Electronic Commerce 2012, 7e (Turban)

Chapter 4 B2B E-Commerce

4.1 True/False
1) B2B e-commerce refers to transactions between businesses that are conducted electronically
over the public Internet only.
Answer: FALSE
Diff: 1 Page Ref: 147
2) The availability of a secure broadband Internet platform is one of the key drivers of B2B EC.
Answer: TRUE
Diff: 1 Page Ref: 147
3) B2B EC marketplaces that involve one seller selling to many buyers is called an exchange.
Answer: FALSE
Diff: 1 Page Ref: 147
4) In one-to-many and many-to-one marketplaces, if all selling is done by one company, it is a
buy-side market.
Answer: FALSE
Diff: 2 Page Ref: 147
5) In company-centric marketplaces, the individual company has very little control over who
participates in selling or buying transactions.
Answer: FALSE
Diff: 2 Page Ref: 147
6) E-marketplace exchanges are usually owned and run by a third party or by a consortium.
Answer: TRUE
Diff: 2 Page Ref: 147
7) Market forecasters estimate that by 2012 the global B2B market, both online and offline,
could reach $1 trillion.
Answer: FALSE
Diff: 2 Page Ref: 148
8) Businesses deal with other businesses for purposes beyond just selling or buying. One
example is that of collaborative commerce, which includes communication, design, planning,
and information sharing among business partners.
Answer: TRUE
Diff: 2 Page Ref: 148
9) Intermediaries in B2B commerce that broker transactions between buyers and sellers are thirdparties that are either virtual or brick-and-mortar.
Answer: TRUE
Diff: 2 Page Ref: 149
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10) Spot buying refers to the purchasing of goods and services according to a schedule, usually
at prevailing market prices that are determined by supply and demand.
Answer: FALSE
Diff: 2 Page Ref: 149
11) Stock exchanges and commodity exchanges (such as oil and sugar) are examples of spot
buying.
Answer: TRUE
Diff: 1 Page Ref: 149
12) Strategic sourcing refers to purchasing involving long-term contracts that usually are based
on private negotiations between sellers and buyers.
Answer: TRUE
Diff: 2 Page Ref: 149
13) Computers and communication devices are two examples of direct materials for a food
processing company.
Answer: FALSE
Diff: 2 Page Ref: 150
14) MRO, which stands for "maintenance, repair, and operation," refers to the indirect materials
used in activities that support production.
Answer: TRUE
Diff: 2 Page Ref: 150
15) Horizontal marketplaces are markets that concentrate on a service, material, or a product that
is used in all types of industries.
Answer: TRUE
Diff: 2 Page Ref: 150
16) Maverick buying refers to the planning, organizing, and coordinating of all the activities
pertaining to the purchasing of the goods and services necessary to accomplish the mission of an
enterprise.
Answer: FALSE
Diff: 2 Page Ref: 162
17) Reverse auctions are one method of electronic procurement that is very popular with public
organizations where tendering is usually mandatory.
Answer: TRUE
Diff: 3 Page Ref: 167
18) Aggregating the catalogs of all approved suppliers and combining them into a single
electronic catalog is an effective solution for internal procurement because it minimizes
maverick buying.
Answer: TRUE
Diff: 3 Page Ref: 169
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19) Caltex, a multinational oil company, reduced the number of its suppliers from over 3,000 to
800 by implementing a central catalog for internal purchasing, lowering the per unit prices.
Answer: TRUE
Diff: 3 Page Ref: 169
20) Exchanges can be vertical or horizontal.
Answer: TRUE
Diff: 1 Page Ref: 172
21) By law, exchanges cannot be owned by a consortium.
Answer: FALSE
Diff: 3 Page Ref: 174
22) Anonymity is a key ingredient of dynamic pricing.
Answer: TRUE
Diff: 2 Page Ref: 175
23) A vertical portal is an exchange formed and operated by a group of major companies in an
industry to provide industry-wide transaction services.
Answer: FALSE
Diff: 3 Page Ref: 175
24) Dynamic pricing is the rapid movement of prices over time and possibly across customers, as
a result of supply and demand matching.
Answer: TRUE
Diff: 1 Page Ref: 175
25) Loss of customer service quality is a potential risk for buyers in B2B exchanges.
Answer: TRUE
Diff: 2 Page Ref: 176
26) Potential gains for sellers in B2B exchanges include less maverick buying.
Answer: FALSE
Diff: 3 Page Ref: 176
27) Corporate portals are major gateways through which employees, business partners, and the
public can enter a corporate website.
Answer: TRUE
Diff: 2 Page Ref: 177
28) Executive and supervisor portals are used for training, dissemination of company news,
information, and discussion groups.
Answer: FALSE
Diff: 3 Page Ref: 179

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29) Mobile portals are accessible via mobile devices.

Answer: TRUE
Diff: 1 Page Ref: 179
30) Alibaba.com requires buyers to pay for sourcing.
Answer: FALSE
Diff: 3 Page Ref: 181
31) Creating brand awareness is an advantage of B2B social networking.
Answer: TRUE
Diff: 2 Page Ref: 182-183
32) Social networks are used extensively in the B2B marketplace.
Answer: FALSE
Diff: 3 Page Ref: 183
33) Google's OpenSocial is a programming standard that lets developers create applications that
can run on a wide range of social networking platforms, which may increase B2B social
networking.
Answer: TRUE
Diff: 2 Page Ref: 185
34) The marketing and advertising processes used for B2B and B2C are remarkably similar.
Answer: FALSE
Diff: 2 Page Ref: 186
35) Affiliate programs, infomediaries, and online data and text mining services are three popular
B2B marketing and advertising methods.
Answer: TRUE
Diff: 1 Page Ref: 187

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4.2 Multiple Choice

1) Key business drivers for B2B include each of the following except
A) the availability of a secure broadband Internet platform.
B) the ability to reduce delays.
C) the willingness of companies to incur higher costs to improve collaboration.
D) the need for collaborations between suppliers and buyers.
Answer: C
Diff: 1 Page Ref: 147
AACSB: Use of information technology
2) E-commerce that focuses on a single company's buying needs or selling needs best defines
A) computer exchange.
B) business-to-business e-commerce.
C) private marketplace.
D) company-centric EC.
Answer: D
Diff: 2 Page Ref: 147
3) Many-to-many e-marketplaces, usually owned and run by a third party or a consortium, in
which many buyers and many sellers meet electronically to trade with each other best describes
A) exchanges.
B) public market.
C) company-centric EC.
D) spot purchases.
Answer: A
Diff: 1 Page Ref: 147
4) B2B transactions that involve communication, design, planning, information sharing, and
activities beyond financial transactions among business partners defines
A) exchanges.
B) collaborative commerce.
C) trading communities.
D) public marketplaces.
Answer: B
Diff: 3 Page Ref: 148
AACSB: Use of information technology
5) An online third party that brokers a transaction online between a buyer and a seller best
describes
A) strategic source.
B) horizontal marketplace.
C) vertical marketplace.
D) online intermediary.
Answer: D
Diff: 2 Page Ref: 149
AACSB: Use of information technology
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6) Types of B2B transactions include

A) strategic sourcing.
B) randomized buying.
C) intermediation.
D) reverse purchasing.
Answer: A
Diff: 2 Page Ref: 149
7) The purchase of goods and services as they are needed, usually at prevailing market prices,
best defines
A) direct materials.
B) consolidation.
C) spot buying.
D) strategic sourcing.
Answer: C
Diff: 2 Page Ref: 149
AACSB: Use of information technology
8) Purchases of goods and services based on long-term contracts best defines
A) direct materials.
B) consolidation.
C) spot buying.
D) strategic sourcing.
Answer: D
Diff: 2 Page Ref: 149
AACSB: Use of information technology
9) Which of the following can be supported more effectively and efficiently through direct
buyer-seller negotiations?
A) strategic sourcing
B) spot buying
C) B2C e-commerce
D) MRO
Answer: A
Diff: 2 Page Ref: 150
AACSB: Use of information technology
10) Materials used in the production of a product best defines
A) indirect materials.
B) direct materials.
C) MRO materials.
D) production materials.
Answer: B
Diff: 2 Page Ref: 150

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11) Two types of materials and supplies that are traded in B2B are
A) digital and physical.
B) direct and indirect.
C) horizontal and vertical.
D) commodities and nonproduction.
Answer: B
Diff: 1 Page Ref: 150
AACSB: Use of information technology
12) Materials used to support production are called
A) indirect materials.
B) operational materials.
C) direct materials.
D) virtual materials.
Answer: A
Diff: 2 Page Ref: 150
AACSB: Use of information technology
13) The major B2B service industries include each of the following except
A) travel and hospitality services.
B) financial services.
C) banking and online financing.
D) retail.
Answer: D
Diff: 2 Page Ref: 151-152
AACSB: Use of information technology
14) Which of the following is not one of the major benefits of B2B for both buyers and sellers?
A) expedites processing and reduces cycle time
B) reduces procurement costs
C) enables customized online catalogs with different prices for different customers
D) increases opportunities for collaboration
Answer: B
Diff: 3 Page Ref: 153
AACSB: Use of information technology
15) A business strategy that focuses on providing comprehensive quality service to business
partners best defines
A) customer relationship management.
B) supplier relationship management.
C) partner relationship management.
D) supply chain management.
Answer: C
Diff: 3 Page Ref: 153

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16) A comprehensive approach to managing an enterprise's interactions with the organizations

that supply the goods and services it uses best defines
A) customer relationship management.
B) supply chain management.
C) partnership relationship management.
D) supplier relationship management.
Answer: D
Diff: 3 Page Ref: 153
17) All are benefits of B2B except
A) creates new sales or purchase opportunities.
B) eliminates paper and reduces administrative costs.
C) increases channel conflict.
D) lowers search costs and time for buyers to find products and vendors.
Answer: C
Diff: 1 Page Ref: 153
AACSB: Use of information technology
18) A Web-based marketplace in which one company sells to many business buyers from ecatalogs or auctions, frequently over an extranet, describes
A) sell-side e-commerce.
B) single-side e-commerce.
C) buy-side e-commerce.
D) reflective e-commerce.
Answer: A
Diff: 1 Page Ref: 154
AACSB: Use of information technology
19) Several benefits of Microsoft's ________ are that distributors can check inventory, make
transactions, and look up the status of their orders, significantly reducing the number of phone
calls, e-mails, and incorrect product shipments.
A) extranet-based order-entry tool
B) electronic data interchange
C) customized catalog
D) auto-responder
Answer: A
Diff: 3 Page Ref: 155
AACSB: Use of information technology

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20) High-quality bicycle manufacturer Gregg's Cycles does not sell its products online, nor do
they allow their bicycles to be sold online by others. By not selling online, Gregg's Cycles avoids
________ with its dealers and the independent bike shops that sell its bikes.
A) pricing conflict
B) channel conflict
C) multichannel distribution
D) disintermediation
Answer: B
Diff: 2 Page Ref: 155
AACSB: Use of information technology
21) Benefits of using a third-party hosting company for conducting B2B auctions instead of
developing an auction site in-house include all of the following except
A) no hiring costs.
B) no redeployment of corporate resources.
C) time-to-market of several weeks.
D) no need for additional resources such as hardware, bandwidth, or IT personnel.
Answer: C
Diff: 3 Page Ref: 160
AACSB: Use of information technology
22) Companies use ________ to sell their unneeded assets for quick disposal or to dispose of
excess, obsolete, and returned products.
A) private auctions
B) liquidation
C) reverse auctions
D) forward auctions
Answer: D
Diff: 2 Page Ref: 160
AACSB: Use of information technology
23) A characteristic that describes customer loyalty to a site that eventually results in higher
revenue best defines
A) retention.
B) acquisition.
C) stickiness.
D) attachment.
Answer: C
Diff: 2 Page Ref: 160

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24) A corporate-based acquisition site that uses reverse auctions, negotiations, group purchasing,
or any other e-procurement method best defines
A) desktop procurement method.
B) buy-side e-marketplace.
C) intermediary.
D) aggregated catalog.
Answer: B
Diff: 3 Page Ref: 162
AACSB: Use of information technology
25) The planning, organizing, and coordinating of all the activities relating to purchasing goods
and services needed to accomplish the organization's mission best defines
A) buy-side e-marketplace.
B) supply chain management.
C) procurement management.
D) customer relationship management.
Answer: C
Diff: 2 Page Ref: 162
26) Unplanned purchases of items needed quickly, often at non-prenegotiated higher prices, best
defines
A) impulse purchases.
B) free market.
C) MRO purchasing.
D) maverick buying.
Answer: D
Diff: 2 Page Ref: 162
27) Major procurement methods include
A) buying at an exchange or industrial mall.
B) buying at private or public auction sites in which the organization participates as one of the
buyers.
C) buying directly from manufacturers, wholesalers, or retailers from their catalogs, and possibly
by negotiation.
D) all of the above.
Answer: D
Diff: 1 Page Ref: 163
28) The electronic acquisition of goods and services for organizations via the Internet or private
network best defines
A) e-procurement.
B) spot buying.
C) resource acquisition.
D) MRO planning.
Answer: A
Diff: 1 Page Ref: 163
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29) Using Internet technology to buy goods and services from a number of known or unknown
suppliers best defines
A) e-reverse auctioning.
B) e-tendering.
C) e-sourcing.
D) e-informing.
Answer: A
Diff: 2 Page Ref: 165
30) Types of e-procurement include
A) E-MRO.
B) E-market sites.
C) E-informing.
D) all of the above.
Answer: D
Diff: 1 Page Ref: 165-166
31) Gathering and distributing purchasing information both from and to internal and external
parties using Internet technology best defines
A) e-tendering.
B) e-informing.
C) e-sourcing.
D) e-MRO.
Answer: B
Diff: 2 Page Ref: 166
32) E-procurement benefits include each of the following except
A) reducing the number of suppliers.
B) ensuring delivery on time, every time.
C) ease of internal and external integration.
D) improving information flow and management.
Answer: C
Diff: 3 Page Ref: 166
33) E-procurement limitations and challenges include each of the following except
A) the technology needs to be updated frequently.
B) the system may be too complex.
C) the cost may be too high.
D) the ease of getting suppliers to cooperate electronically.
Answer: D
Diff: 3 Page Ref: 167

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34) Which of the following is the unplanned, emergency-type buying where buyers usually pay
more?
A) maverick buying
B) spot buying
C) impulse purchasing
D) extreme purchasing
Answer: A
Diff: 2 Page Ref: 169
35) Advantages of using internal catalogs include
A) decreasing the number of suppliers.
B) easy financial controls.
C) using search engines to look through internal catalogs.
D) all of the above.
Answer: D
Diff: 1 Page Ref: 169
36) The aggregated catalogs of all approved suppliers combined into a single internal electronic
catalog defines
A) bartering exchange.
B) buy-side e-marketplace.
C) sell-side e-marketplace.
D) internal procurement marketplace.
Answer: D
Diff: 3 Page Ref: 169
AACSB: Use of information technology
37) An example of a successful aggregation of suppliers' catalogs is that of ________, which
aggregates more than 10,000 items from the catalogs of approved suppliers into an internal
electronic catalog.
A) MasterCard International
B) Amazon.com
C) Google
D) Priceline.com
Answer: A
Diff: 2 Page Ref: 169
AACSB: Use of information technology
38) Direct purchasing from internal marketplaces without the approval of supervisors and
without the intervention of a procurement department best defines
A) spot buying.
B) desktop purchasing.
C) maverick buying.
D) renegade purchasing.
Answer: B
Diff: 2 Page Ref: 170
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39) With a bartering exchange, a company submits its surplus to the exchange and receives
A) points of credit, which the company can then use to buy items that it needs.
B) an equivalent amount of products or services.
C) interest payments until it buys something from the exchange.
D) cash minus a small commission for services.
Answer: A
Diff: 2 Page Ref: 171
AACSB: Use of information technology
40) B2B portals that focus on a single industry or industry segment best describes
A) local portals.
B) information portals.
C) vortals.
D) collaborative portals.
Answer: C
Diff: 3 Page Ref: 176
41) Portals that store data and enable users to navigate and query these data are
A) collaborative portals.
B) information portals.
C) mobile portals.
D) MRO portals.
Answer: B
Diff: 2 Page Ref: 179
42) The main uses of social networks include
A) reducing the number of suppliers.
B) encouraging maverick purchases.
C) learning useful business intelligence.
D) driving traffic to online Web properties.
Answer: C
Diff: 2 Page Ref: 184
43) Which of the following companies uses viral videos to promote renewals of Care Pack
Service agreements?
A) Reed Business Information
B) Cisco Systems
C) Arketi Group
D) Hewlett-Packard
Answer: D
Diff: 2 Page Ref: 184

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44) Marketing by manufacturers and wholesalers along the sell-side of the supply chain best
defines
A) B2C marketing.
B) B2B marketing.
C) M2W marketing.
D) M2B purchasing.
Answer: B
Diff: 2 Page Ref: 185
45) Denver Boards, a B2B manufacturer of snowboard equipment, can reach and target new
retail customers in order to grow its online business by
A) hiring an affiliation service to drive traffic to its Web site.
B) reviewing POS data.
C) mining data.
D) advertising in traditional media.
Answer: A
Diff: 3 Page Ref: 187
4.3 Essay
1) List and briefly describe the four basic types of B2B transactions and activities.
Answer: The four basic types of B2B transactions and activities are sell-side, buy-side,
exchanges, and supply chain improvements and collaborative commerce. While sell-side refers
to one seller to many buyers, buy-side refers to one buyer from many sellers. Exchanges involve
many sellers to many buyers. Supply chain improvements and collaborative commerce refers to
activities, other than buying or selling, among business partners, such as supply chain
improvements, communication, collaboration, and information sharing for joint design and
planning.
Diff: 1 Page Ref: 147-148
2) List five major benefits of B2B for buyers or sellers or both.
Answer: Major benefits of B2B for buyers, sellers, or both include (1) creating new sales or
purchase opportunities; (2) eliminating paper and reducing administrative costs; (3) expediting
processing and reducing cycle time; (4) lowering search costs and time for buyers to find
products and vendors; (5) increasing productivity of employees dealing with buying and/or
selling; (6) reducing errors and improving quality of services; (7) making product configuration
easier; (8) reducing marketing and sales costs for sellers; (9) reducing inventory levels and costs;
(10) enabling customized online catalogs with different prices for different customers; (11)
increasing production flexibility, permitting just-in-time delivery; (12) reducing procurement
costs for buyers; (13) facilitating customization via configuration; (14) providing for efficient
customer service; and (15) increasing opportunities for collaboration.
Diff: 2 Page Ref: 153

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3) Identify five of the seven types of e-procurement.

Answer: E-sourcing, e-tendering, e-reverse auctioning, e-informing, web-based ERP, e-market
sites, and e-MRO are seven types of e-procurement.
Diff: 2 Page Ref: 165-166
4) What are the three major functions of exchanges?
Answer: The three major functions of exchanges are matching buyers and sellers, facilitating
transactions, and maintaining exchange policies and infrastructure.
Diff: 1 Page Ref: 173
5) List five generic types of portals.
Answer: The five generic types of portals are portals for suppliers and other partners, customer
portals, employee portals, executive and supervisor portals, and mobile portals.
Diff: 1 Page Ref: 178-179

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