Page 75 - Electronic Commerce

Chapter 1

5. Many business analysts have discussed the concept of the first-mover advantage. What
50
are some of the disadvantages of being a first mover?
6. What is a commodity item and why would its shipping profile be an important consideration
for firms that want to sell it online?
7. What are transaction costs, and why are they important considerations in electronic
commerce?
8. Provide one example of an industry that operates using a network economic structure today
and explain why it functions better than it would if structured as either a market or a hierarchy.
9. Explain how high transaction costs would push an industry away from a market economic
structure and toward a hierarchical structure.
10. How might a university use SWOT analysis to identify new degree programs that it could
offer online?
11. Explain the difference between translation and localization services that might be used by
an online business that wants to expand into multiple foreign markets.
12. Briefly describe the function a customs broker might perform in the delivery of goods that
were purchased online.

Exercises
1. Many companies that sell luxury goods, such as Chanel, Lilly Pulitzer, and Vera Wang, did
not offer their products for sale on their Web sites for many years. Some of these compa-
nies still do not sell products on their Web sites (or offer only some of their products for
sale), preferring instead to sell their products through exclusive retail stores. Identify at least
one luxury goods producer that does not sell some or all of its products online and specu-
late why they might have chosen this strategy.
2. You have decided to buy a new color printer for your home office, but are unsure whether
an ink-jet or laser printer would be best for you. Use two Web sites such as
HPshopping.com, Office Depot, Best Buy, OfficeMax,or Staples to gather information.
Write a short critique of how each of the two sites provided or failed to provide information
useful to you in your search.
3. Choose one of the Web sites listed in the previous question and identify three ways the com-
pany has reduced its transaction costs by using a Web site to provide information about print-
ers. List these three transaction cost-reduction elements and write a paragraph in which you
discuss one transaction cost-reduction opportunity that you believe the company has missed.
4. Create a diagram (similar to the diagram in Figure 1-10) that describes the industry value
chain for a bicycle. Identify stages of the chain in which a company might use electronic
commerce and explain how the company might use it in those stages.
5. Read the following business messages and come up with a list of words or phrases in each
message that you believe might be troublesome for automated translation software. Then
use either the Yahoo! Babel Fish or the FreeTranslation Web site to translate the mes-
sages from English to one of the foreign languages available on that site. Translate each

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