Solution Manual for E-Commerce 2019: Business, Technology and Society, 15th Edition
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Turban- Electronic Commerce 2012
Instructor’s Manual
Chapter 1
Overview of Electronic Commerce
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Define electronic commerce (EC) and describe its various categories.
2. Describe and discuss the content and framework of EC.
3. Describe the major types of EC transactions.
4. Discuss e-commerce 2.0.
5. Describe social commerce and social software.
6. Understand the elements of the digital world.
7. Describe the drivers of EC as they relate to business pressures and
organizational responses.
8. Describe some EC business models.
9. Describe the benefits of EC to organizations, consumers, and society.
10. List and describe the major limitations of EC.
Content
Opening Case: Net-a-Porter: Dress for Success
1.1 Electronic Commerce: Definitions and Concepts
1.2 The Electronic Commerce Field: Classification, Content, and a Brief History
1.3 E-Commerce 2.0: From Social Commerce to Virtual Worlds
1.4 The Digital World: Economy, Enterprises, and Society
1.5 The Changing Business Environment, Organizations’ Response, and EC Support
1.6 Electronic Commerce Business Models
1.7 Benefits, Limitations, and Impacts of Electronic Commerce
1.8 Overview of This Book
Managerial Issues
Closing Case: E-Commerce at the National Football League (NFL)
Answers to Pause/Break Section Review Questions
Section 1.1 Review Questions
1. Define EC and e-business.
Electronic commerce is the process of buying, selling, or exchanging products, services,
and information via computer networks. E-business is a broader definition of EC that
includes not just the buying and selling of goods and services, but also servicing
customers, collaborating with business partners and conducting electronic transactions
within an organization.
Instructor’s Manual
Chapter 1
Overview of Electronic Commerce
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Define electronic commerce (EC) and describe its various categories.
2. Describe and discuss the content and framework of EC.
3. Describe the major types of EC transactions.
4. Discuss e-commerce 2.0.
5. Describe social commerce and social software.
6. Understand the elements of the digital world.
7. Describe the drivers of EC as they relate to business pressures and
organizational responses.
8. Describe some EC business models.
9. Describe the benefits of EC to organizations, consumers, and society.
10. List and describe the major limitations of EC.
Content
Opening Case: Net-a-Porter: Dress for Success
1.1 Electronic Commerce: Definitions and Concepts
1.2 The Electronic Commerce Field: Classification, Content, and a Brief History
1.3 E-Commerce 2.0: From Social Commerce to Virtual Worlds
1.4 The Digital World: Economy, Enterprises, and Society
1.5 The Changing Business Environment, Organizations’ Response, and EC Support
1.6 Electronic Commerce Business Models
1.7 Benefits, Limitations, and Impacts of Electronic Commerce
1.8 Overview of This Book
Managerial Issues
Closing Case: E-Commerce at the National Football League (NFL)
Answers to Pause/Break Section Review Questions
Section 1.1 Review Questions
1. Define EC and e-business.
Electronic commerce is the process of buying, selling, or exchanging products, services,
and information via computer networks. E-business is a broader definition of EC that
includes not just the buying and selling of goods and services, but also servicing
customers, collaborating with business partners and conducting electronic transactions
within an organization.
Turban- Electronic Commerce 2012
Instructor’s Manual
Chapter 1
Overview of Electronic Commerce
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Define electronic commerce (EC) and describe its various categories.
2. Describe and discuss the content and framework of EC.
3. Describe the major types of EC transactions.
4. Discuss e-commerce 2.0.
5. Describe social commerce and social software.
6. Understand the elements of the digital world.
7. Describe the drivers of EC as they relate to business pressures and
organizational responses.
8. Describe some EC business models.
9. Describe the benefits of EC to organizations, consumers, and society.
10. List and describe the major limitations of EC.
Content
Opening Case: Net-a-Porter: Dress for Success
1.1 Electronic Commerce: Definitions and Concepts
1.2 The Electronic Commerce Field: Classification, Content, and a Brief History
1.3 E-Commerce 2.0: From Social Commerce to Virtual Worlds
1.4 The Digital World: Economy, Enterprises, and Society
1.5 The Changing Business Environment, Organizations’ Response, and EC Support
1.6 Electronic Commerce Business Models
1.7 Benefits, Limitations, and Impacts of Electronic Commerce
1.8 Overview of This Book
Managerial Issues
Closing Case: E-Commerce at the National Football League (NFL)
Answers to Pause/Break Section Review Questions
Section 1.1 Review Questions
1. Define EC and e-business.
Electronic commerce is the process of buying, selling, or exchanging products, services,
and information via computer networks. E-business is a broader definition of EC that
includes not just the buying and selling of goods and services, but also servicing
customers, collaborating with business partners and conducting electronic transactions
within an organization.
Instructor’s Manual
Chapter 1
Overview of Electronic Commerce
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Define electronic commerce (EC) and describe its various categories.
2. Describe and discuss the content and framework of EC.
3. Describe the major types of EC transactions.
4. Discuss e-commerce 2.0.
5. Describe social commerce and social software.
6. Understand the elements of the digital world.
7. Describe the drivers of EC as they relate to business pressures and
organizational responses.
8. Describe some EC business models.
9. Describe the benefits of EC to organizations, consumers, and society.
10. List and describe the major limitations of EC.
Content
Opening Case: Net-a-Porter: Dress for Success
1.1 Electronic Commerce: Definitions and Concepts
1.2 The Electronic Commerce Field: Classification, Content, and a Brief History
1.3 E-Commerce 2.0: From Social Commerce to Virtual Worlds
1.4 The Digital World: Economy, Enterprises, and Society
1.5 The Changing Business Environment, Organizations’ Response, and EC Support
1.6 Electronic Commerce Business Models
1.7 Benefits, Limitations, and Impacts of Electronic Commerce
1.8 Overview of This Book
Managerial Issues
Closing Case: E-Commerce at the National Football League (NFL)
Answers to Pause/Break Section Review Questions
Section 1.1 Review Questions
1. Define EC and e-business.
Electronic commerce is the process of buying, selling, or exchanging products, services,
and information via computer networks. E-business is a broader definition of EC that
includes not just the buying and selling of goods and services, but also servicing
customers, collaborating with business partners and conducting electronic transactions
within an organization.
Chapter 1 Page 2
2. Distinguish between pure and partial EC.
Companies utilizing pure EC conduct all of their business online. Businesses utilizing
partial EC conduct a portion of their business online and a portion of their business off-
line.
3. Define click-and-mortar and pure play organizations.
Click-and-mortar organizations conduct e-commerce activities, but do their primary
business in the physical world. Pure play organizations rely on the Internet and EC for
all of their sales.
4. Define electronic markets.
Electronic market – An online marketplace where buyers and sellers meet to exchange
goods, services, money or information.
5. Define intranets and extranets.
An intranet is an internal use only Web site used by companies. An extranet is a
company’s secured Web site used by select individuals and organizations.
Section 1.2 Review Questions
1. List the major components of the EC framework.
The EC framework is made up of the following components: people, public policy,
technical standards and protocols, business partners and support services.
2. List the major transactional types of EC.
The major transactional types of EC include: business-to-business, business-to-consumer,
business-to-business-to-consumer, consumer-to-business, consumer-to-consumer, mobile
commerce, intrabusiness EC, business-to-employee, collaborative commerce,
nonbusiness EC, electronic government, and exchange-to-exchange.
3. Describe the major landmarks in EC history.
The major landmarks in EC history began with the use of EDI to transmit business
information. This was followed by a wide public acceptance of the Internet. The next
major landmark was the development of several early electronic commerce sites online
and the growth of the “new economy.” Another major landmark is the winding down of
many of these “new economy” businesses. Currently the growth of new Web 2.0
services and ventures defines EC.
2. Distinguish between pure and partial EC.
Companies utilizing pure EC conduct all of their business online. Businesses utilizing
partial EC conduct a portion of their business online and a portion of their business off-
line.
3. Define click-and-mortar and pure play organizations.
Click-and-mortar organizations conduct e-commerce activities, but do their primary
business in the physical world. Pure play organizations rely on the Internet and EC for
all of their sales.
4. Define electronic markets.
Electronic market – An online marketplace where buyers and sellers meet to exchange
goods, services, money or information.
5. Define intranets and extranets.
An intranet is an internal use only Web site used by companies. An extranet is a
company’s secured Web site used by select individuals and organizations.
Section 1.2 Review Questions
1. List the major components of the EC framework.
The EC framework is made up of the following components: people, public policy,
technical standards and protocols, business partners and support services.
2. List the major transactional types of EC.
The major transactional types of EC include: business-to-business, business-to-consumer,
business-to-business-to-consumer, consumer-to-business, consumer-to-consumer, mobile
commerce, intrabusiness EC, business-to-employee, collaborative commerce,
nonbusiness EC, electronic government, and exchange-to-exchange.
3. Describe the major landmarks in EC history.
The major landmarks in EC history began with the use of EDI to transmit business
information. This was followed by a wide public acceptance of the Internet. The next
major landmark was the development of several early electronic commerce sites online
and the growth of the “new economy.” Another major landmark is the winding down of
many of these “new economy” businesses. Currently the growth of new Web 2.0
services and ventures defines EC.
Chapter 1 Page 2
2. Distinguish between pure and partial EC.
Companies utilizing pure EC conduct all of their business online. Businesses utilizing
partial EC conduct a portion of their business online and a portion of their business off-
line.
3. Define click-and-mortar and pure play organizations.
Click-and-mortar organizations conduct e-commerce activities, but do their primary
business in the physical world. Pure play organizations rely on the Internet and EC for
all of their sales.
4. Define electronic markets.
Electronic market – An online marketplace where buyers and sellers meet to exchange
goods, services, money or information.
5. Define intranets and extranets.
An intranet is an internal use only Web site used by companies. An extranet is a
company’s secured Web site used by select individuals and organizations.
Section 1.2 Review Questions
1. List the major components of the EC framework.
The EC framework is made up of the following components: people, public policy,
technical standards and protocols, business partners and support services.
2. List the major transactional types of EC.
The major transactional types of EC include: business-to-business, business-to-consumer,
business-to-business-to-consumer, consumer-to-business, consumer-to-consumer, mobile
commerce, intrabusiness EC, business-to-employee, collaborative commerce,
nonbusiness EC, electronic government, and exchange-to-exchange.
3. Describe the major landmarks in EC history.
The major landmarks in EC history began with the use of EDI to transmit business
information. This was followed by a wide public acceptance of the Internet. The next
major landmark was the development of several early electronic commerce sites online
and the growth of the “new economy.” Another major landmark is the winding down of
many of these “new economy” businesses. Currently the growth of new Web 2.0
services and ventures defines EC.
2. Distinguish between pure and partial EC.
Companies utilizing pure EC conduct all of their business online. Businesses utilizing
partial EC conduct a portion of their business online and a portion of their business off-
line.
3. Define click-and-mortar and pure play organizations.
Click-and-mortar organizations conduct e-commerce activities, but do their primary
business in the physical world. Pure play organizations rely on the Internet and EC for
all of their sales.
4. Define electronic markets.
Electronic market – An online marketplace where buyers and sellers meet to exchange
goods, services, money or information.
5. Define intranets and extranets.
An intranet is an internal use only Web site used by companies. An extranet is a
company’s secured Web site used by select individuals and organizations.
Section 1.2 Review Questions
1. List the major components of the EC framework.
The EC framework is made up of the following components: people, public policy,
technical standards and protocols, business partners and support services.
2. List the major transactional types of EC.
The major transactional types of EC include: business-to-business, business-to-consumer,
business-to-business-to-consumer, consumer-to-business, consumer-to-consumer, mobile
commerce, intrabusiness EC, business-to-employee, collaborative commerce,
nonbusiness EC, electronic government, and exchange-to-exchange.
3. Describe the major landmarks in EC history.
The major landmarks in EC history began with the use of EDI to transmit business
information. This was followed by a wide public acceptance of the Internet. The next
major landmark was the development of several early electronic commerce sites online
and the growth of the “new economy.” Another major landmark is the winding down of
many of these “new economy” businesses. Currently the growth of new Web 2.0
services and ventures defines EC.
Chapter 1 Page 3
4. List some EC successes and failures.
Student answers will vary and may include some of the examples given on page 11.
5. Summarize the future of EC.
Student perceptions will vary, but may focus on the growth and variation of EC
services.
Section 1.3 Review Questions
1. Define social computing and list its characteristics.
Social computing is computing that is concerned with the intersection of social behavior
and information systems. It is performed with a set of tools that includes blogs,
mashups, instant messaging, social network services, wikis, social bookmarking and
other social software, and marketplaces.
2. Define Web 2.0 and list its attributes.
The second-generation of Internet-based services that let people collaborate and share
information online in new ways, such as social networking sites, wiki communication
tools, and folksonomies. Attributes include its functionality and open access to
information/data.
3. Define social networks.
A category of Internet applications that help connect friends, business partners, or
individuals with specific interests by providing free services such as photo presentation,
e-mail, blogging, and so on using a variety of tools.
4. Describe the capabilities of social network services (SNSs).
The following are representative capabilities and services provided by social network
sites:
• Users can construct a Web page that they can use to present themselves to
the larger community.
• Users can create a circle of friends who are linked together.
• The site provides discussion forums (by group, by topic).
• Photo, video, and document viewing and sharing (streaming videos, user-
supplied videos) are supported.
• Wikis can be used to jointly create documents.
• Blogs can be used for discussion, dissemination of information, and much
more.
4. List some EC successes and failures.
Student answers will vary and may include some of the examples given on page 11.
5. Summarize the future of EC.
Student perceptions will vary, but may focus on the growth and variation of EC
services.
Section 1.3 Review Questions
1. Define social computing and list its characteristics.
Social computing is computing that is concerned with the intersection of social behavior
and information systems. It is performed with a set of tools that includes blogs,
mashups, instant messaging, social network services, wikis, social bookmarking and
other social software, and marketplaces.
2. Define Web 2.0 and list its attributes.
The second-generation of Internet-based services that let people collaborate and share
information online in new ways, such as social networking sites, wiki communication
tools, and folksonomies. Attributes include its functionality and open access to
information/data.
3. Define social networks.
A category of Internet applications that help connect friends, business partners, or
individuals with specific interests by providing free services such as photo presentation,
e-mail, blogging, and so on using a variety of tools.
4. Describe the capabilities of social network services (SNSs).
The following are representative capabilities and services provided by social network
sites:
• Users can construct a Web page that they can use to present themselves to
the larger community.
• Users can create a circle of friends who are linked together.
• The site provides discussion forums (by group, by topic).
• Photo, video, and document viewing and sharing (streaming videos, user-
supplied videos) are supported.
• Wikis can be used to jointly create documents.
• Blogs can be used for discussion, dissemination of information, and much
more.
Chapter 1 Page 4
5. Describe Facebook. Why is it so popular?
Facebook is a social network that provides a variety of features to members. Members
use these services to share information and content with each other in a social setting.
Facebook is popular due to the large number of features and other users with which to
interact.
6. What is an enterprise social network?
These networks are similar in function to other social networks, but are organized to
fulfill a business, as opposed to purely social, purpose.
7. Define social commerce.
The e-commerce activities conducted in social networks and/or by using social software
(i.e., Web 2.0 tools).
8. Describe e-commerce activities on Facebook. Why is it referred to as f-commerce?
These activities consist of purchases with the social network, relying on its user base.
Because Facebook has the largest user base, social commerce was termed “f-
commerce” (“F” for Facebook).
9. Define virtual worlds and list their characteristics.
A user-defined world in which people can interact, play, and do business. The most
publicized virtual world is Second Life. Virtual worlds are characterized by their
immersive, interactive environments.
10. Describe some ways for students with computer skills to make money from virtual
worlds.
Students could potentially create goods or services to be sold in these worlds.
Section 1.4 Review Questions
1. Define the digital revolution and list its components.
The digital revolution is the change in the way individuals communicate and do
business based on advances in technology.
2. List the characteristics of the digital economy.
These characteristics include: a wide variety of digitized products, financial transactions
being conducted digitally, and microprocessors and network capabilities embedded in
physical goods.
5. Describe Facebook. Why is it so popular?
Facebook is a social network that provides a variety of features to members. Members
use these services to share information and content with each other in a social setting.
Facebook is popular due to the large number of features and other users with which to
interact.
6. What is an enterprise social network?
These networks are similar in function to other social networks, but are organized to
fulfill a business, as opposed to purely social, purpose.
7. Define social commerce.
The e-commerce activities conducted in social networks and/or by using social software
(i.e., Web 2.0 tools).
8. Describe e-commerce activities on Facebook. Why is it referred to as f-commerce?
These activities consist of purchases with the social network, relying on its user base.
Because Facebook has the largest user base, social commerce was termed “f-
commerce” (“F” for Facebook).
9. Define virtual worlds and list their characteristics.
A user-defined world in which people can interact, play, and do business. The most
publicized virtual world is Second Life. Virtual worlds are characterized by their
immersive, interactive environments.
10. Describe some ways for students with computer skills to make money from virtual
worlds.
Students could potentially create goods or services to be sold in these worlds.
Section 1.4 Review Questions
1. Define the digital revolution and list its components.
The digital revolution is the change in the way individuals communicate and do
business based on advances in technology.
2. List the characteristics of the digital economy.
These characteristics include: a wide variety of digitized products, financial transactions
being conducted digitally, and microprocessors and network capabilities embedded in
physical goods.
Chapter 1 Page 5
3. Define a digital enterprise.
A new business model that uses IT in a fundamental way to accomplish one or more of
three basic objectives: reach and engage customers more effectively, boost employee
productivity, and improve operating efficiency. It uses converged communication and
computing technology in a way that improves business processes.
4. Compare traditional and digital enterprises.
Both enterprises focus on serving the market with goods and services, but the digital
enterprise capitalizes on the benefits of new technologies in all aspects of its business
operations.
5. Describe the digital society.
A digital society is a societal structure built within the confines of technology.
6. Visit doggyspace.com and dogtoys.com. Compare the two sites and relate their
contents to the digital society.
Student experiences will vary based on the time of visit.
Section 1.5 Review Questions
1. List the components of the business environment impact model and explain the model.
The model describes how the business environment creates problems and opportunities
that effect the company and how the company responds to those stimuli to create
solutions.
2. List the major factors in today’s business environment.
The major business pressures faced by organizations can be divided into markets,
societal, and technological categories.
3. List some of the major response activities taken by organizations.
Organizations respond to business pressures by using: strategic systems, continuous
improvement systems, business alliances, electronic markets, increased efficiencies,
employee empowerment, supply chain improvements, and mass customization.
4. List and briefly discuss five capabilities of EC (consult Exhibit 1.10).
The major capabilities are in Exhibit 1.10 and include:
• Efficient transactions
• Fast Dissemination of Information
3. Define a digital enterprise.
A new business model that uses IT in a fundamental way to accomplish one or more of
three basic objectives: reach and engage customers more effectively, boost employee
productivity, and improve operating efficiency. It uses converged communication and
computing technology in a way that improves business processes.
4. Compare traditional and digital enterprises.
Both enterprises focus on serving the market with goods and services, but the digital
enterprise capitalizes on the benefits of new technologies in all aspects of its business
operations.
5. Describe the digital society.
A digital society is a societal structure built within the confines of technology.
6. Visit doggyspace.com and dogtoys.com. Compare the two sites and relate their
contents to the digital society.
Student experiences will vary based on the time of visit.
Section 1.5 Review Questions
1. List the components of the business environment impact model and explain the model.
The model describes how the business environment creates problems and opportunities
that effect the company and how the company responds to those stimuli to create
solutions.
2. List the major factors in today’s business environment.
The major business pressures faced by organizations can be divided into markets,
societal, and technological categories.
3. List some of the major response activities taken by organizations.
Organizations respond to business pressures by using: strategic systems, continuous
improvement systems, business alliances, electronic markets, increased efficiencies,
employee empowerment, supply chain improvements, and mass customization.
4. List and briefly discuss five capabilities of EC (consult Exhibit 1.10).
The major capabilities are in Exhibit 1.10 and include:
• Efficient transactions
• Fast Dissemination of Information
Loading page 6...
Chapter 1 Page 6
• Price Comparison for Customers
• Personalization, Customization
• Global Reach
• Rich Media, Entertainment, Social Networking
• Anytime, Anywhere Convenience
• Easy to Find Product/Vendor Information
• Productivity Booster
• Knowledge, Advice, Collaboration
Section 1.6 Review Questions
1. What is a business model? Describe its functions and properties.
A business model is a method of doing business by which a company can generate
revenue to sustain itself. A business plan is a written document that identifies the
business goals and outlines the plan to achieve them. A business case is a written
document that is used by managers to gather funding for specific applications for
projects; its major emphasis is the justification for specific investment.
2. Describe a revenue model and a value proposition. How are they related?
Revenue model – description of how the company or an EC project will earn money
Value Proposition – the benefits a company can derive from using EC
They are related because they define the attributes of a business that will help it succeed.
3. Describe the following business models: direct marketing, tendering system, electronic
exchanges, viral marketing, and social networking/commerce.
• Direct marketing – advertising to individuals in the hope that they will purchase a
product or service
• Tendering system – collecting a use fee by providing the means for others to
conduct transactions online
• Electronic exchanges – collecting a use fee by providing the means for others to
find buyers online within a community
• Viral marketing – word of mouth marketing
• Social networking – creating a suite of services that allows individuals to
communicate and interact with each other
4. Identify business models related to buying and those related to selling.
Some business models related to buying include: electronic tendering systems, find the
best price, group purchasing and supply chain improvements. Some business models
related to selling include: online direct marketing, name your own price, affiliate
marketing, buyer marketing, online auctions, product and service customization,
electronic marketplaces and exchanges and supply chain improvements.
• Price Comparison for Customers
• Personalization, Customization
• Global Reach
• Rich Media, Entertainment, Social Networking
• Anytime, Anywhere Convenience
• Easy to Find Product/Vendor Information
• Productivity Booster
• Knowledge, Advice, Collaboration
Section 1.6 Review Questions
1. What is a business model? Describe its functions and properties.
A business model is a method of doing business by which a company can generate
revenue to sustain itself. A business plan is a written document that identifies the
business goals and outlines the plan to achieve them. A business case is a written
document that is used by managers to gather funding for specific applications for
projects; its major emphasis is the justification for specific investment.
2. Describe a revenue model and a value proposition. How are they related?
Revenue model – description of how the company or an EC project will earn money
Value Proposition – the benefits a company can derive from using EC
They are related because they define the attributes of a business that will help it succeed.
3. Describe the following business models: direct marketing, tendering system, electronic
exchanges, viral marketing, and social networking/commerce.
• Direct marketing – advertising to individuals in the hope that they will purchase a
product or service
• Tendering system – collecting a use fee by providing the means for others to
conduct transactions online
• Electronic exchanges – collecting a use fee by providing the means for others to
find buyers online within a community
• Viral marketing – word of mouth marketing
• Social networking – creating a suite of services that allows individuals to
communicate and interact with each other
4. Identify business models related to buying and those related to selling.
Some business models related to buying include: electronic tendering systems, find the
best price, group purchasing and supply chain improvements. Some business models
related to selling include: online direct marketing, name your own price, affiliate
marketing, buyer marketing, online auctions, product and service customization,
electronic marketplaces and exchanges and supply chain improvements.
Loading page 7...
Chapter 1 Page 7
5. Describe how viral marketing works.
Viral marketing creates a unique advertisement or proposition that is then spread by
users.
Section 1.7 Review Questions
1. Describe some EC benefits to organizations, individuals, and society.
EC benefits consumers by providing them convenience, speed, reduced costs,
customization, personalization and communities. EC benefits organizations by
expanding the marketplace, creating a cost savings, improving business processes and
promoting interactivity. EC benefits society by improving the standard of living and
delivery of public services.
2. List the major technological and non-technological limitations of EC.
These limitations are summarized in Exhibit 1.13.
3. Describe some of the benefits of studying EC.
EC provides both an understanding of business ideas as well as the expanding
technologies that support them.
4. How can EC help entrepreneurship?
EC helps entrepreneurs by allowing for easier entry into markets.
Answers to EC Application Case Questions
EC Application Case 1.1: Zappos: A Success Story of Selling
Footwear Online
Questions
1. List the major critical success factors of the company.
• Large selection
• Fast delivery
• Positive culture
• Customer service
2. Why was Amazon.com interested in the company?
5. Describe how viral marketing works.
Viral marketing creates a unique advertisement or proposition that is then spread by
users.
Section 1.7 Review Questions
1. Describe some EC benefits to organizations, individuals, and society.
EC benefits consumers by providing them convenience, speed, reduced costs,
customization, personalization and communities. EC benefits organizations by
expanding the marketplace, creating a cost savings, improving business processes and
promoting interactivity. EC benefits society by improving the standard of living and
delivery of public services.
2. List the major technological and non-technological limitations of EC.
These limitations are summarized in Exhibit 1.13.
3. Describe some of the benefits of studying EC.
EC provides both an understanding of business ideas as well as the expanding
technologies that support them.
4. How can EC help entrepreneurship?
EC helps entrepreneurs by allowing for easier entry into markets.
Answers to EC Application Case Questions
EC Application Case 1.1: Zappos: A Success Story of Selling
Footwear Online
Questions
1. List the major critical success factors of the company.
• Large selection
• Fast delivery
• Positive culture
• Customer service
2. Why was Amazon.com interested in the company?
Loading page 8...
Chapter 1 Page 8
It allows Amazon to leverage its supplier relationships, while maintaining a separate
brand.
3. What is “WOW” about?
It relates to a customer experience defined by a huge selection and excellent service.
4. Why did the company change its business model?
After being successful with shoes, it was possible to leverage the brand into other
products.
5. How is order fulfillment being done?
Fulfillment is completed through a large warehouse of products, allowing for fast
delivery. This fulfillment method creates a larger overhead and its associated costs, but
allows for faster service. Other retailers like Amazon use outside suppliers and drop-
shipments to reduce their warehouse requirements.
6. Access wikihow.com/customize-your-shoes. Discuss how such customization may
affect Zappos’s business.
This type of service may decrease the importance of Zappos selection, but would not
benefit from faster fulfillment.
EC Application Case 1.2: Groupon
Questions
1. It is difficult to do business with Groupon. About 85% of merchants’ suggestions are
dismissed by Groupon. Why do you think Groupon is so strict and how will this policy
impact the competition?
Because of the limited space to market (daily), Groupon needs to be careful to select
only the deals that will perform the best. This leaves space for competetiors to select
the discarded deals.
2. Some claim that Groupon is basically an e-mail list that charges advertisers to send
out their coupons (called Groupons). Comment.
This is true to some extent, but Groupon also benefits customers be being
discriminating in the deals it selects.
3. Why does Groupon use Facebook to promote its business, while Facebook is its
competitor?
It allows Amazon to leverage its supplier relationships, while maintaining a separate
brand.
3. What is “WOW” about?
It relates to a customer experience defined by a huge selection and excellent service.
4. Why did the company change its business model?
After being successful with shoes, it was possible to leverage the brand into other
products.
5. How is order fulfillment being done?
Fulfillment is completed through a large warehouse of products, allowing for fast
delivery. This fulfillment method creates a larger overhead and its associated costs, but
allows for faster service. Other retailers like Amazon use outside suppliers and drop-
shipments to reduce their warehouse requirements.
6. Access wikihow.com/customize-your-shoes. Discuss how such customization may
affect Zappos’s business.
This type of service may decrease the importance of Zappos selection, but would not
benefit from faster fulfillment.
EC Application Case 1.2: Groupon
Questions
1. It is difficult to do business with Groupon. About 85% of merchants’ suggestions are
dismissed by Groupon. Why do you think Groupon is so strict and how will this policy
impact the competition?
Because of the limited space to market (daily), Groupon needs to be careful to select
only the deals that will perform the best. This leaves space for competetiors to select
the discarded deals.
2. Some claim that Groupon is basically an e-mail list that charges advertisers to send
out their coupons (called Groupons). Comment.
This is true to some extent, but Groupon also benefits customers be being
discriminating in the deals it selects.
3. Why does Groupon use Facebook to promote its business, while Facebook is its
competitor?
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Groupon benefits from the massive user base of Facebook.
4. Read Carpenter (2010) and write a short essay on Groupon’s chance of survival in
the intensely competitive environment. Examine its revenue model and expansion plans.
Student essays will vary.
5. Learn more about Groupon’s order fulfillment (e.g., ability to handle volume, control
of deliveries, and dealing with marketing and competitors). Write a report.
Student reports will vary.
6. Research Groupon’s global efforts. Start with Emma Hall’s article “Groupon Clones
in Europe Say They Offer Better Deals and Treatment of Merchants” at
adage.com/article/global-news/groupon-clones-europewin-consumers-
merchants/147689.
Student research will vary.
7. Groupon uses classified ads for rental apartments. How does this fit with its business
model?
This potentially overlaps with its current customer base.
8. Groupon now deals in B2B. Search the Internet and find out how it is being done.
Student research will vary based on the time of research since this model appears to be
changing rapidly. In late 2011, Groupon was segmenting the market and providing
business-targeted services to business accounts.
EC Application Case 1.3: How College Students Become
Entrepreneurs
Questions
1. Go to jetpens.com and examine the catalog. What impresses you the most?
Response will vary, but may focus on site design, costs or variety.
2. Evaluate the site’s ease of use.
Response will vary, but the site appears easy to use.
3. Do you think that a business like this can succeed as an independent online-only store?
Why or why not?
Groupon benefits from the massive user base of Facebook.
4. Read Carpenter (2010) and write a short essay on Groupon’s chance of survival in
the intensely competitive environment. Examine its revenue model and expansion plans.
Student essays will vary.
5. Learn more about Groupon’s order fulfillment (e.g., ability to handle volume, control
of deliveries, and dealing with marketing and competitors). Write a report.
Student reports will vary.
6. Research Groupon’s global efforts. Start with Emma Hall’s article “Groupon Clones
in Europe Say They Offer Better Deals and Treatment of Merchants” at
adage.com/article/global-news/groupon-clones-europewin-consumers-
merchants/147689.
Student research will vary.
7. Groupon uses classified ads for rental apartments. How does this fit with its business
model?
This potentially overlaps with its current customer base.
8. Groupon now deals in B2B. Search the Internet and find out how it is being done.
Student research will vary based on the time of research since this model appears to be
changing rapidly. In late 2011, Groupon was segmenting the market and providing
business-targeted services to business accounts.
EC Application Case 1.3: How College Students Become
Entrepreneurs
Questions
1. Go to jetpens.com and examine the catalog. What impresses you the most?
Response will vary, but may focus on site design, costs or variety.
2. Evaluate the site’s ease of use.
Response will vary, but the site appears easy to use.
3. Do you think that a business like this can succeed as an independent online-only store?
Why or why not?
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Response will vary, but niche marketing online has historically succeeded in certain
areas.
4. What is the purpose of the site’s JetPress RSS Feed?
This allows the company to keep users informed of new offerings and promotions.
Answers to Discussion Questions
1. Compare brick-and-mortar and click-and-mortar organizations.
Brick-and-mortar organizations only maintain a presence off-line. Click-and-mortar
organizations maintain a presence both online and off-line.
2. Why is buying with a smart card from a vending machine considered EC?
EC can be defined as the application of technology toward the automation of business
transactions and workflow. Because a smart card uses technology to automate a process
(creating greater efficiencies and ease-of-use) it can therefore be considered EC.
3. Explain how EC can reduce cycle time, improve employees’ empowerment, and
facilitate customer support.
EC can reduce cycle time by eliminating steps in business processes. The steps may be
redundant or can be replaced with more efficient technology solutions. The elimination
of the steps speeds the overall process and reduces cycle time. EC can provide
employee empowerment by providing employees with greater and easier access to
information provided by the employer. EC facilitates customer support by providing a
wide range of technological solutions and communication opportunities. Additionally,
EC supports self-help customer service so consumers can answer their own questions.
4. Compare and contrast viral marketing with affiliate marketing.
In both viral and affiliate marketing, a business relys on a third party to assist in its
marketing effort. With affiliate marketing, individuals or firms are paid based on the
amount of additional business they can send to the selling firm. With viral marketing,
individuals are encouraged to market the product to others without any financial gain.
5. Identify the contribution of Web 2.0. What does it add to EC?
Web 2.0 adds a variety of tools and services that allows for larger feature-sets and
customer draws in EC.
Response will vary, but niche marketing online has historically succeeded in certain
areas.
4. What is the purpose of the site’s JetPress RSS Feed?
This allows the company to keep users informed of new offerings and promotions.
Answers to Discussion Questions
1. Compare brick-and-mortar and click-and-mortar organizations.
Brick-and-mortar organizations only maintain a presence off-line. Click-and-mortar
organizations maintain a presence both online and off-line.
2. Why is buying with a smart card from a vending machine considered EC?
EC can be defined as the application of technology toward the automation of business
transactions and workflow. Because a smart card uses technology to automate a process
(creating greater efficiencies and ease-of-use) it can therefore be considered EC.
3. Explain how EC can reduce cycle time, improve employees’ empowerment, and
facilitate customer support.
EC can reduce cycle time by eliminating steps in business processes. The steps may be
redundant or can be replaced with more efficient technology solutions. The elimination
of the steps speeds the overall process and reduces cycle time. EC can provide
employee empowerment by providing employees with greater and easier access to
information provided by the employer. EC facilitates customer support by providing a
wide range of technological solutions and communication opportunities. Additionally,
EC supports self-help customer service so consumers can answer their own questions.
4. Compare and contrast viral marketing with affiliate marketing.
In both viral and affiliate marketing, a business relys on a third party to assist in its
marketing effort. With affiliate marketing, individuals or firms are paid based on the
amount of additional business they can send to the selling firm. With viral marketing,
individuals are encouraged to market the product to others without any financial gain.
5. Identify the contribution of Web 2.0. What does it add to EC?
Web 2.0 adds a variety of tools and services that allows for larger feature-sets and
customer draws in EC.
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6. Discuss the reasons companies embark on social commerce.
Companies will generally use social commerce to increase their marketing by
leveraging networks that contain potential customers.
7. Distinguish an enterprise social network from a public one such as Facebook.
The largest difference is the intended target, with enterprise social networks focusing on
internal groups, and Facebook focusing on the mass market.
8. Carefully examine the nontechnological limitations of EC. Which are company
dependent and which are generic?
All of the listed nontechnological limitations are generic concerns with the exception of
“Lack of trust in EC and in unknown sellers hinders buying.” This limitation may be
overcome by well-known and established merchants who will bring with them some level
of customer confidence.
9. Why are virtual worlds such as Second Life related to EC?
These are related because there is a fee associated, and the platform allows for the sale of
virtual goods and services.
10. Register at ibm.com/enterpriseofthefuture and download IBM’s study “The
Enterprise of the Future” (IBM 2008). In one page, summarize how the enterprise of the
future differs from today’s enterprise.
Student answers will vary.
Topics for Class Discussion and Debates
1. How can EC be a business pressure and an organizational response to other business
pressure?
Student answers will vary. The need for EC can drive changes in an organization, and
the changes needed by EC can create pressure within the organization.
2. Debate: Does digital business eliminate the “human touch” in trading? And if “yes,”
is it really bad?
Student answers will vary. The use of EC can reduce the need for human interactions in
commerce. This reduction can increase efficiency, but may also reduce the amount of
“personal touch.”
6. Discuss the reasons companies embark on social commerce.
Companies will generally use social commerce to increase their marketing by
leveraging networks that contain potential customers.
7. Distinguish an enterprise social network from a public one such as Facebook.
The largest difference is the intended target, with enterprise social networks focusing on
internal groups, and Facebook focusing on the mass market.
8. Carefully examine the nontechnological limitations of EC. Which are company
dependent and which are generic?
All of the listed nontechnological limitations are generic concerns with the exception of
“Lack of trust in EC and in unknown sellers hinders buying.” This limitation may be
overcome by well-known and established merchants who will bring with them some level
of customer confidence.
9. Why are virtual worlds such as Second Life related to EC?
These are related because there is a fee associated, and the platform allows for the sale of
virtual goods and services.
10. Register at ibm.com/enterpriseofthefuture and download IBM’s study “The
Enterprise of the Future” (IBM 2008). In one page, summarize how the enterprise of the
future differs from today’s enterprise.
Student answers will vary.
Topics for Class Discussion and Debates
1. How can EC be a business pressure and an organizational response to other business
pressure?
Student answers will vary. The need for EC can drive changes in an organization, and
the changes needed by EC can create pressure within the organization.
2. Debate: Does digital business eliminate the “human touch” in trading? And if “yes,”
is it really bad?
Student answers will vary. The use of EC can reduce the need for human interactions in
commerce. This reduction can increase efficiency, but may also reduce the amount of
“personal touch.”
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3. Why do companies frequently change their business models? What are the advantages?
The disadvantages?
Student answers will vary. Companies may change models in an attempt to increase
profitability, but it may create decreases in profitability or organizational cohesion.
4. Debate: EC eliminates more jobs than it creates. Should we restrict its use and growth?
Student answers will vary. While the initial premise is correct, increased efficiencies may
also allow for business expansion.
5. Debate: Will online fashion hurt fashion retailers?
Student answers will vary. Students may agree (zero sum gain) or disagree (increased
overall interest).
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. Visit bigboxx.com and identify the services the company provides to its customers. What
type of EC is this? What business model(s) does Bigboxx use?
This company provides a large supply of office products, as well as other products and
services to customers in the Hong Kong market. This company focuses primarily on B2B
sales. This company makes the majority of its revenue through the direct sale of items.
2. Visit Amazon.com’s site (amazon.com) and locate recent information in the following
areas:
a. Find the five top-selling books on EC.
Student information will vary based on when this question is completed.
b. Find a review of one of these books.
Student information will vary based on when this question is completed.
c. Review the customer services you can get from Amazon and describe the benefits
you receive from shopping there.
Amazon.com provides several services for customers. These benefits include:
• free shipping on large orders
• the ability to track orders
• the ability to combine orders
3. Why do companies frequently change their business models? What are the advantages?
The disadvantages?
Student answers will vary. Companies may change models in an attempt to increase
profitability, but it may create decreases in profitability or organizational cohesion.
4. Debate: EC eliminates more jobs than it creates. Should we restrict its use and growth?
Student answers will vary. While the initial premise is correct, increased efficiencies may
also allow for business expansion.
5. Debate: Will online fashion hurt fashion retailers?
Student answers will vary. Students may agree (zero sum gain) or disagree (increased
overall interest).
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. Visit bigboxx.com and identify the services the company provides to its customers. What
type of EC is this? What business model(s) does Bigboxx use?
This company provides a large supply of office products, as well as other products and
services to customers in the Hong Kong market. This company focuses primarily on B2B
sales. This company makes the majority of its revenue through the direct sale of items.
2. Visit Amazon.com’s site (amazon.com) and locate recent information in the following
areas:
a. Find the five top-selling books on EC.
Student information will vary based on when this question is completed.
b. Find a review of one of these books.
Student information will vary based on when this question is completed.
c. Review the customer services you can get from Amazon and describe the benefits
you receive from shopping there.
Amazon.com provides several services for customers. These benefits include:
• free shipping on large orders
• the ability to track orders
• the ability to combine orders
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• the ability to send orders as guests
• additional answers will vary
d. Review the products directory.
Amazon.com provides a wide variety of products including books, electronics,
music, travel services, and many others.
3. Visit priceline.com and zappos.com identify the various business models used by
both. Discuss their advantages.
Priceline.com uses the “name your own price” or reverse auction business model. This
model allows consumers to place bids for different services with several third-party
companies through priceline.com. If the amount paid by the customer meets the third-
party company’s minimum sales price, the customer purchases the product or service at
that price. Zappos provides a large selection, and quick delivery. Priceline benefits by
providing a service for the cost-sensitive, while Zappos caters to those who have very
specific needs.
4. Go to nike.com and design your own shoes. Next visit office.microsoft.com and
create your own business card. Finally, enter jaguar.com and configure the car of your
dreams. What are the advantages of each activity? The disadvantages?
Each of these sites provides the ability of individual customization for various products.
The major advantage of this system is the ability of the consumer to create and purchase
a product that meets their individual specifications. The disadvantages of the systems
are the limitations and possible customizations and the additional cost and fulfillment
time associated with customized products.
5. Try to save on your next purchase. Visit letsbuyit.com, kaboodle.com, yub.com, and
buyerzone.com. Which site do you prefer? Why?
Opinions will vary based on student preferences. Each site has a different mix of
features and user experience.
6. Enter espn.go.com, 123greetings.com, facebook.com and identify and list all the
revenue sources on each of the companies’ sites.
Because of the large range of options, and changes over time, student responses may
vary. For example, ESPN currently displays:
• Advertising (pop-up)
• Advertising (co-branding MSN)
• Advertising (banners)
• Advertising (internal, for ESPN)
• E-Commerce (sales)
• the ability to send orders as guests
• additional answers will vary
d. Review the products directory.
Amazon.com provides a wide variety of products including books, electronics,
music, travel services, and many others.
3. Visit priceline.com and zappos.com identify the various business models used by
both. Discuss their advantages.
Priceline.com uses the “name your own price” or reverse auction business model. This
model allows consumers to place bids for different services with several third-party
companies through priceline.com. If the amount paid by the customer meets the third-
party company’s minimum sales price, the customer purchases the product or service at
that price. Zappos provides a large selection, and quick delivery. Priceline benefits by
providing a service for the cost-sensitive, while Zappos caters to those who have very
specific needs.
4. Go to nike.com and design your own shoes. Next visit office.microsoft.com and
create your own business card. Finally, enter jaguar.com and configure the car of your
dreams. What are the advantages of each activity? The disadvantages?
Each of these sites provides the ability of individual customization for various products.
The major advantage of this system is the ability of the consumer to create and purchase
a product that meets their individual specifications. The disadvantages of the systems
are the limitations and possible customizations and the additional cost and fulfillment
time associated with customized products.
5. Try to save on your next purchase. Visit letsbuyit.com, kaboodle.com, yub.com, and
buyerzone.com. Which site do you prefer? Why?
Opinions will vary based on student preferences. Each site has a different mix of
features and user experience.
6. Enter espn.go.com, 123greetings.com, facebook.com and identify and list all the
revenue sources on each of the companies’ sites.
Because of the large range of options, and changes over time, student responses may
vary. For example, ESPN currently displays:
• Advertising (pop-up)
• Advertising (co-branding MSN)
• Advertising (banners)
• Advertising (internal, for ESPN)
• E-Commerce (sales)
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7. Enter lala.com and listen to some of the commercial-free digital songs offered (cost
10¢).What other digital products and services do they offer? Write a summary.
Student responses will vary. The site offers other products such as TV and movies.
8. Enter philatino.com, stampauctioncentral.com and statusint.com. Identify the
business model(s) and revenue models they use.
Student responses will vary. The sites appear to be intermediaries who use the auction
model.
9. Enter lowes.com. View the “design it” online feature and the animated “How Tos.”
Examine the Project Calculators and Gift Advisor features. Relate these to the business
models and other EC Features of this chapter.
Student responses will vary based on the wide variety of tools available. These tools
are meant to allow for customization and guided commerce.
10. Go to zipcar.com. What can this site help you do?
Site allows you to rent cars.
11. Enter digitalenterprise.org. Prepare a report regarding the latest EC models and
developments.
Student answers will vary. The site focus is on new and upcoming business models and
comments on if they might succeed.
12. Visit some Web sites that offer employment opportunities in EC (such as
execunet.com and monster.com). Compare the EC salaries to salaries offered to
accountants. For other information on EC salaries, check Computerworld’s annual
salary survey, unixl.com, and salary.com
Student answers will vary. There is a great deal of variation across location and
company.
13. Visit bluenile.com, diamond.com, and jewelryexchange.com. Compare the sites.
Comment on the similarities and the differences.
Student answers will vary. Each site has a different mix of features and user experience.
14. Visit ticketmaster.com, ticketonline.com, and other sites that sell event tickets
online. Assess the competition in online ticket sales. What services do the different sites
provide?
7. Enter lala.com and listen to some of the commercial-free digital songs offered (cost
10¢).What other digital products and services do they offer? Write a summary.
Student responses will vary. The site offers other products such as TV and movies.
8. Enter philatino.com, stampauctioncentral.com and statusint.com. Identify the
business model(s) and revenue models they use.
Student responses will vary. The sites appear to be intermediaries who use the auction
model.
9. Enter lowes.com. View the “design it” online feature and the animated “How Tos.”
Examine the Project Calculators and Gift Advisor features. Relate these to the business
models and other EC Features of this chapter.
Student responses will vary based on the wide variety of tools available. These tools
are meant to allow for customization and guided commerce.
10. Go to zipcar.com. What can this site help you do?
Site allows you to rent cars.
11. Enter digitalenterprise.org. Prepare a report regarding the latest EC models and
developments.
Student answers will vary. The site focus is on new and upcoming business models and
comments on if they might succeed.
12. Visit some Web sites that offer employment opportunities in EC (such as
execunet.com and monster.com). Compare the EC salaries to salaries offered to
accountants. For other information on EC salaries, check Computerworld’s annual
salary survey, unixl.com, and salary.com
Student answers will vary. There is a great deal of variation across location and
company.
13. Visit bluenile.com, diamond.com, and jewelryexchange.com. Compare the sites.
Comment on the similarities and the differences.
Student answers will vary. Each site has a different mix of features and user experience.
14. Visit ticketmaster.com, ticketonline.com, and other sites that sell event tickets
online. Assess the competition in online ticket sales. What services do the different sites
provide?
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Chapter 1 Page 15
Student answers will vary. Competition is strong, with each site attempting to provide
the best suite of services.
15. Enter The Timberland Company (timberland.com) and design a pair of boots.
Compare it to building your own sneakers at Nike.
Student answers may vary. Both services provide a variety of customizations for shoes.
Students will differ on the importance of the interface in each option and possible
selections.
16. Examine two or three of the following sites: prosper. com, swapthing.com,
swaptree.com, peerflix.com, lala.com, swapvillage.com, bigvine.com, etc. Compare
their business and revenue models.
Student answers will vary. These sites allow for the sale of goods – C2C.
Team Assignments and Role Playing
1. Assignment for the Opening Case
Read the opening case and answer the following questions.
a. Why would you buy (or not buy) from Net-a-Porter?
Student opinions will vary. The service may have appeal to some.
b. Watch the video “The Future of Shopping” (youtube.com/watch?v=jDi0FNcaock).
How would you integrate this development with Net-a-Porter?
Student opinions will vary, but this trend may benefit the company.
c. What are the advantages and disadvantages of the Net’s physical stores?
They allow for additional distribution opportunities, but contradict the business model.
d. It is said that the Net is playing a significant role in transforming how designers
reach customers. Explain why.
It appears that designers can now go more easily to customers, instead of through
intermediaries.
e. Read the benefits of EC to customers (Section 1.7). Which ones are most relevant
here?
Possible benefits include:
• Global reach
• Cost reduction
• Niche
Student answers will vary. Competition is strong, with each site attempting to provide
the best suite of services.
15. Enter The Timberland Company (timberland.com) and design a pair of boots.
Compare it to building your own sneakers at Nike.
Student answers may vary. Both services provide a variety of customizations for shoes.
Students will differ on the importance of the interface in each option and possible
selections.
16. Examine two or three of the following sites: prosper. com, swapthing.com,
swaptree.com, peerflix.com, lala.com, swapvillage.com, bigvine.com, etc. Compare
their business and revenue models.
Student answers will vary. These sites allow for the sale of goods – C2C.
Team Assignments and Role Playing
1. Assignment for the Opening Case
Read the opening case and answer the following questions.
a. Why would you buy (or not buy) from Net-a-Porter?
Student opinions will vary. The service may have appeal to some.
b. Watch the video “The Future of Shopping” (youtube.com/watch?v=jDi0FNcaock).
How would you integrate this development with Net-a-Porter?
Student opinions will vary, but this trend may benefit the company.
c. What are the advantages and disadvantages of the Net’s physical stores?
They allow for additional distribution opportunities, but contradict the business model.
d. It is said that the Net is playing a significant role in transforming how designers
reach customers. Explain why.
It appears that designers can now go more easily to customers, instead of through
intermediaries.
e. Read the benefits of EC to customers (Section 1.7). Which ones are most relevant
here?
Possible benefits include:
• Global reach
• Cost reduction
• Niche
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• Time to market
• Selection
f. What EC capabilities are helping the Net and its designers?
Some capabilities include the ability to focus on a niche customer group and provide a
wider selection than a local, physical location could.
g. Analyze the competition in the high-end fashion market.
Student opinions will vary. The market is fairly new, with some strong entrants, but a
historical model that is very location-driven.
h. What is the importance of globalization in this case?
It allows for both a larger selection and user base.
i. Imitators are springing up on all sides. Even eBay and Amazon.com are expanding
their fashion e-tailing efforts. What strategy do you suggest for the Net? (Hint: Read
Brodie 2009 to get some ideas.)
Student opinions will vary. Many answers will focus on differentiation and services.
2. Create an online group for studying EC or a particular aspect of EC that interests
you. You can do this via Google Groups, a social network of your choice, or Yahoo!
Groups. Each member of the group must have an e-mail account. Go to Yahoo! Groups
groups.yahoo.com and log in.
Responses will vary. Each site offers a different set of tools and user experience.
3. Each team will research two EC success stories. Members of the group should
examine companies that operate solely online and some that extensively utilize a click-
and-mortar strategy. Each team should identify the critical success factors for its
companies and present a report to the other teams.
Responses will vary based on the businesses chosen by students and the source of their
information.
4. Each team selects a business-oriented social network such as Linkedin, Xing, or
Viadeo. Each team presents the essentials of the site, the attributes, etc. Each team will
try to convince other students why their site is superior (see Online File W1.11 for some
resources).
Responses will vary based on the sites chosen by students. Each site offers a different
set of tools and user experience.
• Time to market
• Selection
f. What EC capabilities are helping the Net and its designers?
Some capabilities include the ability to focus on a niche customer group and provide a
wider selection than a local, physical location could.
g. Analyze the competition in the high-end fashion market.
Student opinions will vary. The market is fairly new, with some strong entrants, but a
historical model that is very location-driven.
h. What is the importance of globalization in this case?
It allows for both a larger selection and user base.
i. Imitators are springing up on all sides. Even eBay and Amazon.com are expanding
their fashion e-tailing efforts. What strategy do you suggest for the Net? (Hint: Read
Brodie 2009 to get some ideas.)
Student opinions will vary. Many answers will focus on differentiation and services.
2. Create an online group for studying EC or a particular aspect of EC that interests
you. You can do this via Google Groups, a social network of your choice, or Yahoo!
Groups. Each member of the group must have an e-mail account. Go to Yahoo! Groups
groups.yahoo.com and log in.
Responses will vary. Each site offers a different set of tools and user experience.
3. Each team will research two EC success stories. Members of the group should
examine companies that operate solely online and some that extensively utilize a click-
and-mortar strategy. Each team should identify the critical success factors for its
companies and present a report to the other teams.
Responses will vary based on the businesses chosen by students and the source of their
information.
4. Each team selects a business-oriented social network such as Linkedin, Xing, or
Viadeo. Each team presents the essentials of the site, the attributes, etc. Each team will
try to convince other students why their site is superior (see Online File W1.11 for some
resources).
Responses will vary based on the sites chosen by students. Each site offers a different
set of tools and user experience.
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5. Watch the video Part 1-E-Commerce (8 minutes) at
youtube.com/watch?v=OY2tcQ574Ew.
a. Update all the data shown in the video.
Responses will vary based on when a student looks up the data (and the data source).
This video is fairly old, with data mostly from 2005.
b. What fundamental change is introduced by EC?
The video makes the case that EC levels the playing field and opens new markets.
c. What is the first mover advantage discussed in the video?
First mover advantage is the benefit of being the first in a market with a product or
service and avoiding initial competition.
d. Amazon.com and other companies that lost money during the time the video was
made are making lots of money today; find out why.
Again it will depend on when research is completed. In general, as first movers, these
companies needed to invest to promote and gain acceptance.
e. Identify all the EC business models discussed in the video.
The video covers almost all B2C models.
f. How can one conduct an EC business from home?
The site focuses on affiliate marketing.
g. EC is considered a disruptor. In what ways?
It is, because it changes the traditional rules and balance in business.
6. All class members that are not registered in Second Life need to register and create
their avatars. Let each team address one of the following areas:
◗ Trading virtual properties
◗ Creating buildings, projects, stores
◗ Shopping and retail outlets
◗ Virtual jobs
◗ Learning and training
◗ Other topics
a. Prepare a description of what is going on in that area.
5. Watch the video Part 1-E-Commerce (8 minutes) at
youtube.com/watch?v=OY2tcQ574Ew.
a. Update all the data shown in the video.
Responses will vary based on when a student looks up the data (and the data source).
This video is fairly old, with data mostly from 2005.
b. What fundamental change is introduced by EC?
The video makes the case that EC levels the playing field and opens new markets.
c. What is the first mover advantage discussed in the video?
First mover advantage is the benefit of being the first in a market with a product or
service and avoiding initial competition.
d. Amazon.com and other companies that lost money during the time the video was
made are making lots of money today; find out why.
Again it will depend on when research is completed. In general, as first movers, these
companies needed to invest to promote and gain acceptance.
e. Identify all the EC business models discussed in the video.
The video covers almost all B2C models.
f. How can one conduct an EC business from home?
The site focuses on affiliate marketing.
g. EC is considered a disruptor. In what ways?
It is, because it changes the traditional rules and balance in business.
6. All class members that are not registered in Second Life need to register and create
their avatars. Let each team address one of the following areas:
◗ Trading virtual properties
◗ Creating buildings, projects, stores
◗ Shopping and retail outlets
◗ Virtual jobs
◗ Learning and training
◗ Other topics
a. Prepare a description of what is going on in that area.
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Chapter 1 Page 18
b. Have members’ avatars interact with other avatars. Write a report about your
experience.
c. What can you learn from this project?
Student answers will vary. Second Life provides a huge range of experiences, but
some feel it has a steep learning curve.
Answers to End-of-Chapter Real-World Case Questions: E-Commerce
at the National Football League (NFL)
Questions
1. Identify all applications related to B2C in online stores.
Many items are sold including official and unofficial merchandise, as well as tickets to
events.
2. Identify all B2C applications inside the stadium.
Applications include access to league information, B2C sales (inside and outside of the
stadium) and stream video.
3. Identify all B2E applications inside the stadium.
Examples include information for coaches and security applications.
4. Relate online game playing to EC in NFL.
The NFL supports online game playing for economic benefit and to increase interest in
its physical teams.
5. Compare the NFL information available on Facebook and Twitter.
Student perceptions will vary based on the time of visit.
6. Find additional NFL-related applications not cited in this case.
Student research will vary. Many options exist, depending on the search.
7. Enter ignify.com/Atlanta_Falcons_eCommerce_Case_Study.html. Read the case,
then go to the Falcons’ online store and describe all major EC models that are used
there.
Student research will vary. The site offers a number of B2C models and services.
8. Find information on ball tracking technology that can be used by NFL.
b. Have members’ avatars interact with other avatars. Write a report about your
experience.
c. What can you learn from this project?
Student answers will vary. Second Life provides a huge range of experiences, but
some feel it has a steep learning curve.
Answers to End-of-Chapter Real-World Case Questions: E-Commerce
at the National Football League (NFL)
Questions
1. Identify all applications related to B2C in online stores.
Many items are sold including official and unofficial merchandise, as well as tickets to
events.
2. Identify all B2C applications inside the stadium.
Applications include access to league information, B2C sales (inside and outside of the
stadium) and stream video.
3. Identify all B2E applications inside the stadium.
Examples include information for coaches and security applications.
4. Relate online game playing to EC in NFL.
The NFL supports online game playing for economic benefit and to increase interest in
its physical teams.
5. Compare the NFL information available on Facebook and Twitter.
Student perceptions will vary based on the time of visit.
6. Find additional NFL-related applications not cited in this case.
Student research will vary. Many options exist, depending on the search.
7. Enter ignify.com/Atlanta_Falcons_eCommerce_Case_Study.html. Read the case,
then go to the Falcons’ online store and describe all major EC models that are used
there.
Student research will vary. The site offers a number of B2C models and services.
8. Find information on ball tracking technology that can be used by NFL.
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Chapter 1 Page 19
Student research will vary, based on search.
9. Compare Madden NFL 11 with NFL fantasy games.
Student opinions will vary, based on search.
Student research will vary, based on search.
9. Compare Madden NFL 11 with NFL fantasy games.
Student opinions will vary, based on search.
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Turban- Electronic Commerce 2012
Instructor’s Manual
Chapter 2
E-Commerce: Mechanisms, Infrastructure and Tools
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Describe the major electronic commerce (EC) activities and processes and the mechanisms that
support them.
2. Define e-marketplaces and list their components.
3. List the major types of e-marketplaces and describe their features.
4. Describe electronic catalogs, search engines, and shopping carts.
5. Describe the major types of auctions and list their characteristics.
6. Discuss the benefits and limitations of e-auctions.
7. Describe bartering and negotiating online.
8. Describe virtual communities.
9. List the major Web 2.0 tools and their use in EC.
10. Describe social networks as an EC mechanism.
11. Understand virtual worlds and their use in EC.
12. Describe Web 3.0 and define Web 4.0.
Content
Opening Case: Web 2.0 Tools at Eastern Mountain Sports
2.1 Electronic Commerce Mechanisms: An Overview
2.2 E-Marketplaces
2.3 Customer Shopping Mechanisms: Storefronts, Malls, and Portals
2.4 Merchant Solutions: Electronic Catalogs, Search Engines, and Shopping Carts
2.5 Auctions, Bartering, and Negotiating Online
2.6 Social Software Tools: From Blogs to Wikis to Twitter
2.7 Virtual Communities and Social Networks
2.8 Virtual Worlds as an Electronic Commerce Mechanism
2.9 The Future: Web 3.0 and Web 4.0
Managerial Issues
Closing Case: Business in Second Life
Instructor’s Manual
Chapter 2
E-Commerce: Mechanisms, Infrastructure and Tools
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Describe the major electronic commerce (EC) activities and processes and the mechanisms that
support them.
2. Define e-marketplaces and list their components.
3. List the major types of e-marketplaces and describe their features.
4. Describe electronic catalogs, search engines, and shopping carts.
5. Describe the major types of auctions and list their characteristics.
6. Discuss the benefits and limitations of e-auctions.
7. Describe bartering and negotiating online.
8. Describe virtual communities.
9. List the major Web 2.0 tools and their use in EC.
10. Describe social networks as an EC mechanism.
11. Understand virtual worlds and their use in EC.
12. Describe Web 3.0 and define Web 4.0.
Content
Opening Case: Web 2.0 Tools at Eastern Mountain Sports
2.1 Electronic Commerce Mechanisms: An Overview
2.2 E-Marketplaces
2.3 Customer Shopping Mechanisms: Storefronts, Malls, and Portals
2.4 Merchant Solutions: Electronic Catalogs, Search Engines, and Shopping Carts
2.5 Auctions, Bartering, and Negotiating Online
2.6 Social Software Tools: From Blogs to Wikis to Twitter
2.7 Virtual Communities and Social Networks
2.8 Virtual Worlds as an Electronic Commerce Mechanism
2.9 The Future: Web 3.0 and Web 4.0
Managerial Issues
Closing Case: Business in Second Life
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Chapter 2 Page 2
Answers to Pause/Break Section Review Questions
Section 2.1 Review Questions
1. List the major EC activities.
These activities are detailed in Exhibit 2.1.
2. List the major EC mechanisms.
These mechanisms are detailed in Exhibit 2.1.
3. Describe the selling–buying process among a selling company, its suppliers, and customers
(consult Exhibit 2.2).
The company purchases goods from its suppliers (B2B), then prepares them for external sales
(Intrabusiness transactions), then sells them to end customers (B2C).
4. Describe the major steps in the buying process (consult Exhibit 2.3).
These activities are detailed in Exhibit 2.3.
Section 2.2 Review Questions
1. Define e-marketplace and describe its attributes.
An online market, usually B2B, in which buyers and sellers exchange goods or services; the three
types of e-marketplaces are private, public, and consortia.
2. What is the difference between a physical marketplace and an e-marketplace (marketspace)?
A marketspace is an electronic marketplace. While traditional marketplaces are constrained by
their physical locations, marketspaces use technology to eliminate this constraint (by being online).
3. List the components of a marketspace.
A marketspace consists of the following components: customers, sellers, goods, infrastructure, a
front end, a back end, intermediaries/business partners and support services.
4. Define a digital product and provide five examples.
Digital products are goods that can be transformed to digital formats and delivered over the
Internet. Examples of digital products would include e-books, software, graphics, video clips and
electronic documentation.
Answers to Pause/Break Section Review Questions
Section 2.1 Review Questions
1. List the major EC activities.
These activities are detailed in Exhibit 2.1.
2. List the major EC mechanisms.
These mechanisms are detailed in Exhibit 2.1.
3. Describe the selling–buying process among a selling company, its suppliers, and customers
(consult Exhibit 2.2).
The company purchases goods from its suppliers (B2B), then prepares them for external sales
(Intrabusiness transactions), then sells them to end customers (B2C).
4. Describe the major steps in the buying process (consult Exhibit 2.3).
These activities are detailed in Exhibit 2.3.
Section 2.2 Review Questions
1. Define e-marketplace and describe its attributes.
An online market, usually B2B, in which buyers and sellers exchange goods or services; the three
types of e-marketplaces are private, public, and consortia.
2. What is the difference between a physical marketplace and an e-marketplace (marketspace)?
A marketspace is an electronic marketplace. While traditional marketplaces are constrained by
their physical locations, marketspaces use technology to eliminate this constraint (by being online).
3. List the components of a marketspace.
A marketspace consists of the following components: customers, sellers, goods, infrastructure, a
front end, a back end, intermediaries/business partners and support services.
4. Define a digital product and provide five examples.
Digital products are goods that can be transformed to digital formats and delivered over the
Internet. Examples of digital products would include e-books, software, graphics, video clips and
electronic documentation.
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Chapter 2 Page 3
5. Describe private versus public e-markets.
Private marketspaces are generally owned by a single firm, whereas public marketspaces are
generally owned and managed by independent third parties. Public marketspaces are also known
as exchanges.
Section 2.3 Review Questions
1. Describe electronic storefronts and e-malls.
An electronic storefront is a single company’s Web site where products and services are sold. An
electronic mall is an online shopping center where many stores are located.
2. List the various types of stores and e-malls.
There are several different types of stores and malls including: general stores/malls, specialized
stores/malls, regional or global stores and pure online stores or click-and-mortar stores.
3. What are information portals? List the major types.
Information portals are single, personalized online points of access to business information inside
an organization. They include: commercial, corporate, publishing, personal, mobile, and voice
portals.
4. List the roles of intermediaries in e-markets.
Intermediaries can perform the following functions: reduce search costs, increase or create privacy,
provide more complete information, reduce contract risk, and reduce pricing inefficiencies.
5. Describe e-distributors.
An online e-distributor is an intermediary that connects suppliers with buyers by aggregating
multiple suppliers’ product catalogs in a single location.
6. Describe the changing position and location of intermediaries in the supply chain.
Intermediaries are now more often found within hubs, as opposed to between manufactures and
retailers.
Section 2.4 Review Questions
1. List and briefly describe the dimensions by which electronic catalogs can be classified.
5. Describe private versus public e-markets.
Private marketspaces are generally owned by a single firm, whereas public marketspaces are
generally owned and managed by independent third parties. Public marketspaces are also known
as exchanges.
Section 2.3 Review Questions
1. Describe electronic storefronts and e-malls.
An electronic storefront is a single company’s Web site where products and services are sold. An
electronic mall is an online shopping center where many stores are located.
2. List the various types of stores and e-malls.
There are several different types of stores and malls including: general stores/malls, specialized
stores/malls, regional or global stores and pure online stores or click-and-mortar stores.
3. What are information portals? List the major types.
Information portals are single, personalized online points of access to business information inside
an organization. They include: commercial, corporate, publishing, personal, mobile, and voice
portals.
4. List the roles of intermediaries in e-markets.
Intermediaries can perform the following functions: reduce search costs, increase or create privacy,
provide more complete information, reduce contract risk, and reduce pricing inefficiencies.
5. Describe e-distributors.
An online e-distributor is an intermediary that connects suppliers with buyers by aggregating
multiple suppliers’ product catalogs in a single location.
6. Describe the changing position and location of intermediaries in the supply chain.
Intermediaries are now more often found within hubs, as opposed to between manufactures and
retailers.
Section 2.4 Review Questions
1. List and briefly describe the dimensions by which electronic catalogs can be classified.
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Chapter 2 Page 4
Electronic catalogs can be classified by the dynamics of the information presented, the degree of
customization and their integration with business processes.
2. List the benefits of electronic catalogs.
Online catalogs have several advantages as seen in Exhibit 2.7. Some of these advantages
include: the ease of updating product information, improved search and comparison capabilities,
ease of customization, and several other benefits.
3. Explain how customized catalogs are created and used.
Customized catalogs take information from existing print catalogs and product information and
digitize it. This digitized information is then stored in a database. Once the information is in a
database it is very easy to select products and groups of products to display to a potential
customer. These products and groups of products are selected and presented to the customer
through a custom printed catalog or through a personalized Web site.
4. Compare search engines with intelligent agents.
Search engines are used to query databases for specific information and provide results. Software
agents perform routine tasks requiring more intelligence.
5. Describe an electronic shopping cart.
An electronic shopping cart is an order-processing technology that allows customers to
accumulate items they wish to buy while they continue to shop.
6. Describe voice- and vision-related search engines.
These services provide an alternative to text-based search.
7. What is self configuration?
These systems allow the customer to configure a product on their own.
8. Compare and contrast Ask.com and Answers.com.
Both provide answers to questions, the difference is in the cost of the responses.
Section 2.5 Review Questions
1. Define auctions and describe how they work.
An auction is a market mechanism by which a seller places an offer to sell a product and buyers
make bids sequentially and competitively until a final price is reached.
Electronic catalogs can be classified by the dynamics of the information presented, the degree of
customization and their integration with business processes.
2. List the benefits of electronic catalogs.
Online catalogs have several advantages as seen in Exhibit 2.7. Some of these advantages
include: the ease of updating product information, improved search and comparison capabilities,
ease of customization, and several other benefits.
3. Explain how customized catalogs are created and used.
Customized catalogs take information from existing print catalogs and product information and
digitize it. This digitized information is then stored in a database. Once the information is in a
database it is very easy to select products and groups of products to display to a potential
customer. These products and groups of products are selected and presented to the customer
through a custom printed catalog or through a personalized Web site.
4. Compare search engines with intelligent agents.
Search engines are used to query databases for specific information and provide results. Software
agents perform routine tasks requiring more intelligence.
5. Describe an electronic shopping cart.
An electronic shopping cart is an order-processing technology that allows customers to
accumulate items they wish to buy while they continue to shop.
6. Describe voice- and vision-related search engines.
These services provide an alternative to text-based search.
7. What is self configuration?
These systems allow the customer to configure a product on their own.
8. Compare and contrast Ask.com and Answers.com.
Both provide answers to questions, the difference is in the cost of the responses.
Section 2.5 Review Questions
1. Define auctions and describe how they work.
An auction is a market mechanism by which a seller places an offer to sell a product and buyers
make bids sequentially and competitively until a final price is reached.
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Chapter 2 Page 5
2. Describe the benefits of electronic auctions over traditional (off-line) auctions.
Electronic auctions are superior to traditional auctions because they do not suffer the same
limitations. Traditional auctions are limited by the short duration of the auction itself and the
physical location of the auction. Electronic auctions can occur over greater time periods and are
not limited by location since they take place in electronic marketspaces.
3. List the four types of auctions.
They include: one buyer-one seller, many buyers-one seller, one buyer-many sellers and many
buyers-many sellers.
4. Distinguish between forward and reverse auctions.
A forward auction occurs when sellers entertain bids from buyers. A reverse auction occurs when
buyers indicate the good they wish to purchase, and sellers provide quotes for that good.
5. Describe the “name-your-own-price” auction model.
In this model, a would-be buyer specifies the price they are willing to pay to any seller that is
willing to accept the terms.
6. Describe penny auctions.
A formal auction in which participants pay a nonrefundable small fee for each bid. Bid level
changes by small increments.
7. List the major benefits of auctions to buyers, sellers, and auctioneers.
Auctions provide a wide variety of benefits to buyers, sellers and auctioneers. Auctions provide
several advantages to buyers because they allow them to purchase goods from a wide variety of
sellers without the constraint of time or place. The wide variety of different auction styles meets
the needs of a wide variety of different purchasers. Auctions benefit sellers by allowing them to
sell to a huge potential marketplace not constrained by time or place. Additionally, it allows them
to sell goods that may only have a very small target market. Sellers are also able to sell their
goods at the prevailing global market price. Auctioneers benefit from auctions because it
provides a business model that allows their firms to stay in business. They are able to benefit
from usage by both buyers and sellers.
8. What are the major limitations of auctions?
Limitations include lack of security, possibility of fraud, and limited participation.
9. List the major impacts of auctions on markets.
2. Describe the benefits of electronic auctions over traditional (off-line) auctions.
Electronic auctions are superior to traditional auctions because they do not suffer the same
limitations. Traditional auctions are limited by the short duration of the auction itself and the
physical location of the auction. Electronic auctions can occur over greater time periods and are
not limited by location since they take place in electronic marketspaces.
3. List the four types of auctions.
They include: one buyer-one seller, many buyers-one seller, one buyer-many sellers and many
buyers-many sellers.
4. Distinguish between forward and reverse auctions.
A forward auction occurs when sellers entertain bids from buyers. A reverse auction occurs when
buyers indicate the good they wish to purchase, and sellers provide quotes for that good.
5. Describe the “name-your-own-price” auction model.
In this model, a would-be buyer specifies the price they are willing to pay to any seller that is
willing to accept the terms.
6. Describe penny auctions.
A formal auction in which participants pay a nonrefundable small fee for each bid. Bid level
changes by small increments.
7. List the major benefits of auctions to buyers, sellers, and auctioneers.
Auctions provide a wide variety of benefits to buyers, sellers and auctioneers. Auctions provide
several advantages to buyers because they allow them to purchase goods from a wide variety of
sellers without the constraint of time or place. The wide variety of different auction styles meets
the needs of a wide variety of different purchasers. Auctions benefit sellers by allowing them to
sell to a huge potential marketplace not constrained by time or place. Additionally, it allows them
to sell goods that may only have a very small target market. Sellers are also able to sell their
goods at the prevailing global market price. Auctioneers benefit from auctions because it
provides a business model that allows their firms to stay in business. They are able to benefit
from usage by both buyers and sellers.
8. What are the major limitations of auctions?
Limitations include lack of security, possibility of fraud, and limited participation.
9. List the major impacts of auctions on markets.
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Chapter 2 Page 6
Auctions can have an impact by acting as a coordinating mechanism, acting as a social
mechanism to determine a price, acting as a visible distribution mechanism, and acting as a
portion of the EC system.
10. Define bartering and describe the advantages of e-bartering.
Bartering is an exchange of goods and services. E-bartering has the advantage over traditional
bartering because it transcends its limitations of location and variety.
11. Explain the role of online negotiation in EC.
Online negotiation helps improve the bundling and customization of products and services.
Section 2.6 Review Questions
1. Define blogs and bloggers.
A blog is a weblog, a published personal or corporate Web site. A blogger is the author or editor
of the blog.
2. Discuss the critical features that distinguish a blog from a user-produced regular Web page.
A blog is differentiated by its personal nature, unique content and frequency of updates.
3. Describe the potential advantages and risks of blogs.
Blogs are able to focus on niche areas and react quickly. The major risk is in this quick reaction,
where posts may not be as well-thought-out or vetted as desired.
4. Discuss the commercial uses of blogs and wikis.
Corporate uses of blogs mirror some of the characteristics of personal blogs and can be used for
informational or PR purposes. They can be updated regularly and may put a human face on a
firm.
5. Define wikis.
A blog that allows everyone to participate as a peer; anyone may add, delete, or change content.
6. Define tags, folksonomy, and social bookmarking.
Tag – a nonhierarchical keyword or term assigned to a piece of information (such as an Internet
bookmark, digital image, video clip, or any computer document)
Folksonomy – the practice and method of collaboratively creating, classifying, and managing tags
to annotate and categorize content
Auctions can have an impact by acting as a coordinating mechanism, acting as a social
mechanism to determine a price, acting as a visible distribution mechanism, and acting as a
portion of the EC system.
10. Define bartering and describe the advantages of e-bartering.
Bartering is an exchange of goods and services. E-bartering has the advantage over traditional
bartering because it transcends its limitations of location and variety.
11. Explain the role of online negotiation in EC.
Online negotiation helps improve the bundling and customization of products and services.
Section 2.6 Review Questions
1. Define blogs and bloggers.
A blog is a weblog, a published personal or corporate Web site. A blogger is the author or editor
of the blog.
2. Discuss the critical features that distinguish a blog from a user-produced regular Web page.
A blog is differentiated by its personal nature, unique content and frequency of updates.
3. Describe the potential advantages and risks of blogs.
Blogs are able to focus on niche areas and react quickly. The major risk is in this quick reaction,
where posts may not be as well-thought-out or vetted as desired.
4. Discuss the commercial uses of blogs and wikis.
Corporate uses of blogs mirror some of the characteristics of personal blogs and can be used for
informational or PR purposes. They can be updated regularly and may put a human face on a
firm.
5. Define wikis.
A blog that allows everyone to participate as a peer; anyone may add, delete, or change content.
6. Define tags, folksonomy, and social bookmarking.
Tag – a nonhierarchical keyword or term assigned to a piece of information (such as an Internet
bookmark, digital image, video clip, or any computer document)
Folksonomy – the practice and method of collaboratively creating, classifying, and managing tags
to annotate and categorize content
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Chapter 2 Page 7
Social Bookmarking –Web service for sharing Internet bookmarks; the sites are a popular way to
store, classify, share, and search links through the practice of folksonomy techniques on the
Internet and intranets
Section 2.7 Review Questions
1. Define virtual communities and describe their characteristics.
A group of people with similar interests who interact with one another using the Internet.
2. List the major types of virtual communities.
The major types are detailed in Exhibit 2.9.
3. Define social network.
A special structure made of individuals (or organizations). It includes the ways in which
individuals are connected through various social familiarities.
4. List some major social network sites.
Examples are listed on pages 80 and 81.
5. Describe the global nature of social networks.
Networks can be accessed globally, allowing users to interact with participants around the world.
Social networks are used all over the world.
6. Define social network analysis.
Social network analysis – the mapping and measuring of relationships and flows between people,
groups, organizations, animals, computers or other information or knowledge processing entities.
The nodes in the network are the people and groups, whereas the links show relationships or
flows between the nodes. SNA provides both a visual and a mathematical analysis of
relationships.
7. Describe social networking.
Networks that are used mostly for creating contacts, providing requirements, and enlisting
members’ support for problem solving and knowledge sharing.
Section 2.8 Review Questions
1. Define virtual worlds.
Social Bookmarking –Web service for sharing Internet bookmarks; the sites are a popular way to
store, classify, share, and search links through the practice of folksonomy techniques on the
Internet and intranets
Section 2.7 Review Questions
1. Define virtual communities and describe their characteristics.
A group of people with similar interests who interact with one another using the Internet.
2. List the major types of virtual communities.
The major types are detailed in Exhibit 2.9.
3. Define social network.
A special structure made of individuals (or organizations). It includes the ways in which
individuals are connected through various social familiarities.
4. List some major social network sites.
Examples are listed on pages 80 and 81.
5. Describe the global nature of social networks.
Networks can be accessed globally, allowing users to interact with participants around the world.
Social networks are used all over the world.
6. Define social network analysis.
Social network analysis – the mapping and measuring of relationships and flows between people,
groups, organizations, animals, computers or other information or knowledge processing entities.
The nodes in the network are the people and groups, whereas the links show relationships or
flows between the nodes. SNA provides both a visual and a mathematical analysis of
relationships.
7. Describe social networking.
Networks that are used mostly for creating contacts, providing requirements, and enlisting
members’ support for problem solving and knowledge sharing.
Section 2.8 Review Questions
1. Define virtual worlds.
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Chapter 2 Page 8
A user-defined world in which people can interact, play, and do business. The most publicized
virtual world is Second Life.
2. Describe avatars. Why do we use them?
Avatars are animated computer characters that exhibit humanlike movements and behaviors that
individuals use to portray themselves in virtual worlds.
3. List some business activities in virtual worlds. Categorize them by type.
Some categories include creating and managing virtual businesses, conducting business activities
and providing services.
4. Describe virtual shopping.
Selecting products and e-commerce within a virtual world.
Section 2.9 Review Questions
1. What is Web 3.0, and how will it differ from Web 2.0?
Web 3.0 will be the convergence of Web 2.0 and business applications.
2. Define Semantic Web.
An evolving extension of the Web in which Web content can be expressed not only in natural
language, but also in a form that can be understood, interpreted, and used by intelligent computer
software agents, permitting them to find, share, and integrate information more easily.
3. List the major potential inhibitors of e-commerce and Web 2.0.
Inhibitors could include:
• Security concerns
• Lack of Net Neutrality
• Copyright issues
• Connectivity issues
4. What is Web 4.0?
The Web generation after Web 3.0. It is still an unknown entity. However, it is envisioned as
being based on islands of intelligence and as being ubiquitous.
5. What are the major computing and IT trends?
A user-defined world in which people can interact, play, and do business. The most publicized
virtual world is Second Life.
2. Describe avatars. Why do we use them?
Avatars are animated computer characters that exhibit humanlike movements and behaviors that
individuals use to portray themselves in virtual worlds.
3. List some business activities in virtual worlds. Categorize them by type.
Some categories include creating and managing virtual businesses, conducting business activities
and providing services.
4. Describe virtual shopping.
Selecting products and e-commerce within a virtual world.
Section 2.9 Review Questions
1. What is Web 3.0, and how will it differ from Web 2.0?
Web 3.0 will be the convergence of Web 2.0 and business applications.
2. Define Semantic Web.
An evolving extension of the Web in which Web content can be expressed not only in natural
language, but also in a form that can be understood, interpreted, and used by intelligent computer
software agents, permitting them to find, share, and integrate information more easily.
3. List the major potential inhibitors of e-commerce and Web 2.0.
Inhibitors could include:
• Security concerns
• Lack of Net Neutrality
• Copyright issues
• Connectivity issues
4. What is Web 4.0?
The Web generation after Web 3.0. It is still an unknown entity. However, it is envisioned as
being based on islands of intelligence and as being ubiquitous.
5. What are the major computing and IT trends?
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Chapter 2 Page 9
Examples include increasing speed, visualization, pervasive computing and others predicted by
McKinsey and Carr.
Answers to EC Application Case Questions
EC Application Case 2.2: HOW BLUE NILE, INC. IS CHANGING
THE JEWELRY INDUSTRY
Questions
1. Using the classifications of EC (Section 1.2, Chapter 1), what can you say about Blue Nile?
The company is a pure-play, B2C company.
2. In what ways is the company changing its industry?
The site provides a variety and openness on pricing that was not available.
3. What are the critical success factors of the company?
Important aspects of the firm include information, selection, pricing and guarantee.
4. Research Blue Nile’s affiliate marketing program via Linkshare. How does this program help
Blue Nile?
This allows for cross-exposure to related (but not competing) sites.
5. Competition between Blue Nile and Amazon.com will continue to increase. In your opinion,
which one will win? (Visit their Web sites and see how they sell jewelry.)
Student opinions on the merits of each will vary.
6. Compare the following three sites: diamond.com, ice.com, and bluenile.com.
All three of the sites sell jewelry. Student perceptions will vary, but bluenile.com appears to be
the most professional looking.
7. Follow the performance of Blue Nile’s stock since 2003 (symbol: NILE, go to money.cnn.com).
Compare it to the performance of the market average. What is your conclusion?
Student research will vary based on the time of research. In late 2011, it appears that the
company is doing well. Quotes can be found at:
https://www.google.com/finance?client=ob&q=NASDAQ:NILE
8. Find all the ways you can pay at Blue Nile when you shop.
Examples include increasing speed, visualization, pervasive computing and others predicted by
McKinsey and Carr.
Answers to EC Application Case Questions
EC Application Case 2.2: HOW BLUE NILE, INC. IS CHANGING
THE JEWELRY INDUSTRY
Questions
1. Using the classifications of EC (Section 1.2, Chapter 1), what can you say about Blue Nile?
The company is a pure-play, B2C company.
2. In what ways is the company changing its industry?
The site provides a variety and openness on pricing that was not available.
3. What are the critical success factors of the company?
Important aspects of the firm include information, selection, pricing and guarantee.
4. Research Blue Nile’s affiliate marketing program via Linkshare. How does this program help
Blue Nile?
This allows for cross-exposure to related (but not competing) sites.
5. Competition between Blue Nile and Amazon.com will continue to increase. In your opinion,
which one will win? (Visit their Web sites and see how they sell jewelry.)
Student opinions on the merits of each will vary.
6. Compare the following three sites: diamond.com, ice.com, and bluenile.com.
All three of the sites sell jewelry. Student perceptions will vary, but bluenile.com appears to be
the most professional looking.
7. Follow the performance of Blue Nile’s stock since 2003 (symbol: NILE, go to money.cnn.com).
Compare it to the performance of the market average. What is your conclusion?
Student research will vary based on the time of research. In late 2011, it appears that the
company is doing well. Quotes can be found at:
https://www.google.com/finance?client=ob&q=NASDAQ:NILE
8. Find all the ways you can pay at Blue Nile when you shop.
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Chapter 2 Page 10
The site provides a variety of methods including standard credit cards and PayPal.
EC Application Case 2.2: WebMD
Questions
1. Visit webmd.com to learn more about the types of intermediation it provides. Write a report
based on your findings.
Student reports will vary. The site provides information as well links into more in-depth
information from groups, agencies and sponsors.
2. How do the types in question 1 differ from traditional intermediation services?
In most cases the services are more easily and quickly accessed.
3. Enter wiserwiki.com and compare its offering to that of WebMD. Which site do you trust more?
Why?
Student perceptions may vary, but WebMD’s position as an expert (as opposed to community)
driven site may give it the edge.
4. What kind of reintermediation do you foresee for the company?
Student answers will vary. It is possible that customers may develop their own internal systems
or the complexities of HIPPA may continue to benefit WebMD.
5. WebMD Health does not bring in much profit despite its hefty increase in ad revenue. Should the
company be closed? Why or why not? (Check the financial reports at money.cnn.com for WebMD
(stock symbol WBMD) or business.yahoo.com).
The division is probably meant to generate goodwill for the other sections of the firm and should
be retained.
EC Application Case 2.3: Stormhoek Winery
Questions
1. What was the corporate blog used for?
The blog was used to publicize events and activities to create interest in the community.
2. What were the hosts’ blogs used for?
These detailed specific events and happenings.
The site provides a variety of methods including standard credit cards and PayPal.
EC Application Case 2.2: WebMD
Questions
1. Visit webmd.com to learn more about the types of intermediation it provides. Write a report
based on your findings.
Student reports will vary. The site provides information as well links into more in-depth
information from groups, agencies and sponsors.
2. How do the types in question 1 differ from traditional intermediation services?
In most cases the services are more easily and quickly accessed.
3. Enter wiserwiki.com and compare its offering to that of WebMD. Which site do you trust more?
Why?
Student perceptions may vary, but WebMD’s position as an expert (as opposed to community)
driven site may give it the edge.
4. What kind of reintermediation do you foresee for the company?
Student answers will vary. It is possible that customers may develop their own internal systems
or the complexities of HIPPA may continue to benefit WebMD.
5. WebMD Health does not bring in much profit despite its hefty increase in ad revenue. Should the
company be closed? Why or why not? (Check the financial reports at money.cnn.com for WebMD
(stock symbol WBMD) or business.yahoo.com).
The division is probably meant to generate goodwill for the other sections of the firm and should
be retained.
EC Application Case 2.3: Stormhoek Winery
Questions
1. What was the corporate blog used for?
The blog was used to publicize events and activities to create interest in the community.
2. What were the hosts’ blogs used for?
These detailed specific events and happenings.
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Chapter 2 Page 11
3. What capabilities were introduced by the mashups?
They allowed for the use of other technologies such as mapping, reservations and sharing
pictures.
4. How did the wiki help in communication and collaboration?
It allowed for information sharing by all involved.
5. Why do you think the Web 2.0 technologies were successful in increasing sales?
It appears that they were successful and provided a benefit to the winery. This may be because
they involved the customers and made them champions for the business.
6. What is blog spam and why is it a problem?
Reposting of blog content, without any value being added.
7. How did viral marketing work here?
It allowed users to inform their friends directly, without the company marketing to them.
EC Application Case 2.4: Craigslist
Questions
1. Identify the business model used by Craigslist.
The site generates income based on the sale of specific classified ads. This corresponds to the
Advertising model.
2. Visit craigslist.org and identify the social network and business network elements.
The site contains a huge number of social discussion forums.
3. What do you like about the site? What do you dislike about it?
Student responses will vary.
4. Why is Craigslist considered a site that “changes the world”?
Student’s answers will vary but may focus on the huge reach of the site and its ability to bring
users together.
5. What are some of the risks and limitations of using this site?
3. What capabilities were introduced by the mashups?
They allowed for the use of other technologies such as mapping, reservations and sharing
pictures.
4. How did the wiki help in communication and collaboration?
It allowed for information sharing by all involved.
5. Why do you think the Web 2.0 technologies were successful in increasing sales?
It appears that they were successful and provided a benefit to the winery. This may be because
they involved the customers and made them champions for the business.
6. What is blog spam and why is it a problem?
Reposting of blog content, without any value being added.
7. How did viral marketing work here?
It allowed users to inform their friends directly, without the company marketing to them.
EC Application Case 2.4: Craigslist
Questions
1. Identify the business model used by Craigslist.
The site generates income based on the sale of specific classified ads. This corresponds to the
Advertising model.
2. Visit craigslist.org and identify the social network and business network elements.
The site contains a huge number of social discussion forums.
3. What do you like about the site? What do you dislike about it?
Student responses will vary.
4. Why is Craigslist considered a site that “changes the world”?
Student’s answers will vary but may focus on the huge reach of the site and its ability to bring
users together.
5. What are some of the risks and limitations of using this site?
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Business Management