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- E-commerce primarily involves the application of digital technologies to business processes involving an exchange of value external to the firm.
Answer: TRUE
- The universal standards of e-commerce increase search costs for the consumer and decrease market entry costs for merchants.
Answer: FALSE
- In order to be considered successful, it is sufficient that a company make a profit.
Answer: FALSE
- All firms need an organization to efficiently implement their business plans and strategies.
Answer: TRUE
- Real markets are imperfect.
Answer: TRUE

- The systems development life cycle methodology is not useful when creating an e-commerce Web site.
Answer: FALSE

- Using pre-built templates is typically one of the most cost-effective choices when building a Web site.
Answer: TRUE


- Security measures help make a site faster and easier for visitors to use.
Answer: FALSE


- Being able to shop at any time of the day is the top motivating factor in consumers shopping online.
Answer: TRUE


- Online shoppers tend to browse for available products rather than search for specific products they have determined in advance.
Answer: FALSE


- The four generic market entry strategies are: first mover, fast follower, slow follower, and pure play.
Answer: FALSE



- Versioning is selling products at different prices to different people based on their willingness to pay.
Answer: FALSE


21) Which of the following are all unique features of e-commerce technology?
A) interactivity, global reach, information asymmetry, personalization/customization
B) universal standards, richness, information density, interactivity
C) information density, universal standards, personalization/customization, sales force-driven
D) local/regional reach, interactivity, richness, personalization/customization
Answer: B

22) The integration of video, audio, and text marketing messages into a single marketing message and consuming experience is an example of:
A) richness.
B) ubiquity.
C) information density.
D) personalization.
Answer: A

18) Which element of the business model addresses the question of why a customer should buy from the firm?
A) revenue model
B) competitive advantage
C) market strategy
D) value proposition
Answer: D

48) All of the following are examples of Business-to-Business (B2B) business model except:
A) e-distributors.
B) e-procurement.
C) private industrial networks.
D) e-tailers.
Answer: D
60) Which of the following features of e-commerce technology changes industry structure by lowering barriers to entry, but greatly expands the market at the same time?
A) global reach
B) richness
C) interactivity
D) personalization
Answer: A

50) What is the first step in developing an e-commerce security plan?
A) Create a security organization.
B) Develop a security policy.
C) Perform a risk assessment.
D) Perform a security audit.
Answer: C

40) Which of the following types of online market segmentation and targeting involves tracking the actions users take on a Web site?
A) technical
B) behavioral
C) contextual
D) psychographic
Answer: B


81) Define and describe the transaction broker business model and discuss the eight components of the business model for this type of B2C firm.
Answer: The transaction broker business model is most commonly found in the financial services, travel services, and job placement services industries. The eight elements of a business model are value proposition, revenue model, market opportunity, competitive environment, competitive advantage, market strategy, organizational development, and management team.

The primary value proposition for a transaction broker is the saving of time and money. These sites also often provide timely information and opinion. They offer the consumer the opportunity to increase their individual productivity by helping them to get things done faster and more cheaply.

The revenue model for these firms is based upon receiving commissions or transaction fees when a successful business deal is completed. Online stock trading firms receive either a flat fee for each transaction or a fee based on a sliding scale according to the size of the transaction. Job sites charge the employers a listing fee up front, rather than when the position is filled as traditional "head hunter" firms have done.

The market opportunity for transaction brokers in financial services appears to be large due to the rising interest in receiving financial planning advice and conducting stock transactions online. Demand is also increasing for job placement help that is national and even global in nature and for purchasing travel services quickly and easily online. However, there is some market resistance due to consumer's fear of loss of privacy and loss of control over their personal financial information.

The competitive environment for financial services has become fierce as new entrants, including the traditional brokerage firms who have now entered the online marketspace, have flooded the market. In order to compete effectively, online traders must convince consumers that they have superior security and privacy procedures. The number of job placement sites has also multiplied, and the largest sites such as Monster.com, which carry the greatest number of job listings, are the most likely to survive. Consolidation in all of the transaction broker markets is presently occurring, making the market opportunity and competitive environment for new firms looking to enter the marketspace bleak.

The market strategies for such firms will have to include expensive marketing campaigns to convince consumers to switch from their current provider or to choose their company over many other more well-established competitors, also a daunting task in the present economic environment.

Achieving a competitive advantage will be crucial to firms trying to enter these industries. Possible strategies are to lure well-known names in the industry away from their present positions to head a new endeavor, giving the firm instant credibility in the market. Experienced, knowledgeable and well-known employees may be able to give a new firm a competitive edge.
New companies may have to start out recruiting a specialized highly skilled staff, with an organizational development plan that is far more advanced than the typical startup. A strong management team will attract investors and convince investors and consumers alike that a new firm has plenty of market-specific knowledge and the experience necessary to implement the business plan.
Diff: 3 Page Ref: 67-75, 87
AACSB: Analytic Skills