Rosetree mortgage opportunity fund case solution

2MANAGEMENTINFORMATIONSYSTEMS MOVING BUSINESS FORWARD

RAINER PRINCE WATSON

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Management Information Systems Moving Business Forward

Second Edition

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R. Kelly Rainer, Jr. Brad Prince

Hugh Watson

Management Information Systems Moving Business Forward

Second Edition

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Library of Congress Cataloging-in-Publication Data

Rainer, R. Kelly (Rex Kelly) Management information systems / R. Kelly Rainer, Jr., Brad Prince, Hugh Watson.—Second edition. pages cm Includes index. ISBN 978-1-118-44359-0 (pbk.) 1. Management information systems. I. Watson, Hugh J. II. Prince, Brad, 1978- III. Title. HD30.213.R35 2013 658.4’038011—dc23 2012046981

Publisher Don Fowley Executive Editor Beth Lang Golub Content Manager Kevin Holm Production Editor Tim Lindner Executive Marketing Manager Chris Ruel Marketing Assistant Marissa Carroll Design Director Harry Nolan Product Designer Jenny Welter Editorial Operations Manager Melissa Edwards Senior Designer Maureen Eide Senior Photo Editor Lisa Gee Cover Designer Jasmine Lee Senior Content Editor Wendy Ashenberg Assistant Editor Samantha Mandel Editorial Program Assistant Katherine Willis Content Assistant Helen Seachrist Production Management Services Aptara®, Inc.

This book was set in Minion Pro 10/12 by Aptara®, Inc. and printed and bound by Quad Graphics.

This book is printed on acid free paper. �

Founded in 1807, John Wiley & Sons, Inc., has been a valued source of knowledge and understanding for more than 200 years, helping people around the world meet their needs and fulfi ll their aspirations. Our company is built on a foundation of principles that include responsibility to the communities we serve and where we live and work. In 2008, we launched a Corporate Citizenship Initiative, a global effort to address the environmental, social, economic, and ethical challenges we face in our business. Among the issues we are addressing are carbon impact, paper specifi cations and procurement, ethical conduct within our business and among our vendors, and community and charitable support. For more information, please visit our Web site: www.wiley.com/go/ citizenship.

Copyright © 2013 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923 (Web site: www.copyright.com). Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, (201) 748-6011, fax (201) 748-6008, or online at: www.wiley.com/go/permissions.

Evaluation copies are provided to qualifi ed academics and professionals for review purposes only, for use in their courses during the next academic year. These copies are licensed and may not be sold or transferred to a third party. Upon completion of the review period, please return the evaluation copy to Wiley. Return instructions and a free of charge return shipping label are available at: www.wiley.com/go/returnlabel. If you have chosen to adopt this textbook for use in your course, please accept this book as your complimentary desk copy. Outside of the United States, please contact your local sales representative.

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Dear Student,

Why are you here? We are not asking you a philosophical question—that is a diff erent course. We are asking, “Why are you about to spend an entire term learning about informa- tion systems? Why are you—an accounting major, or a marketing or management major— being required to study this topic?” You may be asking, “What’s in IT for me?” Th e short answer is that “IT’s About Business,” and the longer answer is the goal of this book.

Information systems are making the world a very small place and are contributing to rapidly increasing global competition. As a result, organizations are constantly trying to fi nd ways to gain a competitive advantage—by achieving operational excellence, developing new products and services, developing new business models, providing superb customer service, improving decision making, and so on. It should be obvious, then, that an introduc- tory course in information systems is critically important for success in your chosen career.

Rapid advances in information systems mean that, as business students, change will be the only constant you will encounter in today’s dynamic digital business environment. We wrote this book for business students of all majors who will soon become business profes- sionals. We have three goals in mind:

1. To help you be immediately successful when you join your organization 2. To help you understand the importance of information systems for individuals,

organizations, and society as a whole 3. To enable you to become informed users of your organization’s information

systems

To accomplish these goals, we have tried to provide the essential, relevant knowledge that you need to understand to eff ectively use information systems in your careers.

Th e way we propose to do this is by keeping you actively involved in the material. Every section of the chapters has an activity that asks you to do something beyond just reading the textbook that will help you see why the content is useful for your future business career.

We hope you will enjoy this active approach and successfully complete the course with a richer understanding of what’s in IT for you.

Kelly Rainer, Brad Prince, and Hugh Watson

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Dear Instructor,

We are like you. All of us who teach the introductory course in information systems realize that it is diffi cult for students to understand the importance and relevance of the topics in the course. As a result, students oft en memorize the content just before the exam, and then forget it as soon as the exam is over. We all want to engage students at a much deeper level. We know that the best way to accomplish this objective is through hands-on active learning, leading to increased student engagement in our course content.

Accordingly, active learning and student engagement are key principles of our new book. We recognize the need to actively involve students in problem solving, creative thinking, and capitalizing on opportunities. Every section of every chapter includes extensive hands- on exercises, activities, and mini-cases. End-of-chapter material also includes exercises that require students to use soft ware application tools. Th rough these activities, we enable stu- dents to understand how to do something with the concepts they learn, such as meet busi- ness goals using information systems, confi gure products, and use spreadsheets and data- bases to facilitate problem solving.

Th e preface on the next page further outlines the goals, features, and support material provided with our new text. We hope you will enjoy teaching with this approach!

Kelly Rainer, Brad Prince, and Hugh Watson

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Preface Chapter Organization Each chapter contains the following elements:

• Chapter Outline: Lists the major concepts covered in each chapter. • Learning Objectives: Provide an overview of the key learning goals that students

should achieve aft er reading the chapter. • Chapter-Opening Case: A short case that focuses on a small or start-up company

that is using information systems to solve a business problem. Cases in introductory information systems textbooks typically involve very large organizations. In contrast, our chapter-opening cases demonstrate that small and start-up companies also have business problems that they address using information systems. Students will see that small fi rms usually have to be quite creative in building and implementing IS solu- tions, because they do not have MIS departments or large budgets. Th ese small-busi- ness cases also add an entrepreneurial fl avor to each chapter for students who are planning to start their own businesses.

• Ruby’s Club Internship Case: • At the start of each chapter is a “Ruby’s Club internship scenario” that presents a

problem at Ruby’s Club, a downtown music venue that needs help with redesigning its online presence, overhauling its technological infrastructure, etc. Th roughout the semester, the student is presented with problems as if he/she were working as an IT intern for Ruby’s Club. Each chapter-opening scenario presents a business prob- lem that the student will be able to solve aft er reading that chapter.

• Th roughout the chapter are “Ruby’s Club Questions” that help students focus on the concepts they will need to solve the Ruby’s Club business problem. At the end of each chapter is a “Ruby’s Club Internship Assignment” that puts students into the role of an IT Intern. Many assignments are in the form of a business letter that students must address to their employers to solve the problem. Ultimately, this provides students with an opportunity to apply the knowledge they have gained in a business setting, instead of just on their exams.

A supplementary chapter on business writing is available in WileyPLUS for students who need a review.

• Apply the Concept Activities: Th is book’s unique pedagogical structure is designed to keep students actively engaged with the course material. Reading material in each chapter subsection is immediately followed by an “Apply the Concept” activity. Th ese activities include links to online videos and articles and other hands-on activities that require students to immediately apply what they have learned. Via WileyPLUS, instructors can assign a section of text along with an Apply the Concept activity and gradable quiz. Each Apply the Concept has the following elements:

> Background (places the activity in the context of relevant reading material) > Activity (a hands-on activity that students carry out) > Deliverable (various tasks for students to complete as they perform the

activity) > Discussion Questions (discussion questions regarding the activity)

Quiz Questions (assignable in WileyPLUS, or available on the Book Companion Site)

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x Preface

• IT’s About Business: Short cases that demonstrate real-world applications of IT to business. Each case is accompanied by questions relating the case to concepts covered in the chapter. Icons relate these boxes to the specifi c functional areas.

• IT’s Personal: Sprinkled throughout the chapters, these short vignettes explain the relevance of MIS concepts to students’ daily lives.

• Before You Go On: End-of-section reviews prompt students to pause and test their understanding of concepts before moving on to the next section.

• Examples: Interspersed throughout the text, these highlight the use (and misuse) of information systems by real-world organizations, thereby illustrating the concepts discussed in the chapter.

• What’s in IT for Me?: A unique end-of-chapter summary that demonstrates the rel- evance of each key chapter topic to diff erent functional areas, including accounting, fi nance, marketing, production/operations management, human resources manage- ment, and management information systems. Th is cross-functional focus makes the book accessible for students from any major.

• Summary: Keyed to the Learning Objectives listed at the beginning of the chapter, the summary enables students to review major concepts covered.

• Discussion Questions and Problem-Solving Activities: Provide practice through active learning. Th ese exercises are hands-on opportunities to apply the concepts dis- cussed in the chapter.

• Collaboration Exercises: Team exercises that require students to take on diff erent functional roles and collaborative to solve business problems. Th ese exercises allow students to get fi rst-hand experience solving business problems using IS tools while also experiencing an authentic business team dynamic.

• Closing Cases: Each chapter concludes with two cases about business problems faced by actual companies and how they used IS to solve those issues. Th e cases are broken down into four parts: a description of the problem, an overview of the IS solu- tion implemented, a presentation of the results of the implementation, and an analy- sis of key takeaways from the case. Each case is followed by discussion questions, so that students can further explore the concepts presented in the case.

• Spreadsheet Activity: Every chapter includes a hands-on spreadsheet project that requires students to practice their Excel skills while using concepts learned in the chapter. Each activity includes deliverables and discussion questions, with multiple choice quiz questions also assignable in WileyPLUS for automatic grading or down- loadable through the Book Companion Site. WileyPLUS includes an Excel Lab Manual for students who need introductory coverage or review.

• Database Activity: Every chapter includes a hands-on database project that requires students to practice their Access skills while using concepts learned in the chapter. Each activity includes deliverables, quiz questions, and discussion questions. Th ese can be assigned within WileyPLUS for automatic grading. WileyPLUS includes an Access Lab Manual for students who need introductory coverage or review.

• Glossary: A study tool that highlights vocabulary within the chapters and facilitates studying.

Key Features

Student Engagement As discussed in the note addressed to instructors at the beginning of this preface, one of the chief goals of this text is to engage students at a level beyond recognition of key terms. We believe the best way to achieve this goal is through hands-on, active learning that will lead to increased student engagement with the course and its content.

Accordingly, every section of every chapter provides resources that actively involve students in problem solving, creative thinking, and capitalizing on opportunities. Every

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Preface xi

chapter includes extensive hands-on exercises, activities, and mini-cases, including exer- cises that require students to solve business problems using Excel and Access.

Cross-Functional Approach We emphasize the importance of information systems by calling attention in every chapter to how that chapter’s topic relates to each business major. Icons guide students to relevant issues for their specifi c functional area—accounting (ACC), fi nance (FIN), marketing (MKT), operations management (OM), human resources management (HRM), and man- agement information systems (MIS). Chapters conclude with a detailed summary (entitled ‘What’s in IT for Me?’) of how key concepts in the chapter relate to each functional area. Additionally, each chapter has a collaboration exercise that helps students view the same problem from the perspective of diff erent functional areas.

Diversifi ed and Unique Examples from Different Industries Extensive use of vivid examples from large corporations, small businesses, and government and not-for-profi t organizations enlivens the concepts from the chapter. Th e examples illus- trate everything from the capabilities of information systems, to their cost and justifi cation and the innovative ways that corporations are using IS in their operations. Small businesses have been included in recognition of the fact that many students will work for small-to mid-sized companies, and some will even start their own small business. In fact, some stu- dents may already be working at local businesses, and the concepts they are learning in class can be readily observed or put into practice in their part-time jobs. Each chapter constantly highlights the integral connection between business and IS. Th is connection is especially evident in the chapter-opening and closing cases, the “IT’s About Business” boxes, and the highlighted examples.

Successes and Failures Many textbooks present examples of the successful implementation of information systems, and our book is no exception. However, we go one step beyond by also providing numerous examples of IS failures, in the context of lessons that can be learned from such failures. Misuse of information systems can be very expensive.

Global Focus An understanding of global competition, partnerships, and trading is essential to success in a modern business environment. Th erefore, we provide a broad selection of international cases and examples. We discuss the role of information systems in facilitating export and import, the management of international companies, and electronic trading around the globe. Th ese global examples are highlighted with the global icon.

Innovation and Creativity In today’s rapidly changing business environment, creativity and innovation are necessary for a business to operate eff ectively and profi tably. Th roughout our book, we demonstrate how information systems facilitate these processes.

Focus on Ethics With corporate scandals appearing in the headlines almost daily, ethics and ethical ques- tions have come to the forefront of business people’s minds. In addition to devoting an entire chapter to ethics and privacy (Chapter 6), we have included examples and cases throughout the text that focus on business ethics. Th ese examples are highlighted with the ethics icon.

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xii Preface

What’s New in the Second Edition? • New chapter on social computing, focusing on how organizations use social

computing for business purposes • New “Plug IT In” on cloud computing, featuring expanded coverage of this

important topic • All new or updated chapter opening and closing cases • All new or updated “IT’s About Business” • All new or updated examples • Remodeled student activities that provide a variety of thought-provoking, gradable

homework assignments • New “IT’s Personal” vignettes that bring home to students the personal relevance

of concepts • New “Collaboration Exercises” that require students to take on diff erent functional

roles and use collaborative soft ware to solve business problems • Spreadsheet and Database Activities that have been revised to incorporate

reviewer feedback • Remodeled Learning Objectives that clearly defi ne learning goals for each section

of book content • New images and updated interior design that promote visual learning and easy

teaching use

Online Supplements www.wiley.com/college/rainer

Our book also facilitates the teaching of an Introduction to Information Systems course by providing extensive support materials for instructors and students. Visit www.wiley. com/college/rainer to access the Student and Instructor Companion Sites.

Instructor’s Manual Th e Instructor’s Manual includes a chapter overview, teaching tips and strategies, answers to all end-of-chapter questions, supplemental mini-cases with essay questions and answers, and experiential exercises that relate to particular topics. It also includes answers and solu- tions to all spreadsheet and database activities, along with a guide to teaching these exer- cises, and links to the separate Excel and Access solutions fi les.

Test Bank Th e test bank is a comprehensive resource for test questions. Each chapter contains multiple choice, true/false, short answer, and essay questions. In addition, each chapter includes “Apply Your Knowledge” questions that require more creative thought to answer. Each mul- tiple choice and true/false question is labeled to indicate its level of diffi culty: easy, medium, or hard.

Th e test bank is available for use in Respondus’ easy-to-use soft ware. Respondus® is a powerful tool for creating and managing exams that can be printed or published directly to Blackboard, WebCT, Desire2Learn, eCollege, ANGEL, and other learning systems. For more information on Respondus® and the Respondus Test Bank Network, please visit www.respondus.com.

PowerPoint Presentations Th e PowerPoint Presentations consist of a series of slides for each chapter. Th e slides are designed around each chapter’s content, incorporating key points from the chapter and

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Preface xiii

chapter illustrations as appropriate, as well as real-life examples from the Web. Th e slides also include links to relevant videos and articles to enhance classroom discussion. Th ey make extensive use of images and video clips.

Student PowerPoints Posted on the Student Companion Site, these are stripped-down versions of the Instructor slides that students can use for note-taking.

Image Library All textbook fi gures are available for download from the Web site. Th ese fi gures can easily be added to PowerPoint presentations.

Wiley Information Systems Hub Th is community Web site is free and open to all instructors who teach an Introduction to IS/MIS course, regardless of book in use. Th e Hub is topic driven and is a place to ask ques- tions, respond to ideas with comments of your own, share videos, assignments, cases, and news links with other users, and much more. We are delighted to announce David Firth of the University of Montana as the community manager for the site. Please check the Instruc- tor Companion Site for information on how to join.

Updates (http://wileyinformationsystemsupdates.com) Weekly updates, harvested from around the Internet by David Firth of the University of Montana, provide you with the latest IT news and issues. Th ese are posted every Monday morning throughout the year at http://wileyinformationsystemsupdates.com/ and feed through to the Wiley Information Systems Hub. Th ey include links to current articles and videos as well as discussion questions to assign or use in class.

BusinessExtra Select Th is feature allows instructors to package the text with lab manuals, cases, articles, and other real-world content from sources such as INSEAD, Ivey and Harvard Business School cases, Fortune, Th e Economist, and Th e Wall Street Journal. You can combine the book with the content you choose to create a fully customized textbook. For additional information, please visit www.wiley.com/college/bxs.

Practice Quizzes Th ese multiple choice conceptual questions reinforce knowledge and understanding of basic concepts. Th ey are available in Respondus, the WileyPLUS course, and the Book Companion Site.

WileyPLUS Th is online teaching and learning environment integrates the entire digital textbook with the most eff ective instructor and student resources to accommodate every learning style. With WileyPLUS:

• Students achieve concept mastery in a rich, structured environment that is available 24/7.

• Instructors personalize and manage their course more eff ectively with assessment, assignments, grade tracking, and more.

WileyPLUS can complement the textbook or replace the printed textbook altogether.

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xiv Preface

For Students Diff erent learning styles, diff erent levels of profi ciency, diff erent levels of preparation—each of your students is unique. WileyPLUS empowers each student to take advantage of his or her strengths.

• Integrated, multimedia resources—including audio and visual exhibits—provide multiple study paths to fi t each student’s learning preferences and encourage active learning. Resources include

> E-book > Minilecture by author for each chapter section > Student PowerPoints for note taking > Video interviews with managers > Lab Manual for Microsoft Offi ce 2010

• WileyPLUS also includes many opportunities for self-assessment. Students can take control of their own learning and practice until they master the material. Resources include

> Automatically graded practice questions from the Test Bank > Pre- and postlecture quizzes > Vocabulary fl ash cards and quizzes

For Instructors WileyPLUS empowers you with the tools and resources you need to make your teaching as eff ective as possible.

• You can customize your classroom presentation with a wealth of resources and function- ality. You can even add your own materials to your WileyPLUS course. Resources include

> PowerPoint presentations > Link to weekly updates > Library of additional “IT’s About Business” cases

• With WileyPLUS you can identify students who are falling behind and intervene accordingly, without having to wait for them to come to offi ce hours.

• WileyPLUS simplifi es and automates such tasks as assessing student performance, creating assignments, scoring student work, tracking grades, and more.

Acknowledgments Creating, developing, and producing a text for the introduction to information systems course is a formidable undertaking. Along the way, we were fortunate to receive continuous evaluation, criticism, and direction from many colleagues who regularly teach this course.

We would like to acknowledge the contributions made by the following individuals who participated in focus groups, telesessions, surveys, chapter walkthroughs, class tests, and reviews:

Monica Adya Marquette University Lawrence Andrew Western Illinois University, Macomb Orakwue (Bay) Arinze Drexel Laura Atkins James Madison University Nick Ball Brigham Young University Nicholas Barnes Nicholls College Susan …