Chapter 1



Chapter 3

Information Systems, Organizations, Management, and Strategy

True-False Questions

| |To benefit from new technologies, the organization must be aware of, and be open to, the influences of information systems. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 76 |

| |The technical definition of organizations is highly descriptive of the way organizations actually work. |

| | |

| |Answer: False Difficulty: Easy Reference: p. 77 |

| |The technical and behavioral definitions of organizations are mutually contradictory. |

| | |

| |Answer: False Difficulty: Easy Reference: p. 78 |

| |The term “bureaucracy” was first defined in China by the Mandarins. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 78 |

| |Organizations that survive over time become less efficient. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 79 |

| |Standard operating procedures are based on business procedures. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 79 |

| |The current Japanese theories of automobile production are based on the manufacturing theories of Henry Ford. |

| | |

| |Answer: False Difficulty: Easy Reference: p. 79 |

| |Any information system that brings about significant change will elicit serious political opposition within the organization.|

| | |

| |Answer: True Difficulty: Easy Reference: p. 79 |

| |Information systems help managers identify external changes that might require organizational response. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 81 |

| |In economic terms, information system technology can be viewed as a substitute for capital and labor. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 84 |

| |Information technology increases the cost of market participation. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 84 |

| |As firms grow in size and scope, agency costs always decrease. |

| | |

| |Answer: False Difficulty: Hard Reference: p. 85 |

| |By increasing the span of management control, information systems lower agency costs. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 85 |

| |Behavioral research has found that information systems automatically transform organizations. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 85 |

| |In virtual organizations, work is not tied to geographical location. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 86 |

| |Managers perform a great deal of work at an unrelenting pace, and each activity normally lasts less than ten minutes. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 89 |

| |Information systems provide major assistance for managerial decision making. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 89 |

| |There is a defined, linear path to decision making. |

| | |

| |Answer: False Difficulty: Easy Reference: p. 91 |

| |According to research cited in the textbook, when making decisions people tend to take the first available alternative that |

| |will move them closer to the goal, without examining all the alternatives. |

| | |

| |Answer: True Difficulty: Hard Reference: p. 92 |

| |Systematic decision makers approach a problem with multiple methods. |

| | |

| |Answer: False Difficulty: Easy Reference: p. 92 |

| |When planning a new information system, the organization’s culture and politics are central organizational factors that |

| |should be considered. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 94 |

| |Strategic information systems can be used at all organizational levels and are more far reaching and deep rooted than other |

| |kinds of information systems. |

| | |

| |Answer: True Difficulty: Hard Reference: p. 95 |

| |Value chain analysis is the most common analytical tool at the business level of the organization. |

| | |

| |Answer: True Difficulty: Hard Reference: p. 95 |

| |In a value chain, primary activities include inbound logistics, operations, outbound logistics, sales and marketing, and |

| |procurement. |

| | |

| |Answer: False Difficulty: Hard Reference: p. 95 |

| |Digitally enabled networks can be used to coordinate the production of many independent firms. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 96 |

| |A value Web is more customer-driven than the traditional value chain. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 97 |

| |A value web can synchronize the value chains of business partners within an industry to rapidly respond to changes in supply |

| |and demand. |

| | |

| |Answer: True Difficulty: Hard Reference: p. 97 |

| |Value chains and value webs are static. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 97 |

| |Information systems allow companies like Dell Computer Corporation to sell individualized products to individual customers. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 98 |

| |Information systems provide a resource that a company can mine to increase profitability. |

| | |

| |Answer: True Difficulty: Easy Reference: p. 99 |

| |A good information system raises switching costs. |

| | |

| |Answer: True Difficulty: Hard Reference: p. 100 |

| |The U.S. economy is moving away from a “demand-pull” strategy. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 101 |

| |Supply chain management and focused differentiation are two examples of how emerging digital firms can engage in business |

| |strategies not available to traditional firms. |

| | |

| |Answer: False Difficulty: Hard Reference: p. 101 |

| |By sharing knowledge across business units, an information system can enhance competency. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 102 |

| |When two organizations pool markets and expertise, this relationship can lower costs and generate profits. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 102 |

| |The three principal concepts for analyzing strategy at the industry level are information partnerships, competitive forces |

| |model, and focused differentiation. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 103 |

| |Industry structure refers to the nature of participants in an industry and their relative bargaining power; it derives from |

| |the competitive forces and establishes the general business environment in an industry and the overall profitability of doing|

| |business in that environment. |

| | |

| |Answer: True Difficulty: Hard Reference: p. 103 |

| |A major difference between the traditional business model and the model of the digital firm era is the awareness of “industry|

| |sets”. |

| | |

| |Answer: True Difficulty: Hard Reference: p. 104 |

| |Agency economics is a model of strategic systems at the industry level based on the concept of a network where adding another|

| |participant entails zero marginal costs but can create much larger marginal gains. |

| | |

| |Answer: False Difficulty: Medium Reference: p. 105 |

| |When identify opportunities for strategic information systems, managers should determine where in the value chain the |

| |information systems can provide the greatest value to the firm. |

| | |

| |Answer: True Difficulty: Medium Reference: p. 106 |

Multiple- Choice Questions

| |The interaction between information technology and organizations is influenced by: |

| | |

| |a. organizational structure. |

| |b. standard operating procedures. |

| |c. politics and culture. |

| |d. environment and management decisions. |

| |e. All of the above |

| | |

| |Answer: e Difficulty: Easy Reference: p. 77 |

| |Precise rules, procedures, and practices developed by organizations to cope with virtually all expected situations best |

| |describes: |

| | |

| |a. business processes. |

| |b. work methods. |

| |c. formal system. |

| |d. standard operating procedures. |

| |e. process description. |

| | |

| |Answer: d Difficulty: Medium Reference: p. 78 |

| |According to Weber, bureaucracies are prevalent because: |

| | |

| |a. they are impartial. |

| |b. authority is limited by abstract rules. |

| |c. they are the most efficient form of organization. |

| |d. they develop standard operating procedures. |

| |e. people are most comfortable with the expected. |

| | |

| |Answer: c Difficulty: Hard Reference: p. 79 |

| |A task force organization that must respond to rapidly changing environments best describes: |

| | |

| |a. adhocracy. |

| |b. professional bureaucracy. |

| |c. divisionalized bureaucracy. |

| |d. machine bureaucracy. |

| |e. entrepreneurial structure. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 80 |

| |Which of the following is an example of a professional bureaucracy? |

| | |

| |a. Fortune 500 firm |

| |b. School system |

| |c. Midsize manufacturing firm |

| |d. Small start-up business |

| |e. Consulting firm |

| | |

| |Answer: b Difficulty: Medium Reference: p. 80 |

| |All organizations have assumptions that: |

| | |

| |a. can be studied and defined. |

| |b. are incorrect, but accepted. |

| |c. everyone knows and no one speaks. |

| |d. define their goals and products. |

| |e. determine their success over time. |

| | |

| |Answer: d Difficulty: Medium Reference: p. 80 |

| |When information systems help organizations perceive changes in their environments and act on their environments, this |

| |function is called: |

| | |

| |a. external scanning. |

| |b. environmental observation. |

| |c. environmental scanning. |

| |d. competition monitoring. |

| |e. strategic scanning. |

| | |

| |Answer: c Difficulty: Medium Reference: p. 81 |

| |Features common to organizations include: |

| | |

| |a. formal structure. |

| |b. organizational type. |

| |c. environments. |

| |d. power. |

| |e. function. |

| | |

| |Answer: a Difficulty: Hard Reference: p. 82 |

| |Features unique to organizations include: |

| | |

| |a. goals. |

| |b. formal structure. |

| |c. standard operating procedures. |

| |d. politics. |

| |e. culture. |

| | |

| |Answer: a Difficulty: Hard Reference: pp. 82 |

| |Systems analysts 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 systems department. |

| |d. in charge of the information systems function in the organization. |

| |e. representatives of departments outside the information systems group for whom applications are developed. |

| | |

| |Answer: b Difficulty: Medium Reference: p. 83 |

| |CIOs 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 systems department. |

| |d. in charge of the information systems function in the firm. |

| |e. representatives of departments outside the information systems group for whom applications are developed. |

| | |

| |Answer: d Difficulty: Medium Reference: p. 83 |

| |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 systems department. |

| |d. in charge of the information systems function in the organization. |

| |e. representatives of departments outside the information systems group for whom applications are developed. |

| | |

| |Answer: c Difficulty: Medium Reference: p. 83 |

| |By making it worthwhile for firms to contract with external suppliers instead of internal sources, information technology |

| |can reduce: |

| | |

| |a. transaction costs. |

| |b. end user support requirements. |

| |c. management control spans. |

| |d. All of the above |

| |e. None of the above |

| | |

| |Answer: a Difficulty: Medium Reference: p. 84 |

| |Because it makes it easier for managers to oversee a greater number of employees, information technology can reduce: |

| | |

| |a. transaction costs. |

| |b. interdepartmental conflicts. |

| |c. agency costs. |

| |d. information retrieval costs. |

| |e. None of the above |

| | |

| |Answer: c Difficulty: Medium Reference: p. 85 |

| |Some research indicates that computerization decreases the need for large numbers of lower-level workers because: |

| | |

| |a. their work is reclaimed. |

| |b. more information is given to middle managers. |

| |c. it permits task forces to be formed. |

| |d. more highly-trained workers work faster. |

| |e. more training for such workers is required. |

| | |

| |Answer: b Difficulty: Hard Reference: p. 86 |

| |The Internet is capable of reducing _____________ for most organizations. |

| | |

| |a. agency and transaction costs |

| |b. information usage |

| |c. reporting and analysis |

| |d. systems costs |

| |e. All of the above |

| | |

| |Answer: a Difficulty: Medium Reference: p. 87 |

| |According to Fayol, the classical functions of a manager are: |

| | |

| |a. interpersonal, informational, and decisional. |

| |b. planning, interpersonal, decisional, and controlling. |

| |c. planning, organizing, coordinating, deciding, and controlling. |

| |d. strategic, nonstructured, structured, organizing, and interpersonal. |

| |e. liaison, planning, interpersonal, deciding, and decisional. |

| | |

| |Answer: c Difficulty: Hard Reference: p. 88 |

| |Organizations rebuilding some of their key business processes on Internet technology are finding that: |

| | |

| |a. their business processes are simpler. |

| |b. they are much flatter. |

| |c. they need fewer employees. |

| |d. All of the above |

| |e. None of the above |

| | |

| |Answer: d Difficulty: Easy Reference: p. 87 |

| |Mintzberg defined the interpersonal roles of a manager as those in which the manager: |

| | |

| |a. disseminates critical information and negotiates conflicts. |

| |b. acts as the nerve center of the organization, receiving and disseminating critical information. |

| |c. initiates activities, handles disturbances, allocates resources, and negotiates conflicts. |

| |d. acts as a figurehead and leader of the organization. |

| |e. initiates activities, allocates resources, and leads the organization. |

| | |

| |Answer: d Difficulty: Hard Reference: p. 89 |

| |Mintzberg defined the decisional roles of a manager as those in which the manager: |

| | |

| |a. disseminates critical information and negotiates conflicts. |

| |b. acts as the nerve center of the organization, receiving and disseminating critical information. |

| |c. initiates activities, handles disturbances, allocates resources, and negotiates conflicts. |

| |d. acts as a figurehead and leader of the organization. |

| |e. initiates activities, allocates resources, and leads the organization. |

| | |

| |Answer: c Difficulty: Hard Reference: p. 89 |

| |Information systems provide support for the: |

| | |

| |a. figurehead interpersonal role. |

| |b. leader interpersonal role. |

| |c. disturbance handler decisional role. |

| |d. negotiator decisional role. |

| |e. spokesperson informational role. |

| | |

| |Answer: e Difficulty: Hard Reference: p. 90 |

| |Deciding how to carry out specific tasks specified by upper and middle management, and establishing criteria for |

| |completion and resource allocation best describes: |

| | |

| |a. operational control decision making. |

| |b. resource allocation decision making. |

| |c. structured decision making. |

| |d. knowledge-level decision making. |

| |e. liaison decision making. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 90 |

| |In Simon’s four stages of decision making, “intelligence” is when: |

| | |

| |a. the individual selects among the possible alternative solutions to a problem. |

| |b. the individual conceives of possible alternative solutions to a problem. |

| |c. the individual collects information to identify problems occurring in the organization. |

| |d. the individual puts the decision into effect and reports on the progress of the solution. |

| |e. None of the above |

| | |

| |Answer: c Difficulty: Medium Reference: p. 90 |

| |In Simon’s four stages of decision making, “implementation” is when: |

| | |

| |a. the individual selects among the possible alternative solutions to a problem. |

| |b. the individual conceives of possible alternative solutions to a problem. |

| |c. the individual collects information to identify problems occurring in the organization. |

| |d. the individual puts the decision into effect and reports on the progress of the solution. |

| |e. None of the above |

| | |

| |Answer: d Difficulty: Medium Reference: p. 91 |

| |In Simon’s four stages of decision making, “choice” is when: |

| | |

| |a. the individual selects among the possible alternative solutions to a problem. |

| |b. the individual conceives of possible alternative solutions to a problem. |

| |c. the individual collects information to identify problems occurring in the organization. |

| |d. the individual puts the decision into effect and reports on the progress of the solution. |

| |e. the individual does none of the above. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 91 |

| |The rational model of human behavior makes the assumption that people: |

| | |

| |a. make decisions based on correct conclusions. |

| |b. can tell the difference between the right and the wrong decisions. |

| |c. engage in basically consistent, value-maximizing calculations focused on choosing the alternative that contributes most|

| |to their goals. |

| |d. engage in calculations that are concerned with correct, value-maximizing choices that further the goals of the |

| |organization. |

| |e. make decisions based on their own needs and abilities. |

| | |

| |Answer: c Difficulty: Hard Reference: p. 91 |

| |The underlying personality disposition toward decision making is called the: |

| | |

| |a. cognitive style. |

| |b. personal bias. |

| |c. systematic approach. |

| |d. behavioral indicator. |

| |e. model of rationalization. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 92 |

| |The cognitive style that describes people who approach a problem by structuring it in terms of some formal method is: |

| | |

| |a. intuitive decision makers. |

| |b. stylistic decision makers. |

| |c. logical decision makers. |

| |d. systematic decision makers. |

| |e. random decision makers. |

| | |

| |Answer: d Difficulty: Medium Reference: p. 92 |

| |Models of decision making where decisions are shaped by the organization’s standard operating procedures are called: |

| | |

| |a. garbage can models. |

| |b. bureaucratic models of decision making. |

| |c. standard organizational models. |

| |d. business process models. |

| |e. business logic models. |

| | |

| |Answer: b Difficulty: Medium Reference: p. 93 |

| |The key question at the business level of strategy is: |

| | |

| |a. What market should we enter? |

| |b. What will meet our goals? |

| |c. What will give us the most efficient operation? |

| |d. How can we compete effectively in this particular market? |

| |e. How can we affect the market? |

| | |

| |Answer: d Difficulty: Easy Reference: p. 95 |

| |A value chain’s primary activities include: |

| | |

| |a. human resources. |

| |b. inbound logistics. |

| |c. technology. |

| |d. procurement. |

| |e. administration and management. |

| | |

| |Answer: b Difficulty: Medium Reference: p. 95 |

| |A value chain’s support activities include: |

| | |

| |a. organization infrastructure, human resources, technology, and procurement. |

| |b. inbound logistics, operations, and outbound logistics. |

| |c. sales and marketing. |

| |d. organization infrastructure, sales and marketing, and procurement. |

| |e. operations, human resources, and technology. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 96 |

| |A customer-driven network of independent firms who use information technology to coordinate their value chains to |

| |collectively produce a product or service for a market best describes: |

| | |

| |a. value Web. |

| |b. value chain. |

| |c. value extranet. |

| |d. value intranet. |

| |e. enterprise system. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 97 |

| |Strategic information systems for ____________ can prevent the competition from responding in kind. |

| | |

| |a. competitive advantage |

| |b. technology-based products |

| |c. manufacturers |

| |d. product differentiation |

| |e. wholesalers |

| | |

| |Answer: d Difficulty: Hard Reference: p. 98 |

| |A competitive strategy for creating brand loyalty by developing new and unique products and services that are not easily |

| |duplicated by competitors best describes: |

| | |

| |a. focused differentiation. |

| |b. low-cost producer. |

| |c. product differentiation. |

| |d. quality differentiation. |

| |e. marketing differentiation. |

| | |

| |Answer: c Difficulty: Medium Reference: p. 98 |

| |One advantage of information systems is that they enable companies to pitch to: |

| | |

| |a. larger target markets. |

| |b. many markets. |

| |c. global markets. |

| |d. smaller target markets. |

| |e. competitor’s markets. |

| | |

| |Answer: d Difficulty: Medium Reference: p. 99 |

| |Supply chain management can be used to create: |

| | |

| |a. networked markets. |

| |b. efficient customer response systems. |

| |c. franchise-based environments. |

| |d. wide-ranging data reports. |

| |e. demographic-oriented sales. |

| | |

| |Answer: b Difficulty: Easy Reference: p. 100 |

| |Activities at which a firm excels as a world-class leader include: |

| | |

| |a. core competencies. |

| |b. strategic competencies. |

| |c. standard operating procedures. |

| |d. business strategies. |

| |e. strategic business processes. |

| | |

| |Answer: a Difficulty: Medium Reference: p. 102 |

| |The three principal concepts for analyzing strategy at the industry level are: |

| | |

| |a. supply chain theory, customer response theory, and network economics. |

| |b. managerial, operational, and marketing. |

| |c. network analysis, competition analysis, and customer response analysis. |

| |d. information partnerships, the competitive forces model, and network economics. |

| |e. Miller’s theory of adjusted dataflow, Porter’s competitive forces model, and network analysis. |

| | |

| |Answer: d Difficulty: Medium Reference: p. 103 |

| |A movement from one level of sociotechnical system to another best describes: |

| | |

| |a. strategic placement. |

| |b. focused transition. |

| |c. upward transition. |

| |d. competitive transition. |

| |e. strategic transition. |

| | |

| |Answer: e Difficulty: Medium Reference: p. 106 |

Fill In the Blanks

| |A(n) organization, by technical definition, is a stable, formal, social structure that takes resources from the environment |

| |and processes them to produce outputs. |

| | |

| |Difficulty: Easy Reference: p. 77 |

| |A(n) organization, by behavioral definition, is a collection of rights, privileges, obligations, and responsibilities that |

| |are delicately balanced over a period of time through conflict and conflict resolution. |

| | |

| |Difficulty: Easy Reference: p. 78 |

| |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 Reference: p. 78 |

| |A(n) 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 Reference: p. 80 |

| |A(n) systems analyst is a specialist who translates business problems and requirements to information requirements and |

| |systems, acting as a liaison between the information systems department and the rest of the organization. |

| | |

| |Difficulty: Easy Reference: p. 82 |

| |A(n) information systems manager is the leader of the various specialists in the information systems department. |

| | |

| |Difficulty: Easy Reference: p. 83 |

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

| | |

| |Difficulty: Easy Reference: p. 83 |

| |Transaction cost theory is the economic theory stating that firms grow larger because they can conduct marketplace |

| |transactions internally and more economically than they can with external firms in the marketplace. |

| | |

| |Difficulty: Medium Reference: p. 84 |

| |Agency theory views the firm as a nexus of contracts among self-interested individuals who must be supervised and managed. |

| | |

| |Difficulty: Medium Reference: p. 85 |

| |A(n) virtual organization uses networks to link people, assets, and ideas to create and distribute products and services |

| |without being limited to traditional organizational boundaries or physical locations. |

| | |

| |Difficulty: Medium Reference: p. 86 |

| |The classical model of management focuses on the formal functions of planning, organizing, coordinating, deciding, and |

| |controlling. |

| | |

| |Difficulty: Easy Reference: p. 88 |

| |The behavioral model of management is based on observations of what managers actually do on their jobs. |

| | |

| |Difficulty: Easy Reference: p. 88 |

| |Mintzberg’s managerial roles are the expectations of the activities that managers should perform in an organization. |

| | |

| |Difficulty: Easy Reference: p. 89 |

| |Mintzberg’s decisional roles describe situations wherein managers initiate activities, handle disturbances, resources, and |

| |policies of an organization. |

| | |

| |Difficulty: Easy Reference: p. 89 |

| |Strategic decision making is the act of determining the long-term objectives, resources, and policies of an organization. |

| | |

| |Difficulty: Medium Reference: p. 90 |

| |Management control monitors how efficiently or effectively resources are used and how well operational units are performing. |

| | |

| |Difficulty: Hard Reference: p. 90 |

| |A(n) unstructured decision is a nonroutine decision in which the decision maker must provide judgment, evaluation, and |

| |insights into the problem definition. |

| | |

| |Difficulty: Easy Reference: p. 90 |

| |A(n) structured decision is a decision that is repetitive, routine, and has a definite procedure for handling it. |

| | |

| |Difficulty: Easy Reference: p. 90 |

| |In Simon’s stages of decision making, design is the stage when the individual conceives of possible alternative solutions to |

| |a problem. |

| | |

| |Difficulty: Easy Reference: p. 90 |

| |In Simon’s stages of decision making, choice is the stage when the individual selects among the various solution |

| |alternatives. |

| | |

| |Difficulty: Easy Reference: p. 90 |

| |In Simon’s stages of decision making, implementation is the stage when the individual puts the decision into effect and |

| |reports on the progress of the solution. |

| | |

| |Difficulty: Easy Reference: p. 90 |

| | In Simon’s stages of decision making, intelligence is the stage when the individual collects information to identify |

| |problems occurring in the organization. |

| | |

| |Difficulty: Easy Reference: p. 90 |

| |The rational model of human behavior is based on the belief that people, organizations, and nations engage in basically |

| |consistent, value-maximizing calculations. |

| | |

| |Difficulty: Easy Reference: p. 91 |

| |Cognitive style is the underlying personality dispositions toward the treatment of information, selection of alternatives, |

| |and evaluation of consequences. |

| | |

| |Difficulty: Medium Reference: p. 92 |

| |Systematic decision makers have an underlying personality disposition to approach a problem by structuring it in terms of |

| |some formal method. |

| | |

| |Difficulty: Medium Reference: p. 92 |

| |Intuitive decision makers have an underlying personality disposition to approach a problem with multiple methods in an |

| |unstructured manner, using trial and error to find a solution. |

| | |

| |Difficulty: Medium Reference: p. 92 |

| |Organizational models of decision making take into account the structural and political characteristics of an organization. |

| | |

| |Difficulty: Hard Reference: p. 92 |

| |A(n) strategic information system is any computer system at any level of the organization that changes goals, operations, |

| |products, services, or environmental relationships to help the organization gain a competitive advantage. |

| | |

| |Difficulty: Medium Reference: p. 95 |

| |A(n) primary activity is one directly related to the production and distribution of the firm’s products or services. |

| | |

| |Difficulty: Easy Reference: p. 95 |

| |A(n) support activity is one that involves the organization’s infrastructure, human resources, technology, and procurement. |

| | |

| |Difficulty: Medium Reference: p. 96 |

| |A(n) value web is a customer-driven network of independent firms who use information technology to coordinate their value |

| |chains to collectively produce a product or service for a market. |

| | |

| |Difficulty: Medium Reference: p. 97 |

| |Product differentiation is a competitive strategy for creating brand loyalty by developing new and unique products and |

| |services not easily duplicated by competitors. |

| | |

| |Difficulty: Hard Reference: p. 98 |

| |Focused differentiation is a competitive strategy for creating new market niches for specialized products or services where a|

| |business can compete in the target area better than its competitors. |

| | |

| |Difficulty: Hard Reference: p. 99 |

| |A(n) efficient customer response system directly links consumer behavior back to distribution, production, and supply chains.|

| | |

| |Difficulty: Hard Reference: p. 100 |

| |Switching costs are the expense a customer or company incurs in lost time and expenditure of resources when changing from one|

| |supplier or system to a competing supplier or system. |

| | |

| |Difficulty: Easy Reference: p. 100 |

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

| | |

| |Difficulty: Easy Reference: p. 102 |

| |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. 103 |

| |The competitive forces model is used to describe the interaction of external influences, specifically threats and |

| |opportunities that affect an organization’s strategy and ability to compete. |

| | |

| |Difficulty: Medium Reference: p. 103 |

| |Network economics is a model of strategic systems at the industry level based on the concept of a network where adding |

| |another participant entails zero marginal costs but can create much larger marginal gains. |

| | |

| |Difficulty: Easy Reference: p. 105 |

| |A(n) strategic transition is a movement from one level of a sociotechnical system to another. |

| | |

| |Difficulty: Hard Reference: p. 106 |

Essay Questions

| |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? |

| | |

| |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. |

| |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? |

| | |

| |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. |

| |Briefly describe Mintzberg’s classification of organizations. Provide an example of each. |

| | |

| |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. |

| |List three ways in which all organizations are alike. |

| | |

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

| |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. |

| | |

| |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. |

| |Discuss the various types of personnel required by a technology infrastructure and its attendant information technology |

| |services. |

| | |

| |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. |

| |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. |

| | |

| |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. |

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

| | |

| |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. |

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

| |systems? |

| | |

| |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. |

| |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? |

| | |

| |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. |

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