Chapter 17 Nature and Role of Electronic Commerce

(I) Multiple Choice Questions

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A


(II) Examination Style Questions

Answer 1

(a)

Benefits of using an intranet include:

(i) Intranets can help users to locate and view information from anywhere within the company workstations and thus enhance workforce productivity.

(ii) Distribution costs can be minimized because users can view information and data via web-browser rather than maintaining physical documents.

(iii) Training costs are limited because most employees will already be familiar with browser technology from using the internet.

(iv) The start-up costs of intranets is low since the software required is a web browser, such as Internet Explorer or Netscape Netvigator, and a computer to act as a web server.

(v) Intranets can serve as powerful tools for communication within an organization, vertically and horizontally.

(vi) With information easily accessible by all authorized users.

(vii) Intranet can be used as a platform for developing and deploying applications to support business operations and decisions across the company.

(b)

Problems arise from the use of intranet

(i) Inappropriate or incorrect information can be posted on an intranet.

(ii) In a devolved and highly interactive intranet there is freedom to post abusive (濫用的) and possibly illegal materials.

(iii) Need expertise to develop Intranet information within the organization.

(iv) Security of the intranet becomes an issue since information can be accessed by multi-users.

(v) Information overload may occur if it is not properly controlled.

Answer 2

(a)

Main uses and benefits of an extranet are summarized below:

(i) Providing on-line information for customers and suppliers can add value to an organization.

(ii) Allowing authorized buyers of the organization’s products access to information about those products to help them decide which product is appropriate for a specific use.

(iii) Linking with existing Electronic Data Interchange (EDI) applications to provide full stock control, procurement and payments systems.

(iv) Increasing amount of business as a result of providing extranet services; for example, providing an enhanced sales and support system, and so gain additional sales as a result of this.

(b)

E-business has positive impact to consumers in the following aspects:

(i) E-business enables consumers to trade in places and with companies they would never have considered or even known about.

(ii) The range of choices has dramatically increased and product information is easily accessible and in minutes. Comparisons of prices and quality can be obtained from a variety of independent sources.

(iii) The consumer can sit at home and make enquiries rather than visit shops or businesses.

(iv) Customer can avoid traffic congestion and going to those over-crowed shopping centers.

(v) The customers need not do their shopping within business hours and can shop twenty-four hours a day, seven days of the week. They can make use of the time to pursue other activities.

E-Business also has negative impact to consumers in the following aspects:

(i) Internet trading cannot satisfy the needs of those consumers who prefer to touch and feel certain products such as clothes, fresh food and personal items.

(ii) Security remains an issue. Consumers are still very concerned about revealing personal and financial information via the internet.

(iii) E-trading normally means that there is less face-to-face interaction with people. This may affect people in both positive and negative ways. If human contact is valued it will have a negative effect, while on the other hand it may remove possible conflict.

Answer 3

The impact of e-trading from the perspective of a business is as follows:

(i) Advertising and promotion

Business will have to develop new methods for advertising and promoting their goods. Advertising and selling of products/services through Internet may have social or legal restrictions in certain countries.

(ii) No longer require to have a physical presence in the market place

There is now a relatively level playing field for all companies regardless of size. Since e-commerce permitted the development of virtual companies, small companies are now competing with the established large international companies in many sectors.

(iii) Supply chain with worldwide suppliers and customers

The development of markets in a global environment requires an advanced supply chain with suppliers and customers worldwide. The supply and delivery of goods and services must now be extended to meet demand.

(iv) Competition for supply of goods and services

Competition for the supply of goods and services has increased dramatically. As the number of product suppliers or services providers increases then the competition among them is very keen. New entrants into any sector pose a threat to the established companies in the sector.

(v) Changes in the market places

It is becoming the norm for all traders to trade on the internet. Established traders must now compete in two different markets including high street and the internet. The market place is constantly changing and business must keep up with all the latest developments in both products and communication technology.

(vi) Security over internet transactions

Security has become a major concern of the consumer. To overcome security issues requires additional costs to incorporate control mechanism, maintain and update systems.

Answer 4

(a)

An intranet is usually described as an internal or restricted access network that is similar to functionality as the Internet, but is only available to an organization internally. For instance, if your organization would like to share specific information such as documents, any current announcements, new product details, etc., but only allow those computers in the organization access to this information, you would use an intranet.

(b)

Some of the benefits of using an intranet include:

(i) Enhance workforce productivity: Intranets can help employees to quickly find and view information and applications relevant to their roles and responsibilities.

(ii) Minimise distribution costs: Users can view information and data via a web-browser rather than maintaining physical documents.

(iii) Reduce training costs: Most employees will already be familiar with browser technology from using the Internet.

(iv) Low start-up cost: Cost of intranets is low since the software required is a web browser, such as Internet Explorer or Netscape Navigator, and a computer to act as a web server.

(v) Facilitate communication: Intranets can serve as powerful tools for communication within an organization, vertically and horizontally.

(vi) Save time to retrieve information: With intranets, organizations can make more information available to employees on a “pull” basis, i.e. employees can link to relevant information at a time which suits them, rather than being dulged indiscriminately by emails.

(vii) Support business operations and management: Intranets can be used as a platform for developing and deploying applications to support business operations and decisions across the organization.

(viii) Facilitate web publishing: The use of intranet permits information to be published using hypermedia technologies.

[Any two items, 1 mark each, maximum 2 marks]

(c)

Problems that arise from the use of an intranet may come form three areas:

(i) Management concerns:

Ø  Management fears of loss of control;

Ø  Hidden or unknown complexity and costs;

Ø  Potential for chaos.

(ii) Security concerns:

Ø  Unauthorised access;

Ø  Abuse of access;

Ø  Denial of service;

Ø  Packet sniffing

(iii) Productivity concerns:

Ø  Overabundance of information;

Ø  Information overload lowers productivity;

Ø  Users set up own web pages.

[Any 2 bullet points, 1 mark each, maximum 2 marks]

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