Chapter 17: 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 40 years.
2. Moore’s law refers to the prediction that about every two years, the cost of computing will drop by 50
percent as computer-processing power doubles.
3. 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.
4. The primary difference between raw data and information is meaning to the user.
5. The first airline that was able to allow passengers to buy their plane tickets and reserve their seats
online had a first-mover advantage.
6. In today’s hypercompetitive business environments, capital (i.e., money) is still more important than
information for business success.
7. Raw data contain useful information that communicates a clear and readily understandable message to
the person for which the data were gathered.
8. 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.
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. To sustain a competitive advantage, one question companies must answer is this: does the information
technology create value for the firm by lowering costs or providing a better product or service?
12. In order to be useful, information must meet a total of four requirements. It must be accurate,
complete, relevant, and timely.
13. The five costs of obtaining good information are the costs of acquiring, processing, storing, retrieving,
and communicating information.
14. Acquisition cost is the cost of turning raw data into usable information.
15. According to the “Doing the Right Thing” box, people should dispose of old computers by tossing
them in landfills.
16. Information retrieval is a quick and easy process.
17. The two basic methods of capturing information are continuous and periodic.
18. RFID technology provides consumer products manufacturers with the technology to track goods as
they move through the supply chain.
19. Bar codes and document scanners are common methods of electronically capturing data.
20. The term “data mining” refers to the process of discovering unknown patterns and relationships in
large amounts of data.
21. When a database of 100,000 individuals taking multiple prescription drugs was mined to find
combinations of drugs exhibiting harmful interactions, the researcher was looking for a sequence
pattern.
22. 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.
23. Association patterns are also called sequence patterns.
24. Unsupervised data mining is unethical.
25. A data warehouse stores raw data that have been collected from a variety of sources for later use.
26. Data mining often reveals data clusters where three or more database elements occur together.
27. 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.
28. The two activities necessary to properly secure data and data networks are the use of firewalls and
antivirus software.
29. Authentication and authorization are practically synonyms when used to describe information access.
30. Firewalls can only protect personal computers and network servers connected to the corporate
network.
31. Businesses should use an intermittent schedule to scan for computer viruses.
32. Data encryption transforms data into complex, scrambled digital codes that can only be unencrypted
by authorized users who possess unique decryption keys.
33. Email snooping can be curtailed through the use of public key encryption.
34. According to the “Doing the Right Thing” box, shorter passwords are more effective than long ones.
35. Virtual private networks and secure sockets layer (SSL) encryption perform basically the same
function.
36. The goal of an expert system is to provide accurate, complete, timely, and relevant information to
managers.
37. Intranets are private company networks that allow employees to easily access, share, and publish
information using Internet software.
38. Three kinds 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
portals.
39. Electronic data interchange (EDI), extranets, and the Internet have proven to provide so many benefits
that managers are scrambling to find ways to use them in their own companies.
40. In EDI and Web services, the different purchasing and ordering applications in each company interact
automatically without any human input.
41. 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.
42. Extranets are used by companies to exchange information and conduct transactions with outsiders by
providing them direct, web-based access to authorized parts of a company’s intranet or information
system.
43. Data and information are the same as knowledge.
44. It is important to understand that DSS programs should not replace managerial decision making.
45. 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 two years.
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.
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. According to the text, __________ is derived from __________.
a.
information; raw data
b.
raw data; perceived knowledge
c.
perceived knowledge; raw data
d.
raw data; information
e.
influential knowledge; perceived knowledge
5. On the television show Threshold, there are people who monitor all of the police reports from all over
the United States looking for patterns within the data that may indicate alien activity. The numerous
police reports, which are examples of _____, are turned into _____, which reveals areas where the
secret agency suspects that aliens from outer space are operating.
a.
information; raw data
b.
raw data; perceived knowledge
c.
perceived knowledge; raw data
d.
raw data; information
e.
influential knowledge; perceived knowledge
6. Pages listing all of the felony crimes perpetrated in New York 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
7. 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
8. 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.
9. In February 2006, Verizon Wireless launched the first national consumer 3G service. The service,
which included video streaming, online gaming, and other capabilities, was called Vcast. Verizon
Wireless appeared to be first out of the gate with a full-scale combination of 3G business and
consumer services, something the other national carriers could not yet claim. This new wireless
service would have given Verizon Wireless:
a.
a first-mover advantage
b.
benchmarking capabilities
c.
less market adaptability
d.
increased synergy
e.
all of these
10. In 1921, realtor Billy Ingram closed his company and opened White Castle restaurants to sell
hamburgers. In 1921, hamburgers were thought to be 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. Understanding that Midwesterners wanted clean, convenient food when they were
away from home was the information Ingram 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
11. 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?
12. Information is useful when it’s:
a.
accurate
b.
complete
c.
relevant
d.
timely
e.
all of the above
13. __________is the cost of obtaining data that you don’t have.
a.
Acquisition cost
b.
Processing cost
c.
Communication cost
d.
Storage cost
e.
Retrieval cost
14. According to the resource-based view of information technology, sustainable competitive advantage:
a.
is difficult to create or acquire
b.
can be created by continued investment in the information technology used to achieve a
first-mover advantage.
c.
differs across firms
d.
occurs when information technology adds value
e.
is accurately described by all of these
15. Hiring the right person as an employee is an important “business decision, just like buying a piece of
equipment” says the CEO of the Lindenberger Group. “But there are striking differences in
dependability and quality consistency. If a company has ordered similar equipment before and found it
performed as specified, it has reasonable cause to expect the new piece of equipment will also have the
capabilities its specifications sheet claims. That’s often not the case with the resume that job
applicants provide.” In other words, information provided on resumes often is not useful because it
lacks:
a.
relevancy
b.
tangibility
c.
accuracy
d.
timeliness
e.
responsiveness
16. According to the text, which of the following is NOT one of the characteristics of useful information?
a.
accuracy
b.
completeness
c.
relevance
d.
tangibility
e.
timeliness
17. __________ costs are one of the significant costs associated with useful information.
a.
Communication
b.
Retention
c.
Promotion
d.
Mobilization
e.
Authentication
18. Which of the following is NOT a source of significant costs associated with useful information?
a.
communication
b.
storage
c.
mobilization
d.
processing
e.
acquisition
19. Information is __________ when it pertains to the problem, so that decision makers can use it to
define the problem and begin to identify potential solutions.
a.
valid
b.
accurate
c.
complete
d.
timely
e.
relevant
20. To be __________, information must be available when needed to define a problem or begin to
identify possible solutions.
a.
relevant
b.
accurate
c.
complete
d.
timely
e.
concrete
21. According to the text, one of the characteristics of useful information is:
a.
flexibility
b.
concrete
c.
relevance
d.
retrievable
e.
homogeneous
22. To be __________, the amount of information must be sufficient to identify the problem and begin to
identify potential solutions.
a.
relevant
b.
accurate
c.
complete
d.
timely
e.
valid
23. __________ costs are the costs of turning raw data into usable information.
a.
Acquisition
b.
Processing
c.
Retrieval
d.
Communication
e.
Storage
24. On the television show Threshold, there are people who monitor all of the police reports from all over
the United States looking for patterns within the data that may indicate alien activity. The ______
costs of gathering this data are high because of the large number of people required to obtain this data.
a.
acquisition
b.
processing
c.
storage
d.
retrieval
e.
communication
25. One of the most common misunderstandings about information has to do with __________ costs, the
costs of accessing already-stored information.
a.
acquisition
b.
processing
c.
storage
d.
retrieval
e.
communication
26. According to the Doing the Right Thing box “Recycling and Disposing of Computer Equipment,” all
of the following are legal ways to recycle and dispose of computer equipment EXCEPT:
a.
contact the state department of environmental protection
b.
donate the old computer
c.
sell the computer at a discounted price to employees
d.
give the computer to charity
e.
toss the computer in the trash
27. Which of the following statements about the characteristics and costs of useful information is true?
a.
Raw data cannot become information until it is in a form that can affect decisions and
behavior.
b.
For information to be useful, it has to be accurate, complete, relevant, and timely.
c.
Obtaining good information incurs costs in terms of acquisition, processing, storage,
retrieval, and communication.
d.
One of the most common misunderstandings about information is that it is easy and cheap
to retrieve once a company has it.
e.
All of these statements about the characteristics and costs of useful information are true.
28. Which of the following statements about the characteristics and costs of useful information is true?
a.
Raw data are a valuable form of information.
b.
For information to be useful, it has to be accurate, complete, pertinent, and available when
you need it.
c.
Obtaining good information incurs negligible costs.
d.
Processing data from various sources that use different formats is just as simple as
processing data from sources that use similar or identical formats.
e.
All of these statements about the characteristics and costs of useful information are true.
29. Which of the following statements about the characteristics and costs of useful information is true?
a.
Raw data become information as soon as the facts and figures are manipulated.
b.
For information to be useful, it has to be malleable, concrete, reliable, and timely.
c.
Obtaining good information incurs negligible costs in terms of acquisition, processing,
storage, retrieval, and communication.
d.
Useful information does not come cheaply.
e.
All of these statements about the characteristics and costs of useful information are true.
30. The two basic methods of capturing information are:
a.
systematic and unsystematic
b.
planned and unplanned
31. The manual capture of information is:
a.
slow
b.
expensive
c.
labor-intensive
d.
often inaccurate
e.
all of these
32. Which of the following describes the primary advantage of using bar codes?
a.
They are a subtle way to gather customer information.
b.
The data they contain can be read and recorded in an instant.
c.
They use ASCII codes, which protect consumer privacy.
d.
They provide information about the buying habits of individual customers.
e.
They eliminate inventory shrinkage.
33. A large metropolitan hospital that wished to keep track of wheelchairs, gurneys, and other expensive
equipment that regularly disappeared from inventory because some hurried employee put it in a closet
or elsewhere for safekeeping could use __________ to locate and recover missing property.
a.
radio frequency identification (RFID) tags
b.
bar codes
c.
radio scanning systems
d.
electronic data interchanges
e.
inventory recognition scanners
34. Recalls are a fact of life for the food industry according to a senior vice-president of a large Canadian
supermarket chain. The three methods of tracing produce through the supply chain are paper records,
bar codes, and radio frequency identification tags. Which of the following statements about the
tracing of recalled 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
continuous and intermittent
functional and hierarchical
manual and electronic
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.
35. Radio frequency identification (RFID) tags:
a.
are read the same way that bar codes are read
b.
use electronic scanners
c.
represent an innovation that has not yet found its way into general use
d.
were created to study consumer buying patterns
e.
are accurately described by none of these
36. In May 2007, the Wisconsin legislature voted to make it illegal for anyone—including employers and
government agencies—to implant RFID microchips into people without their consent. Why would
someone want to place these chips in employees?
a.
as a way to contact them in an emergency
b.
as a means of tracking their whereabouts
c.
as an intranet method of identification
d.
to eliminate the need for identity badges
e.
to establish sequence patterns of employee behavior
37. Because they are inexpensive and easy to use, __________, which convert printed text and pictures
into digital images, have become an increasingly popular method for electronically capturing data.
a.
electronic data interchanges
b.
electronic scanners
c.
radio frequency information digitizers (RFIDs)
d.
data digitalization
e.
bar coding devices
38. In Germany, the Extra Future branches of the gigantic Metro Group (department stores) were forced to
withdraw its customer loyalty cards when the press discovered that the company had secreted
radio-frequency identification (RFID) tags in the plastic. Even when enclosed in a wallet or purse,
these cards could track which departments the customer visited. The retailer was hoping to engage in
_____ and look for unknown shopping patterns.
a.
information keystoning
b.
data mining
c.
data warehousing
d.
data outsourcing
e.
patterning
39. 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 readers
c.
Optical character recognition software
d.
Radio frequency analog systems
e.
Analog scanners
40. 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
41. 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 __________, 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
42. On the television show Threshold, there are people who monitor all of the police reports from all over
the United States looking for patterns within the data that may indicate alien activity. These computer
people are engaged in:
a.
optical scanning
b.
electronic data interchange
c.
bar coding
d.
data mining
e.
data warehousing
43. __________ 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
44. 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
45. 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.
46. 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
47. 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
48. The two 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
49. 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. The agency could then communicate this knowledge
sooner to medical professionals and patients. 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
50. Jim Rhoade thought he had a decent deal with State Farm for insurance coverage on his two cars and
his home, but a buddy tipped him off to lower premiums at Allstate. After contacting his local Allstate
agent, Rhoade had slashed his annual auto premiums by $400 and his homeowner’s premium by the
same amount. That’s because, in addition to considering Rhoade’s record, Allstate took into account
seemingly unrelated information from his credit report, such as whether he pays bills on time (he does)
and whether there’d ever been a claim on his home (there hadn‘t). Allstate has discovered _____
patterns that indicate that the better the credit report the more likely the individual is to be a good risk
for an insurer.
a.
sequence
b.
association
c.
predictive
d.
adjacency
e.
extrapolative
51. Experts say magazines are uniquely positioned to take advantage of e-commerce because most already
possess the type of data required to create an effective online campaign. Subscribers’ demographics
and psychographics—where readers live, their housing situation, how they like to shop, etc.—are
indicating which individuals will respond to Internet offers. By using their databases, magazine
publishers can discover _____ patterns.
a.
sequence
b.
affinity
c.
predictive
d.
adjacency
e.
extrapolative
52. 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
53. 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
54. 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
55. 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 also bought? This would be an example of __________ data mining.
a.
sequence
b.
association
c.
predictive
d.
adjacency
e.
extrapolative
56. __________ 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
57. 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
58. Baseball management was trying to uncover matches and relationships in the data it had on first-time
patrons who purchased box stadium seats. It 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