Solution Manual For Fundamentals of Information Systems 9th by Stair

Solution Manual for Fundamentals of Information Systems 9th by Stair
Solution Manual for Fundamentals of Information

Systems 9th by Stair
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ystems-9th-by-stair/
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Fundamentals of Information Systems, 9th Edition
Solutions – Chapter 5
Critical Thinking Exercise

Establishing a Consortium
Review Questions
1. An electronic exchange is an electronic forum where manufacturers, suppliers, and

competitors buy and sell goods, trade market information, and run back-office
operations. In this case the exchange will be consortium-operated with competing
hotel chains buying and selling basic supplies.
2. Exchanges speed up the movement of raw materials and finished products, reduces
the amount of inventory that must be maintained, leads to a more competitive
marketplace and reduces prices. Alternately, many companies distrust their
competitors and fear losing trade secrets. Suppliers worry costs will favor buyers and
they will spend a great deal of money configuring their systems to participate in the
exchange. Also, participating in exchanges often invites government scrutiny because
it raises questions of collusion or antitrust behavior.
Critical Thinking Questions
1. As mentioned above, many the potential participating hotel chains may distrust their
competitors and fear losing trade secrets. They may also be worried about inviting
government scrutiny.
2. Student responses will vary.

Third Party Operation of Web Site
Review Questions
1. Key Web site performance measures include response time, transaction success rate,
and system availability.
2. The third-party company rents space on its computer system and provides a high-
speed connection to the Internet, thus minimizing the initial out-of-pocket costs for e-
commerce start-up. The third party can also provide personnel trained to operate,
troubleshoot, and manage the Web server. Alternately, you may have to worry about
the security of your site and the host’s downtime.
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1. Student responses may vary. To help combat the increase in online fraud you might
want to compare the IP address to the billing address, compare the IP address to the
country of the issuing bank or watch for transactions from high-risk countries.
2. Student responses will vary. Companies will continue to make purchases easier for
consumers. One example are the Dash Buttons introduced by Amazon to make
reordering common household products easier.

TPS Needed to Support Small Business
Review Questions
1. Cal likely needs a TPS that includes order processing and accounting systems.
2. Six TPS activities that would be beneficial are: taking inventory, taking customer
orders, handling payroll, invoicing, purchase order processing, and budgeting.
1. Cal should consider purchasing an integrated package.
2. As his business grows, he will have to evaluate the TPS he is using and possibly
upgrade to one with more functionality.

Implementing CRM
Review Questions
1. The CRM should: have the ability to track data on individual customers; organize
data on sales; capture and analyze all customer interactions, generate appropriate
responses and gather data to build marketing campaigns.
2. Using a CRM may help iProspect increase revenue and decrease costs, identify the
firm’s “best customers,” and determine how to retain and find more of them
1. The team should be comprised of stakeholders from each department.
2. The goal of a hosted software solution is to help customers acquire, use, and benefit
from the new technology while avoiding much of the associated complexity and high
start-up costs. Using a hosted software solution for a test drive seems reasonable. The
downside is, it may take time for users to take to a new system. If the system is not
the best fit, it may be hard to change course.
Review Questions
1. Electronic commerce is the conducting of business activities (e.g., distribution,
buying, selling, marketing, and servicing of products or services) electronically over
computer networks. It includes any business transaction executed electronically
between companies (business-to-business), companies and consumers (business-to-
consumer), consumers and other consumers (consumer-to-consumer), public sector
and business (government-to-business), public sector to citizens (government-to-
citizen), and public sector to public sector (government-to-government).
2. The market for m-commerce in North America is maturing much later than in other
countries for several reasons. In North America, responsibility for network
infrastructure is fragmented among many providers and consumer payments are
usually made by credit card. In most Western European countries, consumers are
much more willing to use m-commerce. Japanese consumers are generally
enthusiastic about new technology and therefore have been much more likely to use
mobile technologies to make purchases.
3. Global issues include:

▪ Cultural challenges. Great care must be taken to ensure that a Web site is
appealing, easy to use, and inoffensive to potential customers around the world.
▪ Language challenges. Language differences can make it difficult to understand
the information and directions posted on a Web site.
▪ Time and distance challenges. Significant time differences make it difficult for
some people to be able to speak to customer services representatives or to get
technical support during regular waking hours.
▪ Infrastructure challenges. The Web site must support access by customers using a
wide variety of hardware and software devices.
▪ Currency challenges. The Web site must be able to state prices and accept
payment in a variety of currencies.
▪ State, regional, and national law challenges. The Web site must operate in
conformance to a wide variety of laws that cover a variety of issues, including the
protection of trademarks and patents, the sale of copyrighted material, the
collection and safeguarding of personal or financial data, the payment of sales

taxes and fees, and much more.
4. Market segmentation is the identification of specific markets to target them with

tailored advertising messages. The purpose is to divide the pool of potential
customers into subgroups usually defined in terms of demographic characteristics,
such as age, gender, marital status, income level, and geographic location and market
only to your intended demographic.
5. An average of 74 percent of all online shopping carts are abandoned, representing

more than $4 trillion worth of merchandise in 2013. “Retargeting” is a technique used
by advertisers to recapture these shoppers by using targeted and personalized ads to
direct shoppers back to a retailer’s site.
6. Three Web site performance measures include response time, transaction success rate,
and system availability.
7. A digital certificate is an attachment to an email message or data embedded in a Web

site that verifies the identity of a sender or Web site. A certificate authority (CA) is a
trusted third-party organization or company that issues digital certificates. The
Payment Card Industry (PCI) security standard spells out measures and security
procedures to safeguard the card issuer, the cardholder, and the merchant. The
Transport Layer Security (TLS) is a communications protocol or system of rules that
ensures privacy between communicating applications and their users on the Internet.
8. The key elements of technology infrastructure required to successfully implement e-

commerce within an organization are hardware, Web-server software, server
software, e-commerce software, and e-commerce transaction processing.
9. All TPSs perform the following basic activities: data collection, which involves the
capture of source data to complete a set of transactions; data editing, which checks for
data validity and completeness; data correction, which involves providing feedback of
a potential problem and enabling users to change the data; data processing, which is
the performance of calculations, sorting, categorizing, summarizing, and storing data
for further processing; data storage, which involves placing transaction data into one
or more databases; and document production, which involves outputting records and
reports.
10. Automatic Data Processing (ADP) is a major provider of business outsourcing

solutions for payroll administration for 610,000 organizations in more than 125
countries. It uses a batch processing system to prepare the paychecks of one out of six
Americans.
Online payments giant PayPal Holdings, Inc., employs a massive OLTP system to
process more than 13 million payments each day through its Braintree, PayPal,
Venmo, and Xoom products. The payments between merchants and consumers—as
well as between individual users—total more than $280 billion annually.
11. An enterprise system is central to individuals and organizations of all sizes and
ensures that information can be shared across all business functions and all levels of
management to support the running and managing of a business. Examples of
enterprise systems include: enterprise resource planning systems that support supply
chain processes, such as order processing, inventory management, and purchasing;
customer relationship management systems that support sales, marketing, and
customer service-related processes; and supply chain management systems that has
the goal of decreasing costs and improving customer service while reducing the
overall investment in inventory in the supply chain.
12. The term best practices is used to describe the most efficient and effective ways to
complete a business process.
13. An organization can use an ERP system within a manufacturing organization to

support what is known as supply chain management (SCM), which includes planning,
executing, and controlling all activities involved in raw material sourcing and
procurement, converting raw materials to finished products, and warehousing and
delivering finished product to customers. The goal of SCM is to reduce costs and
improve customer service, while at the same time reducing the overall investment in
inventory in the supply chain.
14. Tier I ERP vendors target large multinational firms with multiple geographic
locations and annual revenues in excess of $1 billion. Tier I ERP system solutions are
highly complex and expensive to implement and support. Implementation across
multiple locations can take years. The primary Tier I vendors are Oracle and SAP.
15. The key features of a CRM system include the following:

▪ Contact management—The ability to track data on individual customers and sales
leads and then access that data from any part of the organization.
▪ Sales management. The ability to organize data about customers and sales leads
and then to prioritize the potential sales opportunities and identify appropriate
next steps.
▪ Customer support—The ability to support customer service representatives so that
they can quickly, thoroughly, and appropriately address customer requests and
resolve customer issues while collecting and storing data about those interactions.
▪ Marketing automation—The ability to capture and analyze all customer
interactions, generate appropriate responses, and gather data to create and build
effective and efficient marketing campaigns.
▪ Analysis—The ability to analyze customer data to identify ways to increase
revenue and decrease costs, identify the firm’s “best customers,” and determine
how to retain and find more of them.

▪ Social networking—The ability to create and join sites such as Facebook, where
salespeople can make contacts with potential customers.
▪ Access by smartphones—The ability to access Web-based customer relationship
management software by devices such as the BlackBerry or Apple iPhone.
▪ Import contact data—The ability for users to import contact data from various
data service providers such as Jigsaw, which offers company-level contact data
that can be downloaded for free directly into the CRM application.
16. Product lifecycle management (PLM) software provides a means for managing the
data and processes associated with the various phases of the lifecycle of a product,
including sales and marketing, research and development, concept development,
product design, prototyping and testing, manufacturing process design, production
and assembly, delivery and product installation, service and support, and product
retirement and replacement.
17. Data collection begins with a transaction (e.g., taking a customer order) and results in
data that serves as input to the TPS. Data should be captured at its source and
recorded accurately in a timely fashion with minimal manual effort and in an
electronic or digital form that can be directly entered into the computer. This
approach is called source data automation.
Discussion Questions
1. One reason for the steady growth in B2C e-commerce is shoppers find that many
goods and services are cheaper when purchased online, including stocks, books,
newspapers, airline tickets, and hotel rooms. Another reason for the growth in B2C e-
commerce is that online B2C shoppers have the ability to design a personalized
product. A third reason is the effective use of social media networks by many
companies looking to reach consumers, promote their products, and generate online
sales.
2. Five advantages of electronic and mobile commerce include:

▪ Reach new customers – The establishment of an e-commerce Web site enables a
firm to reach new customers in new markets.
▪ Reduce costs – By eliminating or reducing time-consuming and labor-intensive
steps throughout the order and delivery process, more sales can be completed in
the same period and with increased accuracy.
▪ Speed the flow of goods and information – When organizations and their
customers are connected via e-commerce, the flow of information is accelerated
because electronic connections and communications are already established.
▪ Increase accuracy – By enabling buyers to enter their own product specifications

and order information directly, human data-entry error on the part of the supplier
is eliminated.
▪ Improve customer service – Increased and more detailed information about
delivery dates and current status can increase customer loyalty. In addition, the
ability to consistently meet customers’ desired delivery dates with high-quality
goods and services eliminates any incentive for customers to seek other sources of
supply.
3. Personalization is the process of tailoring Web pages to specifically target individual

consumers. The most basic form of personalization involves using the consumer’s
name in an email campaign or in a greeting on the Web page. Amazon uses a more
advanced form of personalization in which the Web site greets each repeat customer
by name and recommends a list of new products based on the customer’s previous
purchases.
Businesses use two types of personalization techniques to capture data and build
customer profiles. Implicit personalization techniques capture data from actual
customer Web sessions—primarily based on which pages were viewed and which
weren’t. Explicit personalization techniques capture user-provided information, such
as information from warranties, surveys, user registrations, and contest-entry forms
completed online.
4. A credit card, such as Visa or MasterCard, has a preset spending limit based on the
user’s credit history, and each month the user can pay all or part of the amount owed.
Interest is charged on the unpaid amount. A charge card, such as American Express,
carries no preset spending limit, and the entire amount charged to the card is due at
the end of the billing period. You can’t carry a balance from month to month with a
charge card like you can with a credit card. Charge cards require customers to pay in
full every month or face a fee. Debit cards look like credit cards, but they operate like
cash or a personal check. The debit card is linked directly to your savings or checking
account. Each time you use the card, money is automatically taken from your
checking or savings account to cover the purchase. Credit, charge, and debit cards
currently store limited information about you on a magnetic stripe. This information
is read each time the card is swiped to make a purchase.
The smart card is a credit card–sized device with an embedded microchip to provide
electronic memory and processing capability. Smart cards can be used for a variety of
purposes, including storing a user’s financial facts, health insurance data, credit card
numbers, and network identification codes and passwords. They can also store
monetary values for spending.
5. Student responses will vary.
6. A key benefit common to the use of ERP, CRM and PLM systems is cost savings.
The primary benefits of implementing ERP include improved access to quality data
for operational decision making, elimination of costly, inflexible legacy systems,
improvement of work processes, and the opportunity to upgrade and standardize
technology infrastructure. CRM systems benefits include improved customer
satisfaction, increased customer retention, reduced operating costs, and the ability to
meet customer demand. PLM system benefits include reduced time to market,
reduced costs, and ensured regulatory compliance.
7. Challenges to successful enterprise system implementation:
Challenge Description
Cost and disruption of upgrades Most companies have other systems that must
be integrated with the enterprise system, such as
financial analysis programs, e-commerce
operations, and other applications that
communicate with suppliers, customers,
distributors, and other business partners. This
integration takes even more effort and time.
Cost and long implementation The average ERP implementation cost is $5.5
lead time million with an average project duration of just
over 14 months.
Difficulty in managing change Companies often must radically change how
they operate to conform to the enterprise work
processes. These changes can be so drastic to
longtime employees that they depart rather than
adapt to the change, leaving the firm short of
experienced workers.
Management of software The base enterprise system may need to be
customization modified to meet mandatory business
requirements. This modification can become
extremely expensive and further delay
implementation.
User frustration with the new Effective use of an enterprise system requires
system changes in work processes and in the details of
how work gets done. Many users initially balk at
these changes and require much training and
encouragement.
The following list provides tips for avoiding many common causes for failed enterprise
system implementations:
▪ Assign a full-time executive to manage the project.
▪ Appoint an experienced, independent resource to provide project oversight and to

verify and validate system performance.
▪ Allow sufficient time for transition from the old way of doing things to the new
system and new processes.
▪ Plan to spend considerable time and money training people; many project
managers recommend that 30–60 days per employee be budgeted for training of
personnel.
▪ Define metrics to assess project progress and to identify project-related risks.
▪ Keep the scope of the project well defined and contained to essential business
processes.
▪ Be wary of modifying the enterprise system software to conform to your firm’s
business practices.
8. Student response will vary. The CRM system could capture:

▪ Inventory
▪ Number of sales
▪ Registration data
▪ Warranty information
▪ Service history
▪ Who repaired the bike
▪ Parts ordered/replaced
▪ Owner information
▪ Customer inquiries
This information could help to anticipate the needs of customers, provide better
service, reduce costs, and improve efficiency.
9. Smaller organizations moved to ERP systems about 10 years after larger

organizations did. The smaller firms simply could not afford the investment required
in hardware, software, and people to implement and support ERP. However, ERP
software vendors created new ERP solutions with much lower start-up costs and
faster, easier implementations. Some ERP vendors introduced cloud-based solutions,
which further reduced the start-up costs by avoiding the need to purchase expensive
ERP software and make major hardware upgrades. Instead, with a cloud-based
solution, organizations could rent the software and run it on the vendor’s hardware.
10. Many business application software vendors are pushing the use of the hosted
software model. The goal is to help customers acquire, use, and benefit from the new
technology while avoiding much of the associated complexity and high start-up costs.
This pay-as-you-go approach is appealing because organizations can experiment with

powerful software capabilities without making a major financial investment.
Organizations can then dispose of the software without large investments if the
software fails to provide value or otherwise misses expectations. Also, using the
hosted software model means the business firm does not need to employ a full-time
IT person to maintain key business applications. The business firm can expect
additional savings from reduced hardware costs and costs associated with maintaining
an appropriate computer environment (such as air conditioning, power, and an
uninterruptible power supply).
11. Product lifecycle management (PLM) software provides a means for managing the
data and processes associated with the various phases of the lifecycle of a product,
including sales and marketing, research and development, concept development,
product design, prototyping and testing, manufacturing process design, production
and assembly, delivery and product installation, service and support, and product
retirement and replacement. The scope of PLM software may include computer-aided
design, computer aided engineering, and computer-aided manufacturing.
Computer-aided design (CAD) is the use of software to assist in the creation,

analysis, and modification of the design of a component or product. Its use can
increase the productivity of the designer, improve the quality of design, and create a
database that describes the item. This data can be shared with others or used in the
machining of the part or in other manufacturing operations. Computer aided
engineering (CAE) is the use of software to analyze the robustness and performance
of components and assemblies. The software supports the simulation, validation, and
optimization of products and manufacturing tools. CAE is extremely useful to design
teams in evaluating and decision making. Computer-aided manufacturing (CAM) is
the use of software to control machine tools and related machinery in the manufacture
of components and products.
12. Before any software is loaded onto a computer, a company must retrain employees.
Who handles customer issues and when must be clearly defined, and computer
systems need to be integrated so that all pertinent information is available
immediately, whether a customer calls a sales representative or a customer service
representative. This is much easier to accomplish in a small firm.
13. Student responses will vary. Note that a PLM system provides a means for managing
all the data associated with product development, engineering design, production,
support, and disposal of manufactured products. An engineering firm would benefit
greatly from selecting a system whose scope includes CAD, CAE, and CAM
software.
14. The ultimate goal of an enterprise system is to satisfy customers and provide
significant benefits by reducing costs and improving customer service.
15. Use of an effective PLM system enables global organizations to work as a single team
to design, produce, support, and retire products, while capturing best practices and
lessons learned along the way. PLM powers innovation and improves productivity by
connecting people across global product development and manufacturing

organizations with the product and process knowledge they need to succeed.
Problem-Solving Exercises
1. Students should research the American Consumer Satisfaction Index on the Web and
prepare a presentation about the methodology and how it was used to rate B2C Web
sites.
2. Students should use their Web-enabled smartphone to compare prices for washing
machines and identify the manufacturer and model that best meets their needs and the
retailer with the lowest delivered cost.
3. Students should develop a presentation containing three to six slides about the
implementation of a PLM system.
Team Activities
1. As a team, students should develop a set of criteria that they would use to evaluate the
effectiveness of a mobile advertising campaign to boost the sales of one of your
firm’s products.
2. Students should interview several business managers at a firm that has implemented
an enterprise system.
3. Students should develop a list of seven key criteria that a nonprofit charitable
organization should consider when selecting a CRM system.
Web Exercises
1. Students should conduct research to capture data on the growth of B2C e-commerce
and retail sales over the past 10 years.
2. Students should research and report on a dozen Web sites that offer mobile coupons.
3. Students could use the Web to identify software services firms that offer consulting
services to help organizations implement enterprise systems.
Career Exercises
1. Students should identify three top organizations for developing and operating e-
commerce Web sites and look at their job openings.
2. Students should make a list of six or more specific qualifications needed to be a

strong business systems analyst who supports the implementation and conversion to
an enterprise system within an SME.
3. Students should identify three or four tasks that an SMEs finance and accounting
department need to perform in order to ensure successful implementations of
enterprise systems.
Case Studies
Case One: Facebook Moves into E-Commerce
1. Because Facebook already has access to so much information, a main privacy

concern with shopping is that Facebook would have control over too much personal
information.
2. Student responses will vary. Some may be initially reluctant to use Facebook’s
offerings the same way they might shop on Amazon because Amazon has already
established trust with them.
3. Students should research e-commerce initiatives from other social networks, such as
Pinterest, Twitter, and Instagram. With Pinterest, instead of posting content read,
members post a clickable picture and a short caption. Twitter is a microblogging site
that allows members to broadcast 140 characters or less. Instagram is a photo and
video sharing site. Each of these networks specializes in a particular area. They
probably will not be as strong as Amazon in the e-commerce market.
Case Two: Dunkin’ Donuts Prepares for Rapid Growth
1. Student answers may vary. The ownership structure is likely an advantage. As

owners, the franchisees are likely more willing to adopt and accept change for the
good of the organization.
2. Student answers may vary. Change management aspects are extremely important. The
stakeholders have to be on board for successful change.
3. Risks may include psychological issues/challenges—the staff may be unwilling to

accept change; and business philosophy changes—changing so many parts of the
business and underlying technology at once may bring significant changes to the
business model and the day to day practices it has been using for years.
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Critical Thinking Exercise

1. An electronic exchange is an electronic forum where manufacturers, suppliers, and

Critical Thinking Questions

2. Student responses will vary.

Critical Thinking Exercise

Critical Thinking Questions

Critical Thinking Exercise

Critical Thinking Questions

1. Cal should consider purchasing an integrated package.

Critical Thinking Exercise

Critical Thinking Questions

1. The team should be comprised of stakeholders from each department.

3. Global issues include:

collection and safeguarding of personal or financial data, the payment of sales

4. Market segmentation is the identification of specific markets to target them with

5. An average of 74 percent of all online shopping carts are abandoned, representing

7. A digital certificate is an attachment to an email message or data embedded in a Web

8. The key elements of technology infrastructure required to successfully implement e-

10. Automatic Data Processing (ADP) is a major provider of business outsourcing

13. An organization can use an ERP system within a manufacturing organization to

15. The key features of a CRM system include the following:

how to retain and find more of them.

2. Five advantages of electronic and mobile commerce include:

▪ Increase accuracy – By enabling buyers to enter their own product specifications

3. Personalization is the process of tailoring Web pages to specifically target individual

5. Student responses will vary.

7. Challenges to successful enterprise system implementation:

▪ Appoint an experienced, independent resource to provide project oversight and to

8. Student response will vary. The CRM system could capture:

9. Smaller organizations moved to ERP systems about 10 years after larger

This pay-as-you-go approach is appealing because organizations can experiment with

Computer-aided design (CAD) is the use of software to assist in the creation,

connecting people across global product development and manufacturing

2. Students should make a list of six or more specific qualifications needed to be a

Critical Thinking Questions

1. Because Facebook already has access to so much information, a main privacy

Case Two: Dunkin’ Donuts Prepares for Rapid Growth

Critical Thinking Questions

1. Student answers may vary. The ownership structure is likely an advantage. As

3. Risks may include psychological issues/challenges—the staff may be unwilling to

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