Principles of Information Systems 13th

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Chapter 7 Electronic and Mobile Commerce

TRUEFALSE

1. A business-to-business (B2B) market is considerably larger than a business-to-consumer (B2C)

market.

(A) True

(B) False

Answer : (A)

2. The length of sales process for a typical business-to-business (B2B) e-commerce is shorter than
that for a typical consumer-to-consumer (C2C) e-commerce.

(A) True

(B) False

Answer : (B)

3. An organization uses buy-side e-commerce to purchase goods and services from its suppliers.

(A) True

(B) False

Answer : (A)

4. In 1992, the Supreme Court ruled that online retailers must collect sales taxes even in states
where they lack a physical presence.

(A) True

(B) False

Answer : (B)

5. The Asia-Pacific region has overtaken North America as the region with the largest B2C sales and
now accounts for over one-third of total worldwide B2C sales.

(A) True

(B) False

Answer : (A)
6. The market for m-commerce in North America is maturing much earlier than in Western Europe
and Japan.

(A) True

(B) False

Answer : (B)

7. Conversion to an e-commerce or m-commerce system enables organizations to increase the

accuracy of order processing and order fulfillment.

(A) True

(B) False

Answer : (A)

8. Lack of trust in online sellers is one of the most frequently cited reasons that some consumers are
not willing to purchase online.

(A) True

(B) False

Answer : (A)

9. An electronic exchange is an electronic forum where manufacturers, suppliers, and competitors

buy and sell goods, trade market information, and run back-office operations.

(A) True

(B) False

Answer : (A)

10. In the past, market segmentation has been easy for B2B marketers because firmographic data
was easy to obtain.

(A) True

(B) False

Answer : (B)

11. Consortium-operated exchanges are open to any set of buyers and sellers within a given market.

(A) True
(B) False

Answer : (B)

12. In spite of the recent economic downturn, Website operators have shunned the idea of bartering
for goods and services.

(A) True

(B) False

Answer : (B)

13. Consumers who have enrolled in mobile banking and downloaded the mobile application to their
cell phones can check their credit card balances before making major purchases.

(A) True

(B) False

Answer : (A)

14. Bartering is a technique used by advertisers to recapture shoppers who abandoned a Website
without making a purchase.

(A) True

(B) False

Answer : (B)

15. Implicit personalization techniques capture user-provided information, such as information from
warranties, surveys, user registrations, and contest-entry forms completed online.

(A) True

(B) False

Answer : (B)

16. The three basic components of a successful e-commerce model include content, commerce, and
community.

(A) True

(B) False

Answer : (A)
17. Smart card use is restricted to data associated with financial transactions.

(A) True

(B) False

Answer : (B)

18. PayPal enables any person or business with an e-mail address to securely, easily, and quickly
send and receive payments online.

(A) True

(B) False

Answer : (A)

19. Smart cards are less protected from misuse that conventional credit, charge, and debit cards
because the smart card information is not encrypted.

(A) True

(B) False

Answer : (B)

20. A procurement card is an attachment to an e-mail message or data embedded in a Web site that
verifies the identity of a sender or a Web site.

(A) True

(B) False

Answer : (B)

21. Smart cards can be used for a variety of purposes, including storing a user's financial facts,
health insurance data, credit card numbers, and network identification codes and passwords. They
can also store monetary values for spending.

(A) True

(B) False

Answer : (A)

22. It is safe to assume that personal information will be secure with businesses, because security
breaches of information systems are not common.​

(A) True
(B) False

Answer : (B)

23. A mobile advertiser can find how many people clicked on his ad and how many people bought his
product or service.

(A) True

(B) False

Answer : (A)

24. ​If you abandon an online shopping cart, the seller does not care what you were shopping for.

(A) True

(B) False

Answer : (B)

25. In Kenya and Tanzania, it is not uncommon for citizens to carry out common financial
transactions using mobile phones.

(A) True

(B) False

Answer : (A)

MULTICHOICE

26. Which of the following forms of e-commerce is more likely to offer a more customized product
offering?

(A) Business-to-government (B2G) e-commerce

(B) Business-to-business (B2B) e-commerce

(C) Consumer-to-consumer (C2C) e-commerce

(D) ​Business-to-consumer (B2C) e-commerce

Answer : (D)

27. The elimination of organizations that operate between the producer and the consumer is called
_____.
(A) market segmentation

(B) downsizing

(C) disintermediation

(D) personalization

Answer : (C)

28. _____ is a subset of e-commerce that involves electronic transactions between consumers using a
third party to facilitate the process.

(A) Business-to-business (B2B) e-commerce

(B) Business-to-consumer (B2C) e-commerce

(C) Consumer-to-business (C2B) e-commerce

(D) Consumer-to-consumer (C2C) e-commerce

Answer : (D)

29. Based on a Supreme Court ruling, an Internet-based merchant needs to charge sales tax only
when _____.

(A) the sale price exceeds $100.00

(B) buyers live in a state where the merchant has a physical presence

(C) buyers purchase certain enumerated items

(D) items are purchased through a consumer-to-consumer (C2C) Website

Answer : (B)

30. A reason for the growth in business-to-consumer (B2C) e-commerce is that online B2C
shoppers have the ability to design a _____ product.

(A) standardized

(B) universal

(C) generic

(D) ​personalized

Answer : (D)

31. _____ divides the pool of potential customers into subgroups usually defined in terms of
demographic characteristics.

(A) Disintermediation

(B) Social networking

(C) Market segmentation

(D) Market augmentation

Answer : (C)

32. Which of the following forms of e-commerce has created an opportunity for many people to make
a living out of selling items on auction Websites?

(A) Business-to-business (B2B) e-commerce

(B) Consumer-to-consumer (C2C) e-commerce

(C) Consumer-to-business (C2B) e-commerce

(D) Business-to-consumer (B2C) e-commerce

Answer : (B)

33. Which of the following statements is true of retargeting?

(A) It is targeted at approximately 50% of Website visitors who shop using smartphone applications.

(B) It employs personalized ads to direct shoppers back to a retailer's Website they previously
abandoned.

(C) It attempts to change buying habits of Web shoppers to get them to consider products they have
never considered purchasing before.

(D) It attempts to change buying habits of Web shoppers by getting them to visit Websites they have
not visited before.

Answer : (B)

34. The number of mobile Websites worldwide is expected to grow rapidly because of ______________.

(A) the availability of more costly handsets

(B) typically uniform product offerings

(C) advances in artificial intelligence technologies

(D) the development of new and useful applications

Answer : (D)
35. Which of the following is NOT one of the three basic components of a successful e-commerce
model?

(A) content

(B) capital

(C) community

(D) commerce

Answer : (B)

36. A(n) _____ is an HTML code, not visible on a displayed Web page, that contains keywords
representing the Website's content, which search engines use to build indexes pointing to the
Website.

(A) attribute

(B) meta tag

(C) hyperlink text

(D) identifier

Answer : (B)

37. _____ is an approach used to capture user-provided information, such as information from
warranties, surveys, user registrations, and contest-entry forms completed online.

(A) Search engine optimization

(B) Implicit personalization technique

(C) Explicit personalization technique

(D) Phishing

Answer : (C)

38. The ______ is a security technique associated with the use of credit cards at the time of purchase
that checks additional digits printed on the back of the credit cards.

(A) Address Verification System

(B) Advanced Authorization

(C) Payment Card Industry security standard

(D) Card Verification Number

Answer : (D)

39. _____ is a standard that spells out measures and security procedures to safeguard a card issuer,
a cardholder, and a merchant.

(A) Secure Sockets Layer (SSL)

(B) Card Verification Number

(C) Virtual private network (VPN)

(D) Payment Card Industry (PCI)

Answer : (D)

40. A _____ is a credit card issued to selected employees to streamline the traditional purchase order
and invoice payment processes.

(A) procurement card

(B) smart card

(C) meta card

(D) charge card

Answer : (A)

41. Which of the following is NOT one of the key website performance measures commonly used by
online retailers?

(A) response time

(B) total sales

(C) transaction success rate

(D) system availability

Answer : (B)

42. Authentication technologies are used by many organizations to _____.

(A) verify the accuracy of their product descriptions and prices

(B) secure sensitive data during e-commerce

(C) confirm the uniform resource locator (URL) of their suppliers' Websites

(D) confirm the identity of a user requesting access to information or assets

Answer : (D)

43. Conversion to an e-commerce or m-commerce system enables organizations to _________.

(A) improve the level of customer service

(B) implement an enterprise resource planning (ERP) system

(C) increase the cost of doing business

(D) reinforce consumer-to-consumer (C2C) e-commerce

Answer : (A)

44. If you shop on Amazon.com​, _____.

(A) ​you pay tax on some items, not on all items

(B) ​you never have to pay sales tax

(C) ​depending on which state you are in, you may or may not pay tax

(D) ​you pay tax on all items, no matter which state you are in

Answer : (C)

45. ​Through e-government, _____.

(A) ​only government agencies can interact with one another

(B) ​only businesses can interact with the government

(C) ​only individual citizens can interact with the government

(D) ​any government unit, business or individual can interact with the government

Answer : (D)

46. Consumers prefer mobile commerce sites ________.

(A) ​that have many low price items on sale

(B) ​that are convenient and efficient to use

(C) ​that are linked to the consumers' banks

(D) ​that belong to traditional stores like Wal-mart or Best Buy

Answer : (B)
47. ​When compared to traditional commerce ________.

(A) ​e-commerce transactions are more expensive

(B) ​e-commerce transactions are more fraud prone

(C) ​e-commerce transactions are less secure

(D) ​e-commerce transactions can save money

Answer : (D)

48. Unlike B2C sites, some B2B sites​ ________.

(A) ​are governed by stricter federal govenment laws

(B) ​allow price negotiations

(C) ​offer shorter delivery times

(D) ​only accept bulk orders

Answer : (B)

49. If consumer data is stolen from a business's computers, ________.

(A) ​the consumers have no recourse

(B) ​the federal government protects the consumers' interests

(C) ​the business will automatically compensate the affected customers

(D) ​the customers can file a class-action law suit agains the business

Answer : (D)

50. ​Suppose a retailer who has no technology expertise wishes to set up an online presence for his
business. He ________.

(A) ​should get the necessary hardware and software

(B) ​learn to use Apache web server

(C) ​should learn web technology

(D) ​can use a hosting service to set up the site

Answer : (D)

51. To improve traffic to your e-commerce site,​ _______.

(A) ​fill your web pages with lots of keywords for search engines to find and index

(B) ​post popular content, such as cat videos, on your site

(C) ​acquire links to your site on other sites

(D) ​advertise your website on local papers

Answer : (C)

52. The information necessary for personalizing web pages for individual customers _________.

(A) ​has to be gleaned from users' emails

(B) ​is usually obtained by surveys

(C) is obtained from school yearbooks

(D) is primarily gathered by analyzing users' past transactions on the website

Answer : (D)

53. Because of ____ commerce sites, anyone can become a merchant online​.

(A) ​B2B

(B) ​B2C

(C) ​C2C

(D) ​G2B

Answer : (C)

54. E-commerce sites are able to keep the amount of data entry errors to a minimum ________.

(A) ​by using smart spell-checkers

(B) ​by having the buyers enter products information themselves

(C) ​by using 'smart' computers and 'smart' phones

(D) by using artificial intelligence to correctly "guess" what the users have entered

Answer : (B)

55. ​Tom's Art Supplies used to sell art supplies through mail order catalogs, but the company's
order takers often had difficulty deciphering their customers' handwriting on the order forms. Since
switching to an online e-commerce site, Tom's has been able to enjoy the advantage of ______.

(A) ​reaching new customers

(B) ​reducing costs

(C) ​increasing accuracy

(D) ​increasing quantity ordered

Answer : (C)

SHORTANSWER

56. _____ is the conducting of business activities electronically over computer networks.Answer :
Electronic commerce (e-commerce)
Answer : Electronic commerce
Answer : E-commerce

57. _____ is a subset of e-commerce where all the participants are organizations.Answer : Business-
to-business (B2B) e-commerce
Answer : Business-to-business e-commerce
Answer : B2B e-commerce

58. ______ is a form of e-commerce in which customers deal directly with an organization and avoid
intermediaries.Answer : Business-to-consumer (B2C) e-commerce
Answer : Business-to-consumer e-commerce
Answer : B2C e-commerce

59. ______ electronic commerce applications support transactions between governments such as the
federal government and state or local governments.Answer : Government-to-government (G2G)
Answer : Government-to-government
Answer : G2G

60. _____ is the use of information and communications technology to simplify the sharing of
information, speed formerly paper-based processes, and improve the relationship between citizens
and government.Answer : E-government

61. _____ occurs when someone steals a person's personal information and uses it without his or
her permission; often to commit fraud or other crimes.Answer : Identity theft

62. ​_____ exchanges are owned and operated by a single company.Answer : Private

63. When engaging in e-commerce, consumers typically experience the sales life cycle, the first
stage of which is _____ and identification.Answer : search

64. _____ exchanges are open to any set of buyers and sellers within a given market and provide
services and a common technology platform to their members.Answer : Independent

65. One of the main measures of success of a mobile ad is CTR, which stands for _____.Answer :
click through rate

66. _____ is the process of tailoring Web pages to specifically target individual consumers.Answer :
Personalization

67. _____ exchanges are run by a group of traditionally competing companies with common
procurement needs.Answer : Consortium-operated

68. The identification of specific markets to target them with tailored advertising messages is
referred to as _____.Answer : market segmentation

69. In the most successful e-commerce models, ______ involves consumers and businesses paying to
purchase physical goods, information, or services that are posted or advertised online.Answer :
commerce

70. _____ is an amount of money that is computerized, stored, and used as cash for e-commerce
transactions.Answer : Electronic cash

71. A(n) _____ is a company that acts as an intermediary between a Website and online merchants
who have the products and retail expertise.Answer : storefront broker

72. All credit card customers are protected by law from paying more than _____ for fraudulent
transactions.Answer : $50

73. A(n) _____ is an attachment to an email message or data embedded in a Website that verifies the
identity of a sender or Website.Answer : digital certificate

74. _____ is a Visa-patented process that provides an instantaneous rating of a transaction's potential
for fraud to the financial institution that issued the card.Answer : Advanced Authorization

75. The _____ is a credit card-sized device with an embedded microchip to provide electronic
memory and processing capability.Answer : smart card

76. A(n) _____ is responsible for guaranteeing that the people or organizations who are granted
unique digital certificates are in fact who they claim to be.Answer : certificate authority (CA)
Answer : certificate authority
Answer : CA

77. Mobile commerce destinations, used to place orders and conduct business through mobile
devices, are designated with a domain ending in _____.Answer : .mobi
Answer : mobi

78. A business associate would complete a request for quotation to be submitted to a

_______.Answer : vendor
Answer : seller
Answer : vendor's website
Answer : seller s website
Answer : vendor's site
Answer : seller's site

79. If you have classified your customers as 'college-grads', 'young parents', or 'singles,' you used a
technique known as market ____​.Answer : segmentation

80. For m-commerce to work effectively, the interface must be so good that it is nearly as easy to
make a purchase on a ____ device as it is on a laptop or desktop computer. A
​ nswer : mobile
Answer : wireless

ESSAY

81. Define electronic commerce and identify its various subsets.

Graders Info :

Electronic commerce (e-commerce) is the conducting of business activities (e.g., distribution,

buying, selling, marketing, and servicing of products or services) electronically over computer
networks. It includes any business transaction executed electronically between companies (business-
to-business), companies and consumers (business-to-consumer), consumers and other consumers
(consumer-to-consumer), public sector and business (government-to-business), the public sector to
citizens (government-to-citizen), and public sector to public sector (government-to-government).
Business activities that are strong candidates for conversion to e-commerce are ones that are paper
based, time consuming, and inconvenient for customers.

82. Why is mobile commerce (m-commerce) maturing much later in North America than in Western
Europe and Japan?

Graders Info :

The market for m-commerce in North America is maturing much later than in Western Europe and
Japan for several reasons. In North America, responsibility for network infrastructure is fragmented
among many providers, consumer payments are usually made by credit card, and many Americans
are unfamiliar with mobile data services. In most Western European countries, communicating via
wireless devices is common, and consumers are much more willing to use m-commerce. Japanese
consumers are generally enthusiastic about new technology and are much more likely to use mobile
technologies for making purchases.

83. Identify and briefly discuss three key challenges to e-commerce.

Graders Info :

Three key challenges include: 1) dealing with consumer privacy concerns, 2, overcoming consumers'
lack of trust, and 3) overcoming global issues. While two-thirds of U.S. Internet users have
purchased an item online and most Internet users say online shopping saves them time, about one-
third of all adult Internet users will not buy anything online because they have privacy concerns or
lack trust in online merchants. Global issues include cultural challenges, language challenges, time
and distance challenges, infrastructure challenges, currency challenges, and state, regional, and
national law challenges.

84. Briefly explain the use of a p-card.

Graders Info :

A p-card (procurement card or purchasing card) is a credit card used to streamline the traditional
purchase order and invoice payment process. The p-card is typically issued to selected employees
who must follow company rules and guidelines that may include a single purchase limit, a monthly
spending limit, or merchant category code restrictions. Due to an increased risk of unauthorized
purchases, each p-card holder's spending activity is reviewed periodically by someone independent
of the cardholder to ensure adherence to the guidelines.

85. A small business owner is sceptical about online transactions. She is worried that information
may be stolen in transmission or that the party on the other end may be a bogus one. Also, she is
worried about the security of financial transactions online. What can be done to allay those fears?

Graders Info :

She could use encryption and digital certificate technologies. The data can be encrypted before transmission. Only
the intended recipient of the transmission will be able to decrypt and use it. In addition, she could sign up to use
digital certification service to ensure the authenticity of the other party. The standards for processing financial
transactions quite strict enough to ensure safeguarding the interests of the card issuer, the carholder and the
merchant.