Electronic Commerce, 8th Edition
978-1-4239-0305-5
Chapter 1 Solutions
Review Questions
1. Describe three factors that would cause a company to continue doing business
in traditional ways and avoid electronic commerce.
Answer: Traditional commerce is a better way to sell the items or services when
personal selling skills are a factor, as in the sale of commercial real estate or when the
condition of the product is difficult to determine without making a personal inspection.
For example, the purchases of high-fashion clothing, antiques, or perishable food
products.
2. Figure 1-5 lists roommate-matching services as a type of business that is well-
suited to a combination of electronic and traditional commerce. In one
paragraph, describe the elements of this service that would be best handled
using traditional commerce and explain why.
Answer: Responses will vary, but may suggest that customers are generally concerned
about lifestyle and personality factors, and as a result, would want to meet any potential
roommate.
3. Choose one major difference between the first wave and the second wave of
electronic commerce. Write a paragraph that describes this difference to a
person who is not familiar with either business or Internet technologies.
,Answer: The Internet technologies used in the first wave, especially in B2C commerce,
were slow and inexpensive. Most consumers connected to the Internet using dial-up
modems. The increase in broadband connections in homes is a key element in the
second wave. Although these connections are more expensive, they are up to 20 times
faster and can alter the way people use the Web.
4. What are transaction costs and why are they important?
Answer: Transaction costs are the total of all costs that a buyer and seller incur as they
gather information and negotiate a purchase-sale transaction.
5. Provide one example of how electronic commerce could help change an
industry’s economic structure from a hierarchy to a network.
Answer: When transaction costs are high, concentrated hierarchies reduce unit cost by
taking advantage of specialization and economies of scale. Networked economic
structures with the information technology to coordinate their strategies, resources,
and skills are capable of greater economic efficiencies by taking the business activity
into the market place. A closer cooperation between partner firms and customers will
reduce transaction costs.
6. How might managers use SWOT analysis to identify new applications for
electronic commerce in their strategic business units?
Answer: In SWOT analysis, the analyst first looks into the business unit to identify its
strengths and weaknesses. The analyst then reviews the environment in which the
business unit operates and identifies opportunities presented by that environment and
the threats posed by that environment.
7. In about 200 words, explain the difference between language translation and
language localization.
, Answer: Language translation is the process of restating some text written in one
language into a different language. In other words, to translate is to examine some
original text, written in what is called the source language, and to write a corresponding
text in a different language, called the target language, with the goal of preserving the
tone and meaning of the original text.
Language localization is a translation that considers multiple elements of the local
environment, such as business and cultural practices, in addition to local dialect
variations in the language. The cultural element is very important since it can affect -
and sometimes completely change - the user’s interpretation of text.
8. In a paragraph, describe the advantages of a flat-rate telecommunications
access system for countries that want to encourage electronic commerce.
Answer: In a flat-rate access system, the consumer or business pays one monthly fee for
unlimited telephone line usage. Although many factors contributed to the rapid rise of
U.S. electronic commerce, many industry analysts agree that flat-rate access has been
one of the most important factors. As more European telecommunications providers
have begun to offer flat-rate access, electronic commerce in those countries has
increased dramatically.
Exercises
1. You have decided to buy a new color laser printer for your home office. List
specific activities that you must undertake as you gather information about
printer capabilities and features. Use the HPshopping.com, Office Depot,
OfficeMax, and Staples Web sites to gather information. Write a short
summary of the process you undertook so that others who plan to undertake a
similar task can use your information.
Answer: Answers will vary, but should include the following:
Identify a search engine
, Visit Web sites for information on features, attributes and benefits
Interrogate Web sites for additional information
Place an order
Inquire about shipping/payment terms
2. Choose one of the Web sites listed in the previous question and identify three
ways in which the company has reduced its transaction costs by using a Web
site to provide information about printers. List these three transaction
cost−reduction elements and write a paragraph in which you discuss one
transaction cost−reduction opportunity that you believe the company missed.
Answer: Answers will vary, but may include the following:
Description of the item
Employees no longer have to search for prices
Delivery options
Staples.com could include informational links such as: laser printer buying guide or
laser printer maintenance.
3. Read the following business messages and come up with a list of words or
phrases in each message that you believe might be troublesome for automated
translation software. Then use either the AltaVista Translation Web site or the
FreeTranslation Web site to translate the messages from English to one of the
foreign languages available on that site. Translate each message back into
English. Write a short memo that compares the problems you anticipated with
those that occurred in the automated translation. The business messages are:
The flight has been delayed for several hours and your shipment of
components will not arrive as scheduled.
978-1-4239-0305-5
Chapter 1 Solutions
Review Questions
1. Describe three factors that would cause a company to continue doing business
in traditional ways and avoid electronic commerce.
Answer: Traditional commerce is a better way to sell the items or services when
personal selling skills are a factor, as in the sale of commercial real estate or when the
condition of the product is difficult to determine without making a personal inspection.
For example, the purchases of high-fashion clothing, antiques, or perishable food
products.
2. Figure 1-5 lists roommate-matching services as a type of business that is well-
suited to a combination of electronic and traditional commerce. In one
paragraph, describe the elements of this service that would be best handled
using traditional commerce and explain why.
Answer: Responses will vary, but may suggest that customers are generally concerned
about lifestyle and personality factors, and as a result, would want to meet any potential
roommate.
3. Choose one major difference between the first wave and the second wave of
electronic commerce. Write a paragraph that describes this difference to a
person who is not familiar with either business or Internet technologies.
,Answer: The Internet technologies used in the first wave, especially in B2C commerce,
were slow and inexpensive. Most consumers connected to the Internet using dial-up
modems. The increase in broadband connections in homes is a key element in the
second wave. Although these connections are more expensive, they are up to 20 times
faster and can alter the way people use the Web.
4. What are transaction costs and why are they important?
Answer: Transaction costs are the total of all costs that a buyer and seller incur as they
gather information and negotiate a purchase-sale transaction.
5. Provide one example of how electronic commerce could help change an
industry’s economic structure from a hierarchy to a network.
Answer: When transaction costs are high, concentrated hierarchies reduce unit cost by
taking advantage of specialization and economies of scale. Networked economic
structures with the information technology to coordinate their strategies, resources,
and skills are capable of greater economic efficiencies by taking the business activity
into the market place. A closer cooperation between partner firms and customers will
reduce transaction costs.
6. How might managers use SWOT analysis to identify new applications for
electronic commerce in their strategic business units?
Answer: In SWOT analysis, the analyst first looks into the business unit to identify its
strengths and weaknesses. The analyst then reviews the environment in which the
business unit operates and identifies opportunities presented by that environment and
the threats posed by that environment.
7. In about 200 words, explain the difference between language translation and
language localization.
, Answer: Language translation is the process of restating some text written in one
language into a different language. In other words, to translate is to examine some
original text, written in what is called the source language, and to write a corresponding
text in a different language, called the target language, with the goal of preserving the
tone and meaning of the original text.
Language localization is a translation that considers multiple elements of the local
environment, such as business and cultural practices, in addition to local dialect
variations in the language. The cultural element is very important since it can affect -
and sometimes completely change - the user’s interpretation of text.
8. In a paragraph, describe the advantages of a flat-rate telecommunications
access system for countries that want to encourage electronic commerce.
Answer: In a flat-rate access system, the consumer or business pays one monthly fee for
unlimited telephone line usage. Although many factors contributed to the rapid rise of
U.S. electronic commerce, many industry analysts agree that flat-rate access has been
one of the most important factors. As more European telecommunications providers
have begun to offer flat-rate access, electronic commerce in those countries has
increased dramatically.
Exercises
1. You have decided to buy a new color laser printer for your home office. List
specific activities that you must undertake as you gather information about
printer capabilities and features. Use the HPshopping.com, Office Depot,
OfficeMax, and Staples Web sites to gather information. Write a short
summary of the process you undertook so that others who plan to undertake a
similar task can use your information.
Answer: Answers will vary, but should include the following:
Identify a search engine
, Visit Web sites for information on features, attributes and benefits
Interrogate Web sites for additional information
Place an order
Inquire about shipping/payment terms
2. Choose one of the Web sites listed in the previous question and identify three
ways in which the company has reduced its transaction costs by using a Web
site to provide information about printers. List these three transaction
cost−reduction elements and write a paragraph in which you discuss one
transaction cost−reduction opportunity that you believe the company missed.
Answer: Answers will vary, but may include the following:
Description of the item
Employees no longer have to search for prices
Delivery options
Staples.com could include informational links such as: laser printer buying guide or
laser printer maintenance.
3. Read the following business messages and come up with a list of words or
phrases in each message that you believe might be troublesome for automated
translation software. Then use either the AltaVista Translation Web site or the
FreeTranslation Web site to translate the messages from English to one of the
foreign languages available on that site. Translate each message back into
English. Write a short memo that compares the problems you anticipated with
those that occurred in the automated translation. The business messages are:
The flight has been delayed for several hours and your shipment of
components will not arrive as scheduled.
