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?

<p>Technical qualifications and professionalism (D)</p> Signup and view all the answers

What does organizational politics lead to within organizations?

<p>Competition and conflict for resources and rewards (A)</p> Signup and view all the answers

What does organizational culture include?

<p>Unspoken assumptions about the organization's goals, products, and production methods (B)</p> Signup and view all the answers

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

<p>Reduces the need for labor and other forms of capital (B)</p> Signup and view all the answers

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

<p>Obtaining over 70% of their parts from external suppliers (A)</p> Signup and view all the answers

How do information systems impact the possibility of outsourcing assembly?

<p>Make it possible for companies to outsource assembly to contract manufacturers (A)</p> Signup and view all the answers

What happens to firm size as transaction costs decrease?

<p>Firm size can shrink even as the company increases its revenues (C)</p> Signup and view all the answers

How does information technology impact internal management costs?

<p>Reduces internal management costs by making it easier for managers to oversee a greater number of employees (C)</p> Signup and view all the answers

How does agency theory view the firm?

<p>As a 'nexus of contracts' among self-interested individuals (D)</p> Signup and view all the answers

How does information technology impact agency costs?

<p>Reduces agency costs by making it easier for managers to supervise and manage employees (B)</p> 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?

<p>Reducing the need for large warehouse inventories (D)</p> Signup and view all the answers

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

<p>Lower at 16.6% of sales revenue (D)</p> Signup and view all the answers

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

<p>IT-enabled new products and services (B)</p> Signup and view all the answers

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

<p>By collecting and processing relevant data (B)</p> Signup and view all the answers

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

<p>Guest data (B)</p> Signup and view all the answers

How do credit card companies use data analysis?

<p>To predict profitable cardholders and identify credit risks (B)</p> Signup and view all the answers

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

<p>By providing real-time production schedule updates (D)</p> Signup and view all the answers

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

<p>Tracking user preferences and recommending titles (B)</p> Signup and view all the answers

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

<p>By promoting synergies and core competencies (D)</p> Signup and view all the answers

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

<p>Tying together disparate business unit operations for synergy (D)</p> Signup and view all the answers

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

<p>Reduction of management costs leading to increased revenues and decreased middle managers and clerical workers (A)</p> Signup and view all the answers

How does information technology affect the power of small organizations?

<p>It expands the power, allowing coordinated activities with minimal staff (B)</p> Signup and view all the answers

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

<p>Manage more workers over greater distances (C)</p> Signup and view all the answers

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

<p>Flattening hierarchies as authority relies more on knowledge and competence (C)</p> Signup and view all the answers

What organizational structure may information technology encourage?

<p>Task force–networked organizations (C)</p> Signup and view all the answers

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

<p>Organizational resistance to change (A)</p> Signup and view all the answers

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

<p>Nature of the IT innovation, organization structure, culture, and tasks affected by the innovation (D)</p> Signup and view all the answers

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

<p>Failure of large IT projects (C)</p> Signup and view all the answers

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

<p>Use sales data and continuous replenishment systems (B)</p> Signup and view all the answers

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

<p>Low-cost leadership, product differentiation, focus on market niche, and strengthening customer and supplier intimacy (B)</p> 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?

<p>Walmart's continuous replenishment system (B)</p> Signup and view all the answers

What is network economics?

<p>The economic value produced depends on the number of people using a product (B)</p> Signup and view all the answers

How does network economics differ from traditional economics?

<p>The value of a product or service increases as more people use it (C)</p> Signup and view all the answers

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

<p>The value of their software increases with a larger user base (A)</p> Signup and view all the answers

What is the virtual company model?

<p>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 (D)</p> Signup and view all the answers

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

<p>By facilitating knowledge sharing across business units and leveraging existing competencies in related markets (C)</p> Signup and view all the answers

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

<p>Consolidate operations, reduce costs, and increase cross-marketing of products (A)</p> Signup and view all the answers

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

<p>eBay (C)</p> Signup and view all the answers

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

<p>By building communities of users (D)</p> Signup and view all the answers

What does the virtual company model enable companies to do?

<p>Ally with others to create and distribute products and services without traditional organizational boundaries (D)</p> Signup and view all the answers

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

<p>Expanding its mortgage lending business and gaining access to new customers for its financial products (A)</p> Signup and view all the answers

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

<p>Enabling the success of network effects in social networks and on-demand companies (D)</p> Signup and view all the answers

Flashcards

Information technology's impact on management costs

Information technology can reduce administrative expenses, allowing organizations to bring in more revenue and cut back on middle managers and clerical staff.

Impact of IT on small organizations

IT empowers small organizations to manage complex operations with fewer personnel.

Broadening management span of control

The use of information technology allows managers to supervise more people over wider geographical areas.

Post-industrial theories and organizational structure

IT promotes flatter organizational structures, favoring knowledge and skill over traditional hierarchy.

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Task force-networked organizations

IT encourages task force-based organizations where professionals assemble for specific projects and then move to other teams.

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Organizational resistance to IT change

Introducing new IT systems often faces resistance from employees due to changes in organizational structure, culture, and workflows.

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Factors influencing IT adoption resistance

The nature of the IT innovation, organizational structure, culture, and affected tasks contribute to resistance to change.

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Impact of resistance on IT project success

Resistance can cause major IT projects to fail, emphasizing the importance of understanding human behavior and organizational dynamics.

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Walmart's use of information systems

Walmart uses sales data and continuous replenishment systems to maintain low costs and satisfy customer needs.

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Competitive sourcing in the laptop PC industry

Laptop PC manufacturers rely on multiple suppliers for key components, highlighting the importance of supply chain management.

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Using IT to achieve competitive advantage

Information systems can be used to counter competitive forces by achieving low costs, differentiating products, targeting specific markets, and strengthening relationships with customers and suppliers.

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Walmart's competitive advantage through IT

Walmart's continuous replenishment system is an example of utilizing IT to achieve low operational costs and competitive pricing.

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Mergers and acquisitions using information systems

Bank of America's acquisition of Countrywide Financial allowed them to expand their mortgage lending business and reach new customers for their financial products.

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Post-merger integration using IT

Information systems can facilitate consolidation, cost reduction, and cross-marketing after mergers or acquisitions.

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IT and core competency enhancement

Information systems can enhance core competencies by enabling knowledge sharing across business units and leveraging existing expertise in related markets.

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Procter & Gamble's use of IT for core competency enhancement

Procter & Gamble utilizes systems to enhance its expertise in brand management and consumer product innovation by promoting knowledge sharing worldwide.

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Network economics

Network economics refers to situations where the value of a product or service increases with more users.

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Network effects and internet success

Network effects, such as those observed in social media and on-demand services, have achieved significant success on the internet.

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Network economics vs. traditional economics

In network economics, the value of a product increases with more users, contrasting traditional economics' principle of diminishing returns.

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Building online communities using internet sites

Companies can use internet sites to establish online communities, fostering customer loyalty and unique relationships.

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eBay as an example of network economics

eBay's success illustrates how a business can establish an online community through the internet, enhancing value for users based on network economics.

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Network economics and software vendors

Network economics also strategically benefits commercial software vendors, as the value of their software increases with a larger user base.

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The virtual company model

The virtual company model uses networks to connect people, resources, and ideas, allowing companies to collaborate with others to produce and deliver products without traditional organizational structures.

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Benefits of the virtual company model

The virtual company model is valuable for acquiring products or services from external suppliers or rapidly seizing new market opportunities.

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IT's overall effect on organizations

IT has a significant impact on organizations, affecting management costs, organizational structures, and competitive strategies.

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IT's role in competitive advantage

Information systems play a critical role in achieving competitive advantage through cost reduction, product differentiation, market focus, and strengthening customer relationships.

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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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Management Information Systems: Managing the Digital Firm PDF

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.

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