Which of the following examples represents the best application of a firms primary core competence

The Role of Information Systems in Business Today

Information technology and systems have revolutionized firms and industries, becoming the largest component of capital investment in the U.S. and many industrialized societies. Investment in information technology accounts for approximately 50 percent of all capital invested in the United States.

Figure 1-1

FIGURE 1-1 INFORMATION TECHNOLOGY CAPITAL INVESTMENT Information technology capital investment, defined as hardware, software, and communications equipment, grew from 34% to 50% between 1980 and 2004. Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, 2006.

Information systems are transforming business and the visible results of this include the increased use of cell phones and wireless telecommunications devices, a massive shift toward online news and information, booming e-commerce and Internet advertising, and new federal security and accounting laws that address issues raised by the exponential growth of digital information. The Internet has also drastically reduced the costs of businesses operating on a global scale.

These changes have led to the emergence of the digital firm, a firm in which:

• Most of the firm's significant business relationships with customers, suppliers, and employees are digitally enabled and mediated.
• Core business processes, or logically related business tasks, are accomplished through digital networks.
• Key corporate assets (intellectual property, core competencies, and financial and human assets) are managed through digital means
• Business responses to changes in their environment are enhanced through digital communications, allowing for time shifting (business being conducted 24x7) and space shifting (business being conducted globally or beyond traditional geographic boundaries).

Information systems are essential for conducting day-to-day business in the U.S. and most other advanced countries, as well as achieving strategic business objectives. Some firms, such as Amazon and E*Trade, would be nonexistent without information systems. Some service industries, such as finance, insurance, and real estate industries, could not operate without information systems. The ability of a firm to use IT is becoming intertwined with the firm's ability to implement corporate strategy.

Figure 1-2

FIGURE 1-2 THE INTERDEPENDENCE BETWEEN ORGANIZATIONS AND INFORMATION SYSTEMS There is a growing interdependence between a firm�s information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.

Business firms invest heavily in information systems to achieve six strategic business objectives:

1. Operational excellence: Efficiency, productivity, and improved changes in business practices and management behavior
2. New products, services, and business models: A business model describes how a company produces, delivers, and sells a product or service to create wealth. Information systems and technologies create opportunities for products, services, and new ways to engage in business.
3. Customer and supplier intimacy: Improved communication with and service to customers raises revenues, and improved communication with suppliers lowers costs.
4. Improved decision making: Without accurate and timely information, business managers must make decisions based on forecasts, best guesses, and luck, a process that results in over and under-production of goods, raising costs, and the loss of customers.
5. Competitive advantage: Implementing effective and efficient information systems can allow a company to charge less for superior products, adding up to higher sales and profits than their competitors.
6. Survival: Information systems can also be a necessity of doing business. A necessity may be driven by industry-level changes, as in the implementation of ATMs in the retail banking industry. A necessity may also be driven by governmental regulations, such as federal or state statutes requiring a business to retain data and report specific information.

Answer the following questions and then press 'Submit' to get your score.

Question 1

Google.com is an example of a firm that:

a) adapted well to the business environment within its industry.

b) changed the business environment within its industry.

c) applied the VRIO framework in global strategic planning.

d) applied the SWOT Analysis in global strategic planning.

Question 2

The resource-based perspective suggests that unique firm resources should be the starting point for developing successful strategies.

a) the business opportunity should be the starting point for developing successful strategies

b) unique firm resources should be the starting point for developing successful strategies.

c) both business opportunity and unique firm resources should be the starting point for developing successful strategies.

d) neither business opportunity nor unique firm resources should be the starting point for developing successful strategies.

Question 3

SWOT is an abbreviation for:

a) Internal Strengths (S), Internal Weaknesses (W), External Opportunities (O), External Threats (T).

b) Integrated Strategies (S), Integrated Weaknesses (W), External Opportunities (O), External Threats (T).

c) External Strengths (S), External Weaknesses (W), Internal Opportunities (O), Internal Threats (T).

d) External Strengths (S), Internal Weaknesses (W), External Opportunities (O), Internal Threats (T).

Question 4

The concept of core competencies was originally devised by:

a) Michael E. Porter

b) John Dunning and John Child

c) C. K. Prahalad and Gary Hamel

d) Jay B. Barney

Question 5

The VRIO framework can be used to identify:

a) a firm's resources and external opportunities.

b) the organizational structure of multinational firms.

c) a firm's technical resources.

d) a firm's core competencies.

Question 6

Dynamic capabilities refer to:

a) the firm's ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments.

b) the link between subsidiary resource and multinational firm's competitive advantage in global markets.

c) the firm's dynamic capability to find resources that are valuable, rare, difficult to imitate and can be exploited by the organization.

d) the combination of individual technologies and production skills that underlie a company's multiple production lines and critically underpin the firm's competitive advantage.

Question 7

Value added is:

a) the cost saving through production and marketing efforts within the firm.

b) the value that a firm adds through the development of dynamic capabilities.

c) the value that a firm adds to bought-in materials and services through outsourcing.

d) the difference between the cost of inputs and the market value of outputs.

Question 8

Global value systems are sometimes referred to as:

a) Global value added

b) Global resource systems

c) Global value chains

d) Global capability linkages

Question 9

The systematic collection of information about rivals in order to assist the development of firm strategies is called:

a) Competitor intelligence

b) Internal benchmarking

c) Benchmarking

d) Functional benchmarking

Question 10

Functional benchmarking involves:

a) benchmarking your competitors.

b) benchmarking global competitors in your industry.

c) benchmarking organizations with regards to specific business activities or processes.

d) benchmarking other multinational firms with similar corporate strategies or similar customers.

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