Management Information Systems 9E1

Chapter 2

Information Systems for Competitive Advantage

Mini Quiz

1. / The firm’s physical resources include personnel, material, machines, and money.
Answer:TruePage Reference:25
2. / Which is not a control mechanism for a closed-loop system?
  1. Standards of performance
  2. Management
  3. Information processor
  4. Data
Answer:dPage Reference:26
3. / What are the eight elements that exist in the environments of all firms and what is the purpose of each?
Answer:Suppliers or vendors supply the materials, machines, services, people, and information that are used to produce the firm’s products and services. Products and services are marketed to the firm’s customers. Labor unions provide workers for certain trades and industries. The financial community influences the money resources that are available. Stockholders or owners invest money in the firm and represent the ultimate owners of the firm. Competitors compete with the firm in the marketplace. The government provides laws and regulations and provides assistance through purchases, information, and funds. The global community is the geographic area where the firm performs its operations.
Page Reference:27
4. / Procurement is concerned with obtaining such resources as data and information.
Answer:FalsePage Reference:29
5. / Which of the following is defined as a method of accomplishing the strategy in a better way than do competitors?
  1. Tactical advantage
  2. Operational advantage
  3. Strategic advantage
  4. Decisional advantage
Answer:aPage Reference:30
6. / One advantage of having a good information processing capability in an MNC is the ability to transfer knowledge between units in different countries.
Answer:TruePage Reference:32
7. / List the firm’s seven information resources.
Answer:Computer hardware, computer software, information specialists, users, facilities, the database, and information. Page Reference: 32
8. / All information should be 100% accurate.
Answer:FalsePage Reference:32
9. / Which executive explains IS costs in business terms?
  1. CEO
  2. CFO
  3. CIO
  4. COO
Answer:cPage Reference:35
10. / The acronym, SPIR, refers to:
  1. strategic plan for information retrieval.
  2. strategic planning for information resources.
  3. strategic plan for internal resources.
  4. strategic planning for information services.
Answer:bPage Reference:35

True-False Questions

1. / The physical resources of the firm include personnel, material, machines, and information.
Answer:FalsePage Reference:25
2. / The conceptual resources of the firm include data, information, and information in the form of decisions.
Answer:TruePage Reference:26
3. / An open-loop system is one that can control itself by means of a control mechanism and feedback loop.
Answer:FalsePage Reference:26
4. / The feedback loop in a closed-loop system is composed of physical resources.
Answer:FalsePage Reference:26
5. / The firm exists for the purpose of making a profit.
Answer:FalsePage Reference:26
6. / In a larger system, the environmental elements are referred to as society.
Answer:TruePage Reference:27
7. / The only resource that connects the firm with all of the environmental elements is information.
Answer:TruePage Reference:28
8. / Competitive advantage refers to the use of data to gain leverage over the competitors.
Answer:FalsePage Reference:28
9. / Firms create value by performing value activities.
Answer:TruePage Reference:28
10. / Technology development includes all activities that involve technology.
Answer:TruePage Reference:29
11. / The firm’s business partners work together to create synergy.
Answer:TruePage Reference:29
12. / When information is used to create competitive advantage, it is called the value chain.
Answer:FalsePage Reference:29
13. / Information systems for tactical advantage have a fundamental effect in shaping the firm’s operations.
Answer:FalsePage Reference:30
14. / Tactical advantage is defined as a method of accomplishing the strategy in a better way than do competitors.
Answer:TruePage Reference:30
15. / Operational advantage is one that deals with everyday transactions and processes.
Answer:TruePage Reference:31
16. / Cookies are small files of information on the firm’s computers that store customer information.
Answer:FalsePage Reference:31
17. / A multinational corporation is a firm that operates across products, markets, nations, and cultures.
Answer:TruePage Reference:31
18. / Coordinating information processing in the MNC causes the overall costs of operation to increase.
Answer:FalsePage Reference:32
19. / Information management means acquiring information, using it effectively, then discarding it at the proper time.
Answer:TruePage Reference:32
20. / Information has relevancy when it pertains to the problem at hand.
Answer:TruePage Reference:32
21. / Timely information arrives after a decision has been made.
Answer:FalsePage Reference:33
22. / Communication overload suggests that harm can come from too much information.
Answer:FalsePage Reference:33
23. / Legacy systems are incompatible or only partially compatible with current information technology.
Answer:TruePage Reference:33
24. / Knowledge management is very narrowly defined as the process of organizing a firm’s information so that it can easily be captured, stored, processed, and used by strategic managers.
Answer:FalsePage Reference:34
25. / The most important tool for knowledge management is training.
Answer:TruePage Reference:34
26. / The CIO is the manager of information services who contributes managerial skills to solving problems relating not only to the information resources but also to other areas of the firm’s operations.
Answer:TruePage Reference:35
27. / One approach to business area operational planning would be for each area to establish its own strategic plan independently of others.
Answer:FalsePage Reference:35
28. / The information resources necessary to meet the objectives is one topic that should be included in each SPIR.
Answer:TruePage Reference:36
29. / The decentralized control strategy is a type of “hands-off” strategy in which the parent allows the subsidiaries to develop their own products and practices in an MNC.
Answer:TruePage Reference:39
30. / In a centralized expertise strategy the parent and all subsidiaries work together in formulating strategies and operating policies.
Answer:FalsePage Reference:40

Multiple Choice Questions

31. / Which of the following is a conceptual resource of the firm?
  1. Data
  2. Personnel
  3. Material
  4. Money
Answer:aPage Reference:26
32. / Which of the following is not a physical resource of the firm?
  1. Personnel
  2. Material
  3. Information
  4. Money
Answer:cPage Reference:25
33. / A system that can control itself by means of a control mechanism and feedback loop is a(n):
  1. open-loop system.
  2. closed-loop system.
  3. open environment system.
  4. feedback-loop system.
Answer:bPage Reference:26
34. / Which of the following is not an environmental element of all firms?
  1. Suppliers
  2. Customers
  3. Labor unions
  4. Materials
Answer:dPage Reference:27
35. / Which environmental element provides skilled and unskilled workers for certain trades and industries?
  1. Global community
  2. Labor unions
  3. Human resources
  4. Personnel
Answer:bPage Reference:27
36. / Which environmental element invests money in the firm?
  1. Customers
  2. Financial community
  3. Stockholders
  4. Government
Answer:cPage Reference:27
37. / Which environmental resource flow occurs less frequently than the others?
  1. Information flow from customers
  2. Material flow to customers
  3. Money flow to stockholders
  4. Money flow from the government
Answer:dPage Reference:27
38. / Which environmental resource flow occurs more frequently than the others?
  1. Machine flow from suppliers
  2. Material flow to suppliers
  3. Personnel flow to competitors
  4. Money flow from the government
Answer:aPage Reference:27
39. / What is the only resource that connects the firm with all of the environmental elements?
  1. Machines
  2. Money
  3. Material
  4. Information
Answer:dPage Reference:28
40. / The term to describe the use of information to gain leverage in the marketplace is:
  1. competitive objective.
  2. strategic advantage.
  3. competitive advantage.
  4. strategic objective.
Answer:cPage Reference:28
41. / According to Porter a firm achieves competitive advantage by:
  1. creating value activities.
  2. creating a value chain.
  3. creating a margin.
  4. creating a value system.
Answer:bPage Reference:28
42. / Which of the following is not a primary value activity?
  1. Inbound logistics
  2. Outbound logistics
  3. Technology development
  4. Marketing and sales operations
Answer:cPage Reference:28
43. / Which of the following is a support activity?
  1. Human resources management
  2. Marketing and sales operations
  3. Service activities
  4. Logistics
Answer:aPage Reference:28
44. / Which of the following is concerned with obtaining such resources as materials and machines, which are used by the primary activities?
  1. Procurement
  2. Service activities
  3. Marketing and sales operations
  4. Operations
Answer:aPage Reference:29
45. / When a firm links its value chain to the value chains of other organizations the linkage creates a(n):
  1. value system.
  2. interorganizational system.
  3. cross functional system.
  4. open-loop system.
Answer:bPage Reference:29
46. / The network that uses information to create competitive advantage is called a:
  1. value chain.
  2. value network.
  3. value system.
  4. network chain.
Answer:cPage Reference:29
47. / At which managerial level can managers specify how the strategic plans will be implemented?
  1. Strategic
  2. Middle
  3. Tactical
  4. Operational
Answer:cPage Reference:29
48. / Which dimension of competitive advantage uses cookies to store information about user’s transactions?
  1. Strategic
  2. Middle
  3. Tactical
  4. Operational
Answer:dPage Reference:31
49. / A firm that operates across products, markets, nations, and cultures is referred to as a(n):
  1. multinational corporation.
  2. global corporation.
  3. strategic corporation.
  4. enterprise.
Answer:aPage Reference:31
50. / Which of the following is not an advantage of coordination for the MNC?
  1. Flexibility
  2. Keeping abreast of market needs worldwide
  3. Increased efficiency and effectiveness
d.Increased operating costs
Answer:dPage Reference:32
51. / What type of resource includes computer hardware and software, information specialists, and users?
  1. Physical resources
  2. Information resources
  3. Conceptual resources
  4. Information management
Answer:bPage Reference:32
52. / What activity is defined as acquiring information, using it in the most effective way, and discarding it at the proper time?
  1. Strategic management
  2. Tactical management
  3. Information management
  4. Operational management
Answer:cPage Reference:32
53. / Which of the following is not one of the four basic dimensions of information?
  1. Efficiency
  2. Relevancy
  3. Accuracy
  4. Timeliness
Answer:aPage Reference:32
54. / When information pertains to the problem at hand, which dimension of information is in use?
  1. Accuracy
  2. Timeliness
  3. Relevancy
  4. Completeness
Answer:cPage Reference:32
55. / When information presents a complete picture of a problem, which dimension of information is in use?
  1. Relevancy
  2. Accuracy
  3. Timeliness
  4. Completeness
Answer:dPage Reference:33
56. / What is the most important tool for knowledge management?
  1. Learning the technology
  2. Training
  3. Learning the business’ functional areas
  4. Retrieving information from the system
Answer:bPage Reference:34
57. / Which of the following is not good advice for a CIO to follow?
  1. Spend time with the business and in business training.
  2. Build partnerships with business units and line management.
  3. Teach new technology to the line managers.
  4. Explain IS costs in business terms.
Answer:cPage Reference:35
58. / Which of the following is not included in a SPIR?
  1. Executive summary
  2. Goals of the information services unit
  3. Itemized budget
  4. Summarized work plan
Answer:cPage Reference:36
59. / When a “hands-off” strategy where the parent allows the subsidiaries to develop their own products and practices exists, it is referred to as a:
  1. centralized control strategy.
  2. decentralized control strategy.
  3. distributed control strategy.
  4. centralized expertise strategy.
Answer:bPage Reference:39
60. / When expertise flows to the subsidiaries and financial information flows to the parent, it is referred to as a:
  1. centralized control strategy.
  2. distributed expertise strategy.
  3. centralized expertise strategy.
  4. decentralized control strategy.
Answer:cPage Reference:40

Essay Questions

61. / Explain Porter’s strategy for firms attempting to gain a competitive advantage.
Answer:A firm achieves competitive advantage by creating a value chain that consists of primary and support activities that contribute to margin. Margin is the objective of the chain. Firms create value by performing value activities. The primary activities include inbound logistics, the firm’s operations, outbound logistics, marketing and sales operations, and service activities. The firm’s support activities include the firm’s infrastructure. Each activity contains purchased inputs, human resources, and technology. Finally, each activity uses and creates information. Page Reference: 28
62. / What are the advantages that accrue to the MNC because of good information processing capabilities and the ability to coordinate?
Answer:Flexibility in responding to competitors in different countries and markets. The ability to respond in one country to a change in another. The ability to keep abreast of market needs worldwide. The ability to transfer knowledge between units in different countries. Reduction in the overall operating costs. Increased efficiency and effectiveness in meeting customer needs, and the ability to achieve and maintain diversity in the firm’s products, and in their production and distribution. Page Reference: 32
63. / Explain the four basic dimensions of information.
Answer:The four basic dimensions of information include relevancy, accuracy, timeliness, and completeness. Information has relevancy when it pertains to the problem at hand. The degree of accuracy depends on the level of accuracy needed. Applications involving money require 100% accuracy, but long-range economic forecasts do not need to be 100% accurate. For information to be timely it must be available for solving a problem before a crisis develops or before opportunities are lost. The user should be able to obtain information that presents a complete picture of a problem or solution, but should not be drowned in a sea of information. Page Reference: 32-33
64. / What advice should a CIO take so he/she can position information services as a vital element to the firm?
Answer:Spend time with the business so he/she can learn the business. Build partnerships with the business units and line managers. Focus on improving business processes. Explain IS costs in business terms. Build credibility by delivering reliable IS services. And lastly, be open to ideas from outside the information systems area. Page Reference: 35
65. / Briefly discuss the four basic strategies that MNCs can follow for using information to coordinate the activities of the parent company and the subsidiaries.
Answer:The decentralized control strategy is the oldest strategy and was a “hands-off” strategy where the parent allowed the subsidiaries to develop their own products and practices. The centralized control strategy localizes control within the parent. The firm seeks to meet the needs of its worldwide customers with standardized products. The centralized expertise strategy blends the centralized and decentralized control strategies wherein expertise flows to the subsidiaries and financial information flows to the parent. The final is the centralized control and distributed expertise strategy where the parent and all of the subsidiaries work together to formulate strategies and operating policies and also coordinate the logistics of moving the products to the correct markets. Page Reference: 39-42