Solution Manual for Introduction to Information Systems: People, Technology and Processes, 3rd Edition
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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
1
Chapter 1
Information Systems and People
Learning Objectives
1. Describe the main roles that information systems play in organizations.
2. Compare the terms data, information, and knowledge, and describe three
characteristics that make information valuable.
3. Describe the four main components of an information system and the role that
each plays.
4. Identify several research areas that are studied in the discipline of management
information systems (MIS).
5. Provide examples of how business, nonprofit, and government managers, as well
as information technology departments, depend on information systems
knowledge.
6. Explain how information systems present both promises and perils, and pose
ethical questions.
Solutions to Chapter Review Questions
1-1. What are the six primary roles of information systems in organizations? How
are information systems used in each context?
Information systems play critical roles in (1) managing operations, (2) supporting
customer interactions, (3) making decisions, (4) collaborating on teams,
(5) gaining competitive advantage, and (6) improving individual productivity.
In operations management, information systems are used to manage assets and
inventories; track employee payroll, taxes, benefits, and timesheets; process
transactions; track accounts payable and accounts receivable; procure goods and
services; and pay suppliers. Information systems that support customer
interactions include customer relationship management systems, web-based front
offices, online self-service applications, modern point-of-sale systems and self-
service checkouts. Information systems support data-driven decision making by
using both internal organizational data and external data from partners, suppliers
and public sources. Smart managers use aggregated data to identify trends and
patterns rather than rely on gut instincts.
Instructor’s Manual
Chapter 1, Information Systems and People
1
Chapter 1
Information Systems and People
Learning Objectives
1. Describe the main roles that information systems play in organizations.
2. Compare the terms data, information, and knowledge, and describe three
characteristics that make information valuable.
3. Describe the four main components of an information system and the role that
each plays.
4. Identify several research areas that are studied in the discipline of management
information systems (MIS).
5. Provide examples of how business, nonprofit, and government managers, as well
as information technology departments, depend on information systems
knowledge.
6. Explain how information systems present both promises and perils, and pose
ethical questions.
Solutions to Chapter Review Questions
1-1. What are the six primary roles of information systems in organizations? How
are information systems used in each context?
Information systems play critical roles in (1) managing operations, (2) supporting
customer interactions, (3) making decisions, (4) collaborating on teams,
(5) gaining competitive advantage, and (6) improving individual productivity.
In operations management, information systems are used to manage assets and
inventories; track employee payroll, taxes, benefits, and timesheets; process
transactions; track accounts payable and accounts receivable; procure goods and
services; and pay suppliers. Information systems that support customer
interactions include customer relationship management systems, web-based front
offices, online self-service applications, modern point-of-sale systems and self-
service checkouts. Information systems support data-driven decision making by
using both internal organizational data and external data from partners, suppliers
and public sources. Smart managers use aggregated data to identify trends and
patterns rather than rely on gut instincts.
Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
1
Chapter 1
Information Systems and People
Learning Objectives
1. Describe the main roles that information systems play in organizations.
2. Compare the terms data, information, and knowledge, and describe three
characteristics that make information valuable.
3. Describe the four main components of an information system and the role that
each plays.
4. Identify several research areas that are studied in the discipline of management
information systems (MIS).
5. Provide examples of how business, nonprofit, and government managers, as well
as information technology departments, depend on information systems
knowledge.
6. Explain how information systems present both promises and perils, and pose
ethical questions.
Solutions to Chapter Review Questions
1-1. What are the six primary roles of information systems in organizations? How
are information systems used in each context?
Information systems play critical roles in (1) managing operations, (2) supporting
customer interactions, (3) making decisions, (4) collaborating on teams,
(5) gaining competitive advantage, and (6) improving individual productivity.
In operations management, information systems are used to manage assets and
inventories; track employee payroll, taxes, benefits, and timesheets; process
transactions; track accounts payable and accounts receivable; procure goods and
services; and pay suppliers. Information systems that support customer
interactions include customer relationship management systems, web-based front
offices, online self-service applications, modern point-of-sale systems and self-
service checkouts. Information systems support data-driven decision making by
using both internal organizational data and external data from partners, suppliers
and public sources. Smart managers use aggregated data to identify trends and
patterns rather than rely on gut instincts.
Instructor’s Manual
Chapter 1, Information Systems and People
1
Chapter 1
Information Systems and People
Learning Objectives
1. Describe the main roles that information systems play in organizations.
2. Compare the terms data, information, and knowledge, and describe three
characteristics that make information valuable.
3. Describe the four main components of an information system and the role that
each plays.
4. Identify several research areas that are studied in the discipline of management
information systems (MIS).
5. Provide examples of how business, nonprofit, and government managers, as well
as information technology departments, depend on information systems
knowledge.
6. Explain how information systems present both promises and perils, and pose
ethical questions.
Solutions to Chapter Review Questions
1-1. What are the six primary roles of information systems in organizations? How
are information systems used in each context?
Information systems play critical roles in (1) managing operations, (2) supporting
customer interactions, (3) making decisions, (4) collaborating on teams,
(5) gaining competitive advantage, and (6) improving individual productivity.
In operations management, information systems are used to manage assets and
inventories; track employee payroll, taxes, benefits, and timesheets; process
transactions; track accounts payable and accounts receivable; procure goods and
services; and pay suppliers. Information systems that support customer
interactions include customer relationship management systems, web-based front
offices, online self-service applications, modern point-of-sale systems and self-
service checkouts. Information systems support data-driven decision making by
using both internal organizational data and external data from partners, suppliers
and public sources. Smart managers use aggregated data to identify trends and
patterns rather than rely on gut instincts.
Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
2
Collaboration and teamwork have considerable support from information systems
such as web applications that enable virtual meeting spaces and social networking
sites. Microsoft’s SharePoint is an example of information technology that
supports project teams with document management, shared calendars, and
communication features. The innovative use of an information system can provide
a competitive advantage until competitors jump on the bandwagon. Consider how
Apple’s iPhone got the jump on smartphone competitors with Siri, the intelligent
personal assistant. The selection of information systems and technology to
improve personal productivity ranges from use of email and smartphones to word
processing programs and contact databases. The challenge for most people is to
pick easy-to-use software and devices that integrate with existing applications.
1-2. How is data different from information? How is information different from
knowledge? What are examples of each?
Data refers to individual facts or pieces of information, and information refers to
data or facts that are assembled and analyzed to add meaning and usefulness. A
patient’s temperature reading is one piece of data; however, when combined with
other pieces of data in a patient records information system, it becomes
information that is useful for diagnostic purposes. Aggregated with data from
other patients, it can be further refined and analyzed to become knowledge of a
flu outbreak that is even more useful.
1-3. What are the three characteristics that make information valuable? Why is
each a critical attribute of information?
The three characteristics that make information valuable are timeliness, accuracy,
and completeness. Timeliness is a critical attribute for certain kinds of
information, such as stock prices. Accuracy is a critical attribute for some
information, such as a patient’s temperature reading. On the other hand, extreme
accuracy may not be necessary for certain kinds of information, such as a
competitor’s price for a rival product. Completeness is a critical attribute for some
information, such as a patient’s list of current medications. In the context of a
marketing survey, complete information adds value as a means to avoid bias or
spin.
1-4. What are the four components of an information system? Describe each
component. What are the five functions that these components provide?
The four components of an information system are (1) people, (2) technology, (3)
processes, and (4) data. People interact with information systems in various roles
such as systems analysis and developers, managers, users, customers, and
contributors. Information technology includes hardware, software, and
telecommunications equipment. Business processes are activities designed to
achieve a task, such as automatically generating form letters to students. Data are
Instructor’s Manual
Chapter 1, Information Systems and People
2
Collaboration and teamwork have considerable support from information systems
such as web applications that enable virtual meeting spaces and social networking
sites. Microsoft’s SharePoint is an example of information technology that
supports project teams with document management, shared calendars, and
communication features. The innovative use of an information system can provide
a competitive advantage until competitors jump on the bandwagon. Consider how
Apple’s iPhone got the jump on smartphone competitors with Siri, the intelligent
personal assistant. The selection of information systems and technology to
improve personal productivity ranges from use of email and smartphones to word
processing programs and contact databases. The challenge for most people is to
pick easy-to-use software and devices that integrate with existing applications.
1-2. How is data different from information? How is information different from
knowledge? What are examples of each?
Data refers to individual facts or pieces of information, and information refers to
data or facts that are assembled and analyzed to add meaning and usefulness. A
patient’s temperature reading is one piece of data; however, when combined with
other pieces of data in a patient records information system, it becomes
information that is useful for diagnostic purposes. Aggregated with data from
other patients, it can be further refined and analyzed to become knowledge of a
flu outbreak that is even more useful.
1-3. What are the three characteristics that make information valuable? Why is
each a critical attribute of information?
The three characteristics that make information valuable are timeliness, accuracy,
and completeness. Timeliness is a critical attribute for certain kinds of
information, such as stock prices. Accuracy is a critical attribute for some
information, such as a patient’s temperature reading. On the other hand, extreme
accuracy may not be necessary for certain kinds of information, such as a
competitor’s price for a rival product. Completeness is a critical attribute for some
information, such as a patient’s list of current medications. In the context of a
marketing survey, complete information adds value as a means to avoid bias or
spin.
1-4. What are the four components of an information system? Describe each
component. What are the five functions that these components provide?
The four components of an information system are (1) people, (2) technology, (3)
processes, and (4) data. People interact with information systems in various roles
such as systems analysis and developers, managers, users, customers, and
contributors. Information technology includes hardware, software, and
telecommunications equipment. Business processes are activities designed to
achieve a task, such as automatically generating form letters to students. Data are
Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
3
facts represented by values, which have meaning in a certain context. Data may
be numbers, character strings, or symbols. These four components are used to
collect, process, manage, analyze, and distribute information.
1-5. How are information systems important to managers in a variety of
functional business units? What are examples of ways that information
systems are important to the success of a marketing department, a human
resources department, and a small business owner?
Information systems are important to business managers because they support the
company’s business activities throughout every functional department.
Information systems are used to streamline processes, reduce costs, increase
revenue, or support a strategic initiative. A marketing department uses
information systems to develop data-driven marketing strategies, analyze ROI for
marketing campaigns, and leverage social networking trends to create interest in
the company’s products. A human resources department uses information systems
to deliver online learning programs to reach more employees. A small business
owner can take advantage of the decline in cost for many information systems,
such as inexpensive intelligent dialing software that enables call center staff to
more efficiently reach mobile phone customers.
1-6. What are the functional areas that are common to most information
technology departments?
Common functional areas in an information systems department include end-user
support and help desk, systems administration, data center operations, enterprise
systems, and telecommunications and network services.
1-7. What is the role of the chief information officer?
The chief information officer (CIO) oversees the IT department, and helps to
shape the organization’s strategic goals and ensure that the information systems
support them. The CIO might report directly to the CEO or the vice president of
finance and administration.
1-8. How do information systems offer promises to organizations? What are some
of the perils of information systems? What are some of the ethical questions
associated with the use of information systems?
Students should be able to discuss how information systems offer promises to
organizations by giving them the opportunity or the possibility to change the way
they operate. The perils of information systems include the increased risk of
privacy breaches and amplification effects that result from interconnected
systems. A number of ethical questions are associated with the use of information
systems: Who is responsible for the damage caused by a privacy breach? Who is
Instructor’s Manual
Chapter 1, Information Systems and People
3
facts represented by values, which have meaning in a certain context. Data may
be numbers, character strings, or symbols. These four components are used to
collect, process, manage, analyze, and distribute information.
1-5. How are information systems important to managers in a variety of
functional business units? What are examples of ways that information
systems are important to the success of a marketing department, a human
resources department, and a small business owner?
Information systems are important to business managers because they support the
company’s business activities throughout every functional department.
Information systems are used to streamline processes, reduce costs, increase
revenue, or support a strategic initiative. A marketing department uses
information systems to develop data-driven marketing strategies, analyze ROI for
marketing campaigns, and leverage social networking trends to create interest in
the company’s products. A human resources department uses information systems
to deliver online learning programs to reach more employees. A small business
owner can take advantage of the decline in cost for many information systems,
such as inexpensive intelligent dialing software that enables call center staff to
more efficiently reach mobile phone customers.
1-6. What are the functional areas that are common to most information
technology departments?
Common functional areas in an information systems department include end-user
support and help desk, systems administration, data center operations, enterprise
systems, and telecommunications and network services.
1-7. What is the role of the chief information officer?
The chief information officer (CIO) oversees the IT department, and helps to
shape the organization’s strategic goals and ensure that the information systems
support them. The CIO might report directly to the CEO or the vice president of
finance and administration.
1-8. How do information systems offer promises to organizations? What are some
of the perils of information systems? What are some of the ethical questions
associated with the use of information systems?
Students should be able to discuss how information systems offer promises to
organizations by giving them the opportunity or the possibility to change the way
they operate. The perils of information systems include the increased risk of
privacy breaches and amplification effects that result from interconnected
systems. A number of ethical questions are associated with the use of information
systems: Who is responsible for the damage caused by a privacy breach? Who is
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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
4
responsible when false, damaging, or illegal videos are shared on the Internet? Is
it unethical to broadcast an email message received by mistake?
Solutions to Projects and Discussion Questions
1-9. As customers, students, patients, taxpayers, and citizens, we are surrounded
by information systems that support customer interactions. Identify and
describe two such systems that you have used. Briefly, describe the types of
customer interactions you have experienced with these systems and compare
what you found to be important features of each one. Are there features or
function that you would change or add to either system?
Answers will vary, as the object of this question is to prompt the student to
consider features of an information system. An example is a student registration
system that allows students to browse class offerings, review course descriptions
and required textbooks, and register for classes.
1-10. Web conferencing has been available for many years. In this market space,
products from Adobe, Cisco, Citrix, IBM, and Microsoft compete with lower-
cost or free web-conferencing applications from AnyMeeting, Yugma, and
others. What are some of the advantages of using a virtual meeting space?
Are there disadvantages? Search the web to learn more about online meeting
rooms and prepare a 5-minute presentation of your findings.
The benefits of virtual meetings include saved time and money, increased
productivity, increased meeting participation, and the ability to record meetings
for presentation at a later date. On the other hand, virtual meeting participants
may be less likely to build strong, personal relationships, and they may be more
likely to experience distractions and engage in multi-tasking (i.e., checking email)
during the meeting. Acquiring the necessary technology and training in the use of
that technology are additional drawbacks of virtual meetings.
1-11. Information systems play a very large role in decision making, and many
would argue that you can always use more information to make better
decisions. But sometimes digging deeply for more information leads to
troubling ethical dilemmas. Visit 23andme.com, the website of a company
that offers to read your DNA from saliva for $99 and provide reports about
disease risk factors, ancestral lineage, and more. If you learn of a significant
health risk, should you tell siblings who chose not to investigate their own
DNA? Should you tell your fiancée? List what factors should be taken into
account when making decisions about whether to obtain information like
this, and how to use it.
Instructor’s Manual
Chapter 1, Information Systems and People
4
responsible when false, damaging, or illegal videos are shared on the Internet? Is
it unethical to broadcast an email message received by mistake?
Solutions to Projects and Discussion Questions
1-9. As customers, students, patients, taxpayers, and citizens, we are surrounded
by information systems that support customer interactions. Identify and
describe two such systems that you have used. Briefly, describe the types of
customer interactions you have experienced with these systems and compare
what you found to be important features of each one. Are there features or
function that you would change or add to either system?
Answers will vary, as the object of this question is to prompt the student to
consider features of an information system. An example is a student registration
system that allows students to browse class offerings, review course descriptions
and required textbooks, and register for classes.
1-10. Web conferencing has been available for many years. In this market space,
products from Adobe, Cisco, Citrix, IBM, and Microsoft compete with lower-
cost or free web-conferencing applications from AnyMeeting, Yugma, and
others. What are some of the advantages of using a virtual meeting space?
Are there disadvantages? Search the web to learn more about online meeting
rooms and prepare a 5-minute presentation of your findings.
The benefits of virtual meetings include saved time and money, increased
productivity, increased meeting participation, and the ability to record meetings
for presentation at a later date. On the other hand, virtual meeting participants
may be less likely to build strong, personal relationships, and they may be more
likely to experience distractions and engage in multi-tasking (i.e., checking email)
during the meeting. Acquiring the necessary technology and training in the use of
that technology are additional drawbacks of virtual meetings.
1-11. Information systems play a very large role in decision making, and many
would argue that you can always use more information to make better
decisions. But sometimes digging deeply for more information leads to
troubling ethical dilemmas. Visit 23andme.com, the website of a company
that offers to read your DNA from saliva for $99 and provide reports about
disease risk factors, ancestral lineage, and more. If you learn of a significant
health risk, should you tell siblings who chose not to investigate their own
DNA? Should you tell your fiancée? List what factors should be taken into
account when making decisions about whether to obtain information like
this, and how to use it.
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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
5
Answers to this question will vary based on the student’s perspective and
experience. Potential factors that students may identify are the physical and
psychological health of their friends and family, their own physical and
psychological health, and potential impact to past and future relationships.
1-12. One way to be more productive and manage time efficiently, is to use the
calendar feature of your email system. If you use Microsoft Outlook, visit
Microsoft.com and search for “Outlook tutorial” or search the Internet for
an Outlook “how to” web page to learn how to set up your calendar. Then
create a calendar for the semester that shows class times as well as test dates
and project due dates. Which reminder option did you select for class times?
Which reminder option did you select for project due dates? Briefly, describe
several benefits of using the Outlook calendar feature.
Answers will vary, as the object of this question is to require students to work
with software that enhances productivity. At a minimum, students should be able
to list several benefits of the Outlook calendar feature that include the ability to
mark items such as appointments, meetings, or all-day events, and specify items
as recurring or one-time events. The scheduling option is used to invite others to a
meeting. Reminders can be set anywhere from 15 minutes up to 5 days prior to
an appointment.
1-13. Although Internet users bemoan its annoying popup ads, Netflix has grown
to more than 80 million customers who can stream movies and TV episodes to
any Internet-connected device or request DVDs by mail. Describe Netflix in
terms of (1) the types of information technology it uses and (2) its customer-
facing business processes.
Answers supplied by students will vary, but generally should be drawn from
chapter information contained in Section 4: The Components of an Information
System. Answers should include brief statements relating to people, technology,
processes, and data.
Instructor’s Manual
Chapter 1, Information Systems and People
5
Answers to this question will vary based on the student’s perspective and
experience. Potential factors that students may identify are the physical and
psychological health of their friends and family, their own physical and
psychological health, and potential impact to past and future relationships.
1-12. One way to be more productive and manage time efficiently, is to use the
calendar feature of your email system. If you use Microsoft Outlook, visit
Microsoft.com and search for “Outlook tutorial” or search the Internet for
an Outlook “how to” web page to learn how to set up your calendar. Then
create a calendar for the semester that shows class times as well as test dates
and project due dates. Which reminder option did you select for class times?
Which reminder option did you select for project due dates? Briefly, describe
several benefits of using the Outlook calendar feature.
Answers will vary, as the object of this question is to require students to work
with software that enhances productivity. At a minimum, students should be able
to list several benefits of the Outlook calendar feature that include the ability to
mark items such as appointments, meetings, or all-day events, and specify items
as recurring or one-time events. The scheduling option is used to invite others to a
meeting. Reminders can be set anywhere from 15 minutes up to 5 days prior to
an appointment.
1-13. Although Internet users bemoan its annoying popup ads, Netflix has grown
to more than 80 million customers who can stream movies and TV episodes to
any Internet-connected device or request DVDs by mail. Describe Netflix in
terms of (1) the types of information technology it uses and (2) its customer-
facing business processes.
Answers supplied by students will vary, but generally should be drawn from
chapter information contained in Section 4: The Components of an Information
System. Answers should include brief statements relating to people, technology,
processes, and data.
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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
6
1-14. Consider the information that is maintained by a bank. In addition to
customer records, the bank maintains records on accounts and loans. Figure
1-20 and Figure 1-21 (below) are two examples of database tables for a
regional bank. How might this data be aggregated and analyzed to create
information and knowledge?
Figure 1-20
Customers table
CustomerID Name Address City State Zip
100001 Don Baker 1215 E. New York Aurora IL 60504
100002 Yuxiang Jiang 1230 Douglas Road Oswego IL 60543
100003 Emily Brown 632 Fox Valley Road Aurora IL 60504
100004 Mario Sanchez 24 E. Ogden Naperville IL 60563
Figure 1-21
Accounts table
CustomerID AccountNumber AccountType DateOpened Balance
100001 4875940 Checking 10/19/1971 2500.00
100001 1660375 Savings 08/10/1973 1200.00
100002 1783032 Savings 05/15/1987 500.00
100002 4793289 Checking 05/15/1987 3200.00
100003 6213690 Checking 02/14/1996 6700.00
100004 1890571 Savings 10/16/2007 5300.00
100004 8390126 Checking 12/02/2008 2700.00
Answers will vary but the student should be able to provide several examples. For
instance, the student may discuss how customer data may be aggregated with
account data to create information such as a table showing customers in zip code
60504 having a savings account, and how customer data and account data may be
aggregated and analyzed to create higher-level knowledge such as which
customers may be prospects for a CD savings account or a consumer loan.
1-15. Parking is a problem at many universities across the United States. Is it a
problem on your campus? Describe the business process to acquire a parking
pass at your school. Can you get a parking pass online? Can you get one in
person? How does your process compare to that of a smaller school that uses a
paper form to apply for a parking permit? How can that organization use an
information system to improve this business process? Can you think of a
business process at your college or university that can be improved with an
information system?
Answers will vary depending on the business process evaluated. Students should
be able to provide a comprehensive description of the process they use to acquire
a parking pass and a comparison to the process used at a smaller school. They
may identify a process they have experienced that can be improved or eliminated
with the help of information systems.
Instructor’s Manual
Chapter 1, Information Systems and People
6
1-14. Consider the information that is maintained by a bank. In addition to
customer records, the bank maintains records on accounts and loans. Figure
1-20 and Figure 1-21 (below) are two examples of database tables for a
regional bank. How might this data be aggregated and analyzed to create
information and knowledge?
Figure 1-20
Customers table
CustomerID Name Address City State Zip
100001 Don Baker 1215 E. New York Aurora IL 60504
100002 Yuxiang Jiang 1230 Douglas Road Oswego IL 60543
100003 Emily Brown 632 Fox Valley Road Aurora IL 60504
100004 Mario Sanchez 24 E. Ogden Naperville IL 60563
Figure 1-21
Accounts table
CustomerID AccountNumber AccountType DateOpened Balance
100001 4875940 Checking 10/19/1971 2500.00
100001 1660375 Savings 08/10/1973 1200.00
100002 1783032 Savings 05/15/1987 500.00
100002 4793289 Checking 05/15/1987 3200.00
100003 6213690 Checking 02/14/1996 6700.00
100004 1890571 Savings 10/16/2007 5300.00
100004 8390126 Checking 12/02/2008 2700.00
Answers will vary but the student should be able to provide several examples. For
instance, the student may discuss how customer data may be aggregated with
account data to create information such as a table showing customers in zip code
60504 having a savings account, and how customer data and account data may be
aggregated and analyzed to create higher-level knowledge such as which
customers may be prospects for a CD savings account or a consumer loan.
1-15. Parking is a problem at many universities across the United States. Is it a
problem on your campus? Describe the business process to acquire a parking
pass at your school. Can you get a parking pass online? Can you get one in
person? How does your process compare to that of a smaller school that uses a
paper form to apply for a parking permit? How can that organization use an
information system to improve this business process? Can you think of a
business process at your college or university that can be improved with an
information system?
Answers will vary depending on the business process evaluated. Students should
be able to provide a comprehensive description of the process they use to acquire
a parking pass and a comparison to the process used at a smaller school. They
may identify a process they have experienced that can be improved or eliminated
with the help of information systems.
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Chapter 1, Information Systems and People
7
1-16. A typical information technology department is comprised of common
functional areas, and each requires skills and competencies unique to that
area. Search the web or visit an online job search site such as
careerbuilder.com or monster.com to learn more about the IT functional
areas described in Figure 1-15. Select two functional areas and compare job
postings for each. In a brief report, contrast the differences in education,
experience, and technical certification that are required for each job.
Answers will vary depending on the websites accessed. Job titles generally should
be drawn from information contained in Figure 1-16. Students may identify
network and security certifications such as CCNA (Cisco Certified Network
Associate), CCNP (Cisco Certified Network Professional), and CompTIA’s A+,
Network+, and Security+ certifications.
1-17. In June, 2010, a security breach in the AT&T network exposed the email
addresses of 114,000 Apple iPad 3G owners, many of whom are well-known
business executives. The list of subscribers that were impacted by the breach
included Diane Sawyer of ABC News, New York City Mayor Michael
Bloomberg, and former White House Chief of Staff and Chicago Mayor Rahm
Emanuel. Work in a small group with classmates to consider the severity of this
leak of private information. In this case, is the severity of the breach measured
by the number of affected individuals or by the high-profile status of some of the
subscribers? What criteria are best for judging the severity of a data leak?
Prepare a brief summary of your group discussion.
Answers will vary but students should weigh the factors that they consider
important in judging the scope of the damage, and defend their criteria. The
extent of harm done directly and indirectly should be considered, whether or not
high profile individuals are involved.
1-18. Information systems are fundamental to the success of every functional
business unit within an organization, from marketing to manufacturing to
finance. Work in a small group with classmates to share your career choice
and discuss how information systems support processes within your field.
Can you name types of software applications that are used in your chosen
career?
Answers will vary depending on students’ career choices. Students should discuss
how information systems support processes within a given field in the context of
the different roles information systems play in different organizations. Accounting
majors may identify QuickBooks or Peachtree accounting programs. Marketing
majors may identify email marketing or Internet marketing software programs.
Information technology majors may identify project management software
programs.
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7
1-16. A typical information technology department is comprised of common
functional areas, and each requires skills and competencies unique to that
area. Search the web or visit an online job search site such as
careerbuilder.com or monster.com to learn more about the IT functional
areas described in Figure 1-15. Select two functional areas and compare job
postings for each. In a brief report, contrast the differences in education,
experience, and technical certification that are required for each job.
Answers will vary depending on the websites accessed. Job titles generally should
be drawn from information contained in Figure 1-16. Students may identify
network and security certifications such as CCNA (Cisco Certified Network
Associate), CCNP (Cisco Certified Network Professional), and CompTIA’s A+,
Network+, and Security+ certifications.
1-17. In June, 2010, a security breach in the AT&T network exposed the email
addresses of 114,000 Apple iPad 3G owners, many of whom are well-known
business executives. The list of subscribers that were impacted by the breach
included Diane Sawyer of ABC News, New York City Mayor Michael
Bloomberg, and former White House Chief of Staff and Chicago Mayor Rahm
Emanuel. Work in a small group with classmates to consider the severity of this
leak of private information. In this case, is the severity of the breach measured
by the number of affected individuals or by the high-profile status of some of the
subscribers? What criteria are best for judging the severity of a data leak?
Prepare a brief summary of your group discussion.
Answers will vary but students should weigh the factors that they consider
important in judging the scope of the damage, and defend their criteria. The
extent of harm done directly and indirectly should be considered, whether or not
high profile individuals are involved.
1-18. Information systems are fundamental to the success of every functional
business unit within an organization, from marketing to manufacturing to
finance. Work in a small group with classmates to share your career choice
and discuss how information systems support processes within your field.
Can you name types of software applications that are used in your chosen
career?
Answers will vary depending on students’ career choices. Students should discuss
how information systems support processes within a given field in the context of
the different roles information systems play in different organizations. Accounting
majors may identify QuickBooks or Peachtree accounting programs. Marketing
majors may identify email marketing or Internet marketing software programs.
Information technology majors may identify project management software
programs.
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Chapter 1, Information Systems and People
8
Solutions to Application Exercises
1-19. Excel Application: Manpower Planning Spreadsheet
Precision Products specializes in custom-manufactured metal parts. The production
manager has asked you to create an Excel spreadsheet to help manage operations.
The company needs a way to calculate staffing requirements (number of employees)
based on different levels of production. The five manufacturing operations are
fabrication, welding, machining, assembly, and packaging. One unit of production
requires 1.5 hours for fabrication, 2.25 hours for welding, 0.7 hours for machining,
3.2 hours for assembly, and 0.5 hours for packaging. Create the Excel spreadsheet
shown in Figure 1-18 to calculate the weekly manpower required, at 40 hours per
week, for production levels of 200, 300, 400, and 500 units. How does the total
required for each level of production change if Precision Products operates a 45-
hour production schedule?
In the file Excel Ch01Ex01, students should go to the cell containing 40 (Weekly
Manpower) hours and change it to 45; the formula would then recalculate the Total
Manpower amount.
Figure 1-18
Managing operations at Precision Products using Excel.
Instructor’s Manual
Chapter 1, Information Systems and People
8
Solutions to Application Exercises
1-19. Excel Application: Manpower Planning Spreadsheet
Precision Products specializes in custom-manufactured metal parts. The production
manager has asked you to create an Excel spreadsheet to help manage operations.
The company needs a way to calculate staffing requirements (number of employees)
based on different levels of production. The five manufacturing operations are
fabrication, welding, machining, assembly, and packaging. One unit of production
requires 1.5 hours for fabrication, 2.25 hours for welding, 0.7 hours for machining,
3.2 hours for assembly, and 0.5 hours for packaging. Create the Excel spreadsheet
shown in Figure 1-18 to calculate the weekly manpower required, at 40 hours per
week, for production levels of 200, 300, 400, and 500 units. How does the total
required for each level of production change if Precision Products operates a 45-
hour production schedule?
In the file Excel Ch01Ex01, students should go to the cell containing 40 (Weekly
Manpower) hours and change it to 45; the formula would then recalculate the Total
Manpower amount.
Figure 1-18
Managing operations at Precision Products using Excel.
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1-20. Access Application: Information Systems in Business
Seconds Later, a clothing consignment shop, is fast becoming a favorite place to
shop. The owner has asked you to create an Access database to help manage
inventory. Download and import the information provided in the spreadsheet
Ch01Ex02 to create a database with two tables (Consignors and Items). The owner
wants you to add a calculated field to the items table that shows the net selling price
after he has paid the commission to the consignors. Start with two reports: an
Inventory Report and a Consignor Report. The Inventory Report summarizes the
inventory by item type. This report will include the number of items and the total
selling price for each item type, plus the total sales value of each inventory type. It
will also include the total potential commission to be earned if all items are sold. The
Consignor Report will list the total number of items and the total selling price and
commission to be paid for each consignor. What other reports could you make with
this data that would be useful to the owner?
Students should produce an Access database with two tables by importing data from the
Excel file named Ch01Ex02. In Access 2010, you can create table fields that calculate
values. In Access 2007, calculated fields are created in a query. Students should create
queries to produce the Inventory Report and the Consignor Report, using the Property
sheet caption field to name the columns and the format function to show values as
currency.
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Chapter 1, Information Systems and People
10
1-20. Access Application: Information Systems in Business
Seconds Later, a clothing consignment shop, is fast becoming a favorite place to
shop. The owner has asked you to create an Access database to help manage
inventory. Download and import the information provided in the spreadsheet
Ch01Ex02 to create a database with two tables (Consignors and Items). The owner
wants you to add a calculated field to the items table that shows the net selling price
after he has paid the commission to the consignors. Start with two reports: an
Inventory Report and a Consignor Report. The Inventory Report summarizes the
inventory by item type. This report will include the number of items and the total
selling price for each item type, plus the total sales value of each inventory type. It
will also include the total potential commission to be earned if all items are sold. The
Consignor Report will list the total number of items and the total selling price and
commission to be paid for each consignor. What other reports could you make with
this data that would be useful to the owner?
Students should produce an Access database with two tables by importing data from the
Excel file named Ch01Ex02. In Access 2010, you can create table fields that calculate
values. In Access 2007, calculated fields are created in a query. Students should create
queries to produce the Inventory Report and the Consignor Report, using the Property
sheet caption field to name the columns and the format function to show values as
currency.
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Chapter 1, Information Systems and People
11
Solutions to Case Study Questions
Case 1—Nasdaq’s Information Challenges: Facebook’s Botched Public Opening
and High-Frequency Trading
1-21. How has Nasdaq’s business benefited from the use of information systems?
The purpose of the first two questions for this case is to have students consider
how information systems (IS) can transform an organization. Nasdaq is a
technology company that would not be possible without IS. IS enabled Nasdaq to
enter the trading market even after the NYSE was well established, to offer
customers a full range of trading services even as a relatively new organization,
and to achieve an advantage in speed compared with other exchanges. Further, IS
are a source of revenue growth for Nasdaq, as Nasdaq has sold its technology to
other countries and the IT department directly supports Nasdaq’s new business
strategies.
1-22. What risks do information systems pose for Nasdaq OMX’s business?
The purpose of this question is to have students give a balanced consideration to
the risks of IS as well as the benefits of IS. The benefits of IS were addressed in
question 1 above, and this question addresses risks. One risk is that IS lowers the
cost of doing business for all firms in an industry, which is likely to lead to lower
prices. Nasdaq must manage this risk by finding ways to remain profitable even in
an environment of lower prices. A second risk is that IS can contribute to high
market volatility, which could lead to a loss of investor confidence and cause
instability for the entire industry. To manage this risk, Nasdaq would want to be
involved in the creation of industry-wide technical and trading standards to
achieve greater stability.
1-23. This chapter discusses the value of information. What types of information are
handled through Nasdaq systems, what are the key characteristics of this
information, and how do Nasdaq customers use this information to create value?
The purpose of this question is to have students focus on the “information” aspect
of IS. The most critical components of information handled through Nasdaq
systems are the security name, price, seller, buyer, and time of the trade. One
interesting characteristic is that this information is constantly changing. For
example, from one moment to the next, the price of a security will change and the
seller willing to sell the security at that price will change. Nasdaq customers
create value based on access to timely information, as a customer may want to
buy at a certain price, sell at a certain price, or transact on an exchange with a
certain level of commission.
Instructor’s Manual
Chapter 1, Information Systems and People
11
Solutions to Case Study Questions
Case 1—Nasdaq’s Information Challenges: Facebook’s Botched Public Opening
and High-Frequency Trading
1-21. How has Nasdaq’s business benefited from the use of information systems?
The purpose of the first two questions for this case is to have students consider
how information systems (IS) can transform an organization. Nasdaq is a
technology company that would not be possible without IS. IS enabled Nasdaq to
enter the trading market even after the NYSE was well established, to offer
customers a full range of trading services even as a relatively new organization,
and to achieve an advantage in speed compared with other exchanges. Further, IS
are a source of revenue growth for Nasdaq, as Nasdaq has sold its technology to
other countries and the IT department directly supports Nasdaq’s new business
strategies.
1-22. What risks do information systems pose for Nasdaq OMX’s business?
The purpose of this question is to have students give a balanced consideration to
the risks of IS as well as the benefits of IS. The benefits of IS were addressed in
question 1 above, and this question addresses risks. One risk is that IS lowers the
cost of doing business for all firms in an industry, which is likely to lead to lower
prices. Nasdaq must manage this risk by finding ways to remain profitable even in
an environment of lower prices. A second risk is that IS can contribute to high
market volatility, which could lead to a loss of investor confidence and cause
instability for the entire industry. To manage this risk, Nasdaq would want to be
involved in the creation of industry-wide technical and trading standards to
achieve greater stability.
1-23. This chapter discusses the value of information. What types of information are
handled through Nasdaq systems, what are the key characteristics of this
information, and how do Nasdaq customers use this information to create value?
The purpose of this question is to have students focus on the “information” aspect
of IS. The most critical components of information handled through Nasdaq
systems are the security name, price, seller, buyer, and time of the trade. One
interesting characteristic is that this information is constantly changing. For
example, from one moment to the next, the price of a security will change and the
seller willing to sell the security at that price will change. Nasdaq customers
create value based on access to timely information, as a customer may want to
buy at a certain price, sell at a certain price, or transact on an exchange with a
certain level of commission.
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Chapter 1, Information Systems and People
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1-24. What does the example of Goldman Sachs paying to locate its server in the
Nasdaq data center say about the relationship between information systems and
physical operations?
The purpose of this question is to help students understand the relationship
between technical considerations and physical operations. This theme will surface
in several cases throughout the textbook. Given the importance of timeliness to
Nasdaq customers (see question 3 above), even with high-speed IS there is a small
benefit in response time based on server location and the distance the information
must travel to confirm trades. Trades are conducted within nanoseconds so any
delays due to physical distance might be costly. Goldman Sachs is willing to pay
a premium for server location, which represents yet another IS revenue source for
Nasdaq. Even in automated operations, students will need to understand where
physical location may still make a difference for firms, workers, and customers.
Case 2—Breaking News: Twitter’s Growing Role in Emergencies and Disaster
Communications.
1-25. What are the potential benefits of Twitter and other social media for
emergency and disaster communications?
The purpose of the first two questions for this case is to have students consider
how IS can transform a public service. Although emergency and disaster
communications have developed through the years based on existing technologies
(such as an air horn for a tornado watch, or the Federal Emergency Alert System
[EAS] through television and radio), new technologies such as Twitter and social
media offer potential benefits for these communications. For example, social
media enable emergency and disaster communications to originate from multiple
locations at the same time (while an air horn or a news reporter operates from
only one location at a time). Social media also enable emergency and disaster
communications to be constantly updated in real-time.
1-26. What are the potential risks of using Twitter and other social media for
emergency and disaster communications?
The purpose of this question is to have students give a balanced consideration to
the risks of IS as well as the benefits of IS. The benefits of IS were addressed in
question 1 above, and this question addresses risks. One risk is that the IT and
telecommunications infrastructure on which social media operates could be
overloaded or cease to operate in a disaster. For example, on September 11, 2001
many mobile phone circuits in large cities were overloaded by excessive demand.
To manage this risk, providers would need to look at the robustness of their
infrastructure in the face of peak demand, and the flexibility of infrastructure to
reroute traffic if some nodes are damaged. A second risk is that because various
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Chapter 1, Information Systems and People
12
1-24. What does the example of Goldman Sachs paying to locate its server in the
Nasdaq data center say about the relationship between information systems and
physical operations?
The purpose of this question is to help students understand the relationship
between technical considerations and physical operations. This theme will surface
in several cases throughout the textbook. Given the importance of timeliness to
Nasdaq customers (see question 3 above), even with high-speed IS there is a small
benefit in response time based on server location and the distance the information
must travel to confirm trades. Trades are conducted within nanoseconds so any
delays due to physical distance might be costly. Goldman Sachs is willing to pay
a premium for server location, which represents yet another IS revenue source for
Nasdaq. Even in automated operations, students will need to understand where
physical location may still make a difference for firms, workers, and customers.
Case 2—Breaking News: Twitter’s Growing Role in Emergencies and Disaster
Communications.
1-25. What are the potential benefits of Twitter and other social media for
emergency and disaster communications?
The purpose of the first two questions for this case is to have students consider
how IS can transform a public service. Although emergency and disaster
communications have developed through the years based on existing technologies
(such as an air horn for a tornado watch, or the Federal Emergency Alert System
[EAS] through television and radio), new technologies such as Twitter and social
media offer potential benefits for these communications. For example, social
media enable emergency and disaster communications to originate from multiple
locations at the same time (while an air horn or a news reporter operates from
only one location at a time). Social media also enable emergency and disaster
communications to be constantly updated in real-time.
1-26. What are the potential risks of using Twitter and other social media for
emergency and disaster communications?
The purpose of this question is to have students give a balanced consideration to
the risks of IS as well as the benefits of IS. The benefits of IS were addressed in
question 1 above, and this question addresses risks. One risk is that the IT and
telecommunications infrastructure on which social media operates could be
overloaded or cease to operate in a disaster. For example, on September 11, 2001
many mobile phone circuits in large cities were overloaded by excessive demand.
To manage this risk, providers would need to look at the robustness of their
infrastructure in the face of peak demand, and the flexibility of infrastructure to
reroute traffic if some nodes are damaged. A second risk is that because various
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Chapter 1, Information Systems and People
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individual citizens are preparing updates, the updates may vary in depth and
accuracy. Management of this risk will be discussed in the next question.
1-27. What types of education would be necessary at the user level to make Twitter
and other social media more effective for emergency and disaster communications?
The purpose of this question is to have students consider the value chain in social
media. As social media begins to play a role in functions (such as public safety)
that were previously handled by firms, students need to understand how the
related value chains may be impacted. The key objectives of educating citizens on
the use of social media in emergencies would be to reduce variability and increase
quality and timeliness of communications. Accordingly, it would be useful to
educate citizens on basic principles (such as syntax) of using social media for
emergency communications. It is also important to remind citizens to issue
genuine communications, and to prioritize urgent communications during an
emergency or disaster.
1-28. What would need to happen on the part of aid organizations and traditional
media for Twitter and other social media to be effective in emergency and disaster
communications?
The purpose of this question is for students to continue the discussion from
question 3 and consider the value chain implications of using social media for
emergency and disaster communications. Although citizens may originate the
communications, aid organizations and traditional media would still need to
monitor the communications, integrate the communications, and prioritize the
communications so that appropriate action can be taken. Aid organizations also
need to coordinate directly with each other to ensure that they do not duplicate
efforts in the response, and that they allocate resources efficiently to address all
important areas in a timely manner.
Solutions to E-Project Questions
E-Project 1—Analyzing the May 6 “Flash Crash” with Excel Charts
1-29. Download the Ch01_AAPL Excel file, which contains the high, low, and
closing prices for Apple Computers between May 3 and May 14. (AAPL is the ticker
symbol for Apple.) Open the file to see how the data are arranged in columns, with
the first row showing the column headers.
a) What was the closing price for Apple on May 6?
On May 6, the closing price for Apple stock was $60.75 per share.
b) What was the volume of trading for this stock on May 6?
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Chapter 1, Information Systems and People
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individual citizens are preparing updates, the updates may vary in depth and
accuracy. Management of this risk will be discussed in the next question.
1-27. What types of education would be necessary at the user level to make Twitter
and other social media more effective for emergency and disaster communications?
The purpose of this question is to have students consider the value chain in social
media. As social media begins to play a role in functions (such as public safety)
that were previously handled by firms, students need to understand how the
related value chains may be impacted. The key objectives of educating citizens on
the use of social media in emergencies would be to reduce variability and increase
quality and timeliness of communications. Accordingly, it would be useful to
educate citizens on basic principles (such as syntax) of using social media for
emergency communications. It is also important to remind citizens to issue
genuine communications, and to prioritize urgent communications during an
emergency or disaster.
1-28. What would need to happen on the part of aid organizations and traditional
media for Twitter and other social media to be effective in emergency and disaster
communications?
The purpose of this question is for students to continue the discussion from
question 3 and consider the value chain implications of using social media for
emergency and disaster communications. Although citizens may originate the
communications, aid organizations and traditional media would still need to
monitor the communications, integrate the communications, and prioritize the
communications so that appropriate action can be taken. Aid organizations also
need to coordinate directly with each other to ensure that they do not duplicate
efforts in the response, and that they allocate resources efficiently to address all
important areas in a timely manner.
Solutions to E-Project Questions
E-Project 1—Analyzing the May 6 “Flash Crash” with Excel Charts
1-29. Download the Ch01_AAPL Excel file, which contains the high, low, and
closing prices for Apple Computers between May 3 and May 14. (AAPL is the ticker
symbol for Apple.) Open the file to see how the data are arranged in columns, with
the first row showing the column headers.
a) What was the closing price for Apple on May 6?
On May 6, the closing price for Apple stock was $60.75 per share.
b) What was the volume of trading for this stock on May 6?
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On May 6, 28,560,400 shares of Apple stock were traded.
1-30. Create a line graph from the AAPL data, in which the dates are on the x-axis
(horizontal), and the stock prices are on the vertical y-axis. Include the opening
price, high, low, and closing price on the graph. Add a title to the top of your chart.
The line graph would appear as follows:
1-31. Download Expedia stock prices (ticker symbol EXPE) for the same time
period (May 3–May 14, 2010) from http://finance.yahoo.com. (Click on Historical
Prices, under QUOTES.)
a) Create a line graph to compare the Low and Closing prices for Apple
stock and Expedia stock. You do not need to include Open and High
prices on this graph.
The line graph would appear as follows:35
40
45
50
55
60
65
05/03/10
05/04/10
05/05/10
05/06/10
05/07/10
05/08/10
05/09/10
05/10/10
05/11/10
05/12/10
05/13/10
05/14/10
Price
Apple AAPL
Open
High
Low
Close20
25
30
35
40
45
50
55
60
65
05/03/10
05/04/10
05/05/10
05/06/10
05/07/10
05/08/10
05/09/10
05/10/10
05/11/10
05/12/10
05/13/10
05/14/10
Price
Apple AAPL and Expedia EXPE
AAPL Low
EXPE Low
AAPL Close
EXPE Close
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On May 6, 28,560,400 shares of Apple stock were traded.
1-30. Create a line graph from the AAPL data, in which the dates are on the x-axis
(horizontal), and the stock prices are on the vertical y-axis. Include the opening
price, high, low, and closing price on the graph. Add a title to the top of your chart.
The line graph would appear as follows:
1-31. Download Expedia stock prices (ticker symbol EXPE) for the same time
period (May 3–May 14, 2010) from http://finance.yahoo.com. (Click on Historical
Prices, under QUOTES.)
a) Create a line graph to compare the Low and Closing prices for Apple
stock and Expedia stock. You do not need to include Open and High
prices on this graph.
The line graph would appear as follows:35
40
45
50
55
60
65
05/03/10
05/04/10
05/05/10
05/06/10
05/07/10
05/08/10
05/09/10
05/10/10
05/11/10
05/12/10
05/13/10
05/14/10
Price
Apple AAPL
Open
High
Low
Close20
25
30
35
40
45
50
55
60
65
05/03/10
05/04/10
05/05/10
05/06/10
05/07/10
05/08/10
05/09/10
05/10/10
05/11/10
05/12/10
05/13/10
05/14/10
Price
Apple AAPL and Expedia EXPE
AAPL Low
EXPE Low
AAPL Close
EXPE Close
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b) How do you compare the activity on those two stocks?
Apple experienced a significant intraday price decline (Low stock price)
on May 6 during the “flash crash,” while Expedia did not experience a
significant decline that day.
E-Project 2—Gathering, Visualizing, and Evaluating Reports from Twitter and
Other Sources During a Disaster
Download the Excel file called “Ch01_OilSpill,” which contains sample reports, and
answer the following questions:
1-32. First, select columns B through F and reformat them with the word “wrap,” so
you can easily see the actual comments people sent in.
Using word “wrap,” the spreadsheet should now appear consistent with the
sample of title and first two lines of data below:
1-33. Suppose you have a friend who lives in Bay Champagne. First sort the table by
LOCATION, and scroll down to Bay Champagne. How many reports do you find
using this strategy? Why would this approach be limited in terms of its ability to
find all the events that may have affected your friend?
Eight reports were found. This search strategy is limited for at least two reasons.
First, a user may miscount the number of rows when data is sorted. Second, it is possible
Instructor’s Manual
Chapter 1, Information Systems and People
15
b) How do you compare the activity on those two stocks?
Apple experienced a significant intraday price decline (Low stock price)
on May 6 during the “flash crash,” while Expedia did not experience a
significant decline that day.
E-Project 2—Gathering, Visualizing, and Evaluating Reports from Twitter and
Other Sources During a Disaster
Download the Excel file called “Ch01_OilSpill,” which contains sample reports, and
answer the following questions:
1-32. First, select columns B through F and reformat them with the word “wrap,” so
you can easily see the actual comments people sent in.
Using word “wrap,” the spreadsheet should now appear consistent with the
sample of title and first two lines of data below:
1-33. Suppose you have a friend who lives in Bay Champagne. First sort the table by
LOCATION, and scroll down to Bay Champagne. How many reports do you find
using this strategy? Why would this approach be limited in terms of its ability to
find all the events that may have affected your friend?
Eight reports were found. This search strategy is limited for at least two reasons.
First, a user may miscount the number of rows when data is sorted. Second, it is possible
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that Bay Champagne may be mistyped for other entries (for example, “Champagne Bay”)
and may not show next to the other eight Bay Champagne entries in the spreadsheet.
1-34. For crisis management, timeliness is important, but so is accuracy. How many
reports in this sample were not verified (NO in the Verified column)? You can use
Excel’s ‘countif’ function to determine the number of NO and YES responses.
What is the percentage of total reports that have not been verified?
The verified column indicates that 791 out of 2464 reports (32.1 percent) have not
been verified.
1-35. Sort the file by CATEGORY then by LOCATION. Take a look at the reports
that are categorized as Health Effects in Grand Isle. Why do you think many of
these reports are not verified?
Many reports of Health Effects in Grand Isle involve internal symptoms (such as
coughing or difficulty breathing) that may be more difficult to verify during a
reporting visit. This may be partly because the symptom may not manifest during
the reporting visit, and partly because the report data collection involved verbal
interviews rather than medical examinations.
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Chapter 1, Information Systems and People
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that Bay Champagne may be mistyped for other entries (for example, “Champagne Bay”)
and may not show next to the other eight Bay Champagne entries in the spreadsheet.
1-34. For crisis management, timeliness is important, but so is accuracy. How many
reports in this sample were not verified (NO in the Verified column)? You can use
Excel’s ‘countif’ function to determine the number of NO and YES responses.
What is the percentage of total reports that have not been verified?
The verified column indicates that 791 out of 2464 reports (32.1 percent) have not
been verified.
1-35. Sort the file by CATEGORY then by LOCATION. Take a look at the reports
that are categorized as Health Effects in Grand Isle. Why do you think many of
these reports are not verified?
Many reports of Health Effects in Grand Isle involve internal symptoms (such as
coughing or difficulty breathing) that may be more difficult to verify during a
reporting visit. This may be partly because the symptom may not manifest during
the reporting visit, and partly because the report data collection involved verbal
interviews rather than medical examinations.
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Instructor’s Manual
Chapter 2, Information Systems and Strategy
1
Chapter 2
Information Systems and Strategy
Learning Objectives
1. Describe Porter’s five competitive forces that shape industry competition.
2. Explain how disruptive innovations, government policies, complementary
products and services, and other factors affect how the competitive forces operate.
3. Identify the components of the value chain and explain its extended version.
4. Describe how information systems apply to competitive strategies for business.
5. Explain how information systems apply to strategy for nonprofit organizations
and governments.
6. Explain why the role of information systems in organizations shifts depending on
whether the systems are deployed to run, grow, or transform the business.
Solutions to Chapter Review Questions
2-1. What are the five competitive forces that shape industry competition? How
are these forces interrelated?
The five forces that influence industry competition are (1) threat of new entrants,
(2) power of buyers, (3) power of suppliers, (4) threat of substitutes, and (5)
rivalry among existing competitors. The five forces determine industry structure
and how profitable companies in the industry will be. The five interrelated forces
are “internal” to the industry.
2-2. How do disruptive innovations, government policies, complementary
products and services, and environmental events affect how the competitive
forces operate?
Disruptive innovations, government policies, complementary products and
services, and environmental are “external” forces that affect how the five forces
operate. For example, certain innovations can flood through an industry, changing
everything in their path, forcing every company to change its strategy.
Instructor’s Manual
Chapter 2, Information Systems and Strategy
1
Chapter 2
Information Systems and Strategy
Learning Objectives
1. Describe Porter’s five competitive forces that shape industry competition.
2. Explain how disruptive innovations, government policies, complementary
products and services, and other factors affect how the competitive forces operate.
3. Identify the components of the value chain and explain its extended version.
4. Describe how information systems apply to competitive strategies for business.
5. Explain how information systems apply to strategy for nonprofit organizations
and governments.
6. Explain why the role of information systems in organizations shifts depending on
whether the systems are deployed to run, grow, or transform the business.
Solutions to Chapter Review Questions
2-1. What are the five competitive forces that shape industry competition? How
are these forces interrelated?
The five forces that influence industry competition are (1) threat of new entrants,
(2) power of buyers, (3) power of suppliers, (4) threat of substitutes, and (5)
rivalry among existing competitors. The five forces determine industry structure
and how profitable companies in the industry will be. The five interrelated forces
are “internal” to the industry.
2-2. How do disruptive innovations, government policies, complementary
products and services, and environmental events affect how the competitive
forces operate?
Disruptive innovations, government policies, complementary products and
services, and environmental are “external” forces that affect how the five forces
operate. For example, certain innovations can flood through an industry, changing
everything in their path, forcing every company to change its strategy.
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Chapter 2, Information Systems and Strategy
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2-3. What are the components of the value chain? Which components comprise
the primary activities? Which components comprise the support activities?
What is the extended value chain?
The primary activities of a value chain are: (1) bring in raw resources; (2) make
the product or service; (3) market the product or service; (4) deliver the product or
service; and (5) provide customer support. The support activities are: (1)
administration and management; (2) human resources; (3) technology support;
and (4) procurement. The extended value chain links the company’s value chain
with the value chains of its suppliers and its customers.
2-4. How do managers use benchmarks to analyze the value chain and IT
spending?
Organizations use the value chain model to compare their performance to industry
benchmarks and identify areas that should be targeted for improvement. For
example, an organization may compare its budget allocation to each value chain
activity to industry benchmarks (i.e., average expenditures in its industry). IT
benchmarks include average IT spending by industry and amount spent on IT per
employee.
2-5. How do information systems apply to competitive strategies for business?
All of the competitive strategies leverage information systems to achieve success.
Low cost leaders must automate as much as possible using information systems to
reduce costs in many different ways depending on the industry. Organizations
with a differentiated product or service often rely on innovations in IT to
implement their strategy.
2-6. How are information systems used to run, grow, and transform a business?
Information systems are used to run a business by supporting productivity
throughout the organization, in every component of the value chain, helping to
streamline processes in administration and management and improve customer
loyalty. As a strategic enabler, IT can be used to grow and transform a business
by facilitating a new business model.
2-7. How do information systems apply to competitive strategies for nonprofit
organizations?
Nonprofit organizations can apply information systems to their competitive
strategy in two critical areas: fund-raising and volunteer management. Specialized
information systems assist nonprofits in managing donations and online fund-
raising as well as building relationships with volunteers.
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2-3. What are the components of the value chain? Which components comprise
the primary activities? Which components comprise the support activities?
What is the extended value chain?
The primary activities of a value chain are: (1) bring in raw resources; (2) make
the product or service; (3) market the product or service; (4) deliver the product or
service; and (5) provide customer support. The support activities are: (1)
administration and management; (2) human resources; (3) technology support;
and (4) procurement. The extended value chain links the company’s value chain
with the value chains of its suppliers and its customers.
2-4. How do managers use benchmarks to analyze the value chain and IT
spending?
Organizations use the value chain model to compare their performance to industry
benchmarks and identify areas that should be targeted for improvement. For
example, an organization may compare its budget allocation to each value chain
activity to industry benchmarks (i.e., average expenditures in its industry). IT
benchmarks include average IT spending by industry and amount spent on IT per
employee.
2-5. How do information systems apply to competitive strategies for business?
All of the competitive strategies leverage information systems to achieve success.
Low cost leaders must automate as much as possible using information systems to
reduce costs in many different ways depending on the industry. Organizations
with a differentiated product or service often rely on innovations in IT to
implement their strategy.
2-6. How are information systems used to run, grow, and transform a business?
Information systems are used to run a business by supporting productivity
throughout the organization, in every component of the value chain, helping to
streamline processes in administration and management and improve customer
loyalty. As a strategic enabler, IT can be used to grow and transform a business
by facilitating a new business model.
2-7. How do information systems apply to competitive strategies for nonprofit
organizations?
Nonprofit organizations can apply information systems to their competitive
strategy in two critical areas: fund-raising and volunteer management. Specialized
information systems assist nonprofits in managing donations and online fund-
raising as well as building relationships with volunteers.
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Chapter 2, Information Systems and Strategy
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2-8. How do governments use information systems to improve services and fund
research?
Governments use information systems to improve services in varied ways
depending on the specialized requirements and responsibilities of the agency
providing the service. For example, the military uses real-time systems to support
military personnel and material distribution; a ministry of information and
broadcasting uses information systems to provide news services and other types
of information broadcasts; state and local police use information systems to
access information on criminal offenses. Government funding is critical to certain
kinds of research projects that private investors might avoid for various reasons
including risk and uncertainty. For example, the Internet was developed by the
Defense Advanced Research Projects Agency. Currently, green sources of energy
and the smart electricity grid are receiving significant funding from governments.
Solutions to Projects and Discussion Questions
2-9. Although many people think electronic book readers are too expensive, there
is a massive global demand for the devices, and the trend is likely to continue
for some time. Search the web to learn more about how digital technology
has disrupted the book publishing industry, and prepare a 5-minute
presentation of your findings.
Answers will vary. At a minimum, students should be able to list several effects
of digital technology on book publishing such as a decrease in sales of non-digital
books and new options for self-publishing books and make them available on
Kindle and iBooks and other websites.
2-10. Is a value meal related to a value chain? The value that attracts over 60
million customers to McDonald’s every day comes from capabilities that are
based in its value chain. Briefly, describe McDonald’s value chain and
discuss how information systems facilitate each component in the chain. Can
you think of a way that information technology could improve your next trip
to McDonald’s?
Answers will vary but should include an example of at least one information
system that is used in each component of the value chain and one improvement
using information technology.
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2-8. How do governments use information systems to improve services and fund
research?
Governments use information systems to improve services in varied ways
depending on the specialized requirements and responsibilities of the agency
providing the service. For example, the military uses real-time systems to support
military personnel and material distribution; a ministry of information and
broadcasting uses information systems to provide news services and other types
of information broadcasts; state and local police use information systems to
access information on criminal offenses. Government funding is critical to certain
kinds of research projects that private investors might avoid for various reasons
including risk and uncertainty. For example, the Internet was developed by the
Defense Advanced Research Projects Agency. Currently, green sources of energy
and the smart electricity grid are receiving significant funding from governments.
Solutions to Projects and Discussion Questions
2-9. Although many people think electronic book readers are too expensive, there
is a massive global demand for the devices, and the trend is likely to continue
for some time. Search the web to learn more about how digital technology
has disrupted the book publishing industry, and prepare a 5-minute
presentation of your findings.
Answers will vary. At a minimum, students should be able to list several effects
of digital technology on book publishing such as a decrease in sales of non-digital
books and new options for self-publishing books and make them available on
Kindle and iBooks and other websites.
2-10. Is a value meal related to a value chain? The value that attracts over 60
million customers to McDonald’s every day comes from capabilities that are
based in its value chain. Briefly, describe McDonald’s value chain and
discuss how information systems facilitate each component in the chain. Can
you think of a way that information technology could improve your next trip
to McDonald’s?
Answers will vary but should include an example of at least one information
system that is used in each component of the value chain and one improvement
using information technology.
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Chapter 2, Information Systems and Strategy
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2-11. Information technology enables nonprofit organizations to reach out to
constituents 24 hours a day, 7 days a week. Visit www.redcross.org and note
the various ways this charity is using its website to communicate with
volunteers, donors, and people who need assistance. Compare the Red Cross
site to your university’s alumni association website. Prepare a brief summary
of your findings that includes a list of specific services provided on each site.
How does each website support the organization’s strategic goals?
Answers will vary depending on the services made available by their local alumni
association. Because the content of www.redcross.org may change, expected
results will vary but should include services such as these: Get Assistance,
Volunteer, Take a Class, and Give Blood.
2-12. Government agencies and corporations have similar information needs.
Identify and briefly discuss specific examples of information systems
typically used by a law enforcement agency such as a state or local police
department. Which of these systems are used to “run” the business? Which
are used to fulfill the agency’s mission?
Answers will vary, but should include an example of an information system used
to manage operations such as human resource scheduling, payroll, or accounts
payable. The mission of a state or local police department includes safeguarding
the lives and property of the people it serves. Examples of systems to fulfill the
agency’s mission may include systems to manage criminal history records, arrest
warrants, stolen vehicles and property, fingerprint identification, sex-offender
registration, and concealed handgun licenses.
2-13. What are the three basic strategies that companies adopt to compete?
Describe how information systems support each strategy. What is a “hybrid”
strategy? Describe a company, product, or service that adopts each of these
four competitive strategies.
The three basic strategies are (1) low cost leadership, (2) product differentiation,
and (3) focused. The low cost leadership strategy relies on information systems
that automate and streamline processes and eliminate costly human labor. The
product differentiation strategy requires systems that add special features or
unique add-ons for which customers are willing to pay more. The focused strategy
relies on special features for a particular market niche such as a business or
government segment. A hybrid model incorporates aspects of several strategies.
An example of a hybrid strategy is providing the best value for the lowest price.
Answers will vary regarding names of companies, products, or services that adopt
each of these competitive strategies. This question draws on the student’s ability
to understand the four strategies and their knowledge of companies, products, and
services.
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2-11. Information technology enables nonprofit organizations to reach out to
constituents 24 hours a day, 7 days a week. Visit www.redcross.org and note
the various ways this charity is using its website to communicate with
volunteers, donors, and people who need assistance. Compare the Red Cross
site to your university’s alumni association website. Prepare a brief summary
of your findings that includes a list of specific services provided on each site.
How does each website support the organization’s strategic goals?
Answers will vary depending on the services made available by their local alumni
association. Because the content of www.redcross.org may change, expected
results will vary but should include services such as these: Get Assistance,
Volunteer, Take a Class, and Give Blood.
2-12. Government agencies and corporations have similar information needs.
Identify and briefly discuss specific examples of information systems
typically used by a law enforcement agency such as a state or local police
department. Which of these systems are used to “run” the business? Which
are used to fulfill the agency’s mission?
Answers will vary, but should include an example of an information system used
to manage operations such as human resource scheduling, payroll, or accounts
payable. The mission of a state or local police department includes safeguarding
the lives and property of the people it serves. Examples of systems to fulfill the
agency’s mission may include systems to manage criminal history records, arrest
warrants, stolen vehicles and property, fingerprint identification, sex-offender
registration, and concealed handgun licenses.
2-13. What are the three basic strategies that companies adopt to compete?
Describe how information systems support each strategy. What is a “hybrid”
strategy? Describe a company, product, or service that adopts each of these
four competitive strategies.
The three basic strategies are (1) low cost leadership, (2) product differentiation,
and (3) focused. The low cost leadership strategy relies on information systems
that automate and streamline processes and eliminate costly human labor. The
product differentiation strategy requires systems that add special features or
unique add-ons for which customers are willing to pay more. The focused strategy
relies on special features for a particular market niche such as a business or
government segment. A hybrid model incorporates aspects of several strategies.
An example of a hybrid strategy is providing the best value for the lowest price.
Answers will vary regarding names of companies, products, or services that adopt
each of these competitive strategies. This question draws on the student’s ability
to understand the four strategies and their knowledge of companies, products, and
services.
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2-14. What are network effects? Search the web or visit websites such as
Eversave.com and AmazonLocal.com and discuss how network effects can
impact the threat of new entrants. Is there an Eversave offering or an
Amazon Local deal in your hometown? How would you describe the long-
term value proposition of this online shopping phenomenon? In your
opinion, are there any disadvantages for an organization that offers a daily
deal?
Network effects refer to the increased value of a product or service, which results
simply because there are more people using it. Eversave illustrates network
effects by offering a daily deal to people once a group reaches a “tipping point” of
people who agree to participate. A value proposition describes the benefits, cost,
and value of a product or service that a business can deliver to customers.
Eversave delivers customers to those businesses who sign up to sponsor a daily
deal. Answers will vary on the disadvantages for an organization that offers a
daily deal. Although Eversave offers can drive traffic to a business, unless the
number of coupons offered is capped, the offer can overwhelm a small business.
Additionally, some businesses report mostly one-time buyers rather than sales that
turn in to repeat customers.
2-15. In 2011, the U.S. federal government collected approximately $2.3 trillion in
taxes including individual income taxes, Social Security/ Social Insurance
taxes, and corporate taxes. Visit www.irs.gov and describe how this website
enhances services to the public. What types of services are available to
individuals? To businesses? To charities and nonprofit organizations? What
kind of “tax information for students” does this site provide? Prepare a 5-
minute presentation of your findings.
The list of services provided at www.irs.gov could be extensive. For example,
services provided to individuals include assistance with finding a “free file”
provider, transmitting a tax return electronically, and checking on the status of a
tax return. Services provided to businesses include electronic submission of tax
returns, links to compliance and enforcement information, and taxpayer advocate
services. Services provided to charities and nonprofit organizations are similar to
those provided to businesses. Services provided to students include links to an
interactive tax education program and information on education credits and
student loan interest. Student lists will vary and should include specific services
for each category of client.
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Chapter 2, Information Systems and Strategy
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2-14. What are network effects? Search the web or visit websites such as
Eversave.com and AmazonLocal.com and discuss how network effects can
impact the threat of new entrants. Is there an Eversave offering or an
Amazon Local deal in your hometown? How would you describe the long-
term value proposition of this online shopping phenomenon? In your
opinion, are there any disadvantages for an organization that offers a daily
deal?
Network effects refer to the increased value of a product or service, which results
simply because there are more people using it. Eversave illustrates network
effects by offering a daily deal to people once a group reaches a “tipping point” of
people who agree to participate. A value proposition describes the benefits, cost,
and value of a product or service that a business can deliver to customers.
Eversave delivers customers to those businesses who sign up to sponsor a daily
deal. Answers will vary on the disadvantages for an organization that offers a
daily deal. Although Eversave offers can drive traffic to a business, unless the
number of coupons offered is capped, the offer can overwhelm a small business.
Additionally, some businesses report mostly one-time buyers rather than sales that
turn in to repeat customers.
2-15. In 2011, the U.S. federal government collected approximately $2.3 trillion in
taxes including individual income taxes, Social Security/ Social Insurance
taxes, and corporate taxes. Visit www.irs.gov and describe how this website
enhances services to the public. What types of services are available to
individuals? To businesses? To charities and nonprofit organizations? What
kind of “tax information for students” does this site provide? Prepare a 5-
minute presentation of your findings.
The list of services provided at www.irs.gov could be extensive. For example,
services provided to individuals include assistance with finding a “free file”
provider, transmitting a tax return electronically, and checking on the status of a
tax return. Services provided to businesses include electronic submission of tax
returns, links to compliance and enforcement information, and taxpayer advocate
services. Services provided to charities and nonprofit organizations are similar to
those provided to businesses. Services provided to students include links to an
interactive tax education program and information on education credits and
student loan interest. Student lists will vary and should include specific services
for each category of client.
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2-16. Why are IT resources described as a commodity? How do IT resources
“matter” in terms of the different roles they play in an organization? Which
component of an information system is most critical to success in growing
and transforming the business? Why?
A commodity is a product for which quality is the same no matter who produces
it. Examples are milk and paper. The price of a commodity fluctuates depending
on supply and demand. Nicholas Carr suggests that IT resources have become so
commonplace that their strategic importance has diminished, and they have
become an infrastructure commodity, much like electricity. Information
technology resources that are used to run the business generally fall into the
commodity category where price competition is fierce. Consequently,
organizations can avoid wasteful spending for these systems and get the best
value for the lowest cost. On the other hand, information systems that are used to
grow and transform an organization include the “people” component. Although
many technologies are commodities, the ability to extract their value requires
human imagination. Innovative business practices, new products and services, and
changed processes come from talented people who know how to leverage
information technology.
2-17. According to the Computer History Museum (www.computerhistory.org),
the Kenbak Corporation sold the first personal computer in 1971. Since then,
several billion PCs have been sold under various brand names. Currently,
HP, Dell, Acer, Lenovo, and Asus are the leading brands in the highly
competitive PC market. Work in a small group with classmates to analyze
and describe the personal computer industry using the five competitive
forces model.
Students should be able to provide a brief analysis that describes competitive
rivalry as high due to little differentiation in PCs, supplier power that comes from
the lack of substitutes for their input product and the cost associated with
changing suppliers, and buyer power that comes from customer price sensitivity
and the low cost of switching to another PC. The threat of substitutes is relatively
high because it is easy for customers to switch to alternate products such as
laptops, notebooks, and netbooks. The threat of a new entrant in this industry is
relatively low due to barriers to entry such as acquiring necessary inputs from key
suppliers.
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Chapter 2, Information Systems and Strategy
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2-16. Why are IT resources described as a commodity? How do IT resources
“matter” in terms of the different roles they play in an organization? Which
component of an information system is most critical to success in growing
and transforming the business? Why?
A commodity is a product for which quality is the same no matter who produces
it. Examples are milk and paper. The price of a commodity fluctuates depending
on supply and demand. Nicholas Carr suggests that IT resources have become so
commonplace that their strategic importance has diminished, and they have
become an infrastructure commodity, much like electricity. Information
technology resources that are used to run the business generally fall into the
commodity category where price competition is fierce. Consequently,
organizations can avoid wasteful spending for these systems and get the best
value for the lowest cost. On the other hand, information systems that are used to
grow and transform an organization include the “people” component. Although
many technologies are commodities, the ability to extract their value requires
human imagination. Innovative business practices, new products and services, and
changed processes come from talented people who know how to leverage
information technology.
2-17. According to the Computer History Museum (www.computerhistory.org),
the Kenbak Corporation sold the first personal computer in 1971. Since then,
several billion PCs have been sold under various brand names. Currently,
HP, Dell, Acer, Lenovo, and Asus are the leading brands in the highly
competitive PC market. Work in a small group with classmates to analyze
and describe the personal computer industry using the five competitive
forces model.
Students should be able to provide a brief analysis that describes competitive
rivalry as high due to little differentiation in PCs, supplier power that comes from
the lack of substitutes for their input product and the cost associated with
changing suppliers, and buyer power that comes from customer price sensitivity
and the low cost of switching to another PC. The threat of substitutes is relatively
high because it is easy for customers to switch to alternate products such as
laptops, notebooks, and netbooks. The threat of a new entrant in this industry is
relatively low due to barriers to entry such as acquiring necessary inputs from key
suppliers.
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2-18. Work in a small group with classmates to discuss how information
technology plays a role in the competitive environment of your college or
university. How do you describe the competition to attract and retain
students? How do you describe the threat of substitutes in higher education?
How does the threat of substitutes affect supplier power in education?
Answers will vary. At a minimum, students should provide a list of ways that IT
is used by their college or university to attract and retain students and discuss the
competitive environment of their school. The threat of substitutes in higher
education includes programs provided by community colleges and technical
schools, as well as online degree programs offered by traditional and virtual
universities. As students have more choices, supplier power for institutions of
higher education is reduced.
Solutions to Application Exercises
2-19. Excel Application: IT Benchmarks
Jay’s Bikes is a family-owned and -operated business that stocks a wide range of
bikes designed to fit the needs of professional riders, a child’s first bike, and
everything in between. The business has 12 full-time employees. Jay has asked you
to create a spreadsheet from the data in Figure 2-21 to calculate average IT
spending so that it can be compared to the retail industry average. What is the
average IT spending in the retail industry? What is the average IT spending per
employee in the retail industry? How do Jay’s IT expenditures compare to the
industry averages? How much would Jay need to increase spending in order to
match the retail industry average?
The average IT spending in retail is 1.5 percent of revenue. The average IT spending per
employee in retail is $5,379.
Students should use formulas to calculate Jay’s average IT spending as a percent of
revenue and his average IT spending per employee, then use Goal Seek to determine how
much he needs to increase IT expenditures to match the industry benchmark of 1.5
percent of revenue or $5,379 per employee. To answer the question, “How much would
Jay need to increase spending in order to match the retail industry average?,” students
should use a formulas to calculate (a) the difference between Jay’s current IT spending as
a percent of revenue and the target spending as a percent of revenue and (b) the
difference between Jay’s current IT spending per employee and the target spending per
employee.
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2-18. Work in a small group with classmates to discuss how information
technology plays a role in the competitive environment of your college or
university. How do you describe the competition to attract and retain
students? How do you describe the threat of substitutes in higher education?
How does the threat of substitutes affect supplier power in education?
Answers will vary. At a minimum, students should provide a list of ways that IT
is used by their college or university to attract and retain students and discuss the
competitive environment of their school. The threat of substitutes in higher
education includes programs provided by community colleges and technical
schools, as well as online degree programs offered by traditional and virtual
universities. As students have more choices, supplier power for institutions of
higher education is reduced.
Solutions to Application Exercises
2-19. Excel Application: IT Benchmarks
Jay’s Bikes is a family-owned and -operated business that stocks a wide range of
bikes designed to fit the needs of professional riders, a child’s first bike, and
everything in between. The business has 12 full-time employees. Jay has asked you
to create a spreadsheet from the data in Figure 2-21 to calculate average IT
spending so that it can be compared to the retail industry average. What is the
average IT spending in the retail industry? What is the average IT spending per
employee in the retail industry? How do Jay’s IT expenditures compare to the
industry averages? How much would Jay need to increase spending in order to
match the retail industry average?
The average IT spending in retail is 1.5 percent of revenue. The average IT spending per
employee in retail is $5,379.
Students should use formulas to calculate Jay’s average IT spending as a percent of
revenue and his average IT spending per employee, then use Goal Seek to determine how
much he needs to increase IT expenditures to match the industry benchmark of 1.5
percent of revenue or $5,379 per employee. To answer the question, “How much would
Jay need to increase spending in order to match the retail industry average?,” students
should use a formulas to calculate (a) the difference between Jay’s current IT spending as
a percent of revenue and the target spending as a percent of revenue and (b) the
difference between Jay’s current IT spending per employee and the target spending per
employee.
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2-20. Access Application: Telethon Call Reports
The volunteer coordinator of the Downtown Emergency Shelter has asked you to
use the information provided in Figure 2-20 to create an Access database. (You can
download the Excel file called Ch02Ex02 and import the data into your database.)
Your instructions are to create two tables (donors and volunteers) and prepare a
Phonathon Call Report for each volunteer. The shelter manager wants you to add
three fields to the donor table: this year’s contribution, a calculated field that shows
the average contribution per employee, and a calculated field that shows a target
contribution that is 5 percent higher than last year’s contribution. The report
should list the volunteer’s name and number, as well as the following donor
information: donor number, donor name, company name, phone number, and
contribution amount from the prior year, number of employees, average
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2-20. Access Application: Telethon Call Reports
The volunteer coordinator of the Downtown Emergency Shelter has asked you to
use the information provided in Figure 2-20 to create an Access database. (You can
download the Excel file called Ch02Ex02 and import the data into your database.)
Your instructions are to create two tables (donors and volunteers) and prepare a
Phonathon Call Report for each volunteer. The shelter manager wants you to add
three fields to the donor table: this year’s contribution, a calculated field that shows
the average contribution per employee, and a calculated field that shows a target
contribution that is 5 percent higher than last year’s contribution. The report
should list the volunteer’s name and number, as well as the following donor
information: donor number, donor name, company name, phone number, and
contribution amount from the prior year, number of employees, average
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Chapter 2, Information Systems and Strategy
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contribution per employee, and target contribution for this year. Although address
information will not be included on the report, that information will be used to send
receipts to the donors at the conclusion of this year’s fund-raising event.
Students should produce an Access database with two tables by importing data from the
Excel file named Ch02Ex02. Students should create a query to produce the Phonathon
Call Report. The query includes two calculated fields: average contribution per employee
and target contribution per employee for the current year. Set the format for both fields to
currency in the Property sheet.
Solutions to Case Study Questions
Case 1— Can GameStop Survive with Its Brick-and-Mortar Stores?
2-21. Perform a five forces analysis of the online gaming industry. What are the
implications of the five forces analysis for GameStop?
The purpose of this question is to have students apply a framework from the
chapter to the case. A five forces analysis provides an idea of whether or not an
industry would be attractive to enter. In the online gaming industry, entry barriers
are reasonably low (implies that industry is not attractive), because all that is
required to enter the industry are developers to program a game and a website to
publish the game. There are numerous available substitutes (implies that industry
Instructor’s Manual
Chapter 2, Information Systems and Strategy
9
contribution per employee, and target contribution for this year. Although address
information will not be included on the report, that information will be used to send
receipts to the donors at the conclusion of this year’s fund-raising event.
Students should produce an Access database with two tables by importing data from the
Excel file named Ch02Ex02. Students should create a query to produce the Phonathon
Call Report. The query includes two calculated fields: average contribution per employee
and target contribution per employee for the current year. Set the format for both fields to
currency in the Property sheet.
Solutions to Case Study Questions
Case 1— Can GameStop Survive with Its Brick-and-Mortar Stores?
2-21. Perform a five forces analysis of the online gaming industry. What are the
implications of the five forces analysis for GameStop?
The purpose of this question is to have students apply a framework from the
chapter to the case. A five forces analysis provides an idea of whether or not an
industry would be attractive to enter. In the online gaming industry, entry barriers
are reasonably low (implies that industry is not attractive), because all that is
required to enter the industry are developers to program a game and a website to
publish the game. There are numerous available substitutes (implies that industry
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Chapter 2, Information Systems and Strategy
10
is not attractive), as online gaming is only one of many forms of entertainment.
Internal rivalry is increasing (implies that industry is not attractive) with multiple
providers of online gaming. Buyer power is low (implies that industry is
attractive), because buyers are individual consumers and no consumer wields
undue market power. There is some supplier power (implies that industry is
moderately attractive), because there may be a limit to the number of talented
developers available for hire. This five forces analysis suggests that the online
gaming industry has low to moderate attractiveness. It is not necessary for
students to arrive at this suggested answer, instead it is more important for
students to get experience in performing and drawing implications from a five
forces analysis.
2-22. What role have information systems played in the five forces you identified?
Building from the five forces analysis in the previous question, IS plays a key role
in at least three of the five forces. For example, one reason that barriers to entry
are low is because online distribution reduces the barriers to entry. A game
publisher does not require physical logistics to distribute games to retail locations,
the publisher can simply distribute directly to consumers via the Internet. One
reason that substitutes for online gaming are high is that the target demographic
can use online social media (another form of entertainment) at no cost. One
reason that internal rivalry is increasing is because existing retailers (such as
GameStop) are adding online channels. It is not necessary for students to develop
this precise analysis, instead it is more important for students to understand the
relationship between IS and strategy.
2-23. How has GameStop used information systems to compete more effectively?
The five forces analysis performed in questions 1 and 2 relate with GameStop’s
evaluation of the industry and GameStop’s response to the industry. The purpose
of this question is to have students understand how firms can incorporate IS as
part of their strategy. GameStop acquired an online gaming company to embrace
online gaming as a substitute for offline gaming and to enter that segment of the
industry. Firms can use IS as a tool to implement their strategies.
2-24. What other strategic actions will GameStop need to take to protect its
business?
The purpose of this question is to have students understand that IS are only one
component of strategy, and that organizations need to integrate IS together with
other components to successfully execute a strategy. For this case, in addition to
acquiring the online gaming company, GameStop will need to integrate
operations of the online gaming company with its brick and mortar operations, to
take advantage of GameStop’s physical footprint. Offering opportunities to earn
PowerUP reward points on Kongregate is an example of how the company can
Instructor’s Manual
Chapter 2, Information Systems and Strategy
10
is not attractive), as online gaming is only one of many forms of entertainment.
Internal rivalry is increasing (implies that industry is not attractive) with multiple
providers of online gaming. Buyer power is low (implies that industry is
attractive), because buyers are individual consumers and no consumer wields
undue market power. There is some supplier power (implies that industry is
moderately attractive), because there may be a limit to the number of talented
developers available for hire. This five forces analysis suggests that the online
gaming industry has low to moderate attractiveness. It is not necessary for
students to arrive at this suggested answer, instead it is more important for
students to get experience in performing and drawing implications from a five
forces analysis.
2-22. What role have information systems played in the five forces you identified?
Building from the five forces analysis in the previous question, IS plays a key role
in at least three of the five forces. For example, one reason that barriers to entry
are low is because online distribution reduces the barriers to entry. A game
publisher does not require physical logistics to distribute games to retail locations,
the publisher can simply distribute directly to consumers via the Internet. One
reason that substitutes for online gaming are high is that the target demographic
can use online social media (another form of entertainment) at no cost. One
reason that internal rivalry is increasing is because existing retailers (such as
GameStop) are adding online channels. It is not necessary for students to develop
this precise analysis, instead it is more important for students to understand the
relationship between IS and strategy.
2-23. How has GameStop used information systems to compete more effectively?
The five forces analysis performed in questions 1 and 2 relate with GameStop’s
evaluation of the industry and GameStop’s response to the industry. The purpose
of this question is to have students understand how firms can incorporate IS as
part of their strategy. GameStop acquired an online gaming company to embrace
online gaming as a substitute for offline gaming and to enter that segment of the
industry. Firms can use IS as a tool to implement their strategies.
2-24. What other strategic actions will GameStop need to take to protect its
business?
The purpose of this question is to have students understand that IS are only one
component of strategy, and that organizations need to integrate IS together with
other components to successfully execute a strategy. For this case, in addition to
acquiring the online gaming company, GameStop will need to integrate
operations of the online gaming company with its brick and mortar operations, to
take advantage of GameStop’s physical footprint. Offering opportunities to earn
PowerUP reward points on Kongregate is an example of how the company can
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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 2, Information Systems and Strategy
11
attract more in-store customers. The company might also conduct gaming
tournaments that further integrate its online presence with in-store events.
GameStop management will need to think through whether the firm will compete
more based on low price (in which case it might increase its focus on online
gaming) or quality service (in which case it might maintain focus on the brick and
mortar stores and personnel).
Instructor’s Manual
Chapter 2, Information Systems and Strategy
11
attract more in-store customers. The company might also conduct gaming
tournaments that further integrate its online presence with in-store events.
GameStop management will need to think through whether the firm will compete
more based on low price (in which case it might increase its focus on online
gaming) or quality service (in which case it might maintain focus on the brick and
mortar stores and personnel).
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Chapter 2, Information Systems and Strategy
12
Case 2— The Battle for Net Neutrality
2-25. What are the strategic interests of carriers? What are the strategic interests
of websites?
The purpose of this case is to give students the opportunity to think through
strategic considerations at the industry level, as opposed to the firm level as in the
GameStop case. In this case, the strategic interests of carriers such as Verizon and
AT&T are not necessarily aligned with the strategic interests of websites such as
YouTube and Facebook. Carriers argue that they have invested substantial
financial resources to build Internet capacity, and want to protect their ability to
generate additional revenues from their investments. On the other hand, websites
argue that their success depends on a direct connection to the customer and the
ability to offer the customer an exceptional user experience.
2-26. How do the interests of carriers differ from the interests of websites? What
are the implications for websites from a value chain perspective?
The purpose of this question is to help students further understand the relationship
between IS and strategy at the industry level. Building from question 1, one way
for carriers to protect their investments and generate additional revenues would be
to have users pay for enhanced Internet connectivity. Another way for carriers to
generate additional revenues would be to have websites pay for higher priority.
On the other hand, websites would view less robust Internet access for some users
or websites (implied if not all users or websites pay for enhanced access) as
interference to their user experience and business models. From a five forces
perspective, the decision on net neutrality could dramatically impact the
proportion of online revenues that accrue to carriers versus websites (carriers are
one supplier for websites), and the relative attractiveness of each industry.
2-27. What is the basis for Verizon’s lawsuit against the Federal Communications
Commission? Why did they claim a violation of free speech?
This question helps students understand how companies can use the legal system
to fight government regulations. As a carrier, Verizon is hindered by the FCC’s
ruling in favor of net neutrality. Verizon is claiming a “violation of free speech”
because the FCC’s rulings are taking away control over the carrier’s property,
which in some contexts might be considered speech. Students might also answer
this question more fully by researching the outcome of the case and the court’s
response.
2-28. What are relevant considerations on the role government could play to
resolve differences between carriers and websites?
As in questions 1 and 2 above, the carriers have different interests than the
websites. This situation is likely to require some resolution between these
Instructor’s Manual
Chapter 2, Information Systems and Strategy
12
Case 2— The Battle for Net Neutrality
2-25. What are the strategic interests of carriers? What are the strategic interests
of websites?
The purpose of this case is to give students the opportunity to think through
strategic considerations at the industry level, as opposed to the firm level as in the
GameStop case. In this case, the strategic interests of carriers such as Verizon and
AT&T are not necessarily aligned with the strategic interests of websites such as
YouTube and Facebook. Carriers argue that they have invested substantial
financial resources to build Internet capacity, and want to protect their ability to
generate additional revenues from their investments. On the other hand, websites
argue that their success depends on a direct connection to the customer and the
ability to offer the customer an exceptional user experience.
2-26. How do the interests of carriers differ from the interests of websites? What
are the implications for websites from a value chain perspective?
The purpose of this question is to help students further understand the relationship
between IS and strategy at the industry level. Building from question 1, one way
for carriers to protect their investments and generate additional revenues would be
to have users pay for enhanced Internet connectivity. Another way for carriers to
generate additional revenues would be to have websites pay for higher priority.
On the other hand, websites would view less robust Internet access for some users
or websites (implied if not all users or websites pay for enhanced access) as
interference to their user experience and business models. From a five forces
perspective, the decision on net neutrality could dramatically impact the
proportion of online revenues that accrue to carriers versus websites (carriers are
one supplier for websites), and the relative attractiveness of each industry.
2-27. What is the basis for Verizon’s lawsuit against the Federal Communications
Commission? Why did they claim a violation of free speech?
This question helps students understand how companies can use the legal system
to fight government regulations. As a carrier, Verizon is hindered by the FCC’s
ruling in favor of net neutrality. Verizon is claiming a “violation of free speech”
because the FCC’s rulings are taking away control over the carrier’s property,
which in some contexts might be considered speech. Students might also answer
this question more fully by researching the outcome of the case and the court’s
response.
2-28. What are relevant considerations on the role government could play to
resolve differences between carriers and websites?
As in questions 1 and 2 above, the carriers have different interests than the
websites. This situation is likely to require some resolution between these
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Chapter 2, Information Systems and Strategy
13
differences. Governments also have conflicting considerations. On one hand,
governments have a responsibility to protect the rights of citizens. On the other
hand, governments have a responsibility to regulate commerce. Governments will
need to balance these conflicting considerations as they make decisions related to
net neutrality.
Solutions to E-Project Questions
E-Project 1—Identifying Company Strategy with Online Financial Chart Tools
One useful way to catch up on a company’s strategy is to check out trends in its
stock price, and the net offers many free tools. Go to Google’s finance website
(www.google.com/finance) and type the stock ticker symbol for GameStop (GME)
into the search bar to pull up current news about the company, including a graph of
its share prices, from Google finance.
2-29. The letters on the graph tie to the news stories, and some of them have major
effects on the company’s stock. Change the graph to show 1 year of data by clicking
‘1y’ at the top left of the graph. Do you see any sudden changes in share price paired
with a news story? Does the news shed light on how investors view its strategy or the
execution of it?
The answer to this question will vary based on the date the student performs the
search. A screen shot of the search as of December 2016 is below. This screen shot shows
a drop in the stock’s prices in December of 2016, tied to recent price moves of shares.
Instructor’s Manual
Chapter 2, Information Systems and Strategy
13
differences. Governments also have conflicting considerations. On one hand,
governments have a responsibility to protect the rights of citizens. On the other
hand, governments have a responsibility to regulate commerce. Governments will
need to balance these conflicting considerations as they make decisions related to
net neutrality.
Solutions to E-Project Questions
E-Project 1—Identifying Company Strategy with Online Financial Chart Tools
One useful way to catch up on a company’s strategy is to check out trends in its
stock price, and the net offers many free tools. Go to Google’s finance website
(www.google.com/finance) and type the stock ticker symbol for GameStop (GME)
into the search bar to pull up current news about the company, including a graph of
its share prices, from Google finance.
2-29. The letters on the graph tie to the news stories, and some of them have major
effects on the company’s stock. Change the graph to show 1 year of data by clicking
‘1y’ at the top left of the graph. Do you see any sudden changes in share price paired
with a news story? Does the news shed light on how investors view its strategy or the
execution of it?
The answer to this question will vary based on the date the student performs the
search. A screen shot of the search as of December 2016 is below. This screen shot shows
a drop in the stock’s prices in December of 2016, tied to recent price moves of shares.
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Instructor’s Manual
Chapter 2, Information Systems and Strategy
14
2-30. One way to get an idea of how well the company is doing is to compare the
trend in its share prices to the Dow Jones Industrial Average. Check the box next to
Dow Jones at the top of the graph and compare the trends. How does GameStop’s
performance compare?
The answer to this question will vary based on the date the student performs the
search. A screen shot of the search as of December 12, 2016, is below. This
screen shot shows that stock price for GameStop decreased faster than the Dow
Jones Industrial Average (DJIA) during the period shown in the graph.
E-Project 2— Analyzing Movie Download Times with Excel
In this e-project, you will obtain and analyze information about download times to
assess Internet connectivity.
2-31. Download the file called CH02_MediaDownloads. This file shows the
approximate file sizes for different kinds of media, along with estimated download
times.
Instructor’s Manual
Chapter 2, Information Systems and Strategy
14
2-30. One way to get an idea of how well the company is doing is to compare the
trend in its share prices to the Dow Jones Industrial Average. Check the box next to
Dow Jones at the top of the graph and compare the trends. How does GameStop’s
performance compare?
The answer to this question will vary based on the date the student performs the
search. A screen shot of the search as of December 12, 2016, is below. This
screen shot shows that stock price for GameStop decreased faster than the Dow
Jones Industrial Average (DJIA) during the period shown in the graph.
E-Project 2— Analyzing Movie Download Times with Excel
In this e-project, you will obtain and analyze information about download times to
assess Internet connectivity.
2-31. Download the file called CH02_MediaDownloads. This file shows the
approximate file sizes for different kinds of media, along with estimated download
times.
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