Chap 005

`Chapter 05 Electronic Commerce: Strategies for the New Economy
Answer Key
Multiple Choice Questions
1. _____ is accelerated and enhanced by the Internet and the technology that
supports it.
A. IPO
B. E-commerce
C. Merchandising
D. M-commerce
Electronic commerce (e-commerce) is commerce, but it is commerce

accelerated and enhanced by IT, in particular the Internet. E-commerce enables
customers, consumers, and companies to form powerful new relationships that
would not be possible without the enabling technologies.
AACSB: Technology
Blooms: Remember
Learning Objective: 05-01 Define and describe the nine major e-commerce business models.
Level of Difficulty: 1 Easy
Topic: Introduction
2. _____ is a formal business plan that maps out your customer base and your
strategy for reaching them.
A. E-plan
B. Feasibility plan
C. Customer strategy and outreach plan (CSOP)
D. Path-to-profitability (P2P)
A path-to-profitability (P2P) is a formal business plan that outlines key business

issues such as customer targets (by demographic, industry, etc.), marketing
strategies, operations strategies (e.g., production, transportation, and logistics),
and projected targets for income statement and balance sheet items.
AACSB: Technology
Blooms: Understand
Level of Difficulty: 2 Medium
Topic: Introduction
3. The primary reason most dot-com businesses from the late 1990s are no longer
in existence today is because they didn't:
A. build a company that is Internet and brick-and-mortar based.
B. develop IT systems capable of processing millions of transactions quickly.
C. develop a path-to-profitability (P2P) plan.
D. disperse risk amongst a group of investors.
The major error that most dot-com businesses made in the late 1990s—and
they are no longer in existence today—is that they never developed a clear
path-to-profitability.
AACSB: Technology
Blooms: Understand
Topic: Introduction
4. Which type of e-commerce occurs when a business sells products and services
to a government entity?
A. B2C
B. B2G
C. G2B
D. B2B
Business to Government (B2G) e-commerce occurs when a business sells

products and services to a government entity. Lockheed Martin, for example,
generates almost 80 percent of its revenue by providing products and services
to the U.S. Department of Defense (DoD).
AACSB: Technology
Blooms: Remember
Topic: E-Commerce Business Models
5. _____ occurs when an individual sells products and services to a government
entity.
A. G2B e-commerce
B. B2G e-commerce
C. C2G e-commerce
D. G2C e-commerce
Consumer to Government (C2G) e-commerce occurs when an individual sells

products and services to a government entity. To sell products and services to
the U.S. federal government, you must register yourself as a formal business, so
you're not really an individual anymore but rather an individual "doing business
as" (DBA) some organization or business.
AACSB: Technology
Blooms: Remember
6. _____ occurs when a government entity sells products and services to
businesses.
A. G2B e-commerce
B. B2G e-commerce
C. C2G e-commerce
D. G2C e-commerce
Government to Business (G2B) e-commerce—occurs when a government entity

sells products and services to businesses. The Small Business Administration
(SBA), for example, offers services such as loans, surety guarantees, disaster
assistance, ombudsman, and so on.
AACSB: Technology
Blooms: Remember
7. The _____ e-commerce model is an example of citizens paying their income tax
returns online rather than through the mail.
A. G2C
B. B2G
C. G2B
D. B2B
Government to Consumer (G2C) e-commerce refers to the electronic commerce

activities performed between a government and its citizens or consumers
including paying taxes, registering vehicles, providing information and services,
and so on.
AACSB: Reflective Thinking

AACSB: Technology
Blooms: Apply
Level of Difficulty: 3 Hard
8. Which type of e-commerce occurs when a business sells products or services to
customers who are primarily other businesses?
A. B2C
B. B2G
C. C2B
D. B2B
Business to Business (B2B) e-commerce occurs when a business sells products

and services to customers who are primarily other businesses.
AACSB: Technology
Blooms: Remember
9. If your company sold tires to the automobile industry and these sales were
conducted through the Internet, what type of e-commerce model would you be
using?
A. E-CB
B. I-BB
C. B2B
D. C2B


AACSB: Technology
Blooms: Apply
10. What term depicts a virtual marketplace in which all businesses buy from and
sell products and services to each other, and share information?
A. Virtual Markets (VM)
B. E-Markets (EM)
C. Open-source Market
D. B2B e-marketplace
B2B e-marketplaces are virtual marketplaces in which businesses buy from and
sell products to each other, share information, and perform other important
activities. B2B e-marketplaces represent one of the fastest growing trends in the
B2B e-commerce model.
AACSB: Technology
Blooms: Remember
11. Which type of e-commerce occurs when a business sells products and services
to customers who are primarily individuals?
A. B2B
B. B2C
C. G2C
D. C2B
Business to Consumer (B2C) e-commerce occurs when a business sell products

and services to customers who are primarily individuals.
AACSB: Technology
Blooms: Remember
12. When you purchase your books for this course from an online source such as
Amazon.com, you are participating in which type of e-commerce?
A. I-BC
B. E-CB
C. C2B
D. B2C


AACSB: Technology
Blooms: Apply
13. What is the major difference between B2B and B2C e-commerce?
A. Customers interact freely in a B2B marketplace; they do not in a B2C

marketplace.
B. Consumers are fickle in a B2B marketplace; long time relationships are

established between the consumer and its business partner in B2C e-
commerce.
C. Interaction between consumers and businesses are direct in the B2B market;
they are indirect in the B2C market.
D. The B2B marketplace does not involve consumers, just business partners; the
B2C marketplace involves consumers.
The B2C e-commerce business model is very different from the B2B e-
commerce business model. Consumers interact directly with businesses via the
Web. Consumers surf around the Web evaluating products and services at
numerous separate e-commerce sites until they eventually choose one site from
which to make a purchase. And while businesses prefer to enter into long-term
partnerships with other businesses in B2B e-commerce, consumers are fickle
and purchase the same types of products and services from many different sites.
AACSB: Technology
Blooms: Understand
14. Which type e-commerce occurs when an individual sells products and services
to a business?
A. C2B
B. B2C
C. B2B
D. C2C
Consumer to Business (C2B) e-commerce occurs when an individual sells

products and services to a business. The C2B e-commerce business model is a
true inversion of the B2C e-commerce business model.
AACSB: Technology
Blooms: Remember
15. Affiliate programs are good examples of which type of e-commerce?
A. B2C
B. B2B
C. G2C
D. C2B
Affiliate programs are a good example of the C2B e-commerce business model.
AACSB: Technology
Blooms: Remember
16. If you created links on your personal Web site that connected your visitors to
businesses with the goal that you would earn a fee for purchases made by your
visitors, what type e-commerce model are you creating?
A. Affiliate programs
B. B2B
C. E-Advertisement
D. C2C
Through an affiliate program relationship with Amazon, for example, you can
post links on your personal Web site to Amazon for products and services it
sells.

AACSB: Technology
Blooms: Apply
17. Which type of e-commerce model typically requires the use of an intermediary
organization to complete transactions?
A. B2C
B. G2C
C. C2C
D. C2B
Consumer to Consumer (C2C) e-commerce occurs when an individual sells

products and services to another individual. C2C e-commerce usually takes
place through an intermediary organization, such as eBay.
AACSB: Technology
Blooms: Remember
18. eBay is a hybrid of both:
A. a B2G e-commerce site and a G2C e-commerce site.
B. a G2C e-commerce site and a C2G e-commerce site.
C. a B2B e-commerce site and a C2B e-commerce site.
D. a B2C e-commerce site and a C2C e-commerce site.
eBay is a hybrid of both a B2C e-commerce site and a C2C e-commerce site. It
is a B2C e-commerce site because it sells a service to you, that of giving you the
ability to interact in the auctioning of items. (You pay eBay only if you're the
seller, not the buyer.) And it is really an intermediary supporting your
engagement in a C2C e-commerce business model. That is, you use eBay to sell
products and services to other consumers, and you use eBay to buy products
and services from other consumers.
AACSB: Technology
Blooms: Understand
19. In the world of e-commerce, your business should be able to distinguish
between which of the following?
A. Mobile computing and traditional bulky communication devices
B. Web based computing and database management
C. Alternative operating environments such as Mac OS and Windows
D. End consumers and other businesses
Just as in a brick-and-mortar business, in the e-commerce world you focus your

efforts on selling to other businesses, to individual end consumers, or to some
combination of the two.
AACSB: Technology
Blooms: Understand
Learning Objective: 05-02 Identify the differences and similarities among customers and their perceived value of products and
services in the B2B and B2C e-commerce business models.
Topic: Understand Your Business, Products, Services, and Customers
20. Which of the following types of products purchased on the Internet are typically
priced low because they are used more frequently?
A. Speciality
B. Convenience
C. Niche
D. Luxury
Convenience products are low-priced but needed on a frequent basis.
AACSB: Technology
Blooms: Remember
21. Which of the following types of products purchased on the Internet are typically
high priced items because they are purchased infrequently and often require
some sort of customization?
A. Convenience
B. Commoditylike
C. Specialty
D. Digital
Specialty products are higher-priced, ordered on a less frequent basis, and often
require customization.
AACSB: Technology
Blooms: Remember
22. Which of the following is an example of commoditylike merchandise?
A. Toothpaste
B. Computers
C. Cell phones
D. Automobiles
Commoditylike merchandise, to your customers, is the same regardless of where

they purchase it, and it is similar to convenience items in that respect.

AACSB: Technology
Blooms: Apply
23. Which of the following is true of commoditylike business environments?
A. They are similar to specialty items.
B. The buyer power is low.
C. They have high barriers to entry.
D. They have low barriers to entry.

they purchase it, and it is similar to convenience items in that respect. Of course,
commoditylike business environments are typically easy to enter (i.e., they have
low barriers to entry) and thus buyer power is high.
AACSB: Technology
Blooms: Understand
24. What is a "sticky" Web site?
A. A Web site that gains popularity through e-channels.
B. A Web site that is accessed frequently because it is able to reroute potential

consumers from other sites to it.
C. A Web site that attracts consumers and encourages them to return.
D. A Web site that is located by pop-up and pop-under ads.
A "sticky" Web site not only attracts consumers but also encourages them to
return to it again and again.
AACSB: Technology
Blooms: Understand
25. Which terms describes the ability of an organization to give its customers the
opportunity to tailor its products or services to their specification?
A. E-Itemization
B. Crowd modification
C. Specialization
D. Mass customization
Mass customization is the ability of an organization to give its customers the

opportunity to tailor its product or service to the customer's specifications.
AACSB: Technology
Blooms: Remember
26. BMW is currently creating interactive Web sites that allow one to build and
purchase their own unique car. This type of Web site creates what type of
business opportunity?
A. Direct e-sales
B. I-purchasing
C. Consumer specialty purchasing (CSP)
D. Mass customization

Customization can be appropriate and is a key competitive advantage
regardless of other customer value perceptions.

AACSB: Technology
Blooms: Apply
27. Maintenance, repair, and operations (MRO) materials are also called ____.
A. non-perishable
B. indirect materials
C. additional services
D. support resources
Maintenance, repair, and operations (MRO) materials (also called indirect

materials) are materials that are necessary for running a modern corporation,
but do not relate to the company's primary business activities.
AACSB: Technology
Blooms: Remember
28. _____ refers to the combining of purchase requests from multiple buyers into a
single large order, which justifies a discount from the business.
A. Mass customization
B. E-business alliance
C. Demand aggregation
D. Small business coalition (SBC)
Demand aggregation refers to the combining of purchase requests from

multiple buyers into a single large order, which justifies a discount from the
business.
AACSB: Technology
Blooms: Remember
29. _____ are materials that are used in production in a manufacturing company or
are placed on the shelf for sale in a retail environment.
A. Indirect materials
B. Direct materials
C. Perishable materials
D. Converse materials
Direct materials are materials that are used in production in a manufacturing

company or are placed on the shelf for sale in a retail environment.
AACSB: Technology
Blooms: Remember
30. A(n) _____ is the process in which a buyer posts its interest in buying a certain
quantity of items with notations concerning quality, specification, and delivery
timing, and sellers compete for the business by submitting successively lower
bids until there is only one seller left.
A. vertical e-marketing
B. reverse auction
C. request for bid (RFB)
D. B2B E-mart
A reverse auction is the process in which a buyer posts its interest in buying a
certain quantity of items with notations concerning quality, specification, and
delivery timing, and sellers compete for the business by submitting successively
lower bids until there is only one seller left. Reverse auctions create tremendous
"power" for the buyer because multiple sellers are competing for the same
business.
AACSB: Technology
Blooms: Understand
31. What is the difference between a reverse auction and mass customization?
A. Reverse auction is most often found in B2B whereas mass customization is

often found in B2C.
B. Reverse auction requires a bid from consumers whereas mass customization

requires a bid from suppliers.
C. Mass customization require a click-and-mortar environment; reverse auctions

do not.
D. Mass customization can sell digital products; reverse auctions sell

commoditylike products.
Mass customization, the ability of an organization to give its customers the

opportunity to tailor its product or service to the customer's specifications, is
used in the B2C e-commerce model. In the B2B model, a reverse auction is the
process in which a buyer posts its interest in buying a certain quantity of items
with notations concerning quality, specification, and delivery timing, and sellers
compete for the business by submitting successively lower bids until there is
only one seller left.

AACSB: Technology
Blooms: Understand
32. Which of the following is an electronic marketplace that connects buyers and
sellers across many industries, primarily for MRO materials?
A. Horizontal e-marketplace
B. Vertical e-marketplace
C. Reverse auctions marketplace
D. Direct marketplace
A horizontal e-marketplace is an electronic marketplace that connects buyers

and sellers across many industries, primarily for MRO materials commerce.
AACSB: Technology
Blooms: Remember
33. Which of the following is an electronic marketplace that connects buyers and
sellers in a given industry?
A. Horizontal e-marketplace
B. Indirect marketplace
C. Reverse auctions marketplace
D. Vertical e-marketplace
A vertical e-marketplace is an electronic marketplace that connects buyers and

sellers in a given industry (e.g., oil and gas, textiles, and retail).
AACSB: Technology
Blooms: Remember
34. What is the difference between horizontal e-marketplaces and vertical e-
marketplaces?
A. Vertical e-marketplaces support commerce between multiple industries;

horizontal e-marketplaces support commerce between businesses from the
same industries
B. Vertical e-marketplaces support commerce between businesses from the

same industry; horizontal e-marketplaces support commerce between
businesses from different industries
C. Horizontal e-marketplaces support commerce between businesses and

consumers; vertical e-marketplaces support commerce between business and
business
D. Horizontal e-marketplaces support commerce between business and

business; vertical e-marketplaces support commerce between consumer and
business

sellers in a given industry. A horizontal e-marketplace is an electronic
marketplace that connects buyers and sellers across many industries, primarily
for MRO materials commerce.
AACSB: Technology
Blooms: Understand
35. _____ is the set of marketing tools that your organization will use to pursue its
marketing objectives in reaching and attracting potential customers.
A. Marketing target
B. Marketing potential
C. Marketing strategies
D. Marketing mix
Marketing mix is the set of marketing tools that your organization will use to
pursue its marketing objectives in reaching and attracting potential customers.
AACSB: Technology
Blooms: Remember
Learning Objective: 05-03 Compare and contrast the development of a marketing mix for customers in the B2B and B2C e-
commerce business models.
Topic: Find Customers and Establish Relationships
36. What term is used to describe the small advertisements that appear on other
Web sites?
A. Viral ads
B. Banner ads
C. Adware
D. Spyware ads
Online ads (often called banner ads) are small advertisements that appear on
other sites.
AACSB: Technology
Blooms: Remember
37. What term is used to describe a small Web page containing an advertisement
that appears on your screen, outside the current Web site loaded into your
browser?
A. AdWare
B. External ads
C. Viral ads
D. Pop-up ads
A pop-up ad is a small Web page containing an advertisement that appears on

your screen outside the current Web site loaded into your browser.
AACSB: Technology
Blooms: Remember
38. What term is used to describe an ad that appears after you close your current
browser window?
A. AdWare
B. Viral ads
C. External ads
D. Pop-under ads
A pop-under ad is a form of a pop-up ad that you do not see until you close
your current browser window.
AACSB: Technology
Blooms: Remember
39. What is the difference between a pop-up and pop-under ad?
A. A pop-up ad appears when you open a Web site; you do not see a pop-
under ad until you close your current browser window.
B. A pop-up ad uses a separate window; a pop-under ad does not.
C. A pop-up ad is a click-and-order ad; a pop-under ad is considered a click

through ad.
D. A pop-under ad is a type of spyware; a pop-up ad is not.
A pop-up ad is a small Web page containing an advertisement that appears on

your screen outside the current Web site loaded into your browser. A pop-
under ad is a form of a pop-up ad that you do not see until you close your
current browser window.

AACSB: Technology
Blooms: Understand
40. Viral marketing is:
A. a marketing campaign initiated through a virus.
B. a type of spyware that attaches itself to some other application.
C. a marketing campaign that persuades consumers to encourage friends to

purchase the same products or services.
D. a type of negative marketing plan that criticizes its competitors.
Viral marketing encourages users of a product or service supplied by a B2C e-

commerce business to encourage friends to join in as well.
AACSB: Technology
Blooms: Understand
41. An affiliate program is:
A. a business relationship between sellers and suppliers that support e-

commerce.
B. an ad-on product or service that is purchased through the originating seller.
C. a marketing campaign directed at persuading consumers to get others to

purchase the same product or service.
D. an arrangement made between two e-commerce sites that directs viewers

from one site to the other site.
An affiliate program is an arrangement made between two e-commerce sites

that directs viewers from one site to the other.
AACSB: Technology
Blooms: Understand
42. Google allows publishers at all levels of web traffic to place contextual ads in
blog posts. Hence, Google is a(n) _____ program.
A. affiliate
B. wiki
C. conversion
D. pop-under


AACSB: Technology
Blooms: Apply
43. Which of the following is a count of the number of people who visit one site,
click on an ad, and are then taken to the site of the advertiser?
A. Conversion rate
B. Click-through
C. Marketing hits
D. Viral speed
A click-through is a count of the number of people who visit one site, click on
an ad, and are taken to the site of the advertiser.
AACSB: Technology
Blooms: Remember
44. What is the percentage of potential customers who visit your site who actually
buy something?
A. Hit rate
B. Conversion rate
C. Click-through
D. Virtual check out
A conversion rate is the percentage of potential customers who visit your site
who actually buy something. So, while total views or "hits" to your e-commerce
Web site are important, obviously even more so is your conversion rate.
AACSB: Technology
Blooms: Remember
45. What type of Internet-based company makes it easy for one person to pay
another person or organization over the Internet?
A. Financial cybermediary
B. Electronic bill and payment business
C. E-provider
D. I-banks
Financial cybermediary is an Internet-based company that makes it easy for one

person to pay another person or organization over the Internet. PayPal
(www.paypal.com) is the best-known example of a financial cybermediary.
AACSB: Technology
Blooms: Remember
Learning Objective: 05-04 Summarize the various ways of moving money in the world of e-commerce and related issues.
Topic: Move Money Easily and Securely
46. What mechanism is used for sending money from your checking or savings
account to another person or organization?
A. Cyber money
B. Cybermediary
C. Electronic check
D. E-Payment
Electronic check is a mechanism for sending money from your checking or

savings account to another person or organization. There are many
implementations of electronic checks, with the most prominent being online
banking.
AACSB: Technology
Blooms: Remember
47. What system sends bills over the Internet and provides an easy-to-use
mechanism to pay for them?
A. Cybermediary
B. Electronic check
C. E-Payment
D. EBPP
Electronic Bill Presentment and Payment (EBPP) is a system that sends bills
(usually to end consumers) over the Internet and provides an easy-to-use
mechanism (such as clicking on a button) to pay for them if the amount looks
correct.
AACSB: Technology
Blooms: Remember
48. _____ is a credit-card like device that contains an embedded chip on which
digital information can be stored and updated?
A. Smart card
B. E-credit card
C. E-Information
D. Intelligent spending card (ISC)
Smart card is a plastic card the size of a credit card that contains an embedded
chip on which digital information can be stored and updated. The chip, in this
case, can contain information about how much money you have. When you
swipe your card to pay for a purchase, the swiping device deducts the purchase
amount from the amount you have stored on the chip. Some debit cards are
implementations of the smart card concept.
AACSB: Technology
Blooms: Remember
49. What financial tool contains both security software and information about the
user's payment and delivery preferences?
A. Cybermediary
B. Smart cards
C. E-Payments
D. Digital wallets
A digital wallet is both software and information—the software provides security

for the transaction and the information includes payment information (for
example, the credit card number and expiration date) and delivery information.
AACSB: Technology
Blooms: Remember
50. What is the difference between a smart card and a digital wallet?
A. A smart card is stored on the seller's computer; a digital wallet is stored on

the client's computer.
B. A smart card contains both software and information; a digital wallet contains
only information.
C. A smart card is a physical device; a digital wallet is both software and

information.
D. A digital wallet contains a smart card; a smart card is part of the digital wallet
along with other personal consumer information.
chip on which digital information can be stored and updated. A digital wallet is
both software and information—the software provides security for the
transaction and the information includes payment information (for example, the
credit card number and expiration date) and delivery information.

AACSB: Technology
Blooms: Understand
51. Which type of digital wallet maintains your e-commerce information on your
computer?
A. Client-side digital wallet
B. Consumer-based wallet
C. Server-side digital wallet
D. Smart card
Digital wallets can be stored either on the client side or the server side. A client-
side digital wallet is one that you create and keep on your computer; you can
then use it at a variety of e-commerce Web sites. Most browsers such as
Internet Explorer support your ability to create this type of digital wallet.
AACSB: Technology
Blooms: Understand
52. Which type of digital wallet maintains your e-commerce information on the
seller's Web site?
A. Cybermediary digital wallet
B. Buyer-based digital wallet
C. Thick digital wallet
D. Server-side digital wallet
A server-side digital wallet (sometimes referred to as a thin wallet) is one that an

organization creates for and about you and maintains on its server. Many credit
card issuers use this type of digital wallet to verify your credit card transactions.
AACSB: Technology
Blooms: Understand
53. Which type of business environment supports computer-to-computer transfer
of transaction information in a standard business document and format?
A. Value-added network (VAN)
B. Global eXchange services (GXS)
C. Electronic data interchange (EDI)
D. E-Business Financial Exchange (EBFE)
Electronic data interchange (EDI) is the direct computer-to-computer transfer of

transaction information contained in standard business documents, such as
invoices and purchase orders, in a standard format. Your organization can
implement EDI-facilitated transactions in many ways; one of the more
prominent is a B2B e-marketplace that supports EDI through a value-added
network.
AACSB: Technology
Blooms: Remember
54. _____ is a B2B service that offers information-sharing intermediary services
between organizations based on various standards regarding the format of the
information and how it will be sent and received.
A. Global eXchange services (GXS)
B. Value-added network (VAN)
C. Electronic data interchange (EDI)
D. E-Business Financial Exchange (EBFE)
A value-added network (VAN) is a B2B service that offers information-sharing

intermediary services between organizations based on various standards
regarding the format of the information and how it will be sent and received.
Using a VAN, businesses can easily, for example, order products and send
invoices electronically.
AACSB: Technology
Blooms: Remember
55. Which type of business environment is used within the B2B e-commerce model
for the payment of purchases?
A. VAN
B. GXS
C. PKE
D. Financial EDI
Financial electronic data interchange (financial EDI) is the electronic process

used primarily within the B2B e-commerce model for the payment for
purchases.
AACSB: Technology
Blooms: Remember
56. _____ scrambles the contents of a file so that you can't read it without having the
right key to unscramble the file.
A. Coder
B. Scrambler
C. Encryption
D. Fusion
Encryption scrambles the contents of a file so that you can't read it without
having the right decryption key. Encryption can be achieved in many ways: by
scrambling letters in a known way, replacing letters with other letters or perhaps
numbers, and other ways.
AACSB: Technology
Blooms: Remember
57. Which scrambling technique provides you with two keys: one key that everyone
in an organization can have to scramble the contents of a file and another key
for the intended recipient to unscramble the file?
A. Public key encryption (PKE)
B. Public coder/decoder
C. Shared fusion key (SFE)
D. Community scrambler security device (CSSD)
Public key encryption (PKE) is an encryption system that uses two keys: a public
key that everyone can have and a private key for only the recipient.
AACSB: Technology
Blooms: Remember
58. Which computer tool creates a secure and private connection between a Web
client's computer and a Web server's computer, so that files sent from one to
another are kept confidential?
A. Shared Fusion Connectivity (SFC)
B. Secure Sockets Layer (SSL)
C. Secure Electronic Transaction (SEL)
D. Public Coder detection (PCD)
A Secure Sockets Layer (SSL) creates a secure and private connection between a
Web client computer and a Web server computer, encrypts the information, and
then sends the information over the Internet. SSLs do provide good security for
transferring information and are used widely by B2C e-commerce Web sites.
AACSB: Technology
Blooms: Remember
59. Which transmission method ensures that transactions traveling over the Internet
are legitimate as well as secure?
C. Financial Electronic Data Interchange (FEDI)
D. Secure Electronic Transactions (SET)
A Secure Electronic Transaction (SET) is a transmission security method that

ensures transactions are legitimate as well as secure.
AACSB: Technology
Blooms: Remember
60. If you were a seller on the Internet and you wanted to ensure that your buyer's
transaction information was correct and legitimate, what type of Web
environment would you need?
C. Financial Electronic Data Interchange (FEDI)
D. Secure Electronic Transactions (SET)

ensures transactions are legitimate as well as secure. Much like an SSL, an SET
encrypts information before sending it over the Internet. Taking it one step
further, an SET enables you, as a merchant, to verify a customer's identity by
securely transmitting credit card information to the business that issued the
credit card for verification. SETs are endorsed by major e-commerce players
including MasterCard, American Express, Visa, Netscape, and Microsoft.

AACSB: Technology
Blooms: Apply
61. Which of the following is true of Long Tail economics?
A. It looks at sales in terms of economies of scale.
B. E-commerce businesses that can reach the audience in the Long Tail cannot
do so without the typical brick-and-mortar retail costs and expenses.
C. It seeks to sell as many of one item as possible to offset fixed costs.
D. It is ignored by traditional businesses but e-commerce businesses profit from

it.
E-commerce businesses that can reach the audience in the Long Tail can do so
without the typical brick-and-mortar retail costs and expenses (representing
both fixed and variable costs in break-even analysis). Long Tail represents an
entirely new business model and requires new business thinking. Traditional
business thinking looks at sales in terms of economies of scale, seeking to sell as
many of one item as possible to offset fixed costs (such as shelf placement
costs). The Long Tail model is quite different from the traditional model.
AACSB: Technology
Blooms: Remember
Learning Objective: 05-05 Discuss some major trends that are impacting both the e-commerce business world and society in
general.
Topic: E-Business Trends
62. When businesses provide enabling technologies that allow people to create,
modify, and oversee the development of a product or service, it is known as
____.
A. open source technology
B. Long Tail strategy
C. crowdsourcing
D. initial public offering
Crowdsourcing is when businesses provide enabling technologies that allow

people (i.e., crowds)—instead of designated paid employees—to create, modify,
and oversee the development of a product or service.
AACSB: Technology
Blooms: Remember
general.
63. Which type of technology allows you to wirelessly connect to and use centrally
located information and/or application software?
A. Networking applications
B. Operations management tools
C. Mobile computing
D. Open source applications
Mobile computing is a broad general term describing your ability to use

technology to wirelessly connect to and use centrally located information and/or
application software.
AACSB: Technology
Blooms: Remember
general.
64. What term describes electronic commerce that can be conducted over a
wireless device?
A. E-trade
B. M-commerce
C. Wireless business
D. Virtual commerce
Mobile commerce (m-commerce or wireless e-commerce) describes electronic

commerce conducted over a wireless device such as a smartphone, laptop, or
tablet PC.
AACSB: Technology
Blooms: Remember
general.
65. If you were to purchase a song from iTunes with your cell phone, what type of
technology would you be using?
A. M-commerce
B. Broadband
C. CDMA
D. Web 2.0

tablet PC.

AACSB: Technology
Blooms: Apply
general.
True / False Questions

66. E-commerce is commerce, but it is commerce accelerated and enhanced by IT,
in particular the Internet.
TRUE

accelerated and enhanced by IT, in particular the Internet.
AACSB: Technology
Blooms: Remember
Topic: Introduction
67. Path-to-profitability (P2P) is an informal marketing plan that outlines key

marketing issues.
FALSE

AACSB: Technology
Blooms: Remember
Topic: Introduction
68. B2G e-commerce occurs when a government entity sells products and services
to businesses.
FALSE

products and services to a government entity. Government to Business (G2B) e-
commerce occurs when a government entity sells products and services to
businesses.
AACSB: Technology
Blooms: Remember
69. G2G e-commerce refers to the electronic commerce activities performed within
a nation's government or between two more nations' governments including
providing foreign aid and the sharing of border patrol activities.
TRUE
Government to Government (G2G) e-commerce refers to the electronic

commerce activities performed within a nation's government or between two
more nations' governments including providing foreign aid and the sharing of
border patrol activities.
AACSB: Technology
Blooms: Remember
70. Buying U.S. savings bonds online is an example of a G2G.
FALSE


AACSB: Technology
Blooms: Apply
71. B2B e-marketplaces are virtual marketplaces in which businesses buy from and
sell products to each other.
TRUE
B2B e-marketplaces are virtual marketplaces in which businesses buy from and
sell products to each other, share information, and perform other important
activities.
AACSB: Technology
Blooms: Remember
72. The C2B e-commerce business model is a true inversion of the C2C e-
commerce business model.
FALSE

products and services to a business. The C2B e-commerce business model is a
true inversion of the B2C e-commerce business model.
AACSB: Technology
Blooms: Remember
73. In the B2C e-commerce business model, the consumer drives supply and the
business drives demand.
FALSE
In the B2C e-commerce business model, demand is driven by the consumer and
supply is driven by the business. In C2B it is inverted; the consumer drives
supply and the business drives demand.
AACSB: Technology
Blooms: Remember
74. Affiliate programs are excellent examples of a C2B e-commerce business

model.
TRUE
Affiliate programs are good examples of the C2B e-commerce business model.
AACSB: Technology
Blooms: Remember
75. eBay is a hybrid of both a B2C e-commerce site and a C2C e-commerce site.
TRUE
eBay is a hybrid of both a B2C e-commerce site and a C2C e-commerce site. It
is a B2C e-commerce site because it sells a service to you, that of giving you the
ability to interact in the auctioning of items. (You pay eBay only if you're the
seller, not the buyer.) And it is really an intermediary supporting your
engagement in a C2C e-commerce business model. That is, you use eBay to sell
products and services to other consumers, and you use eBay to buy products
and services from other consumers.
AACSB: Technology
Blooms: Remember
76. For consumers, specialty merchandise are higher-priced than convenience

merchandise items and are typically ordered on a less-frequent basis.
TRUE
For consumers, specialty merchandise are higher-priced (than convenience

merchandise) items, are typically ordered on a less-frequent basis, and often
require some sort of customization or feature specification.
AACSB: Technology
Blooms: Remember
77. Digital products are one of the best products to offer in a B2C environment.
TRUE
In B2C e-commerce, as a general rule, the best merchandise to sell is either

commoditylike, digital, or a combination of the two.
AACSB: Technology
Blooms: Remember
78. For a consumer, a digital product is the same no matter where it is purchased.
FALSE

they purchase it, and it is similar to convenience items in that respect.
AACSB: Technology
Blooms: Remember
79. Commoditylike business environments are typically easy to enter.
TRUE
Commoditylike business environments are typically easy to enter (i.e., they have
low barriers to entry).
AACSB: Technology
Blooms: Remember
80. Indirect materials are materials that are necessary for running a modern
corporation, but do not relate to the company's primary business activities.
TRUE

AACSB: Technology
Blooms: Remember
81. A reverse auction occurs when a seller posts a list of items for sale and then
accepts bids from interested buyers.
FALSE
lower bids until there is only one seller left. Reverse auctions create tremendous
"power" for the buyer because multiple sellers are competing for the same
business.
AACSB: Technology
Blooms: Remember
82. A horizontal e-marketplace is an electronic marketplace that connects buyers

and sellers in a given industry.
FALSE

and sellers across many industries, primarily for MRO materials commerce. A
vertical e-marketplace is an electronic marketplace that connects buyers and
sellers in a given industry.
AACSB: Technology
Blooms: Remember
83. A marketing mix is the set of technology tools that the firm uses to pursue its
marketing objectives in the target market.
FALSE
A marketing mix is the set of marketing tools that your organization will use to
AACSB: Technology
Blooms: Remember
84. A pop-under ad is a form of a pop-up ad that you do not see until you close
TRUE
AACSB: Technology
Blooms: Remember
85. An affiliate program between two e-commerce sites directs viewers from one
site to the other.
TRUE

AACSB: Technology
Blooms: Remember
86. The conversion rate is the count of the number of people who visit one site,
click on an ad, and are taken to the site of the advertiser.
FALSE
who actually buy something. A click-through is a count of the number of people
who visit one site, click on an ad, and are taken to the site of the advertiser.
AACSB: Technology
Blooms: Remember
87. Electronic checks are a mechanism for sending money from your checking or
savings account to another person or organization.
TRUE
Electronic check is a mechanism for sending money from your checking or

savings account to another person or organization. There are many
implementations of electronic checks, with the most prominent being online
banking.
AACSB: Technology
Blooms: Remember
88. Digital wallets are plastic cards the size of a credit card which feature an
embedded chip capable of storing digital information.
FALSE
chip on which digital information can be stored and updated. A digital wallet is
both software and information—the software provides security for the
transaction and the information includes payment information and delivery
information.
AACSB: Technology
Blooms: Remember
89. A client-side digital wallet is one that an organization creates for and about you
and maintains on its server.
FALSE
A client-side digital wallet is one that you create and keep on your computer;
you can then use it at a variety of e-commerce Web sites. A server-side digital
wallet is one that an organization creates for and about you and maintains on
its server.
AACSB: Technology
Blooms: Remember
90. Using a VAN, businesses can order products and send invoices electronically.
TRUE
A value-added network (VAN) is a B2B service that offers information-sharing

intermediary services between organizations based on various standards
regarding the format of the information and how it will be sent and received.
Using a VAN, businesses can easily, for example, order products and send
invoices electronically.
AACSB: Technology
Blooms: Remember
91. After the ordering of products and the sending of invoices, money needs to
exchange hands. This occurs via financial electronic data interchange.
TRUE

purchases.
AACSB: Technology
Blooms: Remember
92. Encryption scrambles the contents of a file so that no unauthorized person can
read it.
TRUE
Encryption scrambles the contents of a file so that you can't read it without
having the right decryption key.
AACSB: Technology
Blooms: Remember
93. A virtual good is a physical object that is sold over the internet.
FALSE
A virtual good is a nonphysical object that can be sold.
AACSB: Technology
Blooms: Remember
general.
94. Mobile computing is a broad general term describing your ability to use
TRUE

AACSB: Technology
Blooms: Remember
general.
95. M-commerce can be conducted over a laptop.
TRUE

tablet PC.
AACSB: Technology
Blooms: Remember
general.
Fill in the Blank Questions
96. _____ is commerce, but it is commerce accelerated and enhanced by IT.
Electronic commerce (e-commerce)

accelerated and enhanced by IT, in particular the Internet.
AACSB: Technology
Blooms: Remember
Topic: Introduction
97. A(n) _____ is a formal business plan that outlines key business issues.
path-to-profitability (P2P)

AACSB: Technology
Blooms: Remember
Topic: Introduction
98. _____ e-commerce occurs when a business sells products and services to a
government entity.
Business to government (B2G)

products and services to a government entity.
AACSB: Technology
Blooms: Remember
99. _____ e-commerce accounts when an individual sells products and services to a
government entity.
Consumer to government (C2G)
Consumer to Government (C2G) e-commerce occurs when an individual sells

products and services to a government entity.
AACSB: Technology
Blooms: Remember
100. _____ e-commerce occurs when a government entity sells products and services
to a business.
Government to business (G2B)
Government to Business (G2B) e-commerce occurs when a government entity

sells products and services to businesses.
AACSB: Technology
Blooms: Remember
101. _____ e-commerce refers to the electronic commerce activities performed

between a government and its citizens or consumers.
Government to consumer (G2C)
Government to Consumer (G2C) e-commerce refers to the electronic commerce

activities performed between a government and its citizens or consumers
including paying taxes, registering vehicles, providing information and services,
and so on.
AACSB: Technology
Blooms: Remember
102. _____ e-commerce refers to the electronic commerce activities performed within
a nation's government.
Government to government (G2G)

AACSB: Technology
Blooms: Remember
103. _____ e-commerce occurs when a business sells products and services to
customers who are primarily other businesses.
Business to Business (B2B)

AACSB: Technology
Blooms: Remember
104. _____ e-commerce occurs when a business sell products and services to
customers who are primarily individuals.
Business to Consumer (B2C)

AACSB: Technology
Blooms: Remember
105. _____ e-commerce occurs when an individual sells products and services to a
business.
Consumer to business (C2B)

products and services to a business.
AACSB: Technology
Blooms: Remember
106. _____ e-commerce occurs when an individual sells products and services to
another individual.
Consumer to consumer (C2C)
Consumer to Consumer (C2C) e-commerce occurs when an individual sells

products and services to another individual.
AACSB: Technology
Blooms: Remember
107. _____ refers to the ability of an organization to tailor products to customer

specifications.
Mass customization

AACSB: Technology
Blooms: Remember
108. _____ materials used in the normal operation of a business but not related to
primary business operations.
Indirect

AACSB: Technology
Blooms: Remember
109. _____ combines purchase requests from multiple buyers into a single large order,
which justifies a discount from the business.
Demand aggregation
Demand aggregation refers to the combining of purchase requests from

multiple buyers into a single large order, which justifies a discount from the
business.
AACSB: Technology
Blooms: Remember
110. _____ materials are materials that are used during production in a manufacturing
Direct
Direct materials are materials that are used in production in a manufacturing

AACSB: Technology
Blooms: Remember
111. A(n) _____ occurs when a buyer posts its interest in buying a certain quantity of
items, and sellers compete for the business by submitting successively lower
bids until there is only one seller left.
reverse auction
lower bids until there is only one seller left.
AACSB: Technology
Blooms: Remember
112. A(n) _____ e-marketplace brings together buyers and sellers from multiple
industries.
horizontal

and sellers across many industries, primarily for MRO materials commerce.
AACSB: Technology
Blooms: Remember
113. A(n) _____ e-marketplace brings together buyers and sellers from the same
industry.
vertical

sellers in a given industry (e.g., oil and gas, textiles, and retail).
AACSB: Technology
Blooms: Remember
114. _____ is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market.
Marketing mix
Marketing mix is the set of marketing tools that your organization will use to
AACSB: Technology
Blooms: Remember
115. A(n) _____ appears under a Web page and cannot be seen until the page is
closed.
pop-under ad
AACSB: Technology
Blooms: Remember
116. _____ encourages users of a product or service to ask their friends to use the
product or service as well.
Viral marketing
Viral marketing encourages users of a product or service supplied by a B2C e-

commerce business to encourage friends to join in as well.
AACSB: Technology
Blooms: Remember
117. _____ is arrangements made between e-commerce sites that direct users from
one site to the other.
Affiliate programs

AACSB: Technology
Blooms: Remember
118. _____ is a count of the number of people who visit one site, click on an ad, and
are taken to the site of the advertiser.
Click-throughs
A click-through is a count of the number of people who visit one site, click on
an ad, and are taken to the site of the advertiser.
AACSB: Technology
Blooms: Remember
119. _____ is the percentage of customers who visit the site who actually buy
something.
Conversion rate
who actually buy something.
AACSB: Technology
Blooms: Remember
120. _____ are Internet-based companies that make it easy for one person to pay
another person over the Internet.
Financial cybermediaries
A financial cybermediary is an Internet-based company that makes it easy for

one person to pay another person or organization over the Internet.
AACSB: Technology
Blooms: Remember
121. A(n) _____ is an electronic mechanism for sending money from your checking or
electronic check
An electronic check is a mechanism for sending money from your checking or

AACSB: Technology
Blooms: Remember
122. _____ is a system that permits a company to send bills to you over the Internet.
Further, you can even pay those bills online.
Electronic bill Presentment and Payment
Electronic Bill Presentment and Payment (EBPP) is a system that sends bills
(usually to end consumers) over the Internet and provides an easy-to-use
mechanism (such as clicking on a button) to pay for them if the amount looks
correct.
AACSB: Technology
Blooms: Remember
123. A(n) _____ combines software (to provide for a secure transaction), payment
information and deliver information.
digital wallet
A digital wallet is both software and information—the software provides security

for the transaction and the information includes payment information (for
example, the credit card number and expiration date) and delivery information.
AACSB: Technology
Blooms: Remember
124. _____ is used primarily in B2B to pay for purchases.
Financial electronic data interchange

purchases.
AACSB: Technology
Blooms: Remember
125. _____ is a transmission security method that ensures transactions are legitimate
as well as secure.
Secure Electronic Transaction (SET)

ensures transactions are legitimate as well as secure.
AACSB: Technology
Blooms: Remember
126. As defined by Chris Anderson, Editor-in-Chief of Wired Magazine, the term
"____" refers to the tail of a sales curve.
Long Tail
The Long Tail—a notion first offered by Chris Anderson, Editor-in-Chief of Wired
magazine, as a way of explaining e-commerce profitability—actually refers to
the tail of a sales curve
AACSB: Technology
Blooms: Remember
general.
127. _____ is a broad general term describing your ability to use technology to
wirelessly connect to and use centrally located information and/or application
software.
Mobile computing

AACSB: Technology
Blooms: Remember
general.
128. _____ describes electronic commerce conducted over a wireless device.
M-commerce

tablet PC.
AACSB: Technology
Blooms: Remember
general.

Chap 005

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chap 005

Uploaded by

Copyright:

Available Formats

`Chapter 05 Electronic Commerce: Strategies for the New Economy

Multiple Choice Questions

Electronic commerce (e-commerce) is commerce, but it is commerce

C. Customer strategy and outreach plan (CSOP)

A path-to-profitability (P2P) is a formal business plan that outlines key business

A. build a company that is Internet and brick-and-mortar based.

B. develop IT systems capable of processing millions of transactions quickly.

C. develop a path-to-profitability (P2P) plan.

D. disperse risk amongst a group of investors.

Business to Government (B2G) e-commerce occurs when a business sells

Consumer to Government (C2G) e-commerce occurs when an individual sells

Government to Business (G2B) e-commerce—occurs when a government entity

Government to Consumer (G2C) e-commerce refers to the electronic commerce

AACSB: Reflective Thinking

Business to Business (B2B) e-commerce occurs when a business sells products

Business to Business (B2B) e-commerce occurs when a business sells products

AACSB: Reflective Thinking

A. Virtual Markets (VM)

Business to Consumer (B2C) e-commerce occurs when a business sell products

Business to Consumer (B2C) e-commerce occurs when a business sell products

AACSB: Reflective Thinking

A. Customers interact freely in a B2B marketplace; they do not in a B2C

B. Consumers are fickle in a B2B marketplace; long time relationships are

Consumer to Business (C2B) e-commerce occurs when an individual sells

AACSB: Reflective Thinking

Consumer to Consumer (C2C) e-commerce occurs when an individual sells

A. a B2G e-commerce site and a G2C e-commerce site.

B. a G2C e-commerce site and a C2G e-commerce site.

C. a B2B e-commerce site and a C2B e-commerce site.

D. a B2C e-commerce site and a C2C e-commerce site.

A. Mobile computing and traditional bulky communication devices

B. Web based computing and database management

C. Alternative operating environments such as Mac OS and Windows

D. End consumers and other businesses

Just as in a brick-and-mortar business, in the e-commerce world you focus your

Convenience products are low-priced but needed on a frequent basis.

Commoditylike merchandise, to your customers, is the same regardless of where

AACSB: Reflective Thinking

A. They are similar to specialty items.

B. The buyer power is low.

C. They have high barriers to entry.

D. They have low barriers to entry.

Commoditylike merchandise, to your customers, is the same regardless of where

A. A Web site that gains popularity through e-channels.

B. A Web site that is accessed frequently because it is able to reroute potential

C. A Web site that attracts consumers and encourages them to return.

D. A Web site that is located by pop-up and pop-under ads.

Mass customization is the ability of an organization to give its customers the

C. Consumer specialty purchasing (CSP)

Mass customization is the ability of an organization to give its customers the

AACSB: Reflective Thinking

Maintenance, repair, and operations (MRO) materials (also called indirect

D. Small business coalition (SBC)

Demand aggregation refers to the combining of purchase requests from

Direct materials are materials that are used in production in a manufacturing

C. request for bid (RFB)

A. Reverse auction is most often found in B2B whereas mass customization is

B. Reverse auction requires a bid from consumers whereas mass customization

C. Mass customization require a click-and-mortar environment; reverse auctions

D. Mass customization can sell digital products; reverse auctions sell

Mass customization, the ability of an organization to give its customers the

AACSB: Reflective Thinking

C. Reverse auctions marketplace