Chapter 15—Managing Information
TRUE/FALSE
1. Moore’s law accounts for the rapid increase in power and reduction in both size and price of computer
equipment over the past 35 years.
2. Moore’s law refers to the prediction that the cost of computing will drop by 50 percent every 2 years as
computer-processing power doubles.
3. In today’s hypercompetitive business environments, capital (i.e., money) is still more important than
information for business success.
4. Raw data contain useful information that communicate a clear and readily understandable message to
the person for which the data were gathered.
5. The primary difference between raw data and information is meaning to the user.
6. Information has strategic importance for organizations because it can be used to obtain first-mover
advantage and to sustain a competitive advantage once it has been created.
7. Pioneering differential refers to the strategic advantage that companies earn by being the first in an
industry to use new information technology to substantially lower costs or to differentiate a product or
service from competitors.
8. The first airline that used technology to allow passengers to buy their plane tickets and reserve their
seats online had a first-mover advantage.
9. The first company to gain first-mover advantage typically benefits from higher profits and larger
market share.
10. According to the resource-based view of information technology, sustainable competitive advantage
occurs when information technology adds value, is different across firms, and is difficult to create or
acquire.
11. The key to sustaining a competitive advantage is using information technology to continuously
improve and support the core functions of a business.
12. The two basic methods of capturing information are continuous and periodic.
13. Bar codes and document scanners are common methods of electronically capturing data.
14. Association patterns are also called sequence patterns.
15. The term data mining refers to the process of discovering unknown patterns and relationships in large
amounts of data.
16. Unsupervised data mining is unethical.
17. Data mining typically splits a data set in half, finds patterns in one half, and then tests the validity of
those patterns by trying to find them again in the second half of the data set.
18. A data warehouse stores raw data that have been collected from a variety of sources for later use.
19. Protecting information is the process of ensuring that data are reliably and consistently retrievable in a
usable format for authorized users but no one else.
20. The two activities necessary to properly secure data and data networks are the use of firewalls and
antivirus software.
21. Data mining often reveals data clusters where three or more database elements occur together.
22. Data encryption transforms data into complex, scrambled digital codes that can only be unencrypted
by authorized users who possess unique decryption keys.
23. Virtual private networks (VPN) and secure sockets layer (SSL) encryption perform basically the same
function.
24. Intranets are private company networks that allow employees to easily access, share, and publish
information using Internet software.
25. Three major types of information technology are used by executives, managers, and workers inside the
company to access and share information. They are executive information systems, intranets, and
corporate portals.
26. Electronic data interchange (EDI), extranets, and the Internet have proven to provide such a
competitive advantage that managers are scrambling to find ways to use them in their own companies.
27. Electronic data interchange, or EDI, is the direct electronic transmission of purchase and ordering
information from one company’s computer system to another company’s computer system.
28. Data and information are the same as knowledge.
29. It is important to understand that DSS programs should not replace managerial decision making.
30. Extranets are used to handle organizational transactions with suppliers and distributors.
31. Most expert systems work by using a collection of “if-then” rules to sort through information and
recommend a course of action.
MULTIPLE CHOICE
1. According to ____, the cost of computing will drop by 50 percent as computer-processing power
doubles every 18 months.
a.
Moore’s law
b.
Gordon’s law
c.
the Peter principle
d.
the rule of e-commerce
e.
Gresham’s Law
2. The term ____ refers to facts and figures that are in an unusable form.
a.
nonspecific information
b.
processed data
c.
raw data
d.
perceived knowledge
e.
relevant information
3. The first company to use new information technology to substantially lower costs or differentiate
products or services often gains ____.
a.
first-mover advantage
b.
lower profits
c.
less market adaptability
d.
increased synergy
e.
all of these
4. Pages listing all of the felony crimes perpetrated in a given city during the last decade would be an
example of ____.
a.
a resource allocation table
b.
traditional knowledge
c.
raw data
d.
perceived knowledge
e.
information
5. Why is information strategically important for organizations?
a.
Information can be used to obtain first-mover advantage.
b.
Information is derived from perceived knowledge, which limits its availability.
c.
Information cannot be used as a medium of exchange.
d.
Information creates suboptimization opportunities.
e.
All of these are examples of why information is strategically important for organizations.
6. A table showing the order frequencies as well as the average dollar value of the orders of different
segments of a catalog retailer’s market would be an example of ____.
a.
an MIS
b.
perceived knowledge
c.
raw data
d.
information
e.
influential knowledge
7. Understanding that consumers wanted clean, convenient food when they were away from home was
the information the first fast food restaurant founder used to ____.
a.
acquire a source of perceived knowledge
b.
create a tactical advantage
c.
create a first-mover advantage
d.
pioneer sales in the consumer food industry
e.
sustain a competitive advantage
8. Which of the following is one of the critical issues companies need to address in order to sustain a
competitive advantage through information technology?
a.
Who will have access to the information technology?
b.
Will the purchase of the information technology be viewed as an expense or as an
investment?
c.
Does the firm’s use of the information technology violate any ethical standards?
d.
Is the firm’s use of information technology difficult for another company to create or buy?
e.
What government regulations may influence the company’s use of information
technology?
9. The key to sustaining competitive advantage is ____.
a.
faster computers with more memory
b.
using information technology to continuously improve and support the core functions of a
business
c.
the Internet
d.
the ability of the managers to delegate
e.
how important the company’s culture perceives conceptual skills
10. When Billy Ingram founded White Castle, much of the public thought that hamburgers were made
from rotten beef and not fit for human consumption. Ingram ground fresh beef in front of customers to
prove it was safe and was the first to successfully sell hamburgers to the middle class. Today Ingram is
credited as the founder of the fast-food industry. Yet, today White Castle has 330 locations, and
McDonald’s has 25,000 stores. From this information, you know ____.
a.
tactics are more influential than strategies
b.
the competitive advantage White Castle achieved from being first was not sustainable
c.
White Castle lost its pioneering differential
d.
product diffusion rates were slow
e.
none of these
11. According to the resource-based view of information technology, sustainable competitive advantage
____.
a.
is difficult to create or acquire
b.
can be created by using information technology to continuously improve and support the
core functions of a business
c.
differs across firms
d.
occurs when information technology adds value
e.
is accurately described by all of these
12. The two basic methods of capturing information are ____.
a.
systematic and unsystematic
b.
planned and unplanned
c.
continuous and intermittent
d.
functional and hierarchical
e.
manual and electronic
13. The manual capture of information is ____.
a.
slow
b.
expensive
c.
labor-intensive
d.
often inaccurate
e.
all of these
14. Because they are inexpensive and easy to use, ____, which convert printed text and pictures into
digital images, have become an increasingly popular method for capturing data electronically.
a.
electronic data interchanges
b.
electronic scanners
c.
radio frequency information digitizers (RFIDs)
d.
data digitalization
e.
bar coding devices
15. Text and pictures that have been digitized cannot be searched or edited like text and pictures found in
word processing software. ____ can be used to convert digitized documents into ASCII code that can
be edited by word processing software.
a.
Electronic bar scanners
b.
Optical numerical readers
c.
Optical character recognition software
d.
Radio frequency analog systems
e.
Analog scanners
16. In the process of capturing information, ASCII text is generated by ____.
a.
bar codes
b.
electronic scanners
c.
optical character recognition software
d.
e-tools
e.
data mining
17. The three methods of tracing products through a distribution system are paper records, bar codes, and
radio frequency identification tags. Which of the following statements about the tracing of products is
true?
a.
RFID tags need direct line-of-sight scanning.
b.
Bar codes would be the easiest and most economical method to use.
c.
Until technological improvements are made, paper records are the best way to trace
recalled products.
d.
RFID tags are most efficient because they can be read by a radio that has been tuned to a
specific frequency.
e.
Bar codes are the most efficient because they make use of optical character recognition.
18. ____ is the process of discovering unknown patterns and relationships in large amounts of data.
a.
Information keystoning
b.
Data mining
c.
Data warehousing
d.
Data outsourcing
e.
Patterning
19. Using ____ data mining, the user usually begins by telling the data mining software to look and test for
specific patterns and relationships in a data set.
a.
supervised
b.
specific
c.
comprehensive
d.
unsupervised
e.
homogenous
20. Using ____ data mining, the user simply tells the data mining software to uncover whatever patterns
and relationships it can find in a data set.
a.
supervised
b.
specific
c.
comprehensive
d.
heterogeneous
e.
unsupervised
21. The two major types of data mining are ____.
a.
supervised and unsupervised
b.
random and sequence
c.
affinity and association
d.
sequence and affinity
e.
ASCII and digital
22. The Food and Drug Administration (FDA) could use data it has collected from millions of suspected
drug-related adverse event reports and other electronic medical information to identify a pattern of
adverse drug events in a specific population. This data collected by the FDA would be held in a(n)
____.
a.
Internet database
b.
competitive intelligence source
c.
data warehouse
d.
data extraction
e.
information clearinghouse
23. By examining checkout data, supermarkets have learned that people who are buying beer typically also
buy a bag of salty snacks. As a result of this finding from ____, supermarkets often place displays of
beer near the chips and pretzel aisle.
a.
optical scanning
b.
electronic data interchange
c.
bar coding
d.
data mining
e.
data warehousing
24. By examining checkout data, supermarkets have learned that people who are buying beer often also
buy a bag of salty snacks. The use of data mining led to the discovery of a(n) ____ pattern.
a.
sequential
b.
affinity
c.
predictive
d.
adjacency
e.
extrapolative
25. Data mining is the ____.
a.
automated, electronic capture of data
b.
process of hypothesis testing in large databases
c.
process of verifying known relationships in large amounts of data
d.
process of discovering unknown patterns and relationships in large amounts of data
e.
method used to identify and eliminate perishable data
26. The data used in data mining typically come from ____ that store huge amounts of data that have been
prepared for data mining analysis by being cleaned of errors and redundancy.
a.
Internet databases
b.
competitive intelligence sources
c.
data warehouses
d.
data extractions
e.
information clearinghouses
27. Unsupervised data mining is particularly good at identifying ____.
a.
association or affinity patterns
b.
sequence patterns
c.
predictive patterns
d.
data clusters
e.
all of these
28. Have you ever purchased a book or CD on Amazon.com and noticed that as soon as you put your
selection in the shopping cart, you were offered a series of other items that people who made the same
purchase as you did also bought? This would be an example of ____ data mining.
a.
sequence
b.
association
c.
predictive
d.
adjacency
e.
extrapolative
29. ____ occur in data mining when two or more database elements occur together in a significant pattern,
with one of the elements preceding the other.
a.
Data clusters
b.
Affinity patterns
c.
Association patterns
d.
Sequence patterns
e.
Logic clusters
30. Unsupervised data mining can be used to recognize ____ patterns.
a.
association, affinity, and sequence
b.
association, extrapolative, and predictive
c.
affinity, predictive, and adjacency
d.
progressive, predictive, and accommodative
e.
affinity, sequence, and predictive
31. Baseball management discovered that its sales increased by almost 100 percent in those seasons when
it held an open house prior to the opening game and allowed people to see the box seats and examine
the view of the stadium from those seats. In terms of data mining, the management discovered a(n)
____ pattern.
a.
affinity
b.
sequence
c.
association
d.
adjacency
e.
collaborative
32. Which of the following statements about data mining is true?
a.
Data mining is the specific process used to match buyers and sellers.
b.
Data mining is too expensive for most companies to use at this time.
c.
The two forms of data mining are centralized and decentralized.
d.
Data mining typically uses data from a data warehouse.
e.
All of these statements about data mining are true.
33. ____ is the process of ensuring that data are reliably and consistently retrievable in a usable format for
authorized users, but no one else.
a.
Decryption
b.
Roadblocking
c.
Data insulation
d.
Protecting information
e.
Cookie manipulation
34. For the purposes of data mining, ____ patterns are just the opposite of association patterns.
a.
divorce
b.
adjacency
c.
predictive
d.
affinity
e.
asymmetrical
35. Data clusters ____.
a.
result from the use of internal data mining
b.
are a statistical technique used for trend analysis
c.
are used to create samples for statistical analyses
d.
occur when three or more database elements occur together in a significant way
e.
are accurately described by all of these
36. To properly secure data and data networks, a manager should use all of the following EXCEPT ____.
a.
roadblocks
b.
firewalls
c.
data encryption
d.
antivirus software
e.
virtual private networks
37. Two critical steps are required to make sure that data can be accessed by authorized users and no one
else. They are ____.
a.
authentication and authorization
b.
authorization and empowerment
c.
delegation and empowerment
d.
encryption and empowerment
e.
authentication and encryption
38. Which of the following statements about firewalls is true?
a.
Firewalls are a way to protect data.
b.
Firewalls can be in the form of hardware or software.
c.
Firewalls prevent unauthorized use of data.
d.
Firewalls sit between the computers in an internal organizational network and outside
networks.
e.
All of these statements about firewalls are true.
39. A system that requires employees to scan their thumbprints as they start work is called
a(n)___________.
a.
intangible cookies
b.
biometrics
c.
personal RFID tags
d.
individual bar codes
e.
optical scanners
40. Although firewalls can protect personal computers and network services connected to the corporate
network, people away from their offices who interact with their company networks via the Internet
face a safety risk. Which of the following technologies has proven to be an inexpensive solution to this
problem?
a.
safe software for logic (SSL) encryption
b.
virtual private networks
c.
local area networks
d.
firewall reassignment
e.
reengineered applets
41. Although firewalls can protect personal computers and network services connected to the corporate
network, people away from their offices who interact with their company networks via the Internet
face a safety risk. Which of the following technologies has proven to be a viable solution to this
problem?
a.
safe software for logic (SSL) encryption
b.
firewall reengineering
c.
secure sockets layer (SSL) encryption
d.
secure logistical LAN (SLL) encryption
e.
virus protected networks (VPNs)
42. The establishment of ____ is an information security procedure that encrypts Internet data at both ends
of the transmission process.
a.
cookie manipulators
b.
virtual private networks
c.
cookie managers
d.
firewall
e.
data insulators
43. Three kinds of information technology are used by executives, managers, and workers inside the
company to access and share information. They are ____.
a.
executive information systems, portals, and intranets
b.
local area networks, extranets, and management information systems
c.
intranets, local area networks, and portals
d.
expert systems, decision support system, and virtual private networks
e.
Internet-accesses, SSL encryption, and intranets
44. A(n) ____ is a private company network that allows employees to easily access, share, and publish
information using Internet software.
a.
LAN portal
b.
private company network (PCN)
c.
intranet
d.
electronic data sharing system
e.
information network
45. ____ are a hybrid of executive information systems and intranets.
a.
Corporate portals
b.
Extranets
c.
Expert systems
d.
Virtual private networks
e.
Electronic data interchanges
46. ____ allow managers and employees to use a Web browser to gain access to customized company
information and to complete specialized transactions.
a.
Corporate portals
b.
Extranets
c.
Expert systems
d.
Virtual private networks
e.
Electronic data interchanges
47. Which of the following are included in intranets?
a.
Instant messaging
b.
Presence awareness
c.
Simultaneous access to files for team members
d.
Customizable email accounts
e.
All of the above