Week 1 Assignment
RQ1. Describe three factors that would cause a company to continue doing business in traditional way s and avoid electronic commerce.
This answer can be found on pages 15 and 16 and Table 1.5. If we start with the first reason, traditional commerce is well suited for the sales of impulse items that are for immediate use. For instance, I’ve been taking my son to his baseball games for the past few years and every time we have to stop for sunflower seeds. Not only are they an impulse purchase, but they are inexpensive and a “low value. This is reason number two. Items that are low-value transactions, under $10.00 are well suited for traditional ...view middle of the document...
Choose one major difference between the first wave and the second wave of electronic commerce. Write a paragraph that describes this difference to a person who is not familiar with either business or Internet technologies.
Let’s look at B2B changes from the first wave to the second wave. Not that long ago, when you were using the internet to buy supplies for your business, your information on what quantities to order were often inputted by you or another staff person that had to count items, match that with what you determined to be the quantity needed. Once ordered, you had to “trust” that the company had what you needed and hope the delivery date was more fact than fiction. Depending on the supplier, when it arrived, it was like a Christmas gift from grandma: it’s what you wanted or it was an ugly sweater. Today, you will most likely have a relationship with your supplier. Technology is such that, with RFI (bar codes and other similar technology) and other new technologies, that your inventory kept electronically and when the predetermined amount of inventory is, it’s ordered automatically. If your supplier is out, you know when you order and alternatives can be found. That same technology will let you know that what was ordered is what was shipped, and where it is in the shipping the process. No longer is it a guessing game with a side show of anticipation.
RQ4. What are transaction costs and why are they important?
Transaction costs are the total of all costs that a buyer and seller incur in the process of buying and selling. These costs include information search, acquisition, brokerage fees, commissions, and even the cost of equipment and labor to supply product/service. As with any situation, cost is important because it determines the profitability of the product. The materials to manufacture the product might be cheap, but the transaction costs high, and the product less profitable. And when you hear that your job is to control costs, the majority of the costs you are “controlling” are the transaction costs.
RQ5. Provide one example of how electronic commerce could help change an industry’s economic structure from a hierarchy to a network.
I’m going to have to pick on the book industry for this one. If you think of the past, you had your big publishers, your big retailers, and everything in between. The publisher seldom worked with one retailer, and the author worked for one publisher, and so on. If you wanted a book, you got it from your store or you ordered it from the publisher, or waited until you saw it at a garage sale for cheap. But the point is that each point of sale was from a traditional source. With networking ability and such things as the nook and other e-readers, or even such places as half.com, the powerhouses of book publishing have to adapt or go out of business. For instance, the majority of my textbooks are e-textbooks. I’m traveling for work all the time and it’s much easier to carry a device that...