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Competing with Information Technology

When an organization uses information technology to develop products, services and capabilities in order to gain a strategic advantage over competitive forces in the global marketplace, it is using information systems in a strategic role.

TRUE

Competition is a negative characteristic in business that can require significant resources to overcome.

FALSE Although competition can require significant resources, it is a positive characteristic in business that is natural and healthy.

Most products and services have some sort of substitute available to the consumer.

TRUE

In the Internet world, a firm's biggest competitor may be one that is not yet in the marketplace but could emerge almost overnight.

TRUE

The threat of new entrants is often at its strongest during periods of rising costs or inflation.

FALSE The threat of substitutes is often at its strongest during periods of rising costs or inflation.

If a key supplier's bargaining power gets too strong, it can force the price of goods and services to unmanageably high levels.

TRUE

An innovation strategy may allow a firm to focus its products or services and gain an advantage in a particular segment or niche of a market.

FALSE A differentiation strategy may allow a firm to focus its products or services and gain an advantage in a particular segment or niche of a market.

When a firm develops ways to differentiate its products from a competitor's, it is pursuing a cost leadership strategy.

FALSE When a firm develops ways to differentiate its products from a competitor's, it is pursuing a differentiation strategy.

When a firm uses IT to create virtual organizations of business partners, it is pursuing a growth strategy.

FALSE When a firm uses IT to create virtual organization of business partners, it is pursuing an alliance strategy.

A given activity can fall into one or more of the categories of competitive strategy.

TRUE

If an organization offers its online package tracking system in a manner that allows its customers to access shipment information not only via a computer, but via a mobile phone as well, then such an action could fall into both the differentiation and innovation strategy categories.

TRUE

When a firm makes such radical changes to its business processes for producing products and services that it alters the fundamental structure of an industry, it is pursuing an innovation strategy.

TRUE

Not everything innovative will serve to differentiate one organization from another.

TRUE

Investments in information technology can allow a business to lock in customers and suppliers, and lock out competitors, by building valuable new relationships with them.

TRUE

Companies like Wal-Mart use information technology to implement competitive strategies for strategic advantage.

TRUE

When a business effectively builds in switching costs, its customers and/or suppliers become reluctant to switch to another competitor.

TRUE

A strategic use of information technology would be to leverage investment in information system specialists, hardware, software, databases, and networks from operational uses into strategic applications.

TRUE

A company that places a strategic focus on customer value recognizes that quality, rather than price, has become a primary determinant in a customer's perception of value.

TRUE

Companies that consistently offer the best value from the customer's perspective must provide two key services: keeping track of their individual customers' preferences and selling products or services at lowest price.

FALSE Companies that consistently offer the best value from the customer's perspective (a) keep track of their customers' individual preferences, (b) keep up with market trends, (c) supply products, services, and information anytime, anywhere, and (d) provide customer services tailored to individual needs.

Internet technologies can make customers the focal point of customer relationship management (CRM) and other e-business applications.

TRUE

The value chain framework can be used to view a firm as a series, a chain, or a network of basic activities that add value to its products and services, and thus add a margin of value to the firm.

TRUE

According to the value chain concept, primary processes include such things as the procurement of resources and human resource management that are directly related to the manufacturing of products or delivery of services to the customer.

FALSE Human resource management is a support process, not a primary process.

When using the value chain concept, managers should seek to develop strategic information systems for those activities that they view as the "weakest link" in the value chain.

FALSE Managers should try focus on the basic processes that add the most value to a company's products or services.

The value chain concept can help managers decide where and how to apply the strategic capabilities of information technology.

TRUE

Business process reengineering (BPR) is most often called streamlining

FALSE Business process reengineering (BPR) is most often called reengineering.

Although the potential payback of reengineering is high, so is the risk of failure and level of disruption to the organizational environment of the firm.

TRUE

Business process reengineering (BPR) combines a strategy of promoting business innovation with a strategy of making major improvements to business operations so that a company can become a much stronger and more successful competitor in the marketplace.

TRUE

Many companies have found that organizational redesign approaches are an important enabler of business process reengineering.

TRUE

All the employees within a marketing department, from clerical staff to top managers, form a cross-functional team.

FALSE A cross-functional team includes employees from several different departments or specialties.

Information technology plays a major role in the business process reengineering of most business processes.

TRUE

Becoming an agile company depends on customer perceptions of products and services, as much as any other strategy.

TRUE

An agile company cooperates with its suppliers and competitors.

TRUE

By nurturing an entrepreneurial spirit, an agile company provides powerful incentives for employee responsibility, adaptability, and innovation.

TRUE

Information technology can enable a company to develop relationships with its customers in virtual communities.

TRUE

Yahoo! transformed its service from a search engine into a portal by dedicating one branch of its business to providing content and other media-related services.

FALSE Yahoo! transformed its service from a search engine into a portal by initiating numerous partnerships to provide content and other media-related services from its website.

One of the reasons people form virtual companies is to keep new entrants out of a market.

FALSE The basic strategies of virtual companies include (a) share information and risk with alliance partners, (b) link complementary core competencies, (c) reduce concept-to-cash time, (d) increase facilities and market coverage, (e) gain access to new markets and share market or customer loyalty, and (f) migrate from selling products to selling solutions.

Knowledge-creating companies constantly create new business knowledge and then disseminate it throughout the company in order to quickly build the new knowledge into their products and services.

TRUE

Explicit knowledge involves the "how-to" knowledge that resides in workers.

FALSE Explicit knowledge is made up of data, documents, and things written down.

Successful knowledge management creates techniques, technologies, and rewards for getting employees to share what they know and to make better use of accumulated workplace knowledge.

TRUE

As an organization's learning process continues and its knowledge base expands, the knowledge creating company works to integrate its knowledge into its business processes, products, and services

TRUE

A strategic information system can be any kind of information system that uses information technology to help an organization _______________.
A. gain a competitive advantage
B. reduce a competitive disadvantage
C. meet strategic enterprise objectives
D. all of the choices are correct

D

A firm can survive and succeed in the long run if it successfully develops strategies to confront the _______________ that shape the structure of competition in its industry.
A. technological innovations
B. competitive business processes
C. competitive forces
D. competitive strategie

D

A(n) _______________ strategy is a competitive strategy by which a firm seeks to become a low-cost producer of products and services in the industry.
A. low cost leadership
B. differentiation
C. innovation
D. alliance

A

A(n) _______________ strategy is a competitive strategy by which a firm develops ways to differentiate its products and services from those of its competitors.
A. low cost leadership
B. innovation
C. differentiation
D. growth

C

A(n) _______________ strategy is a competitive strategy by which a firm develops unique products or services from those of its competitors, or makes radical business changes that may alter the fundamental nature of the industry.
A. alliance B. growth
C. differentiation D. innovation

D

A(n) _______________ strategy is a competitive strategy by which a firm significantly expands its capacity to produce goods and services, expanding and diversifying in the market.
A. alliance B. growth
C. differentiation D. innovation

B

A(n) _______________ strategy is a competitive strategy by which a firm establishes new business linkages with customers, suppliers, competitors, and other companies.
A. growth B. low cost leadership
C. differentiation D. alliance

D

According to the text, competition is a _______________ characteristic in business that _______________.
A. positive, is natural and healthy
B. negative, can consume significant resources
C. neutral, can help a firm meet strategic enterprise objectives
D. none of the choices are correct.

A

According to the text, in the world of the Internet, a firm's biggest competitor:
A. Usually exists and is close in the physical world
B. Usually does not exist but will emerge close in the physical world
C. May not yet exist but could emerge almost overnight
D. Probably exists in an overseas location

C

According to the text, the Internet:
A. Has limited competition world-wide
B. Has created many ways to enter the market quickly, with relatively low cost
C. Has created new entry barriers to competition
D. Has decreased prices world-wide

B

Which of the following is a competitive strategy?
A. New entries into the market
B. Innovation
C. Bargaining power
D. Substitutes

B

All the following are competitive strategies except:
A. New entries into the market
B. Innovation
C. Cost leadership
D. Alliances

A

All of the following can be used to counter competitive forces in the marketplace except:
A. Alliances B. Growth
C. Innovation D. Bargaining

D

All of the following are competitive forces in the marketplace except:
A. Alliances B. Competition
C. Substitutes D. Bargaining

A

Which of the following is a competitive force in the marketplace?
A. Cost leadership B. Competition
C. Differentiation D. Alliances

B

Developing a relationship with a customer such that the customer cannot afford to switch suppliers is an example of:
A. Monopolistic enterprise
B. Locking in the customer
C. Growth strategies
D. None of the above is correct

B

The practice of becoming the largest purchaser of products from a given supplier is an example of:
A. Cost leadership
B. Growth strategies
C. Differentiation
D. Locking in the supplier

D

Becoming a low-cost producer of products and services in an industry is an example of a(n):
A. Cost leadership strategy
B. Differentiation strategy
C. Innovation strategy
D. Growth strategy

A

All of the following are basic competitive forces discussed in the text except:
A. Rivalry of competitors
B. Threat of substitutes
C. Bargaining power of suppliers D. Bargaining power of competitors

D

All of the following are basic competitive strategies discussed in the text except:
A. Cost leadership
B. Innovation
C. Product differentiation
D. Strategic dominance

D

Expanding a company's product offering into global markets is an example of a(n) _______________ strategy.
A. cost leadership
B. differentiation
C. growth
D. alliance

C

Investments in information technology that build valuable new relationships allow a firm to:
A. Lock in the supplier
B. Lock in the customer
C. Lock out competition
D. All the above

D

In addition to the five basic competitive strategies, the text describes several key strategies implemented with information technology. Which of the following is not one of those strategies?
A. Locking in customers
B. Building switching costs
C. Creating alliances
D. Raising barriers to entry

C

Using an information system to make customers and/or suppliers reluctant to change to another competitor is called:
A. Growth strategy
B. Building switching costs
C. Creating alliances
D. Raising barriers to entry

B

When a firm develops ways to differentiate their products and services from their competitors', it is pursuing a _______________ strategy.
A. differentiation B. alliance
C. innovation D. marketing

A

A sales company such as eBay would be most likely to use information technology to promote _______________.
A. online stock trading
B. point-of-sale inventory tracking
C. online auctions
D. virtual manufacturing alliances

C

When a firm strives to find ways to help its suppliers and customers reduce their costs or to increase the costs of their competitors, it is pursuing a strategy of _______________.
A. innovation B. alliance
C. cost leadership D. growth

C

When customers become dependent on mutually beneficial inter-enterprise information systems, they become reluctant to switch to a company's competitors because they would incur all following costs except:
A. Time B. Money
C. Innovation D. Effort

C

Companies like Wal-Mart extend their networks to their customers and suppliers in order to build innovative continuous inventory replenishment systems that would lock in their business. This creates a(n) _______________ information system.
A. leveraged B. inter-enterprise
C. intra-enterprise D. locked-in

B

A serious problem of competitive advantage is that:
A. It normally doesn't last very long and it isn't sustainable over the long term
B. Competitors figure out how it was done and do the same thing
C. A competitive advantage can become a competitive necessity
D. All of the choices are correct.

D

A company that places a strategic focus on customer value recognizes that __________, rather than __________, has become a primary determinant in a customer's perception of value.
A. service, price B. price, quality
C. quality, service D. quality, price.

D

Companies that consistently offer the best value from the customer's perspective do all the following, except:
A. Keep track of their customers' individual preferences
B. Keep up with market trends
C. Supply products, services, and information anytime, anywhere
D. Offer lowest prices and fastest delivery

D

A customer-focused business can build customer value and loyalty by:
A. Making a loyal customer feel special with website personalization
B. Letting customers place orders directly, or through distribution partners
C. Letting customers check order history and delivery status
D. All of the choices are correct.

D

A transaction database allows all of the following activities except:
A. Linking employees and distribution partners to customers
B. Letting customers check order history
C. Giving employees a complete view of each customer
D. None of these activities are supported by a transaction database.

C

According to the textbook case, innovation in information systems at Universal Orlando comes from thinking like a:
A. Customer B. Competitor
C. Employee D. IT specialist

A

The value chain framework can be used to view a firm as a series, a chain, or a network of basic activities that:
A. Add value to its products and services, and thus add a margin of value to the firm.
B. Lower costs along the product development chain.
C. Create the perception of value and goodwill to employees.
D. Create a smooth-flowing chain of events between the supplier and the customer.

A

Which of the following is a primary business process?
A. Collaborative workflow intranet B. Targeted marketing
C. Technology development
D. Procurement of resources

B

All of the following are primary business processes, except:
A. Customer relationship management
B. Targeted marketing
C. Technology development
D. Just-in-time warehousing

C

Which of the following is a support process?
A. Collaborative workflow intranet B. Targeted marketing
C. Customer relationship management
D. Just-in-time warehousing

A

All of the following are support processes, except:
A. Customer relationship management
B. Procurement of resources
C. Technology development
D. Employee benefits intranet

A

Business process reengineering is best defined as:
A. A key technology to reduce customer late payments
B. A radical redesign of business processes to achieve improvements in cost, quality, speed, or service
C. A key way to ensure successful improvement in processing
D. All of the choices are correct.

B

Business process reengineering (BPR) is often referred to as:
A. Streamlining B. Reengineering
C. Quickening D. None of the choices are correct.

B

Business process reengineering (BPR) incorporates all the following strategies, except:
A. Lowering prices as a competitive strategy
B. Promoting business innovation
C. Making major improvements to business operations
D. None of the choices are correct.

A

Traditional business improvement includes:
A. Top-down participation
B. Long time requirements
C. Brand new business processes
D. Incremental levels of change

D

Business process engineering includes:
A. Bottom-up participation
B. Short time requirements
C. Improved new versions of current processes
D. Radical levels of change

D

Traditional business improvement includes all the following, except:
A. Bottom-up participation
B. Short time requirements
C. Improved new versions of current processes
D. Radical levels of change

D

Business process redesign includes all the following, except:
A. Top-down participation
B. Long time requirements
C. Brand new business processes
D. Incremental levels of change

D

Organizations are changing from a competitive environment in which mass-market products and services were standardized, long-lived, information-poor, and exchanged in one-time transactions to an environment in which companies compete globally with niche-market products and services that are _______________.
A. individualized
B. short-lived
C. exchanged on an ongoing basis with customers
D. All the choices are correct.

D

An agile company supports all the following except:
A. Short-lived products and services B. Standardized products and services
C. Information-rich products and services
D. Niche market products and services

B

_______________ agility is the ability to co-opt customers in the exploitation of innovation opportunites.
A. Customer B. Partnering
C. Operational D. Technological

A

_______________ agility is the ability to leverage assets, knowledge, and competencies in the exploration and exploitation of innovation opportunities.
A. Customer B. Partnering
C. Operational D. Technological

B

_______________ agility is the ability to accomplish speed, accuracy, and cost economy in the exploitation of innovation opportunities.
A. Customer B. Partnering
C. Operational D. Technological

C

Which of the following is not a strategy of a virtual company?
A. Share infrastructure and risk with alliance partners
B. Link complementary core competencies
C. Migrate from selling products to selling solutions
D. Increase concept-to-case time

D

Explicit knowledge deals with:
A. Data, documents, and things written down or stored on computers.
B. "How-to" knowledge, which resides in workers.
C. Using data mining techniques to capture external information.
D. All of the choices are correct.

A

Tacit knowledge deals with:
A. Data, documents, and things written down or stored on computers.
B. "How-to" knowledge, which resides in workers.
C. Using data mining techniques to capture external information.
D. None of the choices are correct.

B

Accessing and retrieving documents that have been stored online is a function of _______________.
A. document management
B. enterprise intelligence
C. information creation, sharing, and management
D. All of the choices are correct.

A

Real-time information management, communication, and collaboration are a function of _______________.
A. document management
B. enterprise intelligence
C. information creation, sharing, and management
D. All of the choices are correct.

C

Performance support, building expert networks, and leveraging organizational know-how are a function of _______________.
A. document management
B. enterprise intelligence
C. information creation, sharing, and management
D. All of the choices are correct.

B

The goal of knowledge management systems (KMS) is to help knowledge workers _______________ important business knowledge.
A. create
B. organize
C. distribute
D. All of the choices are correct.

D

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