Management Information Systems: Managing the Digital Firm, 16e (Laudon)
Chapter 3 Information Systems, Organizations, and Strategy
1) The interaction between information technology and organizations is influenced:
A) solely by the decision making of middle and senior managers.
B) by the development of new information technologies.
C) by many factors, including structure, politics, culture, and environment.
D) by two main macroeconomic forces: capital and labor.
E) by the rate of growth of the organization.
Answer: C
Difficulty: Moderate
AACSB: Information technology
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
2) Which of the following statements about organizations is not true?
A) An organization is a stable, formal social structure that takes resources from the environment
and processes them to produce outputs.
B) An organization is a formal, legal entity with internal rules and procedures that must abide by
laws.
C) An organization is a collection of people and other social elements.
D) An informal group can be considered to be an organization.
E) An organization is a collection of rights, privileges, obligations, and responsibilities delicately
balanced over a period of time through conflict and conflict resolution.
Answer: D
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
3) According to the ________ definition of organizations, an organization is seen as a means by
which capital and labor are transformed by the organization into outputs to the environment.
A) microeconomic
B) macroeconomic
C) sociotechnical
D) behavioral
E) psychological
Answer: A
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
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4) Which of the following statements about the technical view of organizations is not true?
A) It focuses on how inputs are combined to create outputs when technology changes are
introduced into a company.
B) It sees capital and labor as being easily substituted for one another.
C) It emphasizes group relationships, values and structures.
D) It sees the organization as a social structure similar to a machine.
E) It sees the firm as being infinitely malleable.
Answer: C
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
5) Which of the following is not a major feature of organizations that impacts the use of
information systems?
A) Business processes
B) Environments
C) Structure of the organization
D) Agency costs
E) Leadership styles
Answer: D
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
6) Which of the following statements about business processes is not true?
A) Business processes influence the relationship between an organization and information
technology.
B) Business processes are a collection of standard operating procedures.
C) A business firm is a collection of business processes.
D) Business processes are usually ensconced in an organization's culture.
E) Business processes are typically unaffected by changes in information systems.
Answer: E
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
2
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7) Which of the following technologies disrupted the traditional publishing industry?
A) Instant messaging
B) e-mail
C) Digital photography
D) PCs
E) World Wide Web
Answer: E
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
8) Under Mintzberg's classification of organizational structure, knowledge-based organizations
fall under the category of:
A) entrepreneurial structures.
B) divisionalized bureaucracies.
C) professional bureaucracies.
D) adhocracies.
E) machine bureaucracies.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
9) Mintzberg classifies a large bureaucracy existing in a slowly changing environment that
produces standard products and is dominated by centralized management as a(n) ________
bureaucracy.
A) machine
B) professional
C) divisionalized
D) multidivisional
E) ad hoc
Answer: A
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
3
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10) Which of the following is an example of a divisionalized bureaucracy?
A) Startup firm
B) University
C) Fortune 500 firm
D) Midsize manufacturer
E) Consulting firm
Answer: C
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
11) Along with capital, ________ is the primary production input that the organization uses to
create products and services.
A) structure
B) culture
C) politics
D) feedback
E) labor
Answer: E
Difficulty: Easy
AACSB: Information technology
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
12) The divergent viewpoints about how resources, rewards, and punishments should be
distributed, and the struggles resulting from these differences are known as organizational:
A) culture.
B) politics.
C) structure.
D) environments.
E) business processes.
Answer: B
Difficulty: Easy
AACSB: Information technology
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
4
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13) Which of the following statements about disruptive technologies is not true?
A) Disruptive technologies radically change the business landscape and environment.
B) Disruptive technologies may be substitute products that perform better than other products
currently being produced.
C) Disruptive technologies may sometimes simply extend the marketplace.
D) Disruptive technologies may put entire industries out of business.
E) Firms that invent disruptive technologies as first movers always become market leaders.
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
14) As discussed in the chapter opening case, which of the following statements about Starbucks
is not true?
A) Starbucks strives to offer customers high-quality coffee, friendly servers, and customer
friendly stores.
B) Starbucks plans to increase its online sales of coffee products using new technology.
C) Starbucks plans to use IT innovations to enhance the customer experience.
D) Starbucks is trying to create a unique customer experiences in stores.
E) Starbucks is planning to sell coffee, branded mugs, and espresso machines on its website.
Answer: E
Difficulty: Challenging
AACSB: Application of knowledge
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
15) All organizations have bedrock, unquestioned assumptions that define their goals and
products.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
16) A machine bureaucracy is a knowledge-based organization where goods and services depend
on the expertise and knowledge of professionals.
Answer: FALSE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
5
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17) Routines are also called standard operating procedures.
Answer: TRUE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
18) How are the technical and behavioral definitions of an organization different?
Answer: The behavioral definition of an organization is that it is a collection of rights,
privileges, obligations, and responsibilities that is delicately balanced over a period of time
through conflict and conflict resolution. The technical definition sees an organization as an entity
that takes inputs from the environment and processes these to create products that are then
consumed by the environment. The technical view sees capital and labor as interchangeable
units, with the ability to rearrange these units at will, whereas the behavioral view sees that
rearranging some aspects of the organization, such as an information system, will have important
consequences and changes for the organization's other units.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-1: Which features of organizations do managers need to know about to build and use
information systems successfully?
19) When a firm buys on the marketplace what it cannot make itself, the costs incurred are
referred to as:
A) switching costs.
B) network costs.
C) procurement.
D) agency costs.
E) transaction costs.
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 3-2: What is the impact of information systems on organizations?
20) All of the following statements are true about information technology's impact on business
firms except:
A) it helps firms expand in size.
B) it helps firms lower the cost of market participation.
C) it helps reduce internal management costs.
D) it helps reduce transaction costs.
E) it helps reduce agency costs.
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 3-2: What is the impact of information systems on organizations?
6
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21) According to agency theory, the firm is viewed as a(n):
A) unified, profit-maximizing entity.
B) task force organization that must respond to rapidly changing environments.
C) entrepreneurial endeavor.
D) "nexus of contracts" among self-interested individuals.
E) entrepreneurial structure.
Answer: D
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-2: What is the impact of information systems on organizations?
22) According to research on organizational resistance, the four components that must be
changed in an organization in order to successfully implement a new information system are:
A) environment, organization, structure, and tasks.
B) technology, people, culture, and structure.
C) organization, culture, management, and environment.
D) tasks, technology, people, and structure.
E) costs, tasks, structure, and management.
Answer: D
Difficulty: Challenging
AACSB: Information technology
LO: 3-2: What is the impact of information systems on organizations?
23) List three organizational factors that can prevent a firm in fully realizing the benefits of a
new information system, and provide examples for each.
Answer: Features of organizations include the organization's culture, politics, and structure. A
new information system might be resisted by end users or by managers for political reasons
because they are concerned about the political changes the system implies. For example, a new
system might lessen the authority of a manager in overseeing the employees, and he or she may
not want to relinquish this power. A new information system might challenge the organization's
culture and be resisted for this reason. For example, an information system might allow students
at a university to take self-managed courses, while the university's basic cultural assumptions
include the concept that professors are the purveyors of knowledge. An information system, by
allowing the distribution of knowledge, may be better used in a company with a flatter
organization. A company with a highly stratified hierarchy may have difficulty adjusting its
business processes and structures to an information system that does not follow the same
business hierarchy of information.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-2: What is the impact of information systems on organizations?
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24) What is agency theory? How does information technology enable a firm to reduce agency
costs?
Answer: According to agency theory, the firm is viewed as a "nexus of contracts" among selfinterested individuals rather than as a unified, profit-maximizing entity. A principal (owner)
employs "agents" (employees) to perform work on his or her behalf. However, agents need
constant supervision and management; otherwise, they will tend to pursue their own interests
rather than those of the owners. As firms grow in size and scope, agency costs or coordination
costs rise because owners must expend more and more effort supervising and managing
employees. Information technology, by reducing the costs of acquiring and analyzing
information, permits organizations to reduce agency costs because it becomes easier for
managers to oversee a greater number of employees. By reducing overall management costs,
information technology enables firms to increase revenues while shrinking the number of middle
managers and clerical workers.
Difficulty: Challenging
AACSB: Application of knowledge; Information technology; Written and oral communication
LO: 3-2: What is the impact of information systems on organizations?
25) Which model is used to describe the interaction of external forces that affect an
organization's strategy and ability to compete?
A) Network economics model
B) Competitive forces model
C) Competitive advantage model
D) Demand control model
E) Agency costs model
Answer: B
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
26) Which of the following industries has the lowest barrier to entry?
A) Automotive
B) Computer chip
C) Solar energy
D) Airline
E) Small retailer
Answer: E
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
8
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27) All of the following are competitive forces in Porter's model except:
A) suppliers.
B) new market entrants.
C) disruptive technologies.
D) customers.
E) substitute products.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
28) Which of the following marketplace forces would be of least concern to a manufacturer of
deep-sea oil rigs?
A) Product differentiation
B) Traditional competitors
C) Low number of suppliers
D) New market entrants
E) Low number of customers
Answer: D
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
29) Which of the following substitute products would be of most concern for a cable TV
distributor?
A) Streaming music services
B) Broadcast TV
C) Satellite radio
D) On-demand Internet television
E) Terrestrial radio
Answer: D
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
9
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30) Walmart's continuous replenishment system is an example of a firm using information
systems to:
A) strengthen ties to its customers.
B) simplify the industry value chain.
C) develop synergies.
D) focus on market niche.
E) achieve low-cost leadership.
Answer: E
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
31) 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.
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
32) Amazon's use of the Internet as a platform to sell books more efficiently than traditional
bookstores illustrates which of the following strategies?
A) Low-cost leadership
B) Marketing effectiveness
C) Focusing on market niche
D) Strengthening supplier intimacy
E) Developing synergies
Answer: A
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
10
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33) The four major competitive strategies are:
A) low-cost leadership, substitute products and services, customers; and suppliers.
B) low-cost leadership, product differentiation, focus on market niche, and customer and supplier
intimacy.
C) new market entrants, substitute products and services, customers, and suppliers.
D) low-cost leadership, new market entrants, product differentiation, and focus on market niche.
E) customers, suppliers, new market entrants, and substitute products.
Answer: B
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
34) 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.
Answer: A
Difficulty: Challenging
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
35) Firms use a ________ strategy to provide a specialized product or service for a narrow target
market better than competitors.
A) product differentiation
B) market niche
C) mass customization
D) process efficiency
E) low-cost leadership
Answer: B
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
11
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36) The ability to offer individually tailored products or services using the same production
resources as bulk production is known as:
A) mass marketing.
B) micromarketing.
C) micro customization.
D) niche customization.
E) mass customization.
Answer: E
Difficulty: Easy
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
37) In environmental scanning, a firm may use information systems to:
A) transform inputs into products and services.
B) analyze the performance of its intranet.
C) identify external events that may affect it.
D) keep track of the temperature within its data centers.
E) develop a unified organizational culture.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
38) 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.
Answer: D
Difficulty: Challenging
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
12
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39) Which of the following best illustrates the use of information systems to focus on market
niche?
A) A car manufacturer's website that lets you customize the features on the car you are
purchasing.
B) A restaurant chain analyzing local sales figures to determine which menu items to serve.
C) A bookseller selling an e-book reader that reads only the bookseller's books.
D) A department store creating specialized products for preferred customers.
E) A clothes manufacturer expanding its offerings to new styles.
Answer: D
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
40) All of the following are IT-enabled products and services providing competitive advantage
except:
A) Amazon's one-click shopping.
B) Apple's iTunes.
C) Ping's golf club customization.
D) PayPal's online person-to-person payment system.
E) Nike's use of celebrities to market their products.
Answer: E
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
41) The Internet increases the bargaining power of customers 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) enabling the development of new services.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
13
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42) Hilton Hotels uses its OnQ system for which of the following purposes?
A) To lower its operating costs
B) To benchmark its progress against competitors
C) To create synergies with its suppliers
D) To take advantage of network economics
E) To estimate each guest's profitability and give additional privileges to profitable customers
Answer: E
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
43) Which of the following is a competitive force challenging the publishing industry?
A) Positioning and rivalry among competitors
B) Low cost of entry
C) Substitute products or services
D) Customers' bargaining power
E) Suppliers' bargaining power
Answer: C
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
44) 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) highlights specific activities in the business where competitive strategies can best be applied.
E) enables more effective product differentiation.
Answer: D
Difficulty: Easy
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
14
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45) Which of the following represent the primary activities of a firm?
A) Inbound logistics, operations, outbound logistics, sales and marketing, and service
B) Inbound logistics, operations, outbound logistics, technology, and service
C) Procurement, inbound logistics, operations, technology, and outbound logistics
D) Procurement, operations, technology, sales and marketing, and services
E) Organization infrastructure, human resources, technology, and procurement
Answer: A
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
46) Which of the following is a support activity in a firm's value chain?
A) Inbound logistics
B) Operations
C) Sales and marketing
D) Service
E) Technology
Answer: E
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
47) Which of the following would a company employ to measure and compare its business
processes to similar processes of other companies within their industry?
A) Benchmarking
B) Best practices
C) Value chain analysis
D) Strategic systems analysis
E) Secondary activities
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
15
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48) The most successful solutions or methods for achieving a business objective are called:
A) value activities.
B) best processes.
C) core competencies.
D) best practices.
E) benchmarks.
Answer: D
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
49) Information systems can be used at the industry level to achieve strategic advantage by:
A) building industrywide, IT-supported consortia and symposia.
B) raising the bargaining power of suppliers.
C) encouraging the entry of new competitors.
D) enforcing standards that reduce the differences between competitors.
E) decreasing switching costs.
Answer: A
Difficulty: Easy
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
50) 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.
Answer: A
Difficulty: Moderate
AACSB: Application of knowledge
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
16
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51) When two organizations pool markets and expertise that result in lower costs and generate
profits, they are creating:
A) a value web.
B) a value chain.
C) net marketplaces.
D) core competencies.
E) synergies.
Answer: E
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
52) Which of the following is an example of synergy in business?
A) Amazon's use of the Internet to sell books
B) Bank of America acquiring Countrywide Financial Corporation 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
Answer: B
Difficulty: Easy
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
53) Information systems 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) fostering synergies among departments.
Answer: D
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
17
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54) 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 value, is
referred to as:
A) the point of no return.
B) the law of diminishing returns.
C) supply and demand.
D) network inelasticity.
E) virtual economics.
Answer: B
Difficulty: Easy
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
55) Which of the following statements about network economics is not true?
A) Uber 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.
Answer: E
Difficulty: Challenging
AACSB: Application of knowledge
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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.
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
18
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57) Which of the following is an example of a keystone firm within a business ecosystem?
A) Apple and 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
Answer: A
Difficulty: Easy
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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) Focusing on market niche
D) Strengthening customer intimacy
E) Strengthening supplier intimacy
Answer: A
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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.
Answer: D
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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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
Answer: B
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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) net marketplace
Answer: C
Difficulty: Challenging
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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63) A(n) ________ is an activity for which a firm is a world-class leader.
A) expertise area
B) competitive advantage
C) growth driver
D) efficiency
E) core competency
Answer: E
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
64) Why does Amazon 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.
Answer: B
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
65) Smart products are an example of the Internet of Things.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
66) A company's competitive advantages ultimately translate into higher stock market valuations
than its competitors.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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67) The competitive forces model cannot be used to analyze modern digital firms which face
new competitive forces that are not true of traditional firms.
Answer: FALSE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
68) Customers are one of the competitive forces that affect an organization's ability to compete.
Answer: TRUE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
69) High product differentiation is a sign of a transparent marketplace.
Answer: FALSE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
70) The effect of the Internet has been to increase the bargaining power of customers.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
71) An efficient customer response system directly links consumer behavior to distribution,
production, and supply chains.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
22
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72) Information systems are used to enable new products and services via product differentiation.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
73) Mass customization offers individually tailored products or services using the same resources
as mass production.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
74) Switching costs increase when customers are strongly linked to products and platforms.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
75) The value chain model classifies all company activities as either primary or support
activities.
Answer: TRUE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
76) 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.
Answer: FALSE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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77) When the output of some units in a firm can be used as inputs to other units, synergies
develop, which can lower costs and generate profits.
Answer: TRUE
Difficulty: Easy
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
78) According to the network economics perspective, the more people offering products on
eBay's site, the greater the value of the site to all who use it.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
79) The term business ecosystem describes the loosely coupled but interdependent networks of
suppliers, distributors, outsourcing firms, transportation service firms, and technology
manufacturers.
Answer: TRUE
Difficulty: Moderate
AACSB: Reflective thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
80) A firm can be said to have competitive advantage when it has access to resources that others
do not.
Answer: TRUE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
81) The law of diminishing returns only applies to digital products.
Answer: FALSE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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82) The inventors of a disruptive technology typically benefit the most from the technology; it is
rare that fast followers catch up quickly.
Answer: FALSE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
83) Smart products generally lower switching costs.
Answer: FALSE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
84) Mintzberg's classification identifies five forces in an industry's environment that affect the
strategic position of a firm.
Answer: FALSE
Difficulty: Easy
AACSB: Application of knowledge
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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85) You are advising the owner of ABC Computers, a small local computer shop that repairs and
also builds custom computers to order. What competitive strategies could ABC Computers
employ? Which ones may it have difficulty executing?
Answer: Low-cost leadership: ABC Computers may have difficulty competing against the
computer sales and warranty services of major national computer manufacturers, such as Dell,
but may be able to implement low-cost leadership in comparison to any other local computer
stores.
Product differentiation: Although many national computer manufacturers sell customized
computers for individuals, ABC Computers may be able to differentiate its product by using
superior components and adding more services to its product.
Focus on market niche: ABC Computers could focus on being a local store with in-store
technology support and assistance as a market niche.
Customer and supplier intimacy: ABC Computers has an advantage in customer intimacy, in that
it can develop relationships with local customers on a face-to-face basis. This advantage could be
augmented to offset the low-cost leadership of national manufacturers, such as Dell. Because of
much smaller production scales, ABC Computers will probably not be able to exercise as much
control over suppliers as does Dell or other manufacturers.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
86) You are consulting with the owner of Better Fitness, a national chain of gyms. What
strategies might Better Fitness use in applying information services to achieve a competitive
advantage?
Answer: Better Fitness could use computers, smart products, and mobile apps to monitor and
evaluate health and fitness of members and customize workouts in product differentiation
strategy. They could use information systems for sales and marketing data research in order to
define a niche market that would bring greater profits. They could allow customers to review
their health data and add additional information or view statistics to create customer intimacy. If
the individual gyms are franchises, then a network could be used for franchisees to share data
and research new sales tactics, etc.
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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87) 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?
Answer: Answers will vary. An example of a possible answer is:
Porter sees the Internet as creating ever more intense rivalry, through allowing new competitors
to enter the market, and forcing competition on price alone, raising the bargaining power of
customers, and dampening profits.
Positive influences of the Internet would be lowering telecommunications costs, creating new
opportunities for building brands and loyal customer bases, lowering costs of globalization. You
could also view Porter's negative take on lowering the barrier to entry as a positive for new
companies.
The Internet's influence being negative or positive depends in part on the point of view from
which the influence is being seen. For example, a telephone utility is impacted negatively by the
emergence of Internet telephony, whereas other industries may be impacted positively either
through the use of this technology or through engaging in Internet telephony as a business.
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
88) 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.
Answer: The value chain model identifies specific, critical leverage points where a firm can use
information technology most effectively to enhance its competitive positions. Exactly where can
it obtain the greatest benefit from strategic information systems? What specific activities can be
used to create new products and services, enhance market penetration, lock in customers and
suppliers, and lower operational costs? This model views the firm as a series or chain of basic
activities that add a margin of value to a firm's products or services. These activities can be
categorized as either primary activities or support activities.
• Primary activities are most directly related to the production and distribution of the firm's
products and services that create value for the customer. Primary activities include: inbound
logistics, operations, outbound logistics, sales and marketing, and service.
• Support activities make the delivery of the primary activities possible and consist of:
organization infrastructure (administration and management), human resources (employee
recruiting, hiring, and training), technology (improving products and the production process),
and procurement (purchasing input).
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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89) How is the concept of core competency relevant to ABC Computers, a local computer store
that repairs and builds custom computers? Give examples.
Answer: A core competency is an activity for which a company is a world leader, and from this
perspective, ABC Computers does not have a core competency, as there are thousands of similar
firms with longer track records. However, it might be good business practice for ABC Computers
to define its core competencies in ways that differentiate its products from those of competitors
and enable it to provide superior service or products. In defining a core competency, the business
management can then determine ways to enable employees to understand and reach higher levels
of quality production and service. For example, ABC Computers might define a core competency
as being able to advise customers as to the types of system they really need, and ABC Computers
could engage in knowledge gathering activities to help employees assess customer need.
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
90) How is Internet technology useful from a network economics perspective? Give examples.
Answer: In network economics, the cost of adding a participant in the network is negligible,
while the gain in value is relatively much larger. The Internet itself is an example of a successful
implementation of network economics–the more people participate, the more valuable and
essential a commodity it is. If a company were to provide a service through the Internet such as a
project management application, the costs to the company of adding another user are small (as
the software infrastructure or application is already built), and the more users are signed up, the
more profit is made.
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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91) Define and describe a business ecosystem. Give an example of a business ecosystem.
Answer: A business ecosystem is a collection of loosely coupled but interdependent industries
(suppliers, distributors, technology manufacturers, etc.) that provides related services and
products. It is similar to a value web, except that cooperation takes place across many industries
rather than many firms.
Business ecosystems can be characterized as having one or a few keystone firms that dominate
the ecosystem and create the platforms used by other niche firms. Keystone firms in the
Microsoft ecosystem include Microsoft and technology producers such as Intel and IBM. Niche
firms include thousands of software application firms, software developers, service firms,
networking firms, and consulting firms that both support and rely on the Microsoft products.
Another example of a business ecosystem is the mobile Internet platform. In this ecosystem there
are four industries: device makers (Apple iPhone, Samsung, Motorola, LG, and others), wireless
telecommunication firms (AT&T, Verizon, T-Mobile, Sprint, and others), independent software
applications providers (generally small firms selling games, applications, and ring tones), and
Internet service providers (who participate as providers of Internet service to the mobile
platform).
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
92) 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?
Answer: Student answers will vary. One example answer using Apple's iPad is:
• Competitors to the iPad include the Microsoft Surface and many others, but few as widely
known.
• New market entrants: There is not a huge barrier to entry in this field; many other technology
companies offer tablet computers.
• Substitute products and services: Smartphones are a substitute product or service.
• Customers: The iPad still has the highest brand recognition among consumers, diminishing
the bargaining power of customers. However, this advantage has diminished as other similar
products that are as well designed enter the marketplace.
In terms of the iPad, Apple seems to be focused on product differentiation by creating a product
with unique features and capabilities.
Difficulty: Challenging
AACSB: Analytical thinking; Written and oral communication
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
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93) Why are disruptive technologies "tricky"? Provide examples.
Answer: Disruptive technologies can be tricky because firms that invent disruptive technologies
as first movers do not always benefit if they lack the resources to exploit the technology or fail to
see the opportunity. For example, the MITS Altair 8800 is widely regarded as the first PC, but its
inventors did not take advantage of their first-mover status. Second movers, so-called fast
followers such as IBM and Microsoft, reaped the rewards. Citibank's ATMs revolutionized retail
banking, but other banks copied them. Now all banks use ATMs, and the benefits go mostly to
the consumers.
Difficulty: Challenging
AACSB: Application of knowledge; Information technology; Written and oral communication
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
94) Why has the Internet made competitive rivalry more intense?
Answer: The Internet has made competitive rivalry more intense because Internet technology is
based on universal standards that any company can use, making it easier for rivals to compete on
price alone and for new competitors to enter the market. Because information is available to
everyone, the Internet also raises the bargaining power of customers, who can quickly find the
lowest-cost provider on the web, which may dampen profits. The Internet also widens the
geographic market, increasing the number of competitors and reducing differences among
competitors, and makes it more difficult to sustain operational advantages.
Difficulty: Challenging
AACSB: Application of knowledge; Information technology; Written and oral communication
LO: 3-3: How do Porter's competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
95) You are consulting for a natural food products 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
Answer: C
Difficulty: Moderate
AACSB: Analytical thinking
LO: 3-4: What are the challenges posed by strategic information systems and how should they
be addressed?
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96) 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.
Answer: B
Difficulty: Challenging
AACSB: Information technology
LO: 3-4: What are the challenges posed by strategic information systems and how should they
be addressed?
97) Research has shown that a majority of firms are able to align their information technology
with their business goals.
Answer: FALSE
Difficulty: Challenging
AACSB: Reflective thinking
LO: 3-4: What are the challenges posed by strategic information systems and how should they
be addressed?
98) The use of Internet technologies allows companies to more easily sustain competitive
advantage.
Answer: FALSE
Difficulty: Challenging
AACSB: Information technology
LO: 3-4: What are the challenges posed by strategic information systems and how should they
be addressed?
99) What are the major factors to consider when performing a strategic systems analysis?
Answer: One major factor is the structure of the industry the firm is in. For example, what
competitive forces are at work in the industry, and what is the basis for competition? What is the
nature and direction of change in the industry, and how does the industry use IT?
A second major factor is determining the firm and industry value chains. For example, how is the
company creating value for the customer? Are best practices being used and core competencies
leveraged? Is the industry supply chain or customer base changing, and what will the effect be?
Can the firm benefit from strategic partnerships or value webs? And where in the value chain
will information systems provide the greatest value to the firm?
The third major factor to consider is has the firm aligned IT with its business strategy and goals.
Have these goals been correctly stated or defined? Is IT improving the right business processes
and activities in accordance with the firm's goals? Are we using the right metrics to measure
progress?
Difficulty: Challenging
AACSB: Analytical thinking
LO: 3-4: What are the challenges posed by strategic information systems and how should they
be addressed?
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100) 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?
Answer: Steps to align IT with your organization's goals include: identifying your business
strategy and goals and breaking these goals into concrete activities and processes; identifying
how you measure progress toward these goals; determining how IT can help achieve these goals
and improve business processes and activities; and measuring the actual performance of the
business.
Difficulty: Challenging
AACSB: Application of knowledge; Information technology; Written and oral communication
LO: 3-4: What are the challenges posed by strategic information systems and how should they
be addressed?
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Management Information Systems, 14e (Laudon)
Chapter 4 Ethical and Social Issues in Information Systems
1) Which of the following best describes how new information systems result in legal gray areas?
A) They work with networked, electronic data, which are more difficult to control than
information stored manually.
B) They result in new situations that are not covered by old laws.
C) They are implemented by technicians rather than managers.
D) They are created from sets of logical and technological rules rather than social or
organizational mores.
E) They are little understood by politicians or lawyers.
Answer: B
Page Ref: 128
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of assess
LO: 4.1: What ethical, social, and political issues are raised by information systems?
2) Which of the following best describes the effect that new information technology has on
society?
A) It has a dampening effect on the discourse of business ethics.
B) It has a ripple effect, raising new ethical, social, and political issues.
C) It is beneficial for society as a whole, while raising dilemmas for consumers.
D) It has a waterfall effect in raising ever more complex ethical issues.
E) It has a magnifying effect, creating increasing numbers of ethical issues.
Answer: B
Page Ref: 127
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.1: What ethical, social, and political issues are raised by information systems?
3) The moral dimension of ________ can be described as the obligations that individuals and
organizations have concerning rights to intellectual property.
A) property rights and obligations
B) system quality
C) accountability and control
D) information rights and obligations
E) quality of life
Answer: A
Page Ref: 128
Difficulty: Easy
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.1: What ethical, social, and political issues are raised by information systems?
4) In the information age, the obligations that individuals and organizations have regarding the
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preservation of existing values and institutions fall within the moral dimension of
A) family and home.
B) property rights and obligations.
C) system quality.
D) accountability and control.
E) quality of life.
Answer: E
Page Ref: 128
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.1: What ethical, social, and political issues are raised by information systems?
5) Which of the following is not one of the current key technology trends that raises ethical
issues?
A) data storage improvements
B) data analysis advancements
C) increase in multimedia quality
D) increase in use of mobile devices
E) advances in networking technology
Answer: C
Page Ref: 129
Difficulty: Easy
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.1: What ethical, social, and political issues are raised by information systems?
6) The central business activities of ChoicePoint raise which of the five moral dimensions?
A) property rights and obligations
B) system quality
C) accountability and control
D) quality of life
E) information rights and obligations
Answer: E
Page Ref: 129
Difficulty: Difficult
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of appraise
LO: 4.1: What ethical, social, and political issues are raised by information systems?
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7) The routine violation of individual privacy is made more difficult by advances in data storage.
Answer: FALSE
Page Ref: 128
Difficulty: Easy
AACSB: Information technology
CASE: Comprehension
LO: 4.1: What ethical, social, and political issues are raised by information systems?
8) In today's legal environment, business managers who violate the law through the misuse of
information systems are still unlikely to be fully prosecuted.
Answer: FALSE
Page Ref: 125
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.1: What ethical, social, and political issues are raised by information systems?
9) Identify the five moral dimensions that are involved in political, social, and ethical issues and
briefly describe each. Of these, which do you think is the most difficult for society to deal with?
Support your opinion.
Answer: The five moral dimensions are:
(1) Information rights and obligations. What rights do individuals and organizations have with
respect to information pertaining to them?
(2) Property rights and obligations. How can intellectual property rights be protected when it is
so easy to copy digital materials?
(3) Accountability and control. Who will be held accountable and liable for the harm done to
individual and collective information and property rights?
(4) System quality. What standards of data and system quality should we demand to protect
individual rights and the safety of society?
(5) Quality of life. What values should be preserved? What institutions must we protect? What
cultural values can be harmed?
Individual answers for determining the most difficult for society to deal with will vary. One
answer might be: Quality of life issues will be most difficult for society to deal with in societies
that are comprised of many different cultural and ethnic groups, such as the United States. It is
difficult to regulate concerns that are based on subjective values.
Page Ref: 128
Difficulty: Moderate
AACSB: Written and oral communication
CASE: Evaluation in terms of assess
LO: 4.1: What ethical, social, and political issues are raised by information systems?
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10) Describe three technology trends that pose ethical issues, giving an example for each of its
ethical or moral impact.
Answer: Key technology trends include the following: (1) Computer power doubling every 18
months: ethical impact—because more organizations depend on computer systems for critical
operations, these systems are vulnerable to computer crime and computer abuse; (2) Data storage
costs are rapidly declining: ethical impact—it is easy to maintain detailed databases on
individuals—who has access to and control of these databases?; (3) Data analysis advances:
ethical impact—vast databases full of individual information may be used to develop detailed
profiles of individual behavior; and (4) Networking advances and the Internet: ethical impact—it
is easy to copy data from one location to another. Who owns data? How can ownership be
protected?; (5) Mobile device growth impact: ethical impact—individual cell phones may be
tracked without user consent or knowledge.
Page Ref: 128-129
Difficulty: Moderate
AACSB: Written and oral communication
CASE: Synthesis in terms of applying
LO: 4.1: What ethical, social, and political issues are raised by information systems?
11) ________ means that you accept the potential costs and obligations for the decisions you
make.
A) Responsibility
B) Accountability
C) Liability
D) Due process
E) Duty
Answer: A
Page Ref: 131
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
12) ________ is a feature of social institutions that means mechanisms are in place to determine
responsibility for an action.
A) Due process
B) Accountability
C) The courts of appeal
D) The judicial system
E) Liability
Answer: B
Page Ref: 131-132
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
4
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13) ________ is a societal practice of having laws that are known and understood, along with the
ability to appeal to higher authorities to ensure that the laws are applied correctly.
A) Liability
B) Due process
C) The courts of appeal
D) Accountability
E) The judicial system
Answer: B
Page Ref: 133
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
14) As discussed in the chapter, all of the following are steps in the process for analyzing an
ethical issue except
A) assigning responsibility.
B) identifying the stakeholders.
C) identifying the options you can reasonably take.
D) identifying and clearly describing the facts.
E) identifying the potential consequences of your options.
Answer: A
Page Ref: 134
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
15) A peer at work takes small amounts of office supplies for her own use at home, saying that
this is a tiny loss to the company. You tell her that if everyone were to take office supplies, then
the loss would no longer be minimal. Your rationale expresses which historical ethical principle?
A) Kant's Categorical Imperative
B) The Golden Rule
C) The Risk Aversion Principle
D) The "No free lunch" rule
E) The slippery-slope rule
Answer: A
Page Ref: 134
Difficulty: Difficult
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of categorize
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
5
Copyright © 2016 Pearson Education, Inc.
16) A man steals from a grocery store in order to feed his starving family. Which of the following
best expresses the Utilitarian Principle in evaluating this situation?
A) His action is acceptable, because the grocer suffers the least harm.
B) His action is acceptable, because the higher social value is the survival of the family.
C) His action is wrong, because the man would not want the grocer to steal from him.
D) His action is wrong, because if everyone were to do this, the concept of personal property is
defeated.
E) His action is wrong, because the grocery store owner is harmed.
Answer: B
Page Ref: 135
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of categorize
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
17) Which of the following describes Immanuel Kant's Categorical Imperative?
A) If an action cannot be taken repeatedly, then it is not right to be taken at any time.
B) One should take the action that produces the least harm or incurs the least cost.
C) One can put values in rank order and understand the consequences of various courses of
action.
D) If an action is not right for everyone to take, it is not right for anyone to take.
E) You should act towards others as you would like them to act towards you.
Answer: D
Page Ref: 135
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
18) The ethical "no free lunch" rule states that
A) if an action cannot be taken repeatedly, then it is not right to be taken at any time.
B) one should take the action that produces the least harm or incurs the least cost.
C) one can put values in rank order and understand the consequences of various courses of
action.
D) everything is owned by someone else, and that the creator wants compensation for this work.
E) anything of value should not be taken.
Answer: D
Page Ref: 135
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
6
Copyright © 2016 Pearson Education, Inc.
19) Taking the action that produces the least harm best describes the
A) Categorical Imperative.
B) Risk Aversion Principle.
C) Utilitarian Principle.
D) Golden Rule.
E) "no free lunch" rule.
Answer: B
Page Ref: 135
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
20) As per the ________, if an action cannot be taken repeatedly, it is not right to take at all.
A) slippery-slope rule
B) lemming rule
C) high-failure cost rule
D) utilitarian principle
E) Golden Rule
Answer: A
Page Ref: 135
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
21) Identifying the stakeholders—people who have a vested interest in the outcome of the
decision—is the last step in analyzing an ethical issue.
Answer: FALSE
Page Ref: 134
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
22) Because of their special claims to knowledge, wisdom, and respect, professionals take on
special rights and obligations.
Answer: TRUE
Page Ref: 135
Difficulty: Easy
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
7
Copyright © 2016 Pearson Education, Inc.
23) The European Parliament has yet to ban unsolicited commercial messaging.
Answer: FALSE
Page Ref: 154
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
24) Ethics describes the principles of right and wrong that can be used by individuals to make
choices to guide their behavior.
Answer: TRUE
Page Ref: 126
Difficulty: Easy
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
25) Liability is a feature of political systems and allows individuals to recover damages done to
them by others.
Answer: TRUE
Page Ref: 133
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
26) The ethical guideline that asks you to put yourself in the place of others, and think of
yourself as the object of the decision, is called the Utilitarian Principle.
Answer: FALSE
Page Ref: 135
Difficulty: Difficult
AACSB: Ethical understanding and reasoning
CASE: Comprehension
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
27) What are the steps in conducting an ethical analysis?
Answer: The steps are: (1) Identify and describe clearly the facts; (2) define the conflict or
dilemma and identify the higher-order values involved; (3) identify the stakeholders; (4) identify
the options that you can reasonably take; and (5) identify the potential consequences of your
options.
Page Ref: 134
Difficulty: Easy
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of organize
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
8
Copyright © 2016 Pearson Education, Inc.
28) Identify and discuss the six ethical principles discussed in the chapter.
Answer: The six ethical principles are the Golden Rule, Kant's Categorical Imperative,
Descartes' rule of change (slippery slope), the Utilitarian Principle, the Risk Aversion Principle,
and the "no free lunch" rule. The Golden Rule proposes: do unto others as you would have them
do unto you. Immanuel Kant's Categorical Imperative proposes, if an action is not right for
everyone to take, it is not right for anyone. Descartes' rule of change says: If an action cannot be
taken repeatedly, it is not right to take at all. The Utilitarian Principle is: Take the action that
achieves the higher or greater value. The Risk Aversion Principle is: Take the action that
produces the least harm or the least potential cost. The ethical "no free lunch" rule says: Assume
that virtually all tangible and intangible objects are owned by someone else unless there is a
specific declaration otherwise. Tangible objects are owned by someone else unless there is a
specific declaration otherwise.
Page Ref: 134-135
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of summarize
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
29) Define the basic concepts of responsibility, accountability, and liability as applied to ethical
decisions. How are these concepts related?
Answer: Responsibility is the first key element of ethical action. Responsibility means that an
individual, group, or organization accepts the potential costs, duties, and obligations for
decisions made. Accountability is a feature of systems and social institutions. It means that
mechanisms are in place to determine who took responsible action; i.e., who is responsible for
the action. Liability is a feature of political systems in which a body of law is in place that
permits individuals to recover the damages done to them by others.
These concepts are related as follows: I will assume the blame or benefit for the actions I take
(responsibility); this blame or benefit accrues to me through the requirement that I be able to
explain why I have taken the actions I have (accountability) for actions traceable to me by
defined mechanisms in the organization, and if those actions result in harm to another, I will be
held by law to reparations for those actions (liability).
Page Ref: 131-133
Difficulty: Difficult
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of examine
LO: 4.2: What specific principles for conduct can be used to guide ethical decisions?
9
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30) ________ is the use of computers to assemble data from different sources to create electronic
dossiers of detailed information about individuals.
A) Profiling
B) Phishing
C) Spamming
D) Targeting
E) Spyware
Answer: A
Page Ref: 129
Difficulty: Easy
AACSB: Information technology
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
31) ________ is a new data analysis technology that finds hidden connections between data in
disparate sources.
A) HIPAA
B) FIP
C) NORA
D) COPPA
E) Spyware
Answer: C
Page Ref: 130
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
32) In 2010, the FTC added all of the following recommendations to its privacy guidelines
except
A) firms should build products and services that protect privacy.
B) firms should increase the transparency of their data collection.
C) firms should require consumer consent and provide clear options to opt out of data collection.
D) firms should limit the length of time that any personal data is stored to six months or less.
E) consumers should be able to review and contest the accuracy and completeness of data.
Answer: D
Page Ref: 137
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
10
Copyright © 2016 Pearson Education, Inc.
33) ________ restricts the information that the U.S. federal government can collect about an
individual and regulates what it can do with the information.
A) The Privacy Act of 1974
B) The Gramm-Leach-Bliley Act of 1999
C) The Freedom of Information Act
D) The FIP set of principles
E) COPPA
Answer: A
Page Ref: 136
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
34) Which of the following best describes the basis for the FIP principles?
A) the accountability of the record holder
B) the responsibility of the record holder
C) the mutuality of interest between the record holder and the individual
D) the privacy of the individual
E) the difference between the interests of the individual and commercial organizations
Answer: C
Page Ref: 136
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
35) The Federal Trade Commission FIP principle of Notice/Awareness states that
A) customers must be allowed to choose how their information will be used for secondary
purposes other than the supporting transaction.
B) data collectors must take responsible steps to assure that consumer information is accurate
and secure from unauthorized use.
C) there must be a mechanism in place to enforce FIP principles.
D) consumers should be able to review the data collected about them.
E) Web sites must disclose their information practices before collecting data.
Answer: E
Page Ref: 137
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
11
Copyright © 2016 Pearson Education, Inc.
36) Which of the following U.S. laws gives patients access to personal medical records and the
right to authorize how this information can be used or disclosed?
A) HIPAA
B) Gramm-Leach-Bliley Act
C) Privacy Protection Act
D) Freedom of Information Act
E) COPPA
Answer: A
Page Ref: 138
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
37) Privacy protection in the United States is ________ in Europe.
A) more far reaching than
B) more liable to laws than
C) much more stringent than
D) much less stringent than
E) at about the same level of strictness as
Answer: D
Page Ref: 139
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
38) U.S. businesses are allowed to use personal data from EU countries if they
A) have informed consent.
B) create a safe harbor.
C) develop equivalent privacy protection policies.
D) make their privacy protection policies publicly available.
E) register their activities with a central EU government databank.
Answer: C
Page Ref: 139
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
12
Copyright © 2016 Pearson Education, Inc.
39) Cookies created during Web site visits are stored
A) on the Web site's server.
B) on the user's computer.
C) on servers owned by advertising networks.
D) in the browser's application settings.
E) nowhere, because they are only used during a visit and are discarded once a visitor leaves the
Web site.
Answer: B
Page Ref: 140
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
40) The ________ framework developed by the U.S. Department of Commerce allows U.S.
businesses to legally use personal data from EU countries.
A) COPPA
B) P3P
C) PGP
D) bilateral
E) safe-harbor
Answer: E
Page Ref: 139
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
41) The Online Privacy Alliance
A) encourages self regulation to develop a set of privacy guidelines for its members.
B) protects user privacy during interactions with Web sites.
C) has established technical guidelines for ensuring privacy.
D) is a government agency regulating the use of customer information.
E) is a lobbying organization promoting the online privacy interests of consumers.
Answer: A
Page Ref: 143
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
13
Copyright © 2016 Pearson Education, Inc.
42) In the ________ model of informed consent, personal information can be collected until the
consumer specifically requests that his or her data not be collected.
A) opt-in
B) opt-out
C) P3P
D) PGP
E) IPA
Answer: B
Page Ref: 143
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
43) Which of the following is not one of the types of information gathered by Web site tracking
tools?
A) health concerns
B) birthplace
C) income
D) purchases
E) marital status
Answer: B
Page Ref: 141
Difficulty: Moderate
AACSB: Information technology
CASE: Analysis in terms of examine
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
44) The limitation of trade secret protection for software is that it is difficult to prevent the ideas
in the work from falling into the public domain when
A) the courts become involved.
B) hackers are able to break into the source code.
C) the software is widely distributed.
D) a new version of the software is released.
E) the software's programming code is released.
Answer: C
Page Ref: 145
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
14
Copyright © 2016 Pearson Education, Inc.
45) Which of the following best describes intellectual property?
A) intangible property created by individuals or corporations
B) unique creative work or ideas
C) tangible or intangible property created from a unique idea
D) the expression of an intangible idea
E) any tangible or intangible property within the creative arts
Answer: A
Page Ref: 145
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
46) ________ protects the creators of intellectual property from having their work copied by
others.
A) Patent protection
B) Intellectual property law
C) Copyright law
D) Fair Use Doctrine
E) Trade Secret law
Answer: C
Page Ref: 145
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
47) "Look and feel" copyright infringement lawsuits are concerned with
A) the distinction between tangible and intangible ideas.
B) the distinction between an idea and its expression.
C) using the graphical elements of another product.
D) using the creative elements of another product.
E) preventing the use of another product's graphical user interface.
Answer: B
Page Ref: 145
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
15
Copyright © 2016 Pearson Education, Inc.
48) The strength of patent protection is that it
A) puts the strength of law behind copyright.
B) allows protection from Internet theft of ideas put forth publicly.
C) is easy to define.
D) provides a clear distinction between software and books.
E) grants a monopoly on underlying concepts and ideas.
Answer: E
Page Ref: 146
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
49) One of the drawbacks of patent protection is
A) that only the underlying ideas are protected.
B) digital media cannot be patented.
C) preventing the ideas from falling into public domain.
D) the years of waiting to receive it.
E) the limited period of protection.
Answer: D
Page Ref: 146
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
50) The ________ brought copyright law to the Internet age by outlawing the circumvention of
technology-based protections of copyrighted materials.
A) Digital Millennium Copyright Act
B) Privacy Act
C) Freedom of Information Act
D) Electronic Communications Privacy Act
E) Computer Software Copyright Act
Answer: A
Page Ref: 147
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
16
Copyright © 2016 Pearson Education, Inc.
51) Unlike regular browser cookies, Flash cookies
A) are installed only at the user's request.
B) are not stored on the user's computer.
C) cannot be easily detected or deleted.
D) monitor the user's behavior at a Web site.
E) are able to track much more of the user's personal information
Answer: C
Page Ref: 140
Difficulty: Moderate
AACSB: Information technology
CASE: Analysis in terms of compare
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
52) ________ enables advertisers to display more relevant ads based on user's search and
browsing history.
A) Behavioral targeting
B) A Web bug
C) NORA
D) An intelligent agent
E) FIP
Answer: A
Page Ref: 141
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
53) ________ prohibits an organization from collecting any personal information unless the
individual specifically takes action to approve information collection and use.
A) A legal safe harbor
B) The opt-in model
C) The FIP set of guidelines
D) P3P
Answer: B
Page Ref: 143
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
17
Copyright © 2016 Pearson Education, Inc.
54) Which legal mechanism grants the owner exclusive ownership of the ideas behind an
invention for 20 years?
A) copyright
B) trademark
C) patent
D) trade secret protection
Answer: C
Page Ref: 146
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
55) A Facebook users' visit to a Web site can be tracked even if they do not click a Like button.
Answer: TRUE
Page Ref: 141
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
56) Malicious software that is installed secretly on your computer by other applications and that
tracks your online movements is called spyware.
Answer: TRUE
Page Ref: 142
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
57) Most Internet businesses do very little to protect the privacy of their customers.
Answer: TRUE
Page Ref: 144
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
18
Copyright © 2016 Pearson Education, Inc.
58) The rate of global piracy is approximately 42%.
Answer: TRUE
Page Ref: 147
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
59) Any intellectual work product that isn't based on public knowledge can be classed as a trade
secret.
Answer: TRUE
Page Ref: 145
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
60) Copyright is the legal protection afforded intellectual property, including drawings, movies,
and maps.
Answer: TRUE
Page Ref: 145
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
61) Software programs were unprotected by copyright law until the early 1990s.
Answer: FALSE
Page Ref: 145
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
62) The problem with Web browsers' Do Not Track options is that Web sites aren't obligated to
honor these settings.
Answer: TRUE
Page Ref: 144
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
19
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63) According to several court findings, the general functional features of software are protected
by copyright law.
Answer: FALSE
Page Ref: 146
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
64) One of the key concepts in patent law is novelty.
Answer: TRUE
Page Ref: 146
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
65) In recent years, the illegal sharing of music files has declined with the improvement of
technological prevention.
Answer: TRUE
Page Ref: 147
Difficulty: Easy
AACSB: Information technology
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
66) COPPA is a set of five principles developed by the FTC that most American and European
privacy law is based on.
Answer: FALSE
Page Ref: 137
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
20
Copyright © 2016 Pearson Education, Inc.
67) Although online tracking gathers an enormous amount of information on individual users, it
is anonymous and can't be tied to a specific person.
Answer: FALSE
Page Ref: 141
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
68) Web beacons are tiny, invisible software programs hidden in e-mail messages and Web pages
that are used to track and report a user's online behavior.
Answer: TRUE
Page Ref: 140
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
69) What are the major issues concerning privacy in the information age? Do you believe the
need for homeland security should overrule some of the personal privacy and information rights
we have previously taken for granted? Why or why not?
Answer: One answer might be that we should depend upon the Federal Trade Commission Fair
Information Practice Principles and that as long as these principles are not ignored or overset,
personal privacy does not conflict with homeland security. This is a weak argument. Other issues
involve online privacy, employee monitoring, tradeoffs between security and privacy and good
business results versus privacy.
Page Ref: 136-144
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Evaluation in terms of assess
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
21
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70) Describe how a cookie works.
Answer: A cookie works as follows: A user opens a Web browser and selects a site to visit. The
user's computer sends a request for information to the computer running at the Web site. The
Web site computer is called the server, since it allows the user's computer to display the Web site.
At the same time it sends a cookie—a data file containing information like an encrypted user ID
and information about when the user visited and what he did on the site. The user's computer
receives the cookie and places it in a file on the hard drive. Whenever the user goes back to the
Web site, the server running the site retrieves the cookie to help identify the user.
Page Ref: 140
Difficulty: Moderate
AACSB: Information technology
CASE: Analysis in terms of summarize
LO: 4.3: Why do contemporary information systems technology and the Internet pose
challenges to the protection of individual privacy and intellectual property?
71) Key differences between software and books include all of the following except
A) software contains more information than a book.
B) software is less easily inspected than a book.
C) software products are more easily compared to each other than books.
D) software is understood to be more fallible than a book.
E) it is more difficult to inspect software for flaws.
Answer: C
Page Ref: 149
Difficulty: Easy
AACSB: Analytical thinking
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
72) When a software product is considered ________, it becomes difficult to hold software
producers liable for flaws in their product.
A) to be part of a machine
B) similar to books
C) a service
D) to be an artistic expression
E) a tangible product rather than a service
Answer: B
Page Ref: 149
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
22
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73) ________ are not held liable for the messages they transmit.
A) Regulated common carriers
B) Private individuals
C) Organizations and businesses
D) Elected officials
E) European ISPs
Answer: A
Page Ref: 149
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
74) Companies can't realistically create error-free software because
A) any programming code is susceptible to error.
B) it is too expensive to create perfect software.
C) errors can be introduced in the maintenance stage of development.
D) any software of any complexity will have errors.
E) many errors are brought on by the user's operating system.
Answer: B
Page Ref: 150
Difficulty: Moderate
AACSB: Information technology
CASE: Analysis in terms of assess, compare
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
75) The most common reason business systems fail is
A) software bugs.
B) software errors.
C) hardware failures.
D) facilities failures.
E) data quality.
Answer: E
Page Ref: 150
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
23
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76) Which of the following is a primary drawback to the "do anything anywhere" computing
environment?
A) It makes work environments less pleasant.
B) It creates inequality between workers who have home computing power and those who don't.
C) It centralizes power at corporate headquarters.
D) It blurs the traditional boundaries between work and family time.
E) It leads to employees being paid less for the total amount of work performed.
Answer: D
Page Ref: 151
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
77) Which of the following is the primary reason that the practice of spamming has grown
exponentially?
A) Telephone solicitation is no longer legal.
B) It is good advertising practice and brings in many new customers.
C) It helps pay for the Internet.
D) It is very inexpensive and can reach so many people.
E) There are no legal preventions against it.
Answer: D
Page Ref: 153
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
78) The U.S. CAN-SPAM Act of 2003
A) makes spamming illegal.
B) requires spammers to identify themselves.
C) has dramatically cut down spamming.
D) does not override state anti-spamming laws.
E) does not outlaw the use of fake return addresses.
Answer: B
Page Ref: 154
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
24
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79) Spamming raises the moral dimension of
A) quality of life.
B) system quality.
C) accountability and control.
D) information rights and obligations.
E) property rights and obligations.
Answer: A
Page Ref: 153
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of assess
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
80) Re-designing and automating business processes can be seen as a double-edged sword
because
A) increases in efficiency may be accompanied by job losses.
B) increases in efficiency may be accompanied by poor data quality.
C) support for middle-management decision making may be offset by poor data quality.
D) reliance on technology results in the loss of hands-on knowledge.
E) senior executives may not approve the changes.
Answer: A
Page Ref: 154
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Analysis in terms of assess
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
81) The extreme difference among different social groups regarding their access to computers
and the Internet is called the ________ divide.
A) computer
B) technology
C) digital
D) electronic
E) Internet
Answer: C
Page Ref: 155
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
25
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82) CVS refers to
A) eyestrain related to computer display screen use.
B) a business practice that attempts to evaluate the intangible values of computer systems.
C) carpal vision syndrome.
D) a type of antivirus protection software.
E) wrist injuries brought about by incorrect hand position when using a keyboard.
Answer: A
Page Ref: 156
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
83) Which of the following ailments is caused by tens of thousands of repetitions under lowimpact loads?
A) CTS
B) CVS
C) RSI
D) technostress
E) RSS
Answer: C
Page Ref: 155
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
84) Gaining unapproved access to a computer is not a federal crime.
Answer: FALSE
Page Ref: 152
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
85) Spam is legally defined as any e-mail that is unsolicited.
Answer: FALSE
Page Ref: 153
Difficulty: Easy
AACSB: Information technology
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
26
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86) The symptoms of technostress include aggravation and hostility toward humans.
Answer: TRUE
Page Ref: 156
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
87) Computer abuse refers to acts involving the computer that may not be illegal but are
considered unethical.
Answer: TRUE
Page Ref: 153
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
88) One of the capabilities of Internet communication is the ability of the individual to appear
essentially anonymous by using made-up user names. Is anonymity the same thing as privacy,
and should it be a right? What ethical issues are raised by increased anonymity?
Answer: Student answers will vary, but should include a definition of privacy and an attempt to
differentiate between anonymity and privacy, as well as an understanding that anonymity can
result in a breakdown of clear accountability or responsibility for actions. A sample answer is:
Privacy is the claim to be left alone, free from surveillance. This is different from anonymity, in
which nobody knows who you are or what actions you take even in a public arena. Some
individuals, if they feel they are anonymous, may have lapses in ethical behavior because
anonymity means they are no longer accountable for their actions. I don't know if anonymity
should be a right, but perhaps anonymity should not be permissible for some types of
communication.
Page Ref: 136-138
Difficulty: Difficult
AACSB: Ethical understanding and reasoning
CASE: Evaluation in terms of assess
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
27
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89) What do you consider to be the primary ethical, social, and political issues regarding the
quality of a software product?
Answer: Student answers will vary, but should include a description of the software
manufacturer's responsibility in software quality and an understanding of the difference between
social concerns (culture, lifestyle effects) and political concerns (legal, institutional effects). A
sample answer is: The central quality-related ethical issue that software quality raises is what
responsibility does a software manufacturer have in the performance of its software? At what
point can the manufacturer conclude that its software achieves an adequate level of quality? The
leading social issue raised by quality is: how is our society affected by low-quality software and
is this a concern? And how much accountability should the software manufacturer have? The
central political concern raised by software quality is whether and how to enforce software
quality minimums and standards, and what institutions are thus also held accountable.
Page Ref: 149-150
Difficulty: Moderate
AACSB: Ethical understanding and reasoning
CASE: Synthesis in terms of devising
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
90) How does the use of electronic voting machines act as a "double-edged sword?" What moral
dimensions are raised by this use of information technology?
Answer: Electronic voting machines can be seen as beneficial by making voting easy to
accomplish and tabulate. However, it may be easier to tamper with electronic voting machines
than with countable paper ballots. In terms of information rights, it seems possible that methods
could be set up to determine how an individual has voted and to store and disseminate this
knowledge. Manufacturers of voting machines claim property rights to the voting software,
which means that if the software is protected from inspection, there is no regulation in how the
software operates or how accurate it is. In terms of accountability and control, if an electronic
voting system malfunctions, will it be the responsibility of the government, of the company
manufacturing the machines or software, or the programmers who programmed the software?
The dimension of system quality raises questions of how the level of accuracy of the machines is
to be judged and what level is acceptable? In terms of quality of life, while it may make voting
easier and quicker, does the vulnerability to abuse of these systems pose a threat to the
democratic principle of one person, one vote?
Page Ref: 148-153
Difficulty: Difficult
AACSB: Ethical understanding and reasoning
CASE: Synthesis in terms of applying
LO: 4.4: How have information systems affected laws for establishing accountability, liability,
and the quality of everyday life?
28
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Management Information Systems: Managing the Digital Firm, 16e (Laudon)
Chapter 5 IT Infrastructure and Emerging Technologies
1) Which type of infrastructure service stores and manages corporate data and provides
capabilities for analyzing the data?
A) Networking
B) Telephone
C) VOIP
D) Telecommunications
E) Data management
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
2) Which of the following is not an IT infrastructure service component?
A) Operating system software
B) Computing platforms to provide a coherent digital environment
C) Physical facilities management to manage the facilities housing physical components
D) IT management services to plan and develop the infrastructure and provide project
management
E) IT education services that provide training to employees
Answer: A
Difficulty: Challenging
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
3) Specifications that establish the compatibility of products and the ability to communicate in a
network are called:
A) network standards.
B) telecommunications standards.
C) technology standards.
D) Internet standards.
E) compatibility standards.
Answer: C
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
1
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4) A(n) ________ is used to communicate between a user and an organization's back-end
systems.
A) public server
B) private server
C) legacy server
D) application server
E) blade server
Answer: D
Difficulty: Easy
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
5) Place the following eras of IT infrastructure evolution in order, from earliest to most recent: 1.
Cloud Computing Era; 2. Client/Server; 3. Enterprise Era; 4. Personal Computer; and 5.
Mainframe and Minicomputer.
A) 5, 2, 3, 4, 1
B) 5, 4, 2, 3, 1
C) 4, 5, 2, 3, 1
D) 5, 4, 2, 1, 3
E) 4, 5, 3, 2, 1
Answer: B
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
6) The introduction of the minicomputer:
A) allowed computers to be customized to the specific needs of departments or business units.
B) strengthened centralized computing.
C) offered new, powerful machines at higher prices than mainframes.
D) represented the rise of Microsoft.
E) was dominated by IBM.
Answer: A
Difficulty: Challenging
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
2
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7) A client computer networked to a server computer, with processing split between the two
types of machines, is called a(n):
A) service-oriented architecture.
B) on-demand architecture.
C) multi-tiered client/server architecture.
D) two-tiered client/server architecture.
E) divided architecture.
Answer: D
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
8) In a multi-tiered network:
A) the work of the entire network is centralized.
B) the work of the entire network is balanced over several levels of servers.
C) processing is split between clients and servers.
D) processing is handled by multiple, geographically-remote clients.
E) processing is located in the cloud.
Answer: B
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
9) Interpretations of Moore's law assert that:
A) computing power will eventually level off.
B) transistors decrease in size 50% every two years.
C) data storage costs decrease by 50% every 18 months.
D) PCs decrease in market share by 9% every 5 years.
E) computing power doubles every 18 months.
Answer: E
Difficulty: Challenging
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
3
Copyright © 2020 Pearson Education, Inc.
10) Today's computer transistors are roughly equivalent in size to:
A) the width of a fingernail.
B) a human hair.
C) a virus.
D) several atoms.
E) a grain of sand.
Answer: C
Difficulty: Moderate
AACSB: Reflective thinking
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
11) Which of the following became the standard PC in the Personal Computer Era?
A) Wintel PC
B) DOS PC
C) MITS PC
D) Altair
E) Apple II
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
12) ________ uses individual atoms and molecules to create computer chips and other devices.
A) Virtualization
B) Nanotechnology
C) Quantum computing
D) A minicomputer
E) On-demand computing
Answer: B
Difficulty: Easy
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
4
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13) ________ states that the value or power of a network grows exponentially as a function of
the number of network members.
A) Metcalfe's Law
B) Moore's Law
C) Law of scalability
D) Law of outsourcing
E) Law of networks
Answer: A
Difficulty: Challenging
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
14) Which of the following factors does not help explain why computing resources today are
even more available than in previous decades?
A) Network economics
B) Law of mass digital storage
C) Moore's law
D) Declining communications costs and the Internet
E) Widespread rejection of technology standards
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
15) Client/server computing is a primary example of decentralized processing.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
16) In N-tier computing, significant parts of website content, logic, and processing are performed
by a single web server.
Answer: FALSE
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
17) A web server is responsible for locating and managing stored webpages.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
5
Copyright © 2020 Pearson Education, Inc.
18) IT infrastructure consists of only those physical computing devices and software required to
operate the enterprise.
Answer: FALSE
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
19) An application server may reside on the same computer as a web server or on its own
dedicated computer.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
20) Enterprise infrastructure requires software that can link disparate applications and enable
data to flow freely among different parts of the business.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
21) It is much harder to eliminate a cloud service than to remove functionality from a company's
core internal systems.
Answer: FALSE
Difficulty: Easy
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
22) In financial services firms, investments in IT infrastructure represent more than half of all
capital invested.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
23) Microsoft is no longer the market leader in client/server networking.
Answer: FALSE
Difficulty: Easy
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
6
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24) Mobile computing is the fastest growing form of computing.
Answer: FALSE
Difficulty: Easy
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
25) Exponential growth in the number of transistors and the power of processors is expected to
decrease in the foreseeable future.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
26) List and describe four services that comprise IT infrastructure, beyond physical devices and
software applications.
Answer:
• The service components of IT infrastructure include:
• Telecommunications services that provide data, voice, and video connectivity.
• Data management services to store, manage, and analyze data.
• Application software services that provide enterprise-wide capabilities.
• Physical facilities management services, to develop and manage physical installations of
technology.
• IT standards services that establish and monitor the firm's policies.
• IT education services that provide training in use of the systems.
• IT research and development services that research potential projects, products, and
investments.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
7
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27) Explain why standards are so important in information technology. What standards have
been important for the growth of Internet technologies?
Answer: Standards are important because they result in different manufacturers creating
products that can be used either with each other or to communicate with each other. For example,
without standards, each light-bulb manufacturer would have to also create specific light-bulb
sockets for use with their light bulbs. In the same way, computers and computer technology have
been enabled through standards. Standards have allowed many different manufacturers to
contribute to the same, standardized definitions of a technological application. For example, the
ASCII data standards made it possible for computer machines from different manufacturers to
exchange data, and standardized software languages have enabled programmers to write
programs that can be used on different machines.
The standards that have been important for the growth of the Internet include TCP/IP, as a
networking standard, and WWW standards for displaying information as web pages, including
HTML.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-1: What is IT infrastructure and what are the stages and drivers of IT infrastructure
evolution?
28) Which of the following is a multitasking, multiuser, operating system developed by Bell
Laboratories that operates on a wide variety of computing platforms?
A) Unix
B) Linux
C) OS X
D) COBOL
E) DOS
Answer: A
Difficulty: Challenging
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
29) Which of the following is the network standard for connecting desktop computers into local
area networks that enabled the widespread adoption of client/server computing and local area
networks and further stimulated the adoption of personal computers?
A) TCP/IP
B) COBOL
C) Ethernet
D) ASCII
E) Linux
Answer: C
Difficulty: Moderate
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
8
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30) The development of TCP/IP occurred during the ________ era.
A) cloud and mobile computing
B) general-purpose mainframe and minicomputer
C) client/server era
D) personal computer
E) mainframe
Answer: E
Difficulty: Challenging
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
31) Which of the following is a leading networking hardware provider?
A) Dell
B) Intel
C) Seagate
D) IBM
E) Cisco
Answer: E
Difficulty: Easy
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
32) The Windows Operating System:
A) was an early PC operating system.
B) is used on virtually all tablet and mobile devices today.
C) is a data management application used on PCs.
D) is an operating system used on most Wintel PCs throughout the world.
E) is a web-based operating system for the Internet era.
Answer: D
Difficulty: Easy
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
33) Infrastructure-as-a-Service (IaaS):
A) is one type of cloud computing service where users pay only for the computing capacity they
actually use.
B) is a cloud-based service which provides software applications to users on demand.
C) is a cloud-based service that provides a platform for software development.
D) provides users with a service-oriented architecture for their systems.
E) provides cloud users with ubiquitous networking environment.
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
9
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34) Which of the following is an example of a legacy system?
A) Transaction processing system running on a mainframe
B) Scalable grid computing system
C) Web services running on a cloud computing platform
D) MDM software
E) Quantum computing system
Answer: A
Difficulty: Challenging
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
35) Which of the following is not a part of the IT infrastructure ecosystem found in firms?
A) Consultant and system integrators
B) Internet platforms
C) Operating system platforms
D) Enterprise software applications
E) Virtual reality systems
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
36) All of the following are typically factors in a firm's decision to engage consulting and system
integration services except:
A) the firm does not have the staff necessary to deploy and maintain the firm's IT infrastructure.
B) the firm's staff do not have the skills necessary to deploy and maintain the firm's IT
infrastructure.
C) The firm does not have the budget to deploy and maintain a firm's IT infrastructure.
D) The firm's staff does not have the necessary experience to deploy and maintain the firm's IT
infrastructure.
E) The firm's staff knows more about the firm's IT infrastructure than service providers.
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
37) The marketplace for computer hardware:
A) has become increasingly concentrated in top firms.
B) has expanded to include a wide variety of start-up and mobile-computing firms.
C) has moved significantly to Asian firms.
D) has been decimated by mobile and cloud computing.
E) has begun moving away from blade servers.
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
10
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38) Which of the following is the most popular mobile operating system?
A) Linux
B) Android
C) Chrome OS
D) iOS
E) Unix
Answer: B
Difficulty: Moderate
AACSB: Analytical thinking
LO: 5-2: What are the components of IT infrastructure?
39) The operating system is used to manage the software applications used in business activities.
Answer: FALSE
Difficulty: Easy
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
40) Web hosting services maintain a series of servers and provide fee-paying subscribers with
space to maintain their websites.
Answer: FALSE
Difficulty: Moderate
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
41) Have mainframes disappeared?
Answer: Mainframes have not disappeared. They continue to be used to reliably and securely
handle huge volumes of transactions, for analyzing very large quantities of data, and for handling
large workloads in cloud computing centers. The mainframe is still the digital workhorse for
banking and telecommunications networks that are often running software programs that are
older and require a specific hardware platform. Currently, mainframes process 30 billion
business transactions per day, and 80 percent of the world's corporate data also originates on the
mainframe.
Difficulty: Moderate
AACSB: Information technology
LO: 5-2: What are the components of IT infrastructure?
11
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42) Briefly explain why corporations are increasingly interested in using Unix or Linux for their
operating systems.
Answer: Linux is an inexpensive and robust open-source relative of Unix. Unix and Linux
constitute the backbone of corporate infrastructure throughout much of the world because they
are scalable, reliable, and much less expensive than mainframe operating systems. They can also
run on many different types of processors. The major providers of Unix operating systems are
IBM, HP, and Sun with slightly different and partially incompatible versions.
Although Windows continues to dominate the client marketplace, many corporations have begun
to explore Linux as a low-cost desktop operating system provided by commercial vendors such
as RedHat Linux and Linux-based desktop productivity suites such as Sun's StarOffice. Linux is
also available in free versions downloadable from the Internet as open-source software. The rise
of open-source software, particularly Linux and the applications it supports at the client and
server level, has profound implications for corporate software platforms: cost, reduction,
reliability and resilience, and integration, because Linux works on all the major hardware
platforms from mainframes to servers to clients. Linux has the potential to break Microsoft's
monopoly on the desktop. Sun's StarOffice has an inexpensive Linux-based version that
competes with Microsoft's Office productivity suite.
Difficulty: Moderate
AACSB: Analytical thinking
LO: 5-2: What are the components of IT infrastructure?
43) Which of the following is not an example of a wearable computing device?
A) Smartwatch
B) Smart glasses
C) Smartphones
D) Activity trackers
E) Smart ID badges
Answer: C
Difficulty: Challenging
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
44) Which of the following is not an example of the mobile digital platform?
A) Tablets
B) Kindle
C) Cell phones
D) CRM
E) Smartwatches
Answer: D
Difficulty: Easy
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
12
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45) All of the following are current hardware platform trends except:
A) green computing.
B) virtualization.
C) cloud computing.
D) Unix.
E) quantum computing.
Answer: D
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
46) The ability to be in multiple states at once, dramatically increasing processing power, is a
hallmark of:
A) colocation.
B) edge computing.
C) grid computing.
D) utility computing.
E) quantum computing.
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
47) Which of the following is a recent addition to the mobile digital platform?
A) Quantum computing devices
B) Wearable computing devices
C) Cloud computing devices
D) Grid computing devices
E) Green computing devices
Answer: B
Difficulty: Moderate
AACSB: Analytical thinking
LO: 5-3: What are the current trends in computer hardware platforms?
48) At what percent of capacity do most servers operate?
A) 100%
B) 80-90%
C) Approximately 70 percent
D) 40-50%
E) 15-20%
Answer: E
Difficulty: Challenging
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
13
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49) Which of the following enables a single physical resource (such as a server or a storage
device) to appear to the user as multiple logical resources?
A) Cloud computing
B) Autonomic computing
C) Virtualization
D) Multicore processing
E) Ubiquitous computing
Answer: C
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
50) Which of the following types of computing involves purchasing computing power from a
remote provider and paying only for the computing power used?
A) On-demand
B) Grid
C) Edge
D) Autonomic
E) Quantum
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
51) All of the following are cloud computing services except:
A) infrastructure as a service.
B) platform as a service.
C) software as a service.
D) on-demand computing.
E) virtualization as a service.
Answer: E
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-3: What are the current trends in computer hardware platforms?
52) Firms that allow employees to use their own devices are embracing which of the following?
A) Wearable computing
B) Mobile consolidation
C) Cloud computing
D) BYOD
E) Self computing
Answer: D
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
14
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53) Which of the following is not one of the characteristics of cloud computing, as defined by the
U.S. National Institute of Standards and Technology?
A) Ubiquitous network access
B) Location-independent resource pooling
C) On-demand self service
D) Measured service
E) Reduced elasticity
Answer: E
Difficulty: Challenging
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
54) Which of the following is not an example of the consumerization of IT?
A) Google Apps
B) Dropbox
C) Facebook
D) Gmail
E) Amazon Web Services
Answer: E
Difficulty: Challenging
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
55) A(n) ________ is an integrated circuit which contains two or more processors to enhance
performance and reduce power consumption.
A) multicore processor
B) legacy processor
C) scalable processor
D) aggregate circuit
E) green circuit
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
15
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56) SaaS refers to:
A) supplying online access over networks to storage devices and storage area network
technology.
B) managing combinations of applications, networks, systems, storage, and security as well as
providing Web site and systems performance monitoring to subscribers over the Internet.
C) self-contained services that communicate with each other to create a working software
application.
D) easy-to-use software tools for displaying Web pages.
E) hosting and managing access to software applications delivered over the Internet to clients on
a subscription basis.
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
57) Which of the following involves practices and technologies to minimize the environmental
effects of manufacturing and managing computing devices?
A) Capacity planning
B) Cloud computing
C) Green computing
D) Utility computing
E) On-demand computing
Answer: C
Difficulty: Easy
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
58) In green computing, reducing computer power consumption is not a top priority.
Answer: FALSE
Difficulty: Easy
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
59) Quantum computing is implemented primarily with enterprise or ISP servers.
Answer: FALSE
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
60) Quantum computing is not yet available to the general public.
Answer: FALSE
Difficulty: Moderate
AACSB: Information technology
LO: 5-3: What are the current trends in computer hardware platforms?
16
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61) Distinguish between cloud computing, green computing, and quantum computing.
Answer: In cloud computing, technology services are provided over a network, primarily the
Internet. These may be infrastructure services, such as storage or networking, or platform
services, such as IBM's application development and test service, or software services, such as
salesforce.com. Green computing refers to practices and technologies for designing computer
equipment to minimize impact on the environment. Quantum computing refers to emerging
technology that uses the principles of quantum physics to dramatically boost computer
processing power.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-3: What are the current trends in computer hardware platforms?
62) An ad-hoc group of oceanographers needs to set up a system to analyze massive amounts of
data on ocean temperatures. The technology and hardware for gathering the data and transmitting
the data to a central computer is in place. What additional hardware might they need? What
techniques might they use to make their research more efficient and lower costs?
Answer: To store their data they may want to use a SAN. To process their data, they will need a
supercomputer. To lower costs, they could look at on-demand computing as well as virtualization
and implementing multicore processors.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-3: What are the current trends in computer hardware platforms?
63) What are the drawbacks of cloud computing? Do you think these ever outweigh the benefits,
and if so, in what cases?
Answer: Students should be able to identify at least two drawbacks. Drawbacks include:
1. placing data storage and control in another firm's hands.
2. security risks in having critical systems and data entrusted to a firm that does business with
other firms.
3. loss of business capability if cloud infrastructures malfunction.
4. dependence on cloud computing provider and switching costs.
Student answers regarding the relative weight will vary, an example is: The disadvantages of
cloud computing outweigh the advantages, except if any data lost is irreplaceable or creates harm
to others. For example, a database of financial information should remain the responsibility of
the original firm so that they can be held accountable.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-3: What are the current trends in computer hardware platforms?
17
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64) What are the essential characteristics of cloud computing?
Answer: As defined by the U.S. National Institute of Standards and Technology, cloud
computing is characterized by on-demand self-service, ubiquitous network access, locationindependent resource pooling, rapid elasticity, and measured service. On-demand self-service
means that consumers can use server time and network storage as they need it on their own.
Ubiquitous network refers to the ability to access cloud resources across all devices and
platforms, including mobile. Location independent resource pooling describes the ability to
allocate resources to any part of the world without a dip in service quality. Rapid elasticity is the
capacity for resources to be increased or decreased as needed to meet demand. Lastly, measured
service refers to the payment technique whereby users are charged based on the resources they
use, as opposed to monthly or yearly rates.
Difficulty: Challenging
AACSB: Information technology; Written and oral communication
LO: 5-3: What are the current trends in computer hardware platforms?
65) What is virtualization and how and why is it used?
Answer: Virtualization is the process of presenting a set of computing resources (such as
computing power or data storage) so that they can all be accessed in ways that are not restricted
by physical configuration or geographic location. Virtualization enables a single physical
resource (such as a server or a storage device) to appear to the user as multiple logical resources.
For example, a server or mainframe can be configured to run many instances of an operating
system (or different operating systems) so that it acts like many different machines. Each virtual
server "looks" like a real physical server to software programs, and multiple virtual servers can
run in parallel on a single machine. Server virtualization is a common method of reducing
technology costs by providing the ability to host multiple systems on a single physical machine.
Most servers run at just 15 to 20 percent of capacity, and virtualization can boost utilization
server utilization rates to 70 percent or higher. Higher utilization rates translate into fewer
computers required to process the same amount of work, reduced data center space to house
machines, and lower energy usage. Virtualization also facilitates centralization and consolidation
of hardware administration. Virtualization also enables multiple physical resources (such as
storage devices or servers) to appear as a single logical resource, as in software-defined storage
(SDS), which separates the software for managing data storage from storage hardware. Using
software, firms can pool and arrange multiple storage infrastructure resources and efficiently
allocate them to meet specific application needs. SDS enables firms to replace expensive storage
hardware with lower-cost commodity hardware and cloud storage hardware. There is less underor over-utilization of storage resources.
Difficulty: Challenging
AACSB: Information technology; Written and oral communication
LO: 5-3: What are the current trends in computer hardware platforms?
18
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66) ZipRealty, which combines Google Maps with real estate data, is an example of:
A) cloud computing.
B) SOA.
C) a widget.
D) a mashup.
E) a web service.
Answer: D
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
67) Which type of software is created and updated by a worldwide community of programmers
and available for free?
A) Software packages
B) Mashups
C) Outsourced
D) Open source
E) Closed source
Answer: D
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
68) Which of the following is not one of the current software platform trends?
A) Web services and service-oriented architecture
B) Open-source software
C) HTML5
D) Software outsourcing
E) Multicore processors
Answer: E
Difficulty: Moderate
AACSB: Analytical thinking
LO: 5-4: What are the current computer software platforms and trends?
69) Linux is:
A) primarily concerned with the tasks of end users.
B) designed for specific machines and specific microprocessors.
C) an example of open-source software.
D) especially useful for processing numeric data.
E) poorly suited to power fast computers.
Answer: C
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
19
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70) Which of the following statements about Linux is not true?
A) It plays a major role in the back office running local area networks.
B) It is available in free versions downloadable from the Internet.
C) It has garnered 20 percent of the server operating system market.
D) Linux applications are embedded in cell phones, smartphones, netbooks, and other handheld
devices.
E) Linux works on all the major hardware platforms.
Answer: C
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
71) Running a Java program on a computer requires:
A) a Java Virtual Machine to be installed on that computer.
B) a Java Virtual Machine to be installed on the server hosting the Java applet.
C) a miniature program to be downloaded to the user's computer.
D) no specialized software, as Java is platform-independent.
E) the Mozilla Firefox browser and no other browsers.
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
72) A software program with a graphical user interface for displaying web pages and for
accessing the web and other Internet resources is called a web:
A) service.
B) client.
C) browser.
D) app.
E) beacon.
Answer: C
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
73) Sets of loosely coupled software components that exchange information with each other
using standard web communication standards and languages are referred to as:
A) web services.
B) EAI software.
C) SOA.
D) SOAP.
E) SaaS.
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
20
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74) Which of the following is the foundation technology for web services?
A) XML
B) HTML
C) SOAP
D) UDDI
E) SCSI
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
75) Which of the following refers to a set of self-contained services that communicate with each
other to create a working software application?
A) Web services
B) EAI software
C) SOA
D) SOAP
E) Prepackaged software
Answer: C
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
76) Prewritten, commercially available sets of software programs that eliminate the need for a
firm to write its own software programs for certain functions, are referred to as:
A) software packages.
B) mashups.
C) outsourced software.
D) open-source software.
E) service level agreements.
Answer: A
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
77) ________ are created by combining and customizing components from different online
software applications.
A) Apps
B) Web browsers
C) SaaS
D) Web services
E) Web mashups
Answer: E
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
21
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78) The practice of contracting custom software development to an outside firm is commonly
referred to as:
A) outsourcing.
B) scaling.
C) service-oriented architecture.
D) application integration.
E) utility computing.
Answer: A
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
79) A formal contract between customers and their service providers that outlines the specific
responsibilities of the service provider and to the customer is called a(n):
A) SOA.
B) SLA.
C) TCO.
D) RFQ.
E) SaaS.
Answer: B
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
80) ________ provides a standard format for data exchange, enabling web services to pass data
from one process to another.
A) HTML
B) HTML5
C) Java
D) Chrome OS
E) XML
Answer: E
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
81) Java software is designed to run only on specific microprocessors and operating systems.
Answer: FALSE
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
22
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82) Web services can exchange information between two different systems only if the operating
systems and programming languages upon which the systems are based are identical.
Answer: FALSE
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
83) Whereas HTML is limited to describing how data should be presented in the form of Web
pages, XML can perform presentation, communication, and data storage tasks.
Answer: TRUE
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
84) Hypertext markup language specifies how text, graphics, video, and sound are placed on a
webpage.
Answer: TRUE
Difficulty: Easy
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
85) A service-oriented architecture is set of self-contained services that communicate with each
other to create a working software application.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
86) Today, many business firms continue to operate legacy systems because they meet a business
need and would be costly to replace.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-4: What are the current computer software platforms and trends?
23
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87) Identify and describe five or more of the current trends in contemporary software platforms.
Answer:
1. Growing use of Linux and open-source software–Open-source software is produced and
maintained by a global community of programmers and is downloadable for free. Linux is a
powerful, resilient open-source operating system that can run on multiple hardware platforms
and is used widely to run Web servers.
2. HTML5–This is the next evolution of HTML which simplifies embedding multimedia, rich
media, and animation in the browser.
3. Cloud-based services–In cloud-based services and software, users rent applications or storage
space from online providers rather than running these applications or themselves or using local
storage.
4. Web services and service-oriented architecture–Web services are loosely coupled software
components based on open web standards that are not product-specific and can work with any
application software and operating system. They can be used as components of Web-based
applications linking the systems of two different organizations or to link disparate systems of a
single company.
5. Software outsourcing–Companies are purchasing their new software applications from
outside sources, including application software packages, by outsourcing custom application
development to an external vendor (that may be offshore), or by renting software services from
an application service provider.
6. Cloud-based services–Companies are leasing infrastructure, hardware, and software from
vendors, paying on a subscription or per-transaction basis.
7. Mashups and apps–Mashups are programs created by combining two or more existing
Internet applications. Apps are small programs developed for mobiles and handhelds, turning
them into more robust computing tools.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-4: What are the current computer software platforms and trends?
88) Define outsourcing and explain some of the computing tasks that are well suited to
outsourcing.
Answer: Outsourcing is the shift of IT infrastructure and systems development to external
vendors. This is a good option for companies without the resources or technical capability to
perform certain computing tasks. Tasks well suited to outsourcing include Web site hosting, Web
design, development of custom software, and software maintenance. More basic tasks such as
data entry and call center operation is often outsourced as well. Outsourcing often requires firms
to enter into a service level agreement (SLA) that defines the specific responsibilities of the
service provider.
Difficulty: Challenging
AACSB: Information technology; Written and oral communication
LO: 5-4: What are the current computer software platforms and trends?
24
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89) Which of the following refers to the ability of a computer, product, or system to expand to
serve a larger number of users without breaking down?
A) Modality
B) Scalability
C) Expandability
D) Disintermediation
E) Customizability
Answer: B
Difficulty: Easy
AACSB: Information technology
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
90) Hardware and software acquisition costs account for about ________ percent of TCO.
A) 20
B) 40
C) 50
D) 75
E) 90
Answer: A
Difficulty: Moderate
AACSB: Information technology
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
91) Which model can be used to analyze the direct and indirect costs to help firms determine the
actual cost of specific technology implementations?
A) Supply and demand
B) Return on investment
C) Breakeven point
D) Cost-benefit analysis
E) Total cost of ownership
Answer: E
Difficulty: Easy
AACSB: Information technology
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
92) How would you determine the market demand for your firm's IT services?
A) Perform a TCO analysis
B) Benchmark your services
C) Hold focus groups to assess your services
D) Analyze sales returns on key investments
E) Perform a stress test
Answer: C
Difficulty: Easy
AACSB: Information technology
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
25
Copyright © 2020 Pearson Education, Inc.
93) Which of the following is not one of the main six factors to consider when evaluating how
much your firm should spend on IT infrastructure?
A) Your firm's business strategy
B) The IT investments made by competitor firms
C) Market demand for your firm's services
D) Your firm's organizational culture
E) Information technology assessment
Answer: D
Difficulty: Moderate
AACSB: Information technology
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
94) The decision to purchase your own IT assets or rent them from external providers is also
referred to as the rent-versus-buy decision.
Answer: TRUE
Difficulty: Moderate
AACSB: Information technology
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
95) Scalability refers to the ability of a computer, product, or system to expand to serve a large
number of users without breaking down.
Answer: TRUE
Difficulty: Easy
AACSB: Information technology
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
96) TCO refers just to the original cost of purchased technology: both hardware and software.
Answer: FALSE
Difficulty: Easy
AACSB: Information technology
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
97) What is scalability? Why is it essential to the success of the modern business firm?
Answer: Scalability is the ability of the computer, product, or system to expand to survey larger
numbers of users without breaking down. It is important because as firms grow, they can quickly
outgrow their infrastructure. As firms shrink, they can get stuck with excessive infrastructure
purchased in better times. Any modern company must be able to make plans for the future, even
though that future may be different than what was expected. Computer equipment is expensive,
though dropping in price, and budgets must be planned to allow for new purchases, upgrades,
and training. It is generally assumed that a successful company will need more computer
capacity for more people as it follows a path to continued success.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
26
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98) A small design agency you are consulting for will be creating client websites and wants to
purchase a web server so they can host the sites themselves. How will you advise them on this
purchase?
Answer: They need to understand total cost of ownership: the costs will go beyond the cost of
the server, but they will also need to purchase the server software and any application software
they will be using. They will also need someone in their IT department to manage and maintain
the computers. They will also incur facilities costs for running the computer. They need to have a
backup plan should the server fail. The design agency will need to add up all the potential costs
and risks. Additionally, they need to prepare for their plan if they need more servers. Will they
eventually have to run and maintain their own server farm? What if one of their clients' sites is
more popular than anticipated and the server has difficulty handling the load? How quickly can
they add servers or processing power? The company should look at colocation, Web hosting
services, and ASPs to see if their needs will be better met this way.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
99) You are starting a market research company with a single business partner and are planning
the hardware and software needs for the two of you. Which factors should play into your
decision of how much to spend on these investments?
Answer: Using the competitive forces model for IT infrastructure investment, the most relevant
factors in this decision are:
• The firm's business strategy. What capabilities will we want to have over the next five years?
• Alignment of IT strategy. How does our IT strategy match up with the business plan?
• IT assessment. What are the current technology levels for the services we are offering and our
business type? We would probably not need to be at the bleeding edge, but not behind the times
either.
• Competitor firm services. What technology-enabled capabilities do our competitors have? We
would want to match services with our competitors.
• Competitor firm IT investments. How much are competitor firms investing in their
technology?
Because this is a startup, one other factor may not play such a large role: that of market demand
for services. However, finding out the market demand for competitor's services may uncover
ways that this new company could have a competitive advantage.
Difficulty: Challenging
AACSB: Analytical thinking
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
27
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100) What are the components that must be considered in a TCO analysis?
Answer: TCO cost components include hardware acquisition, which includes the purchase price
of computer hardware equipment, including computers, terminals, storage, and printers; software
acquisition, which includes the purchase or license of software for each user; installation, which
includes the cost to install computers and software; training, which includes the cost to provide
training to information systems specialists and end users; support, which includes the cost to
provide ongoing technical support; maintenance, which includes the cost to upgrade hardware
and software; infrastructure, which includes the cost to acquire, maintain, and support related
infrastructure, such as networks and specialized equipment; downtown, which includes the cost
of lost productivity if hardware or software failures cost the system to be unavailable; and space
and energy, such as real estate and utility costs.
Difficulty: Challenging
AACSB: Application of knowledge; Written and oral communication
LO: 5-5: What are the challenges of managing IT infrastructure and management solutions?
28
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Management Information Systems, 14e (Laudon)
Chapter 10 E-Commerce: Digital Markets, Digital Goods
1) What event marked the beginning of e-commerce?
A) The first product sold online.
B) The first domain name registered.
C) The first e-mail sent.
D) The first paid advertisements placed on a Web site.
E) The first product advertised online.
Answer: D
Page Ref: 384
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
2) Based on your reading of the chapter, e-commerce is
A) still in a revolutionary phase.
B) widely accepted by consumers, although technology is still quickly changing.
C) not yet fully accepted by consumers, although much of its driving technology is firmly in
place.
D) well entrenched as a form of modern commerce.
E) declining as users lose interest.
Answer: A
Page Ref: 384-394
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Evaluation in terms of assess
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
3) A marketplace extended beyond traditional boundaries and removed from a temporal and
geographic location is called a(n)
A) exchange.
B) marketspace.
C) online marketplace.
D) e-hub.
E) net marketplace.
Answer: B
Page Ref: 387
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
1
Copyright © 2016 Pearson Education, Inc.
4) Recent developments in e-commerce include all of the following except
A) small businesses continue to flood the e-commerce marketplace.
B) social networking sites become a new platform for e-commerce.
C) Internet-based models of computing, such as smartphone apps.
D) the online demographic of shoppers broadens to match that of ordinary shoppers.
E) social sharing e-commerce sites extend the market creator business model.
Answer: C
Page Ref: 386
Difficulty: Difficult
AACSB: Analytical thinking
CASE: Analysis in terms of examine
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
5) What standards are referred to when discussing universal standards as a unique feature of ecommerce?
A) Internet technology standards
B) common spoken and written languages
C) universal measuring standards
D) universal advertising and media format standards
E) EDI standards
Answer: B
Page Ref: 388
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
6) All of the following are unique features of e-commerce technology, except
A) personalization/customization.
B) interactivity.
C) universality.
D) richness.
E) global reach.
Answer: C
Page Ref: 388
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
2
Copyright © 2016 Pearson Education, Inc.
7) The act of engaging consumers in a dialog that dynamically adjusts the experience to the
individual describes which dimension of e-commerce technology?
A) ubiquity
B) personalization/customization
C) richness
D) interactivity
E) information density
Answer: D
Page Ref: 389
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
8) The integration of video, audio, and text marketing messages into a single marketing message
and consumer experience describes which dimension of e-commerce technology?
A) ubiquity
B) personalization/customization
C) richness
D) interactivity
E) social technology
Answer: C
Page Ref: 389
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
9) The lowered costs of information storage, processing, and communication, along with the
improvement of data quality, has resulted in which unique quality of e-commerce?
A) information density
B) richness
C) customization
D) interactivity
E) global reach
Answer: A
Page Ref: 389
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
3
Copyright © 2016 Pearson Education, Inc.
10) The effort required to locate a suitable product is called
A) price discrimination.
B) search costs.
C) menu costs.
D) shopping costs.
E) location costs.
Answer: B
Page Ref: 389
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
11) Information density refers to the
A) richness—complexity and content—of a message.
B) total amount and quantity of information delivered to consumers by merchants.
C) total amount and quantity of information available to all market participants.
D) amount of information available to reduce price transparency.
E) amount of physical storage space needed to store data about a specific entity, such as a
product or consumer.
Answer: C
Page Ref: 389
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
12) Selling the same goods to different targeted groups at different prices is called
A) cost customization.
B) cost optimization.
C) price gouging.
D) cost personalization.
E) price discrimination.
Answer: E
Page Ref: 389
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
4
Copyright © 2016 Pearson Education, Inc.
13) Information ________ exists when one party in a transaction has more information that is
important for the transaction than the other party.
A) transparency
B) asymmetry
C) complexity
D) discrimination
Answer: B
Page Ref: 389
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
14) Varying a product's price according to the supply situation of the seller is called ________
pricing.
A) menu
B) flexible
C) dynamic
D) asymmetric
E) customized
Answer: C
Page Ref: 391
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
15) Reducing the business process layers in a distribution channel is called
A) disintermediation.
B) BPR.
C) market segmentation.
D) network effects.
E) market transparency.
Answer: A
Page Ref: 391
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
5
Copyright © 2016 Pearson Education, Inc.
16) Digital goods are goods that are
A) produced digitally.
B) sold over digital networks.
C) delivered digitally.
D) used with digital equipment.
E) created with software.
Answer: C
Page Ref: 392
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
17) Compared to digital markets, traditional markets have
A) lower search costs.
B) stronger network effects.
C) higher delayed gratification effects.
D) reduced asymmetry.
E) higher transaction costs.
Answer: E
Page Ref: 392
Difficulty: Difficult
AACSB: Analytical thinking
CASE: Analysis in terms of compare
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
18) Compared to traditional goods, digital goods have
A) greater pricing flexibility.
B) lower marketing costs.
C) higher production costs.
D) higher inventory costs.
E) lower menu costs.
Answer: A
Page Ref: 392
Difficulty: Difficult
AACSB: Analytical thinking
CASE: Analysis in terms of compare
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
6
Copyright © 2016 Pearson Education, Inc.
19) Compared to traditional goods, digital goods incur
A) lower distribution costs.
B) higher marginal costs per unit.
C) equivalent copying costs.
D) similar inventory costs.
E) less disintermediation.
Answer: A
Page Ref: 392
Difficulty: Difficult
AACSB: Analytical thinking
CASE: Analysis in terms of compare
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
20) What is the primary benefit to consumers of disintermediation?
A) faster service
B) lower costs
C) higher quality
D) greater choices
E) None, disintermediation primarily benefits manufacturers.
Answer: B
Page Ref: 391
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
21) E-commerce refers simply to the use of the Internet and the Web to transact business.
Answer: TRUE
Page Ref: 384
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
22) Retail consumer e-commerce is growing at single-digit rates.
Answer: FALSE
Page Ref: 383
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
7
Copyright © 2016 Pearson Education, Inc.
23) The Internet shrinks information asymmetry.
Answer: TRUE
Page Ref: 390
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
24) All previous mass media in modern history, including the printing press, use a broadcast
model where content is created in a central location by experts.
Answer: TRUE
Page Ref: 390
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
25) Disintermediation provides major benefits to the distributor.
Answer: FALSE
Page Ref: 391
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Evaluation in terms of assess
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
26) In general, for digital goods, the marginal cost of producing another unit is about zero.
Answer: TRUE
Page Ref: 392
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
27) Intellectual property refers to all forms of human expression, both tangible and intangible.
Answer: FALSE
Page Ref: 392
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
8
Copyright © 2016 Pearson Education, Inc.
28) Traditional online marketing, such as display ads, is still the majority of all online marketing.
Answer: TRUE
Page Ref: 387
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
29) Information asymmetry exists when there is more information about one product than there
is about a similar product.
Answer: FALSE
Page Ref: 390
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
30) Price transparency refers to the ability of consumers to discover what merchants actually pay
for products.
Answer: FALSE
Page Ref: 389
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
31) Switching costs are the merchants' costs of changing prices.
Answer: FALSE
Page Ref: 391
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
9
Copyright © 2016 Pearson Education, Inc.
32) What is the most profound way in which e-commerce and the Internet have changed the
relationship between companies and their customers? Support your answer.
Answer: Student answers will vary. A sample answer is: The most profound way in which ecommerce and the Internet have changed this relationship is in the shrinking of information
asymmetry. An information asymmetry exists when one party in a transaction has more
information that is important for the transaction than the other party. That information helps
determine their relative bargaining power. In digital markets, consumers and suppliers can "see"
the prices being charged for goods, and in that sense digital markets are said to be more
"transparent" than traditional markets. For example, until auto retailing sites appeared on the
Web, there was a pronounced information asymmetry between auto dealers and customers. Only
the auto dealers knew the manufacturers' prices, and it was difficult for consumers to shop
around for the best price. Auto dealers' profit margins depended on this asymmetry of
information. Today's consumers have access to a legion of Web sites providing competitive
pricing information, and three-fourths of U.S. auto buyers use the Internet to shop around for the
best deal. Thus, the Web has reduced the information asymmetry surrounding an auto purchase.
The Internet has also helped businesses seeking to purchase from other businesses reduce
information asymmetries and locate better prices and terms.
Page Ref: 383-418
Difficulty: Moderate
AACSB: Written and oral communication
CASE: Evaluation in terms of assess
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
33) "Knowledge increases exponentially" is a phrase with which we are all familiar. How does
this concept apply to electronic business and the emergence of the digital firm? Support your
contentions.
Answer: Student answers will vary. A sample answer is: The exponential increases of knowledge
refer to shared information. For example, once the concept of a wheel is established, inheritors of
that knowledge do not have to "reinvent the wheel." The Internet is a tool similar to the wheel: it
is based on shared standards and universal tools. The Internet and shared networking
technologies are allowing new techniques for attracting customers and selling customers to be
developed and adapted very quickly. For example, although early Internet retailers had difficulty
setting up secure credit card transactions and payment systems, today there are many systems in
place as vendors step in to create shared tools for doing this. The Internet is fostering shared
knowledge and, as such, propagating ever greater increases in that knowledge.
Page Ref: 383-418
Difficulty: Difficult
AACSB: Written and oral communication
CASE: Synthesis in terms of bringing information together
LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods?
10
Copyright © 2016 Pearson Education, Inc.
34) Which of the following Internet business models does Amazon.com use?
A) vontent provider
B) portal
C) market creator
D) e-tailer
E) transaction brokder
Answer: D
Page Ref: 395
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of categorize
LO: 10.2: What are the principal e-commerce business and revenue models?
35) eBay is an example of
A) C2C e-commerce.
B) B2B e-commerce.
C) B2C e-commerce.
D) M-commerce.
E) P2P-commerce.
Answer: A
Page Ref: 394
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of categorize
LO: 10.2: What are the principal e-commerce business and revenue models?
36) ________ refers to businesses selling goods and services electronically to individuals.
A) B2C e-commerce
B) Social e-commerce
C) C2C e-commerce
D) Disintermediation
E) M-commerce
Answer: A
Page Ref: 394
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.2: What are the principal e-commerce business and revenue models?
11
Copyright © 2016 Pearson Education, Inc.
37) ________ uses the community provider Internet business model.
A) iTunes
B) Yahoo
C) eBay
D) Google
E) Twitter
Answer: E
Page Ref: 395
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of categorize
LO: 10.2: What are the principal e-commerce business and revenue models?
38) Transaction brokers
A) generate revenue from advertising or from directing buyers to sellers.
B) save users money and time by processing online sales transactions.
C) provide a digital environment where buyers and sellers can establish prices for products.
D) sell physical products directly to consumers or individual businesses.
E) provide online meeting places where people with similar interests can communicate.
Answer: B
Page Ref: 395
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.2: What are the principal e-commerce business and revenue models?
39) In which of the following Internet business models does a merchant create an online digital
environment that enables people with like interests to share information?
A) community provider
B) service provider
C) market creator
D) transaction broker
E) portal
Answer: A
Page Ref: 395
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.2: What are the principal e-commerce business and revenue models?
12
Copyright © 2016 Pearson Education, Inc.
40) Market creators
A) save users money and time by processing online sales transactions.
B) provide a digital environment where buyers and sellers can establish prices for products.
C) create revenue by providing digital content over the Web.
D) sell physical products directly to consumers or individual businesses.
E) generate revenue from advertising or from directing buyers to sellers.
Answer: B
Page Ref: 395
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.2: What are the principal e-commerce business and revenue models?
41) Which of the following best illustrates the sales revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Epinions receives a fee after steering a customer to a participating Web site where he or she
makes a purchase.
C) Flickr provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
E) Netflix charges customers a monthly fee for access to its library of movies.
Answer: D
Page Ref: 398
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of categorize
LO: 10.2: What are the principal e-commerce business and revenue models?
42) Which of the following best illustrates the affiliate revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Epinions receives a fee after steering a customer to a participating Web site where he or she
makes a purchase.
C) Flickr provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
E) Netflix charges customers a monthly fee for access to its library of movies.
Answer: B
Page Ref: 399
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of categorize
LO: 10.2: What are the principal e-commerce business and revenue models?
13
Copyright © 2016 Pearson Education, Inc.
43) Which of the following best illustrates the transaction fee revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Epinions receives a fee after steering a customer to a participating Web site where he or she
makes a purchase.
C) Flickr provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
E) Netflix charges customers a monthly fee for access to its library of movies.
Answer: A
Page Ref: 399
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of categorize
LO: 10.2: What are the principal e-commerce business and revenue models?
44) In the ________ revenue models, a firm offers some services for free but charges a
subscription fee for premium services.
A) free/freemium
B) subscription
C) transaction fee
D) affiliate
E) sales
Answer: A
Page Ref: 399
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.2: What are the principal e-commerce business and revenue models?
45) Content providers use ________ systems to process large amounts of very small monetary
transactions cost-effectively.
A) subscription
B) mobile payment
C) transaction fee
D) micropayment
E) affiliate revenue
Answer: D
Page Ref: 398
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.2: What are the principal e-commerce business and revenue models?
14
Copyright © 2016 Pearson Education, Inc.
46) An example of the market creator business model is eBay, a C2C auction site.
Answer: TRUE
Page Ref: 395
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of categorize
LO: 10.2: What are the principal e-commerce business and revenue models?
47) An example of the portal business model is Facebook.
Answer: FALSE
Page Ref: 395
Difficulty: Easy
AACSB: Analytical thinking
CASE: Analysis in terms of categorize
LO: 10.2: What are the principal e-commerce business and revenue models?
48) Web personalization is used primarily as a major marketing tool.
Answer: TRUE
Page Ref: 404
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of appraise
LO: 10.2: What are the principal e-commerce business and revenue models?
49) Podcasting allows subscribers to listen to live, streaming radio and other audio content.
Answer: FALSE
Page Ref: 396
Difficulty: Easy
AACSB: Analytical thinking
CASE: Analysis in terms of examine
LO: 10.2: What are the principal e-commerce business and revenue models?
50) In the affiliate revenue model, firms derive revenue by selling information or services
through partner e-commerce sites.
Answer: FALSE
Page Ref: 399
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.2: What are the principal e-commerce business and revenue models?
15
Copyright © 2016 Pearson Education, Inc.
51) List and describe at least five different Internet business models. Which of these models do
you think would be the most risky for a startup business today? Support your answer.
Answer: Internet business models include: e-tailer, transaction broker, market creator, content
provider, community provider, portal and service. The choice of riskiest model will depend on
the individual student. A sample answer is: Today the riskiest model would be a content-provider,
because most, if not all, of the major offline entertainment and content producers such as
television networks and newspapers are online. They would be your competitors, and already
have the means for content creation and distribution in place. All of the other business models do
not have the risk of creating brand new content.
Page Ref: 394-397
Difficulty: Easy
AACSB: Written and oral communication
CASE: Evaluation in terms of assess
LO: 10.2: What are the principal e-commerce business and revenue models?
52) List and describe the three main categories of electronic commerce. Which do you think is
ultimately the most valuable to the individual consumer? Support your answer.
Answer: Business-to-consumer, business-to-business, and consumer-to-consumer. All three are
valuable to the consumer, but in the long run, business-to-business may be the most valuable to
the individual consumer because it will reduce prices and increase both goods and services.
(Other opinions, of course, are supportable.)
Page Ref: 394
Difficulty: Moderate
AACSB: Written and oral communication
CASE: Evaluation in terms of assess
LO: 10.2: What are the principal e-commerce business and revenue models?
53) What methods could a portal use to generate revenue? Which do you think might be most
successful, and why?
Answer: Advertising, subscriptions, selling collected marketing information, and directing
buyers to sellers could all generate revenue. Student evaluations will vary. A sample answer is: I
would think the most successful method would be through collecting marketing information,
because as a portal that links to large amounts of external information and attracts repeat
customers, the portal would have the opportunity to gather a lot of information about each user.
Page Ref: 394-395
Difficulty: Moderate
AACSB: Written and oral communication
CASE: Evaluation in terms of assess
LO: 10.2: What are the principal e-commerce business and revenue models?
16
Copyright © 2016 Pearson Education, Inc.
54) You are consulting for Lucky's, a chain of gas stations. What types of e-commerce
opportunities, if any, are relevant to Lucky's? Could Lucky's make use of any Internet business
models for this opportunity?
Answer: Student answers will vary. A sample answer is: In terms of B2B e-commerce, Lucky's
might be able to procure goods over the Internet, use a private industrial network to coordinate
their supply chain with suppliers and manage inventory. Depending on the structure of the
gasoline retail business, industry net marketplaces and exchanges might be of use. In terms of
B2C e-commerce, there are not many opportunities, as it is inefficient to sell gasoline over the
Internet. Lucky's could make sure that its stations are listed in popular location-based mobile
services that help drivers find nearby gas stations.
Page Ref: 383-418
Difficulty: Difficult
AACSB: Written and oral communication
CASE: Synthesis in terms of bringing information together
LO: 10.2: What are the principal e-commerce business and revenue models?
55) ________ describes the concept that a large group of people is better at making good
decisions than a single person.
A) The wisdom of crowds
B) Outsourcing
C) Crowdsourcing
D) Social graphing
E) Social search
Answer: A
Page Ref: 407
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
56) Netflix's public announcement of a reward for a technology solution to its movie
recommendation system is an example of
A) prediction markets.
B) behavioral targeting.
C) long-tail marketing.
D) social shopping.
E) crowdsourcing.
Answer: E
Page Ref: 408
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
17
Copyright © 2016 Pearson Education, Inc.
57) Exposing an individual to ads that are chosen and based on the recorded and analyzed online
behavior of the individual is referred to as
A) clickstream advertising.
B) behavioral targeting.
C) online profiling.
D) long tail marketing.
E) crowdsourcing.
Answer: B
Page Ref: 402
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
58) Which of the following best describes the digital social graph?
A) a person's direct and indirect relationships
B) all of a person's closest digital relationships
C) a mapping of all online social relationships
D) all of the online and offline relationships a person has
E) all of the relationships in an online community
Answer: C
Page Ref: 405
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
59) Which of the following marketing formats is sales oriented, rather than branding oriented or
a mix?
A) lead generation
B) search engine
C) rich media
D) display ads
E) video
Answer: B
Page Ref: 402
Difficulty: Difficult
AACSB: Analytical thinking
CASE: Evaluation in terms of assess
LO: 10.3: How has e-commerce transformed marketing?
18
Copyright © 2016 Pearson Education, Inc.
60) Which of the following social commerce features allows social network sites to gather and
distribute to others information about which products a user likes and dislikes?
A) social sign-on
B) collaborative shopping
C) network notification
D) social search
E) newsfeed
Answer: C
Page Ref: 407
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
61) Which of the following is a marketing format that uses banner ads and pop-ups with
interactive features?
A) search engine ads
B) video ads
C) rich media ads
D) e-mail ads
E) display ads
Answer: E
Page Ref: 402
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
62) The Internet enables ________ marketing, by leveraging the fact that there is always some
demand, however small, for a product.
A) long-tail
B) behavioral
C) crowdsource
D) prediction
E) lead generation
Answer: A
Page Ref: 401
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
19
Copyright © 2016 Pearson Education, Inc.
63) ________ is a peer-to-peer market in which participants bet on the outcomes of current
events, business, or social trends.
A) Crowdsourcing
B) A net marketplace
C) A prediction market
D) A futures auction
E) A private exchange
Answer: C
Page Ref: 408
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
64) What is the difference between personalization and customization, as applied to e-commerce
technologies?
A) Customization is any type of adjustment made to a product by the user; personalization refers
to a business changing a product or service for the user.
B) Personalization is any type of adjustment made to a product by the user; customization refers
to a business changing a product or service for the user.
C) Customization refers to adjusting marketing messages for a consumer; personalization refers
to adjusting a product or service based on a user's preferences.
D) Personalization refers to adjusting marketing messages for a consumer; customization refers
to adjusting a product or service based on a user's preferences.
E) There is no difference, both terms refer to changing a product or communication for the
consumer.
Answer: D
Page Ref: 389-390
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
65) Rich media advertisements are a sales-oriented marketing format.
Answer: FALSE
Page Ref: 402
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Analysis in terms of appraise
LO: 10.3: How has e-commerce transformed marketing?
20
Copyright © 2016 Pearson Education, Inc.
66) Behavioral targeting occurs at two levels: individual Web sites and through ISPs.
Answer: FALSE
Page Ref: 403
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
67) Advertising networks track a user's behavior at thousands of Web sites.
Answer: TRUE
Page Ref: 403
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
68) Viral marketing is like traditional word-of-mouth marketing except that it is spread via online
communities.
Answer: TRUE
Page Ref: 407
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
69) The behavioral targeting of ads results in consumers responding ten times more frequently
than when delivered ads randomly.
Answer: TRUE
Page Ref: 404
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.3: How has e-commerce transformed marketing?
21
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70) Describe the use of personalization and customization in e-commerce. What business value
do these techniques have?
Answer: In personalization, merchants can target their marketing messages to specific
individuals by adjusting the message to a person's name, interests, and past purchases. For
example, Amazon.com greets each logged in user with their user name. With customization,
merchants can change the delivered product or service based on a user's preferences or prior
behavior. The Wall Street Journal Online allows you to select the type of news stories you want
to see first and gives you the opportunity to be alerted when certain events happen. The ability of
Internet technology to track customer behavior at Web sites, along with records of purchases and
other behavior, allows merchants to create a detailed profile of a customer. These profiles can be
used to create unique personalized Web pages that display content or ads for products or services
of special interest to each user, improving the customer's experience and creating additional
value. The business value of personalization is reduced marketing costs, as you spend only the
money to target customers that are more likely to be receptive and are more profitable, and
improved sales results, from increased customer response to personalized sites that better serve
their own purposes and shopping needs. Personalization can achieve some of the benefits of
using individual salespeople for dramatically lower costs.
Page Ref: 389-390
Difficulty: Moderate
AACSB: Written and oral communication
CASE: Evaluation in terms of assess
LO: 10.3: How has e-commerce transformed marketing?
71) You have been hired as a marketing consultant by a law firm in Los Angeles that specializes
in juvenile justice. What ways can you use the Internet as a marketing tool and to advertise the
firm's services?
Answer: Student answers will vary. A sample answer is: For marketing research, you could
advertise on search engines. You could pay for marketing research at relevant portals. You could
also collect customer information from the company's Web site. You could monitor relevant
blogs to see what issues are of concern in juvenile justice, so as to address these concerns in your
advertising campaigns. To advertise, you could advertise on search engine results and at relevant
portals or legal information content providers. If it were feasible, you could create a juvenile
justice portal and blog for the company in order to attract users from whom you could gather
market research as well as promote your services. You might also want to investigate social
network marketing—assuming that your clients might be the best leads for other clients.
Page Ref: 399-408
Difficulty: Difficult
AACSB: Written and oral communication
CASE: Synthesis in terms of bringing information together
LO: 10.3: How has e-commerce transformed marketing?
22
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72) Web site tracking software can log the path a customer took through the Web site, the time
spent on the site, and what geographic area, in general, the customer is from, all of which can
help in customer analysis. It can also log the customer's operating system and which browser the
customer is using. How could these last two data items be of interest to a company? Give
examples.
Answer: Student answers will vary, but should include an understanding that customer OS and
browser interact technologically with a Web site and might be relevant in data analysis. An
example is: Customer OSs and browsers could help a company determine what technical
functionalities could be used in the site. For example, if it found out that a significant percentage
of its users are using mobile browsers, they might want to make sure that the Web site is easily
used by various mobile devices. Secondly, this data might be relevant in data mining or other
analysis. For example, a retail clothing company might find that a significant portion of their
most valued customers use an Apple operating system, and from other data analysis know that
Apple users are more likely to purchase cashmere sweaters. Then the company may want to
place a greater emphasis on selling the cashmere sweaters.
Page Ref: 402-405
Difficulty: Moderate
AACSB: Written and oral communication
CASE: Evaluation in terms of assess
LO: 10.3: How has e-commerce transformed marketing?
73) All of the following are activities related to establishing a Web presence except for
A) search.
B) affiliates.
C) apps.
D) newsletters.
E) display.
Answer: D
Page Ref: 417
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
74) EDI is
A) the use of Internet technologies for electronic data transactions.
B) the exchange between two organizations of standard transactions through a network.
C) electronic data invoicing.
D) electronic delivery infrastructure.
E) slowly becoming the norm for B2B communications.
Answer: B
Page Ref: 409
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
23
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75) The process of sourcing goods and materials, negotiating with suppliers, paying for goods,
and making delivery arrangements is called
A) e-procurement.
B) SCM.
C) procurement.
D) sourcing.
E) production.
Answer: C
Page Ref: 410
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
76) A secure Web site that links a large firm to its suppliers and other key business partners is
called a(n)
A) e-hub.
B) marketspace.
C) exchange.
D) private industrial network.
E) net marketplace.
Answer: D
Page Ref: 410
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
77) Net marketplaces
A) focus on continuous business process coordination between companies for supply chain
management.
B) are industry owned or operate as independent intermediaries between buyers and sellers.
C) are geared towards short-term spot purchasing.
D) are more relationship oriented than private industrial networks.
E) typically consist of a large firm linking to its suppliers and partners.
Answer: B
Page Ref: 411
Difficulty: Difficult
AACSB: Analytical thinking
CASE: Evaluation in terms of assess
LO: 10.4: How has e-commerce affected business-to-business transactions?
24
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78) A third-party Net marketplace that connects many buyers and suppliers for spot purchasing is
called a(n)
A) exchange.
B) vertical market.
C) private exchange.
D) e-hub.
E) private industrial network.
Answer: A
Page Ref: 411
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
79) Goods that are involved in the actual production process are referred to as
A) raw materials.
B) direct goods.
C) purchasing goods.
D) indirect goods.
E) products.
Answer: B
Page Ref: 411
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
80) Which of the following statements about m-commerce is not true?
A) In 2014, m-commerce represented about 19 percent of all e-commerce.
B) M-commerce is the fastest growing form of e-commerce.
C) In 2014, mobile advertising is up over 80% from the previous year.
D) Fifty-five percent of online retailers have m-commerce Web sites.
E) In 2014, the main areas of growth are in online banking and location-based services.
Answer: E
Page Ref: 412
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
25
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81) EDI standards that take advantage of network communications have yet to be fully
implemented at the industry level.
Answer: FALSE
Page Ref: 409
Difficulty: Moderate
AACSB: Information technology
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
82) Net marketplaces may either support contractual purchasing based on long-term relationships
with designated suppliers or short-term spot purchasing.
Answer: TRUE
Page Ref: 411
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
83) Exchanges have become one of the most popular types of Net marketplace because they
encourage competitive bidding that drives prices down.
Answer: FALSE
Page Ref: 412
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
84) Indirect goods are not involved firsthand in the production process.
Answer: TRUE
Page Ref: 411
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.4: How has e-commerce affected business-to-business transactions?
26
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85) A new social mobile app you are developing allows users to find friends who are logged in
and within a 10-mile radius. This would be categorized as a ________ service.
A) geosocial
B) geoinformation
C) geoadvertising
D) geomapping
E) geolocating
Answer: B
Page Ref: 413
Difficulty: Easy
AACSB: Analytical thinking
CASE: Analysis in terms of appraise
LO: 10.5: What is the role of m-commerce in business and what are the most important mcommerce applications?
86) Geoadvertising sends ads to users based on their
A) GPS locations.
B) home addresses.
C) shopping preferences.
D) web site behaviors.
E) Google Maps settings.
Answer: A
Page Ref: 413
Difficulty: Moderate
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.5: What is the role of m-commerce in business and what are the most important mcommerce applications?
87) Define location-based services and describe the main categories of these services. Which of
the categories do you feel has the most potential in terms of e-commerce revenues, and why?
Answer: Location-based services are services that use GPS mapping services available on
smartphones to deliver value-added services. They include geosocial services, geoadvertising,
and geoinformation services. A geosocial service can tell you where your friends are meeting.
Geoadvertising services can tell you where to find the nearest Italian restaurant, and
geoinformation services can tell you the price of a house you are looking at, or about special
exhibits at a museum you are passing. Student answers as to the most valuable of these services
will vary; an example is: I feel that geoadvertising services have the most potential for profit, as
it is based on a profit-making mechanism: advertising. Geosocial services and geoinformation
services, by themselves, are more content- and communication-oriented.
Page Ref: 412-413
Difficulty: Moderate
AACSB: Written and oral communication
CASE: Analysis in terms of summarize
LO: 10.5: What is the role of m-commerce in business and what are the most important mcommerce applications?
27
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88) Which of the following is a milestone for the Web site development phase of building an ecommerce presence?
A) Web mission statement
B) social media plan
C) Web site plan
D) Web presence map
E) functional Web site
Answer: C
Page Ref: 418
Difficulty: Difficult
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.6: What issues must be addressed when building an e-commerce presence?
89) In planning a robust e-commerce presence, you will want to consider the blog platform as
part of your ________ presence.
A) social media
B) e-mail
C) community
D) Web site
E) offline media
Answer: A
Page Ref: 417
Difficulty: Moderate
AACSB: Analytical thinking
CASE: Evaluation in terms of appraise, assess
LO: 10.6: What issues must be addressed when building an e-commerce presence?
90) Which of the following is not one of four types of presence to be considered when building
an E-commerce presence?
A) offline media
B) Web sites
C) social media
D) corporate
E) e-mail
Answer: D
Page Ref: 417
Difficulty: Easy
AACSB: Application of knowledge
CASE: Comprehension
LO: 10.6: What issues must be addressed when building an e-commerce presence?
28
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