STRATEGIC MANAGEMENT INFORMATION SYSYTEMS
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True/False Questions (25 Points)
Instructions: Select True or False for each question
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1. Developing a new product, fulfilling an order, and hiring a new employee are
examples of business processes.
2. Information technology (IT) consists of all the hardware that a firm needs to use in
order to achieve its business objectives, whereas information systems consist of all the
software and business processes needed.
3. Knowledge workers assist with paperwork at all levels of the firm.
4. A network requires at least two computers and a shared resource, such as a printer.
5. Intranets allow firms to work easily with third-party suppliers and vendors.
6. In the behavioral approach to information systems, technology is ignored in favor of
understanding the psychological, social, and economic impacts of systems.
7. Operational management is responsible for directing the day-to- day operations of the
business and therefore needs transaction-level information.
8. Deciding whether to introduce a new product line is the responsibility of an operational
9. Transaction processing systems are most commonly used by the senior management
level of an organization.
10. A hotel reservation system is a typical example of a management information
11. Functional systems that support business processes within a single functional group,
such as human resources, are being phased out in favor of cross-functional systems.
12. Decision-support systems use internal information as well as information from
13. Supply chain management systems are more externally oriented than enterprise
14. From the point of view of economics, information systems technology can be viewed
as a factor of production that can be substituted for traditional capital and labor.
15. In an efficient customer response system, digital answering systems are used to
monitor and respond to customer inquiries.
16. Mass customization is a form of mass production.
17. The effect of the Internet has been to raise bargaining power over suppliers.
18. In the age of the Internet, Porter's traditional competitive forces model is still at work,
but competitive rivalry has become much more intense.
19. In network economics, the more people that use Microsoft Office software and
related products, the greater its value.
20. The term business ecosystem describes the interplay between the various
organizational forces within a firm.
21. The use of Internet technologies allows companies to more easily sustain
22. Advances in data storage have made routine violation of individual privacy more
23. Web sites use "cookies" in order to obtain the names and addresses of their visitors.
24. Spyware is software that comes hidden in downloaded applications and can track
your online movements.
25. The key concepts in patent law's determination of non-obviousness are originality,
novelty, and value.
Multiple Choice Questions (25 Points)
Instructions: Select the most suitable answer to each question
1. The six important business objectives of information technology are new products,
services, and business models; customer and supplier intimacy; survival; competitive
advantage; operational excellence; and
A) improved flexibility.
B) improved decision making.
C) improved business practices.
D) improved efficiency.
2. Dell Computer's use of information systems to improve efficiency and implement
"mass customization" techniques to maintain consistent profitability and an industry lead
illustrates which business objective?
A) improved flexibility
B) improved business practices
C) competitive advantage
3. The move of retail banking to use ATMs after Citibank unveiled its first ATMs
illustrates the use of information systems to achieve which business objective?
A) improved efficiency
B) customer and supplier intimacy
D) competitive advantage
4. The three activities in an information system that produce the information
organizations use to control operations are
A) information retrieval, research, and analysis.
B) input, output, and feedback.
C) input, processing, and output.
D) data analysis, processing, and feedback.
5. The fact that online advertising revenues are growing at 25 percent a year, while
offline traditional advertising revenues are growing at about 5 percent a year, suggests
A) Internet advertising is very inexpensive.
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.
6. From a business perspective, raw data is transformed systematically during various
stages, transforming it into valuable information, in a process called
A) the information value chain.
B) the IT value chain.
C) information processing.
7. Which type of system would you use to change a production schedule if a key supplier
was late in delivering goods?
8. Which systems are typically a major source of data for other systems?
A) transaction processing systems
B) management information systems
C) executive support systems
D) decision-support systems
9. A relocation control system that reports summaries on the total moving, house-
hunting, and home financing costs for employees in all company divisions would fall into
the category of
A) knowledge management systems.
B) transaction processing systems.
C) executive-support systems.
D) management information systems.
10. Executive support systems are information systems that support the
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.
11. 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
12. 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 click-throughs about their current banner ads. Which type of system will most
efficiently provide a solution?
B) enterprise system
13. The use of digital technology and the Internet to execute the major business
processes in the enterprise is called
C) enterprise applications.
14. The interaction between information systems and organizations is
A) primarily guided by the decision making of middle- and senior-managers.
B) a complex, two-way relationship mediated by factors such as the environment and
C) driven by the microeconomic forces of capital and labor.
D) successfully managed when the organization's existing culture and goals are
seen as the driving force.
15. All of the following are major features of organizations that impact the use of
information systems EXCEPT for
A) business processes.
D) agency costs.
16. The costs incurred when a firm buys on the marketplace what it cannot make itself
are referred to as:
A) switching costs.
B) transaction costs.
D) agency costs.
17. Which of the following statements is NOT true about information technology's
impacts on business firms?
A) It helps firms expand in size.
B) It helps firms lower the cost of market participation.
C) It helps reduce internal management costs.
D) It helps reduce transaction costs.
18. A substitute product of most concern for a cable TV distributor is
A) satellite TV.
B) broadcast TV.
C) satellite radio.
D) the Internet.
19. Which of the following industries has a low barrier to entry?
B) computer chip
20. Amazon's use of the Internet as a platform to sell books illustrates a tactical use of
information services for
A) low-cost leadership.
B) product differentiation.
C) focusing on market niche.
D) strengthening customer intimacy.
21. An information system can enable a company to focus on a market niche through
A) complex trend forecasting.
B) tailoring products to the client.
C) intensive product trend analysis.
D) intensive customer data analysis.
22. To what competitive force did the printed encyclopedia industry succumb?
A) positioning and rivalry among competitors
B) low cost of entry
C) substitute products or services
D) customer's bargaining power
23. The Internet raises the bargaining power of customers by
A) creating new opportunities for building loyal customer bases.
B) making more products available.
C) making information available to everyone.
D) lowering transaction costs.
24. Advances in data storage techniques and rapidly declining storage costs have
A) been accompanied by relevant federal statutes protecting personal data.
B) made universal access possible.
C) doubled every 18 months.
D) made routine violations of privacy cheap and effective.
25. The use of computers to combine data from multiple sources and create electronic
dossiers of detailed information on individuals is called
a) Discuss the following statements, clearly justifying your support for either
i. ‘Business needs drive IT and information strategy’
ii. ‘IT strategic planning is driving corporate planning’ (10 Marks)
b) The decision to use information technology as a tool for competitive
advantage can either build or destroy an organization.
i. Explain the concept Business Process Re-engineering (BPR) (5
ii. Highlight any TWO opportunities enabled by BPR to an organization
c) Explain any THREE unique features that qualify organizations as systems
d) Identify the strengths and weaknesses of the ‘Payback Period’ as an
investment appraisal technique for a potential IS project