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Questions and Answers
What is a Strategic Information System primarily designed to do?
What is a significant factor that raises barriers to entry in an industry?
Which force is concerned with the ability of buyers to influence prices?
What does the Threat of Substitute Products indicate?
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What factor does NOT determine the existing rivalry between companies?
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How can the power of suppliers impact a company?
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Which of the following is NOT a barrier to entry in an industry?
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What does Porter's Five Forces model primarily help organizations analyze?
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What is one of the advantages of e-commerce?
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Which of the following is a disadvantage of e-commerce?
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How does e-commerce impact traditional markets?
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Which characteristic of cryptocurrency transactions distinguishes them from traditional banking?
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What is a potential drawback of not using e-commerce?
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What advantage does e-commerce provide buyers compared to traditional commerce?
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Why might a business hesitate to accept Bitcoin as payment?
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Which of the following statements is not true regarding the cost of operating online compared to traditional businesses?
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What does e-commerce primarily involve?
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Which type of e-commerce transaction is exemplified by Intel selling microprocessors to Dell?
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What is a characteristic of e-commerce that differentiates it from traditional sales?
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Which of the following is an example of consumer-to-consumer (C2C) e-commerce?
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Which e-commerce model allows companies to offer products to their employees?
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What does the term 'mobile commerce' (m-commerce) refer to?
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Which of the following statements about e-commerce is true?
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What is the significance of digital products in e-commerce?
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What major event occurred in 2003 regarding DVD and VHS rentals?
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In what year were DVDs first released?
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What strategy focuses on producing goods at the lowest possible cost?
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What is the primary threat to Dell from substitute products?
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Which of the following companies is cited as an example of cost leadership in the supermarket industry?
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What characterizes the differentiation strategy?
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What significant change occurred in the VHS market in 2004?
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Which company besides Dell is mentioned as a competitor in the computer manufacturing industry?
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Study Notes
Electronic Commerce (E-Commerce)
- E-commerce involves commercial transactions over the internet, encompassing a wide range of businesses, from retail sites to business exchanges.
- E-commerce facilitates electronic exchange of goods and services without time or distance barriers.
- The line blurs between traditional and electronic commerce as businesses increasingly integrate online operations.
Types of E-Commerce
- Business-to-business (B2B): Largest form, e.g., Intel supplying microprocessors to Dell.
- Business-to-consumer (B2C): Direct online product sales to consumers, e.g., Dell selling laptops.
- Business-to-employee (B2E): Internal company networks providing products/services to employees, e.g., Apple employee discounts.
- Consumer-to-consumer (C2C): Trading between individuals, e.g., Mary buying an iPod from Tom on eBay.
- Consumer-to-business (C2B): Individuals offering products/services to businesses, e.g., John licensing his photo for business use.
- Mobile commerce (m-commerce): Conducting transactions on mobile devices, e.g., mobile banking, mobile ticketing.
Digital Products in E-Commerce
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Advantages:*
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Global distribution with minimal cost.
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Nearly zero marginal cost of production.
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Flexible pricing strategies.
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Access to new markets.
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Disadvantages:*
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Disruption of existing markets.
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Concerns over piracy and ethical implications.
Advantages of E-Commerce
- Faster buying/selling processes.
- Easier product discovery.
- Global reach without distance limitations.
- 24/7 availability.
- Lower operational costs compared to physical stores.
- Automated sales, reducing staff requirements.
- Lower advertising costs.
- Easier identification of suppliers and business partners.
- Wider product and service choices for buyers.
Disadvantages of E-Commerce
- Inability to physically examine products, potentially affecting quality assurance.
- Not everyone has internet access.
- Security concerns regarding personal information like credit card details.
- Lack of human interaction and personal touch.
- Delivery delays.
- Potentially expensive returns.
- International legal complexities.
- Limited online inventory availability.
Cryptocurrencies
- Digital currencies, like Bitcoin, enable peer-to-peer transactions without intermediaries (banks).
- Offer low transaction fees and anonymity.
Competitive Advantage
- Strategic Information Systems: Systems that provide a competitive edge.
- Key strategies for competitive advantage include:
- Reducing costs: Achieving lower production or operation costs than competitors.
- Raising barriers to entry: Making it difficult for new companies to enter the market.
- Raising switching costs: Making it costly for customers to switch to competitors.
- Creating new products: Developing products not offered by competitors.
Porter's Five Forces
- A framework for analyzing the competitive landscape of an industry.
- Threat of New Entrants: How likely new competitors are to enter the market.
- Bargaining Power of Suppliers: How much power suppliers have to influence prices.
- Bargaining Power of Buyers: How much power buyers have to influence prices.
- Threat of Substitute Products: How easily products can be replaced by alternatives.
- Existing Rivalry Between Companies: How intense competition is within the industry.
Threat of New Entrants
- Determined by "barriers to entry," which can include:
- High start-up costs.
- Patents protecting existing technologies.
- Strong brand loyalty.
Threat of Substitute Products
- The ease with which a product can be replaced by a different product.
- Examples: DVD replacing VHS, smartphones replacing landlines.
Power of Buyers
- Determined by factors like:
- Availability of substitutes.
- Buyer concentration: A small number of buyers gives them more power.
- Buyer's willingness to switch suppliers.
Power of Suppliers
- Determined by factors like:
- Supplier concentration: A small number of suppliers gives them more power.
- Availability of substitutes for supplier products.
- Cost of switching suppliers.
Existing Rivalry Between Companies
- Determined by:
- Number of firms in the industry.
- Industry maturity: Higher rivalry in mature industries.
- Size of industry: More intense rivalry in smaller industries.
Industry Lifecycle
- Industries typically go through a lifecycle of Introduction, Growth, Maturity, and Decline.
- The relative strength of Porter's Five Forces changes throughout the lifecycle.
Five Forces Analysis: Dell
- Competition within the industry: High competition from other computer manufacturers.
- Power of suppliers: Dell has some bargaining power, but relies on a limited number of suppliers for key components.
- Power of buyers: High due to diverse options for computer products.
- Threat of new entrants: High start-up costs are a significant barrier.
- Threat of substitute products: Growing threat from alternative devices like smartphones and tablets.
Responding to Competition
- Cost Leadership: Focus on producing goods or services at the lowest cost.
- Differentiation: Offering unique products or services that stand out from competitors.
- Alliance: Collaborating with other companies to gain competitive advantages.
- Growth: Expanding into new markets or product lines.
- Innovation: Developing new technologies or products.
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Description
Explore the essentials of electronic commerce covering various types such as B2B, B2C, C2C, and more. This quiz will test your understanding of how online transactions differ from traditional commerce and their applications across the globe.
