Chapter One Review Questions

1. What is E-Commerce? How does it differ from e-business? Where does it intersect with e-business? P.
56. E-commerce involves digitally enabled commercial transactions among organizations and
individuals. Digitally enabled transactions include: internet, WEB and involves the exchange of value
(e.g. money) across organizations. E-business refers to digital enabled transactions and process within
a firm involving information systems under control of the firm. For the most part it does not involve
commercial transactions across organizational boundaries.
2. What is information asymmetry? Exists when one participant in a market has more resources than the
other participants (p. 72). Any disparity in relevant market information among parties in a transaction
(p.13).
3. What are some of the unique features of e-commerce technology? P.14 Ubiquity- Internet/Web is
available everywhere: at work; home; and elsewhere via mobile devices anytime. Global Reach- The
technology reaches across national boundaries, around the earth. Universal Standards There is one set
of technology standards namely internet standards. Richness Video, audio, and text messages are
possible. Interactivity The technology works through interacting with the user. Information Density The
technology reduces the information costs and raises quality. Personalization/Customization The
technology allows personalized messages to be delivered to individuals as well as groups. Social
technology User content generation and social networks.
4. What is marketspace? Marketplace extended beyond traditional boundaries and removed from a
temporal and geographic location. P.13
5. What are three benefits of universal standards? Lower entry costs, reduction in search costs, and price
discovery is simpler, faster and more accurate. P.15
6. Compare online and traditional transactions in terms of richness? The traditional market was very strong
in richness, face to face, people can see and touch what they are buying, sales people can read visual
cues and respond accordingly etc. The online environment sacrifices richness for reach. Online or the
internet does have the potential for improved richness, it can be interactive, the message can be adjusted
based on the interaction. Using the WEB has enhanced this method and surpasses television, radio and
print ads. It does not however surpass face to face at least at this point.
7. Name three of the business consequences that can result from growth in information density .
More price transparency, costs transparency and price discrimination. P. 17
8. What is WEB 2.0? Give examples of WEB 2.0 sites and explain why they are included in this list.
WEB 2.0 is a set of apps and technology that allows users to create, edit and distribute content. P 18.
Examples: Twitter social network that encourages user interaction; YouTube an online consumer
video posting site to name a few.
9. Give examples of B2B, B2C, C2C and P2P web sites besides those listed in the chapter. B2B examples:

10. How are the internet and the Web similar to or different from other technologies that have changed
commerce in the past? Comparing to other commerce changers both had initial explosive growth
followed by consolidation. The internet and web are closely tied to e-commerce. The earlier technologies
did not have the functionality that is provided with the newer technologies. P. 24-25

11. Describe the three different stages in the evolution of e-commerce.
Explosive growth and innovation, a period of reassessment and consolidation, redefinition and
reinvention. Pgs. 31-37
12. What are the major limitations on the growth of e-commerce? Which is toughest to overcome?
In the area of b2c limitations include: Expensive technology, sophisticated skill set, persistent cultural
attraction of physical shopping experiences, persistent global inequality limiting access to telephones and
personal computers, saturation and ceiling effects.
13. What are three of the factors that will contribute to greater internet penetration in US
households?Wireless technology: mobile devices, laptops, Ipads, smart phones

14. Define disintermediation and explain the benefits to internet users of such a phenomenon. How does
disintermediation impact friction free commerce? Displacement of market middlemen who traditionally are
intermediaries between producers and consumers by a new direct relationship between manufacturers
and content originators with their customers

15. What are some of the major advantages and disadvantages of being a first mover?
First movers have the opportunity to gather market share quickly establishing a large customer base,
build brand name recognition, using technology they could create near monopolies making it difficult for a
customer to switch. Disadvantages: first movers appear to have only succeeded for a small number of
sites. Historically first movers have been long term losers as early to market innovators are displaced by
established fast follower firms with all of the right mix of finance, marketing, legal and production assets.
16. Discuss the ways in which the early years of e-commerce can be considered both a success and a
failure. Assuming early years as 1995, e-commerce experienced explosive growth due to the internet
and web. B2C were a mixed success. Only 10% of the dot.coms survived and only a tiny percentage of
those that survived are profitable as of 2010.

17. What are five of the major differences between the early years of e-commerce and todays e-commerce?
View table 1.5 p. 38

18. What factors will help defines the future of e-commerce over the next five years?
E-commerce prices will rise to cover real costs, e-commerce margins and profits will rise to levels more
typical of all retailers, traditional and well-endowed Fortune 500 companies will play a growing and more
dominant role, entrepreneurs will continue to play a role in pioneering new social applications, The
number of pure online companies will decline and regulation of e-commerce will grow in US and the
world. P40
19. Why is a multidisciplinary approach necessary if one hopes to understand e-commerce?
There are two major academic disciplines that contribute to e-commerce: technical & behavioral. P58
&59. Understanding both allows an individual to have perspective on the technology possibilities aligned
with how people wish to interact with the technology.