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Chapter 3 Information Systems, Organizations, Management, and Strategy 3-1

Chapter 3
Information Systems, Organizations, Management, and
Strategy

True-False Questions

1. To benefit from new technologies, the organization must be aware of, and be open to, the
influences of information systems.

Answer: True Difficulty: Easy Reference: p. 76

2. The technical definition of organizations is highly descriptive of the way organizations


actually work.

Answer: False Difficulty: Easy Reference: p. 77

3. The technical and behavioral definitions of organizations are mutually contradictory.

Answer: False Difficulty: Easy Reference: p. 78

4. The term bureaucracy was first defined in China by the Mandarins.

Answer: False Difficulty: Medium Reference: p. 78

5. Organizations that survive over time become less efficient.

Answer: False Difficulty: Medium Reference: p. 79

6. Standard operating procedures are based on business procedures.

Answer: False Difficulty: Medium Reference: p. 79

7. The current Japanese theories of automobile production are based on the manufacturing
theories of Henry Ford.

Answer: False Difficulty: Easy Reference: p. 79

8. Any information system that brings about significant change will elicit serious political
opposition within the organization.

Answer: True Difficulty: Easy Reference: p. 79

9. Information systems help managers identify external changes that might require
organizational response.

Answer:True Difficulty: Easy Reference: p. 81

10. In economic terms, information system technology can be viewed as a substitute for capital
and labor.

Answer: True Difficulty: Medium Reference: p. 84


3-2 Information Systems, Organizations, Management, and Strategy Chapter 3

11. Information technology increases the cost of market participation.

Answer: False Difficulty: Medium Reference: p. 84

12. As firms grow in size and scope, agency costs always decrease.

Answer: False Difficulty: Hard Reference: p. 85

13. By increasing the span of management control, information systems lower agency costs.

Answer: True Difficulty: Medium Reference: p. 85

14. Behavioral research has found that information systems automatically transform
organizations.

Answer: False Difficulty: Medium Reference: p. 85

15. In virtual organizations, work is not tied to geographical location.

Answer: True Difficulty: Easy Reference: p. 86

16. Managers perform a great deal of work at an unrelenting pace, and each activity normally
lasts less than ten minutes.

Answer: True Difficulty: Easy Reference: p. 89

17. Information systems provide major assistance for managerial decision making.

Answer: False Difficulty: Medium Reference: p. 89

18. There is a defined, linear path to decision making.

Answer: False Difficulty: Easy Reference: p. 91

19. According to research cited in the textbook, when making decisions people tend to take the
first available alternative that will move them closer to the goal, without examining all the
alternatives.

Answer: True Difficulty: Hard Reference: p. 92

20. Systematic decision makers approach a problem with multiple methods.

Answer: False Difficulty: Easy Reference: p. 92

21. When planning a new information system, the organizations culture and politics are central
organizational factors that should be considered.

Answer: True Difficulty: Medium Reference: p. 94

22. Strategic information systems can be used at all organizational levels and are more far
reaching and deep rooted than other kinds of information systems.

Answer: True Difficulty: Hard Reference: p. 95


Chapter 3 Information Systems, Organizations, Management, and Strategy 3-3

23. Value chain analysis is the most common analytical tool at the business level of the
organization.

Answer: True Difficulty: Hard Reference: p. 95

24. In a value chain, primary activities include inbound logistics, operations, outbound logistics,
sales and marketing, and procurement.

Answer: False Difficulty: Hard Reference: p. 95

25. Digitally enabled networks can be used to coordinate the production of many independent
firms.

Answer: True Difficulty: Easy Reference: p. 96

26. A value Web is more customer-driven than the traditional value chain.

Answer: True Difficulty: Easy Reference: p. 97

27. A value web can synchronize the value chains of business partners within an industry to
rapidly respond to changes in supply and demand.

Answer: True Difficulty: Hard Reference: p. 97

28. Value chains and value webs are static.

Answer: False Difficulty: Medium Reference: p. 97

29. Information systems allow companies like Dell Computer Corporation to sell individualized
products to individual customers.

Answer: True Difficulty: Easy Reference: p. 98

30. Information systems provide a resource that a company can mine to increase profitability.

Answer: True Difficulty: Easy Reference: p. 99

31. A good information system raises switching costs.

Answer: True Difficulty: Hard Reference: p. 100

32. The U.S. economy is moving away from a demand-pull strategy.

Answer: False Difficulty: Medium Reference: p. 101

33. Supply chain management and focused differentiation are two examples of how emerging
digital firms can engage in business strategies not available to traditional firms.

Answer: False Difficulty: Hard Reference: p. 101

34. By sharing knowledge across business units, an information system can enhance
competency.

Answer: True Difficulty: Medium Reference: p. 102


3-4 Information Systems, Organizations, Management, and Strategy Chapter 3

35. When two organizations pool markets and expertise, this relationship can lower costs and
generate profits.

Answer: True Difficulty: Medium Reference: p. 102

36. The three principal concepts for analyzing strategy at the industry level are information
partnerships, competitive forces model, and focused differentiation.

Answer: False Difficulty: Medium Reference: p. 103

37. Industry structure refers to the nature of participants in an industry and their relative
bargaining power; it derives from the competitive forces and establishes the general
business environment in an industry and the overall profitability of doing business in that
environment.

Answer: True Difficulty: Hard Reference: p. 103

38. A major difference between the traditional business model and the model of the digital firm
era is the awareness of industry sets.

Answer: True Difficulty: Hard Reference: p. 104

39. Agency economics is a model of strategic systems at the industry level based on the concept
of a network where adding another participant entails zero marginal costs but can create
much larger marginal gains.

Answer: False Difficulty: Medium Reference: p. 105

40. When identify opportunities for strategic information systems, managers should determine
where in the value chain the information systems can provide the greatest value to the firm.

Answer: True Difficulty: Medium Reference: p. 106

Multiple- Choice Questions


41. The interaction between information technology and organizations is influenced by:

a. organizational structure.
b. standard operating procedures.
c. politics and culture.
d. environment and management decisions.
e. All of the above

Answer: e Difficulty: Easy Reference: p. 77


Chapter 3 Information Systems, Organizations, Management, and Strategy 3-5

42. Precise rules, procedures, and practices developed by organizations to cope with virtually
all expected situations best describes:

a. business processes.
b. work methods.
c. formal system.
d. standard operating procedures.
e. process description.

Answer: d Difficulty: Medium Reference: p. 78

43. According to Weber, bureaucracies are prevalent because:

a. they are impartial.


b. authority is limited by abstract rules.
c. they are the most efficient form of organization.
d. they develop standard operating procedures.
e. people are most comfortable with the expected.

Answer: c Difficulty: Hard Reference: p. 79

44. A task force organization that must respond to rapidly changing environments best
describes:

a. adhocracy.
b. professional bureaucracy.
c. divisionalized bureaucracy.
d. machine bureaucracy.
e. entrepreneurial structure.

Answer: a Difficulty: Medium Reference: p. 80

45. Which of the following is an example of a professional bureaucracy?

a. Fortune 500 firm


b. School system
c. Midsize manufacturing firm
d. Small start-up business
e. Consulting firm

Answer: b Difficulty: Medium Reference: p. 80

46. All organizations have assumptions that:

a. can be studied and defined.


b. are incorrect, but accepted.
c. everyone knows and no one speaks.
d. define their goals and products.
e. determine their success over time.

Answer: d Difficulty: Medium Reference: p. 80


3-6 Information Systems, Organizations, Management, and Strategy Chapter 3

47. When information systems help organizations perceive changes in their environments and
act on their environments, this function is called:

a. external scanning.
b. environmental observation.
c. environmental scanning.
d. competition monitoring.
e. strategic scanning.

Answer: c Difficulty: Medium Reference: p. 81

48. Features common to organizations include:

a. formal structure.
b. organizational type.
c. environments.
d. power.
e. function.

Answer: a Difficulty: Hard Reference: p. 82

49. Features unique to organizations include:

a. goals.
b. formal structure.
c. standard operating procedures.
d. politics.
e. culture.

Answer: a Difficulty: Hard Reference: pp. 82

50. Systems analysts are:

a. highly trained technical specialists who write computer software instructions.


b. specialists who translate business problems and requirements into information
requirements and systems.
c. leaders of the various specialists in the information systems department.
d. in charge of the information systems function in the organization.
e. representatives of departments outside the information systems group for whom
applications are developed.

Answer: b Difficulty: Medium Reference: p. 83

51. CIOs are:

a. highly-trained technical specialists who write computer software instructions.


b. specialists who translate business problems and requirements into information
requirements and systems.
c. leaders of the various specialists in the information systems department.
d. in charge of the information systems function in the firm.
e. representatives of departments outside the information systems group for whom
applications are developed.

Answer: d Difficulty: Medium Reference: p. 83


Chapter 3 Information Systems, Organizations, Management, and Strategy 3-7

52. Information systems managers are:

a. highly-trained technical specialists who write computer software instructions.


b. specialists who translate business problems and requirements into information
requirements and systems.
c. leaders of the various specialists in the information systems department.
d. in charge of the information systems function in the organization.
e. representatives of departments outside the information systems group for whom
applications are developed.

Answer: c Difficulty: Medium Reference: p. 83

53. By making it worthwhile for firms to contract with external suppliers instead of internal
sources, information technology can reduce:

a. transaction costs.
b. end user support requirements.
c. management control spans.
d. All of the above
e. None of the above

Answer: a Difficulty: Medium Reference: p. 84

54. Because it makes it easier for managers to oversee a greater number of employees,
information technology can reduce:

a. transaction costs.
b. interdepartmental conflicts.
c. agency costs.
d. information retrieval costs.
e. None of the above

Answer: c Difficulty: Medium Reference: p. 85

55. Some research indicates that computerization decreases the need for large numbers of
lower-level workers because:

a. their work is reclaimed.


b. more information is given to middle managers.
c. it permits task forces to be formed.
d. more highly-trained workers work faster.
e. more training for such workers is required.

Answer: b Difficulty: Hard Reference: p. 86

56. The Internet is capable of reducing _____________ for most organizations.

a. agency and transaction costs


b. information usage
c. reporting and analysis
d. systems costs
e. All of the above

Answer: a Difficulty: Medium Reference: p. 87


3-8 Information Systems, Organizations, Management, and Strategy Chapter 3

57. According to Fayol, the classical functions of a manager are:

a. interpersonal, informational, and decisional.


b. planning, interpersonal, decisional, and controlling.
c. planning, organizing, coordinating, deciding, and controlling.
d. strategic, nonstructured, structured, organizing, and interpersonal.
e. liaison, planning, interpersonal, deciding, and decisional.

Answer: c Difficulty: Hard Reference: p. 88

58. Organizations rebuilding some of their key business processes on Internet technology are
finding that:

a. their business processes are simpler.


b. they are much flatter.
c. they need fewer employees.
d. All of the above
e. None of the above

Answer: d Difficulty: Easy Reference: p. 87

59. Mintzberg defined the interpersonal roles of a manager as those in which the manager:

a. disseminates critical information and negotiates conflicts.


b. acts as the nerve center of the organization, receiving and disseminating critical
information.
c. initiates activities, handles disturbances, allocates resources, and negotiates conflicts.
d. acts as a figurehead and leader of the organization.
e. initiates activities, allocates resources, and leads the organization.

Answer: d Difficulty: Hard Reference: p. 89

60. Mintzberg defined the decisional roles of a manager as those in which the manager:

a. disseminates critical information and negotiates conflicts.


b. acts as the nerve center of the organization, receiving and disseminating critical
information.
c. initiates activities, handles disturbances, allocates resources, and negotiates conflicts.
d. acts as a figurehead and leader of the organization.
e. initiates activities, allocates resources, and leads the organization.

Answer: c Difficulty: Hard Reference: p. 89

61. Information systems provide support for the:

a. figurehead interpersonal role.


b. leader interpersonal role.
c. disturbance handler decisional role.
d. negotiator decisional role.
e. spokesperson informational role.

Answer: e Difficulty: Hard Reference: p. 90


Chapter 3 Information Systems, Organizations, Management, and Strategy 3-9

62. Deciding how to carry out specific tasks specified by upper and middle management, and
establishing criteria for completion and resource allocation best describes:

a. operational control decision making.


b. resource allocation decision making.
c. structured decision making.
d. knowledge-level decision making.
e. liaison decision making.

Answer: a Difficulty: Medium Reference: p. 90

63. In Simons four stages of decision making, intelligence is when:

a. the individual selects among the possible alternative solutions to a problem.


b. the individual conceives of possible alternative solutions to a problem.
c. the individual collects information to identify problems occurring in the organization.
d. the individual puts the decision into effect and reports on the progress of the solution.
e. None of the above

Answer: c Difficulty: Medium Reference: p. 90

64. In Simons four stages of decision making, implementation is when:

a. the individual selects among the possible alternative solutions to a problem.


b. the individual conceives of possible alternative solutions to a problem.
c. the individual collects information to identify problems occurring in the organization.
d. the individual puts the decision into effect and reports on the progress of the solution.
e. None of the above

Answer: d Difficulty: Medium Reference: p. 91

65. In Simons four stages of decision making, choice is when:

a. the individual selects among the possible alternative solutions to a problem.


b. the individual conceives of possible alternative solutions to a problem.
c. the individual collects information to identify problems occurring in the organization.
d. the individual puts the decision into effect and reports on the progress of the solution.
e. the individual does none of the above.

Answer: a Difficulty: Medium Reference: p. 91

66. The rational model of human behavior makes the assumption that people:

a. make decisions based on correct conclusions.


b. can tell the difference between the right and the wrong decisions.
c. engage in basically consistent, value-maximizing calculations focused on choosing the
alternative that contributes most to their goals.
d. engage in calculations that are concerned with correct, value-maximizing choices that
further the goals of the organization.
e. make decisions based on their own needs and abilities.

Answer: c Difficulty: Hard Reference: p. 91


3-10 Information Systems, Organizations, Management, and Strategy Chapter 3

67. The underlying personality disposition toward decision making is called the:

a. cognitive style.
b. personal bias.
c. systematic approach.
d. behavioral indicator.
e. model of rationalization.

Answer: a Difficulty: Medium Reference: p. 92

68. The cognitive style that describes people who approach a problem by structuring it in terms
of some formal method is:

a. intuitive decision makers.


b. stylistic decision makers.
c. logical decision makers.
d. systematic decision makers.
e. random decision makers.

Answer: d Difficulty: Medium Reference: p. 92

69. Models of decision making where decisions are shaped by the organizations standard
operating procedures are called:

a. garbage can models.


b. bureaucratic models of decision making.
c. standard organizational models.
d. business process models.
e. business logic models.

Answer: b Difficulty: Medium Reference: p. 93

70. The key question at the business level of strategy is:

a. What market should we enter?


b. What will meet our goals?
c. What will give us the most efficient operation?
d. How can we compete effectively in this particular market?
e. How can we affect the market?

Answer: d Difficulty: Easy Reference: p. 95

71. A value chains primary activities include:

a. human resources.
b. inbound logistics.
c. technology.
d. procurement.
e. administration and management.

Answer: b Difficulty: Medium Reference: p. 95


Chapter 3 Information Systems, Organizations, Management, and Strategy 3-11

72. A value chains support activities include:

a. organization infrastructure, human resources, technology, and procurement.


b. inbound logistics, operations, and outbound logistics.
c. sales and marketing.
d. organization infrastructure, sales and marketing, and procurement.
e. operations, human resources, and technology.

Answer: a Difficulty: Medium Reference: p. 96

73. A customer-driven network of independent firms who use information technology to


coordinate their value chains to collectively produce a product or service for a market best
describes:

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

Answer: a Difficulty: Medium Reference: p. 97

74. Strategic information systems for ____________ can prevent the competition from
responding in kind.

a. competitive advantage
b. technology-based products
c. manufacturers
d. product differentiation
e. wholesalers

Answer: d Difficulty: Hard Reference: p. 98

75. A competitive strategy for creating brand loyalty by developing new and unique products
and services that are not easily duplicated by competitors best describes:

a. focused differentiation.
b. low-cost producer.
c. product differentiation.
d. quality differentiation.
e. marketing differentiation.

Answer: c Difficulty: Medium Reference: p. 98

76. One advantage of information systems is that they enable companies to pitch to:

a. larger target markets.


b. many markets.
c. global markets.
d. smaller target markets.
e. competitors markets.

Answer: d Difficulty: Medium Reference: p. 99


3-12 Information Systems, Organizations, Management, and Strategy Chapter 3

77. Supply chain management can be used to create:

a. networked markets.
b. efficient customer response systems.
c. franchise-based environments.
d. wide-ranging data reports.
e. demographic-oriented sales.

Answer: b Difficulty: Easy Reference: p. 100

78. Activities at which a firm excels as a world-class leader include:

a. core competencies.
b. strategic competencies.
c. standard operating procedures.
d. business strategies.
e. strategic business processes.

Answer: a Difficulty: Medium Reference: p. 102

79. The three principal concepts for analyzing strategy at the industry level are:

a. supply chain theory, customer response theory, and network economics.


b. managerial, operational, and marketing.
c. network analysis, competition analysis, and customer response analysis.
d. information partnerships, the competitive forces model, and network economics.
e. Millers theory of adjusted dataflow, Porters competitive forces model, and network
analysis.

Answer: d Difficulty: Medium Reference: p. 103

80. A movement from one level of sociotechnical system to another best describes:

a. strategic placement.
b. focused transition.
c. upward transition.
d. competitive transition.
e. strategic transition.

Answer: e Difficulty: Medium Reference: p. 106

Fill In the Blanks


81. A(n) organization, by technical definition, is a stable, formal, social structure that takes
resources from the environment and processes them to produce outputs.

Difficulty: Easy Reference: p. 77


Chapter 3 Information Systems, Organizations, Management, and Strategy 3-13

82. A(n) organization, by behavioral definition, is a collection of rights, privileges, obligations,


and responsibilities that are delicately balanced over a period of time through conflict and
conflict resolution.

Difficulty: Easy Reference: p. 78

83. A(n) bureaucracy is a formal organization with a clear-cut division of labor, abstract rules
and procedures, and impartial decision making that uses technical qualifications and
professionalism as a basis for promoting employees.

Difficulty: Easy Reference: p. 78

84. A(n) organizational culture is the set of fundamental assumptions about what products the
organization should produce, how and where it should produce them, and for whom they
should be produced.

Difficulty: Medium Reference: p. 80

85. A(n) systems analyst is a specialist who translates business problems and requirements to
information requirements and systems, acting as a liaison between the information systems
department and the rest of the organization.

Difficulty: Easy Reference: p. 82

86. A(n) information systems manager is the leader of the various specialists in the
information systems department.

Difficulty: Easy Reference: p. 83

87. A(n) chief information officer is the senior manager in charge of the information systems
function in the firm.

Difficulty: Easy Reference: p. 83

88. Transaction cost theory is the economic theory stating that firms grow larger because they
can conduct marketplace transactions internally and more economically than they can with
external firms in the marketplace.

Difficulty: Medium Reference: p. 84

89. Agency theory views the firm as a nexus of contracts among self-interested individuals who
must be supervised and managed.

Difficulty: Medium Reference: p. 85

90. A(n) virtual organization uses networks to link people, assets, and ideas to create and
distribute products and services without being limited to traditional organizational boundaries
or physical locations.

Difficulty: Medium Reference: p. 86

91. The classical model of management focuses on the formal functions of planning, organizing,
coordinating, deciding, and controlling.

Difficulty: Easy Reference: p. 88


3-14 Information Systems, Organizations, Management, and Strategy Chapter 3

92. The behavioral model of management is based on observations of what managers actually
do on their jobs.

Difficulty: Easy Reference: p. 88

93. Mintzbergs managerial roles are the expectations of the activities that managers should
perform in an organization.

Difficulty: Easy Reference: p. 89

94. Mintzbergs decisional roles describe situations wherein managers initiate activities, handle
disturbances, resources, and policies of an organization.

Difficulty: Easy Reference: p. 89

95. Strategic decision making is the act of determining the long-term objectives, resources,
and policies of an organization.

Difficulty: Medium Reference: p. 90

96. Management control monitors how efficiently or effectively resources are used and how well
operational units are performing.

Difficulty: Hard Reference: p. 90

97. A(n) unstructured decision is a nonroutine decision in which the decision maker must
provide judgment, evaluation, and insights into the problem definition.

Difficulty: Easy Reference: p. 90

98. A(n) structured decision is a decision that is repetitive, routine, and has a definite procedure
for handling it.

Difficulty: Easy Reference: p. 90

99. In Simons stages of decision making, design is the stage when the individual conceives of
possible alternative solutions to a problem.

Difficulty: Easy Reference: p. 90

100. In Simons stages of decision making, choice is the stage when the individual selects among
the various solution alternatives.

Difficulty: Easy Reference: p. 90

101. In Simons stages of decision making, implementation is the stage when the individual puts
the decision into effect and reports on the progress of the solution.

Difficulty: Easy Reference: p. 90

102. In Simons stages of decision making, intelligence is the stage when the individual collects
information to identify problems occurring in the organization.

Difficulty: Easy Reference: p. 90


Chapter 3 Information Systems, Organizations, Management, and Strategy 3-15

103. The rational model of human behavior is based on the belief that people, organizations, and
nations engage in basically consistent, value-maximizing calculations.

Difficulty: Easy Reference: p. 91

104. Cognitive style is the underlying personality dispositions toward the treatment of
information, selection of alternatives, and evaluation of consequences.

Difficulty: Medium Reference: p. 92

105. Systematic decision makers have an underlying personality disposition to approach a


problem by structuring it in terms of some formal method.

Difficulty: Medium Reference: p. 92

106. Intuitive decision makers have an underlying personality disposition to approach a problem
with multiple methods in an unstructured manner, using trial and error to find a solution.

Difficulty: Medium Reference: p. 92

107. Organizational models of decision making take into account the structural and political
characteristics of an organization.

Difficulty: Hard Reference: p. 92

108. A(n) strategic information system is any computer system at any level of the organization
that changes goals, operations, products, services, or environmental relationships to help the
organization gain a competitive advantage.

Difficulty: Medium Reference: p. 95

109. A(n) primary activity is one directly related to the production and distribution of the firms
products or services.

Difficulty: Easy Reference: p. 95

110. A(n) support activity is one that involves the organizations infrastructure, human resources,
technology, and procurement.

Difficulty: Medium Reference: p. 96

111. A(n) value web is a customer-driven network of independent firms who use information
technology to coordinate their value chains to collectively produce a product or service for a
market.

Difficulty: Medium Reference: p. 97

112. Product differentiation is a competitive strategy for creating brand loyalty by developing
new and unique products and services not easily duplicated by competitors.

Difficulty: Hard Reference: p. 98


3-16 Information Systems, Organizations, Management, and Strategy Chapter 3

113. Focused differentiation is a competitive strategy for creating new market niches for
specialized products or services where a business can compete in the target area better than
its competitors.

Difficulty: Hard Reference: p. 99

114. A(n) efficient customer response system directly links consumer behavior back to
distribution, production, and supply chains.

Difficulty: Hard Reference: p. 100

115. Switching costs are the expense a customer or company incurs in lost time and
expenditure of resources when changing from one supplier or system to a competing
supplier or system.

Difficulty: Easy Reference: p. 100

116. A(n) core competency is an activity at which a firm excels as a world-class leader.

Difficulty: Easy Reference: p. 102

117. A(n) information partnership is a cooperative alliance formed between two or more
corporations for the purpose of sharing information to gain strategic advantage.

Difficulty: Medium Reference: p. 103

118. The competitive forces model is used to describe the interaction of external influences,
specifically threats and opportunities that affect an organizations strategy and ability to
compete.

Difficulty: Medium Reference: p. 103

119. Network economics is a model of strategic systems at the industry level based on the
concept of a network where adding another participant entails zero marginal costs but can
create much larger marginal gains.

Difficulty: Easy Reference: p. 105

120. A(n) strategic transition is a movement from one level of a sociotechnical system to
another.

Difficulty: Hard Reference: p. 106


Chapter 3 Information Systems, Organizations, Management, and Strategy 3-17

Essay Questions
121. Discuss the interaction between management and the development of information
systems within the company. What do you think is the single most important thing
management must do to ensure the successful coordination of these systems with the
organization?

The interaction between information technology and organizations is complex and is


influenced by many mediating factors, including the organizations structure, standard
operating procedures, politics, culture, surrounding environment, and management
decisions. Managers must be aware that information systems can markedly alter life in the
organization. They cannot successfully design new systems or understand existing systems
without understanding organizations and the way they work.

122. Define and discuss the two definitions of organization discussed in your textbook.
Why are both useful to management, and under which circumstances is each the
better model for understanding the way the organization works?

The technical definition of an organization is that it is a stable, formal, social structure that
takes resources from the environment and processes them to produce outputs. This
definition is most useful in discussing the more formal aspects of the companylegal
responsibilities, standard operating procedures, management structure, and the hierarchies
of decision making and control.

The behavioral definition of an organization is that an organization is a complex collection of


rights, privileges, obligations, and responsibilities delicately balanced over time through
conflict and conflict resolution. This definition is most useful when one wishes to discuss or
understand the actual day-to-day workings of the business itselfpolitical alignments,
personal needs and desires of the various members, the relationship of the company to the
particular societal environment in which it operates, and the unwritten customs that grease
the wheels of commerce.

123. Briefly describe Mintzbergs classification of organizations. Provide an example of


each.

Entrepreneurial structure, machine bureaucracy, divisionalized bureaucracy, professional


bureaucracy, and adhocracy are Mintzbergs five classifications. The entrepreneurial
structure is a young, small firm in a fast-changing environment. Small start-up businesses
fall within this category. The machine bureaucracy is a large bureaucracy existing in a slowly
changing environment, producing standard products. An example is a mid-size
manufacturing firm. A divisionalized bureaucracy is a combination of multiple machine
bureaucracies, each producing a different product or service, all topped by one central
headquarters. An example is a Fortune 500 firm. A professional bureaucracy is a
knowledge-based organization where goods and services depend on the expertise and
knowledge of professionals. An example is a law firm. An adhocracy is a task force
organization that must respond to rapidly-changing environments. An example is a
consulting firm.

124. List three ways in which all organizations are alike.

They all have formal structure, standard operating procedures, politics, and culture-albeit not
necessarily the same ones.
3-18 Information Systems, Organizations, Management, and Strategy Chapter 3

125. While it is obvious that there are some things common to all organizational structures,
there are more differences and unique features than similarities. List and discuss at
least six features that are unique to each organization.

The authors list ten features that, in combination, are unique to each organization:
organizational type, environments, goals, power, constituencies, function, leadership, tasks,
technology, and business processes. Organizations differ in their ultimate goals and the
types of power used to achieve them. Some organizations have coercive goals (prisons),
some have utilitarian goals (businesses), and some have normative goals (universities,
religious groups). Organizations serve different groups or have different constituencies,
some primarily benefiting their members, others benefiting clients, stockholders, or the
public. The nature of leadership differs greatly from one organization to anothersome are
more democratic or authoritarian than others, some have greater or lesser need for rules and
procedures, or do more or fewer routine tasks requiring more or less judgment and initiative.
Organizations differ in the technology they usesome require little judgment and/or training,
others require far more of both.

126. Discuss the various types of personnel required by a technology infrastructure and its
attendant information technology services.

The formal organizational unit is the information systems department, which is responsible
for maintaining the hardware, software, and networks of the firms IT infrastructure. The
department consists of specialists, such as programmers, systems analysts, and information
systems managers. Each of these is responsible for specific areas of the departments
functions. Many companies also employ a senior manager in the role of chief information
officer, to oversee the use of information technology throughout the firm. The end users are
the representatives of departments outside the information systems group for whom the
applications are developed.

127. Information systems affect organizations economically and behaviorally. Describe the
ways in which each of these applies to an understanding of the working of the
organization.

Economic theories view information system technology as a factor of production that can be
freely substituted for capital and labor. As the cost of information system technology falls, it
is substituted for labor, thus resulting in a decline in the number of middle managers and
clerical workers. Information technology can also lower costs by reducing transaction costs
(transaction cost theory), and by reducing internal management costs (agency theory).

Behavioral theories are more useful for describing the behavior of individual firms. Some
behavioral researchers theorize that information technology could/may change the hierarchy
of decision making in organizations by lowering the costs of information acquisition and
broadening the distribution of information from upper-level management all the way down to
individual workers at the lowest levels of the firm. Others see information systems as the
outcome of political competition between organizational subgroups for influence over the
organizations policies, procedures, and resources.
Chapter 3 Information Systems, Organizations, Management, and Strategy 3-19

128. Define and contrast the two models of managerial behavior. Which do you think is
most useful in the workplace? Why?

The classical model of management is focused on the formal functions of planning,


organizing, coordinating, deciding, and controlling the actions of the firm. It describes the
functions of managers, but does not describe how these functions are carried out.
Behavioral models concentrate on observations of what managers actually do. The
behavioral model offered by Mintzberg classifies ten managerial activities into three
categories: interpersonal roles, informational roles, and decisional roles.

129. Describe and discuss the four stages of decision making as outlined by Simon. How
does each relate to the use of information systems?

Simon identified four stages, including intelligence, design, choice, and implementation.
Intelligence involves identifying the problem and gathering information about it. Traditional
MIS systems deliver a wide variety of detailed information, especially if they report
exceptions. Design determines possible solutions to the problem. Smaller DSS systems are
helpful here because they operate on simple models, can be developed quickly, and can be
operated with limited data. Choice consists of choosing among the alternative solutions. A
larger DSS system can develop more extensive data on a variety of alternatives.
Implementation, when the chosen decision is put into effect, requires a system that can
report on results. Large MIS systems and PC-run project-planning software are useful here.

130. What is a strategic information system? In what ways can these systems be used
differently at the business level, the firm level, and the industry level?

Strategic information systems are computer systems that change goals, operations,
products, services, or environmental relationships to help the organization gain a competitive
advantage. At the business level, they are used to answer the question, How can we
compete effectively in this particular market? At the firm level, they can improve the overall
performance of the business units of the firm in their relationship to each other by promoting
synergies and core competencies. At the industry level, they can be used to determine when
and how specific firms should compete with, or cooperate with, others in the industry. The
three principal concepts at this level are information partnerships, the competitive forces
model, and network economics.