Essentials-of-Business-Information-Systems

Chapter 1
Information Systems in Global
Business Today
True-False Questions
1. Internet advertising is growing at a rate of more than 30 percent a year.
Answer: True Difficulty: Hard Reference: ! "
2. A business model describes how a company produces, delivers, and sells a product or service
to create wealth.
Answer: True Difficulty: #asy Reference: ! $$
3. Information technology (I! consists of all the hardware that a firm needs to use in order to
achieve its business ob"ectives, whereas information systems consist of all the software and
business processes needed.
Answer: False Difficulty: %edium Reference: ! $&'$(
#. $omputers are only part of an information system.
Answer: True Difficulty: #asy Reference: ! $"
%. Information systems literacy describes the behavioral approach to information systems,
whereas computer literacy describes the technical approach.
Answer: False Difficulty: #asy Reference: ! $"
&. he dimensions of information systems are management, organi'ations, and information
technology.
Answer: True Difficulty: #asy Reference: ! $"
(. In order to understand how a specific business firm uses information systems, you need to
)now something about the hierarchy and culture of the company.
Answer: True Difficulty: #asy Reference: ! $)'$*
*. +eveloping a new product, fulfilling an order, or hiring a new employee are e,amples of
business processes.
Answer: True Difficulty: #asy Reference: ! )
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-. .usiness processes are logically related tas)s for accomplishing tas)s that have been
formally encoded by an organi'ation.
Answer: False Difficulty: %edium Reference: ! $*
10. A networ) re/uires at least two computers and a shared resource, such as a printer.
Answer: False Difficulty: %edium Reference: ! $+
11.. An I infrastructure provides the platform on which the firm can build its information
systems.
Answer: True Difficulty: #asy Reference: ! ,$
12. (Analysis)
0123s use of 4eb5based tools that allow customers to embed 012 functions such as trac)ing
and cost calculations into their own 4eb sites was an information systems solution used to
achieve customer intimacy.
Answer: True Difficulty: Hard Reference: ! $$- ,.',$
Analysis in terms of categorize
13. A fully digital firm produces only digital goods or services.
Answer: False Difficulty: #asy Reference: ! )
1#. here are four ma"or business functions6 2ales and mar)eting7 manufacturing and production7
finance and accounting7 and information technology.
Answer: False Difficulty: #asy Reference: ! $)
1%. In the behavioral approach to information systems, technology is ignored in favor of
understanding the psychological, social, and economic impacts of systems.
Answer: False Difficulty: %edium Reference: ! ,)
1&. 8overnment and private sector standards are e,amples of complementary social assets
re/uired to optimi'e returns from I investments.
Answer: True Difficulty: %edium Reference: ! ,/
1(. 9nowledge wor)ers assist with paperwor) at all levels of the firm.
Answer: False Difficulty: #asy Reference: ! $)
1*. A firm that invests in efficient business processes is ma)ing an investment in organi'ational
complementary assets.
Answer: True Difficulty: %edium Reference: ! ,/
,
1-. A substantial part of management responsibility is creative wor) driven by new )nowledge
and information.
Answer: True Difficulty: #asy Reference: ! $+
20. Intranets allow firms to wor) easily with third5party suppliers and vendors.
Answer: False Difficulty: %edium Reference: ! $+
%ultile-01oice Questions
21. he si, important business ob"ectives of information technology are new products, services, and
business models7 customer and supplier intimacy7 survival7 competitive advantage7 operational
e,cellence7 and6
a. improved fle,ibility.
b. improved decision ma)ing.
c. improved business practices.
d. improved efficiency.
Answer: b Difficulty: #asy Reference: ! *
22. +ell $omputer3s use of information systems to improve efficiency and implement :mass
customi'ation; techni/ues to maintain consistent profitability and an industry lead illustrates
which business ob"ective<
a. Improved fle,ibility
b. Improved business practices
c. $ompetitive advantage
d. 2urvival
Answer: c Difficulty: Hard Reference: ! $&
23. he use of information systems because of necessity is6
a. survival.
b. improved business practices.
c. competitive advantage.
d. improved fle,ibility.
Answer: a Difficulty: %edium Reference: ! $&
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2#. (Analysis)
4hich of the following choices may lead to competitive advantage (1! new products, services,
and business models7 (2! charging less for superior products7 (3! responding to customers in real
time<
a. 1 only
b. 1 and 2
c. 2 and 3
d. 1, 2, and 3
Answer: d Difficulty: Hard Reference: ! $,'$&
2%. =eri'on3s implementation of a 4eb5based digital dashboard to provide managers with real5time
information such as customer complaints is an e,ample of6
a. improved fle,ibility.
b. improved decision ma)ing.
c. improved efficiency.
d. customer and supplier intimacy.
Answer: b Difficulty: %edium Reference: ! $,
2&. he move of retail ban)ing to use A>s after $itiban) unveiled its first A>s illustrates the
information system business ob"ective of6
a. improved efficiency.
b. customer and supplier intimacy.
c. survival.
d. competitive advantage.
Answer: c Difficulty: %edium Reference: ! $&
2(. An information system can be defined technically as a set of interrelated components that collect
(or retrieve!, process, store, and distribute information to support6
a. decision ma)ing and control in an organi'ation.
b. communications and data flow.
c. managers analy'ing the organi'ation3s raw data.
d. the creation of new products and services.
Answer6 a Difficulty: %edium Reference: ! $(
(
2*. he three activities in an information system that produce the information organi'ations use to
control operations are6
a. information retrieval, research, and analysis.
b. input, output, and feedbac).
c. input, processing, and output.
d. data analysis, processing, and feedbac).
Answer: c Difficulty: #asy Reference: ! $('$/
2-. ?rder data for baseball tic)ets and bar code data are e,amples of6
a. raw input.
b. raw output.
c. customer and product data.
d. sales information.
Answer: a Difficulty: #asy Reference: ! $/
30. (Analysis)
he average number of tic)ets sold daily online is an e,ample of6
a. input.
b. raw data.
c. meaningful information.
d. output.
Answer: c Difficulty: #asy Reference: ! $(
31. ?utput6
a. is feedbac) that has been processed to create meaningful information.
b. is information that is returned to appropriate members of the organi'ation 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.
Answer: d Difficulty: #asy Reference: ! $/
32. $onverting raw data into a more meaningful form is called6
a. capturing.
b. processing.
c. organi'ing.
d. feedbac).
Answer: b Difficulty: #asy Reference: ! $/
/
33. (Analysis)
An e,ample of raw data from a national chain of automobile stores would be6
a. an average of 13 oyotas are sold daily in 9entuc)y.
b. 30 percent increase in oyota @A= # sales during 2eptember in 9entuc)y.
c. 1 oyota @A=# sold >arch 3, 200% in Aouisville, 9entuc)y.
d. all of the above.
Answer: c Difficulty: Hard Reference: ! $(
3#. he field that 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 is called6
a. information systems literacy.
b. information systems architecture.
c. management information systems.
d. information technology infrastructure.
Answer: c Difficulty: %edium Reference: ! $"'$)
3%. In a hierarchical organi'ation, the upper levels consist of6
a. managerial and professional employees.
b. managerial, professional, and technical employees.
c. professional and operational employees.
d. managerial, professional, and operational employees.
Answer: b Difficulty: %edium Reference: ! $)
3&. A hierarchy6
a. is based on a clear5cut division of labor.
b. is composed primarily of e,perts trained for different functions.
c. is a pyramid structure of rising authority and responsibility.
d. all of the above.
Answer: c Difficulty: #asy Reference: ! $)
3(. he fundamental set of assumptions, values, and ways of doing things that has been accepted by
most of a company3s members is called its6
a. culture.
b. environment.
c. atmosphere.
d. values.
Answer: a Difficulty: #asy Reference: ! $*
"
3*. .usiness processes6
a. include informal wor) practices.
b. are used primarily for sales and accounting functions.
c. are governed by information technology.
d. are logically related tas)s used primarily by operational personnel.
Answer: a Difficulty: #asy Reference: ! $*
3-. +ata management technology consists of6
a. the physical hardware and media used by an organi'ation for storing data.
b. the detailed, preprogrammed instructions that control and coordinate the computer hardware
components in an information system.
c. the software governing the organi'ation of data on physical storage media.
d. the hardware and software used to transfer data.
Answer: c Difficulty: %edium Reference: ! $+
#0. he hardware and software used to transfer data in an organi'ation is called6
a. data management technology.
b. networ)ing and data management technology.
c. data and telecommunications technology.
d. networ)ing and telecommunications technology.
Answer: d Difficulty: %edium Reference: ! $+
#1. Betwor)ing and telecommunications technologies, along with computer hardware, software, data
management technology, and the people re/uired to run and manage them, constitute an
organi'ation3s6
a. data management environment.
b. networ)ed environment.
c. I infrastructure.
d. information system.
Answer: c Difficulty: %edium Reference: ! $+',.
#2. An e,ample of a business using information systems to create new products and services is6
a. 4al5>art3s @etailAin) system.
b. the >andarin ?riental hotel3s customer5preference trac)ing system.
c. =eri'on3s 4eb5based digital dashboard.
d. Apple Inc.3s i1od.
Answer: d Difficulty: Hard Reference: ! $$
)
#3. An e,ample of a business using information systems to attain operational e,cellence is6
a. 4al5>art3s @etailAin) system.
b. the >andarin ?riental hotel3s customer5preference trac)ing system.
c. =eri'on3s 4eb5based digital dashboard.
d. Apple Inc.3s i1od.
Answer: a Difficulty: Hard Reference: ! $.
##. An e,ample of a business using information systems for customer and supplier intimacy is6
a. 4al5>art3s @etailAin) system.
b. the >andarin ?riental hotel3s customer5preference trac)ing system.
c. =eri'on3s 4eb5based digital dashboard.
d. Apple Inc.3s i1od.
Answer: b Difficulty: %edium Reference: ! $$
#%. >aintaining the organi'ation3s financial records is a business function of6
a. accounting.
b. finance.
c. sales.
d. mar)eting.
Answer: a Difficulty: #asy Reference: ! $*
*
#&. (Evaluation)
.ased on the e,amples in the chapter, if you were as)ed to formulate a plan for a regional drive5
in restaurant chain3s efforts to use information technology to attract customers, what would be
the best use of information technology from the list below6
a. 0se I to increase supplier loyalty.
b. 0se I to increase operational efficiency.
c. 0se I to create new products and business models.
d. 0se I to help survive government reporting re/uirements.
e. 0se I to achieve customer intimacy.
Answer: e Difficulty: Hard Reference: ! $$
(Evaluation in the sense of appraise, assess, estimate, judge)
#(. (Analyze)
he fact that online advertising revenues are growing at 30C a year, while offline traditional
advertising is growing at about %C a year, suggests that6
a. Internet advertising is very ine,pensive.
b. offline traditional advertising is not very effective.
c. the Internet is transforming the traditional advertising business model.
d. new technologies are more efficient at selling to customers.
Answer: c Difficulty: Hard Reference ! $$
#*. oyota >otor Durope3s vehicle orders management system allows it to improve efficiency by
basing vehicle production on6
a. superior forecasts of regional demand.
b. actual customer orders.
c. improved decision ma)ing.
d. customer preferences.
Answer: c Difficulty: Hard Reference: ! &
+
#-. In a business hierarchy, the level that is responsible for monitoring the daily activities of the
business is6
a. middle management.
b. service wor)ers.
c. production management.
d. operational management.
Answer: d Difficulty: %edium Reference: ! $)
%0. 4hich of the following are environmental actors that interact with an organi'ation and its
information systems<
a. $ustomers
b. 2uppliers
c. @egulatory agencies
d. All of the above
Answer: d Difficulty: %edium Reference: ! $/
%1. Erom a business perspective, raw data is transformed systematically during various stages,
transforming it into valuable information, in a process called6
a. the information value chain.
b. the I value chain.
c. information processing.
d. feedbac).
Answer: a Difficulty: %edium Reference: ! ,&
%2. (Application)
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. >anagerial
b. 8overnmental
c. 2ocial
d. ?rgani'ational
Answer: c Difficulty: %edium Reference: ! ,/
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%3. Apple $omputer dominates the online legal music sales industry primarily because of a failure of
recording label companies to6
a. invest in technology.
b. adopt a new business model.
c. invest in complementary assets.
d. moderni'e their information value chain.
Answer: b Difficulty: %edium Reference: ! ,(
%#. An e,ample of an organi'ational complementary asset is6
a. using the appropriate business model.
b. as collaborative wor) environment.
c. laws and regulations.
d. all of the above.
Answer: a Difficulty: %edium Reference: ! ,/
%%. An e,ample of a social complementary asset is6
a. technology and service firms in ad"acent mar)ets.
b training programs.
c. distributed decision5ma)ing rights.
d. all of the above.
Answer: a Difficulty: %edium Reference: ! ,/
%&. +isciplines that contribute to the technical approach to information systems are6
a. computer science, engineering, and networ)ing.
b. operations research, management science, and computer science.
c. engineering, utili'ation management, and computer science.
d. management science, computer science, and engineering.
Answer: b Difficulty: Hard Reference: ! ,"
%(. he discipline that focuses on mathematical techni/ues for optimi'ing parameters of
organi'ations, such as transportation and inventory control is6
a. management science.
b. >I2.
c. operations research.
d. utili'ation management.
Answer: c Difficulty: Hard Reference: ! ,)
$$
%*. 2ociologists study information systems with an eye to understanding6
a. how systems affect individuals, groups, and organi'ations.
b. how human decision ma)ers 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.
Answer: a Difficulty: %edium Reference: ! ,)
%-. 1sychologists study information systems with an eye to understanding6
a. how systems affect individuals, groups, and organi'ations.
b. how human decision ma)ers 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.
Answer: b Difficulty: %edium Reference: ! ,)
&0. he costs for firms operating on a global scale have been drastically reduced by6
a. networ)ing technology.
b. investments in organi'ational complementary assets.
c. the Internet.
d. the rise of digital content.
Answer: c Difficulty: %edium Reference: ! )
&1. 9ey corporate assets are6
a. intellectual property, core competencies, and financial and human assets.
b. production technologies and business processes for sales, mar)eting, and finance.
c. )nowledge and the firm3s tangible assets, such as goods or services.
d. time and )nowledge.
Answer: a Difficulty: Hard Reference: ! )
&2. ?verproduction or underproduction of goods and services, misallocation of resources, and poor
response times are the results of a firm3s having6
a. poor relationships with suppliers.
b. poor relationships with customers.
c. inade/uate information.
d. surplus of information.
Answer: c Difficulty: Hard Reference: ! $,
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&3. A firm that must invest in new information systems capabilities in order to comply with federal
legislation can be said to be investing to achieve which business ob"ective<
a. $ustomer intimacy
b. ?perational e,cellence
c. 2urvival
d. Improved reporting
Answer: c Difficulty: %edium Reference: ! $&
&#. 4hich of the following would not be used as an input for an information system<
a. +igital dashboard
b. Fandheld computer
c. .ar5code scanner
d. $ell phone
Answer: a Difficulty: %edium Reference: ! $/
&%. 4hich field of study focuses on both a behavioral and technical understanding of information
systems<
a. 2ociology
b. ?perations research
c. Dconomics
d. >anagement information systems
Answer: d Difficulty: %edium Reference: ! $"'$)
&&. he three principle levels within a business organi'ation hierarchy are6
a. senior management, operational management, and service wor)ers.
b. senior management, middle management, and operational management.
c. senior management, operational management, and information systems.
d. senior management, middle management, and service wor)ers.
Answer: b Difficulty: Hard Reference: ! $)
&(. Dngineers, scientists, or architects, who design new products or services for a firm, belong to
which level of a business hierarchy<
a. >iddle management
b. 1roduction wor)ers
c. 9nowledge wor)ers
d. +ata wor)ers
Answer: c Difficulty: %edium Reference: ! $)
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&*. 4hich main business function is responsible for maintaining employee records<
a. 2ales and mar)eting
b. Fuman resources
c. Einance and accounting
d. >anufacturing and production
Answer: b Difficulty: #asy Reference: ! $*
&-. An organi'ational element in the 012 trac)ing system described in the chapter is6
a. the specification of procedures for identifying pac)ages with sender and recipient
information.
b. monitoring service levels.
c. promoting the company strategy of low5cost, superior service.
d. the use of handheld computers and networ)s for managing pac)age delivery.
Answer: a Difficulty: Hard Reference: ! ,,
(0. A managerial element in the 012 trac)ing system described in the chapter is6
a. ta)ing inventory.
b. providing pac)age status reports to customers.
c. the decision to use automation.
d. in5house pac)age trac)ing software.
Answer: c Difficulty: %edium Reference: ! ,,
Fill In t1e Blan2s
(1. Information is data that has been shaped into a form that is meaningful to human beings.
Difficulty: #asy Reference: ! $(
(2. Feedback is output returned to appropriate members of the organi'ation to help them
evaluate or correct the input stage.
Difficulty: %edium Reference: ! $/
(3. The Internet is a global networ) that uses universal standards to connect millions of different
networ)s around the world.
Difficulty: #asy Reference: ! $+
(#. Computer software consists of the detailed, preprogrammed instructions that control and
coordinate the computer hardware components in an information system.
Difficulty: #asy Reference: ! $+
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(%. he World Wide Web/Web/WWW is a service provided by the Internet that uses universally
accepted standards for storing, retrieving, formatting, and displaying information in a page
format.
Difficulty: #asy Reference: ! $+
(&. Extranets are private corporate networ)s e,tended to authori'ed users outside the
organi'ation.
Difficulty: #asy Reference: ! $+
((. he )ey elements of an organi'ation are its people, structure, business processes, politics,
and culture.
Difficulty: %edium Reference: ! $*
(*. In a sociotechnical perspectiveview, the performance of a system is optimi'ed when both the
technology and the organi'ation mutually ad"ust to one another until a satisfactory fit is
obtained.
Difficulty: %edium Reference: ! ,*
(-. Senior manaement ma)es long5range strategic decisions about the firm3s products and
services.
Difficulty: %edium Reference: ! $)
*0. Investments in organi'ation and management, such as investments in new business models
and training, are also )nown as orani!ational and manaement capital "
Difficulty: %edium Reference: ! ,/
#ssay Questions
$/
*1. Define oerational e3cellence! How can information systems 1el ac1ie4e it5
?perational e,cellence is the achievement of higher levels of productivity, efficiency, and
profitability. Information systems can help achieve operational e,cellence by improving
communications to supplier and optimi'ing the supply chain. Information systems could help
managers communicate with wor)ers more efficiently, enable technological innovation in
products, minimi'e warehouse overhead, and streamline distribution.
Difficulty: Medium Reference: ! *'$$
*2. (Synthesis)
6ou wor2 for an auto manufacturer and distributor! How could you use information
systems to ac1ie4e 7reater customer intimacy5
Gou could create a 4eb site that allows customers to customi'e cars, communicate with
support personnel and other car owners. Gou could create an automated e5mail service
reminding car owners to ta)e their car in for periodic chec)ups. Gou could have an
information system that trac)s customer preferences in local areas, so you can provide cars
that reflect local customer needs and desires.
Difficulty: Hard Reference: ! $$
Synthesis in terms of ringing !no"ledge together
*3. 81at is t1e difference between information tec1nolo7y and information systems5
Describe some of t1e functions of information systems!
Information technology (I! consists of all the hardware and software that a firm needs to use to
achieve its business ob"ectives. Information systems are more comple,. 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 ma)ing and control in an organi'ation.
An information system6
• 2upports decision ma)ing, coordination, and control
• Felps employees analy'e problems
• Felps employees visuali'e comple, sub"ects
• Felps create new products
Difficulty: Medium Reference: ! $(
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*#. (Synthesis)
6ou are a mar2etin7 mana7er for a national mo4ie t1eater c1ain! Gi4e an e3amle of
data t1at your deartment could use for creatin7 meanin7ful information! 81at tye of
information could t1at data roduce5
>ovie tic)et sales from individual theaters would be an e,ample of raw data. >eaningful
information from this would be6 average number of tic)ets sold to seniors on certain days of
the wee).
Difficulty: Hard Reference: ! $(
(Synthesis in terms of ringing !no"ledge together)
*%. (Synthesis)
Define business rocess! 81at mi71t be a business rocess used at a 1osital5
A business process is a set of logically related tas)s and behaviors for accomplishing wor).
Firing a new employee, customer inta)e, and filing medical records are e,amples of business
processes at a hospital.
Difficulty: Medium Reference: ! )
(Synthesis in terms of ringing !no"ledge together)
*&. (Synthesis)
6ou are startin7 a small bi2e messen7er comany! Gi4en your tye of ser4ices 91and-
deli4erin7 ac2a7es wit1in a small 7eo7ra1ical area:- could your firm be a di7ital
firm5 If so- w1at would ma2e t1is a di7ital firm5
.eing a digital firm doesn3t purely rely on having digital goods and services. A digital firm
would have most of its relationships with customers, suppliers, and employees be digitally
enabled. ?rdering deliveries, assigning deliveries, managing employees and assignments
could certainly be digitally enabled7 using cell phones, information systems, and handheld
devices to connect customers, delivery management, and bi)e messengers.
Difficulty: Hard Reference: !)
(Synthesis in terms of model)
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*(. (Evaluation)
T1is c1ater discusses 1ow eac1 or7ani;ation 1as its own culture and sets of 4alues
s1ared by most of its members! 81at 2ind of s1ared 4alues mi71t you find at a law
firm5
2hared values at a law firm might be6 he legal system wor)s, the legal system is fair,
lawyers help people, and people need help with the legal system because it is complicated.
Difficulty: Medium Reference: ! $*
(Evaluation in terms of assess, choose)
**. (Synthesis)
6ou wor2 at t1e business 1ead<uarters for a c1ain of mo4ie t1eaters! Describe t1is
firm=s information 4alue c1ain!
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 tic)et 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 wee) that
people most often saw movies, what snac)s were the most popular. his information would
be valuable in ma)ing decisions, such as offering tic)et discounts during less popular time
slots, and offering more popular snac) items. Eurther feedbac) based on the results of these
decisions could determine whether these decisions were effective.
Difficulty: Hard Reference: ! ,,',&

(Synthesis in terms of propose, model)
*-. (Evaluation)
81ic1 dimension of information systems do you feel was t1e most imortant source of
roblems discussed in t1is c1ater=s study of t1e %or7an Stanley and Dean 8itter
mer7er5 81y5
2tudent answers will vary. he following is an e,ample of a possible answer6 he problems with
the merger were primarily technical. he employees at @etail .ro)erage felt underappreciated
because their information systems were anti/uated. .ro)ers had to wor) overtime and clients did
not receive good information from reports or the 4eb site. his led to both customers and bro)ers
leaving the firm. In addition, the $D? 1hilip 1urcell underestimated investing in technology,
placing the company in a poor position when the mar)et rebounded. In discussing the company3s
problems, $hief D,ecutive >ac) stated that divisions of >organ 2tanley had not received the
technology they needed.
Difficulty: Hard Reference: ! &/
(Evaluation in terms of appraise, assess)
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-0. (Evaluate)
In t1e Accenture case- t1e comany information systems allow for a 1i71ly
decentrali;ed or7ani;ation wit1out a traditional 1ead<uarters! Based on your readin7
of 01ater $- w1ic1 of t1e si3 strate7ic business ob>ecti4es does Accenture=s
information systems contribute to5
2tudent answers will vary. he following is an e,ample of a possible answer6 Accenture3s
information systems allow its mobile wor)force to be within easy, constant reach of its
customers, contributing to the business ob"ective of customer and supplier intimacy.
Additionally, the ability of employees to connect to and wor) with local branch information
systems in standard ways, regardless of their location, contributes to more efficient processes
and operational e,cellence.
Difficulty: Medium Reference: ! *'$&
(Evaluate in terms of appraise, choose)
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