Electronic Commerce 12th Edition PDF - Cengage Learning

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 CengageBrain.com is the smart move when it comes to getting the right stuff on time, every time. Whether you rent or buy, we’ll save you time, money, and frustration. You’ve Got Options: Convenient digital solutions and textbooks the way you want them — to buy or rent. You Get Access: Anytime, anywhere access of digital products, eBooks, and eChapters, on your desktop, laptop, or phone. You Get Free Stuff: Free 14-day eBook access, free shipping on orders of $25 or more, free study tools like flash- cards and quizzes, and a free trial period for most digital products. Look, we get it. You’ve got a full schedule — we’ve got your back(pack). Get what you need to get the grades at CengageBrain.com Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Twelfth Edition Gary P. Schneider, Ph.D., CPA California State University Monterey Bay Australia Brazil Mexico Singapore United Kingdom United States Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may be suppressed. 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Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Electronic Commerce, Twelfth Edition © 2017, 2015 Cengage Learning Gary P. Schneider WCN: 02-200-203 Vice President, General Manager, Social ALL RIGHTS RESERVED. No part of this work covered by the copyright Science & Qualitative Business: Erin Joyner herein may be reproduced, transmitted, stored, or used in any form or by Product Director: Mike Schenk any means graphic, electronic, or mechanical, including but not limited Sr. Product Team Manager: Joe Sabatino to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except Content Developer: Ted Knight as permitted under Section 107 or 108 of the 1976 United States Copyright Marketing Director: Michelle McTighe Act, without the prior written permission of the publisher. 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Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Brief Contents Prefacexv Part 1: Introduction Chapter 1 Introduction to Electronic Commerce 3 Chapter 2 Technology Infrastructure: The Internet and the World Wide Web  57 Part 2: Business Strategies for Electronic Commerce Chapter 3 Selling on the Web  109 Chapter 4 Marketing on the Web  161 Chapter 5 Business-to-Business Activities: Improving Efficiency and Reducing Costs  215 Chapter 6 Social Networking, Mobile Commerce, and Online Auctions  257 Chapter 7 The Environment of Electronic Commerce: Legal, Ethical, and Tax Issues 299 Part 3: Technologies for Electronic Commerce Chapter 8 Web Server Hardware and Software  355 Chapter 9 Electronic Commerce Software 393 Chapter 10 Electronic Commerce Security  423 Chapter 11 Payment Systems for Electronic Commerce  473 Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Brief Contents Part 4: Integration iv Chapter 12 Managing Electronic Commerce Implementations 505 Glossary535 Index571 Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Prefacexv Part 1: Introduction Chapter 1 Introduction to Electronic Commerce 3 The Evolution of Electronic Commerce 5 Electronic Commerce and Electronic Business 5 Categories of Electronic Commerce 5 Business Processes 6 Relative Size of Electronic Commerce Elements 7 The Development and Growth of Electronic Commerce 9 Early Electronic Commerce 9 The First Wave of Electronic Commerce, 1995–2003 10 The Second Wave of Electronic Commerce, 2004–2009 11 The Third Wave of Electronic Commerce, 2010–Present 13 The “Boom and Bust” Myth 17 Business Models, Revenue Models, and Business Processes 17 Focus on Specific Business Processes 19 Role of Merchandising 19 Product/Process Suitability to Electronic Commerce 19 Electronic Commerce: Opportunities, Cautions, and Concerns 21 Opportunities for Electronic Commerce 21 Electronic Commerce: Current Barriers 23 Economic Forces and Electronic Commerce 25 Transaction Costs 27 Markets and Hierarchies 27 Using Electronic Commerce to Reduce Transaction Costs 30 Network Economic Structures 31 Network Effects 32 Identifying Electronic Commerce Opportunities 33 Strategic Business Unit Value Chains 33 Industry Value Chains 35 SWOT Analysis: Evaluating Business Unit Opportunities 37 International Nature of Electronic Commerce 39 Trust Issues on the Web 39 Language Issues 40 Cultural Issues 41 Culture and Government 43 Infrastructure Issues 44 Copyright 201 Cengage Learning. 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Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Summary47 Key Terms 47 vi Review Questions 48 Exercises49 Cases50 For Further Study and Research 53 Chapter 2 Technology Infrastructure: The Internet and the World Wide Web 57 The Internet and the World Wide Web 59 Origins of the Internet 59 New Uses for the Internet 60 Commercial Use of the Internet 61 Growth of the Internet 61 The Internet of Things 62 Packet-Switched Networks 63 Routing Packets 64 Public and Private Networks 65 Virtual Private Networks (VPNs) 66 Intranets and Extranets 66 Internet Protocols 67 TCP/IP68 IP Addressing 68 Electronic Mail Protocols 70 Web Page Request and Delivery Protocols 71 Emergence of the World Wide Web 72 The Development of Hypertext 72 Graphical Interfaces for Hypertext 73 The World Wide Web 73 The Deep Web 74 Domain Names 75 Markup Languages and the Web 76 Hypertext Markup Language 77 Extensible Markup Language (XML) 83 Internet Connection Options 89 Connectivity Overview 89 Voice-Grade Telephone Connections 89 Broadband Services 90 Leased-Line Connections 90 Wireless Connections 90 Internet2 and the Semantic Web 95 Summary98 Key Terms 98 Review Questions 100 Exercises101 Cases102 For Further Study and Research 103 Copyright 201 Cengage Learning. 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Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Part 2: Business Strategies for Electronic Commerce vii Chapter 3 Selling on the Web 109 Revenue Models for Online Business 111 Web Catalog Revenue Models 111 Fee-for-Content Revenue Models 116 Advertising as a Revenue Model Element 120 Fee-for-Transaction Revenue Models 126 Fee-for-Service Revenue Models 131 Free for Many, Fee for a Few 132 Changing Strategies: Revenue Models in Transition 133 Subscription to Advertising-Supported Model 134 Advertising-Supported to Advertising-Subscription Mixed Model 134 Advertising-Supported to Subscription Model 134 Multiple Changes to Revenue Models 135 Revenue Strategy Issues for Online Businesses 137 Channel Conflict and Cannibalization 137 Strategic Alliances 138 Luxury Goods Strategies 138 Overstock Sales Strategies 139 Creating an Effective Business Presence Online 139 Identifying Web Presence Goals 139 Web Site Usability 141 How the Web Is Different 142 Meeting the Needs of Web Site Visitors 142 Trust and Loyalty 144 Usability Testing 146 Customer-Centric Web Site Design 147 Using the Web to Connect with Customers 148 The Nature of Communication on the Web 148 Summary152 Key Terms 152 Review Questions 153 Exercises154 Cases155 For Further Study and Research 158 Chapter 4 Marketing on the Web 161 Web Marketing Strategies 162 The Four Ps of Marketing 163 Product-Based Marketing Strategies 163 Customer-Based Marketing Strategies 164 Communicating with Different Market Segments 165 Trust, Complexity, and Media Choice 165 Market Segmentation 168 Market Segmentation on the Web 169 Offering Customers a Choice on the Web 170 Copyright 201 Cengage Learning. 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Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Beyond Market Segmentation: Customer Behavior and Relationship Intensity 170 Segmentation Using Customer Behavior 170 viii Customer Relationship Intensity and Life-Cycle Segmentation 173 Customer Acquisition: The Funnel Model 175 Advertising on the Web 177 Display Ads 178 Intrusive Ad Formats 181 Rich Media and Video Ad Formats 181 Text Ads 182 Mobile Device Advertising 183 Site Sponsorships 183 Online Advertising Cost and Effectiveness 184 E-Mail Marketing 186 Unsolicited Commercial E-Mail (UCE, Spam) 186 Permission Marketing 187 Combining Content and Advertising 187 Outsourcing E-Mail Processing 188 Technology-Enabled Customer Relationship Management 188 CRM as a Source of Value 188 Creating and Maintaining Brands on the Web 190 Elements of Branding 191 Emotional Branding vs. Rational Branding 192 Affiliate Marketing Strategies 193 Viral Marketing Strategies and Social Media 194 Search Engine Positioning and Domain Names 196 Search Engines and Web Directories 196 Paid Search Engine Inclusion and Placement 197 Web Site Naming Issues 200 Summary203 Key Terms 203 Review Questions 205 Exercises206 Cases208 For Further Study and Research 210 Chapter 5 Business-to-Business Activities: Improving Efficiency and Reducing Costs 215 Purchasing, Logistics, and Business Support Processes 217 Outsourcing and Offshoring 217 Purchasing Activities 218 Logistics Activities 221 Business Process Support Activities 222 E-Government224 Network Model of Economic Organization in Purchasing: Supply Webs 226 Electronic Data Interchange 227 Early Business Information Interchange Efforts 227 Copyright 201 Cengage Learning. 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Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Emergence of Broader Standards: The Birth of EDI 228 How EDI Works 228 Value-Added Networks 233 ix EDI Payments 236 Supply Chain Management Using Internet Technologies 236 Value Creation in the Supply Chain 236 Increasing Supply Chain Efficiency and Cooperation 239 Materials-Tracking Technologies 240 Creating an Ultimate Consumer Orientation in the Supply Chain 242 Building and Maintaining Trust in the Supply Chain 243 Online Business Marketplaces and Networks 244 Independent Industry Marketplaces 244 Private Stores and Customer Portals 246 Private Company Marketplaces 246 Industry Consortia-Sponsored Marketplaces 247 Summary248 Key Terms 248 Review Questions 249 Exercises250 Cases252 For Further Study and Research 254 Chapter 6 Social Networking, Mobile Commerce, and Online Auctions 257 From Virtual Communities to Social Networks 258 Virtual Communities 259 Early Web Communities 259 Social Networking Emerges 260 Business Uses of Social Networking 264 Revenue Models for Social Networking Sites 267 Mobile Commerce 271 Mobile Phones 272 Tablet Devices 272 Mobile Device Operating Systems 273 Mobile Apps 274 Mobile Payment Apps 276 Online Auctions 277 Auction Basics 277 Online Auctions and Related Businesses 280 Auction-Related Services 287 Summary290 Key Terms 290 Review Questions 291 Exercises292 Cases293 For Further Study and Research 295 Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Chapter 7 The Environment of Electronic Commerce: Legal, Ethical, and Tax Issues 299 x The Legal Environment of Electronic Commerce 301 Borders and Jurisdiction 301 Jurisdiction on the Internet 304 Conflict of Laws 308 Contracting and Contract Enforcement in Electronic Commerce 309 Use and Protection of Intellectual Property in Online Business 314 Copyright Issues 315 Patent Issues 317 Trademark Issues 319 Domain Names and Intellectual Property Issues 319 Protecting Intellectual Property Online 320 Defamation321 Deceptive Trade Practices 322 Advertising Regulation 322 Online Crime, Terrorism, and Warfare 323 Online Crime: Jurisdiction Issues 323 New Types of Crime Online 325 Online Warfare and Terrorism 327 Ethical Issues 328 Ethics and Online Business Practices 328 Privacy Rights and Obligations 329 Communications with Children 333 Taxation and Electronic Commerce 336 Nexus337 U.S. Income Taxes 337 U.S. State Sales Taxes 338 Import Tariffs 339 European Union Value Added Taxes 339 Summary  341 Key Terms 341 Review Questions 343 Exercises343 Cases345 For Further Study and Research 347 Part 3: Technologies for Electronic Commerce Chapter 8 Web Server Hardware and Software 355 Web Server Basics 356 Dynamic Content Generation 358 Multiple Meanings of “Server” 359 Web Client/Server Architectures 360 Software for Web Servers 362 Operating Systems for Web Servers 362 Web Server Software 363 Copyright 201 Cengage Learning. 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Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Electronic Mail (e-mail) 364 E-Mail Benefits 365 E-Mail Drawbacks 365 xi Spam365 Solutions to the Spam Problem 365 Web Site Utility Programs 373 Tracert and Other Route-Tracing Programs 373 Telnet and FTP Utilities 374 Indexing and Searching Utility Programs 374 Data Analysis Software 374 Link-Checking Utilities 375 Remote Server Administration 375 Web Server Hardware 375 Web Server Computers 375 Web Servers and Green Computing 377 Web Server Performance Evaluation 378 Web Server Hardware Architectures 378 Cloud Computing 380 Content Delivery Networks 382 Summary  385 Key Terms 385 Review Questions 386 Exercises387 Cases388 For Further Study and Research 390 Chapter 9 Electronic Commerce Software 393 Web Hosting Alternatives 394 Basic Functions of Electronic Commerce Software 395 Catalog Display Software 396 Shopping Cart Software 396 Transaction Processing 399 How Electronic Commerce Software Works With Other Software 401 Databases401 Middleware401 Enterprise Application Integration 402 Integration with ERP Systems 403 Web Services 404 Electronic Commerce Software for Small and Midsize Companies 406 Basic CSPs 407 Mall-Style CSPs 407 Estimated Operating Expenses for a Small Web Business 407 Electronic Commerce Software for Midsize Businesses 408 Web Site Development Tools 409 Midrange Electronic Commerce Software 409 Electronic Commerce Software for Large Businesses 410 Enterprise-Class Electronic Commerce Software 410 Content Management Software 412 Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Knowledge Management Software 412 Supply Chain Management Software 413 xii Customer Relationship Management Software 413 Summary416 Key Terms 416 Review Questions 417 Exercises418 Cases419 For Further Study and Research 420 Chapter 10 Electronic Commerce Security 423 Online Security Issues Overview 425 Origins of Security on Interconnected Computer Systems 425 Computer Security and Risk Management 425 Elements of Computer Security 427 Establishing a Security Policy 427 Security for Client Devices 429 Cookies and Web Bugs 429 Active Content 431 Graphics and Plug-Ins 432 Viruses, Worms, and Antivirus Software 432 Digital Certificates 437 Steganography441 Physical Security for Client Devices 442 Client Security for Mobile Devices 442 Communication Channel Security 443 Secrecy Threats 443 Integrity Threats 446 Necessity Threats 446 Threats to the Physical Security of Internet Communications Channels 447 Threats to Wireless Networks 447 Encryption Solutions 448 Encryption in Web Browsers 452 Hash Functions, Message Digests, and Digital Signatures 454 Security for Server Computers 456 Password Attack Threats 456 Database Threats 457 Other Software-Based Threats 458 Threats to the Physical Security of Web Servers 458 Access Control and Authentication 459 Firewalls460 Organizations That Promote Computer Security 462 CERT462 Other Organizations 462 Computer Forensics and Ethical Hacking 463 Summary464 Key Terms 464 Review Questions 466 Copyright 201 Cengage Learning. 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Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Exercises467 Cases467 For Further Study and Research 469 xiii Chapter 11 Payment Systems for Electronic Commerce 473 Common Online Payment Methods 474 Electronic Bill Presentment and Payment Systems 475 Micropayments and Small Payments 476 Payment Cards 477 Advantages and Disadvantages of Payment Cards 478 Payment Acceptance and Processing 479 Stored-Value Cards 483 Digital Cash 484 The Double Spending Issue 485 Advantages and Disadvantages of Digital Cash 486 Digital Wallets 487 Software-Based Digital Wallets 487 Hardware-Based Digital Wallets 488 Internet Technologies and the Banking Industry 489 Check Processing 489 Mobile Banking 491 Payment System Threats: Phishing and Identity Theft 491 Phishing Attacks 491 Using Phishing Attacks for Identity Theft 493 Phishing Attack Countermeasures 495 Summary496 Key Terms 496 Review Questions 497 Exercises498 Cases499 For Further Study and Research 501 Part 4: Integration Chapter 12 Managing Electronic Commerce Implementations 505 Identifying Benefits and Estimating Costs of Online Business Initiatives 506 Identifying Objectives 506 Linking Objectives to Business Strategies 507 Identifying and Measuring Benefits 508 Identifying and Estimating Costs 510 Funding Online Business Startups 512 Comparing Benefits to Costs 513 Return on Investment (ROI) 514 Strategies for Developing Electronic Commerce Web Sites 515 Internal Development versus Outsourcing 516 Incubators518 Accelerators520 Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Table of Contents Managing Electronic Commerce Implementations 520 Project Management 521 xiv Project Portfolio Management 522 Staffing for Electronic Commerce 522 Postimplementation Audits 525 Change Management 526 Summary527 Key Terms 528 Review Questions 528 Exercises529 Cases530 For Further Study and Research 532 Glossary535 Index571 Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Preface Electronic Commerce, Twelfth Edition, provides complete coverage of the key business and technology elements of electronic commerce. The book does not assume that readers have any previous electronic commerce knowledge or experience. In 1998, having spent several years doing electronic commerce research, consulting, and corporate training, I began developing undergraduate and graduate business school courses in electronic commerce. Although I had used a variety of books and other materials in my corporate training work, I was concerned that those materials would not work well in university courses because they were written at widely varying levels and did not have the organization and pedagogic features, such as review questions, that are so important to students. After searching for a textbook that offered balanced coverage of both the business and technology elements of electronic commerce, I concluded that no such book existed. The first edition of Electronic Commerce was written to fill that void. Since that first edition, I have worked to improve the book and keep it current with the rapid changes in this dynamic field. New to This Edition This edition includes the usual updates to keep the content current with the rapidly occurring changes in electronic commerce. It also includes new material on the following topics: The emergence of mobile apps as a driver of retail sales in the United States (Chapter 1) Technology developments such as Google’s Project Loon, new wireless technologies, and the first commercial applications of Semantic Web research (Chapter 2) Revenue model developments in online video (Chapter 3) New online advertising standards and developments in mobile advertising (Chapter 4) How supply chain management enhances organizations’ abilities to implement lean production and just-in-time inventory management (Chapter 5) Chinese banks’ use of online auctions to sell off nonperforming loans (Chapter 6) Legal issues facing lodging brokers such as Airbnb and ride brokers such as Lyft and Uber (Chapter 7) Cloud computing and content-delivery networks (Chapter 8) Advanced shopping cart management services, enterprise resource planning systems in the form of software-as-a-service, and detailed coverage of customer relationship management system architectures (Chapter 9) Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Preface LastPass hack, new viruses including Regin and TeslaCrypt, and emerging initiatives for making digital certificates more widely available (Chapter 10) xvi Mobile device payment systems and electronic bill presentment and payment systems (Chapter 11) Business accelerators (Chapter 12) ORGANIZATION AND COVERAGE Electronic Commerce, Twelfth Edition, introduces readers to both the theory and practice of conducting business over the Internet and World Wide Web. The book is organized into four sections: an introduction, business strategies, technologies, and integration. Introduction The book’s first section includes two chapters. Chapter 1, “Introduction to Electronic Commerce,” defines electronic commerce and describes how companies use it to create new products and services, reduce the cost of existing business processes, and improve the efficiency and effectiveness of their operations. The concept of electronic commerce waves is presented and developed in this chapter. Chapter 1 also outlines the history of the Internet and the Web, explains the international environment in which electronic commerce exists, provides an overview of the economic structures in which businesses operate, and describes how electronic commerce fits into those structures. Two themes are introduced in this chapter and recur throughout later chapters: that examining a firm’s value chain can reveal opportunities for electronic commerce initiatives, and reductions in transaction costs are important elements of many electronic commerce initiatives. Chapter 2, “Technology Infrastructure: The Internet and the World Wide Web,” introduces the technologies used to conduct business online, including topics such as Internet infrastructure, protocols, packet-switched networks, and the Internet of Things. Chapter 2 also describes the markup languages used on the Web (HTML and XML) and discusses Internet connection options and tradeoffs, including wireless technologies. Business Strategies for Electronic Commerce The second section of the book includes five chapters that describe the business strategies that companies and other organizations are using to do business online. Chapter 3, “Selling on the Web,” describes revenue models that companies are using online and explains how some companies have changed their revenue models as the Web has matured. The chapter also explains how firms that understand the nature of communication on the Web can identify and reach the largest possible number of qualified customers. Chapter 4, “Marketing on the Web,” provides an introduction to Internet marketing and online advertising. It includes coverage of market segmentation, technology-enabled customer relationship management, rational branding, contextual advertising, localized advertising, viral marketing, and permission marketing. The chapter also explains how online businesses can share and transfer brand benefits through affiliate marketing and cooperative efforts among brand owners. Effective use of mobile apps to advertise and promote products and services is also included here. Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Preface Chapter 5, “Business-to-Business Activities: Improving Efficiency and Reducing Costs,” explores the variety of methods that companies are using to improve their purchasing and logistics primary activities with Internet and Web technologies. The xvii chapter describes how companies are using EDI, and outsourcing or offshoring some of their business processes to less-developed countries, and using collaborative commerce in precision manufacturing supply chains. Chapter 5 describes how businesses are using technologies such as e-procurement, radio-frequency identification, and reverse auctions in the practice of supply chain management online. Chapter 6, “Social Networking, Mobile Commerce, and Online Auctions,” explains how companies now use the Web to do things that they have never done before, such as creating social networks, engaging in mobile commerce, and operating auction sites. The chapter describes how businesses are developing social networks and using existing social networking Web sites to increase sales and do market research. The development of mobile commerce, order and pay services, and location-aware online services is discussed. The chapter also explains how companies are using Web auctions to sell goods and generate advertising revenue. Chapter 7, “The Environment of Electronic Commerce: Legal, Ethical, and Tax Issues,” discusses the legal and ethical aspects of intellectual property usage, the privacy rights of customers, and the protection of children who use the Internet. Online crime, terrorism, and warfare are covered as well. The chapter also explains that the large number of government units that have jurisdiction and power to tax makes it essential that companies doing business on the Web understand the potential liabilities of doing business with customers in those jurisdictions. Technologies for Electronic Commerce The third section of the book includes four chapters that describe the technologies of electronic commerce and explains how they work. Chapter 8, “Web Server Hardware and Software,” describes the computers, operating systems, e-mail systems, utility programs, and Web server software that organizations use in the operation of their electronic commerce Web sites, including cloud computing technologies. The chapter describes the problem of unsolicited commercial e-mail (UCE, or spam) and outlines both technical and legal solutions to the problem. Chapter 9, “Electronic Commerce Software,” describes the basic functions that all electronic commerce Web sites must accomplish and explains the various software options used to perform those functions. This chapter includes an overview of Web services, database management, shopping carts, content delivery networks, cloud computing, and other types of software used in electronic commerce. The chapter also includes a discussion of Web hosting options for online businesses of various sizes. Chapter 10, “Electronic Commerce Security,” discusses security threats and countermeasures that organizations can use to ensure the security of client computers (and smartphones and tablet devices), communications channels, and Web servers. The chapter emphasizes the importance of a written security policy and explains how encryption and digital certificates work. The chapter also includes an overview of significant computer viruses, worms, and other threats that have affected online business activities. Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Preface Chapter 11, “Payment Systems for Electronic Commerce,” presents a discussion of electronic payment systems, including electronic bill presentment and payment, mobile xviii banking, digital cash, digital wallets, and the technologies used to make stored-value cards, credit cards, debit cards, and charge cards work. The chapter describes how payment systems operate, including approval of transactions and disbursements to merchants, and describes how banks use Internet technologies to improve check clearing and payment- processing operations. The use of mobile devices as digital wallets to make payments and doing online banking is outlined. The chapter also includes a discussion of the threats that phishing attacks and identity theft crimes pose for individuals and online businesses. Integration The fourth and final section of the book includes one chapter that integrates the business and technology strategies used in electronic commerce. Chapter 12, “Managing Electronic Commerce Implementations,” presents an overview of key elements that are typically included in business plans for electronic commerce implementations, such as the setting of objectives and estimating project costs and benefits. The chapter describes online business incubators and accelerators, outsourcing strategies, and the use of project management and project portfolio management as formal ways to plan and control tasks and resources used in electronic commerce implementations. This chapter includes a discussion of change management and outlines specific jobs available in organizations that conduct electronic commerce. FEATURES The twelfth edition of Electronic Commerce includes a number of features and offers additional resources designed to help readers understand electronic commerce. These features and resources include: Business Case Approach The introduction to each chapter includes a real business case that provides a unifying theme and backdrop for the material described in the chapter. Each case illustrates an important topic from the chapter and demonstrates its relevance to the current practice of electronic commerce. Learning From Failures Not all electronic commerce initiatives have been successful. Each chapter in the book includes a short summary of an electronic commerce failure related to the content of that chapter. We all learn from our mistakes—this feature is designed to help readers understand the missteps of electronic commerce pioneers who learned their lessons the hard way. Summaries Each chapter concludes with a Summary that concisely recaps the most important concepts in the chapter. Web Links The Web Links are a set of Web pages maintained by the publisher for readers of this book. The Web Links complement the book by linking to Web sites mentioned in the book and to other relevant online resources. The Web Links are continually monitored and updated for changes so they Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Preface continue to lead to useful Web resources for each chapter. You can find the Web Links for this book by visiting the companion site. Web Links References in Text Throughout each chapter, there are Web Links xix references that indicate the name of a link included in the Web Links. Text set in bold, green, sans-serif letters (Metabot Pro) indicates a like-named link in the Web Links. The links are organized under chapter and subchapter headings that correspond to those in the book. The Web Links also contains many supplemental links to help students explore beyond the book’s content. Review Questions and Exercises Each chapter concludes with meaningful review materials including both conceptual discussion questions and hands-on exercises. The review questions are ideal for use as the basis for class discussions or as written homework assignments. The exercises give students hands-on experiences that yield computer output or a written report. Cases Each chapter concludes with two comprehensive cases. One case uses a fictitious setting to illustrate key learning objectives from that chapter. The other case gives students an opportunity to apply what they have learned from the chapter to an actual situation that a real company or organization has faced. The cases offer students a rich environment in which they can apply what they have learned and provide motivation for doing further research on the topics. For Further Study and Research Each chapter concludes with a comprehensive list of the resources that were consulted during the writing of the chapter. These references to publications in academic journals, books, and the IT industry and business press provide a sound starting point for readers who want to learn more about the topics contained in the chapter. Key Terms and Glossary Terms within each chapter that may be new to the student or have specific subject-related meaning are highlighted by boldface type. The end of each chapter includes a list of the chapter’s key terms. All of the book’s key terms are compiled, along with definitions, in a Glossary at the end of the book. TEACHING TOOLS When this book is used in an academic setting, instructors may obtain the following teaching tools: Instructor’s Manual The Instructor’s Manual has been carefully prepared and tested to ensure its accuracy and dependability. The Instructor’s Manual is available on the instructor companion site. Cengage Learning Testing Powered by Cognero is a flexible, online system that allows you to: author, edit, and manage test bank content from multiple Cengage Learning solutions Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Preface create multiple test versions in an instant deliver tests from your LMS, your classroom, or wherever you want xx PowerPoint Presentations Microsoft PowerPoint slides are included for each chapter as a teaching aid for classroom presentations, to make available to students on a network for chapter review, or to be printed for classroom distribution. Instructors can add their own slides for additional topics they introduce to the class. The presentations are available on the instructor companion site. ACKNOWLEDGMENTS I owe a great debt of gratitude to my good friends at Cengage who made this book possible, including Jason Guyler, Product Manager; Ted Knight, Content Developer; and Divya Divakaran, Project Manager. I am also indebted to Amanda Brodkin, who served as Development Editor on the first 11 editions. I want to thank the following reviewers for their insightful comments and suggestions on previous editions: Paul Ambrose University of Wisconsin, Milwaukee Kirk Arnett Mississippi State University Tina Ashford Macon State College Rafael Azuaje Sul Ross State University Robert Chi California State University-Long Beach Chet Cunningham Madisonville Community College Roland Eichelberger Baylor University Mary Garrett Michigan Virtual High School Barbara Grabowski Benedictine University Milena Head McMaster University Perry M. Hidalgo Gwinnett Technical Institute Brent Hussin University of Wisconsin, Green Bay Cheri L. Kase Legg Mason Corporate Technology Joanne Kuzma St. Petersburg College Rick Lindgren Graceland University Victor Lipe Trident Technical College William Lisenby Alamo Community College Diane Lockwood Seattle University Jane Mackay Texas Christian University Michael P. Martel University of Alabama William E. McTammany Florida State College at Jacksonville Leslie Moore Jackson State Community College Martha Myers Kennesaw State University Pete Partin Forethought Financial Services Andy Pickering University of Maryland University College David Reavis Texas A&M University Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Preface George Reynolds Strayer University Barbara Warner University of South Florida Gene Yelle Megacom Services xxi Special thanks go to reviewer A. Lee Gilbert of Nanyang Technological University in Singapore, who provided extremely detailed comments and many useful suggestions for improving Chapter 12. My thanks also go to the many professors who have used the previous editions in their classes and who have sent me suggestions for improving the text. In particular, I want to acknowledge the detailed recommendations made by David Bell of Pacific Union College regarding the coverage of IP addresses in Chapter 2. The University of San Diego provided research funding that allowed me to work on the first edition of this book and gave me fellow faculty members who were always happy to discuss and critically evaluate ideas for the book, including Tom Buckles (now at Azusa Pacific University), Rahul Singh (now at the University of North Carolina-Greensboro), Carl Rebman, and Jim Perry, who co-authored the first two editions of this book with me. The University of San Diego School of Business also provided the research assistance of many graduate students who helped me with work on the first seven editions of this book. Among those research assistants were Sebastian Ailioaie, a Fulbright Fellow who did substantial work on the Web Links, and Anthony Coury, who applied his considerable legal knowledge to reviewing Chapter 7 and suggesting many improvements. I also thank Quinnipiac University for providing a graduate student, Arienne Kvetkus, who made many helpful comments on the content of Chapter 6. Many of my graduate students have provided helpful suggestions and ideas over the years. My special thanks go to two of those students, Dima Ghawi and Dan Gordon. Dima shared her significant background research on reverse auctions and helped me develop many of the ideas presented in Chapters 5 and 6. Dan gave me the benefit of his experiences as manager of global EDI operations for a major international firm and provided an in-depth review of Chapter 5. Other students who provided valuable suggestions include Maximiliano Altieri, Adrian Boyce, Karl Flaig, Kathy Glaser, Emilie Johnson Hersh, Robin Lloyd, Chad McManamy, Dan Mulligan, Firat Ozkan, Suzanne Phillips, Susan Soelaiman, Carolyn Sturz, Leila Worthy, and Zu-yo Wang. Finally, I want to express my deep appreciation for the support and encouragement of my wife, Cathy Cosby. Without her support and patience, writing this book would not have been possible. DEDICATION To the memory of my father, Anthony J. Schneider. ABOUT THE AUTHOR Gary Schneider is currently a Professor at the California State University Monterey Bay College of Business. His previous appointments include the William S. Perlroth Professorship at Quinnipiac University and the Clarence L. Steber Professorship at the University of San Diego. He has also taught at the University of Cincinnati, Northern Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Preface Kentucky University, the University of Tennessee, and Xavier University. He has won a number of teaching and research awards at these universities and served as academic xxii director of the University of San Diego’s graduate programs in electronic commerce and information systems. Gary has published more than 50 books and 100 research papers on a variety of accounting, information systems, and management topics. His books have been translated into Chinese, French, Italian, Korean, and Spanish. Gary’s research has been funded by the Irvine Foundation and the U.S. Office of Naval Research. His work has appeared in Accounting Horizons, the Journal of Information Systems, Interfaces, Issues in Accounting Education, and the Information Systems Audit and Control Journal. He has served as editor of the Business Studies Journal and the Accounting Systems and Technology Reporter, as accounting discipline editor of Advances in Accounting, Finance and Economics, as ass