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Chapter 10 - test bank
information system (comm 2KA3)
McMaster University
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Management Information Systems: Managing the Digital Firm, 16e (Laudon) Chapter 10 E-Commerce: Digital Markets, Digital Goods
What event marked the beginning of e-commerce? A) The first product sold online B) The first domain name registered C) The first e-mail sent D) The first paid advertisements placed on a website E) The first product advertised online Answer: D Difficulty: Challenging AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
All of the following are examples of "on demand" companies except: A) Uber. B) Airbnb. C) Lyft. D) Sidecar. E) Instagram. Answer: E Difficulty: Easy AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
A marketplace extended beyond traditional boundaries and removed from a temporal and geographic location is called a(n): A) exchange. B) marketspace. C) online marketplace. D) e-hub. E) net marketplace. Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
When did e-commerce begin? A) 1965 B) 1983 C) 1995 D) 1999 E) 2000 Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
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What standards are referred to when discussing universal standards as a unique feature of e- commerce? A) Internet technology standards B) Common spoken and written languages C) Universal measuring standards D) Universal advertising and media format standards E) EDI standards Answer: A Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
All of the following are unique features of e-commerce technology, except: A) personalization/customization. B) interactivity. C) price discrimination. D) richness. E) global reach. Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Which of the following dimensions of e-commerce technology involves engaging consumers in a dialogue that dynamically adjusts the experience to the individual? A) Ubiquity B) Personalization/customization C) Richness D) Interactivity E) Information density Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Which of the following dimensions of e-commerce technology involves the integration of video, audio, and text marketing messages into a single marketing message and consumer experience? A) Ubiquity B) Personalization/customization C) Richness D) Interactivity E) Social technology Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
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Information ________ exists when one party in a transaction has more information that is important for the transaction than the other party. A) transparency B) asymmetry C) complexity D) discrimination E) competition Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Changing the prices of products based on the level of demand characteristics of the customer is called ________ pricing. A) menu B) dynamic C) flexible D) asymmetric E) customized Answer: B Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Removing the business process layers in a distribution channel is called: A) disintermediation. B) BPR. C) market segmentation. D) network effects. E) market transparency. Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
In digital markets: A) search costs increase. B) menu costs decline. C) switching costs decline. D) network costs decline. E) information asymmetry increases. Answer: B Difficulty: Challenging AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
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Compared to traditional markets, digital markets have: A) lower search costs. B) weaker network effects. C) lower delayed gratification effects. D) greater asymmetry. E) higher transaction costs. Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Compared to traditional goods, digital goods have: A) low marginal costs of production. B) higher delivery costs. C) lower initial production costs. D) higher inventory costs. E) higher marginal costs. Answer: A Difficulty: Challenging AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Compared to digital goods, traditional goods have: A) lower inventory costs. B) lower marginal costs per unit. C) lower copying costs. D) more variable pricing. E) higher costs of distribution. Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
What is the primary benefit to consumers of disintermediation? A) Faster service B) Lower costs C) Higher quality D) Greater choices E) None, because disintermediation primarily benefits manufacturers. Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
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In general, for digital goods, the marginal cost of producing another unit is about zero. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Traditional online marketing, such as display ads, have been replaced by video ads. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Information asymmetry exists when there is more information about one product than there is about a similar product. Answer: FALSE Difficulty: Easy AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Cost transparency refers to the ability of consumers to discover what merchants actually pay for products. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Menu costs are the merchants' costs of changing prices. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Behavioral targeting refers to targeting ad messages to a person's clickstream behavior. Answer: TRUE Difficulty: Moderate AACSB: Analytical thinking LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
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What is the most profound way in which e-commerce and the Internet have changed the relationship between companies and their customers? Support your answer. Answer: Student answers will vary. A sample answer is: The most profound way in which e- commerce and the Internet have changed this relationship is in the shrinking of information asymmetry. An information asymmetry exists when one party in a transaction has more information that is important for the transaction than the other party. That information helps determine their relative bargaining power. In digital markets, consumers and suppliers can "see" the prices being charged for goods, and in that sense digital markets are said to be more "transparent" than traditional markets. For example, until auto retailing sites appeared on the web, there was a pronounced information asymmetry between auto dealers and customers. Only the auto dealers knew the manufacturers' prices, and it was difficult for consumers to shop around for the best price. Auto dealers' profit margins depended on this asymmetry of information. Today's consumers have access to a legion of websites providing competitive pricing information, and three-fourths of U. auto buyers use the Internet to shop around for the best deal. Thus, the web has reduced the information asymmetry surrounding an auto purchase. The Internet has also helped businesses seeking to purchase from other businesses reduce information asymmetries and locate better prices and terms. Difficulty: Moderate AACSB: Written and oral communication LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
"Knowledge increases exponentially" is a phrase with which we are all familiar. How does this concept apply to the emergence of the digital firm? Support your contentions. Answer: Student answers will vary. A sample answer is: The exponential increases of knowledge refer to shared information. For example, once the concept of a wheel is established, inheritors of that knowledge do not have to "reinvent the wheel." The Internet is a tool similar to the wheel: it is based on shared standards and universal tools. The Internet and shared networking technologies are allowing new techniques for attracting customers and selling customers to be developed and adapted very quickly. For example, although early Internet retailers had difficulty setting up secure credit card transactions and payment systems, today there are many systems in place as vendors step in to create shared tools for doing this. The Internet is fostering shared knowledge and, as such, propagating ever greater increases in that knowledge. Difficulty: Challenging AACSB: Written and oral communication LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
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Describe the use of personalization and customization in e-commerce. What business value do these techniques have? Answer: In personalization, merchants can target their marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purchases. For example, Amazon greets each logged in user with their user name. With customization, merchants can change the delivered product or service based on a user's preferences or prior behavior. The Wall Street Journal Online allows you to select the type of news stories you want to see first and gives you the opportunity to be alerted when certain events happen. The ability of Internet technology to track customer behavior at websites, along with records of purchases and other behavior, allows merchants to create a detailed profile of a customer. These profiles can be used to create unique personalized web pages that display content or ads for products or services of special interest to each user, improving the customer's experience and creating additional value. The business value of personalization is reduced marketing costs, as you spend only the money to target customers that are more likely to be receptive and are more profitable, and improved sales results, from increased customer response to personalized sites that better serve their own purposes and shopping needs. Personalization can achieve some of the benefits of using individual salespeople for dramatically lower costs. Difficulty: Moderate AACSB: Written and oral communication LO: 10-1: What are the unique features of e-commerce, digital markets, and digital goods?
Amazon is known primarily for its use of which of the following business models? A) Content provider B) Portal C) Market creator D) E-tailer E) Transaction broker Answer: D Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?
Craigslist is an example of: A) C2C e-commerce. B) B2B e-commerce. C) B2C e-commerce. D) M-commerce. E) P2P-commerce. Answer: A Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?
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Which of the following types of e-commerce involves businesses selling goods and services directly to individuals via the Internet? A) B2C e-commerce B) B2B e-commerce C) C2C e-commerce D) M-commerce E) P2P e-commerce Answer: A Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
As described in the opening case, what is the primary business model employed by YouTube? A) Portal B) E-tailer C) Content provider D) Transaction broker E) Market creator Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?
Transaction brokers: A) generate revenue from advertising or from directing buyers to sellers. B) save users money and time by processing online sales transactions. C) provide a digital environment where buyers and sellers can establish prices for products. D) sell physical products directly to consumers or individual businesses. E) provide online meeting places where people with similar interests can communicate. Answer: B Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
Which of the following Internet business models involves a merchant creating an online digital environment that enables people with like interests to share information? A) Community provider B) Service provider C) Market creator D) Transaction broker E) Portal Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
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In the ________ revenue models, a firm offers some services for free but charges a subscription fee for premium services. A) free/freemium B) subscription C) transaction fee D) affiliate E) sales Answer: A Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
Content providers use ________ systems to process large amounts of very small monetary transactions cost-effectively. A) subscription B) mobile payment C) transaction fee D) micropayment E) affiliate revenue Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
Which of the following best illustrates the advertising revenue model? A) eBay receives a small fee from a seller if a seller is successful in selling an item. B) Yelp receives a fee after steering a customer to a participating website where he or she makes a purchase. C) Facebook provides a social network for free, but shows sponsored content in users' News Feeds. D) Apple accepts micropayments for single music track downloads. E) Netflix charges customers a monthly fee for access to its library of movies. Answer: C Difficulty: Moderate AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?
Which of the following companies uses the subscription revenue model? A) Expedia B) ETrade C) Facebook D) Netflix E) Google Search Answer: D Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
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As described in the opening case, what is YouTube's revenue model? A) Advertising B) Transaction fee C) Subscription D) Freemium E) Affiliate Answer: A Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
YouTube does not use dynamic pricing. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
eBay is an example of the market creator business model. Answer: TRUE Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?
Yahoo is an example of the portal business model. Answer: TRUE Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?
Podcasting allows subscribers to listen to live, streaming radio and other audio content. Answer: TRUE Difficulty: Easy AACSB: Analytical thinking LO: 10-2: What are the principal e-commerce business and revenue models?
In the affiliate revenue model, firms derive revenue by referring consumers to other firms selling online. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge LO: 10-2: What are the principal e-commerce business and revenue models?
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Ikea asked for the help of its customers in designing new furniture. This is an example of: A) prediction markets. B) behavioral targeting. C) long-tail marketing. D) social shopping. E) crowdsourcing. Answer: E Difficulty: Challenging AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?
Exposing an individual to ads that are chosen based on the choices of their friends is an example of: A) clickstream advertising. B) behavioral targeting. C) online profiling. D) social marketing. E) crowdsourcing. Answer: D Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?
Which of the following best describes the digital social graph? A) A person's direct and indirect relationships B) All of a person's closest digital relationships C) A collection of millions of personal social graphs D) All of the online and offline relationships a person has E) All of the relationships in an online community Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?
Which of the following marketing formats is sales-oriented, rather than branding-oriented or a mix? A) Lead generation B) Search engine C) Rich media D) Display ads E) Video Answer: B Difficulty: Challenging AACSB: Analytical thinking LO: 10-3: How has e-commerce transformed marketing?
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Facebook's Like button is an example of which of the following? A) Social sign-on B) Collaborative shopping C) Network notification D) Social search E) Newsfeed Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?
An environment where consumers can share their shopping experiences with one another by viewing products, chatting, or texting about brands, products, and services is an example of: A) network notification. B) web personal marketing. C) collaborative shopping. D) social search. E) social sign-on. Answer: C Difficulty: Easy AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?
________ involves placing ads in social network newsfeeds or within traditional editorial content, such as a newspaper article. A) Behavioral targeting B) Crowdsourcing C) Native advertising D) Demand prediction software E) Lead generation marketing Answer: C Difficulty: Challenging AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?
Rich media advertisements are used to sell products and services online. Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking LO: 10-3: How has e-commerce transformed marketing?
Behavioral targeting occurs at individual websites and within apps. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge LO: 10-3: How has e-commerce transformed marketing?
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You have been hired as a marketing consultant by a law firm in Los Angeles that specializes in juvenile justice. What ways can you use the Internet as a marketing tool and to advertise the firm's services? Answer: Student answers will vary. A sample answer is: For marketing research, you could advertise on search engines. You could pay for marketing research at relevant portals. You could also collect customer information from the company's website. You could monitor relevant blogs to see what issues are of concern in juvenile justice, so as to address these concerns in your advertising campaigns. To advertise, you could advertise on search engine results and at relevant portals or legal information content providers. If it were feasible, you could create a juvenile justice portal and blog for the company in order to attract users from whom you could gather market research as well as promote your services. You might also want to investigate social network marketing–assuming that your clients might be the best leads for other clients. Difficulty: Challenging AACSB: Written and oral communication LO: 10-3: How has e-commerce transformed marketing?
Website tracking software can log the path a customer took through the website, the time spent on the site, and what geographic area, in general, the customer is from, all of which can help in customer analysis. It can also log the customer's operating system and which browser the customer is using. How could these last two data items be of interest to a company? Give examples. Answer: Student answers will vary, but should include an understanding that customer OS and browser interact technologically with a website and might be relevant in data analysis. An example is: Customer OSs and browsers could help a company determine what technical functionalities could be used in the site. For example, if it found out that a significant percentage of its users are using mobile browsers, they might want to make sure that the website is easily used by various mobile devices. Secondly, this data might be relevant in data mining or other analysis. For example, a retail clothing company might find that a significant portion of their most valued customers use an Apple operating system, and from other data analysis know that Apple users are more likely to purchase cashmere sweaters. Then the company may want to place a greater emphasis on selling the cashmere sweaters. Difficulty: Moderate AACSB: Written and oral communication LO: 10-3: How has e-commerce transformed marketing?
Which of the following statements about EDI is not true? A) Each major industry in the United States has EDI standards. B) Today, EDI is only used for document automation. C) Many organizations still use private networks for EDI. D) EDI systems are increasingly web-enabled. E) About 80 percent of online B2B e-commerce is still based on EDI. Answer: B Difficulty: Challenging AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?
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The process of sourcing goods and materials, negotiating with suppliers, paying for goods, and making delivery arrangements is called: A) e-procurement. B) SCM. C) procurement. D) distribution E) production. Answer: C Difficulty: Moderate AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?
A secure website that links a large firm to its suppliers and other key business partners is called a(n): A) e-hub. B) marketspace. C) exchange. D) private industrial network. E) net marketplace. Answer: D Difficulty: Moderate AACSB: Information technology LO: 10-4: How has e-commerce affected business-to-business transactions?
Which of the following statements about Net marketplaces is not true? A) Some Net marketplaces sell direct goods. B) Some Net marketplaces serve vertical markets. C) Some Net marketplaces sell indirect goods. D) Some Net marketplaces support contractual purchases based on long-term relationships. E) Some Net marketplaces are owned by a single firm and used to link solely to the firm's suppliers and key business partners. Answer: E Difficulty: Challenging AACSB: Analytical thinking LO: 10-4: How has e-commerce affected business-to-business transactions?
Which of the following statements about exchanges is not true? A) Exchanges are independently owned third-party Net marketplaces. B) Some exchanges provide vertical markets. C) Exchanges are the most successful form of B2B commerce. D) Some exchanges enable a spot market. E) Go2Paper is an example of an exchange. Answer: C Difficulty: Challenging AACSB: Application of knowledge LO: 10-4: How has e-commerce affected business-to-business transactions?
Chapter 10 - test bank
Course: information system (comm 2KA3)
University: McMaster University
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