Electronic Business and Commerce

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Questions and Answers

What defines the concept of electronic business?

Utilization of internet technologies to conduct business (correct)

Offline marketing strategies

Face-to-face transactions exclusively

Traditional value chains without digital elements

Which of the following is a key benefit of electronic commerce?

Extended distribution channels (correct)

Reduced consumer information access

Increased need for physical storefronts

Higher transaction costs

What is meant by 'information asymmetry' in the context of electronic commerce?

Products are consistently misrepresented

One party has more crucial information than the other (correct)

Information is irrelevant in electronic transactions

Both parties have equal information in a transaction

Which characteristic does not contribute to the 'richness' of online communications?

Physical proximity of consumers Signup and view all the answers

How do digital payment systems enhance e-commerce?

By facilitating secure and fast online transactions Signup and view all the answers

Which online marketplace concept directly benefits from extended reach?

Global e-commerce platforms Signup and view all the answers

What role do peer-to-peer payment systems play in electronic commerce?

Simplifying transactions between individual users Signup and view all the answers

What is a potential risk associated with electronic payment security?

Increased risk of cyberattacks Signup and view all the answers

Which feature of the Internet contributes to reduced network costs in e-commerce?

Digital tracking and automation Signup and view all the answers

What intrinsic advantage does electronic commerce have over traditional retail?

Ability to operate 24/7 Signup and view all the answers

What is a primary characteristic of a private industrial network?

It connects a large firm with its suppliers and partners using an extranet. Signup and view all the answers

Which option best defines a net marketplace?

A virtual platform serving as a marketplace for multiple buyers and sellers. Signup and view all the answers

What best describes third-party exchanges in business-to-business electronic commerce?

They connect numerous suppliers and buyers for real-time purchasing. Signup and view all the answers

What is a key feature of digital wallet systems?

They facilitate the secure storage of payment and shipping information. Signup and view all the answers

What is a common challenge faced by electronic payment systems?

They struggle with security and privacy issues. Signup and view all the answers

Which of the following represents a peer-to-peer payment system?

A method for sending money directly between individuals without needing a formal banking setup. Signup and view all the answers

Which payment system allows for payments based on accumulated micropayments?

Stored value payment system Signup and view all the answers

How do intranets facilitate electronic business?

By integrating core transaction data and applications tied to the organization. Signup and view all the answers

What is a potential risk associated with business-to-business electronic commerce?

Legal and trust issues arising from digital transactions. Signup and view all the answers

Which of these is NOT a feature of electronic billing systems?

Automatically generating physical bills to be mailed. Signup and view all the answers

What is a major advantage of using intranets in electronic business?

Scalability according to changing business needs. Signup and view all the answers

Which of the following best describes a stored value payment system?

A system allowing payments from a preloaded account balance. Signup and view all the answers

What role do exchanges play in electronic commerce?

They facilitate spot purchasing with multiple sellers. Signup and view all the answers

Which of the following best describes Business-to-Business (B2B) electronic commerce?

The sale of goods and services between businesses. Signup and view all the answers

What is the primary benefit of utilizing e-procurement in B2B electronic commerce?

Elimination of inefficient, paper-based processes. Signup and view all the answers

What characterizes an online marketplace in the context of electronic business?

A digital forum where buyers and sellers can interact and make deals. Signup and view all the answers

How do digital payment systems enhance the efficiency of online transactions?

They facilitate quicker and safer payment processing for goods and services. Signup and view all the answers

What is a potential drawback of peer-to-peer payment systems?

Higher risks of unauthorized transactions and security breaches. Signup and view all the answers

Which of the following accurately describes electronic payment security measures?

They implement multiple layers of security to protect sensitive information. Signup and view all the answers

What role do online service providers play in the electronic commerce ecosystem?

They provide connectivity and earn revenue through fees and advertising. Signup and view all the answers

What is a major benefit of disintermediation in customer-centered retailing?

It lowers purchase transaction costs by selling directly to consumers. Signup and view all the answers

Which statement best defines digital content providers in electronic business?

They offer digital content and generate revenue through advertising or fees. Signup and view all the answers

What is the primary function of a syndicator in the context of online services?

To aggregate and resell content or applications to third-party websites. Signup and view all the answers

What advantage does web personalization provide to online businesses?

It allows for tailoring content to individual user profiles and behaviors. Signup and view all the answers

In the context of electronic commerce, what does reintermediation involve?

The establishment of new intermediaries in the value chain. Signup and view all the answers

Which type of electronic commerce allows consumers to sell goods directly to other consumers?

Consumer-to-Consumer (C2C) Signup and view all the answers

Which of the following statements is true regarding web-based responses to customer inquiries?

They significantly reduce customer service costs and improve efficiency. Signup and view all the answers

Study Notes

Chapter 4: The Digital Firm: Electronic Business and Electronic Commerce

Chapter 4 focuses on the digital firm, electronic business, and electronic commerce.
Objectives include understanding how internet technology has changed value propositions and business models.
It also explores electronic commerce's impact on consumer retailing and business-to-business transactions.
The chapter clarifies the key payment systems for electronic commerce.
It examines how internet technology assists in internal and interorganizational business process management and coordination.
Studying the major managerial and organizational challenges posed by electronic business and commerce is important.

Management Challenges

Digitally integrating the enterprise demands a significant mindset shift.
Developing a successful internet business model is crucial.

Internet Technology and the Digital Firm

The internet is rapidly becoming the primary infrastructure choice.
The internet provides a universal, user-friendly set of technologies and standards.
Web sites are readily available 24/7.
Distribution channels are broadened.
Transaction costs and network/coordination costs decrease.

New Business Models and Value Propositions

In the past, information about products/services was bundled with the physical value chain.
Today, the internet has decoupled information from the traditional value chain, leading to new business models.
Information asymmetry, where one party holds more essential information than the other, exists.
The internet has reduced information asymmetry.
Richness refers to the depth and detail of information available.
Reach refers to the number of people a business can connect with and the number of products offered to those individuals.
The internet fosters richer communication and broader reach.
Internet technology's impact on the economics of information brings new levels of richness and reach.

Internet Business Models

Virtual storefront: Direct selling of physical products to consumers/businesses.
Information broker: Provides pricing/availability information, generating revenue from advertising or guiding buyers towards sellers.
Transaction broker: Processes online transactions for a fee.
Online marketplace: A digital platform where buyers and sellers converge.
Content provider: Offers digital content (e.g., news) generating revenue from fees or advertising.
Online service provider: Offers connectivity, leveraging revenue from fees, advertising, and informational resources.
Virtual community: Facilitates online interactions among like-minded individuals.
Portal: A primary entry point to the internet, providing specialized content and services.
Syndicator: Aggregates content/applications for resale on third-party websites.

Electronic Commerce

Categories of electronic commerce include business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C).

Customer-Centered Retailing

Disintermediation involves removing intermediaries in a value chain, leading to reduced customer costs.
Reintermediation involves transferring intermediary functions to a new source, such as service hubs.
Benefits of disintermediation for consumers showcase the cost savings from eliminating middlemen.
Interactive marketing and presentation allows collection of customer information efficiently through website auditing tools, which are less expensive than surveys/focus groups.
Personalization technologies offer customized content based on customer profiles and purchase histories, reducing the time spent in educating customers.

Customer Self-Service

Web-based customer support is cheaper than phone support.
Web-based self-service applications, like airline flight information websites are helpful.
Traditional call centers are integrating with web-based technologies.

Business-to-Business Electronic Commerce

Private industrial networks connect large firms with suppliers and partners via extranets, enabling sharing of product design, development, marketing, scheduling, inventory management, and communication.
Private industrial networks are rapidly expanding B2B commerce.
Net marketplaces (e-hubs) provide centralized Internet-based platforms for various buyers and sellers.
Net marketplaces are industry owned or independent intermediaries, operating transaction-oriented models and deriving revenue from transaction and other services.
Exchanges are third-party marketplaces connecting many suppliers and buyers, encouraging spot purchasing.

Electronic Commerce Payment Systems

Digital credit card systems facilitate secure credit card transactions over the internet.
A digital wallet stores credit card information, facilitating payment processes.
Accumulated balance digital payment systems aggregate micropayments as a debit balance to be later paid on credit cards/phone bills.
Stored value systems enables consumers to make instant payments using value stored in a digital account.
Digital cash is a digital form of currency used for micro-transactions and larger purchases.
Peer-to-peer payment systems facilitate payments to vendors that do not accept credit cards.
Digital checking enables electronic check processing/transactions using secure digital signatures.
Electronic billing systems allow for online and physical purchases to be processed electronically.

Electronic Commerce Information Flows

Retailers communicate with the buyer through information, orders, service and support.
Manufacturers/suppliers/distributors interact with their counterparts via purchases and bids.
Banks facilitate credit/payment authorization, and electronic payment transfers.

How Intranets Support Electronic Business

Intranets offer broad accessibility from various devices.
Intranets can integrate with internal corporate systems and transaction data.
Intranets foster interactive applications utilizing text, audio, and video.
Intranets scale to accommodate larger or smaller computing demands.
Intranets feature easy-to-use web interfaces.
Intranets have low startup costs.
Rich, dynamic information environments are characterized by intranets.
Intranets reduce information distribution costs.
Intranet application examples include finance/accounting, human resources, sales/marketing, and manufacturing/production.

Business Process Integration

Pre-internet integration methods were costly and complex.
Internet technology provides a more affordable approach to enterprise system design.
Intranets foster improved coordination within internal business processes.
Extranets aid in coordinating processes shared between businesses and external stakeholders, like customers/partners.
Intranets support collaborative commerce

Management Challenges and Opportunities

Unproven business models pose challenges.
Business process requirements present integration complexities.
Channel conflicts can arise from integrating new systems.
Legal issues are inevitable during the transition to online business models.
Issues regarding online trust, security, and privacy warrant considerations.

Case Study: Can the Music Industry Change Its Tune?

The impact of the internet on the music industry and declining CD sales are subject to this case study.
Students apply value chain and competitive forces models to the music recording industry.
Assessing the internet’s role in the shifting value propositions/competitive landscapes of the music industry.
Determining how much the internet has contributed to the decline of CD sales.
Analyzing the industry's response to these changes, identifying management, organizational, and technological issues influenced by that response.
Examining the industry's present business strategy to determine its viability.

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Description

Chapter 4 delves into the digital firm, focusing on electronic business and commerce. You will explore the transformation of business models through internet technology, its effects on consumer retailing, and the essentials of key payment systems. The chapter also highlights managerial challenges and the impact of digital integration on enterprises.

Electronic Business and Commerce - Chapter 4