Solution Manual for Introduction to Information Systems, 4th Edition

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People1Chapter 1Information Systemsand PeopleLearning Objectives1.Describe the main roles that information systems play in organizations.2.Compare the termsdata,information, andknowledge,and describe threecharacteristics that make information valuable.3.Describe the four main components of an information system and the role thateach plays.4.Identify several research areas that are studied in the discipline of managementinformation systems (MIS).5.Provide examples of how business, nonprofit, and government managers,as wellasinformation technology departments, depend on information systemsknowledge.6.Explain how information systems present both promises and perils, and poseethical questions.Solutions to Chapter Review Questions1-1.What are the sixprimaryrolesthatinformation systemsplayinorganizations? How are information systems used in each context?Whatdoes digital transformation mean?Information systems play critical roles in (1)managingoperations, (2)supportingcustomer interactions, (3) makingdecisions, (4) collaborating on teams,(5)gaining competitiveadvantage, and (6)improvingindividual productivity.In operations management, information systems are used to manage assets andinventories; track employee payroll, taxes, benefits,and timesheets; processtransactions; track accounts payable and accounts receivable; procure goods andservices;and pay suppliers.Information systems that support customerinteractions include customer relationship management systems, web-based frontoffices, online self-service applications, modern point-of-sale systems and self-service checkouts.Information systems support data-driven decision making byusing both internal organizational data and external data from partners, suppliers

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People2and public sources.Smart managers use aggregated data to identify trends andpatterns rather than rely on gutinstincts.Collaboration and teamwork have considerable support from information systemssuch aswebapplications that enable virtual meeting spaces and social networkingsites.Microsoft’s SharePoint is an example of information technology thatsupports project teams with document management, shared calendars, andcommunication features.The innovative use of an information system can providea competitive advantage until competitors jump on the bandwagon.Consider howApple’s iPhone got the jump on smartphone competitors with Siri, the intelligentpersonal assistant.The selection of information systems and technology toimprove personal productivity ranges fromuse ofemailandsmartphonesto wordprocessing programs and contact databases.The challenge for most people is topick easy-to-use software and devices that integrate with existing applications.Digital transformation ishoworganizations develop newbusiness models byintegratingdigital technologies into all aspectsof the business, includingrelationships with customers,suppliers, and partners.1-2.How is data different from information?How is information different fromknowledge?What are examples of each?Data refers to individual facts or pieces of information, andinformation refers todata or facts that are assembled and analyzed to add meaning and usefulness.Apatient’s temperature reading is one piece of data; however, when combined withother pieces of data in a patient records information system, it becomesinformation that is useful for diagnostic purposes.Aggregated with data fromother patients, it can be further refined and analyzed to become knowledge of aflu outbreak that is even more useful.1-3.What are the three characteristics that makeinformation valuable?Why iseach a critical attribute of information?The three characteristics that make information valuable are timeliness, accuracy,and completeness.Timeliness is a critical attribute for certain kinds ofinformation, such as stock prices.Accuracy is a critical attribute for someinformation, such as a patient’s temperature reading.On the other hand, extremeaccuracy may not be necessary for certain kinds of information, such as acompetitor’s price for a rival product.Completeness is a critical attribute for someinformation, such as a patient’s list of current medications.In the context of amarketing survey, complete information adds value as a means to avoid bias orspin.1-4.What are the four components of an information system?Describe eachcomponent.What are the five functions that these components provide?

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People3The four components of an information system are (1) people, (2) technology, (3)processes,and (4) data.People interact with information systems in various rolessuch as systems analysis and developers, managers, users, customers,contributors, and sometimes roadblocks.Information technology includeshardware, software, and telecommunications equipment.Business processes areactivities designed to achieve a task, such as automatically generating form lettersto students.Data areindividualfactsor pieces of information.These fourcomponents are used to collect, process, manage, analyze, and distributeinformation.1-5.How are information systemsimportant to managers in a variety offunctional business units?What are examples of ways that informationsystems are important to the success of a marketing department, a humanresources department,anda small business owner?Information systems are important to business managers because they support thecompany’s business activities throughout every functional department.Information systems are used to streamline processes, reduce costs, increaserevenue, orlaunch that“killer app.”A marketing manager who knows how toanalyze big data from multiple sourceswill make much smarter decisions abouthow to spend the marketing budgetmost effectively.A talent developmentprofessional who has experience launching effectivee-learning modules willreach more employees for far less money compared withthe trainer who handsout three-ring binders in face-to-face classes. The onlinelearning programs canalso be easily updated, while information in the bindersgrows stale quickly.Self-employed consultants with knowledge of information systems can launchwebsites, build social networks, and maximize profits from online ads—all forvery little money.1-6.What are the functional areas that are common to most informationtechnology departments?Common functional areas in an information systems department include helpdesk, systems administration, data center operations, enterprise systemsandapplications, and telecommunications and network services.1-7.What is the role of the chief information officer?The chief information officer (CIO)headsthe IT department, andisresponsiblefor managingand maintaining information systemsand ensuring they supporttheorganization’s strategic goals. The CIO might report directly to the CEO or thevice president of finance and administration.1-8.What are some of the perils of information systems?What are some of theethical questions associated with the use of information systems?

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People4The perils of information systems include the increased risk of privacy breachesand amplification effects that result from interconnected systems.A number ofethical questions are associated with the use of information systems:Who isresponsible forthedamage caused by a privacy breach?Who is responsible whenfalse, damaging, or illegal videos are shared on theinternet?Is it unethical tobroadcast anemailmessage received by mistake?Solutions toProjects and Discussion Questions1-9.As customers, students, patients, taxpayers, and citizens, we are surroundedbyinformation systems that support customer interactions.Identify anddescribe two such systems that you have used.Briefly describe the types ofcustomer interactions you have experienced with these systems and comparewhat you found to be important features of each one.Are there features orfunctionsthat you would change or add to either system?Answers will vary, as the object of this question is to prompt the student toconsider features of an information system. An example is a student registrationsystem that allows students to browse class offerings, review course descriptionsand required textbooks, and register for classes.1-10.Web conferencing has been available for many years.In this market space,products from Adobe, Cisco, Citrix, IBM, and Microsoft compete with lower-cost or free web-conferencing applications fromZoom,AnyMeeting, andothers.What are some of the advantages of using a virtual meeting space?Are there disadvantages?Search the web to learn more about online meetingrooms and prepare afive-minute presentation of your findings.The benefits of virtual meetings include saved time and money, increasedproductivity, increased meeting participation, and the ability to record meetingsfor presentation at a later date. On the other hand, virtual meeting participantsmay be less likely to build strong, personal relationships, and they may be morelikely to experience distractions and engage in multitasking (e.g., checkingemail)during the meeting. Acquiring the necessary technology and training in the use ofthat technology are additional drawbacks of virtual meetings.1-11.Information systems play a very large role in decision making, and manywould argue that you can always use more information to make betterdecisions. But sometimes digging deeply for more information leads totroubling ethical dilemmas. Visit 23andme.com, the website of a companythat offers to read your DNA from saliva fora flat feeand provide reportsabout disease risk factors, ancestral lineage, and more. If you learn of asignificant health risk, should you tell siblings who chose not to investigatetheir own DNA? Should you tell yoursignificant other? List factorsyoushould take into account when making decisions about whether to obtaininformation like this and how to use it.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People5Answers to this question will vary based on the student’s perspective andexperience. Potential factors that students may identify are the physical andpsychological health of their friends and family, their own physical andpsychological health, and potential impact to past and future relationships.1-12.One way to be more productive and manage timeefficiently,is to use thecalendar feature offered bymanyemailsystems,such as Microsoft Outlook orGmail.Create a calendar for the semester that shows class times as well as testdates and project due dates.If you have a smartphone, you maybe able to syncyour calendar to an app so youalways have it handy.Which reminder optiondid you select for class times? Which reminder option did you select for projectdue dates? Briefly describe several benefits of using the calendar feature.Answers will vary,as the object of this question is to require students to workwith softwarethat enhances productivity. At a minimum, students should be ableto list several benefits of the Outlookor Gmailcalendar features,whichincludethe ability tomarkitems such as appointments, meetings, or all-day events, andtospecify items as recurring or one-time events. The scheduling option is used toinvite others to a meeting.Reminders can be set anywhere from 15 minutes up tofivedays prior to an appointment.1-13.Netflix has grown to more than millions ofcustomers who can stream moviesand TV episodes to anyinternet-connected device or request DVDs by mail.Describe Netflix in terms of (1) the types of information technology it uses and(2) its customer-facing business processes.Answers supplied by students will vary, but generally should be drawn fromchapter information contained in Section1.3: The Components of an InformationSystem. Answers should include brief statements relating to people, technology,processes, and data.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People61-14.Consider the information that is maintained by a bank. In addition tocustomer records, the bank maintains records on accounts and loans.Figure1-20and Figure 1-21(below) aretwo examples of database tables for aregional bank.How might this data be aggregated and analyzed to createinformation and knowledge?Figure 1-20Customers tableCustomerIDNameAddressCityStateZip100001Don Baker1215 E. New YorkAuroraIL60504100002Yuxiang Jiang1230 Douglas RoadOswegoIL60543100003Emily Brown632 Fox Valley RoadAuroraIL60504100004Mario Sanchez24 E. OgdenNapervilleIL60563Figure 1-21AccountstableCustomerIDAccountNumberAccountTypeDateOpenedBalance1000014875940Checking10/19/19712500.001000011660375Savings08/10/19731200.001000021783032Savings05/15/1987500.001000024793289Checking05/15/19873200.001000036213690Checking02/14/19966700.001000041890571Savings10/16/20075300.001000048390126Checking12/02/20082700.00Answers will vary but the student should be able to provide several examples. Forinstance, the student may discuss howcustomer data may be aggregated withaccount data to create information such as a table showing customers in zip code60504 having a savings account, and how customer data and account data may beaggregated and analyzed to create higher-level knowledge,such as whichcustomers may be prospects for a CD savings account or a consumer loan.1-15.Parking is a problem at many universities across the United States. Is it aproblem on your campus? Describe the business process to acquire a parkingpass at your school. Can you get a parking pass online? Can you get one inperson? How does your process comparewiththat of an organizationthat uses apaper form to apply for a parking permit? How canthat organizationuse aninformation system to improve this business process? Can you think of abusiness process at yourcollege or universitythat can be improved with aninformation system?Answers will vary depending on the business process evaluated. Students shouldbe able to provide a comprehensive description of the process they use to acquirea parking pass and a comparison to the process used at a smaller school.Theymay identify a process they have experienced that can be improved or eliminatedwith the help of information systems.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People71-16.A typical information technology department is composedof commonfunctional areas, and each requires skills and competencies unique to thatarea.Scanthewebor visit an online job search site such ascareerbuilder.com or monster.com to learn more about the IT functionalareas described in Figure1-15.Select two functional areas and compare jobpostings for each.In a brief report, contrast the differences in education,experience, and technical certification that are required for each job.Answers will vary depending on thewebsitesaccessed. Job titles generally shouldbe drawn from information contained inFigure 1-16.Students may identifynetwork and security certifications such as CCNA (Cisco Certified NetworkAssociate), CCNP (Cisco Certified Network Professional), and CompTIA’s A+,Network+,and Security+ certifications.1-17.In June, 2010, a security breach in the AT&T network exposed theemailaddresses of 114,000 Apple iPad 3G owners, many of whomwerewell-knownbusiness executives.The list of subscriberswhose data was releasedincludedTVjournalistDiane Sawyer,formerNew York City Mayor Michael Bloomberg, andformerWhite House Chief of Staffand Chicago MayorRahm Emanuel.Workin a small group with classmates to consider the severity of this leak of privateinformation.In this case, is the severity of the breach measured by the numberof affected individuals or by the high-profile status of some of the subscribers?What criteria are best for judging the severity of a data leak?Prepare a briefsummary of your group discussion.Answers will vary but studentsshould weigh the factors that they considerimportant in judging the scope of the damage, and defend their criteria. The extentof harm done directly and indirectly should be considered, whether or not highprofile individuals are involved.1-18.Information systems are fundamental to the success ofevery functionalbusiness unit within an organization, from marketing to manufacturing tofinance.Work in a small group with classmates to share your career choiceand discuss how information systems support processes within your field.Can you nametypes of software applications that are used in your chosencareer?Answers will vary depending on students’ career choices. Students should discusshow information systems support processes within a given field in the context ofthedifferentroles information systems play indifferentorganizations. Accountingmajors may identifyQuickBooksorNetSuiteaccounting programs. Marketingmajors may identifyemailmarketing orinternet marketing software programs.Information technology majors may identify project management softwareprograms.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People8Solutions to Application Exercises1-19.Excel Application:StaffPlanning SpreadsheetPrecisionProducts specializes in custom-manufactured metal parts.The productionmanager has asked you to create an Excel spreadsheet to helpmanage operations.The company needs a way tocalculatestaffingrequirements (number of employees)based on different levels of production.The five manufacturing operations arefabrication, welding, machining, assembly, andpackaging.One unit of productionrequires 1.5 hours for fabrication, 2.25 hours for welding, 0.7 hours for machining,3.2hours for assembly, and 0.5 hours for packaging.Downloadthe ExcelfileCh01Ex01(Figure 1.22)and thencalculate the weeklystaffingrequired, at 40 hoursper week, for production levels of 200, 300, 400,and 500 units.How does the totalrequired for each level of production change if Precision Products operates a 45-hour production schedule?In the file ExcelCh01Ex01,students should go to the cell containing 40 (WeeklyRequirement) hours and change it to 45; the formula would then recalculate the TotalRequirementamount.Refer to the Ch01Ex01_Solution file.Figure 1.22Managing operations at Precision Products using Excel.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People91-20.Access Application:Information Systems in BusinessSeconds Later, a clothing consignment shop, is fast becoming a favorite place toshop.The ownerhas asked you to create an Access databaseto helpmanageinventory.Download andimportthe information provided in the spreadsheetCh01Ex02to create a database with two tables (Consignors and Items).The ownerwants you to add a calculated field to theItems table that shows the net selling priceafterhe has paidthe commissionto the consignors.Start with two reports: anInventory Report and a Consignor Report.The Inventory Report summarizes theinventory by item type.This report will include the number of items and the totalselling price for each item type plus the total sales value of each inventory type.Itwill also include the total potential commissionthat the consignors willearn iftheowner sellsall items.The Consignor Report will list the total number of items andthe total selling price and commission for each consignor.What other reports couldyou make with this data that would be useful to the owner?Students should produce an Access database with two tables by importing data from theExcel file namedCh01Ex02.In Access, you can create table fields that calculate values.Inthe olderAccess 2007, calculated fields are created in a query. Students should createqueries to produce the Inventory Report and the Consignor Report, using the Propertysheet caption field to name the columns and the format function to show values ascurrency.Refer to the Ch01Ex02_Solution file.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People10Solutions toCase Study QuestionsCase 1—Trading at the Speed of Light:Nasdaq’s Information Challenges1-21.How has Nasdaq’s business benefited from the use of information systems?The purpose of the first two questions for this case is to have students considerhow information systems (IS) can transform an organization. Nasdaq is atechnology company that would not be possible without IS. IS enabled Nasdaq toenter the trading market even after the NYSE was well established, to offercustomers a full range of trading services even as a relatively new organization,and to achieve an advantage in speed compared with other exchanges. Further, ISare a source of revenue growth for Nasdaq, as Nasdaq has sold its technology toother countries and the IT department directly supports Nasdaq’s new businessstrategies.1-22.What risks do information systems pose for Nasdaq’s business?The purpose of this question is to have students give a balanced consideration tothe risks of IS as well as the benefits of IS. The benefits of IS were addressed inthe previous question, and this question addresses risks. One risk is that IS lowersthe cost of doing business for all firms in an industry, which is likely to lead tolower prices. Nasdaq must manage this risk by finding ways to remain profitableeven in an environment of lower prices. A second risk is that IS can contribute tohigh market volatility, which could lead to a loss of investor confidence and causeinstability for the entire industry. To manage this risk, Nasdaq would want to beinvolved in the creation of industry-wide technical and trading standards toachieve greater stability.1-23.This chapter discusses the value of information. What types of information arehandled through Nasdaq systems, what are the key characteristics of thisinformation, and how do Nasdaq customers use this information to create value?The purpose of this question is to have students focus on the“information” aspectof IS. The most critical components of information handled through Nasdaqsystems are the security name, price, seller, buyer, and time of the trade. Oneinteresting characteristic is that this information is constantly changing. Forexample, from one moment to the next, the price of a security will change and theseller willing to sell the security at that price will change. Nasdaq customerscreate value based on access to timely information, as a customer may want tobuy at a certain price, sell at a certain price, or transact on an exchange with acertain level of commission.1-24.What does the example of Goldman Sachs paying to locate its server in theNasdaq data center say about the relationship between information systems andphysical operations?

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People11The purpose of this question is to help students understand the relationshipbetween technical considerations and physicaloperations.This theme will surfacein several cases throughout the textbook. Given the importance of timeliness toNasdaq customers (seethirdquestionin this case study), even with high-speed ISthere is a small benefit in response time based on server locationand the distancethe information must travel to confirm trades.Trades are conducted withinnanoseconds so any delays due to physical distance might be costly.GoldmanSachs is willing to pay a premium for server location, which represents yetanother IS revenue source for Nasdaq. Even in automated operations, studentswill need to understand where physical location may still make a difference forfirms, workers, and customers.Case 2—Breaking News: Twitter’s Growing Role inEmergenciesand DisasterCommunications.1-25.What are the potential benefits of Twitter and other social media foremergency and disaster communications?The purpose ofthe first two questions for this case is to have students considerhowIScan transform apublic service.Although emergency and disastercommunications have developed through the years based on existing technologies(such as an air horn for a tornado watch, or the Federal Emergency Alert System[EAS] through television and radio), new technologies such as Twitter and socialmedia offer potential benefits for these communications. For example, socialmedia enable emergency and disaster communications to originate from multiplelocations at the same time (while an air horn or a news reporter operates fromonly one location at a time). Social media also enable emergency and disastercommunications to be constantly updated in realtime.1-26.What are the potential risks of using Twitter and other social media foremergency and disaster communications?The purpose of this question is to have students give a balanced consideration tothe risksof ISas well as the benefits of IS.The benefits of IS were addressed inthe previous questionforthis case studyabove, and this question addresses risks.One risk is thatthe IT and telecommunications infrastructure on which socialmedia operatescould be overloaded or cease to operate in a disaster. For example,on September 11, 2001 many mobile phone circuits in large cities wereoverloaded by excessive demand. To manage this risk, providers would need tolook at the robustness of their infrastructure in the face of peak demand, and theflexibility of infrastructure to reroute traffic if some nodes are damaged. A secondrisk is that because various individual citizens are preparing updates, the updatesmay vary in depth and accuracy. Management of this risk will be discussed in thenext question.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People121-27.What types of education would be necessary at the user level to make Twitterand other social media more effective for emergency and disaster communications?The purpose of this question is to have students consider the value chain in socialmedia. As social media begins to play a role in functions (such as public safety)that were previously handled by firms, students need to understand how therelated value chains may be impacted. The key objectives of educating citizens onthe use of social media in emergencies would be to reduce variability and increasequality and timeliness of communications. Accordingly, it would be useful toeducate citizens on basic principles (such as syntax) of using social media foremergency communications. It is also important to remind citizens to issuegenuine communications, and to prioritize urgent communications during anemergency or disaster.1-28.What would need to happen on the part of aid organizations and traditionalmedia for Twitter and other social media to be effective in emergency and disastercommunications?The purpose of this question is for students to continue the discussion fromthethird question for this case studyand consider the value chain implications ofusing social media for emergency and disaster communications. Although citizensmay originate the communications, aid organizations and traditional media wouldstill need to monitor the communications, integrate the communications, andprioritize the communications so that appropriate action can be taken. Aidorganizations also need to coordinate directly with each other to ensure that theydo not duplicate efforts in the response, and that they allocate resources efficientlyto address all important areas in a timely manner.Solutions to E-Project QuestionsE-Project 1—Analyzing the May 6“Flash Crash” with Excel Charts1-29.Download the Ch01_AAPL Excel file, which contains the high, low, andclosing prices for Apple Computers between May 3 and May 14. (AAPL is the tickersymbol for Apple.) Open the file to see how the data are arranged in columns, withthe first row showing the column headers.Refer to the Ch01_AAPL_Solution file.a)What was the closing price for Apple on May 6?On May 6, the closing price for Applestockwas $60.75 per share.b)What was the volume of trading for this stock on May 6?On May 6,there were28,560,400shares of Apple stock traded.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People131-30.Create a line graph from the AAPL data, in which the dates are on thex-axis(horizontal), and the stock prices are on the verticaly-axis. Include the openingprice, high, low, and closing price on the graph. Add a title to the top of your chart.The line graph would appear as follows:1-31.Download Expedia stock prices (ticker symbol EXPE) for the same timeperiod (May 3–May 14, 2010) from http://finance.yahoo.com. (Click on“HistoricalData”, underthe current chart and prices.)a)Createa line graph to compare thelowandclosing pricesfor Applestock and Expedia stock. You do not need to includeopen andhighprices on this graph.The line graph would appear as follows:b)How do you compare the activity on those two stocks?3540455055606505/03/1005/04/1005/05/1005/06/1005/07/1005/08/1005/09/1005/10/1005/11/1005/12/1005/13/1005/14/10PriceApple AAPLOpenHighLowClose2025303540455055606505/03/1005/04/1005/05/1005/06/1005/07/1005/08/1005/09/1005/10/1005/11/1005/12/1005/13/1005/14/10PriceApple AAPL and Expedia EXPEAAPL LowEXPE LowAAPL CloseEXPE Close

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People14Apple experienced a significant intraday price decline (Low stock price)on May 6 during the “flash crash,” while Expedia did not experience asignificant decline that day.E-Project 2—Gathering, Visualizing, and Evaluating Reports from Twitter andOther Sources During a DisasterDownload the Excel file called“Ch01_OilSpill,”which containssample reports,andanswer the following questions(alsorefer to the Ch01_OilSpill_Solution file.:1-32.First, select columns B through F and reformat them with word wrap so youcan easily see the actual comments people sent in.Using wordwrap the spreadsheet should now appear consistent with the sampleof title and first two lines of data below:1-33.Suppose you have a friend who lives in Bay Champagne. First sort the table byLOCATION, and scroll down to Bay Champagne. How many reports do you findusing this strategy? Why would this approach be limited in terms of its ability tofind all the events that may have affected your friend?Eight reportswere found. This search strategy is limited for at least two reasons.First, a user may miscount the number of rows when data is sorted. Second, it is possiblethat Bay Champagne may be mistyped for other entries (for example, “Champagne Bay”)and may not show next to the other eight Bay Champagne entries in the spreadsheet.

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Wallace,Introduction to Information Systems, 4th editionInstructor’s ManualChapter 1, Information Systems and People151-34.For crisis management, timeliness is important, but so is accuracy. How manyreports in this sample were not verified (NO in the Verified column)? You can useExcel’s countif function to determine the number of NOsand YESes.What is thepercentage of total reports that have not been verified?The verified column indicates that 791 out of 2464 reports (32.1 percent) have notbeen verified.1-35.Sort the file by CATEGORY then by LOCATION. Take a look at thereportsthat are categorized as Health Effects in Grand Isle. Why do you think many ofthese reports are not verified?Many reports of Health Effects in Grand Isle involve internal symptoms (such ascoughing or difficulty breathing) that may be more difficult to verify during areporting visit. This may be partly because the symptom may not manifest duringthe reporting visit, and partly because the report data collection involved verbalinterviews rather than medical examinations.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy1Chapter 2Information SystemsandStrategyLearning Objectives1.Describe Porter’s five competitive forces that shape industry competition.2.Explain how disruptive innovations, government policies, complementaryproducts and services, and other factors affect howthe competitive forces operate.3.Identify the components of the value chain and explain its extended version.4.Describe how information systems apply to competitive strategies for business.5.Explain how information systems apply to strategy for nonprofit organizationsand governments.6.Explain why the role of information systems in organizations shiftsdepending onwhether the systems are deployed to run, grow, or transform the business.Solutions to Chapter Review Questions2-1.What are the five competitive forces that shape industry competition?Howare these forces interrelated?The five forces that influence industrycompetition are (1) threat of new entrants,(2) power of buyers, (3) power of suppliers, (4) threat of substitutes, and (5)rivalry among existing competitors. The five forces determine industry structureand how profitable companies in the industry will be. The five interrelated forcesare “internal” to the industry.2-2.How do disruptive innovations, government policies, complementaryproducts and services, and environmental events affect how the competitiveforces operate?Disruptiveinnovations, government policies, complementary products andservices, and environmental are “external” forces that affect how the five forcesoperate. For example, certain innovations can flood through an industrylike atidal wave, changing everything in their path, forcing every company toeithermake changes or sink.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy22-3.What are the components of the value chain?Which components comprisethe primary activities?Which components comprise the support activities?What is the extended value chain?The primary activities of a value chain are: (1) bring in raw resources; (2) makethe product or service; (3) market the product or service; (4) deliver the product orservice; and (5) provide customer support. The support activities are: (1)administration and management; (2) human resources(3) technology support; and(4) procurement.The extended value chain links the company’s value chain withthe value chains of its suppliers and its customers.2-4.How do managers use benchmarks to analyze the value chain and ITspending?Organizations use the value chain model to compare their performance to industrybenchmarks and identify areas that should be targeted for improvement. Forexample, an organization may compare its budget allocation to each value chainactivity to industry benchmarks (i.e., average expenditures in its industry). ITbenchmarks include average IT spending by industry and amount spent on IT peremployee.2-5.How do information systems apply to competitive strategies for business?All of the competitive strategies leverage information systems to achieve success.Low-cost leaders must automate as much as possible using information systems toreduce costs in many different ways depending on the industry. Organizationswith a differentiated product or service often rely on innovations in IT toimplement their strategy.2-6.How are information systems used to run, grow, and transform a business?Information systems are used to run a business by supporting productivitythroughout the organization, in everycomponent of the value chain, helping tostreamline processes in administration and management and improve customerloyalty. As a strategic enabler, IT can be used to grow and transform a businessby facilitating a new business modelor introducing disruptive innovations.2-7.How do information systems apply to competitive strategies for nonprofitorganizations?Nonprofit organizations can apply information systems to their competitivestrategy in two critical areas: fund-raising and volunteer management. Specializedinformation systems assist nonprofits in managing donations and online fund-raising as well as building relationships with volunteers.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy32-8.How do governments use information systems to improve services and fundresearch?Governments use information systems to improve services in varied waysdepending on the specialized requirements and responsibilities of the agencyproviding the service. For example, the military uses real-time systems to supportmilitary personnel and material distribution;the Department of Natural Resourcesneeds easy ways for people to report poachers who damage forests or huntillegally, and the agency offers online tools for that; the US Internal RevenueService must have information systems to support e-filing and to process millionsof tax returns.Government funding is critical to certain kinds of research projectsthat private investors might avoid for various reasons including risk anduncertainty. For example, theinternetwas developed by the Defense AdvancedResearch Projects Agency. Currently, green sources of energy and the smartelectricity grid are receiving significant funding from governments.Solutions to Projects and Discussion Questions2-9.Although many people think electronic book readers are tooexpensive, thereis a massive global demand for the devices,and the trend is likely to continuefor some time.Search the web to learn more about how digital technologyhas disrupted the book publishing industry, and prepare afive-minutepresentation of your findings.Answers will vary. At a minimum, students should be able to list several effectsof digital technology on book publishing such as a decrease in sales of non-digitalbooks and new options for self-publishing books and make them available onKindle and iBooks and other websites.2-10.The value that attracts millions ofcustomers to McDonald’s every day comesfrom capabilities that are based in its value chain.Briefly describeMcDonald’s value chain and discuss how information systems facilitate eachcomponent in the chain.Can you think of a way that information technologycould improve your next trip to McDonald’s?Answers will vary but should include an example of at least one informationsystem that is used in each component of the value chainand one improvementusing information technology.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy42-11.Information technology enables nonprofit organizations to reach out toconstituents 24 hours a day, 7 days a week.Visit www.redcross.org and notethe various ways this charity is using itswebsiteto communicate withvolunteers, donors, and people who need assistance.Compare the Red Crosssite to your university’s alumni associationwebsite.Prepare a brief summaryof your findings that includes a list of specific services provided on each site.How does eachwebsitesupport the organization’s strategic goals?Answers will vary depending on the services made available by their local alumniassociation. Because the content of www.redcross.org may change, expectedresults will vary but should include services such as these: Get Assistance,Volunteer, Take a Class,andGiveBlood.2-12.Government agencies and corporations have similar information needs.Identify and briefly discuss specific examples of information systemstypically used by a law enforcement agency such as a state or local policedepartment.Which of these systems are used to “run”the business?Whichare used to fulfill the agency’s mission?Answers will vary,but should include an example of an information system usedto manage operations such as human resource scheduling, payroll, or accountspayable. The mission of a state or local police department includes safeguardingthe lives and property of the people it serves. Examples of systems to fulfill theagency’s mission may include systems to manage criminal history records, arrestwarrants, stolen vehicles and property, fingerprint identification, sex-offenderregistration, and concealed handgun licenses.2-13.What are the three basic strategies that companies adopt to compete?Describe how information systems support each strategy. What is a “hybrid”strategy? Describe a company, product, or service that adopts each of thesefour competitive strategies.The three basic strategies are (1) low-cost leadership, (2) product differentiation,and (3) focusedniche. Thelow-cost leadershipstrategy relies on informationsystems that automate and streamline processes and eliminate costly human labor.The product differentiation strategy requires systems that add special features orunique add-ons for which customers are willing to pay more. The focusednichestrategy relies on special features for a particular market niche such as a businessor government segment. A hybrid model incorporates aspects of severalstrategies.An example of a hybrid strategy is providing the best value for thelowest price.Answers will vary regarding names of companies, products, orservices that adopt each of these competitive strategies. This question draws onthe student’s ability to understand the four strategies and their knowledge ofcompanies, products, and services.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy52-14.The U.S. federal government collectstrillionsintaxeseach year,includingindividual income taxes,socialsecurity/socialinsurance taxes, and corporatetaxes.Visit www.irs.gov and describe how thiswebsiteenhances services tothe public.What types of services are available to individuals?Tobusinesses?To charities and nonprofit organizations?What kind of “taxinformation for students”does this site provide? Prepare afive-minutepresentation of your findings.The list of services provided at www.irs.gov could be extensive. For example,services provided to individuals include assistance with finding a “free file”provider, transmitting a tax return electronically, and checking on the status of atax return. Services provided to businesses include electronic submission of taxreturns, links to compliance and enforcement information, and taxpayer advocateservices. Services provided to charities and nonprofit organizations are similar tothose provided to businesses. Services provided to students include links to aninteractive tax education program and information on education credits andstudent loan interest. Student lists will vary and should include specific servicesfor each category of client.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy62-15.Why are IT resources described as a commodity?How do IT resources“matter” in terms of the different rolestheyplay in an organization?Whichcomponent of an information system is most critical to success in growingand transforming the business?Why?A commodity is a product for which quality is the same no matter who producesit. Examples are milk and paper. The price of a commodity fluctuates dependingon supply and demand. Nicholas Carr suggests that IT resources have become socommonplace that their strategic importance has diminished, and they havebecome an infrastructure commodity, much like electricity. Informationtechnology resources that are used to run the business generally fall into thecommodity category where price competition is fierce. Consequently,organizations can avoid wasteful spending for these systems and get the bestvalue for the lowest cost. On the other hand, information systems that are used togrow and transform an organization include the “people” component. Althoughmany technologies are commodities, the ability to extract their value requireshuman imagination. Innovative business practices, new products and services, andchanged processes come from talented people who know how to leverageinformation technology.2-16.According to the Computer History Museum (www.computerhistory.org),the Kenbak Corporation sold the first personal computer in 1971.Since then,several billion PCs have been sold under various brand names.Work in asmall group with classmates to analyze and describe the personal computerindustry using thefivecompetitiveforcesmodel.Students should be able to provide a brief analysis that describes competitiverivalry as high due to little differentiation in PCs, supplier power that comes fromthelack of substitutes for their input product and the cost associated withchanging suppliers, and buyer power that comes from customer price sensitivityand the low cost of switching to another PC. The threat of substitutes is relativelyhigh because it is easy for customers to switch to alternate products such aslaptops, notebooks, and netbooks. The threat of a new entrant in this industry isrelatively low due to barriers to entry such as acquiring necessary inputs from keysuppliers.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy72-17.Work in a small group with classmates to discuss how informationtechnology plays a role in the competitive environment of your college oruniversity.How do you describe the competition to attract and retainstudents?How do you describe the threat of substitutes in higher education?How does the threat of substitutes affect supplier power in education?Answers will vary. At a minimum, students should provide a list of ways that ITis used by their college or university to attract and retain students and discuss thecompetitive environment of their school. The threat of substitutes in highereducation includes programs provided by community colleges and technicalschools,as well as online degree programs offered by traditional and virtualuniversities. As students have more choices, supplier power for institutions ofhigher education is reduced.Solutions to Application Exercises2-19.Excel Application: IT BenchmarksJay’s Bikes is a family-owned and-operated business that stocks a wide range ofbikes designed to fit the needs of professional riders,yourchild’s first bike, andeverything in between. The business has 12 full-time employees.Download the Excelfile Ch02Ex01 (Figure 2.21)to calculate average IT spending so that it can becomparedwith the retail industry average. Recall that averageIT spending in theretail industry is about 2 percent ofrevenue.How do Jay’s IT expenditures comparewiththe industry average?How much would Jay need tochangespending in orderto match the retail industry average?Students should use formulas to calculate Jay’s average IT spending as a percent ofrevenue and his average IT spending per employee, then use Goal Seek to determine howmuch he needs tochangeIT expenditures to match the industry benchmark of2percentof revenue.To answer the question, “How much would Jay need tochangespending inorder to match the retail industry average?,” students should use a formulas to calculate(a) the difference between Jay’s current IT spending as a percent of revenue and thetarget spending as a percent of revenue and (b) the difference between Jay’s current ITspending per employee and the target spending per employee.Refer toCh02Ex01_Solution file.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy82-20.Access Application:Telethon Call ReportsThe volunteer coordinator of the Downtown Emergency Shelter has asked you touse the information providedin Figure 2-22to create an Access database.(You candownload the Excel file called Ch02Ex02 and import the data into your database.)The coordinatorwill use the database to manage donor records and helpthe shelterprepare for an upcoming Phonathon fundraisingevent. During the Phonathon,volunteers willcall previous donors to ask for donations to this year’sfund.Yourinstructions are to create two tables (donors and volunteers) and prepare aPhonathon Call Report for each volunteer.The shelter manager wants you to addthree fields to the donor table: this year’s contribution, a calculated field that showsthe average contribution per employee, and a calculated field that shows a targetcontribution that is 5percenthigher than last year’s contribution.The reportshould list the volunteer’s name and number, as well as the following donorinformation: donor number, donor name, company name, phone number,contributionamount from the prior year, number of employees, averagecontribution per employee, and target contribution for this year.Although addressinformation will not be included on the report, that information will be used to sendreceipts to the donors at the conclusion of this year’s fund-raising event.Students should produce an Access database with two tables by importing data from theExcel file namedCh02Ex02.Students should create a query to produce the PhonathonCall Report. The query includes two calculated fields: average contribution per employee

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy9and target contribution per employee for the current year. Set the format for both fields tocurrency in the Property sheet.Refer to Ch02Ex01_Solution file.Solutions toCase Study QuestionsCase 1—Can GameStop Survive with Its Brick-and-Mortar Stores?2-21.Perform a five forces analysis of the online gamingindustry.What aretheimplications of the five forces analysis for GameStop?The purpose of this question is to have students apply a framework from thechapter to the case. A five forces analysis provides an idea of whether or not anindustry would be attractive to enter. In the online gaming industry, entry barriersare reasonably low (implies that industry is not attractive), because all that isrequired to enter the industry are developers to program a game and a website topublish the game. There are numerous available substitutes (implies that industryis not attractive), as online gaming is only one of many forms of entertainment.Internal rivalry is increasing (implies that industry is not attractive) with multipleproviders of online gaming. Buyer power is low (implies that industry isattractive), because buyers are individual consumers and no consumer wieldsundue market power. There is some supplier power (implies that industry ismoderately attractive), because there may be a limit to the number of talenteddevelopers available for hire. This five forces analysis suggests that the online

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy10gaming industry has low to moderate attractiveness. It is not necessary forstudents to arrive at this suggested answer, instead it is more important forstudents to get experience in performing and drawing implications from a fiveforces analysis.2-22.What role have information systems played in the five forces you identified?Building from the five forces analysis in the previous question, IS plays a key rolein at least three of the five forces. For example, one reason that barriers to entryare low is because online distribution reduces the barriers to entry. A gamepublisher does not require physical logistics to distribute games to retail locations;the publisher can simply distribute directly to consumers via theinternet. Onereason that substitutes for online gaming are high is that the target demographiccan use online social media (another form of entertainment) at no cost. Onereason that internal rivalry is increasing is because existing retailers (such asGameStop) are adding online channels. It is not necessary for students to developthis precise analysis,instead it is more important for students tounderstand therelationship between IS and strategy.2-23.How has GameStop used information systems to compete more effectively?The five forces analysis performed in questions 1 and 2 relate with GameStop’sevaluation of the industry and GameStop’s response to the industry. The purposeof this question is to have students understand how firms can incorporate IS aspart of their strategy. GameStop acquired an online gaming company to embraceonline gaming as a substitute for offline gaming and to enter that segment of theindustry. Firms can use IS as a tool to implement their strategies.2-24.What other strategic actions will GameStop need to take to protect itsbusiness?The purpose of this question is to have students understand that IS are only onecomponent of strategy, and that organizations need to integrate IS together withother components to successfully execute a strategy. For this case, in addition toacquiring the online gaming company, GameStop will need to integrateoperations of the online gaming company with its brick and mortar operations, totake advantage of GameStop’s physical footprint.Offeringopportunities to earnPowerUPreward pointsis anexampleof how the company can attract more in-storecustomers. The company might alsoconduct gaming tournamentsthatfurther integrate its online presence with in-store events.GameStop managementwill need to think through whether the firm will compete more based on low price(in which case it might increase its focus on online gaming) or quality service (inwhich case it might maintain focus on the brick and mortar stores and personnel).

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy11Case 2—The BattleoverNet Neutrality2-25.What are thestrategic interests of carriers?What are the strategic interestsofwebsites?The purpose of this case is to give students the opportunity to think throughstrategic considerations at the industry level, as opposed to the firm level as in theGameStop case. In this case, the strategic interests of carriers such as Verizon andAT&T are not necessarily aligned with the strategic interests ofwebsites such asYouTube and Facebook. Carriers argue that they have invested substantialfinancial resources to buildinternetcapacity, and want to protect their ability togenerate additional revenues from their investments. On the other hand,websitesargue that their success depends on a direct connection to the customer and theability to offer the customer an exceptional user experience.2-26.How do the interests of carriers differ from the interests ofwebsites?Whatare the implications for websites from a value chain perspective?The purpose of this question is to help students further understand the relationshipbetween IS and strategy at the industry level. Building fromthe first question forthis case, one way for carriers to protect their investments andgenerate additionalrevenues would be to haveuserspay for enhancedinternetconnectivity.Anotherway for carriers to generate additional revenues would be to have websites pay forhigher priority. On the other hand,websites would view less robustinternetaccessfor some usersorwebsites(implied if not allusers or websitespay for enhancedaccess)asinterference to their user experienceand business models.From a fiveforces perspective, the decision on net neutrality could dramatically impact theproportion of online revenues that accrue to carriers versuswebsites (carriers areone supplier forwebsites), and the relative attractiveness of each industry.2-27.Whatis the basis for Verizon’s lawsuit against the Federal CommunicationsCommission? Why diditclaim a violation of free speech?This questionhelps students understand how companies can use the legal systemto fight government regulations. As a carrier, Verizon is hindered by the FCC’sruling in favorof net neutrality. Verizon is claiming a “violation of free speech”because the FCC’s rulings are taking away control over the carrier’s property,which in some contexts might be considered speech. Students might also answerthis question more fully by researching the outcome of the case and the court’sresponse.2-28.What are relevant considerations on the role government could play toresolve differences between carriers and websites?As in questionsthe first two questions for this case, the carriers have differentinterests than the websites. This situation is likely to require some resolution

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy12between these differences. Governments also have conflictingconsiderations. Onone hand, governments have a responsibility to protect the rights of citizens. Onthe other hand, governments have a responsibility to regulate commerce.Governments will need to balance these conflicting considerations as they makedecisions related to net neutrality.Solutions to E-Project QuestionsE-Project 1—Identifying Company Strategy with Online Financial Chart ToolsOne useful way to catch up on a company’s strategy is to check outtrends in itsstock price, and the netoffers many free tools. Go toGoogle’s financewebsite(www.google.com/finance) and type the stockticker symbol for GameStop (GME)into the search bar to pull up currentnews about the company, including a graph ofits share prices.2-29.Change the graph tozoom to different periods of time. Do you see anylargechanges in share price?Check out the news section to see if something happenedthat might have triggered a change in investors’sentiments about the company.The answer to this question will vary based on the date the student performs thesearch. A screenshot of the search as ofJanuary2020is below. This screenshot showsa

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy13changein the stock’s prices inJanuaryof 20202, tied tothe upsurge in digital games.2-30.One way to get an idea of how well the company is doing is to compare thetrend in its share prices toa competitor.Click on Compareat the top of the graphtoview Best Buy and GameStop performanceon the same graph. How doesGameStop’s performance comparein recent years?The answer to this question will vary based on the date the student performs thesearch.Ascreenshotof the search as ofJanuary 15, 2020,isbelow.Thisscreenshotshows that stock price for GameStopdecreasedfaster than thestockprice for Best Buyduring theperiod shown in the graph.

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy14E-Project 2—AnalyzingMediaDownload Times with Excel

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Wallace, Introduction to Information Systems, 4th editionInstructor’s ManualChapter 2, Information Systems and Strategy15In this e-project, you will obtain and analyze information about downloadtimes toassessinternetconnectivity.2-31.Download the file called CH02_MediaDownloads. This file shows theapproximate file sizes for different kinds of media, along with estimated downloadtimes.2-32.Add a column calledSpeed Advantage and enter the formula that shows howmany times faster the download will be if one uses fast broadband (d2/c2). Copy theformula to the remaining rows, and then add a row at the bottom called“AVERAGE”. On average, how much faster is it to download media files using fastbroadband compared to regular broadband?On average, it is 4.85 times faster to download media files using fast broadbandcompared to regular broadband.Seescreenshotof completed Excel spreadsheetbelow.2-33.Add two more columns called Download Time per MB (Fast Broadband) andDownload Time per MB (Regular Broadband). Compute these values by dividingthe appropriate download time by the file size in MB, and add the average at thebottom.a.What is the average download time per MB for fast broadband?The average download time is 1.12 seconds per MB for fast broadband.Seescreenshotof completed Excel spreadsheetabove.

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