36.

CIOs need to effectively communicate the value of proposed EC projects in order to gain approval for each
of the following reasons except
A) the success of EC projects may be assessed in order to pay bonuses to those involved with the project.
B) some large companies, and many public organizations, mandate a formal evaluation of requests for
funding.
C) companies now realize that EC is not necessarily the solution to all problems.
D) demand for expanding or initiating e-business projects is no longer strong so there are fewer requests
for funding.
Answer: D
Diff: 2 Type: MC Page Ref: 664-665
AACSB:
Objective:


37. One basic way to categorize different EC investments is to distinguish between investments in infrastructure
and investments in specific EC applications because benefits from infrastructure investments
A) are very complex.
B) have a low return.
C) depend on the EC applications.
D) are made for the long-term.
Answer: D
Diff: 1 Type: MC Page Ref: 665
AACSB:
Objective:


38. Basic reasons companies invest in IT and EC include each of the following except
A) justify new marketing campaigns.
B) reduce time-to-market.
C) improve business processes.
D) increase customer satisfaction and retention.
Answer: A
Diff: 2 Type: MC Page Ref: 665
AACSB:
Objective:


39. Not all EC investments need to be formally justified. Each of the following is a case where formal evaluation
may not be needed except
A) when the relevant data are not available, are inaccurate, or are too volatile.
B) when the value of the investment is relatively small for the organization.
C) when the EC project is mandated and must be done regardless of the costs and benefits.
D) when competitors have made that type of investment.
Answer: D
Diff: 2 Type: MC Page Ref: 665
AACSB:
Objective:


40. A comparison of the costs of a project against the benefits best defines
A) benefits metric.
B) IRR.
C) cost-benefit analysis.
D) feasibility justification.
Answer: C
Diff: 1 Type: MC Page Ref: 665
AACSB:
Objective:


41. Metrics can
A) define the value proposition of business models.
B) be the basis for specific goals and plans.
C) assess the health of companies by using tools such as balanced scorecards and performance
dashboards.
D) do all of the above.
Answer: D
Diff: 2 Type: MC Page Ref: 666
AACSB:
Objective:


42. Metrics are used to describe each of the following except
A) the ratio of costs to benefits.
B) costs.
C) benefits.
D) standards.
Answer: D
Diff: 2 Type: MC Page Ref: 666
AACSB:
Objective:


43. In B2C, an example of a tangible EC metric from the buyer's perspective is
A) ease of use of EC.
B) cost/price of the product.
C) profit per customer.
D) convenience in purchasing.
Answer: B
Diff: 3 Type: MC Page Ref: 667
AACSB:
Objective:


44. Tangible metrics include
A) reelection of candidates.
B) lower tax rates.
C) flexibility in changing a purchase.
D) ease of use of EC.
Answer: B
Diff: 3 Type: MC Page Ref: 667
AACSB:
Objective:


45. For governments, an example of an intangible EC metric is
A) risk reduction.
B) reelection of candidates.
C) increase in participation in government programs.
D) lower tax rates.
Answer: B
Diff: 2 Type: MC Page Ref: 667
AACSB:
Objective:


46. Productivity benefits from using EC are difficult to measure because
A) EC gains in certain areas of the company may be offset by losses in other areas.
B) the payoffs are too short.
C) qualitative benefits do not count.
D) there is no time lag in EC gains.
Answer: A
Diff: 3 Type: MC Page Ref: 669
AACSB:
Objective:


47. The relationship between EC investment and organizational performance is
A) shared with other investments.
B) not measurable.
C) indirect.
D) direct.
Answer: C
Diff: 3 Type: MC Page Ref: 670
AACSB:
Objective:


48. EC costs and benefits can be classified into two broad categories
A) short-term and capital.
B) direct and routine.
C) operational and strategic.
D) tangible and intangible.
Answer: D
Diff: 1 Type: MC Page Ref: 671
AACSB:
Objective:


49. The major steps in the process of justifying large-scale EC and IT projects include each of the following
except
A) do not leave out strategic benefits, including long-term ones.
B) document and verify all figures used in the calculation. Clarify all assumptions.
C) be careful not to overestimate cost and underestimate benefits (a tendency of many managers).
D) lay an appropriate foundation for analysis with your vendor, and then conduct your ROI.
Answer: C
Diff: 3 Type: MC Page Ref: 672
AACSB:
Objective:


50. A graphic representation of the maturity, adoption, and social application of specific IT tools best defines
A) hype cycle.
B) logic model.
C) Gantt chart.
D) network diagram.
Answer: A
Diff: 2 Type: MC Page Ref: 672
AACSB:
Objective:


51. Gartner's hype cycle includes each of the following stages except
A) simplicity of method.
B) trough of disillusionment.
C) plateau of productivity.
D) technology trigger.
Answer: A
Diff: 3 Type: MC Page Ref: 672
AACSB:
Objective:


52. According to Gartner's hype cycle, which of the following is the stage of overenthusiasm and unrealistic
projections during which a flurry of publicized activity by technology leaders may result in some successes
but more failures as the technology is pushed to its limits?
A) trough of disillusionment
B) slope of enlightenment
C) peak of inflated expectations
D) plateau of productivity
Answer: C
Diff: 3 Type: MC Page Ref: 672-673
AACSB:
Objective:


53. According to Gartner's hype cycle, which of the following stages is the point at which the technology
becomes unfashionable and the media abandons the topic, because the topic did not live up to its inflated
expectations?
A) peak of inflated expectations
B) plateau of productivity
C) trough of disillusionment
D) slope of enlightenment
Answer: C
Diff: 3 Type: MC Page Ref: 672-673
AACSB:
Objective:


54. Traditional methods for evaluating EC investments include each of the following except
A) discount rate.
B) ROI.
C) NPV.
D) payback period.
Answer: A
Diff: 1 Type: MC Page Ref: 674-678
AACSB:
Objective:


55. Which of the following is the discount rate that makes the NPV of cash flows produced over time equal to
zero?
A) IRR
B) ROI
C) TCO
D) CPR
Answer: A
Diff: 2 Type: MC Page Ref: 675
AACSB:
Objective:


56. A formula for calculating the cost of owning, operating, and controlling an IT system best defines
A) total cost of ownership.
B) total benefits of ownership.
C) return on investment.
D) payback period.
Answer: A
Diff: 2 Type: MC Page Ref: 675
AACSB:
Objective:


57. Benefits of ownership that include both tangible and intangible costs best defines
A) NPV analysis.
B) total benefits of ownership.
C) benefit-to-cost analysis.
D) economic value of ownership.
Answer: B
Diff: 2 Type: MC Page Ref: 675
AACSB:
Objective:


58. The return on invested capital generated by a company minus the cost of the capital used in recreating the
cash flow best describes
A) return on investment.
B) break-even analysis.
C) economic value added.
D) NPV analysis.
Answer: C
Diff: 3 Type: MC Page Ref: 675
AACSB:
Objective:


59. Maximizing the value for unconstrained project selection is an advantage of
A) payback period.
B) net present value.
C) total cost of ownership.
D) economic value added.
Answer: B
Diff: 2 Type: MC Page Ref: 676
AACSB:
Objective:


60. The disadvantage of the NPV method for evaluating EC and IT is
A) it is difficult to compare projects of unequal lives or sizes.
B) it assumes reinvestment at the same rate.
C) it may be difficult to classify outlays as expenses or investments.
D) the true benefits are difficult to measure.
Answer: A
Diff: 3 Type: MC Page Ref: 676
AACSB:
Objective:


61. Types of appraisal and justification methods for IT investments include each of the following except
A) portfolio approaches.
B) ratio approaches.
C) real-time investment approaches.
D) financial approaches.
Answer: C
Diff: 3 Type: MC Page Ref: 677-678
AACSB:
Objective:


62. Which of the following advanced methods for EC justification and evaluation uses the idea of critical success
factors and focuses on key organizational objectives and the potential impacts of the proposed EC project on
each of them?
A) performance dashboard
B) management by maxim
C) benchmarks
D) information economics
Answer: D
Diff: 3 Type: MC Page Ref: 678
AACSB:
Objective:


63. Which of the following advanced methods for EC justification and evaluation uses a combination of
brainstorming and consensus-reaching methodologies to determine how much a company should invest in
large EC infrastructures?
A) balanced scorecard
B) management by maxim
C) benchmarks
D) scoring methodologies
Answer: B
Diff: 3 Type: MC Page Ref: 678
AACSB:
Objective:


64. Each of the following metrics indicates excellence in e-procurement except
A) increased on-time deliveries.
B) increased order fulfillment rate.
C) increased production costs.
D) decreased number of rejects received from suppliers.
Answer: C
Diff: 3 Type: MC Page Ref: 679
AACSB:
Objective:


65. Justifying information security projects
A) is not done because ROI calculators are not available.
B) is not needed because it is well-known that preventing network security problems is less labor
intensive than cleaning up virus infections.
C) should be done because employee security training is usually poorly done.
D) should focus on defending against external threats such as hackers and malware.
Answer: C
Diff: 3 Type: MC Page Ref: 681
AACSB:
Objective:


66. Antivirus investments are easily justified because more than ________ percent of viruses enter business
networks via e-mail.
A) 85
B) 33
C) 50
D) 25
Answer: A
Diff: 2 Type: MC Page Ref: 681
AACSB:
Objective:


67. The average-cost curves (AVC) of physical products and digital products
A) are both L-shaped.
B) are different because the AVC of physical products declines as quantity increases forming an L-shape,
while the AVC of digital products is U-shaped.
C) are different because the AVC of digital products declines as quantity increases forming an L-shape,
while the AVC of physical products is U-shaped.
D) are both U-shaped.
Answer: C
Diff: 3 Type: MC Page Ref: 682
AACSB:
Objective:


68. An equation indicating that for the same quantity of production, Q, companies either can use a certain
amount of labor or invest in more automation best describes
A) unit testing.
B) production function.
C) product valuation.
D) Q-model.
Answer: B
Diff: 2 Type: MC Page Ref: 682
AACSB:
Objective:


69. Transaction costs include each of the following except
A) negotiation costs.
B) production costs.
C) search costs.
D) monitoring costs.
Answer: B
Diff: 2 Type: MC Page Ref: 683
AACSB:
Objective:


70. Costs incurred in ensuring that the agent performs tasks as expected best defines
A) production costs.
B) agency costs.
C) time-on-task costs.
D) opportunity costs.
Answer: B
Diff: 2 Type: MC Page Ref: 683
AACSB:
Objective:


71. McAfee allows users of its VirusScan virus-detection software to automatically update the latest security
patches online. This is an example of ________ to attract customers who value this automatic update.
A) agility
B) product or service differentiation
C) core competency
D) competitive advantage
Answer: B
Diff: 2 Type: MC Page Ref: 685
AACSB:
Objective:


72. The fair market value of a business or the price at which a property would change hands between a willing
buyer and a willing seller who are both informed and under no compulsion to act best describes
A) feasibility.
B) agility.
C) valuation.
D) reusability.
Answer: C
Diff: 2 Type: MC Page Ref: 685
AACSB:
Objective:


73.
A Web-
based
seller of
CDs carefully monitors the prices charged by its competitors for identical products. This company has the
ability to change a given price within three minutes in response to changes by competitors. This is an
example of EC
A) core competency.
B) product or service differentiation.
C) competitive advantage.
D) agility.
Answer: D
Diff: 2 Type: MC Page Ref: 685
AACSB:
Objective:


74. Referencing the capabilities needed by Webstore users, buyers need the ability to
A) create the capability for cross-selling and up-selling.
B) analyze purchases in order to customize buyers' experiences.
C) provide Web-based postsale support.
D) track orders once they are shipped.
Answer: D
Diff: 2 Type: MC Page Ref: 687
AACSB:
Objective:


75. Referencing capabilities needed by Webstore users, sellers need the ability to do each of the following except
A) select products to purchase and negotiate or determine their total price.
B) provide an electronic shopping cart in which buyers can assemble their purchases.
C) track shipments to ensure that they are delivered.
D) arrange product delivery.
Answer: A
Diff: 3 Type: MC Page Ref: 687
AACSB:
Objective:


76. Determining whether a website meets the original business objectives and vision best defines
A) feasibility testing.
B) usability testing.
C) acceptance testing.
D) unit testing.
Answer: C
Diff: 2 Type: MC Page Ref: 691
AACSB:
Objective:


77. A structured approach to shifting/transitioning individuals, teams, and organizations from a current state to
a desired future state. It is an organizational process aimed at empowering employees to accept and embrace
changes in their current business environment. This best describes
A) usability testing.
B) change management.
C) employee empowerment.
D) acceptance testing.
Answer: B
Diff: 2 Type: MC Page Ref: 702
AACSB:
Objective:


78. Each of the following is a critical success factor (CSF) of the Old Economy except
A) compete to sell product.
B) build market share to get economies of scale.
C) deliver high-value products.
D) create new partnerships, stay with core competency.
Answer: D
Diff: 2 Type: MC Page Ref: 705
AACSB:
Objective:


79. One of the strengths of EC is the ease with which its adopters can reach a global population of consumers.
However, EC-driven businesses must consider the critical elements affecting the value of EC across cultures.
These elements include each of the following except
A) perceived trust.
B) political influences.
C) consumer loyalty.
D) delivery delays.
Answer: D
Diff: 2 Type: MC Page Ref: 707
AACSB:
Objective:


80. Each of the following apply to EC in developing economies except
A) developing economies struggle with various issues that create too many business and technology risks
to justify investment in those economies at this time.
B) developing economies, such as China and India, represent a significant opportunity for EC to connect
businesses to customers, as well as other businesses.
C) developing economies often face power blackouts and unreliable infrastructure and delivery
mechanisms creating limitations that make it difficult for firms to predict whether EC investments will
pay off, and when.
D) the potential volume of transactions in developed countries can make EC investments more attractive
for established firms than new firms because established firms have already recovered the costs of their
IT infrastructures.
Answer:
A