Chapter 8: Leveraging Internet and E-Business Capabilities
The Internet offers few advantages for focusers because niche players and small companies cannot implement Internet capabilities as effectively as their larger competitors.
False
The Internet suppresses the bargaining power of buyers by providing them with more information to make buying decisions.
False
In most industries, new entrants will be a bigger threat because the Internet lowers entry barriers.
True
Incumbent firms that thought a niche market was too small to enter in the past may use Internet technologies to enter that segment and compete with focusers.
True
Many differentiation advantages are diminished by the Internet.
True
Most analysts agree that use of the Internet will lower transactions costs.
True
New entrants who use the Internet to launch their businesses can use overall low cost and/or differentiation strategies to compete.
True
One way the Internet is creating opportunities for firms with differentiation strategies is by enabling mass customization.
True
The Internet heightens the threat of substitutes because it creates new ways to accomplish the same tasks.
True
The Internet makes it possible for firms that want to expand internationally to "leapfrog" the usual path(s) of international development because the technology makes allows firms to directly reach customers from around the globe.
True
The Internet provides an electronic "staging area" for several forms of digital communications.
True
The bargaining power of distribution channel buyers may decrease because of the Internet.
True
The greatest danger to the success of many Internet start-ups is that the service or capability they offer can easily be imitated.
True
The process known as disinter mediation occurs when "middlemen" are removed from a supply chain or distribution channel.
True
The Internet has created a new climate for business in which the traditional principles of strategic management are less important.
False
The Internet has provided a small subset of companies with greater tools for managing costs.
False
All of the following are examples of Internet business models except A) Referral-based model B) Subscription-based model C) Prescription-based model D) Production-based model
C
E-marketplaces create new opportunities for buyers and sellers but also increase transaction costs.
False
Evaluation activities add value by helping firms finalize transactions including negotiating contracts, making payments, and taking delivery.
False
Generally speaking, the process of disintermediation increases transaction costs.
False
Infomediary services are good for Internet businesses because it gives consumers the chance to compare prices and services.
False
Personalization and customization features always add value to the websites of differentiators that use them.
False
Reintermediation is responsible for an overall reduction in business opportunities.
False
All of the following are ways that Internet technologies are being used to enhance an overall cost leadership strategy except: A) Quick online responses to service requests and rapid feedback to customer surveys and product promotions are enhancing marketing efforts. B) Direct access to progress reports and the ability for customers to periodically check work-in-progress is minimizing rework. C) Online bidding and order processing are eliminating the need for sales calls and minimizing sales force expenses. D) Online purchase orders are making many transactions paperless, reducing the costs of procurement and paper.
A
According to the text, the types of industries that are likely to be most radically transformed by the Internet are: A) research-intensive industries such as pharmaceuticals B) manufacturing-intensive such as microprocessors C) information-intensive such as financial services D) all of the above
C
In 2000 and 2001, the Internet sector of the U.S. economy plummeted for all of the following reasons except: A) the growth in new Internet users ceased. B) investors realized that many dot-coms were overcapitalized. C) venture capital for Internet firms dried up. D) several dot-com start-ups failed.
A
In general, the threat of substitutes is heightened because the Internet: A) introduces new ways to accomplish the same tasks. B) lowers switching costs. C) lowers barriers to entry. D) increases output per unit of cost.
A
Internet business models A) outline methods that online businesses use to create value. B) cannot be used by traditional businesses. C) outline specific actions a firm needs to take to be profitable. D)cannot be combined to create additional competitive advantages.
A
Juno.com became the third largest Internet service provider by offering free email service, but eventually had to stop this practice because of what potential pitfall: A) it offered the free service to build market share but then could not sustain the low-cost strategy. B) it copied a close competitor and was in danger of being sued. C) it let others aspects of its business slip because it was overly focused on selling advertising to support the free e-mail service. D) by offering the service for free it forfeited its bargaining power over suppliers.
A
One of the greatest threats to supplier power that has emerged because of the Internet is A) the Internet inhibits the ability of suppliers to offer highly differentiated products or services. B) Internet technologies cannot easily be imitated. C) procurement technologies eliminate the need for suppliers. D) the cost of accessing business customers has increased.
A
Technologies that use information in the form of electronic signals or "bits" are called A) digital technologies. B) analog technologies. C) high fidelity technologies. D) broadband.
A
The sum total of all expenses associated with conducting business are known as A) transaction costs. B) historical costs. C) opportunity costs. D) operating expenses.
A
All of the following are ways that Internet technologies are being used to enhance a differentiation strategy except: A) Internet-based knowledge management systems that link all parts of the organization are shortening response times and accelerating organization learning. B) Virtual organizing and online "officing" are being used to minimize firm infrastructure requirements and lower costs. C) Online access to real-time sales and service information is being used to empower the sales force and continually update R&D and technology development efforts. D) Automated procurement and payment systems provide both suppliers and customers with access to detailed status reports and purchasing histories.
B
Because the Internet lowers barriers to entry in most industries, it A) decreases the threat of new entrants. B) increases the threat of new entrants. C) makes it easier to build customer loyalty. D) increases supplier power.
B
Complete the following sentence: "It is the actual use of the Internet for profitable transactions, ______________________________________________" A) that has altered the structure of the American economy.. B) not the technology itself, that matters to a company's bottom line. C) not the sustainability of competitive advantages, that is creating new business opportunities. D) that is making strategizing in the Internet economy less important.
B
Examples of value-adding content often found on websites include all of the following except A) customer feedback. B) online shopping. C) expertise. D) entertainment programming.
B
Incumbent firms may enjoy increased bargaining power because the Internet A) focuses marketing efforts on end users. B) diminishes the power of many distribution channel intermediaries. C) increases channel conflict. D) has reduced the number of wholesalers and distributors.
B
Internet-based venues that draw business buyers and sellers together in one virtual space where participants can reach new customers and reduce transaction costs are known as A) browsers. B) E-marketplaces. C) cyberstores. D) portals.
B
One of the reasons the Internet is eroding sustainable competitive advantages is A) incumbent firms are entering market segments that they previously considered to be too small. B) nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage. C) differentiators have been able to preserve the unique advantages that have always been the hallmark of their success. D) firms are ignoring opportunities to offer high-end services in niche markets.
B
Pets.com spent an enormous sum promoting its brand but eventually closed during the dot-com downturn. Which of the following was not one of the reason Pets.com failed: A) it was based on a faulty business model with overly thin margins. B) it overextended its focus on a market niche and tried to appeal to an overly broad audience. C) despite its efforts, the Pets.com marketing campaign was ill-conceived and did not create name recognition. D) its strategy was based on a value proposition that customers did not value.
B
Supplier power has increased because of the Internet for all of the following reasons except A) the growth of new Web-based businesses has created more outlets for suppliers to sell to. B) some suppliers have created Web-based purchasing systems that encourage switching. C) the process of disintermediation makes it possible for some suppliers to reach end users directly. D) software that links buyers to a supplier=s website has created rapid, low-cost ordering capabilities.
B
The company in the opening case, Agillion, Inc., provided expert Internet services on an outsourced basis for less money than it cost firms to develop those capabilities internally. This type of business is known as a(n) A) Internet service provider. B) Application service provider. C) Contract laborer. D) Human resources consultant.
B
The value-adding activity known as problem-solving A) involves streamlining operations. B) is typically used in the context of providing unique services. C) refers to comparing the costs and benefits of various options. D)creates access to products' ratings and price comparisons.
B
Which of the following is not one of the ways the Internet is lowering transaction costs A) eliminating supply chain intermediaries. B) evaluating employee performance. C) minimizing office expenses. D) reducing business travel.
B
All of the following are ways that Internet technologies are being used to enhance a focus strategy except: A) Permission marketing techniques are focusing sales efforts on specific customers who opt to receive advertising notices. B) Niche portals that target specific groups are providing advertisers with access to viewers with specialized interests. C) Human resources departments are using online testing and evaluation techniques in the hiring process and online training after they hire. D) Procurement technologies that use Internet software to match buyers and sellers are highlighting specialized buyers and drawing attention to smaller suppliers.
C
How do infomediaries and consumer information websites increase the intensity of competitive rivalry: A) by shifting customers attention away from issues of price. B) by making competitors in cyberspace seem less equally balanced. C) by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over. D) by highlighting a firm=s unique selling advantages.
C
Internet search activities include A) generating action plans. B) considering alternatives. C) gathering information. D) making payments and taking delivery.
C
Removing the organizations or business process layers responsible for intermediary steps in the value chain is known as A) channel conflict. B) disaggregation. C) disintermediation. D) reintermediation.
C
Which of the following is not one of the reasons why the bargaining power of buyers is increasing because of the Internet: A) the Internet makes it easier for consumers to obtain the information needed to compare prices and make buying decisions. B) Internet technologies are making the cost of switching products or services lower. C) the Internet isolates customers which makes differential pricing possible. D) Internet purchasing practices are shifting emphasis to price competition which is making consumers less loyal.
C
All of the following factors are likely to be impediments to growth in Internet use except A) speed and extent of Internet connectivity. B) strong vested interests. C) institutional and regulatory barriers. D) advances in wireless technology.
D
Combination strategies may work best for Internet competitors because, in the Internet age, A) there are fewer rather than more opportunities for achieving sustainable advantages by using traditional competitive strategies. B) cost management and control systems will increase in importance as management tools that all companies can use. C) many of the unique advantages that were the hallmark of success for differentiators can easily be imitated. D) all of the above
D
Conferenza is an example of an Internet company that offers busy people an alternative way to participate in conferences. This is an example of Internet-based A) rivalry.. B) competitive aggressiveness. C) channel conflict. D)substitution.
D
Dell Computer has an online ordering system that allows consumers to configure their own computers before Dell builds them. This capability is an example of A) electronic data interchange. B) knowledge management. C) collaborative design. D) mass customization.
D
EncrypTix is an electronic delivery company that uses bar-code printing technology to let customers print-out their own tickets to concerts and sporting events. This new Internet company is an example of: A) channel conflict. B) disaggregation. C) disintermediation. D) reintermediation.
D
End users are A) the final consumers in a distribution channel. B) usually the AC@ in B2C. C) likely to have greater bargaining power because of the Internet. D) all of the above
D
Four Internet-based activities that are enhancing firms' capabilities to use the Internet to add value include: A) outsourcing, problem-solving, bill-paying, and delivery. B) evaluating, bill-paying, customizing, and returning. C) search, rescue, repair, return. D) search, evaluation, problem-solving, and transaction.
D
In the opening case, Agillion, Inc., the start-up failed because A) it was unable to provide a clear and unique value proposition. B) it offered a product that could easily be imitated. C) it never recorded a single dollar of revenue. D) all of the above.
D
Internet "cookies" can be used to violate consumer privacy because they A) reveal an individual Web user=s browsing habits. B) include a record of purchases that can be sold to marketers. C) are recorded on your hard drive and can be retrieved without your knowledge or consent. D) all of the above
D
Internet start-up Buy.com tried to build brand with an overall low cost leadership strategy. Why is this a risky strategy? A) To build brand recognition, companies must sell high-priced products or services. B) The Internet may help focusers build competitive advantage, but not low cost leaders. C) Only combination strategies that combine features of more than one competitive strategy will work for Internet companies. D)Investing heavily to build brand recognition is considered ineffective for low cost leaders because customers who seek low prices are typically not brand loyal.
D
Scale economies may be less important for new entrants that launch Web-based businesses because A) it is relatively more expensive for an incumbent firm to create an impressive Web appearance than a new entrant. B) larger, older companies will have the same Internet expenses as new entrants. C) new entrants do not derive any benefit from making volume purchases. D) the Web makes it possible for new entrants to enter a market with relatively lower capital costs.
D
The only technology ever adopted by consumers more rapidly than the Internet was A) the telephone. B) television. C) the automobile. D) none of the above
D
The reason Levi Strauss & Co. closed its online store for selling Levi jeans was A) to avoid conflict with its supply chain. B) to participate in disintermediation. C) to lower the cost of accessing distribution channels. D)to eliminate channel conflict with retail outlets.
D
Unique content will not add value to an Internet website under the following conditions: A) the cost of developing the content exceeds the benefits gained. B) visitors to the website do not value or use the content. C) the content is unreliable. D)all of the above.
D
Which of the following is not one of the reasons the Internet increases the intensity of competitive rivalry: A) the Internet makes it more difficult for firms to differentiate themselves. B) the Internet has Acommoditized@ products that previously were regarded as rare or unique. C) the Internet has eliminated the importance of location by making geographically distant products available online. D) the Internet has made it more difficult to imitate the advantages achieved by competitors.
D
Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies? A) celebrity endorsements B) prestige packaging C) exceptional service D)mass customization
D
Which of the following phrases best completes the sentence: Because of the Internet, firms that use a focus strategy have new opportunities to ________________________________ A) respond quickly to customer requests. B) provide more services and features. C) access markets less expensively. D) access niche markets in a highly specialized fashion.
D
1. Because of the dot-com crash in 2000 and 2001, it is unlikely that the Internet will have a positive impact on the economy in the long term.
False
A commission-based business model, when applied to the Internet, is similar to the broadcast television model in which viewers watch shows produced with revenues from commission fees.
False
An end user's switching costs are potentially much higher because of the Internet.
False
Because of the Internet, it is very difficult for suppliers to create purchasing techniques that lower switching costs.
False
Content such as entertainment programming does little to improve the value proposition of a website.
False
Focusers that use Internet technologies to expand their target markets run the risk of losing the advantages associated with offering a limited product or service offering.
True
Because a large amount of consumer information is available via the Internet, end users typically have greater bargaining power.
True
Business models can be defined as methods companies use to create value and earn profits in a competitive environment.
True
Channel conflict occurs when buyers can access the same products through several different outlets.
True