Test Bank for Essentials of MIS, 12th Edition

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Essentials of MIS, 12e (Laudon)
Chapter 1 Business Information Systems in Your Career
1) As discussed in the chapter opening case, the San Francisco Giants are taking advantage of
wireless technology to do which of the following?
A) Improve decision making
B) Achieve operational excellence
C) Implement dynamic ticket pricing
D) Perform data analysis
E) Enhance fan experience
Answer: E
Difficulty: 3: Challenging
AACSB: Analytical Thinking; Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?
2) Journalist Thomas Friedman's description of the world as "flat" refers to:
A) the flattening of economic and cultural advantages of developed countries.
B) the use of the Internet and technology for instantaneous communication.
C) the reduction in travel times and the ubiquity of global exchange and travel.
D) the growth of globalization.
E) the increased use of global currencies.
Answer: A
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
3) The six important business objectives of information system investment include all of the
following except:
A) competitive advantage.
B) employee morale.
C) improved decision making.
D) survival.
E) new products.
Answer: B
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?

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4) A firm that invests in an information system because it is a necessity of doing business does so
because it is seeking to achieve which of the following business objectives?
A) Survival
B) Improved decision making
C) Competitive advantage
D) Operational excellence
E) Customer intimacy
Answer: A
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?
5) Walmart exemplifies the power of information systems coupled with excellent business
practices and supportive management to achieve which of the following?
A) New business models
B) Operational efficiency
C) Customer intimacy
D) Competitive advantage
E) Survival
Answer: B
Difficulty: 3: Challenging
AACSB: Analytical Thinking
LO: 1.1: Why are information systems so essential for running and managing a business today?
6) Verizon's implementation of a web-based digital dashboard to provide managers with real-
time information, such as customer complaints, is an example of:
A) improved flexibility.
B) improved decision making.
C) competitive advantage.
D) supplier intimacy.
E) a new product.
Answer: B
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?
7) Which business objective were competitors seeking when they rushed to provide ATMs as
well after Citibank introduced the first ATMs in New York?
A) Improved efficiency
B) Customer and supplier intimacy
C) Survival
D) Competitive advantage
E) Improved decision making
Answer: C
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?

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8) All of the following describe the effects of globalization except:
A) significant decreases in operating costs.
B) reduction of labor costs through outsourcing.
C) ability to find low-cost suppliers.
D) increases in transaction costs.
E) replication of business models in multiple countries.
Answer: D
Difficulty: 3: Challenging
AACSB: Analytical Thinking
LO: 1.1: Why are information systems so essential for running and managing a business today?
9) A firm that must invest in a new information system in order to comply with federal
legislation is investing to achieve which of the following business objectives?
A) Customer intimacy
B) Operational excellence
C) New products.
D) Improved decision making
E) Survival
Answer: E
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
10) Which of the following is an example of a business using information systems to create new
products and services?
A) Apple's creation of the iPad
B) JC Penney's information system that allows its contract manufacturers to see what garments
have been sold and need to be replaced
C) The Mandarin Oriental's use of computers to keep track of guests' preferences
D) Verizon's web-based digital dashboard providing real-time company information for
managers
E) Walmart's Retail Link's system
Answer: A
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?

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11) An example of a business using information systems for supplier intimacy is:
A) Apple's creation of the iPad.
B) JCPenney's information system that allows its contract manufacturers to see what garments
have been sold and need to be replaced.
C) Citibank's ATM system.
D) Verizon's web-based digital dashboard providing real-time company information for
managers.
E) the Mandarin Oriental's use of computers to keep track of guests' preferences.
Answer: B
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?
12) To make sure they stock clothes that their customers will purchase, a department store
implements a new application that analyzes spending levels at their stores and cross-references
this data to popular clothing styles. Which of the following business objectives is this
information intended to support?
A) New products
B) Survival
C) Customer intimacy
D) Improved decision making
E) Operational excellence
Answer: C
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?
13) Telepresence is an example of which of the following?
A) Business intelligence
B) Social business
C) IoT
D) Mobile digital platform
E) Virtual meeting
Answer: E
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?

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14) The enormous volume of data generated by Internet activity, such as web traffic, email, and
social media is referred to as:
A) IoT.
B) big data.
C) the mobile digital platform.
D) cloud computing.
E) business intelligence.
Answer: B
Difficulty: 1: Easy
AACSB: Analytical Thinking; Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?
15) In 2015, what percent of Internet users will access the web through mobile devices?
A) Less than 15 percent
B) Around 25 percent
C) 50 percent
D) More than 60 percent
E) More than 75 percent
Answer: D
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
16) What percent of U.S. businesses have some form of remote work program?
A) 15 percent
B) 25 percent
C) 35 percent
D) 55 percent
E) 75 percent
Answer: D
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
17) All of the following are new technology-related trends in MIS except:
A) cloud computing.
B) big data.
C) IoT.
D) the mobile digital platform.
E) co-creation of business value.
Answer: E
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?

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18) Which of the following statements is not true?
A) In 2015, American businesses will invest nearly $600 billion in information systems
hardware, software, and telecommunications equipment.
B) In 2015, American businesses will spend $400 billion on business and management
consulting and information technology services,
C) In 2015, about 25 percent of all capital investment in the United States will be for information
systems hardware, software, and telecommunications equipment.
D) Expenditures in the United States for information systems are growing at a faster rate than the
U.S. economy as a whole.
E) Worldwide expenditures for information were around $1 trillion.
Answer: E
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
19) Approximately how many adult Americans are online?
A) 118 million
B) 170 million
C) 205 million
D) 220 million
E) 227 million
Answer: E
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
20) What percent of the Fortune 500 companies uses Twitter to communicate with their
customers?
A) 20 percent
B) 40 percent
C) 50 percent
D) 60 percent
E) 80 percent
Answer: E
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
21) Purchase of information systems hardware, software, and telecommunications equipment
will constitute more than half of all capital investment in the United States in 2015.
Answer: FALSE
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.1: Why are information systems so essential for running and managing a business today?

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22) A business model describes how a company produces, delivers, and sells a product or service
to create wealth.
Answer: TRUE
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
23) Federal law requires many businesses to keep email messages for five years.
Answer: TRUE
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.1: Why are information systems so essential for running and managing a business today?
24) Define operational excellence. How can information systems help achieve it?
Answer: Operational excellence is the achievement of higher levels of productivity and
efficiency. Information systems can help achieve operational excellence by improving
communications to suppliers and optimizing the supply chain. Information systems could help
managers communicate with workers more efficiently, enable technological innovation in
products, minimize warehouse overhead, and streamline distribution.
Difficulty: 2: Moderate
AACSB: Information Technology; Written and Oral Communication; Reflective Thinking
LO: 1.1: Why are information systems so essential for running and managing a business today?
25) You work for an auto manufacturer and distributor. How could you use information systems
to achieve greater customer intimacy?
Answer: You could create a website that allows customers to customize cars, communicate with
support personnel and other car owners. You could create an automated email service reminding
car owners to take their car in for periodic check-ups. You could have an information system that
tracks customer preferences in local areas, so you can provide cars that reflect local customer
needs and desires.
Difficulty: 2: Moderate
AACSB: Application of Knowledge; Information Technology; Written and Oral
Communication
LO: 1.1: Why are information systems so essential for running and managing a business today?

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26) Which of the following is the best definition of an information system?
A) A set of interrelated components that collect (or retrieve), process, store, and distribute
information to support decision making and control in an organization
B) Computers, keyboards, printers, and telecommunications devices
C) A set of detailed programmed instructions that transform raw data into information
D) Physical devices and software that can be connected to share voice, data, images, sound, and
video
E) A global network that uses universal standards
Answer: A
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
27) The three activities in an information system that produce the information organizations use
to control operations are:
A) information, research, and analysis.
B) input, output, and feedback.
C) input, processing, and output.
D) data analysis, processing, and feedback.
E) information, data, and processing.
Answer: C
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
28) The average number of baseball tickets sold at a particular price is an example of:
A) input.
B) raw data.
C) meaningful information.
D) output.
E) feedback.
Answer: C
Difficulty: 1: Easy
AACSB: Analytical Thinking
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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29) Output:
A) is feedback that has been processed to create meaningful information.
B) is information that is returned to appropriate members of the organization to help them
evaluate the input stage.
C) transfers raw data to the people who will use it or to the activities for which it will be used.
D) transfers processed information to the people who will use it or to the activities for which it
will be used.
E) is a stream of raw facts representing events occurring in organizations or the physical
environment.
Answer: D
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
30) Converting raw data into a more meaningful form is called:
A) capturing.
B) processing.
C) organizing.
D) feedback.
E) inputting.
Answer: B
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
31) An example of raw data from an automobile manufacturer would be:
A) an average of 130 Subarus sold daily in New York in 2015.
B) 1,300 Subaru Outbacks sold during the first quarter 2015 in New York.
C) 1 Subaru Outback sold January 7, 2015 in Mount Kisco, New York for $25,000.
D) annual sales of Subaru Outbacks increased 4.5 percent.
E) an average sale price of $26,000 for all Subaru Outbacks sold during January 2015 in Mount
Kisco, New York.
Answer: C
Difficulty: 3: Challenging
AACSB: Analytical Thinking
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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32) Which of the following fields deals with behavioral issues, as well as technical issues
surrounding the development, use, and impact of information systems used by managers and
employees in the firm?
A) Information systems literacy
B) Information systems architecture
C) Management information systems
D) Information technology infrastructure
E) Computer information systems
Answer: C
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
33) All of the following are examples of environmental actors in an information system except:
A) customers.
B) stockholders.
C) feedback.
D) competitors.
E) regulatory agencies.
Answer: C
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
34) In a hierarchical organization, the upper levels consist of:
A) managerial, professional and knowledge workers.
B) managerial, professional, and technical workers.
C) professional and operational workers.
D) managerial, professional, and operational workers.
E) knowledge, technical and operational workers.
Answer: B
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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35) The fundamental set of assumptions, values, and ways of doing things that has been accepted
by most of a company's members is called its:
A) business process.
B) environment.
C) atmosphere.
D) values.
E) culture.
Answer: E
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
36) All of the following can be considered managerial responsibilities except:
A) making action plans to solve organizational problems.
B) creating new products and services.
C) designing new information systems.
D) allocating human resources to coordinate the work to be done.
E) setting strategy for responding to business challenges in the environment.
Answer: C
Difficulty: 2: Moderate
AACSB: Analytical Thinking
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
37) Data management technology consists of:
A) the physical hardware and media used by an organization for storing data.
B) the detailed, preprogrammed instructions that control and coordinate the computer hardware
components in an information system.
C) the software governing the organization of data on physical storage media.
D) the hardware and software used to transfer data.
E) the universally accepted standards for storing data.
Answer: C
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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38) Intranets:
A) are based on mainframe technology.
B) are multiple networks joined together.
C) are typically used to communicate with the business's trusted vendors.
D) use Internet technology for a private company network.
E) provide the platform on which a firm builds its information systems.
Answer: D
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
39) As described in the chapter case, which of the following constitutes an organizational
element in the UPS tracking system?
A) The specification of procedures for identifying packages with sender and recipient
information
B) Monitoring service levels
C) Promoting the company strategy of low-cost, superior service
D) The use of handheld computers and networks for managing package delivery
E) Routing software that creates the most efficient delivery route for each driver
Answer: A
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
40) As described in the chapter case, which of the following constitutes a managerial element of
the UPS tracking system?
A) The web-based Post Sales Order Management System
B) The ability to provide package status reports to customers
C) The decision to use automation
D) The implementation of in-house package tracking software
E) The ability to embed UPS functions in external sites
Answer: C
Difficulty: 3: Challenging
AACSB: Analytical Thinking; Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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41) Consider an information system in a moving company that analyzes travel patterns and
decides which routes are the most efficient for every van. The need for employees to follow
procedures to update this system with arrival and departure times would be considered a(n)
________ dimension of the system.
A) organizational
B) managerial
C) people
D) technology
E) cultural
Answer: A
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
42) The culture of UPS places service to the customer among the company's highest business
objectives, which is reflected in their use of information systems to enable customer tracking of
their packages. Based on your reading of Chapter 1, why is "culture" an important factor to
consider when building information system solutions to business problems?
A) Culture is one element that can be radically changed, not always for the better, by new
information systems.
B) Culture affects how information system solutions are implemented and used.
C) Culture is a cauldron of employee perspectives and conflicts, which can be used to improve
business processes.
D) Culture is the driving force behind decision making and innovation.
E) Culture is the basis for organizational politics.
Answer: B
Difficulty: 3: Challenging
AACSB: Analytical Thinking; Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
43) Which of the following is a global network that uses universal standards to connect millions
of different networks around the world?
A) An extranet
B) The World Wide Web
C) The Internet
D) An intranet
E) Verizon
Answer: C
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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44) ________ consists of detailed, preprogrammed instructions that control and coordinate the
computer hardware components in an information system.
A) Software
B) Programming
C) Enterprise applications
D) Business intelligence
E) Data management technology
Answer: A
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
45) ________ is a service provided by the Internet that uses universally accepted standards for
storing, retrieving, formatting, and displaying information in a page format.
A) FTP
B) Email
C) The World Wide Web
D) HTML
E) An extranet
Answer: C
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
46) Information systems consist of all the hardware and software that a firm needs to use in order
to achieve its business objectives.
Answer: FALSE
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
47) An extranet is a private intranet extended to authorized users outside the organization.
Answer: TRUE
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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48) Information systems literacy describes the behavioral approach to information systems, while
computer literacy describes the technical approach.
Answer: FALSE
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
49) People, organizations, and information technology are all dimensions of information
systems.
Answer: TRUE
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
50) In order to understand how a specific business firm uses information systems, you need to
know something about the history and culture of the company.
Answer: TRUE
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
51) Developing a new product, fulfilling an order, and hiring a new employee are all examples of
business processes.
Answer: TRUE
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
52) Business processes are those logically related tasks for accomplishing tasks that have been
formally encoded by an organization.
Answer: FALSE
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
53) Employee attitudes about their jobs, employers, or technology can have a powerful effect on
their abilities to use information systems productively.
Answer: TRUE
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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54) A network requires at least three computers and a shared resource.
Answer: FALSE
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
55) A firm's IT infrastructure provides the platform on which the firm can build its information
systems.
Answer: TRUE
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
56) According to the chapter case, UPS's use of web-based tools that allow customers to embed
UPS functions, such as tracking and cost calculations, into their own websites, was an
information systems solution used to achieve customer intimacy.
Answer: TRUE
Difficulty: 3: Challenging
AACSB: Analytical Thinking; Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
57) Data is information that has been shaped into a form that is meaningful to human beings.
Answer: FALSE
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
58) Feedback is output returned to appropriate members of the organization to help them
evaluate or correct the input stage.
Answer: TRUE
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
59) Intranets are private corporate networks extended to authorized users outside the
organization.
Answer: FALSE
Difficulty: 1: Easy
AACSB: Information Technology
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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60) What important managerial function is impaired by not having access to timely and accurate
information? What is the effect of this lack of data?
Answer: The managerial function is decision making. Without access to timely and accurate
information, business managers rely on forecasts, best guesses, and luck. The result is over- or
under-production of goods and services, misallocation of resources, and poor response times.
The potential poor outcomes can raise costs, and the company can lose customers.
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology; Written and Oral Communication
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
61) Describe the people dimension of information systems and give an example. Is this
dimension as vital as the technology dimension when considering a technology-based solution to
a business problem?
Answer: The people dimension describes all of the factors related to employees, from
operational personnel to senior management. Essentially, an organization and its information
systems are worthless without skilled employees. For example, a people dimension of
implementing a new information system is ensuring users are properly trained to use the system.
The people dimension is just as vital as the other dimensions - the success of an information
system depends on the people implementing and operating it. In addition, as a resource,
employees are expensive to hire, manage, and train, whereas technology and hardware can be
relatively inexpensive.
Difficulty: 2: Moderate
AACSB: Reflective Thinking; Information Technology; Written and Oral Communication
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
62) You are a marketing manager for a national movie theater chain. Give an example of data
that your department could use for creating meaningful information. What type of information
could that data produce?
Answer: Movie ticket sales from individual theaters would be an example of raw data.
Meaningful information from this would be: average number of tickets sold to seniors on certain
days of the week.
Difficulty: 1: Easy
AACSB: Application of Knowledge; Information Technology; Written and Oral
Communication
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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63) Define business process. What might be a business process used at a hospital?
Answer: A business process is a set of logically related tasks and behaviors for accomplishing
work. Hiring a new employee, customer intake, and filing medical records are examples of
business processes at a hospital.
Difficulty: 2: Moderate
AACSB: Reflective Thinking; Written and Oral Communication
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
64) What is the difference between information technology and information systems?
Answer: Information technology (IT) consists of all the hardware and software that a firm needs
to use to achieve its business objectives. Information systems are more complex. An information
system can be defined technically as a set of interrelated components that collect (or retrieve),
process, store, and distribute information to support decision making and control in an
organization.
Difficulty: 2: Moderate
AACSB: Application of Knowledge; Written and Oral Communication
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
65) This chapter discusses how each organization has its own culture and sets of values shared
by most of its members. What kind of shared values might you find at a law firm?
Answer: Shared values at a law firm might be: The legal system works, the legal system is fair,
lawyers help people, and people need help with the legal system because it is complicated.
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Written and Oral Communication
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
66) Why is the building of a house an appropriate analogy for the building of an information
system?
Answer: Houses are built with hammers, nails, and wood, but these alone do not make a house.
The architecture, design, setting, landscaping, and all of the decisions that lead to the creation of
these features are part of the house and are crucial for solving the problem of putting a roof over
one's head. Computers and programs are the hammer, nails, and lumber of computer-based
information systems, but alone they cannot produce the information a particular organization
needs. To understand information systems, you must understand the problems they are designed
to solve, their architectural and design elements, and the organizational processes that lead to
these solutions.
Difficulty: 3: Challenging
AACSB: Analytical Thinking; Written and Oral Communication
LO: 1.2: What exactly is an information system? How does it work? What are its people,
organizational, and technology components?

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67) A database into which employees manually input customer names and addresses is riddled
with errors and you have been charged with rectifying the situation. In considering the
organizational dimensions of this problem, you should consider:
A) the skill levels of the employees inputting the data.
B) the training given to the employees inputting the data.
C) the business processes in place governing the manual input of the data.
D) the types of automatic error checking provided by the input software.
E) the storage capacity of the database.
Answer: C
Difficulty: 2: Moderate
AACSB: Application of Knowledge; Information Technology
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
68) The first step in the model of business problem solving discussed in the chapter is:
A) interviewing the people involved in the problem.
B) identifying the problem.
C) outlining the problem's causes.
D) assigning the problem to a problem solver.
E) evaluating possible solutions to the problem.
Answer: B
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
69) Inadequate database capacity is an example of the ________ dimension of business
problems.
A) technology
B) organizational
C) people
D) management
E) cultural
Answer: A
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?

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70) Legal compliance is an example of the ________ dimension of business problems.
A) management
B) organizational
C) people
D) technology
E) cultural
Answer: C
Difficulty: 3: Challenging
AACSB: Analytical Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
71) You are a new manager at a plumbing supply manufacturer where there are an unusually
high number of returns for a new aerator used in the production of high-end faucets. In
examining the problem you determine that the primary cause is the improperly designed die cast
for the aerator. Which dimension of a business problem does this reflect?
A) People
B) Technology
C) Management
D) Organizational
E) Cultural
Answer: A
Difficulty: 3: Challenging
AACSB: Application of Knowledge; Analytical Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
72) Poor business processes are an example of the ________ dimension of business problems.
A) management
B) organizational
C) people
D) infrastructure
E) cultural
Answer: B
Difficulty: 2: Moderate
AACSB: Analytical Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?

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73) The owners of Speed-EZ, a new bike messenger service, are concerned about how they will
manage their messengers once the messengers have left the office. This is a business problem
that falls into the:
A) management dimension.
B) people dimension.
C) organizational dimension.
D) technology dimension.
E) cultural dimension.
Answer: B
Difficulty: 3: Challenging
AACSB: Analytical Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
74) Flapjack Flats, a new pancake chain, is having difficulty finding pancake chefs. This is a
business problem that falls into the:
A) management dimension.
B) people dimension.
C) organizational dimension.
D) technical dimension.
E) cultural dimension.
Answer: C
Difficulty: 3: Challenging
AACSB: Analytical Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
75) In choosing the best solution for a business problem, all of the following are important
considerations except:
A) the cost of the solution.
B) the feasibility of the solution given existing resources and skills.
C) the length of time to implement the solution.
D) the attitudes of employees.
E) the ability to forget about the problem once it has been solved.
Answer: E
Difficulty: 3: Challenging
AACSB: Reflective Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?

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76) The final step in the four-step model of business problem solving is:
A) outcome.
B) implementation.
C) change management.
D) feedback.
E) employee re-training.
Answer: B
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
77) Which of the following would not be considered part of the implementation phase of
problem solving?
A) Change management
B) Purchasing hardware for an information systems solution
C) Training an employee on new systems software
D) Evaluating a selection of software packages for implementing a new business process
E) Determining the attitude of employees about the solution.
Answer: D
Difficulty: 2: Moderate
AACSB: Analytical Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
78) The failure of NASA's initial solution to preventing the space shuttle shedding foam
illustrates:
A) the importance of training employees on new business processes.
B) the need to prepare for measuring outcomes of a business solution.
C) the continuous nature of problem solving.
D) the need to quickly adapt to new technological innovations.
E) the importance of organizational change in problem solving.
Answer: C
Difficulty: 2: Moderate
AACSB: Analytical Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?

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79) Perhaps the most frequent error in problem solving is:
A) rushing to judgment about the nature of a problem.
B) not being aware of personal limitations.
C) being too doubtful.
D) following a rote pattern of decision making.
E) failing to consider all dimensions of a problem.
Answer: A
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
80) Assume you work for a package delivery service in a major metropolitan area and that the
business has been losing customers for several years. You have been asked to find a solution to
this problem. What is the correct way to proceed?
A) Look for solutions, evaluate the solutions, identify the problem more clearly, and then
implement the solution.
B) Think about what solutions can be implemented, look for solution designs, evaluate the
designs, and then implement the solution.
C) Identify the problem, design alternative solutions, choose the best solution, and then
implement the solution.
D) Design solutions, evaluate and identify the problems, choose the best solution, and then
implement the solution.
E) Identify relevant information technologies, interview employees, choose a technology, and
implement the technology.
Answer: C
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Application of Knowledge; Information Technology
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
81) Which are the three major dimensions of business problem solving?
A) Organizational dimensions, people dimensions, and technology dimension
B) Organizational dimensions, people dimensions, and environmental dimensions
C) People dimensions, technology dimensions, and environmental dimensions
D) Technology dimensions, organizational dimensions, and environmental dimensions
E) Organizational dimensions, technology dimensions, and cultural dimensions
Answer: A
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?

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82) Identifying a problem includes agreeing that a problem exists.
Answer: TRUE
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
83) Political conflict is an example of the people dimension of business problems.
Answer: FALSE
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
84) Encouraging employees to adapt to new business processes is an important factor in change
management.
Answer: TRUE
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
85) Describe the four steps taken in solving a business problem.
Answer: The four steps are problem identification, solution design, choice of a solution, and
implementation. In the problem identification step, relevant people in an organization must agree
that a problem exists, what the problem is, what its causes are, and what can be done about the
problem given the organization's resources. In the solution design step, as many solutions as
possible should be determined. In the choice step, you choose the best solution from the list of
options determined in the previous step. It is important to match a choice to existing resources,
skills, and feasibility. In the last step, implementation, the solution is put in place. In information
systems solutions, this may include purchasing hardware or software and testing it.
Implementation also includes employee training, change management, and using a method to
measure the outcome.
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Written and Oral Communication
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?

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86) What are the three dimensions of business problems? Give an example of each.
Answer: The three dimensions to business problems are:
(1) Organizational: This may include outdated business processes, unsupportive culture and
attitudes, political conflict, turbulent business environment and change, complexity of task,
inadequate resources.
(2) Technology: This may include insufficient or aging hardware, outdated software, inadequate
data management, insufficient telecommunications capacity, incompatibility of old systems with
new technology, and rapid technological change.
(3) People: This may include lack of employee training, difficulties in evaluation performance,
legal and regulatory compliance, work environment, lack of employee support and participation,
indecisive management, or poor management.
Difficulty: 2: Moderate
AACSB: Analytical Thinking
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
87) The department chain you work for has had numerous complaints about slow customer
service. Your colleague, a sales manager, informs you that this happened at a previous store she
worked for, and it was cleared up by hiring more sales representatives. Should you take her
advice? Why or why not? What techniques can you use in evaluating the problem?
Answer: The advice should not be taken, as it is a rush to judgment, which could mean that the
wrong solution is used, wasting time and resources. You should ask the colleague to employ
critical thinking. Critical thinking is sustained suspension of judgment with an awareness of
multiple perspectives and alternatives. It involves at least four elements:
• Maintaining doubt and suspending judgment
• Being aware of different perspectives
• Testing alternatives and letting experience guide
• Being aware of organizational and personal limitations
Difficulty: 3: Challenging
AACSB: Interpersonal Relations and Teamwork
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?

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88) How does critical thinking relate to the problem-solving process?
Answer: Simply following a rote pattern of decision making, or a model, does not guarantee a
correct solution. The best protection against incorrect results is to engage in critical thinking
throughout the problem-solving process.
Perhaps the most frequent error in problem solving is to arrive prematurely at a judgment about
the nature of the problem. By doubting all solutions at first and refusing to rush to a judgment,
you create the necessary mental conditions to take a fresh, creative look at problems and you
keep open the chance to make a creative contribution.
Second, it is important to recognize that all interesting business problems have many dimensions
and that the same problem can be viewed from different perspectives such as the technology
perspective, the organization perspective, and the people perspective.
The third element of critical thinking involves testing alternatives, or modeling solutions to
problems, and letting experience be the guide. Not all contingencies can be known in advance
and much can be learned through experience. Therefore, it is important to experiment, gather
data and reassess the problem periodically.
Difficulty: 3: Challenging
AACSB: Application of Knowledge
LO: 1.3: How will a four-step method for business problem solving help you solve information
system-related problems?
89) Which of the following is an important skill for an accounting major?
A) An understanding of online transaction and reporting systems
B) An understanding of product management enterprise systems
C) An understanding of supplier management enterprise systems
D) An understanding of enterprise systems that enhance leadership
E) An understanding of enterprise systems for customer relationship management
Answer: A
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?
90) Which of the following is an important skill for a marketing major?
A) An understanding of online transaction and reporting systems
B) An understanding of product management enterprise systems
C) An understanding of supplier management enterprise systems
D) An understanding of enterprise systems that enhance leadership
E) An understanding of financial reporting systems
Answer: B
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?

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91) What is the estimated growth rate for information systems managers' jobs through 2020?
A) -10%
B) -1%
C) 15%
D) 5%
E) 45%
Answer: C
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?
92) Financial managers work directly with ________ to ensure investments in information
systems help achieve corporate goals.
A) operations managers
B) senior managers
C) marketing managers
D) accounting managers
E) knowledge workers
Answer: B
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?
93) Which of the following statements is not true?
A) The most common and successful offshore outsourcing projects involve production
programming and system maintenance programming work, along with call center work.
B) Inflation in Indian wages for technology work is leading to a counter movement of some IT
jobs back to the United States.
C) The fear that offshore outsourcing will reduce demand for new information system hires in
the United States is mitigated by the fact that reduced IT expenditures results in increased IT
investments and the creation of domestic jobs.
D) The impact of domestic IT outsourcing has been very disruptive to some regional areas of the
United States.
E) Management and organizational tasks required in systems development usually are not
outsourced.
Answer: D
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?

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94) As a result of new public laws, accountants are beginning to perform more technical duties,
such as auditing systems and networks.
Answer: TRUE
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?
95) IT managerial jobs are outsourced easily because of the universal standards used by the
Internet.
Answer: FALSE
Difficulty: 2: Moderate
AACSB: Analytical Thinking; Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?
96) An understanding of enterprise-wide systems for customer relationship management is one
of the skills relevant to careers in marketing.
Answer: TRUE
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?
97) Whereas marketing and financial careers have been transformed by the growth in
information systems, thus far the job of management has remained relatively unaffected.
Answer: FALSE
Difficulty: 2: Moderate
AACSB: Information Technology
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?
98) There are two types of outsourcing: offshore outsourcing and foreign outsourcing.
Answer: FALSE
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?

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99) Describe at least three of the general information skills essential for all business careers.
Answer: General information skills essential for all business careers include (1) understanding
how information systems and technologies can help firms achieve business objectives such as
operational efficiency, developing new products and services, and maintaining customer
intimacy. Also essential is (2) understanding the central role of databases in a modern firm as
well as (3) developing skills in the analysis of information in order to help firms understand and
make sense out of their environments. (4) All business majors need to be able to work with
specialists and system designers who build and implement information systems. This is
necessary to ensure that the systems that are built actually service business purposes and provide
the information and understanding required by managers and employees. In addition, students
need to (5) understand how information systems work in relation to social and community issues,
including ethical issues and how systems must meet requirements for reporting to government
regulators and the public.
Difficulty: 3: Challenging
AACSB: Application of Knowledge; Written and Oral Communication
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?
100) What kinds of jobs are not likely to be outsourced and why?
Answer: Jobs involved with the creation of innovative new products, services, and systems are
rarely outsourced either domestically or globally. The advantage of low-wage countries is their
low wages, not their keen sense of new products, services, and technologies for the United States
market. Software design and new programming efforts are also rarely outsourced because of
their strategic importance to firms and because domestic software designers are much closer to
the American marketplace and customer base.
Difficulty: 3: Challenging
AACSB: Application of Knowledge; Written and Oral Communication
LO: 1.4: How will information systems affect business careers, and what information systems
skills and knowledge are essential?

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Essentials of MIS, 12e (Laudon)
Chapter 2 Global E-Business and Collaboration
1) Suppliers, customers, employees, products and services, and ________ are the five basic
components with which businesses must deal.
A) the environment
B) manufacturing and production
C) sales and marketing
D) invoices and payments
E) technology
Answer: D
Difficulty: 2: Moderate
AACSB: Application of Knowledge
LO: 2.1: What major features of a business are important for understanding the role of
information systems?
2) Producing a bill of materials is a responsibility of the ________ function.
A) finance and accounting
B) human resources
C) manufacturing and production
D) sales and marketing
E) technology
Answer: C
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 2.1: What major features of a business are important for understanding the role of
information systems?
3) Identifying potential customers for the businesses' products or services is an activity
associated with the ________ function.
A) finance and accounting
B) human resources
C) manufacturing and production
D) technology
E) sales and marketing
Answer: E
Difficulty: 1: Easy
AACSB: Application of Knowledge
LO: 2.1: What major features of a business are important for understanding the role of
information systems?

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