Chapter 3 MCQ

Chapter 3

Information Systems, Organizations, Management, and and Strategy

3-1

Chapter 3 Information Systems, Organizations, Management, and Strategy True-False Questions 1.

The interaction between information technology and organizations is simple and is not influenced by other mediating factors. Answer: False

2.

p. 72

Difficulty:

Easy

Reference:

p. 73

Difficulty:

Medium

Reference:

p. 73

Difficulty:

Medium

Reference:

p. 74

Difficulty:

Easy

Reference:

p. 74

Difficulty:

Easy

Reference:

p. 75

Reference:

p. 75

Organizations Organizations that survive over time become bec ome less efficient. Answer: False

9.

Reference:

Standard operating procedures procedures are precise rules, procedures, and practices that have bee n developed to cope with virtually all expected situations. Answer: True

8.

Easy

Peter Drucker was the first person to describe the “ideal -typical” characteristics of an organization. Answer: False

7.

Difficulty:

The technical and behavioral definitions of organizations organizations are ar e contradictory. Answer: False

6.

p. 72

Organizations Organizations are social structures. Answer: True

5.

Reference:

An organization is less stable than an informal group in ter ms of longevity and routines. Answer: False

4.

Easy

E-mail and instant messaging have become a dominant for m of business communication. communication. Answer: True

3.

Difficulty:

Difficulty:

Medium

Organizational Organizational culture restrains political conflict a nd promotes common understanding, understanding, agreement on procedures, and common practices. Answer: True

Difficulty:

Easy

Reference:

p. 76

3-2

Information Systems, Organizations, Management, and Strategy

10.

Organizations generally have more features in common with each other than they have unique features. Answer: False

11.

Difficulty:

Medium

Reference:

p. 80

Difficulty:

Medium

Reference:

p. 82

Difficulty:

Easy

Reference:

p. 83

Difficulty:

Easy

Reference:

p. 84

Difficulty:

Easy

Reference:

p. 85

Difficulty:

Easy

Reference:

p. 86

Difficulty:

Easy

Reference:

p. 86

Mintzberg has defined the five modern attributes of managerial behavior. Answer: False

20.

p. 80

Managers do not behave as the classical model of management has led us to believe. Answer: True

19.

Reference:

The classical model of management is still popular today. Answer: True

18.

Easy

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: True

17.

Difficulty:

Micromarketing can help companies pinpoint tiny target markets for finely customized products and services. Answer: True

16.

p. 78

In virtual organizations, work is tied to geographic location. Answer: False

15.

Reference:

By reducing overall management c osts, information technology enables firms to increase revenues while shrinking the number of middle managers and clerical workers. Answer: True

14.

Easy

The role of the CFO is a senior management position that oversees the use of information technology in a firm. Answer: False

13.

Difficulty:

It is the systems s ystems analysts job to translate b usiness problems and requirements into information requirements requirements and systems. Answer: True

12.

Chapter 3

Difficulty:

Hard

Reference:

p. 87

Information systems provide only limited assistance for management decision making. Answer: True

Difficulty:

Easy

Reference:

p. 88

Chapter 3

21.


The rational model of human behavior is built on the idea that people engage in basically consistent, rational, value-maximizing calculations. Answer: True

22.

p. 88

Difficulty:

Easy

Reference:

p. 89

Difficulty:

Easy

Reference:

p. 89

Difficulty:

Easy

Reference:

p. 89

Difficulty:

Medium

Reference:

p. 91

Difficulty:

Medium

Reference:

p. 91

Difficulty:

Medium

Reference:

p. 91

Many of information technology-based products and services were developed originally by financial institutions. Answer: True

30.

Reference:

Digitally enabled networks can be used not only to purchase supplies but also to closely coordinate production of many independent firms. Answer: True

29.

Easy

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: True

28.

Difficulty:

The value chain model classifies all company activities as either primary or s upport. Answer: True

27.

p. 88

If an information system is not built with a c lear 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: True

26.

Reference:

According to bureaucratic models of decision making an organization’s most important goal is the preservation of the organization. Answer: True

25.

Easy

Understanding the environment in which an organization must function is not relevant when building a new information system. Answer: False

24.

Difficulty:

People tend to choose the first available alternative that moves them toward the ultimate goal, not necessarily the alternative that is best. Answer: True

23.

3-3

Difficulty:

Easy

Reference:

p. 93

One way an organization can increase profitability and market penetration is to mine existing data. Answer: True

Difficulty:

Easy

Reference:

p. 94

3-4


31.

The just-in-time supply method allows stockless inventory. Answer: False

32.

p. 96

Difficulty:

Easy

Reference:

p. 97

Difficulty:

Hard

Reference:

p. 99

Difficulty:

Easy

Reference:

p. 99

Difficulty:

Easy

Reference:

p. 99

Difficulty:

Medium

Reference:

p. 100

Difficulty:

Medium

Reference:

p. 101

The more people that use Microsoft Office software a nd related products, the greater its value. Answer: False

40.

Reference:

The law of diminishing returns always applies to digital, as well as traditional companies. Answer: False

39.

Easy

Business ecosystems typically have one or a few keystone firms that dominate the ecosystem and create the platforms used by other niche firms. Answer: True

38.

Difficulty:

Customers are one of the c ompetitive forces that affect a n organization’s ability to compete. Answer: True

37.

p. 96

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: True

36.

Reference:

The competitive forces model was created for today’s digital firm. Answer: False

35.

Hard

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: True

34.

Difficulty:

Supply chain management and efficient customer r esponse systems allow digital firms to engage in business strategies not available to traditional firms. Answer: True

33.

Chapter 3

Difficulty:

Medium

Reference:

p. 102

The competitive advantages strategic systems confer usually last long enough to ensure longterm profitability. Answer: False

Difficulty:

Easy

Reference:

p. 103

Chapter 3


3-5

Multiple-Choice Questions 41.

The interaction between information technology and organizations is very c omplex and is influenced by a great many mediating factors, including the organization structure, business processes, politics, culture, management decisions and: a. b. c. d.

the surrounding environment. the economic basis of the company. the availability of trained employees. the cash flow within the company.

Answer:

42.

Easy

Reference:

p. 72

micro system. organization. bureaucracy. value chain.

Answer:

b

Difficulty:

Easy

Reference:

p. 73

_____________________ are common features of all organizations. a. b. c. d.

Culture, routines, and politics Power, technology, and business processes Formal structure, politics, and goals Formal structure, function, and environments

Answer:

44.

Difficulty:

A stable, formal social structure that takes resources from the environment and processes them to produce outputs is called a(n): a. b. c. d.

43.

a

a

Difficulty:

Hard

Reference:

p. 74

The behavioral view of organizations emphasizes group relationships and ____________. a. b. c. d.

values abstract rules and procedures structures Both a and c

Answer:

d

Difficulty:

Medium

Reference:

p. 74

3-6


45.

In 1911, this German sociologist called organizations bureaucracies: a. b. c. d.

Max Webber Franz Kafka Anne Frank Paul Gerhardt

Answer:

46.

Medium

Reference:

p. 74

b

Difficulty:

Easy

Reference: pp. 75-76

Routines for producing goods and services are sometimes called: a. b. c. d.

bureaucratic structures. standard operating procedures. routine tasks. formal structures.

Answer:

b

Difficulty:

Medium

Reference:

p. 75

Collections of routines for producing goods and services are referred to as: a. b. c. d.

business processes. work with routine tasks. standard reporting procedures. mediating factors.

Answer:

49.

Difficulty:

doomed to failure. going to elicit serious political opposition. going to require a CIO. unnecessary.

Answer:

48.

a

Virtually all information systems that bring about significant changes in goals, procedures, productivity, and personnel are: a. b. c. d.

47.

Chapter 3

a

Difficulty:

Medium

Reference:

p. 75

The greatest difficulty of bringing about organizational change – especially the development of new information systems is: a. b. c. d.

computerizing manual systems. recruiting qualified employees. political resistance. perceiving environmental change.

Answer:

c

Difficulty:

Medium

Reference:

p. 76

Chapter 3

50.


Fundamental assumptions about what products the organization should produce, how it should produce them, where, and for whom is known as: a. b. c. d.

motivational factors. organizational culture. business processes. standard operating procedures.

Answer:

51.

Medium

Reference:

p. 76

a

Difficulty:

Easy

Reference:

p. 76

According to Mintzberg, a ______________________ is an example of a professional bureaucracy structure. a. b. c. d.

midsize manufacturing firm law firm or school system consulting firm small start-up business

Answer:

b

Difficulty:

Easy

Reference:

p. 77

According to Mintzberg, a ______________________ is an example of a divisionalized bureaucracy structure. a. b. c. d.

midsize manufacturing firm law firm or school system small start-up business very large established company

Answer:

54.

Difficulty:

five six seven eight

Answer:

53.

b

Mintzberg classifies ______________________basic kinds of organizational structures. a. b. c. d.

52.

3-7

d

Difficulty:

Easy

Reference:

p. 77

Only ______________________ percent of the Fortune 500 companies of 1919 still exist today. a. b. c. d.

10 20 30 40

Answer:

a

Difficulty:

Hard

Reference:

p. 77

3-8


55.

These information specialists constitute the principal liaisons between the information systems groups and the rest of the organization: a. b. c. d.

systems analysts. programmers. end users. Web-page developers.

Answer:

56.

a

Difficulty:

Easy

Reference:

p. 80

The role of ______________________ is a senior management position that oversees the use of information technology in the firm. a. b. c. d.

CTO CFO CIO CEO

Answer:

57.

Chapter 3

c

Difficulty:

Easy

Reference:

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:

58.

Difficulty:

Easy

Reference:

p. 80

______________________ are representatives of departments outside of the information systems group for whom applications are developed. a. b. c. d.

End users Programmers Analysts IS managers

Answer:

59.

c

a

Difficulty:

Easy

Reference:

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. b. c. d.

behavioral; transaction economic; behavioral economic; agency agency; behavioral

Answer:

b

Difficulty:

Hard

Reference:

p. 81

Chapter 3

60.


__________________________organizations use networks to link people, assets, and ideas. Work is no longer tied to geographic location. a. b. c. d.

Hierarchical Vertical Virtual Manufacturing

Answer:

61.

Easy

Reference:

p. 83

a

Difficulty:

Easy

Reference:

p. 84

Managers as planners, organizers, c oordinators, decision makers, and controllers describe the principles of the: a. b. c. d.

classical model of management. interpersonal model of management. transactional model of management. virtual organization.

Answer:

a

Difficulty:

Medium

Reference:

p. 86

For the manager, no technological support systems exist for the managerial roles of: a. b. c. d.

liaison or negotiator. spokesperson or resource allocator. entrepreneur or nerve center. figurehead or disturbance handler.

Answer:

64.

Difficulty:

Mass customization Size customization Magnitude customization Dimension customization

Answer:

63.

c

__________________________is the ability to offer individually tailored products or services using the same production resources as bulk production. a. b. c. d.

62.

3-9

d

Difficulty:

Hard

Reference:

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:

d

Difficulty:

Easy

Reference:

p. 87

3-10


65.

Chapter 3

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:

66.

Easy

Reference:

p. 87

hierarchical rational model choice model decisional model

Answer:

b

Difficulty:

Easy

Reference:

p. 88

At the business level the most common analytical tool for identifying opportunities for strategic systems is: a. b. c. d.

DSS. the value web. ESS. value chain analysis.

Answer:

68.

Difficulty:

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. b. c. d.

67.

b

d

Difficulty:

Medium

Reference:

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:

c

Difficulty:

Medium

Reference:

p. 91

Chapter 3

69.


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:

70.

Medium

Reference:

p. 93

c

Difficulty:

Easy

Reference:

p. 94

Reference:

p. 96

Which of the following is most likely to raise switching costs: a. b. c. d.

just-in-time supply method. stockless inventory method traditional delivery method vendor-supported supply method

Answer:

b

Difficulty:

Medium

When the output of some units can be used as inputs to other units, or if two organizations pool markets and expertise that res ult in lower costs and generate profits it is often referred to as creating: a. b. c. d.

digital strategies. switching costs. synergies. low-cost producer strategies.

Answer:

73.

Difficulty:

three six five seven

Answer:

72.

b

The cost of acquiring a new customer has been estimated to be _____________ times that of retaining an existing customer. a. b. c. d.

71.

3-11

c

Difficulty:

Easy

Reference:

p. 97

Which of the following is not an example of firm-level strategy: a. b. c. d.

an information system integrating the operations of a company and its subsidiaries an information system for knowledge-sharing an information system for cross-marketing among a firm and its subsidiaries an information system enabling a firm and its suppliers to share order status data

Answer:

d

Difficulty:

Medium

Reference:

p. 97

3-12


74.

An information system can enhance core competencies by: a. b. c. d.

providing better reporting facilities. creating educational opportunities for management. allowing operational employees to interact with management. encouraging the sharing of knowledge across business units.

Answer:

75.

Medium

Reference:

p. 98

b

Difficulty:

Medium

Reference:

p. 99

___________ is determined by the nature of the players in an industry and their relative bargaining power. a. b. c. d.

Industry structure Industry opportunities Industry threats Industry power

Answer:

a

Difficulty:

Easy

Reference:

p. 99

Which of the following is not one of the competitive forces: a. b. c. d.

suppliers. other competitors. external environment customers.

Answer:

78.

Difficulty:

network economics competitive forces strategic transitions environmental conditions

Answer:

77.

d

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. b. c. d.

76.

Chapter 3

c

Difficulty:

Medium

Reference:

p. 99

This traditional model assumes a relatively static industry environment, relatively clearcut industry boundaries, and a relatively stable set of suppliers, substitutes, and customers, with a focus on industry players in a market environment: a. b. c. d.

Porter’s competitive forces model. Porter’s value chain model. Porter’s model of diminishing returns. Porter’s generic strategy model.

Answer:

a

Difficulty:

Easy

Reference:

p. 100

Chapter 3

79.


Another term for loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers is: a. b. c. d.

Keystone firm. Niche firm. business portal. business ecosystem.

Answer:

80.

3-13

d

Difficulty: Easy

Reference:

p. 100

The more any given resource is a pplied 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. b. c. d.

the point of no return. the law of diminishing returns. supply and demand. inelasticity.

Answer:

b

Difficulty: Easy

Reference:

p. 101

Fill In the Blanks 81.

A(n) organization, by technical definition, is a stable, formal, social structure taking

resources from the environment and processing them to produce outputs. Difficulty: Easy

82.

Reference:

p. 74

Max Weber was the first to describe the “ideal -typical” characteristics of organizations in 1911. Difficulty: Easy

84.

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: Easy

83.

Reference:

Reference:

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: Medium

Reference:

p. 74

3-14


85.

Routines are the precise rules, methods, and practices developed by organizations to cope with virtually all expected situations. Difficulty: Easy

86.

Reference:

p. 80

Reference:

p. 80

Reference:

p. 80

Reference:

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: Medium

93.

p. 77

A(n) end user is a representative of the department outside the information systems group for whom applications are developed. Difficulty: Easy

92.

Reference:

A(n) chief information officer is the senior manager in charge of the information systems function in the firm. Difficulty: Easy

91.

p. 76

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: Easy

90.

Reference:

A(n) programmer is a highly trained technical specialist who writes computer software instructions. Difficulty: Easy

89.

p. 75

The examination by management of the external changes that might require a n organizational response is called environmental scanning. Difficulty: Hard

88.

Reference:

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: Medium

87.

Chapter 3

Reference:

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: Hard

Reference:

p. 81

Chapter 3

94.


The agency theory views the firm as a nexus of contracts a mong self-interested individuals who must be supervised and managed. Difficulty: Medium

95.

p. 83

Reference:

p. 84

Reference:

p. 84

A(n) behavioral model is a description of management based on beha vioral scientists’ observation of what managers actually do in their jobs. Difficulty: Easy

99.

Reference:

Information systems inevitably become bound up with organizational politics because they influence access to information. Difficulty: Easy

98.

p. 81

Mass customization is the ability to offer individually tailored products and services using the same production resources as mass production. Difficulty: Easy

97.

Reference:

A(n) virtual organization uses networks to link people, a ssets, and ideas to create and distribute products and services without being limited to t raditional organizational boundaries or physical locations. Difficulty: Easy

96.

3-15

Reference:

p. 87

A(n) managerial role is the expectation of the activities that a manager will perform in a n organization. Difficulty: Medium

Reference:

p. 87

100. A manager presenting employees with awards for high performance would be performing a(n) interpersonal role. . Difficulty: Medium

Reference:

p. 87

101. The rational model of human behavior is built on the idea that people engage in basically consistent, rational, value-maximizing calculations. Difficulty: Easy

Reference:

p. 88

102. Organizational models of decision making take into account the str ucture and political characteristics of an organization. Difficulty: Medium

Reference:

p. 89

103. In the bureaucratic model of decision making an organization’s most important goal is the preservation of the organization. Difficulty: Hard

Reference:

p. 89

3-16


Chapter 3

104. In political models of decision making, what an organization does is a result of bargains struck among key leaders and interest groups. Difficulty: Medium

Reference:

p. 89

105. The value chain 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. Difficulty: Medium

Reference:

p. 91

106. A(n) primary activity is one that is directly related to the production and distribution of a firm’s products or services. Difficulty: Easy

Reference:

p. 91

107. A(n) support activity is a part of the organization’s infrastructure, human resources, technology, and procurement that makes the delivery of the firm’s products or services possible. Difficulty: Medium

Reference:

p. 91

108. The value web is the customer-driven network of independent firms that use information technology to coordinate their value chains to collectively produce a product or service for a market. Difficulty: Hard

Reference:

p. 91

109. Product differentiation is a competitive strategy for creating brand l oyalty by developing new and unique products and services that are not easily duplicated by competitors. Difficulty: Easy

Reference:

p. 93

110. Focused differentiation is a competitive strategy for developing new market niches for specialized products or services where a business can compete in t he target area better than its competitors. Difficulty: Easy

Reference:

p. 93

111. Switching costs are 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. Difficulty: Medium

Reference:

p. 96

112. A(n) core competency is an activity at which a firm excels as a world-class leader. Difficulty: Medium

Reference:

p. 97

Chapter 3


3-17

113. A(n) information partnership is a cooperative alliance formed between two or more corporations for the purpose of sharing information to gain strategic advantage. Difficulty: Medium

Reference:

p. 98

114. Porter’s competitive forces model illustrates that a firm faces a number of external threats and opportunities. Difficulty: Medium

Reference:

p. 99

115. The Internet can lower transaction and agency costs. Difficulty: Medium Reference:

p. 99

116. American Airlines awarding a mile in its frequent flier program for every dollar a customer spends on MCI long-distance telephone calls is an example of a(n) information partnership. Difficulty: Medium

Reference:

p. 99

117. A(n) business ecosystem is a term used to describe loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers. Difficulty: Medium

Reference:

p. 100

118. According to the law of diminishing returns 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 outputs. Difficulty: Medium

Reference:

p. 101

119. The Internet can make competitive advantage disappear very quickly because virtually all companies can use this technology. Difficulty: Medium

Reference:

p. 103

120. Sociotechnical changes that affect b oth social and technical elements of an organization, can be considered strategic transitions – a movement between levels of sociotechnical systems. Difficulty: Medium

Reference:

p. 104

3-18


Chapter 3

Essay Questions 121.

Distinguish between the behavioral definition of an organization and the technical definition.

The technical definition of an organization is that it is a stable, formal, social structure that takes resources from the environment and processes them to produce outputs. The behavioral definition of an organization is that it is a collection of rights, privileges, obligations, and responsibilities delicately balanced over time through conflict and c onflict resolution. 122.

List at least four of the six structural characteristics of all organizations. Which two of these do you think are most important to the digital firm as opposed to the traditional firm? As always, support your answer.

The six characteristics are: a clear di vision of labor, hierarchy, explicit rules and procedures, impartial judgments, technical qualifications for positions, and maximum organizational efficiency. Hierarchy and efficiency are probably the most affected by the digital firm. 123.

From an economic standpoint, information system technology can be viewed as a factor production that can be freely substituted for capital and labor." What is the meaning of this sentence, and how does it change the traditional managerial perspective?

There are, of course, several possible answers. One of them could be: Traditionally, labor has been a rising cost. Information technology, by providing better data, reporting, and speed of dissemination of information, makes it possible for individual middle managers to have a wider span of control. This means that fewer middle managers and fewer clerical workers are needed, which reduces costs. This in turn results in a flatter, more open, organization. Information technology also provides more precise and accurate information for running the organization, with the potential of reducing unnecessary work and increasing efficiency.

Chapter 3

124.


3-19

Distinguish between the transaction cost theory of the impact of information technology on the organization and the agency cost theory of the impact of information technology on the organization. Are these theories contradictory or complementary? Support your answer.

The transaction costs theory says the firms traditionally grew in size in order to reduce transaction costs. Information technology potentially reduces the cost for growing size, shifting the transaction costs that occur inward, opening up the possibility of revenue growth without increasing size, where even revenue growth is accompanied by shrinking size. The agency cost theory says that as firms grow i n size and complexity, traditionally they experience rising agency costs. Information technology shifts the a gency costs curve down to the right, allowing firms to increase size while lowering agency costs. One answer might be that the two the ories are complementary in that each is concerned with the relationship between company size and cost, and each one makes the point that the use of information technology allows the company (through its managers) to do more with less expenditure. However, the success of the transaction cost theory is measured in the need for fewer employees, while the agency cost theory measures success in that the c ompany can increase its size at the same time it lowers costs. 125.

Discuss the impact of the Internet on the competitive forces model .

The traditional competitive forces are still at work, but the Internet has made competitive rivalry much more intense. Internet technology is based on universal standards that any company can use, making it easy for rivals to compete on price alone and for new competitors to enter the market. E asy access to information on the Internet raises the bargaining power of customers, who can qu ickly find the lowestcost provider on the Web, lowering profits. At the same time, the Internet creates new opportunities for building brands and building ver y large and loyal customer bases that are willing to pay a premium for the brand. The traditional Porter model assumes a relatively static industry environment; relatively clear-cut industry boundaries; and a relatively stable set of suppliers, substitutes, and customers, with the focus on industry players in a market en vironment. Instead of participating in a single industry, some of today’s firms participate in industry sets and business ecosystems that — collections of industries that provide related services and products.

3-20


126.

Chapter 3

Your text lists five attributes of managerial behavior that differ greatly from t he classical description. What are these five attributes, and how do they differ from the classical description?

The five attributes are: managers perform a great deal of work at an unrelenting pace, managerial activities are fragmented, managers prefer speculation, hearsay, and gossip – ad hoc information – because printed information is often too old, managers prefer oral forms of communication to written forms because oral media provide greater flexibility, require less effort, and bring a faster response, and finally, managers give high priority to maintaining a diverse and complex web of contacts that acts as an informal information system and helps them execute their personal agendas and short- a nd long-term goals. • • •

•

•

The classical model of management describes managers as planners, organizers, coordinators, decision makers, and controllers. The impression left in the mind of the student is one of reserved dignity, wisdom, and tremendous self-control. (This might be termed "manager as father figure.") Behavioral models state that the actual behavior of managers appears to be less systematic, more informal, less re flective, more reactive, less well organized, and much more frivolous than a classical model of management would indicate (and this might be termed "manager as elder brother"). 127.

Managerial roles are expectations of the activities that managers should perform in an organization. Mintzberg found that these managerial roles fell into three categories. List and discuss these three categories. •

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Interpersonal roles – managers act as figureheads for the organization when they represent their companies to the outside world and perform symbolic duties. Managers act as leaders, attempting to motivate, counsel, and support subordinates. Managers also act as liaisons between various organizational levels; within each of these levels, they serve as liaisons among the members of the management team. Managers provide time and favors, which they expect to be returned. Informational roles – managers act as the nerve centers of their organizations, receiving the most concrete, up-to-date information and redistributing it to those who need to be aware of it. Managers are therefore information disseminators and spokespersons for their organizations. Decisional roles – managers make decisions. They act as entrepreneurs by initiating new kinds of activities; they handle disturbances arising in the organization; they allocate resources to staff members who need them; and they negotiate conflicts and mediate between conflicting groups in the organization.

Chapter 3

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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 how the model can be applied to the concept of information technology.

The value chain model identifies specific, critical leverage points where a firm ca n 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 tra ining, technology (improving products and the production process), a nd procurement (purchasing input). •

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List at least four of the six central organizational factors to consider when planning a new information system. • •

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The environment in which the organization must function. The structure of the organization: hierarchy, specialization, and standard operating procedures. The organization’s culture and politics. The type of organization and its style of lea dership. The principal interest groups affected by the system and the attitudes of workers who will be using the system. The kinds of tasks, decisions, and business processes that the information system is designed to assist.

At the business level, what are the three most common competitive strategies? What new capabilities for supporting business level strategy do digital firms provide?

The strategies are: Become the below-cost producer. Differentiate your product or service. Change the scope of competition by either enlarging the market to include global markets or narrowing the market by focusing on a small niche not well served by your competitors. • • •

The capabilities provided by digital firms are: Managing the supply chain. Building efficient customer sense and response systems. Participation in value webs to deliver new products and services to market. • • •

Chapter 3 MCQ

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