Introduction to Electronic Commerce, 3e (Turban)
Chapter 12 Launching a Successful Online Business and EC Projects
12.1 True/False
1) The first step in creating a new company or adding an online project is to identify a consumer
or business need in the marketplace.
2) Many good ideas and realistic initiatives have failed because of poor execution due to the lack
of sufficient business skills by the owners or other principals of the business.
3) The primary reason an entrepreneur writes a business plan is to acquire funding from a bank,
an angel investor, a venture capitalist, or the financial markets.
4) An existing brick-and-mortar business looking to move online needs a business case.
5) Some entrepreneurs may simply invest personal funds from savings, personal lines of credit,
or a house mortgage since these sources of “bootstrap funding” are typically enough.
6) An important source of financial support or direct funding for preventure capital firms is an
angel investor.
7) Venture capitalists tend to invest in companies that have identified what seems to be an
outstanding business opportunity, have taken some action to make the opportunity happen, such
as written a new software application or secured a patent, and need an infusion of funds and
management expertise to expand and launch the business.
8) Losing control over the business is a serious downside for start-up businesses that acquire
venture capital.
9) Once the company is well known and successful, it can go to a stock exchange to raise money
via an initial public offer (IPO).
10) Unlike the brick-and-mortar marketplace, the failure rate for online companies is low.
11) Organizational transformation is a comprehensive concept that implies not only a major
change, but also a sharp break from the past.
12) Business process management systems monitor the execution of the business processes so
that managers can analyze and change processes in response to data, rather than on just a hunch.
13) Transforming an existing business to an e-business means a manager must change business
processes, but not the way people work or communicate.
14) An informational Web site provides opportunities for the customers and the business to
communicate and share information.
15) Web hosting services are the prime choice of small and sometimes medium-size businesses.
16) Lower cost and construction speed are two advantages of self-hosting a Web site.
17) An ISP hosting service provides an independent, stand-alone Web site for small and
medium-sized businesses.
18) Selecting a domain name is an important marketing and branding consideration for a
business because it will be the business’s online address and create an identity for the business.
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19) E-newsletters are not an effective strategy for delivering content of interest to potential
customers.
20) Syndicated content is Web content that matches the needs and expectations of the individual
visitor.
21) Content creation and management for a large EC site can be slow and expensive.
22) Hybrid is the most common Web site structure.
23) Web site usability means that people who use the Web site can do so quickly and easily to
accomplish their tasks and may also consider such factors as cost-effectiveness and usefulness.
24) A well-developed Web site not only adds to the value of products and services being offered,
but it also enhances the worth of the company.
25) Most EC applications are built with hardware, software, hosting services, and development
expertise provided by outside vendors.
1) When creating a new business, the first step is to
A) write a business case or plan.
B) acquire financing needed to make the business successful.
C) investigate all existing opportunities.
D) identify a consumer or business need that is not presently being met.
2) The primary reason for writing a business plan is to
A) help the founders remember what they are trying to accomplish.
B) provide an operational framework for the business.
C) acquire external funding.
D) provide strategic direction to employees.
3) A wealthy individual who contributes personal funds and possibly expertise at the earliest
stage of business development is called a(n)
A) angel investor.
B) entrepreneur.
C) incubator.
D) venture capitalist.
4) A company, university, or nonprofit organization that supports promising businesses in their
initial stages of development is called a(n)
A) angel investor.
B) entrepreneur.
C) incubator.
D) venture capitalist.
5) ________ is money invested in a business by an individual, a group of individuals, or a
funding company in exchange for equity in the business.
A) Venture capital
B) Operating capital
C) Start-up funding
D) Advancement
6) The greatest difficulty in dealing with venture capital is
A) the loss of control over the business.
B) finding a willing venture capitalist.
C) matching a venture capitalist with the business.
D) relocating the business to an incubator.
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7) Which of the following is true regarding a second round of financing?
A) IPO investors will pay the highest price per share.
B) The venture capitalist will pay the highest price per share.
C) The entrepreneur will pay the highest price per share.
D) The angel investor will pay the highest price per share.
8) Chaplin’s Pet Store has been in business for many years. Chaplin, the present owner, decides
to open an online sales channel where he can advertise and sell the same gourmet pet food. This
is an example of adding
A) a Webstore.
B) a reverse auction.
C) e-procurement.
D) a portal.
9) Reprise Electronics, a conglomerate that manufactures and sells all kinds of electronic goods
under several brand names, currently has separate Web sites for each of its brands. The company
decides to bring all of the Web sites together through a single site that, in addition to providing
links to the brand pages, will also provide general information about how to select electronic
merchandise and informational pages about the Reprise company today and its management
team. This is an example of adding
A) a Webstore.
B) a reverse auction.
C) e-procurement.
D) a portal.
10) In organizational transformation
A) there are incremental changes to the ways things have always been done.
B) the change may affect only one or a few of the functional areas of the business.
C) there is always a sharp break with the past and every aspect of the business will probably
change.
D) there is a change in outlook, but rarely a change in procedures or investment in infrastructure.
11) Which of the following does little more than provide information about the business and its
products?
A) informational Web site
B) interactive Web site
C) transactional Web site
D) dynamic Web site
12) The Web hosting option under which the business acquires the hardware, software, staff, and
dedicated telecommunications services necessary to set up and manage its own Web site is called
A) self-hosting.
B) mirror hosting.
C) storebuilder.
D) ISP hosting.
13) ________ is the name-based address that identifies an Internet-connected server.
A) Host name
B) IP address
C) Domain name
D) URL name
14) A major entertainment company has four studios that have been in the same location for
more than ten years. The company includes a page on its Web site with addresses, phone
numbers, and general e-mail addresses for each of these studios. None of this information has
changed since the Web site was developed. This is an example of ________ content.
A) dynamic
B) static
C) organizational
D) functional
15) Secondary content that offers a coupon, rebate, or special service is called
A) up-selling.
B) comment.
C) cross-selling.
D) promotion.
16) Reviews, testimonials, expert advice, or further explanation about the product are called
A) up-selling.
B) comment.
C) cross-selling.
D) promotion.
17) Offering similar or complementary products and services to increase sales describes
A) up-selling.
B) cross-selling.
C) aggressive selling.
D) personalization.
18) The process of adding, revising, and removing content from a Web site to keep content fresh,
accurate, compelling, and credible describes
A) content management.
B) Web site development.
C) personalized content.
D) syndication.
19) Factors determining usability include
A) ease of learning.
B) efficiency of use.
C) memorability.
D) all of the above.
20) Each of the following dictates what functionality a Webstore should have and how a Web
site should be developed except the
A) budget.
B) product line.
C) business type.
D) competition.
21) Major steps needed to develop a typical e-commerce application include each of the
following except
A) operation, maintenance, and updating.
B) vendor selection, contract negotiation, and monitoring.
C) testing, installation, and integration.
D) project identification, justification, and planning.
22) A plan for organizing the underlying infrastructure and applications of a site best describes
A) EC architecture.
B) IT infrastructure.
C) business plan.
D) IT architecture.
23) Insourcing
A) is a method of transferring the management and/or day-to-day execution of an entire business
function to a third-party service provider.
B) is a class of systems that integrates large systems.
C) connects people, data, and diverse systems.
D) is the in-house development of applications.
24) Basic options for developing an EC Web site include each of the following except
A) clone a competitor’s Web site.
B) develop the site in-house.
C) buy a packaged application.
D) lease the application.
25) Advantages for using the off-the-shelf approach as an EC development strategy include each
of the following except:
A) It saves time and money.
B) Off-the-shelf applications integrate easily with existing systems.
C) The price is usually much lower than the in-house option.
D) The company knows what it is getting before it invests in the product.
26) Disadvantages for using the off-the-shelf approach as an EC development strategy include:
A) Limited off-the-shelf software packages are available.
B) The company must hire programmers specifically dedicated to an EC project.
C) Software may not exactly meet the company’s needs.
D) The vendor rarely updates the software.
27) Outsourcing options for creating and operating EC applications include
A) software houses, such as IBM.
B) outsourcers, such as EDS.
C) telecommunications companies, such as MCI.
D) all of the above.
28) Before choosing the appropriate Web site development option, you need to consider all of
the following issues in order to generate a list of requirements and capabilities except:
A) Who are the target customers?
B) What kinds of products or services will the business sell online?
C) Can customers place orders online?
D) What might be the reaction of competitors?
29) The process of selecting a software vendor and EC package includes each of the following
except
A) establish a service-level agreement.
B) determine the evaluation criteria.
C) evaluate vendors and packages.
D) close vendor contract.
30) A service level agreement is a
A) formal agreement regarding the division of work between a company and a vendor.
B) written document that identifies a company’s goals and outlines how the company intends to
achieve the goals and at what costs.
C) document that justifies the investment of internal, organizational resources in a specific
application or project.
D) plan for organizing the underlying infrastructure and applications of a Web site.
1) A ________ is a written document that identifies a company’s goals and outlines how the
company intends to achieve the goals and at what cost.
2) A ________ is a document that justifies the investment of internal, organizational resources in
a specific application or project.
3) A(n) ________ is a wealthy individual who contributes personal funds and possibly expertise
at the earliest stage of business development.
4) A(n) ________ is a company, university, or nonprofit organization that supports promising
businesses in their initial stages of development.
5) ________ is money invested in a business by an individual, a group of individuals, or a
funding company in exchange for equity in the business.
6) The term ________ refers to activities performed by business to improve their processes.
7) A(n) ________ Web site does little more than provide information about the business and its
products and services.
8) A(n) ________ Web site provides opportunities for the customers and the business to
communicate and share information.
9) ________ are Web site features that attract and interact with visitors in the target stakeholder
group.
10) A ________ Web site sells products and services.
11) A ________ Web site allows business partners to collaborate.
12) A ________ provides disk space and services to help small and microbusinesses build a Web
site quickly and cheaply.
13) A ________ is a dedicated Web site hosting company that offers a wide range of hosting
services and functionality to businesses of all sizes.
14) When a business acquires the hardware, software, staff, and dedicated telecommunications
services necessary to set up and manage its own Web site, it is called ________.
15) A ________ is a name-based address that identifies an Internet-connected server and usually
refers to the portion of the address to the left of .com and .org, etc.
16) ________ involves the sale of the same good to many customers, who then integrate it with
other offerings and resell it or give it away for free.
17) Creating content for ________ means offering an upgraded version of the product in order to
boost sales and profit.
18) A Web site’s ________ determines how a site organizes, labels, and navigates its Web pages
to support browsing and searching.
19) The likelihood a segment of source code can be used again to add new functionalities with
slight or no modification describes ________.
20) ________ refers to connecting people, data, and diverse systems; the term can be defined in a
technical way or in a broad way, taking into account social, political, and organizational factors.
21) A class of software that integrates large systems describes ________.
22) Ready to use without further assembly or testing; supplied in a state that is ready to turn on
and operate defines ________.
23) ________ is a method of transferring the management and/or day-to-day execution of an
entire business function to a third-party service provider.
24) A notice sent to potential vendors inviting them to submit a proposal describing their
software package and how it would meet the company’s needs describes ________.
25) A formal agreement regarding the division of work between a company and a vendor defines
________.
1) List and briefly describe the three steps that most new businesses brick-and-mortar, pure play,
or click-and-mortar go through.
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2) List and briefly discuss funding options for a start-up online business.
3) Identify six ways an EC initiative is added to an existing business.
4) Describe four Web site classifications.
5) Define EC architecture. What does it specify?