This WGU C724 Information Systems Management is a 3-unit course covering
the strategic use of IT, including 6 key components: People, Processes, Networks,
Software, Hardware, and Data. With the objective assessment (OA) focuses on
MIS, TPS, DSS, and ESS systems, database management, and IT strategy, with a
focus on improving business efficiency and effectiveness.
Key Exam Themes and Topics
System Types: Understand the difference between Transaction
•
Processing Systems (TPS - daily ops), Management Information Systems
(MIS - operational reports), and Decision Support Systems (DSS - analysis).
• 6 IS Components: Data, Software, Hardware, Networks, People, and
Processes.
• Strategic Advantage: Utilizing systems to improve organizational
efficiency and effectiveness.
• Database Management: Understanding data dictionaries, normalization,
and avoiding data inconsistency.
• Systems Development Life Cycle (SDLC): Phases including Waterfall,
Agile, and Prototyping.
• Security/Ethics: CIA triad (Confidentiality, Integrity, Availability) and data
governance.
Q1. What does 'information technology management' primarily involve? [Multiple Choice]
A) the management of hardware, software, data, networks, and people that facilitate access to
information and allow the organization to achieve business objectives.
B) The procurement process for buying new office furniture and equipment only.
1
, C) Creating advertising campaigns and promotional content for customers.
D) Maintaining ledgers and preparing external financial statements for regulators.
Answer: the management of hardware, software, data, networks, and people that facilitate
access to information and allow the organization to achieve business objectives.
Explanation: Information technology management refers to overseeing both the technical components
(hardware, software, networks, data) and the people who use them to ensure information is accessible
and aligned with business goals. It is broader than simply owning technology. Distractors: "Only
purchasing IT equipment" is just procurement. "Developing customer-facing marketing content" is
marketing, not IT management. "Managing company finances and accounting ledgers" belongs to finance,
not IT management.
Q2. Which best describes the role of a 'Strategic information system'? [Multiple Choice]
A) provide tools used by an organization to accomplish specific tasks to gain competitive
advantage.
B) Only store employee contact and HR contact information for internal use.
C) Process payroll and employee paychecks on a weekly basis.
D) Perform nightly backups of company files without business differentiation.
Answer: provide tools used by an organization to accomplish specific tasks to gain competitive
advantage.
Explanation: A strategic information system is implemented to support competitive goals by providing
tools or capabilities that let an organization perform tasks better than rivals. It's focused on strategic
advantage rather than routine reporting. Distractors: "Only stores employee contact information" is
administrative, not strategic. "Processes payroll on a weekly basis" is transactional. "Ensures daily backup
of all files without business differentiation" is an operational/technical control, not a strategic advantage.
Q3. How is 'Information' defined in the context of data processing? [Multiple Choice]
A) Data that has been organized in a meaningful manner.
B) Raw numeric measurements without context or labels.
C) The practical use of information to guide action.
D) A network of hardware and software components.
Answer: Data that has been organized in a meaningful manner.
Explanation: Information is data that has been processed, organized, or structured so it becomes
meaningful and useful for decision-making. Raw data becomes information when context and organization
reveal patterns or trends. Distractors: "Raw numeric measurements without context" is data, not
information. "The practical use of information" is knowledge. "A network of hardware and software
components" is an information system, not the information itself.
Q4. What is meant by 'Product differentiation' as a business strategy? [Multiple Choice]
2
, A) offering a higher quality product to differentiate from others in the market
B) lowering prices below cost to force competitors out of the market
C) reducing product features to minimize production expenses only
D) relying solely on heavy advertising without changing the product
Answer: offering a higher quality product to differentiate from others in the market
Explanation: Product differentiation as a business strategy involves distinguishing a product—often by
offering higher quality, unique features, or superior service—so it stands out from competitors and attracts
customers. Distractors: "Lowering prices below cost to force competitors out" describes predatory pricing,
not differentiation. "Reducing product features to minimize production expenses" removes differentiation
by making products more similar. "Relying solely on increased advertising without product changes" may
influence perception but is not product differentiation based on offering higher quality.
Q5. What key principle describes 'Network economics (network-based strategy)'? [Multiple
Choice]
A) the cost of adding another business participant to a business venture is small, the potential
gain is great.
B) Each additional participant increases cost exponentially and reduces value.
C) Networks typically reduce the potential gain from business collaboration.
D) Network strategies eliminate the need for coordinating partners and processes.
Answer: the cost of adding another business participant to a business venture is small, the
potential gain is great.
Explanation: Network economics (or network-based strategy) highlights that when networks are involved,
marginal cost to add another participant can be low while the value or gain increases because of network
effects—each new participant can add disproportionate value. Distractors: "Each additional participant
increases cost exponentially" contradicts the idea of low marginal cost. "Networks reduce the potential
gain from collaboration" is opposite the intended point. "Network strategies eliminate the need for
coordinating partners" misunderstands the cooperative nature of networks.
Q6. Which statement best defines 'Knowledge' in the DIK (Data–Information–Knowledge)
hierarchy? [Multiple Choice]
A) The practical application of information.
B) Raw numbers or measurements without context.
C) Organized facts that provide meaning to users.
D) A computerized system for storing company records.
Answer: The practical application of information.
3
, Explanation: Knowledge is information applied in context to make decisions or take action; it is the
actionable understanding that comes from interpreting information. Distractors: "Raw numbers without
interpretation" is data. "Organized facts that provide meaning" is information. "A software system that
stores files" is an information system; none of those describe the application-oriented nature of
knowledge.
Q7. What is a primary benefit of a Customer Relationship Management (CRM) system? [Multiple
Choice]
A) Allows for personalized communication to customers.
B) Automates internal payroll processing and HR paperwork exclusively.
C) Eliminates any need for direct contact between customers and staff.
D) Tracks only equipment maintenance schedules and warehouse inventory.
Answer: Allows for personalized communication to customers.
Explanation: Customer Relationship Management (CRM) systems store customer data and interaction
histories so businesses can tailor communications and offers—enabling personalized outreach and
improved customer relationships. Distractors: "Automates only internal payroll and HR forms" is unrelated
to customer interactions. "Replaces the need to ever contact customers directly" overstates and
misrepresents CRM's role. "Only tracks equipment maintenance schedules and inventory levels" describes
asset management, not CRM.
Q8. Which of the following is one of Porter's Five Competitive Forces? [Multiple Choice]
A) Bargaining power of suppliers
B) Government regulatory pressure
C) Rapid internal process improvement
D) Local cultural preferences
Answer: Bargaining power of suppliers
Explanation: Porter's Five Forces identifies bargaining power of suppliers as one of the competitive forces
that determines industry attractiveness and competition. It examines how supplier leverage can influence
prices or input availability. Distractors: "Government regulatory pressure" can affect competitiveness but is
not one of Porter's canonical five forces. "Rapid internal process improvement" is an internal capability, not
a market force. "Local cultural preferences" may influence demand but isn't listed as one of the five core
competitive forces.
Q9. What capability characterizes a 'Decision support system'? [Multiple Choice]
A) This system uses models and statistical analysis to help decision makers solve problems
B) A system that automatically processes every transaction in real time
C) A passive data archive that stores historical records without analysis
4
the strategic use of IT, including 6 key components: People, Processes, Networks,
Software, Hardware, and Data. With the objective assessment (OA) focuses on
MIS, TPS, DSS, and ESS systems, database management, and IT strategy, with a
focus on improving business efficiency and effectiveness.
Key Exam Themes and Topics
System Types: Understand the difference between Transaction
•
Processing Systems (TPS - daily ops), Management Information Systems
(MIS - operational reports), and Decision Support Systems (DSS - analysis).
• 6 IS Components: Data, Software, Hardware, Networks, People, and
Processes.
• Strategic Advantage: Utilizing systems to improve organizational
efficiency and effectiveness.
• Database Management: Understanding data dictionaries, normalization,
and avoiding data inconsistency.
• Systems Development Life Cycle (SDLC): Phases including Waterfall,
Agile, and Prototyping.
• Security/Ethics: CIA triad (Confidentiality, Integrity, Availability) and data
governance.
Q1. What does 'information technology management' primarily involve? [Multiple Choice]
A) the management of hardware, software, data, networks, and people that facilitate access to
information and allow the organization to achieve business objectives.
B) The procurement process for buying new office furniture and equipment only.
1
, C) Creating advertising campaigns and promotional content for customers.
D) Maintaining ledgers and preparing external financial statements for regulators.
Answer: the management of hardware, software, data, networks, and people that facilitate
access to information and allow the organization to achieve business objectives.
Explanation: Information technology management refers to overseeing both the technical components
(hardware, software, networks, data) and the people who use them to ensure information is accessible
and aligned with business goals. It is broader than simply owning technology. Distractors: "Only
purchasing IT equipment" is just procurement. "Developing customer-facing marketing content" is
marketing, not IT management. "Managing company finances and accounting ledgers" belongs to finance,
not IT management.
Q2. Which best describes the role of a 'Strategic information system'? [Multiple Choice]
A) provide tools used by an organization to accomplish specific tasks to gain competitive
advantage.
B) Only store employee contact and HR contact information for internal use.
C) Process payroll and employee paychecks on a weekly basis.
D) Perform nightly backups of company files without business differentiation.
Answer: provide tools used by an organization to accomplish specific tasks to gain competitive
advantage.
Explanation: A strategic information system is implemented to support competitive goals by providing
tools or capabilities that let an organization perform tasks better than rivals. It's focused on strategic
advantage rather than routine reporting. Distractors: "Only stores employee contact information" is
administrative, not strategic. "Processes payroll on a weekly basis" is transactional. "Ensures daily backup
of all files without business differentiation" is an operational/technical control, not a strategic advantage.
Q3. How is 'Information' defined in the context of data processing? [Multiple Choice]
A) Data that has been organized in a meaningful manner.
B) Raw numeric measurements without context or labels.
C) The practical use of information to guide action.
D) A network of hardware and software components.
Answer: Data that has been organized in a meaningful manner.
Explanation: Information is data that has been processed, organized, or structured so it becomes
meaningful and useful for decision-making. Raw data becomes information when context and organization
reveal patterns or trends. Distractors: "Raw numeric measurements without context" is data, not
information. "The practical use of information" is knowledge. "A network of hardware and software
components" is an information system, not the information itself.
Q4. What is meant by 'Product differentiation' as a business strategy? [Multiple Choice]
2
, A) offering a higher quality product to differentiate from others in the market
B) lowering prices below cost to force competitors out of the market
C) reducing product features to minimize production expenses only
D) relying solely on heavy advertising without changing the product
Answer: offering a higher quality product to differentiate from others in the market
Explanation: Product differentiation as a business strategy involves distinguishing a product—often by
offering higher quality, unique features, or superior service—so it stands out from competitors and attracts
customers. Distractors: "Lowering prices below cost to force competitors out" describes predatory pricing,
not differentiation. "Reducing product features to minimize production expenses" removes differentiation
by making products more similar. "Relying solely on increased advertising without product changes" may
influence perception but is not product differentiation based on offering higher quality.
Q5. What key principle describes 'Network economics (network-based strategy)'? [Multiple
Choice]
A) the cost of adding another business participant to a business venture is small, the potential
gain is great.
B) Each additional participant increases cost exponentially and reduces value.
C) Networks typically reduce the potential gain from business collaboration.
D) Network strategies eliminate the need for coordinating partners and processes.
Answer: the cost of adding another business participant to a business venture is small, the
potential gain is great.
Explanation: Network economics (or network-based strategy) highlights that when networks are involved,
marginal cost to add another participant can be low while the value or gain increases because of network
effects—each new participant can add disproportionate value. Distractors: "Each additional participant
increases cost exponentially" contradicts the idea of low marginal cost. "Networks reduce the potential
gain from collaboration" is opposite the intended point. "Network strategies eliminate the need for
coordinating partners" misunderstands the cooperative nature of networks.
Q6. Which statement best defines 'Knowledge' in the DIK (Data–Information–Knowledge)
hierarchy? [Multiple Choice]
A) The practical application of information.
B) Raw numbers or measurements without context.
C) Organized facts that provide meaning to users.
D) A computerized system for storing company records.
Answer: The practical application of information.
3
, Explanation: Knowledge is information applied in context to make decisions or take action; it is the
actionable understanding that comes from interpreting information. Distractors: "Raw numbers without
interpretation" is data. "Organized facts that provide meaning" is information. "A software system that
stores files" is an information system; none of those describe the application-oriented nature of
knowledge.
Q7. What is a primary benefit of a Customer Relationship Management (CRM) system? [Multiple
Choice]
A) Allows for personalized communication to customers.
B) Automates internal payroll processing and HR paperwork exclusively.
C) Eliminates any need for direct contact between customers and staff.
D) Tracks only equipment maintenance schedules and warehouse inventory.
Answer: Allows for personalized communication to customers.
Explanation: Customer Relationship Management (CRM) systems store customer data and interaction
histories so businesses can tailor communications and offers—enabling personalized outreach and
improved customer relationships. Distractors: "Automates only internal payroll and HR forms" is unrelated
to customer interactions. "Replaces the need to ever contact customers directly" overstates and
misrepresents CRM's role. "Only tracks equipment maintenance schedules and inventory levels" describes
asset management, not CRM.
Q8. Which of the following is one of Porter's Five Competitive Forces? [Multiple Choice]
A) Bargaining power of suppliers
B) Government regulatory pressure
C) Rapid internal process improvement
D) Local cultural preferences
Answer: Bargaining power of suppliers
Explanation: Porter's Five Forces identifies bargaining power of suppliers as one of the competitive forces
that determines industry attractiveness and competition. It examines how supplier leverage can influence
prices or input availability. Distractors: "Government regulatory pressure" can affect competitiveness but is
not one of Porter's canonical five forces. "Rapid internal process improvement" is an internal capability, not
a market force. "Local cultural preferences" may influence demand but isn't listed as one of the five core
competitive forces.
Q9. What capability characterizes a 'Decision support system'? [Multiple Choice]
A) This system uses models and statistical analysis to help decision makers solve problems
B) A system that automatically processes every transaction in real time
C) A passive data archive that stores historical records without analysis
4
