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INFS1602 Exam preparation:

1. What is the Internets impact on competitive advantage?

Internet has raised the bargaining power of customers as information is
available to everyone they can find the lowest prices or highest quality
more easily
Internet has created new markets and therefore increasing the presence of
Internet has reduced barriers to entry in the global marketplace increasing
Internet has created eBay and Amazon which increases product substitutes
2. What are the functions and activities of an information system?
IS set of interrelated components that collect, process, store and
distribute information to support decision making and control in an
Its activities include:
o 1. Inputs: capturing internal and external raw data
o 2. Processing: converting raw data into information
o 3. Output: distributing this information to those who require it
Information literacy: information systems require an understanding of the
management, organisational and technical dimensions of systems
o Management: deals with the behavioural and technical issues
involved with using IS
o Organisations: Is helps integrate distinct business functions of the
o Technology IS:
Hardware: physical equipment supporting IS activities
Software: pre-programmed instructions that control and
govern hardware
Data management technology: software that governs the
organisation of data
3. What is the social technical systems approach towards understanding
information systems
The social technical systems approach impresses optimal operations is
achieved by jointly optimizing both social/behavioural and technical
systems used in production.
Technical approach: used of mathematic models to study IS
o Computer science: establishing theories of computability and
methods for efficient data storage and access
o Management science: development of models for decision making
o Operations research: focuses on techniques for optimizing selected
parameters of the organisation.
Behavioural approach: concentrates on IT as a stimulus for a behavioural
o Sociology: Studies how organisations shape the development of
systems and how IS affects individuals and the organisation
o Economics: Studies IS with an interest in understanding the
production of digital goods and how new IS changes the cost
structure within the firm
o Psychology: Studies IS with an interest in how decision makers
perceive and use formal information.
4. What are the information system strategies for dealing with Competitive

Porters five competitive forces are:

o Traditional competition: firms share market space with competitors
o New market entrants: some industries have high barriers to entry
o Availability of substitute products and services: consumers switch to
cheap products. New technologies can create substitute products.
o Bargaining power of buyers (locking in customers): ease for
customers to switch between products. Profitable firms can easily
attract and retain customers.
o Supplier power: the more suppliers a firm has the greater the control
they can exercise over them in terms of price and quality. Suppliers
therefore have less power

Low cost leadership: IS used to lower prices and cost of operations.
o Qantas use of online check ins to lower administrative expenses
Product differentiation: IS used to modify existing products/services. They
are capable of creating customizable products to fit the precise needs of
individual customers.
o Mass customization: ability to offer individually tailored products
using the same production resources as mass production
o McDonalds create your taste vendors
Focus on market niche: IS is used to serve the needs of the niche market
better than competitors. Involves analyzing customer preferences and
buying patterns from data.
o Credit card companies collect data on individuals such as their
spending behaviour to determine whether the cardholder is a good
or bad credit risk.
Strengthening customer and supplier intimacy (high switching costs): IS
tightens the relationship between suppliers and customers.
o Switching costs can be explicit charging customers for switching
o High switching costs give customers less purchasing power
o Amazon keeps track of user preferences for books and CD purchases
and can even recommend titles purchased by others to its
Adopting new technology or constantly improving technology can raise
barriers to market entrants.
5. What is the value chain model and what are the activities in the model?
Value chain model: views firms as a series of value-adding activities that
helps organisations identify opportunities for strategic IS application in
order to gain a competitive advantage
o Also a benchmarking tool to ensure efficiency and effectiveness of
the firm
Primary activities: directly related to the production and distribution of the
firms products and creates value for the customer
o Inbound logistics, operations, sales and marketing, service and
outbound logistics
Secondary activities: make the delivery of the primary activities possible
o Administration and management, human resources, technology and

IS used to automate routine activities to reduce costs and to enhance

Ford has adopted value chain analysis to add more value to its products by
offering software interfaces and applications for improving vehicle
performance and providing entertainment.
6. What is re-intermediation and disintermediation?
Disintermediation: cutting out the middleman and reaching customers
more directly and efficiently.
o Airlines such as Qantas selling tickets online and dealing directly
with customers, dis-intermediating travel agents.
Re-intermediation: design of business models that reintroduce the
middlemen in order to reduce the chaos brought on by
o Middlemen like Travelocity.com enable consumers to compare
flights offered by different firms to find the cheapest flights
rather than having the consumer check all airline websites.
7. What are business ecosystems?
Collection of interdependent industries that provide related products and
Characterized as having one or a few keystone firms that dominate the
ecosystem and create the platform used by other niche firms
Each business in the ecosystem affects and is affected by the others,
which creates a constantly evolving relationship in which each business
must be flexible and adaptable in order to survive.
IT makes participation into business ecosystems less costly
A rapidly expanding ecosystem is the mobile Internet platform. In this
ecosystem there are 4 industries: Device makers (Apple), wireless
telecommunication firms (Verizon), independent software application
providers (small firms selling games) and Internet service providers
(Optus). Apple has integrated all these firms to offer one powerful system,
the Iphone.
8. What are the benefits and disadvantages of E-Tailing
E-tailing: selling goods and services in the digital world
o Product benefits: unlimited number of products can be sold as there
is no physical storage restriction and comparison shopping is must
easier to perform
Amazon offers millions of book titles compared to a physical
o Place benefit: e-tailers can conduct business anywhere at anytime
including the global market. This enables them to compete
effectively for customers.
Amazon sells books 24/7/365
o Price benefits: inventory turnover is increased due to the increase in
potential customers. Virtual Companies can sell more, and do not
incur rent expense, etc., which reduces prices for consumers and
increases profitability.
Large consumer base of Amazon allows it to reduce prices of
its books
o Product delivery drawbacks: credit card information may not be
approved and deliveries may not arrive on time.

Direct product experience drawback: lack of sensory information

such as taste, smell and feel. Products such as foods are difficult to
assess via the web.
9. How to design Electronic Commerce websites to attract and retain online
Websites should offer unique information to achieve profitability
Websites must stand out from competitors and attract repeat sales such as
having the lowest prices, good online communities and providing reliable
Firms must learn from their websites by tracking visitors paths, and page
Characteristics of websites:
Structural firmness: website must function well, be fast, have good links
and ensure privacy
Functional convenience: easy to navigate, enables quick searches, varying
payment options
Representational delight: aesthetically pleasing through high quality
pictures and colours
For utilitarian sites such as online banking, structure firmness is the most
important characteristic, followed by functional convenience and representational
For a hedonic site, such as music sites, representational delight will be more
important to attract repeat visits.
Whilst websites that are aesthetically pleasing but hard to navigate will be
avoided by customers.
10.What is a mash-up?
Mash-up: website that uses data from one or more service providers.
Provides efficiency for websites as they do not have to create information
already available
Companies are now offering web APIs to the public in order to extend their
reach and strengthen customer relationships and generate revenue.
Many websites use Google Maps rather than create their own expensive
mapping systems. Google Maps API is free for low volume usage but is
offered as a paid version for high-volume commercial usage.
Web APIs- application programming interfaces that provide a way for
different components of software to interact and exchange data.

11.What are possible future web capabilities?

The semantic web: set of design principles, envisioned by Tim Berners-Lee
that allow computers to better index websites, topics and subjects to
provide more accurate answers.
o Whilst an increase in data and webpages is generally good, there is
a contradiction in that it makes key information difficult to find.
o Semantic web is currently unrealized but is closer to being achieved,
Googles search engine now trying to foresee what the user may
want to search for.
Web 3.0: uncertainty of what Web 3.0 will hold
o Eric Jackson envisions the next web is to be centred around mobility

Others see Web 3.0 as the contextual web where the immense
amounts of content available will be filtered by contextual factors
such as time and location.
12.What are synchronous and asynchronous communications?
Groupware: class of software that enables people to work together more
Synchronous tools: tools that enable communications at the same time
o Shared whiteboards
o Electronic meeting systems: utilises network computers and
sophisticated software to support various group tasks
o Online chats
Asynchronous tools: tools that enable communication at different times
o Emailing
o Intranets
o Discussion forums: emulate traditional bulletin boards and allow for
threaded discussion between participants.
13.What are the benefits of groupware?
Parallelism: enables may people to speak and listen at the same time
providing equal opportunities to participate
Group memory: automatically records member ideas, comments and
votes which allows members to focus on the discussion rather than on
note taking
Access to external information: can easily incorporate external
electronic data and files, documents can be collected and easily
distributed to all members
Group size: enables larger groups to participate providing broader
Spanning time and space: enables members to collaborate from
different places at different times thus reducing travel costs
14.What is the concept of the long tail?
Catering to niche markets in addition to purely selling mainstream
Based on the idea that the distribution of needs and wants can be modeled
by a normal distribution where the bulk in the centre represents the mass
market and the long tails represents the niche market
For brick and mortar stores, high storage and distribution costs make niche
product investments inefficient and expensive. Therefore these stores only
target mass markets
Lower costs presented by e-tailing enables such firms to focus on the long
NetFlix can afford to have a very large selection of unpopular movies and
still make profits
15.What are the core business processes?
Order to cash: processes associated with selling a product or service
o Online retailers provide real time information on available stock
o Involves multiple sub-processes such as creating customer records,
packing, shipping and creating the orders
o Ineffective order to cash results in human errors, high levels of
disputes and defecting customers
o Effective order to cash creates customer satisfaction and improves

Amazon: you need to create an account, add items to shopping cart,

add billing information and submit the order.
Procure to pay:
o Processes of procuring goods from external vendors
o Sub-processes include price negotiation, receiving goods, settling
o Ineffective processes: increased error rate, limits supplier intimacy
o Effective processes: reduce transaction costs, create customer
o Amazon needs to acquire products from suppliers in order to sell to
customers. They will place purchase orders, receive the products,
allocate warehouse space and pay.
Make to Stock/Make to order:
o Make to stock (push-based approach): goods are produced based on
forecasts and stocked in a warehouse and sales orders are then
fulfilled from inventory
Amazon.coms kindle ebook reader undertakes make to stock.
Organisation aims to push the product out to customers after
orders are received.
o Make to order (pull-based approach): raw materials are procured
based on forecasts, but the actual manufacturing only occurs when
sales orders are received.
The assembly of dell computers initiate after a customer has
placed an order
Organisation waits for an order and initiates a pulling
sequence to move the order through the production process.
16.What are the 3 tenets of the business process redesign process?
What are the symptoms of underperforming business processes?
Are there redundant activities (efficiency)?
o Activities whereby the input and output are the same by design.
o Student emailing administrator with a request to have the email
forwarded to the lecturer
Are there underperforming activities (effectiveness)?
o Poor transformation process (correct input and correct resource)
o Customer representatives responses to customers must stick
strictly to a script
o Poor resource allocation (correct input and correct transformation)
o Utilizing an illiterate worker to undertake computer duties
Are there activities that are done in sequence but could be done in parallel
and vice versa?
o Activities whereby the outputs are needed as the inputs of another
activity should be done in sequence
o Activities whereby the outputs are not needed as the inputs of other
activities can be done in parallel
o Are there missing activities? Activities whereby their inclusion makes
the input of subsequent activities better
17.What are data mining, master data, a metadata repository and a data
Data mining: analyse large amounts of data to identify certain
o Data mining algorithms search for patterns or rules that are hidden
in data



Data reduction: reduces the complexity of data to be analysed. This

is important as it reduces the time taken for data mining algorithms
to run
Association discovery: technique to find correlations among set of
Supermarket may want to find out which items are purchased
Clustering: grouping related records together based on similar
attributes to form structured data
Can be clustered around age and income levels
Classification: records are segmented into pre-determined groups
and classes
Banks classify customers into risk categories

Master Data: data that is deemed most important in the operations of a

o Includes information on customers
o Involves business units and corporate levels coming to a consensus
on the classification of master data items
Metadata repository: database created to store metadata
o Metadata is data about data.
o Purpose of this repository is to provide a consistent and reliable
means of access to data.
Data warehouse: integrates multiple large data bases into a single
o Contains both historic and current data for analysis and reporting.
o Purpose: to put key business information into the hands of more
decision makers, sharing critical corporate data throughout the firm
o Expensive but can store vast amounts of data
18.What is business intelligence?
Business intelligence: use of IS to gather and analyse data and information
from internal and external sources to make better business decisions
o Increases the responsiveness of organisations to threats and
o Improves effective management and business processes.
19.What does it mean by do anything anywhere computing environment?
The Internet and development of smartphones and the digital firm have
enabled businesses to run past their normal 9-5 hours, commuting time
and vacation time.
Instead, new technologies have allowed organisations to be run on a 24/7
basis, which could potentially interfere and deteriorate work-life balance
and cause stress.
Arises from ubiquitous computing and mobile computing
20.What are just in time strategies in supply chain management?
Parts or raw materials arrive just when they are needed for production
Based on the notion that keeping inventory is costly (in terms of both
storage costs and tied up capital) and does not add value.
Depends on intimate connections with suppliers and other logistical
Amount of materials delivered are based on the firms orders.
Toyota adopts the JIT approach
21.What are tangible and intangible benefits of information systems?

Tangible benefits can be quantified and assigned a monetary value

o Increase in profitability, share price
Intangible benefits cannot be immediately quantified but may lead to
quantifiable gains in the long run.
o Efficient customer service, improved decision making
22.What are the different conversion strategies when changing from an old
system to a new system in an organisation?
Parallel strategy: both the old system and its potential replacement are run
together for a time until everyone is assured the new one functions
correctly. The old system is used as a back up in case of an error in the
new system. This strategy is expensive as additional staff and resources
are required to run the extra system
Direct cutover strategy: replacing the old system entirely with the new
system on an appointed day. Although cheaper in terms of implementation,
it is a risky strategy that could incur great costs in the long run such as
Pilot study strategy: introduces the new system to only a limited area of
the organisation such as a single department or operating unit. When this
pilot version is complete and working smoothly, it is installed throughout
the rest of the organisation
Phased approach strategy: introduces the new system in stages, either by
functions or by organisational units.
o Introducing by function: new payroll system might begin with hourly
workers who are paid weekly, followed by added salaried employees
(paid monthly) to the system
o Organisational unit: corporate headquarters might be converted
first, followed by outlying operating units 4 months later
23.How could organisations ensure system availability?
As firms increasingly rely on digital networks to make revenue and for operations,
they need to take the following steps to ensure 100% system availability:
Online transaction processing: transactions entered online are immediately
processed by the computer
Fault tolerant computer systems: contains redundant hardware, software
and power supply components that create an environment that provide
continuous, uninterrupted service. They use special software routines to
detect hardware failures and automatically switch to a backup device to
ensure 100% availability.
Fault tolerant computer systems and high availability computing try to
minimize downtime: periods of time in which a system is not operational.
However high-availability computing helps firms recover quickly from
system crash, whereas fault tolerance promises continuous availability and
the elimination of recovery time altogether.
Recovery oriented computing: an approach that makes computer systems
recover even more rapidly when mishaps occur through implemented
capabilities that help operators identify sources of faults and to correct
them promptly
Controlling networks traffic deep packet inspection (DPI): DPI examines
data files and sorts out low-priority online material while assigning higher
priority to business-critical files. Based on priorities, it decides whether a
specific data packet can continue to its destination or should be blocked or
delayed while more important traffic proceeds. Increases speed.
Security outsourcing: businesses that lack the resources to provide secure
high availability computing can outsource many security functions to

managed security service providers (MSSPs) that monitor network activity

and perform vulnerability testing and intrusion detection.
24.How to link information systems projects to the business plan in
To identify the information systems projects that will deliver the most
business value, organisations need to develop an information systems plan
that supports their overall business plan and in which strategic systems
are incorporated into top level planning.
Information systems plan serves as a road map indicating the direction of
systems development (purpose of the plan), the rationale, the current
systems/situation, new developments to consider, the management
strategy, implementation plan and the budget.
Plan contains a statement of corporate goals and specifies how information
technology will support the attainment of these goals.
Report shows how general goals will be achieved by specific systems
Plan indicates the key management decisions concerning hardware
acquisition; data, and hardware and required organisational change.
Organisational change includes management and employee training
requirements, recruiting efforts and changes in business processes and
25.What is a portfolio analysis?
Used to evaluate alternative system projects
Inventories all of the organisations information systems project and
assets, including infrastructure, outsourcing contracts and licenses
Portfolio of information systems has a certain profile of risk and benefit to
the firm.
Each IS project has its own set of risks and benefits. Firms try to improve
the return on their portfolios of IT assets by balancing the risk and return
from their systems investment.
Information projects should have a few high risk and high benefit projects
to stay with current technology
Non-information projects should focus on high benefit, low risk projects.
Most desirable are projects with high benefit and low risk that promise
early returns and low risk.
High benefit and high-risk systems should be examined
Low benefit, high risks systems should be avoided
Low benefit, low risks systems should be reexamined for the possibility of
rebuilding and replacing them with more desirable systems with higher