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Management Information Systems, Cdn. 6e (Laudon et al.

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Chapter 10 E-Commerce: Digital Markets and Digital Goods

1) E-commerce is ubiquitous, meaning that is it available just about everywhere, at all times.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

2) Marketspace is a marketplace extended beyond traditional boundaries and removed from a temporal
and geographic location.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

3) The first wave of e-commerce transformed the business world of books, music, and air travel.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 315
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

4) In the second wave of e-commerce, nine new industries are facing a similar transformation scenario:
advertising, telephones, movies, television, jewellery, real estate, hotels, bill payments, and software.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

5) From a consumer point of view, ubiquity reduces transaction coststhe costs of participating in a
market.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

6) The universal technical standards of the Internet and e-commerce greatly increase market entry costs
the cost merchants must pay simply to bring their goods to market.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

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2013 Pearson Canada Inc.
7) Information richness refers to the complexity and cost of a message.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

8) The Internet and the Web vastly decrease information densitythe total amount and quality of
information available to all market participants, consumers, and merchants alike.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

9) Cost transparency refers to the ability of consumers to discover the actual costs merchants pay for
products.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

10) Price transparency refers to the ability of consumers to discover the actual costs merchants pay for
products.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

11) Price discrimination is selling the same goods, or nearly the same goods, to different targeted groups
at similar prices.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

12) E-commerce technologies permit personalization.


Answer: TRUE
Diff: 2 Type: TF Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

2
2013 Pearson Canada Inc.
13) The technology also permits customization is changing the delivered product or service based on a
user's preferences or prior behaviour.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

14) In dynamic pricing, the price of a product varies depending on the demand characteristics of the
customer or the supply situation of the seller.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

15) Digital goods are goods that can be delivered over a digital network.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 320
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

16) Newspapers and magazines are losing readers to the Internet and losing advertisers.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 320
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

17) Banner ads automatically open up when a user accesses a specific Web site, and the user must click
the ad to make it disappear.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 330
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

18) Social networking is so appealing that it has inspired a new type of e-commerce experience called
m-commerce.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 315
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

3
2013 Pearson Canada Inc.
19) Social networking is the practice of expanding the number of one's business or social contacts by
making connections through individuals.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 315
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

20) Pure-play business models are based purely on the Internet.


Answer: TRUE
Diff: 2 Type: TF Page Ref: 315
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

21) Many existing retail firms, such as Canadian Tire, Office Depot, The Bay, and the National Post
have developed Web sites as extensions of their traditional bricks-and-mortar businesses, these
businesses represent a hybrid clicks-and-mortar business model.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 322
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

22) Business-to-Business (B2B) electronic commerce involves retailing products and services to
individual shoppers.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

23) Business-to-business (B2B) electronic commerce involves sales of goods and services among
businesses. ChemConnect's Web site for buying and selling natural gas liquids, refined and intermediate
fuels, chemicals, and plastics is an example of B2B e-commerce.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

24) Consumer-to-consumer (C2C) electronic commerce involves consumers selling directly to


consumers. For example, eBay, the giant Web auction site, enables individuals to sell their goods to
other consumers by auctioning the merchandise to the highest bidder.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

4
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25) Clickstream tracking tools collect data on customer activities at Web sites and store them in a log.
The tools record the site that users visited prior to coming to a particular Web site and where these users
go when they leave that site.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 331
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

26) Record label companies are gaining sales to Internet piracy, and record stores are doing brisk
business.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 320
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

27) E-commerce refers to the use of any networking technologies to transact business.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 313
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

28) The Internet shrinks information asymmetry.


Answer: TRUE
Diff: 2 Type: TF Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

29) Information asymmetry exists when one party in a transaction has more information for the
transaction than the other party.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

30) All previous mass media in modern history, including the printing press, use a broadcast model
where content is created in a central location by experts.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

5
2013 Pearson Canada Inc.
31) Disintermediation provides major benefits to the distributor.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 319
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.1 Electronic Commerce And The Internet

32) In general, for digital goods, the marginal cost of producing another unit is about zero.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 320
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

33) An information broker provides product, pricing, and availability information to individuals and
businesses and generates revenue from advertising or from directing buyers to sellers.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 323
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

34) A banner ad opens a new window automatically and does not disappear until the user clicks on it.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 330
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

35) Podcasting allows subscribers to listen to live, streaming radio and other audio content.
Answer: FALSE
Diff: 1 Type: TF Page Ref: 323
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

36) Web sites can gather bountiful detailed information about customer behaviour and demographics.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 331
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

37) Companies rarely use Web pages to analyze customer information.


Answer: FALSE
Diff: 1 Type: TF Page Ref: 331
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

6
2013 Pearson Canada Inc.
38) Amazon.com uses Web personalization as a major marketing tool.
Answer: TRUE
Diff: 3 Type: TF Page Ref: 331
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

39) EDI standards that take advantage of network communications have yet to be fully implemented at
the industry level.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 333
AACSB: Use of information technology
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

40) Some Net marketplaces support contractual purchasing based on long-term relationships with
designated suppliers.
Answer: TRUE
Diff: 3 Type: TF Page Ref: 334
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

41) Exchanges proliferated during the early years of e-commerce, but many have failed, in part because
they encouraged competitive bidding that drove prices down.
Answer: FALSE
Diff: 3 Type: TF Page Ref: 335
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

42) Automobile manufacturing is an example of a vertical market.


Answer: TRUE
Diff: 2 Type: TF Page Ref: 334
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

43) Building a successful e-commerce site requires a keen understanding of business, technology, and
social issues, as well as a systematic approach.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 338
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.4 Building an E-commere Web Site

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44) If you have some experience with computers, you might decide to build the site yourself.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 339
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.4 Building an E-commere Web Site

45) Unless you are fairly skilled, you should use a pre-built template to create the Web site.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 339
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.4 Building an E-commere Web Site

46) Most businesses choose to outsource hosting and pay a company to host their Web site, which means
that the hosting company is responsible for ensuring the site is "live," or accessible, 24 hours a day.
Answer: TRUE
Diff: 2 Type: TF Page Ref: 340
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.4 Building an E-commere Web Site

47) With a self-host agreement, your firm purchases or leases a Web server (and has total control over its
operation) but locates the server in a vendor's physical facility.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 340
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.4 Building an E-commere Web Site

48) Simple Web sites cannot be developed and hosted with a first-year cost of $5000 or less.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 340
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.4 Building an E-commere Web Site

49) The Web sites of large firms with high levels of interactivity and linkage to corporate systems cost
several thousand dollars a year to create and operate.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 340
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.4 Building an E-commere Web Site

8
2013 Pearson Canada Inc.
50) Mobile e-commerce is the slowest-growing type of B2C e-commerce, but it represented only a small
part of all e-commerce in 2010.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 336
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

51) In 2010, shoppers ordered about $2.1 billion in physical goods from Web sites via desktops (over $1
billion of that at Amazon alone).
Answer: FALSE
Diff: 2 Type: TF Page Ref: 337
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

52) Banks and credit card companies are rolling out services that let customers manage their accounts
from their legacy devices.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 337
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

53) Myspace is the leader in social networking; it has waged a constant struggle to develop viable
methods of generating revenue.
Answer: FALSE
Diff: 2 Type: TF Page Ref: 328
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

54) Information ________ refers to the complexity and content of a message.


A) richness
B) interactivity
C) ubiquity
D) global reach
Answer: A
Diff: 2 Type: MC Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

9
2013 Pearson Canada Inc.
55) Internet/Web technology is available everywhere: at work, at home, and elsewhere via mobile
devices, anytime. This best describes ________.
A) social technology
B) interactivity
C) ubiquity
D) global reach
Answer: C
Diff: 2 Type: MC Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

56) The marketspace includes, potentially, billions of consumers and millions of businesses worldwide.
This best describes ________.
A) social technology
B) interactivity
C) ubiquity
D) global reach
Answer: D
Diff: 2 Type: MC Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

57) New Internet social and business models enable user content creation and distribution, and support
social networks. This best describes ________.
A) social technology
B) interactivity
C) ubiquity
D) global reach
Answer: A
Diff: 2 Type: MC Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

58) Consumers are engaged in a dialogue that dynamically adjusts the experience to the individual and
makes the consumer a co-participant in the process of delivering goods to the market. This best
describes ________.
A) social technology
B) interactivity
C) ubiquity
D) global reach
Answer: B
Diff: 2 Type: MC Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

10
2013 Pearson Canada Inc.
59) The technology allows personalized messages to be delivered to individuals as well as groups. This
best describes ________.
A) social technology
B) personalization/customization
C) ubiquity
D) global reach
Answer: B
Diff: 2 Type: MC Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

60) Babydads.com is an e-commerce business that creates revenue by providing digital content, such as
digital news, music, photos, and video, over the Web. The customer pays to access the content. Revenue
is also generated by selling advertising space. Which business model best describes the way this
business participates in e-commerce?
A) service provider
B) content provider
C) online marketplace
D) social network
Answer: B
Diff: 2 Type: MC Page Ref: 322
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

61) Bigideas.com is an e-commerce business that creates revenue by providing Web 2.0 applications
such as photo sharing, video sharing, and user-generated content as services. They use a subscription
revenue model. Which business model best describes the way this business participates in e-commerce?
A) service provider
B) content provider
C) online marketplace
D) social network
Answer: A
Diff: 3 Type: MC Page Ref: 322
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

11
2013 Pearson Canada Inc.
62) AuctionsRus.ca is an e-commerce business that creates revenue by providing a digital environment
where buyers and sellers can meet, search for products, display products, and establish prices for those
products. Customers can complete the transaction on the site and AuctionsRus take a small percentage of
the selling price. Which business model best describes the way this business participates in e-commerce?
A) service provider
B) content provider
C) online marketplace
D) social network
Answer: C
Diff: 2 Type: MC Page Ref: 322
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

63) www.jobs-r-us.net is an e-commerce business that creates revenue by providing an online meeting
place where people with similar interests can communicate and find useful information about
employment. They create revenue through advertising. Which business model best describes the way
this business participates in e-commerce?
A) service provider
B) content provider
C) online marketplace
D) social network
Answer: D
Diff: 2 Type: MC Page Ref: 323
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.1 Electronic Commerce And The Internet

64) TextbooksRus.com is an e-commerce business that creates revenue by selling technical manuals and
books online. Their customers are people from technical fields who shop there because of the
specialization of TextbooksRus. Which business model best describes the way this business participates
in e-commerce?
A) playpure
B) bricks and clicks
C) clicks-and-mortar
D) pureplay
Answer: D
Diff: 3 Type: MC Page Ref: 313
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.1 Electronic Commerce And The Internet

12
2013 Pearson Canada Inc.
65) Doug's Sports is a retail sports store. They have a 6000 sq. ft. store located in Lethbridge. They also
market their goods through their Web site and distribute products around Canada. Which business model
best describes the way this business participates in e-commerce?
A) playpure
B) bricks and clicks
C) clicks-and-mortar
D) pureplay
Answer: C
Diff: 2 Type: MC Page Ref: 322
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

66) TextbooksRus.com is an e-commerce business that creates revenue by selling technical manuals and
books online. Their customers are people from technical fields who shop there because of the
specialization of TextnooksRus. What major electronic commerce category best describes this scenario?
A) consumer-to-consumer (C2C) electronic commerce
B) business-to-government (B2G) electronic commerce
C) business-to-business (B2B) electronic commerce
D) business-to-consumer (B2C) electronic commerce
Answer: D
Diff: 2 Type: MC Page Ref: 321
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

67) Jay's Diamonds Inc. distributes diamonds around the world by using the Internet and a very neatly
designed Web site. They refer to themselves as the jewellers' jeweller. Their customers buy diamonds in
bulk and then sell the diamonds to local customers one at a time. What major electronic commerce
category best describes this scenario?
A) consumer-to-consumer (C2C) electronic commerce
B) business-to-government (B2G) electronic commerce
C) business-to-business (B2B) electronic commerce
D) business-to-consumer (B2C) electronic commerce
Answer: C
Diff: 2 Type: MC Page Ref: 321
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

13
2013 Pearson Canada Inc.
68) Hockey fans gather at the site nhl-cards.com. Here collectors and fans are able to buy and sell
hockey cards with each other. What major electronic commerce category best describes this scenario?
A) consumer-to-consumer (C2C) electronic commerce
B) business-to-government (B2G) electronic commerce
C) business-to-business (B2B) electronic commerce
D) business-to-consumer (B2C) electronic commerce
Answer: A
Diff: 2 Type: MC Page Ref: 321
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

69) Since the dot-com bubble burst of 2001, e-commerce revenues:


A) have essentially stagnated.
B) show signs of stabilizing.
C) have returned to solid growth.
D) have returned to exponential growth.
Answer: C
Diff: 2 Type: MC Page Ref: 314
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

70) Based on your reading of the chapter, e-commerce is


A) still in a revolutionary phase.
B) widely accepted by consumers, although technology is still quickly changing.
C) not yet fully accepted by consumers, although much of its driving technology is firmly in place.
D) well entrenched as a form of modern commerce.
Answer: A
Diff: 2 Type: MC Page Ref: 315
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.1 Electronic Commerce And The Internet

71) The quality of ubiquity, as it relates to e-commerce, is illustrated by


A) the same set of standards being used across the globe.
B) plentiful, cheap information.
C) the enabling of commerce worldwide.
D) the availability of Internet technology everywhere and anytime.
Answer: D
Diff: 2 Type: MC Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

14
2013 Pearson Canada Inc.
72) A marketplace extended beyond traditional boundaries and removed from a temporal and geographic
location is called a(n)
A) exchange.
B) marketspace.
C) online marketplace.
D) e-hub.
Answer: B
Diff: 2 Type: MC Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

73) How is the Internet and e-commerce causing severe disruption to the existing advertising business
model?
A) Ties between customer and businesses are being rethought.
B) Technology players such as Yahoo! seek to dominate online advertising.
C) New methods of advertising, such as blog advertising, are emerging.
D) The market entry costs for online advertising services are extremely low.
Answer: B
Diff: 3 Type: MC Page Ref: 315
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.1 Electronic Commerce And The Internet

74) The act of engaging consumers in a dialog that dynamically adjusts the experience to the individual
describes which dimension of e-commerce technology?
A) ubiquity
B) personalization/customization
C) richness
D) interactivity
Answer: D
Diff: 2 Type: MC Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

75) The integration of video, audio, and text marketing messages into a single marketing message and
consumer experience describes which dimension of e-commerce technology?
A) ubiquity
B) personalization/customization
C) richness
D) interactivity
Answer: C
Diff: 2 Type: MC Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

15
2013 Pearson Canada Inc.
76) The effort required to locate a suitable product is called
A) price discrimination.
B) search costs.
C) menu costs.
D) transparency costs.
Answer: B
Diff: 2 Type: MC Page Ref: 319
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

77) The lowered costs of information storage, processing, and communication, along with the
improvement of data quality has resulted in which unique quality of e-commerce?
A) information density
B) richness
C) customization
D) interactivity
Answer: A
Diff: 2 Type: MC Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

78) Information density refers to the


A) richnesscomplexity and contentof a message.
B) total amount and quantity of information delivered to consumers by merchants.
C) total amount and quantity of information available to all market participants.
D) amount of information available to reduce price transparency.
Answer: C
Diff: 2 Type: MC Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

79) Selling the same goods to different targeted groups at different prices is called price ________.
A) customization
B) opacity
C) gouging
D) discrimination
Answer: D
Diff: 1 Type: MC Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

16
2013 Pearson Canada Inc.
80) Information ________ exists when one party in a transaction has more information that is important
for the transaction than the other party.
A) transparency
B) asymmetry
C) complexity
D) imbalance
Answer: B
Diff: 1 Type: MC Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

81) The cost to a merchant of changing the price of a product is called a ________ cost.
A) pricing
B) dynamic pricing
C) menu
D) switching
Answer: C
Diff: 2 Type: MC Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

82) Varying a product's price according to the supply situation of the seller is called ________ pricing.
A) menu
B) flexible
C) dynamic
D) asymmetric
Answer: C
Diff: 2 Type: MC Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

83) Compared to digital markets, traditional markets have


A) lower search costs.
B) stronger network effects.
C) higher delayed gratification effects.
D) higher transaction costs.
Answer: D
Diff: 3 Type: MC Page Ref: 319
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

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2013 Pearson Canada Inc.
84) Reducing the business process layers in a distribution channel is called
A) disintermediation.
B) BPR.
C) market segmentation.
D) network effects.
Answer: A
Diff: 2 Type: MC Page Ref: 319
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

85) Digital goods are goods that are


A) produced digitally.
B) sold over digital networks.
C) delivered digitally.
D) used with digital equipment.
Answer: C
Diff: 2 Type: MC Page Ref: 320
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

86) Compared to traditional goods, digital goods have


A) greater pricing flexibility.
B) lower marketing costs.
C) higher production costs.
D) higher inventory costs.
Answer: A
Diff: 3 Type: MC Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

87) Compared to traditional markets, digital markets have


A) lower distributed delivery costs.
B) higher marginal costs per unit.
C) equivalent copying costs.
D) similar inventory costs.
Answer: A
Diff: 3 Type: MC Page Ref: 319
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

18
2013 Pearson Canada Inc.
88) Which of the following Internet business models does Amazon.com use?
A) information broker
B) transaction broker
C) online service provider
D) virtual storefront
Answer: D
Diff: 2 Type: MC Page Ref: 322
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

89) Which of the following businesses utilizes the content provider Internet business model?
A) Amazon.com
B) eBay.com
C) theglobeandmail.com
D) Motocross.com
Answer: C
Diff: 2 Type: MC Page Ref: 322
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

90) Transaction brokers


A) generate revenue from advertising or from directing buyers to sellers.
B) save users money and time by processing online sales dealings.
C) provide a digital environment where buyers and sellers can establish prices for products.
D) sell physical products directly to consumers or individual businesses.
Answer: B
Diff: 1 Type: MC Page Ref: 323
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

91) Online marketplaces


A) save users money and time by processing online sales dealings.
B) provide a digital environment where buyers and sellers can establish prices for products.
C) create revenue by providing digital content over the Web.
D) sell physical products directly to consumers or individual businesses.
Answer: B
Diff: 2 Type: MC Page Ref: 323
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

19
2013 Pearson Canada Inc.
92) A "supersite" that provides a comprehensive entry point for a huge array of Internet resources and
services is called a(n):
A) portal.
B) online syndicator.
C) content provider.
D) information broker.
Answer: A
Diff: 2 Type: MC Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

93) eBay is an example of


A) a click-and-mortar business.
B) C2C electronic commerce.
C) B2C electronic commerce.
D) an online exchange.
Answer: B
Diff: 2 Type: MC Page Ref: 321
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

94) Businesses retailing products and services directly via the Internet to individual consumers best
describes
A) B2B electronic commerce.
B) C2C electronic commerce.
C) M-commerce.
D) B2C electronic commerce.
Answer: D
Diff: 1 Type: MC Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

95) Consumers selling goods and services electronically to other consumers best describes:
A) disintermediation.
B) C2C electronic commerce.
C) M-commerce.
D) B2C electronic commerce.
Answer: B
Diff: 1 Type: MC Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

20
2013 Pearson Canada Inc.
96) Tools that record customer activities at Web sites and store them in a log for further analysis are
called ________ tools.
A) clickstream tracking
B) customer tracking
C) collaborative filtering
D) filtering
Answer: A
Diff: 2 Type: MC Page Ref: 331
AACSB: Use of information technology
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

97) EDI is
A) the use of Internet technologies for electronic data transactions.
B) the exchange between two organizations of standard transactions through a network.
C) electronic data invoicing.
D) electronic delivery infrastructure.
Answer: B
Diff: 2 Type: MC Page Ref: 333
AACSB: Use of information technology
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

98) The process of sourcing goods and materials, negotiating with suppliers, paying for goods, and
making delivery arrangements is called
A) procurement.
B) e-procurement.
C) supply chain management.
D) electronic commerce.
Answer: A
Diff: 2 Type: MC Page Ref: 333
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

99) An extranet that links a large firm to its suppliers and other key business partners is called a(n)
A) private industrial network.
B) e-hub.
C) marketspace.
D) exchange.
Answer: A
Diff: 2 Type: MC Page Ref: 334
AACSB: Use of information technology
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

21
2013 Pearson Canada Inc.
100) E-hubs are more ________ than private industrial networks.
A) transaction-oriented
B) collaborative
C) independent
D) supply-chain oriented
Answer: A
Diff: 3 Type: MC Page Ref: 334
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.2 Electronic Commerce: Business and Technology

101) Net marketplaces


A) focus on continuous business process coordination between companies for supply chain
management.
B) are industry owned or operate as independent intermediaries between buyers and sellers.
C) are geared towards short-term spot purchasing.
D) are more relationship oriented than private industrial networks.
Answer: B
Diff: 3 Type: MC Page Ref: 334
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

102) A third-party Net marketplace that connects many buyers and suppliers for spot purchasing is
called a(n)
A) exchange.
B) vertical market.
C) private exchange.
D) e-hub.
Answer: A
Diff: 2 Type: MC Page Ref: 334
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

103) Which of the following is NOT one of the categories of services that are popular for m-commerce?
A) location-based services
B) financial services
C) games and entertainment
D) e-books
Answer: D
Diff: 1 Type: MC Page Ref: 336
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.4 Building an E-commere Web Site

22
2013 Pearson Canada Inc.
104) Building a successful e-commerce site requires a keen understanding of ________, as well as a
systematic approach.
A) digital, technology, and cultural issues
B) digital, technology, and social issues
C) business, technology, and cultural issues
D) business, technology, and social issues
Answer: D
Diff: 1 Type: MC Page Ref: 338
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.4 Building an E-commere Web Site

105) If you have some experience with computers, you might decide ________.
A) to outsource your site
B) to rent a site
C) to purchase a site
D) to build the site yourself
Answer: D
Diff: 1 Type: MC Page Ref: 339
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.4 Building an E-commere Web Site

106) Unless you are ________, you should use a pre-built template to create the Web site.
A) unskilled
B) not skilled
C) fairly skilled
D) profitable
Answer: C
Diff: 1 Type: MC Page Ref: 339
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.4 Building an E-commere Web Site

107) Most businesses choose to ________ hosting and pay a company to host their Web site, which
means that the hosting company is responsible for ensuring the site is "live," or accessible, 24 hours a
day.
A) insource
B) cosource
C) outsource
D) bi-source
Answer: C
Diff: 1 Type: MC Page Ref: 340
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.4 Building an E-commere Web Site

23
2013 Pearson Canada Inc.
108) With a co-location agreement, your firm purchases or leases a Web server (and has total control
over its operation) but locates the server in a ________.
A) customer's physical facility
B) competitors' physical facility
C) vendor's physical facility
D) physical facility
Answer: C
Diff: 1 Type: MC Page Ref: 340
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.4 Building an E-commere Web Site

109) Simple Web sites can be developed and hosted with a first-year cost of ________ or less.
A) $15 000
B) $10 000
C) $5000
D) $20 000
Answer: C
Diff: 1 Type: MC Page Ref: 340
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.4 Building an E-commere Web Site

110) The Web sites of large firms with high levels of interactivity and linkage to corporate systems cost
several ________ dollars a year to create and operate.
A) thousand
B) million
C) billion
D) hundred
Answer: B
Diff: 1 Type: MC Page Ref: 340
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.4 Building an E-commere Web Site

111) ________ e-commerce is the fastest-growing type of B2C e-commerce, but it represented only a
small part of all e-commerce in 2010.
A) Desktop
B) Mobile
C) Mainframe
D) Business
Answer: B
Diff: 1 Type: MC Page Ref: 336
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

24
2013 Pearson Canada Inc.
112) In 2010, shoppers ordered about $2.1 billion in physical goods from Web sites via ________.
A) laptops
B) smartphones
C) desktops
D) mainframes
Answer: B
Diff: 1 Type: MC Page Ref: 337
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

113) Banks and credit card companies are rolling out services that let customers manage their accounts
from their ________.
A) laptop devices
B) mobile devices
C) desktop devices
D) mainframe devices
Answer: B
Diff: 1 Type: MC Page Ref: 337
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

114) ________ is the leader in social networking, it has waged a constant struggle to develop viable
methods of generating revenue.
A) Myspace
B) Facebook
C) Twitter
D) Wiki
Answer: B
Diff: 1 Type: MC Page Ref: 328
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.2 Electronic Commerce: Business and Technology

115) Facebook makes its money through ________.


A) transactions
B) advertising
C) retail
D) subscriptions
Answer: B
Diff: 1 Type: MC Page Ref: 328
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.2 Electronic Commerce: Business and Technology

25
2013 Pearson Canada Inc.
116) Like most social networking sites, Twitter faces the problem of how to ________.
A) get more customers
B) make money
C) deal with competition
D) penetrate business market
Answer: B
Diff: 1 Type: MC Page Ref: 324
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.2 Electronic Commerce: Business and Technology

117) ________ refers to the use of the Internet and the Web to transact business.
Answer: E-commerce
Diff: 2 Type: SA Page Ref: 313
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

118) E-commerce is ________, meaning that is it available just about everywhere, at all times.
Answer: ubiquitous
Diff: 2 Type: SA Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

119) The result is called a ________, a marketplace extended beyond traditional boundaries and
removed from a temporal and geographic location.
Answer: marketspace
Diff: 2 Type: SA Page Ref: 316
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

120) The ________ wave of e-commerce transformed the business world of books, music, and air travel.
Answer: first
Diff: 2 Type: SA Page Ref: 315
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

121) In the ________ wave of e-commerce, nine new industries are facing a similar transformation
scenario: advertising, telephones, movies, television, jewelry, real estate, hotels, bill payments, and
software.
Answer: second
Diff: 2 Type: SA Page Ref: 315
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

26
2013 Pearson Canada Inc.
122) The universal technical standards of the Internet and e-commerce greatly lower ________ costs, the
cost merchants must pay simply to bring their goods to market.
Answer: market entry
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

123) Information ________ refers to the complexity and content of a message.


Answer: richness
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

124) The Internet and the Web vastly increase ________, the total amount and quality of information
available to all market participants, consumers, and merchants alike.
Answer: information density
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

125) ________ refers to the ease with which consumers can find out the variety of prices in a market.
Answer: Price transparency
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

126) ________ refers to the ability of consumers to discover the actual costs merchants pay for products.
Answer: Cost transparency
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

127) Merchants to segment the market into groups who are willing to pay different prices and permits
merchants to engage in ________, selling the same goods, or nearly the same goods, to different targeted
groups at different prices.
Answer: price discrimination
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

27
2013 Pearson Canada Inc.
128) E-commerce technologies permit ________. Merchants can target their marketing messages to
specific individuals by adjusting the message to a person's name, interests, and past purchases.
Answer: personalization
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

129) The technology also permits ________, changing the delivered product or service based on a user's
preferences or prior behaviour.
Answer: customization
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

130) An ________ exists when one party in a transaction has more information that is important for the
transaction than the other party.
Answer: information asymmetry
Diff: 2 Type: SA Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

131) In ________, the price of a product varies depending on the demand characteristics of the customer
or the supply situation of the seller.
Answer: dynamic pricing
Diff: 2 Type: SA Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

132) The removal of organizations or business process layers responsible for intermediary steps in a
value chain is called ________.
Answer: disintermediation
Diff: 2 Type: SA Page Ref: 319
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

133) ________ are goods that can be delivered over a digital network.
Answer: Digital goods
Diff: 2 Type: SA Page Ref: 320
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

28
2013 Pearson Canada Inc.
134) In general, for digital goods, the marginal cost of producing another unit is about ________.
Answer: zero
Diff: 2 Type: SA Page Ref: 320
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

135) ________ electronic commerce involves retailing products and services to individual shoppers.
Answer: Business-to-consumer (B2C)
Diff: 2 Type: SA Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

136) ________ electronic commerce involves sales of goods and services among businesses.
Answer: Business-to-business (B2B)
Diff: 2 Type: SA Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

137) ________ electronic commerce involves consumers selling directly to consumers.


Answer: Consumer-to-consumer (C2C)
Diff: 2 Type: SA Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

138) The use of handheld wireless devices for purchasing goods and services from any location has been
termed ________.
Answer: mobile commerce or m-commerce
Diff: 2 Type: SA Page Ref: 321
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

139) E-commerce Web sites have ________ to track a shopper's every step through an online store.
Answer: tools
Diff: 2 Type: SA Page Ref: 331
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

140) ________ enables the computer-to-computer exchange between two organizations of standard
transactions such as invoices, bills of lading, shipment schedules, or purchase orders.
Answer: Electronic data interchange (EDI)
Diff: 2 Type: SA Page Ref: 333
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology
29
2013 Pearson Canada Inc.
141) ________ involves not only purchasing goods and materials but also sourcing, negotiating with
suppliers, paying for goods, and making delivery arrangements.
Answer: Procurement
Diff: 2 Type: SA Page Ref: 333
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

142) ________ typically consist of a large firm using an extranet to link to its suppliers and other key
business partners.
Answer: Private industrial networks
Diff: 2 Type: SA Page Ref: 334
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

143) ________ systems have been developed for purchases of less than $10, such as downloads of
individual articles or music clips, which would be too small for conventional credit card payments.
Answer: Micropayment
Diff: 2 Type: SA Page Ref: 326
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

144) ________ refers to the ability of consumers to discover what merchants actually pay for products.
Answer: Cost transparency
Diff: 2 Type: SA Page Ref: 317
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

145) ________ are the merchants' costs of changing prices.


Answer: Menu costs
Diff: 2 Type: SA Page Ref: 318
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.1 Electronic Commerce And The Internet

146) A(n) ________ provides an online meeting place where people with similar interests can
communicate and find useful information.
Answer: social network
Diff: 2 Type: SA Page Ref: 323
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

30
2013 Pearson Canada Inc.
147) A(n) ________ business model has the Web site as an extension of a traditional bricks-and-mortar
business.
Answer: clicks-and-mortar
Diff: 1 Type: SA Page Ref: 322
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

148) A(n) ________ is another term for a private industrial network.


Answer: private exchange
Diff: 2 Type: SA Page Ref: 334
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

149) Building a successful e-commerce site requires a keen understanding of business, technology, and
social issues, as well as a ________ approach.
Answer: systematic
Diff: 2 Type: SA Page Ref: 338
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

150) If you have some experience with computers, you might decide to ________ the site yourself.
Answer: build
Diff: 2 Type: SA Page Ref: 339
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

151) Unless you are fairly ________, you should use a pre-built template to create the Web site.
Answer: skilled
Diff: 2 Type: SA Page Ref: 339
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

152) Most businesses choose to ________ hosting and pay a company to host their Web site, which
means that the hosting company is responsible for ensuring the site is "live," or accessible, 24 hours a
day.
Answer: outsource
Diff: 2 Type: SA Page Ref: 340
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

31
2013 Pearson Canada Inc.
153) With a ________ agreement, your firm purchases or leases a Web server but locates the server in a
vendor's physical facility.
Answer: co-location
Diff: 2 Type: SA Page Ref: 340
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

154) Simple Web sites can be developed and hosted with a first-year cost of ________ or less.
Answer: $5000
Diff: 2 Type: SA Page Ref: 340
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

155) The Web sites of large firms with high levels of ________ and linkage to corporate systems cost
several million dollars a year to create and operate.
Answer: interactivity
Diff: 2 Type: SA Page Ref: 340
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.4 Building an E-commere Web Site

156) ________ e-commerce is the fastest-growing type of B2C e-commerce, but it represented only a
small part of all e-commerce in 2010.
Answer: Mobile
Diff: 2 Type: SA Page Ref: 336
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

157) In 2010, shoppers ordered about $2.1 billion in physical goods from Web sites via ________.
Answer: smartphones
Diff: 2 Type: SA Page Ref: 337
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

158) Banks and credit card companies are rolling out services that let customers manage their accounts
from their ________ devices.
Answer: mobile
Diff: 2 Type: SA Page Ref: 337
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

32
2013 Pearson Canada Inc.
159) ________ is the leader in social networking, it has waged a constant struggle to develop viable
methods of generating revenue.
Answer: Facebook
Diff: 2 Type: SA Page Ref: 328
AACSB: Reflective thinking skills
CASE: Content
A-level Heading: 10.2 Electronic Commerce: Business and Technology

160) What is the most profound way in which e-commerce and the Internet has changed the relationship
between companies and their customers? Support your answer.
Answer: Answers will vary. One answer is: The most profound way in which e-commerce and the
Internet has changed this relationship is in the shrinking of information asymmetry. An information
asymmetry exists when one party in a transaction has more information that is important for the
transaction than the other party. That information helps determine their relative bargaining power. In
digital markets, consumers and suppliers can "see" the prices being charged for goods, and in that sense
digital markets are said to be more "transparent" than traditional markets. For example, until auto
retailing sites appeared on the Web, there was a pronounced information asymmetry between auto
dealers and customers. Only the auto dealers knew the manufacturers' prices, and it was difficult for
consumers to shop around for the best price. Auto dealers' profit margins depended on this asymmetry of
information. Today's consumers have access to a legion of Web sites providing competitive pricing
information, and three-fourths of U.S. auto buyers use the Internet to shop around for the best deal.
Thus, the Web has reduced the information asymmetry surrounding an auto purchase. The Internet has
also helped businesses seeking to purchase from other businesses reduce information asymmetries and
locate better prices and terms.
Diff: 2 Type: ES Page Ref: 316
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.1 Electronic Commerce And The Internet

161) List and describe at least five different Internet business models. Which of these models do you
think is the most risky for a dot-com business? Support your answer.
Answer: The eight models are: virtual storefront, information broker, transaction broker, online
marketplace, content provider, online service provider, virtual community, and portal. The choice of
riskiest model will depend on the individual student.
Diff: 1 Type: ES Page Ref: 322
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.2 Electronic Commerce: Business and Technology

33
2013 Pearson Canada Inc.
162) "Knowledge increases exponentially" is a phrase with which we are all familiar. How does this
concept apply to electronic business and the emergence of the digital firm? Support your contentions.
Answer: Student answers will vary. One answer might be: The exponential increases of knowledge refer
to shared information. For example, once the concept of a wheel is established, inheritors of that
knowledge do not have to "reinvent the wheel." The Internet is a tool similar to the wheel: it is based on
shared standards and universal tools. The Internet and shared networking technologies are allowing new
techniques for attracting customers and selling customers to be developed and adapted very quickly. For
example, although early Internet retailers had difficulty setting up secure credit card transactions and
payment systems, today there are many systems in place as vendors step in to create shared tools for
doing this. The Internet is fostering shared knowledge and as such propagating ever greater increases in
that knowledge.
Diff: 3 Type: ES Page Ref: 336
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

163) Describe the use of personalization in e-commerce. What business value does personalization
have?
Answer: E-commerce technologies permit personalization: Merchants can target their marketing
messages to specific individuals by adjusting the message to a person's name, interests, and past
purchases. The technology also permits customizationchanging the delivered product or service based
on a user's preferences or prior behaviour. Given the interactive nature of e-commerce technology, a
great deal of information about the consumer's past purchases and behaviour can be stored and used by
online merchants. The result is a level of personalization and customization unthinkable with traditional
commerce technologies. For instance, you may be able to shape what you see on television by selecting
a channel, but you cannot change the content of the channel you have chosen. In contrast, the Wall Street
Journal Online allows you to select the type of news stories you want to see first and gives you the
opportunity to be alerted when certain events happen. Customer information also enables firms to create
unique personalized Web pages that display content or ads for products or services of special interest to
each user, improving the customer's experience and creating additional value. By using personalization
technology to modify the Web pages presented to each customer, marketers achieve the benefits of using
individual salespeople at dramatically lower costs. One technique for Web personalization is
collaborative filtering, which compares information gathered about a specific user's behaviour at a Web
site to data about other customers with similar interests to predict what the user would like to see next.
The software then makes recommendations to users based on their assumed interests.

The business value of personalization is reduced marketing costs, as you spend only the money to target
customers that are more likely to be receptive and are more profitable, and improved sales results, from
increased customer response to personalized sites that better server their own purposes and shopping
needs.
Diff: 2 Type: ES Page Ref: 317-318
AACSB: Analytic skills
CASE: Synthesis
A-level Heading: 10.1 Electronic Commerce And The Internet

34
2013 Pearson Canada Inc.
164) List and describe the three major types of electronic commerce. Which do you think is ultimately
the most valuable to the individual consumer? Support your answer.
Answer: Business-to-consumer, business-to-business, and consumer-to-consumer. All three are valuable
to the consumer, but in the long run, business-to-business may be the most valuable to the individual
consumer because it will reduce prices and increase both goods and services. (Other opinions, of course,
are supportable.)
Diff: 2 Type: ES Page Ref: 321
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.2 Electronic Commerce: Business and Technology

165) What methods could a portal use to generate revenue? Which do you think might be most
successful, and why?
Answer: Advertising, subscriptions, selling collected marketing information, and directing buyers to
sellers could all generate revenue. I would think the most successful method would be through collecting
marketing information, because as a portal that links to large amounts of external information and
attracts repeat customers, the portal would have the opportunity to gather a lot of information about each
user.
Diff: 2 Type: ES Page Ref: 321
AACSB: Analytic skills
CASE: Evaluation
A-level Heading: 10.2 Electronic Commerce: Business and Technology

166) You are consulting for Lucky's, a chain of gas stations. What types of e-commerce opportunities, if
any, are relevant to Lucky's? Could Lucky's make use of any Internet business models for this
opportunity?
Answer: In terms of B2B e-commerce, Lucky's might be able to procure goods over the Internet, use a
private industrial network to coordinate their supply chain with suppliers and manage inventory.
Depending on the structure of the gasoline retail business, industry net marketplaces and exchanges
might be of use.

In terms of B2C e-commerce, there are not many opportunities, as it is inefficient to sell gasoline over
the Internet. However, a mobile payment system, similar to Mobil's SpeedPass payment system, is a way
of offering more convenient services to customers. Additionally, Lucky's could make sure that it's
stations are listed in popular location-based mobile services that help drivers find nearby gas stations.
Diff: 3 Type: ES Page Ref: 322-323
AACSB: Analytic skills
CASE: Synthesis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

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2013 Pearson Canada Inc.
167) Describe four types of applications that are especially well-suited for m-commerce.
Answer: Types of applications include location-based services, banking and financial services, wireless
advertising, and games and entertainment. Location-based services such as Mobio and Where enable
users to locate nearby restaurants and gasoline stations, find local entertainment and movie times, and
call a cab, providing maps showing how to reach their locations. New York-based MeetMoi provides a
dating service that helps users identify people who are nearby and looking for dates. Banks are rolling
out services that let customers manage their bank accounts from their cell phones or other mobile
devices. Citibank and Bank of America customers can use their cell phones to check account balances,
transfer funds, and pay bills. Cell phone service providers who have information valuable to advertisers
about where subscribers live, their location the moment they view ads, their age, and the games, music,
and other services they use on their phones. When done right, mobile campaigns yield high response
rates and increased consumer engagement. Games and entertainment are another popular area, with
music, digital games, ringtones, and even films designed for cell phone screens.
Diff: 2 Type: ES Page Ref: 336-337
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

168) Computers Inc. has been in business for 20 years. They have not been very involved with e-
commerce up to now. They feel they need to enter into the e-commerce end of things. They are
wondering how has Internet technology changed business models?
Answer: The Internet can help companies add extra value to existing products and services or create
new products and services. Many different business models for electronic commerce on the Internet
have emerged, including virtual storefronts, information brokers, transaction brokers, online
marketplaces, content providers, social networks, service providers, and portals. Business models that
take advantage of the Internet's capabilities for communication, community building, and digital goods
distribution have become especially prominent.
Diff: 2 Type: ES Page Ref: 320
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

169) Buymore Inc. is looking for new channels and ways to sell more products. They have seen a real
change in how their customers communicate. They have noticed that 50 percent of their customers have
smartphones of some sort. Buymore is wanting to know, what is the role of m-commerce in business,
and what are the most important m-commerce applications?
Answer: M-commerce is especially well suited for location-based applications, such as finding local
hotels and restaurants, monitoring local traffic and weather, and providing personalized location-based
marketing. Mobile phones and handhelds are being used for mobile bill payment; banking; securities
trading; transportation schedule updates; and downloads of digital content, such as music, games, and
video clips. M-commerce requires wireless portals and special digital payment systems that can handle
micropayments.
Diff: 2 Type: ES Page Ref: 316
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.3 The Mobile Digital Platform and Mobile E-Commerce

36
2013 Pearson Canada Inc.
170) How would you characterize Twitter's business model?
Answer: Twitter provides a platform for users to express themselves by creating content and sharing it
with their "followers," who sign up to receive someone's "tweets." And like most social networking
sites, Twitter faces the problem of how to make money. Coming up with solid numbers for Twitter is not
easy because the firm is not releasing any "official" figures. The value proposition is "get it now" real-
time news on just about anything from the mundane to the monumental. An equally important asset is
the database of tweets that contains the comments, observations, and opinions of the audience, and the
search engine that mines those tweets for patterns.
Diff: 2 Type: ES Page Ref: 324
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

171) What is the most important asset that Twitter has, and how could it monetize this asset?
Answer: Twitter is a powerful alternative media platform for the distribution of news, videos, and
pictures. The number of individual tweets is also known only by the company. According to the
company, by early 2007, Twitter had transmitted 20 000 tweets, which jumped to 60 000 tweets in a few
months. he main asset is user attention and audience size (eyeballs per day). The value proposition is
"get it now" real-time news on just about anything from the mundane to the monumental. An equally
important asset is the database of tweets that contains the comments, observations, and opinions of the
audience, and the search engine that mines those tweets for patterns. These are real-time and
spontaneous observations.
Diff: 2 Type: ES Page Ref: 324
AACSB: Analytic skills
CASE: Analysis
A-level Heading: 10.2 Electronic Commerce: Business and Technology

37
2013 Pearson Canada Inc.