1623 CLC Testbank Chapter2

Chapter 2 E-Marketplaces: Structure, Mechanisms, Economics, and Impacts 1

Chapter 2 E-Marketplaces: Structure, Mechanisms, Economics, and Impacts

True-False Questions

1. The functions and efficiency of an e-market are the same as that of a physical marketplace. Answer: False Difficulty: East Page Reference: 44 AACSB: Reflective thinking skills

2. The emergence of electronic marketplaces has resulted in lower information search costs for buyers and lower transaction and distribution costs for sellers. Answer: True Difficulty: Medium Page Reference: 44, 45 AACSB: Reflective thinking skills

3. Although both marketplaces and marketspaces can sell physical products, the marketspace also can sell digital products, which are goods that can be transformed to digital format and delivered instantly over the Internet. Answer: True Difficulty: Medium Page Reference: 45 AACSB: Use of information technology

4. Front end refers to the activities that support online order fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery. Answer: False Difficulty: Medium Page Reference: 45 AACSB: Use of information technology

5. In marketing, an intermediary is a third party that operates between sellers and buyers. Intermediaries of all kinds offer their services on the Web. Answer: True Difficulty: Medium Page Reference: 45 AACSB: Use of information technology

2 E-Marketplaces: Structure, Mechanisms, Economics, and Impacts

6. WebMD, which is the largest U.S. medical services company, is known mainly for its webmd.com consumer portal, but its core business is being an e-intermediary. Answer: True Difficulty: Easy Page Reference: 46 AACSB: Use of information technology

7. The major B2B e-marketplaces are electronic storefronts, Internet malls, and exchanges. Answer: False Difficulty: Easy Page Reference: 47 AACSB: Use of information technology

8. A portal is an information gateway that attempts to address information overload by enabling people to search and access relevant information from disparate IT systems and the Internet, using advanced search and indexing techniques, such as Google’s desktop. Answer: True Difficulty: Medium Page Reference: 49 AACSB: Use of information technology

9. Intermediaries are human or electronic agents that play an important role in EC by providing value-added services such as making payment arrangements to buyers and sellers. Answer: True Difficulty: Medium Page Reference: 51 AACSB: Use of information technology

10. Travelers using airline Web sites to book their flights directly without the use of travel agents is resulting in the reintermediation of travel agents. Answer: False Difficulty: Hard Page Reference: 53 AACSB: Reflective thinking skills

11. Search engines not only “search and match,” but also have capabilities that can be used to perform routine tasks that require intelligence. Answer: False Difficulty: Easy Page Reference: 57 AACSB: Use of information technology


12. An electronic shopping cart is an order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop. Answer: True Difficulty: Easy Page Reference: 58 AACSB: Use of information technology

13. Shopping carts for B2B are fairly simple, but a shopping cart for B2C may be more complex. Answer: False Difficulty: Medium Page Reference: 59 AACSB: Use of information technology

14. An auction is a competitive process and market mechanism that uses a competitive process by which a seller solicits consecutive bids from buyers or a buyer solicits bids from sellers. Answer: True Difficulty: Easy Page Reference: 59 AACSB: Use of information technology

15. Negotiation and bargaining are two types of auctions where prices are not fixed, but rather are allowed to fluctuate as market supply and demand change. Answer: False Difficulty: Medium Page Reference: 60 AACSB: Use of information technology

16. Reverse auctions are bidding or tendering systems in which the buyer places an item for bid on a request for quote (RFQ) system; then potential suppliers bid on the job, with the price reducing sequentially, and the lowest bid wins. Answer: True Difficulty: Medium Page Reference: 61 AACSB: Use of information technology

17. E-auctions are becoming less important selling and buying channels for companies and individuals. Answer: False Difficulty: Easy Page Reference: 62 AACSB: Reflective thinking skills


18. The major limitations of e-auctions are insufficient security, risk of fraud, and a limited pool of participants. Answer: True Difficulty: Medium Page Reference: 62 AACSB: Reflective thinking skills

19. A limitation of e-bartering for businesses is that excess capacity items such as office space, storage, factory space; idle facilities; and labor cannot be bartered. Answer: False Difficulty: Medium Page Reference: 64 AACSB: Reflective thinking skills

20. Online negotiation can be facilitated by computer technology for the negotiation process and software agents for searches and comparisons. Answer: True Difficulty: Easy Page Reference: 64 AACSB: Use of information technology

21. Due to the lack of hurdles, the adoption and growth of m-commerce has been widespread. Answer: False Difficulty: Medium Page Reference: 66 AACSB: Use of information technology

22. The Internet economy’s low barriers to entry are both an opportunity and a threat to businesses. Answer: True Difficulty: Easy Page Reference: 68 AACSB: Reflective thinking skills

23. Strong competition for commodity-type products, such as toys and CDs, was a major contributor to the collapse of many dot-com companies, which suggests that a company needs to use innovative strategies to survive and prosper in the Internet economy. Answer: True Difficulty: Medium Page Reference: 68 AACSB: Analytic skills

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24. Because the strength of each of Porter’s five forces varies considerably from industry to industry, it would be a mistake to draw general conclusions about the impact of the Internet on long-term industry profitability. Answer: True Difficulty: Medium Page Reference: 70 AACSB: Reflective thinking skills

25. Because of intense competition on the Web, new companies cannot establish good corporate images quickly as Amazon.com had done when it had few online competitors. Answer: False Difficulty: Medium Page Reference: 73 AACSB: Reflective thinking skills

Multiple Choice Questions

26. Fundamentally, the success of the pure-play jewelry e-tailer Blue Nile was due to the company’s use of Internet technologies to: a. go public b. provide quality ratings c. eliminate intermediaries d. offer lower prices than competitors Answer: D Difficulty: Medium Page Reference: 43 AACSB:

27. Traditional and electronic markets have three main functions, which include each of the following EXCEPT: a. transforming raw materials into finished products. b. matching buyers and sellers. c. facilitating the exchange of information, goods, services, and payments associated with

market transactions. d. providing an institutional infrastructure, such as a legal and regulatory framework that

enables the efficient functioning of the market. Answer: A Difficulty: Easy Page Reference: 44 AACSB: Reflective thinking skills


28. Digital products have different cost curves than those of regular products because: a. in digitization, most of the costs are variable and fixed costs are low. b. in digitization, most of the costs are fixed, and variable costs are very low. c. in digitization, most of the costs are fixed, but variable costs are high. d. in digitization, all of the costs are variable. Answer: B Difficulty: Hard Page Reference: 45 AACSB: Analytic skills

29. The portion of an e-seller’s business processes through which customers interact, including the seller’s portal, electronic catalogs, a shopping cart, a search engine, and a payment gateway is referred to as the _____________ of the business. a. front end b. back end c. infrastructure d. intermediary Answer: A Difficulty: Medium Page Reference: 45 AACSB:

30. All the activities that are related to order aggregation and fulfillment, inventory management, purchasing from suppliers, accounting and finance, insurance, payment processing, packaging, and delivery are done in what is termed the_______ of the business. a. front end b. back end c. infrastructure d. intermediary Answer: B Difficulty: Medium Page Reference: 45 AACSB:

31. The major __________ e-marketplaces are storefronts and Internet malls. a. B2B b. C2B c. B2B2C d. B2C Answer: D Difficulty: Medium Page Reference: 47 AACSB:


32. An electronic storefront includes several mechanisms that are necessary for conducting the sale. The most common mechanisms include each of the following EXCEPT: a. an electronic catalog; b. a search engine c. a supply chain d. a payment gateway Answer: C Difficulty: Easy Page Reference: 47 AACSB:

33. _______________ are online markets owned and operated by a single company and may be either sell-side or buy-side. a. Private e-marketplaces b. Commercial portals c. E-malls d. B2B marketplaces Answer: A Difficulty: Easy Page Reference: 48 AACSB:

34. A(n) _____________ is a single point of access through a Web browser to help users find relevant and accurate business information and reduce information overload. a. intermediary b. search engine c. information portal d. browser Answer: C Difficulty: Easy Page Reference: 49 AACSB:

35. Finding relevant and accurate information is often time-consuming and requires access to multiple systems causing organizations to lose a lot of productive employee time. One solution to this problem is the use of: a. portals. b. intermediaries. c. browsers. d. intranets. Answer: A Difficulty: Medium Page Reference: 49 AACSB:

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36. A type of broker that helps consumers compare different stores is a: a. virtual mall. b. search agent. c. shopping facilitator. d. metamediary. Answer: C Difficulty: Medium Page Reference: 52 AACSB:

37. Human or electronic intermediaries attempt to address each of the following limitations of direct interaction EXCEPT: a. search costs. b. lack of privacy for those wanting to remain anonymous. c. contract risk. d. product distribution. Answer: D Difficulty: Medium Page Reference: 52 AACSB:

38. The elimination of various types of agents that mediate between buyers and sellers, such as travel and insurance agents, is referred to as: a. remediation b. disintermediation c. e-distribution d. automation Answer: B Difficulty: Medium Page Reference: 53 AACSB:

39. A mode is purchasing where prices are negotiated or discounted is ________________, which refers to nonfixed prices, such as those in auctions or stock markets. a. dynamic pricing b. commodity pricing c. pre-shopping d. negotiation Answer: A Difficulty: Medium Page Reference: 54 AACSB:


40. Although used occasionally in B2C commerce, customized catalogs are especially useful in B2B e-commerce for each of the following reasons EXCEPT: a. e-catalogs can show only the items that the employees in a specific organization are

allowed to purchase. b. Intranets, in particular, can deliver customized catalogs to different business customers. c. e-catalogs can show the buyer’s ID number for the item, model, or SKU number rather

than the seller’s ID numbers. d. E-‐catalogs can be customized to show the same item to different customers at different

prices, reflecting discounts or purchase-‐contract agreements. Answer: B Difficulty: Medium Page Reference: 56 AACSB:

41. To be successful and useful, large e-catalogs need a(n) __________________. a. search engine b. directory c. data mining technology d. enhanced viewing capability Answer: A Difficulty: Medium Page Reference: 57 AACSB:

42. A ____________ has capabilities that can be used to perform routine tasks that require intelligence such as providing customers with assistance based on their movements on a Web site. a. search engine b. intelligent engine c. software agent d. software engine Answer: C Difficulty: Medium Page Reference: 58 AACSB:

43. Popular search engines include all of the following EXCEPT: a. Google b. MSN c. AltaVista d. Lycos Answer: B Difficulty: Easy Page Reference: 58 AACSB:

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44. A(n) ____________ is an order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop. a. intelligent agent b. e-fulfillment agent c. electronic shopping cart d. merchant server Answer: C Difficulty: Medium Page Reference: 58 AACSB:

45. The most common and traditional form of auctions in which one seller entertains bids from many buyers is referred to as: a. forward auctions b. reverse auctions. c. double auction. d. e-auctions. Answer: A Difficulty: Medium Page Reference: 61 AACSB:

46. An auction in which there is one buyer and many potential sellers; or in which a buyer places an item for bid on an RFQ system and the lowest bid wins is referred to as all of the following EXCEPT: a. reverse auctions. b. forward auctions. c. bidding system. d. tendering system. Answer: B Difficulty: Medium Page Reference: 61 AACSB:

47. What is a benefit of e-auctions to sellers? a. Convenience since the bidding can occur anywhere and any time. b. High stickiness to the Web site. c. Anonymity. d. The optimal price is determined by the market. Answer: D Difficulty: Hard Page Reference: 62 AACSB: Reflective thinking skills


48. Organizations are embracing mobilized computing technologies for several reasons EXCEPT: a. It improves the productivity of workers in the field. b. Wireless telecom support for mobility is growing quickly. c. Wireless security problems have been solved with encryption. d. The prices of notebook computers, wireless handhelds, and smart phones continue to fall

and their capabilities continue to increase. Answer: C Difficulty: Medium Page Reference: 65 AACSB:

49. EC competition is very intense because online transactions enable each of the following EXCEPT: a. For buyer, e-markets reduce the cost of searching for product information; e.g., sellers,

models, prices, frequently to zero. b. Higher prices because of a greater number of potential buyers. c. Setting up a Web site is relatively easy and inexpensive, and doing so reduces the need

for a sales force and brick-and-mortar stores. d. Product or service differentiation and personalization. Answer: B Difficulty: Medium Page Reference: 68 AACSB: Reflective thinking skills

50. Which of the following statements about differentiation and personalization is not correct? a. Products must be differentiated for perfect competition. b. Consumers like differentiation and personalization and are frequently willing to pay more

for them. c. Differentiation reduces the substitutability between products, benefiting sellers who use

this strategy. d. Price cutting in differentiated markets does not impact market share very much: Answer: A Difficulty: Medium Page Reference: 68 AACSB:

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51. It can be said that competition between companies is being replaced by competition between ___________ . a. industries b. digital products and services c. differentiated products and services d. networks Answer: D Difficulty: Medium Page Reference: 69 AACSB:

52. The Internet has influenced industry structures in each of the following ways EXCEPT: a. A flood of new entrants has come into many industries because of reduced barriers to

entry. b. Increases differences among competitors whose offerings are kept proprietary. c. There has been a shift in bargaining and buyer power to end users. d. Industries are more efficient overall. Answer: B Difficulty: Medium Page Reference: 70 AACSB: Reflective thinking skills

53. Impacts of e-marketplaces on B2C direct marketing include all of the following EXCEPT: a. The existence of e-marketplaces has increased the promotion of products and services

through direct marketing. b. The administrative work related to physical delivery, especially across international

borders, can be reduced significantly, cutting the cycle time by more than 90 percent. c. Brand images for new companies have become more difficult to establish. d. EC enables customization of products and services, which is changing marketing and

sales activities both in B2C and in B2B. Answer: C Difficulty: Medium Page Reference: 73 AACSB: Reflective thinking skills

54. One of the major benefits of e-markets is the improvement in supply chains with the creation of a(n) _____________________. a. hub-‐based chain b. customized chain c. support chain d. logistics chain Answer: A Difficulty: Medium Page Reference: 76 AACSB:

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55. ______________ provides customers with exactly what they want, when and where they want it. Effective communication between the supply chain and the factory floor is needed to make it happen a. Virtual manufacturing b. Demand-driven manufacturing c. Build-to-order manufacturing d. Real-time manufacturing Answer: B Difficulty: Medium Page Reference: 78 AACSB:

Fill In the Blanks

56. An e-marketplace is a virtual marketplace in which sellers and buyers meet and conduct different types of transactions.

Difficulty: Easy Page Reference: 44 AACSB:

57. A marketspace is a marketplace in which sellers and buyers exchange goods and services for money or for other goods and services, but do so electronically.

Difficulty: Medium Page Reference: 45 AACSB:

58. All the activities that are related to order aggregation and fulfillment, inventory management, purchasing from suppliers, accounting and finance, insurance, payment processing, packaging, and delivery are done in what is termed the back end of the business.


59. In marketing, an intermediary is typically a third party that operates between sellers and buyers.



60. The front end is the portion of an e-seller’s business processes through which customers interact, including the seller’s portal, electronic catalogs, a shopping cart, a search engine, and a payment gateway.


61. An electronic or Web storefront refers to a single company’s Web site where products and services are sold.


62. To attract users to shopping malls, vendors use rich media called virtual reality to relate the content via digital representation to potential buyers.


63. Private e-marketplaces are online markets owned and operated by a single company.


64. An information portal is a single point of access through a Web browser to critical business information located inside and outside of an organization.


65. Commercial (public) portals are portals that offer fairly routine content for broad audiences and are the most popular portals on the Internet; e.g., yahoo.com, aol.com, and msn.com.


66. E-marketplaces, especially for B2B and mega B2C such as Amazon.com may be plagued by information overload.

Difficulty: Medium Page Reference:50 AACSB:

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67. In cyberspace, there are intermediaries that provide and/or control information flow. These electronic intermediaries are known as infomediaries.

Difficulty: Medium Page Reference: 51, 52

AACSB:

68. A broker is a company that facilitates transactions between buyers and sellers.


69. A special type of intermediary in e-commerce is the B2B e-distributor which connect manufacturers with business buyers, such as retailers or resellers in the computer industry.


70. Disintermediation is the elimination of intermediaries between sellers and buyers.


71. A search engine is a computer program that can access databases of Internet resources, search for specific information or keywords, and report the results.


72. An electronic shopping cart is an order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop.


73. Dynamic pricing refers to prices that are not fixed, but that are allowed to fluctuate as supply and demand in a market change.


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74. Priceline.com pioneered the name-your-own-price model. In this C2B model, a potential buyer specifies the price or other terms that he or she is willing to pay to any willing and able seller.


75. Mobile commerce refers to the conduct of e-commerce via wireless devices or from portable devices.


76. Location-based commerce is an m-commerce application targeted to a customer whose preferences and needs and location (e.g., using GPS) are known in real time.


77. Because of these interrelationships, the business model of the Internet economy has been called the Internet ecosystem.


78. Differentiation involves providing a product or service that is unique and not available elsewhere.


79. The competitive forces model is a model devised by Porter that says that five major forces of competition determine industry structure and how economic value is divided among the industry players in an industry; analysis of these forces helps companies develop their competitive strategy.


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80. E-learning systems offer two-way video, on-the-fly interaction, and application sharing. Such systems provide for interactive remote instruction systems, which link sites over a high-speed intranet.


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1623 CLC Testbank Chapter2