Question 1

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

Accepted Answer

This statement correctly categorizes EC investments into two types.

Question 2

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

Accepted Answer

This statement is true. During this time period, there was a lot of enthusiasm and optimism for technology and the internet, leading to many projects and companies being funded without proper scrutiny of their financial and business viability. This contributed to the dot-com bubble and subsequent burst in the early 2000s.

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.

Accepted Answer

The statement is true as e-procurement involves multiple processes such as vendor management, purchasing, invoicing, payment, and contract management. The metrics used to measure the effectiveness of e-procurement should consider how well each of these processes is accomplished and whether the company is a buyer or seller.

Question 4

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

Accepted Answer

Intangible costs and benefits, such as improved customer satisfaction or increased employee morale, are subjective and not easily quantifiable, making it challenging to justify the investment in EC projects.

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.

Accepted Answer

This statement is true. The rush to invest in EC projects and start-up companies led to a bubble in the stock market, which ultimately burst and resulted in the failure of many companies and a crash in the stock market. This period is commonly referred to as the "dot-com bust."

Question 6

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

Accepted Answer

Companies have realized that EC may not be the ultimate solution to all their problems and therefore they need to have a justification for implementing EC initiatives.

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.

Accepted Answer

The statement is true. The ROI method calculates the ratio of net benefits to the initial cost, resulting in a measure of the return on investment for the given period.

Question 8

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

Accepted Answer

The answer of After the dot-com bust,most IT executives acquired...

Question 9

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

Accepted Answer

Key Performance Indicators (KPIs) are used to quantitatively track critical metrics or success factors, often related to achieving business objectives.

Question 10

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

Accepted Answer

EC justification, when done properly, can actually increase the credibility of EC (Electronic Commerce) projects by providing a clear rationale, expected benefits, and a framework for measuring success, thereby enhancing stakeholder confidence.

Question 11

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

Accepted Answer

The answer of All EC investments need to be formally...

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.

Accepted Answer

The statement is true. The U-shaped curve of the average cost is due to economies of scale in the production process for regular products, where the cost per unit initially decreases with increased output until it reaches an optimal minimum point, after which it starts increasing again. However, digital products have low production costs, and the cost per unit decreases as quantity increases due to the absence of physical production costs. Therefore, the average cost curve for digital products is downward sloping rather than U-shaped.

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.

Accepted Answer

These examples are considered intangible benefits because they cannot be easily quantified or measured in monetary terms, unlike tangible benefits which are directly measurable and quantifiable.

Question 14

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

Accepted Answer

Infrastructure investments typically have a long-term focus because they involve the construction or installation of physical assets that are meant to provide benefits for years to come. While technological changes may require updates or modifications to these assets, they are not the sole focus of infrastructure investments.

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.

Accepted Answer

Cannibalization occurs when a new EC initiative, such as launching an online store, generates significant online sales but at the same time causes a decline in traditional sales. As a result, the total revenue may remain unchanged or even decrease, leading to cannibalization of the business.

Question 16

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

Accepted Answer

Usability testing refers to testing the usability and user-friendliness of an application software as a whole, not just one module at a time. It involves evaluating how easily and effectively users can interact with the software, identify shortcomings and areas of improvement.

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.

Accepted Answer

Managers should indeed consider the potential additional revenues when preparing the business case for EC investment, including the possibility of reaching a larger global market and improving 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.

Accepted Answer

Cost-benefit analysis is often evaluated through the return on investment (ROI) method.

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.

Accepted Answer

Analysts discount future cash flows at a rate that reflects the risk of the investment, not 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.

Accepted Answer

Metrics are used to measure or quantify the performance of a process or system. The metrics should be defined clearly and objectively, with a specific way of measuring them, in order to accurately measure costs, benefits, or the ratio between them.

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