Information Technology For Managers 2nd Edition By George Reynolds – Test Bank

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Information Technology For Managers 2nd Edition By George Reynolds – Test Bank

CHAPTER 4—BUSINESS PROCESS AND IT OUTSOURCING

MULTIPLE CHOICE

1. _____ is an arrangement in which one company contracts with another organization to provide services that could be provided by company employees.

a. Outsourcing

b. Scaling

c. Marketing

d. Manufacturing

ANS: A

RATIONALE: Outsourcing is an arrangement in which one company contracts with another organization to provide services that could be provided by company employees. When the people doing the work are located in another country, the arrangement is called offshore outsourcing.

2. Which of the following organizations outsources its work?

a. Lenc Inc. is a chain of stores that sells home appliances and is spread across the United States. Goods not available in one of its stores can be procured from its other stores.

b. Zeta Inc. supplies raw materials to Clips&Hangers, a soap and detergent manufacturing organization.

c. Lusach Dine entered into a two-year contract with Soy&Cream for procuring its dairy products.

d. Ace Healthcare entered into a five-year contract with Masters Inc. to take care of Ace Healthcare’s recruiting process and insurance policies.

ANS: D

RATIONALE: Outsourcing is an arrangement in which one company contracts with another organization to provide services that could be provided by company employees. Ace Healthcare entered into a five-year contract with Masters Inc. Masters Inc. takes care of the recruiting process and insurance policies for Ace Healthcare. Therefore, Ace healthcare has outsourced its insurance policy process and recruiting process to Masters Inc.

3. Bersk, a brewing company, entered into a three-year contract with Seins Inc. According to the contract, Seins Inc. will package and market the beverages produced by Bersk. This is an example of _____.

a. liquidating

b. outsourcing

c. amalgamating

d. conglomerating

ANS: B

RATIONALE: Outsourcing is an arrangement in which one company contracts with another organization to provide services that could be provided by company employees. In this case, Bersk outsourced the packaging and marketing of its beverages to Seins Inc.

4. When the people of an organization doing the work for another organization are located in another country, the arrangement is called _____.

a. horizontal integration

b. business unit sponsoring

c. offshore outsourcing

d. functional decomposition

ANS: C

RATIONALE: Outsourcing is an arrangement in which one company contracts with another organization to provide services that could be provided by company employees. When the people of an organization doing the work are located in another country, the arrangement is called offshore outsourcing.

5. Many organizations contract with service providers to handle their complete services such as accounting and finance, customer services, human resources, and research and development. This is known as _____.

a. vertical integration

b. business process outsourcing

c. outbound telemarketing process

d. horizontal integration

ANS: B

RATIONALE: Outsourcing takes many forms and is by no means limited to information technology outsourcing (ITO). Many organizations contract with service providers to handle complete business processes such as accounting and finance, customer services, human resources, and even research and development, in what is called business process outsourcing (BPO).

6. _____ provides valuable customer benefits, is hard for competitors to imitate, has a direct impact on the organization’s customers, is a major cost driver, is essential for providing services, and can be leveraged widely across many products and markets.

a. Physical capital

b. A core business process

c. A retail price index

d. Sequential sampling

ANS: B

RATIONALE: A core business process is one that provides valuable customer benefits, is hard for competitors to imitate, and can be leveraged widely across many products and markets. It takes the unique knowledge and skills of the organization’s workers to operate these processes effectively. Core processes have a direct impact on the organization’s customers, are major cost drivers, or are essential for providing services.

7. Which of the following is true about a core business process?

a. It requires an organization’s workers to possess unique knowledge and skills.

b. It has a direct impact on the organization’s infrastructure.

c. It is easy for competitors to imitate the process.

d. It decelerates a product’s time to market.

ANS: A

RATIONALE: A core business process is one that provides valuable customer benefits, is hard for competitors to imitate, and can be leveraged widely across many products and markets. It requires an organization’s workers to possess unique knowledge and skills to operate it effectively.

8. Which of the following is true about outsourcing?

a. Organizations outsource to reduce the money spent on tax and revenue.

b. Organizations outsource to decelerate a product’s time to market.

c. Organizations outsource to increase production cost.

d. Organizations outsource to improve their focus on core operations.

ANS: D

RATIONALE: Organizations decide to outsource for many reasons. The most frequently cited reasons are to cut costs, improve the firm’s focus on core operations, upgrade the firm’s capabilities and services, and accelerate time to market.

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