4etbch06

File: ch06, Chapter 6: E-Business and E-Commerce

True/False

1. Electronic commerce is changing only the production and operations management functional area.

Ans: FalseResponse: See page 176

2. Electronic commerce is the buying and selling of products, services, and information via computer networks, primarily the Internet.

Ans: TrueResponse: See page 179

3. Electronic business is a broader term than electronic commerce.


4. Electronic commerce can take several forms depending on the degree of digitization.


5. Electronic commerce can take only one form; i.e., digital.


6. In traditional commerce, the product or service, the process, and the delivery agent are physical.


7. In traditional commerce, one or more of the product or service, the process, and the delivery agent can be digital.

Ans: False

Response: See page 179

8. In pure electronic commerce, the product or service, the process, and the delivery agent can be digital or physical.


9. In partial electronic commerce, at least one of the product or service, the process, or the delivery agent is digital.


10. Companies that are engaged only in electronic commerce are considered virtual (or pure-play) organizations.


11. Companies that conduct some e-commerce activities, yet their primary business is done in the physical world, are considered click-and-mortar organizations.


12. Buying a car at your local dealership is an example of pure electronic commerce.


13. Going to the Web site of a car manufacturer (e.g., www.gm.com), entering the specifications for the car you want, and then picking up your car at your local dealership is an example of partial electronic commerce.


14. Going to the Web site of a car manufacturer (e.g., www.gm.com), entering the specifications for the car you want, and then picking up your car at your local dealership is an example of pure electronic commerce.

Ans: False

http://www.gm.com/

http://www.gm.com/


15. With business-to-consumer EC, the sellers are organizations and the buyers are individuals.


16. With business-to-business EC, the sellers and buyers are organizations.


17. With business-to-business EC, the sellers are organizations and the buyers are individuals.


18. With consumer-to-consumer EC, individuals sell products or services to other individuals.


19. eBay is a good example of consumer-to-consumer electronic commerce.


20. eBay is a good example of business-to-consumer electronic commerce.


21. Internet-based classified ads offer an international audience, which is an advantage over traditional classified ads.


22. Internet-based classified ads increase the listings of goods and services.


23. Internet-based classified ads decrease the listings of goods and services.


24. Internet-based classified ads increase the number of potential buyers.


25. Internet-based classified ads decrease the number of potential buyers.


26. In business-to-employee electronic commerce, an organization uses EC internally to provide information and services to its employees.


27. In business-to-consumer electronic commerce, an organization uses EC internally to provide information and services to its employees.


28. An example of government-to-citizen electronic commerce is the direct deposit of Social Security and pension payments.


29. Electronic benefits transfer is a type of B2B electronic commerce.


30. When electronic commerce is done in a wireless environment, it is called mobile commerce.


31. The primary characteristic of auctions is that prices are determined dynamically by competitive bidding.


32. The primary characteristic of auctions is that prices are static during the bidding process.


33. Forward auctions are used mainly as a selling channel.


34. In reverse auctions, there is one buyer who wants to buy a product or a service. Suppliers are invited to submit bids and the supplier with the lowest bid wins.


35. The reverse auction is the most common auction model for large purchases.


36. The forward auction is the most common auction model for large purchases.


37. eBay uses a forward auction process.


38. eBay uses a reverse auction process.


39. An electronic marketplace is a central, virtual market space on the Web where many buyers and many sellers can conduct electronic business activities.


40. An electronic marketplace is a central, physical marketplace where many buyers and many sellers can conduct electronic business activities.


41. Electronic commerce makes national and international markets more accessible.


42. Electronic commerce makes national and international markets less accessible.


43. Electronic commerce increases the costs of processing, distributing, and retrieving information.


44. Electronic commerce decreases the costs of processing, distributing, and retrieving information.


45. Electronic commerce provides the ability to easily and conveniently deliver information, services, and products to people in cities, rural areas, and developing countries.


46. Electronic commerce provides the ability to easily and conveniently deliver information, services, and products to people in cities, but unfortunately not rural areas or developing countries.


47. There are universally accepted standards for quality, security, and reliability of electronic commerce transactions.


48. There is a lack of universally accepted standards for quality, security, and reliability of electronic commerce transactions.


49. Even though B2B EC is much larger by volume, B2C EC is more complex.


50. Even though B2C EC is much larger by volume, B2B is more complex.


51. B2C involves a large number of buyers making millions of diverse transactions per day with a relatively small number of sellers.


52. B2B involves a large number of buyers making millions of diverse transactions per day with a relatively small number of sellers.

Ans: False


53. The vast majority of electronic commerce volume is business-to-consumer.


54. Electronic retailing (e-tailing) is the direct sale of products and services through electronic storefronts or electronic malls, usually designed around an electronic catalog and/or auctions.

Ans: TrueResponse: See pages 184-185

55. An electronic storefront is a Web site on the Internet representing a single store.


56. An electronic mall is a Web site on the Internet representing a single store.

Ans: FalseResponse: See page185

57. An electronic storefront is a collection of individual shops under a single Internet address.


58. All electronic storefronts are extensions of physical stores.


59. An electronic mall is a collection of individual shops under a single Internet address.

Ans: TrueResponse: See page185

60. Electronic wholesaling is the direct sale, businesses to consumers, through electronic storefronts or malls, usually designed around an electronic catalog.

Ans: FalseResponse: See page 184-185

61. Solo storefronts maintain their own Internet names and Web sites and may be extensions of physical stores.


62. Solo storefronts are always affiliated with electronic malls.


63. You can make a purchase in a referral mall.


64. Selling products on the Internet may reduce vendors’ selling costs by 20 to 40 percent, and further reductions are easily possible.


65. Selling products such as books and computers on the Internet may reduce vendors’ selling costs by 20 to 40 percent, with further reductions being difficult because the products must be delivered physically.


66. Selling products on the Internet may reduce vendors’ selling costs by 20 to 40 percent, with further reductions being difficult due to the high cost of hardware and software necessary to run the Web site.


67. The cost per transaction of cyberbanking is far less than the cost per transaction at a physical bank branch.

Ans: True


68. Virtual banks are those banks dedicated only to Internet transactions.


69. The Internet is ineffective for job seekers and for companies searching for employees.


70. The Internet is effective for job seekers and for companies searching for employees.


71. Electronic commerce is not well-suited for the real estate industry.


72. Really simple syndication allows you to put together a list of Web sites that you want to follow.


73. Multichanneling allows you to put together a list of Web sites that you want to follow.


74. Channel conflict occurs when click-and-mortar companies have problems with their regular distributors when they sell directly to customers online.


75. Multichanneling occurs when companies integrate their online and offline channels.


76. Multichanneling occurs when companies use only their online channels.


77. When an established company decides to sell direct online, it may create a conflict within its existing operation.


78. E-tailers have few conflicts with order fulfillment, because they are shipping large quantities of products to few buyers.


79. Order fulfillment includes only providing customers with what they ordered in a timely fashion.


80. Order fulfillment includes providing customers with what they ordered in a timely manner, as well as all aspects of customer service.


81. Traditional advertisement on TV or newspaper is impersonal, one-way mass communication.


82. Traditional advertisement on TV or newspaper is personalized, one-to-one communication.


83. Internet advertising is media-rich, dynamic, and interactive.


84. Internet advertising is impersonal, one-way mass communication.


85. Internet ads can be updated any time at minimal cost.


86. Print ads can be updated at any time at minimal cost.


87. Internet ads can be interactive and targeted to specific groups and/or individuals.


88. Print ads are interactive and targeted to specific groups and/or individuals.


89. Banners are the most common form of advertisement on the Internet.


90. Electronic mail is the most common form of advertisement on the Internet.


91. Banners can be customized to a target audience.


92. Banners cannot be customized to a target audience.


93. Many people ignore banner advertising today.


94. A pop-up ad is automatically launched by some trigger and appears in front of the active window.


95. A pop-under ad is automatically launched by some trigger and appears behind the active window.


96. A pop-under ad is automatically launched by some trigger and appears in front of the active window.


97. A pop-up ad is automatically launched by some trigger and appears behind the active window.


98. E-mail provides a better and quicker response rate than print ads.


99. Print ads provide a better and quicker response rate than e-mail.


100. Spamming is the indiscriminate distribution of electronic ads without permission of the receiver.


101. Hacking is the indiscriminate distribution of electronic ads without permission of the receiver.


102. Permission marketing asks consumers to give their permission to voluntarily accept online advertising and e-mail.


103. Permission marketing refers to online “word-of-mouth” marketing.


104. Viral marketing asks consumers to give their permission to voluntarily accept online advertising and e-mail.


105. Business-to-consumer applications comprise the majority of electronic commerce volume.


106. Business-to-business applications comprise the majority of electronic commerce volume.


107. In the sell-side marketplace, organizations attempt to sell their products and services to other organizations electronically.


108. In the buy-side marketplace, organizations attempt to sell their products and services to other organizations electronically.


109. The key mechanisms in the sell-side marketplace are customized electronic catalogs and forward auctions.


110. The key mechanisms in the sell-side marketplace are customized electronic catalogs and reverse auctions.


111. The sell-side marketplace is similar to the business-to-consumer model.


112. In the sell-side marketplace, electronic commerce technology is used to reduce both the cost of items purchased and the administrative cost of procurement.


113. The buy-side marketplace is similar to the business-to-consumer model.


114. The buy-side marketplace reduces the purchasing cycle time.


115. The sell-side marketplace reduces the purchasing cycle time.


116. The key mechanism of the buy-side marketplace is the electronic catalog.


117. Electronic exchanges refer to e-marketplaces where there are many sellers and few buyers.


118. Vertical exchanges connect buyers and sellers in a given industry.


119. Horizontal exchanges connect buyers and sellers in a given industry.


120. Horizontal exchanges connect buyers and sellers across many industries.


121. Vertical exchanges connect buyers and sellers across many industries.


122. Vertical exchanges are used mainly for maintenance, operations, and repair (MRO) materials.


123. Horizontal exchanges are used mainly for maintenance, operations, and repair (MRO) materials.


124. In functional exchanges, needed services such as temporary help are traded on an as-needed basis.


125. With horizontal distributors, needed services such as temporary help are traded on an as-needed basis.


126. Where B2B exchanges are used mainly to facilitate trading among companies, electronic hubs are used to facilitate communications and coordination among business partners in a supply chain.


127. Where electronic hubs are used mainly to facilitate trading among companies, B2B exchanges are used to facilitate communications and coordination among business partners in a supply chain.


128. In most cases, traditional payment systems are effective for electronic commerce.

Ans: False Response: See page 194

129. In most cases, traditional payment systems are not effective for electronic commerce.


130. Cash cannot be used in electronic commerce because there is no face-to-face contact.


131. Cash can be used in electronic commerce even though there is no face-to-face contact.


132. It is more secure for a buyer to use the telephone or mail to arrange or send payment, than to finish the transaction on a computer.


133. Electronic checks are used mostly in B2B electronic commerce.


134. Electronic checks are used mostly in C2C electronic commerce.


135. Purchasing cards are the B2B equivalent of electronic credit cards.


136. Stored-value money cards are a form of e-cash.


137. Stored-value money cards and smart cards are the same thing.

Ans: False


138. Smart cards are frequently multipurpose.


139. Smart cards can be used as credit cards, debit cards, and/or loyalty cards.


140. Stored-value money cards can be used as credit cards, debit cards, and/or loyalty cards.


141. Person-to-person payments allow two individuals to transfer funds with a credit card.


142. Digital wallets are software mechanisms that provide security measures, combined with convenience, to electronic commerce purchasing.


143. You need an e-wallet with each merchant.


144. Each buyer needs only one e-wallet for all merchants.


145. Internet fraud is increasing rapidly.


146. Cybersquatting refers to the practice of registering domain names in order to sell them later at a higher price.


Multiple Choice

1. The nature of business competition is changing drastically as a result of which of the following?a) new online companiesb) new business modelsc) the diversity of EC-related products and servicesd) all of the above

Ans: dResponse: See page 176

2. Electronic business includes which of the following?a) buying and sellingb) servicing customersc) collaborating with business partnersd) conducting electronic transactions within an organizatione) all of the above

Ans: eResponse: See page 179

3. The degree of digitization does not relate to which of the following?a) the product or service soldb) the processc) the intermediaryd) the number of e-commerce transactionse) none of the above


4. In this type of e-commerce, the sellers and buyers are organizations.a) government-to-citizenb) consumer-to-consumerc) business-to-business

d) business-to-consumere) none of the above

Ans: cResponse: See page 181

5. In this type of e-commerce, buyers and sellers are individuals.a) government-to-citizenb) consumer-to-consumerc) consumer-to-businessd) business-to-consumere) none of the above

Ans: bResponse: See page 181

6. eBay is an example of which type of e-commerce?a) government-to-citizenb) consumer-to-consumerc) consumer-to-businessd) business-to-consumere) none of the above


7. In this type of e-commerce, an organization provides information and services to its workers.a) business-to-employeeb) consumer-to-consumerc) consumer-to-businessd) business-to-consumere) none of the above

Ans: aResponse: See page 182

8. Direct payment of Social Security benefits is an example of which type of e-commerce?a) government-to-citizenb) consumer-to-consumerc) consumer-to-businessd) business-to-consumere) none of the above


9. If you are an employee managing your fringe benefits over your company’s intranet, you are engaging in which of the following?a) business-to-businessb) business-to-consumerc) consumer-to-consumerd) business-to-employeee) government-to-citizen


10. When e-commerce is done in a wireless environment, this is called:a) pervasive computingb) wireless commercec) location commerced) consumer commercee) mobile commerce


11. In _____ auctions, a single seller auctions item(s) to many potential buyers.a) forwardb) reversec) staticd) physicale) none of the above


12. In _____ auctions, there is one buyer who wants to buy a product. Suppliers submit bids and the lowest bid wins.a) forwardb) staticc) reversed) physicale) none of the above


13. eBay uses a _____ auction.a) forwardb) staticc) reversed) physicale) none of the above


14. _____ auctions employ a request for quotation.a) forwardb) staticc) reversed) physicale) none of the above


15. _____ auctions are the most common auction model for large purchases.a) forwardb) staticc) reversed) physicale) none of the above


16. Manufacturers or retailers sell directly to customers in which of the following business models?a) find-the-best-priceb) electronic tendering systemc) name-your-own-priced) online direct marketinge) affiliate marketing


17. In which of the following business models do businesses request quotes from suppliers and use B2B with a reverse auction mechanism?a) find-the-best-priceb) electronic tendering systemc) name-your-own-priced) online direct marketinge) affiliate marketing


18. Vendors ask partners to place logos or banners on partners’ site. If customers click on logo, go to vendor’s site and buy, then vendor pays commissions to partners. This is which business model?a) find-the-best-priceb) electronic tendering systemc) name-your-own-priced) online direct marketinge) affiliate marketing


19. In which business model do receivers send information about your product to their friends?a) find-the-best-priceb) electronic tendering systemc) name-your-own-priced) viral marketinge) affiliate marketing


20. Which type of electronic commerce is the largest by volume?a) business-to-employeeb) consumer-to-consumerc) business-to-businessd) business-to-consumere) none of the above


21. Which type of electronic commerce does Amazon practice?a) business-to-employeeb) consumer-to-consumerc) consumer- to-businessd) business-to-consumere) none of the above


22. This type of e-commerce is known as e-tailing.a) business-to-businessb) collaborative commercec) intrabusinessd) business-to-consumere) consumer-to-business


23. _____ is not an electronic commerce application?a) home bankingb) buying stocksc) evaluating an employeed) conducting an auctione) buying real estate

Ans: cResponse: See pages 184-188

24. Which of the following are advantages of e-tailing?a) you can buy from home, 24 hours per dayb) you have a wide variety of products and servicesc) you can obtain detailed information on productsd) you can compare competitor’s products and pricese) all of the above


25. Which of the following is not an advantage of e-tailing?a) you can buy from home, 24 hours per dayb) you have just a few products to choose fromc) you can obtain detailed information on productsd) you can compare competitor’s products and pricese) all of the above


26. Which of the following is not an advantage of e-tailing?a) you can buy from home, 24 hours per dayb) you have a wide variety of products and servicesc) you can obtain limited information on productsd) you can compare competitor’s products and pricese) all of the above


27. Cyberbanking offers which of the following advantages?a) convenient for customersb) saves time for customers

c) inexpensive transactions for the bankd) chance of recruiting remote customerse) all of the above


28. Cyberbanking offers all of the following advantages except:a) convenient for customersb) saves time for customersc) inexpensive transactions for the bankd) chance of recruiting remote customerse) more expensive for the customer


29. Online securities trading offers which of the following advantages?a) transactions are cheaperb) saves timec) minimizes mistakesd) increases available informatione) all of the above


30. Which of the following is not an advantage of online securities trading?a) transactions are cheaperb) saves timec) minimizes mistakesd) decreases available informatione) none of the above


31. When Ford Motor Company decided to avoid direct online sales, the company was trying to eliminate which of the following?a) federal sales taxesb) customer irritationc) channel conflictd) channel integratione) state sales taxes


32. Difficulties in order fulfillment are most closely associated with which of the following?a) business-to-business ECb) business-to-consumer ECc) government-to-citizen ECd) business-to-employee ECe) mobile commerce


33. Internet advertising improves on traditional advertising in all of the following ways except: a) Internet ads can be updated at any time at minimal costb) Internet ads can reach large numbers of potential buyers all over the worldc) Internet ads are always more effectived) Internet ads can make effective use of multimediae) Internet ads are current


34. A _____ is automatically launched by some trigger and appears in front of the active window.a) keyword bannerb) random bannerc) pop-up add) pop-under ade) text box


35. A_____ is automatically launched by some trigger and appears behind the active window.a) keyword bannerb) random bannerc) pop-up add) pop-under ade) text box


36. _____ offers consumers incentives to accept advertising and e-mail voluntarily.a) viral marketingb) personalized marketingc) permission marketingd) paper catalogse) direct mail


37. _____ refers to online word-of-mouth marketing.a) permission marketingb) one-to-one marketingc) personalized marketingd) viral marketinge) direct mail

Ans: dResponse: See page 189-90

38. In the _____ marketplace model, organizations attempt to sell their products or services to other organizations electronically.a) buy-sideb) sell-sidec) group purchasingd) desktop purchasinge) electronic exchange


39. The key mechanisms of the _____ marketplace model are electronic catalogs that can be customized for each large buyer and forward auctions.a) buy-sideb) sell-sidec) group purchasingd) desktop purchasinge) electronic exchange


40. In the _____ marketplace model, EC technology is used to streamline the purchasing process in order to reduce the cost of items purchased, the administrative cost of procurement, and purchasing cycle time.a) buy-sideb) sell-sidec) auctionsd) group purchasinge) electronic exchange


41. In the _____ marketplace model, the reverse auction is typically used.a) buy-sideb) sell-sidec) group purchasingd) desktop purchasinge) electronic exchange


42. In the _____ B2B application, the orders of many buyers are aggregated so that they total to a large volume, in order to merit more seller attention.a) buy-sideb) sell-sidec) auctionsd) group purchasinge) electronic exchange


43. In _____, direct and indirect materials in one industry are purchased on an as-needed basis.a) horizontal exchangesb) vertical exchangesc) buy-side marketplacesd) functional exchangese) none of the above


44. _____ connect buyers and sellers across many industries and are used mainly for indirect materials.a) horizontal exchangesb) vertical exchangesc) buy-side marketplacesd) functional exchangese) none of the above


45. In _____, needed services such as temporary help or extra space are traded on an as-needed basis.a) horizontal exchangesb) vertical exchangesc) buy-side marketplacesd) functional exchangese) none of the above


46. _____ are used to facilitate trading among companies in a supply chain.a) horizontal exchangesb) vertical exchangesc) buy-side marketplacesd) functional exchangese) electronic hubs


47. Nonelectronic payment methods have which of the following limitations in electronic commerce?a) cash cannot be used because there is no face-to-face contactb) takes time for payment in the mailc) not all organizations accept credit cardsd) it is less secure for the buyer to use the telephone than to complete a secure transaction on a computere) all of the above


48. Which of the following is not a limitation of nonelectronic payment methods in electronic commerce?a) cash cannot be used because there is no face-to-face contactb) takes time for payment in the mailc) not all organizations accept credit cardsd) it is more secure for the buyer to use the telephone than to complete a secure transaction on a computere) all of the above


49. _____ are a payment mechanism similar to regular bank checks but transmitted electronically, with a signature in digital form. a) electronic checksb) electronic credit cardsc) electronic cashd) electronic wallete) electronic debit cards


50. _____ use credit card numbers, transmitted electronically over the Internet, to pay for goods and services and are unencrypted or encrypted, with coded data readable by an intermediary between the buyer’s and seller’s banks. a) electronic checksb) electronic credit cardsc) electronic cashd) electronic wallete) electronic debit cards


51. _____ are typically used for unplanned B2B purchases for amounts under $2000.a) electronic checksb) stored-value money cardsc) purchasing cardsd) smart cardse) person-to-person payments


52. A form of e-cash, _____ allow you to store a fixed amount of prepaid money and then spend it as necessary.a) electronic checksb) stored-value money cardsc) purchasing cardsd) smart cardse) person-to-person payments


53. _____ contain a chip that can store information and can be used for several purposes.a) electronic checksb) stored-value money cardsc) purchasing cardsd) smart cardse) person-to-person payments


54. _____ enable two individuals to transfer funds without using a credit card.a) electronic checksb) stored-value money cardsc) purchasing cardsd) smart cards

e) person-to-person payments


55. _____ are software mechanisms that provide security measures and convenience for electronic commerce purchasing.a) electronic checksb) digital walletsc) purchasing cardsd) smart cardse) person-to-person payments


Short Answer

1. Differentiate between pure and partial electronic commerce. Give examples of companies in each category.

Response: See page 177-178

2. Discuss the various types of electronic commerce.

Response: See pages 179-180

3. Differentiate between forward and reverse auctions.


4. Discuss the following electronic commerce business models and give examples of each type: online direct marketing, electronic tendering system, name-your-own-price, find-the-best-price, affiliate marketing, and viral marketing.


5. Differentiate between electronic storefronts and electronic malls and give examples of each.


6. Discuss the benefits and limitations of electronic commerce.


7. Discuss the various business-to-consumer applications (e.g., e-tailing, electronic storefronts, electronic malls).


8. Discuss the various methods of online advertising.


9. Differentiate between sell-side marketplaces, buy-side marketplaces, and electronic exchanges.


10. Describe the various types of electronic payments.
