Answers to Pause/Break Section Review Questions

Section 1.1 Review Questions 1. Define EC and e-business.

Electronic commerce is the process of buying, selling, or exchanging products, services, and information via computer networks. E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners and conducting electronic transactions within an organization. 2. Distinguish between pure and partial EC.

Companies utilizing pure EC conduct all of their business online. usinesses utilizing partial EC conduct a portion of their business online and a portion of their business off-line. 3. Define click-and-mortar and pure play organizations.

Click-and-mortar organizations conduct e-commerce activities, but do their primary business in the physical world. !ure play organizations rely on the "nternet and EC for all of their sales. . Define electronic markets! "#$s! and intraorganizational information systems.

Electronic market # $n online marketplace where buyers and sellers meet to exchange goods, services, money or information. "%&s # Communication systems that allow routine transaction processing and information flow between two or more organizations. "ntraorganizational information systems # Communication systems that enable ecommerce activities to go on within individual organizations. %. Describe non-"nternet EC.

'on-"nternet EC is the use of EC technologies on private (as opposed to public) networks. Section 1.2 Review Questions 1. &ist the ma'or components of the EC framework.

*he EC framework is made up of the following components+ people, the public policy, technical standards and protocols, business partners and support services.

2.

&ist the ma'or transactional types of EC.

*he major transactional types of EC include+ business-to-business, business-toconsumer, business-to-business-to-consumer, consumer-to-business, consumer-toconsumer, mobile commerce, intrabusiness EC, business-to-employee, collaborative commerce, nonbusiness EC, electronic government and exchange-to-exchange. 3. Describe the ma'or landmarks in EC history.

*he major landmarks in EC history began with the use of E," to transmit business information. *his was followed by a wide public acceptance of the "nternet. *he next major landmark was the development of several early electronic commerce sites online and the growth of the -new economy.- $nother major landmark is the winding down of many of these -new economy- businesses. Currently the growth of new .eb /.0 services and ventures defines EC. . &ist some EC successes and failures.

&tudent answers will vary and may include some of the examples given on page 1/. . Section 1.3 Review Questions 1. Define the digital economy. $ digital economy is an economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies. "t may also be called the "nternet economy, the new economy, or the .eb economy. 2. &ist the three characteristics of the digital economy.

*hese characteristics include+ a wide variety of digitized products, financial transactions being conducted digitally, and microprocessors and network capabilities embedded in physical goods. Section 1.4 Review Questions 1. &ist the components of the business en(ironment impact model and e)plain the model. *he model describes how the business environment creates problems and opportunities that effect the company and how the company responds to those stimuli to create solutions. 2. &ist the ma'or factors in today*s business en(ironment.

*he major business pressures faced by organizations can be divided into markets, societal and technological categories. 3. &ist the ma'or response acti(ities taken by organizations.

%rganizations respond to business pressures by using+ strategic systems, continuous improvement systems, business alliances, electronic markets, increased efficiencies, employee empowerment, supply chain improvements, and mass customization. Section 1.5 Review Questions 1. Define the following+ business plan! business case! and business model.

$ business plan is a written document that identifies the business goals and outlines the plan to achieve them. $ business case is a written document that is used by managers to gather funding for specific applications for projects2 its major emphasis is the justification for specific investment. $ business model is a method of doing business by which a company can generate revenue to sustain itself. 2. Describe a re(enue model and a (alue proposition.

3evenue model # ,escription of how the company or an EC project will earn money. 4alue !roposition # *he benefits a company can derive from using EC. 3. Describe the following business models+ name your own price! affiliate marketing! (iral marketing! and product customization. 'ame your own price # reverse auction where bidders submit prices they would pay, and the system attempts to match those prices with merchants $ffiliate marketing # %ne firm helps advertise for another and takes a commission on sales from referrals 4iral marketing # .ord of mouth marketing !roduct customization # Creating products based on individual needs . "dentify business models related to buying and those related to selling.

&ome business models related to buying include+ electronic tendering systems, find the best price, group purchasing and supply chain improvements. &ome business models related to selling include+ online direct marketing, name your own price, affiliate marketing, buyer marketing, online auctions, product and service customization, electronic marketplaces and exchanges and supply chain improvements. Section 1.6 Review Questions

1.

Describe some EC benefits to organizations! indi(iduals! and society.

EC benefits consumers by providing them convenience, speed, cost, customization, personalization and communities. EC benefits organizations by expanding the marketplace, creating a cost savings, improving business processes and promoting interactivity. EC benefits society by improving the standard of living and delivery of public services. 2. &ist the ma'or technological and non-technological limitations of EC.

*hese limitations are summarized in Exhibit 1.5. 3. Describe some contributions of EC to homeland security.

EC technologies allow for better communication, coordination, information interpretation and information sharing (transparency).

Section 1.7 Review Questions 1. ,hat is a social network- "dentify ma'or features offered by social networks.

&ocial networks are websites that aggregate individuals with similar interests and provide an array of tools and services to them. 6eatures vary by site but can include+ Chat ,iscussion !hoto sharing 4ideo sharing logging $nd more 2. Describe .y$pace. ,hy is it so popular-

7y&pace is a social network that provides a variety of features to members. 7embers use these services to share information and content with each other in a social setting. 7y&pace is popular due to the large number of features and other users to interact with. 3. ,hat are some of the ma'or issues faced by social network sites-

&tudent answers will vary, but may focus on issues of accessibility, access restriction, liability, security, safety and revenue generation. . ,hat is a business-oriented network-

*hese networks are similar in function to other social networks, but are organized to fulfill a business, as opposed to purely social, purpose. %. Describe /ing.com and list fi(e of its ma'or benefits.

8ing.com is a European business oriented network. "t provides many benefits including+ contacts9network expansion, personal marketing, content experts9advice, meetings9events and privacy of information. Section 1.8 Review Questions 1. 2. Define a digital enterprise. $ digital enterprise is a firm that relies on "* to manage customers, increase productivity and improve efficiency. Define intranets and e)tranets.

$n intranet is an internal use only website used by companies. $n extranet is a company:s secured website used by select individuals and organizations. 3. ,hat is a corporate portal-

$ corporate portal is a company:s gateway to a variety of services available to employees, partners and the public. . "dentify EC transaction models 0e.g.! 1212 in E)hibit 1.11.

&tudent answers will vary.

Answers to E A!!"ication ase Questions

E A!!"ication ase 1.1# Bu$ %oco"ate &n"ine' (r$ )o*iva.co+. Questions 1. "dentify the 121 and 12C transactions in this case. ;odiva.com sells both to individuals and corporations through the website. 2. ,hy did 3odi(a decide to sell online*he firm was looking for an avenue to increase sales. 3. &ist the EC dri(ers in this case.

"n 155< the major drivers for increased sales were user groups. *argeting these users with the .eb site was key to increasing sales. . 4isit 3odi(a.com. 5ow user-friendly is the site&tudent answers will vary. *he site appears to be very user-friendly, providing an easy shopping experience coupled with a large amount of information. %. Describe 1212C at 3odi(a. *he company sells to companies that will then resell to individuals. *he site makes this easier by facilitating some of the logistics. E A!!"ication ase 1.2# Boein, %an,es t%e -ature o. its Business wit% )"o/a" o""a/oration Questions 1. Describe online collaboration and its benefits to 1oeing.

%nline collaboration at oeing includes the ability to =uickly share and evaluate the ideas and inputs of a wide variety of global partners to enhance product design and reduce cycle time. /. &ist the le(els of collaboration and the parties in(ol(ed. *here are three levels of collaboration. *he first level is design collaboration where designs are reviewed and improved by a large group of internal and external designers. *he second level is supply chain management where production and logistics are coordinated by the company and its suppliers. *he third level is real-time collaboration between all partners as the need arises. >. 5ow does the technology facilitate collaboration*he technology makes it much easier for individuals and groups to share and comment on information, making it more likely that decisions will be based on wider input.

E A!!"ication ase 1.3# 0$S!ace# (%e 1or"*2s 0ost Po!u"ar Socia" -etworkin, 1e/ Site Questions 1. ,hy does .y$pace attract so many (isitors-

*he site provides a variety of tools that makes it easier for individuals to interact. *he site also benefits from a large number of users, making the interaction more diverse and interesting. 2. &ist the ma'or issues faced by the company.

&ome issues include accessibility, access restriction, liability, security, safety and revenue generation. 3. ,hat are the benefits to .y$pace and 3oogle from their collaboration-

7y&pace benefits from the fees paid and it is now able to add an on-site search feature to users. ;oogle benefits by having access to the users and being the default search tool.

Answers to 3iscussion Questions

1. Compare brick-and-mortar and click-and-mortar organizations. rick-and-mortar organizations only maintain a presence off-line. Click-and-mortar organizations maintain a presence both online and off-line. 2. ,hy is buying with a smart card from a (ending machine considered ECEC can be defined as the application of technology toward the automation of business transactions and workflow. ecause a smart card uses technology to automate a process (creating greater efficiencies and ease-of-use) it can therefore be considered EC. 3. ,hy is e-learning considered ECEC can be defined as the application of technology toward the automation of business transactions and workflow, as well as a gathering place for community members to learn, transact and collaborate. E-learning fits both of these definitions because it provides the technology solution for workflows (education) while also creating a learning community. . ,hy is it said the EC is a catalyst of fundamental changes in organizationsEC causes fundamental changes in organizations because it re=uires business models and processes to be redesigned and streamlined. *his is re=uired for firms to have successful EC. %. 5ow does EC facilitate customization of products and ser(ices-

EC facilitates customization by allowing customers to see the full range of options available for a given product. Customers are then able to select the options that they desire and these options may be sent directly to the manufacturer or service provider. *his provides a more direct link between the customer and the firm that will eventually fill their custom order. 6. Discuss the relationships among the (arious components of a business model. !roducts and services should be directed at appropriate customers. usiness processes should reflect current resources and supply networks to focus on providing products and services with an acceptable revenue model. 7. E)plain how EC can reduce cycle time! impro(e employees* empowerment! and facilitate customer support. EC can reduce cycle time by eliminating steps in business processes. *he steps may be redundant or can be replaced with more efficient technology solutions. *he elimination of the steps speeds the overall process and reduces cycle time. EC can provide employee empowerment by providing employees with greater and easier access to information provided by the employer. EC facilitates customer support by providing a wide range of technological solutions and communication opportunities. $dditionally, EC supports self-help customer service so consumers can answer their own =uestions. 8. Compare and contrast (iral marketing with affiliate marketing. "n both viral and affiliate marketing of business, relying on a third party to assist in its marketing effort is necessary. .ith affiliate marketing, individuals or firms are paid based on the amount of additional business they can send to the selling firm. .ith viral marketing, individuals are encouraged to market the product to others without any financial gain. 9. E)plain how EC is related to supply chain management. EC facilitates supply chain management by exposing the inner workings of the supply chain and indicating which areas contribute the greatest value. *hese indications, coupled with a firm understanding of the chain?s workings, provide the necessary information for supply-chain optimization. 1:. Discuss the contributions of EC technologies to homeland security. EC technologies allow for better communication, coordination, information interpretation and information sharing (transparency). 11. Carefully e)amine the nontechnological limitations of EC. ,hich are company dependent and which are generic-

$ll of the listed nontechnological limitations are generic concerns with EC with the exception of -@ack of trust in EC and in unknown sellers hinders buying.- *his limitation may be overcome by well-known and established merchants who will bring with them some level of customer confidence.

12. ,hich of the EC limitations do you think will be more easily o(ercome;the technological or the nontechnological limitations! and why&tudent answers will vary. "n most cases technological limitations are easier to overcome, with customer preferences taking more time to adapt. 13. ,hy are social networks! such as .y$pace! considered EC*hese networks are considered EC because they rely on EC tools and models to function. 1 . ,ould you consider eDiets.com to be a social network- ,hy or why not&tudent answers will vary. "t appears that the site has social aspects, but primarily provides information.