Chapter 12
Launching a Successful Online Business and EC Projects
As you read the textbook and go through this lesson, think
about the following questions:
o How
does a business go about justifying the expense of an online component or
initiating a business online?
o What
are some common sources of funding?
o What
are some of the most common e-commerce initiatives that are added to
traditional businesses?
o How
can websites be classified via functionality?
o What
are some major web hosting options?
o What
are domain names?
o What
are some of the pitfalls of managing content on the web?
o What
are the components of sound website design?
o What
are components of e-commerce architecture?
o What
are several options for developing an e-commerce website?
o How
does an e-business go about selecting vendors and software to support its
business?
Upon completion of this chapter, you
will be able to:
1. Understand the fundamental requirements
for initiating an online business.
2. Describe the process of initiating and
funding a startup e-business or large e-project.
3. Understand the process of adding EC initiatives
to an existing business.
4. Describe the issues and methods of
transforming an organization into an e-business.
5. Describe the process of acquiring websites
and evaluate building versus hosting options.
6. Understand the importance of providing and
managing content and describe how to accomplish this.
7. Evaluate websites on design criteria, such
as appearance, navigation, consistency, and performance.
8. Understand how search engine optimization may
help a website obtain high placement in search engines.
9. Understand how to provide some support e-services.
10. Understand the process of building a webstore.
11. Know how to build a webstore with
templates.
Answers
to Pause/Break Section Review Questions
Section 12.1
Review Questions
1. List the major steps in the process of building an online
business.
·
Identify
a consumer or business need in the marketplace.
·
Investigate
the opportunity.
·
Determine
the business owner’s ability to meet the need.
2. Describe the formation process of a typical online business.
·
Identify customer or business need.
·
Investigate.
·
Determine ability to meet the need.
3. What special requirements must an online business consider in its
formation? In e-business planning?
Online business formation must consider the unique online aspects of the
business as well as appropriate products and services. In e-business planning, the major difference
is the understanding of the unique aspects of the Internet and the sales
channel.
4. What is a business case and how does it
contribute to business success?
Business case – a document that is used to justify the investment of
internal, organizational resources in a specific application or project
A business case can help an entrepreneur focus their plans, and gain
financial support for them.
5. Describe initial, secondary, and IPO funding options available to
a startup.
·
Initial funding is usually from an incubator or
an angel investor.
·
Secondary funding is usually from a venture
capitalist.
·
An IPO is an initial public offering of stock to
the investment community and individual investors at large.
6.
What is an angel investor? An incubator?
·
Angel investor – a wealthy individual who
contributes personal funds and possibly expertise at the earliest stage of
business development
·
Incubator – a company, university, or nonprofit
organization that supports businesses in their initial stages of development
7. How does a VC company support a
start-up?
In addition to providing capital, VCs may also provide strategic
assistance and connections.
Section 12.2
Review Questions
1. Which EC initiatives are
brick-and-mortar organizations most likely to add?
Initiatives include storefronts, portals, e-procurement and auctions.
2. Describe the steps in becoming
an e-business and the major activities involved in the process.
The steps are depicted in Exhibit 12.2.
The processes include the evaluation of current abilities, strategy
formation, creation of new tools, processes and abilities and the launch and
operation of the e-business.
3. List some of the issues
involved in transforming to an e-business.
Some example issues may include legacy systems and processes, resistance
from staff, costs and time to implement new systems and processes.
4. Define BPR and BPM.
Business Process Reengineering
(BPR) and business process management (BPM) are two systems to evaluate and
improve business activities to create efficiency and increase organizational
effectiveness. Business process management (BPM) is a method for business
restructuring that combines workflow systems and redesign methods; covers three
process categories—people-to-people, systems-to-systems, and systems-to-people
interactions.
5. Describe the major characteristics
(key points) of organizational transformation.
·
The organization’s ways of thinking and vision
will fundamentally change.
·
There will be revolutionary changes to the
process and context involved in creating a new organizational vision and
rethinking business models and business strategy.
·
The change must involve a substantial break from
previous ways of acting. It will likely involve discovering and developing new
opportunities and new ways of doing things.
·
The change must permeate through and impact the
behavior of a majority of organizational members.
·
The change will involve creating new systems,
procedures, and structures that not only enable and dictate how new processes
function, but that will also impact the deeply embedded business models and
understandings that drive the organization.
Section 12.3
Review Questions
1. Distinguish between informational, interactive, transactional and
collaborative Web sites.
Informational Web site – a Web site that does little more than provide
information about the business and its products and services
Interactive Web site – a Web site that provides opportunities for the
customers and the business to communicate and share information
Transactional Web site – a Web site that sells products or services
Collaborative Web site – a Web site that allows for individuals or
groups to collaborate
2. List the six steps in building a Web site.
·
Select a host
·
Register a domain name
·
Create/manage content
·
Design the site
·
Construct and test
·
Market and promote
Section 12.4 Review
Questions
1. What are the advantages and disadvantages offered by the different
Web hosting options?
Storebuilder services are quick and inexpensive, but generally lack
customization and strong branding. ISP
hosted sites can offer customization and strong branding, but may be more
expensive and difficult to deploy.
2. What is a mirror site? Why would a company use a mirror site?
A mirror site is an exact duplicate of the original Web site that is
hosted at another location. They are
used to create redundancy and balance loads.
3. What criteria should an online business
consider in choosing a Web hosting service?
·
Service quality
·
Services offered
·
Price
4. What is a domain name? Why is selecting a domain name an important
step for going online?
A domain name is a name-based address that identifies an
Internet-connected server. It is the
“address” that potential customers will use to access the site.
5. How are domain names controlled
in order to avoid duplication?
Domain names are controlled centrally
by ICANN to avoid any duplication.
Section 12.5
Review Questions
1. What is content? Dynamic content?
Personalized content?
Content – the text, images, sound and video that make up a Web page
Dynamic content – content that changes rapidly
Personalized Content – Web content that is prepared to match the needs
and expectations of the individual visitor
2. How can a business use content for cross selling? For up selling?
For promotion?
Content can be used to persuade customers to buy similar or enhanced
products. It can also be used to promote
a site or an item for sale.
3. Where does content come from? Identify four sources of Web site
content. What is content creation?
Content can be created locally, purchased, or automatically generated. Student answers will vary on sources of
content. Content creation is the development of content material.
4. What is syndication? How does it relate to content?
Syndication is the referral of information. Content may be freely syndicated from some
sites/services, as long as credit is given, or a price may be charged..
5. What e-newsletter content does a
subscriber value most?
It varies based on the user and industry.
6. What is the purpose of content management?
It is keeping content fresh, accurate, compelling, and credible.
7. Describe content maximization.
Using content as much as possible to make up for its creation price.
Section 12.6
Review Questions
1. Describe 10 criteria used to judge Web site design.
1. Build it for users (useful for the user, not
necessarily the company).
2. Make it useful (e.g. usability test).
3. Make information easy to find.
4. Accommodate all users, including those with
disabilities.
5. Build a comprehensive, responsive, and
effective site.
6. Measure the site against the best of its peer
group.
7. Build trust; be up front about security,
privacy, and marketing policies.
8. Assign ownership to users, but work as a team
with the technical people.
9. Set priorities; do the most beneficial activities
first.
10. Watch for new developments and encourage
innovation.
2. Name four site navigation aids.
·
Navigation bar
·
Navigation column
·
Site map
·
Searchable Web site
3. Why is performance a key design criterion? What causes slow
performance? What can be done to decrease download time?
Performance affects the amount of time a user may stay on the site. Slow performance can come from many sources
including incorrect code and excessive images/media. Download time can be decreased by
streamlining the code and media used.
4. Describe some issues for proper use of
color and graphics on a Web site.
Student responses will vary. Some
example issues may include the use of culturally correct colors to match the
product, as well as a blend of colors that enhances readability of the
site. Graphics should complement the
site and be quick-loading.
5. What is usability? List the major criteria
used to determine usability.
Web site
usability is a measure of the ease-of-use of a site by its audience. Factors involved include:
·
Ease of learning
·
Efficiency of
use
·
Memorability
·
Error frequency
& severity
·
Subjective
satisfaction
Section 12.7
Review Questions
1. List the three options for Web site
construction.
·
Internal development
·
External development
·
Partnering
2. What factors favor internal development of a Web site? What
factors favor external development?
Internal development provides absolute control while external
development can rely on experts.
3. Describe
the process required for an online business to accept credit cards over the
Internet.
· Open
a merchant account
· Purchase
credit card processing software
· Integrate
the software into the transaction system
4. List
four types of Web site content that can promote the Web site internally.
Purchasing
Compelling
content
Useful
links
Useful
features
5. What is search engine optimization? Why is it important?
SEO – the application of strategies intended to position a Web site at
the top of Web search engines. It is
important because search engines can be a marketing tool.
6. List ways Web sites can use content to manage customer
relationships.
See Exhibit 12.10.
Section 12.8
Review Questions
1. List the various
options for acquiring a storefront.
Options include: build from scratch, build from components,
build with templates, or use someone else’s storefront.
2. What are the
advantages of building with templates?
What are the disadvantages?
Templates tend to be fast and inexpensive, but may look
standardized and may not be full-featured.
3. List the typical
features of a storefront.
Storefronts should allow for the presentation, selection
and purchase of products.
4. What are some of the
selection criteria for a software option?
The options are varied but include the features required by
the customer base, the cost, the difficulty of implementation, and the
difficulty of upkeep.
Answers
to EC Application Case Questions
EC Application Case 12.1: Innovation and Creativity at Amazon.com
Questions
1. What were the opportunities and needs in the consumer market
that inspired Bezos to create Amazon.com?
There was a large market for books, but bookstores could
not stock all options. New (at the time)
EC technologies made it possible to sell books online.
2. What factors, at both personal and
business levels, led Bezos to his brilliant idea?
His experience in EC and evaluating
Internet opportunities was coupled with interest risk taking.
3.
Visit Amazon.com and find some of their recent innovations.
Student responses will change based
on when they go to the site.
EC Application Case 12.2: Akamai Technologies
Questions
1. What services does Akamai
provide?
They provide services that
help Internet congestion through intelligent traffic controls.
2. What is the company’s
revenue model?
Fees are charged for each data center in use.
3. What are the service’s
limitations?
Traffic can be routed intelligently, but it does not increase
available bandwidth.
EC Application Case 12.3: THE WEBSITE DESIGN OF ALIBABA.COM
Questions
1. Go to alibaba.com and examine the layout
and features of the site. Is the site navigation effective?
The site appears to be very user-friendly.
2. Alibaba.com is designed to help China’s small
and medium enterprises (SMEs). Do you think the interface design is appropriate
for nontechnical users?
Student opinions will vary, but the site
is very straightforward.
3. Do the user communities of the website
help to promote loyalty and trust of its users?
Yes, the addition of social elements
should drive visits.
4. Comment on the use of color and
graphics on the website.
Student opinions will vary,
EC Application Case 12.2: BAIDU’S SEARCH FOR SUCCESS
Questions
1. Baidu is nicknamed “China’s Google.”
How is Baidu’s business model different from that of Google?
Baidu focuses on the Chinese market,
Google has a global focus.
2. Baidu offers paid search placement. Do
you think such website ranking services will promote unfair competition?
Student opinions will vary – this is
similar to Google.
3. Baidu’s localization strategy (focus on
Chinese language search engine service) is its biggest competitive advantage.
Explain why.
By focusing on a limited customer base,
the company is able to adapt its product to meet that groups needs
specifically. A global entrant will need
to compromise options to fit a variety of tastes.
4. What lessons does the Baidu case offer
to e-commerce startups and entrepreneurs?
It is possible to be successful competing
against a large firm, especially with a focused strategy.
Answers to Discussion Questions
1. Compare and contrast
setting up a traditional, brick-and-mortar business and an online business.
Consider factors such as entrepreneurial skills, facilities and equipment, and
business processes.
Both processes
are similar in the planning phases with the exception of understanding unique
online aspects. Internet understanding
is critical in the online business. An
off-line business obtains physical settings (storefront, fixtures, etc.)
whereas an online business creates Web sites and systems.
2. How is an e-business plan different from a traditional business
plan?
In e-business planning the major difference is the understanding of the
unique aspects of the Internet and the sales channel.
3. Describe
organizational transformation, and discuss some of the difficulties involved.
Organizational transformation is the process of changing an organization
to be more competitive. Student
responses on the areas of difficulty will vary, but may include interpersonal
issues and existing systems/processes.
4. How would
you decide which Web site hosting option an online business should use? List
and briefly explain factors to include in your decision.
Student answers
will vary. Criteria would include:
·
Service quality
·
Services offered
·
Price
5. Who should
be on a Web site development team for a small business? For a large business?
Both teams
should include involved stakeholders and experts in design/development. External consultants may or may not be
included.
6. Several
times in this chapter online business owners are advised to gather competitive
intelligence from competitors (e.g., in SEO, what sites link to competitor
sites). Is this ethical? Why or why not?
Student answers
will vary. In almost all cases this
information is in the public domain and it is generally considered ethical to
use it.
7. Why is a store such as cattoys.com not economically feasible
off-line?
It would be
difficult to generate a consumer base for the niche products in any geographic
region.
8. What are
the advantages and disadvantages of using templates to build a storefront?
Advantages may
include ease of use, quick production, improved quality (for novices) and
expert support. Disadvantages could
include reduction of control, limited templates/customizations and a fixed
feature set.
9. Yahoo! provides many
services, including Web site hosting, storebuilding tools, and an online
mall. List the benefits of these
services. What are the drawbacks, if
any?
Student answers
will vary based on the perceived benefits.
10. How is
usability related to Web site design?
Website should
be designed to maximize usability.
Usablity is important to ensure that the user can quickly and easily
accomplish their goals at the site. Good
usability increases the chances that a user will stay longer and return in the
future.
Topics for Class Discussion and Debates
1. Compare and contrast the creation of a new online business and the
establishment of an online initiative in an existing company. Consider factors
such as resource acquisition, startup processes, and competitor analysis.
Student opinions will vary. The discussion will focus on the advantages
and disadvantages of creating something new versus working within an
established entity.
2. Discuss the logic of outsourcing the
combined Web hosting and site construction. What are some of the disadvantages?
Student opinions will vary. The debate will focus on the issues of ease
versus control.
3. What are the trade-offs in giving the
customer everything possible (e.g., personalized content, high-resolution graphics,
a feature-full site) and the fundamental rules of Web design?
Student opinions will vary. The discussion
will focus on how much is enough and diminishing marginal benefits.
4. What is a good time for entrepreneurial
startups to go public? You may refer to the cases of Alibaba.com (the closing
case), Baidu (Case 12.4), and Facebook (th opening case) for your discussion.
Student opinions will vary. Some responses are industry and economy
specific.
5. Debate: Could the success of Facebook
(the opening case), Amazon.com (Case 12.1), Baidu (Case 12.4), and Alibaba.com
(the closing case) be traced to the entrepreneurial attitudes of their
founders? Would it be possible for other EC entrepreneurs to duplicate Zuckerberg,
Bezos, Li, and Ma’s success on the strength of similar traits and
characteristics?
Student opinions will vary. The debate will focus on student perceptions
of these founders.
6. Debate: Should a small business
maintain its own website? Why or why not? Should a large business maintain its
own website? Why or why not?
Student opinions will vary. The debate
will focus on the issues of ease versus control.
Internet Exercises
(Note:
URLs may change over time; please check the Internet Exercises on the Turban
Web site for possible updates: www.pearsonhighered.com/turban.)
1. Go to
the vFinance Capital (vfinance.com)
and National Venture Capital Association (nvca.com) sites and identify any trends or opportunities in
acquiring start-up funding.
Student
reports will vary based on the time of the report.
2. Go to a
Yahoo! category such as tourist agencies or insurance companies and pick 10
sites. Rate them as informational, interactive, or transactional Web sites.
Make a list of informational, interactive, or transactional features.
Student reports
will vary based on the content selected.
3. Many
individuals attempt to make a living simply by buying and selling goods on
eBay. Visit ebay.com and make a
list of the ways in which these entrepreneurs use cross selling and up selling
in their sales activities.
Student reports
will vary based on the research.
4. Visit
Webmaster Forums (webmaster-forums.net),
register (for free), and visit the Web site critique area. Compare the design
rules offered in this chapter with some of the Web sites being offered for
critique here. Offer at least one design suggestion to a Webmaster who is
soliciting feedback.
Student reports
will vary. Most rules are very similar.
5. Enter
networksolutions.com. View the shopping cart demo. What features impress you
the most and why? What related services does it provide? Compare it to
storefront.net and nexternal.com.
Student reports will vary based on
preferences.
6.
Go to godaddy.com. Examine their Traffic Blazer. How can it help you with SEO?
Student reports will vary. The site can help increase traffic and site
optimization.
7.
Enter 1and1.com. Examine their hosting,
development, and other tools. Take the Test Drive. Compare it with services offered by
jstreettech.com. Write a report.
Student reports will vary based on
preferences.
8. Enter willmaster.com. View its tutorials
and comment on its usefulness to EC site builders.
Student reports will vary based on preferences. The site provides a number of tools, but
their effectiveness will be a function of how they might be used, and the
alternatives available to a site owner.
9. Enter omniture.com. How does it help with
site optimization? What other services does it provide?
Student reports will vary.
The site helps to evaluate and update site content to better match SEO
trends.
10. Go to checkout.google.com and find the services offered to buyers. Why
is shopping here faster than in Amazon.com or Yahoo!?
Student answers
will vary based on personal experience and opinion. Google supports the idea that the reduction of
clicks between selection and order result in faster shopping.
11. Enter documentum.com and find its enterprise content management
products. Write a report.
Student answers
will vary based on the time of the report.
12.
Explore the Web to find five dedicated website hosting services. Compare them
using the criteria listed in this chapter. Write a report based on your
findings.
Student answers
will vary based on the services evaluated.
Team Assignments and Role Playing
1. Assignment
for the Opening Case
Read the
opening case and answer the following questions.
a. Log on to
Facebook (facebook.com) and socialize on the website. Compare and contrast
Facebook with other social networking sites such as MySpace, Friendster, Hi5,
and LinkedIn.
b. Comment
on the website design of Facebook.
c. Using
Facebook as an example, discuss the revenue models of social networking sites.
d. What
contributes to the exponential growth of Facebook’s user base over the past few
years?
e. Do you
think Facebook’s idea of opening up its inner workings to outside developers is
a good idea?
f. Comment
on Mark Zuckerberg’s decision to turn down acquisition offers from Microsoft
and Google.
g. What are
the merits and demerits of a startup going for an initial public offering
(IPO)? What is a good time for Facebook to go public? (See the closing case and
note the success of alibaba.com’s IPO in Hong Kong
in 2007.)
h. What
lessons does the Facebook experience offer to e-commerce startups and entrepreneurs?
i. Watch the
video “Mark Zuckerberg Named Time ‘Person of Year’”
(youtube.com/watch?v=CzOuTx6mpXA&feature=related). Do you think Mark
Zuckerberg deserves the award?
Student opinions and responses will vary.
2. Identify
a product or service that is suitable for marketing on Facebook. Draft a
promotion plan. Present your plan to the class.
Student opinions and responses will vary
based on the product.
3. Enter
entrepreneurs.about.com. Each team member should select two or three of the
“browse topics” and relate it to online businesses. Make a presentation to the
class.
Student opinions and responses will vary
based on the topics used.
4. Enter
myownbusiness.org/s2/index.html. Obtain a template and design a business plan
for your class EC project.
Student opinions and responses will vary
based on user experiences.
5. Form two
teams, a client team and a Web design team. After suitable preparation, both
teams meet for their first website planning meeting. Afterward, both teams critique
their own and the other team’s performance in the meeting.
Student opinions and responses will vary.
6. Enter
webhosting.yahoo.com/ps/sb/index.php and download the SiteBuilder. As a team,
build a storefront for your dream business. You can try it for free for 30 days.
Use the design features available. Have visitors check out the site. The
instructor and class will review the sites for design and usability. Awards
will be given to the best stores. Alternatively, you may use the equivalent
tools from eBay or 1and1.com.
Student opinions and responses will vary.
End-of-Chapter Real-World
Case Questions: ALIBABA.COM: FROM
A SMALL STARTUP TO AN INTERNATIONAL ENTERPRISE
1. Alibaba.com has a strong
commitment to assist small and medium enterprises (SMEs) in B2B e-commerce.
What are the advantages and disadvantages of this strategy?
It allows the company to focus on a certain group, but
does not address other potential customers (like large businesses).
2. Compare and
contrast the business model of Alibaba.com with other B2B business models.
Comparisons will vary based on the other companies
selected.
3. Alibaba.com is
creating and maximizing a “network effect” that helps attract users and expand
business. How?
By creating a broad customer base, it is possible for
members to benefit from the sheer size and capabilities of the network.
4. Alibaba.com is a
general type of e-commerce platform so it focuses on the horizontal coverage of
specific industries. Does the horizontal coverage limit its vertical power?
This approach is consistent with Alibaba’s business model,
of providing a wide variety. Focusing on
variety may hurt the company’s effectiveness in specific sub-markets.
5. What are the
limitations of Alibaba.com’s business in venturing beyond the Chinese boundaries?
It may be possible to replicate these
successes outside of China,
but it is also possible that some success is due to localization in China.
6. What lessons does
the Alibaba.com case offer to e-commerce startups and entrepreneurs?
It shows that a firm can specialize in a specific market
and thrive.
Practice Test
1. From 1995
through 2000, many EC projects and start-up companies were funded with little
analysis of their business viability or finances.
A. True
B. False
2. The result of
the rush to invest in EC projects and start-up companies was the 2001 to 2003
"dot-com bust," when hundreds of EC startups went out of business and
the stock market crashed.
A. True
B. False
3. After the
dot-com bust, most IT executives acquired the knowledge and tools to do ROI
calculations on proposed EC investments.
A. True
B. False
4. One reason why
EC justification is needed is that companies now realize that EC is not
necessarily the solution to all problems.
A. True
B. False
5. According to a
CIO Insight report, EC justification decreases the credibility of EC
projects.
A. True
B. False
6. One basic way to
categorize different EC investments is to distinguish between investment in
infrastructure and investment in specific EC applications.
A. True
B. False
7. Infrastructure
investments are made for the short-term because of frequent technological
changes.
A. True
B. False
8. Cost-benefit
analysis is frequently assessed by return on investment (ROI), which is also
the name of a specific method for evaluating investments.
A. True
B. False
9. All EC
investments need to be formally justified to insure that they align with the
company's competitive strategy.
A. True
B. False
10. Metrics are
used to describe costs, benefits, or the ratio between them and need to be
defined properly with a clear way to measure them.
A. True
B. False
11. Key performance
indicators (KPI) are used to qualitatively track critical metrics or success
factors.
A. True
B. False
12. Cannibalization
occurs when a new EC initiative produces substantial online sales, but
traditional sales fall such that no increase in total revenue occurs.
A. True
B. False
13. A major
difficulty in justifying EC projects is that many costs and benefits are
intangible and therefore very difficult to measure.
A. True
B. False
14. Creating a
competitive advantage, providing a benefit to society, and improving the
company's image are examples of tangible benefits that might be realized from
an EC project.
A. True
B. False
15. In preparing
the business case for EC investment, managers should examine the potential
additional revenues, such as increased revenues via products or services from a
larger global market because of more effective product marketing on the
Web.
A. True
B. False
16. The ROI method
uses a formula that divides the total net benefit by the initial cost. The
result is a ratio that measures the ROI for each year or for an entire
period.
A. True
B. False
17. In an NPV
analysis, analysts convert future values of benefits to their present-value
equivalents by discounting future cash flows at the risk-free rate set by the
Federal Reserve Bank.
A. True
B. False
18. Given the
diversity of activities involved in e-procurement, the metrics used to measure
the value of e-procurement must reflect how well each process is accomplished
and take into consideration whether the company is a buyer or seller.
A. True
B. False
19. The average
cost curve of regular products is U-shaped and has an optimal lowest point, but
with digital products the average cost per unit declines as quantity
increases.
A. True
B. False
20. Usability
testing refers to testing application software modules one at a time.
A. True
B. False
21. Unit testing
refers to testing the combination of application modules acting in concert.
A. True
B. False
22.
Interoperability refers to connecting people, data, and diverse systems.
A. True
B. False
23. Performance
value is the likelihood a segment of source code can be used again to add new
functionalities with slight or no modification.
A. True
B. False
24. The higher
purchase price is a disadvantage of purchasing an EC system.
A. True
B. False
25. Vendors
dropping a product or going out of business is a disadvantage to purchasing an
EC system.
A. True
B. False
26. Turnkey computing
is the provision of computational resources on demand via a computer
network.
A. True
B. False
27. Reduced
time-to-market is a cloud computing advantage.
A. True
B. False
28. New
technologies require new organizational structures and procedures.
A. True
B. False
29. Reengineering
eliminates the intermediaries between sellers and buyers.
A. True
B. False
30. Business
process reengineering is the analysis and design of workflows and processes
within an organization.
A. True
B. False
31. Structured
management is a holistic management approach focused on aligning all aspects of
an organization with the wants and needs of clients.
A. True
B. False
32. Mass
customization enables manufacturers to create specific products for each
customer based on the customer's exact needs.
A. True
B. False
33. Leveraging
intangible assets, capabilities, relationships, and unleashing dormant assets
is a critical success factor for EC.
A. True
B. False
34. Critical
elements that can affect the value of EC across cultures are perceived trust,
consumer loyalty, regulation, political influences, and even the content of
online ads.
A. True
B. False
35. Developing
economies often face power blackouts, unreliable telecommunications
infrastructure, undependable delivery mechanisms, and a relatively few
customers who own computers and credit cards. These limitations can be overcome
when predicting EC investment payoffs by using a combination of break-even
analysis and NPV.
A. True
B. False
Chapter Test
1. Web site usability means that people who use the Web site can do so
quickly and easily to accomplish their tasks and may also consider such factors
as cost-effectiveness and usefulness.
A)
True
B)
False
2. Unlike the brick-and-mortar marketplace, the failure rate for online
companies is low.
A)
True
B)
False
3. Business process management
systems monitor the execution of the business processes so that managers can
analyze and change processes in response to data, rather than on just a hunch.
A)
True
B)
False
4. Insuring:
A)
connects people, data, and diverse systems.
B)
is
the in-house development of applications.
C)
is a method of transferring the management and/or
day-to-day execution of an entire business function to a third-party service
provider.
D)
is a class of systems that integrates large systems.
5. Basic options for developing an EC Web site include each of the
following except:
A)
lease the application.
B)
develop the site in-house.
C)
buy a packaged application.
D)
clone
a competitor's Web site.
6. In organizational transformation:
A)
the change may affect only one or a few of the
functional areas of the business.
B)
there
is always a sharp break with the past and every aspect of the business will
probably change.
C)
there are incremental changes to the ways things have
always been done.
D)
there is a change in outlook, but rarely a change in
procedures or investment in infrastructure.
7. Factors determining usability include:
A)
efficiency of use.
B)
memorability.
C)
ease of learning.
D)
all
of the above.
8. Reprise Electronics, a conglomerate that manufactures and sells all
kinds of electronic goods under several brand names, currently has separate Web
sites for each of its brands. The company decides to bring all of the Web sites
together through a single site that, in addition to providing links to the
brand pages, will also provide general information about how to select
electronic merchandise and informational pages about the Reprise Company today
and its management team. This is an example of adding:
A)
a reverse auction.
B)
a
portal.
C)
e-procurement.
D)
a Webstore.
9. Secondary content that offers a coupon, rebate, or special service
is called:
A)
cross-selling.
B)
comment.
C)
promotion.
D)
up-selling.
10. The primary reason for writing a business plan is to:
A)
provide an operational framework for the business.
B)
provide strategic direction to employees.
C)
acquire
external funding.
D)
help the founders remember what they are trying to
accomplish.
11. Syndicated content is Web
content that matches the needs and expectations of the individual visitor.
A)
True
B)
False
12. Content creation and management for a large EC site can be slow and
expensive.
A)
True
B)
False
13. A plan for organizing the underlying infrastructure and
applications of a site best describes:
A)
IT architecture.
B)
IT infrastructure.
C)
business plan.
D)
EC
architecture.
14. The process of selecting a software vendor and EC package includes
each of the following except:
A)
establish a service-level agreement.
B)
determine the evaluation criteria.
C)
close
vendor contract.
D)
evaluate vendors and packages.
15. Outsourcing options for
creating and operating EC applications include:
A)
software houses, such as IBM.
B)
telecommunications companies, such as MCI.
C)
outsourcers, such as EDS.
D)
all
of the above.
16. ________ is the name-based
address that identifies an Internet-connected server.
A)
URL name
B)
Host name
C)
Domain
name
D)
IP address
17. When creating a new
business, the first step is to:
A)
acquire financing needed to make the business
successful.
B)
investigate all existing opportunities.
C)
identify
a consumer or business need that is not presently being met.
D)
write a business case or plan.
18. ________ is money invested
in a business by an individual, a group of individuals, or a funding company in
exchange for equity in the business.
A)
Advancement
B)
Venture
capital
C)
Operating capital
D)
Start-up funding
19. The first step in creating a new company or adding an online
project is to identify a consumer or business need in the marketplace.
A)
True
B)
False
20. Chaplin's Pet Store has been in business for many years. Chaplin,
the present owner, decides to open an online sales channel where he can
advertise and sell the same gourmet pet food. This is an example of adding:
A)
a portal.
B)
a
Webstore.
C)
e-procurement.
D)
a reverse auction.
21. Which of the following is true regarding a second round of
financing?
A)
The angel investor will pay the highest price per
share.
B)
The venture capitalist will pay the highest price per
share.
C)
The entrepreneur will pay the highest price per share.
D)
IPO
investors will pay the highest price per share.
22. A major entertainment company has four studios that have been in
the same location for more than ten years. The company includes a page on its
Web site with addresses, phone numbers, and general e-mail addresses for each
of these studios. None of this information has changed since the Web site was
developed. This is an example of ________ content.
A)
dynamic
B)
functional
C)
static
D)
organizational
23. Disadvantages for using the off-the-shelf approach as an EC
development strategy include:
A)
Software
may not exactly meet the company's needs.
B)
Limited off-the-shelf software packages are available.
C)
The company must hire programmers specifically
dedicated to an EC project.
D)
The vendor rarely updates the software.
24. Reviews, testimonials, expert advice, or further explanation about
the product are called:
A)
up selling.
B)
comment.
C)
cross-selling.
D)
promotion.
25. A _________________ is a wealthy individual who contributes
personal funds and possibly expertise at the earliest stage of business
development.
A)
entrepreneur
B)
venture capitalist
C)
angel
D)
incubator
26. A______________ is a company, university, or nonprofit organization
that supports promising businesses in their initial stages of development.
A)
entrepreneur
B)
venture capitalist
C)
angel
D)
incubator
27. The difference between a business plan and a business case is:
A)
all
new businesses should have a business plan, but only existing businesses
planning a major EC or IT initiative should develop a business case.
B)
business cases are brief and general, while business
plans are long and detailed.
C)
a business case is a part of every business plan.
D)
all businesses need a business case, but only new
businesses need a business plan.
28. The key difference between an e-business plan and a traditional
business plan is that the entrepreneur must:
A)
understand all aspects of the technology required to
implement the plan.
B)
understand
that the Internet is a unique sales channel.
C)
understand that traditional rules do not apply when
doing business on the Internet.
D)
develop a ten-year plan.
29. The greatest difficulty in dealing with venture capital is:
A)
finding the money a venture capitalist will require.
B)
the loss of control a venture capitalist demands.
C)
relocating the business to an incubator.
D)
finding
a willing venture capitalist.
30. A__________________ Web site does little more than provide
information about the business and its products.
A)
informational
B)
interactive
C)
transactional
D)
dynamic
