ITM100 CHAPTER 3 QUIZ

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Questions and Answers

What is the principle that organizations are devoted to?

Maximizing output using limited inputs (correct)

Creating a system of partial decision making

Promoting employees based on personal connections

Encouraging a hierarchy of authority

What are the precise rules, procedures, and practices developed to cope with expected situations in organizations called?

Hierarchies

Routines (correct)

Specializations

Personal connections

What governs specific actions in organizations?

Technical qualifications

Impartial decision making

Abstract rules or procedures (correct)

Personal connections

What do organizations try to base hiring and promotion decisions on?

Technical qualifications and professionalism Signup and view all the answers

What does organizational politics lead to within organizations?

Competition and conflict for resources and rewards Signup and view all the answers

What does organizational culture include?

Unspoken assumptions about the organization's goals, products, and production methods Signup and view all the answers

How does information technology affect the need for labor and other forms of capital?

Reduces the need for labor and other forms of capital Signup and view all the answers

What is one way in which firms can achieve economies due to information technology?

Obtaining over 70% of their parts from external suppliers Signup and view all the answers

How do information systems impact the possibility of outsourcing assembly?

Make it possible for companies to outsource assembly to contract manufacturers Signup and view all the answers

What happens to firm size as transaction costs decrease?

Firm size can shrink even as the company increases its revenues Signup and view all the answers

How does information technology impact internal management costs?

Reduces internal management costs by making it easier for managers to oversee a greater number of employees Signup and view all the answers

How does agency theory view the firm?

As a 'nexus of contracts' among self-interested individuals Signup and view all the answers

How does information technology impact agency costs?

Reduces agency costs by making it easier for managers to supervise and manage employees Signup and view all the answers

What is the main benefit of Walmart's point-of-sale terminals sending purchase transactions to a central computer at headquarters?

Reducing the need for large warehouse inventories Signup and view all the answers

How does Walmart's operating costs compare to the industry average?

Lower at 16.6% of sales revenue Signup and view all the answers

What is an example of how Amazon, Apple, Ping, and PayPal have used IT for competitive advantage?

IT-enabled new products and services Signup and view all the answers

How do information systems enable companies to analyze customer buying patterns, tastes, and preferences?

By collecting and processing relevant data Signup and view all the answers

What does Hilton Hotels' OnQ system analyze to determine preferences and profitability?

Guest data Signup and view all the answers

How do credit card companies use data analysis?

To predict profitable cardholders and identify credit risks Signup and view all the answers

How do automobile manufacturers use information systems to facilitate direct access by suppliers to production schedules?

By providing real-time production schedule updates Signup and view all the answers

What is an example of how Amazon uses information systems to increase customer intimacy and loyalty?

Tracking user preferences and recommending titles Signup and view all the answers

How can information systems improve the overall performance of strategic business units?

By promoting synergies and core competencies Signup and view all the answers

What role does information technology play in bank and financial firm mergers?

Tying together disparate business unit operations for synergy Signup and view all the answers

What is one of the impacts of information technology on organizations according to the text?

Reduction of management costs leading to increased revenues and decreased middle managers and clerical workers Signup and view all the answers

How does information technology affect the power of small organizations?

It expands the power, allowing coordinated activities with minimal staff Signup and view all the answers

What does the broadening management span of control allow high-level managers to do?

Manage more workers over greater distances Signup and view all the answers

What do postindustrial theories support regarding the impact of IT on hierarchies?

Flattening hierarchies as authority relies more on knowledge and competence Signup and view all the answers

What organizational structure may information technology encourage?

Task force–networked organizations Signup and view all the answers

What is a common outcome of introducing new information systems to organizations?

Organizational resistance to change Signup and view all the answers

What factors contribute to organizational resistance when introducing new information systems?

Nature of the IT innovation, organization structure, culture, and tasks affected by the innovation Signup and view all the answers

What does organizational resistance often lead to in the context of large IT projects?

Failure of large IT projects Signup and view all the answers

How do supermarkets like Walmart use information systems to keep costs low and meet customer demands?

Use sales data and continuous replenishment systems Signup and view all the answers

What strategy do firms use information systems to counteract competitive forces?

Low-cost leadership, product differentiation, focus on market niche, and strengthening customer and supplier intimacy Signup and view all the answers

What is an example of using information systems to achieve low operational costs and prices according to the text?

Walmart's continuous replenishment system Signup and view all the answers

What is network economics?

The economic value produced depends on the number of people using a product Signup and view all the answers

How does network economics differ from traditional economics?

The value of a product or service increases as more people use it Signup and view all the answers

What strategic benefits does network economics provide to commercial software vendors?

The value of their software increases with a larger user base Signup and view all the answers

What is the virtual company model?

It uses networks to link people, assets, and ideas, enabling companies to ally with others to create and distribute products and services without traditional organizational boundaries Signup and view all the answers

How does Procter & Gamble use information systems to enhance its core competencies?

By facilitating knowledge sharing across business units and leveraging existing competencies in related markets Signup and view all the answers

How can information systems help companies after a merger or acquisition?

Consolidate operations, reduce costs, and increase cross-marketing of products Signup and view all the answers

What is an example of leveraging network economics to increase value for users?

eBay Signup and view all the answers

How do Internet sites foster customer loyalty and unique ties to customers?

By building communities of users Signup and view all the answers

What does the virtual company model enable companies to do?

Ally with others to create and distribute products and services without traditional organizational boundaries Signup and view all the answers

In what way does information systems help Bank of America after acquiring Countrywide Financial?

Expanding its mortgage lending business and gaining access to new customers for its financial products Signup and view all the answers

What is the role of information systems in the success of network effects on the Internet?

Enabling the success of network effects in social networks and on-demand companies Signup and view all the answers

Study Notes

Impact of Information Technology on Organizations

Information technology reduces management costs, enabling firms to increase revenues and reduce the number of middle managers and clerical workers.
IT expands the power of small organizations, allowing them to perform coordinated activities with minimal staff.
The broadening management span of control allows high-level managers to manage more workers over greater distances.
Postindustrial theories support the idea that IT should flatten hierarchies, as authority increasingly relies on knowledge and competence.
Information technology may encourage task force–networked organizations, where professionals come together for specific tasks and then join other task forces.
Organizational resistance to change is common when introducing new information systems due to changes in structure, culture, and business processes.
Resistance factors include the nature of the IT innovation, organization structure, culture, and tasks affected by the innovation.
Organizational resistance often leads to failure of large IT projects, making working with people and organizations as important as technical knowledge for managers.
Supermarkets like Walmart use sales data and continuous replenishment systems to keep costs low and meet customer demands.
Manufacturers of laptop PCs have multiple competing suppliers of key components, such as keyboards and hard drives.
Firms can use information systems to counteract competitive forces through low-cost leadership, product differentiation, focus on market niche, and strengthening customer and supplier intimacy.
Walmart's continuous replenishment system is an example of using information systems to achieve low operational costs and prices.

Using Information Systems for Competitive Advantage

Bank of America acquired Countrywide Financial, expanding its mortgage lending business and gaining access to new customers for its financial products.
Information systems can help companies consolidate operations, reduce costs, and increase cross-marketing of products after a merger or acquisition.
Information systems can enhance core competencies by facilitating knowledge sharing across business units and leveraging existing competencies in related markets.
Procter & Gamble uses systems to enhance its core competencies in brand management and consumer product innovation by enabling global knowledge sharing.
Network economics refers to market situations where the economic value produced depends on the number of people using a product.
Network effects, such as those seen in social networks and on-demand companies, have been highly successful on the Internet.
In network economics, the value of a product or service increases as more people use it, unlike in traditional economics where diminishing returns apply.
Internet sites can be used by firms to build communities of users, fostering customer loyalty and unique ties to customers.
eBay is an example of a business that has built an online community using the Internet, leveraging network economics to increase value for users.
Network economics also provides strategic benefits to commercial software vendors, as the value of their software increases with a larger user base.
The virtual company model uses networks to link people, assets, and ideas, enabling companies to ally with others to create and distribute products and services without traditional organizational boundaries.
The virtual company model is useful for companies seeking to acquire products or services from external vendors or to move quickly to exploit new market opportunities.

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Description

This quiz explores the impact of information technology on organizations, including cost reduction, management span expansion, resistance to change, and leveraging information systems for competitive advantage. It also delves into how information systems can be utilized to achieve competitive advantages, enhance core competencies, and apply network economics for strategic benefits.