Management Information Systems 9E1

Chapter 3

Using Information Technology to Engage in Electronic Commerce

Mini Quiz

1. / Electronic commerce is narrowly defined as including business transactions that deal with customers and suppliers, connecting their respective computers via the Internet.
Answer:TruePage Reference:49
2. / Electronic commerce that refers to transactions between a business and the final consumer is:
  1. business-to-business.
  2. client-to-client.
  3. consumer-to-consumer.
  4. business-to-consumer.
Answer:dPage Reference:50
3. / Firms engage in electronic commerce to achieve improvements throughout the organization. What are the expected benefits from making these improvements?
Answer:Improved customer service before, during, and after the sale; improved relationships with suppliers and the financial community; and increased economic return on stockholder and other investments. Page Reference: 51
4. / The activity of gathering information about the elements in the environment that interact with your firm is referred to as business management.
Answer:FalsePage Reference:53
5. / A World Wide Web directory is a special computer program that asks a user for a word or group of words to be found.
Answer:FalsePage Reference:54
6. / Which of the following is not a popular search engine site?
Answer:cPage Reference:55
7. / Which of the following is not a term referring to firms that work together to create an interorganizational system?
  1. Trading alliance
  2. Trading partner
  3. Business partner
  4. Business alliance
Answer:aPage Reference:55
8. / What term is used to refer to improvements in the firm’s own operations, which enables the firm to gather data faster, analyze it faster, and make decisions faster?
  1. Comparative efficiency
  2. Internal efficiency
  3. Interorganizational efficiency
  4. Bargaining power
Answer:bPage Reference:55
9. / Extranets allow the sharing of sensitive computer-based information with other firms using information technology commonly associated with the Internet.
Answer:TruePage Reference:57
10. / When data representing money is transmitted over a computer network, it is called:
  1. EFT.
  2. EDI.
  3. EMT.
  4. EMI.
Answer:aPage Reference:57

True-False Questions

1. / Broadly speaking, a business transaction that uses network access, computer-based systems, and a Web browser interface qualifies as electronic commerce.
Answer:TruePage Reference:50
2. / Consumer-to-consumer electronic commerce refers to transactions between a business and the final consumer of the product.
Answer:FalsePage Reference:50
3. / Business-to-business electronic commerce refers to transactions between businesses where neither is the final consumer.
Answer:TruePage Reference:50
4. / B2C sites are required to have quick download times, more instructions for site navigation, shopping carts, and methods for keeping user profiles.
Answer:TruePage Reference:50
5. / The electronic commerce form of government can be referred to as e-gov.
Answer:TruePage Reference:51
6. / Increased profit is an anticipated benefit when firms engage in electronic commerce.
Answer:FalsePage Reference:51
7. / Secure sockets layer (SSL) has never had a recorded breach of its secure transactions.
Answer:TruePage Reference:52
8. / Electronic commerce accounted for more than $1 billion of economic activity in the United States during 2000.
Answer:FalsePage Reference:52
9. / Implementing electronic commerce is not a difficult task.
Answer:FalsePage Reference:53
10. / LEXIS-NEXIS is an external database that covers news, business, government, and other sources of information.
Answer:FalsePage Reference:53
11. / EDGAR is the Electronic Data Gathering, Analysis, and Retrieval system.
Answer:TruePage Reference:53
12. / The first step toward achieving electronic commerce is to gain a thorough understanding of the environment in which the commerce will be conducted.
Answer:TruePage Reference:55
13. / If interorganizational systems are the highways of electronic commerce, then electronic funds transfer is the favorite method of traveling that highway.
Answer:FalsePage Reference:55
14. / The ability of a firm to resolve disagreements with its suppliers and customers to its own advantage is called interorganizational efficiency.
Answer:FalsePage Reference:56
15. / Vendor stock replenishment is a special type of IOS in that the customer trusts the supplier enough to allow the supplier to access its computer-based inventory system.
Answer:TruePage Reference:56
16. / Electronic data interchange consists of direct computer-to-computer transmissions among multiple forms of data in a machine-readable, structured format.
Answer:TruePage Reference:56
17. / When the services that operate and manage the communications line are provided in addition to the line itself it is referred to as a virtual private network (VPN).
Answer:FalsePage Reference:56
18. / Top management support is the most frequent reason firms adopt EDI.
Answer:FalsePage Reference:58
19. / The direct benefits of having an EDI include reduced data entry errors, reduced costs, and increased operational efficiency.
Answer:TruePage Reference:58
20. / DHTML is an extension of the hypertext markup language used to code Web pages.
Answer:TruePage Reference:60
21. / The Common Object Broker Request Architecture (COBRA) is a standard for object oriented programming and databases.
Answer:FalsePage Reference:60
22. / Virtual sales occur when firms have both a physical storefront and a Web site where customers can purchase products.
Answer:FalsePage Reference:61
23. / The origin of the Internet can be traced back to 1969 when the U. S. government established ARPANET.
Answer:TruePage Reference:63
24. / World Wide Web is the name given to the world’s largest collection of computer networks.
Answer:FalsePage Reference:63
25. / The World Wide Web is the collection of computers acting as content servers that host documents formatted to allow viewing of hypermedia documents.
Answer:TruePage Reference:65
26. / Gopher is the software that enables you to copy files onto your computer from any Web site.
Answer:FalsePage Reference:65
27. / The term cyberspace was first coined in George Orwell’s book, Nineteen Eighty Four.
Answer:FalsePage Reference:65
28. / Web standards come from the World Wide Web Consortium (W3C).
Answer:TruePage Reference:66
29. / The business area with the most untapped potential for using the Internet is finance.
Answer:FalsePage Reference:66
30. / The Internet is seen as the beginning of a National Information Infrastructure.
Answer:TruePage Reference:68

Multiple Choice Questions

31. / Electronic commerce that refers to transactions between businesses where neither is the final consumer is referred to as:
  1. business-to-consumer.
  2. business-to-business.
  3. consumer-to-consumer.
  4. consumer-to-business.
Answer:bPage Reference:50
32. / Which of the following is not a requirement for B2C sites?
  1. Separate payment systems
  2. Quick download times
  3. Shopping cart styles
  4. Keeping a user profile
Answer:aPage Reference:50
33. / Which business area deals with the global community and labor unions for electronic commerce operations?
  1. Finance
  2. Manufacturing
  3. Information services
  4. Human resources
Answer:dPage Reference:51
34. / Which business area deals with customers, hardware, and software suppliers for electronic commerce operations?
  1. Human resources
  2. Information services
  3. Marketing
  4. Finance
Answer:bPage Reference:51
35. / Which of the following is not an anticipated benefit of firms engaging in electronic commerce?
  1. Increased profits
  2. Increased economic return on stockholder investments
  3. Improved customer service
  4. Improved relationships with suppliers
Answer:aPage Reference:51
36. / Which of the following is not a constraint for firms engaging in electronic commerce?
  1. High costs
  2. Security concerns
  3. Low speed networks
  4. Immature or unavailable software
Answer:cPage Reference:51
37. / What was the total value for B2C sales for the year 2002?
  1. > $1 billion
  2. > $10 billion
  3. > $30 billion
  4. > $ 50 billion
Answer:cPage Reference:52
38. / Which industry segment had the greatest percentage of electronic commerce sales in the year 2000?
  1. Transportation equipment manufacturing
  2. Drug wholesaling
  3. Travel and reservation retail
  4. Apparel manufacturing
Answer:aPage Reference:52
39. / Which of the following external databases can search and analyze news media for subjects of concern to a firm much more effectively and efficiently than most firms can do for themselves?
  1. LEXIS-NEXIS
  2. Reuters
  3. DIALOG
  4. Global eXchange Services
Answer:bPage Reference:53
40. / Which company sells services aimed at integrating electronic transactions for global supply chains?
  1. DIALOG
  2. Dow Jones
  3. Global eXchange Services
  4. Reuters
Answer:cPage Reference:53
41. / Which government database offers a wide range of topics for researchers in many fields?
  1. Thomas Register Online
  2. Library of Congress
  3. Census Bureau
  4. EDGAR
Answer:bPage Reference:53
42. / What technology is beginning to take the place of EDI in some organizations?
  1. Intranets
  2. Extranets
  3. EFT
  4. Interorganizational systems
Answer:bPage Reference:55
43. / When trading partners can produce their goods and services with greater efficiency and produce their goods and services at lower costs to their customers it is called:
  1. comparative efficiency.
  2. internal efficiency.
  3. interorganizational efficiency.
  4. bargaining power.
Answer:aPage Reference:55
44. / When a firm makes it expensive and inconvenient for customers to switch to a competitor, the firm is:
  1. reducing search-related costs.
  2. increasing their bargaining power.
  3. decreasing their switching costs.
  4. increasing their switching costs.
Answer:dPage Reference:56
45. / When the customer trusts a supplier enough to allow the supplier to access its computer-based inventory system it is referred to as:
  1. an extranet.
  2. an intranet.
  3. vendor stock replenishment.
  4. supplier stock replenishment.
Answer:cPage Reference:56
46. / What term refers to the sharing of sensitive computer-based information with other firms using information technology commonly associated with the Internet?
  1. Interorganizational information system
  2. Extranet
  3. Intranet
  4. Firewall
Answer:bPage Reference:57
47. / Which of the following is not a characteristic of electronic funds transfer?
  1. Individuals use EFT when their payroll checks are deposited into their bank accounts.
  2. EFT is the dominant implementation of an interorganizational information system.
  3. Monies associated with assets are transferred with greater speed and security compared to sending cash or checks between parties.
  4. EFT is important in B2B.
Answer:bPage Reference:57
48. / What is the most frequent reason for adopting EDI?
  1. Competitive pressure
  2. Exercised power
  3. Internal need
  4. Top management support
Answer:aPage Reference:58
49. / When significant benefits from adopting an interorganizational system are intangible which factor is critical?
  1. Competitive pressure
  2. Exercised power
  3. Internal need
  4. Top management support
Answer:dPage Reference:58
50. / Which of the following is not a direct benefit of adopting an interorganizational system?
  1. Reduced errors
  2. Reduced costs
  3. Increased operational efficiency
  4. Increased ability to compete
Answer:dPage Reference:58
51. / When all participants realize that they are working toward the same ends and gain mutual advantage, what is the indirect benefit of adopting an interorganizational system?
  1. Increased operational efficiency
  2. Increased ability to compete
  3. Improved relationships with trading partners
  4. Improved customer service
Answer:cPage Reference:59
52. / Which language adds features such as scripting and active controls so that the content of the displayed Web page can be dynamically generated based upon who is viewing the page?
  1. XML
  2. DHTML
  3. HTML
  4. CORBA
Answer:bPage Reference:60
53. / The standard language for designing with an object-oriented methodology to access database records is:
  1. XML.
  2. DHTML.
  3. HTML.
  4. CORBA.
Answer:dPage Reference:60
54. / What percentage of electronic commerce dollars is generated by B2C?
  1. 6%
  2. 12%
  3. 20%
  4. 22%
Answer:aPage Reference:60
55. / The digital product that has been the earliest to take advantage of the Internet is:
  1. software.
  2. services.
  3. entertainment.
  4. stock trading.
Answer:cPage Reference:61
56. / The type of sales that are made when a company has both a physical storefront and a Web site is called:
  1. catalogue sales.
  2. virtual sales.
  3. hybrid sales.
  4. mixed sales.
Answer:cPage Reference:61
57. / What was formed that marked the beginning of the Internet?
  1. World Wide Web
  2. ARPANET
  3. NII
  4. NSFNET
Answer:bPage Reference:63
58. / What is the name given to the world’s largest collection of computer networks?
  1. Internet
  2. WWW
  3. Information superhighway
  4. Cyberspace
Answer:aPage Reference:63
59. / Which area of the firm has the greatest potential for using the Internet?
  1. Production
  2. Human resources
  3. Marketing
  4. Finance
Answer:cPage Reference:66
60. / What is the newest infrastructure to date?
  1. NII
  2. Net2
  3. WWW
  4. W3C
Answer:aPage Reference:68

Essay Questions

61. / What are three constraints for firms moving into electronic commerce, and how are those constraints beginning to disappear?
Answer:The three constraints are high costs, security concerns, and immature or unavailable software. They are beginning to disappear because the cost of computing resources inevitably comes down according to Moore’s Law. Networks are becoming more secure because of new encryption methods such as secure sockets layer. And firms are designing new software for electronic commerce that takes advantage of current Web browser software. Page Reference: 51
62. / Define bargaining power and list the three areas from which it is derived.
Answer:The ability of a firm to resolve disagreements with its suppliers and customers to its own advantage is called its bargaining power. It is derived from offering unique product features, reducing search-related costs, and by increasing switching costs.
Page Reference:56
63. / What are the four factors that determine whether the firm will be proactive or reactive in adopting an interorganizational system?
Answer:Competitive pressure, exercised power, internal need, and top management support are the four factors that determine whether a firm will be proactive or reactive in adopting an interorganizational system. Page Reference: 58
64. / Explain the development of the World Wide Web and identify the person who is credited with its creation.
Answer:Tim Berners-Lee is credited with the creation of the WWW. He had the idea of using hypertext documents and hypermedia as a way for physicists to communicate. The WWW is accessible via the Internet where these hypermedia documents are stored and retrieved by means of a unique address scheme. Page Reference: 64
65. / What are ten tips that executives should consider to be able to use the Internet successfully?
Answer:The ten tips are : make sure your Web site is robust; make sure your browser and database structure are both flexible and intuitive; emphasize content; update often; look beyond customers; target content to specific users’ needs; make the interface intuitive; be in the right Web location; create a sense of community; get help if you need it.
Page Reference:67