Ebusiness and Ecommerce Management 4Th Edition

Chaffey, E-Business and E-Commerce, Third edition, Instructor’s Manual

Ebusiness and Ecommerce Management 4th edition

Self assessment questions for students at the end of each chapter.

Note, that answers to in-chapter activities and other questions are only available to lecturers who register via the Pearson site at

Chapter 1

Self-assessment questions

1. Distinguish between e-commerce and e-business.

This can best be explained by referring to different elements shown in Figure1.1 i.e.

• sell-side e-commerce
• buy-side e-commerce
• internal use of electronic communications to support business processes.

E-business is generally understood to include all three elements. E-commerce is commonly used to refer to either the first one or first two of these elements, but less commonly the third. E-business is broader in scope than e-commerce.

2. Explain what is meant by buy-side and sell-side e-commerce.

Again refer to Figure1.1. Buy-side e-commerce is using communications technology to support the upstream supply chain from procurement to inbound logistics. Sell-side refers to selling and distributing products and services from an organization to its customers.

3. Describe the different services that can be offered to customers via a web presence.

This is covered in more detail in Chapter 5 where stage models are referred to (p214):

• outline information services on company and products
• detailed information services on products, e.g. technical infosheets
• transactional e-commerce – purchases can be made online
• transactional customer service – questions can be asked and answers supplied online

4. Summarize the consumer and business adoption levels in your country. What seem to be the main barriers to adoption

Clickz ( is a good source of country information. For business, the main barriers are highlighted by the DTI (2000) survey:

• lack of imperative;
• security risks.

For consumers, the Which report highlights fears about security and privacy as well as the lack of a perceived need.

5. Outline the reasons why a business may wish to adopt e-commerce.

The 6Cs are a good framework here:

• Cost reduction – less use of physical resources and staff.
• New Capability – e.g. to sell into an overseas market.
• Improved communication – internal and external.
• Control – better visibility/information for managers of trading relationships.
• Customer service – more detailed information, faster response can be provided 24 hours, and 7 days a week.
• Competitive advantage – any of the above factors may provide this, but it is likely to be short lived.

6. What are the main differences between business-to-business and business-to-consumer e-commerce?

Refer also to the section in Chapter 2 (p43). In terms of volume of transactions B2B dwarfs B2C. B2C transactions will typically be smaller and less frequent for a trading relationship, but this is a generalization.

7. Summarize the impact of the introduction of e-business on different aspects of an organization.

The McKinsey 7S model is a useful framework for looking at the different aspects of a business that may be affected by the move to e-business.

• Strategy – new strategic responses are required
• Structure – new structures and responsibilities may be required
• Systems – new information systems and new processes will be required
• Style – less likely to change, but some organizational styles are more responsive to change
• Staff – new responsibilities
• Skills – new skills
• Superordinate goals – higher level aims may be updated depending on the business.

8. What is the relevance of intermediary sites such as Kelkoo( to the B2C company?

Companies must think about whether they are represented on such intermediaries. If they are not, they may lose potential business. They also need to consider the positioning of their products relative to competitors who also use the intermediary.

Note that Mondus wound down operations in 2002. Another example is Clearly Business, a joint venture between Barclays and Freeserve.

Chapter 2

1.Outline the main options for trading between businesses and consumers.

These are:

• B2C – retail to consumers
• B2B – interorganizational
• C2C – consumer interactions e.g. auctions
• C2B – customer make offers to businesses, e.g. Priceline

2.Explain the concept of disintermediation and reintermediation with reference to a particular industry; what are the implications for a company operating in this industry?

Example air travel. A carrier has the option of:

• distintermediation – selling direct from its web site
• reintermediation – selling via new online intermediaries with new pricing models such as Priceline, Lastminute or Expedia

3.Describe the three main alternative locations for trading within the electronic marketplace.

• From company’s own web site
• From an intermediary web site or marketplace
• By making bids after reviewing customers’ web sites

4.What are the main types of commercial transactions that can occur through the Internet or in traditional commerce?

See Table 2.5:

Commercial (trading) mechanism

1. Negotiated deal
2. Brokered deal
3. Auction
4. Fixed-price sale
5. Pure markets
6. Barter

5.E-business involves re-evaluating value-chain activities. What types of changes can be introduced to the value chain through e-business?

• Improve speed of information flow between primary activities of value chain
• Increase depth of information shared between activities
• Reduce costs of information processing

6.List the different business models identified by Timmers (1999).

Timmers (1999) identifies no less than 11 different types of business model that can be facilitated by the web as follows:

1. E-shop – marketing of a company or shop via web.
2. E-procurement – electronic tendering and procurement of goods and services.
3. E-malls – a collection of e-shops such as Barclays Square (
4. E-auctions – these can be both for B2C and B2B as is the case with eBay.

1. Virtual communities – these can be B2C communities such as Xoom ( or B2B communities such as Vertical Net ( these are important for their potential in e-marketing and are described in the Focus on Online Communities section in Chapter 9.
2. Collaboration platforms – these enable collaboration between businesses or individuals e.g. E-groups ( now part of Yahoo! ( services.
3. Third-party marketplaces – Marketplaces are described in the Focus On section of Chapter 7.
4. Value-chain integrators – offer a range of services across the value chain.
5. Value-chain service providers – specialize in providing functions for a specific part of the value chain such as the logistics company UPS (
6. Information brokerage – providing information for consumers and businesses, often to assist in making the buying decision or for business operations or leisure.
7. Trust and other services – examples of trust services include Which Web Trader ( or TRUSTE ( that authenticate the quality of service provided by companies trading on the web.

Timmers, P.(1999) Electronic commerce strategies and models for business-to-business trading John Wiley series in information systems.Chichester, England.

These can grouped as shown in Figure 2.11.

7.Describe some alternative revenue models for a web site from a magazine publisher.

See Figure 2.11.

Subscription: per-month payment

Pay per view: pay for each article, or articles up to a value

Advertising revenue – for advertising space on site

Affiliate revenue – for referral to other sites leading to sale

8.Draw a diagram summarizing the different types of online marketplace

Refer to Figure 2.9.

Chapter 3

1.What is the difference between the Internet and the World Wide Web?

Use TV analogy: Internet is the network for transmitting data globally, web is the method of delivering the content (channels).

The Internet

The Internet refers to the physical network that links computers across the globe. It consists of the infrastructure of network servers and communication links between them that are used to hold and transport information between the client PCs and web servers.

2.Describe the two main functions of an Internet Service Provider (ISP). How do they differ from Applications Service Providers?

Internet Service Provider (ISP)

A provider enabling home or business users a connection to access the Internet (1). They can also host web-based applications.

ASPs can host specific business applications.

Application server

An application server provides a business application on a server remote from the user.

3.Distinguish between intranets, extranets and the Internet.

Internet is public, intranet restricted to organizations employees, extranet has restricted access beyond company.

Intranet

A private network within a single company using Internet standards to enable employees to share information using e-mail and web publishing.

Extranet

Formed by extending the intranet beyond a company to customers, suppliers and collaborators.

4.Describe the standards involved when a web page is served from a web server to a user’s web browser.

Request page and deliver page (HTTP), transfer request and information (TCP/IP), render page in browser (HTML).

TCP/IP

The Transmission Control Protocol is a transport layer protocol that moves data between applications. The Internet protocol is a network layer protocol that moves data between host computers.

HTTP (Hypertext transfer protocol)

HTTP or Hypertext transfer protocol is a standard which defines the way information is transmitted across the Internet between web browsers and web servers.

HTML (Hypertext Markup Language)

HTML is a standard format used to define the text and layout of web pages. HTML files usually have the extension .HTML or .HTM.

5.What are the management issues involved with enabling staff access to a web site.

• Cost of access.
• Time spent in access lost from main activities.
• Access to illegal material.

6.Explain the following terms:

• HTML
• HTTP
• XML
• FTP

HTML (Hypertext Markup Language)

HTML is a standard format used to define the text and layout of web pages. HTML files usually have the extension .HTML or .HTM.

HTTP (Hypertext transfer protocol)

HTTP or Hypertext transfer protocol is a standard which defines the way information is transmitted across the Internet between web browsers and web servers.

XML or eXtensible Markup Language

A standard for transferring structured data, unlike HTML which is purely presentational.

File Transfer Protocol (FTP)

Standard used for uploading and downloading files to and from web servers

7.What is the difference between static web content written in HTML and dynamic content developed using a scripting language such as JavaScript?

Static content appears the same to all users. Dynamic content can be updated to reflect the environment, e.g. time or personal preferences.

8.What software and hardware are required to access the Internet from home?

Software: web browser, operating system, TCP/IP stack.

Hardware: PC plus modem

Chapter 4

1.Why is environmental scanning necessary?

It is necessary at a macro-level to understand new constraints on conducting business such as legal and technical constraints. These may also present opportunities. On a micro-level it is important to be responsive to customers’ needs and competitors’ actions.

2.Give an example how each of the macro-environment factors may directly drive the content and services provided by a web site.

• social – localized content for different cultures
• legal – privacy statement
• economic – funding and awards may be possible from governmental sources
• political – same as above
• technological – the incorporation of personalization

3.Summarize the social factors that govern consumer access to the Internet. How can companies overcome these influences once people venture online?

• Cost of access technology
• Cost of online access per minute
• Peer pressure
• Security fears
• Perception of need for online access

Companies should clearly communicate the benefits of online trading and make reassurances about the threats.

4.What actions can e-commerce managers take to safeguard consumer privacy and security?

Privacy statements should explain the actions taken to the customers. Firewalls should be maintained to minimize the risk of unauthorized access to customer data. The relevant data protection act should be followed.

5.What are the general legal constraints that a company acts under in any country?

See Table 4.2. Includes

• Consumer data protection and privacy laws
• Copy promoting goods
• Sales of goods/returns
• Trademark law
• Intellectual property law
• Disability and discrimination

6.How do governments attempt to control the use of the Internet?

They control through policies to promote its use and through monitoring messages through ISPs.

7.Summarize adoption patterns across the continents.

Refer to a source such as the International Telecommunications Union ( for the latest statistics.

8.How should innovation be managed?

It should be managed by frequent review of new opportunities, achieving balance between adopting all new technologies and conservative non-adoption and careful selection of technologies that will achieve competitive advantage.

Chapter 5

1.What are the key characteristics of an e-business strategy model?

All strategy models should:

• Be based on assessment of internal and external environment
• Have clearly defined SMART objectives backed up by vision
• Have strategies, tactics and implementation that select the best techniques to achieve these strategies
• Have monitoring and control that assess whether the objectives are being achieved and a feedback loop to ensure corrective action occurs.

For e-business in particular, the strategy objectives should define the balance of online and offline trading with customers, suppliers and distributors. The tactics should look at how investment in information systems and revising business processes should occur to hit these targets.

2.Select a retailer or manufacturer of your choice and describe what the main elements of its situation analysis should comprise.

Situation analysis is summarized in Figure 5.6, p213. It includes evaluation of the external environment as described in Chapter 4 (SLEPT or PEST) and internal resources using techniques such as SWOT, application portfolio analysis and also demand and competitor analysis.

3.For the same retailer or manufacturer suggest different methods and metrics for defining e-business objectives.

Objectives should be SMART (Chapter 12). Examples of metrics are in Table 5.4, p227, e.g.

• Revenue amount
• Revenue source (which geographical markets, segments and products)
• Acquisition and retention of particular segments
• New product development
• Cost and lead-times that are part of the supply chain

4.For the same retailer or manufacturer assess different strategic options to adopt for e-business.

This refers to the types of decisions outlined in the strategy section of this chapter. i.e.

• Decision 1 E-business channel priorities
• Decision 2 Organizational restructuring and capabilities
• Decision 3 Business, service and revenue models
• Decision 4 Marketplace restructuring
• Decision 5 Market and product development strategies
• Decision 6 Positioning and differentiation strategies

Chapter 6

1.Define supply chain management, how does it relate to:

• logistics;
• the value chain concept;
• value networks?

Supply chain management (SCM)

The coordination of all supply activities of an organization from its suppliers and partners to its customers.

Logistics – large overlap according to definition from Institute of Logistics and Transport:

‘Logistics is the time-related positioning of resource, or the strategic management of the total supply chain. The supply chain is a sequence of events intended to satisfy a customer. It can include procurement, manufacture, distribution and waste disposal, together with associated transport, storage and information technology.’

Value chain concept – has similar components such as inbound and outbound logistics, production and sales and marketing. Different orientation which is how to deliver customer value. Plus separate identification of secondary activities such as HR and IS.

Value networks – interactions between different value chains of a range of organizations.

2.What is the difference between a push orientation to the value chain and pull orientation.

A change in supply chain thinking, and also in marketing communications thinking is the move from push models of selling to pull models or combined push-pull approaches. The push model is illustrated by a manufacture who perhaps develops an innovative product and then identifies a suitable target market. A distribution channel is then created to push the product to the market. This situation is shown in Figure 6.3 (a) where it can be characterized by the statement ‘This is a great product, now who shall we sell it to?’ or the quip about the original model T Ford – ‘you can have any colour, so long as it is black’. The typical motivation for a push approach is to optimize the production process for cost and efficiency.

3.How can information systems support the supply chain?

Information systems are used to increase the efficiency of information flow by:

• delivering more information (e.g. sales data in Tesco TIE system)
• analysing information (e.g. alerting a large order)
• delivering it more rapidly (e.g. reduced lead times in e-procurement)

4.What are the key strategic options in supply chain management?

• How to restructure supply chain (vertical integration/disintegration/virtual integration)
• How to restructure (disintermediation, reintermediation, countermediation)
• How to restructure relationships in a value network

New procurement models e.g. auctions and B2B exchanges

Chapter 7

1Outline the two main methods how companies purchase supplies and the two broad divisions of supplies needed.

‘There are two broad categories of procurement; those that relate to manufacturing of products (production-related procurement) and operating or non-production-related procurement that supports the operations of the whole business and includes office supplies, furniture, information systems, MRO goods and a range of services from catering, buying travel or professional services such as consulting and training. Raw materials for the production of goods and MRO goods are particularly important since they are critical to the operation of a business’.

2Taking your answer from one, give examples of B2B exchanges that have been created to meet these purchasing needs.

Production-related procurement examples include Vertical Net ( sites such as Industry-to-Industry ( which trades petrochemicals, and in pharmaceuticals (

MRO type sites include the Staples example from Schlumberger.

3Draw a sketch that shows the main stages and people involved in traditional procurement and e-procurement.

This is Figure 7.1 on p289.