Accounting Information Systems 15th Global Edition by Marshall B. Romney Solution manual

 

1.4    How do an organization’s business processes and lines of business affect the design of its AIS?  Give several examples of how differences among organizations are reflected in their AIS.
 
         An organization’s AIS must reflect its business processes and its line of business.  For example:
 
Manufacturing companies will need a set of procedures and documents for the production cycle; non-manufacturing companies do not. 
Government agencies need procedures to track separately all inflows and outflows from various funds, to ensure that legal requirements about the use of specific funds are followed. 
Financial institutions do not need extensive inventory control systems. 
Passenger service companies (e.g., airlines, bus, and trains) generally receive payments in advance of providing services.  Therefore, extensive billing and accounts receivable procedures are not needed; instead, they must develop procedures to account for prepaid revenue. 
Construction firms typically receive payments at regular intervals, based on the percentage of work completed.  Thus, their revenue cycles must be designed to track carefully all work performed and the amount of work remaining to be done. 
Service companies (e.g., public accounting and law firms) do not sell physical goods and, therefore, do not need inventory control systems.  They must develop and maintain detailed records of the work performed for each customer to provide backup for the amounts billed. Tracking individual employee time is especially important for these firms because labor is the major cost component.
 
1.5    Figure 1-5 shows that organizational culture and the design of an AIS influence one another.  What does this imply about the degree to which an innovative system developed by one company can be transferred to another company?
 
         Since people are one of the basic components of any system, it will always be difficult to transfer successfully a specific information systems design intact to another organization.  Considering in advance how aspects of the new organizational culture are likely to affect acceptance of the system can increase the chances for successful transfer.  Doing so may enable the organization to take steps to mitigate likely causes of resistance.  The design of an AIS, however, itself can influence and change an organization’s culture and philosophy.  Therefore, with adequate top management support, implementation of a new AIS can be used as a vehicle to change an organization.  The reciprocal effects of technology and organizational culture on one another, however, mean that it is unrealistic to expect that the introduction of a new AIS will produce the same results observed in another organization.
 

1.6    Figure 1-5 shows that developments in IT affect both an organization’s strategy and the design of its AIS.  How can a company determine whether it is spending too much, too little, or just enough on IT?
 
There is no easy answer to this question.  Although a company can try to identify the benefits of a new IT initiative and compare those benefits to the associated costs, this is often easier said than done.  Usually, it is difficult to measure precisely the benefits of new uses of IT.  Nevertheless, companies should gather as much data as possible about changes in market share, sales trends, cost reductions, and other results that can plausibly be associated with an IT initiative and that were predicted in the planning process.
 
1.7    Apply the value chain concept to S&S.  Explain how it would perform the various primary and support activities.
 
         The value chain classifies business activities into two categories: primary and support. 
 
         The five primary activities at S&S:
Inbound logistics includes all processes involved in ordering, receiving, and temporarily storing merchandise that is going to be sold to S&S customers. 
S&S does not manufacture any goods, thus its operations activities consists of displaying merchandise for sale and protecting it from theft. 
Outbound logistics includes delivering the products to the customer. 
Sales & marketing includes ringing up and processing all sales transactions and advertising products to increase sales. 
Service includes repairs, periodic maintenance, and all other post-sales services offered to customers.
 
         The four support activities at S&S: