49) How are information systems used at the industry level to achieve strategic advantage?
A) by building industry-wide, IT-supported consortia and symposia
B) by raising the bargaining power of suppliers
C) by encouraging the entry of new competitors
D) by enforcing standards that reduce the differences between competitors
E) by decreasing switching costs
50) A collection of independent firms that use information technology to coordinate their value
chains to produce a product or service for a market collectively is called a(n)
A) industry value chain.
B) business ecosystem.
C) value web.
D) consortia.
E) synergy chain.
51) When two organizations pool markets and expertise that result in lower costs and generate
profits, it is referred to as creating
A) a value web.
B) a value chain.
C) net marketplaces.
D) core competencies.
E) synergies.
52) An example of synergy in business is
A) Amazon’s use of the Internet to sell books.
B) Bank of America acquiring Countrywide Financial to reach a large pool of new customers.
C) Blockbuster combining traditional video rental with online video rental.
D) Walmart’s order entry and inventory management system to coordinate with suppliers.
E) Nike’s use of technology to improve its product offerings.
53) How do information systems enhance core competencies?
A) by providing better reporting facilities
B) by creating educational opportunities for management
C) by allowing operational employees to interact with management
D) by encouraging the sharing of knowledge across business units
E) by fostering synergies among departments
54) The more any given resource is applied to production, the lower the marginal gain in output,
until a point is reached where the additional inputs produce no additional output. This is referred
to as
A) the point of no return.
B) the law of diminishing returns.
C) supply and demand.
D) network inelasticity.
E) the invisible hand.
55) Network economics
A) applies the law of diminishing returns to communities of users.
B) applies traditional economics to networked users.
C) sees the cost of adding new members as inconsequential.
D) balances the high cost of adding new members to a community against the lower cost of using
network infrastructure.
E) uses networks to link people, assets, and ideas.
56) A virtual company
A) uses networks to link people, assets, and ideas.
B) uses Internet technology to maintain a virtual storefront.
C) uses Internet technology to maintain a networked community of users.
D) provides entirely Internet-driven services, or virtual products.
E) is limited by traditional organizational boundaries.
57) An example of a keystone firm within a business ecosystem is
A) Apple and software application writers in the mobile platform ecosystem.
B) GUESS and the fashion ecosystem.
C) Citibank and the ATM ecosystem.
D) American Airlines and the computerized reservation ecosystem.
E) Nike and the athletic apparel ecosystem.
58) ________ is a competitive strategy for creating brand loyalty by developing new and unique
products and services that are not easily duplicated by competitors.
A) Product differentiation
B) Low-cost leadership
C) Customer efficiency
D) Mass customization
E) Switching cost
59) The expenses incurred by a customer or company in lost time and resources when changing
from one supplier or system to a competing supplier or system are known as
A) retention costs.
B) preservation costs.
C) differentiation costs.
D) switching costs.
E) variation costs.
60) The ________ model highlights the primary or support activities that add a margin of value
to a firm’s products or services where information systems can best be applied to achieve a
competitive advantage.
A) competitive forces
B) value chain
C) bargaining power
D) new entrant
E) rivalry
61) The parts of an organization’s infrastructure, human resources, technology, and procurement
that make the delivery of the firm’s products or services possible are known as ________
activities.
A) primary
B) auxiliary
C) secondary
D) service
E) support
62) A(n) ________ is a collection of independent firms that use information technology to
coordinate their value chains to collectively produce a product or service for a market.
A) value chain
B) support web
C) value web
D) consortium
E) firm network
63) A(n) ________ is an activity at which a firm excels as a world-class leader.
A) expertise area
B) competitive advantage
C) growth driver
D) efficiency
E) core competency
64) A company’s competitive advantages ultimately translate into higher stock market valuations
than its competitors.
65) The competitive forces model cannot be used to analyze modern digital firms which face
new competitive forces that are not true of traditional firms.
66) Customers are one of the competitive forces that affect an organization’s ability to compete.
67) High product differentiation is a sign of a transparent marketplace.
68) The effect of the Internet has been to decrease the bargaining power of customers.
69) An efficient customer response system directly links consumer behavior to distribution and
production and supply chains.
70) Information systems are used to enable new products and services via product differentiation.
71) Mass customization offers individually tailored products or services using the same resources
as mass production.
72) Switching costs increase when customers are strongly linked to products and platforms.
73) The value chain model classifies all company activities as primary activities.
74) In the value chain model, support activities are most directly related to the production and
distribution of the firm’s products and services, which create value for the customer.
75) ‘Synergies’ occur when the output of some units in a firm can be used as inputs to other units,
lowering cost and generating profits.
76) In a demonstration of network economics, the more people that use eBay’s site, the greater
the value of the site.
77) The term business ecosystem describes the loosely coupled but interdependent networks of
suppliers, distributors, outsourcing firms, transportation service firms, and technology
manufacturers.
78) You are advising the owner of Smalltown Computer, a new, local computer repair store that
also builds custom computers to order. What competitive strategies could Smalltown Computer
exert? Which ones will it have difficulty exercising?
79) You are consulting with the owner of Better Bodies, a national chain of gyms. What
strategies might Better Bodies use in applying information services to achieve a competitive
advantage?
80) The text describes Michael Porter’s view of the Internet as somewhat negative. What
negative influences does Porter see? Describe several positive influences the Internet has on
business. Do these outweigh the negative influences?
81) Value chain analysis is useful at the business level to highlight specific activities in the
business where information systems are most likely to have a strategic impact. Discuss this
model, identify the activities, and describe how the model can be applied to the concept of
information technology.
82) How is the concept of core competency relevant to Smalltown Computer, a local computer
repair store that builds custom computers? Give examples.
83) How is Internet technology useful from a network economics perspective? Give examples.
84) Define and describe a business ecosystem. Give an example of a business ecosystem.
85) Why does Amazon.com need to worry about competitors in online shopping?
A) E-commerce is affected by the law of diminishing returns.
B) Internet technologies are universal, and therefore usable by all companies.
C) Internet shopping produces cost transparency.
D) The Internet enables the production or sales of substitute products or services.
E) The Internet increases switching costs.
86) You are consulting for a cosmetics distributor who is interested in determining the benefits it
could achieve from implementing new information systems. What will you advise as the first
step?
A) Identify the business ecosystem the distributor is in.
B) Implement a strategic transition to the new system.
C) Perform a strategic systems analysis.
D) Benchmark existing systems.
E) Set up a strategic transition.
87) Sociotechnical changes affecting a firm adopting new information systems requiring
organizational change can be considered
A) organizational adjustments.
B) strategic transitions.
C) systems alterations.
D) business goal transitions.
E) sociotechnical transitions.
88) Research has shown that a majority of firms are able to align their information technology
with their business goals.
89) The use of Internet technologies allows companies to more easily sustain competitive
advantage.
90) What are the major factors to consider when performing a strategic systems analysis?