Deck 3: Achieving Competitive Advantage With Information Systems

Question 1

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.
E) focuses primarily on collaboration with suppliers.

Answer 1

D

Question 2

Which of the following illustrates the use of information systems to achieve product differentiation?

A) A hot tub dealer's use of information systems to determine which models and options its customers are most likely to buy
B) A shoe manufacturer's use of information systems in selling custom, made-to-order shoes directly to customers
C) A PC manufacturer's use of information systems to facilitate direct access from suppliers to production schedules
D) A grocery store chain's use of information systems to produce products and services at a lower price than competitors
E) A hotel chain's use of information systems to analyze detailed data on guests to determine each guest's profitability

Answer 2

B

Question 3

The Internet raises the bargaining power of customers most effectively 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.
E) reducing barriers to entry.

Answer 3

C

Question 4

Which of the following can force a business and its competitors to compete on price alone?

A) High product differentiation
B) Poor process efficiency
C) Demand control
D) Transparent marketplace
E) Multiple competing suppliers

Question 5

Walmart's continuous replenishment system allows it to do all of the following except:

A) provide mass customization.
B) transmit orders to restock directly to its suppliers.
C) keep costs low.
D) better meet customer demands.
E) fine-tune merchandise availability.

Question 6

Which of the following illustrates the use of information systems to strengthen customer and supplier intimacy?

A) A hot tub dealer's use of information systems to determine which models and options its customers are most likely to buy
B) A shoe manufacturer's use of information systems in selling custom, made-to-order shoes directly to customers
C) A PC manufacturer's use of information systems to facilitate direct access from suppliers to their production schedules
D) A grocery store chain's use of information systems to produce products and services at a lower price than competitors
E) An airline's use of information systems to analyze detailed data on customers to determine each customer's profitability

Question 7

Which of the following illustrates the use of information systems to focus on market niche?

A) A hot tub dealer's use of information systems to determine which models and options its customers are most likely to buy
B) A shoe manufacturer's use of information systems in selling custom, made-to-order shoes directly to customers
C) A PC manufacturer's use of information systems to facilitate direct access from suppliers to production schedules
D) A grocery store chain's use of information systems to produce products and services at a lower price than competitors
E) An airline's use of information systems to analyze detailed data on customers to determine each customer's profitability

Question 8

A firm can exercise greater control over its suppliers by having:

A) more suppliers.
B) fewer suppliers.
C) global suppliers.
D) local suppliers.
E) only a single supplier.

Question 9

Which of the following is not one of the competitive forces in Porter's model?

A) Suppliers
B) Competitors
C) External environment
D) Customers
E) Technology

Question 10

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
E) market transparency

Question 11

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.
E) tightening linkages with suppliers.

Question 12

Which of the following industries has the lowest barrier to entry?

A) Automotive
B) Computer chip
C) Small retailer
D) Airline
E) Solar energy

Question 13

Internet technology:

A) makes it easy for rivals to compete on price alone.
B) imposes a significant cost of entry, due to infrastructure requirements.
C) increases the difference between competitors because of the wide availability of information.
D) makes it easy to sustain operational advantages.
E) has lessened competitive rivalries.

Question 14

As discussed in the chapter opening case, which of the following statements about Verizon is not true?

A) Verizon is focusing on satellite-based television in its competition with AT&T.
B) Verizon claims that its wireless network is the largest and most reliable in the United States.
C) AT&T is investing in upgrading its high-speed networks.
D) Verizon sees acquiring companies involved in digital advertising as an investment for the future.
E) Verizon offers a standalone video service.

Question 15

A manufacturer of deep-sea oil rigs may be least concerned about which of these marketplace forces?

A) Product differentiation
B) Traditional competitors
C) Low number of suppliers
D) New market entrants
E) Substitute products

Question 16

All of the following could be considered substitute products for industrial electricity generation except:

A) solar.
B) wind.
C) coal.
D) hydro-power.
E) ethanol.

Question 17

Hilton Hotels' use of customer information software to identify the most profitable customers to direct its services to is an example of using information systems to:

A) strengthen customer intimacy.
B) differentiate their service.
C) focus on market niche.
D) increase efficiency.
E) provide services at a lower price than its competitors.

Question 18

To what competitive force did the printed encyclopedia industry succumb?

A) Positioning and rivalry among competitors
B) Low cost of entry
C) Substitute products or services
D) Increased bargaining power of customers
E) Increased bargaining power of suppliers

Question 19

Which of the following is not one of the four basic strategies a company can employ to deal with competitive forces?

A) Strengthen customer and supplier intimacy
B) Focus on market niche
C) Differentiate products
D) Compete on employee loyalty
E) Low-cost leadership

Question 20

________ is the ability to offer individually tailored products or services using the same production resources as mass production.

A) Mass customization
B) Size customization
C) Personalization
D) Demand customization
E) CAD

Question 21

A virtual company:

A) uses networks to link people, assets, and ideas enabling it to ally with other companies to create and distribute products and services without being limited by traditional organizational boundaries or physical locations.
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 an example of the law of diminishing returns.

Question 22

The power of suppliers is one of the competitive forces that affect an organization's ability to compete.

Question 23

An information system can enhance core competencies by:

A) providing better reporting facilities.
B) creating educational opportunities for management.
C) allowing operational employees to interact with management.
D) encouraging the sharing of knowledge across business units.
E) synchronizing the value chains of business partners with an industry.

Question 24

Which of the following statements about network economics is not true?

A) eBay is an example of a business model that is based on the principle of network economics.
B) The law of diminishing returns does not always apply to every situation.
C) From a network economics perspective, the value of a community of people grows as the number of participants in the community increases.
D) Information technology can be strategically useful from a network economics perspective.
E) In network economics, the marginal cost of adding new members to the network is higher than the marginal gain.

Question 25

The most successful solutions or methods for achieving a business objective are called:

A) core processes.
B) best processes.
C) benchmarks.
D) best practices.
E) value webs.

Question 26

All of the following have been disruptive technologies except:

A) the PageRank algorithm.
B) digital photography.
C) minicomputers.
D) the iPod.
E) the automobile.

Question 27

The emergence of software as a web service has acted as a disruptive technology for:

A) traditional key-word search engines.
B) telecommunications providers.
C) PC manufacturers.
D) local Internet service providers.
E) traditional boxed software companies.

Question 28

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 enabling companies to develop customer intimacy

Question 29

In network economics, the value of a commercial software vendor's software products:

A) increases as more people use them.
B) decreases as more people use them.
C) increases due to higher marginal gain in output.
D) decreases according to the law of diminishing returns.
E) is unrelated to the number of people that use them.

Question 30

The power of customers is diminished in a transparent marketplace.

Question 31

When the output of some units can be used as inputs to other units, or if two organizations pool markets and expertise that result in lower costs and generate profits, ________ are created.

A) value webs
B) value chains
C) synergies
D) core competencies
E) benchmarks

Question 32

Which of the following is not an advantage for new companies entering the marketplace?

A) They can implement new systems and equipment.
B) They are not locked into an existing brand image.
C) They are more highly motivated.
D) They can establish new relationships with suppliers.
E) They can often hire younger, less expensive workers.

Question 33

The support activities of a firm include:

A) inbound logistics, technology, outbound logistics, sales and marketing, and service.
B) inbound logistics, organization infrastructure, outbound logistics, technology, and procurement.
C) organization infrastructure, human resources, sales and marketing, and technology.
D) organization infrastructure, human resources, technology, and procurement.
E) sales and marketing, procurement, human resources, and technology.

Question 34

Which of the following is not a true statement about value webs?

A) Value webs involve a collection of independent firms that use information technology to coordinate their value chains.
B) Value webs are more customer-driven than traditional value chains.
C) Value webs operate in a less linear fashion than traditional value chains.
D) Value webs are inflexible and cannot adapt quickly to changes in supply and demand.
E) Value webs involve highly synchronized industry value chains.

Question 35

All of the following are considered primary activities of a firm except:

A) inbound logistics.
B) sales and marketing.
C) procurement.
D) service.
E) outbound logistics.

Question 36

The idea that 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, is referred to as:

A) the point of no return.
B) the law of diminishing returns.
C) supply and demand.
D) inelasticity.
E) virtual economics.

Question 37

Benchmarking:

A) compares the efficiency and effectiveness of your business processes against strict standards.
B) allows industry participants to develop industry-wide standards.
C) is used to measure the speed and responsiveness of information technology.
D) synchronizes the business processes of customers, suppliers, and trading partners.
E) coordinates the value chains of independent firms to enable them to collectively produce a product or service.

Question 38

A ________ is a collection of independent firms that use information technology to coordinate their value chains to produce a product or service for a market collectively.

A) value chain
B) business network
C) value web
D) consortia
E) supply chain

Question 39

A firm can be said to have competitive advantage when it uses commonly available resources more efficiently.

Question 40

Studies show that more than 75% of a business firm's profits can be explained by alignment of IT with business.

Question 41

The inventors of a disruptive technology always benefit the most from the technology; and it is rare that fast followers catch up quickly.

Question 42

The more people that use Microsoft Office software and related products, the lower its value.

Question 43

The law of diminishing returns does not apply to traditional products.

Question 44

When the output of some units can be used as inputs to other units, synergies develop, which can lower cost and generate profits.

Question 45

You are advising the owner of Smalltown Computer, a new, local computer repair store that also builds custom computers to order. What competitive strategies would you advise Smalltown Computer to take? Which ones will it have difficulty exercising?

Question 46

You are consulting with the owner of Better Bodies, a national chain of gyms. How could the use of information systems help them exert each of the four generic strategies in achieving competitive advantage?

Question 47

Why are disruptive technologies "tricky"? Provide examples.

Question 48

In the value chain model, primary activities are those that are most directly related to the production and distribution of the firm's products and services.

Question 49

The effect of the Internet has been to increase a company's bargaining power vis-à-vis its customers.

Question 50

A value web 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.

Question 51

Why has the Internet made competitive rivalry more intense?

Question 52

The activities that measure the performance of your business processes against strict standards are called best practices.

Question 53

Low-cost leadership is one of the four basic competitive strategies.

Question 54

Research has shown that the more successfully a firm can align its IT with its business goals, the more profitable it will be. What practical steps should a firm use in aligning IT with its goals?

Question 55

Select a popular product or company that you are familiar with, such as Apple's iPad. Apply Porter's competitive forces model to that product and/or company. Which of the four generic strategies is the company using?

Question 56

Strong linkages to customers and suppliers increase switching costs.

Question 57

Value chain analysis is useful at the business level to highlight specific activities in a 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.

Question 58

How is Internet technology useful from a network economics perspective? Give examples.

Question 59

The Internet has made it more difficult for companies to sustain operational advantages.

Question 60

The value chain model classifies all company activities as either primary or support.

Question 61

Seeing quality as the responsibility of all people and functions in an organization is central to the concept of:

A) Six Sigma.
B) TQM.
C) quality control.
D) cycle time reduction.
E) benchmarking.

Question 62

Customer definitions of the quality of a product include all of the following except:

A) uniformity of the product.
B) accuracy of the advertising with respect to the product.
C) durability and safety of the product.
D) ease of use of the product.
E) customer support for the product.

Question 63

In a ________ system configuration, separate information systems are designed and managed by each foreign unit.

A) duplicated
B) centralized
C) decentralized
D) networked
E) virtual

Question 64

A firm that locates all systems development and operations at its headquarters is using a ________ system configuration.

A) unilateral
B) centralized
C) decentralized
D) networked
E) virtual

Question 65

Which of the following statements about 3-D printing is not true?

A) 3-D printing is also known as additive manufacturing.
B) Unlike traditional techniques, 3-D printing results in some wasted material.
C) 3-D printing can create objects from plastic, metal, or composite materials.
D) CAD systems supply data for 3-D printing.
E) 3-D printing is often used to fashion items for small production runs.

Question 66

All of the following are psychological aspects of quality except:

A) effective marketing.
B) the company's knowledge of its products.
C) the product's reputation.
D) the courtesy of salespeople.
E) the sensitivity of support staff.

Question 67

The ________ strategy concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries.

A) domestic exporter
B) multinational
C) franchise
D) transnational
E) virtual company

Question 68

________ systems are those in which development occurs at the home base, but operations are handed over to autonomous units in foreign locations.

A) Transnational
B) Decentralized
C) Duplicated
D) Networked
E) Virtual

Question 69

What are the four main ways of organizing businesses internationally, and what types of systems configurations do each of these types typically use?

Question 70

________ typically develop a single information system, usually at the home base, and then replicate it around the world.

A) Domestic exporters
B) Multinational firms
C) Franchisers
D) Transnational firms
E) Virtual companies

Question 71

Caterpillar Corporation is example of which of the following?

A) Domestic exporter
B) Multinational
C) Franchiser
D) Transnational
E) Virtual company

Question 72

Franchisers are firms that have their product created, designed, financed, and initially produced in the home country but rely heavily on foreign personnel for further production, marketing, and human resources.

Question 73

The reduction of errors to 3.4 defects per million opportunities is central to the concept of:

A) Six Sigma.
B) TQM.
C) benchmarking.
D) cycle time reduction.
E) BPR.

Question 74

The ________ strategy is characterized by heavy centralization of corporate activities in the home country of origin.

A) domestic exporter
B) multinational
C) franchise
D) transnational
E) virtual company

Question 75

Final assembly of iPhones occurs in which of the following countries?

A) United States
B) South Korea
C) China
D) Germany
E) Japan

Question 76

All of the following are ways to improve quality except:

A) improving products and services based on customer demands.
B) simplifying the production process.
C) implementing a new information system.
D) improving production precision.
E) reducing cycle time.

Question 77

Which of the following statements about cycle time is not true?

A) Cycle time refers to the total elapsed time from the beginning of a process to its end.
B) Shorter cycle times mean that problems are caught earlier in the process.
C) Finding ways to reduce cycle time often means finding ways to simplify production steps.
D) The fewer steps in a production process, the more likely that an error will occur.
E) Information systems can help reduce cycle time.

Question 78

Which of the following technologies permits service calls to U.S. companies to be answered in India just as easily and inexpensively as if the help desk were in the United States?

A) Cellular networks
B) Internet telephony
C) The World Wide Web
D) Software as a web service
E) TQM

Question 79

You are the production manager for a manufacturer of bicycle parts. Which of the following tools or technologies would you use to improve production precision?

A) Value chain
B) CAD software
C) Benchmarking
D) Industry best practices
E) Porter's competitive forces model

Question 80

Which of the following is pursuing a transnational strategy?

A) Caterpillar Corporation
B) Ford Motor Co.
C) Intel Corporation
D) Nestlé
E) Starbucks