Chapter 1 Managing the Digital Firm 1-1

Chapter 1
Managing the Digital Firm

Multiple-Choice Questions

1. Internet culture is:

a. global.
b. regional.
c. domestic.
d. local.

2. What term is used to refer to all of the computer-based information systems used by
organizations and their underlying technologies?

a. network technology
b. digital technology
c. information technology
d. productivity technology

3. The largest component of capital investment for firms in the United States and many
industrialized societies is:

a. inventory.
b. information technology.
c. machinery.
d. buildings.

4. In 2005, U.S. firms alone will spend nearly $1.8 __________________ on IT and
telecommunications equipment and software.

a. thousand
b. million
c. billion
d. trillion

5. Buying and selling of goods and services electronically with computerized business
transactions using the Internet, networks, and other digital technologies is called:

a. electronic commerce.
b. electronic communications.
c. electronic business.
d. electronic exchanges.
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6. The application of the Internet and related technologies to digitally enable government
and public sector agencies’ relationships with citizens, businesses, and other arms of
government is called:

a. e-commerce.
b. e-business.
c. e-government.
d. e-technology.

7. Experts believe that ____________________ percent of travel sales will be online within
a decade.

a. 10 to 30
b. 30 to 40
c. 40 to 50.
d. 50 to 70.

8. Developing a new product, generating and fulfilling an order, creating a marketing plan,
and hiring an employee are examples of:

a. creating feedback.
b. business processes.
c. maintaining a competitive edge.
d. industrial processes.

9. Information is:

a. the accumulation of raw data.

b. the way we analyze problems.
c. the best form of knowledge.
d. data shaped into meaningful form.

10. Streams of raw facts representing events occurring in organizations or the physical
environment before they have been organized and arranged into a form that people can
understand and use are called:

a. wisdom.
b. knowledge.
c. data.
d. expertise.

11. Input:

a. captures or collects raw data from within the organization or from the external
environment.
b. allows the analysis of problems faced by the organization.
c. is data shaped into meaningful form.
d. converts raw data into meaningful form.
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12. Converting raw data into a more meaningful form is called:

a. capturing.
b. processing.
c. controlling.
d. feedback.

13. Electronic computers and related software programs are the technical foundation, the
tools and materials, of:

a. all business procedures.

b. information accumulation.
c. modern information systems.
d. all industrialized countries.

14. Sets of operating instructions that direct and control computer processing are called:

a. protocols.
b. policies.
c. computer programs.
d. procedures.

15. One of the information processing activities in the business information value chain is:

a. modeling
b. planning multinational organizations.
c. dissemination satellite communications systems.
d. knowledge management

16. The primary purpose why information systems are built is to:

a. contribute to corporate value.

b. comply with government regulations.
c. link up with business partners.
d. gather competitive knowledge.

17. Which of the following would not be classified as a management activity in the business
information value chain?
a. Disseminating
b. Planning.
c. Coordinating.
d. Controlling.

18. Promoting the organization’s products and services is a business function of:

a. manufacturing and production.

b. finance and accounting.
c. human resources.
d. sales and marketing.
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19. Creating products and services is a business function of:

a. manufacturing and production.

b. finance and accounting.
c. human resources.
d. sales and marketing.

20. Managing the organization’s financial assets is a business function of:

a. manufacturing and production.

b. finance and accounting.
c. human resources.
d. sales and marketing.

21. Long-range strategic decisions about what products and services to produce are done by:

a. middle managers.
b. senior managers.
c. operational managers.
d. supervisory personnel.

22. An intranet uses:

a. mainframe technology.
b. infrared telecommunications systems.
c. the telecommunications capacities of fiber optic networks.
d. Internet technology within the boundaries of the firm.

23. The shared information technology resources for the organization are called its:

a. MIS plan.
b. operational network.
c. IT infrastructure.
d. business infrastructure.

24. Because information systems are so essential to business, government, and daily life,
organizations must take special steps to ensure:

a. that all managers know and understand the basics of copyright law.
b. that the systems are accurate, reliable, and secure.
c. that references are checked before employees are hired.
d. that software is updated frequently.

Essay Questions
25. Describe the following terms: Internet, intranets, and an extranet.