CPS 603 Sample Exam 1 (Chapters 1 – 7)



CPS 603 Sample Exam 1 (Chapters 1 – 7)

The exam will consist of 10 short-answer questions. These questions will be taken from, or motivated by the following problems. Sample solutions appear below.

1) Identify four problems endemic to the traditional file environment.

2) Define total cost of ownership. Identify nine important cost components.

3) Discuss the various types of personnel required by a technology infrastructure and its attendant information technology services.

4) Identify and briefly describe the five moral dimensions raised by information systems.

5) List three ways in which all organizations are alike.

6) What is a supply chain? What is a supply chain management system?

7) Identify the three main categories of information systems in relation to the groups they serve and the functional areas in which they operate. Which do you believe is most difficult to implement? Why?

8) Describe and discuss the four stages of decision making as outlined by Simon. How does each relate to the use of information systems?

9) "With the Internet, the traditional business model is no longer valid." Describe the traditional business model and how the new business models differ. Do you agree, or disagree with the statement given here? Support your argument.

10) List the four technology trends given by the authors of your text that raise ethical issues. Give an example of an ethical or moral impact connected to each one.

11) Briefly describe Mintzberg's classification of organizations. Provide an example of each.

12) Define each of the following pairs of terms, distinguishing between the members of each pair. Logical view and physical view; data definition language and data manipulation language; data dictionary and data element.

13) Discuss the hierarchical organization of data in a typical database.

14) Identify the five step process for analyzing an ethical issue.

15) What is computer forensics? What problems does it deal with?

16) What are the five areas a corporate code of ethics should address? Give at least three examples of items that must be covered in each area.

17) Discuss the issue of organizational change, especially changes in power arrangements, which can occur when an organization institutes an organization-wide DBMS.

18) Channel conflicts can be a threat to the success of an electronic business. What is this problem, and how do you think it might be solved? Support your conclusions.

19) What is "profiling"? What are the advantages and disadvantages of its use? How does the use of profiling relate to ethics?

20) A moral and ethical issue raised by the information age is the collection and use of information about individuals, i.e. privacy concerns. What aspect of this information collection do you find most alarming?

21) List and define at least five of the new Internet business models discussed in the textbook. Which do you think will prove to be most profitable in the long run? Support your position.

22) Define and distinguish between the basic concepts of responsibility, accountability, and liability as applied to ethical decisions.

23) Briefly describe four forms of global business organization.

24) List and describe the components of the CPU.

25) What is a customer relationship management system? What are the advantages to using a customer relationship management system?

26) Define and contrast the two models of managerial behavior. Which do you think is most useful in the workplace? Why?

27) What is meant by the term "normalization"? Why are some effective DBMS systems not completely normalized?

28) How does management use information systems to support the sales and marketing function of a business? How do these systems make the manager more effective in this area than paper-and-pencil systems?

29) Though there are few truly digital firms extant today, there is an emerging sense of what is required to create one. List and discuss at least three of the ways in which a digital firm is different from a traditional one, using an existing company you consider close to being a fully-digital firm as an example.

30) Define and describe data warehouses, data marts, and datamining. What is the major concern connected with the use of these tools?

31) What is collaborative commerce? Identify three advantages of collaborative commerce.

32) Distinguish between private industrial network and enterprise system.

33) Identify and briefly describe five categories of computers.

34) Define and describe OLAP and its potential uses.

35) Define and differentiate among Java, HTML, and XML.

36) List and describe at least three health risks that arise from the use of computer.

37) Discuss the term "disintermediation" as it applies to business models affected by the Internet and the Web. Give examples from your reading.

38) While it is obvious that there are some things common to all organizational structures, there are more differences and unique features than similarities. List and discuss at least six features that are unique to each organization.

39) List at least five examples of electronic payment systems.

40) Discuss the uses of Internet technology in the human resources environment.

41) Briefly identify and discuss four powerful worldwide changes that have altered the business environment.

42) What must a manager be prepared to understand and deal with in working with information systems that a technician may not need to know?

43) While globalization and information technology are exciting, they are also carriers of threats to existing economies and businesses. List and discuss at least two of the difficulties brought about by this new environment.

44) What is an information system?

45) Discuss the ability of the Web site owner to increase personalization of the site to his customers and the advantages this brings to the business.

46) Describe the three basic operations of the relational database.

47) Identify five challenges information systems pose for management. For each challenge, identify at least one question that must be answered.

48) How has the Internet made possible the swift rise of electronic commerce?

49) What is a strategic information system? In what ways can these systems be used differently at the business level, the firm level, and the industry level?

50) In what ways has electronic commerce changed the relationship between buyer and seller?

51) List and describe the three categories of electronic commerce as defined by the participants in the transactions. Give an example of each one.

52) List and describe the six major components of a contemporary computer system.

53) List and define the four major types of information systems, and give at least two information outputs to be expected from each one.

54) Define and discuss the types of service providers that have arisen in the recent decades. Give an example of each one.

55) List and describe the four critical elements in a database environment.

56) Define and discuss the two definitions of "organization" discussed in your textbook. Why are both useful to management, and under which circumstances is each the better model for understanding the way the organization works?

57) What is a knowledge management system? Provide three examples.

58) Information systems affect organizations economically and behaviorally. Describe the ways in which each of these applies to an understanding of the working of the organization.

59) Discuss the interaction between management and the development of information systems within the company. What do you think is the single most important thing management must do to ensure the successful coordination of these systems with the organization?

60) How does the database approach to data management increase the efficiency and effectiveness of an organization?

61) What are complementary assets? Why are complementary asset investments important to a firm?

62) Define primary and secondary storage, how they differ, and the uses to which each is put.

63) What is a fourth-generation language? List the seven categories of fourth-generation languages with an example of each one.

64) Discuss the issue of centralized versus decentralized computer resources.

65) To be effective, an information system requires input from disciplines beyond the simply technical. Discuss the influence of at least three of these disciplines on the creation and maintenance of an effective information system.

66) What are software packages? List and describe at least three types of PC software packages, other than word processing and spreadsheets, used in modern business.

67) Discuss at least three ways in which the traditional business firm must change to meet the challenges of the new environment in which business is conducted.

68) Identify and briefly discuss the six candidate principles presented in the textbook.

69) Distinguish between MIS and DSS. Who within the organization is most likely to find each useful, and why?

70) What is meant by the term "optimal hierarchy?" How does this concept apply to the digital firm?

CPS 603 Sample Exam 1 -- Solutions

1) If each branch of the organization designs, manages, and keeps its own information, the problems of data redundancy, program-data dependence, inflexibility, poor data security, and inability to share data among applications will become apparent, and worsen, with time.

2) Total cost of ownership designates the total cost of owning technology resources. Important cost components include hardware acquisition, software acquisition, installation, training, support, maintenance, infrastructure, downtime, and space and energy.

3) The formal organizational unit is the information systems department, which is responsible for maintaining the hardware, software, and networks of the firm's IT infrastructure. The department consists of specialists, such as programmers, systems analysts, and information systems managers. Each of these is responsible for specific areas of the department's functions. Many companies also employ a senior manager in the role of chief information officer, to oversee the use of information technology throughout the firm. The end users are the representatives of departments outside the information systems group for whom the applications are developed.

4) 1. Information rights and obligations-What rights do individuals and organizations have with respect to information pertaining to themselves?

2. Property rights-How can intellectual property rights be protected when it is so easy to copy digital materials?

3. Accountability and control-Who will be held accountable and liable for the harm done to individual and collective information and property rights?

4. System quality-What standards of data and system quality should we demand to protect individual rights and the safety of society?

5. Quality of life-What values should be preserved? What institutions must we protect? What cultural values can be harmed?

5) They all have formal structure, standard operating procedures, politics, and culture-albeit not necessarily the same ones.

6) Supply chain refers to a network of organizations and business processes for procuring materials, transforming raw materials into intermediate and finished products, and distributing the finished products to customers. A supply chain management system automates the flow of information between a firm and its suppliers in order to optimize the planning, sourcing, manufacturing, and deliver of products and services.

7) The textbook identifies operational, management, and strategic as the three main categories of information systems. The operational level systems support operational managers; the management level systems support middle managers, and the strategic level systems support senior managers. These main system categories provide support across all functional areas, including sales and marketing, manufacturing and production, finance and accounting, and human resources.

8) Simon identified four stages, including intelligence, design, choice, and implementation. Intelligence involves identifying the problem and gathering information about it. Traditional MIS systems deliver a wide variety of detailed information, especially if they report exceptions. Design determines possible solutions to the problem. Smaller DSS systems are helpful here because they operate on simple models, can be developed quickly, and can be operated with limited data. Choice consists of choosing among the alternative solutions. A larger DSS system can develop more extensive data on a variety of alternatives. Implementation, when the chosen decision is put into effect, requires a system that can report on results. Large MIS systems and PC-run project-planning software are useful here.

9) In the traditional business model, information about products and services was tightly linked to the physical value chain for those products and services. If a consumer wanted to find out about the features, price, and availability of an item, that person had to visit a retail store that sold the product. The cost of comparison shopping was high because people had to travel from store to store.

Once everyone is connected electronically, information about products and services flows on its own, directly and instantly to consumers. Customers can find out about products on their own on the Web and buy directly from product suppliers instead of using intermediaries such as retail stores. This unbundling of information about the product from the product itself has created vast changes in the way business works by decreasing information asymmetry and tends to knock out the middleman and all the expenses ascribed thereto.

Further, using the Internet means that businesses no longer must choose between richness and reach in their information about clients, consumers, customers, and their needs and desires. This decreases the costs of internal operations, and makes it easier for management to coordinate more jobs and tasks. The time and distance factors are drastically reduced, improving accuracy and timeliness of customer service.

There are several advantages specific to the Internet, notably the uses of dynamic prices, the rise of virtual communities, and the uses of portals.

10) 1. Computing power doubles every 18 months. Ethical impact: Because more organizations depend on computer systems for critical operations, these systems are vulnerable to computer crime and computer abuse.

2. Data storage costs are declining rapidly. Ethical Impact: It is easy to maintain detailed databases on individuals. Who has access to and control of these databases?

3. Data analysis advances. Ethical impact: Vast databases full of individual information may be used to develop detailed profiles of individual behavior.

4. Networking advances and the Internet. Ethical impact: It is easy to copy data from one location to another. Who owns data? How can ownership be protected?

11) Entrepreneurial structure, machine bureaucracy, divisionalized bureaucracy, professional bureaucracy, and adhocracy are Mintzberg's five classifications. The entrepreneurial structure is a young, small firm in a fast-changing environment. Small start-up businesses fall within this category. The machine bureaucracy is a large bureaucracy existing in a slowly changing environment, producing standard products. An example is a mid-size manufacturing firm. A divisionalized bureaucracy is a combination of multiple machine bureaucracies, each producing a different product or service, all topped by one central headquarters. An example is a Fortune 500 firm. A professional bureaucracy is a knowledge-based organization where goods and services depend on the expertise and knowledge of professionals. An example is a law firm. An adhocracy is a "task force" organization that must respond to rapidly-changing environments. An example is a consulting firm.

12) The logical view of the database is the representation of data, as they would appear to an application programmer or end user. The physical view of the data is the representation of data, as they would actually be placed on the physical storage media.

The data definition language is that component of a database management system that defines each data element as it appears in the database. The data manipulation language is the language associated with a DBMS that end users and programmers use to query the data in the database. SQL is the standard for relational DBMS.

The data dictionary is an automated or manual file that stores the descriptions of data elements and their characteristics, such as usage, physical representation, ownership, authorization, and security. A data element represents the field itself, with its name, the names that reference this element in specific systems. The individuals, business functions, programs, and reports that use this data element are also identified.

13) A bit is a one (1) or a zero (0), the smallest unit of data a computer can handle. Eight bits compose a byte, which normally stands for one character or letter. Characters make up fields, which are named groupings of characters. A group of related fields creates a record, each of which describes one entity. A group of related records composes a file. Groups of related files compose a database. Each record must contain one field, called the key, which uniquely identifies that particular entity in the file. Linking fields that occur in both files through the key field of one of the files to the same field data in the second file can relate entities file-to-file.

14) 1. Identify and describe clearly the facts.

2. Define the conflict or dilemma and identify the higher-order values involved.

3. Identify the stakeholders.

4. Identify the options you can reasonably take.

5. Identify the potential consequences of your options.

15) Computer forensics is the scientific collection, examination, authentication, preservation, and analysis of data held on or retrieved from computer storage media in such a way that the information can be used as evidence in a court of law. Problems include recovering data from computers while preserving evidential integrity, securely storing and handling recovered electronic data, finding significant information in a large volume of electronic data, and presenting the information to a court of law.

16) The five areas include information rights and obligations, property rights and obligations, system quality, quality of life, and accountability and control.

Information rights and obligation examples include employee e-mail and Internet privacy, workplace monitoring, treatment of corporate information, and policies on customer information. Property rights and obligation examples include software licenses, ownership of firm data and facilities, ownership of software created by employees on company hardware, and software copyrights. When considering accountability and control, the code should specify a single individual responsible for all information systems, and reporting to this individual should be others who are responsible for individual rights. Additional examples include the protection of property rights, system quality, and quality of life. In terms of system quality, the code should describe the general levels of data quality and system error that can be tolerated with detailed specifications left to specific projects. All systems must attempt to estimate data quality and system error probabilities. Quality of life examples include high levels of product quality, customer service, employee satisfaction and human dignity through proper ergonomics, job and work flow design, and human resource development.

17) Implementing a database requires widespread organizational change in the role of information (and information managers), the allocation of power at senior levels, the ownership and sharing of information, and patterns of organizational agreement. A DBMS challenges the existing power arrangements in an organization and for that reason often generates political resistance. In a traditional file environment, each department constructed files and programs to fulfill its specific needs. Now, with a database, files and programs must be built that take into account the full organization's interest in data. Although the organization has spent the money on hardware and software for a database environment, it may not reap the benefits it should because it is unwilling to make the requisite organizational changes.

18) Channel conflicts arise when the Internet is used to sell a product more cheaply than its distributors can. A company's sales force and other representatives might fear that their revenues will drop as customers make purchases directly, or that they will be displaced entirely. There are various ways in which companies try to deal with this. Some companies are paying full commissions to sales representatives for online sales made in their territory, and others are limiting their online presence to only a portion of their product line.

19) Profiling is the use of computers to combine data from multiple sources and create electronic dossiers of detailed information on individuals or groups. The advantages include creating behavioral profiles to help solve crimes and disease profiles in medical research. Disadvantages include social and political prejudices, as well as privacy issues.

20) There are many alarming aspects, among them the difficulty of protecting the data that is gathered from inappropriate uses, the ownership of personal data, and the line between public and private information and its uses. Foreseeable problems include the possibility of refusal of insurance to persons who have been tested and found to have certain diseases, the evils associated with national identity cards for everyone, racial profiling, and spamming based on personal purchasing choices.

21) Virtual storefront, information broker, transaction broker, online marketplace, content provider, online service provider, virtual community, and portal are the eight Internet business models presented in the textbook. A virtual storefront sells physical products directly to consumers. The information broker provides product, pricing, and availability information to individuals and businesses; it generates revenue from advertising and directing buyers to sellers. The transaction broker saves user money and time by processing (for a fee) online sales transactions; it provides information on rates and terms. The online marketplace provides a digital environment where buyers and sellers can meet to do business. The content provider creates revenue by providing digital content (information) to interested parties willing to pay for it or to advertise on the site. The online service provider provides online services for businesses and individuals; it generates revenue from subscription or transaction fees, advertising, or by collecting marketing information from/about users. A virtual community provides an online meeting place where people with similar interests can communicate and find useful information. A portal provides an initial point of entry to the Web along with specialized content and other services.

22) Responsibility is the first key element of ethical action. Responsibility means that an individual, group, or organization accepts the potential costs, duties, and obligations for decisions made. Accountability is a feature of systems and social institutions. It means that mechanisms are in place to determine who took responsible action; i.e., who is responsible for the action. Liability is a feature of political systems in which a body of law is in place that permits individuals to recover the damages done to them by others.

In one sentence, the three may be distinguished thus: I will assume the blame or benefit for the actions I take (responsibility); this blame or benefit accrues to me through the requirement that I be able to explain why I have taken the actions I have (accountability) for actions traceable to me by defined mechanisms in the organization, and if those actions result in harm to another, I will be held by law to reparations for those actions (liability).

23) Domestic exporter, multinational, franchiser, and transnational are the four forms mentioned in the textbook. The domestic exporter form is characterized by heavy centralization of corporate activities in the home country of origin. The multinational form concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries. The franchiser form creates, designs, finances, and initially produces a product in the home country, but for product-specific reasons relies heavily on foreign personnel for further production, marketing, and human resources. The transnational form has no national headquarters; value-added activities are managed from a global perspective without reference to national borders, optimizing sources of supply and demand and local competitive advantage.

24) The central processing unit has two components: an arithmetic logic unit and a control unit. The arithmetic logic unit adds, subtracts, multiplies, and divides, determining whether a number is positive, negative, or zero. It must also be able to determine when one quantity is greater than or less than another and when two quantities are equal. It can perform logic operations on letters, as well as numbers. The control unit coordinates and controls the other parts of the computer system. It reads a stored program, one instruction at a time, and directs other components of the computer system to perform the program's required tasks.

25) A customer relationship management system tracks all of the ways in which a company interacts with its customers and analyzes these interactions to optimize revenue profitability, customer satisfaction and customer retention. Advantages include the acquisition and retention of new customers, providing better service and support to existing customers, and the ability to customize offerings based on customer preference.

26) The classical model of management is focused on the formal functions of planning, organizing, coordinating, deciding, and controlling the actions of the firm. It describes the functions of managers, but does not describe how these functions are carried out. Behavioral models concentrate on observations of what managers actually do. The behavioral model offered by Mintzberg classifies ten managerial activities into three categories: interpersonal roles, informational roles, and decisional roles.

27) To use a relational database model effectively, complex groupings of data must be streamlined to eliminate redundant data elements and awkward many-to-many relationships. The process of creating small, stable data structures from complex groups of data is called "normalization". The objective is to set the data files up so that each item of data required by the DBMS need be entered only once, then pulled for multiple reports as required by the various applications. Many real-world databases are not fully normalized because this may not be the most sensible way to meet their business information requirements. In a case where each single part is always ordered from the same manufacturer, and each manufacturer is responsible only for the one part it provides, fully normalizing the database would require two separate files-one for the parts, another for the manufacturer-which in this case would not be efficient.

28) At the operational level, information systems record daily sales figures and processes orders. At the management level, information systems track monthly sales figures by sales territory and report on territories where sales exceed or fall below anticipated levels. At the strategic level, information systems forecast sales trends over a five-year period.

The most obvious advantage of information systems over paper-and-pencil systems is in the amount of time that is saved when sales and marketing information does not have to be manually-recorded, typed by a clerical worker, delivered by snail-mail or by hand, and manually filed and re-filed. Further, it is easier to correct errors than to ferret out errors in handwritten materials, or errors occurring when multiple carbons make reading difficult. The more paper-and-pencil entries are required before the material is entered into the computer system, the more chance for error exists. Further, paper-and-pencil materials must be filed and retrieved manually, and may be lost in the office melee. With an MIS, the information is available on the desktop, or retrievable on a laptop or distant computer. Using an MIS allows management to manipulate the data and retrieve information otherwise not available.

29) A digital firm is one where nearly all of the organization's significant business relationships with customers, suppliers, and employees are digitally enabled and mediated. Core business processes are accomplished through digital networks spanning the entire organization or linking multiple organizations. In a digital firm, any piece of information required to support key business decisions is available at any time and anywhere in the firm. Digital firms sense and respond to their environments far more rapidly than traditional firms, giving them more flexibility to survive in turbulent times. Digital firms offer extraordinary opportunities for more global organization and management. By digitally enabling and streamlining their work, digital firms have the potential to achieve unprecedented levels of profitability and competitiveness. Digital firms have a near total reliance on a set of information technologies to organize and manage their work. Information technology is the core of the business and the primary management tool.

30) Data warehouses are huge databases that store current and historical data extracted from various operational systems and consolidated for management reporting and analysis. A data mart is a small data warehouse containing only a portion of the organization's data for a specified function or population of users. Datamining is the manipulation and analysis of large pools of data to find patterns and rules that can be used to guide decision making and predict future behavior. The major concern connected with the use of these tools involves privacy concerns-should companies be allowed to collect such detailed information about individuals and their behavior?

31) Collaborative commerce is the use of digital technologies to enable multiple organizations to collaboratively design, develop, build, and manage products through their lifecycles. Efficiency, minimizing excess inventory, better forecasts, and enhanced communication with partners and customers are several advantages.

32) A private industrial network links systems of multiple firms in an industry for the coordination of transorganizational business processes. These Web-enabled networks provide a platform where systems from different companies can seamlessly exchange information and an infrastructure for collaborative commerce activities. They are often owned and managed by large companies who use them to coordinate purchases, orders, and other activities with their suppliers, distributors, and selected business partners. Procter & Gamble is an example. An enterprise system links and integrates key business processes within a firm so that information can flow freely within the firm. Companies can use enterprise systems to support organizational structures that were not previously possible or to create a more disciplined organizational culture.

33) Computer categories include mainframes, midrange, personal computers, workstations, and supercomputers. Mainframes are the largest category and are used for major business processing. Midrange computers are middle-sized computers that are capable of supporting the computing needs of smaller organizations or of managing networks of other computers. Personal computers are small desktop or portable computers and are used by individuals. Workstations are desktop computers with powerful graphics and mathematical capabilities and have the ability to perform several complicated tasks at once. Supercomputers are highly sophisticated and powerful computers that rapidly perform very complex computations.

34) Online analytical processing provides powerful tools for the manipulation and analysis of large volumes of data from multiple perspectives or dimensions. It provides analyses that traditional database models cannot represent, such as the ability to compare and manipulate product, pricing, cost, region, or time period, each in relationship to any one of the others. These data views can become very complex, with one set nested within another. Senior management can use such views in planning long-range changes in the organization.

35) Java is a programming language that can deliver only the software functionality needed for a particular task. It is a platform-independent, object-oriented programming language. It can be used to create miniature programs called "applets" which are delivered from a centralized network server only when needed to perform a particular task. HTML is a page description language for creating Web pages and other hypermedia documents. HTML uses instructions called tags to specify how text, graphics, video, and sound are placed on a document and to create dynamic links to other documents and objects stored in the same or remote computers. XML is new and specifically designed to improve usefulness of Web documents. It is a general-purpose language that describes the structure of a document and supports links to multiple documents, allowing data to be manipulated by the computer.

36) Carpal tunnel syndrome, computer vision syndrome, and technostress are three health risks mentioned in the textbook. Carpal tunnel syndrome occurs when pressure on the median nerve through the wrist's structure produces pain. Computer vision syndrome is an eyestrain condition related to computer display use. Technostress is induced by computer use; symptoms include aggravation, hostility toward humans, impatience, and enervation.

37) In the traditional business model, the price of an item increases each time it passes through a layer of the sales and marketing chain. This means that the item, by the time it reaches the consumer, has doubled or tripled in "value" or "cost". This is the use of "intermediaries".

Disintermediation is the removal of organizations or business process layers responsible for certain intermediary steps in a value chain. The Internet accelerates disintermediation in some industries and creates opportunities for new types of intermediaries (reintermediation) in others.

38) The authors list ten features that, in combination, are unique to each organization: organizational type, environments, goals, power, constituencies, function, leadership, tasks, technology, and business processes. Organizations differ in their ultimate goals and the types of power used to achieve them. Some organizations have coercive goals (prisons), some have utilitarian goals (businesses), and some have normative goals (universities, religious groups). Organizations serve different groups or have different constituencies, some primarily benefiting their members, others benefiting clients, stockholders, or the public. The nature of leadership differs greatly from one organization to another-some are more democratic or authoritarian than others, some have greater or lesser need for rules and procedures, or do more or fewer routine tasks requiring more or less judgment and initiative. Organizations differ in the technology they use-some require little judgment and/or training, others require far more of both.

39) Digital credit card payment systems, digital wallets, accumulated balance payment systems, stored value payment systems, digital cash, peer-to-peer payment systems, digital checking, and electronic bill presentment and payment are discussed in the textbook.

40) Internet technology has led to efficiencies and cost savings in employee communication and training as well as the processing of basic human resources systems on intranets to deliver HR-related services such as enrolling in insurance and medical plans, maintaining employee savings plans, and applying for company jobs. Companies can realize productivity and publishing savings by using Web technology to deliver interactive employee training and human resources policy manuals and company directories. Human resources staff members can use intranets to access employee records from the firm's basic human resources transaction systems.

41) The four changes discussed in the textbook are globalization, transformation of industrial economies, transformation of the enterprise, and emergence of the digital firm. Table 1-1 in the textbook summarizes these changes.

Globalization changes include management and control in a global marketplace, competition in world markets, global work groups, and global delivery systems. The transformation of industrial economies changes include knowledge- and information-based economies, new products and services, knowledge as a central productive and strategic asset, time-based competition, shorter product life, turbulent environment, and limited employee knowledge base. Changes associated with the transformation of the enterprise include flattening, decentralization, flexibility, location independence, low transaction and coordination costs, empowerment, and collaborative work and teamwork. Changes associated with the emergence of the digital firm include digitally-enabled relationships with customers, suppliers, and employees; core business processes accomplished via digital networks; digital management of key corporate assets; and rapid sending and responding to environmental changes.

42) To a technician, the information system is composed of hardware, software, the data that are manipulated, and the output requested. To a manager in a business, it is much more. To fully understand information systems, the manager must understand the broader organization, management, and information technology dimensions of systems and their power to provide solutions to challenges and problems in the business environment.

43) Customers can now shop in a worldwide marketplace, obtain price and quality information 24/7, and reach suppliers heretofore either unknown or nonexistent. Further, while it is possible for smaller companies to compete in markets once closed to them, the speed with which circumstances change and new challenges arise is not always a positive factor for them.

44) An information system can be defined technically as a set of interrelated components working together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization. It may also help managers and workers analyze problems, visualize complex subjects, and create new products.

An information system contains information about an organization and its surrounding environment. Three basic activities (input, processing, and output) produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors such as customers, suppliers, competitors, stockholders, and regulatory agencies interact with the organization and its information systems.

45) The digital statistics generated by those who access a Web site, or who purchase from it, are far more quickly, accurately, and easily gathered than in the traditional paper-and-pencil environment of the traditional method. They are timely, up-to-the-minute, and accurate. They trace the customer's thought processes and preferences as he/she moves through the Web site. This gives the site owner the ability to "tailor" the appearance of the Web page to the preferences of the returning viewer, which increases sales and efficiency. is a pioneer in this activity, which has been successful for the online bookseller.

46) The three basic operations are select, join, and project. The select operation creates a subset consisting of all records in the file that meet stated criteria. The project operation creates a subset consisting of columns in a table, permitting the user to create new tables that contain only the information required. The join operation combines relational tables to provide the user with more information than is available in the individual tables.

47) 1) The Information Systems Investment Challenge: How can organizations obtain business value from their information systems?

2) The Strategic Business Challenge: What complementary assets are needed to use information technology effectively?

3) The Globalization Challenge: How can firms understand the business and system requirements of a global economic environment?

4) The Information Architecture and Infrastructure Challenge-How can organizations develop an information architecture and information technology infrastructure that can support their goals when business conditions and technologies are changing so rapidly?

5) The Responsibility and Control Challenge-How can organizations ensure that their information systems are used in an ethically and socially responsible manner?

48) It has provided a low-cost and easy way to link businesses and individuals through a common platform. This means that companies can use the technology to radically reduce their transaction costs through the intelligent use of supply chain management. Trading partners can communicate directly with each other, bypassing intermediaries and inefficient multi-layered processes. Some products and services can be more efficiently provided by the Internet than by traditional means. The Internet can replace existing distribution channels or extend them, thus creating outlets for attracting and serving new customers who otherwise would not patronize the company. Information on buyers, sellers and products is widely and instantly available 24/7. It is far less expensive to process an order electronically than with older paper-and-pencil methods.

49) Strategic information systems are computer systems that change goals, operations, products, services, or environmental relationships to help the organization gain a competitive advantage. At the business level, they are used to answer the question, "How can we compete effectively in this particular market?" At the firm level, they can improve the overall performance of the business units of the firm in their relationship to each other by promoting synergies and core competencies. At the industry level, they can be used to determine when and how specific firms should compete with, or cooperate with, others in the industry. The three principal concepts at this level are information partnerships, the competitive forces model, and network economics.

50) There is more information available to both buyer and seller-to the buyer, more information about products and prices; to the seller, more information (and more quickly-gathered information) about the buyer and his/her needs. It is easier and less expensive for the buyer to change suppliers, so the seller must be more responsive. It is possible to customize both product and customer relationships, so the seller can change and tailor merchandise as needed. Because the entire transaction is faster, money flows more quickly through the system. Buyers and sellers are not limited in their geographic reach.

51) The textbook discussed business-to-consumer, business-to-business, and consumer to consumer. Business-to-consumer involves retailing products and services to individual shoppers. Barnes & Noble is an example. Business-to-business involves the sell of goods and services among businesses. Examples include and Milacron Inc.'s Web site for selling cutting tools, etc. Consumer-to-consumer electronic commerce involves consumers selling directly to consumers. is an example.

52) A contemporary computer system consists of a central processing unit, primary storage, input devices, output devices, secondary storage, and communications devices. The central processing unit is composed of the ALU and the control unit. The central processing unit is where the actual "computing" is accomplished, one instruction at a time. Primary storage or RAM is composed of registers, which hold all, or part of the software being used; it holds the operating system that manages the resources of the computer, and it holds data that the program is using. Input devices allow data, software, and communications materials to come into the computer. Keyboards, mice, and touch screens are examples of input devices. Output devices display or print processing results. Video display terminals and printers are examples of output devices. Secondary storage is a nonvolatile area outside the CPU and primary storage where data are kept indefinitely or until deleted. Examples include magnetic disks, optical disks, and magnetic tape. Communications devices allow the computer to communicate with other computers. Modems are an example of a communications device.

53) The four major types of information systems discussed in the textbook include executive support systems, decision-support systems, management information systems, and transaction processing systems. Executive support systems exist at the strategic level and are designed to address unstructured decision making through advanced graphics and communications. Information outputs include projections and responses to inquiries.

Decision-support systems exist at the management level and combine data and sophisticated analytical models or data analysis tools to support semistructured and unstructured decision making. Information outputs include special reports, decision analyses, and responses to queries.

Management information systems serve the management level and support the functions of planning, controlling, and decision making by providing routine summary and exception reports.

Transaction processing systems serve the operations level by performing and recording the daily routine transactions necessary to conduct the business. Information outputs include detailed reports, lists, and summaries.

54) The textbook mentions storage service provider, application service provider, management service provider, and business continuity service provider. A storage service provider provides online access over networks to storage devices and storage network technology. IBM Managed Storage Services is an example. An application service provider uses centrally-managed facilities to host and manage access to package applications delivered over networks on a subscription basis. Corio Inc. is an example. A management service provider manages combinations of applications, networks, systems, storage, and security as well as providing Web site and systems performance monitoring to subscribers over the Internet. Totality is an example. A business continuity service provider defines and documents procedures for planning and recovering from system malfunctions that threaten vital business operations. Comdisco is an example.

55) The textbook identifies data administration, data planning and modeling methodology, database technology and management, and users as the four critical elements. Data administration is the special organizational function for managing the organization's data resources; it is concerned with information policy, data planning, maintenance of data dictionaries, and data quality standards. Data planning and modeling methodology is the use of enterprise analysis to identify and address the information requirements of the entire organization, as opposed to the requirements of individual applications. Enterprise analysis identifies the key entities, attributes, and relationships that constitute the organization's data. Database technology and management refers to the decisions and processes involved in the purchase of hardware and software and the identification of those in management who are responsible for specific areas of data gathering, maintenance, and reporting. Users are the individuals who actually manipulate the data gathered, creating and distributing the necessary reports.

56) 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. This definition is most useful in discussing the more formal aspects of the company-legal responsibilities, standard operating procedures, management structure, and the hierarchies of decision making and control.

The behavioral definition of an organization is that an organization is a complex collection of rights, privileges, obligations, and responsibilities delicately balanced over time through conflict and conflict resolution. This definition is most useful when one wishes to discuss or understand the actual day-to-day workings of the business itself-political alignments, personal needs and desires of the various members, the relationship of the company to the particular societal environment in which it operates, and the unwritten customs that grease the wheels of commerce.

57) A knowledge management system supports the creation, capture, storage, and dissemination of firm expertise and knowledge. Enterprise-wide systems, office systems, and knowledge work systems are three examples.

58) Economic theories view information system technology as a factor of production that can be freely substituted for capital and labor. As the cost of information system technology falls, it is substituted for labor, thus resulting in a decline in the number of middle managers and clerical workers. Information technology can also lower costs by reducing transaction costs (transaction cost theory), and by reducing internal management costs (agency theory).

Behavioral theories are more useful for describing the behavior of individual firms. Some behavioral researchers theorize that information technology could/may change the hierarchy of decision making in organizations by lowering the costs of information acquisition and broadening the distribution of information from upper-level management all the way down to individual workers at the lowest levels of the firm. Others see information systems as the outcome of political competition between organizational subgroups for influence over the organization's policies, procedures, and resources.

59) The interaction between information technology and organizations is complex and is influenced by many mediating factors, including the organization's structure, standard operating procedures, politics, culture, surrounding environment, and management decisions. Managers must be aware that information systems can markedly alter life in the organization. They cannot successfully design new systems or understand existing systems without understanding organizations and the way they work.

60) The DBMS (database management system) uses special software to create and maintain a central database available to everyone in the organization. This enables individual business applications to extract the data they need without having to create separate files or data definitions. The data are more secure because they are held in one place, more consistent and accurate because the same data are not kept in many separate files (each of which must be updated accurately when the data changes), and more flexible because the DBMS supports ad hoc inquiries.

61) Complementary assets are additional assets that are required to derive value from a primary investment. In order to receive substantial returns from their information technology investments, firms must also invest in new business processes, management behavior, organizational culture, and training.

62) Primary storage has three functions-it stores all or part of the software program that is being executed, it stores the operating system programs that manage the computer, and stores data that the program is using. It is sometimes called RAM because it can directly access any randomly chosen location in the same amount of time. Primary storage is placed within the computer, close to the CPU. It is divided into storage locations, each of which holds one byte-a letter, digit, or special symbol. Each byte has a unique address indicating where it is located in primary memory. The computer can remember where the data in each location are stored by keeping track of these addresses. Data and instructions and the instruction results are moved back and forth in primary storage as necessary. Primary storage is volatile-it returns to a null state when the power is turned off.

Secondary storage accepts the transfer of data from primary memory, translating it from volatile electrical impulses into nonvolatile magnetic dots onto a hard or floppy disk, a tape, or an optical disk. This storage is permanent, unless it is deliberately deleted, destroyed, or damaged. Secondary memory is located outside the primary storage area.

63) Fourth-generation languages consist of a variety of software tools enabling end-users to develop software applications with minimal or no technical assistance, or that enhance professional programmers' productivity. Fourth-generation languages are usually nonprocedural, or less procedural, than conventional programming languages. Some of these nonprocedural languages are natural languages that enable users to communicate with the computer using conversational commands resembling human speech.

Following is a list of the categories and examples of each. Additional examples are provided in Table 6-6 of the text.

1. PC software tools: WordPerfect

2. Query language: SQL

3. Report generator: Crystal Reports

4. Graphics language: SAS Graph

5. Application generator: FOCUS

6. Application software package: PeopleSoft HCM

7. Very high-level programming language: APL

64) With centralized computer resources, management retains more control of resources, it is easier to maintain congruent information, and information distribution is faster. Some drawbacks are that, if the center goes down, the entire firm is crippled until repairs can be made and a larger, more expensive IT staff is usually required.

Decentralized computer resources allow the purchase of many smaller computers, which are less expensive individually and can be replaced piecemeal. Because there is no central computer, data and information may be incongruent or lost. Decentralized computer resources do encourage more decision making at lower levels. Fewer first-rank IT professionals may be required, but planning and the structure of the information flow must be more carefully designed.

65) An organization is made up of human beings, who react in unpredictable ways and require a broader approach than an understanding of computer science, management science, and operations research to maintain an effective environment. An understanding of the behavioral approaches studied in sociology, psychology, and economics leads to a more humanized, practical understanding of the solutions required by real-world problems.

66) Software packages are prewritten, precoded, commercially available sets of programs that eliminate the need to write software programs for certain functions. Other than word processing and spreadsheets, the textbook discusses desktop publishing software, data management software, presentation graphics, integrated software packages, e-mail, Web browsers, and groupware. Desktop publishing software produces professional quality documents with capabilities for design, layout, and work with graphics. Data management software is used for creating and manipulating lists, creating files and databases to store data, and combining information for reports. Presentation graphics software allows users to create professional-quality graphic presentations. Integrated software packages combine the functions of two or more stand-alone software packages to provide a more general-purpose software tool and eliminate redundant data entry and maintenance. E-mail software is used for the computer-to-computer exchange of messages. Web browsers are easy-to-use software tools for displaying Web pages and for accessing the Web and other Internet resources. Groupware provides functions and services to support the collaborative activities of work groups.

67) Traditional business firms are based on a hierarchical system, wherein a centralized, structured set of operating procedures is carried out by an arrangement of specialists who bear specific responsibilities for certain aspects of the business. This structure relies on formal plans, a rigid division of labor, and a firmly codified handbook of employee behavior (usually printed). The object of this bureaucratization is to provide mass-produced products and services to broadly defined markets.

The new style of firm is a less hierarchical, decentralized, flexible arrangement of generalists who rely on nearly instant information to deliver mass-customized services and products to highly specific, often individualized, markets.

In the new arrangement, employees have more decision-making power, are required to react more quickly, and rely on knowledge-based information systems of all kinds. Lines of command are not so well-defined, and the span of control of the individual manager is increased.

68) The six candidate principles include the Golden Rule, Immanuel Kant's Categorical Imperative, Descartes' rule of change, Utilitarian Principle, Risk Aversion Principle, and ethical "no free lunch" rule.

The Golden Rule "Do unto others as you have them do unto you."

Immanuel Kant's Categorical Imperative states that if an action is not right for everyone to take, it is not right for anyone. Descartes' rule of change states that if an action cannot be taken repeatedly, then it is not right to be taken at any time. The Utilitarian Principle assumes one can put values in rank order and understand the consequences of various courses of action. The Risk Aversion Principle states that one should take the action that produces the least harm or incurs the least cost. The "no free lunch" rule assumes that someone else owns all tangible and intangible objects, unless there is a specific declaration otherwise, and that the creator wants compensation for this work.

69) MIS provide routine summary and exception reports to provide answers to routine questions that have been specified in advance and have a predefined procedure for answering them. These systems use internal information. They are generally not flexible, and have little analytical capability, but provide basic information for the continued running of the company.

DSS combine data and analytical models or data analysis tools to support semistructured and unstructured decision making. They address problems where the procedure for arriving at a solution may not be fully predefined in advance. They use information from external as well as internal sources, and contain a variety of models to analyze data. They often condense large amounts of data into a form in which they can be analyzed by decision makers at the middle and upper management level. They are interactive, and allow the user to change assumptions, ask new questions, and include new data.

Middle and upper management are most likely to use both systems, but the higher up in the organization, and the more responsibility he/she holds, the more likely he/she is to use a DSS.

70) Traditional firms are often bloated with managers, inefficient, slow to change, and less competitive than newly created firms. When one of these organizations downsizes by reducing the number of its employees and the number of levels in its hierarchy, a "flattened" or "optimized" structure results, with fewer people and a wider span of control for the remaining managers. This flattened architecture makes possible a balance of decision-making loads across the organization, with lower-level employees being given greater decision-making authority and a better understanding of the working of company processes at all levels.

A digital firm is able to maintain a more optimal hierarchy because a good information system increases efficiency and effectiveness by making more information available to more people, and making it available almost instantaneously.

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