Chapter 10 Multinational e-Commerce: Strategies and Structures

MULTIPLE CHOICE

1. Ebay is a prime example of which form of e-commerce?

a. Business to business transactions (B2B)
b. Business to consumer transactions (B2C)
c. Consumer to business transactions (C2B)
d. Consumer to consumer transactions (C2C)
ANS: D
AACSB Technology, Information technologies

PTS: 1

2. An Internet host that allows users to send encrypted data so that those outside the connection cannot
see the information is a
a. A secure server.
b. An internet host.
c. A computer that has its own Internet Protocol address.
d. A computer that has its own World Wide Web address.
ANS: A
AACSB Technology, Information technologies

PTS: 1

3. Secure servers and internet hosts are two indicators of the

a. Internet infrastructure.
b. Web influence.
c. global presence of e-commerce.
d. Internet security.
ANS: C
AACSB Technology, Information technologies

PTS: 1

4. Traditional internet metrics do not quantify the use of new internet devices and features, including:
a. Smart phones.
b. Cloud-computing.
c. Social networking.
d. All of the above.
ANS: D
AACSB Technology, Information technologies

PTS: 1

5. Companies such as manufacturers that sell directly to consumers (Dell), and companies that provide
online shipping services (FedEx, UPS) are all examples of which of the following?
a. Web customers
b. B2B
c. C2B
 d. B2C
ANS: D
AACSB Technology, Information technologies

PTS: 1

6. Which of the following is NOT one of the necessary steps to ensure a successful E-Commerce
strategy?
a. Building on current business models and experimenting with new e-commerce models
b. Allocating resources to the e-commerce business
c. Making sure that the entire firm is prepared to embrace the e-commerce model
d. Training all upper level management in computer programming
ANS: D
AACSB Technology, Information technologies

PTS: 1

7. The brick and mortar part of the company refers to

a. The degree of interaction between traditional business operations and the company's e-
commerce system.
b. The company's traditional business operations.
c. The company's management information systems.
d. The extent of computer use in the company.
ANS: B
AACSB Technology, Information technologies

PTS: 1

8. Independent operations between the brick and mortar part of a company and its e-commerce system
offer which of the following benefits?
a. The independent operation can move faster and be more entrepreneurial when freed from
corporate bureaucracy and it can seek funding from deep pockets of venture capitalists.
b. The independent operation can benefit from cross-promotion of shared products, shared
customer information, increased large-quantity purchase leverage, and economies of scale
by using the same distribution channels.
c. The brick and mortar part of the company can transfer learning to the e-commerce system
of the company.
d. Independent operations can facilitate synergy between the brick and mortar part and the e-
commerce system.
ANS: A
AACSB Technology, Information technologies

PTS: 1

9. According to the text, which of the following is NOT one of the management challenges companies
will face as they develop their e-commerce businesses?
a. Attracting, retaining, and developing employees in the e-commerce unit
b. Deciding which e-commerce functions to outsource
c. Finding funds to develop the e-commerce business
d. Finding ways to provide individuals with growth opportunities and job fulfillment to
encourage employee retention in the e-commerce business
 ANS: C
AACSB Technology, Information technologies

PTS: 1

10. Which of the following strategies is a pure e-business least likely to be concerned with when facing e-
commerce challenges?
a. Developing information and management systems to respond to rapid growth
b. Attracting and retaining e-commerce-capable talent
c. Altering HR programs to suit the different skill requirements of e-commerce employees
d. Maintaining rapid decision making, creativity, innovation, and flexibility
ANS: C
AACSB Technology, Information technologies

PTS: 1

11. Which of the following statements regarding globalizing through the Internet is not true?
a. A company that globalizes through the Internet does not have to be concerned with the
global-local dilemma.
b. A company that globalizes through the Internet still faces the same challenges that a brick
and mortar company faces.
c. A company that globalizes through the internet must still address the traditional problems
of multinational business (i.e., currencies, local laws, infrastructure for delivery).
d. A company that globalizes through the Internet must still decide whether to go global or to
require localization to national or regional levels.
ANS: A
AACSB Technology, Information technologies

PTS: 1

12. According to the text, which of the following areas is not one of the areas that e-commerce companies
work in?
a. Moving bits or computerized information
b. Moving money in payment flows
c. Providing Internet services
d. Moving physical products
ANS: C
AACSB Technology, Information technologies

PTS: 1

13. Which of the following businesses poses the highest degree of difficulty in e-commerce?
a. Portals and infomediaries
b. Businesses such as Travelocity, and those that sell digital music, and software
c. Businesses that rely on a physical infrastructure
d. Brick and mortar companies
ANS: C
AACSB Technology, Information technologies

PTS: 1
14. According to the text, the degree of difficulty in conducting global e-commerce businesses is primarily
dependent on
a. The financial requirements.
b. The availability of management talent.
c. The infrastructure requirements.
d. The telecommunications infrastructure requirements.
ANS: C
AACSB Technology, Information technologies

PTS: 1

15. Which of the following types of companies are more likely to face challenges when they decide to
enter the international market through the Internet?
a. Large multinational firms that already have an existing global presence.
b. Large multinationals firms that already have existing international operations.
c. Smaller firms and firms new to international commerce.
d. Small firms that already have an existing global presence.
ANS: C
AACSB Technology, Information technologies

PTS: 1

16. The major opportunities of e-commerce globalization include all of the following EXCEPT
a. Cost reduction.
b. Efficiencies.
c. Speed of access and convenience.
d. Access to new sources of financing.
ANS: D
AACSB Technology, Information technologies

PTS: 1

17. Which of the following is NOT one of the major threats to e-commerce globalization?
a. Cost of site construction, maintenance and upgrades
b. Cost of training in top managers in computer programming
c. Easily copied e-commerce models
d. Traditional cross-border transaction and other cross-cultural complexities
ANS: B
AACSB Technology, Information technologies

PTS: 1

18. According to the text, which of the following is NOT one of the factors to take in consideration when
picking a country to start an e-business?
a. Internet population of at least 5%
b. Countries with market inefficiencies, such as formerly state-controlled markets
c. Countries that participates in at least one free trade agreement
d. Countries that have remarkable education systems
ANS: D
 AACSB Technology, Information technologies

PTS: 1

19. According to the text, where is the greatest potential for e-commerce businesses?
a. North America
b. The European Union
c. South America
d. Asia
ANS: C
AACSB Technology, Information technologies

PTS: 1

20. Which of the following statements does not accurately describe the most likely form of organizing a
multinational e-business?
a. A multinational e-business is three-tiered mixing global and local functions.
b. Corporate headquarters of the business provides the vision, strategy and leadership that
drive the marketing of products worldwide.
c. Local subsidiaries of the business take charge of the functions better done locally in each
country.
d. Corporate headquarters of the business provides the vision, strategy and leadership and
also takes charge of the local strategies in each country.
ANS: D
AACSB Technology, Information technologies

PTS: 1

21. Which of the following is not one of the necessary electronic capabilities required for successful online
presence?
a. Software to process pricing in multiple currencies
b. Ability to provide support in English in the various service centers
c. Systems that check regulatory compliance with local and international laws
d. Fraud protection
ANS: B
AACSB Technology, Information technologies

PTS: 1

22. E-commerce enablers are

a. Software that provide electronic payment models in addition to credit cards.
b. Systems that calculate and show purchase information on international shipping, duties,
and local taxes such as VAT.
c. Companies that provide services and software that translate Web sites, calculate shipping,
value-added taxes, duties, and other charges unique to each country.
d. Equity partners in multinational businesses.
ANS: C
AACSB Technology, Information technologies

PTS: 1
23. Multinational e-commerce enablers exist because
a. Many companies including very large ones, do not have the internal resources or abilities
to conduct all e-commerce functions.
b. There is a shortage of employees with e-commerce skills.
c. It is extremely difficult for a brick and mortar company to develop an e-commerce
strategy.
d. It is more beneficial to have a strategic partner when conducting multinational e-
commerce.
ANS: A
AACSB Technology, Information technologies

PTS: 1

24. MNC’s face rising pressures to maintain the __________ of their customers.
a. Data
b. Privacy
c. Support
d. Repeat business
ANS: B
AACSB Technology, Information technologies

PTS: 1

25. Cost reduction, technology and efficiencies are considered to be the ________ of e-commerce.
a. Attractions
b. Challenges
c. Deterrents
d. Keys
ANS: A
AACSB Technology, Information technologies

PTS: 1

26. Which of the following is not true regarding e-commerce?

a. Refers to the selling of goods and services over the Internet
b. Includes products that are delivered offline such as UPS shipping a book purchased
through Amazon.com
c. Does not include goods and services delivered online, such as downloaded computer
software
d. Includes goods and services delivered online, such as downloaded computer software
ANS: C
AACSB Technology, Information technologies

PTS: 1

27. Which of the following statements is NOT true regarding Business-to-Business transactions (B2B)?
a. B2B is not as important as business-to-consumer (B2C) e-commerce businesses.
b. B2B allows instant information sharing between business customers and suppliers.
c. B2B allows suppliers to know what their customers want and allows businesses to know
price, availability and product characteristics immediately.
d. B2B transactions make up more than 70 % of all current e-commerce business.
 ANS: A
AACSB Technology, Information technologies

PTS: 1

28. Channel conflicts, cost of site construction and maintenance are considered to be _____ of e-
commerce.
a. Attractions
b. Challenges or deterrents
c. Linking services
d. Supporting software
ANS: B
AACSB Technology, Information technologies

PTS: 1

29. Which of the following services is not provided by e-commerce enablers?

a. Services and software that translate Websites
b. Software that calculate shipping, value-added, and duties
c. Receiving customers purchased goods and storing, packaging, and shipping to the
customer
d. Training programs to understand the local culture
ANS: D
AACSB Technology, Information technologies

PTS: 1

30. E-commerce potential is substantial in South America because

a. Of the Mercosur trade group.
b. Of trade with the U.S.
c. Because of the demographic characteristics.
d. Of the ASEAN trade group.
ANS: A
AACSB Technology, Information technologies

PTS: 1

31. Price comparison websites which searches online stores around the world to provide price comparisons
and shipping and delivery information represents which form of e-commerce?
a. B2B (business-to-business)
b. B2C (business-to-consumer)
c. C2C (consumer-to-consumer)
d. C2B (consumer-to-business)
ANS: D
AACSB Technology, Information technologies

PTS: 1

32. Which of the following is NOT one of the ways to modify a website to make it global?
a. All company websites should first show the corporate website in the home country.
 b. Provide a prominent list of languages used by the company's web site
c. Provide the firm's privacy statements in all local languages
d. Provide a culturally-sensitive website
ANS: A
AACSB Technology, Information technologies

PTS: 1

33. Which of the following is NOT a benefit of integrated brick-and-mortar and internet businesses?
a. The integrated operation can benefit from shared customer information.
b. The integrated operation can move faster and be more entrepreneurial.
c. The integrated operation can benefit from cross-promotion of shared products.
d. The integrated operation can benefit from economies of scale by using the small
distribution channels.
ANS: B
AACSB Technology, Information technologies

PTS: 1

34. Which of the following does NOT represent a necessary component of the ideal multinational e-
business?
a. Corporate headquarters which represents the global core in charge of providing a common
vision and strategy
b. Managers at headquarters having worldwide responsibility for their shared functional
areas responsibility
c. Local subsidiaries which actually deliver the goods and also taking charge of functions
best done locally
d. All of the above are necessary aspects of the multinational e-business
ANS: D
AACSB Technology, Information technologies

PTS: 1

35. The internet has enabled the emergence of a new form of multinational, known as
a. Internet Service Providers.
b. Virtual enablers.
c. Internet businesses.
d. Born-globals.
ANS: D
AACSB Technology, Information technologies

PTS: 1

36. The retail sale of toys from the Wal-Mart website represents which form of transaction?
a. B2C
b. B2B
c. C2C
d. C2B
ANS: A
AACSB Technology, Information technologies
 PTS: 1

37. Having systems in place to ensure that collected information is accurate and reliable represents which
form of information security?
a. Confidentiality
b. Availability
c. Integrity
d. Authentication
ANS: C
AACSB Technology, Information technologies

PTS: 1

38. Confidentiality
a. Is ensuring that collected information is available to authorized users.
b. Is ensuring that collected private information is protected and safeguarded.
c. Is ensuring the privacy of online shoppers.
d. Is ensuring that systems are in place to ensure that only legitimate individuals are using
systems.
ANS: B
AACSB Technology, Information technologies

PTS: 1

39. Southeast Asian countries represent opportunities for e-commerce growth due to
a. Spanish language websites.
b. Membership in ASEAN.
c. Global demand.
d. Internet economy.
ANS: B
AACSB Technology, Information technologies

PTS: 1

40. A new trend is that multinationals are using _______________ to their advantage.
a. Tall hierarchical web structures
b. Tacit knowledge
c. User Generated Content
d. None of the above
ANS: C
AACSB Technology, Information technologies

PTS: 1

ESSAY

1. What is e-commerce? What are the main types of e-commerce transactions? Discuss some of the
reasons why B2B transactions make up a significant percentage of current e-commerce business?
 ANS:
Answers will vary but should mention that e-commerce is the selling of goods or services over the
Internet, which can be delivered online or offline. B2B means business-to-business sales; C2C means
consumer-to-consumer transactions; B2C indicates business-to-consumer sales. The Internet is
especially useful in B2B transactions because it allows customers and suppliers within supply chains
to know price, availability, and product characteristics immediately.

PTS: 1

2. Discuss some of the basic steps to building a successful e-commerce strategy.

ANS:
Answers will vary. Students’ answers should reflect a detailed understanding of the seven steps:
leadership, build on current business models/experiment with new e-commerce models, meet the
challenge of developing an e-commerce organization, allocate resources, have an e-commerce strategy,
develop an appropriate e-commerce system, and measure success.

PTS: 1

3. What is a brick and mortar part of a company? What are some benefits of integrating the brick and
mortar part of an organization with their Internet business? Why do some companies such as Barnes
and Nobles still choose to have their Internet division operate independently from their brick and
mortar part?

ANS:
Answers will vary but should reflect students’ understanding of the key concepts: Traditional business
operations are often called the brick-and-mortar part of the company. The degree of integration
between brick-and-mortar operations and the Internet business can occur anywhere in the value chain
from the procurement of raw material to after-sales service. The independent operation can move
faster and be more entrepreneurial when freed from corporate bureaucracy. It can seek funding from
the deep pockets of venture capitalists willing to invest in e-commerce companies. The integrated
operation, on the other hand, can benefit from the cross-promotion of shared products, shared customer
information, increased large-quantity purchasing leverage, and economies of scale by using the same
distribution channels.

PTS: 1

4. What are some of the major factors a company needs to take into consideration when setting up a
global e-business? Why do companies with already established international brick and mortar units
have an advantage in setting up global e-business compared to firms with no international presence?

ANS:
Answers will vary but should reflect students’ understanding of the key concepts and their critical
thinking skills: A company considering a global e-business still must solve the global-local dilemma,
meaning managers must still decide whether the company’s products or services are global in content
and delivery or require localization at the national or regional level. E-commerce companies also must
address the traditional multinational business problems relating to national and business cultures and
national institutional contexts. Companies with established brick and mortar units have already
resolved many of these issues.

PTS: 1
5. What are some of the major factors to take into consideration when picking a country for setting up an
e-commerce business? Why do trading blocks such as Mercosur, ASEAN, and the European Union
present significant potential for e-commerce businesses?

ANS:
Answers will vary but should demonstrate students’ understanding of the key concepts. Web
entrepreneurs should target countries based on two factors: First, attractive markets for e-commerce
are those with market inefficiencies. Second, target markets with attractive demographic
characteristics include locations with an Internet population of at least 5 percent, a high literacy rate (to
predict the future growth of the Internet population), a country that participates in at least one free
trade agreement, and a government with a viable legal system. The open borders and common
currency among countries involved in trade agreements make for fertile ground for e-commerce
growth.

PTS: 1

6. Discuss the three-tiered ideal organizational structure of a multinational e-corporation. What are some
of the essential functions served by the headquarters of the multinational e-corporation? Why should
company headquarters not be responsible for local strategies?

ANS:
Answers will vary. Students’ answers should include many of the following main points:
1. Corporate headquarters represents the global core that supplies the vision, strategy, and leadership
driving the electronic marketing of worldwide products or services.
2. Headquarters also provides shared services, such as the network infrastructure. Managers at
headquarters and in the shared functional areas have worldwide responsibility for their operations.
3. Local subsidiaries, which actually deliver the goods, take charge of functions that are better done
locally, such as managing the supply chain and dealing with regulations. These organizations try to
solve the global-local dilemma with the integration of similar technical functions, such as Web server
design, while making necessary adaptations such as Web site translations.

PTS: 1

7. What are e-commerce enablers? Why are e-commerce enablers becoming increasingly popular?
Discuss some of the essential services provided by e-commerce enablers.

ANS:
Answers will vary but should reflect students’ understanding of the concept. E-commerce enablers
provide services and take on functions such as receiving the customers’ purchased goods, storing,
packing, and eventual shipping to the customer. They offer software that translate Web sites and
calculate shipping, value-added taxes, duties, and other charges unique to each country, and help keep
companies in compliance with taxes and other legalities. Enablers exist because many companies of all
sizes do not have the internal resources or capabilities to conduct all the required e-commerce
fulfillment.

PTS: 1

8. Discuss some of the technical capabilities that are needed for multinational e-commerce.

ANS:
Answers will vary. Among the answers students should mention are:
1. Software to process pricing in multiple currencies.
2. Systems that calculate and show purchase information on international shipping, duties, and local
taxes.
 3. Systems that check regulatory compliance with local and international laws.
4. The ability to give support in multilingual service centers.
5. Fraud protection.
6. Electronic payment models in addition to credit cards.

PTS: 1

9. Discuss some of the major problems companies face when they try to globalize their Web sites. What
can companies do to face these challenges?

ANS:
Answers will vary but should demonstrate students’ understanding of these issues. Developing a
global Web site entails challenges to organizations beyond cultural sensitivity and language
differences. Many firms discover that they need to adapt their organizations to the information flow
and customer demands created by Web locations accessed from anywhere in the world. The resultant
changes in organizational structure and in internal information systems make the company more
globally integrated.

PTS: 1

10. What is e-commerce security? Discuss the four key aspects of information security. What can a
multinational do to ensure that its e-commerce system is secure?

ANS:
Answers will vary. Students’ answers should state that e-commerce security is the degree to which
customers feel that their private, personal information is safe in the hands of online companies
collecting it. Four key aspects include: (1) confidentiality (making sure that private information is
protected), (2) availability (ensuring that information is accessible to authorized users), (3) integrity
(ensuring that the information collected is accurate and reliable), and (4) authentication (having
systems in place to ensure that persons using the systems are legitimate). To ensure a secure system,
experts suggest the use of: (1) firewalls,21 antivirus protection software, (2) data encryption and
several levels of authentication for users, and (3) abiding by privacy rules to address internet security
issues.

PTS: 1