File: chapter2TestBank.

docx, Chapter 2, Strategic Use of Information Resources

Multiple Choice

1. Two automobile manufacturers are working together to develop hybrid technology.

This type of relationship between the two automobile manufacturers is best described as:
a) Co-opetition
b) Strategic alliance
c) Competition
d) Collaboration
e) Business strategy

Ans: a (Medium)
Response: See page 65

2. While information systems can be used to gain a strategic advantage, they have
inherent risks. Hershey Foods, for example, crippled its Halloween sales when its
complex IS system failed to support its supply and inventory needs during peak
productionseason. This is an example of which specific IS risk?
a) Awaking a sleeping giant
b) Implementing IS poorly
c) Demonstrating bad timing
d) Running afoul of the law
e) Mobile-based alternative removes advantages

Ans: b (Medium)
Response: See page 67

3. Suppose Zara has a linked supply chain with Silk City, a fabric supplier. Zara and Silk
City use IT to seamlessly exchange data, communicating requirements as well as delivery
expectations. The relationship between Zara and Silk City is best described as:
a) Strategic alliance
b) Co-opetition
c) Collaboration
d) Dependence
e) Competition

Ans: a (Medium)
Response: See page 64
4. The Nike + iPod Sports Kit is a sensor in your shoe that syncs with your iPod and
provides details about your workout. This inter-organizational relationship affords both
Nike and Apple a business advantage. This relationship between Nike and Apple is best
described as:
a) Strategic alliance
b) Co-opetition
c) Collaboration
d) Dependence
e) Competition

Ans: a (Medium)
Response: See page 64

5. Kodak was once the largest supplier of photographic film. In 2004 it was dropped from
the Dow Jones Industrial Average after having been listed for 74 years. Kodak failed to
use IT to fend off which one of the following of Porter's 5 competitive forces?
a) Bargaining power of suppliers
b) Threat of substitute products
c) Potential threat of new entrants
d) Bargaining power of buyers
e) Industry collaboration

Ans: b (Medium)
Response: See page 54

6. Zaras strategically uses information technologies to do all of the following EXCEPT:

a) Bring new products quickly to market, meeting customer demands
b) Support a continuous flow of information from stores to manufacturers to
distributors
c) Maintain a rich, centralized repository of customer data
d) Build silos of responsibilities with limited interaction betweenstore managers,
designers and market specialists
e) Keep its inventory levels very low (relative to other retailers)

Ans: d (hard)
Response: See page 44-45,56

7. Many companies like Zara use POS to capture information on what has sold, to whom
and when. This use of technology to realize efficiencies supports which one of Porter's
value chain activities?
a) Outbound Logistics
b) Marketing &Sales
 c) Operations
d) Service
e) Human resources

Ans: b (Medium)
Response: See page 57

8. Which one of the following risks can threaten the IS of a company in a highly
regulated industry such as financial services or health care?
a) Demonstrating bad timing
b) Awakening a sleeping giant
c) Mobile-based alternative removes advantages
d) Running afoul of the law
e) Implementing IS poorly

Ans: d (Medium)
Response: See page 67

9. Afirm releases a new technology only to have a competitor implement a similar

technology with more features and value to the consumer. Thiswould be which type of
risk?
a) Demonstrating bad timing
b) Awakening a sleeping giant
c) Mobile-based alternative removes advantages
d) Running afoul of the law
e) Implementing IS poorly

Ans: b (Medium)
Response: See page 66

10. Which model is best used to understand the ways in which information technologies
allow a firm to both attain and sustain a competitive advantage?
a) Porters Competitive Forces
b) Porters Value Chain
c) The Information Systems Strategy Triangle
d) The Network Effect
e) The Resource-Based View

Ans: e (Medium)
Response: See page 59
11. Partnering with a competitor is becoming more and more common in today's
integrated, technology-based environment. This type of collaboration with a competitor is
uniquely described as:
a) Co-opetition
b) Integrated supply chain
c) Business process
d) Strategic alliance
e) Value proposition

Ans: a (Medium)
Response: See page 64

12. This risk of using information resources must be carefully considered by managers
due to the rapid spread ofapplications on smartphones and tablet devices.
a) Demonstrating bad timing
b) Awakening a sleeping giant
c) Delivering a strategic coup
d) Mobile-based alternatives remove advantages
e) Equal access competition

Ans: d (Easy)
Response: See page 67

13. Facebook offers services that many individuals have adapted to, making it difficult
for themto choose another social networking site. It can be said that Facebook has
protected itself from which competitive force?
a) Bargaining power of suppliers
b) Threat of substitute products
c) Potential threat of new entrants
d) Bargaining power of buyers
e) Industry collaboration

Ans: c (Medium)
Response: See page 52

14. A company that is in a market with few buying options for the consumer is
experiencing which one of Porter's Five Competitive Forces?
a) Bargaining power of suppliers
b) Threat of substitute products
c) Potential threat of new entrants
d) Bargaining power of buyers
e) Industry competitors
Ans: a (Medium)
Response: See page 53

15. The Resource-Based Viewhelps determine whether a firms strategy has created
value. Unlike Porters Competitive Forces framework, this view maintains that
competitive advantage comes from the ________________ and other resources of the
firm.
a) data
b) technology
c) information
d) systems
e) people

Ans: c (Medium)
Response: See page 59

16. Which one of the following is not considered to be a primary activityof the value
chain of a firm?
a) Inbound Logistics
b) Service
c) Sales & Marketing
d) Technology
e) Operations

Ans: d (Medium)
Response: See page 57

17. Which part of the value chain includes the manufacturing of goods?
a) Inbound Logistics
b) Outbound Logistics
c) Operations
d) Service
e) Organization

Ans: c (Medium)
Response: See page 57 (Figure 2.5)

18. Which "view," applied in the area of Information Systems,helps identify two subsets
of information resources: those that enable a firm to attain competitive advantage and
those that enable a firm to sustain the advantage over the long-term?
a) Resource-Based View
b) Information-System View
 c) Information-Resource View
d) System-Based View
e) Organization View

Ans: a (Medium)
Response: See page 59

19. Porters value chain framework suggests that a competitive advantage can stem from:
a)Lowering costs and adding value
b)Reducing isolated costs
c)Disregarding customer data
d)Optimizing internal costs
e)Improving customer service

Ans: a (Medium)
Response: See page 57-58

20. All of the following benefit from the network effect EXCEPT:
a. Wikis
b. Twitter
c. Email
d. Facebook
e. Network bandwidth

Ans: e (Medium)
Response: See page 48

True/False

21. Unlike most assets, information resources do not lose value over time.

Ans: False (Medium)

Response: See page 50

22. Supply Chain Management (SCM) consists of technological components as well as a

process that brings together information about customers, sales and marketing.

Ans: False (Medium)

Response: See page 59
23. A firm that acquires a supplier is looking to reduce the "bargaining power of
suppliers" force.

Ans: True (Medium)

Response: See page 53

24. Zaras use of information recourses has given it a substantial advantage over its
competitors.

Ans: True (Easy)

Response: See page 45

25. Web 2.0 technologies are Internet based applications that allow for interaction and
collaboration among users.

Ans: True (Easy)

Response: See page 5, 47

26. A firms IS strategy and business strategy focus more on its external requirements
than internal requirements.

Ans: True (Medium)

Response: See page 47

27. A firms IS strategy and organizational strategy focus more on its external
requirements than internal requirements.

Ans: False (Medium)

Response: See page 47

28. In order to maximize the effectiveness of an organizations business strategy, the

manager must be able to identify and use information resources.

Ans: True (Medium)

Response: See page 47

Short Answer
29. SCM stands for ________________.

Ans: Supply chain management

Response: See page 59

30. This is a collection of firms that, using technology, extend their business relationships
and connect their value chains.

Ans: Value system

Response: See page 58

31. List the three IS tools used to optimize the operations of a firms value chain.

Answ: ERP, SCM, CRM

Response: See page 59

32. This IT asset is business data that has been captured, organized and made available to
an organization.

Ans: Information repository

Response: See page 47

33. List the four support activities of the value chain.

Ans: Organization, Human Resources, Technology, Purchasing

Response: See page 57

34. Information resources are defined as the available data, technology, people, and
______ available in an organization to be used by managers to complete business tasks.

Ans: Processes
Response: See page 47

35. IT resources consist of IT assets and IT _______.

Ans: Capabilities
Response: See page 47
36. For a company whose main product is information (like a financial services
company), the company must co-create its ________ strategy and ________ strategy.

Ans: Business, IS
Response: See page 68

Essay

37. List one externally managed IT resource a company may use and how it provides a
strategic advantage.

38. Explain why relationship skills are becoming more important to IS managers in
todays economy.

39. Provide an example of two companies that have built a strategic alliance. Briefly
explain the benefits of the relationship.

40. Provide an example of two companies that have built an effective co-opetition.
Briefly explain the benefit of the relationship.

41. List a Web 2.0 technology and how it benefits from the network effect.

42. Give an example of a company whose switching costs are too high, effectively
keeping its customer captive. How is this company using technology to maintain high
switching costs?

43. Explain how Zara has aligned its information systems strategy with its business
strategy

44. Why is it that more and more firms need to co-create their business and IS strategy?

Matching
45. Over the different eras, organizations have adapted their information systems strategy
as technologies have matured. Place these different needs satisfied by information
systems in order of maturity. In other words, which need is most likely the first need to be
satisfied by an organization?

First Need to lower existing transaction costs

Second Need to innovate and create opportunities
Third Need to use social IT platforms to collaborate
and engage stakeholders

46. Match the technology with the era it dominated.

Era I 1960s Centralized mainframe

Era II 1970s Centralized minicomputers
Era III 1980s Decentralized minicomputers and personal
computers
Era IV 1990s Client server
Era V 2000s The Internet
Era VI 2010+ Social networks, mobility and cloud computing

47. Starbucks allows customers in the US to use smartphones to pay for their purchases in
an effort to drive sales. Starbucks uses a reader in the store to scan a bar code displayed
on the customer's smartphone screen. While this use of information resources may be
used to gain a strategic advantage, there are possible risks. Match the potentially harmful
experience below with the IT risk it represents:

Implementing IS poorly Someone reported that the use

of the mobile payment
application was causing longer
lines at the cash register.
Demonstrate bad timing A very small percentage of
customers use the service
because few have mobile
devices and even fewer are able
to download and use the
application.
Awaking a sleeping giant A large credit card processing
agency deploys asmartphone
application for mobile
payments that can be used in
any retail environment.
48. Identify each resource below as an IT asset or an IT capability.

IT asset Information repository

IT asset IT infrastructure
IT asset Software
IT asset Network
IT capability Ability to design, develop and implement IS
IT capability Project management
IT capability Relationship skills

49. Match an organizations activity with the competitive force it has successfully
influenced.

Threat of new entrants Walmarts massive, complex inventory

control system is hard for others to
replicate and gain the same economies of
scale.
Bargaining power of the buyer Amazons One Click ordering
systemmakes buying online easy, enticing
the customer to return for other purchases.
Threat of substitute product Apples ability to create new products even
at the risk of cannibalizing existing
products.
Bargaining power of suppliers Amazons purchase of Zappos.

50. Match Zaras use of IT to the competitive force it influences.

Threat of new entrants Zara has a highly collaborative group of

designers, sales people and manufacturing
planners who are supported by a unique IT
that is hard for any retailer to replicate.
Threat of substitute product IT enables Zara to turn around new
products, reacting within 3 weeks to
customers likes and dislikes.
Bargaining power of suppliers Zara cuts and dyes much of its fabric,
making it less dependent on those that
provide fabric.

51. Match Zaras primary activity to the Porters value chain activity it represents.

Inbound logistics Zara receives fabric from a supplier.

Outbound logistics Using automated conveyer belts, finished
clothes are sorted and shipped to stores.
 Operations Fabric is cut and sewn and thefinished
clothes are packaged.
Marketing & Sales POS capture what has been sold.

52. Match Zaras support activity to the Porters value chain activity it represents.

Human Resources Store managers are trained to not only

service customers but also discover what
the customer wants but is unable to find.
Technology Zara works with hardware and software
vendors to develop and design automated
systems that support activities like the
distribution of goods and the cutting of
fabrics.
Purchasing Fabric suppliers are paid for the fabric Zara
has purchased.

53. Social capital is a valuable resource for businesses. Match the category of social
capital with the questions is seeks to answer.

Structural Who is connected to whom?

Relational How do connected people interact?
Cognitive How do the connected individuals think?

54. Match the methodology used to align a firms business strategy with its information
strategy.

Porters 5 Competitive Forces Information resources should be used to

strategically alter the marketplace while
benefiting the firms position in the
industry.
Porters Value Chain Framework Information can lower cost of business and
strategically adds value to the firms
internal operations.
Resource-Based View Leverage IT resources that are identified to
create and sustain a strategic advantage for
the firm.