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Steve, the Vice President of Information Systems for Alpha Flight

question 48

Multiple Choice

Steve, the vice president of information systems for Alpha Flight Company, was dissatisfied with the company's current method of providing IT help to its internal customers. Having read an article about information systems outsourcing, he decided to develop a new business process in which most IT help would be provided externally. By doing so, he reasoned, he would save the company money and make his job easier. Steve decided to start the project by drawing two flowcharts: one of the current process and another of the new process. He would then hire a consultant to do a cost / benefit analysis and recommend a company for outsourcing; when the project was complete, Steve planned to inform his employees individually, as some of them would have to look for other employment.
-The final step in the generalized model of business process management includes monitoring process improvements. Steve could monitor process improvements by: (i) comparing the number of calls under the old and new systems, (ii) creating a relational database with answers to common questions, (iii) calculating the change in cost from outsourcing.

Definitions:

Relatively Elastic

Describes a situation where the quantity demanded of a good or service greatly changes in response to changes in its price.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price level in a given period.

Coefficient

A numerical value that multiplies a variable in an equation, serving as a measure of some property or characteristic.

Price Elasticity

Refers to how sensitive the quantity demanded of a good is to a change in its price.