Chapter 2: Competing with Information Technology

Question 1

What is strategic role of information systems

Answer 1

involves using information technology to develop products, services, and capabilities that give a company major advantages over the competitive forces it faces in the global marketplace

Question 2

This role is accomplished through a strategic information architecture: the collection of ____________ that supports or shapes the competitive position and strategies of a business enterprise

Answer 2

strategic information systems

Question 3

can be any kind of information system (e.g., TPS, MIS, and DSS) that uses information technology to help an organization gain a competitive advantage, reduce a competitive disadvantage, or meet other strategic enterprise objective

Answer 3

strategic information system

Question 4

Enumeration: Competitive Forces

Answer 4

• Rivalry of Competitors
• Threat of New Entrants
• Threat of Substitutes
• Bargaining Power of Customers and Suppliers

Question 5

Competition is a positive characteristic in business, and competitors share a natural, and often healthy, rivalry. This rivalry encourages and sometimes requires a constant effort to gain competitive advantage in the marketplace. This ever-present competitive force requires significant resources on the part of a firm.

Answer 5

Rivalry of Competitors

Question 6

Guarding against the threat of new entrants also requires the expenditure of significant organizational resources. Not only do firms need to compete with other firms in the marketplace, but they must also work to create significant barriers to the entry of new competition. This competitive force has always been difficult to manage, but it is even more so today. The Internet has created many ways to enter the marketplace quickly and with relatively low cost. In the Internet world, a firm’s biggest potential competitor may be one that is not yet in the marketplace but could emerge almost overnight.

Answer 6

Threat of New Entrants

Question 7

The ______________ is another competitive force that confronts a business. The effect of this force is apparent almost daily in a wide variety of industries, often at its strongest during periods of rising costs or inflation. When airline prices get too high, people substitute car travel for their vacations. When the cost of steak gets too high, people eat more hamburger and fish. Most products or services have some sort of substitute available to the consumer.

Answer 7

Threat of Substitutes

Question 8

a business must guard against the often opposing forces of customer and supplier
bargaining powers. If customers’ bargaining power gets too strong, they can drive prices to unmanageably low levels or just refuse to buy the product or service. If a key supplier’s bargaining power gets too strong, it can force the price of goods and services to unmanageably high levels or just starve a business by controlling the flow of parts or raw materials essential to the manufacture of a product.

Answer 8

Bargaining Power of Customers and Suppliers

Question 9

Enumeration: Competitive Strategies

Answer 9

• Cost Leadership Strategy
• Differentiation Strategy
• Innovation Strategy
• Growth Strategies
• Alliance Strategies
• Other Strategies

Question 10

Becoming a low-cost producer of products and services in the industry or finding ways to help suppliers or customers reduce their costs or increase the costs of competitors.

Answer 10

Cost Leadership Strategy

Question 11

Developing ways to differentiate a firm’s products and services from those of its
competitors or reduce the differentiation advantages of competitors. This strategy may allow a firm to focus its products or services to give it an advantage in particular segments or niches of a market

Answer 11

Differentiation Strategy

Question 12

Finding new ways of doing business. This strategy may involve developing unique
products and services or entering unique markets or market niches (recess). It may also involve making radical changes to the business processes for producing or distributing products and services that are so different from the way a business has been conducted that they alter the fundamental structure of an industry.

Answer 12

Innovation Strategy

Question 13

Significantly expanding a company’s capacity to produce goods and services, expanding into global markets, diversifying into new products and services, or integrating into related products and services.

Answer 13

Growth Strategies

Question 14

Establishing new business linkages and alliances with customers, suppliers, competitors, consultants, and other companies. These linkages may include mergers, acquisitions, joint ventures, formation of virtual companies, or other marketing, manufacturing, or distribution
agreements between a business and its trading partners.

Answer 14

Alliance Strategies

Question 15

TorF. Competitive strategies are not mutually exclusive.

Answer 15

True

Question 16

TorF. Not everything innovative will serve to differentiate one organization from another.

Answer 16

True

Question 17

Enumeration

The key strategies that can be implemented with information technology includes:

Answer 17

a. locking in customers or suppliers,
b. building switching costs,
c. raising barriers to entry, and
d. leveraging investment in information technology

Question 18

Investments in information technology can allow a business to lock in customers
and suppliers (and lock out competitors) by building valuable new relationships
with them.

Answer 18

Lock in customers or suppliers

Question 19

These business relationships can become so valuable to customers or suppliers
that they deter (discourage) them from abandoning a company for its competitors
or intimidate (frighten) them into accepting less profitable business arrangements.

Answer 19

Lock in customers or suppliers

Question 20

Early attempts to use information systems technology in these relationships
focused on significantly improving the quality of service to customers and suppliers in a firm’s distribution, marketing, sales, and service activities.

Answer 20

Lock in customers or suppliers

Question 21

More recent projects characterize a move toward more innovative uses of
information technology.

Answer 21

Lock in customers or suppliers

Question 22

A major emphasis in strategic information systems has been to find ways to create
switching costs in the relationships between a firm and its customers or suppliers.

Answer 22

Building switching costs

Question 23

In other words, investments in information systems technology can make
customers or suppliers dependent on the continued use of innovative, mutually
beneficial inter-enterprise information systems.

Answer 23

Building switching costs

Question 24

They then become reluctant (unwilling or hesitant) to pay the costs in time, money,
effort, and inconvenience that it would take to switch to a company’s competitors.

Answer 24

Building switching costs

Question 25

By making investments in information technology to improve its operations or
promote innovation, a firm could also raise barriers to entry that would discourage
or delay other companies from entering a market

Answer 25

Raising barriers to entry

Question 26

Typically, these barriers increase the amount of investment or the complexity of
the technology required to compete in an industry or a market segment.

Answer 26

Raising barriers to entry

Question 27

Such actions tend to discourage firms already in the industry and deter external
firms from entering the industry.

Answer 27

Raising barriers to entry

Question 28

Investing in information technology enables a firm to build strategic IT capabilities so that they can take advantage of opportunities when they arise

Answer 28

Leveraging investment in information technology

Question 29

In many cases, this happens when a company invests in advanced computer-based information systems to improve the efficiency of its own business processes. Then, armed with this strategic technology platform, the firm can leverage investment in IT by developing new products and services that would not be possible without a strong IT capability.

Answer 29

Leveraging investment in information technology

Question 30

The _______ means to keep customers loyal, anticipate their future needs, respond to customer concerns, and provide top-quality customer service.

Answer 30

customer focused-business

Question 31

A __________ helps its e-commerce customers help themselves while also helping them do their jobs. Finally, a successful business nurtures an online community of customers, employees, and business partners that builds great customer loyalty as it fosters (encourage the development of) cooperation to provide an outstanding customer experience.

Answer 31

customer focused-business

Question 32

Who develop value chain concept?

Answer 32

Michael Porter

Question 33

It views a firm as a series, chain, or network of basic activities that add value to its products and services and thus add a margin of value to both the firm and its customers.

Answer 33

Value Chain

Question 34

are those business activities that are directly related to the manufacture of products or the delivery of services to the customer

Answer 34

Primary processes

Question 35

are those business activities that help support the day-to-day operation of the business and that indirectly contribute to the products or services of the organization

Answer 35

support processes

Question 36

This framework can highlight where competitive strategies can best be applied in a business.

Answer 36

Value Chain

Question 37

TorF. the value chain concept can help you identify where and how to apply the strategic capabilities of information technology.

Answer 37

True

Question 38

TorF. a coordinated and integrated customer relationship management system cannot dramatically improve customer service.

Answer 38

False