TEACHING SUGGESTIONS
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Information Systems Today, 7th Edition, Instructor’s Manual 3
Electronic commerce is a fun subject to teach for the instructor because it gives students an opportunity to talk at great length about the “cool” Web sites that they have visited and critiqued This can be facilitated by doing a brief lecture on concepts and models for success and then doing site critiques of sites suggested by students and researched by them in a pre-class assignment. I would encourage them to list Web sites they have visited pertaining to each of the sections in this chapter.
ANSWERS TO REVIEW QUESTIONS
4-1. What is EC, and what different business models do companies use to compete in cyberspace?
Answer:
EC (e-commerce) is defined very broadly as the online exchange of goods, services, and money among firms, between firms and their customers, and between customers, supported by communication technologies and the Internet. Business models used include B2C, B2B, C2B, and C2C.
LO: 1 Describe different business models used to compete in cyberspace as well as different forms of electronic government
AACSB: Reflective Thinking Skills
4-2. What are the primary forms of e-government? Provide examples for each.
Answer:
The primary forms are government-to-citizens such as the IRS website that provides information; government-to-business, such as sites that allow governmental agencies to purchase directly from suppliers; and government-to-government, such as sites that allow interaction between different levels of government.
LO: 1 Describe different business models used to compete in cyberspace as well as different forms of electronic government
AACSB: Reflective Thinking Skills
4-3. Compare and contrast two EC business strategies.
Answer:
There are a number of possible strategic combinations. First is a brick-and-mortar business strategy where the firm operates close to a traditional business model without an e-commerce presence. A virtual company is a pure network presence without storefront or other fixed location. The intermediate form called click-and-mortar business strategy involves a firm pursuing both strategies.
LO: 1 Describe different business models used to compete in cyberspace as well as different forms of electronic government.
AACSB: Reflective Thinking Skills
4-4. Describe the effects of disintermediation.
Answer:
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4 Information Systems Today, 7th Edition, Instructor’s Manual
It is the ability to sell products directly to the end customers, without the need for distributors or retailers. This phenomenon of cutting out the “middleman” and reaching customers more directly and efficiently is known as disintermediation.
LO: 3 Understand the keys to successful electronic commerce Web sites, and explain the different forms of Internet marketing
AACSB: Reflective Thinking Skills
4-5. Describe social commerce and explain how companies can leverage consumers’ social networks.
4-6. Describe the benefits and drawbacks of e-tailing.
Answer:
Benefits include the ability to offer a virtually unlimited number and variety of products, the ease of comparison shopping, can shop anywhere not limited by physical presence, and usually lower prices because of lower overhead by merchants. Drawbacks include trust of the unknown merchant, lack of being able to physically see and feel the product, and returns can be a problem (having to package and ship).
LO: 1 Describe different business models used to compete in cyberspace as well as different forms of electronic government
AACSB: Analytic Skills
4-7. What is the online consumer’s hierarchy of needs, and why is it important for e-tailers?
4-8. Describe the differences between SEO, search marketing, and sponsored search.
4-9 Describe m-commerce and explain how it is different from regular EC.
Answer:
M-commerce is defined as any electronic transaction or information interaction conducted using a wireless, mobile device and mobile networks (wireless or switched public network) that leads to transfer of real or perceived value in exchange for information, services, or goods (MobileInfo, 2008). It can be distinguished from e-commerce in that it uses a mobile device and wireless network. E-commerce is a more general term.
LO: 3 Understand the keys to successful electronic commerce Web sites, and explain the different forms of Internet marketing
AACSB: Analytic Skills
4-10. What is showrooming, and how has it affected offline retailers?
Answer:
Showrooming is where shoppers come into a store to evaluate the look and feel of a product and then purchase it online or at a competitor’s store. Offline retailers are negatively affected by showrooming because they spend their time and effort with the customer then do not make the sale, resulting in less profit for the retailer.
LO: 3 Understand the keys to successful electronic commerce Web sites, and explain the different forms of Internet marketing
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AACSB: Reflective Thinking Skills
4-11. Explain the different forms of online auctions.
Answer:
There are several types and subtypes of online auctions (known as e-auctions) now available. These types can be broadly classified into four distinct categories split between buyer and seller: (1) forward auction, where the highest bid wins; (2) reverse auction, where buyers post a request for quote (RFQ); (3) bartering, which takes place on a one-toone level with a site such as swap.com; and (4) exchanges, which typically take place on a B2B level with many buyers and many sellers. There are also e-auctions where sellers post items and customers bid on them, such as on eBay.
LO: 4 Describe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce
AACSB: Reflective Thinking Skills
4-12. How does taxation pose a threat to EC?
Answer:
The main threat would be the loss of business for EC companies when the competitive advantage of buying goods without having to pay a sales tax is eliminated. This could also result in EC business going outside the country to secure those same advantages.
LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
AACSB: Analytic Skills
4-13. How does net neutrality pose a threat to EC?
Answer:
Without net neutrality customers could be locked out of quick access for EC (slower service) by those willing to pay more for quicker access. Net neutrality gives a level playing field for all customers.
LO: 3 Understand the keys to successful electronic commerce Web sites, and explain the different forms of Internet marketing
AACSB: Reflective Thinking Skills
NOTE: Self-study questions and answers 4-14 through 4-22 can be found in the text.
ANSWERS TO PROBLEMS AND EXERCISES
4-23. Match the following terms with the appropriate definitions:
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__a__ Click-through rate __c__ Long Tails __b__ Reintermediation j__ Click fraud h __ Web analytics __g__ Search engine optimization
__i__ Paid inclusion __f__ e-Government __d__ Conversion rate
__ Group buying
4-24. Visit www.firstgov.gov. What kind of services do you see that would help you? What services would you use? What areas are missing?
Answer:
Answer may vary but could include jobs, training, passport services, benefits, etc.
LO: 1 Describe different business models used to compete in cyberspace as well as different forms of electronic government.
4-25. Visit Alaska Airlines’ Web site (www.alaskaair.com) for real-time pricing and test the custom messenger bag builder at www.timbuk2.com. How have Internet technologies improved over the years?
Answer:
Answers will vary. The custom bag builder allows the customer to select colors for each area on the bag as well as the dimensions. The instructor can also suggest alternate sites in the same lines of business for comparison.
LO: 2 Describe business-to-consumer electronic commerce strategies
AACSB: Reflective Thinking Skills
4-26 Search the Web for a company that is purely Web based Next, find the Web site of a company that is a hybrid (i.e., it has a traditional brick-and-mortar business plus a presence on the Web) What are the pros and cons of dealing with each type of company?
Answer:
Answers will vary depending on the site chosen. A Web-based business has the advantage of being able to quickly reduce prices (or re-price) products to stay ahead of the competition and is highly adaptable to new technologies as they are introduced. The main drawback is that it is sometimes difficult for customers to return items when needed. A click-and-mortar business allows customers the convenience of buying either online or at a physical location. The main drawback is that the business must support two major types of businesses requiring different types of system.
LO: 2 Describe business-to-consumer electronic commerce strategies.
AACSB: Analytic Skills
4-27. Are the advertisements you receive through e-mail directed toward any specific audience or product category? Which ads seem to be most prevalent? Do you pay much attention or just delete them? How much work is it to get off an advertising list? Why would and wouldn’t you try to get off the list?
Answer:
Answers will vary, but you might ask students how many times they receive an e-mail ad for products or services that they may have previously been searching the Internet for.
LO: 2 Describe business-to-consumer electronic commerce strategies
AACSB: Reflective Thinking Skills
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Information Systems Today, 7th Edition, Instructor’s Manual 7
e
4-28. What is it about a company’s Web site that draws you to it, keeps you there on the site longer, and keeps you coming back for more? If you could summarize these answers into a set of criteria for Web sites, what would those criteria be?
Answer:
Answers will vary but should include some of the following:
• The Web site should offer valuable products and services at a fair price
• The Web site should offer unique products or something of particular interest
• The Web site should be aesthetically pleasing and designed to pull you in
• The Web site must be easy to navigate and use, with little time wasted between links to pages on the site
• The Web site must motivate people to visit, stay, and return, in other words to build Web site loyalty from visits to the site
• The business must advertise its presence on the Web
• A business should monitor and learn from its Web site so that it can continually improve the site.
LO: 2 Describe business-to-consumer electronic commerce strategies
AACSB: Reflective Thinking Skills
4-29. Visit the following services for comparison shopping: BestBookBuys (www.bestwebbuys.com/books), Bizrate (www.bizrate.com), and mySimon (www.mysimon.com). These companies focus on aggregating content for consumers. What are the advantages of these Web sites? What does the existence of such sites mean for the online merchants?
Answer:
These sites provide a way to comparison shop for goods. It saves the consumer time and makes the marketplace more competitive.
LO: 2 Describe business-to-consumer electronic commerce strategies.
AACSB: Reflective Thinking Skills
4-30. Compare three different search engines. What tips do they provide to improve a page’s rankings? How much does it cost to advertise a page on their results pages? If you were a company, could you think of any situation where you would pay almost any amount to have the first listing on the first results page?
Answer:
Answers will vary. Students should concentrate on the business models that search engines use in their advertisement strategies
LO: 2 Describe business-to-consumer electronic commerce strategies
AACSB: Reflective Thinking Skills
4-31. Describe your experiences in online shopping. How did you pay for your purchases? What information did you have to reveal to the merchant? Did you feel comfortable giving out that information?
Answer:
Answers will vary, but find out reasons why students who have not purchased anything online have not done so.
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LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce
AACSB: Reflective Thinking Skills
4-32. Have you ever used a mobile, wireless device such as a smartphone for online shopping? If so, what do you like or dislike about it? In what ways could your shopping experience be made better? If you are not using a mobile device for shopping, what prevented you from doing so? What would have to happen before you would begin using a mobile device for shopping?
Answer:
Answers will vary. Many students will report that they own and regularly use mobile, wireless devices such as cell phones.
LO: 4 Describe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce
AACSB: Reflective Thinking Skills
4-33. When you shop online, is sales tax a criterion for you? Do you try to purchase goods where you do not have to pay sales tax? If you would have to pay sales tax for everything you buy online, would that change your online shopping behavior?
Answer:
Answers will vary.
LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
AACSB: Reflective Thinking Skills
ANSWERS TO APPLICATIONS EXERCISES
The Solution Files to accompany these exercises are available within the Instructor Resource Center. The Student Files to accompany these exercises are available for download at: www.pearsonhighered.com/valacich. Please refer to the Data File Guide for file names.
SUGGESTED ANSWERS TO TEAM WORK EXERCISE: Net Stats: Who Is Subsidizing Web Content?
When you subscribe to cable television, you typically have to decide among different packages, each offering various channels focusing on sports, movies, cartoons, and so on. In addition, you have the option of subscribing to other channels that interest you. Hence, the charges on your monthly cable bill are for your subscribed services. In contrast, the charges on your Internet bill are for connecting to the Internet rather than for the content on the Web. Hence, content providers on the Internet are dependent on other ways to generate revenue. Companies such as CNN, the Washington Post, Google, or Yahoo!, which provide content for free, subsidize their expenses by
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advertising revenue. One of the most common forms of advertising on the Web is display ads, which have moved from simple static images to rich, interactive advertisements. Although the CPM may be only between US$5 and US$20, display ads are big business.
Where do people visit most often on the Web? Research firm comScore regularly provides rankings of the Web’s most popular “Web properties,” based on the number of unique monthly visitors. The top five properties in the year 2014 are:
1. Google Sites: 187.0 million unique visitors
2. Yahoo Sites: 183.1 million unique visitors
3. Microsoft Sites: 162.8 million unique visitors
4. Facebook: 133.6 million unique visitors
5. AOL, Inc.: 109.6 million unique visitors
4-36. Search the Web for the most up-to-date statistics.
Answer:
Answers will vary depending on where student find statistics. There are numerous sites and ways to measure, but the statistics requested in the question may be hard to find.
LO: 3 Understand the keys to successful electronic commerce Web sites, and explain the different forms of Internet marketing.
AACSB: Reflective Thinking Skills
4-37. As a team, interpret these numbers. What is striking/important about these statistics?
Answer: Answers will vary among students.
LO: 2 Describe business-to-consumer electronic commerce strategies.
AACSB: Reflective Thinking Skills
4-38. How have the numbers changed? Which industries seem to be most interested in online advertising? Why?
Answer: Answers will vary.
LO: 2 Describe business-to-consumer electronic commerce strategies.
AACSB: Reflective Thinking Skills
4-39. Using your spreadsheet software of choice, create a graph/figure most effectively visualizing the statistics/changes you consider most important.
Answer: Answers will vary.
LO: 2 Describe business-to-consumer electronic commerce strategies
AACSB: Reflective Thinking Skills
ANSWERS TO OPENING CASE—Managing in the Digital World: Taobao and the World
of e-Commerce
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1. How have Taobao and JD.com evolved their e-commerce strategies to remain competitive in the global marketplace?
Answer:
Answers will vary, but should include disintermediation, where name brand companies have launched their own retail store fronts in the online mall to sell directly to consumers. They are also starting their own logistic trucking chains to overcome delivery troubles that exist.
LO: 2 Describe business-to-consumer electronic commerce strategies.
AACSB: Reflective Thinking Skills
2. How does the proliferation of mobile devices change the competitive landscape for these companies?
Answer:
Answers may vary, but should include the ability for the population to comparison shop online through many devices, which puts pressure on businesses to keep prices low in order to compete.
LO: 4 Describe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.
AACSB: Reflective Thinking Skills
3. How can these companies address issues related to trust and fraud?
Answer: Answers will vary.
LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
AACSB: Reflective Thinking Skills
ANSWERS TO BRIEF CASE—CrowdSpring—The Graphic Designers’ Marketplace
1. What are the drawbacks of using sites such as CrowdSpring for designers? What are the drawbacks of using sites such as CrowdSpring for businesses?
Answer:
Answers will vary, but some of the drawbacks for designers would be submitting a bid and preliminary design into a pool with many others and trying to find the right pricing point. Work can be done without any compensation if the design is not chosen. Drawbacks for businesses would be finding the right pricing point to get quality design quotes back, as well as working with a designer that could be far away and finding solutions when there is a misunderstanding in work.
LO: 3 Understand the keys to successful electronic commerce Web sites, and explain the different forms of Internet marketing.
AACSB: Reflective Thinking Skills
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2. What other innovative business models can you think of that could use the crowds as a labor force?
Answer: Answers will vary
LO: 3 Understand the keys to successful electronic commerce Web sites, and explain the different forms of Internet marketing
AACSB: Reflective Thinking Skills
ANSWERS TO INDUSTRY ANALYSIS—Retailing
1. How can technology help brick-and-mortar retailers compete against e-tailers?
Answer:
Opinions will vary Students will suggest technology used to improve customer experiences, make the purchase and ordering tasks easier and more efficient for employees, and inventory control systems Each of these types of technology can help retailers become more efficient.
LO: 1 Describe different business models used to compete in cyberspace as well as different forms of electronic government
AACSB: Reflective Thinking Skills
2. Privacy advocates criticize the use of RFID, as it allows better tracking of purchasing habits How can brick-and-mortar retailers alleviate these concerns?
Answer:
Opinions will vary.
LO: 2 Describe business-to-consumer electronic commerce strategies
AACSB: Reflective Thinking Skills
3. As you have read, some of the “human element” in retailing is replaced by technology How can brick-and-mortar stores avoid becoming too “sterile” when using information systems to compete against e-tailers?
Answer:
Opinions will vary.
LO: 3 Understand the keys to successful electronic commerce Web sites, and explain the different forms of Internet marketing
AACSB: Reflective Thinking Skills
ANSWERS TO END-OF-CHAPTER CASES
Case 1: Bitcoin
4-40. Is a service like bitcoin needed? Why or why not?
Answer: Answers will vary
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LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce
AACSB: Reflective Thinking Skills
4-41. If you were able to institute changes in bitcoin’s policy, what would you change and why?
Answer: Answers will vary.
LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
AACSB: Reflective Thinking Skills
4-42. Would you use bitcoin if Amazon.com accepted it as a form of payment? Why or why not?
Answer:
Answers may vary, but would probably include many positive responses because of the trust people have in Amazon.com.
LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce.
AACSB: Reflective Thinking Skills
Case 2: Enabling Global Payments at PayPal
4-43. Why do you think PayPal has been so successful throughout the world?
Answer:
Answers will vary, but should include the security features, especially of not having to list credit card numbers with multiple vendors.
LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce
AACSB: Reflective Thinking Skills
4-44. What other opportunities will megatrends such as mobility and social networking provide for PayPal?
Answer: Opinions will vary.
LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce
AACSB: Reflective Thinking Skills
4-45. Do you use PayPal? Why or why not?
Answer: Answers will vary.
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LO: 5 Describe how to conduct financial transactions and navigate the legal issues of electronic commerce
AACSB: Reflective Thinking Skills
MyMISLab
4-46. How do the five megatrends influence how people work and interact?
Answer: Visit MyMISLab for suggested answers.
4-47. Describe and contrast the economic, cultural, and technological changes occurring in the digital world.
Answer: Visit MyMISLab for suggested answers.
For an example illustrating the concepts found in this chapter, view the videos in mymislab.com.
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