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Answer 1;

( a) Which type of e-business applications do we develop?

Which technologies do we use for orders?

How do we achieve quality of service?

Where do we host applications?

Which platform do we support? (Web based, Mobile access,..)

How do we publish and manage content and data quality (How are content & data updated so
that they are up-to-date, accurate, etc)

How do we manage employee access to the Internet (Staff can potentially waste time using the
Internet or can act illegally)

How do we secure data? (Content and Data can be deleted in error or maliciously)

Environmental scanning and analysis are necessary in order that a company can respond to
environmental changes and act on legal and ethical constraints on its activities.

The constantly changing e-business environment should be monitored by all organizations in

order to be able to respond to changes in social, legal, economic, political and technological
factors together with changes in the immediate market-place that occur through changes in
customer requirements and competitors and intermediaries offerings.

Cost of access

Value proposition

Ease of use


Fear of the unknown. [ any 5 from above ..5 Marks]


Environmental scanning and analysis are necessary in order that a company can
respond to environmental changes and act on legal and ethical constraints on its

The manager has to constantly scan the environment and assess which changes are
relevant to their sphere of influence.

Organizations that either do not monitor these environmental factors, or those that do
not respond to them adequately will not remain competitive and may fail.

[ 1 Mark for each 3 Marks ]

( c) Organizations are widely influenced by macro-environmental factors

These factors are known as SLEPT factors :

Social factors : the influence of consumer perceptions in determining usage of
the internet for different activities

Legal and ethical factors : determine the method by which products can be
promoted and sold online, with regard to an individuals rights to privacy

Economic factors : variations in the economic performance in different countries

affecting spending patterns and international trade.

Political factors : governments role in determining adoption and control of the

internet and the rules by which it is governed.

Technological factors: changes in technology offer new ways in which products

can be marketed. [ 1Marks each.. 6 Marks ]


Missed opportunities for additional sales on the sell-side and more efficient purchasing
on the buy-side

Fall-behind competitors in delivering online services may become difficult to catch-up,

for example, Dell Computers

Poor customer experience from poorly integrated channels.[ 1Marks each..3 Marks ]


While there is much natural concern amongst consumers about their online privacy,
information about these customers are very useful to marketers.

Through understanding their customers needs, characteristics and behaviors, it is

possible to create more personalized, target communications such as e-mails and web-
based personalization about related products and offers, which help increase sales

As a result, effective e-commerce requires a delicate balance to be struck between the

benefits of a individual customer will gain to their online experience through providing
personal information and the amount and type of information that they are prepared for
companies to hold about them.[ 2 Marks each ] ..6 Marks.

( f) Benefits of e_marketing:


Internet marketing enables you to be open for business around the clock without worrying about
store opening hours or overtime payments for staff. Offering your products on the Internet is
also convenient for customers.

By marketing on the Internet, you can overcome barriers of distance. You can sell goods in any
part of the country without setting up local outlets, widening your target market. You can also
build an export business without opening a network of distributors in different countries.


Marketing products on the Internet costs less than marketing them through a physical retail
outlet. You do not have the recurring costs of property rental and maintenance. You do not have
to purchase stock for display in a store. You can order stock in line with demand, keeping your
inventory costs low.


Internet marketing enables you to personalize offers to customers by building a profile of their
purchasing history and preferences. By tracking the web pages and product information that
prospects visit, you can make targeted offers that reflect their interests.


The Internet provides an important platform for building relationships with customers and
increasing customer retention levels. When a customer has purchased a product from your
online store, you can begin the relationship by sending a follow-up email to confirm the
transaction and thank the customer. Emailing customers regularly with special, personalized
offers helps to maintain the relationship. You can also invite customers to submit product
reviews on your website, helping to build a sense of community.


Internet marketing enables you to take advantage of the growing importance of social media.
You can take advantage of this type of influence by incorporating social networking tools in your
Internet marketing campaigns.[ 1Marks each..6Marks ]

( g)


Authenticity of business


Information privacy

Data Integrity

Data must not be altered

Audit Trail

Data should be trailed[ 1Marks each..4 Marks ]


Increased efficiency of individual processes.

Reduced complexity of the supply chain.

Improved data integration between elements of the supply chain. .

Reduced cost through outsourcing.

Innovation.[ Any 4 ..1*4 Mark]..4 Marks

Push supply chain

A supply chain that emphasizes distribution of a product to passive customers.

Example a manufacturer develops an innovative product and then identifies a

suitable target market, whereby afterwards a distribution channel is then created to
push the product into the market.[2 Marks]

Pull supply chain

Focused on customer needs and starts with the analysis of their requirements
through market research and close cooperation with customers and suppliers in new
product development.
Constructed to deliver value to the customer by reducing costs and increasing
service quality.
There has been a change from a push-oriented supply chain that emphasizes
distribution of a product to passive customers to a pull-oriented supply chain that
utilizes the supply chain to deliver value to customers who are actively involved in
product and service specification. [2 Marks]

Answer 2:


Reduced purchasing cycle time and cost

Enhanced budgetary control (achieved through rules to limit spending and improved
reporting facilities)

Elimination of administrative errors (correcting errors is traditionally a major part of a

buyers workload)
Increasing buyers productivity (enabling themto concentrate on strategic purchasing

Lowering prices through product standardization and consolidation of buys

Improving information management (better access to prices from alternative suppliers

and summaries of spending)

Improving the payment process (this does not often occur currently since payment is not
always integrated into e-procurement systems).[any 5 ..1*5 Mark]..[ 5 Marks ]

(b) Brick-and-Mortar Organisations

Selling in physical stores

Selling tangible goods

Internal inventory/production planning

Paper catalogue/s

Physical marketplace

Use of Value Adding Networks and traditional Electronic Data Interchange (EDI)

Value adding services

Physical auctions

Broker-based transactions

Paper-based bidding

Paper-based tendering

Push production, starting with demand forecast

Mass production (standard products)

Word-of-mouth, slow and limited advertisement

Linear supply chains

Working days and time.

Digital Organisations

Selling online 24/7

Selling digital products

Online collaborative inventory forecasting

Smart electronic catalogue

Marketspace (electronic)

Use of the Internet and extranets

Online auctions, everywhere, any time

Electronic infomediaries,

More value-added services

Electronic billing

Electronic tendering (reverse auctions)

Pull production, starting with an order

Mass customisation, build-to-order

Affiliated, virtual marketing

Viral marketing

Hub-based supply chains

[any 10 from each comparisons .25*20] 5 Marks]

( c) Advantages of E-Business
Worldwide Presence: This is the biggest advantage of conducting business online.

Cost Effective Marketing and Promotions: Using the web to market products guarantees
worldwide reach at a nominal price.

Developing a Competitive Strategy: Firms need to have a competitive strategy in order to

ensure a competitive advantage. Without an effective strategy, they will find it impossible to
maintain the advantage and earn profits.

Better Customer Service: E-Business has resulted in improved customer service. Many a times,
on visiting a website, the customer is greeted by a pop-up chat window.

Create cost-savings and operational efficiencies

by replacing time-consuming back-office processes such as handwritten forms

and fax communication, with efficient automated systems such as email
Create additional revenue

by using your website to sell products or services

Reach more customers and markets

by using the Internet to broaden your customer base at a relatively low cost

Make it easier for people to do business with you

by developing a website that makes it easier for your customers, members,

visitors, suppliers, distributors or associates to do business with you and you
with them

Improve marketing and promotion

by using a well-designed and maintained website as a promotional tool

Strengthen business relationships

Real-time data increase the profit (value) for every partner involved


Increase responsiveness to customers and partners

[ any 5 5 Marks]


Weak Infrastructure , security, older people cannot use computers, Plastic money is not
available to every one.[ 2 Marks]


Business to Business B2B)

E-commerce that can occur between two organization

Business to Consumer B2C)

Exchange between business and consumers

Consumer to consumer (C2C)

A consumer performs financial transactions directly with other consumers, usually mediated
through a business website.[1*3Mark]..[ 3 Marks]

Answer 3:

( a ) A brief explanation of the following:

Storefront Model
Auction Model

Portal Model

Dynamic Pricing Models :Name-Your-Price Model, Comparison Pricing Model.

[Brief explanation for each5 Marks]

(b) (b) An Intranet is a private network within a single company using Internet standards to
enable employees to share information using email and web publishing (information limited
inside the organisation). [ 1 Mark]

Extranet is formed by extending an intranet beyond a company to customers, suppliers,

distributors and collaborators.[ 1 Mark]

( c)

Extranets can improve organization productivity by automating processes that were

previously done manually Automation can also reduce the margin of error of these

Extranets allow organization or project information to be viewed at times convenient for

business partners, customers, employees, suppliers and other stake-holders. This cuts
down on meeting times and is an advantage when doing business with partners in
different time zones.

Information on an extranet can be updated, edited and changed instantly. All authorised
users therefore have immediate access to the most up-to-date information.

Extranets can improve relationships with key customers, providing them with accurate
and updated information.[[1*4].4 Marks]

(d) E-commerce is generally considered as a subset of a company's E-business strategy.

E-commerce is a subset of business, where products and services are advertised, bought and
sold electronically or over the Internet.

In e-business, on the other hand, ICT is used to enhance ones business. It includes any
process that a business organisation (either a for-profit, governmental or non-profit entity)
conducts over a computer-mediated.[ 2*2 Marks]..[4 Marks]
( e) The Seller should have the following components:

A corporate Web site with e-commerce capabilities (e.g., a secure transaction

A corporate intranet so that orders are processed in an efficient manner; and
IT-literate employees to manage the information flows and maintain the e-commerce System.

Transaction partners include:

Banking institutions that offer transaction clearing services (e.g., processing credit
card payments and electronic fund transfers);
National and international freight companies to enable the movement of physical
goods within, around and out of the country. For business-to-consumer
transactions, the system must offer a means for cost-efficient transport of small
packages (such that purchasing books over the Internet, for example, is not
prohibitively more expensive than buying from a local store); and
Authentication authority that serves as a trusted third party to ensure the integrity
and security of transactions.
Consumers (in a business-to-consumer transaction) who:
Form a critical mass of the population with access to the Internet and disposable
income enabling widespread use of credit cards; and
Possess a mindset for purchasing goods over the Internet rather than by physically
inspecting items.
Firms/Businesses (in a business-to-business transaction) that together form a
critical mass of companies (especially within supply chains) with Internet access
and the capability to place and take orders over the Internet.

Government, to establish:
A legal framework governing e-commerce transactions (including electronic documents,
signatures, and the like); and
Legal institutions that would enforce the legal framework (i.e., laws and regulations)
and protect consumers and businesses from fraud, among others.
And finally, the Internet, the successful use of which depends on the following:
A robust and reliable Internet infrastructure; and
A pricing structure that doesnt penalize consumers for spending time on and
buying goods over the Internet (e.g., a flat monthly charge for both ISP access
and local phone calls).[ 5 Marks.including each details][ 5Marks]

Answer 4


EDI is the computer-to-computer exchange of business information using a public


EDI is a central part of Electronic Commerce because it enables businesses to

exchange information electronically much faster, more cheaply and more accurately than
is possible using a paper-based system.

Electronic data interchange (EDI) involves the structured transfer of information,

particularly for online B2B purchasing transactions. It can now occur over the Internet as
Internet EDI.

In EDI, electronic documents (purchase orders, bills, etc.) are given standardized
electronic formats and numbers, so everyone involved can correctly interpret the
information being transferred.

Value-Added networks (VANs), maintained by companies similar to long-distance phone

companies, provide telecommunications connectivity between Trading Partners.

Translation software is used by each Trading Partner to translate the business data. EDI
links trading partners electronically. The people using EDI are called Trading Partners.

[ explanation for the concept of EDI..4Marks]

( b) Benefits

Greatly increase opportunities through wider diffusion of procurement information.

Improve overall business quality through better record-keeping, fewer errors in data,
reduced processing time, less reliance on human interpretation of data, and minimized
unproductive time.

Reduce inventory because of faster and more accurate filling of orders.

Reduce mailing costs due to mailroom sorting/distribution time, elimination of lost

documents, and reduction of postage.

Reduce order time since EDI allows businesses to process orders much faster.

Improve customer relationships with higher customer satisfaction due to faster response
to orders and less paper to handle.

Reduce billing and closeout time, since orders are filled and delivered more quickly.
Provide better management decision-making information with accurate documentation
and audit trails of transactions identifying areas of greatest potential for cost reduction or
efficiency improvement.


EDI is Too Expensive

Some companies are only doing business with others who use EDI. If a company
wants to do business with these organizations, they have to implement an EDI
program. This expense may be very costly for small companies.

Limit Your Trading Partners

Some large companies tend to stop doing business with companies who don't
comply with EDI. For example Wal Mart is only doing business with other
companies that use EDI. The result of this is a limited group of people you can do
business with.

[ 4Benefits and 2 limitations].[4 Marks]

( c) Its a four step process:

1. Authorization

The cardholder requests a purchase from the merchant.

The merchant submits the request to the acquirer.
The acquirer sends a request to the issuer to authorize the transaction.
An authorization code is sent to the acquirer if there is valid credit available.
The acquirer authorizes the transaction.
The cardholder receives the product.
2. Batching
The merchant stores all the days authorized sales in a batch
The merchant sends the batch to the acquirer at the end of the day to receive payment.
3 .Clearing
The batch is sent through the card network to request payment from the issuer.
The card network distributes each transaction to the appropriate issuer.
The issuer subtracts its interchange fees, which are shared with the card network, and
transfers the amount.
The card network routes the amount to the acquirer.
4. Funding
The acquirer subtracts its discount rate and pays the merchant the remainder
The cardholder is billed.
[Include all detail transactions 4 Marks]
(d) Explanation on four payment methods

Electronic checks

Purchasing cards

Electronic letters of credit

Electronic Funds Transfer

Electronic Benefits Transfer

Electronic Payment Cards

(credit, debit, charge)

Smart Cards

(phone cards, bank cards)

P2P payments

(paypal, c2it).

[Detail explanation of Payment Methods..4 Marks]

(e) Customer selection

means defining the types of customers that a company will market to. It means
identifying different groups of customers for which to develop offerings and to
target during acquisition, retention and extension. Different ways of segmenting
customers by value and by their detailed life cycle with the customer are

Customer acquisition

refers to marketing activities intended to form relationships with new customers

while minimizing acquisition costs and targeting high value customers. Service
quality and selecting the right channels for different customers are important at
this stage and throughout the lifecycle.

Customer retention

refers to the marketing activities taken by an organization to keep its existing

customers, identifying relevant offerings based on their individual needs and
detailed position in the customer life cycle

Customer extension

refers to increasing the depth or range of products that a customer purchases

from a company. This is often referred to as customer development

[[1*4 Mark]..4 Marks].