Chapter 2E-Business: How Businesses Use Information SystemsTrue-False Questions1.Operational management is responsible for directing the day-to-day operations of thebusiness.Answer: True Difficulty: Easy Reference: p. 442.Deciding whether to introduce a new product line is the responsibility of an operationalmanager.Answer: False Difficulty: Easy Reference: p. 473.Operational-level manufacturing systems deal with the firm’s long-term manufacturinggoals, such as where to locate a new plant.Answer: False Difficulty: Medium Reference: p. 484.Transaction processing systems are most commonly encountered at the management level ofan organization.Answer: False Difficulty: Medium Reference: p. 51-535. A transaction processing system is a computerized system that performs and records the dailyroutine transactions necessary to conduct business.Answer: True Difficulty: Easy Reference: p. 516. A hotel reservation system is a typical example of a management information system.Answer: False Difficulty: Medium Reference: p. 517.Management-level systems do not support nonroutine decision making.Answer: False Difficulty: Medium Reference: p. 53-558.The decision to grant credit to a customer is normally made by the middle manager.Answer: False Difficulty: Medium Reference: p. 539.Transaction processing systems are the basic business systems that serve the operationallevel of the organization.Answer: True Difficulty: Medium Reference: p. 5310.Managers need TPSs to monitor the status o f internal operations and the firm’s relations withthe external environment.Answer: True Difficulty: Medium Reference: p. 5311.Most MISs use sophisticated mathematical models or statistical techniques.Answer: False Difficulty: Medium Reference: p. 5412.Decision-support systems help managers make decisions that are unique, rapidly changing,and not easily specified in advance.Answer: True Difficulty: Easy Reference: p.5413.Decision-support systems use internal information as well as information from externalsources.Answer: True Difficulty: Medium Reference: p. 5414.ESSs are designed to serve the middle management of the organization.Answer: False Difficulty: Medium Reference: p. 5515.ESSs are designed to incorporate data about external events, but they also draw summarizedinformation from internal MIS and DSS.Answer: True Difficulty: Medium Reference: p. 5516.ESSs are designed primarily to solve specific problems.Answer: False Difficulty: Medium Reference: p. 55rmation supplied by an enterprise system is structured around cross-functional businessprocesses.Answer: True Difficulty: Medium Reference: p. 58 18.Enterprise systems often include transactions with customers and vendors.Answer: True Difficulty: Easy Reference: p. 5919.Supply chain management systems are more externally oriented than enterprise systems.Answer: True Difficulty: Medium Reference: p. 59-60 20.Maintaining online directories of employees with special areas of expertise is one applicationof knowledge management systems.Answer: True Difficulty: Medium Reference: p. 63Multiple-Choice Questions21.AnalysisKia’s difficulties in getting a complete picture of defects in their cars illustrates:a.the difficulties in creating accurate tracking systems.b.the challenges posed by having multiple information systems that are not linked.c.the difficulties in complying with government regulations.d.the compromises made in drawing accurate reports from poorly plannedinformation systems.Answer: b Difficulty: Easy Reference: p. 40Analysis in terms of differentiating22.(Analysis, Synthesis) How would you best categorize the types of systems Kiaimplemented in their defect early warning system?a. A TPS to store basic data about vehicles, parts, sales, and warranties, and an MISto create reports on the data.b. A TPS to store basic data about vehicles, parts, sales, and warranties, and a DSSfor high-level analysis and forecasts.c.An MIS to create reports from existing TPSs and a DSS for high-level analysisand forecasts.d. A production and manufacturing system to record basic data about faulty partsand a DSS for high-level analysis and forecasts.Answer: c Difficulty: Hard Reference: p. 39-41Analysis in terms of differentiating, Synthesis in terms of bringing parts of knowledgetogether.23.The five basic entities that make up any business are suppliers, customers, employees,products and services, and:a.its environment.b.manufacturing and production.c.sales and marketing.d.invoices and payments.Answer: d Difficulty: Medium Reference: p. 4324.Which of the following is a cross-functional business process?a.hiring an employee.b.identifying a customer.c.fulfilling a customer order.d.creating an invoice.Answer: c Difficulty: Easy Reference: p. 4325.Employees that assist with paperwork at all levels of the firm are called:a.data workers.b.knowledge workers.c.operational management.d.service workers.Answer: a Difficulty: Easy Reference: p. 4426.The three principal levels of hierarchies within a business organization are:a.management, knowledge workers, and service workers.b.senior management, middle management, and operational management.c.management, data workers, and operational management.d.senior management, middle management, and service workers.Answer: b Difficulty: Easy Reference: p. 4427.Key actors in a business’s immediate environment include:a.regulations.b.technology.c.economy.d.politics.Answer: a Difficulty: Hard Reference: p. 4528.Promoting the organization’s products or services is a responsibility of the:a.finance and accounting function.b.human resources function.c.manufacturing and production function.d.sales and marketing function.Answer: d Difficulty: Easy Reference: p. 4729.Market research is an activity associated with the:a.Finance and accounting functionb.Human resources functionc.Manufacturing and production functiond.Sales and marketing functionAnswer: d Difficulty:Easy Reference: p. 4730.Pricing analysis is an example of:a. a sales and marketing information system serving senior management.b. a sales and marketing information system serving management.c. a finance and accounting information system serving senior management.d. a finance and accounting information system serving management.Answer: b Difficulty: Medium Reference: p. 4731. A sales and marketing information system aids operational management in:a.tracking sales.b.planning new products and services.c.analyzing sales performance.d.preparing sales forecasts.Answer: a Difficulty: Medium Reference: p. 4732. A sales and marketing information system aids middle management employees in:a.tracking sales.b.planning new products and services.c.analyzing sales performance.d.preparing sales forecasts.Answer: c Difficulty: Medium Reference: p. 4733.Equipment scheduling and facilities maintenance are functions of:a.Finance and accounting systems.b.Human resources systems.c.Manufacturing and production systems.d.Sales and marketing systems.Answer: c Difficulty:Easy Reference: p. 4834.Senior management uses finance and accounting information systems to:a.plan long-term profits.b.decide where to locate new facilities.c.forecast sales trends.d.c ontrol the firms’ financial resources.Answer: c Difficulty: Medium Reference: p. 4935.Budgeting is typically a feature of an information system serving:a.operational management.b.sales and marketing.c.senior management.d.middle management.Answer: d Difficulty: Easy Reference: p. 4936. A finance and accounting information system aids operational management with:a.establishing long term investment goals.b.profit planning.c.accounts receivable.d.budgeting.Answer: c Difficulty: Medium Reference: p. 49pensation analysis is an example of:a.finance and accounting information systems.b.enterprise application information systems.c.human resources information systems.d.sales and marketing information systems.Answer: c Difficulty:Easy Reference: p. 5038.TPSs are the basic business systems that serve which level of the organization?a.senior management.b.middle management.c.operational.d.knowledge management.Answer: c Difficulty:Easy Reference: p. 5139. A computerized system that performs and records the daily dealings necessary to conductbusiness is classified as a(n):a.executive support system.b.management-level system.c.operational-level system.d.transaction-level system.Answer: d Difficulty:Easy Reference: p. 5140. A relocation control system that reports summaries on the total moving, house-hunting,and home financing costs for employees in all company divisions would fall into thecategory of:a.knowledge management systems.b.operational-level systems.c.executive-support systems.d.management-level systems.Answer: d Difficulty:Hard Reference: p. 51-5541.The term “management information systems” designates a specific category ofinformation systems serving:a.integrated data processing throughout the firm.b.transaction process reporting.c.employees with online access to historical records.d.middle management functions.Answer: d Difficulty:Easy Reference: p. 5342.The principal purpose of __________________ is to answer routine questions and totrack the flow of transactions through the organization.a.senior management-level systems.b.operational-level systems.c.management-level systems.d.knowledge management systems.Answer: b Difficulty: Easy Reference: p. 53 43.Managers need __________ to monitor the status of internal operations and the firm’srelations with the external environment.a.decision support systemsb.knowledge systemsc.transaction processing systemsd.management information systemsAnswer: c Difficulty: Medium Reference: p. 5344.Management-level systems are information systems that support the:a.long-range planning activities of senior management.b.knowledge and data workers in an organization.c.decision-making and administrative activities of middle managers.d.day-to-day processes of production.Answer: c Difficulty:Easy Reference: p. 5345.These systems are designed to summarize and report on the company’s basic operations.a.decision-support systemsb.executive information systemsc.transaction processing systemsd.management information systemsAnswer: d Difficulty:Medium Reference: p. 5346.These systems are typically a major source of data for other systems:a.transaction processing systems.b.management information systems.c.executive support systems.d.decision-support systems.Answer: a Difficulty:Medium Reference: p. 53 47.Decisions that are unique, rapidly changing, and not easily specified in advance are bestsuited to this type of system:a.management.b.transaction processingc.executive supportd.decision-supportAnswer: d Difficulty:Easy Reference: p. 54 48.These systems are especially suited to situations in which the procedure for arriving at asolution may not be fully predefined in advance:a.management information systems.b.transaction processing systems.c.decision-support systems.d.knowledge management systems.Answer: c Difficulty: Medium Reference: p. 5449.These systems allow users to change assumptions, ask new questions, and include newdata:a.decision-support systems.b.transaction processing systems.c.management information systems.d.executive support systems.Answer: a Difficulty: Medium Reference: p. 54-5550.Executive support systems are information systems that support the:a.long-range planning activities of senior management.b.knowledge and data workers in an organization.c.decision-making and administrative activities of middle managers.d.day-to-day processes of production.Answer: a Difficulty:Easy Reference: p. 5551.These systems have more analytical power than other types of systems:a.management information systems.b.transaction processing systems.c.decision-support systems.d.executive support systems.Answer: c Difficulty: Medium Reference: p. 5552.Decision-support systems are often referred to as:a.business information systems.b.business intelligence systems.c.business support systems.d.business model systems.Answer: b Difficulty:Medium Reference: p. 5553.ESS are specifically designed to serve this level of the organization:a.operationalb.end-use.c.middle managementd.senior managementAnswer: d Difficulty:Medium Reference: p. 5554.These systems often deliver information to senior executives through a portal, whichuses a Web interface to present integrated personalized business content:a.transaction processing systems.b.executive support systems.c.management information systems.d.decision-support systems.Answer: b Difficulty:Medium Reference: p. 55 55.These systems are designed to support organization-wide process coordination andintegration.a.Decision-support systemsb.Management information systemsc.CRMd.Enterprise applicationsAnswer: d Difficulty:Easy Reference: p. 57 56. A (an) _______________________ collects data from various key business processesand stores the data in a single comprehensive data repository, usable by other parts of the business.a.transaction systemb.enterprise systemc.automatic reporting systemd.management information systemAnswer: b Difficulty:Medium Reference: p. 58 57.___________________________ is the process that integrates supplier, manufacturer,distributor, and customer logistics processes.a.Collaborative distributionb.Supply-chain managementc.Reverse logisticsd.Enterprise planningAnswer: b Difficulty:Medium Reference: p. 59 58._______________________ uses a set of integrated applications to address all aspects ofthe customer relationship.a.CRMb.MISc.CLEd.CLUAnswer: a Difficulty:Easy Reference: p. 60Which type of system would you use to determine what trends in your supplier’s industry will affect your firm the most in five years?a.ESSb.TPSc.MISd.DSSAnswer: a Difficulty:Easy Reference: p. 55Analysis in terms of differentiate and appraise60.(Analysis)Which type of system would you use to forecast the return on investment if you usednew suppliers with better delivery track records?a.ESSb.TPSc.MISd.DSSAnswer: d Difficulty:Easy Reference: p. 55Analysis in terms of differentiate and appraise61.(Analysis)Which type of system would you use to change a production schedule if a key supplierwas late in delivering goods?a.ESSb.TPSc.MISd.DSSAnswer: b Difficulty:Medium Reference: p. 53Analysis in terms of differentiate and appraiseWhich type of system would you use to determine the five suppliers with the worstrecord in delivering goods on time?a.ESSb.TPSc.MISd.DSSAnswer: c Difficulty:Easy Reference: p. 53-54 Analysis in terms of differentiate and appraise63.Different firms can work collaboratively on product design, marketing, and productionthrough:a.An intranetb.An extranetc. A KMSd. A CRMAnswer: b Difficulty:Easy Reference: p. 63 64.(Synthesis)What type of information system is an intranet most easily adapted to:a.CRMb.MISc.TPSd.KMSAnswer: d Difficulty:Hard Reference: 63Synthesize in terms of bringing information together65. Buying or selling goods over the Internet is called:a.e-commerceb.e-businessc.an intranetd.an extranetAnswer: a Difficulty:Easy Reference: p. 6366. (Synthesis)You would recommend that a system interface use a portal when:a.employees need to communicate with clients and vendors.b.employees need to collaborate with suppliers and vendors.c.employees need to reference multiple sources of data.d.employees need to use data from the Internet.Answer: b Difficulty:Easy Reference: p. 63Synthesize in terms of brining information together67 The use of digital technology and the Internet to execute the major business processes inthe enterprise is calleda.e-commerceb.e-businessc.enterprise applicationsd.MISAnswer: b Difficulty:Easy Reference: p. 64 68 The principal liaison between the information systems groups and the rest of theorganization is a/an:a.Programmerrmation systems managerc.Systems analystd.CIOAnswer: c Difficulty:Easy Reference: p. 6469 A __________ is a senior manager who oversees the use of IT in the firm.a.CEOb.CFOc.CIOd.CITAnswer: c Difficulty:Easy Reference: p. 6570 Development and support services for a firms’ business systems are provided by:a.IT educational services.b.IT management services.c.application software services.d.IT standards services.Answer: c Difficulty:Hard Reference: p. 65 71 Policies that determine which information technology will be used, when, and how areprovided by:a.IT educational services.b.IT management services.c.application software services.d.IT standards services.Answer: d Difficulty:Hard Reference: p. 65 72 The advantage of a decentralized arrangement of the information services function, inwhich each functional area of the business has its own information systemsdepartment is:a.more likely to produce more compatible systems and more coherent long-termsystems development plans.b.lower costs of technology purchases.c.systems are built that directly address that funct ion’s business needs.d.systems are built that can function independently and more efficiently.Answer: c Difficulty:Hard Reference: p. 67 73 (Evaluate)What is the most important benefit of an enterprise application:a.enabling speed of communicating.b.enabling business functions and departments to share information.c.enabling a company to work collaboratively with customers and suppliers.d.enabling cost-effective, e-business processes.Answer: b Difficulty:Hard Reference: p. 57-58(Evaluate in terms of appraise, evaluate)74 (Analysis)What does Danaher Corporation’s implementation of e-Kanban illustrate?rmation systems can often reproduce manual business processes in a moreefficient and error-free way.b.Implementing technical solutions is a continuous process, needing themeasurement of benefits against drawbacks.c.Lean manufacturing relies on ever improving production solutions.d.Updating supply chain management systems will transform business processesleading to increased profits across the board.Answer: b Difficulty:Hard Reference: p. 71-73Analysis in terms of analyzing and appraising75 (Evaluate)You manage the Information Systems department at a small startup Internet advertiser.You need to set up an inexpensive system that allows customers to see real-timestatistics such as views and click-throughs about their current banner ads. Which typeof system will most efficiently provide a solution?a.CRMb.Enterprise systemc.Extranetd.IntranetAnswer: c Difficulty:Medium Reference: p. 71-73Evaluate in terms of assess and choose76. (Synthesis)You work for a highly successful advertiser that is just about to expand nationally. Of utmost importance will be fin ding a way to store and disseminate their client’sconstantly updating branding and style guides, which include multiple image filesand text documents, to all of their branches. What system will best serve these needs?a.An intranet with KMS capabilitiesb.An extranet with KMS capabilitiesc. A TPS with KMS capabilitiesd. A sales and marketing information systemAnswer: b Difficulty:Hard Reference:Synthesize in terms of bringing information together77 EvaluateWhat is one of the biggest drawbacks in having separate information systems for separate business functionsa.Cost in upgrading to an enterprise systemck of speed in communicationc.Redundancy of informationck of communication between systemsAnswer: c Difficulty:Hard Reference: p. 58Evaluate in terms of appraise78 (Synthesis)You have been hired by a non-profit agency to implement a system to handle their donations. Event fund-raisers need to be able to quickly access a donor’s informationand history. The marketing department needs to be able to create customized mailinglists, in order to send different messages to different types of donors. What system(s)will best meet these needs?a.TPSb.TPS with DSSc.TPS with MISd.TPS with ESSAnswer: c Difficulty:Hard Reference:Synthesis in terms of bringing information together79 (Synthesis)You have been hired by Inspiration Inc, to help improve their profit margin. Inspiration Inc. is a business communications consultancy that services many clients in differentindustries throughout the U.S. The end products of the company are customizedrecommendations for the best use of a client’s existing resources for improvinginternal communications, typically delivered via documentation in different media.The company has approximately 100 consultants all of whom are located in theircentral headquarters in Chicago. What system do you recommend to improve thecompany’s business processes and increase their profit margin?a.Extranet, to enable quick collaboration over the Internet , minimize the timespent communicating with the client, and minimize the amount of paperworkneededb.CRM, to maintain easily accessible customer records to minimize the time spentlooking for client datac.KMS, for minimizing redundant work on similar clientsd.Marketing system, for improving sales levelsAnswer: a Difficulty:Hard Reference:Synthesis in terms of bringing information togetherFill In the Blanks80.A(n) business process is a set of logically related activities for accomplishing a specificbusiness result.Difficulty: Easy Reference: p. 4381. A firm depends heavily on its environment to supply capital, labor, customers, newtechnology, services and products, stable markets and legal systems, and general educationalresources.Difficulty: Medium Reference: p. 4582.Enterprise applications span the entire firm, integrating information from multiple functionsand business processes to enhance the performance of the organization as a whole.Difficulty: Medium Reference: p. 5783.A(n) decision-support system is used by middle management to combine data andsophisticated analytical models or data analysis tools to support semistructured andunstructured decision making.Difficulty: Easy Reference: p. 5484.The “economic order quantity” formul a calculates the least expensive quantity to reorder forrestocking inventory.Difficulty: Medium Reference: p. 4985.The human resources function is responsible for attracting, developing, and maintaining thefirm’s workforce.Difficulty: Easy Reference: p. 5086.The total elapsed time from the time a purchase requisition is generated to the time thepayment for the purchase is made is called the requisition-to-pay cycle time.Difficulty: Hard Reference: p. 5987.Supply chain management systems are one type of interorganizational system because theyautomate the flow of information across organizational boundaries.Difficulty: Medium Reference: p. 6088.Cross-docking enables goods earmarked for a specific customer to move directly from thereceiving dock to the shipping dock without being checked into the system and picked from inventory.Difficulty: Hard Reference: p. 6189.Programmers are highly trained technical specialists who write the software instructions forcomputers.Difficulty: Easy Reference: p. 6490.End users are representatives of departments outside of the information systems groupfor whom applications are developed.Difficulty: Easy Reference: p. 64Essay Questions91.Identify and discuss the major types of systems in a business from a constituency perspective.What is the relationship between these systems?There are four major types of information systems in contemporary organizations.1.Transaction processing systems, such as payroll or order processing, trackthe flow of the daily routine transactions that are necessary to conductbusiness.2.Management-level systems (MIS) provide the management control levelwith reports and access to the organization’s current performance andhistorical records. Most MIS reports condense information from TPS andare not highly analytical.3.Decision-support systems (DSS) support management decisions when thesedecisions are unique, rapidly changing, and not specified easily in advance.They have more advanced analytical models and data analysis capabilitiesthan MIS and often draw on information from external as well as internalsources.4.Executive support systems (ESS) support senior management by providingdata of greatest importance to senior management decision makers, often inthe form of graphs and charts delivered via portals. They have limitedanalytical capabilities but can draw on sophisticated graphics software andmany sources of internal and external information.The various types of systems in the organization exchange data with one another. TPS are amajor source of data for other systems, especially MIS and DSS. ESSs primarily receivedata from lower-level systems.92.(Evaluation)In your opinion, what are at least three factors that contribute to the difficulty of integratingsystems for different organizational levels and functions within an organization? Supportyour answer.One answer might be similar to this: A business firm is not a simple mechanism, and firmsthat have been in business any length of time will have highly individualized ways ofconducting common business procedures. Even though software programs can becustomized, it will be necessary for the business to change because new procedures arealways required by new software, and these changes are expensive partly because of the timeinvolved. On the other hand, if the company decides to write software to fit the specializedmethods it has developed to conduct its business, it will most certainly find this process to bemuch more expensive and technologically difficult than anyone imagined! Though manycompanies do not realize it, it will be necessary for them to map and to understand theirsystems before they will be able to integrate them. This is another time-consuming andexpensive process, and is not easy to achieve.Evaluation in terms of assess and compare93.. Discuss the difference between the finance function and the accounting function.The finance function is responsible for managing the firm’s financial assets, such as cash,stocks, bonds, and other investments, to maximize the return on these financial assets. The finance function is also in charge of managing the capitalization of the firm. To determinewhether the firm is getting the best return on its investments, the finance function mustobtain a considerable amount of information from sources external to the firm.The accounting function is responsible for maintaining and managing the firm’s financialrecords – receipts, disbursements, depreciation, and payroll – to account for the flow of funds in a firm. The accounting function obtains information from sources internal to the firm. 94.Describe the information systems supporting the major business functions: sales andmarketing, manufacturing and production, finance and accounting, and human resources.•Sales and marketing help the firm identify customers for the firm’s products or services, develop products and services to meet customers’ needs,promote the products and services, sell the products and services, andprovide ongoing customer support.•Manufacturing and production systems deal with the planning, development, and production of products and services, and controlling the flow ofproduction.•Finance and accounting systems keep track of the firm’s financial assets and fund flows.•Human resources systems maintain employee records; track employee skills, job performance, and training; and support planning for employeecompensation and career development.95.(Synthesis, Evaluation)Apex Vacuum, a family-owned manufacturer of budget vacuums, has grown exponentiallyover the last few years. However, they are having difficulty in preparing for future growth.The only information system used at Apex is an antiquated accounting system. The company has one manufacturing plant located in Arkansas, and three warehouses, in Arkansas,Delaware, and California. The Apex sales force is national, and Apex purchases about athird of its vacuum parts and materials from a single overseas supplier. You have been hired to recommend the information systems Apex should implement in order to maintain theircompetitive edge. However, there is not enough money for a full-blown, cross-functionalenterprise application, and you will need to limit the first step to a single functional area or constituency. What will you choose, and why?A TPS focusing on production and manufacturing to keep production costs low whilemaintaining quality, and for communicating with other possible vendors. The TPS wouldlater be used to feed MIS and other higher level systems.Synthesis in terms of arrange, propose. Evaluation in terms of appraise, defend.。