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Chapter 2 Information Systems in the Enterprise 2-1

Chapter 2Information Systems in the Enterprise

True-False Questions

1.1

It is possible for a single system to provide all the information an organization needs.

Answer: False Difficulty: Easy Reference: p. 42

2. Well-conceived systems linking the entire enterprise typically require a significant amount of organizational and management change.

Answer: True Difficulty: Medium Reference: p. 42

3. Enterprise systems, supply chain management systems, customer relationship systems, and knowledge management systems are types of enterprise applications.


4. At the management-level, systems are principally concerned with matching changes in the external environment with existing organizational capability.

Answer: False Difficulty: Medium Reference: p. 43

5. Management-level systems keep track of the elementary activities and transactions of the organization.


6. Order processing and payroll are not functions of the TPS.


7. At the operational level of an organization, tasks, resources, and goals are predefined and highly structured.


8. Routine reports, simple models, and low-level analysis are processing characteristics of a DSS.


9. Professionals and staff managers are the primary users of a TPS.


10. Promotion tracking is a major function of sales/marketing systems.

Answer: True Difficulty: Easy Reference: p. 46

11. MIS primarily serve the functions of planning, controlling, and decision making at the


management level.


12. TPS are so central to a business that the business could die if they suddenly become unavailable.


13. TPS are typically a major source of data for other systems.


14. MIS systems are very flexible and have good analytical capabilities.

Answer: False Difficulty: Hard Reference: p. 47

15. Decision-support systems are information systems at the organization’s operational level that combine data and sophisticated analytical models or data analysis tools to support semistructured and unstructured decision making.


16. DSS have less analytical power than other systems and are created primarily to gather data to be analyzed by decision makers.


17. ESS serve the strategic level of the organization.


18. ESS are designed to send raw information from internal MIS to DSS.


19. Integrating different systems is extremely time consuming and complex.


20. Information systems can be classified both by specific organizational function and the organizational level at which they are used.


21. Pricing analysis, a type of sales and marketing system, is located at the operational organizational level.


22. Most manufacturing and productions systems use some sort of inventory system.


23. In an inventory system, the “reorder point” is that point at which a decision is made to prevent a stockout.



24. “Economic order quantity” is a name for the formula that calculates the least expensive quantity to reorder.


25. Machine control, a type of manufacturing and production information system, is located at the operational level in an organization.


26. Long-term investment goals for the company are established through strategic-level systems for the finance and accounting functions.


27. Human resources information systems support activities involving the management of the employee skills of the firm.


28. Human resources information systems are typically designed to provide data to satisfy government record keeping requirements as part of their function.


29. Organizations are using information systems to coordinate activities and decisions across entire industries.


30. The goal of an enterprise system is to integrate key business processes so that information can flow freely between different parts of the firm.


31. Most supply chains are multitiered.


32. Using customer feedback to drive marketing and production is called micromarketing.


33. The use of digital technologies to enable multiple organizations to collaboratively design, develop, build, and manage products through their lifecycles is called “collaborative commerce.”


34. Private industrial networks are Web-enabled networks linking systems of multiple firms in an industry for the coordination of transorganizational business processes.



35. Businesses now view customers as long-term assets to be nurtured.


36. Customer relationship management systems attempt to solve the fragmentation of customer information by integrating all contacts with customers to ensure the firm can present one coherent face to those customers.


37. Intelligence management systems support the creation, capture, storage, and dissemination of firm expertise and knowledge.


38. The transnational form is the form of global business organization in which a product is created, designed, financed, and initially produced in the home country, but for product-specific reasons relies heavily on foreign personnel for further production, marketing, and human resources.


39. Referencing global system configuration, duplicated systems are those in which development occurs at the home base but operations are handed over to autonomous units in foreign locations.


40. Referencing global system configuration, networked systems are those in which each foreign unit designs its own unique solutions and systems.


Multiple- Choice Questions

41. Which of the following are types of enterprise applications?

a. enterprise systemsb. supply chain management systemsc. customer relationship management systemsd. knowledge management systemse. All of the above

Answer: e Difficulty: Medium Reference: p. 42

42. Strategic-level systems:

a. monitor the elementary activities and transactions of the organization.b. support knowledge and data workers in an organization.c. support the monitoring, controlling, decision-making and administrative activities of

middle management.


d. support long-range planning activities of senior management.e. support financial and resource planning activities.

Answer: d Difficulty: Medium Reference: p. 43

43. Operational-level systems:


middle management.d. support long-range planning activities.e. support financial and resource planning activities.

Answer: a Difficulty: Medium Reference: p. 43

44. Management-level systems:


middle management.d. support long-range planning activities.e. support financial and resource planning activities.

Answer: c Difficulty: Medium Reference: p. 43

45. An example of an operational-level system is:

a. one record that the number of hours worked each day by employees on the factory floor.

b. a voyage estimating system.c. decisions about the design of future products.d. reports where sales fall below anticipated levels by territory.e. All of the above


46. Transaction processing systems operate at the:

a. management level.b. strategic level.c. decision-support level.d. operational level.e. knowledge level.

Answer: d Difficulty: Easy Reference: p. 44

47. The basic business systems that support the operational level of the organization are the:

a. DSS.b. KWS.c. TPS.d. MIS.e. JIT.


Answer: c Difficulty: Easy Reference: p. 44

48. Graphics, simulations, and interactive processing occur mostly in _______ systems.

a. DSSb. SIMc. MISd. KWSe. ESS

Answer: e Difficulty: Hard Reference: p. 45

49. Which of the following is characteristic of a DSS’s information inputs?

a. Low-volume data or massive databases optimized for data analysis; analytic models and data analysis tools

b. Aggregate data; external, internalc. Summary transaction data; high-volume data; simple modelsd. Transactions; eventse. None of the above


50. Which of the following types of users are characteristic of an ESS?

a. Operations personnel; supervisorsb. Middle managersc. Professionals; staff managersd. Senior managerse. Customers


51. Information systems at the management level of an organization that serve the functions of planning, controlling, and decision making by providing routine summary and exception reports best describes:

a. management information systems.b. artificial intelligence systems.c. transaction processing systems.d. executive support systems.e. decision support systems.


52. Which of the following is not a major functional category of TPS?

a. Sales/marketingb. Manufacturing/productionc. Finance/accountingd. Human resourcese. Economics



53. DSS systems explicitly include:

a. predefined solutions for problems.b. coordination through diverse knowledge workers.c. online access to the current business environment.d. user-friendly software.e. All of the above


54. Information systems at the organization’s management level that combine data and sophisticated analytical models or data analysis tools to support semistructured and unstructured decision making best describes:

a. management information systems.b. artificial intelligence systems.c. transaction processing systems.d. executive support systems.e. decision support systems.


55. The voyage-estimating system described in this chapter best exemplifies a(n):

a. management information system.b. artificial intelligence system.c. transaction processing system.d. executive support system.e. decision-support system.


56. ESS:

a. provide specific capabilities and fixed applications.b. solve specific problems.c. provide a generalized computing and telecommunications environment.d. require a great deal of technology ability and training.e. are highly analytical.


57. Information systems at the organization’s strategic level designed to address unstructured decision making through advanced graphics and communications best describes:

a. management information systems.b. artificial intelligence systems.c. transaction processing systems.d. executive support systems.e. decision-support systems.


58. Systems that help the firm identify customers for the firm’s products or services, develop products and services to meet customers’ needs, promote these products and services,


sell the products and services, and provide ongoing customer support best describe:

a. sales and marketing information systems.b. manufacturing and production information systems.c. finance and accounting information systems.d. human resources information systems.e. economic systems.


59. Information systems can be defined by organizational level and:

a. specific organizational function.b. the cost of equipment and training.c. the educational requirements needed to use them.d. analytical reporting ability.e. user support functions.

Answer: a Difficulty: Easy Reference: p. 50

60. Systems that deal with the planning, development, and production of products and services, and with controlling the flow of production best describe:


Answer: b Difficulty: Medium Reference: p. 51

61. At the management level, sales and marketing information systems support:

a. market research.b. advertising campaigns.c. pricing decisions.d. promotional campaigns.e. All of the above

Answer: e Difficulty: Easy Reference: p. 51

62. At the management level, manufacturing and production systems:

a. deal with the status of production tasks.b. deal with the data about each item in inventory.c. analyze and monitor manufacturing and production costs and resources.d. Both a and ce. All of the above

Answer: c Difficulty: Hard Reference: p. 51

63. Systems that keep track of the firm’s financial assets and fund flows best describe:

a. sales and marketing information systems.b. manufacturing and production information systems.c. finance and accounting information systems.


d. human resources information systems.e. economic systems.


64. Finance and accounting systems keep track of:

a. manpower requirements for meeting long-term business plans.b. financial assets and fund flows.c. supply chain and computer resource management.d. financial information external to the firm.e. sales records.


65. Systems that maintain employee records; track employee skills, job performance, and training; and support planning for employee compensation and career development best describes:



66. Systems that can coordinate activities, decisions, and knowledge across many different functions, levels, and business units in a firm best describes:

a. knowledge applications.b. enterprise applications.c. management information systems.d. transaction processing systems.e. manufacturing systems.


67. Integrated enterprise-wide information systems that coordinate key internal processes of the firm best describes:

a. knowledge systems.b. integrated systems.c. enterprise systems.d. extranets.e. intranets.


68. The close linkage and coordination of cross-functional and interenterprise business processes involved in buying, making, and moving a product best describes:

a. market chain management.b. production chain management.c. business chain management.d. supply chain management.


e. business process management.


69. The return of items from buyers to sellers in a supply chain best describes:

a. market chain.b. return logistics.c. retro logistics.d. downstream logistics.e. reverse logistics.


70. Managing a supply chain requires that a company:

a. eliminate redundant steps, delays, and the unnecessary use of resources.b. ask for the right reports from MIS.c. share internal information with suppliers and competitors.d. understand information technology.e. include reverse logistics in all planning.


71. The use of digital technologies to enable multiple organizations to collaboratively design, develop, build, and manage products through their lifecycles best describes:

a. collaborative commerce.b. value chain.c. enterprise system.d. extranet.e. intranet.


72. Private industrial networks permit firms and their business partners to:

a. share product design and development.b. share marketing plans.c. share inventory and production scheduling.d. All of the abovee. None of the above


73. The business and technology discipline that uses information systems to coordinate all of the business processes surrounding the firm’s interactions with its customers in sales, marketing, and service best describes:

a. supply chain management system.b. enterprise system.c. knowledge management system.d. management information system.e. customer relationship management system.



74. Systems that support the creation, capture, storage, and dissemination of firm expertise and knowledge best describes:

a. expert systems.b. customer relationship management systems.c. transaction processing system.d. knowledge management systems.e. strategic system.


75. Forms of global business organization include:

a. multinationals.b. franchisers.c. transnationals.d. domestic exporters.e. All of the above

Answer: e Difficulty: Easy Reference: p. 66

76. The form of global business organization characterized by heavy centralization of corporate activities in the home country best describes:

a. domestic exporter.b. transnational.c. multinational.d. franchiser.e. None of the above


77. A company that controls finances in the home country and decentralizes production, sales, and marketing operations to other countries is using:

a. the domestic exporter strategy.b. the transnational strategy.c. the multinational strategy.d. the franchising strategy.e. None of the above


78. Value-added activities are managed from a global perspective by:

a. the domestic exporter strategy.b. the transnational strategy.c. the multinational strategy.d. the franchising strategy.e. None of the above


79. A form of global business organization in which a product is created, designed, financed, and initially produced in the home country, but for product-specific reasons relies heavily


on foreign personnel for further production, marketing, and human resources best describes:

a. the domestic exporter strategy.b. the transnational strategy.c. the multinational strategy.d. the franchiser strategy.e. None of the above


80. Which global system configuration’s development occurs at the home base but operations are handed over to autonomous units in foreign locations?

a. Decentralized systemsb. Duplicated systemsc. Knowledge systemsd. Centralized systemse. Networked systems


Fill In the Blanks81. A(n) operational-level system monitors the elementary activities and transactions of the

organization.

Difficulty: Easy Reference: p. 43

82. A(n) management-level system supports the monitoring, controlling, decision-making, and administrative activities of middle managers.


83. A(n) strategic-level system supports the long-range planning activities of senior management.


84. The principle concern of strategic-level systems is matching changes in the external environment with existing organizational capability.

Difficulty: Medium Reference: p. 43

85. A(n) transaction processing system performs and records the daily routine dealings necessary to conduct the business.


86. Operational personnel and supervisors are characteristically users of a(n) TPS.



87. Middle managers are characteristically users of a(n) MIS.


88. Sorting, listing, merging, and updating are processing characteristic of a(n) TPS.


89. Projections and responses to queries are information outputs characteristic of a(n) ESS.


90. A(n) management information system serves the functions of planning, controlling, and decision making by providing routine summary and exception reports.


91. A(n) decision-support system combines data and sophisticated analytical models or data analysis tools to support semistructured and unstructured decisions.


92. A(n) executive support system addresses unstructured decision making through advanced graphics and communications.

Difficulty: Hard Reference: p. 49

93. A(n) sales and marketing information system identifies customers for the firm’s products and services, develops products to meet customer needs, promotes and sells the products, and provides customer support.


94. A(n) manufacturing and production information system plans, develops and produces the output of the company and controls the flow of production.


95. A(n) finance and accounting information system keeps track of the firm’s monetary assets and fund flows.


96. A(n) human resources information system maintains employee records, tracks employee skills, job performance and training, and supports planning for employee compensation and career development.


97. Business process refers to the manner in which work is organized, coordinated, and focused to produce a valuable product or service.


98. Enterprise applications are systems that can coordinate activities, decisions, and


knowledge across many different functions, levels, and business units in a firm.


99. Enterprise system s are integrated enterprise-wide information systems that coordinate key internal processes of the firm.


100. The upstream portion of the supply chain includes the organization’s suppliers and their suppliers and the processes for managing relationships with them.


101. The downstream portion of the supply chain consists of the organizations and processes for distributing and delivering products to the final customers.


102. Supply chain management is the close linkage and coordination of cross-functional and interenterprise business processes involved in buying, making, and moving a product.


103. A(n) supply chain is the network of organizations and business processes for procuring materials, transforming raw materials into intermediate and finished products, and distributing the finished products to customers.


104. Reverse logistics is the process of returning items from buyers to sellers in a supply chain.


105. Supply chain management systems are information systems that automate the flow of information between a firm and its suppliers in order to optimize the planning, sourcing, manufacturing, and delivery of products and services.


106. Collaborative planning, forecasting, and replenishment (CPFR) refers to firms collaborating with their suppliers and buyers to formulate demand forecasts, develop production plans and coordinate shipping, warehousing, and stocking activities.


107. Collaborative commerce is the use of digital technologies to enable multiple organizations to work together to design, develop, build, and manage products through their lifecycles.


108. Private industrial networks are Web-enabled networks linking systems of multiple firms in an industry for the coordination of transorganizational business processes.



109. Customer relationship management refers to a business and technology discipline that uses information systems to coordinate all of the business processes surrounding the firm’s interactions with its customers in sales, marketing, and service.


110. Customer relationship management systems are information systems that track all of the ways in which a company interacts with its customers and analyze these interactions to optimize revenue, profitability, customer satisfaction, and customer retention.


111. Knowledge management systems are systems that support the creation, capture, storage, and dissemination of firm expertise and knowledge.


112. Enterprise-wide systems, office systems, and knowledge work systems are three types of knowledge management systems.


113. D omestic exporter is a form of global business organization characterized by heavy centralization of corporate activities in the home country of origin.


114. The multinational global form of organization concentrates financial management and control out of a central home base while decentralizing production, sales and marketing operations to units in other countries.


115. The franchiser is a global form of business organization in which a product is created, designed, financed, and initially produced in the home country, but for product-specific reasons relies heavily on foreign personnel for further production, marketing, and human resources.


116. The transnational global form of business organization is a truly global form of company with no national headquarters and does business from a global perspective without regard to national borders to optimize sources of supply and demand and competitive advantages.


117. In a global system configuration, a(n) centralized system is one in which systems development and operations occur totally at the domestic home base.


118. In a global system configuration, a(n) networked system is one in which systems development and operations occur in an integrated and coordinated fashion across all units.



119. In a global system configuration, a(n)duplicated system is one in which development occurs at the home base but operations are handed over to autonomous units in foreign locations.


120. In a global system configuration, a(n) decentralized system is one in which each foreign unit designs its own unique solutions and systems.


Essay Questions121. How does management use information systems to support the sales and marketing

function of a business? How do these systems make the manager more effective in this area than paper-and-pencil systems?

At the operational level, information systems record daily sales figures and processes orders. At the management level, information systems track monthly sales figures by sales territory and report on territories where sales exceed or fall below anticipated levels. At the strategic level, information systems forecast sales trends over a five-year period.

The most obvious advantage of information systems over paper-and-pencil systems is in the amount of time that is saved when sales and marketing information does not have to be manually-recorded, typed by a clerical worker, delivered by snail-mail or by hand, and manually filed and re-filed. Further, it is easier to correct errors than to ferret out errors in handwritten materials, or errors occurring when multiple carbons make reading difficult. The more paper-and-pencil entries are required before the material is entered into the computer system, the more chance for error exists. Further, paper-and-pencil materials must be filed and retrieved manually, and may be lost in the office melee. With an MIS, the information is available on the desktop, or retrievable on a laptop or distant computer. Using an MIS allows management to manipulate the data and retrieve information otherwise not available.

122. Distinguish between private industrial network and enterprise system.

A private industrial network links systems of multiple firms in an industry for the coordination of transorganizational business processes. These Web-enabled networks provide a platform where systems from different companies can seamlessly exchange information and an infrastructure for collaborative commerce activities. They are often owned and managed by large companies who use them to coordinate purchases, orders, and other activities with their suppliers, distributors, and selected business partners. Procter & Gamble is an example. An enterprise system links and integrates key business processes within a firm so that information can flow freely within the firm. Companies can use enterprise systems to support organizational structures that were not previously possible or to create a more disciplined organizational culture.

123. List and define the four major types of information systems, and give at least two information outputs to be expected from each one.

The four major types of information systems discussed in the textbook include executive support systems, decision-support systems, management information systems, and transaction processing systems. Executive support systems exist at the strategic level and are designed to address unstructured decision making through advanced graphics and communications. Information outputs include projections and responses to inquiries.


Decision-support systems exist at the management level and combine data and sophisticated analytical models or data analysis tools to support semistructured and unstructured decision making. Information outputs include special reports, decision analyses, and responses to queries.

Management information systems serve the management level and support the functions of planning, controlling, and decision making by providing routine summary and exception reports.

Transaction processing systems serve the operations level by performing and recording the daily routine transactions necessary to conduct the business. Information outputs include detailed reports, lists, and summaries.

124. Identify the three main categories of information systems in relation to the groups they serve and the functional areas in which they operate. Which do you believe is most difficult to implement? Why?

The textbook identifies operational, management, and strategic as the three main categories of information systems. The operational level systems support operational managers; the management level systems support middle managers, and the strategic level systems support senior managers. These main system categories provide support across all functional areas, including sales and marketing, manufacturing and production, finance and accounting, and human resources.

125. Distinguish between MIS and DSS. Who within the organization is most likely to find each useful, and why?

MIS provide routine summary and exception reports to provide answers to routine questions that have been specified in advance and have a predefined procedure for answering them. These systems use internal information. They are generally not flexible, and have little analytical capability, but provide basic information for the continued running of the company.

DSS combine data and analytical models or data analysis tools to support semistructured and unstructured decision making. They address problems where the procedure for arriving at a solution may not be fully predefined in advance. They use information from external as well as internal sources, and contain a variety of models to analyze data. They often condense large amounts of data into a form in which they can be analyzed by decision makers at the middle and upper management level. They are interactive, and allow the user to change assumptions, ask new questions, and include new data.

Middle and upper management are most likely to use both systems, but the higher up in the organization, and the more responsibility he/she holds, the more likely he/she is to use a DSS.

126. What is a customer relationship management system? What are the advantages to using a customer relationship management system?

A customer relationship management system tracks all of the ways in which a company interacts with its customers and analyzes these interactions to optimize revenue profitability, customer satisfaction and customer retention. Advantages include the acquisition and retention of new customers, providing better service and support to existing customers, and the ability to customize offerings based on customer preference.

127. What is a supply chain? What is a supply chain management system?


Supply chain refers to a network of organizations and business processes for procuring materials, transforming raw materials into intermediate and finished products, and distributing the finished products to customers. A supply chain management system automates the flow of information between a firm and its suppliers in order to optimize the planning, sourcing, manufacturing, and deliver of products and services.

128. What is collaborative commerce? Identify three advantages of collaborative commerce.

Collaborative commerce is the use of digital technologies to enable multiple organizations to collaboratively design, develop, build, and manage products through their lifecycles. Efficiency, minimizing excess inventory, better forecasts, and enhanced communication with partners and customers are several advantages.

129. What is a knowledge management system? Provide three examples.

A knowledge management system supports the creation, capture, storage, and dissemination of firm expertise and knowledge. Enterprise-wide systems, office systems, and knowledge work systems are three examples.

130. Briefly describe four forms of global business organization.

Domestic exporter, multinational, franchiser, and transnational are the four forms mentioned in the textbook. The domestic exporter form is characterized by heavy centralization of corporate activities in the home country of origin. The multinational form concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries. The franchiser form creates, designs, finances, and initially produces a product in the home country, but for product-specific reasons relies heavily on foreign personnel for further production, marketing, and human resources. The transnational form has no national headquarters; value-added activities are managed from a global perspective without reference to national borders, optimizing sources of supply and demand and local competitive advantage.

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