Solution Manual for E-Commerce 2019: Business, Technology and Society, 15th Edition

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Turban-Electronic Commerce2012Instructor’s ManualChapter 1Overview of Electronic CommerceLearning ObjectivesUpon completion of this chapter, you will be able to:1.Define electronic commerce (EC) and describeits various categories.2.Describe and discuss the content andframework 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 tobusiness pressures andorganizationalresponses.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.ContentOpening Case: Net-a-Porter: Dress for Success1.1 Electronic Commerce: Definitions and Concepts1.2 The Electronic Commerce Field: Classification, Content, and a Brief History1.3 E-Commerce 2.0: From Social Commerce to Virtual Worlds1.4 The Digital World: Economy, Enterprises, and Society1.5 The Changing Business Environment, Organizations’ Response, and EC Support1.6 Electronic Commerce Business Models1.7 Benefits, Limitations, and Impacts of Electronic Commerce1.8 Overview of This BookManagerial IssuesClosing Case: E-Commerce at the NationalFootball League (NFL)Answers to Pause/Break Section Review QuestionsSection 1.1 Review Questions1.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 thatincludes not just the buying and selling of goods and services, but also servicingcustomers, collaborating with business partners and conducting electronic transactionswithin an organization.

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Chapter 1Page22.Distinguish between pure and partial EC.Companies utilizing pure EC conduct all of their business online.Businesses utilizingpartial 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 primarybusiness in the physical world. Pure play organizations rely on the Internet and EC forall of their sales.4.Define electronic markets.Electronic market–An online marketplace where buyers and sellers meet to exchangegoods, services, money or information.5.Define intranets and extranets.An intranet is an internal use onlyWeb siteused by companies.An extranet is acompany’s securedWeb siteused by select individuals and organizations.Section 1.2 Review Questions1.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, mobilecommerce, 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 businessinformation. This was followed by a wide public acceptance of the Internet.The nextmajor landmark was the development of several early electronic commerce sites onlineand the growth of the“new economy.”Another major landmark is the winding down ofmany of these“new economy”businesses. Currently the growth of new Web 2.0services and ventures defines EC.

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Chapter 1Page34.List some EC successes and failures.Student answers will vary and may include some of the examples given on page11.5.Summarize the future of EC.Student perceptions will vary, but may focus on the growth and variation of ECservices.Section 1.3 Review Questions1.Define social computing and list its characteristics.Social computing is computing that is concerned with the intersection of social behaviorand information systems. It is performed with a set of tools that includes blogs,mashups, instant messaging, social network services, wikis, social bookmarking andother 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 shareinformation online in new ways, such as social networking sites, wiki communicationtools, and folksonomies. Attributes include its functionality and open access toinformation/data.3.Define social networks.A category of Internet applications that help connect friends, business partners, orindividuals 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 networksites:•Users can construct a Web page that they can use to present themselves tothelarger 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-suppliedvideos) are supported.•Wikis can be used to jointly create documents.•Blogs can be used for discussion, dissemination of information, and muchmore.

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Chapter 1Page45. DescribeFacebook. Why is it so popular?Facebookis a social network that provides a variety of features to members. Membersuse these services to share information and content with each other in a social setting.Facebookis popular due to the large number of features and other userswith whichtointeract.6. What is an enterprise social network?These networks are similar in function to other social networks, but are organized tofulfill a business, as opposed to purely social, purpose.7. Define social commerce.The e-commerce activitiesconducted in socialnetworks and/or byusing 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 ofpurchases 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 mostpublicized virtual world is Second Life.Virtual worlds are characterized by theirimmersive, interactive environments.10. Describe some ways for studentswith computer skills to make money from virtualworlds.Students could potentially create goods or services to be sold in these worlds.Section 1.4Review Questions1.Define the digital revolution and list its components.The digital revolution is the change in the way individuals communicate and dobusiness based on advances in technology.2.List the characteristics of the digital economy.These characteristics include: a wide variety of digitized products, financial transactionsbeing conducted digitally, and microprocessors and network capabilities embedded inphysical goods.

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Chapter 1Page53.Define a digital enterprise.A new business model that uses IT in a fundamental way to accomplish one or more ofthree basic objectives: reach and engage customers more effectively, boost employeeproductivity, and improve operating efficiency. It uses converged communication andcomputing 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 digitalenterprise capitalizes on the benefits of new technologies in all aspects of its businessoperations.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 theircontents to the digital society.Student experiences will vary based on the time of visit.Section 1.5 Review Questions1.List the components of the business environment impact model and explain the model.The model describes how the business environment creates problems and opportunitiesthat effect the company and how the company responds to those stimuli to createsolutions.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, continuousimprovement 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

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Chapter 1Page6•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, CollaborationSection 1.6 Review Questions1.What is a business model? Describe its functions and properties.A business model is a method of doing business by which a company can generaterevenue to sustain itself. A business plan is a written document that identifies thebusiness goals and outlines the plan to achieve them.A business case is a writtendocument that is used by managers to gather funding for specific applications forprojects; its major emphasis is the justification for specific investment.2.Describe a revenue model and a value proposition.How are they related?Revenue model–descriptionof how the company or an EC project will earn moneyValue Proposition–thebenefits a company can derive from using ECThey are related because theydefine the attributes of a business that will help it succeed.3.Describe the following business models: direct marketing, tendering system, electronicexchanges, viral marketing, and social networking/commerce.•Direct marketing–advertising to individuals in the hope that they will purchase aproduct or service•Tendering system–collecting a use fee by providing the means for others toconduct transactions online•Electronic exchanges–collecting a use fee by providing the means for others tofind buyers online within a community•Viral marketing–wordof mouth marketing•Social networking–creating a suite of services that allowsindividuals tocommunicate and interact with each other4.Identify business models related to buying and those related to selling.Some business models related to buying include: electronic tendering systems, find thebest price, group purchasing and supply chain improvements.Some business modelsrelated to selling include: online direct marketing, name your own price, affiliatemarketing,buyermarketing,onlineauctions,productandservicecustomization,electronic marketplaces and exchanges and supply chain improvements.

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Chapter 1Page75. Describe how viral marketing works.Viral marketing creates a unique advertisement or proposition that is then spread byusers.Section 1.7 Review Questions1.Describe some EC benefits to organizations, individuals, and society.ECbenefitsconsumersbyprovidingthemconvenience,speed,reducedcosts,customization,personalizationandcommunities.ECbenefitsorganizationsbyexpanding the marketplace, creating a cost savings, improving business processes andpromoting interactivity.EC benefits society by improving the standard of living anddelivery 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.ECprovides bothanunderstandingofbusinessideasas wellas the expandingtechnologies that support them.4.How can EC help entrepreneurship?EC helps entrepreneurs by allowing for easier entry into markets.Answers to EC Application Case QuestionsEC Application Case 1.1: Zappos: A Success Story of SellingFootwear OnlineQuestions1.List the major critical success factors of the company.•Large selection•Fast delivery•Positive culture•Customer service2.Why was Amazon.com interested in the company?

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Chapter 1Page8It allows Amazon to leverage its supplier relationships, while maintaining a separatebrand.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 otherproducts.5.How is order fulfillment being done?Fulfillment is completed throughalarge warehouse of products, allowing for fastdelivery.This fulfillment method creates a larger overhead and its associated costs, butallows 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 howsuch customization mayaffect Zappos’s business.This type of service may decrease the importance of Zappos selection, but would notbenefit from faster fulfillment.EC Application Case 1.2:GrouponQuestions1.It is difficult to do business with Groupon. About 85%of merchants’ suggestions aredismissed by Groupon.Why do you think Groupon is so strict and how will thispolicyimpact the competition?Because of the limited space to market (daily), Groupon needs to be careful to selectonly the deals that will perform the best. This leaves space for competetiors to selectthe discarded deals.2.Some claim that Groupon is basically an e-mail listthat charges advertisers to sendout their coupons(called Groupons). Comment.This is true to some extent, but Groupon also benefits customers be beingdiscriminating in the deals it selects.3.Why does Groupon use Facebook to promote its business,while Facebook is itscompetitor?

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Chapter 1Page9Groupon benefits from the massive user base of Facebook.4.Read Carpenter (2010) and write a short essay onGroupon’s chance of survival inthe intensely competitiveenvironment. Examine its revenue model andexpansion plans.Student essays will vary.5.Learn more about Groupon’s order fulfillment (e.g., abilityto handle volume, controlof deliveries, and dealing withmarketing and competitors). Write a report.Studentreportswill vary.6.Research Groupon’s global efforts. Start with EmmaHall’s article“Groupon Clonesin Europe Say They OfferBetter Deals and Treatment of Merchants”atadage.com/article/global-news/groupon-clones-europewin-consumers-merchants/147689.Studentresearchwill vary.7.Groupon uses classified ads for rental apartments. Howdoes this fit with its businessmodel?This potentially overlaps with its current customer base.8.Groupon now deals in B2B. Search the Internet andfind out how it is being done.Studentresearchwill varybased on the time of research since this model appears to bechanging rapidly. In late 2011, Groupon was segmenting the market and providingbusiness-targeted services to business accounts.EC Application Case 1.3: How College Students BecomeEntrepreneursQuestions1.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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Chapter 1Page10Response will vary, but niche marketing online has historically succeeded in certainareas.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 Questions1. Compare brick-and-mortar and click-and-mortar organizations.Brick-and-mortar organizations only maintain a presence off-line. Click-and-mortarorganizations 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 businesstransactions 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, andfacilitate customer support.EC can reduce cycle time by eliminating steps in business processes. The steps may beredundant or can be replaced with more efficient technology solutions. The eliminationof the steps speeds the overall process and reduces cycle time.EC can provideemployee empowerment by providing employees with greater and easier access toinformation provided by the employer.EC facilitates customer support by providing awide 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,abusiness relyson a third party to assist in itsmarketing effort. With affiliate marketing, individuals or firms are paid based on theamount 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 andcustomer draws in EC.

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Chapter 1Page116. Discuss the reasons companies embark on social commerce.Companies will generally use social commerce toincrease their marketing byleveraging 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 oninternal groups, and Facebook focusing on the mass market.8. Carefully examine the nontechnological limitations of EC. Which are companydependent 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 beovercome by well-known and established merchants who will bring with them some levelof 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 ofvirtual goods and services.10. Register at ibm.com/enterpriseofthefuture and download IBM’s study“TheEnterprise of the Future”(IBM 2008). In one page, summarize how the enterprise of thefuture differs from today’s enterprise.Student answers will vary.Topics for Class Discussion and Debates1. How can EC be a business pressure and an organizational response to other businesspressure?Student answers will vary.The need for EC can drive changes in an organization, andthe 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 incommerce.This reduction can increase efficiency, but may also reduce the amount of“personal touch.”

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Chapter 1Page123. 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 increaseprofitability, 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 mayalso allow for business expansion.5. Debate: Will online fashion hurt fashion retailers?Student answers will vary.Students may agree (zero sum gain) or disagree (increasedoverall interest).Internet Exercises(Note: URLs may change over time; please check the Internet Exercises on theTurban Web site for possible updates:www.pearsonhighered.com/turban.)1.Visitbigboxx.comand identify the services the company provides to its customers. Whattype 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 andservices to customers in the Hong Kong market. This company focuses primarily on B2Bsales. 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 followingareas: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 benefitsyou 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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Chapter 1Page13•the ability to send orders as guests•additional answers will varyd.Review the products directory.Amazon.com provides a wide variety of products including books, electronics,music, travel services,and many others.3.Visitpriceline.comandzappos.comidentify the various business models used byboth.Discuss theiradvantages.Priceline.com uses the“name your own price”or reverse auction business model. Thismodel allows consumers to place bids for different services with several third-partycompanies 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 atthat price.Zappos provides a large selection, and quick delivery. Priceline benefits byproviding a service for the cost-sensitive, while Zappos caters to those who have veryspecific needs.4.Go to nike.com and design your own shoes.Next visit office.microsoft.com andcreate your own business card. Finally, enter jaguar.com and configure the car of yourdreams. 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 purchasea product that meets their individual specifications.The disadvantages of the systemsare the limitations and possible customizations and the additional cost and fulfillmenttime associated with customized products.5.Try to save on your next purchase. Visit letsbuyit.com, kaboodle.com, yub.com, andbuyerzone.com. Which site do you prefer? Why?Opinions will vary based on student preferences.Each site has a different mix offeatures and user experience.6.Enter espn.go.com, 123greetings.com, facebook.comand identify and list all therevenue sources on each ofthe companies’ sites.Because of the large range of options, and changes over time, student responses mayvary. 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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Chapter 1Page147.Enter lala.com and listen to some of the commercial-free digital songs offered (cost10¢).Whatother digital productsand servicesdo they offer? Write a summary.Student responses will vary.The site offers other products such as TV and movies.8.Enterphilatino.com,stampauctioncentral.comandstatusint.com.Identifythebusiness model(s) and revenue models they use.Student responses will vary. Thesites appear to be intermediaries who use the auctionmodel.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 businessmodels and other EC Features of this chapter.Student responses will vary based on the wide variety of tools available.These toolsare 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 anddevelopments.Student answers will vary.The site focus is onnew and upcoming business models andcomments on if they might succeed.12.VisitsomeWebsitesthatofferemploymentopportunitiesinEC(suchasexecunet.com and monster.com). Compare the EC salaries to salaries offered toaccountants. For other information on EC salaries, check Computerworld’s annualsalary survey, unixl.com, and salary.comStudent answers will vary.There is a great deal of variation across location andcompany.13. Visit bluenile.com, diamond.com, and jewelryexchange.com. Compare the sites.Comment onthe 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, andother sites that sell event ticketsonline. Assess thecompetition in online ticket sales.What services dothe different sitesprovide?

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Chapter 1Page15Student answers will vary.Competition is strong, with each site attempting to providethe best suite of services.15. Enter The Timberland Company (timberland.com) and design a pair of boots.Compare it tobuilding your own sneakers atNike.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 possibleselections.16.Examinetwoorthreeofthefollowingsites:prosper.com,swapthing.com,swaptree.com, peerflix.com, lala.com, swapvillage.com, bigvine.com, etc. Comparetheir business and revenue models.Student answers will vary.These sites allow for the sale of goods–C2C.Team Assignments and Role Playing1.Assignment for the Opening CaseRead 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 designersreach customers. Explain why.It appears that designers can now go more easily to customers, instead of throughintermediaries.e. Read the benefits of EC to customers (Section 1.7).Which ones are most relevanthere?Possible benefits include:•Global reach•Cost reduction•Niche

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Chapter 1Page16•Time to market•Selectionf. What EC capabilities are helping the Net and its designers?Somecapabilitiesinclude theabilityto focus on a niche customer group andprovideawiderselectionthan 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 ahistorical 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 expandingtheir fashion e-tailing efforts. What strategy do you suggest for the Net? (Hint: ReadBrodie 2009 to getsome 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 interestsyou. 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! Groupsgroups.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 shouldexamine companies that operate solely online and some that extensively utilize a click-and-mortar strategy. Each team should identify the critical success factors for itscompanies and present a report to the other teams.Responses will vary based on the businesses chosen by students and the source of theirinformation.4.Each team selects abusiness-orientedsocial network such as Linkedin, Xing, orViadeo. Each team presents the essentials of the site, the attributes, etc. Each team willtry to convince other students why their site is superior (see Online File W1.11 for someresources).Responses will vary based on the sites chosen by students.Each site offers a differentset of tools and user experience.

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Chapter 1Page175. Watch the video Part 1-E-Commerce (8 minutes) atyoutube.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 fieldand opens new markets.c. What is the first mover advantage discussed in thevideo?First mover advantage is the benefit of being the first in a market with a product orservice and avoiding initial competition.d. Amazon.com and other companies that lost moneyduring the time the video wasmade are makinglots of money today; find out why.Again it will depend on when research is completed. In general, as first movers,thesecompanies needed to invest to promote and gain acceptance.e. Identify all the EC business models discussed inthe video.The video covers almost all B2C models.f. How can one conduct an EC business fromhome?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 createtheir 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 topicsa. Prepare adescription of what is going on inthat area.

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Chapter 1Page18b. Have members’ avatars interact with other avatars.Write a report about yourexperience.c. What can you learn from this project?Student answers will vary.Second Life provides a huge range of experiences, butsome feel it has a steep learning curve.Answers to End-of-Chapter Real-World Case Questions:E-Commerceat the National Football League (NFL)Questions1. Identify all applications related to B2C in online stores.Many items are sold including official and unofficial merchandise, as well as tickets toevents.2. Identify all B2C applications inside the stadium.Applications include access to league information, B2C sales (inside and outside of thestadium) 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 inits 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 usedthere.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 1Page19Student 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 Commerce2012Instructor’s ManualChapter 2E-Commerce: Mechanisms,Infrastructure and ToolsLearning ObjectivesUpon completion of this chapter, you will be able to:1. Describe the major electronic commerce (EC)activities and processes and the mechanismsthatsupport them.2. Define e-marketplaces and list theircomponents.3. List the major types of e-marketplaces anddescribe their features.4. Describe electronic catalogs, search engines,and shopping carts.5. Describe the major types of auctions and listtheir characteristics.6. Discuss the benefits and limitations ofe-auctions.7. Describe bartering and negotiating online.8. Describe virtual communities.9. List the major Web 2.0 tools and their usein 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.ContentOpening Case: Web 2.0 Tools at EasternMountain Sports2.1 Electronic Commerce Mechanisms: AnOverview2.2 E-Marketplaces2.3 Customer Shopping Mechanisms:Storefronts, Malls, and Portals2.4 Merchant Solutions: Electronic Catalogs,Search Engines, and Shopping Carts2.5 Auctions, Bartering, and NegotiatingOnline2.6 Social Software Tools: From Blogs toWikis to Twitter2.7 Virtual Communities and SocialNetworks2.8 Virtual Worlds as an ElectronicCommerce Mechanism2.9 The Future: Web 3.0 and Web 4.0Managerial IssuesClosing Case: Business in Second Life

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Chapter 2Page2Answers to Pause/Break Section Review QuestionsSection 2.1 Review Questions1.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 Questions1.Define e-marketplace and describe its attributes.An online market, usually B2B, in which buyers and sellers exchange goods or services; the threetypes 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 bytheir 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, afront 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 theInternet. Examples of digital products would include e-books, software, graphics, video clips andelectronic documentation.

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Chapter 2Page35.Describe private versus public e-markets.Private marketspaces are generally owned by a single firm, whereas public marketspaces aregenerally owned and managed by independent third parties. Public marketspaces are also knownas exchanges.Section 2.3 Review Questions1.Describe electronic storefronts and e-malls.An electronic storefront is a single company’s Web site where products and services are sold. Anelectronic 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, specializedstores/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 insidean organization.They include: commercial, corporate, publishing, personal, mobile, and voiceportals.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 aggregatingmultiple 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 andretailers.Section 2.4 Review Questions1.List and briefly describe the dimensions by which electronic catalogs can be classified.

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Chapter 2Page4Electronic catalogs can be classified by the dynamics of the information presented, the degree ofcustomization 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 advantagesinclude: 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 anddigitize it.This digitized information is then stored in a database.Once the information is in adatabase it is very easy to select products and groups of products to display to a potentialcustomer.These products and groups of products are selected and presented to the customerthrough a custom printed catalog or through a personalized Web site.4.Compare search engines withintelligentagents.Search engines are used to query databases for specific information and provide results. Softwareagents perform routine tasks requiring more intelligence.5.Describe an electronic shopping cart.Anelectronicshoppingcartisanorder-processingtechnologythatallowscustomerstoaccumulate 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 provideanswers to questions, the difference is in the cost of the responses.Section 2.5 Review Questions1.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 buyersmake bids sequentially and competitively until a final price is reached.

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Chapter 2Page52.Describe the benefits of electronic auctions over traditional (off-line) auctions.Electronic auctions are superior to traditional auctions because they do not suffer the samelimitations.Traditional auctions are limited by the short duration of the auction itself and thephysical location of the auction. Electronic auctions can occur over greater time periods and arenot 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 manybuyers-many sellers.4.Distinguish between forward and reverse auctions.A forward auction occurs when sellers entertain bids from buyers. A reverse auction occurs whenbuyers 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 iswilling to accept the terms.6. Describe penny auctions.A formal auction in which participants pay a nonrefundable small fee for each bid. Bid levelchanges 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 provideseveral advantages to buyers because they allow them to purchase goods from a wide variety ofsellers without the constraint of time or place. The wide variety of different auction styles meetsthe needs of a wide variety of different purchasers. Auctions benefit sellers by allowing them tosell to a huge potential marketplace not constrained by time or place. Additionally, it allows themto sell goods that may only have a very small target market.Sellers are also able to sell theirgoods at the prevailing global market price.Auctioneers benefit from auctions because itprovides a business model that allows their firms to stay in business.They are able to benefitfrom 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 2Page6Auctions can have an impact by acting as a coordinating mechanism, acting as a socialmechanism to determine a price, acting as a visible distribution mechanism,and acting as aportion 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 traditionalbartering 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 Questions1. Define blogs and bloggers.A blog is a weblog, a published personal or corporateWeb site. A blogger is the author or editorof 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 mirrorsome ofthe characteristics of personal blogs and can be used forinformational or PR purposes.They can be updatedregularly and may putahuman face on afirm.5. Define wikis.A blog that allowseveryone to participateas a peer; anyone mayadd, delete, or changecontent.6. Define tags, folksonomy, and social bookmarking.Tag–anonhierarchical keyword or term assigned to a piece of information (such as an Internetbookmark, digital image, videoclip, or any computer document)Folksonomy–the practice and method of collaboratively creating, classifying, and managing tagstoannotate and categorize content

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Chapter 2Page7SocialBookmarking–Web service for sharing Internet bookmarks;the sites are a popular way tostore, classify, share, and search links through the practice of folksonomy techniques on theInternet and intranetsSection 2.7Review Questions1.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 whichindividuals are connected through various social familiarities.4. List some major social network sites.Examples arelisted 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 orflows between the nodes. SNA provides both a visual and a mathematical analysis ofrelationships.7. Describe social networking.Networksthatare used mostlyfor creating contacts,providing requirements,and enlistingmembers’support for problem solvingand knowledge sharing.Section 2.8Review Questions1.Define virtual worlds.

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Chapter 2Page8A user-defined world in which people can interact, play, and do business. The most publicizedvirtual world is Second Life.2. Describe avatars. Why do we use them?Avatars are animated computer characters that exhibit humanlike movements and behaviors thatindividuals useto 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 activitiesand providing services.4. Describe virtual shopping.Selecting products and e-commerce within a virtual world.Section 2.9Review Questions1.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 naturallanguage, but also in a form that can be understood, interpreted, and used by intelligent computersoftware 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 issues4.What is Web 4.0?The Web generation after Web 3.0. It is still an unknown entity. However, it is envisioned asbeing based on islands of intelligence and as being ubiquitous.5. What are the major computing and IT trends?

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Chapter 2Page9Examples include increasing speed, visualization, pervasive computing and others predicted byMcKinsey and Carr.Answers to EC Application Case QuestionsEC Application Case 2.2: HOW BLUE NILE, INC. IS CHANGINGTHE JEWELRY INDUSTRYQuestions1.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 helpBlue 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 theirWeb 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 bethe 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 varybased on the time of research. In late 2011, it appears that thecompany is doing well. Quotes can be found at:https://www.google.com/finance?client=ob&q=NASDAQ:NILE8.Find all the ways you can pay at Blue Nile when you shop.

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Chapter 2Page10The site provides a variety of methods including standard credit cards and PayPal.EC Application Case 2.2: WebMDQuestions1.Visit webmd.com to learn more about the types of intermediation it provides. Write a reportbased on your findings.Student reports will vary.The site provides information as well links into more in-depthinformation from groups, agencies and sponsors.2.How do the types in question 1 differ from traditionalintermediation services?In most cases the services are more easily and quickly accessed.3.Enter wiserwiki.com and compare its offering to that ofWebMD. 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 systemsor the complexities of HIPPA may continue to benefit WebMD.5.WebMD Health does not bring in much profit despiteits hefty increase in ad revenue. Should thecompanybe closed? Why or why not? (Check the financialreports at money.cnn.com for WebMD(stock symbolWBMD) or business.yahoo.com).The division is probably meant to generate goodwill for the other sections of the firm and shouldbe retained.EC Application Case 2.3: Stormhoek WineryQuestions1. 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 2Page113. What capabilities were introduced by the mashups?They allowed for the use of other technologies such as mapping, reservations and sharingpictures.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 weresuccessful and provided a benefit to the winery.This may be becausethey 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: CraigslistQuestions1.Identify the business model used by Craigslist.The site generates income based on the sale of specific classified ads. This corresponds to theAdvertising 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 bringusers together.5.What are some of the risks and limitations of using this site?

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