Fundamentals of E Commerce-1


SKU: AMSEQ-099 Category:

Assignment – A

Q1. Discuss the unique features of e-commerce.

Q2. Discuss about the various types of e-commerce, with advantage of each.

Q3. Discuss “How does the Internet change consumer and supplier relationship”.

Q4. What are the principal payment systems for electronic commerce.

Q5. Discuss the role of m-commerce in business and what are the most important m-commerce applications?

Assignment – B

Q1. What are the security issues of E-commerce?

Q2. What is E-shopping? What are the advantages and disadvantages of e-shopping?

Q3. Read this Case study, then answer the questions below.

Dynamic pricing at SmithKline Beecham
When the healthcare company SmithKline Beecham bought supplies of a basic solvent recently, the price was 15 per cent lower than the day’s spot price in the commodity market. On other purchases, also of highly specified solvents and chemicals, SmithKline Beecham is regularly beating its own historic pricing by between 7 and 25 per cent.

The reason is that SmithKline Beecham is using the Internet to hold downward or ‘reverse’ auctions in which suppliers bid against each other for pre-specified contracts. FreeMarkets, the company that manages the SmithKline Beecham auctions, quotes examples of savings achieved by other clients in these virtual marketplaces: 42 per cent on orders for printed circuit boards, 41 per cent on labels, 24 per cent on commercial machinings and so on.

As well as production items, the process also works well for many services, such as car hire contracts.
This pricing free-for-all sounds a little shocking at first. After all, successful companies are supposed to buy on quality, nurture critical supplier relationships, and think strategically. And, of course, they still do.

Guy Allen, director of purchasing at SmithKline Beecham emphasizes that the auction itself is a new part of a still rigorous buying process. ‘It’s just one tool in our toolbox,’ he says. ‘The process only works if you put good purchasing management up front.’ This includes issuing a particularly detailed request for proposals (RFP) to which hopeful suppliers respond as usual, but without quoting a price.

Based on the RFPs, selected suppliers are invited to take part in the auction.

Training in using the software is available. Once the bidding starts, the participants see every bid, but not the names of the bidders. In the final stages of the auction, each last bid extends the bidding time by one more minute. One auction scheduled for two hours ran for four hours and 20 minutes and attracted more than 700 bids.

A buyer need not necessarily accept the lowest bid, but may still prefer to use a tried and tested supplier at a slightly higher price. But the reverse auction offers buyers a number of benefits: it shortens the time spent negotiating separately with each supplier, the inclusion of non-incumbent suppliers can help to bring pricing down and, according to Mr Allen, ‘It makes the process a little more transparent, since everyone can see the lowest price on offer. In general, non-incumbent suppliers like the process, though some incumbent suppliers are a little less happy.’

SmithKline Beecham is using private online auctions for global procurement of highly specified items at a spend that is attractive to the market. In contrast, Andrew Biggs, managing director of, is providing public reverse auction facilities for what he describes as ‘low touch’ products – construction bricks and sand and gravel, for example – as well as haulage services and builders’ skips. Buyers can post their tenders on his specialist sites and sellers can bid for the work using a pseudonym.

Mirroring the need for liquidity in successful financial markets, auctions need a competitive environment and public auction sites seek to attract more buyers and sellers through features such as Category Watch from OpenSite, the company that supplies software for Bidbusiness. This feature will notify registered users by e-mail when an item of interest to them is posted.
Now companies that provide auction facilities are looking to factor other variables into their software as well, to let buyers and sellers take account of differences in transport costs, lead times, duration of warranty periods and so on.

The strength of the auction is that it allows prices to fluctuate according to demand and factors in the value of opportunity. But, arguably, its weakness is the fixed nature of the event. The auction format demands the simultaneous attention of everyone interested in that particular contract or item.
Airlines try to match availability to demand and reward early bookers by creating fare classes where some seats on a particular flight cost more than others. The problem is that fare classes are determined in advance and fare differentials can be rigid, creating a blunt tool, according to Sharookh Cambata, president of Greaves Travel USA, an airline ticket wholesaler.

Greaves has teamed up with Equant to develop a dynamic pricing engine to automatically adjust the price of airline tickets according to demand. First, the airline needs to be able to track all bookings into one point, so the pricing engine can view the current request against other demands. The pricing engine must then work rapidly. Customers booking through a web site, for example, are not going to wait minutes for lengthy number crunching; they want an instant price.

Greaves will soon start trials of the new system, called ‘Web-fares’, but Mr Cambata believes it also has potential for other pre-booked travel services, such as hotel accommodation. Using the system, a web site user would quickly get the price for the flight or service they wanted, but could also be directed to a cheaper alternative at a different time.

Online auctions are no longer just for surplus goods or unwanted gifts, and the advent of ‘d-commerce’ is more than marketing hype. The concept of dynamic pricing is gathering interest very quickly. For example, Transco, the UK provider of gas piping infrastructure, has recently introduced web-based auctions to sell capacity in its pipelines, since demand for gas fluctuates according to weather and other conditions.

Dynamic pricing is a convincing example of the way in which the internet will fundamentally change the way we do business.

Explain how SmithKline Beecham is achieving lower prices than traditionally through e-commerce.

2. To what extent do you think this approach would work for companies smaller than SmithKline Beecham?

3. What are the implications for a dynamic pricing engine referred to a supplier and its customers.

Assignment C

1 By Electronic Commerce we mean:
a. Commerce of electronic goods
b. Commerce which depends on electronics
c. Commerce which is based on the use of internet
d. Commerce which is based on transactions using computers connected by telecommunication network

2 For carrying out B2B e-Commerce the following infrastructure is essential:
(i) World Wide Web
(ii) Corporate network
(iii) Electronic Data Interchange standards
(iv) Secure Payment Services
(v)Secure electronic communication link connecting businesses
a. i, ii, iii
b. ii, iii, iv
c. ii, iii, iv, v
d. i, ii, iii, iv, v

3 For carrying out B2C e-Commerce the following infrastructure is essential (i) World Wide Web

(ii) Corporate network
(iii) Electronic Data Interchange standards
(iv) Secure Payment Services
(v) Secure electronic communication link connecting businesses
a. i, iv
b. i, iii, iv
c. ii, iii
d. i, ii, iii, iv

4 For carrying out C2C e-Commerce the following infrastructure is essential

(i) World Wide Web
(ii) Corporate network
(iii) Electronic Data Interchange standards
(iv) Secure Payment Services
(v)Secure electronic communication link connecting businesses
a. i and ii
b. ii and iv
c. i and iii
d. i and iv

5 Advantages of B2C commerce are

(i) Business gets a wide reach to customers

(ii) Payment for services easy
(iii)Shop can be open 24 hours a day seven days a week
(iv)Privacy of transaction always maintained
a. i and ii
b. ii and iii
c. i and iii
d. iii and iv

6 B2C commerce
a. includes services such as legal advice
b. means only shopping for physical goods
c. means only customers should approach customers to sell
d. means only customers should approach business to buy

7 Advantages of B2C commerce to customers are

(i)wide variety of goods can be accessed and comparative prices can be found
(ii) shopping can be done at any time
(iii)privacy of transactions can be guaranteed
(iv)security of transactions can be guaranteed
a. i and ii
b. ii and iii
c. iii and iv
d. i and iv

8 Disadvantages of e-Commerce in Africa are

(i) internet access is not universally available
(ii) Credit card payment security is not yet guaranteed
(iii) Transactions are de-personalized and human contact is missing
(iv) Cyberlaws are not in place
a. i and ii
b. ii and iii
c. i, ii, iii
d. i, ii, iii, iv

9 Electronic Data Interchange is necessary in
a. B2C e-Commerce
b. C2C e-Commerce
c. B2B e-Commerce
d. Commerce using internet

10 EDI requires
a. representation of common business documents in computer readable forms
b. data entry operators by receivers
c. special value added networks
d. special hardware at co-operating Business premises

11 EDI standards are
a. not universally available
b. essential for B2B commerce
c. not required for B2B commerce
d. still being evolved

12 In B2B e-Commerce
(i) Co-operating Business should give an EDI standard to be used
(ii) Programs must be developed to translate EDI forms to a form accepted by application program
(iii) Method of transmitting/receiving data should be mutually agreed
(iv) It is essential to use internet
a. i, ii 1
b. i, ii, iii
c. i, ii, iii, iv
d. ii, iii, iv

13 EDI use
a. requires an extranet
b. requires value added network
c. can be done on internet
d. requires a corporate intranet

14 EDI over internet uses
a. MIME to attach EDI forms to e-mail messages
b. FTP to send business forms
c. HTTP to send business forms
d. SGML to send business forms

15 By security in e-Commerce we mean
(i) Protecting an organization’s data resource from unauthorized access
(ii) Preventing disasters from happening
(iii) Authenticating messages received by an organization
(iv) Protecting messages sent on the internet from being read and understood by unauthorized persons/organizations
a. i, ii
b. ii, iii
c. iii, iv
d. i, iii, iv

16 A firewall is a
a. wall built to prevent fires from damaging a corporate intranet
b. security device deployed at the boundary of a company to prevent unauthorized physical access
c. security device deployed at the boundary of a corporate intranet to protect it from unauthorized access
d. device to prevent all accesses from the internet to the corporate intranet

17 A firewall may be implemented in
a. routers which connect intranet to internet
b. bridges used in an intranet
c. expensive modem
d. user’s application programs

18 Firewall as part of a router program
a. filters only packets coming from internet
b. filters only packets going to internet
c. filters packets travelling from and to the intranet from the internet
d. ensures rapid traffic of packets for speedy e-Commerce

19 By encryption of a text we mean
a. compressing it
b. expanding it
c. scrambling it to preserve its security
d. hashing it

20 Encryption is required to

(i) protect business information from eavesdropping when it is transmitted on internet

(ii) efficiently use the bandwidth available in PSTN

(iii) to protect information stored in companies’ databases from retrieval

(iv) to preserve secrecy of information stored in databases if an unauthorized person retrieves it

a. i and ii

b. ii and iii

c. iii and iv

d. i and iv


21 Encryption can be done

a. only on textual data

b. only on ASCII coded data

c. on any bit string

d. only on mnemonic data


22        A digital signature is

a.         a bit string giving identity of a correspondent

b.         a unique identification of a sender

c.         an authentication of an electronic record by tying it uniquely to a key only a sender knows

d.         an encrypted signature of a sender


23        A digital signature is required

(i) to tie an electronic message to the sender’s identity

(ii)for non repudiation of communication by a sender

(iii) to prove that a message was sent by the sender in a court of law

(iv) in all e-mail transactions

a.         i and ii

b.         i, ii, iii

c.         i, ii, iii, iv

d.         ii, iii, iv


24        In electronic cheque payments developed, it is assumed that most of the transactions will be

a.         customers to customers

b.         customers to business

c.         business to business

d.         banks to banks


25        In Electronic cash payment

a.         a debit card payment system is used

b.         a customer buys several electronic coins which are digitally signed by coin issuing bank

c.         a credit card payment system is used

d.         RSA cryptography is used in the transactions


26        In Electronic cash payment

(i) a customer withdraws “coins” in various denominations signed by the bank

(ii) the bank has a database of issued coins

(iii) the bank has a database of spent coins

(iv) the bank cannot trace a customer

a.         i, ii

b.         i, ii, iii

c.         i, ii, iii, iv

d.         ii, iii, iv


27.       E-business is:

1.         the use of electronic communications to support the full range of business processes.

2.         an organisation using electronic media to sell direct to its customers.

3.         an organisation using electronic media to purchase from to its suppliers.

4.         any electronically mediated communication between an organisation and its stakeholders.

5.         none of the above.


28. Sell-side e-commerce is:

1. any electronically mediated communication between an organisation and its stakeholders.

2. the use of electronic communications for all business processes.

3. an organisation using electronic media to purchase from to its suppliers.

4. an organisation using electronic media to sell to its customers directly or indirectly.

5. none of the above.


29.       Which of the following is a limitation of E-Commerce?

a.         Ability to operate 24 hours a day.

b.         Integration of distributor and supplier IT systems.

c.         Special network and hardware requirements.

d.         Increased market area


30.       What type of commerce occurs when a business sells its products over the        Internet to other businesses?

a.         B2B

b.         B2C

c.         C2B

d.         Enterprise commerce


31.       ________is a software that helps a web server process web pages containing   server-side scripts or tags.

a.         web server

b.         server operating system

c.         network operating system

d.         none of the above


32.       In order to prevent the theft of credit card numbers and banking information,      the             _________________communications protocol is used.

a.         TCP/IP

b.         HTML

c.         XML

d.         SSL


33.       What are plastic cards the size of a credit card that contains an embedded chip on which digital information can be stored?

a.         Customer relationship management systems cards

b.         E-government identity cards

c.         FEDI cards

d.         Smart cards


34        Which of the following is used in B2B to pay for purchases?

a.         e-commerce

b.         financial electronic data interchange

c.         electronic data exchange

d.         electronic checks


35.       An agent of the biller that accepts remittance information on behalf of the Biller is

a.         Biller payment provider (BPP)

b.         Biller service provider (BSP)

c.         Consolidator

d.         Customer service provider (CSP)


36.       A chemical manufacturer has transactions that are predominantly:

a.         business to business

b.         consumer to consumer

c.         consumer to business

d.         business to consumer


37.       E-business infrastructure refers to:

a.         e-business networking

b.         e-business client/server environment

c.         e-business applications

d.         e-business content hosting

e.         all of the above.


38.       The website for a company is hosted on a:

a.         web infrastructure.

b.         Web client

c.         Web page

d.         Web server


39.       Which of the applications has most increased business usage of the Internet?

a.         World Wide Web (WWW).

b.         Extensible Markup Language (XML).

c.         Electronic Data Interchange (EDI).

d.         Usenet Newsgroups

e.         None of the above


40        The typical sequence for a web transaction is:

a.         script runs on server, user presses submit on form, transmitted across Internet, result returned.

b.         transmitted across Internet, user presses submit on form, script runs on server, result returned.

c.         transmitted across Internet, script runs on server, result returned, user presses submit on form.

d.         result returned, user presses submit on form, transmitted across Internet, script runs on server.

e.         none of the above



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