Turban 3e
Instructor’s Manual
Chapter 1
Overview of Electronic Commerce
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Define electronic commerce (EC) and describe its various categories.
3. Describe the major types of EC transactions.
5. Understand the elements of the digital world.
7. Describe some EC business models.
8. Describe the benefits and limitations of EC to organizations, consumers, and
society.
Content
Content
Opening Case: Zappos WOWs Their Customers
1.2 The Electronic Commerce Field: Classification, Content, and History
1.4 The Digital World: Economy, Enterprises, and Society
1.6 Electronic Commerce Business Models
1.8 Overview of This Book
Managerial Issues
Supplementary Videos for this Chapter
1. E-commerce- evolution (6:52 min)
2. The Five competitive forces that shape strategy (13 min)
4. Did You Know 4.0 (4:46 min)
Interesting statistics about social media. Points to changes in computing.
5. Social Commerce: It’s time to make the move (2:49 min)
6. ecommerce (8:02 min)
An introductory tutorial. Point to the benefits of EC.
7. Global E-Commerce in the future (5:48 min)
8. The Best Social Media Video Ever- Now Refreshed! (4:14 min)
Social Media ROI, Socialnomics. A must to see! Points to companies’ benefits and high
ROI.
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Answers to Pause/Break Section Review Questions
Section 1.1 Review Questions
1. Define EC and e-business.
Electronic commerce is the process of buying, selling, or exchanging products, services,
2. Distinguish between pure and partial EC.
3. Define click-and-mortar and pure play organizations.
4. Define electronic markets, IOSs, and intra-organizational information systems.
Electronic market – An online marketplace where buyers and sellers meet to exchange
5. Define intranets and extranets.
Section 1.2 Review Questions
1. List the major components of the EC framework.
2. List the major transactional types of EC.
The major transactional types of EC include: business-to-business, business-to-consumer,
3. Describe the major landmarks in EC history.
The major landmarks in EC history began with the use of EDI to transmit business
4. List some EC successes and failures.
Student answers will vary and may include some of the examples given on page 12.
5. Summarize the future of EC.
Student answers will vary and may include some of the examples given on page 12-13.
Section 1.3 Review Questions
1. Define social computing and list its characteristics.
Social computing is computing that is concerned with the intersection of social behavior
2. Define Web 2.0 and list its attributes.
The second-generation of Internet-based services that let people collaborate and share
3. Define social networks.
A category of Internet applications that help connect friends, business partners, or
4. Describe the capabilities of social network services (SNSs).
A service that builds online communities by providing an online space for people to
build free homepages and that provides basic communication and support tools for
conducting different activities in the social network. The following are representative
5. Describe MySpace. Why is it so popular?
6. What is an enterprise social network?
7. Define virtual worlds and list their characteristics.
8. Describe some ways for student with computer skills to make money from virtual
worlds.
9. Describe how Twitter can help businesses.
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Section 1.4 Review Questions
1. Define the digital revolution and list its components.
2. List the characteristics of the digital economy.
3. Define a digital enterprise.
A new business model that uses IT in a fundamental way to accomplish one or more of
4. Compare traditional and digital enterprises.
5. Describe the digital society.
6. Visit doggyspace.com and dogtoys.com. Compare the two sites and relate their
contents to the digital society.
Section 1.5 Review Questions
1. List five of the major drivers of EC.
2. List the components of the business environment impact model and explain the
model.
3. List the major factors in today’s business environment.
4. List some of the major response activities taken by organizations (consult Exhibit
1.8).
Section 1.6 Review Questions
1. What is a business model? Describe its functions and properties.
2. Describe a revenue model and a value proposition.
3. Describe the following business models: direct marketing, tendering system,
electronic exchanges, viral marketing, and social networking.
• Direct marketing – advertising to individuals in the hope that they will purchase a
4. Identify business models related to buying and those related to selling.
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Some business models related to buying include: electronic tendering systems, find the
Section 1.7 Review Questions
1. Describe some EC benefits to organizations, individuals, and society.
EC benefits consumers by providing them convenience, speed, reduced costs,
2. List the major technological and non-technological limitations of EC.
These limitations are summarized in Exhibit 1.11.
3. Describe some of the benefits of studying EC.
Answers to EC Application Case Questions
EC Application Case 1.1: Buy Chocolate Online? Try Godiva.com.
Questions
1. Identify the B2B and B2C transactions in this case.
2. Why did Godiva decide to sell online? List the EC drivers in this case.
3. Visit Godiva.com. How user-friendly is the site?
4. Describe B2B2C at Godiva.
EC Application Case 1.2: MySpace: The World’s Most Popular Social
Networking Web Site
Questions
1. Why does MySpace attract so many visitors?
2. List the major issues faced by the company.
3. What are the benefits to MySpace and Google from their collaboration?
4. Visit myspace.com and review some features not discussed in this case. Prepare a
report.
EC Application Case 1.3: How College Students Become Entrepreneurs
Questions
1. Go to jetpens.com and examine the catalog. What impresses you the most?
2. Evaluate the site’s ease of use.
3. Do you think that a business like this can succeed as an independent online-only store?
Why or why not?
4. What is the purpose of the site’s JetPress RSS Feed?
Answers to Individual Discussion Questions
1. Compare brick-and-mortar and click-and-mortar organizations.
2. Why is buying with a smart card from a vending machine considered EC?
3. Why is e-learning considered EC?
EC can be defined as the application of technology toward the automation of business
4. How does EC facilitate customization of products and services?
5. Explain how EC can reduce cycle time, improve employees’ empowerment, and
facilitate customer support.
EC can reduce cycle time by eliminating steps in business processes. The steps may be
6. Compare and contrast viral marketing with affiliate marketing.
In both viral and affiliate marketing of business relying on a third party to assist in its
7. Identify the contribution of Web 2.0. What does it add to EC?
8. Distinguish an enterprise social network from a public one such as Facebook.
9. Carefully examine the nontechnological limitations of EC. Which are company
dependent and which are generic?
10. Why are virtual worlds such as Second Life related to EC?
11. Register at ibm.com/enterpriseofthefuture and download IBM’s study “The
Enterprise of the Future” (IBM 2008). In one page, summarize how the enterprise of the
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Answers to Class Discussion Questions
1. How can EC be a business pressure and an organizational response?
2. Some claim that digital businesses eliminate the “human touch.” Discuss.
3. Why do companies frequently change their business models? What are the
advantages? The disadvantages?
4. Discuss the seven lessons learned from the Zappos case. How has EC technology made
this company so successful?
Student reports will vary.
Internet Exercises
(Note: URLs may change over time; please check the Internet Exercises on the
Turban Web site for possible updates: www.pearsonhighered.com/turban.)
1. Visit bigboxx.com and identify the services the company provides to its customers.
What type of EC is this? What business model(s) does Bigboxx use?
2. Visit Amazon.com’s site (amazon.com) and locate recent information in the following
areas:
a. Find the five top-selling books on EC.
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c. Review the customer services you can get from Amazon and describe the benefits you
receive from shopping there.
Amazon.com provides several services for customers. These benefits include:
• free shipping on large orders
d. Review the products directory.
3. Visit priceline.com and zappos.com and identify the various business models used by
both.
Priceline.com uses the “name your own price” or reverse auction business model. This
4. Go to nike.com and design your own shoes. Next visit office.microsoft.com and
create your own business card. Finally, enter jaguar.com and configure the car of your
dreams. What are the advantages of each activity? The disadvantages?
5. Try to save on your next purchase. Visit letsbuyit.com and buyerzone.com. Which site
do you prefer? Why?
6. Enter espn.com and identify all sources of revenue on the site.
I was able to identify:
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E-Commerce (sales)
7. Enter lala.com and listen to some of the commercial free digital songs offered (cost
10¢). What other digital products and services do they offer? Write a summary.
Student reports will vary.
8. Enter philatino.com and statusint.com. Identify the business model(s) and revenue
9. Enter lowes.com. View the “design it” online feature and the animated “How Tos”.
Examine the Project Calculators and Gift Advisor features. Relate these to the business
models and other EC Features of this chapter.
10. Go to zipcar.com. What can this site help you do?
11. Enter digitalenterprise.org. Prepare a report regarding the latest EC models and
developments.
Student answers will vary.
12. Visit some Web sites that offer employment opportunities in EC (such as
execunet.com and monster.com). Compare the EC salaries to salaries offered to
accountants. For other information on EC salaries, check Computerworld’s annual
salary survey, unixl.com, and salary.com
Student answers will vary.
13. Visit bluenile.com, diamond.com, and jewelry exchange.com. Compare the sites.
Comment on the similarities and the differences.
Student answers will vary. Student reports will likely focus on:
14. Visit ticketmaster.com, ticketonline.com, and other sites that sell event tickets
online. Assess the competition in online ticket sales. What services do the different sites
provide?
Student answers will vary. Student reports will likely focus on:
• Pricing (service fees)
15. Enter The Timberland Company (timberland.com) and design a pair of boots.
Compare it to building your own sneakers at Nike.
Team Assignments and Role Playing
1. Reread the Blue Nile case and discuss the following.
a. What are the key success factors for Blue Nile?
Success factors include low price, quality information and an excellent return policy.
b. Amazon.com makes only a 15 percent margin on the products it sells. This enables
Amazon.com to sell diamond earrings for $1,000 (traditional jewelers charge $1,700
for the same). Do you think that Amazon.com will succeed in selling this type of jewelry
as well as Blue Nile did in selling expensive engagement rings?
Student responses will vary.
c. Competition between Blue Nile and Amazon.com will continue to increase. In your
opinion, which one will win (visit their Web sites and see how they sell jewelry)?
Student responses will vary.
d. Why is “commoditization” so important to the diamond business?
e. Compare the following three sites: diamond.com, ice.com, and bluenile.com.
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f . Follow the performance of Blue Nile’s stock since 2004 (symbol: NILE, go to
money.cnn.com).
Student responses will vary.
2. Create an online group for studying EC or a particular aspect of EC that interests
you. You can do this via Google Groups, a social network of your choice, or Yahoo!
Groups. Each member of the group must have an e-mail account. Go to Yahoo! Groups
groups.yahoo.com and log in.
Responses will vary.
3. Each team will research two EC success stories. Members of the group should
examine companies that operate solely online and some that extensively utilize a click-
and-mortar strategy. Each team should identify the critical success factors for its
companies and present a report to the other teams.
4. Each team selects a business-oriented social network such as LinkedIn, Xing, or
Viadeo. Each team presents the essentials of the site, the attributes, etc. Each team will
try to convince other students why their site is superior.
5. All class members that are not registered in Second Life need to register and create
their avatars. Let each team address one of the following areas:
• ◗ Trading virtual properties
a. Prepare a description of what is going on in
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Answers to End-of-Chapter Real-World Case Questions: Bejing 2008:
A Digital Olympics
1. For each business requirement explain how the EC tools helped.
2. Identify the B2C and B2B activities described in this case.
3. Identify the major business models described in this case.
These models included B2C, B2B and C2C as well as G2C and G2B.
4. Relate the case to the concept of the digital enterprise.
Student perceptions will vary. Overall, it can be said that the Olympics capitalized on a
5. Relate the case to social networks and communities.