Chapter 1:

SHORT-ANSWER QUESTIONS (p. 33)

1. What is the relationship between management information systems (MIS)
and information technology (IT)?
ANSWER: MIS is a broad business function and the study of the use of
IT. IT is a set of tools and a resource within MIS. P. 6
2. What four steps should an organization follow in determining which
technologies to use?
ANSWER: The four steps are: (1) assess the state of competition and
industry pressures, (2) determine business strategies, (3) identify
important business processes, and (4) align technology tools with the
business processes. P. 6
3. What is the relationship between data, information, business intelligence
(BI), and knowledge?
ANSWER: Each build on the previous. Data are raw facts, while
information is data that has meaning. Business intelligence is
collective information that gives you the ability to make strategic
business decisions. Finally, knowledge is a broad term that can
encompass BI context, how to affect BI, patents and trademarks, and
organizational know-how. P. 7
4. How does the granularity of information change as it moves from lower to
upper organizational levels?
ANSWER: At the lowest levels, information granularity is very fine
because people need tremendous detail to perform their jobs. As
information moves up through the organization, it becomes more coarse
because people dont need as much detail but rather aggregations of
information. p. 9
5. What is the difference between a technology-literate knowledge worker
and an information-literate knowledge worker?
ANSWER: A technology-literate knowledge worker knows how and
when to apply technology; that is, he/she understands the value and role
of technology. An information-literate knowledge worker knows all
about information; that is, he/she understands the value and role of
information. p. 11
6. How do ethics differ from laws?
ANSWER: Laws either clearly require or prohibit an action. Ethics are
more subjective, more a matter of personal or cultural interpretation. P.
13

7. What role does the Five Forces Model play?

ANSWER: Porters Five Forces Model helps business people
understand the relative attractiveness of an industry and the industrys
competitive pressures in terms of buyer power, supplier power, threat of
substitute products or services, threat of new entrants, and rivalry among
existing competitors. P. 17

8. Why are competitive advantages never permanent?

ANSWER: Once an organization creates a competitive advantage, all
competitors move to offer similar or even better competitive advantages,
thus nullifying the competitive advantage of the first organization. P. 17
9. What are the three generic strategies according to Michael Porter?
ANSWER: The three generic strategies according to Michael Porter are:
overall cost leadership, differentiation, and focus. P. 21
10. How are Porters three generic strategies, a top-line versus bottom-line
approach, and the RGT framework similar?
ANSWER: They are similar as follows: (1) run = overall cost leadership
= bottom line, (2) grow = focus and differentiation = top line, and (3)
transform = (new) differentiation = top line (when the focus is
innovation). P. 25
11.

What is the role of value-chain analysis?

ANSWER: Value-chain analysis is a systematic approach to assessing
and improving the value of business processes within your organization
to further increase it competitive strengths. So, value-chain analysis
helps you identify important business processes and how technology
might help support them. P. 26

Chapter 2:

SHORT-ANSWER QUESTIONS (p. 87)

1. Why is the traditional buy-hold-sell inventory model an expensive and
potentially risky one?
ANSWER: The traditional inventory model requires that (1) you create
inventory without a known demand, (2) you keep a lot of inventory
throughout the supply chain, and (3) you sell off obsolete inventory at a
very low price. P. 67
2. What is the role of a supply chain management (SCM) system?
ANSWER: The role of a supply chain management (SCM) system is
to support supply chain management activities by automating the
tracking of inventory and information among business processes and
across companies. p. 67

3. How does SCM fit into Porters three generic strategies?

ANSWER: SCM is most commonly associated with the overall cost
leadership generic strategy. P. 68
4. What are the typical functions in a CRM system?
ANSWER: The typical functions in a CRM system include sales force
automation, customer service and support, and marketing campaign
management and analysis. P. 70
5. How does CRM fit into the RGT framework?
ANSWER: CRM is most commonly associated with growing the
organization in the RGT framework. P. 71
6. What is the difference between front office and back office systems?
ANSWER: A front office system is the primary interface to a customer
and a sales channel, while a back office system is used to fulfill and
support customer orders. p. 72
7. For what five things does e-collaboration provide support?
ANSWER: E-collaboration supports (1) work activities within integrated
collaboration environments, (2) knowledge management with knowledge
management systems, (3) social networking with social networking
systems, (4) learning with e-learning tools, and (5) informal collaboration
to support open-source information. p. 73
8. What is the difference between a social networking site and a social
networking system?
ANSWER: A social networking site (e.g., Myspace) is a site on which
you post information about yourself, create a network of friends, share
content, and so on. A social networking system is an IT system that
links you to people you know and, from there, to people your contacts
know. p. 74
9. What is open-source information?
ANSWER: Open-source information is content that is publicly
available (in a broad sense), free of charge, and most often updateable
by anyone. P. 75
10. What are the three most common ways in which the IT function can be
placed within an organization?
ANSWER: The three most common ways in which the IT functions can
be placed are: top-down silo, matrix, and fully integrated. P. 77
11. How are the structuring of the IT function and the philosophical
approach to IT interrelated?
ANSWER: They are interrelated in that the philosophical approach is
most often implemented as a specific structure. Wait-and-see

organizations tend to centralize the IT function in a top-down silo

approach, while early IT adopters tend to disperse the IT function (i.e.,
either matrix or fully integrated). P. 79
12.

What is an enterprise resource planning (ERP) system?

ANSWER: An ERP system is a collection of integrated software for
business management, accounting, finance, HR, project and inventory
management, supply chain, customer relationship management, ecollaboration, etc. p. 80

Chapter 3
SHORT-ANSWER QUESTIONS (p. 139)
1. What is business intelligence? Why it is more than just information?
ANSWER: Business intelligence is knowledge knowledge about your
customers, your competitors, your partners, your competitive
environment, and your own internal operations. It is more than just
information because it combines various types of information to allow
you to make better decisions and operate more productively. p. 112
2. What is online transaction processing (OLTP)?
ANSWER: OLTP is the gathering of input information, processing that
information, and updating existing information to reflect the gathered
and processed information. p. 112
3. What is online analytical processing (OLAP)?
ANSWER: Online analytical processing (OLAP) is the manipulation
of information to support decision making. It differs from OLTP in that it
does not process transactions but rather manipulates existing information
to support the making of a decision. p. 112
4. What is the most popular database model?
ANSWER: The most popular database model is the relational database
model. p. 114
5. How are primary and foreign keys different?
ANSWER: A primary key is a field that uniquely identifies a record in a
relation of a database while a foreign key is a primary key of one file
that appears in another file. So, primary keys must be unique in a given
relation while foreign keys do not have to be. They are the same in that
both are used to enforce integrity constraints. p. 116

6. What are the five software components of a database management

system?
ANSWER: The five important software components of a DBMS are (1)
DBMS engine, (2) data definition subsystem, (3) data manipulation
subsystem, (4) application generation subsystem, and (5) data
administration subsystem. p. 118
7. How are QBE tools and SQL similar? How are they different?
ANSWER: QBE tools and SQL are similar in that they both give you the
ability to create queries to find information in a database. They are
different in that QBE tools provide a GUI interface while SQL requires that
you create your query in statement form. p. 122
8. What is a data warehouse? How does it differ from a database?
ANSWER: The four types of information according to what information
describes are internal, external, objective, and subjective. p. 125
9. What are the four major types of data-mining tools?
ANSWER: The four major types of data mining tools are intelligent
agents, query-and-reporting tools, multidimensional analysis tools, and
statistical tools. p. 127
10.

What is a data mart? How is it similar to a data warehouse?

ANSWER: A data mart is a subset of a data warehouse in which only a
focused portion of the data warehoused information is kept. p. 128

Chapter 4:
SHORT-ANSWER QUESTIONS (p. 186)
11. What are the four types of decision discussed in this chapter? Give an
example of each.
ANSWER: Nonrecurring, or ad hoc, decision is one that you make
infrequently (perhaps only once) and you may even have different criteria
for determining the best solution each time. A merger with another
company is an example. Recurring decisions are decisions that you
have to make repeatedly and often periodically, whether weekly, monthly,
quarterly, or yearly. An example would be which route to take to go to
work. Nonstructured decision is a decision for which there may be
several right answers and there is no precise way to get a right answer.
An example would be whether to change a companys strategy.
Structured decision is a decision where processing a certain kind of
information in a specified way so that you will always get the right answer.
An example would be deciding how much to pay employees.

12.

What are the four steps in making a decision?

ANSWER:
The four steps are intelligence, design, choice, and
implementation.

13.

What is a DSS? Describe its components.?

ANSWER: A decision support system (DSS) is a highly flexible and
interactive IT system that is designed to support decision making when
the problem is not structured. The components of a decision support
system are the model management component, the data management
component, and the user interface management component.

14.

What is a geographic information system used for?

ANSWER: A geographic information system is used for any type of
information that can be represented spatially.

15.

How is information represented in a geographic information system?

ANSWER: A geographic information system represents information in
overlapping layers.

16. What is artificial intelligence? Name the artificial intelligence systems

used widely in business?
ANSWER:
Artificial intelligence (AI) is the science of making
machines imitate human thinking and behavior. The types of artificial
intelligence widely used in business are expert systems, neural networks,
genetic algorithms, and intelligent agents
17.

What are four advantages of an expert system?

ANSWER: Four advantages would be their ability to handle large
amounts of data; to reduce errors; to aggregate information from various
sources; and to improve customer service.

18.

What sort of problems is an expert system used for?

ANSWER: An expert system is used or diagnostic (whats wrong?) and
prescriptive (what to do?) types of problems

19.

How does a neural network work?

ANSWER: A neural network has an input layer with the factors under
consideration, a hidden or middle layer that assigns and adjusts weights
of the factors, and an output layer that provides the answer in the form of
the category the set of inputs belong in.

20.

What three concepts of evolution are used by the genetic algorithm?

ANSWER: The three concepts are selection, mutation, and crossover.
Selection is the feature of a genetic algorithm that give preference to
better outcomes. Mutation is a feature of a genetic algorithm; its the

process of trying combinations and evaluating the success (or failure) of

the outcome. Crossover is the feature of a genetic algorithm where
portions of good outcomes are combined in the hope of creating an even
better outcome.
21.

What are intelligent agents? What tasks can they perform?

ANSWER: Intelligent agents are software that assists you, or act on
your behalf, in performing repetitive computer-related tasks. They can
find good deals on the Internet, monitor computer networks for failures,
fill out forms, play computer games, and so on

12. What is a multi-agent system?

ANSWER: A multi-agent system is a group of intelligent agents that
each has the ability to work independently and to interact with others.
13. What do monitoring-and-surveillance agents do?
ANSWER:
Monitoring-and-surveillance agents (or predictive
agents) are intelligent agents that observe and report on equipment.
2. CHOOSE A FINANCING OPTION. Using a spreadsheet (like Excel, for
example) evaluate your options for a $12,000 car. Compare the
payments (use the =pmt function in Excel), the total amount of
interest, and the total youll pay for the car under the following four
options:
a. 3 years at 0% interest
b. 2 years at 1.99% annual percent rate (APR)
c. 4 years at 5% APR
d. 6 years at 6% APR
What other considerations would you take into account if youre going to
buy a new car? Are there considerations other than the interest rate and
the other parts that can be calculated? What are they? How is a car
different from other purchases, such as CDs or TV sets or computers?
DISCUSSION
The numerical results are as follows:
3 Years @ 0%;
Payments=$333.33
Total Interest = $0.00
Total for the Car=$12,000

2 Years @ 1.99%;
Payments = $510.43
Total Interest = $250.33
Total for the Car = $12,250.33

4 Years @ 5%;
Payments = $276.35
Total Interest = $1264.87
Total for the Car=$13,264.87

6 Years @ 6%;
Payments=$198.87
Total Interest = $14318.98
Total for the Car=$2318.98

There are many considerations involved in buying a new car.

The interest rate is only one factor. It may not be as important as
keeping payments down so that a person might choose to pay for
longer with a higher interest rate.
A car is different from CDs, TV, and computers in that it usually costs
more and will require payments for much longer. A car doesnt
usually lose it value as fast as the other items. Buying a car usually
requires a lot more thought and effort than small purchases like CDs.

3.

WHICH SOFTWARE WOULD YOU USE? Which type or types of

computer-aided decision support software would you use for each of the
situations in the following tasks? Note why you think each of your
choices is appropriate. The decision support alternatives are:
Decision support system
Geographic information system
Expert system
Neural network
Genetic algorithm
Intelligent agent
Problem
You and another marketing executive on a
different continent want to develop a new
pricing structure for products
You want to predict when customers are about
to take their business elsewhere
You want to fill out a short tax form
You want to determine the fastest route for
package delivery to 23 different addresses in a
city
You want to decide where to spend advertising
dollars (TV, radio, newspaper, direct mail, email)
You want to keep track of competitors prices
for comparable goods and services

Type of Decision
Support
Decision support
system
Expert system or
neural network
User agent
Genetic algorithm
or
geographic
information
system
Decision support
system
Intelligent agent

DISCUSSION
Marketing executives on two continents: A decision support system,
especially together with collaboration software, would enable
executives to make a decision in this unstructured case.
Predicting customer behavior: Neural networks could be used to spot
the pattern of transactions and frequency that indicate coming
withdrawal. Expert systems could be used to check the answers to
questions with the conclusion of likely to leave or not likely to
leave.
Tax forms: A user agent that fills out forms, with special features for
tax forms.
Fastest route: A genetic algorithm can try all possible routes and pick
the best one. A geographic information could help analyze the routes.

Advertising dollars: A decision support system can analyze the

options based on performance in the past and other factors.
Competitors prices: Intelligent agents (either a user or a monitoringand-surveillance agent) could keep track of the Web sites of
competitors and report back on significant information.