Chapter 3: Information Systems, Organizations, Management, and Strategy

Chapter 3Information Systems, Organizations, Management, and Strategy3-1

Chapter 3

Information Systems, Organizations, Management, and Strategy

True-False Questions

The interaction between information technology and organizations is simple and is not influenced by other mediating factors.
Answer:FalseDifficulty:EasyReference:p. 72
E-mail and instant messaging have become a dominant form of business communication.
Answer:TrueDifficulty:EasyReference:p. 72
An organization is less stable than an informal group in terms of longevity and routines.
Answer:FalseDifficulty:EasyReference:p. 73
Organizations are social structures.
Answer:TrueDifficulty:MediumReference:p. 73
The technical and behavioral definitions of organizations are contradictory.
Answer:FalseDifficulty:MediumReference:p. 74
Peter Drucker was the first person to describe the “ideal-typical” characteristics of an organization.
Answer:FalseDifficulty:EasyReference:p. 74
Standard operating procedures are precise rules, procedures, and practices that have been developed to cope with virtually all expected situations.
Answer:TrueDifficulty:EasyReference:p. 75
Organizations that survive over time become less efficient.
Answer:FalseDifficulty:MediumReference:p. 75
Organizational culture restrains political conflict and promotes common understanding, agreement on procedures, and common practices.
Answer:TrueDifficulty:EasyReference:p. 76
Organizations generally have more features in common with each other than they have unique features.
Answer:FalseDifficulty:EasyReference:p. 78
It is the systems analysts job to translate business problems and requirements into information requirements and systems.
Answer:TrueDifficulty:EasyReference:p. 80
The role of the CFO is a senior management position that oversees the use of information technology in a firm.
Answer:FalseDifficulty:MediumReference:p. 80
By reducing overall management costs, information technology enables firms to increase revenues while shrinking the number of middle managers and clerical workers.
Answer:TrueDifficulty:MediumReference:p. 82
In virtual organizations, work is tied to geographic location.
Answer:FalseDifficulty:EasyReference:p. 83
Micromarketing can help companies pinpoint tiny target markets for finely customized products and services.
Answer:TrueDifficulty:EasyReference:p. 84
Research on project implementation failures demonstrates that the most common reason for failure of large projects to reach their objectives is organizational and political resistance to change.
Answer:TrueDifficulty:EasyReference:p. 85
The classical model of management is still popular today.
Answer:TrueDifficulty:EasyReference:p. 86
Managers do not behave as the classical model of management has led us to believe.
Answer:TrueDifficulty:EasyReference:p. 86
Mintzberg has defined the five modern attributes of managerial behavior.
Answer:FalseDifficulty:HardReference:p. 87
Information systems provide only limited assistance for management decision making.
Answer:TrueDifficulty:EasyReference:p. 88
The rational model of human behavior is built on the idea that people engage in basically consistent, rational, value-maximizing calculations.
Answer:TrueDifficulty:EasyReference:p. 88
People tend to choose the first available alternative that moves them toward the ultimate goal, not necessarily the alternative that is best.
Answer:TrueDifficulty:EasyReference:p. 88
Understanding the environment in which an organization must function is not relevant when building a new information system.
Answer:FalseDifficulty:EasyReference:p. 89
According to bureaucratic models of decision making an organization’s most important goal is the preservation of the organization.
Answer:TrueDifficulty:EasyReference:p. 89
If an information system is not built with a clear understanding of the organization and a clear understanding of exactly what is expected of it, it will not be able to deliver genuine benefits.
Answer:TrueDifficulty:EasyReference:p. 89
The value chain model classifies all company activities as either primary or support.
Answer:TrueDifficulty:MediumReference:p. 91
In the value chain model, primary activities are most directly related to the production and distribution of the firm’s products and services that create value for the customer.
Answer:TrueDifficulty:MediumReference:p. 91
Digitally enabled networks can be used not only to purchase supplies but also to closely coordinate production of many independent firms.
Answer:TrueDifficulty:MediumReference:p. 91
Many of information technology-based products and services were developed originally by financial institutions.
Answer:TrueDifficulty:EasyReference:p. 93
One way an organization can increase profitability and market penetration is to mine existing data.
Answer:TrueDifficulty:EasyReference:p. 94
The just-in-time supply method allows stockless inventory.
Answer:FalseDifficulty:HardReference:p. 96
Supply chain management and efficient customer response systems allow digital firms to engage in business strategies not available to traditional firms.
Answer:TrueDifficulty:EasyReference:p. 96
The idea driving synergies is that when the output of some units can be used as inputs to other units, the relationship can lower cost and generate profits.
Answer:TrueDifficulty:EasyReference:p. 97
The competitive forces model was created for today’s digital firm.
Answer:FalseDifficulty:HardReference:p. 99
In the age of the Internet, Porter’s traditional competitive forces model is still at work, but competitive rivalry has become much more intense.
Answer:TrueDifficulty:EasyReference:p. 99
Customers are one of the competitive forces that affect an organization’s ability to compete.
Answer:TrueDifficulty:EasyReference:p. 99
Business ecosystems typically have one or a few keystone firms that dominate the ecosystem and create the platforms used by other niche firms.
Answer:TrueDifficulty:MediumReference:p. 100
The law of diminishing returns always applies to digital, as well as traditional companies.
Answer:FalseDifficulty:MediumReference:p. 101
The more people that use Microsoft Office software and related products, the greater its value.
Answer:FalseDifficulty:MediumReference:p. 102
The competitive advantages strategic systems confer usually last long enough to ensure long-term profitability.
Answer:FalseDifficulty:EasyReference:p. 103

Multiple-Choice Questions

The interaction between information technology and organizations is very complex and is influenced by a great many mediating factors, including the organization structure, business processes, politics, culture, management decisions and:
a.the surrounding environment.
b.the economic basis of the company.
c.the availability of trained employees.
d.the cash flow within the company.
Answer: aDifficulty:EasyReference:p. 72
A stable, formal social structure that takes resources from the environment and processes them to produce outputs is called a(n):
a.micro system.
b.organization.
c.bureaucracy.
d.value chain.
Answer: bDifficulty:EasyReference:p. 73
______are common features of all organizations.
a.Culture, routines, and politics
b.Power, technology, and business processes
c.Formal structure, politics, and goals
d.Formal structure, function, and environments
Answer: aDifficulty:HardReference:p. 74
The behavioral view of organizations emphasizes group relationships and ______.
a.values
b.abstract rules and procedures
c.structures
d.Both a and c
Answer: dDifficulty:MediumReference:p. 74
In 1911, this German sociologist called organizations bureaucracies:
a.Max Webber
b.Franz Kafka
c.Anne Frank
d.Paul Gerhardt
Answer: aDifficulty:MediumReference:p. 74
Virtually all information systems that bring about significant changes in goals, procedures, productivity, and personnel are:
a.doomed to failure.
b.going to elicit serious political opposition.
c.going to require a CIO.
d.unnecessary.
Answer: bDifficulty:EasyReference: pp. 75-76
Routines for producing goods and services are sometimes called:
a.bureaucratic structures.
b.standard operating procedures.
c.routine tasks.
d.formal structures.
Answer: bDifficulty:MediumReference:p. 75
Collections of routines for producing goods and services are referred to as:
a.business processes.
b.work with routine tasks.
c.standard reporting procedures.
d.mediating factors.
Answer: aDifficulty:MediumReference:p. 75
The greatest difficulty of bringing about organizational change – especially the development of new information systems is:
a.computerizing manual systems.
b.recruiting qualified employees.
c.political resistance.
d.perceiving environmental change.
Answer: cDifficulty:MediumReference:p. 76
Fundamental assumptions about what products the organization should produce, how it should produce them, where, and for whom is known as:
a.motivational factors.
b.organizational culture.
c.business processes.
d.standard operating procedures.
Answer: bDifficulty:MediumReference:p. 76
Mintzberg classifies ______basic kinds of organizational structures.
a.five
b.six
c.seven
d.eight
Answer: aDifficulty:EasyReference:p. 76
According to Mintzberg, a ______is an example of a professional bureaucracy structure.
a.midsize manufacturing firm
b.law firm or school system
c.consulting firm
d.small start-up business
Answer: bDifficulty:EasyReference:p. 77
According to Mintzberg, a ______is an example of a divisionalized bureaucracy structure.
a.midsize manufacturing firm
b.law firm or school system
c.small start-up business
d.very large established company
Answer: dDifficulty:EasyReference:p. 77
Only ______percent of the Fortune 500 companies of 1919 still exist today.
a.10
b.20
c.30
d.40
Answer: aDifficulty:HardReference:p. 77
These information specialists constitute the principal liaisons between the information systems groups and the rest of the organization:
a.systems analysts.
b.programmers.
c.end users.
d.Web-page developers.
Answer: aDifficulty:EasyReference:p. 80
The role of ______is a senior management position that oversees the use of information technology in the firm.
a.CTO
b.CFO
c.CIO
d.CEO
Answer: cDifficulty:EasyReference:p. 80
Information systems managers are:
a. highly-trained technical specialists who write computer software instructions.
b. specialists who translate business problems and requirements into information requirements and systems.
c. leaders of the various specialists in the information system department.
d. in change of the information systems function in the organization.
Answer: c Difficulty: Easy Reference: p. 80
______are representatives of departments outside of the information systems group for whom applications are developed.
a.End users
b.Programmers
c.Analysts
d.IS managers
Answer: aDifficulty:EasyReference: p. 80
Although ______theories try to explain how large numbers of firms act in the marketplace, ______theories are more useful in describing the mechanics of actual firms.
a.behavioral; transaction
b.economic; behavioral
c.economic; agency
d.agency; behavioral
Answer: bDifficulty:HardReference:p. 81
______organizations use networks to link people, assets, and ideas. Work is no longer tied to geographic location.
a.Hierarchical
b.Vertical
c.Virtual
d.Manufacturing
Answer: cDifficulty:EasyReference:p. 83
______is the ability to offer individually tailored products or services using the same production resources as bulk production.
a.Mass customization
b.Size customization
c.Magnitude customization
d.Dimension customization
Answer: aDifficulty:EasyReference:p. 84
Managers as planners, organizers, coordinators, decision makers, and controllers describe the principles of the:
a.classical model of management.
b.interpersonal model of management.
c.transactional model of management.
d.virtual organization.
Answer: aDifficulty:MediumReference:p. 86
For the manager, no technological support systems exist for the managerial roles of:
a.liaison or negotiator.
b.spokesperson or resource allocator.
c.entrepreneur or nerve center.
d.figurehead or disturbance handler.
Answer: dDifficulty:HardReference:p. 87
According to the Mintzberg model of management, managerial roles are:
a.where managers initiate activities, handle disturbances, allocate resources, and negotiate conflict.
b.where managers act as figureheads and leaders for the organization.
c.where managers act as a liaison, disseminating and allocating resources.
d.the expectations of the activities that managers should perform in an organization.
Answer: dDifficulty:EasyReference:p. 87
According to the Mintzberg model of management, interpersonal roles are:
a.where managers initiate activities, handle disturbances, allocate resources, and negotiate conflict.
b.where managers act as figureheads and leaders for the organization.
c.where managers act as a liaison, disseminating and allocating resources.
d.the expectations of the activities that managers should perform in an organization.
Answer: bDifficulty:EasyReference:p. 87
According to the ______model of human behavior, an individual identifies goals, ranks all possible alternatives actions by their contributions to those goals, and chooses the alternative that contributes most to those goals.
a.hierarchical
b.rational model
c.choice model
d.decisional model
Answer: bDifficulty:EasyReference:p. 88
At the business level the most common analytical tool for identifying opportunities for strategic systems is:
a.DSS.
b.the value web.
c.ESS.
d.value chain analysis.
Answer: dDifficulty:MediumReference:p. 91
A ______is a collection of independent firms that use information technology to coordinate their value chains to produce a product or service for a market collectively.
a.portal
b.business link
c.value web
d.primary activity
Answer: cDifficulty:MediumReference:p. 91
When a firm provides a specialized product or service for a narrow target market better than competitors, they are using a:
a.product differentiation strategy.
b.focused differentiation strategy.
c.value web strategy.
d.customization strategy.
Answer: bDifficulty:MediumReference:p. 93
The cost of acquiring a new customer has been estimated to be ______times that of retaining an existing customer.
a.three
b.six
c.five
d.seven
Answer: cDifficulty:EasyReference:p. 94
Which of the following is most likely to raise switching costs:
a.just-in-time supply method.
b. stockless inventory method
c.traditional delivery method
d.vendor-supported supply method
Answer: bDifficulty:MediumReference:p. 96
When the output of some units can be used as inputs to other units, or if two organizations pool markets and expertise that result in lower costs and generate profits it is often referred to as creating:
a.digital strategies.
b.switching costs.
c.synergies.
d.low-cost producer strategies.
Answer: cDifficulty:EasyReference:p. 97
Which of the following is not an example of firm-level strategy:
a.an information system integrating the operations of a company and its subsidiaries
b.an information system for knowledge-sharing
c.an information system for cross-marketing among a firm and its subsidiaries
d.an information system enabling a firm and its suppliers to share order status data
Answer: dDifficulty:MediumReference:p. 97
An information system can enhance core competencies by:
a.providing better reporting facilities.
b.creating educational opportunities for management.
c.allowing operational employees to interact with management.
d.encouraging the sharing of knowledge across business units.
Answer: dDifficulty:MediumReference:p. 98
The ______model is used to describe the interaction of external influences, specifically threats and opportunities that affect an organization’s strategy and ability to compete.
a.network economics
b.competitive forces
c.strategic transitions
d.environmental conditions
Answer: bDifficulty:MediumReference:p. 99
______is determined by the nature of the players in an industry and their relative bargaining power.
a.Industry structure
b.Industry opportunities
c.Industry threats
d. Industry power
Answer: aDifficulty:EasyReference:p. 99
Which of the following is not one of the competitive forces:
a.suppliers.
b.other competitors.
c.external environment
d.customers.
Answer: cDifficulty:Medium Reference: p. 99
This traditional model assumes a relatively static industry environment, relatively clear-cut industry boundaries, and a relatively stable set of suppliers, substitutes, and customers, with a focus on industry players in a market environment:
a.Porter’s competitive forces model.
b.Porter’s value chain model.
c.Porter’s model of diminishing returns.
d.Porter’s generic strategy model.
Answer: aDifficulty:EasyReference:p. 100
Another term for loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers is:
a.Keystone firm.
b.Niche firm.
c.business portal.
d. business ecosystem.
Answer: dDifficulty: EasyReference:p. 100
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. inelasticity.
Answer: bDifficulty: EasyReference:p. 101

Fill In the Blanks

A(n) organization, by technical definition, is a stable, formal, social structure taking resources from the environment and processing them to produce outputs.
Difficulty: EasyReference:p. 73
A(n) bureaucracy is a formal organization with a clear-cut division of labor, abstract rules and procedures, and impartial decision making that uses technical qualifications and professionalism as a basis for promoting employees.
Difficulty: EasyReference:p. 74
Max Weber was the first to describe the “ideal-typical” characteristics of organizations in 1911.
Difficulty: EasyReference:p. 74
An organization arranges specialists in a hierarchy of authority in which everyone is accountable to someone and authority is limited to specific actions.
Difficulty: MediumReference:p. 74
Routines are the precise rules, methods, and practices developed by organizations to cope with virtually all expected situations.
Difficulty: EasyReference:p. 75
The organizational culture is the set of fundamental assumptions about what products the organization should produce, how and where it should produce them, and for whom they should be produced.
Difficulty: MediumReference:p. 76
The examination by management of the external changes that might require an organizational response is called environmental scanning.
Difficulty: HardReference:p. 77
A(n) programmeris a highly trained technical specialist who writes computer software instructions.
Difficulty: EasyReference:p. 80
A(n) systems analyst is a specialist who translates business problems and requirements into information requirements and systems, acting as a liaison between the information systems department and the rest of the organization.
Difficulty: EasyReference:p. 80
A(n) chief information officer is the senior manager in charge of the information systems function in the firm.
Difficulty: EasyReference:p. 80
A(n) end user is a representative of the department outside the information systems group for whom applications are developed.
Difficulty: EasyReference:p. 80
The transaction cost theory states that firms grow larger because they can conduct marketplace transactions internally more cheaply than they can with external firms in the marketplace.
Difficulty: MediumReference:p. 81
Traditionally, firms have tried to reduce transactions costs through vertical integration, by getting bigger, hiring more employees, and buying their own suppliers and distributors.
Difficulty: HardReference:p. 81
The agency theory views the firm as a nexus of contracts among self-interested individuals who must be supervised and managed.
Difficulty: MediumReference:p. 81
A(n) virtual organization uses networks to link people, assets, and ideas to create and distribute products and services without being limited to traditional organizational boundaries or physical locations.
Difficulty: EasyReference:p. 83
Mass customization is the ability to offer individually tailored products and services using the same production resources as mass production.
Difficulty: EasyReference:p. 84
Information systems inevitably become bound up with organizational politics because they influence access to information.
Difficulty: EasyReference:p. 84
A(n) behavioral model is a description of management based on behavioral scientists’ observation of what managers actually do in their jobs.
Difficulty: EasyReference:p. 87
A(n) managerial role is the expectation of the activities that a manager will perform in an organization.
Difficulty: MediumReference:p. 87
A manager presenting employees with awards for high performance would be performing a(n) interpersonal role. .
Difficulty: MediumReference:p. 87
The rational model of human behavior is built on the idea that people engage in basically consistent, rational, value-maximizing calculations.