Electronic Commerce
E-Commerce: Mechanisms, Infrastructure, and Tools
2.1 True/False
1) Eastern Mountain Sports uses Web 2.0 tools to increase collaboration, information sharing,
and communication among their employees, suppliers, and customers.
Answer: TRUE
2) A dashboard is a graphical display of performance results.
Answer: TRUE
3) Intermediation is the process of buying materials, products, and services directly from
suppliers, distributors, or the government.
Answer: FALSE
4) Dynamic pricing is the most common way customers purchase items online.
Answer: FALSE
5) The emergence of electronic marketplaces has resulted in lower information search time and
costs for buyers.
Answer: TRUE
6) In marketing, an intermediary is a third party that operates between manufacturers and buyers.
Intermediaries of all kinds offer their services on the Web.
Answer: TRUE
7) Individuals are the largest consumers, accounting for more than 85 percent of EC volume and
value activities.
Answer: FALSE
8) Disintermediation is the elimination of intermediaries between sellers and buyers.
Answer: TRUE
9) Travelers using airline Web sites to book their flights directly, without the use of travel agents,
is resulting in the reintermediation of travel agents.
Answer: FALSE
10) A single-sided e-marketplace is a private e-marketplace in which one company makes
purchases from invited suppliers.
Answer: FALSE
11) Private and public are two types of e-marketplaces.
Answer: TRUE
12) Electronic storefronts, Internet malls, and exchanges are major B2B e-marketplaces.
Answer: FALSE
13) Microsite refers to a page or pages that are meant to function as an auxiliary supplement to a
primary website.
Answer: TRUE
14) A Web portal is a single point of access, through a Web browser, to critical business
information loaded inside and outside (via Internet) an organization.
Answer: TRUE
15) Pure-play stores sell only one or a few kinds of products.
Answer: FALSE
16) A widget is an element of user interface that displays an information arrangement changeable
by the user, such as a window.
Answer: TRUE
17) The two major types of online intermediaries are infomediaries and negotiators.
Answer: FALSE
18) A shopping facilitator is a type of broker and helps consumers compare prices and service at
different stores.
Answer: FALSE
19) WebMD, which is the largest U.S. medical services company, is known mainly for its
webmd.com consumer portal, but its core business is being an e-intermediary.
Answer: TRUE
20) A desktop search is conducted by tools that search only the contents of the user's own
computer files.
Answer: TRUE
21) Search engines not only "search and match," but also have capabilities that can be used to
perform routine tasks that require intelligence.
Answer: FALSE
22) Shopping carts for B2B are fairly simple, but a shopping cart for B2C may be more complex.
Answer: FALSE
23) An electronic shopping cart is an order-processing technology that allows customers to
accumulate items they wish to buy while they continue to shop.
Answer: TRUE
24) An auction is a competitive process and market mechanism that uses a competitive process
by which a seller solicits consecutive bids from buyers or a buyer solicits bids from sellers.
Answer: TRUE
25) Forward auctions are bidding or tendering systems in which the buyer places an item for bid
on a request for quote (RFQ) system; then potential suppliers bid on the job, with the price
reducing sequentially, and the lowest bid wins.
Answer: FALSE
26) Reverse auctions are primarily B2C.
Answer: FALSE
27) English and Yankee are the two major types of double auctions.
Answer: FALSE
28) E-auctions are becoming less important selling and buying channels for companies and
individuals.
Answer: FALSE
Page Ref: 67
29) The major limitations of e-auctions are minimal security, possibility of fraud, and a limited
participation.
Answer: TRUE
Page Ref: 68
30) A limitation of e-bartering for businesses is that excess capacity items such as office space,
storage, factory space, idle facilities, and labor cannot be bartered.
Answer: FALSE
Page Ref: 69
31) Bartering is the exchange of goods and services.
Answer: TRUE
Page Ref: 69
32) Twitter is a free microblogging service that allows its users to send and read other users'
updates.
Answer: TRUE
Page Ref: 73
33) E-marketplaces, shopping carts, e-catalogs, and auctions are the major Web 2.0 mechanisms.
Answer: FALSE
Page Ref: 75
34) An auction is the most popular type of virtual community.
Answer: FALSE
Page Ref: 80
35) Net neutrality is a big advantage of Web 3.0.
Answer: FALSE
Page Ref: 89
2.2 Multiple Choice
1) The entertainment EC activity is supported by
A) Web 2.0 tools.
B) e-auctions.
C) electronic markets.
D) storefronts.
Answer: A
Page Ref: 48
2) EC activities include
A) trading, buy, sell, and exchange.
B) communicate, collaborate, and learn.
C) improve performance.
D) all of the above.
Answer: D
Page Ref: 48
3) Traditional and electronic markets have three main functions, which include each of the
following except
A) matching buyers and sellers.
B) facilitating the exchange of information, goods, services, and payments associated with
market transactions.
C) financing the transformation of raw materials into finished products.
D) providing an institutional infrastructure, such as a legal and regulatory framework that
enables the efficient functioning of the market.
Answer: C
Page Ref: 50
4) An online market, usually B2B, in which buyers and sellers exchange goods or services best
defines
A) cybermarket.
B) e-marketplace.
C) auction site.
D) cyberstore.
Answer: B
Page Ref: 51
5) The emergence of electronic marketplaces changed several of the processes used in trading
and supply chains including
A) lowering information search time and cost for buyers.
B) the ability of buyers, sellers, and the virtual market to each be in a different location.
C) the ability for EC to leverage capabilities with increased effectiveness and lower transaction
and distribution costs, leading to more efficient "friction-free" markets.
D) all of the above.
Answer: D
Page Ref: 51
6) The portion of an e-seller's business through which customers interact, including the seller's
portal, electronic catalogs, shopping cart, and payment gateway is referred to as the ________ of
the business.
A) front end
B) back end
C) infrastructure
D) intermediary
Answer: A
7) Each of the following is a major component and player in a marketspace except
A) auctions.
B) products and services.
C) infrastructure.
D) front end.
Answer: A
8) Activities related to order aggregation and fulfillment, inventory management, purchasing
from suppliers, accounting and finance, packaging, and delivery are done in what is termed the
________ of the business.
A) front end
B) back end
C) infrastructure
D) intermediary
Answer: B
9) The elimination of various types of agents that mediate between buyers and sellers, such as
travel and insurance agents, is referred to as
A) automation.
B) disintermediation.
C) remediation.
D) e-distribution.
Answer: B
10) A private e-marketplace in which one company sells either standard and/or customized
products to qualified companies best defines
A) buy-side e-marketplace.
B) sell-side e-marketplace.
C) Webstore.
D) hidden e-marketplace.
Answer: B
Page Ref: 54
11) Online markets that are owned and operated by a single company and that are either sell-side
or buy-side are known as
A) private e-marketplaces.
B) commercial portals.
C) e-malls.
D) B2B marketplaces.
Answer: A
Page Ref: 54
12) Each of the following is a true statement about public e-marketplaces except
A) public marketplaces are usually B2B markets.
B) public marketplaces are often owned by a third party.
C) public marketplaces are not regulated by the government.
D) public marketplaces serve many sellers and buyers.
Answer: C
Page Ref: 54
13) The major ________ mechanisms are storefronts and Internet malls.
A) B2B
B) C2B
C) B2B2C
D) B2C
Answer: D
Page Ref: 55
14) An electronic storefront includes several mechanisms that are needed for conducting the sale.
The most common mechanisms include each of the following except
A) electronic catalog.
B) search engine.
C) supply chain.
D) payment gateway.
Answer: C
Page Ref: 55
15) Types of stores and malls include
A) general stores/malls.
B) specialized stores/malls.
C) pure-play stores.
D) all of the above.
Answer: D
16) A(n) ________ is a single point of access, through a Web browser, to critical business
information located inside and outside (via Internet) an organization.
A) browser
B) intermediary
C) Web portal
D) search engine
Answer: C
17) Electronic intermediaries that provide and/or control information flow in cyberspace, often
aggregating information and selling it to others, best defines
A) infomediaries.
B) knowledge managers.
C) metamediary.
D) Webstore.
Answer: A
18) An e-commerce intermediary that connects manufacturers with business buyers (customers)
by aggregating the catalogs of many manufacturers in one place best describes
A) electronic catalog.
B) e-distributor.
C) metamediary.
D) broker.
Answer: B
Page Ref: 60
19) The practice of identifying and enabling specific content across the enterprise to be indexed,
searched, and displayed to authorized users best describes
A) desktop search.
B) enterprise search.
C) web search.
D) portal search.
Answer: B
Page Ref: 61
20) Which is not a popular search engine?
A) Google
B) Linux
C) AltaVista
D) Lycos
Answer: B
Page Ref: 62
21) An order-processing technology that allows customers to accumulate items they wish to buy
while they continue to shop best defines
A) intelligent agent.
B) e-fulfillment agent.
C) electronic shopping cart.
D) mobile portal.
Answer: C
Page Ref: 63
22) Prices that change based on supply and demand relationships at any given time best defines
A) dynamic pricing.
B) commodity pricing.
C) pre-shopping.
D) negotiation.
Answer: A
Page Ref: 64
23) An auction in which a seller entertains bids from buyers, and the bidders increase price
sequentially best defines
A) forward auctions.
B) reverse auctions.
C) bidding auction system.
D) tendering system.
Answer: A
24) An auction in which the buyer places an item for bid on a request for quote system, potential
suppliers bid on the job, with the price reducing sequentially, and the lowest bid wins; this
describes
A) forward auctions.
B) reverse auctions.
C) bidding auction system.
D) tendering system.
Answer: B
25) An auction in which multiple buyers and their bidding prices are matched with multiple
sellers and their asking prices, considering the quantities on both sides best defines
A) forward auction.
B) reverse auction.
C) double auction.
D) penny auction.
Answer: C
Page Ref: 67
26) A formal auction in which participants pay a nonrefundable small fee for each bid, and the
bid level changes by small increments. This defines
A) reverse auction.
B) charge-by-bid auction.
C) forward auction.
D) penny auction.
Answer: D
Page Ref: 67
27) Benefits of e-auctions to sellers include
A) anonymity.
B) convenience of bidding anywhere and any time.
C) lack of differentiation.
D) optimal price is determined by the market.
Answer: D
Page Ref: 68
28) Benefits of e-auctions to buyers include
A) liquidating large quantities quickly.
B) higher repeat purchases.
C) optimal price setting determined by the market.
D) opportunities to find unique items.
Answer: D
Page Ref: 68
29) A marketplace in which an intermediary arranges barter transactions best defines
A) bartering exchange.
B) forward auction.
C) blog.
D) Web portal.
Answer: A
Page Ref: 69
30) Which of the following is a social software tool?
A) auctions
B) blogs
C) shopping carts
D) e-catalogs
Answer: B
Page Ref: 70
31) A combination of two or more websites into a single website that provides the content of
both sites to deliver a novel product to consumers best defines
A) blog.
B) mashup.
C) podcast.
D) wiki.
Answer: B
Page Ref: 76
32) A method for Internet users to store, organize, search, and manage bookmarks of Web pages
on the Internet with the help of metadata best defines
A) tagging.
B) filtering.
C) social bookmarking.
D) intermediating.
Answer: C
Page Ref: 76
33) The practice and method of collaboratively creating, classifying, and managing tags to
annotate and categorize content best defines
A) mashup.
B) tweeting.
C) social bookmarking.
D) folksonomy.
Answer: D
Page Ref: 76
34) Which of the following was Stormhoek Winery's successful marketing campaign that had
volunteers, over a series of days, host dinners that included tasting Stormhoek wine?
A) 100 Geek Dinners in 100 Days.
B) Stormhoek's May Wine Days.
C) Stormhoek's Friends, Dinner, and Wine.
D) Stormhoek's No Grape Before It's Time Wine Tasting Event
Answer: A
Page Ref: 77
35) Types of virtual communities include each of the following except
A) relations or practices.
B) virtual worlds.
C) mashups.
D) social networks.
Answer: C
Page Ref: 78
36) Which of the following refers to communities organized by interest, such as hobbies,
technical topic, vocations, political parties, or trade unions?
A) association portals
B) affinity portals
C) communities of practice
D) virtual worlds
Answer: B
Page Ref: 78-79
37) Facebook, LinkedIn, and catster.com are examples of
A) gender communities.
B) communities of practice.
C) virtual worlds.
D) social network sites.
Answer: D
Page Ref: 79
38) Which of the following is a global, multilanguage, social network popular in Asia and parts
of Europe, Africa, and South America?
A) Hi5.com
B) Piczo.com
C) Friendsreunited.co.uk
D) Iwiw.net
Answer: A
Page Ref: 80-81
39) Capabilities and services provided by social networking sites include
A) discussion forums.
B) blogs for discussion and dissemination of information.
C) viewing and sharing photos, videos, and documents.
D) all of the above.
Answer: D
Page Ref: 81
40) A virtual world is
A) a user-defined world in which people can interact, play, and do business.
B) a single point of access, through a Web browser, to critical business information located
inside and outside (via Internet) an organization.
C) a social network whose major interest is business topics.
D) a combination of two or more websites into a single website that provides the content of both
sites to deliver a novel product to consumers.
Answer: A
41) Types of business activities in virtual worlds include each of the following except
A) creating and managing a virtual business.
B) operating a bed and breakfast in Nova Scotia.
C) providing services for those who build, manage, or make money with virtual properties.
D) conducting regular business activities.
Answer: B
42) Which of the following consists of the creation of high-quality content and services produced
by gifted individuals using Web 2.0 technology as an enabling platform and is used to describe
the future of the World Wide Web?
A) Level 2.0
B) Web 4.0
C) Web 3.0
D) Web 5.0
Answer: C
43) An evolving extension of the Web in which Web content can be expressed not only in
natural language, but also in a form that can be understood, interpreted, and used by intelligent
computer software agents, permitting them to find, share, and integrate information more easily
describes
A) Web 4.0.
B) Camelot Web.
C) Web 2.0.
D) Semantic Web.
Answer: D
44) Concerns about Web 3.0 implementation and the future of EC include
A) lack of net neutrality.
B) wiring for a sustainable world.
C) the use of 3-D tools.
D) ownership.
Answer: A
45) McKinsey and Company's trend predictions include(s)
A) distributed cocreation moves into the mainstream.
B) imagining anything as a service.
C) innovation coming from the bottom of the pyramid.
D) all of the above.
Answer: D
1) List three ways in which electronic marketplaces have changed the processes used in trading
and supply chains.
Answer: Changes resulting from electronic marketplaces include greater information richness of
the transactional and relational environment, lower information search costs for buyers,
diminished information asymmetry between sellers and buyers, less time between purchase and
possession of physical products purchased in the e-marketplace, greater temporal proximity
between time of purchase and time of possession of digital products purchased in the emarketplace, the ability of buyers and sellers to be in different locations, and the ability for EC to
leverage capabilities with increased effectiveness and lower transaction and distribution costs.
2) Define marketspace. Identify the major components and players in the marketspace.
Answer: A marketspace is where sellers and buyers can electronically exchange goods and
services for money. The major components and players include customers, sellers, products and
services, infrastructure, front end, back end, and intermediaries.
3) Briefly discuss four mechanism aids for Web 2.0 tools.
Answer: Tags, folksonomy, mashups, and social bookmarks are four mechanism aids for Web
2.0 tools. A tag is a nonhierarchical key word or term assigned to a piece of information.
Folksonomy is the practice and method of collaboratively creating, classifying, and managing
tags to annotate and categorize content. Mashup refers to the combination of two or more
websites into a single website that provides the content of both sites. Social bookmarking is a
Web service for sharing Internet bookmarks.
4) Identify seven concerns regarding the implementation of Web 3.0 and the future of EC.
Answer: Future threats, security concerns, lack of Net neutrality, copyright complaints, choppy
connectivity, language fitness, and standards are seven concerns regarding the implementation of
Web 3.0 and the future of EC.
5) List five of McKinsey and Company's predictions about the future of EC, Web 3.0, and
Semantic Web.
Answer: McKinsey and Company identified ten trends including distributed cocreation moves
into the mainstream, making the network the organization, collaboration at scale, the growing
"Internet of Things," experimentation and big data, wiring for a sustainable world, imagining
anything as a service, the age of the multisided business model, innovation coming from the
bottom of the pyramid, and producing public good on the information grid.