Chapter 2 How does the Internet affect the way you purchase

68. The Bodymetrics body scanner is best characterized as an example of:

A. mass production.

B. customer focus.

C. real-time customer input.

D. mass customization.

E. continuous improvement.

69. Information-based industries are most susceptible to which one of Porter’s five

forces?

A. threat of entry of new competitors

B. bargaining power of suppliers

C. bargaining power of customers

D. threat of substitute products

E. rivalry among existing firms in an industry

70. Competitive advantage for an organization manifests itself as all of the following

except:

A. Lower costs

B. Higher quality

C. Increased time to market

D. Increased profits

E. Increased speed

71. For most companies, the Web _____ the threat that new competitors will enter the

market by _____ traditional barriers to entry.

A. decreases, increasing

B. increases, decreasing

C. increases, increasing

D. decreases, decreasing

72. _____ is a feature that must be offered by a competing organization in order to

survive in the marketplace.

A. Competitive advantage

B. An entry barrier

C. Strategic advantage

D. Rapid time-to-market

E. One-to-one marketing

73. The threat of competitors’ entering the automobile manufacturing industry is _____

because barriers to entry are so _____.

A. low, low

B. high, high

C. high, low

D. low, high

74. The threat of competitors’ entering a market is very high in industries that perform

a(n) _____ role and in industries where the primary product or service is _____.

A. intermediation, physical

B. broker, physical

C. sales, financial

D. financial, digital

E. intermediation, digital

75. How does the Internet affect the way you purchase your textbooks?

A. The Internet gives you fewer choices.

B. The Internet increases your bargaining power.

C. The Internet provides you with less information.

D. The Internet decreases your bargaining power.

E. The Internet increases your switching costs.

76. Buyer power is _____ when buyers have many choices from whom to buy and

_____ when buyers have few choices.

A. high, the same

B. high, low

C. low, low

D. low, high

E. low, the same

77. The costs of delivering products in the _____ channel are much higher than

delivering products in the _____ channel.

A. e-commerce, digital

B. digital, e-commerce

C. digital, physical

D. physical, financial

E. physical, digital

78. Porter’s competitive forces model helps organizations identify _____, whereas his

value chain model helps organizations identify specific _____.

A. competitive opportunities, activities

B. general strategies, activities

C. activities, competitive opportunities

D. activities, general strategies

E. primary activities, support activities

79. _____ activities create value for which customers are willing to pay, whereas _____

activities do not add value directly to the firm’s products or services.

A. Support, primary

B. Human resource management, inbound logistics

C. Procurement, operations

D. Primary, support

E. Accounting, outbound logistics

80. If there are _____ substitutes for an organization’s products or services, then the

threat of substitutes is _____.

A. many, high

B. few, low

C. few, high

D. many, low

E. few, negligible

81. New technologies can produce new products very _____, which _____ the threat

from substitute products.

A. slowly, decreases

B. slowly, increases

C. slowly, does not affect

D. quickly, increases

E. quickly, does not affect

82. The visibility of Internet applications on the Web makes proprietary systems more

difficult to keep secret. This is an example of which of Porter’s five forces?

A. threat of entry of new competitors

B. bargaining power of suppliers

C. bargaining power of customers

D. threat of substitute products

E. rivalry among existing firms in an industry

83. Walmart’s automatic replenishment system, which enables the company to reduce

inventory storage requirements, is an example of which strategy for competitive

advantage?

A. cost leadership

B. differentiation

C. innovation

D. operational effectiveness

E. customer-orientation

84. Which strategy for competitive advantage involves offering different products,

services, or product features?

A. cost leadership

B. differentiation

C. innovation

D. operational effectiveness

E. customer-orientation

85. Which strategy for competitive advantage involves introducing new products and

putting new features in existing products?

A. cost leadership

B. differentiation

C. innovation

D. operational effectiveness

E. customer-orientation

86. Which strategy for competitive advantage involves improving the manner in which an

organization executes its internal business processes?

A. cost leadership

B. differentiation

C. innovation

D. operational effectiveness

E. customer-orientation

87. When Amazon welcomes you by name back to its Web site on your second visit, it is

employing which strategy for competitive advantage?

A. cost leadership

B. differentiation

C. innovation

D. operational effectiveness

E. customer-orientation

88. IT will impact managers’ jobs in all of the following ways except:

A. managers will have time to get into the field

B. managers can spend more time planning

C. managers can spend more time “putting out fires”

D. managers can gather information more quickly

E. none of the above

89. Porter’s _____ help(s) companies identify general strategies, whereas his _____

help(s) to identify specific activities where companies can use the strategies for greatest

impact.

A. value chain model, competitive forces model

B. primary activities, support activities

C. competitive forces model, primary activities

D. competitive forces model, value chain model

E. value chain model, support activities

90. Which of the following is not an example of business – IT alignment?

A. The company goals are clear to every IT and business employee.

B. The company ensures that IT employees understand how the company makes

money.

C. The company views IT as a way to support the business but not as a way to create

new revenue streams.

D. IT professionals rotate into business departments.

E. The company views customer service as extremely important.

91. Which of the following is not a cause of inadequate alignment between IT and

business?

A. A lack of communication

B. Different objectives

C. Not understanding each group’s expertise

D. Lack of IT knowledge on the part of the business executives

E. Lack of funds

92. Refer IT’s About Business 2.1 – Sharing Bicycles. Alta’s competitive advantage

stems from the fact that

A. they have a unique product or service

B. they have un-replicable business model

C. they have a first mover advantage

D. they are the cost leader in their industry

E. none of the above

93. Refer to IT’s About Business 2.2 – Chevron: The changes over the past few years at

Chevron were brought about by __________ and __________ at the company level and

____________ at the local level.

A. BPI, BPM, BPR

B. BPR, BPI, BPM

C. BPM, Six Sigma, BPR

D. BPR, BPM and BPI

94. Refer to IT’s About Business 2.3 – “Bring Your Own Device” Can Cause Problems:

Hamilton Fraser’s human resource department created an acceptable use policy for their

employees’ personal communication devices for the following reason:

A. They didn’t want their employees wasting time playing games on their iPhones

B. They didn’t want the corporate data to be accessible on mobile devices that were

lost/misplaced

C. They wanted to monitor how their employees were spending their time

D. They didn’t want their employees to use social media while working

E. They only wanted employees to use Android devices

95. Refer to IT’s About Business 2.4 – The Surui Tribe of the Amazon: The Surui Tribe’s

use of technology demonstrates how IT can be used to

A. to conserve natural resources

B. to prevent deforestation

C. to catch criminals

D. to create carbon off-sets

E. to create awareness about environmental problems

96. Refer to IT’s About Business 2.5 – Massachusetts Mutual Transforms Its

Information Systems: What kind of transformation did Massachusetts Mutual Transforms

undergo?

A. BPI

B. BPR

C. BPM

97. Refer to Closing Case – IBM’s Watson: IBM Watson differs from other information

systems’ capabilities in the following manner:

A. it can store vast amounts of information

B. it can search through a large amount of information

C. it can process natural language commands

D. it can process large amounts of information in response to a query and assign

confidence measures to a set of possible solutions

E. it can selectively update information based on current trends on the Internet

Question Type: Short Answer

98. Identify the three types of business pressures, and explain how organizations can

use IT to respond to each one.

99. Using Porter’s competitive forces model, contrast the bargaining power of suppliers

and the bargaining power of customers (buyers).

100. What are switching costs, and why would a company care about them?

101. Differentiate between Porter’s competitive forces model and his value chain model.

102. Differentiate between primary activities and support activities in Porter’s value chain

model.

103. Evaluate the assertion that an information system by itself can rarely provide a

sustainable competitive advantage.

Question Type: Essay

104. Explain what a business environment is and what factors within the environment

put pressure on the business.

105. Explain how changes in social responsibility, government regulation/deregulation,

social programs, protection against terrorism, and ethics put pressure on modern

businesses.

106. Identify the five forces of Porter’s competitive forces model, and explain how the

Internet impacts each one.

107. Discuss why the variable cost of digital products is extremely low.

108. Provide an example of each of the five strategies for competitive advantage. (Do

not use the examples provided in the book).

Question Type: Multiple Choice

109. Ted works in his family’s bakery business. They supply bread and rolls to

neighboring restaurants, and have their own store-front where they sell breads, rolls,

pastries, cookies, and cupcakes. Ted thinks he should put free Wi-Fi in the store front

(which seats about 15 people). This idea reflects which one of Porter’s five competitive

forces?

A. threat of entry of new competitors

B. bargaining power of suppliers

C. bargaining power of customers

D. threat of substitute products

E. rivalry among existing firms in an industry

110. Ted works in his family’s bakery business. They supply bread and rolls to

neighboring restaurants, and they have their own store front where they sell breads,

rolls, pastries, cookies and cupcakes. Ted wants to start a Cookie Club that gives each

member (joining is free) a free cookie after they have purchased a dozen. This idea

Reflects which one of Porter’s five competitive forces?

A. threat of entry of new competitors

B. bargaining power of suppliers

C. bargaining power of customers

D. threat of substitute products

E. rivalry among existing firms in an industry

111. Ted works in his family’s bakery business. They supply bread and rolls to

neighboring restaurants, and they have their own-store front where they sell breads,

rolls, pastries, cookies and cupcakes. Ted wants to build a web site for the business that

will allow customers to order cookies and cupcakes for later pickup. Is this idea

A. A strategic information system

B. In alignment with the business.

C. in support of a cost leadership strategy

D. likely to provide long term competitive advantage

E. a support activity within the value chain

112. Hyo runs an ice cream store with her family. Which of the following activities is a

part of their procurement process?

A. Recording their daily sales revenue

B. Sending an order to their sugar supplier

C. Making the ice cream

D. Setting up an employee schedule

E. Taking an order for an ice cream cake

113. Hyo runs an ice cream store with her family. Which of the following activities is a

part of their procurement?

A. Send an order to a supplier.

B. Decide what to order.

C. Record daily sales revenue

D. Record goods received

E. Send a check to a supplier

114. Hyo runs an ice cream store with her family. Which of the following activities is a

part of their fulfillment process?

A. Receiving goods from their supplier

B. Making ice cream

C. Recording daily sales revenue

D. Recording goods received

E. Making a custom-order ice cream cake