Solutions: Solutions To Review Questions

Electronic Commerce, Fourth Edition
Solutions
Chapter 1
Solutions to Review Questions
1. Describe three factors that would cause a company to continue doing business in
traditional ways and avoid electronic commerce.
Traditional commerce is a better way to sell the items or services when personal
selling skills are a factor, as in commercial real estate sales; or when the condition of
the products is difficult to determine without making a personal inspection, as in the
purchases of high-fashion clothing, antiques, or perishable food products.
2. Name one type of transaction not listed in figure 1-4 that you believe would be a
good candidate for electronic commerce. Explain why.
Responses will vary, but one may include clothing. For consumers who shop at a
select number of clothing stores, they may be willing to buy without trying on since
they already own articles in a size they trust.
3. What are transaction costs and why are they important?
Transaction costs are the total of all costs that a buyer and a seller incur as they gather
information and negotiate a purchase sale transaction. Any reduction in transaction
costs associated with the quality, timing, or efficiency of information technology will
increase operating results as well as competitive advantage.
4. Provide one example of how electronic commerce could help change an
industrys economic structure from a hierarchy to a network?
When transaction costs are high, concentrated hierarchies reduce unit cost by taking
advantage of specialization and economies of scale. Networked economic structures
with the information technology to coordinate their strategies, resources, and skills
are capable of greater economic efficiencies by taking the business activity into the
market place. A closer cooperation between partner firms and customers will reduce
transaction costs.
5. How might a manager use SWOT analysis to identify new applications for
electronic commerce in their strategic business?
In SWOT analysis you list strengths and weaknesses of the business unit and then
identify opportunities presented by the markets of the business unit and threats posed

by the competitors of the business unit. This is accomplished by analyzing all the
business operations into value adding activities and supporting activities.
Suggested Solutions to Exercises

1. You have decided to buy a new laser printer for your home office. List specific
activities that you must undertake as you gather information about printer
capabilities and features. Use the CompUSA, Office Depot, and Staples Web
sites to gather information. Write a short summary of the process you
undertook so that others who plan to undertake a similar task can use your
information.
Answers might vary, but should include the following:
Identify a search engine

Visit Websites for information on features, attributes and benefits
Interrogate Websites for additional information
Place an order
Inquire about shipping/payment terms
2. Germany and China have laws that prohibit the use of certain kinds of political
speech and adult images in the conduct of commerce. Both of these countries
have recently taken steps to enforce these laws by prosecuting firms and
individuals that violate them while conducting electronic commerce. In an
essay of approximately 200 words outline the problems that such enforcement
actions can create for companies and their non-German and non-Chinese
customers who engage in electronic commerce. In your essay, include a solution
for each problem you identify. The Online Companion includes links for
Exercise2 that lead to news stories you might find helpful as you prepare your
essay.
Answers will vary, but should consider the following:
Common laws must rule Internet activity or global trade will suffer from legal
barriers.
A provider (ISP) or an e-commerce firm outside a nation should not be
accountable for content on the Internet.
Sanctions for transgressions of law are almost impossible to enforce in a
practical sense.
3. Create a diagram (similar to the diagram in Figure 1-9) that describes the
industry value chain for the retail book business. You can use the Online

Companion links for this exercise to examine the Web sites for Amazon.com,
Barnes & Noble, Books-A-Million, eCampus, and Internet Bookshop.
Responses should include some of the following:
a. author writes book
b. publishing company manufactures and releases book
c. publisher partners with Amazon.com to advertise on Amazons
website
d. reader / student is asked to find said book
e. reader / student goes online to Amazon.com to make purchase
f. reader / student no longer needs book and sells it back to Amazon at
used price
Chapter 2
1. What were the main forces that led to the commercialization of the Internet?
Summarize your answer in about 100 words.
The Internet was born out of the need for the U.S. government, specifically the
Defense Department, to communicate with its weapons installation distributions all
over the world. This idea, in the hands of researchers and scientists evolved even
further allowing those researchers the capability to communicate with their colleagues
at other universities. As personal computers became more popular and affordable,
companies increasingly wanted to construct their own networks. This all led to the
dramatic increase in business activity, but the commercialization of the Internet was
really spurred by the emergence of the World Wide Web. The software that allowed
computers to communicate while on the Internet is still the largest category of traffic
today.
2. Describe in one or two paragraphs the origins of HTML. Explain how markup
tags work in HTML, and describe the role of at least one person involved with
HTMLs development.
SGML is a software language for describing electronic documents and how they
should be formatted as well as displayed. This language is the precursor of HTML,
which is used by all documents on the Web. Robert Calliau and Tim Berners-Lee
independently invented HTML at the CERN research center in Switzerland. HTMLs
document type definition is easier for users to learn and use for describing formatting
and displaying electronic documents by Meta tag codes.
3. In about 200 words, compare the POP e-mail protocol to the IMAP e-mail
protocol. Describe situations in which you would prefer to use one protocol or
the other and explain the reasons for your preference.

A POP message can tell the e-mail computer to send mail to the users computer and to
delete it from the e-mail computer; to send mail to the users computer and do not
delete it; or simply to ask whether new mail has arrived. IMAP protocol that performs
the same basic functions as POP, but includes additional features that can instruct the
e-mail server to send only selected messages to the client instead of all messages. It
also allows the user to view only the headers and the e-mail senders name before
deciding to download the entire message. One would choose IMAP if they have a
need for a more robust system that allows them to access their email from different
computers at different times.
4. In about 400 words, describe the similarities and differences between XML and
HTML. Provide examples of at least two situations in which you would use
XML and two situations in which you would use HTML.
XML and HTML are similar in that they are both powerful tools for creating web pages
that use tags to organize data. However, XML is not a markup language with defined
tags, as is HTML. XML is a framework within which individuals, companies and
others can create their own tags. These tags do not specify how the text will appear on
a web page the tags convey the meaning of the information included with them.
One would choose HTML if they were building a simpler page that did not require data
management capabilities. HTML also allows the developer to embed scripting
language code giving them more control over the format of displayed pages.
XML is very useful for sites that have lists that require updating such as inventory items,
purchase orders, etc. XML is far superior to HTML for data management. XML also
allows developers to create a tag for each fact that define the meaning of the fact.
5. Use your favorite search engine and the links in the Online Companion (under
the heading Internet Connection Options) to search for more information
about broadband satellite connections, DSL connections, wireless connections
and cable connections. Prepare a four-column table (one column for each
technology) in which you list the advantages and disadvantages of each
connection method.
Answers will vary but should include the following:
Satellite
DSL
Wireless
---
100 640 Kbps
150 Kbps
1.5 9 Mbps
500 Kbps
Cable
Advantages
Upstream
transmission
Downstream
transmission
500 Kbps
300 Kbps Mbps

Up to 10 Mbps
Disadvantages
Satellite
users have
to rely on
plain old
telephone
system to
upload files
Installation can
be quirky
Unusable for
people living in
large cities
Connection
bandwidth
varies with the
number of
subscribers

1. You are the assistant to Julie Davidson, the president of Davidson Design, a firm
that creates and builds Web sites for small and medium-sized business clients.
Many of the firms projects result in Web sites that the clients want Davidson
Design to maintain after the sites are implemented. A growing number of clients,
however, would like to handle the maintenance tasks themselves. These tasks
include making changes in the Web page text and, in some cases, creating new
Web pages. Some of these clients have asked Julie and members of the Web
design team to recommend a software tool that they could use to maintain their
Web pages. A good program would be one that is easy to learn, easy to use,
reasonably priced, and capable of handling all maintenance tasks that a typical
client would encounter. Most of the Web page designers at Davidson use
Macromedia Dreamweaver as their Web site design tool, but Julie is not sure
that Dreamweaver is the best choice for clients. Julie wants you to research
HTML editors and Web design software and make a recommendation. Prepare
a report for Julie in which you briefly review at least six software packages,
writing no more than three paragraphs for each editor. Then choose the two
best software packages and write a one-page evaluation of strengths and
weaknesses for each of them. Use the Online Companion links and your favorite
Web search engines to do your research.
Responses to this exercise will vary significantly depending upon the HTML editors,
which might include:
Microsofts Front-page
Macromedia Dreamweaver
NetObjects Fusion MX
Allaire HomeSite
CoffeCup HTML editor
Adobe GoLive
The review of the selected HTML editors should include some or all of the following
points:
Both WYSIWYG and source code view
HTML/Tag help
Pre-built designs/themes and scripts
Image capabilities
Broken link/orphan files reports
Site wizard and site map view
Database wizard
Macros
Supports JavaScript, style sheets
Supports wireless development
Source control/ collaboration
Technical support
Price
2. Bridgewater Engineering Company (BECO), a privately held machine shop,

makes industrial-quality, heavy-duty machinery for assembly lines in other
factories. It sells its presses, grinders, and milling equipment using a few inside
salespeople and telephones. This traditional approach worked well during the
startup years, but BECO is getting a lot of competition from abroad. Because
you worked for the company during the summers of your college years, BECOs
president, Tom Dalton, knows you and realizes you are Web savvy. He wants to
form close relationship with the steel companies and small parts manufacturers
so that he can tap into their ordering systems and request supplies when he
needs them. Tom wants you to describe to him the ways in which he can use the
Internet to set up such electronic relationships. Use the Web and the links in the
Online Companion to locate information about extranets and VPNs. Write a
short report comparing various network options and indicate, in writing, at least
two companies (from the Web) that could develop a system that would work for
Tom. Limit your report to 500 words or less.
Responses can vary significantly in this exercise. Any recommendation for systems
development should include the infrastructure required to support a supply-chain
management extranet, as well as the costs and the anticipated benefits. The
infrastructure for a private network requires a TCP/IP network, Web authoring
software, and a firewall server. The benefits include lower communication costs, and
more timely and accessible information, as well as convenient use.
3. Frieda Bannister is the IT manager for the State of Iowas Department of

Transportation (DOT). She is interested in finding ways to reduce the costs of
operating the DOTs vehicle repair facilities. These facilities purchase
replacement parts and repair supplies for all of the states cars, trucks,
construction machinery, and road maintenance equipment. Frieda has read
about XML and thinks that it might help the DOT send orders to its many
suppliers throughout the country more efficiently. Use the Online Companion
links, the Web, and your library to conduct research on the use of XML in state,
local, and federal government operations. Provide Frieda with a report of about
7 pages that includes sections that discuss what XML is and why XML shows
promise for the ordering application Frieda envisions. Your report should also
include a summary of the main disadvantages of using XML today for
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integrating business transactions. End the report with a brief study of how the
W3C Semantic Web project results might help the DOT operate more efficiently
in the future.
Responses should include the following points:
XML uses markup tags to describe the meaning or semantics of the text.
XML records are embedded in HTML documents.
With XML, tags can be created that identify all the record details for the ordering
application that Frieda envisions.
The extensibility of XML is also its weakness. Sharing data across organizations
means that the organizations must use the same tag names. For example, Friedas
organization might create a tag called "PurchaseOrderNumber", and one of her
suppliers might call the same item "OrderNum".
The W3C Semantic Web will allow XML tags to be read by software agents,
which will result in better, less-timely searching on the Web for information.
This would allow the DOT to research pricing, availability, etc. of parts from
suppliers.
Chapter 3
1. Write a paragraph in which you describe the conditions under which a Web site
can hope to become profitable if it relies exclusively on advertising revenue. In a
second paragraph, provide an example of a company not mentioned in the
chapter that is using the advertising-supported model and that is likely to be
successful in the long run. Explain why you think it will succeed.
A Web site that relies exclusively on advertising revenues must contend with two
major problems. First, no consensus has emerged on how to measure and charge for
site views and the second problem is that very few Web sites have sufficient numbers
of visitors to interest large advertisers. To be successful using the advertisingsupported revenue model exclusively, a Web site must be large search engine,
because they generate sufficient traffic to be profitable. Another alternative is to
become a site that targets niche markets, for example employment-advertising sites.
2. Describe two possible service-for-fee offerings that might become available on

the Web in the near future. Write one paragraph for each service in which you
outline the profit potential and risk of losses for each.

Two possible fee-for-service offerings that might become available are medical and
legal services. The profit potential for these services would be higher than the
traditional brick and mortar services offered. There are limitations placed on these
services because of licensure issues and dispensing legal and medical advice over the
Internet is still a major hurdle. As technology and the Internet mature, it will be
possible to offer these services offer the Internet.
3. In one paragraph, define the term presence. Write an additional paragraph in
which you explain why firms that do business on the Web should be more
concerned about presence than firms that operate only in the physical world.
A business presence is the public image a business conveys to its customers, suppliers,
employees, stockholders, neighbors, and the general-public. Businesses have always
created a presence in the physical world by building stores, factories, warehouses, and
office buildings.
Web presence can be critical even for the smallest and newest firms operating on the
Web. It is more important for electronic commerce companies because their Web
presence might constitute the only contact that customers and other stakeholders
have with the firm.
4. Write one or two paragraphs in which you describe two Web design mistakes
that firms often made when they created their first Web sites in the mid-1990s.
Many firms did not base their Web site design on market research to determine their
customers needs and expectations when visiting their site. Also, many firms did not
consider what business infrastructure changes would be needed to service their sites
and respond to visitors e-mail.
5. In an essay of about 500 words, explain how promoting products on the Web is
different from using mass media promotion or personal contact.
Promoting products on the Web is different because of the two-way communication
feature and information dissemination capacity of the Web. These combine to create a
different environment for product promotion. The two-way communication feature
has some of the major elements of personal selling; however, the customer has most
of the control over the situation. The Web is not a mass media system and the cost of
promotion to customers is not as cost effective as mass media. The Web is effective at
reaching the middle market between personal selling and mass media marketing.

1. Page 127 includes a list of five things that Web sites can do to meet the needs of
visitors. Create a table in which the first column is a list of the five needs of Web

site visitors. Find three Web sites that meet three or more of the needs. Create a
column for each Web site next to the first column (columns two through four)
and rate how well each site meets each need in the first column. You may want
to use the Webby Awards site as a starting point in your search, but do not use
any of the award nominees or winners as your table.
Answer will vary depending on the Web sites chosen and the degree to which each
site meets the needs defined in this chapter. For example, visit eddiebauer.com, a
retailer of business casual and casual clothing, and notice the category links, which
provide specific information about their product. The same Web site is also capable
of transaction processing and payment. In addition, the visitor will see links that
provide access to company information, shopping online or the option of catalog
shopping and tools for online shopping. At the top of the site are links to customer
service, account and order status, and even access to your shopping cart.
2. A number of occupations are exposed to the risk of disintermediation posed by
firms moving activities to the Web. Four of these occupations are: auto
salesperson, stockbroker, insurance agent, and travel agent. For each occupation,
write one paragraph in which you explain whether the employees would be able
to find jobs in the new business activity and explain what those jobs would be.
You may want to use About.com or your favorite Web search engine to find
information on this topic.
Some points to consider include:
Online business activities still require traditional knowledge of the business.
Online business activities must still support their customer base.
Support services are critical to the success of an online business and this offers an
opportunity for auto sales people, stockbrokers, insurance agents, and travel
agents to provide these services.
3. You have been employed by Bob Drudge, the owner of refdesk.com, to explore
revenue-generating alternatives. Currently, the site is using an advertisingsupported revenue model. Bob wants you to consider each of the other revenue
models and the potential of strategic alliances that might make sense for his site.
Write a report of about 500 words in which you summarize your research and
state your recommendations. Your instructor might assign you to a group to
complete this exercise and might also ask you to present your recommendations
in class.
Responses will vary; however, a reference site such as refdesk.com should certainly
consider all of the revenue generating options, especially the digital content,
advertising subscription mix, for-fee-transaction, and fee-for-service models. A site
such as refdesk.com likely attracts many different types of users: those willing to pay
for as much information as possible, thereby using less advertising. It will also
appeal to those looking for a quick fact, where advertising will reach many.
Chapter 4
1. Assume you are a consultant to Freds Sticks, a golf club manufacturer that sells
its clubs directly to customers on the Web. Review figure 4-5 in this chapter,
which describes how advertisers select television programs that would be good
hosts for their ads. Present a list of four magazines (other than golf magazines)
in which Freds Sticks should consider placing print advertising to support its
Web sales effort. For each magazine, write one paragraph in which you explain
why that magazine would be a good advertising outlet to reach potential
customers of an online golf club store.
Responses will vary, but one magazine may be a travel magazine. Students might
explain how Freds golf clubs would be a good choice to take on a golfing excursion.
2. Write a paragraph in which you describe two Web site features that could help
retain customers who are in the familiarity life-cycle stage of their relationship
with a company.
Responses will vary, but one may include an auto Web site. For example, some
automotive manufacturers include links to discount a car if the prospective buyer
already owns a car of that same manufacturer.
3. Many people have strong negative reactions to pop-behind ads. Write a 500word letter to the editor of an Internet industry magazine in which you explain,
from the advertisers viewpoint, why pop-behind ads are an effective advertising
medium?
Responses will vary, but the students might discuss how pop-behind ads remain
visible after the browser has closed and keeps that information fresh in the users
mind. In addition, a good point to bring up is that unlike pop-up ads, they do not
cover the browser window.
4. What are the key elements of technology-enabled customer relationship
management. What advantages does technology-enabled customer relationship
management have over traditional seller-customer interactions? Limit your
answer to 250 words.
The key elements of technology-enabled CRM are to provide information in response
to specific inquiries, identify and respond to specific customer behaviors and
preferences, individually tailor discounts to customer, customers choice of
distribution channels, price negotiated with the customer, new product features
created in response to customer demands, and customer retention is a good
measurement used to manage CRM. The advantages can be summed up as customercentric. Traditional relationships focus on customers as a group, not as individuals.
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5. Describe two businesses, other than wedding planning and wedding gift
registries, in which a brand consolidation Web site might provide enough value
to customer to become profitable. Include specific examples of the value
created.
Responses will vary, but some examples might include Travelocity, which sells
flights, rental cars, hotels, and other needs for vacations. Another business might be
Amazon.com, which encompasses books, music, apparel, electronics, and other
items needed in the home.

1. Visit the RedEnvelope Web site to examine how that company implements
occasion segmentation. Write a report of no more than 200 words in which you
describe two clear examples of occasion segmentation.
Answers might vary, but Red Envelope has a section that displays various holidays,
such as spring, Easter, and birthdays. Students should discuss the details of these
different occasions.
2. You have been employed by Switchboard.com to sell space on its site to
advertisers. Create a promotional press release on no more that 300 words in
which you describe the advantages of advertising on Switchboard.com. You
may decide to promote space on the main page, specific other pages, or all pages.
Be prepared to explain why your promotional strategy should work. You may
find the Art of Web Site Promotion, Promotion World, Sitelaunch, or Seltzers
How to Publicize Your Web Site over the Internet Online Companion links
helpful in your task.
The differences between the main home page and the other pages.
Different costs to advertisers between ads on the main page and other pages
Different possible Web designs and how they would look on the home page as
well as other pages.
3. Marti Baron operates a small Web business, The Cannonball, that sells parts,
repair kits, books, and accessories to hobbyists who restore antique model trains.
Many model train hobbyists and collectors have created Web sites on which
they share photos and other information about model trains. Marti is interested
in creating an affiliate marketing program that would allow those hobbyists to
place links on their sites to The Cannonball and be rewarded with commissions
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on sales that result from visitors following those links. Examine the services
offered by Free Be, Commission Junction, LinkShare, and any other affiliate
program brokers that you can find on the Web. Recommend at least one
affiliate program broker that would be good for Martis business. In no more
than 500 words, explain your recommendation. Be sure to consider the
characteristics of Martis business in your analysis.
The students should search different program brokers and try to find one that
already deals in hobbies and collectibles. Be Free would be a good fit, since it caters to
smaller businesses and is scalable as well.
Chapter 5
1. Define direct materials and indirect materials. Why would a large company
have two separate departments to manage the purchasing of each?
Large companies need to keep such different items separate, since one (direct
materials) is related to the creation and sale of the goods or services, while the
indirect materials include the non-production departments (accounting, research, IT,
etc.) Most indirect materials departments are considered a drain on profits.
2. Which industries were the first to establish standard EDI transaction sets? State
why, in your opinion, these industries were more interested in setting standards
than other industries.
The freight and shipping companies were the first, because they had the most
paperwork to cover; EDI made their paperwork system obsolete.
3. Define knowledge management. Briefly describe three advantages that a
management consulting firm could gain over its competitors by creating an
internal knowledge management system?
Knowledge management is the intentional collection, classification, and dissemination
of information about a company, its processes, and its products and services. Some
advantages include the ability to generate new ideas, help solve problems, and
improve business processes.
4. Companies in a particular supply chain can work together to eliminate costs
from the supply chain. In many cases, these cost savings are not shared evenly
among the companies. Using research resources on the Web or in your library,
explain why some supply chain participants in your chosen industry can obtain
more benefit than others from cost reductions in the supply chain.
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Responses may vary, but should include an acknowledgement of different

relationships and their trust of others (some businesses may not be as willing to share
resources).
5. In about 300 words, describe the reasons a company might have for wanting to
participate in an industry consortium marketplace instead of setting up its own
private company marketplace.
Responses may vary, but should include a discussion of the power that a collection
of companies can exert (as opposed to a single company) over vendor prices and
goods.

1. Use the Thomas Register of American Manufacturers Web site (note: free
registration is required to access this site) to locate an industrial product with
which you are completely unfamiliar. Note how many companies offer that
product, have catalogs or Web sites, offer on-line ordering, and offer literature
by fax. Summarize that you learn about the product and its availability on the
Web in a report of approximately 400 words. Note: Your instructor might ask
you to prepare a formal presentation of your findings in class.
Answers might vary, but should include the product itself (such as beads, tools, and
other jewelry making items from BeadBox), as well as the different ordering features
and the literature selections.
2. Your boss, Andrew Wheeler, is the president of a small plastic parts
fabricator. He wants you to look into improving client interactions through EDI.
You know that a number of companies that provide VAN services for
companies engaging in EDI, such as General Electric Information Services,
GPAS, IBM Global Services, and Kleinschmidt, have begun offering Internet
EDI services too. Some of these VAN operators are targeting smaller businesses
that, in the past, would not have been able to implement EDI. Choose two VAN
providers from this list, or that you find on the Web, and examine their Web
sites. For the two Van providers that you choose, determine whether they are
offering Internet EDI services. Also decide whether, in your opinion, their Web
sites are targeting smaller businesses such as Andrews. In a memo to Andrew
of approximately 150 words, summarize your findings for the two VAN
providers you chose.
Answers will vary, but should consider the following: the student should examine
any businesses that are listed with those VANs; for example, IBMs site has a
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feature story on company as well as a fact sheet and services portfolios that the
student should examine.
3. A number of standard-setting organizations offer memberships to business firms.
You are working for Grace Henry, CIO of a medium-sized company that
manufactures commercial seating products. These products include furniture for
waiting rooms made in standard sizes and a wide range of customer-specified chair
designs for auditoriums, music halls, and theaters. Grace asks you to investigate
the benefits of joining two standard-setting organizations, the Open Buying on the
Internet Consortium and RosettaNet. Prepare a memo to Grace in which you
outline the purposes of each organization and the costs and benefits of becoming a
member. Close your memo with a recommendation regarding whether your
company should join either organization.
Responses will vary, but students should provide details about the services offered to
members as well as the costs of joining. The student should list the pros and cons of each
organization; do they have regular meetings, support, Web support, and other items.
Examine the costs and see if they are comparable.
Chapter 6
1. The consumer auction site eBay allows seller to conduct what it calls a Dutch
auction. Examine the eBay Web site to find information about how an eBay
Dutch auction works. Is eBays version of a Dutch auction a true Dutch auction
(as defined in the chapter)? Explain why or why not in two or three paragraphs.
Simply, eBays Dutch auction is really a Yankee auction; sellers put up multiple
items and buyers bid on a quantity. The lowest successful bidders price is then the
winning bid, but the quantities are offered from the highest bidder to the lowest until
there are no more items.
2. In approximately 200 words, define the term reserve price and explain how the
use of a reserve price can affect the progress and outcome of an auction.
A reserve price is a minimum; even though the bid may start at a very low price, there
will be no winner unless the bids reach a reserve price set by the seller. If the reserve
is set too high, no one may win the auction.
3. Write three paragraphs in which you name and briefly describe each of the
three emerging models for business-to-business Web auctions.
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The large company model is where the business creates its own auction site to sell
excess inventory. The small company model is where the business has a third-party
Web auction site take the place of the liquidation broker to sell excess inventory, and
the third model is similar to consumer Web auctions.
4. In about 300 words, describe the services offered by an online auction service.
Name one advantage and one disadvantage of using an escrow service.
An escrow service will hold the buyers funds until the buyer has received the
merchandise and is satisfied; this is primarily used for high ticket items. The
advantage to the buyer is that they can be sure they are getting what they paid for in
the auction. The disadvantage is that a buyer can be dissatisfied about almost
anything and the seller must wait for a decision.
5. In 500 words, describe the elements that you would include in a an internal Web
portal for students at your school or for employees at your company. Provide
one advantage for each element that your school or company would gain by
including that element in its internal Web portal design.
Responses may vary, but the students should focus on items that they can offer other
students, such as school clothing, grade lookups, information, and so on.
Advantages include a centralized location for all these items.

1. Use the Online Companion to examine the projects list at the MIT Software
Agents Group Projects site. Choose a software agent technology used in one of
these projects, and in approximately 200 words, describe how you could use it in
an e-commerce application.
Answers might vary, but should include notes on navigation guides and buying and
selling agents. If they used information from a navigation guide, the students should
discuss how this guide will make a site more user-friendly.
2. Use mySimon, Best Web Buys, or another Web pricing robot of your choice to
find sources for a book or CD that you want to buy. Evaluate the results
provided by the robot in terms of how useful the robot was in helping you plan
for your purchase. Summarize your findings in a report of approximately 200
words.
Answers will vary, but students should discuss the listing of products and how they
can often list in terms of descending price or by store. Yahoo! allows you to sort by
price and then shows the Yahoo! rating of the stores that carry the product.
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3. You have been hired as an electronic commerce consultant to Oyster Bay, Inc., a
dealer in ocean-going yachts. Oyster Bay maintains offices and marinas in
major U.S. East Coast ports. The typical purchaser of an Oyster Bay yacht is a
high-income business executive, a retiree, or a person of significant inherited
wealth. Oyster Bay salespeople have noted that their customers are increasingly
aware of the Web. Prepare a proposal for an Oyster Bay Web portal site. You
do not need to design the Web pages, but your proposal should include a
detailed list of features that should be included in the site design. Describe each
feature in detail, and explain why you believe it should be included. For each
feature, not whether it will be supplied by Oyster Bay personnel or purchased
from an outside supplier. To learn more about existing yacht sales, you can use
your favorite search engine or consult the Carver Yachts, Moran Yacht & Ship,
and YachtWorld.com links in the Online Companion
Responses will vary, but should include pictures of some of the yachts, personnel,
different departments, as well as accessories and parts from Oyster Bay as well as
links to other suppliers and vendors.
Chapter 7
1. In about 200 words, explain the difference between language translation and
language localization.
The businesses that work with translation efforts often prefer the term localization, since
the translation considers multiple elements of the local environment, while translation is a
loosely defined word used to describe the conversion of one language to another.
2. In a paragraph, describe the advantages of a flat-rate telecommunications access

system for countries that want to encourage electronic commerce.
Since the majority of countries without flat-rate access are hindered by the high cost of
telephone rates, a flat-rate would make the Internet more accessible to people of normal
financial means.
3. In about 300 words, describe the differences between subject-matter jurisdiction
and personal jurisdiction.
Subject matter jurisdiction is the jurisdiction over issues governed by federal law
(bankruptcies, patents, etc.), while personal jurisdiction is determined by the residence of
the parties.
16
4. Define product disparagement. In two or three paragraphs, describe a situation

that would be an example of product disparagement.
Product disparagement deals with the badmouthing of a particular product. A good
example would be Oprah Winfrey discussing her issues with beef. A group of Texas
cattle ranchers sued her for her talk show discussion of mad cow disease in 1998.
5. In about 300 words, explain the idea of nexus. Why is it an important concept in
state and international taxation? In what ways is it similar to jurisdiction?
The connection between a taxpaying entity and a government is known as a nexus. Its
an important concept, because if a nexus is established, then taxes must be collected and
paid. Its similar to jurisdiction because of the government-seller connection.

1. Read the following business messages and come up with a list of words or phrases
in each message that you believe might be troublesome for automated translation
software. Then use the AltaVista Translation Web site to translate the messages
from English to one of the foreign languages available on that site. Translate each
message back into English. Write a short memo that compares the problems
you anticipated with those that occurred in the automated translation. The business
messages are:
The flight has been delayed for several hours and your shipment of components
will not arrive as scheduled.
We would be happy to bid on your proposal; however, we will need the drawings
of subassembly #24 and the supervising mechanical engineers quality control
report by next Thursday.
Our company offers the latest and greatest hot deals on wheels. We would love to
send you a brochure that explains why our brakes, wheels, and suspension
components will do the job for you effectively and economically.
Although the different languages were translated fairly well, any slang does not translate
well and humorous mistakes can occur, although it would not be so humorous on the job!
2) Use Google or your favorite Web search engine to obtain a list of Web pages
that include the words privacy statement. Visit the Web pages on the search
results list until you find a page that includes the text of a privacy statement. Print
the page and turn it in with your answers to the following questions:
17

Does the site follow an opt-in or opt-out policy (or is the policy not clearly stated in
the privacy statement)?
Does the privacy statement include a specific provision or provisions regarding the
collection of information from children?
Does the privacy statement describe what happens to the collected personal
information if the company goes out of business or is sold to another company? List
those provisions.
Write one paragraph in which you evaluate the clarity of the privacy statement.
Each response will vary, but using Yahoo! as an example, we see that they include a
separate policy concerning children and it does explain what happens to any collected
information. It also discusses the opt-in./opt-out policy, but not clearly. Yahoo! allows
you to opt-in by editing your personal preferences as opposed to a specific policy
regarding all information.
3. Use your favorite search engine, the links in the Online Companion for this
exercise, and your library, to learn more about the Napster lawsuit. Identify the
main issues in the case and the principal arguments that could be used by either side.
In about 300 words, present the case against Napster.
In about 300 words, present one or more well-reasoned arguments to support
Napsters position.
Responses will vary, but should include copyright information and payments made to
artists in the case against Napster. In addition, arguments in the case for Napster should
include the high price of CDs vs. the low cost of production as well as Napsters
argument that they are not actually reproducing the music downloaded.
Chapter 8
1. Compare the two- and three-tier Web client/server architectures and indicate the
role of each tier in each architecture. Which architecture is the most likely
candidate for an electronic commerce site? Explain why in about 100 words.
Responses may vary, but if there is a database or additional processing or structure
needed, then a 3-tier is the best choice. If a basic e-commerce site is wanted, a 2-tier
is called for. Most students should choose the 3-tier, however, as it provides the most
flexibility with e-commerce.
2. Describe and briefly discuss two important measures of a Web sites
performance.
18

Two possible answers are the connection speed (T1 line vs. T3 line) and the number of
users that the system can satisfy at any one time.
3. Beginning with the links provided in the Online Companion, locate more
information about two of the three Web servers mentioned in the chapter:
Apache, Microsoft Internet Information Server, and Sun ONE Web Server.
Write approximately 250 words about each of the two servers you choose.
Include descriptions of six features for each Web server and indicate the
computer platforms and operating systems on which each runs.
Responses may vary, but should include the operating systems that will work on each
server, who is using the server, what will work on each server and what will not, how
easily scalable and configurable each server.
4. In one paragraph, outline the main differences between a desktop PC and a

computer that would be suitable as a Web server for a small Web site.
Responses may vary, but should include sizes of the hard drive, memory, and
processor speed.
5. List and describe in about 200 words the advantages and disadvantages of
hosting your own Web site instead of contracting with a service provider to
perform this function.
Responses may vary, but should include such items as control of hardware (advantage:
you decide the hardware configuration; no responsibilities if something happens to it,
disadvantage: you have no say in the hardware; are responsible if it breaks), costs, the
need for experienced IT employees.

1. Your friend Faye Borthick wants to set up a small Web site devoted to gardening.
She believes her many years of experience in gardening give her an
understanding of the kinds of gardening tools, fertilizers, soil amendment
products, herbicides, pesticides, and plants that will appeal to the serious
gardener. Right now Faye doesnt want to sell anything. She merely wants to
display pages of plant photography, write and store short how-to papers for
novice gardeners, and provide links to other gardening tips and traps on the
Web. She wants your advice on whether to self-host the Web site or use an ISP
(or CSP) to start her endeavor. Use The List or the TopHosts sites to locate
information on the cost of using a service provider to host a Web site. Then,
estimate what a small Web site might cost in terms of the minimal configuration
of hardware and software. Estimate the design and development costs and the
annual maintenance costs. Then, select one of the Web server programs.
19

Estimate the cost of a Web connection. Write a 400-word summary of everything
you think Faye will need to know to use either of the two options (she builds it or
she uses a service provider) for creating her site.
Startup costs
Initial leasing costs
Monthly maintenance costs
Employee costs of development vs. ISP/CSP site creation
Time (the time it takes to set up the site for both options)
2. You created a Web site for International Paper Products and Pulp, complete
with links to other pages on your site and to pages on the Internet. Bob Pardee,
your supervisor, wants you to check periodically that the links on the corporate
site are still valid. Instead of purchasing and installing a link-checking program,
you decide to investigate online link checkers (Web sites that allow you to enter a
Web sites root or home address and then check all the links that emanate from
that site). Use Link Check or Elsop LinkScan to check the links on any site of
your choice. Print a few pages of the report and be prepared to turn them in to
your instructor. Be patient. The program takes a little time to complete its
workespecially on a Web page that has a large number of links.
Responses may vary, but have the students check their favorite Web site and submit
the paperwork.
3. In doing research on Web server computers, you find that many companies that
sell these computers offer a configuration option for controlling computers disk
drives called RAID. Using the Web and your library, investigate the purpose
of RAID controllers. Learn what these controllers do and how they do it.
Summarize your findings in a 600-word briefing report suitable for presentation
to a non-technical manager.
Responses may vary, but should include the definition: a redundant array of
inexpensive disks, as well as some of the uses for RAID. Some items that students
should focus on include: a demand for an efficient and cost-effective method to
protect customer data, quick integration, a robust feature set, ease of use, and
increased stability (through the use of RAID software architecture).
20
Chapter 9
1. List and describe the basic tasks that a medium-sized electronic commerce site
must accomplish.
Similar to large businesses, a medium business needs to address such issues as
customer relationship management, supply chain management, content management,
and knowledge management. The need to handle higher transaction loads is more of
a concern for larger businesses, however.
2. How can the Internet, a stateless system, keep track of a persons preferences
between browsing sessions? Are there any security restrictions that a browser
could impose that would force a change in the way information about users is
recorded? Explain one way to record information about a user that does not
require accessing the users computer.
Responses will vary, but should include a discussion of cookies. Browsers have
preferences that allow the user to turn off the use of cookies. In order to record
information without accessing the users computer, the Web site can store the
customers preference. A good example is Amazons wish list and preferences list.
3. List two disadvantages of hosting an electronic commerce site on a host that is
free or available at a very low cost. What is missing from such a hosts services
that would make an online entrepreneurs job more difficult?
Responses may vary, but may include a domain name that is part of the host site as
well as not providing a shopping cart. An online business often needs more
flexibility than a free or low cost service can provide. You get what you pay for!
4. In about 200 words, describe the differences between basic electronic commerce
software and midrange electronic commerce software. Discuss at least four
differences and give examples of each type of software.
Responses may vary, but should include the less expensive ISPs vs. in-house hosting,
the lack of features for basic e-commerce software, and the cost of the software itself.
The software available in the basic e-commerce level is a fairly simple HTML engine.
The larger business software includes Dreamweaver or Visual Studio .NET. This
type of software allows for more flexibility and more bells and whistles.
21

5. What are the characteristics of large firms conducting both business-to-business
and business-to-consumer transactions that require more robust and capable
electronic commerce systems? Consider the volume and types of transactions
and store maintenance activities that differ between a small storefront operation
and, for example, an Amazon.com-caliber store.
An enterprise system is fairly expensive and allows for both B2B and B2C. These
businesses do a large volume business and are a large Web presence. In addition,
since the enterprise system is expensive, only the larger businesses can afford to
implement them.

1. Main Street Stores eCommerce Builder allows you to create and save a storefront
free for 60 days. Create a small store using the store building tools at Main
Street Stores eCommerce Builder. When you have completed building your
store, visit the store as a customer and print several of your stores Web pages.
Hand in to your instructor your printed storefront Web pages. Your store
should include at least eight products in at least three categories.
Answers might vary, but each product should include the following:
Price and any discount

Colors
Pictures of the product
Links to accessories
Three categories might include (if a sporting goods store) camping, fishing, and
fitness.
2. Annette Jackson owns a small crafts store in central Missouri. She wants to
expand her stores reach outside the region to increase her profits and
simultaneously reduce her inventory. Annette has been watching her teenage
daughter, Kelly, use the Internet to order music CDs and books. After learning
from Kelly how simple it is to order from online stores, Annette decided that she
needs to create an online store. She asked you to do a little research on how
much it might cost in the first year to create a simple store with a catalog of
about 100 items. Annette wants you to investigate two CSP offerings and report
back to her what you find. Because her store is small, limit your research to
basic commerce and mall-style services. You might want to begin your research
with sites such as Freemerchant.com or Bigstep. Annette would like to
consider the following information for the two CSP offerings you examine:
22
Costs: initial setup fee, monthly fee, and transaction fees

Amount of disk space the CSP would provide for Annettes 100-item store
Existence of a search engine within each store
Promotion and marketing opportunities
Customer communications capabilities, such as automated e-mail confirmation
of orders
Shopping cart or other order entry mechanism
Storefront-building wizards for creating a new store
Security provisions for transactions
Nature of the domain names available (subdomain of the site or not)
Upload capabilities for product names, descriptions, images, and costs (can
they be uploaded from files or databases, or must the merchant enter each item
individually?)
Existence of an online user manual for the merchant
Produce a report of about 1000 words summarizing your findings.
Responses will vary, but should list all of the above. For example, initial setup fee might
be $200 with a maintenance fee of $1200. The domain name might run approximately
$100. The automated e-mail confirmation will cost Annette $1000, and all payment
processing fees should be estimated at 3% of her gross sales. Students should list all fees,
understanding that these are approximations.
3. Investigate and write a 400-word report summarizing the costs and features of
any enterprise-class commerce package for large businesses. You can review a
product mentioned in the chapter or one of your own choosing. Pick seven
characteristics of the software package and describe them in detail in your
report. The Online Companion includes links to several vendors of these
products under the Exercise 3 heading.
Responses may vary, but should include such items as shopping cart transactions,
automated e-mail, secure transaction processing and fulfillment, etc. Have the
students compare and contrast the costs of the chosen product (WebSphere, EBusiness Suite) as well as what is available on each one.
Chapter 10
23

1. In about 200 words, explain why Web sites use cookies. What problem do cookies
solve for Web sites? What does a cookie contain? Where are they stored? Use
the Online Companion to help with your research.
Responses will vary, but should include references to shopping carts. Since cookies
contain text data, they can help with the statelessness of the Internet.
2. What is steganography? What does steganography have to do with security? Use
the Online Companion to research the question. Write at least 100 words
explaining steganography.
Responses will vary, but should mention that this involves hiding information within
another piece of information; it is believed that Al Qaeda used steganography to pass
messages from one person or group to another.
3. List four Web server security risks. See if you can find a Web site at which you
can list the names of the directories on the site. Print the directory listings.
Threats include secrecy issues, requiring a user to enter a username and password,
access issues, and program issues (CGI, for example). Responses for the Web site
will vary, but should list folders and hierarchy.
4. In about 300 words, describe the security threats that a company could face if it
implements a wireless network. Assume that the company occupies the six
middle floors in a 12-story office building that is located in a downtown business
area between two other buildings of similar height. Briefly explain how the
company could reduce the risks it faces.
Responses will vary, but should include a note about WEP (wireless encryption
protocol). Other mentions include wardrivers and warchalking, people that drive
around with wireless laptops and monitor high-rise buildings for signals.
5. Why are programs such as CGI scripts and Java programs that run on client
machines or a Web server considered security threats? Explain how programs
could breach security. Do JavaScript programs pose an equally serious security
risk?
CGI and Java programs are designed to run without restrictions; Java applets have a
sandbox that ensures that all constraints are followed. JavaScript also do not
operate under the sandbox security model.
24
1. Brought Back Bugs is a used Volkswagen dealer in Lincoln, Nebraska. The

dealership hired you to create a Web site. One of the requirements is that the site
display a few banner advertisements showing the weeks specials. You decide
that active content would be the best technology to use for the rotating
advertisement. Your immediate task is to investigate Java, JavaScript, Jscript,
and Java appletsyou need to learn everything there is to know about Javarelated alternatives. Using the Online Companion and Web search engines,
research Java applications and write a two-page paper about what you discover
about Java, JavaScript, and the other Java namesakes. You might want to start
by describing the history of Java. Who invented it? What are the advantages
and disadvantages of Java over ActiveX controls? Who publishes JavaScript
and Jscript? Are electronic commerce customers restricted to a particular
browser to run Java-enhanced Web pages? Be sure to list the URLs for any Web
sites that you use in your research.
Java and Java applets are Sun products, JavaScript is a Netscape product,
while ActiveX is a Microsoft product.
Java is a programming language while ActiveX is a Visual Basic invention.
E-commerce customers are restricted; some browsers will not run Java or Java
applets, particularly Internet Explorer.
25

2. You are the administrator of a Web server for an electronic commerce site. The
site receives about 12,000 visitors per day, maintains a product catalog of about
4000 items, and processes about 2000 sales per day. The average sale amount is
$87. The site accepts four major credit cards and it outsources its payment
processing for all of the credit cards to another company. You suspect that your
Web server might be under attack from at least one source. Describe in a
general way the types of threats that can be launched against a Web server.
Consult sources on the Internet or in your library to help you answer this
question. What are the three categories of security threats and how might they
apply to your organizations Web server? Answer these two separate questions
in 100200 words.
Threats include physical threats to the equipment, database and CGI threats,
and other programming threats, among others.
Other threats include access to the server and theft of credit card numbers.
3. Write a 300-word paper in which you evaluate the CERT organization. Include
information about when it was founded, what groups or people are members,
and where it is headquartered. Include in your discussion at least three current
security alerts, specifying the name of the virus or attack program, the date the
alert was posted, and two sentences about each reported security alert. Use the
Online Companion, any of several Internet search engines, and the CERT home
page to help you locate information. Use at least one of the sources in the
references at the end of this chapter and include a citation to that reference.
Reponses may vary, but should include information about CERT (Computer
Emergency Response Team), its beginnings at Carnegie Mellon, and the meetings
that began in 1988. Students should check for these attacks on the CERT website
which might include the W32/BadTrans Worm and the W32/Goner Worm.
Chapter 11
1. Prepare a 200-word overview that explains watermarking. Explain how it works
and what it protects. Include two specific examples of how a company might use
watermarking to protect its intellectual property.
Responses will vary, but should discuss both digital and audio watermarking.
Watermarking is defined as a digital code or stream embedded undetectably in a
digital image or audio file.
26

2. Using your favorite search engine or Web directory site, research and briefly
describe the contents of a digital certificate. In about 100 words, explain two uses
a company might have for a digital certificate.
Responses may vary, but should define a digital certificate (an attachment to an email message or program embedded in a Web page); some uses include e-mail and efunds transfers.
3. Write a 200-word description of computer forensics and ethical hacking. In your
essay, describe at least one real situation in which computer forensic experts or
ethical hackers used their talents to help a company overcome a security
weakness.
Responses may vary, but should include definitions of both (computer people who are
hired to probe PCs and locate information that can be used in legal proceedings). In
addition, a search in a search engine should reveal a number of cases where
businesses have hired hackers to plug security weaknesses.
4. In about 200 words, explain the differences between public-key encryption and
private-key encryption. List advantages and disadvantages of each encryption
method. Explain which method you would use for e-mail sent from a field sales
office to corporate headquarters. Assume that the e-mail regularly includes
highly confidential information about upcoming sales opportunities.
Public encryption encodes messages by using two mathematically related numeric
keys, while private key uses a single numeric key. An advantage of private key is
that it is simpler, but the disadvantage is that its easier to break, whereas the public
key is more complex, but more secure. Responses may vary, but students may
recommend public key encryption for the tightest security.
5. Write 250 words about how hash algorithms work and how they differ from
encryption methods (either public-key or private-key encryption). Using the
Online Companion and your favorite search engine or Web directory sites, list
the names of three hash algorithms and describe their differences in a few words.
For example, mention how long the hash value is and who proposed or invented
the particular algorithm.
Hash coding calculates a number from the length of the message, as opposed to a
particular key with either public or private key. Responses may vary, but may
include such algorithms as MD2, MD4, MD5, or SHA1. The hash value can be up to
160 bit, but the different methods all have varying levels of security and most were
developed by RSA Security Inc.
27

1. Historians believe that Julius Caesar and his military commanders used secret
codes, which are known today as Caesar ciphers. There are 26 such ciphers in
the English alphabet. In the simplest, A is replaced with B, B is replaced with C,
and so on, up to Z, which is replaced with A. Thus, Caesar becomes dbftbs.
This type of code is called a rotate-one Caesar cipher because it rotates the
alphabet one place. A rotate-two cipher replaces A with C, B with D, and so on,
until Z, which is replaced with B. The following line is encrypted using a simple
Caesar rotation cipher:
MjqqtHfjxfw.Mtbnxdtzwhnvmjw?XyfdfbfdkwtrymjXjsfyjytifd. In
the preceding cipher text, the letters have been changed, but spaces and
punctuation marks remain the same. Capitalization has been preserved. See if
you can decipher the preceding message using a simple rotate-n cipher where the
value of n is less than 10. For your assignment, write the cipher text first, and
then below it, write the plain text decryption of the message.
Have the students work in groups, trying each rotation-n cipher from 1 to 10. Discuss
the cryptograms that appear in the newspapers and how similar they are to this type of
encryption.
2. Follow the links in the Online Companion to the Web sites of VeriSign and Thawte.
Examine the digital certificates offered by both companies. Provide a 200-word
comparison of these two digital certificates and explain which you would
recommend to a new company opening a Web business.
What type of identification is required?

What type of certificate does each one offer (low, medium, or high assurance)?
When do the certificates expire?
3. Your colleague, Andrea Flemington, is responsible for security of your

companys electronic commerce Web site. Her manager has sent her, rather
unexpectedly, to one of the companys divisions in Sydney. Before leaving, she
left a note on your desk asking you to help her with a brief analysis of other
electronic commerce sites. In her note, she requested that you conduct a survey
of 10 Web sites that employ the Secure Sockets Layer (SSL) protocol to protect
transactions. Andrea indicated that you could select six sites yourself, but she
wanted you to be sure to include these sites in the survey: www.amazon.com,
www.ebay.com, www.fedex.com, and www.gateway.com. Print out the query
results from each of the 10 sites for reference as you write a report about your
research. Create a table containing 11 rows and five columns. In the leftmost
28

column of the table, list the name (or abbreviation) of each company. Place the
following labels in the first row of the table: Company Name, HTTPS Server,
SSL Ciphers, Validity Period, and CAs Name. Fill in each row with the
appropriate information. Here is an example of the table:
Company
Name
HTTPS Server
SSL Ciphers
Validity Period
CAs Name
Sun Microsystems
Netscape Enterprise
4.1
RC4 with MD5

RC4 with MD5
(export version
December 13, 2006
restricted to
40-bit key)
RC2 with MD5
RC2 with MD5
(export version
restricted to
40-bit key)
DES with MD5
Triple DES
with MD5
December 13, 2001

to December 13,
2006
Sun Microsystems
Inc CA (Class B)

g. eBay site
h. Amazon.com site
i. Fedex site
j. Gateway site
Have the students choose several other sites of interest and research the requested
information in groups. As the first site has been done, make sure the students understand
the table outlay.
Chapter 12
1. Write two paragraphs in which you explain the advantages and disadvantages of
electronic cash.
Reponses may vary, but should include the advantages of efficiency and lower costs
for vendors (which means lower prices for consumers), while the disadvantages
include no audit trail and can be counterfeited or forged.
2. In about 200 words, discuss why anyone with a credit card would want to use an
electronic payment system, such as PayPal, for an Internet transaction.
29

Responses will vary, but will include security, wide acceptance for many vendors and
buyers, no need to risk other online payment options, and all that is needed is an email address (vendors must set up a PayPal account).
3. In one paragraph, outline the problems that a company might encounter if it
were to conduct international transactions using electronic cash.
Although the costs of using e-cash for international transactions are less than using
other payment options, there is a chance that e-cash can be forged or used in a money
laundering scheme.
4. In about 100 words, explain what electronic wallets are and why they are useful.
E-wallets are a storage place for credit card and personal information. They are
useful in that they buyer does not have to reenter their information when they buy on
the Web.
5. In about 200 words, outline the advantages and disadvantages of a smart card
such as Mondex.
Responses may vary, but should include such advantages as acceptance of e-cash
from the users bank account and the ability to spend the e-cash with any vendor that
has a Mondex reader. Disadvantages include issues with theft (since the card holds
real cash) and no deferred payment is allowed.

1. Matt Remes has formed a small business and has just completed building an
electronic commerce Web site that sells subscriptions to special-interest
newsletters. The titles range from Apple Growers Digest to Wilderness
Backpacking Newsletter. Many organizations and individuals produce the
newsletters, and Matts role is to raise the visibility of these somewhat obscure
publications. The newsletters are published and available either biweekly or
monthly. Unlike traditional subscription services, Matts business has an
agreement from all newsletter publishers that he can sell subscriptions for single
issues or for periods of up to three years. He does not want to allow subscribers
to use their payment cards to purchase a subscription that is less than two years
in duration. But he finds that nearly 60 percent of the first-time customers on his
site prefer to order a sample issue before committing to a subscription of a year
or more. Discuss this case and present possible solutions to the problem. In
about 200 words, describe existing systems that Matt could use to provide his
subscribers with a simple system that does not depend on payment cards.
30
Offer a sample issue and a discount on a one year (or two year) subscription.
Set up PayPal accounts, realizing that even though he will have to pay a fee,
most people still prefer to pay with credit or debit cards.
Accept checks, money orders, or cashiers checks and offer discounts to those
who pay with this method.
2. Bonnie Carson has owned and managed her gift and card shop in the Central
Shopping Mall for three years. Business has been good, but Bonnie wanted to
expand her business. One year ago, she hired a Web designer and built a Web
site hosted by a national Internet service provider. Part of the monthly ISP fee
for her merchant site includes the software needed to process credit card
purchases. She has obtained a merchant account with a national credit card
processing company. Bonnies Web-based business is beginning to pick up. She
wants to provide more payment options to her customers. Write a report in
which you advise Bonnie on the use of payment processing services such as
PayPal. Identify at least three reasons that Bonnie should use such a service and
at least three reasons why she should not.
Answers will vary, but should consider the following as pros
PayPal will enable her to accept more payment options

More secure payments
Lower fees than standard credit cards
Answers will vary, but should consider the following as cons
More fees than checks or money orders

Must set up the PayPal account initially
Adds extra paperwork e-mails, etc.
31

3. Evan Moskowitz has formed an Internet training company called Teach-U-Comp
to market and sell computer courses online. The first courses the company will
offer online are introductions to computer programming languages, including
Visual Basic .NET, Java, and C++. Students can sign up for as many courses as
they want, and each course takes four weeks to complete. Each course costs $95,
and students receive continuing education units (CEUs) based on the duration of
the course and its level of difficulty. Evan is busy creating the online content and
installing the course delivery software, and he hired you to investigate the
feasibility of implementing an electronic wallet payment system in addition to
the sites existing credit card payment system. Investigate available electronic
wallet software, such as Microsoft Passport and Gator. You should also
review the current status of the electronic commerce modeling language (ECML).
Write a 400-word report of your findings for Evan. Conclude your report with
specific recommendations.
1.
2.
3.
4.
Costs associated with the different e-wallets

Ease of use
Standards (or lack of standards)
Customization (could Evan use the ECML to his own advantage to customize
the e-commerce project to his training company
Chapter 13
1. Name three benefit objectives that a business might decide to measure in an
electronic commerce business plan.
Responses may vary, but might include identifying new vendors, increasing sales in
existing markets, and opening new markets.
2. In two paragraphs, explain why some firms approved electronic commerce
projects without taking a close look at the return on investment numbers of
those projects.
Responses will vary, but might include a reference to wanting to position themselves
early in a new market to get the jump on the competition.
3. In one paragraph, explain why late outsourcing is seldom used in electronic
commerce projects.
Most e-commerce initiatives tend to lend themselves to early outsourcing, so most
projects do not use late outsourcing.
32
4. In fewer than 200 words, name and briefly describe four factors that a company
should evaluate when selecting an ISP, ASP, or CSP to provide Web hosting
services.
Responses may vary, but might include such factors as functionality, reliability,
security, and cost.
5. Why should the head of the business management function of an electronic
commerce initiative be an employee of the company implementing the project
even if most of the work is outsourced? Limit your answer to 250 words.
Reponses will vary, but should note that employees should be included since they
know the corporate structure and corporate objectives.

1. The Grover Cams Company manufactures cams and other components for diesel
engines. As Webmaster for Grover, you created an attractive Web site that
includes information about the companys history, its financial statements, and
digitized depictions of the companys main products. You have been talking
with your manager, chief information officer Tom Buckles, for several months
about adding electronic commerce features to the Web site that will allow your
smaller customers to order directly from Grover instead of through their local
distributors. Tom finally created a capital budget proposal for the Web site
expansion and submitted it to Grovers board of directors. The board always
calculates and evaluates a capital projects return on investment before
approving it. The board told Tom that the project did not provide a high enough
financial return to approve it. However, the board realized that electronic
commerce initiatives could be important to Grovers future strategic position in
the business; thus it is willing to consider nonmonetary factors as a basis for
approving the project. Tom would like to take the project back to the board next
month, but he does not have a good sense of what nonmonetary factors might
persuade the board to approve the project. He wants you to write a memo that
outlines some of those factors and explains why they are important to Grovers
future strategic position. In addition to considering the discussion in this chapter,
you may want to use the Online Companion and draw on resources at Business
Weeks e.biz, CIOs E-Business Research Center, Internet.coms
Electronic Commerce Guide, or ZDNets eBusiness Update as you prepare
your memo.
The value of early positioning in the marketplace

The biases of ROI in making IT and Web decisions
33
The short-term and long-term benefits of this project, since the short-term
benefits are more easily measured, but long-term benefits are generally not
included.
2. You are working for International Delicacies, which has become successful
selling unusual food and other gift items through its mail order catalog. Your
manager, Jagdish Singh, is interested in exploring electronic commerce options
for the company. He wants you to be a member of the internal team for the
project and has asked you to identify some potential ISPs, ASPs, or CSPs to
which the company could outsource the Web hosting portion of the project.
Since the project is at a very early stage, the team has not specified the exact
nature of the Web hosting function; however, the team would like to get an
estimate of the setup costs and monthly charges. Use The List,
HostCompare.com, or another directory of service providers to find three
providers in your area. Follow the directorys links to your chosen service
providers to learn more about them. Write a memo to Jagdish that summarizes
the services offered by each Web hosting service provider and compares the
costs charged by each for those services. Based on your research, evaluate each
service provider and recommend whether the team should further consider each
service provider as a potential outsourcing partner.
Consulting costs
Services included in the cost or available services
Hardware (can Jagdish rent space or will the pages be served in-house)
Bandwidth
Scalability
3. As manager of networks and computing operations for Fashion Land, a

retailer of womens clothing and accessories, you have seen the business grow
from seven stores in Kansas City to over 100 stores located throughout the
Midwest. Fashion Lands marketing research team has found that many
members of its target customer groupfemales between the ages of 15 and
35are becoming regular users of the Web. The researchers have asked you
for help in developing an electronic commerce initiative for Fashion Land.
Alone, or in a team assigned by your instructor, do the following:
Outline a business strategy for Fashion Lands electronic commerce initiative.
The outline should include a list of specific objectives and the costs and benefits
of accomplishing each objective. The outline should also include
recommendations regarding what to outsource, what Web hosting services will
be needed, and what staff should be hired.
34

Prepare a memo that lists and briefly describes the major hardware, software,
security, payment processing, advertising, international, legal, and ethics issues
that might arise in the development of this electronic commerce site.
Reponses may vary, but should include the following:
The objectives for the company

Choose a list of outsourcing companies and make cost comparisons.
Do an analysis of in-house hosting and compare those costs to having it
outsourced.
Research salaries on the Web for IT employees.
35

Solutions: Solutions To Review Questions

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Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

Identify a search engine

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

100 640 Kbps

300 Kbps Mbps

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

2. Bridgewater Engineering Company (BECO), a privately held machine shop,

3. Frieda Bannister is the IT manager for the State of Iowas Department of

Electronic Commerce, Fourth Edition

2. Describe two possible service-for-fee offerings that might become available on

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Responses may vary, but should include an acknowledgement of different

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

2. In a paragraph, describe the advantages of a flat-rate telecommunications access

Electronic Commerce, Fourth Edition

4. Define product disparagement. In two or three paragraphs, describe a situation

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

4. In one paragraph, outline the main differences between a desktop PC and a

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

Price and any discount

Electronic Commerce, Fourth Edition

Costs: initial setup fee, monthly fee, and transaction fees

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

1. Brought Back Bugs is a used Volkswagen dealer in Lincoln, Nebraska. The

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

What type of identification is required?

3. Your colleague, Andrea Flemington, is responsible for security of your

Electronic Commerce, Fourth Edition

RC4 with MD5

December 13, 2001

Responses should include some of the following:

Electronic Commerce, Fourth Edition

Suggested Solutions to Exercises

Electronic Commerce, Fourth Edition

PayPal will enable her to accept more payment options

Answers will vary, but should consider the following as cons