Business Applications

Question 1

E-Business and E-Commerce Defined:

Answer 1

E-business : E-business is the generic name given to any business process that relies on electronic dissemination of information or on automated transaction processing.

E-commerce : E-commerce is a narrower term used to refer to transactions between the organization and its trading partners.

Types:

• Business-to-Business (B2B) e-commerce – Involves electronic processing of transactions between businesses and includes electronic data interchange (EDI), supply chain management (SCM) and electronic funds transfer (EFT).
• Business-to-Consumer (B2C) e-commerce – Involves selling goods and services directly to consumers, almost always using the Internet and web-based technology. B2C e-commerce relies heavily on intermediaries or brokers to facilitate the sales transaction.
• Business-to-Employee (B2E) – Involves the use of web-based technology to share information with, and interact, with an organization’s employees, e.g., through portals and intranets.
• Business-to-Government (B2G) – Involves the growing use of web-based technologies to provide, and support, governmental units, e.g., providing property tax data online, paying parking tickets online, online contract bidding.

Question 2

Risks of E-Commerce:

Answer 2

Risks of E-Commerce:

1. System Availability – Online systems must be stable and availability. This was an early challenge to eBay. In its early days, it asked users to stay off of the system during peak hours!
2. Security and confidentiality – Data breaches, for example, the 2013 Target credit and debit card breach can irreparably harm trust in systems and companies.
3. Authentication – Is an online person or company who they say they are? Increasingly, e-commerce sites (e.g., e-lance) include verification of identity as a prerequisite to site use.
4. Nonrepudiation – This is, essentially, the existence of an audit trail that renders actions verifiable. Hence, one cannot deny, after a transaction, one’s role in it.
5. Integrity – Is the system secure from hackers and crackers? Creating a system that is immune to hacks is a formidable undertaking. Even the FBI website has been hacked.

Question 3

Problems associated with e-commerce in general include all of the following except

A. Problems in establishing identity and authenticity.
B. Maintaining privacy of customer information.
C. Establishing contractual agreements between trading partners.
D. Effecting a secure exchange of payment for the goods/services.

Answer 3

C. Establishing contractual agreements between trading partners.

Most e-commerce transactions are not based on prior contractual agreements between trading partners.

Question 4

This is an example of B2G

A. Amazon.
B. Municipal audit procurement.
C. Online chemical sales.
D. RAID.

Answer 4

B. Municipal audit procurement.

Question 5

Which of the following is not a risk of e-commerce?

A. Integrity.
B. Authentication.
C. Limited growth.
D. Security and confidentiality.

Answer 5

C. Limited growth.

Limited growth is a risk of failing to implement e-commerce, not a risk of e-commerce.

Question 6

Which of the following is not a risk of e-commerce?

A. System availability.
B. Viral marketing.
C. Nonrepudiation.
D. Failure of trust in trading partners.

Answer 6

B. Viral marketing.

Viral marketing is the use of e-commerce or e-business to increase brand awareness or sales.

Question 7

Which of the following is the primary advantage of using a value-added network (VAN)?

A. It provides confidentiality for data transmitted over the Internet.

B. It provides increased security for data transmissions.

C. It is more cost effective for the company than transmitting data over the Internet.

D. It enables the company to obtain trend information on data transmissions.

Answer 7

B. It provides increased security for data transmissions.

This is the best answer because increased security is a common motivation for the use of a value-added network.

Question 8

Which of the following types of networks is often utilized to process electronic data interchange (EDI) transactions?

A. Wide area network (WAN).
B. Secure electronic transactions (SET) network.
C. Value-added network (VAN).
D. Intranet.

Answer 8

C. Value-added network (VAN).

VANs often provide the additional security and addressing capabilities necessary to process EDI transactions.

Question 9

Common E-Commerce Applications:

Answer 9

Common E-Commerce Applications Include

1. Customer Relationship Management (CRM) – Technologies used to manage relationships with clients; biographic and transaction information about existing and potential customers is collected and stored in a database; the CRM provides tools to analyze the information and develop personalized marketing plans for individual customers.
2. Electronic Data Interchange (EDI) – EDI is computer-to-computer exchange of business data (e.g., purchase orders, confirmations, invoices, etc.) in structured formats allowing direct processing of the data by the receiving system; EDI reduces handling costs and speeds transaction processing compared to traditional paper-based processing.
3. Supply Chain Management - it includes transactions between trading partners who are involved in the manufacturing process.

Question 10

Which of the following is not a benefit of using an electronic data interchange (EDI) system?

A. Reduction in the number of suppliers a company must deal with.
B. Reduction in the ordering costs.
C. Faster transaction processing.
D. Reduction in the lead time between placing the order and receiving the goods.

Answer 10

A. Reduction in the number of suppliers a company must deal with.

EDI does not necessarily reduce the number of suppliers a company works with.

Question 11

QuikStop, Inc., a local convenience store chain, is planning to install point-of-sale (POS) systems (EFT) in all eight of its locations by the end of the year. In the first year or so of operation, QuikStop can reasonably expect to experience all of the following EXCEPT

A. Increases in order processing efficiency.
B. Increases in order processing accuracy.
C. Decreases in total inventory carrying costs.
D. Decreases in total inventory order costs.

Answer 11

D. Decreases in total inventory order costs.

The reduction in inventory levels results in more frequent ordering for smaller quantities. This, in turn, leads to higher total inventory order costs.

Question 12

Which of the following statements is correct concerning the security of messages in an electronic data interchange (EDI) system?

A. Removable drives that can be locked up at night provide adequate security when the confidentiality of data is the primary risk.
B. Message authentication in EDI systems performs the same function as segregation of duties in other information systems.
C. Encryption performed by a physically secure hardware device is more secure than encryption performed by software.
D. Security at the transaction phase in EDI systems is not necessary because problems at that level will be identified by the service provider.

Answer 12

C. Encryption performed by a physically secure hardware device is more secure than encryption performed by software.

This answer is correct. Encryption can be used to ensure the privacy and security of EDI messages both during transmission and when stored. Hardware-based encryption is inherently more secure than software-based encryption, as software can be more easily accessed and altered than hardware.

Question 13

Which of the following best defines electronic data interchange (EDI) transactions?

A. Electronic business information is exchanged between two or more businesses.

B. Customers’ funds-related transactions are electronically transmitted and processed.

C. Entered sales data are electronically transmitted via a centralized network to a central processor.

D. Products sold on central web servers can be accessed by users anytime.

Answer 13

A. Electronic business information is exchanged between two or more businesses.

Question 14

Which of the following is NOT an example of an e-commerce system?

A. Customer relationship management (CRM).
B. Electronic data interchange (EDI).
C. Supply chain management (SCM).
D. Electronic funds transfer (EFT).

Answer 14

A. Customer relationship management (CRM).

Customer relationship management (CRM) systems are e-business systems, but are not e-commerce systems, because they are used primarily for internal operations.

Question 15

Which of the following is not considered to be an electronic funds transfer (EFT) transaction?

A. Direct deposit of payroll payments into the employee’s bank account.
B. Cash cards.
C. Automated teller machine (ATM) transactions.
D. Credit card payment initiated from a POS terminal.

Answer 15

B. Cash cards.

Cash cards do not involve bank clearing processes and are not considered to be EFT transactions.

Question 16

A manufacturing company that wants to be able to place material orders more efficiently most likely would utilize which of the following?

A. Electronic check presentment.
B. Electronic data interchange.
C. Automated clearinghouse.
D. Electronic funds transfer.

Answer 16

B. Electronic data interchange. (EDI)

Electronic data interchange (EDI) allows companies to place orders with their suppliers electronically. This reduces the costs associated with producing, distributing, and managing the paperwork associated with a traditional ordering system and dramatically reduces the amount of time required to receive and process the order.