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Ch 4-1Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall
Chapter 4
The Internal Assessment
Strategic Management:Concepts & Cases
13th Edition
Fred David
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Ch 4-2Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall
“ Great spirits hae al!ays encountered
iolent opposition "ro# #ediocre #inds.$
% Albert Einstein
Internal Assessment
“ &ea' leadership can !rec' the soundest
strategy.$ % Sun Tzu
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Ch 4-3Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall
at!re o" an Internal A!dit
% Strengths
% Weaknesses
Functional Areas of Business
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Ch 4-4Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall
#e$ Internal Forces
F!nctional %!siness Areas:
Vary by organizationDivisions have differing strengths &eaknesses
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Ch 4-5Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall
#e$ Internal Forces
Distinctive Competencies:
Fir!"s strengths that cannot be easily!atched or i!itated by co!#etitors
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Ch 4-6Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall
#e$ Internal Forces
Distinctive Competencies:
Building co!#etitive advantage involvestaking advantage of distinctiveco!#etencies
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Ch 4-7Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall
#e$ Internal Forces
Distinctive Competencies:
Strategies designed to i!#rove on afir!"s eaknesses and turn to strengths
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Ch 4-8Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall
Internal A!dit
$%nfor!ation fro!
$Management$Mareting
$Finance'acco!nting
$(rod!ction'operations
$)esearch & development
$Management in"ormation s$stems
'arallels #rocess of e(ternal audit
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Ch 4-9
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Internal A!dit
)oordination & understanding a!ong!anagers fro! all functional areas
*ey to +rganizational Success
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Ch 4-10
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Internal A!dit
,u!ber and co!#le(ity increasesrelative to organization size
Functional -elationshi#s
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Ch 4-11
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Internal A!dit
E(e!#lifies co!#le(ity of relationshi#sa!ong functional areas of the business
Financial -atio Analysis
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Ch 4-12
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)eso!rce %ased *ie+ ,)%*-
A##roach to )o!#etitive Advantage
%nternal resources are !ore i!#ortantthan e(ternal factors
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Ch 4-13
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)eso!rce %ased *ie+ ,)%*-
Three All.Enco!#assing )ategories
/0 'hysical resources10 2u!an resources
30 +rganizational resources
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Ch 4-14
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)eso!rce %ased *ie+ ,)%*-
E!#irical %ndicators
-are 2ard to i!itate
,ot easily substitutable
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Ch 4-15
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Integrating Strateg$ & C!lt!re
Pattern o" behaior deeloped by an
organi(ation as it learns to cope !ith its
proble# o" e)ternal adaptation and
internal integration . . . is considered alid
and taught to ne! #e#bers
+rganizational )ulture
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Ch 4-16
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Integrating Strateg$ & C!lt!re
+rganizational )ulture
-esistant to change 4ay re#resent
Strength
Weakness
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Ch 4-17
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Integrating Strateg$ & C!lt!re
+rganizational )ulture )an %nhibitStrategic 4anage!ent
4iss e(ternal changes due to stronglyheld beliefs
,atural tendency to 5hold the course6
even during ti!es of strategic change
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Ch 4-18
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70S0 Versus Foreign )ultures
*o success"ully co#pete in !orld #ar'ets,
+.. #anagers #ust obtain a better
'no!ledge o" historical, cultural, and religious"orces that #otiate and drie people in other
countries.
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Ch 4-19
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Ch 4-20
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Management A!dit Checlist
$Does the fir! use strategic !anage!entconce#ts8$ Are ob9ectives:goals !easurable8 Well
co!!unicated8$Do !anagers at all levels #laneffectively8
$Does the fir! use strategic !anage!entconce#ts8$ Are ob9ectives:goals !easurable8 Well
co!!unicated8$Do !anagers at all levels #laneffectively8
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Ch 4-21
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Management A!dit Checlist
$Do !anagers delegate ell8$%s the organization"s structurea##ro#riate8
$ Are 9ob descri#tions clear8$ Are 9ob s#ecifications clear8$%s e!#loyee !orale high8
$Do !anagers delegate ell8$%s the organization"s structurea##ro#riate8
$ Are 9ob descri#tions clear8$ Are 9ob s#ecifications clear8$%s e!#loyee !orale high8
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Ch 4-22
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Management A!dit Checlist
$%s e!#loyee absenteeis! lo8$%s e!#loyee turnover lo8$ Are the reard !echanis!s effective8
$ Are the organization"s control!echanis!s effective8
$%s e!#loyee absenteeis! lo8$%s e!#loyee turnover lo8$ Are the reard !echanis!s effective8
$ Are the organization"s control!echanis!s effective8
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Ch 4-23
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Mareting
4arketing Functions1. C!stomer anal$sis
/. Selling prod!cts'services
3. (rod!ct & service planning
4. (ricing
0. Distri!tion
2. Mareting research
. pport!nit$ anal$sis
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Ch 4-24
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C!stomer
Anal$sis
)usto!er surveys
)onsu!er infor!ation
4arket #ositioningstrategies
)usto!er #rofiles
4arket seg!entationstrategies
Mareting
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Ch 4-25
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AdvertisingSales
'ro!otion'ublicity
Sales force !anage!ent)usto!er relations
Dealer relations
Mareting
Selling
(rod!cts'Services
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Ch 4-26
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Ch 4-27
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Test !arketingBrand #ositioning
Devising arrantees'ackaging
'roduct features:o#tions'roduct style
;uality
Mareting
(lanning
(rod!ct'Service
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Ch 4-28
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Forard integrationDiscounts
)redit ter!s)ondition of sale
4arku#s)osts
7nit #ricing
Mareting
(ricing
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Ch 4-29
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Warehousing)hannels
)overage-etail site locations
Sales territories%nventory levelsTrans#ortation
Mareting
Distri!tion
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Ch 4-30
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Data collectionData in#ut
Data analysisSu##ort business functions
Mareting
Mareting )esearch
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Ch 4-31
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Assessing costs
Assessing benefits
Assessing risks
)ost:benefit:risk analysis
Mareting
pport!nit$
Anal$sis
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Ch 4-32
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Mareting
Audit )hecklist1. Are marets segmented e""ectivel$5
/. Is the organi6ation positioned +ell among
competitors53. 7as the "irm8s maret share een
increasing5
4. Are the distri!tion channels reliale &cost e""ective5
0. Is the sales "orce e""ective5
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Ch 4-33
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Mareting
Audit )hecklist2. Does the "irm cond!ct maret research5
. Are prod!ct 9!alit$ & c!stomer service
good5. Are the "irm8s prod!cts'services priced
appropriatel$5
;. Does the "irm have e""ective promotion<advertising< and p!licit$ strategies5
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Ch 4-34
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Mareting
Audit )hecklist
1=.Are the mareting< planning< and
!dgeting e""ective511.Do the "irm8s mareting managers have
ade9!ate e>perience and training5
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Ch 4-35
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Finance'Acco!nting
Deter!ining financial strengths &
eaknesses key to strategyfor!ation
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Ch 4-36
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Finance'Acco!nting
Finance:Accounting Functions
1. Investment decision ,Capital !dgeting-
/. Financing decision
3. Dividend decision
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Ch 4-37
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Firm’s ability to meet itsshort-term obligations
)atios
)urrent ratio
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Ch 4-38
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Extent of debt financing
)atios
Debt.to.total.assetsDebt.to.e>uity
?ong.ter! debt.to.e>uityTi!es.interest.earned
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Ch 4-39
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Effective use of firm’sresources
)atios
%nventory turnover
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Ch 4-40
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Effectiveness shown by
returns on sales &
investment
)atios
@ross #rofit !argin
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Ch 4-41
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Effectiveness shown by
returns on sales &
investment
)atios
-eturn on stockholders" e>uityuity=Earnings #er share'rice.earnings ratio
%asic Financial )atios
(ro"itailit$ )atios
,cont8d-
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Ch 4-42
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Firm’s ability to maintain
economic position
)atios
Sales,et inco!e
Earnings #er shareDividends #er share
%asic Financial )atios
@ro+th )atios
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Ch 4-43
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Natural EnvironmentPerspectiveEU Countries Impose Curbs on Use of Chemicals Tough ne las start in 1
7se of so!e 3C che!icals need to be docu!ented
)ease using /C of the !ost dangerous che!icals
E7 countries need to cut e!issions
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Ch 4-44
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Finance'Acco!nting A!dit
$Does the fir! have sufficient orkingca#ital8$ Are ca#ital budgeting #rocedures
effective8$ Are dividend #ayout #olicies reasonable8$ Are the fir!"s financial !anagerse(#erienced & ell trained8
$Does the fir! have sufficient orkingca#ital8$ Are ca#ital budgeting #rocedures
effective8$ Are dividend #ayout #olicies reasonable8$ Are the fir!"s financial !anagerse(#erienced & ell trained8
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Ch 4-45
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Finance'Acco!nting A!dit
Effective Financial Analysis -e>uires/0 Analysis of ho the ratios have
changed over ti!e
10 2o the ratios co!#are to industrynor!s
30 2o the ratios co!#are ith keyco!#etitors
Effective Financial Analysis -e>uires/0 Analysis of ho the ratios have
changed over ti!e
10 2o the ratios co!#are to industrynor!s30 2o the ratios co!#are ith key
co!#etitors
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Ch 4-46
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(rod!ction'perations
'roduction:+#erations Functions
(rocess
Capacit$
Inventor$
or"orce
B!alit$
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Ch 4-47
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Ch 4-48
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Global Perspective Auto Industry Work Week and Hourly Pay ariation
@er!any 0
70S0 330G
)anada 1G0/HIa#an 1H03
France 1J03
S0 *orea /01
4e(ico 30
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Ch 4-49
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Facility designTechnology selection
Facility layout'rocess flo analysis
Facility location?ine balancing'rocess control
(rod!ction'perations
(rocess
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Ch 4-50
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ForecastingFacilities #lanning
Aggregate #lanningScheduling
)a#acity #lanning;ueuing analysis
(rod!ction'perations
Capacit$
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Ch 4-51
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-a !aterials
Work in #rocessFinished goods
4aterials handling
(rod!ction'perations
Inventor$
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Ch 4-52
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Iob design
Work !easure!entIob enrich!entWork standards
4otivation techni>ues
(rod!ction'perations
or"orce
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Ch 4-53
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;uality control
Sa!#lingTesting;uality assurance
)ost control
(rod!ction'perations
B!alit$
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Ch 4-54
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(rod!ction'perations A!dit
$ Are su##liers of !aterialsC #artsC etc0reliable and reasonable8$ Are facilitiesC e>ui#!entC and !achinery
in good condition8$ Are inventory.control #olicies and#rocedures effective8
$ Are su##liers of !aterialsC #artsC etc0reliable and reasonable8$ Are facilitiesC e>ui#!entC and !achinery
in good condition8$ Are inventory.control #olicies and#rocedures effective8
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Ch 4-55
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(rod!ction'perations A!dit
$ Are >uality.control #olicies & #rocedureseffective8$ Are facilitiesC resourcesC and !arkets
strategically located8$Does the fir! have technologicalco!#etencies8
$ Are >uality.control #olicies & #rocedureseffective8$ Are facilitiesC resourcesC and !arkets
strategically located8$Does the fir! have technologicalco!#etencies8
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Ch 4-56
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)esearch & Development
-esearch & Develo#!ent Functions
Development o" ne+ prod!cts e"ore
competitors
Improving prod!ct 9!alit$
Improving man!"act!ring processes to
red!ce costs
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Ch 4-57
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Financing as !any#ro9ects as #ossible
7se #ercent.of.sales!ethod
Budgeting relative toco!#etitors
2o !any successfulne #roducts are
needed
)esearch & Development
)&D %!dgets
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Ch 4-58
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)esearch & Development A!dit
$ Are the -&D facilities ade>uate8$%f -&D is outsourcedC is it cost.effective8$ Are the -&D #ersonnel ell >ualified8
$ Are -&D resources allocated effectively8
$ Are the -&D facilities ade>uate8$%f -&D is outsourcedC is it cost.effective8$ Are the -&D #ersonnel ell >ualified8
$ Are -&D resources allocated effectively8
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Ch 4-59
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)esearch & Development A!dit
$ Are 4%S and co!#uter syste!sade>uate8$%s co!!unication beteen -&D and
other organizational units effective8$ Are #resent #roducts technologicallyco!#etitive8
$ Are 4%S and co!#uter syste!sade>uate8$%s co!!unication beteen -&D and
other organizational units effective8$ Are #resent #roducts technologicallyco!#etitive8
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Ch 4-60
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Management In"ormation
S$stems
'ur#ose
Improve per"ormance o" an enterprise $improving the 9!alit$ o" managerial
decisions
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Ch 4-61
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Management In"ormation
S$stems
%nfor!ation Syste!s
)%+:)T+
Security 7ser.friendly
E.co!!erce
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Ch 4-62
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Management In"ormation
S$stems A!dit
$Do !anagers use the infor!ation syste!to !ake decisions8$%s there a )%+ or Director of %nfor!ationSyste!s #osition in the fir!8$%s data u#dated regularly8
$Do !anagers use the infor!ation syste!to !ake decisions8$%s there a )%+ or Director of %nfor!ation
Syste!s #osition in the fir!8$%s data u#dated regularly8
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Ch 4-63
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Management In"ormation
S$stems A!dit
$Do !anagers fro! all functional areascontribute in#ut to the infor!ation syste!8$ Are there effective #assords for entryinto the fir!"s infor!ation syste!8$ Are strategists of the fir! fa!iliar ith theinfor!ation syste!s of rival fir!s8
$Do !anagers fro! all functional areascontribute in#ut to the infor!ation syste!8$ Are there effective #assords for entry
into the fir!"s infor!ation syste!8$ Are strategists of the fir! fa!iliar ith theinfor!ation syste!s of rival fir!s8
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Ch 4-64
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Management In"ormation
S$stems A!dit
$%s the infor!ation syste! user.friendly8$Do all users understand the co!#etitiveadvantages that infor!ation can #rovide8
$ Are co!#uter training orksho#s #rovidedfor users8$%s the fir!"s syste! being i!#roved8
$%s the infor!ation syste! user.friendly8$Do all users understand the co!#etitiveadvantages that infor!ation can #rovide8
$ Are co!#uter training orksho#s #rovidedfor users8$%s the fir!"s syste! being i!#roved8
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Ch 4-65
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C i ht © 2009 P Ed ti I