Laudon - Ess9e - Tif - ch01-1 Mis

Essentials of Management Information Systems, 9e (Laudon/Laudon)
Chapter 1 Business Information Systems in Your Career
1) Internet advertising is growing at a rate of more than 30 percent a year.

Answer: FALSE
Diff: 3 Page Ref: 6
AACSB: Reflective Thinking
CASE: Comprehension
2) A business model describes how a company produces, delivers, and sells a product or service
to create wealth.
Answer: TRUE
Diff: 1 Page Ref: 11
CASE: Comprehension
3) Information technology (IT) consists of all the hardware that a firm needs to use in order to
achieve its business objectives, whereas information systems consist of all the hardware and
software needed.
Answer: FALSE
AACSB: Use of IT
CASE: Comprehension
4) Computers are only part of an information system.

Answer: TRUE
AACSB: Use of IT
CASE: Comprehension
5) Information systems literacy describes the behavioral approach to information systems, while
computer literacy describes the technical approach.
Answer: FALSE
AACSB: Use of IT
CASE: Comprehension
6) The dimensions of information systems are people, organizations, and information technology.
Answer: TRUE
AACSB: Use of IT
CASE: Comprehension
7) In order to understand how a specific business firm uses information systems, you need to
know something about the history and culture of the company.
Answer: TRUE
AACSB: Use of IT
CASE: Comprehension
8) Developing a new product, fulfilling an order, or hiring a new employee are all examples of
business processes.
Answer: TRUE
CASE: Comprehension
9) Business processes are those logically related tasks for accomplishing tasks that have been
formally encoded by an organization.
Answer: FALSE
CASE: Comprehension
10) Employee attitudes about their jobs, employers, or technology can have a powerful effect on
their abilities to use information systems productively.
Answer: TRUE
AACSB: Use of IT
CASE: Comprehension
11) A network requires at least three computers and a shared resource.

Answer: FALSE
AACSB: Use of IT
CASE: Comprehension
12) An IT infrastructure provides the platform on which the firm can build its information
systems.
Answer: TRUE
AACSB: Use of IT
CASE: Comprehension
13) UPS's use of Web-based tools that allow customers to embed UPS functions such as
tracking and cost calculations into their own Web sites was an information systems solution used
to achieve customer intimacy.
Answer: TRUE
AACSB: Analytic Skills
CASE: Comprehension
14) Identifying a problem includes agreeing that a problem exists.

Answer: TRUE
CASE: Comprehension
15) Political conflict is an example of the people dimension of business problems.

Answer: FALSE
CASE: Comprehension
16) As a result of new public laws, accountants are beginning to perform more technical duties,
such as auditing systems and networks.
Answer: TRUE
AACSB: Use of IT
CASE: Comprehension
17) Forensic accounting is used to investigate bankruptcies and contract disputes.

Answer: TRUE
CASE: Comprehension
18) An understanding of enterprise-wide systems for customer relationship management is one

of the skills relevant to careers in marketing.
Answer: TRUE
AACSB: Use of IT
CASE: Comprehension
19) Whereas marketing and financial careers have been transformed by the growth in
information systems, management has–so far–remained relatively unaffected.
Answer: FALSE
AACSB: Use of IT
CASE: Comprehension
20) There are two types of outsourcing: offshore outsourcing and foreign outsourcing.
Answer: FALSE
CASE: Comprehension
21) As discussed in the chapter opening case, the Yankees' use of information systems in their
new stadium can be seen as an effort to achieve which of the primary business objectives?
A) Operational excellence
B) Survival
C) Customer and supplier intimacy
D) Improved decision making
Answer: A
Diff: 3 Page Ref: 3-4
CASE: Analysis in terms of categorize
22) Journalist Thomas Friedman's description of the world as "flat" referred to:
A) the flattening of economic and cultural advantages of developed countries.
B) the use of the Internet and technology for instantaneous communication.
C) the reduction in travel times and the ubiquity of global exchange and travel.
D) the growth of globalization.
Answer: A
Diff: 2 Page Ref: 9
CASE: Comprehension
23) The six important business objectives of information technology are: new products, services,
and business models; customer and supplier intimacy; improved decision-making; competitive
advantage; operational excellence, and:
A) flexibility.
B) survival.
C) improved business practices.
D) improved efficiency.
Answer: B
AACSB: Use of IT
CASE: Comprehension
24) The use of information systems because of necessity describes the business objective of:
A) survival.
B) improved business practices.
C) competitive advantage.
D) improved flexibility.
Answer: A
AACSB: Use of IT
CASE: Comprehension
25) Which of the following choices may lead to competitive advantage (1) new products,
services, and business models; (2) charging less for superior products; (3) responding to
customers in real-time?
A) 1 only
B) 1 and 2
C) 2 and 3
D) 1, 2, and 3
Answer: D
CASE: Analysis in terms of compare
26) Verizon's implementation of a Web-based digital dashboard to provide managers with real-
time information such as customer complaints is an example of:
A) improved flexibility.
B) improved decision-making.
C) improved efficiency.
D) customer and supplier intimacy.
Answer: B
AACSB: Use of IT
27) The move of retail banking to use ATMs after Citibank unveiled its first ATMs illustrates the
information system business objective of:
A) improved efficiency.
B) customer and supplier intimacy.
C) survival.
D) competitive advantage.
Answer: C
AACSB: Use of IT
28) An information system can be defined technically as a set of interrelated components that
collect (or retrieve), process, store, and distribute information to support:
A) decision making and control in an organization.
B) communications and data flow.
C) managers analyzing the organization's raw data.
D) the creation of new products and services.
Answer: A
AACSB: Use of IT
CASE: Comprehension
29) The three activities in an information system that produce the information organizations use
to control operations are:
A) information retrieval, research, and analysis.
B) input, output, and feedback.
C) input, processing, and output.
D) data analysis, processing, and feedback.
Answer: C
AACSB: Use of IT
CASE: Comprehension
30) Order data for baseball tickets and bar code data are examples of:
A) raw input.
B) raw output.
C) customer and product data.
D) sales information.
Answer: A
31) The average number of tickets sold daily online is an example of:
A) input.
B) raw data.
C) meaningful information.
D) output.
Answer: C
32) Output:
A) is feedback that has been processed to create meaningful information.
B) is information that is returned to appropriate members of the organization to help them
evaluate the input stage.
C) transfers raw data to the people who will use it or to the activities for which it will be used.
D) transfers processed information to the people who will use it or to the activities for which it
will be used.
Answer: D
CASE: Comprehension
33) Converting raw data into a more meaningful form is called:

A) capturing.
B) processing.
C) organizing.
D) feedback.
Answer: B
CASE: Comprehension
34) An example of raw data from a national chain of automobile stores would be:
A) average of 13 Toyotas sold daily in Kentucky in 2007.
B) 300 Toyota RAV4s sold during fourth quarter 2007 in Kentucky.
C) 1 Toyota RAV4 sold January 7, 2008 in Louisville, Kentucky - $28000.
D) annual sales of Toyota RAV4s increased 2.4 percent.
Answer: C
35) Electronic computers and related software programs are the technical foundation, the tools
and materials, of:
A) all business procedures.
B) information accumulation.
C) modern information systems.
D) all industrialized countries.
Answer: C
CASE: Comprehension
36) The field that deals with behavioral issues as well as technical issues surrounding the
development, use, and impact of information systems used by managers and employees in the
firm is called:
A) information systems literacy.
B) information systems architecture.
C) management information systems.
D) information technology infrastructure.
Answer: C
CASE: Comprehension
37) A hierarchy:
A) results in a clear-cut division of labor.
B) is composed primarily of experts trained for different functions.
C) is a pyramid structure of rising authority and responsibility.
D) is used primarily in large organizations to define job roles.
Answer: C
CASE: Comprehension
38) In a hierarchical organization, the upper levels consist of:

A) managerial and professional workers.
B) managerial, professional, and technical workers.
C) professional and operational workers.
D) managerial, professional, and operational workers.
Answer: B
CASE: Comprehension
39) The fundamental set of assumptions, values, and ways of doing things that has been accepted
by most of a company's members is called its:
A) culture.
B) environment.
C) atmosphere.
D) values.
Answer: A
CASE: Comprehension
40) Business processes:

A) include informal work practices.
B) are used primarily for sales and accounting functions.
C) are governed by information technology.
D) are logically related tasks used primarily by operational personnel.
Answer: A
CASE: Comprehension
41) Data management technology consists of:

A) the physical hardware and media used by an organization for storing data.
B) the detailed, preprogrammed instructions that control and coordinate the computer hardware
components in an information system.
C) the software governing the organization of data on physical storage media.
D) the hardware and software used to transfer data.
Answer: C
AACSB: Use of IT
CASE: Comprehension
42) The hardware and software used to transfer data in an organization is called:
A) data management technology.
B) networking and data management technology.
C) data and telecommunications technology.
D) networking and telecommunications technology.
Answer: D
AACSB: Use of IT
CASE: Comprehension
43) An intranet uses:

A) mainframe technology.
B) infrared telecommunications systems.
C) the telecommunications capacities of fiber optic networks.
D) Internet technology within the boundaries of the firm.
Answer: D
AACSB: Use of IT
CASE: Comprehension
44) The first step in the four-step model of business problem solving is:
A) agreeing that a problem exists.
B) identifying the problem.
C) outlining the problem's causes.
D) assigning the problem to a problem solver.
Answer: B
CASE: Comprehension
45) Inadequate database capacity is an example of the ________ dimension of business

problems.
A) technology
B) organizational
C) people
D) management
Answer: A
46) Legal and regulatory compliance is an example of the ________ dimension of business
problems.
A) management
B) organizational
C) people
D) technology
Answer: C
47) Aging hardware and outdated software are examples of the ________ dimension of business
problems.
A) technology
B) management
C) information systems
D) organizational
Answer: A
48) Poor business processes and unsupportive culture are examples of the ________ dimension
of business problems.
A) management
B) organizational
C) people
D) infrastructure
Answer: B
49) The owners of Speed-EZ, a new bike messenger service, are concerned about how they will
manage their messengers once they have left the office. This is a business problem that falls into
the:
A) management dimension.
B) people dimension.
C) organizational dimension.
D) technology dimension.
Answer: B
50) Flapjack Flats, a new pancake chain, is having difficulty finding pancake chefs. This is a
business problem that falls into the:
A) management dimension.
B) people dimension.
C) organizational dimension.
D) technical dimension.
Answer: C
51) In choosing the best solution for a business problem, one of the most important
considerations is:
A) change management.
B) existing resources and skills.
C) employee training.
D) outcome measurement.
Answer: B
CASE: Synthesis in terms of predicting
52) The final step in the four-step model of business problem solving is:
A) outcome.
B) implementation.
C) change management.
D) feedback.
Answer: B
CASE: Comprehension
53) Which of the following would not be considered part of the implementation phase of
problem solving?
A) change management
B) purchasing hardware for an information systems solution
C) training an employee on new systems software
D) evaluating a selection of software packages for implementing a new business process
Answer: D
54) The failure of NASA's initial solution to preventing the space shuttle shedding foam
illustrates:
A) the importance of training employees on new business processes.
B) the need to prepare for measuring outcomes of a business solution.
C) the continuous nature of problem solving.
D) the need to quickly adapt to new technological innovations.
Answer: C
CASE: Analysis in terms of compare
55) One of the most frequent errors in problem solving is:

A) rushing to judgment.
B) not being aware of personal limitations.
C) being too doubtful.
D) following a rote pattern of decision making.
Answer: A
CASE: Comprehension
56) A major criterion in deciding the most important perspectives of a business problem is:
A) implementation.
B) change management.
C) usefulness.
D) organizational needs.
Answer: C
CASE: Comprehension
57) Which of the following is an example of a business using information systems to create new
products and services?
A) Apple's creation of the iPod
B) JC Penney's information system that allows its contract manufacturers to see what garments
have been sold and need to be replaced
C) Toyota's legendary TPS that has created superlative efficiencies and enabled Toyota to
become the world's largest auto maker
D) Verizon's Web-based digital dashboard providing real-time company information for
managers
Answer: A
58) An example of a business using information systems to attain competitive advantage is:
A) Apple's creation of the iPod.
have been sold and need to be replaced.
become the world's largest auto maker.
managers.
Answer: C
AACSB: Use of IT
59) An example of a business using information systems for customer and supplier intimacy is:
A) Apple's creation of the iPod.
have been sold and need to be replaced.
become the world's largest auto maker.
managers.
Answer: B
60) An information skill important for an accounting major would be:

A) an understanding of system and network security issues.
B) an understanding of product management enterprise systems.
C) an understanding of supplier management enterprise systems.
D) an understanding of enterprise systems that enhance leadership.
Answer: A
CASE: Comprehension
61) An information skill important for a marketing major would be:

A) an understanding of system and network security issues.
B) an understanding of product management enterprise systems.
C) an understanding of supplier management enterprise systems.
D) an understanding of enterprise systems that enhance leadership.
Answer: B
CASE: Comprehension
62) Maintaining the organization's financial records is a business function of:

A) accounting.
B) finance
C) sales
D) marketing.
Answer: A
CASE: Comprehension
63) Branding products is a business function of:

A) manufacturing and production.
B) finance and accounting.
C) human resources.
D) marketing.
Answer: D
CASE: Comprehension
64) To make sure they stock clothes that their customers will purchase, a department store
implements a new application that analyzes spending levels at their stores and cross-references
this data to popular clothing styles. This is an example of using information systems to support a
business strategy of:
A) new products, services, and business models.
B) survival.
C) customer and supplier intimacy.
D) improved decision making.
Answer: C
65) Financial managers work directly with ________ to ensure investments in information
systems help achieve corporate goals.
A) operations managers
B) senior managers
C) marketing managers
D) accounting managers
Answer: B
CASE: Comprehension
66) Operations management as a discipline is directly relevant to three occupational categories:

A) industrial production managers, operations analysts, and administrative service managers.
B) project managers, production managers, and administrative service managers.
C) project managers, production managers, and industrial production managers.
D) finance, accounting, and management.
Answer: A
CASE: Comprehension
67) Assume you work for a package delivery service in a major metropolitan area, and that the
business has been losing customers for several years. You have been asked to find a solution to
this problem, perhaps one which uses modern information technologies. What is the correct way
to proceed?
A) Look for solutions, evaluate the solutions, identify the problem more clearly, and then
implement the solution.
B) Think about what solutions can be implemented, look for solution designs, evaluate the
designs, and then implement the solution.
C) Identify the problem, design alternative solutions, choose the best solution, and then
D) Design solutions, evaluate and identify the problems, choose the best solution, and then
Answer: C
CASE: Analysis in terms of organizing
68) Which of the following statements is not true?

A) The most common and successful offshore outsourcing projects involve production
programming and system maintenance programming work, along with call center work.
B) Inflation in Indian wages for technology work is leading to a counter movement of jobs back
to the United States.
C) The fear that offshore outsourcing will reduce demand for new information system hires in
the U.S. is mitigated by the fact that reduced IT expenditures results in increased IT investments
and the creation of domestic jobs.
D) The impact of domestic IT outsourcing has been very disruptive to some regional areas of the
U.S.
Answer: D
CASE: Comprehension
69) The culture of UPS places service to the customer among the company's highest business
objectives, which is reflected in their use of information systems to enable customer tracking of
their packages. Based on your reading of Chapter 1, why is "culture" an important factor to
consider when building information system solutions to business problems?
A) Business culture has to be synchronized with new technology.
B) The business culture provides the vision and inspiration for information system solutions.
C) People are a company's most important asset.
D) Businesses without culture do not understand new technology.
Answer: B
CASE: Evaluation in terms of assess
70) Based on your reading of the case discussing mobile handhelds, Doylestown Hospital's use
of iPhones is an example of using information systems to enhance which of the following
generic business objectives?
A) Survival
B) New products, services, and business models
C) Improved decision making
D) Customer and supplier intimacy
Answer: C
Diff: 3 Page Ref: 8
CASE: Evaluation in terms of categorize
71) ________ is data that has been shaped into a form that is meaningful to human beings.
Answer: Information
CASE: Comprehension
72) ________ is output returned to appropriate members of the organization to help them
evaluate or correct the input stage.
Answer: Feedback
CASE: Comprehension
73) The world's largest and most widely used network is ________.
Answer: the Internet
CASE: Comprehension
74) ________ consists of the detailed, preprogrammed instructions that control and coordinate
the computer hardware components in an information system.
Answer: Computer software/software
CASE: Comprehension
75) The ________ is a service provided by the Internet that uses universally accepted standards
for storing, retrieving, formatting, and displaying information in a page format.
Answer: World Wide Web/Web/WWW
CASE: Comprehension
76) ________ are private corporate networks extended to authorized users outside the
organization.
Answer: Extranets
CASE: Comprehension
77) In business problem solving, the three major categories of factors are organization,
technology, and ________.
Answer: people
CASE: Comprehension
78) Having inadequate resources is a business problem that falls into the ________ dimension.
Answer: organizational
CASE: Comprehension
79) Encouraging employees to adapt to new business processes is one factor of ________.
Answer: change management
CASE: Comprehension
80) Being aware of organizational and personal limitations is one of the four elements of
________.
Answer: critical thinking.
CASE: Comprehension
81) Define operational excellence. How can information systems help achieve it?
Answer: Operational excellence is the achievement of higher levels of productivity and
efficiency. Information systems can help achieve operational excellence by improving
communications to supplier and optimizing the supply chain. Information systems could help
managers communicate with workers more efficiently, enable technological innovation in
products, minimize warehouse overhead, streamline distribution.
AACSB: Use of IT
CASE: Synthesis in terms of devising
82) You work for an auto manufacturer and distributor. How could you use information
systems to achieve greater customer intimacy?
Answer: You could create a web site that allows customers to customize cars, communicate with
support personnel and other car owners. You could create an automated e-mail service reminding
car owners to take their car in for periodic check ups. You could have an information system that
tracks customer preferences in local areas, so you can provide cars that reflect local customer
needs and desires.
CASE: Synthesis in terms of applying
83) What important managerial function is impaired by not having access to timely and accurate
information? What is the effect of this lack of data?
Answer: The managerial function is decision-making. Without access to timely and accurate
information business managers rely on forecasts, best guesses, and luck. The result is over- or
underproduction of goods and services, misallocation of resources, and poor response times.
These poor outcomes raise costs and lose customers.
AACSB: Use of IT
CASE: Evaluation in terms of justify
84) What is the difference between information technology and information systems? Describe
some of the functions of information systems.
Answer: Information technology (IT) consists of all the hardware and software that a firm needs
to use in order to achieve its business objectives. Information systems are more complex. An
information system can be defined technically as a set of interrelated components that collect (or
retrieve), process, store, and distribute information to support decision making and control in an
organization.
The functions of an information system are to support decision making, coordination, and
control; help employees analyze problems; help employees visualize complex subjects; and help
create new products.
AACSB: Use of IT
CASE: Synthesis in terms of applying, generalizing
85) You are a marketing manager for a national movie theater chain. Give an example of data
that your department could use for creating meaningful information. What type of information
could that data produce?
Answer: Movie ticket sales from individual theaters would be an example of raw data.
Meaningful information from this would be: average number of tickets sold to seniors on certain
days of the week.
AACSB: Use of IT
86) Define business process. What might be a business process used at a hospital?
Answer: A business process is a set of logically related tasks and behaviors for accomplishing
work. Hiring a new employee, customer intake, and filing medical records are examples of
business processes at a hospital.
87) Describe the four steps taken in solving a business problem.

Answer: The four steps are problem identification, solution design, choice of a solution, and
implementation. In the problem identification step, relevant people in an organization must agree
that a problem exists, about what the problem is and what its causes are, and what can be done
about the problem given the organization's resources. In the solution design step, as many
possible solutions should be determined. In the choice step, you choose the best solution from
the list of options determined in the previous step. It is important to match a choice to existing
resources, skills, and feasibility. In the last step, implementation, the solution is put in place. In
information systems solutions, this may include purchasing hardware or software and testing it.
Implementation also includes employee training, change management, and using a method to
measure the outcome.
CASE: Analysis in terms of summarize
88) What are the three dimensions to business problems? Give an example of each.
Answer: The three dimensions to business problems are:
(1) Organizational: This may include outdated business processes, unsupportive culture and
attitudes, political conflict, turbulent business environment and change, complexity of task,
inadequate resources.
(2) Technology: This may include insufficient or aging hardware, outdated software, inadequate
data management, insufficient telecommunications capacity, incompatibility of old systems with
new technology, and rapid technological change.
(3) People: This may include lack of employee training, difficulties in evaluation performance,
legal and regulatory compliance, work environment, lack of employee support and participation,
indecisive management, or poor management.
Diff: 2 Page Ref: 22, 24
CASE: Synthesis in terms of generalize
89) The department chain you work for has had numerous complaints about slow customer
service. Your colleague, a sales manager, informs you that this happened at a previous store she
worked for, and it was cleared up by hiring more sales representatives. Should you take her
advice? Why not? What techniques can you use in evaluating the problem?
Answer: The advice should not be taken, as it is a rush to judgment, which could mean that the
wrong solution is used, wasting time and resources. You should ask the colleague to employ
critical thinking. Critical thinking is sustained suspension of judgment with an awareness of
multiple perspectives and alternatives. It involves at least four elements:
• Maintaining doubt and suspending judgment
• Being aware of different perspectives
• Testing alternatives and letting experience guide
• Being aware of organizational and personal limitations
CASE: Synthesis in terms of applying
90) Describe at least three of the general information skills essential for all business careers.
Answer: General information skills essential for all business careers include (1) understanding
how information systems and technologies can help firms achieve business objectives such as
operational efficiency, developing new products and services, and maintaining customer
intimacy. Also essential is (2) an understanding the central role of databases in a modern firm as
well as (3) developing skills in the analysis of information in order to help firms understand and
make sense out of their environments. (4) All business majors need to be able to work with
specialists and system designers who build and implement information systems. This is
necessary to ensure that the systems that are built actually service business purposes and provide
the information and understanding required by managers and employees. In addition, students
need to (5) understand how information systems work in relation to social and community issues,
including ethical issues and how systems must meet requirements for reporting to government
regulators and the public.
CASE: Analysis in terms of organizing
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Essentials of Management Information Systems, 9e (Laudon/Laudon)

Chapter 1 Business Information Systems in Your Career

1) Internet advertising is growing at a rate of more than 30 percent a year.

4) Computers are only part of an information system.

11) A network requires at least three computers and a shared resource.

14) Identifying a problem includes agreeing that a problem exists.

15) Political conflict is an example of the people dimension of business problems.

17) Forensic accounting is used to investigate bankruptcies and contract disputes.

18) An understanding of enterprise-wide systems for customer relationship management is one

33) Converting raw data into a more meaningful form is called:

38) In a hierarchical organization, the upper levels consist of:

40) Business processes:

41) Data management technology consists of:

43) An intranet uses:

45) Inadequate database capacity is an example of the ________ dimension of business

55) One of the most frequent errors in problem solving is:

60) An information skill important for an accounting major would be:

61) An information skill important for a marketing major would be:

62) Maintaining the organization's financial records is a business function of:

63) Branding products is a business function of:

66) Operations management as a discipline is directly relevant to three occupational categories:

68) Which of the following statements is not true?

87) Describe the four steps taken in solving a business problem.

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