Professional Documents
Culture Documents
10) Spot buying refers to the purchasing of goods and services according to a schedule, usually
at prevailing market prices that are determined by supply and demand.
Answer: FALSE
Diff: 2 Page Ref: 149
11) Stock exchanges and commodity exchanges (such as oil and sugar) are examples of spot
buying.
Answer: TRUE
Diff: 1 Page Ref: 149
12) Strategic sourcing refers to purchasing involving long-term contracts that usually are based
on private negotiations between sellers and buyers.
Answer: TRUE
Diff: 2 Page Ref: 149
13) Computers and communication devices are two examples of direct materials for a food
processing company.
Answer: FALSE
Diff: 2 Page Ref: 150
14) MRO, which stands for "maintenance, repair, and operation," refers to the indirect materials
used in activities that support production.
Answer: TRUE
Diff: 2 Page Ref: 150
15) Horizontal marketplaces are markets that concentrate on a service, material, or a product that
is used in all types of industries.
Answer: TRUE
Diff: 2 Page Ref: 150
16) Maverick buying refers to the planning, organizing, and coordinating of all the activities
pertaining to the purchasing of the goods and services necessary to accomplish the mission of an
enterprise.
Answer: FALSE
Diff: 2 Page Ref: 162
17) Reverse auctions are one method of electronic procurement that is very popular with public
organizations where tendering is usually mandatory.
Answer: TRUE
Diff: 3 Page Ref: 167
18) Aggregating the catalogs of all approved suppliers and combining them into a single
electronic catalog is an effective solution for internal procurement because it minimizes
maverick buying.
Answer: TRUE
Diff: 3 Page Ref: 169
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19) Caltex, a multinational oil company, reduced the number of its suppliers from over 3,000 to
800 by implementing a central catalog for internal purchasing, lowering the per unit prices.
Answer: TRUE
Diff: 3 Page Ref: 169
20) Exchanges can be vertical or horizontal.
Answer: TRUE
Diff: 1 Page Ref: 172
21) By law, exchanges cannot be owned by a consortium.
Answer: FALSE
Diff: 3 Page Ref: 174
22) Anonymity is a key ingredient of dynamic pricing.
Answer: TRUE
Diff: 2 Page Ref: 175
23) A vertical portal is an exchange formed and operated by a group of major companies in an
industry to provide industry-wide transaction services.
Answer: FALSE
Diff: 3 Page Ref: 175
24) Dynamic pricing is the rapid movement of prices over time and possibly across customers, as
a result of supply and demand matching.
Answer: TRUE
Diff: 1 Page Ref: 175
25) Loss of customer service quality is a potential risk for buyers in B2B exchanges.
Answer: TRUE
Diff: 2 Page Ref: 176
26) Potential gains for sellers in B2B exchanges include less maverick buying.
Answer: FALSE
Diff: 3 Page Ref: 176
27) Corporate portals are major gateways through which employees, business partners, and the
public can enter a corporate website.
Answer: TRUE
Diff: 2 Page Ref: 177
28) Executive and supervisor portals are used for training, dissemination of company news,
information, and discussion groups.
Answer: FALSE
Diff: 3 Page Ref: 179
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Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
11) Two types of materials and supplies that are traded in B2B are
A) digital and physical.
B) direct and indirect.
C) horizontal and vertical.
D) commodities and nonproduction.
Answer: B
Diff: 1 Page Ref: 150
AACSB: Use of information technology
12) Materials used to support production are called
A) indirect materials.
B) operational materials.
C) direct materials.
D) virtual materials.
Answer: A
Diff: 2 Page Ref: 150
AACSB: Use of information technology
13) The major B2B service industries include each of the following except
A) travel and hospitality services.
B) financial services.
C) banking and online financing.
D) retail.
Answer: D
Diff: 2 Page Ref: 151-152
AACSB: Use of information technology
14) Which of the following is not one of the major benefits of B2B for both buyers and sellers?
A) expedites processing and reduces cycle time
B) reduces procurement costs
C) enables customized online catalogs with different prices for different customers
D) increases opportunities for collaboration
Answer: B
Diff: 3 Page Ref: 153
AACSB: Use of information technology
15) A business strategy that focuses on providing comprehensive quality service to business
partners best defines
A) customer relationship management.
B) supplier relationship management.
C) partner relationship management.
D) supply chain management.
Answer: C
Diff: 3 Page Ref: 153
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Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall
20) High-quality bicycle manufacturer Gregg's Cycles does not sell its products online, nor do
they allow their bicycles to be sold online by others. By not selling online, Gregg's Cycles avoids
________ with its dealers and the independent bike shops that sell its bikes.
A) pricing conflict
B) channel conflict
C) multichannel distribution
D) disintermediation
Answer: B
Diff: 2 Page Ref: 155
AACSB: Use of information technology
21) Benefits of using a third-party hosting company for conducting B2B auctions instead of
developing an auction site in-house include all of the following except
A) no hiring costs.
B) no redeployment of corporate resources.
C) time-to-market of several weeks.
D) no need for additional resources such as hardware, bandwidth, or IT personnel.
Answer: C
Diff: 3 Page Ref: 160
AACSB: Use of information technology
22) Companies use ________ to sell their unneeded assets for quick disposal or to dispose of
excess, obsolete, and returned products.
A) private auctions
B) liquidation
C) reverse auctions
D) forward auctions
Answer: D
Diff: 2 Page Ref: 160
AACSB: Use of information technology
23) A characteristic that describes customer loyalty to a site that eventually results in higher
revenue best defines
A) retention.
B) acquisition.
C) stickiness.
D) attachment.
Answer: C
Diff: 2 Page Ref: 160
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24) A corporate-based acquisition site that uses reverse auctions, negotiations, group purchasing,
or any other e-procurement method best defines
A) desktop procurement method.
B) buy-side e-marketplace.
C) intermediary.
D) aggregated catalog.
Answer: B
Diff: 3 Page Ref: 162
AACSB: Use of information technology
25) The planning, organizing, and coordinating of all the activities relating to purchasing goods
and services needed to accomplish the organization's mission best defines
A) buy-side e-marketplace.
B) supply chain management.
C) procurement management.
D) customer relationship management.
Answer: C
Diff: 2 Page Ref: 162
26) Unplanned purchases of items needed quickly, often at non-prenegotiated higher prices, best
defines
A) impulse purchases.
B) free market.
C) MRO purchasing.
D) maverick buying.
Answer: D
Diff: 2 Page Ref: 162
27) Major procurement methods include
A) buying at an exchange or industrial mall.
B) buying at private or public auction sites in which the organization participates as one of the
buyers.
C) buying directly from manufacturers, wholesalers, or retailers from their catalogs, and possibly
by negotiation.
D) all of the above.
Answer: D
Diff: 1 Page Ref: 163
28) The electronic acquisition of goods and services for organizations via the Internet or private
network best defines
A) e-procurement.
B) spot buying.
C) resource acquisition.
D) MRO planning.
Answer: A
Diff: 1 Page Ref: 163
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29) Using Internet technology to buy goods and services from a number of known or unknown
suppliers best defines
A) e-reverse auctioning.
B) e-tendering.
C) e-sourcing.
D) e-informing.
Answer: A
Diff: 2 Page Ref: 165
30) Types of e-procurement include
A) E-MRO.
B) E-market sites.
C) E-informing.
D) all of the above.
Answer: D
Diff: 1 Page Ref: 165-166
31) Gathering and distributing purchasing information both from and to internal and external
parties using Internet technology best defines
A) e-tendering.
B) e-informing.
C) e-sourcing.
D) e-MRO.
Answer: B
Diff: 2 Page Ref: 166
32) E-procurement benefits include each of the following except
A) reducing the number of suppliers.
B) ensuring delivery on time, every time.
C) ease of internal and external integration.
D) improving information flow and management.
Answer: C
Diff: 3 Page Ref: 166
33) E-procurement limitations and challenges include each of the following except
A) the technology needs to be updated frequently.
B) the system may be too complex.
C) the cost may be too high.
D) the ease of getting suppliers to cooperate electronically.
Answer: D
Diff: 3 Page Ref: 167
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34) Which of the following is the unplanned, emergency-type buying where buyers usually pay
more?
A) maverick buying
B) spot buying
C) impulse purchasing
D) extreme purchasing
Answer: A
Diff: 2 Page Ref: 169
35) Advantages of using internal catalogs include
A) decreasing the number of suppliers.
B) easy financial controls.
C) using search engines to look through internal catalogs.
D) all of the above.
Answer: D
Diff: 1 Page Ref: 169
36) The aggregated catalogs of all approved suppliers combined into a single internal electronic
catalog defines
A) bartering exchange.
B) buy-side e-marketplace.
C) sell-side e-marketplace.
D) internal procurement marketplace.
Answer: D
Diff: 3 Page Ref: 169
AACSB: Use of information technology
37) An example of a successful aggregation of suppliers' catalogs is that of ________, which
aggregates more than 10,000 items from the catalogs of approved suppliers into an internal
electronic catalog.
A) MasterCard International
B) Amazon.com
C) Google
D) Priceline.com
Answer: A
Diff: 2 Page Ref: 169
AACSB: Use of information technology
38) Direct purchasing from internal marketplaces without the approval of supervisors and
without the intervention of a procurement department best defines
A) spot buying.
B) desktop purchasing.
C) maverick buying.
D) renegade purchasing.
Answer: B
Diff: 2 Page Ref: 170
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39) With a bartering exchange, a company submits its surplus to the exchange and receives
A) points of credit, which the company can then use to buy items that it needs.
B) an equivalent amount of products or services.
C) interest payments until it buys something from the exchange.
D) cash minus a small commission for services.
Answer: A
Diff: 2 Page Ref: 171
AACSB: Use of information technology
40) B2B portals that focus on a single industry or industry segment best describes
A) local portals.
B) information portals.
C) vortals.
D) collaborative portals.
Answer: C
Diff: 3 Page Ref: 176
41) Portals that store data and enable users to navigate and query these data are
A) collaborative portals.
B) information portals.
C) mobile portals.
D) MRO portals.
Answer: B
Diff: 2 Page Ref: 179
42) The main uses of social networks include
A) reducing the number of suppliers.
B) encouraging maverick purchases.
C) learning useful business intelligence.
D) driving traffic to online Web properties.
Answer: C
Diff: 2 Page Ref: 184
43) Which of the following companies uses viral videos to promote renewals of Care Pack
Service agreements?
A) Reed Business Information
B) Cisco Systems
C) Arketi Group
D) Hewlett-Packard
Answer: D
Diff: 2 Page Ref: 184
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44) Marketing by manufacturers and wholesalers along the sell-side of the supply chain best
defines
A) B2C marketing.
B) B2B marketing.
C) M2W marketing.
D) M2B purchasing.
Answer: B
Diff: 2 Page Ref: 185
45) Denver Boards, a B2B manufacturer of snowboard equipment, can reach and target new
retail customers in order to grow its online business by
A) hiring an affiliation service to drive traffic to its Web site.
B) reviewing POS data.
C) mining data.
D) advertising in traditional media.
Answer: A
Diff: 3 Page Ref: 187
4.3 Essay
1) List and briefly describe the four basic types of B2B transactions and activities.
Answer: The four basic types of B2B transactions and activities are sell-side, buy-side,
exchanges, and supply chain improvements and collaborative commerce. While sell-side refers
to one seller to many buyers, buy-side refers to one buyer from many sellers. Exchanges involve
many sellers to many buyers. Supply chain improvements and collaborative commerce refers to
activities, other than buying or selling, among business partners, such as supply chain
improvements, communication, collaboration, and information sharing for joint design and
planning.
Diff: 1 Page Ref: 147-148
2) List five major benefits of B2B for buyers or sellers or both.
Answer: Major benefits of B2B for buyers, sellers, or both include (1) creating new sales or
purchase opportunities; (2) eliminating paper and reducing administrative costs; (3) expediting
processing and reducing cycle time; (4) lowering search costs and time for buyers to find
products and vendors; (5) increasing productivity of employees dealing with buying and/or
selling; (6) reducing errors and improving quality of services; (7) making product configuration
easier; (8) reducing marketing and sales costs for sellers; (9) reducing inventory levels and costs;
(10) enabling customized online catalogs with different prices for different customers; (11)
increasing production flexibility, permitting just-in-time delivery; (12) reducing procurement
costs for buyers; (13) facilitating customization via configuration; (14) providing for efficient
customer service; and (15) increasing opportunities for collaboration.
Diff: 2 Page Ref: 153
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Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall