Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
Chapter 3 Information Systems, Organizations, and Strategy
1) All organizations have bedrock, unassailable assumptions that define their goals and
products.
2) An adhocracy is a knowledge-based organization where goods and services depend on the
expertise and knowledge of professionals.
3) From the point of view of economics, information systems technology can be viewed as a
factor of production that can be substituted for traditional capital and labor.
4) A firm can be said to have competitive advantage when they have higher stock market
valuations than their competitors.
5) Customers are one of the competitive forces that affect an organization’s ability to compete.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
6) A transparent marketplace means that there is high product differentiation.
7) The effect of the Internet has been to raise bargaining power over suppliers.
8) In the strategy of product differentiation, information systems are used to enable new
products and services.
9) Mass customization is a form of mass production.
10) Strong linkages to customers and suppliers decrease switching costs.
11) Business processes are collections of standard operating procedures.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
12) The value chain model classifies all company activities as either primary or support.
13) In the value chain model, primary activities are most directly related to the production and
distribution of the firm’s products and services that create value for the customer.
14) The idea driving synergies is that when the output of some units can be used as inputs to
other units, the relationship can lower cost and generate profits.
15) In a demonstration of network economics, the more people that use Adobe software and
related products, the greater the value of the software.
16) The term business ecosystem describes the interplay between the various organizational
forces within a firm.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
17) Research has shown that only 25% of firms are able to align their information technology
with their business goals.
18) The use of Internet technologies allows companies to more easily sustain competitive
advantage.
19) In the macroeconomic definition of organizations, capital and labour are transformed by the
firm through the production process into products and services.
20) The technical and behavioural definitions of organizations are not complementary. Indeed,
they contradict each other.
21) Routines—sometimes called non-standard operating procedures—are precise rules,
procedures, and practices that have been developed to cope with virtually all expected
situations.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
22) Information systems are key instruments for environmental scanning, helping managers
identify external changes that might require an organizational response.
23) As transaction costs decrease, firm size (the number of employees) should shrink because it
becomes easier and cheaper for the firm to contract for the purchase of goods and services
in the marketplace rather than to make the product or offer the service itself.
24) The interaction between information systems and organizations is influenced
A) primarily by the decision making of middle and senior managers.
B) by many factors, including structure, politics, culture, and environment.
C) by two main microeconomic forces: capital and labor.
D) primarily by the organization’s business processes and culture.
25) An organization is a
A) stable, formal social structure that takes resources from the environment and processes
them to produce outputs.
B) formal, legal entity with internal rules and procedures that must abide by laws.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
C) collection of social elements.
D) B and C
E) A, B, and C
26) According to the ________ definition of organizations, an organization is seen as a means
by which primary production factors are transformed into outputs consumed by the
environment.
A) microeconomic
B) macroeconomic
C) sociotechnical
D) behavioral
27) How does the technical view of organizations fall short of understanding the full impacts of
information systems in a firm?
A) It sees information systems as a way to rearrange the inputs and outputs of the
organization.
B) It sees capital and labor as primary production factors.
C) It sees the inputs and outputs, labor and capital, as being infinitely malleable.
D) It sees the organization as a social structure similar to a machine.
28) All of the following are major features of organizations that impact the use of information
systems except for
A) business processes.
B) environments.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
C) goals.
D) agency costs.
29) Business processes are collections of
A) informal practices and behaviors.
B) formalized and documented practices.
C) routines.
D) rights and privileges.
30) Which of the following would not be considered a disruptive technology?
A) instant messaging
B) e-mail
C) Internet telephony
D) PCs
31) Mintzberg’s classification of organizational structure categorizes the knowledge-based
organization where goods and services depend on the expertise and knowledge of
professionals as a(n)
A) entrepreneurial structure.
B) divisionalized bureaucracy.
C) professional bureaucracy.
D) adhocracy.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
32) A large bureaucracy existing in a slowly changing environment that produces standard
products and is dominated by centralized management making is classified by Mintzberg as
a ________ bureaucracy.
A) machine
B) professional
C) divisionalized
D) multidivisional
33) An example of a divisionalized bureaucracy is a
A) startup firm.
B) university.
C) Fortune 500 firm.
D) midsize manufacturer.
34) The costs incurred when a firm buys on the marketplace what it cannot make itself are
referred to as
A) switching costs.
B) transaction costs.
C) procurement.
D) agency costs.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
35) Which of the following statements is not true about information technology’s impacts on
business firms?
A) It helps firms expand in size.
B) It helps firms lower the cost of market participation.
C) It helps reduce internal management costs.
D) It helps reduce transaction costs.
36) According to agency theory, the firm is viewed as a(n)
A) unified, profit-maximizing entity.
B) task force organization that must respond to rapidly changing environments.
C) entrepreneurial endeavor.
D) “nexus of contracts” among self-interested individuals.
37) According to research of organizational resistance, the four components that must be
changed in an organization in order to successfully implement a new information system are
A) environment, organization, structure, and tasks.
B) technology, people, culture, and structure.
C) organization, culture, management, and environment.
D) tasks, technology, people, and structure.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
38) The ________ model is used to describe the interaction of external forces that affect an
organization’s strategy and ability to compete.
A) network economics
B) competitive forces
C) competitive advantage
D) demand control
39) Which of the following industries has a low barrier to entry?
A) automotive
B) computer chip
C) restaurant
D) airline
40) Which of the following is not one of the competitive forces?
A) suppliers
B) other competitors
C) external environment
D) customers
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
41) A manufacturer of deep-sea oil rigs may be least concerned about this marketplace force.
A) product differentiation
B) traditional competitors
C) low number of suppliers
D) new market entrants
42) A substitute product of most concern for a cable TV distributor is
A) satellite TV.
B) broadcast TV.
C) satellite radio.
D) the Internet.
43) Barnes & Noble’s apps for its e-reader, the Nook, is an example of a firm using information
systems to
A) strengthen ties to its customers.
B) remove publishers from the industry value chain.
C) develop synergies with publishers.
D) focus on market niche.
44) A firm can exercise greater control over its suppliers by having
A) more suppliers.
B) fewer suppliers.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
C) global suppliers.
D) local suppliers.
45) Amazon’s use of the Internet as a platform to sell books more efficiently than traditional
bookstores illustrates a use of information services for
A) low-cost leadership.
B) marketing effectiveness.
C) focusing on market niche.
D) strengthening supplier intimacy.
46) The four major types of competitive strategy are
A) low-cost leadership; substitute products and services; customers; and suppliers.
B) low-cost leadership; product differentiation; focus on market niche; and customer and
supplier intimacy.
C) new market entrants; substitute products and services; customers; and suppliers.
D) low-cost leadership; new market entrants; product differentiation; and focus on market
niche.
47) Walmart’s continuous replenishment system allows it to
A) provide mass customization.
B) provide an efficient customer response system.
C) strengthen customer intimacy.
D) achieve economy of scale.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
48) When a firm provides a specialized product or service for a narrow target market better than
competitors, they are using a ________ strategy.
A) product differentiation
B) market niche
C) mass customization
D) process efficiency
49) ________ is the ability to offer individually tailored products or services using the same
production resources as bulk production.
A) Mass customization
B) Size customization
C) Magnitude customization
D) Dimension customization
50) In environmental scanning, a firm may use information systems to
A) utilize sensors that track products through the value chain.
B) analyze external Internet traffic to its Web sites.
C) identify external events that may affect it.
D) understand its carbon footprint and energy impacts on the environment.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
51) An information system can enable a company to focus on a market niche through
A) complex trend forecasting.
B) tailoring products to the client.
C) intensive product trend analysis.
D) intensive customer data analysis.
52) Which of the following best illustrates the use of information systems to focus on market
niche?
A) A car manufacturer’s Web site that lets you customize the features on the car you are
purchasing.
B) A restaurant chain analyzing local sales figures to determine which menu items to serve.
C) A bookseller selling an e-book reader that reads only the bookseller’s books.
D) A department store creating specialized products for small groups of customers.
53) As described in the chapter case, the competitive force of ________ resulted in Starbuck’s
downturn in 2008, and it employed information systems in a strategy of ________ to
combat this force.
A) traditional competitors; product differentiation
B) new market entrants; product specialization
C) substitute products; market niche
D) customers; customer intimacy
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
54) The Internet raises the bargaining power of customers by
A) creating new opportunities for building loyal customer bases.
B) making more products available.
C) making information available to everyone.
D) lowering transaction costs.
55) Which of the following industries has not been disrupted by the Internet?
A) encyclopedias
B) newspapers
C) clothing
D) air travel
56) What significant competitive force is challenging the publishing industry?
A) positioning and rivalry among competitors
B) low cost of entry
C) substitute products or services
D) customer’s bargaining power
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
57) The value chain model
A) categorizes five related advantages for adding value to a firm’s products or services.
B) sees the supply chain as the primary activity for adding value.
C) categorizes four basic strategies a firm can use to enhance its value chain.
D) helps a firm identify points at which information technology can most effectively
enhance its competitive position.
58) The primary activities of a firm include
A) inbound logistics, operations, outbound logistics, sales and marketing, and service.
B) inbound logistics, operations, outbound logistics, technology, and service.
C) procurement, inbound logistics, operations, technology, and outbound logistics.
D) procurement, operations, technology, sales and marketing, and services.
59) Which of the following is one of the support activities in a firm’s value chain?
A) inbound logistics
B) operations
C) sales and marketing
D) technology
60) Which of the following activities would you perform to measure and compare your business
processes to similar processes of other companies within your industry?
A) benchmarking
B) best practices