching the Internet.

A) Web 2.0 B) Web 3.0 C) intelligent agent D) comparison E) SEO Answer: C Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

61) Which of the following is not a defining feature of Web 2.0?

A) Interactivity B) Real-time user control C) Semantic search D) Social participation (sharing) E) User-generated content Answer: C Difficulty: Challenging AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

62) A(n) ________ is a commercial organization with a permanent connection to the Internet that sells temporary connections to retail subscribers.

A) RSS B) WAN C) NFP D) ISP E) FTP Answer: D Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

196

63) The backbone networks of the Internet are typically owned by long-distance telephone companies called: A) regional network providers.

B) enhanced service providers.

C) internet bulk providers.

D) backbone providers.

E) network service providers.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

64) A(n) ________ is software for locating and managing stored web pages.

A) web server B) net server C) router D) modem E) hub Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

65) More than 200 million Americans access the Internet via mobile devices.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

66) Wikis allow visitors to change or add to the original posted material.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

67) The Domain Name System (DNS) converts domain names to IP addresses.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

197

68) VoIP technology delivers voice information in digital form using packet switching.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

69) Web 3.0 is an effort to add a layer of meaning to the existing web in order to reduce the amount of human involvement in searching for and processing web information.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

70) Mobile search makes up at more than 50% of all Internet searches.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

71) The "Internet of Things" refers to a vision of a pervasive Web, in which common objects are connected to and controlled over the Internet.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

72) Digital rights activists believe "zero-rating" practices violate net neutrality principles.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

73) In addition to being an online retailer, Amazon is also a powerful search engine.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

198

74) The emerging Internet of People is based on sensors attached to clothing and personal effects that monitor physical states and locations of individuals.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

75) What is IPv6 and why is it necessary?

Answer: The Internet was not originally designed to handle the transmission of massive quantities of data and billions of users. Because of sheer Internet population growth, the world is about to run out of available IP addresses using the old addressing convention. The old addressing system is being replaced by a new version of the IP addressing schema called IPv6 (Internet Protocol version 6), which contains 128-bit addresses (2 to the power of 128), or more than a quadrillion possible unique addresses. IPv6 is compatible with most modems and routers sold today, and IPv6 will fall back to the old addressing system if IPv6 is not available on local networks. The transition to IPv6 will take several years as systems replace older equipment.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

76) What are the business advantages of using voice over IP (VoIP) technology?

Answer: Business can lower costs by using the Internet to deliver voice information, avoiding the tolls charged by local and long-distance telephone networks. They can lower costs from not having to create a separate telephone network. VOIP enables communication by supporting Internet conference calls using video. VOIP also provides flexibility—phones can be added or moved to different offices without rewiring or reconfiguring the network.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

77) What is Web 3.0, and how do you think Web 3.0 developments could impact businesses?

Answer: Web 3.0 is the vision of the next generation of the web in which all of the information available on the web is woven together into a single experience. The related movement called the Semantic Web is a collaborative effort to add a layer of meaning to existing information to reduce the amount of human time spent in searching and processing that information. Student views on the impact on businesses would vary. An example answer is: This potentially could have huge effects on businesses as simple analysis becomes mechanized, requiring fewer humans to perform this basic task.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

199

78) Blogs, wikis, and social networking sites were designed for individuals to communicate with each other. What uses do businesses have for these tools? Give specific examples.

Answer: Businesses can use these tools to reach out and market to potential new customers.

For example, many businesses have Facebook sites to market their product to specific groups on Facebook. They can use these tools to support and give added value to existing customers.

For example, a software company could have a blog that discusses in-depth use of a software product. Businesses can also use these tools within their company to communicate between departments and share knowledge. For example, a company wiki could be set up as a repository of expert information.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

79) What has made the Google search engine so successful?

Answer: The Google search engine became so successful because it was one of the first search engines to incorporate page ranking. Not only does it index the web pages it finds according to both keywords and combinations of keywords, it also ranks each page according to the number of pages that link to it, and the number of pages it links to itself. This helped make search results more relevant when compared to search engines relying solely on key words used on web pages. A user could be relatively certain that they would find relevant information within the top results of a Google search. Improved search results for the user, along with continual improvements to its search engine, the development and other web applications, tools, and its Ad Sense product where it sells keywords to the highest bidder has made Google so successful as a search engine and marketing firm.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

80) Explain the Domain Name System. What are some of the common domain name extensions currently available and what types of services do they designate?

Answer: The Domain Name System (DNS) converts domain names to IP addresses. Domain names are the English-like names that correspond to the unique 32-bit numeric IP address for each computer connected to the Internet. DNS is a hierarchy, with the root domain at the top, top-level domains such as .com and .edu one level below, and second-level domains designate a top level name and a second level name, like amazon.com. Common domain name extensions include .edu (educational institutions), .gov (government agencies), .mil (military), .net (network computers), .org (nonprofit organizations and foundations), .biz (business firms), and .info (information providers). Additionally, countries have their own domain names. Answers may cite a variety of other domain name extensions.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 7-3: How do the Internet and Internet technology work, and how do they support communication and e-business?

200

81) All of the following are physical components of an RFID system except: A) bar codes.

B) antennas.

C) radio transmitters.

D) tags.

E) a stationary or handheld device.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

82) Which digital cellular standard is used widely throughout the world except the United States?

A) GSM B) CDMA C) WLAN D) LTD E) 4G Answer: A Difficulty: Challenging AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

83) The concept of a future web in which it is commonplace for everyday objects to be connected, controlled or monitored over the Internet is called: A) the Internet of Things.

B) the Semantic Web. C) Internet2.

D) a 3-D Web. E) Web 2.0.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

201

84) Which of the following statements about RFID is not true?

A) RFIDs transmit only over a short range.

B) RFIDs use an antenna to transmit data.

C) Microchips embedded in RFIDs are used to store data.

D) RFIDs require line-of-sight contact to be read.

E) RFID tags and antennas come in a variety of shapes and sizes.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

85) Which of the following is the first generation of cellular systems suitable for watching videos?

A) 2G B) 2.5G C) 3G D) 3.5G E) 4G Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

86) 4G networks use which of the following standards?

A) GSM and LTD B) CDMA and PAN C) LTE and LTD D) T-Mobile and AT&T E) LTE and WiMax Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

202

87) The most appropriate wireless networking standard for creating PANs is: A) I-mode.

B) IEEE 802.11b.

C) Wi-Fi. D) Bluetooth.

E) RFID. Answer: D Difficulty: Moderate AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

88) Bluetooth can be used to link up to ________ devices within a 10-meter area using lowpower, radio-based communication.

A) two B) five C) eight D) fifteen E) twenty Answer: C Difficulty: Challenging AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

89) One or more access points positioned on a ceiling, wall, or other strategic spot in a public place to provide maximum wireless coverage for a specific area are referred to as: A) touch points.

B) netcenters.

C) hot points.

D) wireless hubs.

E) hotspots.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

203

90) The 802.11 set of standards is known as: A) WLAN. B) WSN. C) Wi-Fi. D) WiMax. E) WAN. Answer: C Difficulty: Moderate AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

91) The WiMax standard can transmit up to a distance of approximately: A) 30 meters.

B) 500 meters.

C) 30 miles.

D) 5 miles.

E) 70 miles.

Answer: C Difficulty: Challenging AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

92) Based on your reading of the examples in the chapter, which of the following would be the best use of RFID for a business?

A) Logging transactions B) Managing the supply chain C) Lowering network costs D) Enabling client communication E) Improving employee engagement Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

204

93) Macy's Pick to the Last Unit system, described in the chapter-opening case, is an example of which of the following?

A) IoT application B) IoP application C) BLE application D) GPS application E) Web 3.0 application Answer: A Difficulty: Challenging AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

94) A(n) ________ is a box consisting of a radio receiver/transmitter and antennas that links to a wired network, router, or hub.

A) RFID receiver B) WiMax receiver C) access point D) hub E) hotspot Answer: C Difficulty: Challenging AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

95) RFID technology is being gradually replaced by less costly technologies such as WSNs. Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

96) Apple Pay uses an RFID-related technology called near field communication.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

97) NFC tags are always passive.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

205

98) How are RFID systems used in inventory control and supply chain management?

Answer: In inventory control and supply chain management, RFID systems capture and manage more detailed information about items in warehouses or in production than bar coding systems. If a large number of items are shipped together, RFID systems track each pallet, lot, or even unit item in the shipment. This technology may help companies improve receiving and storage operations by enhancing their ability to "see" exactly what stock is stored in warehouses or on retail store shelves.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

99) What are wireless sensor networks? How do they work and what are they used for?

Answer: Wireless sensor networks (WSNs) are networks of interconnected wireless devices that are embedded into the physical environment to provide measurements of many points over large spaces. These devices have built-in processing, storage, and radio frequency sensors and antennas. They are linked into an interconnected network that routes the data they capture to a computer for analysis. These networks range from hundreds to thousands of nodes. Because wireless sensor devices are placed in the field for years at a time without any maintenance or human intervention, they must have very low power requirements and batteries capable of lasting for years. Wireless sensor networks are valuable in areas such as monitoring environmental changes; monitoring traffic or military activity; protecting property; efficiently operating and managing machinery and vehicles; establishing security perimeters; monitoring supply chain management; or detecting chemical, biological, or radiological material.

Difficulty: Challenging AACSB: Analytical thinking LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

100) What are some of the standards and networks used in digital cellular service, and where are they in use?

Answer: Common cellular system standards include the Global System for Mobile Communications (GSM), which is used in Europe and much of the world outside of the United States. In the U.S., Code Division Multiple Access is used by Verizon and Sprint. It is a more efficient system than GSM. The generations of networks in use today by cellular systems includes 3G and 4G. 4G networks offer higher speeds than 3G. The standards in use by 4G Networks are Long Term Evolution (LTE) and Worldwide Interoperability for Microwave Access (WiMax).

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 7-4: What are the principal technologies and standards for wireless networking, communication, and Internet access?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 8 Securing Information Systems 1) Which of the following refers to policies, procedures, and technical measures used to prevent 206

unauthorized access, alteration, theft, or physical damage to information systems?

A) Security B) Controls C) Benchmarking D) Algorithms E) Identity management Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

2) Which of the following refers to all of the methods, policies, and organizational procedures that ensure the safety of the organization's assets, the accuracy and reliability of its accounting records, and operational adherence to management standards?

A) Legacy systems B) SSID standards C) Vulnerabilities D) Security policy E) Controls Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

3) Most computer viruses deliver a: A) worm.

B) Trojan horse.

C) driveby download.

D) keylogger.

E) payload.

Answer: E Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

207

4) Which of the following statements about wireless security is not true?

A) SSIDs are broadcast multiple times and can be picked up fairly easily by sniffer programs.

B) Radio frequency bands are easy to scan.

C) An intruder who has associated with an access point by using the correct SSID is capable of accessing other resources on the network.

D) Intruders can force a user's NIC to associate with a rogue access point.

E) Bluetooth is the only wireless technology that is not susceptible to hacking by eavesdroppers.

Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

5) All of the following are specific security challenges that threaten the communications lines in a client/server environment except: A) errors.

B) tapping.

C) theft and fraud.

D) radiation.

E) sniffing.

Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

6) All of the following are specific security challenges that threaten corporate servers in a client/server environment except: A) hacking.

B) malware.

C) denial-of-service attacks.

D) sniffing.

E) vandalism.

Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

208

7) All of the following are specific security challenges that threaten corporate systems in a client/server environment except: A) theft of data.

B) copying of data.

C) alteration of data.

D) radiation.

E) hardware failure.

Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

8) CryptoLocker is an example of which of the following?

A) Worm B) SQL injection attack C) Sniffer D) Evil twin E) Ransomware Answer: E Difficulty: Easy AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

9) Which of the following statements about Internet security is not true?

A) The use of P2P networks can expose a corporate computer to outsiders.

B) A corporate network without access to the Internet is more secure than one that provides access.

C) VoIP is more secure than the switched voice network.

D) Instant messaging can provide hackers access to an otherwise secure network.

E) Smartphones have the same security weaknesses as other Internet devices.

Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

10) A Trojan horse: A) is software that appears to be benign but does something other than expected.

B) is a virus that replicates quickly.

C) is malware named for a breed of fast-moving Near-Eastern horses.

D) installs spyware on users' computers.

E) is a type of sniffer used to infiltrate corporate networks.

Answer: A Difficulty: Easy AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

209

11) A salesperson clicks repeatedly on the online ads of a competitor in order to drive the competitor's advertising costs up. This is an example of: A) phishing.

B) pharming.

C) spoofing.

D) evil twins.

E) click fraud.

Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

12) Which of the following is a virus that uses flaws in Windows software to take over a computer remotely?

A) Sasser B) Zeus C) Cryptolocker D) ILOVEYOU E) Conficker Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

13) ________ is malware that hijacks a user's computer and demands payment in return for giving back access.

A) A Trojan horse B) Ransomware C) Spyware D) A virus E) An evil twin Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

14) ________ is malware that logs and transmits everything a user types.

A) Spyware B) A Trojan horse C) A keylogger D) A worm E) A sniffer Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

210

15) Which of the following statements about botnets is not true?

A) Eighty percent of the world's malware is delivered by botnets.

B) Botnets are often used to perpetrate DDoS attacks.

C) Ninety percent of the world's spam is delivered by botnets.

D) Botnets are often used for click fraud.

E) It is not possible to make a smartphone part of a botnet.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

16) Using numerous computers to inundate and overwhelm the network from numerous launch points is called a(n) ________ attack.

A) DDoS B) DoS C) SQL injection D) phishing E) botnet Answer: A Difficulty: Moderate AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

17) Which of the following is not an example of a computer used as a target of crime?

A) Knowingly accessing a protected computer to commit fraud B) Accessing a computer system without authority C) Illegally accessing stored electronic communication D) Threatening to cause damage to a protected computer E) Breaching the confidentiality of protected computerized data Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

18) Which of the following is not an example of a computer used as an instrument of crime?

A) Theft of trade secrets B) Intentionally attempting to intercept electronic communication C) Unauthorized copying of software D) Breaching the confidentiality of protected computerized data E) Schemes to defraud Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

211

19) Which of the following specifically makes malware distribution and hacker attacks to disable websites a federal crime?

A) Computer Fraud and Abuse Act B) Economic Espionage Act C) Electronic Communications Privacy Act D) Data Security and Breach Notification Act E) National Information Infrastructure Protection Act Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

20) The intentional defacement or destruction of a website is called: A) spoofing.

B) cybervandalism.

C) cyberwarfare.

D) phishing.

E) pharming.

Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

21) Evil twins are: A) Trojan horses that appears to the user to be a legitimate commercial software application.

B) e-mail messages that mimic the e-mail messages of a legitimate business.

C) fraudulent websites that mimic a legitimate business's website.

D) computers that fraudulently access a website or network using the IP address and identification of an authorized computer.

E) bogus wireless network access points that look legitimate to users.

Answer: E Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

22) Pharming involves: A) redirecting users to a fraudulent website even when the user has typed in the correct address in the web browser.

B) pretending to be a legitimate business's representative in order to garner information about a security system.

C) setting up fake website to ask users for confidential information.

D) using e-mails for threats or harassment.

E) setting up fake Wi-Fi access points that look as if they are legitimate public networks.

Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

212

23) Which of the following is the single greatest cause of network security breaches?

A) Viruses B) User lack of knowledge C) Trojan horses D) Cyberwarfare E) Bugs Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

24) Tricking employees into revealing their passwords by pretending to be a legitimate member of a company is called: A) sniffing.

B) social engineering.

C) phishing.

D) pharming.

E) snooping Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

25) According to Ponemon Institute's 2015 Annual Cost of Cyber Crime Study, the average annualized cost of cybercrime for companies in the United States was approximately: A) $1.5 million.

B) $15 million.

C) $150 million.

D) $1.5 billion.

E) $15 billion.

Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

26) Which of the following refers to eavesdroppers driving by buildings or parking outside and trying to intercept wireless network traffic?

A) War driving B) Sniffing C) Cybervandalism D) Drive-by tapping E) Snooping Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

213

27) ________ is a crime in which an imposter obtains key pieces of personal information to impersonate someone else.

A) Identity theft B) Spoofing C) Social engineering D) Evil twins E) Pharming Answer: A Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

28) ________ identify the access points in a Wi-Fi network.

A) NICs B) Mac addresses C) URLs D) UTMs E) SSIDs Answer: E Difficulty: Challenging AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

29) A foreign country attempting to access government networks in order to disable a national power grid is an example of: A) phishing.

B) denial-of-service attacks.

C) cyberwarfare.

D) cyberterrorism.

E) evil twins.

Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

30) According to the 2016 Identity Fraud Study by Javelin Strategy & Research, how much did consumers lose to identity fraud in 2015?

A) $1.5 million B) $15 million C) $150 million D) $1.5 billion E) $15 billion Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

214

31) All of the following have contributed to an increase in software flaws except: A) the growing complexity of software programs.

B) the growing size of software programs.

C) demands for timely delivery to markets.

D) the inability to fully test programs.

E) the increase in malicious intruders seeking system access.

Answer: E Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

32) Which of the following is an example of a keylogger?

A) Zeus B) Conficker C) Sasser D) ILOVEYOU E) Cryptolocker Answer: A Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

33) Smartphones have the same security flaws as other Internet-connected devices.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

34) The Apple iOS platform is the mobile platform most frequently targeted by hackers.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

35) Viruses can be spread through e-mail.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

36) The term cracker is used to identify a hacker whose specialty is breaking open security systems.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

215

37) Wireless networks are more difficult for hackers to gain access too because radio frequency bands are difficult to scan.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

38) A computer virus replicates more quickly than a computer worm.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

39) One form of spoofing involves forging the return address on an e-mail so that the e-mail message appears to come from someone other than the sender.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

40) Sniffers enable hackers to steal proprietary information from anywhere on a network, including e-mail messages, company files, and confidential reports.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

41) DoS attacks are used to destroy information and access restricted areas of a company's information system.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

42) Zero defects cannot be achieved in larger software programs because fully testing programs that contain thousands of choices and millions of paths would require thousands of years.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

43) Most IoT devices support sophisticated security approaches.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

216

44) Malicious software programs referred to as spyware include a variety of threats such as computer viruses, worms, and Trojan horses.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

45) What are the security challenges faced by wireless networks?

Answer: Wireless networks are vulnerable because radio frequency bands are easy to scan.

Both Bluetooth and Wi-Fi networks are susceptible to hacking by eavesdroppers. Local area networks (LANs) using the 802.11 standard can be easily penetrated by outsiders armed with laptops, wireless cards, external antennae, and hacking software. Hackers use these tools to detect unprotected networks, monitor network traffic, and, in some cases, gain access to the Internet or to corporate networks. Wi-Fi transmission technology was designed to make it easy for stations to find and hear one another. The service set identifiers (SSIDs) identifying the access points in a Wi-Fi network are broadcast multiple times and can be picked up fairly easily by intruders' sniffer programs. Wireless networks in many locations do not have basic protections against war driving, in which eavesdroppers drive by buildings or park outside and try to intercept wireless network traffic. A hacker can employ an 802.11 analysis tool to identify the SSID. An intruder that has associated with an access point by using the correct SSID is capable of accessing other resources on the network, using the Windows operating system to determine which other users are connected to the network, access their computer hard drives, and open or copy their files. Intruders also use the information they have gleaned to set up rogue access points on a different radio channel in physical locations close to users to force a user's radio NIC to associate with the rogue access point. Once this association occurs, hackers using the rogue access point can capture the names and passwords of unsuspecting users.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

46) Explain how an SQL injection attack works and what types of systems are vulnerable to this type of attack.

Answer: SQL injection attacks take advantage of vulnerabilities in poorly coded web application software to introduce malicious code into a company's systems and networks. These vulnerabilities occur when a web application fails to properly validate or filter data entered by a user on a web page, which might occur when ordering something online. An attacker uses this input validation error to send a rogue SQL query to the underlying database to access the database, plant malicious code, or access other systems on the network. Large web applications using databases are most vulnerable, as they may have hundreds of places for inputting user data, each of which creates an opportunity for an SQL injection attack.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

217

47) How is the security of a firm's information system and data affected by its people, organization, and technology? Is the contribution of one of these dimensions any more important than the other? Why? Answer: There are various technological essentials to protecting an information system: firewalls, authentication, encryption, anti-virus protection etc. Without technology implemented correctly, there is no security. A firm's employees are its greatest threat, in terms of embezzlement and insider fraud, errors, and lax enforcement of security policies. Probably the most important dimension is organization, because this is what determines a firm's business processes and policies. The firm's information policies can most enhance security by stressing intelligent design of security systems, appropriate use of security technology, and the usability of its security processes.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 8-1: Why are information systems vulnerable to destruction, error, and abuse?

48) The HIPAA Act of 1996: A) requires financial institutions to ensure the security of customer data.

B) specifies best practices in information systems security and control.

C) imposes responsibility on companies and management to safeguard the accuracy of financial information.

D) outlines medical security and privacy rules.

E) identifies computer abuse as a crime and defines abusive activities.

Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 8-2: What is the business value of security and control?

49) The Gramm-Leach-Bliley Act: A) requires financial institutions to ensure the security of customer data.

B) specifies best practices in information systems security and control.

C) imposes responsibility on companies and management to safeguard the accuracy of financial information.

D) outlines medical security and privacy rules.

E) identifies computer abuse as a crime and defines abusive activities.

Answer: A Difficulty: Challenging AACSB: Application of knowledge LO: 8-2: What is the business value of security and control?

218

50) The Sarbanes-Oxley Act: A) requires financial institutions to ensure the security of customer data.

B) specifies best practices in information systems security and control.

C) imposes responsibility on companies and management to safeguard the accuracy of financial information.

D) outlines medical security and privacy rules.

E) identifies computer abuse as a crime and defines abusive activities.

Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 8-2: What is the business value of security and control?

51) Which of the following is the most common type of electronic evidence?

A) Voice-mail B) Spreadsheets C) Instant messages D) E-mail E) VOIP data Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 8-2: What is the business value of security and control?

52) Which of the following is a type of ambient data?

A) Computer log containing recent system errors B) A file deleted from a hard disk C) A file that contains an application's user settings D) A set of raw data from an environmental sensor E) Data that has been recorded over Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 8-2: What is the business value of security and control?

53) Computer forensics tasks include all of the following except: A) presenting collected evidence in a court of law.

B) securely storing recovered electronic data.

C) collecting physical evidence on the computer.

D) finding significant information in a large volume of electronic data.

E) recovering data from computers while preserving evidential integrity.

Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 8-2: What is the business value of security and control?

219

54) Target has had to pay out over $100 million to U.S. banks, credit card companies and consumers as a result of a data breach in 2013.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 8-2: What is the business value of security and control?

55) Three major concerns of system builders and users are disaster, security, and human error.

Of the three, which do you think is most difficult to deal with? Why? Answer: Student answers will vary. Example answers are: Disaster might be the most difficult because it is unexpected, broad-based, and frequently life threatening. In addition, the company cannot know if the disaster plan will work until a disaster occurs, and then it's too late to make corrections. Security might be the most difficult because it is an ongoing problem, new viruses are devised constantly, and hackers get smarter every day. Furthermore, damage done by a trusted employee from inside cannot be obviated by system security measures. Human error might be most difficult because it isn't caught until too late, and the consequences may be disastrous. Also, administrative error can occur at any level and through any operation or procedure in the company.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 8-2: What is the business value of security and control?

56) Hackers and their companion viruses are an increasing problem, especially on the Internet.

What are the most important measurers for a firm to take to protect itself from this? Is full protection feasible? Why or why not?

Answer: For protection, a company must institute good security measures, which will include firewalls, investigation of personnel to be hired, physical and software security and controls, antivirus software, and internal education measures. These measures are best put in place at the time the system is designed, and careful attention paid to them. A prudent company will engage in disaster protection measures, frequent updating of security software, and frequent auditing of all security measures and of all data upon which the company depends. Full protection may not be feasible in light of the time and expenses involved, but a risk analysis can provide insights into which areas are most important and vulnerable. These are the areas to protect first.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication LO: 8-2: What is the business value of security and control?

220

57) Define computer forensics and describe the types of problems it is designed to address.

Answer: Computer forensics involves the scientific collection, examination, authentication, preservation, and analysis of data held on or retrieved from computer storage media in such a way that the information can be used as evidence in a court of law. It deals with the following problems: • Recovering data from computers while preserving evidential integrity • Securely storing and handling recovered electronic data • Finding significant information in a large volume of electronic data • Presenting the information to a court of law Electronic evidence may reside on computer storage media in the form of computer files and as ambient data, which are not visible to the average user. An example might be a file that has been deleted on a PC hard drive. Data that a computer user may have deleted on computer storage media can be recovered through various techniques. Computer forensics experts try to recover such hidden data for presentation as evidence. An awareness of computer forensics should be incorporated into a firm's contingency planning process.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 8-2: What is the business value of security and control?

58) Your company, an online discount pet supply store, has calculated that a loss of Internet connectivity for 3 hours results in a potential loss of $2,000 to $3,000 and that there is a 50% chance of this occurring each year. What is the annual expected loss from this exposure?

A) $500 B) $1,000 C) $1,250 D) $1,500 E) $2,500 Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 8-3: What are the components of an organizational framework for security and control?

59) Application controls: A) can be classified as input controls, processing controls, and output controls.

B) govern the design, security, and use of computer programs and the security of data files in general throughout the organization.

C) apply to all computerized applications and consist of a combination of hardware, software, and manual procedures that create an overall control environment.

D) include software controls, computer operations controls, and implementation controls.

E) monitor the use of system software and prevent unauthorized access to software and programs.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 8-3: What are the components of an organizational framework for security and control?

221

60) ________ controls ensure that valuable business data files on either disk or tape are not subject to unauthorized access, change, or destruction while they are in use or in storage.

A) Software B) Administrative C) Data security D) Implementation E) Input Answer: C Difficulty: Challenging AACSB: Information technology LO: 8-3: What are the components of an organizational framework for security and control?

61) An analysis of an information system that rates the likelihood of a security incident occurring and its cost would be included in which of the following?

A) Security policy B) AUP C) Risk assessment D) Business impact analysis E) Business continuity plan Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 8-3: What are the components of an organizational framework for security and control?

62) A statement ranking information risks and identifying security goals would be included in which of the following?

A) Security policy B) AUP C) Risk assessment D) Business impact analysis E) Business continuity plan Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 8-3: What are the components of an organizational framework for security and control?

63) Which of the following defines acceptable uses of a firm's information resources and computing equipment?

A) An information systems audit policy B) A CA policy C) A MSSP D) A UTM system E) An AUP Answer: E Difficulty: Easy AACSB: Application of knowledge 222

LO: 8-3: What are the components of an organizational framework for security and control?

64) Which of the following focuses primarily on the technical issues of keeping systems up and running?

A) Business continuity planning B) Security policies C) Disaster recovery planning D) An AUP E) An information systems audit Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 8-3: What are the components of an organizational framework for security and control?

65) An acceptable use policy defines the acceptable level of access to information assets for different users.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 8-3: What are the components of an organizational framework for security and control?

223

66) How can a firm's security policies contribute and relate to the six main business objectives?

Give examples.

Answer: A firm's security policies can contribute and relate to the six main business objectives as follows: (1) Operational excellence: Security policies are essential to operational excellence. A firm's daily transactions can be severely disrupted by cybercrime such as hackers. A firm's efficiency relies on accurate data. In addition, information assets have tremendous value, and the repercussions can be devastating if they are lost, destroyed, or placed in the wrong hands.

(2) New products, services, business models. Security policies protect a company's ideas for new products and services, which could be stolen by competitors. Additionally, enhanced security could be seen by a customer as a way to differentiate your product.

(3) Customer and supplier intimacy: Customers rely on your security if they enter personal data into your information system, for example, credit card information into your e-commerce site.

The information you receive from customers and suppliers directly affects how able you are to customize your product, service, or communication with them.

(4) Improved decision making: Secure systems make data accuracy a priority, and good decision making relies on accurate and timely data. Lost and inaccurate data would lead to compromised decision making.

(5) Competitive advantage: The knowledge that your firm has superior security than another would, on an otherwise level playing field, make your firm more attractive to do business with.

Also, improved decision-making, new products and services, which are also affected by security (see above), will contribute to a firm's competitive advantage. Strong security and control also increase employee productivity and lower operational costs.

(6) Survival: New laws and regulations make keeping your security system up to date a matter of survival. Inadequate security and control may result in serious legal liability. Firms have been destroyed by errors in security policies.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 8-3: What are the components of an organizational framework for security and control?

67) What is the role of an information systems audit?

Answer: An information systems audit examines the firm's overall security environment as well as controls governing individual information systems. The auditor should trace the flow of sample transactions through the system and perform tests, using, if appropriate, automated audit software. The information systems audit may also examine data quality.

The audit should review technologies, procedures, documentation, training, and personnel. A thorough audit will even simulate an attack or disaster to test the response of the technology, information systems staff, and business employees.

The audit lists and ranks all control weaknesses and estimates the probability of their occurrence. It then assesses the financial and organizational impact of each threat. Management is expected to devise a plan for countering significant weaknesses in controls.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication LO: 8-3: What are the components of an organizational framework for security and control?

224

68) How does disaster recovery planning differ from business continuity planning?

Answer: Disaster recovery planning devises plans for the restoration of disrupted computing and communications services. Disaster recovery plans focus primarily on the technical issues involved in keeping systems up and running, such as which files to back up and the maintenance of backup computer systems or disaster recovery services. Business continuity planning, on the other hand, focuses on how the company can restore business operations after a disaster strikes. The business continuity plan identifies critical business processes and determines action plans for handling mission-critical functions if systems go down.

Difficulty: Easy AACSB: Application of knowledge; Written and oral communication LO: 8-3: What are the components of an organizational framework for security and control?

69) Which of the following specifications replaced WEP with a stronger security standard that features changing encryption keys?

A) TLS B) AUP C) VPN D) WPA2 E) UTM Answer: D Difficulty: Challenging AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

70) Which of the following statements about passwords is not true?

A) Authentication cannot be established by the use of a password.

B) Password systems that are too rigorous may hinder employee productivity.

C) Passwords can be stolen through social engineering.

D) Passwords are often disregarded by employees.

E) Passwords can be sniffed when being transmitted over a network.

Answer: A Difficulty: Challenging AACSB: Application of knowledge LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

71) An authentication token is a(n): A) device the size of a credit card that contains access permission data.

B) type of smart card.

C) gadget that displays passcodes.

D) electronic marker attached to a digital authorization file.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

225

72) All of the following are currently being used as traits that can be profiled by biometric authentication except: A) fingerprints.

B) facial characteristics.

C) body odor.

D) retinal images.

E) voice.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

73) A firewall allows the organization to: A) enforce a security policy on data exchanged between its network and the Internet.

B) check the accuracy of all transactions between its network and the Internet.

C) create an enterprise system on the Internet.

D) check the content of all incoming and outgoing e-mail messages.

E) create access rules for a network.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

74) ________ use scanning software to look for known problems such as bad passwords, the removal of important files, security attacks in progress, and system administration errors.

A) Stateful inspections B) Intrusion detection systems C) Application proxy filtering technologies D) Packet filtering technologies E) Firewalls Answer: B Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

226

75) Currently, the protocols used for secure information transfer over the Internet are: A) TCP/IP and SSL. B) S-HTTP and CA. C) HTTP and TCP/IP. D) S-HTTP and SHTML. E) SSL, TLS, and S-HTTP. Answer: E Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

76) In which method of encryption is a single encryption key sent to the receiver so both sender and receiver share the same key?

A) SSL/TLS B) Symmetric key encryption C) Public key encryption D) Private key encryption E) Distributed encryption Answer: B Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

77) A digital certificate system: A) uses third-party CAs to validate a user's identity.

B) uses digital signatures to validate a user's identity.

C) uses tokens to validate a user's identity.

D) is used primarily by individuals for personal correspondence.

E) protects a user's identity by substituting a certificate in place of identifiable traits.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

227

78) All of the following are types of information systems general controls except: A) application controls.

B) computer operations controls.

C) physical hardware controls.

D) software controls.

E) administrative controls Answer: A Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

79) For 100-percent availability, online transaction processing requires: A) high-capacity storage.

B) a multi-tier server network.

C) fault-tolerant computer systems.

D) dedicated phone lines.

E) a digital certificate system.

Answer: C Difficulty: Easy AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

80) In controlling network traffic to minimize slow-downs, a technology called ________ is used to examine data files and sort low-priority data from high-priority data.

A) high availability computing B) deep packet inspection C) application proxy filtering D) stateful inspection E) unified threat management Answer: B Difficulty: Challenging AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

228

81) An authentication system in which a user must provide two types of identification, such as a bank card and PIN, is called: A) smart card authentication.

B) biometric authentication.

C) two-factor authentication.

D) symmetric key authorization.

E) token authentication.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

82) Which of the following provides additional security by determining whether packets are part of an ongoing dialogue between a sender and receiver?

A) NAT B) Packet filtering C) Deep packet inspection D) Stateful inspection E) Application proxy filtering Answer: D Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

83) Comprehensive security management products, with tools for firewalls, VPNs, intrusion detection systems, and more, are called ________ systems.

A) DPI B) MSSP C) NSP D) PKI E) UTM Answer: E Difficulty: Challenging AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

84) Organizations can use existing network security software to secure mobile devices.

Answer: FALSE Difficulty: Challenging AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

229

85) The dispersed nature of cloud computing makes it difficult to track unauthorized access.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

86) Biometric authentication is the use of personal, biographic details such as the high school you attended and the first street you lived on to provide identification.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

87) Packet filtering catches most types of network attacks.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

88) NAT conceals the IP addresses of the organization's internal host computers to deter sniffer programs.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

89) SSL is a protocol used to establish a secure connection between two computers.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

90) Public key encryption uses two keys.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

230

91) Smartphones typically feature state-of-the-art encryption and security features, making them highly secure tools for businesses.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

92) Authentication refers to verifying that a person is who he or she claims to be.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

93) You can test software before it is even written by conducting a walkthrough.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

94) When errors are discovered in software programs, the sources of the errors are found and eliminated through a process called debugging.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

95) Is the cloud a safer and more secure computing environment than an in-house network?

Why or why not?

Answer: Student evaluations will vary, but should include the understanding that using the cloud for computing distributes data to remote services that a company will not have final control of, that a company's cloud data will be stored alongside the data of other companies, and that various safeguards should be in place to protect your data. A sample answer is: The safety of cloud computing as compared to in-house network computing depends on the security implemented both at the corporation and at the service provider. For example, the company will need to ensure secure procedures and make sure that employees have secure passwords and access levels. The cloud service provider should use encryption for all data, at a minimum.

Clients should make sure that the service provider complies with local privacy rules, external security audits, and certifications and provides proof of encryption mechanisms.

Difficulty: Moderate AACSB: Information technology; Written and oral communication LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

231

96) Why is software quality important to security? What specific steps can an organization take to ensure software quality?

Answer: Software errors pose a constant threat to information systems, causing untold losses in productivity. Growing complexity and size of software programs, coupled with demands for timely delivery to markets, have contributed to an increase in software flaws or vulnerabilities.

A major problem with software is the presence of hidden bugs or program code defects. Studies have shown that it is virtually impossible to eliminate all bugs from large programs. Flaws in commercial software not only impede performance but also create security vulnerabilities that open networks to intruders. To correct software flaws once they are identified, the software vendor creates small pieces of software called patches to repair the flaws without disturbing the proper operation of the software. Organizations must maintain best efforts to both make sure purchased software is up to date and make sure their own software and programming is as bugfree as possible by employing software metrics and rigorous software testing. Ongoing use of metrics allows the information systems department and end users to jointly measure the performance of the system and identify problems as they occur. Examples of software metrics include the number of transactions that can be processed in a specified unit of time, online response time, the number of payroll checks printed per hour, and the number of known bugs per hundred lines of program code. For metrics to be successful, they must be carefully designed, formal, objective, and used consistently. Early, regular, and thorough testing will contribute significantly to system quality. Good testing begins before a software program is even written by using a walkthrough—a review of a specification or design document by a small group of people carefully selected based on the skills needed for the particular objectives being tested. Once developers start writing software programs, coding walkthroughs also can be used to review program code. However, code must be tested by computer runs. When errors are discovered, the source is found and eliminated through a process called debugging.

Difficulty: Moderate AACSB: Information technology; Written and oral communication LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

232

97) You have just been hired as a security consultant by MegaMalls Inc., a chain of retail malls, to make sure that the security of their information systems is up to par. Outline the steps you will take to achieve this.

Answer: To ensure that the security of MegaMalls' information systems is up to par, I would take the following steps: (1) Establish what data and processes are important and essential to the company. Determine what external and internal information is essential to the different employee roles in the company.

(2) Conduct a security audit and create a risk assessment analysis.

(3) Establish what legal/governmental/industry standards need to be adhered to and which international standards are relevant.

(4) Conduct a business impact analysis and determine a disaster recovery and business continuity plan.

(5) Create a security policy that defines an acceptable use policy, authorization policies and processes.

(6) Plan for any change management needed.

(7) Determine how the success of your policy will be measured and set up means for measuring this.

(8) Implement such policies.

(9) Measure and evaluate the effectiveness of the policy and make any additional adjustments.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

98) What is a digital certificate? How does it work?

Answer: Digital certificates are data files used to establish the identity of users and electronic assets for protection of online transactions. A digital certificate system uses a trusted third party, known as a certification authority, to validate a user's identity. The CA verifies a digital certificate user's identity offline. This information is put into a CA server, which generates an encrypted digital certificate containing owner identification information and a copy of the owner's public key. The certificate authenticates that the public key belongs to the designated owner. The CA makes its own public key available publicly either in print or perhaps on the Internet. The recipient of an encrypted message uses the CA's public key to decode the digital certificate attached to the message, verifies it was issued by the CA, and then obtains the sender's public key and identification information contained in the certificate. Using this information, the recipient can send an encrypted reply. The digital certificate system would enable, for example, a credit card user and a merchant to validate that their digital certificates were issued by an authorized and trusted third party before they exchange data. Public key infrastructure (PKI), the use of public key cryptography working with a certificate authority, is now widely used in e-commerce.

Difficulty: Moderate AACSB: Information technology; Written and oral communication LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

233

99) Name and describe four firewall screening technologies.

Answer: There are a number of firewall screening technologies, including static packet filtering, stateful inspection, Network Address Translation, and application proxy filtering.

They are frequently used in combination to provide firewall protection.

• Packet filtering examines selected fields in the headers of data packets flowing back and forth between the trusted network and the Internet, examining individual packets in isolation. This filtering technology can miss many types of attacks.

• Stateful inspection provides additional security by determining whether packets are part of an ongoing dialogue between a sender and a receiver. It sets up state tables to track information over multiple packets. Packets are accepted or rejected based on whether they are part of an approved conversation or attempting to establish a legitimate connection.

• Network Address Translation (NAT) can provide another layer of protection when static packet filtering and stateful inspection are employed. NAT conceals the IP addresses of the organization's internal host computer(s) to prevent sniffer programs outside the firewall from ascertaining them and using that information to penetrate internal systems.

• Application proxy filtering examines the application content of packets. A proxy server stops data packets originating outside the organization, inspects them, and passes a proxy to the other side of the firewall. If a user outside the company wants to communicate with a user inside the organization, the outside user first communicates with the proxy application, and the proxy application communicates with the firm's internal computer. Likewise, a computer user inside the organization goes through the proxy to talk with computers on the outside.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

100) Explain how two-factor authentication increases security.

Answer: Two-factor authentication increases security by validating users by a multistep process. To be authenticated, a user must provide two means of identification, one of which is typically a physical token, such as a smartcard or chip-enabled bank card, and the other of which is typically data, such as a password or PIN (personal identification number). Biometric data, such as fingerprints, iris prints, or voice prints, can also be used as one of the authenticating mechanisms. A common example of two-factor authentication is a bank card; the card itself is the physical item, and the PIN is the data that go with it.

Difficulty: Challenging AACSB: Information technology; Written and oral communication LO: 8-4: What are the most important tools and technologies for safeguarding information resources?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 1) From your reading of the chapter's opening case, Skullcandy chose enterprise resource planning software from which of the following ERP vendors?

A) Oracle B) SAP 234

C) IBM D) Microsoft E) Infor Global Solutions Answer: B Difficulty: Easy AACSB: Analytical thinking LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

2) Which of the following provides a suite of integrated software modules for finance and accounting, human resources, manufacturing and production, and sales and marketing that allows data to be used by multiple functions and business processes?

A) Process management software B) ERP systems C) Groupware D) CRM software E) Supply chain management systems Answer: B Difficulty: Moderate AACSB: Information technology LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

3) Enterprise software is built around thousands of predefined business processes that reflect: A) government regulations.

B) industry benchmarks.

C) best practices.

D) cutting edge workflow analyses.

E) the firm's culture.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

235

4) Which of the following is not true about enterprise systems?

A) Enterprise systems help firms respond rapidly to customer requests for information or products.

B) Enterprise system data have standardized definitions and formats that are accepted by the entire organization.

C) Enterprise software is expressly built to allow companies to mimic their unique business practices.

D) Enterprise software includes analytical tools to evaluate overall organizational performance.

E) Enterprise systems provide firm-wide information to help managers make better decisions.

Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

5) You have been asked to implement enterprise software for a manufacturer of kitchen appliances. What is the first step you should take?

A) Rewrite the software to support the way the company's business processes work.

B) Select the business processes you wish to automate.

C) Map the company's business processes to the software's business processes.

D) Map the software's business processes to the company's business processes.

E) Select the functions of the system you wish to use.

Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

6) Which of the following enables a company to tailor a particular aspect of enterprise software to the way a company does business?

A) Configuration tables B) Web services C) Data dictionaries D) Middleware E) Groupware Answer: A Difficulty: Moderate AACSB: Information technology LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

236

7) In order to achieve maximum benefit from an enterprise software package, a business should: A) customize the software to match all of its business processes.

B) use only the processes in the software that match its own processes.

C) change the way it works to match the software's business processes.

D) select only the software that best matches its existing business processes.

E) retain legacy systems that best work with the software.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

8) Implementing enterprise software from Oracle enabled Alcoa to achieve all of the following except: A) reduce requisition-to-pay cycle times.

B) reduce accounts payable transaction processing.

C) centralize financial activities.

D) centralize procurement activities.

E) obtain lower prices for raw materials.

Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

9) Manufacturing and production processes include all of the following except: A) procurement.

B) material requirements planning.

C) quality control.

D) transportation execution.

E) product configuration.

Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

10) Enterprise systems include analytical tools.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

11) An enterprise system can help reduce redundant business processes.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

237

12) Extensive customization of enterprise software may degrade system performance.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

13) Identify and describe three major enterprise applications.

Answer: Enterprise systems, customer relationship management, and supply chain management are three enterprise applications. Enterprise systems are based on a suite of integrated software modules and a common central database. Enterprise systems utilize enterprise software to support financial and accounting, human resources, manufacturing and production, and sales and marketing processes. Enterprise systems provide many benefits including an enterprise-enabled organization, improved management reporting and decision making, a unified information systems technology platform, and more efficient operations and customer-driven business processes.

Supply chain management systems help an organization better manage its supply chain, including planning, sourcing, manufacturing, delivering, and returning items. Supply chain management software can be categorized as a supply chain planning system or as a supply chain execution system. A supply chain planning system enables a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product. A supply chain execution system manages the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner. Supply chain management benefits include improved customer service and responsiveness, cost reduction, and cash utilization.

Customer relationship management systems help firms maximize the benefits of their customer assets. These systems capture and consolidate data from all over the organization and then distribute the results to various systems and customer touch points across the enterprise.

Customer relationship management systems can be classified as operational or as analytical.

Operational CRM refers to customer-facing applications, such as sales force automation, call center and customer service support, and marketing automation. Analytical CRM refers to customer relationship management applications dealing with the analysis of customer data to provide information for improving business performance. Benefits include increased customer satisfaction, reduced direct marketing costs, more effective marketing, and lower costs for customer acquisition and retention.

Difficulty: Challenging AACSB: Analytical thinking LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

238

14) Identify at least four benefits and four challenges of enterprise systems.

Answer: Benefits include: increasing operational efficiency; providing firm-wide information to help decision making; standardized business processes; greater responsiveness to customer needs; greater accuracy in fulfilling product demand; reduction of inventory and inventory costs; reduction in order-to-delivery time; improving business processes; removing redundant processes and systems; lowering costs through centralized processing; and improved decision making. Challenges include: the expense of the software and related costs; the time required for implementation; deep-seated technological changes required, the deep-seated organizational changes required; overcoming organizational resistance; switching costs; data cleansing work required.

Difficulty: Challenging AACSB: Analytical thinking LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

15) You have been hired by Santori, Inc., a small company that imports and distributes an Italian sparkling water. The company is interested in what benefits an enterprise system would bring. Would an enterprise system be appropriate for this company? What steps would you take in determining this?

Answer: An enterprise system may be too expensive, although there are enterprise software packages that are available to smaller companies. A hosted enterprise application might be the most economical way to implement an enterprise system. To determine whether this would be beneficial to Santori, I would first look at their existing business processes. It would be ideal to determine if their efficiency meets benchmarks in their industry and allows them to be competitive with other businesses in their niche. Then I would review existing hosted applications to see how the applications business processes matched up with Santori's. It would be important to compare the costs of instituting new business processes with the benefits and cost savings.

Difficulty: Challenging AACSB: Analytical thinking LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

239

16) What business processes are supported by enterprise systems? Give specific examples.

Answer: The four major business processes supported by enterprise systems are: • Financial and accounting processes, including general ledger, accounts payable, accounts receivable, fixed assets, cash management and forecasting, product-cost accounting, cost-center accounting, asset accounting, tax accounting, credit management, and financial reporting.

• Human resources processes, including personnel administration, time accounting, payroll, personnel planning and development, benefits accounting, applicant tracking, time management, compensation, workforce planning, performance management, and travel expense reporting.

• Manufacturing and production processes, including procurement, inventory management, purchasing, shipping, production planning, production scheduling, material requirements planning, quality control, distribution, transportation execution, and plant and equipment maintenance.

• Sales and marketing processes, including order processing, quotations, contracts, product configuration, pricing, billing, credit checking, incentive and commission management, and sales planning.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 9-1: How do enterprise systems help businesses achieve operational excellence?

17) A network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers is called a/an: A) distribution channel.

B) supply chain.

C) value chain.

D) marketing channel.

E) information system.

Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

18) Components or parts of finished products are referred to as: A) upstream materials.

B) raw materials.

C) secondary products.

D) intermediate products.

E) mid-chain products.

Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

240

19) Which of the following refers to a company's suppliers, supplier's suppliers, and the processes for managing relationships with them?

A) Supplier's internal supply chain B) External supply chain C) Upstream portion of the supply chain D) Downstream portion of the supply chain E) Onstream portion of the supply chain Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

20) Which of the following refers to a company's organizations and processes for distributing and delivering products to the final customers?

A) Supplier's internal supply chain B) External supply chain C) Upstream portion of the supply chain D) Downstream portion of the supply chain E) Onstream portion of the supply chain Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

21) If manufacturers had perfect information, they could implement a: A) hyper-efficient strategy.

B) frictionless strategy.

C) streamlined strategy.

D) bullwhip strategy.

E) just-in-time strategy.

Answer: E Difficulty: Easy AACSB: Analytical thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

241

22) Why isn't overstocking warehouses an effective solution for a problem of low availability?

A) It does not speed product time to market.

B) It is an inefficient use of raw materials.

C) It increases sales costs.

D) It increases inventory costs.

E) It lowers fill rate.

Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

23) Which of the following traditional solutions enables manufacturers to deal with uncertainties in the supply chain?

A) Safety stock B) Continuous replenishment C) Just-in-time strategies D) Demand planning E) Perfect information Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

24) A scheduling system for minimizing inventory by having components arrive exactly at the moment they are needed and finished goods shipped as soon as they leave the assembly line best describes a ________ strategy.

A) just-in-time B) frictionless C) bullwhip D) safety-stock E) streamlined Answer: A Difficulty: Easy AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

242

25) A distortion of information about the demand for a product as it passes from one entity to the next across the supply chain is called the ________ effect.

A) network B) bullwhip C) ripple D) whirlpool E) diffraction Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

26) Supply chain software can be classified as either supply chain ________ systems or supply chain ________ systems.

A) push; pull B) demand; continual C) upstream; downstream D) planning; execution E) maintenance; development Answer: D Difficulty: Moderate AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

27) Which of the following enables a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product?

A) Supply chain demand system B) Supply chain delivery system C) Supply chain optimization system D) Supply chain execution system E) Supply chain planning system Answer: E Difficulty: Moderate AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

243

28) Supply chain planning systems perform all of the following functions except: A) establish inventory levels for raw materials and finished goods.

B) identify the transportation mode to use for product delivery.

C) determine where to store finished goods.

D) determine how much product to manufacture in a given time period.

E) track the physical status of goods.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

29) Which supply chain planning function determines how much product is needed to satisfy all customer demands?

A) Distribution management B) Replenishment planning C) Demand planning D) Order planning E) Customer planning Answer: C Difficulty: Moderate AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

30) Which of the following manages the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner?

A) Supply chain demand system B) Supply chain delivery system C) Supply chain planning system D) Supply chain execution system E) Supply chain optimization system Answer: D Difficulty: Moderate AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

244

31) Supply chain execution systems provide all of the following functions except: A) generating demand forecasts for products.

B) tracking the flow of finished goods.

C) managing materials.

D) managing warehouse operations.

E) managing the financial information involving all parties.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

32) A supply chain driven by actual customer orders or purchases follows a ________ model.

A) pull-based B) build-to-stock C) push-based D) replenishment-driven E) optimized Answer: A Difficulty: Moderate AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

33) A build-to-order supply-chain model is also called a ________ model.

A) supply-based B) demand-driven C) replenishment-driven D) push-based E) market-driven Answer: B Difficulty: Moderate AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

34) Concurrent supply chains are made possible by which technology?

A) ERP systems B) The Internet C) Supply-chain management systems D) Just-in-time supply-chain technologies E) Extranets Answer: B Difficulty: Easy AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

245

35) The business value of an effective supply chain management system includes all of the following except: A) faster time to market.

B) cost reduction.

C) supply matched to demand.

D) improved delivery service.

E) increased inventory levels.

Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

36) The bullwhip effect can be countered by: A) globalization.

B) disintermediation.

C) implementing a CRM. D) reducing information uncertainty.

E) product differentiation.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

37) As they move through the supply chain, ________ are transformed into finished products and shipped to retailers and customers.

A) raw materials B) intermediate products C) basic products D) natural resources E) nascent products Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

246

38) The total time it takes to complete a business process, from start to finish, is called its ________ time.

A) development B) cycle C) fulfillment D) service E) actualization Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

39) A company having difficulty with timely delivery of parts to its manufacturing plants should implement a supply chain ________ system.

A) execution B) planning C) optimization D) management E) touch point Answer: A Difficulty: Moderate AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

40) Supply chain management systems are a type of enterprise system.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

41) The upstream portion of the supply chain consists of the organizations and processes for distributing and delivering products to the final customers.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

247

42) Supply chain inefficiencies can waste as much as 25 percent of a company's operating costs.

Answer: TRUE Difficulty: Challenging AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

43) Safety stock acts as a buffer for the lack of flexibility in the supply chain.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

44) The bullwhip effect describes consistency and continuity in demand for a product as it passes from one entity to the next across the supply chain.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

45) Supply chain execution systems enable the firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

46) Before the pre-Internet environment, supply chain coordination was hampered by the difficulties of making information flow smoothly among different internal supply chain processes.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

47) Inefficiencies in a supply chain are primarily caused by inaccurate or untimely information.

Answer: TRUE Difficulty: Easy AACSB: Analytical thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

248

48) In a push-based model of SCM systems, actual customer orders or purchases trigger events in the supply chain.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

49) In a pull-based model of SCM systems, production master schedules are based on forecasts of demand for products.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

50) Walmart is an example of a push-based model.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

51) Total supply chain costs in some industries approach 75 percent of the total operating budget.

Answer: TRUE Difficulty: Challenging AACSB: Reflective thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

52) Identify two classifications for supply chain software. For each classification, identify five capabilities.

Answer: Supply chain planning systems and supply chain execution systems are two classifications for supply chain software. Supply chain planning systems enable a firm to generate demand forecasts for a product and develop sourcing and manufacturing plans for that product. Capabilities include order planning, advanced scheduling and manufacturing planning, demand planning, distribution planning, and transportation planning. Supply chain execution systems manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations. Capabilities include order commitments, final production, replenishment, distribution management, and reverse distribution.

Difficulty: Challenging AACSB: Analytical thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

249

53) What additional complexities are faced in global supply chains? How does the Internet help in managing global supply chains?

Answer: Global supply chains typically span greater geographic distances and time differences than domestic supply chains and have participants from a number of different countries.

Although the purchase price of many goods might be lower abroad, there are often additional costs for transportation, inventory, and local taxes or fees. Performance standards may vary from region to region or from nation to nation. Supply chain management may need to reflect foreign government regulations and cultural differences. All of these factors impact how a company takes orders, plans distribution, organizes warehousing, and manages inbound and outbound logistics throughout the global markets its services. The Internet helps companies manage many aspects of their global supply chains, including sourcing, transportation, communications, and international finance. As goods are being sourced, produced, and shipped, communication is required among retailers, manufacturers, contractors, agents, and logistics providers. With Internet technology, supply chain members communicate through a Web-based system. Firms use intranets to improve coordination among their internal supply chain processes, and they use extranets to coordinate supply chain processes shared with their business partners.

Difficulty: Challenging AACSB: Analytical thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

54) Identify two supply chain models. Which is better?

Answer: Push-based and pull-based models were discussed in the textbook. Push-based refers to a supply chain driven by production master schedules based on forecasts or best guesses of demand for products. Pull-based refers to a supply chain driven by actual customer orders or purchases so that members of the supply chain produce and deliver only what customers have ordered. Pull-based models are better.

Difficulty: Moderate AACSB: Analytical thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

250

55) Plant Away is an Oregon-based retailer and distributor of trees and shrubs. They have hundreds of smaller nurseries based around the country that grow the plant stock. The majority of their business is conducted online. Consumers purchase typically small quantities of products online and Plant Away coordinates the shipping from the most appropriate nursery.

What unique problems might you anticipate they have in their supply chain? What might remedy these problems?

Answer: Typical problems in supply chains arise from unforeseeable events. In a plant nursery, variations in the weather, growing season, plant diseases, crop output would be uncertainties.

Other problems might be interstate regulations governing plants allowed in different states, and making sure plants survive and are healthy during transportation. It would be very important to have up-to-date forecasting of the weather or growing seasons that could anticipate possible problems, and analyze and determine the best transportation routes.

Difficulty: Challenging AACSB: Analytical thinking LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

56) Discuss the business value of supply chain management systems.

Answer: Supply chain management systems enable firms to streamline both their internal and external supply chain processes and provide management with more accurate information about what to produce, store, and move. By implementing a networked and integrated supply chain management system, companies match supply to demand, reduce inventory levels, improve delivery service, speed product time to market, and use assets more effectively.

Total supply chain costs represent the majority of operating expenses for many businesses and in some industries approach 75 percent of the total operating budget. Reducing supply chain costs has a major impact on firm profitability.

In addition to reducing costs, supply chain management systems help increase sales. If a product is not available when a customer wants it, customers often try to purchase it from someone else. More precise control of the supply chain enhances the firm's ability to have the right product available for customer purchases at the right time.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 9-2: How do supply chain management systems coordinate planning, production, and logistics with suppliers?

57) From your reading of the LG Electronics case study, the company implemented JDA software solutions to solve what problems?

A) Lack of brand recognition B) Lack of coordination among production facilities C) Poor supply chain visibility for management D) Shoddy record-keeping E) Inefficient logistics Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

251

58) A ________ is a method of interaction with a customer, such as telephone or customer service desk.

A) point of presence B) touch point C) sales point D) client channel E) point of service Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

59) Which of the following would not be considered a contact point?

A) E-mail B) Website C) Intranet D) Retail store E) Facebook Answer: C Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

60) ________ modules use many of the same data, tools, and systems as CRM to enhance collaboration between a company and its selling partners.

A) SCM B) SFA C) ERM D) DRM E) PRM Answer: E Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

252

61) ________ modules deal with issues such as setting objectives, employee performance management, and performance-based compensation.

A) SCM B) SFA C) ERM D) DRM E) PRM Answer: C Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

62) Customer relationship management systems typically provide software and online tools for sales, customer service, and: A) marketing.

B) account management.

C) advertising.

D) public relations.

E) human resources.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

63) SFA modules in CRM systems provide tools for all of the following except: A) team selling.

B) territory management.

C) sales forecasting.

D) managing sales prospect and contact information.

E) managing customer service requests.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

253

64) CRM systems help businesses achieve which of the following business objectives?

A) Automated accounting processes B) Automated production forecasts C) Faster time to market with new products and services D) Enhanced supplier intimacy E) Enhanced customer intimacy Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

65) Customer service modules in CRM systems provide tools for: A) assigning and managing customer service requests.

B) capturing prospect and customer data.

C) identifying profitable and unprofitable customers.

D) managing sales prospect and contact information.

E) organizing effective marketing campaigns.

Answer: A Difficulty: Easy AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

66) Marketing modules in CRM systems provide tools for all of the following except: A) assigning and managing customer service requests.

B) capturing prospect and customer data.

C) identifying profitable and unprofitable customers.

D) qualifying leads.

E) identifying opportunities for cross-selling.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

67) Selling a customer with a checking account a home improvement loan is an example of: A) operational CRM. B) direct marketing.

C) sales force automation.

D) cross-channel promotions.

E) cross-selling.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

254

68) Major CRM products typically have all of the following service capabilities except: A) customer satisfaction management.

B) returns management.

C) call center & help desk.

D) service analytics.

E) order management.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

69) Which of the following is an important capability for sales processes that is found in most SFA modules in major CRM software products?

A) Returns management B) Lead management C) Channel promotions management D) Events management E) Customer satisfaction management Answer: B Difficulty: Challenging AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

70) Which of the following customer relationship management applications provides analysis of customer data?

A) Operational CRM B) Analytical CRM C) Operational SCM D) Analytical SFA E) Operational SFA Answer: B Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

255

71) Operational CRM applications include tools for all of the following except: A) sales force automation.

B) call center support.

C) marketing automation.

D) customer service support.

E) calculating CLTV. Answer: E Difficulty: Challenging AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

72) The difference between push- and pull-based models is summarized by which of the following slogans?

A) Sell what we make, not make what we sell.

B) Push what we make, not pull what we make.

C) Make what we sell, not sell what we make.

D) Pull what we make, not push what we sell.

E) Make what we push, not push what we sell.

Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

73) Which of the following tools is used to analyzing customer buying patterns?

A) CLTV B) Analytical CRM C) Operational CRM D) Demand planning E) SFA Answer: B Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

256

74) Which metric is based on the relationship between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing that customer, and the expected life of the relationship between the customer and the company?

A) Churn rate B) Customer lifetime value C) Cost per lead D) Cost per sale E) Customer average value Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

75) The measurement of the number of customers who stop using or purchasing products or services from a company is called: A) switching costs.

B) churn rate.

C) CLTV. D) switch rate.

E) turnover percentage.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

76) Walmart's continuous replenishment system is an example of a ________ model.

A) push-based B) pull-based C) enterprise-based D) supply chain optimization E) forecast-based Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

257

77) ________ modules in CRM systems help sales staff increase their productivity by focusing sales efforts on the most profitable customers, those who are good candidates for sales and services.

A) Customer B) SOA C) Marketing D) Complex E) SFA Answer: E Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

78) ________ CRM includes customer-facing applications such as tools for sales force automation, call center and customer service support, and marketing automation.

A) Analytical B) Employee C) Operational D) Partner E) Next-generation Answer: C Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

79) All CRM packages contain modules for PRM and ERM. Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

80) Major CRM application software vendors include Oracle, SAP, and Salesforce.com.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

81) Cross-selling is the marketing of complementary products to customers.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

258

82) CRM software can help organizations identify high-value customers for preferential treatments.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

83) Analytical CRM uses tools to analyze customer data collected from the firm's customer touch points and from other sources.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

84) Churn rate is an important indicator of the growth or decline of a company's customer base.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

85) Identify and describe the two types of customer relationship management applications.

Answer: Operational CRM and analytical CRM are two types of CRM. Operational CRM refers to customer-facing applications, such as sales force automation, call center and customer service support, and marketing automation. Analytical CRM refers to customer relationship management applications dealing with the analysis of customer data to provide information for improving business performance.

Difficulty: Moderate AACSB: Analytical thinking LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

86) Identify five benefits of customer relationship management systems.

Answer: Benefits include: better customer service, make call centers more efficient, cross-sell products more effectively, help sales staff close deals faster, simplify marketing and sales processes, acquire new profitable customers, sell additional products and services, provide customer information for developing new products, increase product utilization, reduce sales and marketing costs, identify and retain profitable customers, optimize service delivery costs, retain high-lifetime value customers, improve customer loyalty, improve response rates to direct mail, increase product profitability, respond quickly to market opportunities.

Difficulty: Challenging LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

259

87) You have been hired by Croydon Visiting Nurse Services, whose business processes are all manual, paper-based processes. How might a CRM system benefit them?

Answer: A CRM system that includes patients' health records would allow any nurse to take over if another needed replacement. Assuming that the nurses had access via laptops or other PDAs to the system, a new nurse would have instant access to the patients' needs. The CRM might also be able to record which types of treatments or products customers were most interested in or gave the greatest benefit to customers, and help anticipate needs. Additionally, with PRM capabilities, products needed by the nursing service would be more easily anticipated, ordered, and delivered. Since the employees work in the field, or away from a central office, Internet-based communications might provide tools for reviewing employee performance.

Difficulty: Challenging LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

88) What are four questions that a good CRM system can help answer and how do firms use the answers to those questions?

Answer: Four questions that a good CRM system can help answer are: (1) What is the value of a particular customer to the firm over his or her lifetime?; (2) Who are our most loyal customers? ; (3) Who are our most profitable customers?; and (4) What do these profitable customers want to buy?

Firms use the answers to these questions to acquire new customers, provide better service and support to existing customers, customize their offerings more precisely to customer preferences, and provide ongoing value to retain profitable customers.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

260

89) What is a PRM module? How does it differ from an ERM module?

Answer: The more comprehensive CRM packages contain modules for partner relationship management (PRM) and employee relationship management (ERM).

PRM uses many of the same data, tools, and systems as customer relationship management to enhance collaboration between a company and its selling partners. If a company does not sell directly to customers but rather works through distributors or retailers, PRM helps these channels sell to customers directly. It provides a company and its selling partners with the ability to trade information and distribute leads and data about customers, integrating lead generation, pricing, promotions, order configurations, and availability. It also provides a firm with tools to assess its partners' performances so it can make sure its best partners receive the support they need to close more business.

ERM software deals with employee issues that are closely related to CRM, such as setting objectives, employee performance management, performance-based compensation, and employee training. Major CRM application software vendors include Oracle, SAP, Salesforce.com, and Microsoft Dynamics CRM. Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 9-3: How do customer relationship management systems help firms achieve customer intimacy?

90) Which of the following statements about enterprise applications is not true?

A) Enterprise applications require organizational learning.

B) Enterprise applications introduce "switching costs."

C) Enterprise applications are based on organization-wide definitions of data.

D) Enterprise applications require fundamental changes in the way a business operates.

E) Enterprise applications are best implemented when few changes in business processes are required.

Answer: E Difficulty: Moderate LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

91) Which of the following is not an example of next-generation enterprise applications?

A) Openbravo B) Social CRM C) Apache Open for Business (OFBiz) D) Salesforce.com E) JDA Software Answer: E Difficulty: Challenging LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

261

92) Enterprise application vendors have created ________ to make their own customer relationship management, supply chain management, and enterprise systems work closely together with each other.

A) e-business suites B) ERP systems C) middleware D) legacy systems E) cloud solutions Answer: A Difficulty: Easy AACSB: Information technology LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

93) Next-generation enterprise suites use ________ and SOA to link to systems of customers and suppliers.

A) employee relationship management B) cross-selling C) just-in-time strategy D) web services E) operational CRM Answer: D Difficulty: Challenging AACSB: Information technology LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

94) Using social networking tools to converse with customers is called: A) analytical CRM. B) social CRM. C) operational CRM. D) PRM. E) ERM. Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

262

95) Enterprise application vendors are now including ________ features, such as tools for data visualization, flexible reporting, and ad-hoc analysis, as part of the application.

A) social media B) PRM C) ERM D) SOA E) business intelligence Answer: E Difficulty: Moderate AACSB: Information technology LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

96) Enterprise systems require fundamental changes in the way the business operates.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

97) Enterprise applications introduce switching costs.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

98) Enterprise applications are based on organization-wide definitions of data.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

99) SCM systems require multiple organizations to share information and business processes.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

263

100) What is social CRM and how is it being used?

Answer: Social CRM tools enable a business to connect customer conversations and relationships from social networking sites to CRM processes. SAP, Salesforce.com and Oracle CRM products now feature technology to monitor, track, and analyze social media activity in Facebook, LinkedIn, Twitter, YouTube, and other sites. For example, Salesforce.com connected its system for tracking leads in the sales process with social-listening and socialmedia marketing tools, enabling users to tailor their social-marketing dollars to core customers and observe the resulting comments. If an ad agency wants to run a targeted Facebook or Twitter ad, these capabilities make it possible to aim the ad specifically at people in the client's lead pipeline who are already being tracked in the CRM system. Users will be able to view tweets as they take place in real time and perhaps uncover new leads. They can also manage multiple campaigns and compare them all to figure out which ones generate the highest clickthrough rates and cost per click.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 9-4: What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 10 E-Commerce: Digital Markets, Digital Goods 1) What event marked the beginning of e-commerce?

A) The first product sold online.

B) The first domain name registered.

C) The first e-mail sent.

D) The first paid advertisements placed on a website.

E) The first product advertised online.

Answer: D Difficulty: Challenging AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

2) All of the following are examples of "on demand" companies except: A) Uber.

B) Airbnb.

C) Lyft.

D) Instacart.

E) Instagram.

Answer: E Difficulty: Easy AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

3) A marketplace extended beyond traditional boundaries and removed from a temporal and geographic location is called a(n): A) exchange.

B) marketspace.

264

C) online marketplace.

D) e-hub.

E) net marketplace.

Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

4) When did e-commerce begin?

A) 1965 B) 1983 C) 1995 D) 1999 E) 2000 Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

5) What standards are referred to when discussing universal standards as a unique feature of ecommerce?

A) Internet technology standards B) Common spoken and written languages C) Universal measuring standards D) Universal advertising and media format standards E) EDI standards Answer: A Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

6) All of the following are unique features of e-commerce technology, except: A) personalization/customization.

B) interactivity.

C) transparency.

D) richness.

E) global reach.

Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

7) Which of the following dimensions of e-commerce technology involves engaging consumers in a dialog that dynamically adjusts the experience to the individual?

A) Ubiquity B) Personalization/customization C) Richness 265

D) Interactivity E) Information density Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

8) Which of the following dimensions of e-commerce technology involves the integration of video, audio, and text marketing messages into a single marketing message and consumer experience?

A) Ubiquity B) Personalization/customization C) Richness D) Interactivity E) Social technology Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

9) Which of the following dimensions of e-commerce technology has the potential to raise the quality of information?

A) Information density B) Richness C) Customization D) Interactivity E) Global reach Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

10) The effort required to locate a suitable product is called: A) price discrimination.

B) search costs.

C) menu costs.

D) shopping costs.

E) location costs.

Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

11) Information density refers to the: A) richness—complexity and content—of a message.

B) total amount and quantity of information delivered to consumers by merchants.

C) total amount and quantity of information available to all market participants.

266

D) amount of information available to reduce price transparency.

E) amount of physical storage space needed to store data about a specific entity, such as a product or consumer.

Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

12) Selling the same goods to different targeted groups at different prices is called: A) cost customization.

B) cost optimization.

C) price gouging.

D) cost personalization.

E) price discrimination.

Answer: E Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

267

13) Information ________ exists when one party in a transaction has more information that is important for the transaction than the other party.

A) transparency B) asymmetry C) complexity D) discrimination E) competition Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

14) Varying a product's price according to the supply situation of the seller is called ________ pricing.

A) menu B) flexible C) dynamic D) asymmetric E) customized Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

15) Removing the business process layers in a distribution channel is called: A) disintermediation.

B) BPR. C) market segmentation.

D) network effects.

E) market transparency.

Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

16) All of the following are increased in traditional markets compared to digital markets except: A) search costs.

B) menu costs.

C) switching costs.

D) network effects.

E) information asymmetry.

Answer: D Difficulty: Challenging AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

268

17) Compared to digital markets, traditional markets have: A) lower search costs.

B) stronger network effects.

C) higher delayed gratification effects.

D) reduced asymmetry.

E) higher transaction costs.

Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

18) Compared to traditional goods, digital goods have: A) greater pricing flexibility.

B) lower marketing costs.

C) higher production costs.

D) higher inventory costs.

E) lower menu costs.

Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

19) Compared to traditional goods, digital goods have: A) lower costs of production.

B) higher marginal costs per unit.

C) equivalent copying costs.

D) similar inventory costs.

E) less disintermediation.

Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

20) What is the primary benefit to consumers of disintermediation?

A) Faster service B) Lower costs C) Higher quality D) Greater choices E) None, because disintermediation primarily benefits manufacturers.

Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

269

21) E-commerce refers to the use of any networking technologies to transact business.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

22) Retail consumer e-commerce is growing at double-digit rates.

Answer: TRUE Difficulty: Challenging AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

23) The Internet reduces information asymmetry.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

24) All previous mass media in modern history, including the printing press, use a broadcast model where content is created in a central location by experts.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

25) Disintermediation provides major benefits to the distributor.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

26) In general, for digital goods, the marginal cost of producing another unit is about zero.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

27) Traditional online marketing, such as display ads, still constitutes the majority of all online marketing.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

270

28) Information asymmetry exists when there is more information about one product than there is about a similar product.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

29) Price transparency refers to the ability of consumers to discover what merchants actually pay for products.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

30) Switching costs are the merchants' costs of changing prices.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

31) What is the most profound way in which e-commerce and the Internet have changed the relationship between companies and their customers? Support your answer.

Answer: Student answers will vary. A sample answer is: The most profound way in which ecommerce and the Internet have changed this relationship is in the shrinking of information asymmetry. An information asymmetry exists when one party in a transaction has more information that is important for the transaction than the other party. That information helps determine their relative bargaining power. In digital markets, consumers and suppliers can "see" the prices being charged for goods, and in that sense digital markets are said to be more "transparent" than traditional markets. For example, until auto retailing sites appeared on the web, there was a pronounced information asymmetry between auto dealers and customers.

Only the auto dealers knew the manufacturers' prices, and it was difficult for consumers to shop around for the best price. Auto dealers' profit margins depended on this asymmetry of information. Today's consumers have access to a legion of websites providing competitive pricing information, and three-fourths of U.S. auto buyers use the Internet to shop around for the best deal. Thus, the web has reduced the information asymmetry surrounding an auto purchase. The Internet has also helped businesses seeking to purchase from other businesses reduce information asymmetries and locate better prices and terms.

Difficulty: Moderate AACSB: Written and oral communication LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

271

32) "Knowledge increases exponentially" is a phrase with which we are all familiar. How does this concept apply to the emergence of the digital firm? Support your contentions.

Answer: Student answers will vary. A sample answer is: The exponential increases of knowledge refer to shared information. For example, once the concept of a wheel is established, inheritors of that knowledge do not have to "reinvent the wheel." The Internet is a tool similar to the wheel: it is based on shared standards and universal tools. The Internet and shared networking technologies are allowing new techniques for attracting customers and selling customers to be developed and adapted very quickly. For example, although early Internet retailers had difficulty setting up secure credit card transactions and payment systems, today there are many systems in place as vendors step in to create shared tools for doing this. The Internet is fostering shared knowledge and, as such, propagating ever greater increases in that knowledge.

Difficulty: Challenging AACSB: Written and oral communication LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

33) What are digital goods, and how does the Internet impact the market for digital goods?

Answer: Digital goods are goods that can be delivered over a digital network. Music tracks, video, Hollywood movies, software, newspapers, magazines, and books can all be expressed, stored, delivered, and sold as purely digital products. For the most part, digital goods are intellectual property, which is defined as "works of the mind." Intellectual property is protected from misappropriation by copyright, patent, and trade secret laws. Today, all these products are delivered as digital streams or downloads while their physical counterparts decline in sales. The impact of the Internet on the market for digital goods is nothing short of revolutionary.

Businesses dependent on physical products for sales—such as bookstores, music stores, book publishers, music labels, and film studios—face the possibility of declining sales and even destruction of their businesses. In general, for digital goods, the marginal cost of producing another unit is about zero (it costs nothing to make a copy of a digital file such as a music file).

However, the cost of producing the original first unit is relatively high—in fact, it is nearly the total cost of the product because there are few other costs of inventory and distribution. Costs of delivery over the Internet are very low, inventory costs are low, marketing costs often remain the same, and pricing can be highly variable. On the Internet, the merchant can change prices as often as desired because of low menu costs.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

272

34) What is dynamic pricing and how is it used in e-commerce?

Answer: In dynamic pricing, the price of a product varies depending on the demand characteristics of the customer or the supply situation of the seller. For instance, online retailers from Amazon to Walmart change prices on many products based on time of day, demand for the product, and users' prior visits to their sites. Using big data analytics, some online firms can adjust prices at the individual level based on behavioral targeting parameters such as whether the consumer is a price haggler (who will receive a lower price offer) versus a person who accepts offered prices and does not search for lower prices. Prices can also vary by zip code, with higher prices set for poor sections of a community. Uber, along with other ride services, uses surge pricing to adjust prices of a ride based on demand (which always rises during storms and major conventions).

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?

35) Amazon.com is known primarily for its use of which of the following business models?

A) Content provider B) Portal C) Market creator D) E-tailer E) Transaction broker Answer: D Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

36) Craigslist is an example of: A) C2C e-commerce.

B) B2B e-commerce.

C) B2C e-commerce.

D) M-commerce.

E) P2P-commerce.

Answer: A Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

273

37) Which of the following types of e-commerce involves businesses selling goods and services directly to individuals via the Internet?

A) B2C e-commerce B) B2B e-commerce C) C2C e-commerce D) M-commerce E) P2P e-commerce Answer: A Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

38) All of the following are examples of firms that use the community provider Internet business model except: A) eBay. B) Facebook.

C) Twitter.

D) Instagram.

E) Pinterest.

Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

39) Transaction brokers: A) generate revenue from advertising or from directing buyers to sellers.

B) save users money and time by processing online sales transactions.

C) provide a digital environment where buyers and sellers can establish prices for products.

D) sell physical products directly to consumers or individual businesses.

E) provide online meeting places where people with similar interests can communicate.

Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

40) Which of the following Internet business models involves a merchant creating an online digital environment that enables people with like interests to share information?

A) Community provider B) Service provider C) Market creator D) Transaction broker E) Portal Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

274

41) Market creators: A) save users money and time by processing online sales transactions.

B) provide a digital environment where buyers and sellers can establish prices for products.

C) create revenue by providing digital content over the web.

D) sell physical products directly to consumers or individual businesses.

E) generate revenue from advertising or from directing buyers to sellers.

Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

42) Which of the following best illustrates the sales revenue model?

A) eBay receives a small fee from a seller if a seller is successful in selling an item.

B) Yelp receives a fee after steering a customer to a participating website where he or she makes a purchase.

C) Pandora provides basic services for free, but charges a premium for advanced services.

D) Apple accepts micropayments for single music track downloads.

E) Netflix charges customers a monthly fee for access to its library of movies.

Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

43) Which of the following best illustrates the affiliate revenue model?

A) eBay receives a small fee from a seller if a seller is successful in selling an item.

B) Yelp receives a fee after steering a customer to a participating Web site where he or she makes a purchase.

C) Pandora provides basic services for free, but charges a premium for advanced services.

D) Apple accepts micropayments for single music track downloads.

E) Netflix charges customers a monthly fee for access to its library of movies.

Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

44) Which of the following best illustrates the transaction fee revenue model?

A) eBay receives a small fee from a seller if a seller is successful in selling an item.

B) Yelp receives a fee after steering a customer to a participating website where he or she makes a purchase.

C) Pandora provides basic services for free, but charges a premium for advanced services.

D) Apple accepts micropayments for single music track downloads.

E) Netflix charges customers a monthly fee for access to its library of movies.

Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

275

45) In the ________ revenue models, a firm offers some services for free but charges a subscription fee for premium services.

A) free/freemium B) subscription C) transaction fee D) affiliate E) sales Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

46) Content providers use ________ systems to process large amounts of very small monetary transactions cost-effectively.

A) subscription B) mobile payment C) transaction fee D) micropayment E) affiliate revenue Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

47) Which of the following best illustrates the advertising revenue model?

A) eBay receives a small fee from a seller if a seller is successful in selling an item.

B) Yelp receives a fee after steering a customer to a participating website where he or she makes a purchase.

C) Facebook provides a social network for free, but shows sponsored content in users' News Feeds.

D) Apple accepts micropayments for single music track downloads.

E) Netflix charges customers a monthly fee for access to its library of movies.

Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

48) Which of the following companies uses the service provider business model?

A) Expedia B) ETrade C) Facebook D) Yahoo E) Dropbox Answer: E Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

276

49) Netflix uses which of the following revenue models?

A) Advertising B) Transaction fee C) Subscription D) Freemium E) Affiliate Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

50) Uber uses a form of dynamic pricing.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

51) eBay is an example of the market creator business model.

Answer: TRUE Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

52) MSN is an example of the portal business model.

Answer: TRUE Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

53) Web personalization is used primarily as a marketing tool.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

54) Podcasting allows subscribers to listen to live, streaming radio and other audio content.

Answer: FALSE Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?

277

55) In the affiliate revenue model, firms derive revenue by selling information or services through partner e-commerce sites.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?

56) List and describe at least five different Internet business models. Which of these models do you think would be the riskiest for a startup business today? Support your answer.

Answer: Internet business models include: e-tailer, transaction broker, market creator, content provider, community provider, portal and service. The choice of riskiest model will depend on the individual student. A sample answer is: Today the riskiest model would be a contentprovider, because most, if not all, of the major offline entertainment and content producers such as television networks and newspapers are online. They would be your competitors, and already have the means for content creation and distribution in place. All of the other business models do not have the risk of creating brand new content.

Difficulty: Easy AACSB: Written and oral communication LO: 10-2: What are the principal e-commerce business and revenue models?

57) List and describe the three main categories of e-commerce. Which do you think is ultimately the most valuable to the individual consumer? Support your answer.

Answer: Business-to-consumer, business-to-business, and consumer-to-consumer. All three are valuable to the consumer, but in the long run, business-to-business may be the most valuable to the individual consumer because it will reduce prices and increase both goods and services.

(Other opinions, of course, are supportable.)

Difficulty: Moderate AACSB: Written and oral communication LO: 10-2: What are the principal e-commerce business and revenue models?

58) What methods could a portal use to generate revenue? Which do you think might be most successful, and why?

Answer: Advertising, subscriptions, selling collected marketing information, and directing buyers to sellers could all generate revenue. Student evaluations will vary. A sample answer is: I would think the most successful method would be through collecting marketing information, because as a portal that links to large amounts of external information and attracts repeat customers, the portal would have the opportunity to gather a lot of information about each user.

Difficulty: Moderate AACSB: Written and oral communication LO: 10-2: What are the principal e-commerce business and revenue models?

278

59) You are consulting for Lucky's, a chain of gas stations. What types of e-commerce opportunities, if any, are relevant to Lucky's? Could Lucky's make use of any Internet business models for this opportunity?

Answer: Student answers will vary. A sample answer is: In terms of B2B e-commerce, Lucky's might be able to procure goods over the Internet, use a private industrial network to coordinate their supply chain with suppliers and manage inventory. Depending on the structure of the gasoline retail business, industry net marketplaces and exchanges might be of use. In terms of B2C e-commerce, there are not many opportunities, as it is inefficient to sell gasoline over the Internet. Lucky's could make sure that its stations are listed in popular location-based mobile services that help drivers find nearby gas stations.

Difficulty: Challenging AACSB: Written and oral communication LO: 10-2: What are the principal e-commerce business and revenue models?

60) List and describe the top five methods of online marketing and advertising formats, in terms of 2015 revenue?

Answer: The top five methods of online advertising are: display ads, which are banner ads with interactive features that increasingly are behaviorally targeted to individual web activity ($33 billion); search engine marketing, which employs text ads targeted at precisely what the customer is looking for at the moment of shopping and purchase ($30 billion); video ads, which are the fastest-growing format, and use engaging, entertaining, interactive video that are also often behaviorally targeted ($9.8 billion); rich media ads, which use interactive, targeted, entertaining animations, games and/or puzzles ($7.6 billion); and online classified, such as job, real estate, and services ads ($3.1 billion).

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 10-2: What are the principal e-commerce business and revenue models?

61) Netflix's public announcement of a reward for a technology solution to its movie recommendation system is an example of: A) prediction markets.

B) behavioral targeting.

C) long-tail marketing.

D) social shopping.

E) crowdsourcing.

Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

279

62) Exposing an individual to ads that are chosen and based on the recorded and analyzed online behavior of the individual is referred to as: A) clickstream advertising.

B) behavioral targeting.

C) online profiling.

D) long tail marketing.

E) crowdsourcing.

Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

63) Which of the following best describes the digital social graph?

A) A person's direct and indirect relationships B) All of a person's closest digital relationships C) A mapping of all online social relationships D) All of the online and offline relationships a person has E) All of the relationships in an online community Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

64) Which of the following marketing formats is sales oriented, rather than branding oriented or a mix?

A) Lead generation B) Search engine C) Rich media D) Display ads E) Video Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 10-3: How has e-commerce transformed marketing?

65) Facebook's Like button is an example of which of the following?

A) Social sign-on B) Collaborative shopping C) Network notification D) Social search E) Newsfeed Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

280

66) Which of the following is a marketing format that uses banner ads and pop-ups with interactive features?

A) Search engine ads B) Video ads C) Rich media ads D) E-mail ads E) Display ads Answer: E Difficulty: Easy AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

67) ________ attempts to leverage the fact that there is always some demand, however small, for a product.

A) Long tail marketing B) Behavioral targeting C) Crowdsourcing D) Demand prediction software E) Lead generation marketing Answer: A Difficulty: Challenging AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

68) Which of the following is the largest mobile advertising market?

A) Google B) Yahoo C) Facebook D) Microsoft E) Twitter Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

281

69) What is the difference between personalization and customization, as applied to ecommerce technologies?

A) Customization is any type of adjustment made to a product by the user; personalization refers to a business changing a product or service for the user.

B) Personalization is any type of adjustment made to a product by the user; customization refers to a business changing a product or service for the user.

C) Customization refers to adjusting marketing messages for a consumer; personalization refers to adjusting a product or service based on a user's preferences.

D) Personalization refers to adjusting marketing messages for a consumer; customization refers to adjusting a product or service based on a user's preferences.

E) There is no difference. Both terms refer to changing a product or communication for the consumer.

Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

70) Rich media advertisements are a sales-oriented marketing format.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking LO: 10-3: How has e-commerce transformed marketing?

71) Behavioral targeting occurs at two levels: individual websites and through ISPs. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

72) Advertising networks track a user's behavior at thousands of websites.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

73) Viral marketing is like traditional word-of-mouth marketing except that it is spread via online communities.

Answer: TRUE Difficulty: Challenging AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

282

74) The behavioral targeting of ads results in consumers responding ten times more frequently than when delivered ads randomly.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?

75) Describe the use of personalization and customization in e-commerce. What business value do these techniques have?

Answer: In personalization, merchants can target their marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purchases. For example, Amazon.com greets each logged in user with their user name. With customization, merchants can change the delivered product or service based on a user's preferences or prior behavior. The Wall Street Journal Online allows you to select the type of news stories you want to see first and gives you the opportunity to be alerted when certain events happen. The ability of Internet technology to track customer behavior at websites, along with records of purchases and other behavior, allows merchants to create a detailed profile of a customer. These profiles can be used to create unique personalized web pages that display content or ads for products or services of special interest to each user, improving the customer's experience and creating additional value. The business value of personalization is reduced marketing costs, as you spend only the money to target customers that are more likely to be receptive and are more profitable, and improved sales results, from increased customer response to personalized sites that better serve their own purposes and shopping needs. Personalization can achieve some of the benefits of using individual salespeople for dramatically lower costs.

Difficulty: Moderate AACSB: Written and oral communication LO: 10-3: How has e-commerce transformed marketing?

76) You have been hired as a marketing consultant by a law firm in Los Angeles that specializes in juvenile justice. What ways can you use the Internet as a marketing tool and to advertise the firm's services?

Answer: Student answers will vary. A sample answer is: For marketing research, you could advertise on search engines. You could pay for marketing research at relevant portals. You could also collect customer information from the company's website. You could monitor relevant blogs to see what issues are of concern in juvenile justice, so as to address these concerns in your advertising campaigns. To advertise, you could advertise on search engine results and at relevant portals or legal information content providers. If it were feasible, you could create a juvenile justice portal and blog for the company in order to attract users from whom you could gather market research as well as promote your services. You might also want to investigate social network marketing—assuming that your clients might be the best leads for other clients.

Difficulty: Challenging AACSB: Written and oral communication LO: 10-3: How has e-commerce transformed marketing?

283

77) Website tracking software can log the path a customer took through the website, the time spent on the site, and what geographic area, in general, the customer is from, all of which can help in customer analysis. It can also log the customer's operating system and which browser the customer is using. How could these last two data items be of interest to a company? Give examples.

Answer: Student answers will vary, but should include an understanding that customer OS and browser interact technologically with a website and might be relevant in data analysis. An example is: Customer OSs and browsers could help a company determine what technical functionalities could be used in the site. For example, if it found out that a significant percentage of its users are using mobile browsers, they might want to make sure that the website is easily used by various mobile devices. Secondly, this data might be relevant in data mining or other analysis. For example, a retail clothing company might find that a significant portion of their most valued customers use an Apple operating system, and from other data analysis know that Apple users are more likely to purchase cashmere sweaters. Then the company may want to place a greater emphasis on selling the cashmere sweaters.

Difficulty: Moderate AACSB: Written and oral communication LO: 10-3: How has e-commerce transformed marketing?

78) Which of the following statements about EDI is not true?

A) Each major industry in the United States has EDI standards.

B) Today, EDI is only used for document automation.

C) Many organizations still use private networks for EDI. D) EDI systems are increasingly web-enabled.

E) About 80 percent of online B2B e-commerce is still based on EDI. Answer: B Difficulty: Challenging AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

79) The process of sourcing goods and materials, negotiating with suppliers, paying for goods, and making delivery arrangements is called: A) e-procurement.

B) SCM. C) procurement.

D) sourcing.

E) production.

Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

284

80) A secure website that links a large firm to its suppliers and other key business partners is called a(n): A) e-hub.

B) marketspace.

C) exchange.

D) private industrial network.

E) net marketplace.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 10-4: How has e-commerce affected business-to-business transactions?

81) Which of the following statements about Net marketplaces is not true?

A) Some Net marketplaces sell direct goods.

B) Some Net marketplaces serve vertical markets.

C) Some Net marketplaces sell indirect goods.

D) Some Net marketplaces support contractual purchases based on long-term relationships.

E) Some Net marketplaces are owned by a single firm and used to link solely to the firm's suppliers and key business partners.

Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 10-4: How has e-commerce affected business-to-business transactions?

82) Which of the following statements about exchanges is not true?

A) Exchanges are independently owned third-party Net marketplaces.

B) Some exchanges provide vertical markets.

C) Exchanges are the most successful form of B2B commerce.

D) Some exchanges enable a spot market.

E) Go2Paper is an example of an exchange.

Answer: C Difficulty: Challenging AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

83) Which of the following is an example of a direct good in the automobile industry?

A) Computer equipment B) Paper C) Office furniture D) Roofing shingles E) Sheet steel Answer: E Difficulty: Easy AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

285

84) Which of the following is an example of a private industrial network?

A) Exostar B) Go2Paper C) Elemica D) Expedia E) VW Group Supply Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

85) Procurement involves all of the following except: A) negotiating with suppliers.

B) paying for goods.

C) making delivery arrangements.

D) sourcing.

E) production scheduling.

Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

86) EDI standards that take advantage of network communications have yet to be fully implemented at the industry level.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 10-4: How has e-commerce affected business-to-business transactions?

87) Net marketplaces may either support contractual purchasing based on long-term relationships with designated suppliers or short-term spot purchasing.

Answer: TRUE Difficulty: Challenging AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

88) Exchanges have become one of the most popular types of Net marketplace because they encourage competitive bidding that drives prices down.

Answer: FALSE Difficulty: Challenging AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

286

89) Indirect goods are not involved firsthand in the production process.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?

90) A new social mobile app you are developing allows users to find friends who are logged in and within a 10-mile radius. This would be categorized as a ________ service.

A) geosocial B) geoinformation C) geoadvertising D) geomapping E) geolocating Answer: B Difficulty: Easy AACSB: Analytical thinking LO: 10-5: What is the role of m-commerce in business, and what are the most important mcommerce applications?

91) Geoadvertising sends ads to users based on their: A) GPS locations.

B) home addresses.

C) shopping preferences.

D) website behaviors.

E) Google Maps settings.

Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-5: What is the role of m-commerce in business, and what are the most important mcommerce applications?

92) What percent of online retailers now have m-commerce websites?

A) 15 percent B) 25 percent C) 55 percent D) 75 percent E) 85 percent Answer: C Difficulty: Challenging AACSB: Application of knowledge LO: 10-5: What is the role of m-commerce in business, and what are the most important mcommerce applications?

287

93) Foursquare is an example of which of the following?

A) Social graph B) Collaborative shopping C) Net marketplace D) Crowdsourcing application E) Geosocial services Answer: E Difficulty: Moderate AACSB: Application of knowledge LO: 10-5: What is the role of m-commerce in business, and what are the most important mcommerce applications?

94) Define location-based services and describe the main categories of these services. Which of the categories do you feel has the most potential in terms of e-commerce revenues, and why?

Answer: Location-based services are services that use GPS mapping services available on smartphones to deliver value-added services. They include geosocial services, geoadvertising, and geoinformation services. A geosocial service can tell you where your friends are meeting.

Geoadvertising services can tell you where to find the nearest Italian restaurant, and geoinformation services can tell you the price of a house you are looking at, or about special exhibits at a museum you are passing. Student answers as to the most valuable of these services will vary; an example is: I feel that geoadvertising services have the most potential for profit, as it is based on a profit-making mechanism: advertising. Geosocial services and geoinformation services, by themselves, are more content- and communication-oriented.

Difficulty: Moderate AACSB: Written and oral communication LO: 10-5: What is the role of m-commerce in business, and what are the most important mcommerce applications?

95) What are geosocial services and how are they being used?

Answer: Geosocial services help you find friends, or your friends to find you, by checking in to the service, announcing your presence in a restaurant or other place. Your friends are instantly notified. About 20 percent of smartphone owners use geosocial services. One example of a firm using geosocial services is Foursquare. Foursquare provides a location-based social networking service to 60 million registered individual users, who may connect with friends, update their location, and provide reviews and tips for enjoying a location. Points are awarded for checking in at designated venues. Users choose to post their check-ins on their accounts on Twitter, Facebook, or both. Users also earn badges by checking in at locations with certain tags, for check-in frequency, or for the time of check-in. More than 500,000 local merchants worldwide use the merchant platform for marketing.

Difficulty: Easy AACSB: Application of knowledge; Written and oral communication LO: 10-5: What is the role of m-commerce in business, and what are the most important mcommerce applications?

288

96) Which of the following is a milestone for the Phase 1: Planning phase of developing an ecommerce presence?

A) Website plan B) Web mission statement C) Functional website D) Social media plan E) Mobile media plan Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 10-6: What issues must be addressed when building an e-commerce presence?

97) Which of the following is a milestone for the website development phase of building an ecommerce presence?

A) Web mission statement B) Social media plan C) Website plan D) Web presence map E) Functional website Answer: C Difficulty: Challenging AACSB: Application of knowledge LO: 10-6: What issues must be addressed when building an e-commerce presence?

98) In planning a robust e-commerce presence, you will want to consider the blog platform as part of your ________ presence.

A) social media B) e-mail C) community D) website E) offline media Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 10-6: What issues must be addressed when building an e-commerce presence?

99) Which of the following is not one of four types of presence to be considered when building an e-commerce presence?

A) Offline media B) Websites C) Social media D) Corporate E) E-mail Answer: D Difficulty: Easy AACSB: Application of knowledge LO: 10-6: What issues must be addressed when building an e-commerce presence?

289

100) What are the steps involved in developing an e-commerce presence for a start-up company?

Answer: A one-year timeline for developing an e-commerce presence for a start-up company would involve the following: Phase 1: Planning, which involves envisioning the company's web presence and determining personnel, and producing a web mission statement; Phase 2, Website development, which involves acquiring content, developing a website design, arranging for hosting a website, and producing a website plan; Phase 3: Web implementation, which involves developing keywords and metatags, focusing on search engine optimization, identifying potential sponsors, and producing a functional website; Phase 4: Social media plan, which involves identifying appropriate social platforms and content for the company's products and services, and producing a social media plan; Phase 5, Social media implementation, which involves developing Facebook, Twitter and Pinterest presences, and results in a functioning social media presence, and Phase 6: Mobile plan, which involves developing a mobile media plan and considering options for porting the website.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 10-6: What issues must be addressed when building an e-commerce presence?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 11 Managing Knowledge 1) Which of the following is the last step in the knowledge management value chain?

A) Feedback B) Acquire C) Disseminate D) Store E) Apply Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

2) About ________ percent of the United States GDP is produced by the knowledge and information sectors.

A) 15 B) 25 C) 55 D) 65 E) 85 Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

290

3) Which of the following statements best describes the relationship between collaboration and knowledge management?

A) Collaboration is impossible without knowledge.

B) Knowledge is impossible without collaboration.

C) Knowledge is useful only when shared with others.

D) As knowledge improves, so does collaboration.

E) Knowledge is the result of collaboration.

Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

291

4) The text defines ________ as the flow of events or transactions captured by an organization's system.

A) information B) data C) wisdom D) knowledge E) experience Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

5) The text defines ________ as expertise of organizational members that has not been formally documented.

A) wisdom B) information C) data D) experience E) tacit knowledge Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

6) Which of the following statements is not an accurate description of the importance of knowledge to a firm?

A) Knowledge experiences network effects as more people share it.

B) Knowledge should be seen as an intangible key asset.

C) Knowledge enables firms to become more efficient in their use of scarce resources.

D) Knowledge is unconditional.

E) Much of the firm's value relies on being able to create knowledge.

Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

292

7) What is meant by the statement "knowledge is sticky"?

A) Knowledge is hard to move.

B) Knowledge is universally applicable.

C) Knowledge works only in certain situations.

D) Knowledge is intangible.

E) Knowledge is difficult to replace.

Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

8) Which of the following is not one of the main four dimensions of knowledge described in the chapter?

A) Knowledge is a firm asset.

B) Knowledge has different forms.

C) Knowledge has a location.

D) Knowledge is situational.

E) Knowledge is timeless.

Answer: E Difficulty: Challenging AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

9) Changing organizational behavior by sensing and responding to new experience and knowledge is called: A) change management.

B) knowledge leveraging.

C) the knowledge value chain.

D) machine learning.

E) knowledge management.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

293

10) What is the first value-adding step in the knowledge business value chain?

A) Acquire B) Data and information acquisition C) Store D) Disseminate E) Apply Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

11) The set of business processes, culture, and behavior required to obtain value from investments in information systems is one type of: A) knowledge culture.

B) knowledge discovery.

C) organizational and management capital.

D) organizational routine.

E) knowledge.

Answer: C Difficulty: Challenging AACSB: Information technology LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

12) Which of the following are the three major types of knowledge management systems?

A) MIS, DSS, and TPS B) CRM, SCM, and CAD C) DBMS, DSS, and ECM D) COPs, ECM, and MIS E) Enterprise-wide knowledge management systems, KWS, and intelligent techniques Answer: E Difficulty: Moderate AACSB: Information technology LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

294

13) Specialized systems built for knowledge workers charged with discovering and creating new knowledge for a company are called: A) KWS. B) LMS. C) wikis.

D) COPs. E) enterprise-wide knowledge management systems.

Answer: A Difficulty: Easy AACSB: Information technology LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

14) Which of the following does not describe the dimensions of knowledge in a firm?

A) It is contextual and applicable only in relevant situations.

B) It is intangible.

C) It is subject to the laws of diminishing returns.

D) It is a cognitive event involving mental models.

E) It is enmeshed in a firm's culture.

Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

15) Informal social networks of professionals and employees within and outside the firm who have similar work-related activities and interests are called communities of: A) practice.

B) professionals.

C) interest.

D) knowledge.

E) expertise.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

295

16) All of the following are intangible assets of a firm except its: A) brand.

B) reputation.

C) knowledge.

D) information systems.

E) unique business processes.

Answer: D Difficulty: Challenging AACSB: Application of knowledge LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

17) While systems such as KWS can manage semistructured and unstructured information, enterprise-wide content management systems are designed to manage a firm's structured information.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

18) Knowledge is "sticky" and not easily moved.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

19) For a firm, organizational resources are unnecessary to transform data into knowledge.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

20) Expertise is thought to be the collective and individual experience of applying knowledge to the solution of problems.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

296

21) Document management systems are essentially large databases.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

22) What is knowledge management? What types of knowledge might a company such as a taxi service have, and could a taxi service benefit from knowledge management?

Answer: Knowledge management is the set of processes developed in an organization to create, gather, store, disseminate, and apply the firm's knowledge. A taxi company's knowledge might include explicit knowledge, such as maps and routes between destinations. Tacit knowledge would include the experience of drivers, such as the best alternate routes between destinations or passenger needs. A taxi service might benefit from a system that gave drivers guides on routes that included alternate routes drivers had found. It might benefit from a learning management system (LMS) that trained drivers for locations, destinations, and alternate routes.

Difficulty: Easy AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

23) Briefly outline the knowledge management value chain as it might apply to the online catalog system of a public library.

Answer: Steps in the knowledge management chain include: Acquisition: for an online catalog of a library this would be getting the book data into digital format.

Storage: This would involve the systems for storing this data, perhaps a central server.

Dissemination: The library would need to determine how the card catalog information is accessed by the public or by staff.

Application: This would involve the card catalog becoming part of the library's business processes: for example, the card catalog would be linked to a system of borrowing, so that users would know from the card catalog whether a book was out on loan.

Management and organizational activities: This would entail using the system with a card catalog base for other services, perhaps linking up to a wider library system to share resources, information, or book loaning between systems.

Difficulty: Challenging AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

297

24) Identify the three major types of knowledge management systems. Provide two examples of each.

Answer: The major types of knowledge management systems are enterprise-wide knowledge management systems, knowledge work systems (KWS), and intelligent techniques.

Enterprise-wide knowledge management systems include: enterprise content management (ECM) systems, collaboration and social tools, and learning management systems (LMS).

Types of KWS include: computer-aided design (CAD) systems, and virtual reality (VR) systems. Intelligent techniques include: data mining, expert systems, case-based reasoning, fuzzy logic, neural networks, genetic algorithms, hybrid AI systems, and intelligent agents.

Difficulty: Easy AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

25) What do you see as the challenges in setting up a knowledge management system?

Answer: Determining what knowledge will be the most effective or offer the most benefits to the company; defining taxonomies, gathering accurate knowledge, quantifying the system's success, change management and implementing business processes that incorporate the system.

Difficulty: Challenging AACSB: Analytical thinking LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

26) What are the four dimensions of knowledge?

Answer: The four dimensions of knowledge are that it is a firm asset, it has different forms, it has a location, and it is situational. Knowledge is a firm asset, although it is intangible, and its value to the firm increases as more people share it. The different forms of knowledge are tacit (unspoken) or explicit (codified), and involves both knowing how to follow procedures and why things occur. The location of knowledge is in the minds of workers — it is a cognitive event with both social and individual basis, and it is "sticky" within a firm's culture. Finally, knowledge is situational — it is dependent on context, and knowing when to apply a procedure is just as important as knowing the procedure itself.

Difficulty: Easy AACSB: Application of knowledge; Written and oral communication LO: 11-1: What is the role of knowledge management and knowledge management programs in business?

298

27) ________ knowledge exists in formal documents, as well as in formal rules that organizations derive by observing experts and their decision-making behaviors.

A) Unstructured B) Tacit C) Management D) Explicit E) Structured Answer: E Difficulty: Easy AACSB: Reflective thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

28) Which of the following types of system enables organizations to digitize, index, and tag documents according to a coherent framework?

A) Wikis B) CAD C) ECM D) LMS E) VR Answer: C Difficulty: Easy AACSB: Information technology LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

29) All of the following are typical components or capabilities of an ECM system except: A) knowledge portals.

B) communication tools.

C) tagging tools.

D) digital asset management.

E) AR tools.

Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

299

30) Which of the following would not be considered semistructured knowledge?

A) Request for proposals B) Voice mail C) Videos D) E-mail E) Brochures Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

31) In content management, once a taxonomy is developed, documents must then be ________ with the proper classification.

A) tagged B) inventoried C) tupled D) retrieved E) archived Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

32) You are advising a video production company on the best type of knowledge management system to help them archive digital video and sound clips. Which of the following will suit their needs?

A) MOOC B) Digital asset management system C) CAD system D) VRML system E) LMS Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

300

33) A MOOC is: A) a type of online course.

B) an intelligent technique.

C) a VR system.

D) a machine learning system.

E) a type of content management system.

Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

34) Which of the following is a tool for the management, delivery, tracking, and assessment of various types of employee learning?

A) Investment workstation B) Organizational learning system C) Employee enrichment system D) LMS E) Employee management system Answer: D Difficulty: Moderate AACSB: Information technology LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

35) A(n) ________ is a scheme for classifying information and knowledge in such a way that it can be easily accessed.

A) Intelligent technique B) COP C) KWS D) enterprise-wide knowledge management system E) taxonomy Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

36) Both structured and unstructured documents can contain knowledge.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

301

37) Structured knowledge is explicit knowledge that exists in formal documents and formal rules.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

38) Semistructured information is all the knowledge in a firm that resides in the heads of experienced employees.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

39) How can knowledge be gathered from the personal and undocumented expertise of professionals within a firm? List at least four ways to gather and disseminate such knowledge.

Answer: The expertise and experience of firm employees can be gathered by documenting their experience through documenting best practices and frequently asked questions. You can also develop a referral system by providing a way for employees to find a company expert for the solution they are looking for. Other tools you can use include best-practices documents, FAQs, collaboration tools, wikis, and blogs for helping gather and disseminate tacit knowledge.

Difficulty: Challenging AACSB: Analytical thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

40) You have been hired by a small architectural firm interested in implementing a knowledge management system. What features do you think would be of most benefit to them?

Answer: Student answers will vary. The ability to store structured documents, such as plans, blueprints; collaboration tools, the ability to reference up-to-date local or national building codes, a system for storing case studies, best practices, and corporate standards. Also of importance is a KWS or CAD to aid in engineering and design.

Difficulty: Challenging AACSB: Analytical thinking LO: 11-2: What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?

302

41) Which of the following statements about 3-D printing is not true?

A) It creates solid objects.

B) It is also called additive manufacturing.

C) It is incompatible with the cloud.

D) It creates objects layer by layer.

E) It uses specifications in a digital file.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

42) All of the following are considered to be knowledge workers except: A) designers.

B) engineers.

C) architects.

D) executives.

E) researchers.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

43) CAD workstations: A) provide engineers, designers, and factory managers with precise control over industrial design and manufacturing.

B) provide an important source of expertise for organizations.

C) allow groups to work together on documents.

D) are high-end PCs used in the financial sector to analyze trading situations instantaneously and facilitate portfolio management.

E) facilitate employee learning.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

303

44) Which of the following would not be classified as a KWS? A) CAD system B) 3D visualization system C) AR applications D) Expert system E) VR system Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

45) VR systems: A) provide engineers, designers, and factory managers with precise control over industrial design and manufacturing.

B) automate the creation and revision of designs.

C) use machines to make solid objects.

D) provide architects, engineers, and medical workers with precise, photorealistic simulations of objects.

E) enable acquiring, storing, and disseminating knowledge documents in a virtual world.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

46) Which of the following seeks to enhance human perception by combining a live direct view of the physical world with computer-generated images?

A) AR B) VRML C) CAD D) KWS E) LMS Answer: A Difficulty: Moderate AACSB: Information technology LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

47) 3-D printers can produce fully functioning components, such as working batteries and LEDs. Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

304

48) CAD and VRML are both types of KWS. Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

49) Knowledge workers include all of a company's workers who are tasked with managing or creating knowledge, from top-level scientists to clerical and data workers.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

50) VRML requires the use of a powerful server as well as large amounts of bandwidth.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

51) Today's 3-D printers can create objects out of human cartilage.

Answer: TRUE Difficulty: Challenging AACSB: Information technology LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

52) The yellow first-down markers shown on televised football games are examples of AR. Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

305

53) Why are knowledge workers so important to the digital firm? What are their functions and which of these do you feel is most critical to the success of the firm? Why? Answer: Student answers will vary, but should include an understanding of the three main functions of knowledge workers. An example answer is: Knowledge workers create new products or find ways to improve existing ones. Without them, the firm would stagnate and become less competitive in an environment that is always changing and is increasingly more competitive. In the modern economy, knowledge is truly power. The three major functions of knowledge workers are: keeping the organization up-to-date in knowledge as it develops in the external world; serving as internal consultants regarding their areas of knowledge and its opportunities; and acting as change agents as they evaluate, initiate, and promote new projects.

The most important of these is to develop new knowledge as it applies to the making of products or services, as offering products and services is the mainstay of the corporation.

Difficulty: Moderate AACSB: Analytical thinking LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

54) What are three important qualities or capabilities of a KWS? Answer: A KWS must give knowledge workers the specialized tools they need, such as powerful graphics, analytical tools, and communications and document-management tools. A KWS must provide a user-friendly interface to the KWS. These user-friendly interfaces save time by allowing the user to perform needed tasks and get to required information without having to spend a lot of time learning to use the computer. A KWS must be carefully designed to optimize the performance of the specific tasks of the pertinent knowledge worker.

Difficulty: Moderate AACSB: Analytical thinking LO: 11-3: What are the major types of knowledge work systems and how do they provide value for firms?

55) Discuss the concept of virtual reality, especially with regard to VRML and its applications in the business arena.

Answer: Virtual reality (VR) systems use interactive graphics software and hardware to create the illusion of reality in cyberspace. The original applications were in gaming, but new uses in education, science, and business are being developed and have great promise. Virtual reality applications are being developed for the Web using a standard called Virtual Reality Modeling Language (VRML), which can organize multiple media types to put users in a simulated realworld environment. VRML is platform independent, operates over a desktop computer, and requires little bandwidth. DuPont's HyperPlant is an example of a business application.

HyperPlant allows users to go through three-dimensional models as if they were physically walking through a plant, which reduces errors during the construction of manufacturing structures. Augmented reality (AR) systems combine a direct view of physical world with computer-generated imagery to enhance the perception of reality. AR has been used in sports broadcasts, image guided surgery, military training, and other fields.

Difficulty: Moderate AACSB: Analytical thinking LO: 11-3: What are the major types of knowledge work systems and how do they provide value 306

for firms?

56) Which of the following statements about genetic algorithms is not true?

A) Genetic algorithms are based on techniques inspired by evolutionary biology.

B) Genetic algorithms are used to solve problems that are very dynamic and complex, involving hundreds or thousands of variables or formulas.

C) Genetic algorithms are able to evaluate many solution alternatives quickly to find the best one.

D) Genetic algorithms use an iterative process to refine initial solutions so that better ones are more likely to emerge as the best solution.

E) Genetic algorithms discover knowledge by using hardware and software that parallel the processing patterns of the biological or human brain.

Answer: E Difficulty: Challenging AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

57) All of the following are intelligent personal assistants for consumers except: A) Siri.

B) Alexa.

C) Google Now. D) Watson.

E) Cortana.

Answer: D Difficulty: Easy AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

58) Apple's Siri application is an example of: A) neural networks.

B) CBR. C) AI. D) intelligent agents.

E) machine learning.

Answer: D Difficulty: Easy AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

307

59) Which of the following is not used to capture tacit knowledge?

A) Expert system B) CBR C) Fuzzy logic D) Neural network E) Knowledge base Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

60) Which of the following is a type of intelligent technique?

A) Digital asset management B) Case-based reasoning C) CAD D) VRML E) LMS Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

61) Which of the following techniques is used for knowledge discovery?

A) Expert system B) Transaction processing systems C) CBR D) Data mining E) Fuzzy logic Answer: D Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

308

62) Which of the following is a computer-based system that attempts to emulate human behavior?

A) Fuzzy logic B) Neural networks C) AI technology D) Genetic algorithms E) LMS Answer: C Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

63) An inference engine is: A) a strategy for searching the rule base in case-based reasoning.

B) the programming environment of an expert system.

C) a method of organizing expert system knowledge into chunks.

D) a strategy used to search through the rule base in an expert system by forward chaining or backward chaining.

E) a programming algorithm used to create a virtual world using VRML. Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

64) Forward chaining is: A) a strategy for searching the rule base in an expert system that begins with information entered by the user.

B) the programming environment of an expert system.

C) a method of organizing expert system knowledge into chunks.

D) a strategy for searching the rule base in an expert system that begins with a hypothesis.

E) a programming algorithm used to create a virtual world using VRML. Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

309

65) Backward chaining is: A) a strategy for searching the rule base in an expert system that begins with information entered by the user.

B) the programming environment of an expert system.

C) a method of organizing expert system knowledge into chunks.

D) a strategy for searching the rule base in an expert system that begins with a hypothesis.

E) a programming algorithm used to create a virtual world using VRML. Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

66) Expert systems: A) are capable of solving wide ranges of problems.

B) are based on DO WHILE rules.

C) lack the general intelligence of human beings.

D) share characteristics with mainframe computing.

E) are used for knowledge discovery.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

67) Virtually all expert systems deal with problems of: A) policy development.

B) classification.

C) logic and control.

D) high complexity.

E) imprecise rules.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

310

68) Expert systems are expensive and time consuming to maintain because: A) their rule base is so complex.

B) they rely on equipment that becomes outdated.

C) their rules must be reprogrammed every time there is a change in the environment, which in turn may change the applicable rules.

D) only the person who created the system knows exactly how it works, and may not be available when changes are needed.

E) it is difficult to program at this level of complexity without introducing software bugs.

Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

69) Which of the following stores descriptions of past experiences of human specialists in a database for later retrieval when the user encounters a situation with similar characteristics?

A) CBR B) Fuzzy logic C) Data mining D) LMS E) Expert systems Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

70) Your company wants to develop intelligent techniques to create a "smart" oven that can perfectly cook basic foodstuffs, such as roasts and bread, using sensors and minimal input from the user. The system would know the difference between rare, medium rare, medium, and well done roasts. The category of intelligent technique that would describe this system is: A) expert system.

B) neural network.

C) CBR. D) fuzzy logic.

E) genetic algorithm.

Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

311

71) You are an automotive engineer working on an application that will automatically parallel park a car. The intelligent technique you may find most useful is: A) CBR. B) AI. C) fuzzy logic.

D) expert system.

E) a neural network.

Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

72) Fuzzy logic is a type of: A) data mining.

B) a neural network.

C) an intelligent technique.

D) business intelligence.

E) CBR. Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

73) Which of the following has a large number of sensing and processing nodes that continuously interact with each other?

A) Neural network B) Expert system C) CBR D) Fuzzy logic system E) Genetic algorithm Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

312

74) Which of the following describes a difference between neural networks and genetic algorithms?

A) Genetic algorithms are designed to process large amounts of information.

B) Genetic algorithms are a type of knowledge discovery, while neural networks are an intelligent technique.

C) Neural networks are programmed to "learn."

D) Genetic algorithms are designed to work with small amounts of data, while neural networks can handle large quantities of data.

E) Neural networks are a type of machine learning, whereas genetic algorithms are static programs.

Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

75) Genetic algorithms: A) develop solutions to particular problems using inheritance, crossover, and mutation.

B) represent knowledge as groups of characteristics.

C) do not work for most problems.

D) are based on logic.

E) seek to emulate a human expert's way of solving problems.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

76) Software programs that work without direct human intervention to carry out specific tasks for individual users, business processes, or software applications, are called: A) intelligent agents.

B) intelligent techniques.

C) business intelligence.

D) AI hybrid systems.

E) genetic algorithms.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

313

77) What type of intelligent technique helped Procter & Gamble determine the most efficient methods for their trucks to deliver goods?

A) Fuzzy logic B) Intelligent agents C) Genetic algorithms D) Neural networks E) CBR Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

78) To automate routine tasks to help firms search for and filter information for use in electronic commerce and supply chain management a firm would most likely use which of the following?

A) CAD system B) VR system C) Fuzzy logic D) Intelligent agent E) Genetic algorithm Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

79) ________ is the study of how computer programs can improve their performance without explicit programming.

A) Neural networks B) COP C) Genetic algorithms D) Machine learning E) Intelligent techniques Answer: D Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

314

80) The terms used in a fuzzy logic system to describe imprecise states or conditions are referred to as: A) neural networks.

B) membership functions.

C) inference engines.

D) taxonomies.

E) tags.

Answer: B Difficulty: Challenging AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

81) Which type of intelligent agent models the behavior of consumers, stock markets, and more, by seeing them as autonomous agents that follow relatively simple rules for interaction?

A) Agent-based modeling B) MOOC C) AR D) VRML E) Genetic algorithm Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

82) The model of human knowledge used by expert systems is referred to as: A) the knowledge base.

B) CBR. C) a neural network.

D) expert AI E) VRML. Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

315

83) A(n) ________ is a type of intelligent technique that finds patterns and relationships in massive data sets too large for a human to analyze.

A) inference engine B) CAD C) expert system D) genetic algorithm E) neural network Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

84) Systems that integrate different types of techniques, such as genetic algorithms, fuzzy logic, neural networks, and expert systems, into a single application are called ________ systems.

A) differential intelligence B) hybrid AI C) machine learning D) enterprise learning E) CAD Answer: B Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

85) Expert systems are the primary tools used for knowledge discovery.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

86) Expert systems capture the knowledge of skilled employees in the form of a set of rules in a software system that can be used by others in the organization.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

316

87) Expert systems are typically used in business in discrete, highly structured decision-making situations.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

88) Expert systems work by applying a set of AND/OR rules against a knowledge base, both of which are extracted from human experts.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

89) CBR is not well-suited for diagnostic systems in medicine.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

90) Fuzzy logic can describe a particular phenomenon or process linguistically and then represent that description in a small number of flexible rules.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

91) Fuzzy logic systems "learn" patterns from large quantities of data by sifting through data, searching for relationships, building models, and correcting over and over again the model's own mistakes.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

92) Because neural network applications cannot always explain why they arrive at a particular solution, they are not well suited for use in the medical profession.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

317

93) Hybrid AI applications are being implemented in home appliances, such as washing machines.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

94) Intelligent agents can discover underlying patterns, categories, and behaviors in large data sets.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

95) Today's AI systems are about to come up with new and novel solutions to problems.

Answer: FALSE Difficulty: Challenging AACSB: Information technology LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

96) What is the difference between a neural network, fuzzy logic, and genetic algorithms?

Which would be most useful to an organization of astronomers analyzing gamma ray emissions reaching Earth?

Answer: A neural network attempts to emulate the processing patterns of the biological brain.

The results are a program that can "learn" by comparing solutions to known problems to sets of data presented to it. Neural networks are used for solving complex, poorly understood problems for which large amounts of data have been collected. Fuzzy logic creates rules that use approximate or subjective values. It describes a particular phenomenon or process linguistically and then represents that logic in a small number of flexible rules. Genetic algorithms are problem-solving methods that use the model of living organisms adapting to their environment.

Possible solutions are evaluated, the "best" choices are made, then more possible solutions are created by combining the factors involved in those first "best" choices, and choosing again. The process continues until an optimum solution is reached. These genetic algorithms are useful for finding the optimal solution for a specific problem by examining a very large number of alternative solutions for that problem. Student evaluations will vary. One answer is: I think a neural network would be of most use because of its ability to analyze large amounts of data and find hidden relationships.

Difficulty: Challenging AACSB: Analytical thinking LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

318

97) What is CBR and how does it work?

Answer: Case-based reasoning (CBR) is an intelligent technique for enhancing an organization's knowledge. In CBR, the knowledge and past experiences of human specialists are represented as cases and stored in a database for later retrieval when the user encounters a new case with similar parameters. The system searches for stored cases with problem characteristics similar to the new one, finds the closest fit, and applies the solutions of the old case to the new case.

Difficulty: Easy AACSB: Application of knowledge; Written and oral communication LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

98) What is a chatbot and how are they used in business?

Answer: Chatbots (chatterbots) are software agents designed to simulate a conversation with one or more human users via textual or auditory methods. They try to understand what you type or say and respond by answering questions or executing tasks. Chatbots are typically used in systems for customer service or information acquisition. For example, Facebook has integrated chatbots into its Messenger messaging app, so that any outside company with a Facebook brand page can interact with Facebook users through the chat program. A Facebook user could, for example, browse for a pair of lightweight running shoes on Messenger by texting a message to begin a conversation with Spring, a mobile shopping app. Spring would ask the user for his or her preferred price range for the shoes and display small selections of what it thinks the user might like.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

99) What is an inference engine and what is the difference between forward chaining and backward chaining?

Answer: An inference engine is the strategy used to search through the knowledge base of an expert system. Forward chaining and backward chaining are two different ways an inference engine can function. In forward chaining, the engine begins with information entered by the user and executes steps to arrive at a conclusion. In backward chaining, the user begins with a hypothesis or condition and the engine asks questions in sequence to reach a conclusion.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

319

100) Describe some of the ways we use machine learning technologies every day.

Answer: Machine learning is omnipresent in modern technology. Each Google search you perform uses machine learning techniques to adjust results to be more accurate over time.

Amazon's recommendations are generated using machine learning to be most appealing to you based on your prior purchases and online behavior. The same goes for Netflix, whose recommendations for TV and movies to watch are generated in the same way.

Difficulty: Challenging AACSB: Application of knowledge; Written and oral communication LO: 11-4: What are the business benefits of using intelligent techniques for knowledge management?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 12 Enhancing Decision Making 1) Which of the following statements best describes the business value of improved decision making?

A) Improved decision making creates better products.

B) Improved decision making results in a large monetary value for the firm as numerous small daily decisions affecting efficiency, production, costs, and more add up to large annual values.

C) Improved decision making enables senior executives to more accurately foresee future financial trends.

D) Improved decision making strengthens customer and supplier intimacy, which reduces costs.

E) Improved decision making creates a better organizational culture.

Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

2) When there is no well-understood or agreed-on procedure for making a decision, it is said to be: A) undocumented.

B) unstructured.

C) documented.

D) semi-structured.

E) ad-hoc.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

3) If you can follow a definite procedure to make a business decision, you are making a(n) ________ decision.

A) ad-hoc B) procedural C) unstructured 320

D) semi-structured E) structured Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

321

4) Which type of decision is calculating gross pay for hourly workers?

A) Semi-structured B) Procedural C) Structured D) Unstructured E) Ad hoc Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

5) Which type of decision is deciding whether to introduce a new product line?

A) Structured B) Unstructured C) Recurring D) Nonrecurring E) Procedural Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

6) The decision to approve a capital budget is an example of a(n) ________ decision.

A) structured B) ad hoc C) semi-structured D) undocumented E) unstructured Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

322

7) The decisions involved in creating and producing a corporate intranet can be classified as ________ decisions.

A) semi-structured B) procedural C) ad hoc D) structured E) unstructured Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

8) Checking store inventory is an example of a(n) ________ decision.

A) procedural B) structured C) ad hoc D) unstructured E) semi-structured Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

9) The ________ phase of decision making finds or recognizes a problem, need, or opportunity.

A) choice B) design C) implementation D) analysis E) intelligence Answer: E Difficulty: Easy AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

323

10) Which of the following is not one of the Simon's four stages of decision making?

A) Implementation B) Intelligence C) Analysis D) Choice E) Design Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

11) Improving the quality of high-value decision making by an executive will save an organization far more money than improving the quality of lesser-value decisions made at a lower level.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

12) A structured decision cannot be made by following a well-defined set of procedures. "Feel" or intuition is necessary.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

13) Structured decision making is most prevalent at lower organizational levels.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

14) The design phase of decision making consists of discovering, identifying, and understanding the problems occurring in the organization.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

324

15) The choice phase of Simon's decision-making model includes choosing among solution alternatives.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

16) The first stage in Simon's decision-making process model is the design stage.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

17) A structured decision is repetitive and routine, for which known procedures provide solutions.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

18) The third stage in Simon's description of decision making is implementation.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

325

19) In your position of office manager at a legal firm, you are in charge of hiring temporary legal assistants and clerical workers. Describe how Simon's decision-making process applies to this decision. Could that decision be aided by an information system in any way, and if so, how?

Answer: The decision-making process is: 1. Intelligence, or problem discovery: How many temps need to be hired, for how long, and what skills would they need?

2. Design, or solution discovery: What temp agencies are available and what are their prices?

3. Choice, or choosing solutions: Evaluate the offerings of the temp agencies, and evaluate the abilities of temps as per need.

4. Implementation, or solution testing: Evaluate the work of each temp against assignments and other needs.

An information system that displayed the temps available for hire along with pertinent information such as rate, and past assignments and evaluations would help in this process.

Difficulty: Moderate AACSB: Analytical thinking LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

20) You are the CIO at an insurance firm and a manager has proposed implementing expensive new project management software that would help increase the efficiency of the IT staff. The idea of improved efficiency sounds good, but is there any way you can evaluate her decision before purchasing the software? Be specific.

Answer: Student answers will vary but should utilize the steps of the decision-making process and/or the qualities of decisions as a means of evaluation. A sample answer is: Yes, you can ask the manager to describe her decision-making process and evaluate the decision according to the steps she has taken. For example, how was she able to identify efficiency as a problem that needed solving? Is it the most pressing problem? What were the various solutions considered to the problem and what criteria did she choose to evaluate them? You can also evaluate the manager's decision according to the various qualities of decision making: Accuracy (does the decision reflects reality?), comprehensiveness: (does the decision reflects a full consideration of the facts and circumstances?), fairness (does the decision faithfully reflects the concerns and interests of affected parties?), speed (is the decision making efficient with respect to time and other resources?), coherence (does the decision reflects a rational process that can be explained to others and made understandable?), and due process (is the decision the result of a known process and can it be appealed to a higher authority?).

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

326

21) What are managerial roles and what are the three main categories of managerial roles?

Answer: Managerial roles are expectations of the activities that managers should perform. The three main categories of managerial roles are interpersonal, informational, and decisional.

Interpersonal roles involve representing companies and performing symbolic duties, while also acting as liaisons between other levels of the firm. Informational roles require the distribution of information to those who need to have it. Decisional roles require the initiation of new activities and the handling of disturbances within the organization, as well as mediation of conflicts.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

22) Describe high-velocity automated decision making and its dangers.

Answer: High-velocity automated decision making is a class of decisions that are highly structured and performed in a manner of milliseconds, like a Google search or an automated stock trade. The danger of these types of decisions is that they are made faster than a manager can supervise or control, so mistakes can be disastrous. For example, Knight Capital lost $440 million due to trades made in error by automated systems. Human beings who write the software enabling these types of decisions must be careful to ensure that the systems operate properly.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-1: What are the different types of decisions, and how does the decision-making process work?

23) Which of the following is not one of the five observed ways in which managerial behavior differs from the classical description of managers?

A) Managers perform a great deal of work at an unrelenting pace.

B) Managers perform a low number of activities for a high percentage of time.

C) Managers prefer current, specific, ad-hoc information.

D) Managers prefer oral forms of communication.

E) Managers give high priority to maintaining a diverse web of contacts.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 12-2: How do information systems support the activities of managers and management decision making?

327

24) The role of liaison falls into which of Mintzberg's managerial classifications?

A) Decisional B) Informational C) Interpersonal D) Symbolic E) Leading Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

25) Mintzberg outlined three categories of managerial roles: A) interpersonal, informational, and decisional.

B) control, leadership, oversight.

C) operational, management, and executive.

D) cultural, organizational, and technical.

E) middle management, senior management, executive.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

26) The role of entrepreneur falls into which of Mintzberg's managerial classifications?

A) Decisional B) Informational C) Interpersonal D) Symbolic E) Leading Answer: A Difficulty: Challenging AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

27) According to Mintzberg, managers in their informational role act as: A) figureheads for the organization.

B) leaders.

C) nerve centers of the organization.

D) negotiators.

E) liaisons.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

328

28) Which of the following systems support a manager's role as leader of an organization?

A) DSS B) Telepresence systems C) E-mail D) MIS E) ESS Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

29) All of the following managerial roles can be supported by information systems except: A) liaison.

B) resource allocator.

C) nerve center D) disseminator.

E) negotiator.

Answer: E Difficulty: Challenging AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

30) When managers represent their company in the outside world and perform symbolic duties, they are acting in their: A) decisional role.

B) managerial role.

C) informational role.

D) interpersonal role.

E) leadership role.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

329

31) As discussed in the chapter text, the three main reasons that investments in information technology do not always produce positive results are: A) management support, technical logistics, and user compliance.

B) organization, environment, culture.

C) information quality, information integrity, and information accuracy.

D) information quality, organizational culture, and management filters.

E) organization, culture, and technology.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 12-2: How do information systems support the activities of managers and management decision making?

32) The concept of management ________ describes situations in which managers act on preconceived notions that reject information that does not conform to their prior conceptions.

A) filters B) backgrounds C) biases D) inefficiency E) politics Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

33) Which quality dimension of information is concerned that the data values of an information source fall within a defined range?

A) Timeliness B) Consistency C) Completeness D) Accessibility E) Validity Answer: E Difficulty: Challenging AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

330

34) The dimension of ________ describes whether data elements are consistently defined.

A) completeness B) accuracy C) validity D) consistency E) integrity Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

35) High-velocity decision making systems are growing rapidly for decisions classed as: A) semi-structured.

B) financial.

C) ad hoc.

D) predefined.

E) highly structured.

Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

36) Which of the following describes how the Simon framework of decision-making works in high-velocity decision environments?

A) Only the initial step is performed by the software; the final three steps are handled by humans.

B) The first two steps of Simon's framework are eliminated and the final two steps are handled by software algorithms.

C) The first three steps of the process are handled by software algorithms and the final step is handled by experienced managers.

D) All four steps are performed by humans with the support of high-speed, high-volume DSS and ESS. E) All four steps of the process are handled by software algorithms; humans are eliminated from the decisions because they are too slow.

Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

331

37) A drawback to high-velocity, automated decision-making systems is that they are unable to: A) handle high volumes of decisions.

B) handle structured decisions.

C) handle semi-structured decisions.

D) control themselves and respond to new environments.

E) be applied to situations outside of the financial world.

Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

38) Behavioral models of management see managers as being ________ than does the classical model.

A) more systematic B) more informal C) more reflective D) more well organized E) less reactive Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

39) Which of the following is not one of the five classical functions of managers?

A) Leading B) Deciding C) Planning D) Organizing E) Controlling Answer: A Difficulty: Challenging AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

332

40) The dimension of ________ in information quality describes whether the structure of data is consistent.

A) integrity B) accuracy C) timeliness D) completeness E) consistency Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

41) The classical model of management does not address what exactly managers do when they plan, decide things, and control the work of others.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

42) Experts from a variety of fields have found that managers are poor at assessing risk.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 12-2: How do information systems support the activities of managers and management decision making?

43) A key business decision in your sporting goods manufacturing company is determining what suppliers to use for your raw materials. How can you determine if a manager in charge of selecting suppliers is making the best choice?

Answer: Student answers will vary but should include an understanding of evaluating the information the data is based on. For example: One way to determine the manager's choice is to find out what he or she is basing their decision on: price, quality, schedule, relationship, etc.

Then you could find out how those measurements of the supplier qualities are made—is the data about the suppliers accurate information. You could evaluate the data informing the decision along the information quality dimensions: accuracy, integrity, consistency, completeness, validity, timeliness, and accessibility.

Difficulty: Moderate AACSB: Analytical thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

333

44) Explain why even well-designed information systems do not always help improve a firm's decision making.

Answer: Student answers will vary but should include the three main reasons for information systems not always producing positive results: 1. information quality, 2. management filters, and 3. organizational inertia/politics.

A sample answer is: There are three main reasons that implementing a well-designed information system might not result in better decisions. First, the information produced by a system may be incomplete and inaccurate. The quality of information will depend on the quality of data gathered, and may require a minimum amount of data to be gathered. Inaccurate data and incomplete data can degrade the quality of decision making. Second, management filters can also stymie good decision making—a manager who has a bias against some types of activities or solutions, or is overly optimistic or pessimistic will make decisions that are skewed towards their own perspective rather than actual facts. Finally, organizational inertia and politics can hamper decision making. Information systems can require organizational change in roles and business processes that employees want to resist; or a system can produce information that suggests that a change is necessary but employees ignore in order to maintain the status quo in roles and responsibilities.

Difficulty: Moderate AACSB: Analytical thinking LO: 12-2: How do information systems support the activities of managers and management decision making?

45) Which of the following BI tools or abilities has been driving the movement toward "smart cities?"

A) OLAP B) Chi-square analysis C) Predictive analytics D) Data mining E) Big data analytics Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

46) Which of the following statements best describes the term business intelligence?

A) Software developed exclusively for business management B) The tools and techniques used to analyze and understand business data C) The infrastructure for collecting and managing business data D) Information systems involved in business decision making E) Enterprise systems used to make business decisions Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

334

47) Decisions regarding managing and monitoring day-to-day business activities are referred to as ________ intelligence.

A) business B) analytical C) operational D) transactional E) production Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

48) Which of the following companies is not identified in the text as one of the leading producers of business intelligence and analytics products?

A) Google B) Microsoft C) SAP D) IBM E) SAS Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

49) Which of the following is not one of the six main elements in the business intelligence environment discussed in this chapter?

A) Managerial users and methods B) Organizational environment C) User interface D) Data from the business environment E) Delivery platform Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

335

50) Which of the following is not one of the six main analytic functionalities of BI systems for helping decision makers understand information and take action?

A) Production reports B) Parameterized reports C) Business case archives D) Forecasts, scenarios, and models E) Drill down Answer: C Difficulty: Easy AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

51) ________ are visual tools for presenting performance data in a BI system.

A) Dashboards and scorecards B) Parameterized reports C) Reports and the drill-down feature D) Scenarios and models E) Ad hoc report creation Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

52) Which of the following are most likely to rely primarily on the drill-down functionality of BI for their decision-making needs?

A) IT developers B) Middle managers C) Operational employees D) Business analysts E) Senior executives Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 12-3: How do business intelligence and business analytics support decision making?

53) A(n)________ report is produced when a user enters various values in a pivot table to filter data.

A) drill-down B) SQL C) ad hoc D) production E) parameterized Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 12-3: How do business intelligence and business analytics support decision making?

336

54) A(n) ________ is a BI feature that presents performance data defined by users.

A) ad hoc query B) parameterized report C) interface D) portal E) dashboard Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

55) BI that is designed to determine the most likely effects of changes in the business environment is called: A) statistical modeling.

B) environmental analytics.

C) predictive analytics.

D) big data analytics.

E) parameterized reports.

Answer: C Difficulty: Easy AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

56) Which of the following are most likely to rely primarily on production reports for their decision-making needs?

A) Operational supervisors B) Senior managers C) Analytic modelers D) Business analysts E) Executives Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 12-3: How do business intelligence and business analytics support decision making?

57) Which type of information system uses data visualization technology to analyze and display data for planning and decision making in the form of digitized maps?

A) GIS B) DSS C) Location analytics D) Executive support systems E) GDSS Answer: A Difficulty: Easy AACSB: Information technology LO: 12-3: How do business intelligence and business analytics support decision making?

337

58) Predictive analytics is used for all of the following except: A) anticipating customer response to price changes.

B) identifying the most profitable customers.

C) determining the best routes for product delivery.

D) establishing consumer credit scores.

E) forecasting driver safety.

Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 12-3: How do business intelligence and business analytics support decision making?

59) Which of the following is not an example of a BI predefined production report?

A) Workforce demographics B) Order cycle time C) Revenue forecasts D) Supplier performance E) Direct and indirect spending Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 12-3: How do business intelligence and business analytics support decision making?

60) You can use location analytics to determine how best to route your deliveries of products to retail outlets.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

61) A GIS is a DSS designed specifically to work with spatial information.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 12-3: How do business intelligence and business analytics support decision making?

62) Big data is too unwieldy to analyze for consumer preferences.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 12-3: How do business intelligence and business analytics support decision making?

63) Data visualization technologies are used to help human users see patterns and relationships in large amounts of data.

Answer: TRUE Difficulty: Easy AACSB: Information technology 338

LO: 12-3: How do business intelligence and business analytics support decision making?

64) GIS are useful for businesses, but not as much for state and local governments.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 12-3: How do business intelligence and business analytics support decision making?

65) You are evaluating BI software from a variety of vendors. Identify six elements in the BI environment. Use your understanding of the importance of these elements to formulate six questions to ask the vendor in order to determine how their software will interplay with your needs.

Answer: The six elements are: 1. Data from the business environment. A question for a salesperson is: "How does your software integrate with our data?"

2. Business intelligence infrastructure. "What type of database system does your software use?"

3. Business analytics toolset. "What tools are included?"

4. Managerial users and methods. "Our management team uses these metrics. Does your software provide that?"

5. Delivery platform: "How does your software integrate with our platforms?"

6. User interface: "What are the elements of your user interface and what delivery methods are used—mobile, social media, web portal, etc."

Student evaluations of which of these are the most important will vary.

Difficulty: Challenging AACSB: Analytical thinking LO: 12-3: How do business intelligence and business analytics support decision making?

66) What is a GIS? Describe at least three ways in which a GIS could be used by modern business.

Answer: Geographic information systems (GIS) are a special category of DSS that use data visualization technology to analyze and display data for planning and decision making in the form of digitized maps. GIS can best be used to support decisions that require knowledge about the geographic distribution of people or other resources in scientific research, resource management, and development planning. GIS have modeling capabilities, allowing managers to change data and automatically revise business scenarios to find better solutions.

For instance, a company could display its customers on a map and then design the most efficient delivery route for its products. A second way in which it could be used would be to analyze demographic information to decide where to open branch restaurants. A third use could be customer demographic data and map information to locate people who are likely to become customers for the company's services.

Difficulty: Challenging AACSB: Analytical thinking LO: 12-3: How do business intelligence and business analytics support decision making?

339

67) You are an analyst for a firm that imports and distributes specialty oils and vinegars and your company wants you to evaluate their options for taking advantage of cutting edge business analytics. What are their choices? What will you recommend?

Answer: There are two strategies for adopting BI and BA capabilities: 1. an integrated solution or 2. using multiple best-of-breed vendor software solutions.

The hardware firms want to sell you integrated hardware/software solutions that run on their hardware (the totally integrated solution). Software firms will want to sell you "best of breed" software that runs on any machine they want. In this strategy, you adopt the best database and data warehouse solution, and select the best business intelligence and analytics package from whatever vendor you believe is best. Student recommendations will vary: The first solution carries the risk that a single vendor provides your firm's total hardware and software solution, making your firm dependent on its pricing power, but it offers the advantage of dealing with a single vendor who can deliver on a global scale. The second solution offers greater flexibility and independence, but with the risk of potential difficulties integrating the software to the hardware platform, as well as to other software.

Difficulty: Moderate AACSB: Analytical thinking LO: 12-3: How do business intelligence and business analytics support decision making?

68) Why are managerial users and methods considered an important part of the BI environment?

Answer: Managerial users and methods are an important part because the hardware and software of business intelligence are only tools — they are only as useful or intelligent as their users. The managers using the BI tools will decide how important or unimportant various business goals are, choose what analytic tools are used, and determine whether and how to measure progress towards those goals, and how they evaluate the tools themselves.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-3: How do business intelligence and business analytics support decision making?

69) You are a city transportation planner and are interested in improving the city's bus service.

What types of analytic tools might help you do this, and how would you use them?

Answer: To help plan an efficient bus system you could use some kind of decision support system (DSS). Ideally, you will want to use predictive analytics to see how potential changes in the service would affect various elements such as riders and speed. You could use big data predictive modeling and location analytics to gain insight from existing service and routes and prioritize service.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-3: How do business intelligence and business analytics support decision making?

340

70) Not all business intelligence users are managers interested in forecasting sales figures for the next quarter. What different types of users are there for a business's intelligence systems?

Answer: Business intelligence users include everyone from operational employees, customers, and suppliers, through managers, knowledge workers, and senior executives. These users can be ordinary or casual users, who rely on the pre-packaged reports given by the system, or they can be super users, who create custom reports and use the more advanced features of the system for custom analyses. Super users can occur at any level of the organization. An operational level super user is likely to be involved in IT development, while a managerial level super user is more likely to be a business analyst.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-3: How do business intelligence and business analytics support decision making?

71) What is big data? How does it provide business value?

Answer: Big data is a term to describe the massive amount of data generated by social media, customer transactions, and output from machines and sensors. It is valuable to the business because it provides ways to find new ways to analyze sales, customers, and more, and make better predictions, improving business decisions.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 12-3: How do business intelligence and business analytics support decision making?

72) What is behind the movement towards "smart cities?"

Answer: "Smart cities" make use of big data analytics and digital technology to make better decisions. Most cities have stockpiles of tax records, crime data, health stats, educational records, and much more. Until now, there's been no good way to synthesize all of that raw data into actionable information. Using big data analytics and predictive modeling, cities can make better decisions on transportation operation, public safety, and health care, and other models allow cities to determine the impacts of changing one service on the rest of their services.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-3: How do business intelligence and business analytics support decision making?

73) MIS typically produce: A) new ways of looking at data that emphasize change, flexibility, and rapid response.

B) fixed, regularly scheduled reports based on data extracted from the organization's TPS. C) solutions to semi-structured problems appropriate for middle management decision making.

D) assumptions, responses to ad-hoc queries, and graphic representations of existing data.

E) scorecards of overall firm performance along predefined key indicators.

Answer: B Difficulty: Easy AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

341

74) An information system for a building company that tracks construction costs for various projects across the United States would be categorized as a type of: A) BPM. B) MIS. C) KPI. D) GSS. E) GDSS. Answer: B Difficulty: Easy AACSB: Analytical thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

75) A pivot table is a(n): A) spreadsheet tool that displays two or more dimensions of data in a convenient format.

B) type of relational database.

C) chart tool that can rotate columnar data quickly and visually.

D) tool for performing sensitivity analysis.

E) integral data visualization tool used in digital dashboards and scorecards.

Answer: A Difficulty: Easy AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

76) An information system that combines data from internal TPS with information from financial systems and external sources to deliver reports such as profit-loss statements and impact analyses, is an example of: A) DSS. B) ESS. C) CDSS. D) MIS. E) GIS. Answer: B Difficulty: Easy AACSB: Analytical thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

342

77) The leading methodology for understanding the really important information needed by a firm's executives is called the ________ method.

A) digital dashboard B) balanced scorecard C) KPI D) data visualization E) predictive analytics Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

78) Which of the following types of systems would be used to present senior marketing executives with in-depth information about customer retention, satisfaction, and quality performance?

A) CDSS B) MIS C) DSS D) TPS E) ESS Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

79) Measures defined by management and used to internally evaluate the success of a firm's financial, business process, customer, and learning and growth are called: A) benchmarks.

B) KPIs. C) the balanced scorecard method.

D) BPM. E) parameters.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

343

80) A(n) ________ facilitates the solution to unstructured problems by a set of decision makers working together as a group.

A) DSS B) ESS C) CDSS D) GIS E) GDSS Answer: E Difficulty: Moderate AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

81) The management methodology of using a firm's strategy to generate operational targets for the business and measuring progress towards them using the firm's enterprise systems is called: A) benchmarks.

B) KPIs. C) the balanced scorecard method.

D) BPM. E) business intelligence.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

82) ESS: A) support the structured decision making of senior executives.

B) have the ability to drill down into lower levels of detail.

C) easily integrate data from different systems.

D) are primarily driven by information derived from a company's transaction processing systems.

E) enable operational managers to create parameterized reports.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

344

83) A well-designed ESS will allow management to: A) create routine production reports as well as view overall business performance.

B) facilitate group decision making.

C) create pivot charts.

D) analyze big data.

E) track the activities of competitors.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

84) GDSS: A) are designed to allow meeting attendees to share their thoughts in real-time with their peers.

B) support decisions that require knowledge about the geographic distribution of resources.

C) are only used with geographically dispersed attendees.

D) facilitate the solution of unstructured problems.

E) provide tools that allow managers to visualize data.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

85) GDSS capabilities have improved along with all of the following except: A) improved power of desktop PCs. B) explosion of mobile computing.

C) growth of cellular networks.

D) increase in dedicated conference rooms.

E) expansion of Wi-Fi bandwidth.

Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

345

86) GDSS such as Cisco Collaboration Meeting Rooms Hybrid can handle up to: A) 5 participants.

B) 50 participants.

C) 500 participants.

D) 1000 participants.

E) 5000 participants.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

87) Middle management face primarily structured decisions.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

88) DSS primarily address structured problems.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

89) MIS typically produce fixed, regularly scheduled reports based on data extracted and summarized from the firm's underlying transaction processing systems.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

90) DSS are a special category of location analytics.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

346

91) What-if analysis works forward from known or assumed conditions.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

92) Sensitivity analysis predicts outcomes from constant inputs.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

93) GDSS facilitate the solution of unstructured problems by a set of decision makers working together as a group in either the same location or different locations.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

94) GDSS requires a dedicated conference room with special hardware and software tools.

Answer: FALSE Difficulty: Challenging AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

95) GDSS are designed to display data in the form of digitized maps.

Answer: FALSE Difficulty: Challenging AACSB: Information technology LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

347

96) KPI analysis is the leading methodology for understanding the most important information needed by a firm's executives.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

97) Describe MIS and DSS and differentiate between them.

Answer: MIS provide information on the firm's performance to help managers monitor and control the business. They typically produce hard copy, fixed, regularly scheduled reports based on data extracted and summarized from the organization's underlying transaction processing systems. DSS provide new sets of capabilities for nonroutine decisions and user control. MIS accents reports based on routine flows of data and assists in the general control of the organization. DSS emphasizes change, flexibility, and rapid response to unstructured problems.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

98) What is the business value of a DSS? Answer: DSS can help companies improve supply chain management and customer relationship management. Some take advantage of the company-wide data provided by enterprise systems. DSS today can also harness the interactive capabilities of the web to provide decision-support tools to both employees and customers.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

348

99) Describe the balanced scorecard model and its role in ESS. Answer: The balanced score card is a framework for operationalizing a firm's strategic plan by focusing on measurable outcomes on four dimensions of firm performance: financial, business process, customer, and learning and growth. Performance on each dimension is measured using key performance indicators (KPIs), which are the measures proposed by senior management for understanding how well the firm is performing along any given dimension. The balanced scorecard framework is thought to be "balanced" because it causes managers to focus on more than just financial performance. In this view, financial performance is past history—the result of past actions—and managers should focus on the things they are able to influence today, such as business process efficiency, customer satisfaction, and employee training.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

100) The business value of a GDSS is improved decision making. How does a GDSS accomplish this?

Answer: GDSS helps groups make decisions about unstructured problems. Firstly, because GDSS provides value by allowing collaboration over important decisions — the decision doesn't rest in the hands of one person alone. By having more people working on the problem, the decision is more likely to realistically reflect the needs and goals of the group, rather than just one person. Secondly, because anonymity is a feature, people are encouraged to be more honest. This will also enhance the accuracy of the solution. The ability of the GDSS to record the meeting and decisions means that the decision-making process, its ideas and solutions, can be made part of the company's knowledge base. Additionally, by providing structure, the GDSS may enhance the efficiency of the particular type of unstructured decision making.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 12-4: How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 13 Building Information Systems 1) The four kinds of structural organizational change enabled by IT, in order from least to most risky, are: A) rationalization, automation, reengineering, and redesigning.

B) rationalization, automation, reengineering, and paradigm shift.

C) automation, rationalization, redesigning, and paradigm shift.

D) automation, redesigning, restructuring, and paradigm shift.

E) paradigm shift, reengineering, rationalization, and automation.

Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 13-1: How does building new systems produce organizational change?

349

2) In automation: A) more manual steps are required.

B) business processes are reorganized to cut waste and eliminate repetitive, paper-intensive tasks.

C) the nature of the business is rethought.

D) employees are enabled to perform their tasks more efficiently.

E) business processes are added.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 13-1: How does building new systems produce organizational change?

3) Which of the following is more powerful than rationalization of procedures?

A) Business process redesign B) TQM C) Automation D) Six sigma E) Systems analysis and design Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 13-1: How does building new systems produce organizational change?

350

4) A bank has reworked its mortgage application process so that several steps are handled by computer software, and some steps are combined to reduce bottlenecks in processing. The goal is to gradually improve its efficiency over time. This is an example of: A) automation.

B) rationalization of procedures.

C) paradigm shift.

D) TQM. E) six sigma.

Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 13-1: How does building new systems produce organizational change?

5) An upscale organic foods grocery chain is implementing an information system that will enable it to add same-day home delivery of groceries to its customers. This is an example of: A) automation.

B) rationalization of procedures.

C) paradigm shift.

D) business process redesign.

E) organizational change.

Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 13-1: How does building new systems produce organizational change?

6) The idea that the achievement of quality control is an end in itself describes a main concept of: A) BPM. B) BPR. C) six sigma.

D) TQM. E) systems analysis and design.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 13-1: How does building new systems produce organizational change?

351

7) ________ provide(s) a methodology and tools for dealing with the organization's ongoing need to revise and optimize its numerous business processes.

A) Business process redesign B) Business process management C) CASE tools D) TQM E) Systems analysis and design Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 13-1: How does building new systems produce organizational change?

8) In order, what are the first three steps in BPM? A) 1. identifying processes for change, 2. analyzing existing processes, 3. designing the new process.

B) 1. analyzing existing processes, 2. identifying processes for change, 3. designing the new process.

C) 1. identifying processes for change, 2. designing the new process, 3. implementing the new process.

D) 1. analyzing processes to change, 2. designing the new process, 3. measuring the optimized process.

E) 1. designing new processes, 2. analyzing existing processes, 3. identifying processes for change.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 13-1: How does building new systems produce organizational change?

9) What is the greatest barrier to successful business process change?

A) Ineffective project management B) Usability of implemented solution C) Selecting the correct process to change D) Organizational culture E) Poor choice of technology Answer: D Difficulty: Easy AACSB: Analytical thinking LO: 13-1: How does building new systems produce organizational change?

352

10) Possible functions of BPM tools include all of the following except: A) integrating existing systems to support business processes' improvements.

B) automating business processes.

C) identifying and document business processes.

D) testing the security of business processes.

E) designing new processes.

Answer: D Difficulty: Easy AACSB: Information technology LO: 13-1: How does building new systems produce organizational change?

11) BPM software provides tools that help business do all of the following except: A) identify and document processes requiring improvement.

B) create models of improved processes.

C) capture and enforce business rules for performing processes.

D) capture and identify information system requirements for a new system.

E) integrate existing systems to support new or redesigned processes.

Answer: D Difficulty: Challenging AACSB: Information technology LO: 13-1: How does building new systems produce organizational change?

12) A(n) ________ is an organizational change that involves rethinking the nature of the business and the nature of the organization itself.

A) automation program B) rationalization program C) systems analysis D) paradigm shift E) business process redesign program Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 13-1: How does building new systems produce organizational change?

13) The most common form of IT-enabled organizational change is automation.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 13-1: How does building new systems produce organizational change?

14) Rationalization of procedures describes a radical rethinking of the business models.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 13-1: How does building new systems produce organizational change?

353

15) Organizations will adjust to new information systems without any special efforts if the system is a good system to begin with.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking LO: 13-1: How does building new systems produce organizational change?

16) Six sigma describes the measurement of quality as 3.4 defects per million.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 13-1: How does building new systems produce organizational change?

17) Describe each type of organizational change enabled by information technology. Give an example of each type of change, as it might be illustrated through the operations of a hotel.

Answer: 1. In automation, employees are assisted with performing tasks automatically. In a hotel, this might mean that a system is set up for the reservations desk to record and process customer reservations.

2. In rationalization of procedures, standard operating procedures are streamlined. In a hotel, this might mean that a reservation system that required three or four steps for checking a customer in would be reduced to one or two steps.

3. In business process reengineering, business processes are analyzed, simplified and redesigned. In a hotel, the reservation and check-in system might be designed to allow the customers to reserve rooms and check in themselves, without the need of a hotel employee to confirm the process.

4. In paradigm shift, the very nature of the business is rethought and new business models are defined. In a hotel, this might mean that the idea of renting rooms on a night-by-night basis to clients might be rethought of as an extended stay place, or perhaps even as a condominium or other business type.

Difficulty: Moderate AACSB: Analytical thinking LO: 13-1: How does building new systems produce organizational change?

18) What is the business importance of managing the quality of business processes? Describe two methods of quality management.

Answer: Quality management is one area of continuous process improvement. Quality improvements in business processes can increase efficiency, reduce waste, lower costs, and can raise the level of product and service quality. Two methods for achieving greater quality are Total Quality Management (TQM) and Six Sigma. In TQM, quality is the responsibility of all people and functions within an organization. Everyone is expected to contribute to the overall improvement of quality. Six sigma is a specific measure of quality, representing 3.4 defects per million opportunities. Most companies cannot achieve this level of quality but use six sigma as a goal to implement a set of methodologies and techniques for improving quality and reducing costs.

Difficulty: Moderate AACSB: Analytical thinking LO: 13-1: How does building new systems produce organizational change?

354

19) Which conversion process introduces the system first to a limited portion of the organization?

A) Pilot study strategy B) Phased approach strategy C) Limited cutover strategy D) Parallel strategy E) Parallel approach strategy Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 13-2: What are the core activities in the systems development process?

20) Which process develops a detailed description of the functions that a new information system must perform?

A) Feasibility study B) Requirements analysis C) Systems design D) Test plan development E) Management plan Answer: B Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

21) Systems design: A) determines whether a solution is feasible from a financial and organizational standpoint.

B) shows how the new system will fulfill the information requirements.

C) identifies which users need what information, where, when and how.

D) is concerned with the logical view of the system solution.

E) translates system specifications into software program code.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

22) Transferring data from a legacy system to the new system would be defined by which category of system design specifications?

A) Input B) Database C) Manual procedures D) Conversion E) Implementation Answer: D Difficulty: Challenging AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

355

23) Unit testing: A) includes all the preparations for the series of tests to be performed on the system.

B) tests the functioning of the system as a whole in order to determine if discrete modules will function together as planned.

C) involves testing the entire system with real-world data.

D) provides the final certification that the system is ready to be used in a production setting.

E) tests each program separately.

Answer: E Difficulty: Easy AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

24) System testing: A) includes all the preparations for the series of tests to be performed on the system.

B) tests the functioning of the system as a whole in order to determine if discrete modules will function together as planned.

C) tests each program separately.

D) provides the final certification that the system is ready to be used in a production setting.

E) tests the information requirements of a system.

Answer: B Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

25) Acceptance testing: A) includes all the preparations for the series of tests to be performed on the system.

B) tests the functioning of the system as a whole.

C) tests each program separately in the system.

D) provides the final certification that the system is ready to be used in a production setting.

E) tests the conversion of legacy data to the new system.

Answer: D Difficulty: Easy AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

26) In a parallel conversion strategy, the new system: A) is tested by an outsourced company.

B) replaces the old one on an appointed day.

C) and the old are run together for a time.

D) is introduced only to a limited area first.

E) is slowly converted from the old system.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

356

27) In the direct cutover conversion strategy, the new system: A) is tested by an outsourced company.

B) replaces the old one at on an appointed day.

C) and the old are run together.

D) is introduced in stages.

E) the old and new systems are run in parallel.

Answer: B Difficulty: Easy AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

28) Changes in hardware, software, documentation, or production to a production system to correct errors, meet new requirements, or improve processing efficiencies are termed: A) acceptance.

B) production.

C) maintenance.

D) post-implementation.

E) implementation.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

29) In what stage of systems development are design specifications created?

A) Systems analysis B) Systems design C) Testing D) Conversion E) Implementation Answer: B Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

30) A systems analysis includes a(n) ________ that is used to determine whether the solution is achievable, from a financial, technical, and organizational standpoint.

A) feasibility study B) data flow diagram C) logical design D) systems design document E) request for proposal Answer: A Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

357

31) ________ provide(s) a detailed statement of the information needs that a new system must satisfy; identifies who needs what information, and when, where, and how the information is needed.

A) Systems analysis and design documents B) Information requirements C) A data flow diagram D) A feasibility study E) Requests for proposal Answer: B Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

32) A(n) ________ is the model or blueprint for an information system solution and consists of all the specifications that will deliver the functions identified during systems analysis.

A) feasibility study B) data flow diagram C) systems design document D) information requirements document E) request for proposal Answer: C Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

33) During the ________ stage of system development, system specifications that were prepared during the design stage are translated into software code.

A) programming B) systems analysis and design C) implementation D) conversion E) acceptance testing Answer: A Difficulty: Easy AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

34) ________ is the process of changing from the old system to the new system.

A) Implementation B) Conversion C) Systems analysis and design D) Programming E) End user involvement Answer: B Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

358

35) The entire system-building effort is driven by: A) six sigma.

B) feasibility studies.

C) documentation.

D) user information requirements.

E) available information technology.

Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 13-2: What are the core activities in the systems development process?

36) Information systems can only have one possible design.

Answer: FALSE Difficulty: Moderate AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

37) Documentation reveals how well a system works from both a technical standpoint, but not an end-user standpoint.

Answer: FALSE Difficulty: Challenging AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

38) Systems development activities always take place in sequential order.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 13-2: What are the core activities in the systems development process?

359

39) You are consulting for the information technology division of a state university to guide and facilitate the design of a new system for handling college applications, which has previously been handled entirely with a paper-based process. They would like to set up a system by which prospective students can apply online. Describe in detail their first steps and any studies they should perform before designing the new information system.

Answer: Student answers will vary, but should include an understanding of the first step of systems development—systems analysis, along with feasibility studies and determining information requirements. An example answer is: The college will need to perform systems analysis. This consists of defining the problem, identifying its causes, specifying the solution, identifying the information requirements. It also includes identifying the primary owners and users of data along with existing hardware and software, the problems of existing systems, examining documents, work papers, and procedures; observing system operations; and interviewing key users of the systems. The systems analysis would include a feasibility study to determine whether that solution was feasible, or achievable, from a financial, technical, and organizational standpoint. The feasibility study would determine whether the proposed system was a good investment, whether the technology needed for the system was available and could be handled by the firm's information systems specialists, and whether the organization could handle the changes introduced by the system. They should identify several alternative solutions that the organization can pursue. The process then assesses the feasibility of each.

A written systems proposal report describes the costs and benefits, advantages and disadvantages of each alternative. It is up to management to determine which mix of costs, benefits, technical features, and organizational impacts represents the most desirable alternative. They will also need to define the specific information requirements that must be met by the system solution selected. This involves identifying who needs what information, where, when, and how. Requirements analysis carefully defines the objectives of the new or modified system and develops a detailed description of the functions that the new system must perform.

Difficulty: Challenging AACSB: Analytical thinking LO: 13-2: What are the core activities in the systems development process?

360

40) List and describe at least nine factors considered in the design specifications for a new system. Give at least two examples for each one.

Answer: • Output. Medium, content, timing • Input. Origins, flow, data entry • User interface. Simplicity, efficiency, logic, feedback, errors • Database design. Logical data model, volume and speed requirements, organization and design, record specifications • Processing. Computations, program modules, required reports, timing of outputs • Manual procedures. What activities, who performs them, when, how, where • Controls. Input controls, processing controls, output controls, procedural controls • Security. Access controls, catastrophe plans, audit trails • Documentation. Operations documentation, systems documents, user documentation • Conversion. Transfer files, initiate procedures, select testing method, cut over to new system • Training. Select training techniques, develop training modules, identify training facilities • Organizational changes. Task redesign, job design, process design, organization structure design, reporting relationships Difficulty: Moderate AACSB: Analytical thinking LO: 13-2: What are the core activities in the systems development process?

41) Discuss the role and influence the user plays in software development.

Answer: The user is the primary focus of software development. Whether a new information system succeeds or fails largely depends on the roles of users. Building successful information systems requires close cooperation among end users and information systems specialists throughout the systems development process. If users are heavily involved in the development of a system, they have more opportunities to mold the system according to their priorities and business requirements, and more opportunities to control the outcome. They also are more likely to react positively to the completed system because they have been active participants in the change process. Incorporating user knowledge and expertise leads to better solutions.

The role of the user in the development of software depends on the method of development used. In SDLC work, end users are limited to providing information requirements and reviewing the technical staff's work. In prototyping, users are involved throughout development, through the use and review of iterative steps of the prototype. In end-user development, the users themselves create the system. Users are typically more involved also in RAD, through the use of prototyping and JAD. In joint application design, end users and information systems specialists work together in an interactive session to discuss design.

Difficulty: Moderate AACSB: Analytical thinking LO: 13-2: What are the core activities in the systems development process?

361

42) You work for the IT department of a startup ASP, and it is your job to set up the testing processes for a new enterprise system the company will be hosting. Describe the processes you will recommend. What unique considerations will you have?

Answer: The first step is to prepare the test plan. Any individual components will need to be tested separately, first (in unit testing), and then the system as a whole will need to be tested (in system testing). Finally, acceptance testing will be conducted to make sure the system is ready to be used in a production setting. Because this is a hosted application, the system will need to be tested as accessed from the variety of platforms that are supported by the application. If the hosted application supports both Mac and Windows users, the system and its parts will need to be tested using client computers running these systems.

Difficulty: Challenging AACSB: Analytical thinking LO: 13-2: What are the core activities in the systems development process?

43) Briefly describe the four main conversion strategies for changing from an old system to a new system.

Answer: The four main conversion strategies are the parallel strategy, the direct cutover strategy, the pilot study strategy, and the phased approach strategy. The parallel strategy involves running the old system and its replacement concurrently until the organization is sure that the new one will work properly. The direct cutover strategy replaces the old system with the new one entirely on a specific date, which could be risky. The pilot study strategy introduces the new system to a limited area of the organization to test its efficacy. The phased approach strategy introduces the system in stages, either by functions or by organizational units.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 13-2: What are the core activities in the systems development process?

44) What is the typical breakdown of time spent maintaining information systems? How can maintenance time and costs be reduced?

Answer: On average, 20 percent of the time spent on maintenance is used for debugging or correcting emergencies. Another 20 percent is spent on investigating changes in data, files, hardware, and software. However, the majority of the time (60 percent) is spent making user enhancements, improving documentation, and increasing efficiency. The work in this category could be reduced with better systems analysis, design practices, and better documentation.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 13-2: What are the core activities in the systems development process?

362

45) The primary tool for representing a system's component processes and the flow of data between them is the: A) data dictionary.

B) process specifications diagram.

C) structure chart.

D) data flow diagram.

E) object-oriented chart.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

46) An entire information system is broken down into its subsystems by using: A) high-level data flow diagrams.

B) low-level data flow diagrams.

C) process specifications.

D) structured diagrams.

E) logical design diagrams.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

47) To understand and define the contents of data flows and data stores, system builders use: A) a data dictionary.

B) process specifications diagrams.

C) user documentation.

D) data flow diagrams.

E) systems analysis.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

48) To show each level of a system's design, its relationship to other levels, and its place in the overall design structure, structured methodologies use: A) structure charts.

B) Gantt and PERT charts.

C) process specifications.

D) data flow diagrams.

E) user documentation.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

363

49) In object-oriented development: A) the class is used as the basic unit of systems analysis and design.

B) an object is a collection of data that is acted on by external processes.

C) processing logic resides within objects.

D) a strict, step-by-step development process is essential.

E) data and processes are separated.

Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 13-3: What are the principal methodologies for modeling and designing systems?

50) In an object-oriented development framework for a university, how would the classes Degree, Mathematics, and Physics be related?

A) Degree would be a sister class to Mathematics and Physics.

B) Degree is a superclass to Mathematics and Physics.

C) Mathematics and Physics would be ancestors to Degree.

D) Degree would be a subclass to Mathematics and Physics.

E) Math, Physics and Degree are sister classes.

Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 13-3: What are the principal methodologies for modeling and designing systems?

51) Object-oriented modeling is based on the concepts of: A) class and inheritance.

B) classes and objects.

C) objects and relationships.

D) objects and inheritance.

E) classes and relationships.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

52) Object-oriented development could potentially reduce the time and cost of writing software because: A) object-oriented programming requires less training.

B) iterative prototyping is not required.

C) objects are reusable.

D) a single user interface object can be used for the entire application.

E) it's not necessary to use a formal methodology to design a system.

Answer: C Difficulty: Moderate AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

364

53) Which of the following statements about CASE is not true?

A) CASE provides hardware and software tools.

B) To be used effectively, CASE tools require organizational discipline.

C) CASE tools can improve communication between users and technical specialists.

D) CASE tools support iterative design.

E) CASE tools facilitate the creation of clear documentation.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

54) ________ describe the transformation occurring within the lowest level of the data flow diagrams.

A) Design requirements B) Information requirements C) Technology design plans D) object-oriented frameworks E) Process specifications Answer: E Difficulty: Challenging AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

55) A data flow diagram offers a logical and graphical model of information flow, partitioning a system into modules that show manageable levels of detail.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

56) A structure chart is a top-down chart, showing each level of design, its relationship to other levels, and its place in the overall design structure.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

57) Objects are grouped into hierarchies, and hierarchies into classes.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

365

58) Traditional structured development is more incremental than object-oriented development.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

59) CASE tools facilitate the creation of clear documentation and the coordination of team development efforts.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 13-3: What are the principal methodologies for modeling and designing systems?

60) What qualities of object-oriented development make this method especially suitable for Internet applications?

Answer: Object-oriented development uses the object as the basic unit of systems analysis and design. The system is modeled as a collection of objects and the relationships between them. Ecommerce companies need to be able to add, change, and retire their technology capabilities very rapidly. Object-oriented development allows objects to be reused and repackaged with other objects to create new software, saving money and development time.

Difficulty: Moderate AACSB: Analytical thinking LO: 13-3: What are the principal methodologies for modeling and designing systems?

61) End user development: A) allows end users to create highly complex information systems.

B) increases the time and steps required to produce a finished application when compared to professional development.

C) allows ends users to develop simple information systems.

D) requires more time to develop systems.

E) requires formal assistance from technical specialists.

Answer: C Difficulty: Challenging AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

62) Organizational software packages often include ________ features that allow the software to be modified to meet organizational requirements.

A) automation B) object oriented C) programming D) design E) customization Answer: E Difficulty: Easy AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

366

63) The oldest method for building information systems is: A) component-based development.

B) prototyping.

C) object-oriented development.

D) the systems life cycle.

E) computer-aided software engineering.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

64) In the traditional systems life cycle, end users: A) are important and ongoing members of the team from the original analysis phase through maintenance.

B) are important only in the testing phases.

C) have no input.

D) are limited to providing information requirements and reviewing the technical staff's work.

E) control the development of the system.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

65) In which type of systems building are the development stages organized so that tasks in one stage are completed before the tasks in the next stage begin?

A) Traditional B) Prototyping C) RAD D) JAD E) Object oriented development Answer: A Difficulty: Easy AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

367

66) You are an IT project manager for an advertising firm. The firm wishes to create an online tool that will be used to survey focus group reactions to products in development. The most important consideration for the firm is being able to offer the tool as soon as possible as a new corporate service. However, you know that many of the senior managers that are business owners of this project have difficulty in understanding technical or software development issues, and are likely to change their requirements during the course of development. What development method would be most successful for this project?

A) RAD B) JAD C) End-user development D) Prototyping E) Traditional Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 13-4: What are alternative methods for building information systems?

67) A systems building approach in which the system is developed as successive versions, each version reflecting requirements more accurately, is described to be: A) end-user oriented.

B) prototyped.

C) object-oriented.

D) agile.

E) iterative.

Answer: E Difficulty: Moderate AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

68) Which of the following may occur when systems are created rapidly, without a formal development methodology?

A) End users can take over the work of IT specialists.

B) The organization quickly outgrows the new system.

C) Hardware, software, and quality standards are less important.

D) Testing and documentation may be inadequate.

E) IT specialists dominate the design of the system.

Answer: D Difficulty: Moderate AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

368

69) What is the primary driving factor for firms in selecting domestic outsourcing firms to build system solutions?

A) To take advantage of technical skills the firm does not have B) To save labor costs C) To avoid change management issues D) To reduce the cost of hardware E) To avoid offshore outsourcing Answer: A Difficulty: Challenging AACSB: Reflective thinking LO: 13-4: What are alternative methods for building information systems?

70) A software package evaluation process is often based on a series of questions sent to vendors, called a(n): A) systems design document.

B) strategic planning document.

C) information systems management plan.

D) request for proposal.

E) logical design document.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 13-4: What are alternative methods for building information systems?

71) As a technical project manager, you have decided to propose implementing a prototyping methodology for a small web-based design project. What is the order of steps you will follow in this project?

A) Develop the prototype; use the prototype; revise and enhance the prototype.

B) Identify user requirements, develop the prototype, use the prototype, revise and enhance the prototype.

C) Define the requirements, develop solutions, select the best prototype, and implement the prototype.

D) Define the requirements, develop the prototype, revise and enhance the prototype.

E) Select the best prototype, define the requirements, and implement the prototype.

Answer: B Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 13-4: What are alternative methods for building information systems?

72) The systems life cycle methodology maintains a formal division of labor between end users and information systems specialists.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

369

73) Prototyping is more iterative than the conventional lifecycle.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

74) A prototype is a working version of an information system that serves as a final model.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

75) End-user-developed systems can be completed more rapidly than those developed through the conventional systems lifecycle.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

76) A primary benefit of offshore outsourcing is that this can substantially reduce hidden costs.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

77) A request for proposal (RFP) is a detailed list of questions submitted to software vendors.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 13-4: What are alternative methods for building information systems?

78) Identify and describe each of the five systems development approaches.

Answer: 1. Systems lifecycle is a sequential step-by-step formal process, written specification and approvals, limited role of users.

2. In prototyping, requirements are specified dynamically with experimental systems in a rapid, informal, and iterative process; users continually interact with the prototype.

3. An applications software package is commercial software that eliminates the need for internally developed software programs.

4. In end-user development, systems are created by end users using fourth-generation software tools, rapid and informal, minimal role of information systems specialists.

5. In outsourcing, systems are built and sometimes operated by an external vendor.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 13-4: What are alternative methods for building information systems?

370

79) What are the advantages and disadvantages of prototyping? Describe the steps in prototyping. Give at least two circumstances under which prototyping might be useful.

Answer: Prototyping is most useful when there is some uncertainty about requirements or design solutions. Because prototyping encourages intense end-user involvement throughout the process, it is more likely to produce systems that fulfill user requirements. Working prototype systems can be developed very rapidly and inexpensively.

Rapid prototyping can gloss over essential steps in systems development. If the completed prototype works reasonably well, management may not see the need for reprogramming, redesigned, full documentation in testing to build a polished production system. This can backfire later with large quantities of data or large numbers of users in a production environment.

The steps in prototyping are: 1. identify the user's basic requirements, 2. develop an initial prototype, 3. use the prototype, 4. revise and enhance the prototype.

Prototyping might be especially useful in designing end-user interfaces, or situations in which the users have no clear ideas of what their information requirements are.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 13-4: What are alternative methods for building information systems?

80) What are customization features and when should an organization pursue them?

Answer: Customization features allow a commercial software package or cloud-based software to be modified to meet an organization's unique requirements without destroying the integrity of the software. However, if a great deal of customization is required, the effort required to customize the software may become so expensive and time-consuming that it negates the advantages of the software in the first place.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 13-4: What are alternative methods for building information systems?

81) A native mobile app is: A) a mobile website.

B) a mobile web app.

C) a standalone application that does not use a browser.

D) a responsive mobile app.

E) one that can only operate on selected devices.

Answer: C Difficulty: Challenging AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

371

82) What is the purpose of responsive web design?

A) It allows one website to serve different platforms, such as tablets, PCs, and mobile phones.

B) It allows websites to respond quickly to changing user needs.

C) It enables websites to customize design according to user preferences.

D) It enables websites to customize content based on user location and preferences.

E) It enables different people to responsively program the system.

Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 13-5: What are new approaches for system building in the digital firm era?

83) A "responsive design" for mobile applications is a design that responds to a user's: A) needs.

B) location.

C) voice commands.

D) digital device and screen size.

E) gestures.

Answer: D Difficulty: Challenging AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

84) Which of the following is not a top priority in mobile application development?

A) Designing for multitouch B) Saving resources C) Limiting the use of keyboards D) Designing for keyboard data entry E) Designing for a mobile device's camera or other features Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 13-5: What are new approaches for system building in the digital firm era?

85) The process of creating workable information systems in a very short period of time is called: A) RAD. B) JAD. C) prototyping.

D) systems analysis and design.

E) end user design.

Answer: A Difficulty: Moderate AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

372

86) Which type of systems development is characterized by significantly speeding up the design phase and the generation of information requirements and involving users at an intense level?

A) RAD B) JAD C) Prototyping D) End-user development E) Traditional Answer: B Difficulty: Moderate AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

87) Groups of objects are assembled into software components for common functions, which can be combined into large-scale business applications, in which type of software development?

A) Object-oriented development B) Component-based development C) Structured methodologies D) RAD E) Agile development Answer: B Difficulty: Moderate AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

88) ________ development focuses on rapid delivery of working software by breaking a large project into a series of small sub-projects that are completed in short periods of time using iteration and continuous feedback.

A) Agile B) Rapid application C) Joint application D) Object-oriented E) DevOps Answer: A Difficulty: Moderate AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

373

89) Compared to the use of proprietary components, web services promise to be less expensive and less difficult to implement because of: A) their ability to integrate seamlessly with legacy systems.

B) their ability to enable communication among different systems using universal standards.

C) the ubiquity of the Internet.

D) the ability to reuse web services components.

E) their use of custom programming.

Answer: B Difficulty: Challenging AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

90) Which of the following statements about mobile web apps is true?

A) Users access mobile web apps through their mobile device's web browser.

B) A mobile web app resides on the user's device.

C) A mobile web app only works on certain mobile platforms.

D) A mobile web app requires the user to sign onto a web page.

E) A mobile web app requires the user to login to a web service.

Answer: A Difficulty: Challenging AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

91) In component-based development, applications are developed one small portion at a time, with each portion able to function independently.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 13-5: What are new approaches for system building in the digital firm era?

92) Responsive web design enables websites to change layouts according to the user's screen size.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

93) Native apps are cheap to develop and only one version is required for different mobile operating systems.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

374

94) Web services are less expensive to weave together than proprietary components.

Answer: TRUE Difficulty: Moderate AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

95) DevOps stands for "development opportunities."

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

96) DevOps emphasizes close collaboration between the software developers and IT operational staff.

Answer: TRUE Difficulty: Easy AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

97) Companies using DevOps, like Netflix, can update its production systems with new software in a matter of months.

Answer: FALSE Difficulty: Easy AACSB: Information technology LO: 13-5: What are new approaches for system building in the digital firm era?

98) What is outsourcing? Describe the advantages and disadvantages to outsourcing software development.

Answer: In outsourcing, a firm hires an external organization to build or maintain part or all of its information system needs. This can include software development and hosting applications, but the firm may also host any developed applications on its own hardware while having the vendor create and maintain software or systems. The vendor may be domestic or in another country (in offshore outsourcing).

The benefit to outsourcing is, in the case of domestic outsourcing, being able to develop systems that in-house staff may not have the time or skills to do. In the case of offshore outsourcing, a primary benefit is cost savings, as costs and salaries in foreign countries can be significantly less.

Disadvantages would include relinquishing some control over development, having third party firms access to privileged company data and information. It is also possible to underestimate costs in outsourcing, which include costs for transferring knowledge, cultural differences, productivity losses, and other human resource issues.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 13-5: What are new approaches for system building in the digital firm era?

375

99) How is the relationship between software developers and end users different under the traditional systems life cycle compared to DevOps? Answer: Under the traditional systems life cycle, there is a formal division of labor between end users and information systems specialists, and end users are limited to providing their information requirements and reviewing work. However, under DevOps, there's close collaboration between software developers and the IT staff using the applications. DevOps tries to avoid problems that arise when the development team is unaware of operational issues that prevent software from working as expected.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 13-5: What are new approaches for system building in the digital firm era?

100) You are a software developer for a large online retailing site with a cloud-based IT infrastructure with hundreds of small software services that communicate with each other.

What approach might you recommend for managing your software infrastructure?

Answer: Student answers will vary, but a good fit for this type of organization is the DevOps framework, which allows these types of companies, like Netflix, to automatically create software code that integrates within the existing infrastructure, and allows companies to update their production systems with new software within hours, as opposed to months.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 13-5: What are new approaches for system building in the digital firm era?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 14 Managing Projects 1) On average, private sector IT projects underestimated budget and delivery time of systems by ________ percent.

A) 30 B) 40 C) 50 D) 60 E) 70 Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

2) As discussed in the chapter, which of the following is not one of the immediate consequences of inadequate software project management?

A) Cost overruns B) Customer loyalty C) Time slippage D) Technical shortfalls E) Failure to obtain anticipated benefits Answer: B 376

Difficulty: Challenging AACSB: Analytical thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

3) Which of the following is not one of the five main variables affecting project success?

A) Risk B) Vendors C) Time D) Quality E) Cost Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

377

4) All of the following are indications of a failed information systems project except: A) employees are refusing to switch to the new system.

B) employees have created a spreadsheet solution to manipulate the data generated by the system.

C) a redesigned website has fewer visits to the customer support pages.

D) employees require training to properly use the system.

E) the system is not being used by anyone.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

5) Which of the following project management variables defines what work is or is not included in a project?

A) Goals B) Risk C) Quality D) Scope E) Cost Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

6) Which of the following statistics from studies on failed projects is not true?

A) Large software projects on average run 33 percent over schedule.

B) Large software projects on average run 66 percent over budget.

C) Between 30 and 40 percent of all software projects are "runaway" projects that far exceed the original schedule and budget projections and fail to perform as originally specified.

D) As many as 17 percent of projects turn out so badly that they can threaten the existence of the company.

E) The average cost overrun of IT projects is 20 percent.

Answer: E Difficulty: Challenging AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

378

7) Which of the following variables in project management is an indicator of how well the project satisfies management objectives?

A) Scope B) Quality C) Time D) Cost E) Risk Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

8) The cost of a project is based on the time to complete a project multiplied by the cost of human resources required to complete the project.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

9) An information system project's scope is directly related to its business requirements.

Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

10) Project management refers to the application of knowledge, skills, tools and techniques to achieve specific targets within specified budget and time constraints.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

11) The data entry screen is an example of a user interface.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

379

12) According to a 2015 report by 1E, over 50% of all software installed is not being used.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 14-1: What are the objectives of project management, and why is it so essential in developing information systems?

13) Which of the following is at the top of the management structure for information systems projects in a large company?

A) Project team B) Project management group C) Corporate strategic planning group and information systems steering committee D) Information systems managers E) End-user managers Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

14) The ________ reviews and approves plans for systems in all divisions.

A) project management group B) project team C) information systems steering committee D) corporate strategic planning committee E) board of directors Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

15) The ________ consists of systems analysts, specialists from the relevant end-user business areas, application programmers, and perhaps database specialists.

A) project management group B) project team C) IS steering committee D) corporate strategic planning committee E) system planning committee Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

380

16) The ________ is directly responsible for the individual systems project.

A) project management group B) project team C) IS steering committee D) corporate strategic planning committee E) systems planning committee Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

17) A road map indicating the direction of systems development, the rationale, the current systems, new developments to consider, the management strategy, the implementation plan, and the budget is called a(n): A) project plan.

B) portfolio analysis.

C) information systems plan.

D) enterprise analysis.

E) strategic planning document.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

18) Which of the following best describes the central method used in a portfolio analysis?

A) Performing an inventory of all of the organization's information systems projects and assets B) Performing a weighted comparison of the criteria used to evaluate a system C) Surveying a large sample of managers on their objectives, decision-making process, and uses and needs for data and information D) Interviewing a small number of top managers to identify their goals and criteria for achieving success E) Scoring proposed systems on a number of dimensions, and selecting the one with the highest score Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

381

19) A firm in the finance industry should do which of the following to ensure that it stays current with technology?

A) Select only low-cost, low risk projects B) Limit work to those projects with great rewards C) Select only low-risk, high-reward projects D) Have a few high-risk, high benefit projects E) Avoid projects that were very costly Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

20) Which method would you use to develop risk profiles for a firm's information system projects and assets?

A) Information systems plan B) Scoring model C) Portfolio analysis D) TCO E) Real options model Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

21) You have been hired by a firm in a non-information-intensive industry to evaluate its inventory of systems and IT projects. Which types of projects should the firm focus on?

A) High-risk projects B) Low cost, low-benefit projects C) High-benefit, low-risk projects D) Any project that might be beneficial E) Low cost, high benefit projects Answer: C Difficulty: Challenging AACSB: Analytical thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

382

22) Which of the following best describes the central method used in a scoring model?

A) Performing an inventory of all of the organization's information systems projects and assets B) Performing a weighted comparison of the criteria used to evaluate a system C) Surveying a large sample of managers on their objectives, decision-making process, and uses and needs for data and information D) Interviewing a small number of top managers to identify their goals and criteria for achieving success E) Calculating the return on investment for each system, and choosing the system with the best return Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

23) Which method is used to assign weights to various features of a system?

A) Information systems plan B) Scoring model C) Portfolio analysis D) TCO E) Real options model Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

24) Which of the following statements about scoring models is not true?

A) There are many qualitative judgments involved in using a scoring model.

B) A scoring model is useful for selecting projects where many criteria must be considered.

C) The most important outcome of a scoring model is the score.

D) A scoring model requires experts who understand the issues and the technology.

E) It is appropriate to cycle through a scoring model several times.

Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

383

25) Which of the following would not be covered in the Strategic Business Plan Rationale section of an information systems plan?

A) Current situation B) Current business organization C) Firm's strategic plan D) Changing environments E) Current infrastructure capabilities Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

26) Which of the following would not be covered in the Management Strategy section of an information systems plan?

A) Acquisition plans B) Progress reports C) Organizational realignment D) Internal reorganization E) Major training initiatives Answer: B Difficulty: Easy AACSB: Analytical thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

27) Which of the following would not be covered in the Budget Requirements section of an information systems plan?

A) Requirements B) Potential savings C) Difficulties meeting business requirements D) Financing E) Acquisition cycle Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

28) The information systems steering committee is composed of information systems managers and end-user managers responsible for overseeing several specific information systems projects.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects 384

and aligning them with the firm's business goals?

29) An information systems plan contains a statement of corporate goals and specifies how information technology will support the attainment of those goals.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

30) If an intended benefit of an IT project is improved decision making, managers should develop a set of metrics to quantify the value of an improved decision.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

31) Scoring models are most commonly used to make the final decision when selecting different systems.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

32) The criteria used in a scoring model are usually the result of lengthy discussions among the decision-making group.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

385

33) You are working as a project manager for a small IT consulting firm and have been asked to create a plan for reviewing and auditing completed projects in order to gauge their success.

What factors will you use to measure the success of a project? What questions would you ask in order to understand why a project succeeded or failed?

Answer: Student answers will vary but should include an understanding of the main project variables: scope, time, cost, quality, and risk. A sample answer is: The factors I would use are: • Cost: What was the original budget and final budget?

• Time: What was the original schedule and final schedule?

• Quality: Did the project meet the requirements outlined in the project plan?

• Scope: Did the scope of the project change?

Questions I would ask to understand the success or failure of the project would be: • What technical difficulties were experienced and which could have been foreseen?

• What risks did the project entail?

• What events led to the scope changing?

• What difficulties occurred that were a consequence of personal, employee-oriented problems?

• What difficulties occurred that were a consequence of environmental, organizational, or managerial challenges?

• What do project team members consider as the primary challenges?

• What do clients or stakeholders consider as the primary challenges?

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

34) Describe the elements of a management structure for information systems projects in a large corporation.

Answer: In a large corporation, the management structure typically consists of (from top to bottom levels in the hierarchy): • Corporate strategic planning group: The higher level group of managers responsible for developing the firm's strategic plan.

• Information systems steering committee: A senior management group with responsibility for systems development and operation.

• Project management: A group of information systems managers and end-user managers responsible for overseeing several specific information systems projects.

• Project team: The group directly responsible for the individual systems project, consisting of systems analysts, specialists from the relevant end-user business areas, application programmers, and perhaps database specialists.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

386

35) List five types of information that should be included in an information systems plan.

Answer: General categories of information included in an information plan are: • Purpose of the plan • Business rationale • Current systems or situation • New developments to consider • Management strategy • Implementation plan • Budget Difficulty: Challenging AACSB: Analytical thinking LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

36) You have been hired as a consultant for a nationwide real estate firm, Cross & Deptford, who are interested in achieving better organization between branches by updating their information systems, but are not sure what will suit their needs. What will you recommend they do in order to determine the most effective IT projects?

Answer: Cross & Deptford first should have an information systems plan created to determine what their information requirements are and what systems will support their business goals.

They will need to inventory their existing systems and develop metrics to quantify any future improvements are made. They can use portfolio analysis and/or scoring models to help determine the most important information systems projects to pursue.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

37) Describe the process of portfolio analysis. In what situations is this evaluation method useful?

Answer: Portfolio analysis inventories all of the organization's information systems projects and assets, including infrastructure, outsourcing contracts, and licenses. Each project can be described as having a profile of risk and benefit to the firm, similar to the financial portfolio. In a portfolio analysis, you would list the various systems projects and rate them according to their potential risks and benefits. You would use the portfolio analysis to determine which potential projects should be pursued and which should be modified or abandoned. High-risk, low-benefit projects should be avoided, while low-risk, high-benefit projects would be at the top of the list.

High-benefit, high-risk projects and low-risk, low-benefit projects would be reexamined to see if they could be modified to better fit with the company's strategic plans. A mix of profiles could also be defined as acceptable in terms of the company's overall plans, much as is done with a financial portfolio.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

387

38) You have been hired as a consultant to make recommendations for Smarty's, a healthy fastfood chain that is undergoing major expansion and is in need of a supply chain planning system. They are evaluating two commercially available software packages. What systems evaluation model will help them assess and compare the two packages? How does this model work?

Answer: A scoring model can be used for selecting projects where many criteria must be considered. It assigns weights to various features of a system and then calculates the weighted totals. What Smarty's would do is have decision makers such as top managers list the various features they feel are important to have in the system, such as the processes that need support or reports they may need from the system. Each feature, or criteria, the managers list is given a weight, or rating, in terms of how important it is overall to have in the system. Each package then is evaluated in terms of the percentage of requirements it contributes or supports for each criteria. In the scoring model, you multiply the weight with the software's percentage of contribution to arrive at a score for each criteria. The scores of both software packages are totaled and compared to see overall their contribution to fulfilling the company's requirements.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-2: What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals?

39) You are using a capital budgeting method to assess the worth of your company's new information system. Which of the following costs would you include in measuring the cash outflow?

A) Increased sales of products B) Hardware and software expenditures C) Labor expenditures D) Reduced costs in production and operation E) Hardware, software, and labor expenditures Answer: E Difficulty: Moderate AACSB: Analytical thinking LO: 14-3: How can firms assess the business value of information systems?

40) The worth of systems from a financial perspective essentially revolves around the issue of: A) total cost of ownership.

B) adherence to information requirements.

C) asset utilization.

D) return on invested capital.

E) the cost of computing equipment.

Answer: D Difficulty: Easy AACSB: Analytical thinking LO: 14-3: How can firms assess the business value of information systems?

388

41) All of the following are intangible benefits of information systems except: A) improved asset utilization.

B) increased organizational learning.

C) improved operations.

D) reduced workforce.

E) improved decision making.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

42) Which of the following is not a tangible benefit of information systems?

A) Reduced rate of growth in expenses B) Lower computer expenses C) Improved resource control D) Increased productivity E) Reduced facility costs Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

43) The principal capital budgeting models for evaluating information technology projects are the payback method, the accounting rate of return on investment (ROI), the net present value, and the: A) future present value.

B) internal rate of return.

C) external rate of return.

D) ROPM (real options pricing model).

E) present value of future cash flows.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

44) Which of the following strategies represents the proper approach to a high risk, high reward project?

A) Identify and develop B) Avoid C) Treat as a routine project D) Pursue after all other projects are complete E) Cautiously examine Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

389

45) Enhanced employee goodwill falls under what category of costs and benefits of information systems?

A) Costs B) Tangible benefits C) Cost savings D) Intangible costs E) Intangible benefits Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

46) Which of the following is a limitation of using a financial approach to evaluate information systems?

A) Inability to measure ROI B) Inability to control vendor costs C) Inability to assess risk D) Inability to assess costs from organizational disruption E) Inability to assess the cost of technology Answer: D Difficulty: Easy AACSB: Analytical thinking LO: 14-3: How can firms assess the business value of information systems?

47) ________ methods rely on measures of cash flows into and out of the firm.

A) Scoring model B) Portfolio analysis C) Real options pricing D) Capital budgeting E) Cost effectiveness Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

48) In one strategic approach to determining information requirements, managers select a small number of ________ that reflect firm success and profitability.

A) efficiency measures B) output measures C) strategic indicators D) key performance indicators E) financial indicators Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

390

49) Transaction and clerical systems that displace labor and save space typically produce more measurable, tangible benefits than management information systems.

Answer: TRUE Difficulty: Challenging AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

50) Intangible benefits generally do not lead to quantifiable gains in the long run.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

51) A benefit of using TCO analysis to evaluate an information technology investment is that it is able to incorporate intangible and "soft" factors such as benefits and complexity costs.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

52) More timely information is an intangible benefit of information systems.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

53) The difference between cash outflows and cash inflows is used for calculating the financial worth of an investment.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 14-3: How can firms assess the business value of information systems?

391

54) Differentiate between intangible and tangible benefits and list three examples of each. In what types of systems are intangible benefits more predominant?

Answer: Tangible benefits can be quantified and given a monetary value. For example, a monetary value can be given to increased productivity, lower operational costs, reduced workforce, lower computer expenses, lower outside vendor costs, lower clerical and professional costs, reduced rate of growth in expenses, and reduced facility, telecommunications, software, services, and personnel costs.

Intangible benefits cannot be immediately quantified but may lead to quantifiable gains in the long run, such as higher sales. Examples of intangible benefits include: improved asset utilization, resource control, organizational planning, decision making, operations, increased flexibility, learning, job satisfaction, client satisfaction, employee goodwill, more timely information and more information, the fulfillment of legal requirements and a better corporate image.

Systems that produce more intangible benefits are MIS, DSS, and collaborative work systems.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-3: How can firms assess the business value of information systems?

55) You are a senior manager at a mid-sized regional retail chain. The company's IT manager approaches you with a project that would completely overhaul the company's information system infrastructure, generating significant risk; but if executed successfully, would dramatically improve the company's overall efficiency. How should you proceed?

Answer: Using the portfolio analysis approach, this type of project is a high-risk, high-reward project, and should be considered carefully. Student answers may vary about how to proceed, but should involve mention of a scoring model to compare the system to other choices and soliciting input from employees across many areas of the firm to determine their willingness to take on risk and endure organizational change.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-3: How can firms assess the business value of information systems?

56) You have been hired to implement an enterprise system that will automate much of the billing and accounting work for a statewide HVAC services company. Which of the following would you prepare to describe how the new system will affect a firm's structure and operations?

A) Information systems plan B) Internal integration report C) Sociotechnical design report D) Organizational impact analysis E) Strategic planning document Answer: D Difficulty: Challenging AACSB: Analytical thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

392

57) Counterimplementation is best defined as: A) multiple implementations that are run in parallel.

B) deliberate attempts to thwart the implementation of a system.

C) critiquing the implementation of a system constructively.

D) all of the organizational challenges involved in implementing a system.

E) strategies used to overcome user resistance to change.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

58) All of the following are directly correlated with increased risk except: A) a large amount of technical expertise from project team and information team staff.

B) a large amount of dollars spent.

C) a large amount of implementation staff.

D) a large amount of time allocated for implementation.

E) a large amount of organizational units affected.

Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

59) Which of the following statements best describes the effect that project structure has on overall project risk?

A) Highly structured projects are more complex, and run a higher risk of programmers and users misunderstanding the ultimate goals.

B) Projects with relatively undefined goals are more likely to be subjected to users changing requirements and to run a higher risk of not satisfying project goals.

C) Highly structured projects tend to be larger, affecting more organizational units, and run both the risk of out-of-control costs and becoming too difficult to control.

D) Less structured projects are more able to be quickly developed, tested, and implemented using cutting-edge RAD and JAD development techniques, and pose less risk of running up unforeseen costs.

E) The less structured a project, the greater the freedom of users to define the system.

Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

393

60) Which of the following statements about project risk is not true?

A) The more dollars spent on project, the greater the risk.

B) The higher the number of implementation staff on a project, the lower the risk.

C) The higher the number of organizational units affected by a project, the greater the risk.

D) Very large-scale systems project have a failure rate that is 50 to 75 percent higher than that for other projects.

E) The organizational complexity of a system contributes to the complexity of large-scale systems projects.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

61) Which of the following refers to all organizational activities working toward the adoption, management, and routinization of a new information system?

A) Production B) Maintenance C) Implementation D) Acceptance E) Final acceptance Answer: C Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

62) Which of the following is not one of the activities of the systems analyst?

A) Acting as a change agent B) Communicating with users C) Mediating between competing interest groups D) Formulating of capital budgeting models E) Deciding which systems to develop Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

394

63) Which of the following types of projects is most likely to fail?

A) Integration of a third-party automated payment system B) Replacement of middleware with web services for legacy application integration C) Business process redesign project that restructures workflow and responsibilities D) Redesigning a user interface to an online investment site E) Building a web-based interface to an existing system Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

64) Which of the following is not a responsibility of effective change management?

A) Integrating legacy systems B) Dealing with fear and anxiety about new systems C) Training users of the new system D) Enforcing user participation at all stages of system development E) Ensuring users are properly trained Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

65) Which of the following is not something you would use to control risk factors in an information systems project?

A) Internal integration tools B) External integration tools C) Formal planning tools and formal control tools D) Real options pricing models E) Gantt charts Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

395

66) Internal integration tools: A) enable a project to have sufficient technical support for projects with challenging and complex technology.

B) enable a project manager to properly document and monitor project plans.

C) portray a project as a network diagram with numbered nodes representing project tasks.

D) consist of ways to link the work of the implementation team with users at all organization levels.

E) enable end users to communicate with system developers.

Answer: A Difficulty: Challenging AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

67) Which of the following is an example of using an internal integration tool?

A) Creating a Gantt chart B) Including user representatives as active members of the project team C) Creating PERT chart D) Holding frequent project team meetings E) Developing a scoring model Answer: D Difficulty: Moderate AACSB: Analytical thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

68) Formal planning and control tools: A) are used to select projects where many criteria must be considered.

B) enable a project manager to properly document and monitor project plans.

C) are used to evaluate alternative systems projects.

D) link the work of the implementation team with users at all organization levels.

E) serve as a road map indicating the direction of systems development.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

396

69) Which type of planning tool shows each task as a horizontal bar whose length is proportional to the time required to complete it?

A) PERT chart B) Gantt chart C) Both a PERT chart and a Gannt chart D) Scoring model E) Portfolio analysis Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

70) To review a project's tasks and their interrelationships, you would use which of the following?

A) PERT chart B) Gantt chart C) PERT chart or a Gantt chart D) Scoring model E) Portfolio analysis Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

71) Which of the following helps project managers identify bottlenecks in project development?

A) Internal integration tools B) External integration tools C) Formal planning and control tools D) Both internal and external integration tools E) Portfolio analysis tools Answer: C Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

397

72) External integration tools: A) enable a project to have sufficient technical support for project management and development.

B) enable a project manager to properly document and monitor project plans.

C) portray a project as a network diagram with numbered nodes representing project tasks.

D) consist of ways to link the work of the implementation team with users at all organization levels.

E) enable project team members to keep track of external costs of a project.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

73) Which of the following is an example of using an external integration tool?

A) Creating a Gantt chart B) Including user representatives as active members of the project team C) Creating a PERT chart D) Using portfolio analysis E) Developing a scoring model Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

74) Which of the following is not an organizational factor in systems planning and implementation?

A) Standards and performance monitoring B) Government regulatory compliance C) Health and safety D) User interface E) Ergonomics Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

398

75) In sociotechnical design: A) separate sets of technical and social design solutions are developed and compared.

B) ergonomic features of a system are considered to be the most important consideration.

C) systems analysts with proven backgrounds in sociological concerns rate and compare a system's social and technical aspects.

D) human needs are given more importance than technical needs.

E) technical needs are given more importance than organizational needs.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

76) Which of the following is the most widely used project management software today?

A) Vertabase B) IBM Project Guide C) Microsoft Project D) Microsoft Excel E) Zoho Projects Answer: C Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

77) Successful system building requires careful ________ management to minimize organizational resistance.

A) cost B) technology C) change D) supply chain E) system application Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

399

78) Which of the following statements about the user-designer communications gap is not true?

A) It occurs because users and information systems specialists tend to have different backgrounds, interests, and priorities.

B) It is one of the major reasons why user requirements are not properly incorporated into information systems.

C) It is one of the major reasons why users are driven out of the implementation process.

D) When it is pronounced, it creates a very high risk of failure for a systems development project.

E) Information systems specialists prefer systems that are oriented toward solving business problems or facilitating organizational tasks.

Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

79) Which of the following best describes the relationship between system implementation and user involvement and management support?

A) System implementation rarely benefits from user involvement.

B) System implementation benefits from user support, but does not require management support.

C) System implementation generally benefits from high levels of user involvement and management support.

D) System implementation benefits from management support, but does not require user support.

E) System implementation rarely benefits from management support.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

80) The differing backgrounds between users and information systems specialists is referred to as the: A) user expertise gap.

B) information system specialist inefficiency.

C) user-designer paradigm.

D) user-designer expertise gap.

E) user-designer communications gap.

Answer: E Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

400

81) Information systems specialists often tend to seek solutions that: A) are oriented towards solving business problems.

B) facilitate organizational tasks.

C) optimize hardware and software efficiency at the expense of ease of use.

D) are simplistic for end users to understand.

E) employ clear documentation.

Answer: C Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

82) According to the Project Management Institute, what is the leading factor in project success?

A) Upper management that financially backs the project B) Executive sponsors who are actively engaged C) Carefully monitored changes in work habits and procedures D) Communication between technicians and end users E) End users who communicate their needs for the project Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

83) While users are concerned about an information system delivering the information needed for work, designers might be concerned about: A) accessing the data on iPhones and tablets.

B) the procedures required to enter data into the system.

C) how operation of the system will change their daily routines.

D) what demands the system will place on the company servers.

E) opening lines of communication with end users.

Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

84) The larger the systems project, the greater the chance that the project will be completed on time, within budget, and according to project requirements.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

401

85) The systems analyst is the catalyst for the entire change process and is responsible for making sure that everyone involved accepts the changes created by a new system.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

86) The relationship between users and information systems specialists has traditionally been a problem area for information systems implementation efforts.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

87) User concerns and designer concerns are usually the same at the beginning of the project but may diverge later as the system is built.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

88) A Gantt chart graphically depicts project tasks and their interrelationships.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

89) Mandatory use of a system is one effective way of overcoming user resistance to an information system.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

90) Counterimplementation refers to a deliberate strategy to thwart the implementation of an information system or an innovation in an organization.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

402

91) The design of jobs, health issues, and the end-user interface of information systems are all considerations in the field of ergonomics.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

92) The goal of sociotechnical design is to create systems where the organization and the technology change and adjust to one another.

Answer: TRUE Difficulty: Challenging AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

93) Ergonomics is the interaction of people and machines in the work environment, including the design of jobs, health issues, and the end-user interface of information systems.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

403

94) You are the senior project manager for a web development company with upwards of 100 current client projects. You have been assigned to evaluate two upcoming projects. One project is to develop a time-tracking solution that would allow your 20 freelancers to submit daily time sheets and would report on the time spent on each project. The other project is to redesign the client interface to the company extranet to make it easier to use. The extranet allows clients to log in and view their current websites under development, as well as view project statistics, documents, and progress reports. Compare the two projects in terms of risk factors.

Answer: Student answers will vary but should include an understanding of the main risks factors: size, structure, and technical expertise. An example answer is: The main risk factors are size, structure, and technical expertise.

• Size. The time-tracking project is a larger project: It involves creating new programming that may interface with back-end systems and will immediately influence payment and cost. It also affects business processes. Redesigning an interface for the client extranet may simply be designing one or two pages that will be replicated for each client once the initial design is done.

• Structure. It may be easier to define the requirements of the time-tracking software, as this process is relatively straightforward. Understanding what makes the user interface problematic and defining ways to make it easier to use is somewhat of a less tangible quality than reporting on time, so this may be a concern in the second project.

• Technical expertise. Since the time-tracking project is a new application, there may be some issues of making sure any in-house staff has the appropriate level of expertise. The user interface involves working with existing programming that will not change. However, there may be a need to make sure that an expert who understands usability is present.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

404

95) Americlinic, a national chain of budget health-care clinics, is creating an information system that will allow patients and doctors at participating franchises to communicate online.

The goal of the system is to allow doctors to respond to minor health questions quickly and more efficiently, saving patients unnecessary visits to the clinic. This will be a major procedural change. What steps would you recommend to this company to ensure the user acceptance of the system?

Answer: The first step should be to conduct an organizational impact analysis, to determine the changes in procedures, job function, organizational structure, power relationships, and behavior that this system requires or will engender. Any organizational changes should occur prior to implementing the system. In order to gain compliance and support of the doctors, I would establish a review committee of influential participating doctors and change agents to discuss the system prior to development and during development in order to meet physician needs and requirements. I would also involve focus groups of intended users to review prototypes of the system to make sure it is easy to use, and hopefully easier to use in the relevant health situations than going to the doctor. The company will need to make sure that there is also an option for users that do not have Internet access. User training for doctors and nurses will be essential. The company should also consider incentives for doctors and patients that use the system.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

96) What is the user-designer communications gap? Describe the differences between the types of concerns users and designers have about information systems.

Answer: The user-designer communication gap refers to the tendency for users and information systems specialists to have different backgrounds, interests, and priorities. This often manifests itself in the types of concerns the two groups have about information systems; for example, while a user might simply be concerned whether the information system works properly, the designer is concerned with the demands that the system will put on the company servers. While users might be concerned with the procedures required to enter data into a new system, the designers are likely to be focused on where the data will be stored and the most effective technique to store it.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

405

97) What is counterimplementation and what are some of the strategies that organizations can use to avoid it?

Answer: Counterimplementation is a deliberate strategy to thwart the implementation of a new information system or innovation in general. Organizations can overcome this resistance by soliciting user participation in the design of a new system, to ensure that employees feel invested in the change; user education and training; encouraging management policies; and employee incentives for those who cooperate and participate.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

98) What are the benefits of the sociotechnical design approach to information systems?

Answer: The sociotechnical design approach features designers setting forth two separate plans — technical solutions and social design solutions. The social design plan will emphasize workgroup structures, allocation of tasks, and the design of individual jobs. If the technical solutions enable the social design plan to also be achieved, then the design can move forward.

The result is an information system that blends technical efficiency with sensitivity to organizational and human needs, as opposed to an information system that works properly but is poorly suited to the social environment of the workplace.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

99) What are Gantt charts and PERT charts? In what way might a PERT chart be a better option than a Gantt chart?

Answer: Gantt charts lists project activities and corresponding start and completion dates and visually shows the duration of tasks in a project along with their human resource requirements.

Tasks are displayed as horizontal bars whose length represents the amount of time required to complete the task. However, Gantt charts don't show how one task is affected by others. For example, if delays in a task cause a ripple effect in other tasks, this renders the Gantt chart obsolete. PERT charts graphically depict project tasks and their inter-relationships, much like a flow chart. PERT charts show the activities that must be completed before the next activity can begin.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

406

100) You are the IT manager for a small online marketing firm looking to determine the best way to budget more capital in information systems projects your firm has completed within the last year. How would you evaluate the worth of your firm's completed projects?

Answer: Capital budgeting models are techniques used to measure the value of investing in long-term capital investment projects like information systems. The principal capital budgeting models for evaluating an IT project are the payback method, accounting rate of return on investment (ROI), net present value, and the internal rate of return. Each of these methods measures cash flows into and out of the firm, taking account of investment costs of systems as well as the increased sales of products and services made possible by the new systems.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 14-4: What are the principal risk factors in information systems projects, and how can they be managed?

Management Information Systems: Managing the Digital Firm, 15e (Laudon) Chapter 15 Managing Global Systems 1) Final assembly of Apple's iPhone occurs in which of the following locations?

A) United States B) Japan C) South Korea D) China E) Germany Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

2) The major dimensions of international systems architecture include each of the following except: A) the global environment.

B) corporate global strategy.

C) technology platform.

D) transborder data flows.

E) management and business processes.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

3) Which of the following is not a general cultural factor driving global business?

A) Global communication and transportation technologies B) Political instability C) Global knowledge base D) Global culture E) Global social norms Answer: D 407

Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

408

4) New levels of global coordination of all of the major business functions permit the location of business activity according to: A) comparative advantage.

B) social norms and values.

C) competitive threat.

D) knowledge base.

E) labor costs.

Answer: A Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

5) Which of the following is the best definition of international information systems?

A) Systems that talk to one another using the global Internet B) Systems used by international businesses C) Business processes that span the globe D) Basic information systems required by organizations to coordinate worldwide trade and other activities E) Systems that are developed by global firms Answer: D Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

6) What is the first thing you should consider when thinking about building an international information system?

A) The state of world politics B) New technologies that will help you achieve your goals C) The global environment where your business will operate, and identify the business drivers for your firm and industry D) The business challenges you face in the global environment E) The different computing and communication standards in the world Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

7) Which of the following industries is most affected by globalization?

A) Telecommunications B) Manufacturing C) Law D) Entertainment E) Transportation Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

409

8) Transborder data flow refers to: A) the flow of information in international systems.

B) the ways in which a country's laws change the flow of data from one country to another.

C) the business of moving information from one country to another.

D) the movement of information across international boundaries.

E) the business process of coordinating information from many different countries.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

9) Which of the following is not a business driver of global business?

A) Global communication and transportation technologies B) Development of global culture C) Emergence of global social norms D) Political stability E) Growth of international systems Answer: E Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

10) Making judgments and taking action on the basis of narrow or personal characteristics is referred to as: A) localization.

B) cooptation.

C) particularism.

D) prejudice.

E) globalization.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

11) All of the following present challenges to developing global business systems except: A) foreign accounting practices.

B) production costs.

C) language differences.

D) exchange rates.

E) shortages of skilled consultants.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

410

12) Which of the following is not a specific challenge to global business systems?

A) Shortages of skilled consultants B) Cultural expectations C) Different telecommunication standards D) Different data transfer speeds E) Unreliable phone networks Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

13) Which of the following statements about transborder data flow is not true?

A) The E.U.-U.S. Privacy Shield replaces previous agreements between the United States and the EU with respect to transborder data flow.

B) Privacy Shield provides additional privacy protection for U.S. citizens.

C) Privacy Shield protects European citizens from certain surveillance activities of U.S. national security agencies.

D) U.S. firms must register with European privacy regulators in order to process personal information of European citizens in the United States.

E) European countries have different laws concerning transborder data flow and privacy than the United States.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

14) Which of the following statements about accounting practices in different countries is not true?

A) German companies generally do not recognize a profit from a venture until the project is completely finished and they have been paid.

B) British firms recognize profits before a project is finished, once they are reasonably certain they will get the money.

C) Dutch firms separate tax calculations from reports to shareholders.

D) U.S. accounting practices focus on demonstrating compliance with strict rules.

E) British firms focus on showing shareholders how fast profits are growing.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

411

15) Most large companies with overseas operations have inherited: A) recently built technology platforms for international systems.

B) patchwork international systems from the distant past.

C) transaction-oriented reporting based at the home office for overseas business.

D) global marketing systems developed domestically.

E) enterprise systems developed by local firms.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

16) From your reading of the chapter case, which of the following best describes the challenge Dunlop Aircraft Tyres was facing as a global company?

A) Inadequate information for managerial decision making B) Lack of buy-in for global systems by foreign units C) Fragmented legacy systems and data without proper integration D) Poor governance of information systems E) Managing a global supply chain Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

17) Japanese consumers who only want to purchase products made in Japan are an example of: A) cultural particularism.

B) political culture.

C) universal global attitudes.

D) different laws in different countries.

E) different business standards.

Answer: A Difficulty: Moderate AACSB: Analytical thinking LO: 15-1: What major factors are driving the internationalization of business?

18) Global business drivers can be divided into two groups: general cultural factors and specific business factors.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

19) The growth of powerful communications technologies and the emergence of world cultures create the condition for global markets.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

412

20) The collapse of the Eastern bloc has retarded the growth of a world culture.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

21) Micromarketing involves marketing to very small geographic and social units.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

22) A powerful strategic advantage for a globalized firm is lowered cost factors in production.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

23) Particularism is a concept based on accepting a shared global culture and the penetration of domestic markets by foreign goods and services.

Answer: FALSE Difficulty: Challenging AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

24) In international companies, English has become a kind of standard business language.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

25) European countries have very strict laws concerning transborder data flows and privacy.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

26) To comply with European privacy laws, many multinational firms have developed information systems within each European country.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

413

27) With the growth of the Internet and reliable phone networks, skilled consultants are readily available to companies operating in global markets.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

28) Accounting practices can vary significantly from country to country.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

29) The growth of powerful communications technologies and the emergence of world cultures have failed to create a foundation for global markets.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

30) The last step in establishing a corporate strategy and structure for globalization is to determine the appropriate technology platform.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

31) Global economies of scale are facilitated by global markets, production, and administration.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

32) The growth of international trade has radically altered domestic economies around the globe.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-1: What major factors are driving the internationalization of business?

414

33) What steps should you take to develop an international information systems architecture?

Answer: • Begin by developing an understanding of the overall market forces, or business drivers, that are pushing your industry toward global competition, i.e., the global environment. Also examine the inhibitors or negative factors that could scuttle the development of a global business.

• Develop a corporate strategy for competing in the global environment.

• Plan how to structure your organization so that it can pursue the strategy you have developed.

• Consider the management issues in implementing your strategy and making the organization design a reality. The key here will be the design of business procedures.

• Consider the technology platform. You must have a corporate strategy instructor before you can choose the right technology.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 15-1: What major factors are driving the internationalization of business?

34) List at least four general cultural factors and four specific business factors driving global business. Which two factors (one of each) do you feel are most problematic at the current moment? Why? Answer: General cultural factors include global communication and transportation technologies, development of the global culture, emergency global social norms, political stability, and a global knowledge base. Specific business factors include global markets, global production operations, global coordination, global workforce, and global economies of scale.

One answer might be that two general cultural factors most in danger at the current moment are political stability and development of a global culture (either would be a good answer). Two business factors most problematic at the moment are global coordination and global workforce.

Coordinating work on a truly global scale requires a fairly high level of corporation sophistication that only a small number of large firms are truly capable of on a real-time basis; and there is significant opposition in both developed and under-developed countries to changes in local labor markets which are threatened by global trade.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 15-1: What major factors are driving the internationalization of business?

415

35) What are the four specific types of business challenges to global business systems? Which one do you think will be easiest to solve? Why? Answer: • Standards: Different EDI, e-mail, telecommunications standards.

• Reliability: Phone networks are not uniformly reliable.

• Speed: Different data transfer speeds; many are slower than United States speeds.

• Personnel: Shortages of skilled consultants.

Answers will vary, but an example answer is: The easiest challenge to solve is that of standards because of the growth of universal, Internet-based standards, Web services, and componentbased programming.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 15-1: What major factors are driving the internationalization of business?

36) How do cultural, legal, political, and social expectations affect global business?

Answer: At a cultural level, particularism in all its forms rejects the very concept of a shared global culture and rejects the penetration of domestic markets by foreign goods and services.

Differences among cultures produce differences in social expectations, politics, and ultimately in legal rules. Different cultures produce different political regimes, with different laws governing the movement of information, information privacy of their citizens, origins of software and hardware in systems, and radio and satellite telecommunications. Even the hours of business and terms of business trade vary greatly across political cultures.

Cultural and political differences profoundly affect organizations' standard operating procedures. Everything from the different reliability of telephone systems to the shortage of skilled consultants creates barriers. National laws and traditions have created different accounting practices in various countries, which impact the way profits and losses are analyzed.

These accounting practices are tightly intertwined with each country's legal system, business philosophy, and tax code. Cultural differences can also affect the way organizations use information technology. Language is a significant barrier. Software may have to be built with local language interfaces before a new information system can be successfully implemented.

Currency fluctuations can play havoc with planning models and projections. Some of these problems will diminish in parts of the world when the Euro becomes more widely used.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 15-1: What major factors are driving the internationalization of business?

37) Define transborder data flow and explain what makes it a business challenge for global companies.

Answer: Transborder data flow is defined as the movement of information across international boundaries in any form. What makes this a challenge for firms is that different countries have different standards for privacy protection and data transfer. In the European Union, these standards are more comprehensive than they have been historically in the U.S., though an agreement was made in 2016 (The E.U.-U.S. Privacy Shield) that will force U.S. companies to ensure that their systems comply with European standards.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication 416

LO: 15-1: What major factors are driving the internationalization of business?

38) In a multinational business strategy, the ________ business function is decentralized and dispersed among foreign units.

A) finance/accounting B) production C) human resources D) strategic management E) sales/marketing Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

39) In terms of global business strategy and structure, a multinational strategy: A) centralizes production and accounting and decentralizes marketing and human resources.

B) concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries.

C) centralizes production, accounting, marketing, and human resources.

D) disperses production and marketing, with centralized accounting, human resources and strategic management.

E) concentrates production and marketing in each country, and decentralizes accounting and human resources.

Answer: B Difficulty: Challenging AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

40) Most companies pursuing a global strategy begin as: A) domestic exporters.

B) multinationals.

C) franchisers.

D) transnationals.

E) conglomerate corporations.

Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

417

41) A company that controls finances in the home country and decentralizes production, sales, and marketing operations to other countries is using a ________ strategy.

A) domestic exporter B) franchising C) transnational D) multinational E) conglomerate Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

42) In terms of global business strategy and structure, a multinational company will use a policy of: A) mixed sales and marketing, with centralized production, accounting, human resources, and strategic management.

B) centralized production, accounting, marketing, human resources, with strategic management.

C) dispersed production, accounting, human resources, with centralized strategic management, and marketing.

D) dispersed production and marketing, with centralized accounting and strategic management.

E) making local units that are clones of the mother country units.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

43) Which of the following is the dominant pattern of the system configurations used by transnational firms?

A) Centralized B) Duplicated C) Decentralized D) Networked E) Localized Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

418

44) In terms of global business strategy and structure, a franchise company will use a policy of: A) centralized production, accounting, marketing, human resources, with strategic management.

B) dispersed production, accounting, human resources, with centralized strategic management, and marketing.

C) dispersed production and marketing, with centralized accounting, human resources and strategic management.

D) dispersed production, marketing, and human resources, with centralized strategic management and finance/accounting.

E) decentralized production, accounting, human resources, with a decentralized management.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

45) Which of the following is not one of the primary types of firm strategy discussed in the chapter?

A) Domestic exporter B) Multinational C) Franchiser D) Transnational E) International exporter Answer: E Difficulty: Easy AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

46) In terms of global business strategy, the governance of ________ firms has been likened to a federal structure—strong central management core of decision making, but considerable dispersal of power and financial resources.

A) domestic exporter B) multinational C) franchiser D) transnational E) domestic importer Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

419

47) Which of the following statements about transnational firms is not true?

A) Transnational firms have many regional headquarters and perhaps a world headquarters.

B) Transnational firms are stateless.

C) Transnational firms view the entire globe as their management frame of reference.

D) Transnational firms have no single headquarters.

E) Many firms have attained transnational status.

Answer: E Difficulty: Challenging AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

48) Which of the following is not one of the main organizational issues facing firms who are seeking to globalize?

A) Choosing a global strategy B) Organizing the global business structure C) Organizing the systems management D) Defining the global environment E) Organizing the business Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

49) In centralized systems: A) development occurs at the home base and operations are handed over to autonomous units in foreign locations.

B) each foreign unit designs its own unique solutions and systems.

C) systems development and operations occur in an integrated and coordinated fashion across all units.

D) systems development and operations occur totally at the domestic home base.

E) systems development is a combined effort of domestic and international units.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

420

50) In duplicated systems: A) development occurs at the home base and operations are handed over to autonomous units in foreign locations.

B) each foreign unit designs its own unique solutions and systems.

C) systems development and operations occur in an integrated and coordinated fashion across all units.

D) foreign units design the solutions and systems used at the domestic home base.

E) systems development is a combined effort of domestic and international units which are then duplicated across the world.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

51) In decentralized systems: A) development occurs at the home base and operations are handed over to autonomous units in foreign locations.

B) each foreign unit designs its own unique solutions and systems.

C) systems development and operations occur in an integrated and coordinated fashion across all units.

D) foreign units design the solutions and systems used at the domestic home base.

E) all systems are designed in domestic headquarters and then distributed to foreign units.

Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

52) In networked systems: A) development occurs at the home base and operations are handed over to autonomous units in foreign locations.

B) each foreign unit designs its own unique solutions and systems.

C) systems development and operations occur in an integrated and coordinated fashion across all units.

D) foreign units design the solutions and systems used at the domestic home base.

E) development occurs at the home base but operations are handed over to autonomous units in foreign locations.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

421

53) Domestic exporters typically have highly ________ systems.

A) duplicated B) centralized C) networked D) decentralized E) autonomous Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

54) Multinational companies tend to dominantly have ________ systems.

A) duplicated B) centralized C) networked D) decentralized E) autonomous Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

55) Franchise companies have typically had ________ systems.

A) duplicated B) centralized C) networked D) decentralized E) autonomous Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

56) Which of the following is an emerging pattern of system configuration for multinational companies?

A) Duplicated B) Centralized C) Networked D) Decentralized E) Autonomous Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

422

57) The network systems structure is the most visible in ________ services.

A) production B) financial C) marketing D) software design E) administrative Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

58) Which of the following statements about networked systems is not true?

A) Networked systems require a powerful telecommunications backbone.

B) Networked systems require a culture of shared applications development.

C) Networked systems require a shared management culture that crosses cultural barriers.

D) Networked systems are those in which there is a solid, singular global environment for developing and operating systems.

E) Networked systems are an emerging trend for domestic exporters.

Answer: E Difficulty: Challenging AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

59) Of the following, which is one of the central principles recommended in this chapter for a firm organizing itself for international business?

A) Organize value-adding activities along lines of comparative advantage.

B) Establish multiple offices for international systems and a global CIO position.

C) Disperse production and marketing to regional centers and establish a single center for world headquarters and strategic management.

D) Develop and operate systems units at the international level first.

E) Centralize production, but decentralize marketing and sales to be close to the customer.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

60) In a transnational business strategy, all of the regional units participate and coordinate over all activities, from production to sales.

Answer: TRUE Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

423

61) In a franchiser business strategy, each foreign unit designs its own solutions and systems.

Answer: FALSE Difficulty: Easy AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

62) There are two primary global organization types: management centralized in the home country or distributed to foreign centers.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

63) In a multinational strategy, financial management is centralized while production and sales are decentralized.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-2: What are the alternative strategies for developing global businesses?

64) Describe the four main global strategies that form the basis for global firms' organizational structure.

Answer: The domestic exporter strategy is characterized by heavy centralization of corporate activities in the home country of origin. The multinational strategy concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries. For franchisers, their product is created, designed, financed, and initially produced in the home country, but for product-specific reasons must rely heavily on foreign personnel for further production, marketing, and human resources.

Transnational firms are the stateless, truly globally managed firms that may represent a larger part of international business in the future. Transnational firms have no single national headquarters, but instead have many regional headquarters and perhaps a world headquarters.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 15-2: What are the alternative strategies for developing global businesses?

424

65) What are the organizational principles a company should follow to develop a global company and its information systems support structure? Do you agree? Would you change these principles, or add others? Support your answer.

Answer: Student answers will vary, but should include an understanding of the following three principles.

1. Organized value-adding activities along lines of comparative advantage.

2. Develop and operate systems units at each level of corporate activity—regional, national, and international.

3. Establish at world headquarters a single office responsible for development of international systems, a global chief information officer position.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 15-2: What are the alternative strategies for developing global businesses?

66) List and describe four types of systems configurations used by international firms to fit their global strategies.

Answer: Centralized systems are those in which systems development and operation occur totally at the domestic home base. Duplicated systems are those in which development occurs at the home base, but operations are turned over to autonomous units in locations across the globe. Decentralized systems are those in which foreign units design their own unique solutions. Network systems are those in which systems development and operations occur in an integrated and coordinated fashion across all units.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 15-2: What are the alternative strategies for developing global businesses?

67) Which of the following methods of encouraging local users to support global systems should be avoided as much as possible?

A) Permitting each country unit the opportunity to develop a transnational application first in its home territory and then throughout the world B) Developing transnational centers of excellence C) Requiring local units to agree on a short list of transnational systems D) Using raw power E) Involving users in the creation of the design without giving up control over the development of the project to parochial interests Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

425

68) Which of the following is not one of the principal management challenges in developing global systems?

A) Encouraging local users to support global systems B) Coordinating applications development C) Defining an acceptable test plan D) Agreeing on common user requirements E) Introducing changes in business processes Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

69) Which of the following occurs as a firm moves from local option systems to regional and global systems?

A) Agency costs increase.

B) Coordination costs decrease.

C) Transaction costs increase.

D) Both transaction and agency costs increase.

E) All costs increase.

Answer: A Difficulty: Challenging AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

70) In order to define centers of excellence in a global firm, you first need to identify: A) functional areas.

B) core business processes.

C) SOPs. D) core competencies.

E) international best practices.

Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

426

71) Which of the following is not one of the main benefits to implementing global systems?

A) Superior management and coordination B) Vast improvements in operation C) New economies of scale at production facilities D) Reduced hardware costs E) Optimization of the use of corporate funds Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

72) When developing a global system, bringing the opposition of local groups into the process of designing and implementing the solution without giving up control over the direction and nature of the change is called: A) cooptation.

B) change management.

C) implementation.

D) advocacy.

E) cooperation.

Answer: A Difficulty: Easy AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

73) Transnational centers of excellence do all of the following except: A) perform initial identification and specification of business processes.

B) define information requirements.

C) perform business and systems analysis.

D) accomplish all design and testing.

E) implement the system.

Answer: E Difficulty: Moderate AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

427

74) Which of the following is not an important factor when implementing a global information system solution?

A) Agreeing on common user requirements B) Understanding if your computer system can operate in a global environment C) Introducing changes in business processes D) Coordinating applications development E) Coordinating software releases Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

75) Which systems are worth sharing on a transnational basis, from a cost and feasibility point of view?

A) Only some core systems that support functions that are absolutely critical to the organization B) Core systems and worthwhile provincial systems C) Core systems and any financial systems that can be easily integrated with each other D) Financial and accounting systems E) Systems that support decentralized units Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

76) The chapter outlines four steps in developing an effective global system solution. Which of the following is not one of these steps?

A) Identify outdated legacy systems to be replaced B) Identify the core systems to coordinate centrally C) Choose a developmental approach, incremental, evolutionary, or other D) Make the benefits clear E) Define the core business processes Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

428

77) The way to identify core business processes is to conduct a: A) cost-benefit analysis.

B) work-flow analysis.

C) business process analysis.

D) feasibility analysis.

E) systems analysis.

Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

78) Global systems allow fixed costs to be amortized over a much smaller customer base.

Answer: FALSE Difficulty: Moderate AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

79) One major telecommunications challenge in an international setting is making data flow seamlessly across networks shaped by disparate national standards.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

80) Success as a change agent depends on legitimacy, authority, and ability to involve users in the change design process.

Answer: TRUE Difficulty: Easy AACSB: Reflective thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

81) List at least four difficult problems for management in the development of the international information system. Which do you see as the most problematic, and why?

Answer: Student answers will vary, but should include four of the five following problems.

1. Agreeing on common user requirements.

2. Introducing changes in business processes.

3. Coordinating applications development.

4. Coordinating software releases.

5. Encouraging local users to support global systems.

Difficulty: Moderate AACSB: Analytical thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

429

82) You are working for a global electronic parts manufacturing company with divisions in Taiwan, Malaysia, Australia, and Germany, that has embarked on developing a global enterprise system. To ensure that overseas divisions comply with the new system, they are considering a cooptation strategy in which they will permit each country unit the opportunity to develop one transnational application first in its home territory, and then throughout the world.

What are the benefits and drawbacks to this approach? Are there any other solutions for the company's cooptation strategy?

Answer: With this strategy, local units will feel a sense of ownership in the transnational effort. On the downside, this assumes the ability to develop high-quality systems is widely distributed, and that a German team can successfully implement systems in Taiwan or Malaysia. This will not always be the case. Another cooptation strategy would be to develop new transnational centers of excellence, or a single center of excellence. In this, you would identify a regional location with excellent implementation of specific business processes. These centers draw heavily from local national units, are based on multinational teams, and must report to worldwide management. The centers of excellence would perform the initial identification and specification of business processes, define the information requirements, perform the business and systems analysis, and accomplish all design and testing.

Implementation, however, and pilot testing are rolled out to other parts of the globe. Recruiting a wide range of local groups to transnational centers of excellence helps send the message that all significant groups are involved in the design and will have an influence.

Difficulty: Challenging AACSB: Analytical thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

83) You work for a business consulting firm, and you have been asked to advise Bamboo Home, a home furniture retailer on implementing a global information system. What general benefits can Bamboo Home expect from a globalized system?

Answer: Benefits in globalizing include superior management and coordination. This may not show up on balance sheets, but will affect profitability in the long run. Related benefits are the ability to switch suppliers quickly if there is a crisis and the ability to use excess capacity in one region to fulfill demand in another. Additionally, they can expect major improvements in production, operation, and supply and distribution. Value-adding activities can be concentrated in regions where they are most economical and efficient. Also, with global systems, fixed costs around the world can be amortized over a much larger customer base. In addition, corporate funds can be used over a much larger capital base.

Difficulty: Easy AACSB: Analytical thinking LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

430

84) Why should only some core systems be coordinated on a transnational basis?

Answer: Although core systems support functions that are absolutely critical to the organization, only some core systems are worth sharing globally from a cost and feasibility point of view. Participating in global markets reduces transaction costs, but agency costs increase with global systems compared to local systems. Also, many core systems share key elements across geographical boundaries, but are distinct enough that a global system would be a poor fit. The best mix for most organizations is a combination of global systems and regional systems, developing core systems for only the most vital business functions.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 15-3: What are the challenges posed by global information systems and management solutions for these challenges?

85) Software localization is the process of: A) developing a purely graphical user interface.

B) converting software programming to run on a different platform.

C) converting software to operate in a second language.

D) modifying software so that it can be adopted in other countries without engineering changes.

E) modifying software so executives can understand its command language.

Answer: C Difficulty: Challenging AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

86) Which of the following is not an important technology issue to consider when developing an international information system?

A) Standardizing the global computing platform B) Deciding how mobile computing will fit into your international system C) Finding specific software applications that are user friendly and enhance productivity D) Building sufficient connectivity E) Developing common data standards Answer: B Difficulty: Moderate AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

431

87) Which of the following countries has the highest percentage of its total population using the Internet?

A) United States B) China C) Brazil D) Finland E) Somalia Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

88) Based on your reading of the chapter, why should companies avoid creating an allencompassing, new global system when moving towards global operations?

A) This approach may fail due to a lack of visibility.

B) It is difficult to quantify and explain the benefits of information systems that are large.

C) "Grand design" approaches typically fail to identify centers of excellence.

D) Opposition is strengthened because of requirements for huge resources.

E) This approach will fail because of a lack of concrete objectives.

Answer: D Difficulty: Challenging AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

89) Which of the following statements about connectivity in relation to global systems is not true?

A) Few global corporations trust the security of the Internet.

B) The public Internet guarantees a basic level of service.

C) Many global corporations use private networks to communicate sensitive data.

D) Not all countries support basic Internet service.

E) The Internet provides a powerful foundation for providing connectivity among the dispersed units of global firms.

Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

432

90) Which of the following has the second-largest number of Internet users in the world?

A) China B) India C) United States D) Brazil E) Canada Answer: B Difficulty: Moderate AACSB: Analytical thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

91) All of the following countries block access to websites considered morally or politically offensive except: A) China.

B) Iran.

C) Singapore.

D) United States.

E) Saudi Arabia.

Answer: D Difficulty: Moderate AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

92) Which of the following is not one of the principal problems of international networks?

A) Network capacity B) Poor quality of international service C) Network standards D) Regulatory constraints E) Installation delays Answer: C Difficulty: Moderate AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

433

93) In developing countries, use of the Internet is limited by all of the following except: A) use of mobile telephones.

B) high cost of PCs. C) poor bandwidth capacity.

D) unreliable power grids.

E) political disruptions.

Answer: A Difficulty: Moderate AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

94) Which types of systems are widely used by manufacturing and distribution firms to connect to suppliers on a global basis?

A) TPS B) EDI C) CRM D) Enterprise systems E) MIS Answer: B Difficulty: Easy AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

95) While private networks have guaranteed service levels and better security than the Internet, the Internet is the primary foundation for global corporate networks when lower security and service levels are acceptable.

Answer: TRUE Difficulty: Challenging AACSB: Reflective thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

96) Internet-based VPNs provide the same level of quick and predictable response as private networks.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

434

97) The rate of growth in the Internet population is far faster in North America and Europe than it is in Africa and the Middle East.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

98) How does the Internet benefit the development of a global information system? Should all global systems be based on the Internet?

Answer: The Internet allows anyone connected to it to communicate and compute at any time, or anywhere. Satellite systems, digital cell phones, and personal communications services will make it even easier to coordinate work and information in many parts of the globe that cannot be reached by existing ground-based systems. Companies can use Internet technology to construct virtual private networks to reduce wide-area networking costs and staffing requirements. If it wishes, the company can outsource the virtual private network to an Internet service provider.

All global systems can't be based primarily on the Internet because currently not all countries have the same access to the Internet. Additionally, high-traffic volumes at certain times of the day in various regions may impede responsiveness.

Difficulty: Moderate AACSB: Analytical thinking LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

99) List and describe four of the challenges involved with international networks.

Answer: Answers may include the following: 1. Quality of service — the public Internet doesn't guarantee any level of service.

2. Security — most companies use private networks to communicate data and do not trust the security of the public Internet.

3. Costs and tariffs.

4. Network management — not all countries support basic Internet service.

5. Installation delays.

6. Poor quality of international service — Internet connectivity varies worldwide.

7. Regulatory constraints — some countries employ comprehensive blocking and monitoring techniques, slowing down traffic.

8. Network capacity — the Internet can support different amounts of traffic at different times depending on worldwide usage.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

435

100) What is software localization and why is it important for global companies?

Answer: Software localization is the process of converting software to operate in a second language. Although English is the assumed standard for graphical user interfaces for global systems, many systems are in use in areas where there is no common language. When this happens, software localization is necessary to build new interfaces for different languages, taking care to account for differences in meaning and expression.

Difficulty: Challenging AACSB: Analytical thinking; Written and oral communication LO: 15-4: What are the issues and technical alternatives to be considered when developing international information systems?

436