Deck 13: Implementing EC Systems: From Justification to Successful Performance

Question 1

One basic way to categorize different EC investments is to distinguish between investment in infrastructure and investment in specific EC applications.

Answer 1

True

Question 2

From 1995 through 2000,many EC projects and start-up companies were funded with little analysis of their business viability or finances.

Answer 2

True

Question 3

Given the diversity of activities involved in e-procurement,the metrics used to measure the value of e-procurement must reflect how well each process is accomplished and take into consideration whether the company is a buyer or seller.

Answer 3

True

Question 4

A major difficulty in justifying EC projects is that many costs and benefits are intangible and therefore very difficult to measure.

Question 5

The result of the rush to invest in EC projects and start-up companies was the 2001 to 2003 "dot-com bust," when hundreds of EC startups went out of business and the stock market crashed.

Question 6

One reason why EC justification is needed is that companies now realize that EC is not necessarily the solution to all problems.

Question 7

The ROI method uses a formula that divides the total net benefit by the initial cost.The result is a ratio that measures the ROI for each year or for an entire period.

Question 8

After the dot-com bust,most IT executives acquired the knowledge and tools to do ROI calculations on proposed EC investments.

Question 9

Key performance indicators (KPI)are used to qualitatively track critical metrics or success factors.

Question 10

According to a CIO Insight report,EC justification decreases the credibility of EC projects.

Question 11

All EC investments need to be formally justified to insure that they align with the company's competitive strategy.

Question 12

The average cost curve of regular products is U-shaped and has an optimal lowest point,but with digital products the average cost per unit declines as quantity increases.

Question 13

Creating a competitive advantage,providing a benefit to society,and improving the company's image are examples of tangible benefits that might be realized from an EC project.

Question 14

Infrastructure investments are made for the short-term because of frequent technological changes.

Question 15

Cannibalization occurs when a new EC initiative produces substantial online sales,but traditional sales fall such that no increase in total revenue occurs.

Question 16

Usability testing refers to testing application software modules one at a time.

Question 17

In preparing the business case for EC investment,managers should examine the potential additional revenues,such as increased revenues via products or services from a larger global market because of more effective product marketing on the Web.

Question 18

Cost-benefit analysis is frequently assessed by return on investment (ROI),which is also the name of a specific method for evaluating investments.

Question 19

In an NPV analysis,analysts convert future values of benefits to their present-value equivalents by discounting future cash flows at the risk-free rate set by the Federal Reserve Bank.

Question 20

Metrics are used to describe costs,benefits,or the ratio between them and need to be defined properly with a clear way to measure them.

Question 21

Reduced time-to-market is a cloud computing advantage.

Question 22

Leveraging intangible assets,capabilities,relationships,and unleashing dormant assets is a critical success factor for EC.

Question 23

Business process reengineering is the analysis and design of workflows and processes within an organization.

Question 24

Developing economies often face power blackouts,unreliable telecommunications infrastructure,undependable delivery mechanisms,and a relatively few customers who own computers and credit cards.These limitations can be overcome when predicting EC investment payoffs by using a combination of break-even analysis and NPV.

Question 25

Mass customization enables manufacturers to create specific products for each customer based on the customer's exact needs.

Question 26

The higher purchase price is a disadvantage of purchasing an EC system.

Question 27

Not all EC investments need to be formally justified.Each of the following is a case where formal evaluation may not be needed except

A) when the value of the investment is relatively small for the organization.
B) when competitors have made that type of investment.
C) when the relevant data are not available, are inaccurate, or are too volatile.
D) when the EC project is mandated and must be done regardless of the costs and benefits.

Question 28

CIOs need to effectively communicate the value of proposed EC projects in order to gain approval for each of the following reasons except

A) companies now realize that EC is not necessarily the solution to all problems.
B) some large companies, and many public organizations, mandate a formal evaluation of requests for funding.
C) the success of EC projects may be assessed in order to pay bonuses to those involved with the project.
D) demand for expanding or initiating e-business projects is no longer strong so there are fewer requests for funding.

Question 29

Interoperability refers to connecting people,data,and diverse systems.

Question 30

Performance value is the likelihood a segment of source code can be used again to add new functionalities with slight or no modification.

Question 31

Vendors dropping a product or going out of business is a disadvantage to purchasing an EC system.

Question 32

One basic way to categorize different EC investments is to distinguish between investments in infrastructure and investments in specific EC applications because benefits from infrastructure investments

A) are made for the long-term.
B) depend on the EC applications.
C) are very complex.
D) have a low return.

Question 33

New technologies require new organizational structures and procedures.

Question 34

Reengineering eliminates the intermediaries between sellers and buyers.

Question 35

A comparison of the costs of a project against the benefits best defines

A) IRR.
B) benefits metric.
C) cost-benefit analysis.
D) feasibility justification.

Question 36

Unit testing refers to testing the combination of application modules acting in concert.

Question 37

Basic reasons companies invest in IT and EC include each of the following except

A) improve business processes.
B) increase customer satisfaction and retention.
C) reduce time-to-market.
D) justify new marketing campaigns.

Question 38

Structured management is a holistic management approach focused on aligning all aspects of an organization with the wants and needs of clients.

Question 39

Turnkey computing is the provision of computational resources on demand via a computer network.

Question 40

Critical elements that can affect the value of EC across cultures are perceived trust,consumer loyalty,regulation,political influences,and even the content of online ads.

Question 41

Tangible metrics include

A) lower tax rates.
B) ease of use of EC.
C) reelection of candidates.
D) flexibility in changing a purchase.

Question 42

Metrics are used to describe each of the following except

A) standards.
B) costs.
C) benefits.
D) the ratio of costs to benefits.

Question 43

The disadvantage of the NPV method for evaluating EC and IT is

A) the true benefits are difficult to measure.
B) it is difficult to compare projects of unequal lives or sizes.
C) it assumes reinvestment at the same rate.
D) it may be difficult to classify outlays as expenses or investments.

Question 44

Benefits of ownership that include both tangible and intangible costs best defines

A) economic value of ownership.
B) NPV analysis.
C) benefit-to-cost analysis.
D) total benefits of ownership.

Question 45

According to Gartner's hype cycle,which of the following stages is the point at which the technology becomes unfashionable and the media abandons the topic,because the topic did not live up to its inflated expectations?

A) trough of disillusionment
B) slope of enlightenment
C) plateau of productivity
D) peak of inflated expectations

Question 46

In B2C,an example of a tangible EC metric from the buyer's perspective is

A) ease of use of EC.
B) convenience in purchasing.
C) profit per customer.
D) cost/price of the product.

Question 47

Metrics can

A) be the basis for specific goals and plans.
B) define the value proposition of business models.
C) assess the health of companies by using tools such as balanced scorecards and performance dashboards.
D) do all of the above.

Question 48

The return on invested capital generated by a company minus the cost of the capital used in recreating the cash flow best describes

A) economic value added.
B) return on investment.
C) break-even analysis.
D) NPV analysis.

Question 49

The relationship between EC investment and organizational performance is

A) direct.
B) indirect.
C) shared with other investments.
D) not measurable.

Question 50

EC costs and benefits can be classified into two broad categories

A) direct and routine.
B) short-term and capital.
C) tangible and intangible.
D) operational and strategic.

Question 51

Productivity benefits from using EC are difficult to measure because

A) the payoffs are too short.
B) there is no time lag in EC gains.
C) EC gains in certain areas of the company may be offset by losses in other areas.
D) qualitative benefits do not count.

Question 52

A graphic representation of the maturity,adoption,and social application of specific IT tools best defines

A) Gantt chart.
B) hype cycle.
C) network diagram.
D) logic model.

Question 53

Gartner's hype cycle includes each of the following stages except

A) plateau of productivity.
B) technology trigger.
C) simplicity of method.
D) trough of disillusionment.

Question 54

Maximizing the value for unconstrained project selection is an advantage of

A) economic value added.
B) net present value.
C) payback period.
D) total cost of ownership.

Question 55

Traditional methods for evaluating EC investments include each of the following except

A) ROI.
B) payback period.
C) discount rate.
D) NPV.

Question 56

The major steps in the process of justifying large-scale EC and IT projects include each of the following except

A) lay an appropriate foundation for analysis with your vendor, and then conduct your ROI.
B) document and verify all figures used in the calculation. Clarify all assumptions.
C) do not leave out strategic benefits, including long-term ones.
D) be careful not to overestimate cost and underestimate benefits (a tendency of many managers).

Question 57

A formula for calculating the cost of owning,operating,and controlling an IT system best defines

A) payback period.
B) return on investment.
C) total cost of ownership.
D) total benefits of ownership.

Question 58

Which of the following is the discount rate that makes the NPV of cash flows produced over time equal to zero?

A) CPR
B) IRR
C) ROI
D) TCO

Question 59

For governments,an example of an intangible EC metric is

A) reelection of candidates.
B) lower tax rates.
C) increase in participation in government programs.
D) risk reduction.

Question 60

According to Gartner's hype cycle,which of the following is the stage of overenthusiasm and unrealistic projections during which a flurry of publicized activity by technology leaders may result in some successes but more failures as the technology is pushed to its limits?

A) plateau of productivity
B) slope of enlightenment
C) trough of disillusionment
D) peak of inflated expectations

Question 61

Costs incurred in ensuring that the agent performs tasks as expected best defines

A) opportunity costs.
B) agency costs.
C) time-on-task costs.
D) production costs.

Question 62

McAfee allows users of its VirusScan virus-detection software to automatically update the latest security patches online.This is an example of ________ to attract customers who value this automatic update.

A) competitive advantage
B) core competency
C) product or service differentiation
D) agility

Question 63

A Web-based seller of CDs carefully monitors the prices charged by its competitors for identical products.This company has the ability to change a given price within three minutes in response to changes by competitors.This is an example of EC

A) competitive advantage.
B) core competency.
C) product or service differentiation.
D) agility.

Question 64

Which of the following advanced methods for EC justification and evaluation uses a combination of brainstorming and consensus-reaching methodologies to determine how much a company should invest in large EC infrastructures?

A) management by maxim
B) balanced scorecard
C) benchmarks
D) scoring methodologies

Question 65

Each of the following apply to EC in developing economies except

A) developing economies often face power blackouts and unreliable infrastructure and delivery mechanisms creating limitations that make it difficult for firms to predict whether EC investments will pay off, and when.
B) developing economies, such as China and India, represent a significant opportunity for EC to connect businesses to customers, as well as other businesses.
C) developing economies struggle with various issues that create too many business and technology risks to justify investment in those economies at this time.
D) the potential volume of transactions in developed countries can make EC investments more attractive for established firms than new firms because established firms have already recovered the costs of their IT infrastructures.

Question 66

Referencing capabilities needed by Webstore users,sellers need the ability to do each of the following except

A) arrange product delivery.
B) provide an electronic shopping cart in which buyers can assemble their purchases.
C) track shipments to ensure that they are delivered.
D) select products to purchase and negotiate or determine their total price.

Question 67

Types of appraisal and justification methods for IT investments include each of the following except

A) ratio approaches.
B) portfolio approaches.
C) real-time investment approaches.
D) financial approaches.

Question 68

Each of the following metrics indicates excellence in e-procurement except

A) increased order fulfillment rate.
B) decreased number of rejects received from suppliers.
C) increased production costs.
D) increased on-time deliveries.

Question 69

Determining whether a website meets the original business objectives and vision best defines

A) acceptance testing.
B) feasibility testing.
C) usability testing.
D) unit testing.

Question 70

The average-cost curves (AVC)of physical products and digital products

A) are different because the AVC of digital products declines as quantity increases forming an L-shape, while the AVC of physical products is U-shaped.
B) are both U-shaped.
C) are both L-shaped.
D) are different because the AVC of physical products declines as quantity increases forming an L-shape, while the AVC of digital products is U-shaped.

Question 71

One of the strengths of EC is the ease with which its adopters can reach a global population of consumers.However,EC-driven businesses must consider the critical elements affecting the value of EC across cultures.These elements include each of the following except

A) delivery delays.
B) perceived trust.
C) consumer loyalty.
D) political influences.

Question 72

Transaction costs include each of the following except

A) production costs.
B) search costs.
C) negotiation costs.
D) monitoring costs.

Question 73

Antivirus investments are easily justified because more than ________ percent of viruses enter business networks via e-mail.

A) 25
B) 33
C) 50
D) 85

Question 74

Each of the following is a critical success factor (CSF)of the Old Economy except

A) deliver high-value products.
B) compete to sell product.
C) build market share to get economies of scale.
D) create new partnerships, stay with core competency.

Question 75

Justifying information security projects

A) is not needed because it is well-known that preventing network security problems is less labor intensive than cleaning up virus infections.
B) is not done because ROI calculators are not available.
C) should focus on defending against external threats such as hackers and malware.
D) should be done because employee security training is usually poorly done.

Question 76

A structured approach to shifting/transitioning individuals,teams,and organizations from a current state to a desired future state.It is an organizational process aimed at empowering employees to accept and embrace changes in their current business environment.This best describes

A) employee empowerment.
B) change management.
C) usability testing.
D) acceptance testing.

Question 77

Referencing the capabilities needed by Webstore users,buyers need the ability to

A) provide Web-based postsale support.
B) create the capability for cross-selling and up-selling.
C) track orders once they are shipped.
D) analyze purchases in order to customize buyers' experiences.

Question 78

The fair market value of a business or the price at which a property would change hands between a willing buyer and a willing seller who are both informed and under no compulsion to act best describes

A) feasibility.
B) reusability.
C) agility.
D) valuation.

Question 79

An equation indicating that for the same quantity of production,Q,companies either can use a certain amount of labor or invest in more automation best describes

A) Q-model.
B) production function.
C) unit testing.
D) product valuation.

Question 80

Which of the following advanced methods for EC justification and evaluation uses the idea of critical success factors and focuses on key organizational objectives and the potential impacts of the proposed EC project on each of them?

A) benchmarks
B) management by maxim
C) performance dashboard
D) information economics