Chapter 1-Essay Questions
1. Briefly describe the four basic categories of e-commerce.
Answer: Business-to-business (B2B) refers to the full range of e-commerce transaction
that can occur between two firms. Business-to-Consumer (B2C) refers to exchanges
between firms and consumers. Peer-to-peer (P2P0 exchanges involve transactions
between and among consumers. consumer-to-business (C2B) refers to aggregations of
consumers who present themselves to business as a buying group. Page: 4-5
2. Are the four types of e-commerce really separate and distinct entities? Discuss.
Answer: While it is fashionable to create categories, in reality, the various types of ecommerce regularly interact. In fact, it is likely that a single chain e-commerce will
ultimately emerge—either as a distinct channel, or as a component of more traditional
channels. Page: 5
3. How has e-commerce impacted the classical strategic planning process?
Answer: Traditionally, strategic planning has been the slow, deliberate process of
developing a set of detailed, inter-related plans to guide all levels of the firm over the
short, medium, and long term. The dynamic, chaotic nature of e-commerce has
compressed the reaction time available to firms while injecting a level of uncertainty that
is more suited to the entrepreneurial than the bureaucratic style of management. Page: 6
4. Briefly evaluate the potential of “sense and respond” and “strategy as simple rules” as
strategic alternatives in e-commerce.
Answer: Sense and respond is really the marketing concept of customer orientation
brought into the information age. Unfortunately, the approach is primarily reactive in
nature—better suited to improving existing products and defending existing markets than
creating new products and/or markets. The use of simple rules is an entrepreneurial
solution which allows important decisions to be made quickly, within brand constraints,
by front-line managers. Unfortunately, entrepreneurship is, in many ways, the opposite of
traditional bureaucracy. Page: 8-9
43. How are the concepts of customization and interactivity inter-related?
Answer: Customization refers to the personalization of communications between users
and a website. This, or course, relies upon interactivity—two-way communication—over
time. The end result should be a better understanding of the consumer which can drive
ALL facets of the firm-consumer relationship. Page: 10-11
Rayport/Jaworski: Introduction to e-Commerce, 2/e
1
Chapter 2- Essay Questions
1. Why might customer service pose special problems for e-tailers?
Answer: By nature, e-tailing is “virtual” shopping-devoid of personal contact. In return
for its impersonal shopping experience, the customer expects “good” prices AND
efficient, error-free service. Page: 50-51
2. Why must e-tailers be concerned with security?
Answer: E-tailing complexity enhances the real/perceived chance for mistakes. The scope
of the web attracts many potential attackers—with potential for huge damage. In the face
of increasing news reports of credit card fraud and identity theft, firms must promote—
and deliver—dependable security—BOTH with regard to data transmission AND
database storage. Page: 57
3. Why is fulfillment critical to e-tailing success?
Answer: Since most e-tailers are “newer” than mail-order firms, they have no long-term
reputation. Add in their impersonal nature and consumers are buying on faith. ANY
breach of that faith-late delivery, shoddy quality, damaged goods, poor service after the
sale, poor financial/personal data security—is likely to lose the consumer forever.
Page: 63-64
Chapter 3 Essay Questions
1. What is co-opetition? Why has it recently become more common?
Answer: Co-opetition exists when the same firms act as both competitors and
collaborators. The phenomenon has become more common as a result of the growing
impact of the internet-—he world without walls facilitate collaboration while promoting
competition. Page: 74
2. How does a value chain differ from a value system?
Answer: Value chains focus primarily upon discrete collections of individuals and
organizational activities WITHIN a firm cooperating to create and deliver product/service
satisfactions. Value systems expand this cooperation to include cross-firm efforts that
benefit both end-consumers AND intermediaries. Page: 75
Rayport/Jaworski: Introduction to e-Commerce, 2/e
2
3. How can new-to-the-world value be created?
Answer: While this effort is typically tied to the creation of totally new (breakthrough)
products, services, products, services, processes, or technologies. However, existing
offerings may be perceived as “new” as a result of advances in customization,
reach/access, community and/or collaboration. Page: 79-80
4. What underlies the practice of segmentation? What characterizes “useful” segments?
Answer: Segmentation is founded upon the recognition of the fact that no product/service
can satisfy all of the diverse desires of a heterogeneous population. Segmentation, done
well, produces smaller, more homogeneous groups that can be identified, reached and
described (actionable) and served profitably (meaningful). Page: 89
5. How does technology impact the success of new products in today's world?
Answer: Technology has become a dominant force on BOTH sides of the market—a
driving force for change that is, by nature, dynamic, ethereal, and unpredictable.
Innovators must predict the willingness of consumers to accept and use the innovation,
the emergence/acceptance of supporting technologies, and the emergence/acceptance of
threatening technologies. AND, this must be accomplished inane environment that is, by
nature, chaotic and unpredictable. Page: 89
Chapter 4- Essay Questions
1. Briefly describe the basic components of the online business model.
Answer: The value proposition/cluster specifies the target segment(s), their desired
benefits, and the key resources required to provide them. The online offering (tangible
and intangible) is the vehicle for benefit provision. The resource system (tangible and
intangible) refers to the firm's unique assets for use in providing those benefits. The
revenue model specifies how the firm can serve its target segments profitably.
Page: 112
2. How does the concept of a value cluster differ from that of a value proposition?
Answer: While both focus on customers, desired benefits, and required resources, the
value cluster recognizes that an internet firm often serves multiple segments having
different desires, will probably require partners to serve them, and solve coordination
problems effectively. Page: 112
Rayport/Jaworski: Introduction to e-Commerce, 2/e
3
3. What characteristics would be possessed by the “ideal” target segment.
Answer: Ideally, the segment would be large and rapidly growing. It would be populated
by customers with unmet, or poorly met, needs. Finally, competitors would be weak—or
nonexistent. Page: 113
4. The ultimate success of an online business is dependent upon the number of benefits a
firm can offer its target market. Evaluate.
Answer: Not true. Benefits are “beneficial” only if the firm—perhaps with partners—can
focus them upon customer desires and provide satisfactions more effectively, more
efficiently, and at less cost than competitors. Page: 115
5. Why is the postpurchase stages of the consumer decision process MORE critical to the
long-term success of the firm than the purchase stage that has been traditionally
emphasized?
Answer: No firm can live on a one-shot sale. After purchase, the consumer decides if
they will buy again—or abstain AND tell everyone they can to do the same. The firm
must focus on post-sale satisfaction by emphasizing relevant benefits effectively provided
during product/offering development AND prepare to “fix” mistakes after the sale to
build/maintain loyalty. Page: 119
6. How must the traditional view of the resource system be modified to adapt to the online
world?
Answer: In the online world, the focus must shift from the physical world to the virtual
AND physical world; from a supply—to a demand—side emphasis; from resources to
benefits; and, from single to multiform systems. Page: 122-123
7. How can a firm assess the “quality” of resource systems?
Answer: Several dimensions should be considered. The “ideal” resource system should:
(1) feature a unique organization; (2) provide strong support for one another; (4) support
the offline system; and, (5) provide a sustainable advantage. Page: 124-125
8. Why have partnerships assumed 'critical” importance in the online world:
Answer: In the “no-walls world”, consumers expect all sellers to offer what they want,
when they want it, and at the lowest price. Of course, not all firms can be all things to all
Rayport/Jaworski: Introduction to e-Commerce, 2/e
4
people at all times. Partners allow several firms to pool their unique strengths in order to
create “virtual” synergy. Page: 127
9. Of all the potential revenue models, which is MOST suited to the online world? LEAST
suited? Defend your choice.
Answer: Least suited is probably the lowest-price model. Lower prices require high
volumes to produce profits—often difficult in hyper-competition. The most-personalized
is probably the BEST—this model encourages full use of the unique strengths of the net
to enhance satisfactions. Page: 127-140
Chapter 5- Essay Questions
1. Why is the 7Cs critical to the success of e-commerce efforts?
Answer: The 7Cs represent the means of presenting and presenting the firm's value
proposition. As the “face” of the firm, the 7Cs—in the form of the firm's interface—must
attract, serve, and facilitate the retention of customers. Page: 151
2. Which of the 7Cs deals “initial” responsibility for attracting customers and encouraging
them to explore the site? What is the offline equivalent of this factor?
Answer: A site's context employs aesthetic and functional features to capture and serve
potential customers. Context is the “virtual” form of the brick-and-mortar factor of
atmospherics. Page: 151-152
3. Of the 7Cs, which BEST expresses the unique advantage websites may enjoy over
traditional retailers?
Answer: Websites offer the ultimate in customization. While offline stores may attempt
to tailor their offerings, only website can facilitate USER personalization. Page: 152
4. Why is “fit and reinforcement” critical to the successful use of the 7Cs? Which effort is
MOST difficult/likely to be overlooked?
Answer: Obviously, the selection of these factors required for the effective presentation
of the firm's value proposition is critical to success. However, each factor must become
part of a coherent, comprehensive presentation that is mutually reinforcing to provide its
greatest impact. Page: 153-154
Rayport/Jaworski: Introduction to e-Commerce, 2/e
5
5. Briefly describe the role of the two components of context.
Answer: Context is composed of function and aesthetics. Function refers to the speed,
reliability, and other “usability” features of the site. Aesthetics refers to the aesthetics—
the look and feel—of the site. Page: 152
6. Can form and function coexist on a single site? How/why is this changing?
Answer: Traditionally, it was felt that a single site could not offer BOTH “high” form and
“high” function. However, technological advances are continually enhancing the
dynamics of BOTH components. In the future, the question may be made.
Page: 159-160
7. What characteristics comprise community? What primary advantages/disadvantages
distinguish websites from traditional retailers in this area?
Answer: Mature communities exhibit cohesion, effectiveness, help, relationships,
language, and self-regulation. Websites have the potential to build huge, borderless
communities—IF they can overcome the problems of diversity that attend this huge
potential. Page: 160-167
8. Briefly describe the two forms of customization a website might pursue. Which offers the
MOST unique advantage to e-tailers?
Answer: Websites may seek to tailor their offerings to their perceptions of customer
desires. Or, the site may provide users with the tools to personalize the site to their own
needs. Personalization offers n unique advantage for e-tailers that cannot be easily
matched by traditional retailers. Page: 170-172
9. Why would e-tailers desire to become destination sites. What types of firms would be
less concerned with this goal?
Answer: E-tailers want customers to seek out their site, enter that site, and “stick” long
enough to purchase—and to do so repetitively. While hubs and portals sere as gateways
to other sites, and are thus less concerned with “stickiness”, they still desire to become
“destination gateways”. Page: 179-180
10. What TWO concerns tend to be dominant among the many commerce features that may
be offered by a website?
Answer: Consumers may choose from a large, and growing, number of websites offering
similar items. Consumers facing this choice will tend to emphasize convenience.
Rayport/Jaworski: Introduction to e-Commerce, 2/e
6
Page: 180-183
Chapter 6- Essay Questions
1. The traditional approach to communications used two categories (mass and direct)—two
more (personalized and general) have been added by the internet. Each category—and
subcategory—has unique advantages and disadvantages. What MUST be the guiding
principle for media selection and why is INTEGRATED MARKETING
COMMUNICATIONS essential?
Answer: Marketers cannot MAKE the consumer view or listen to their messages—much
less make them respond in the desired way. Rather, he/she must understand the media
preferences and desired satisfactions of the target market—and use this knowledge to
select the media most appropriate for reaching the market and most suited to effective
presentation of appropriate content REGARDLESS OF “CATEGORY”. The purpose of
integrated communications is to achieve synergy from a cross-category, mutually
reinforcing campaign. Page: 196-197
2. What is the MAJOR advantage offered by personalized online communications?
Answer: Personalized communication allows mass marketers to come closer to the
personal interaction previously available only through the use of expensive personal
selling. To the extent that the offering can be modified to meet individual desires, the
marketer can approach the ideal of mass-customization. Page: 204-206
3. From the “dot.com flood” that dominated the 2000 Super bowl advertising wars, internet
firms accounted for only 7 percent of Super bowl advertisers in 2001. What did this
decline prove?
Answer: The radical shakeout of dot-coms proved that heavy advertising doesn't
guarantee success, that volume is not king, that profits do matter, that report sales are
critical, and that firms survive only if they provide satisfaction. In summary, the dot-coms
DID NOT suspend the old rules of survival. Page: 206-207
4. Define “brand”.
Answer: In general, “brand” refers to customer perceptions of the firm's total offering—
the “meaning” of the product/service, its “wraparounds”, and the offering firm. In short,
brand is the customer's summary evaluation of a firm's ability to provide satisfaction—
and is, therefore, a major factor in product/firm selection. Page: 208-209
5. Why is brand likely to be even more important for online firms than offline firms?
Rayport/Jaworski: Introduction to e-Commerce, 2/e
7
Answer: Online firms are often “new”—they have not had the time to establish the
reputation (perception) enjoyed by established firms. The “virtual” nature of its customer
contact further emphasizes the importance of favorable perceptions—especially in the
initial purchase decision. Page: 209-210
6. Why is it critical—especially for online firms—to present honest brand images and
promises and to follow-through on those promises?
Answer: Overpromises will produce high expectations that may generate an initial
purchase. But, high expectations also make dissatisfaction more likely. In a competitive
environment, customers do not have to deal with firms they perceive as “liars” again and
they will engage in “negative” viral “demarketing” reputation/trust is built on
performance, not promises. Page: 209-210
7. What is brand equity? Why is it important?
Answer: Brand equity is the combination of consumer responses and benefits. It is the
firm's reputation—built upon the consumer's perceptions of promises and performance.
This “satisfaction reputation” is the basis for valuing the firm itself—as seen in the stock
market and the prices offered for firms upon their liquidation. Page: 209-212
Chapter 7- Essay Questions
1. Why does implementation “matter”?
Answer: GOOD implementation MAY overcome poor strategy and WILL ensure the
success of good strategy. POOR implementation WILL hamper good strategy and MAY
mask poor strategy. Either way, implementation must be a primary concern. Page: 239
2. What “special” implementation challenges are faced by online firms?
Answer: Online implementation efforts are challenged by higher error visibility, ease of
switching, fluid boundaries, a highly dynamic environment, and highly complex linkages.
These are, of course, the result of the unique environment that is the internet.
Page: 240-241
3. Which of the various types of processes proved to be the greatest problem for early
dot.coms?
Rayport/Jaworski: Introduction to e-Commerce, 2/e
8
Answer: Customer support/handling was the prime cause of failure for many early
dot.coms. In a very real sense, the strategy of tapping into the large worldwide web
marketplace was TOO successful. Too many firms were not prepared for the volume they
generated—and could not deliver the level of post-sale service needed to retain customers
in a hyper-competitive environment. Page: 243-244
4. Why might CRM systems be the MOST critical of the functional software systems
discussed in the text?
Answer: In the final analysis, firms must retain its customers in order to survive and
grow. Profits result from satisfying the customer over the long-term. ANY tool that
improves that process is critical to the firm. Page: 249-250
5. Most of the “early” dot.coms were B2C firms—and many of them failed. Why?
Answer: The focus of early B2C firms was sales—the net was seen as a tool to reach the
HUGE worldwide market. Ironically, many firms succeeded too well—they were not
prepared to serve the initial customers they reached. No firm can survive on a one-shot
sale. If the customer is not satisfied, they will not buy again, but will engage in viral “demarketing”—and the firm “dies”. Page: 252-255
Chapter 8- Essay Questions
1. What are metrics? Why are they important?
Answer: Metrics are measurements of those activities deemed critical to implementing
strategy and/or achieving objectives. A firm must be able to evaluate progress AND
determine when changes are required. Page: 274
2. Why are traditional financial metrics not sufficient for evaluating the firm's progress?
Answer: Financial metrics measure the success of past strategies—but provide no
insights into future results. These metrics are only output measures, but do not provide
firm-specific metrics that precisely track its strategy. Page: 274
3. How can the use of metrics improve the quality of a firm's value proposition and/or
business model?
Answer: A focus on metrics “forces” the firm to define its business model, objectives,
and value proposition in precise, measurable terms. The firm benefits from ore rigorous
Rayport/Jaworski: Introduction to e-Commerce, 2/e
9
analysis in the planning phase—and a more objective-focused approach to
implementation/modification during the term of the plan. Improved analysis of results—
with implications for the next planning cycle—is another important benefit. Page: 276
4. BRIEFLY describe the “limitations” of the balanced Scoreboard Model as it applies to
online firms.
Answer: While the model has been useful, it does not provide for (1) a clear definition of
strategy or business models; (2) a clear location of organizational capabilities or
resources; or (3) a clear role for partnerships in the framework. These omissions make it
difficult to develop effective metrics to improve performance in these important areas.
Page: 279
5. How has “globalization” contributed to problems with the use of traditional financial
metrics?
Answer: In order for these measures to be useful in the world market, they must be
COMPARABLE. Yet, different countries have differing financial reporting/accounting
methods, legal systems, ownership structures, and tax structures. As a result, global
financial metrics can be confusing (at best) or misleading (at worst). Page: 283
6. How can the “Performance Dashboard” be implemented?
Answer: First, the business strategy must be clearly stated. Then, it is possible to identify
key actions and outcomes in critical performance areas—and state these in clear,
measurable terms. Thirdly, appropriate metrics must be chosen to monitor key activities
and progress. Next, leading and lagging indicators must be identified and linked to the
appropriate metrics—with particular emphasis upon those that help the firm focus on the
future. Finally, metrics must be calculated to effectively track current efforts and progress
toward objectives. Page: 285-287
7. Why is the postpurchase portion of the consumer process the MOST important part of the
process?
Answer: Traditionally, firms focused upon making the sale. BUT, firms must remember
that the customer will evaluate the firm's offering AFTER the purchase—and the results
of that evaluation will determine IF he/she will buy again. The culmination of several
POSITIVE iterations is “loyalty” and favorable recommendations. The result of ONE
negative evaluation can easily lead to the reverse. Page: 289
Chapter 9- Essay Questions
Rayport/Jaworski: Introduction to e-Commerce, 2/e
10
1. Why is the creation of user personas similar to the practice of market segmentation?
Answer: A site may have to deal with six distinct user groups having significantly
different needs, desires, and behaviors. Worse still, the individuals within each group are
diverse as well. User personas, like segmentation, seeks to group diverse users into a
manageable number of groups having similar CORE needs/characteristics.
Page: 312-314
2. What security problems must be addressed in site development? Which is MOST
important/difficult? Defend your choice.
Answer: Security must be provided for the network, the hardware/software comprising
the system, and the information moving or stored, in the system. While all are important,
the protection of data entrusted to the system is critical. Large volumes of
personal/financial data moving an/stored in a system is a prime target for criminal
hackers—witness increasing credit card fraud and the ultimate threat of identity theft.
Worse still, security concerns reduce the willingness of consumers to use these systems.
Page: 323
3. Rapid site design is a common goal. When is it feasible?
Answer: Sites are more amenable to rapid design if: (1) they are relatively small (under
30 pages), (3) they can be quickly visually designed with minimal user input or
constraint, (3) the content is relatively static, and (4) the audience is limited. Obviously,
increased complexity/demands will require more developmental time and effort.
Page: 324
4. Why is portability important? What must precede the achievement of this goal?
Answer: Portability allows a site to be accessed/used by a variety of operating systems.
This requires the development/implementation of standards. Firms/sites that insist upon
proprietary systems dramatically restrict their markets and growth potential—witness
Apple. Page: 328
Chapter 10- Essay Questions
1. What advantages are offered by the N-Tier architecture?
Answer: Best known for reducing complexity, this approach also offers decreased costs,
improved reliability, and scalability. Page: 343-344
2. What is the difference between flexibility and scalability?
Rayport/Jaworski: Introduction to e-Commerce, 2/e
11
Answer: Flexibility refers to ability to adapt to changes in system function. Scalability
refers to the ability of a system to be extended to handle a greater load. Ideally, a system
should offer both. Page: 345
3. Why is “performance” difficult to measure—and impossible to “maximize”?
Answer: Performance is the PERCEIVED speed of a system. Actual processing speed is
an objective, easily measured factor—BUT, perceived speed is subjective and relative.
Faster will never be fast enough for some. Page: 347-348
4. Why have reliability and security surged to the forefront of system concerns?
Answer: As more firms/individuals depend on computer systems for a growing range of
activities, dependable access becomes critical. Similarly, the volumes of sensitive
firm/personal data must be perceived as safe from loss or abuse or the system will be
avoided. Page: 348-349
5. Briefly identify and describe the roles of the three components of the three tier
architecture.
Answer: The data layer must provide fast, reliable access to the data required to run the
system. The business-logic layer is responsible for implementing the basic rules of the
system according to the operating rules of the business. The presentation layer is
responsible for all communications between the user and the system, within the system,
and between the system and the user. Page: 352-355
Chapter 11- Essay Questions
1. What are the basic assets of any new start-up? Which is MOST critical to success?
Answer: Any new firm is constrained by its human and financial assets. While both are
necessary, human assets are the critical component since they will acquire, plan, and
implement the use of all other assets. Page: 371
2. When do venture capitalists tend to become involved in a start-up? Why is this timing
significant to both the start-up and the VC?
Answer: Venture capitalists tend to enter in the expansion stage—after concept
development and prior to launch—during the development of the management team. This
period is critical to the start-up seeking support for its final push. For the VC, the start-up
has more than a mere concept, has proved its determination, and may be more open to
negotiation/compromise in exchange for support. Page: 384-386
Rayport/Jaworski: Introduction to e-Commerce, 2/e
12
3. What are corporate ventures? How do their goals differ from those of venture capitalists?
Answer: Corporate ventures are investment entities that exist within large corporations to
find and help “grow” strategic opportunities. Their goal is primarily one of incubating
technologies that it may require strategically rather than to merely seek financial returns.
Acquisition may be the ultimate goal. Page: 388-389
4. How does a holding company differ from a venture capitalist?
Answer: Venture capitalists are primarily investors. The holding company has an
operational focus—desiring to own a 25 to 50 percent stake over a long period of time.
Page: 391
5. Why is a business plan critical to a start-up?
Answer: The business plan is to often thought of as just a tool in gaining financing. Its
greatest value, however, is probably due to the fact that it “forces” the prospective startup to critically think through their value proposition and business model. Its main value
may be to prevent ill-advised ventures before they fail. Page: 392
6. Why is valuation of a start-up so critical—and so difficult?
Answer: Obviously, the future value of a firm is the basis for its ability to provide
financial returns for its investors. The rub, just as obviously, is that the investor must try
to PREDICT the future. Valuation methods may reduce risk by forcing closer
examination—but, investment is still a gamble. Page: 395-398
Chapter 12- Essay Questions
1. What is technological convergence? What factors brought it to emerge?
Answer: Technological convergence refers to the shift from many analog to a digital
platform. Decreasing costs, media proliferation, usage fragmentation, advancing
technology, and the pursuit of scale/scope economies have driven the surge. Page: 413
2. How are media proliferation and audience fragmentation related?
Answer: As more channels for content emerge, competition for the finite audience
increases. Media have moved from “mass” broadcasting to “narrowcasting” to more
specialized sub-markets or “information-niches”. Continuing proliferation and
competition will tend to bring even more fragmentation. Page: 415-417
Rayport/Jaworski: Introduction to e-Commerce, 2/e
13
3. Why is television noted as facing the greatest fragmentation among the traditional mass
media (TV, radio, magazines) today?
Answer: TV is actually a “laggard” in facing audience fragmentation. The demise of
meaningful national radio networks years ago forced radio stations (and affiliations) to
seek niched markets. Print media also underwent a similar process following the demise
of traditional national magazines. Page: 421-422
4. Why was the Telecommunications Act of 1996 a critical part of the digital explosion and
audience fragmentation process?
Answer: The Act removed artificial barriers to competition in an otherwise “borderless”
world. Regional telephone companies and cable companies were allowed to compete—
resulting in more alternatives and lower costs. The advent of more low-cost alternatives
led, in turn, to greater audience fragmentation. Page: 431
5. What does the debate over the ideal internet “gateway” resolve down to? How is the
problem likely to be resolved?
Answer: Basically, consumers want multi-media connectivity that is cheap, simple, and
portable. Wireless technology is likely to offer the final solution by allowing connectivity
through a variety of devices both in and outside the home. Page: 437-438
6. The Telecommunications Act of 1996 cleared the way for the advent of megamergers
designed to achieve organizational convergence. What are the advantages/problems
associated with this effort?
Answer: The goal of synergy-improved impact with the bonus of economies of
scale/scope. Problems include high capital costs, the difficulties of resolving conflicts
between internal/external constituencies, cultures, and regulators and the vagaries of the
global business environment. Page: 442-446
Chapter 13- Essay Questions
1. Briefly identify the basic regulatory issues confronting the internet.
Answer: Regulators must deal with questions of access, taxation, privacy/security,
copyright protection, and free speech. Page: 456
2. Why is taxation such a contentious problem in the internet world?
Rayport/Jaworski: Introduction to e-Commerce, 2/e
14
Answer: Taxation is confusing enough in just the US—which has more than 36,000 state
and local jurisdictions. When the very different tax laws of other nations are thrown in,
the result is chaos. Each taxing entity wants their share of the huge amount of potential
tax windfall. Offline sellers cry “foul” over internet tax advantages—online sellers claim
tax exemption is both valid and necessary for the continued growth of the internet.
Page: 464-465
2. Why have issues of privacy and security come to the forefront of internet concerns:
Answer: Unauthorized access to a user's financial/health information can have disastrous
results related to job/insurance loss, identity theft, and bankruptcy. If customers cannot
trust that their data is safe, they will be hesitant—to use the service. Page: 466-467
3. Briefly describe the two provisions of the Digital Millennium Copyright Act of 1998 that
are of greatest relevance to the internet.
Answer: The Act made it a crime to circumvent technological protection measures
created by copyright owners to protect their work. The Act also exempted online service
providers from liability as long as they remove the offending material and remove the
offending subscriber as soon as they become aware of the infringement. Page: 477
4. What problems does the internet pose with regard to free speech?
Answer: The internet was created to facilitate the free and rapid exchange of ideas. Its
dynamic architecture ensures almost complete anonymity. These characteristics,
unfortunately, make the web attractive to those desiring to distribute obscenity and hate.
The structural problems are only made worse by concerns with security/privacy.
Page: 480-483
Rayport/Jaworski: Introduction to e-Commerce, 2/e
15