Chapter 1- Introduction to Electronic Commerce

1. Describe three factors that would cause a company to continue doing business in traditional ways and avoid electronic commerce. * Traditional commerce is a better way to sell items or services when personal selling skills are a factor, as in commercial real estate sales; or when the condition of the products is difficult to determine without making a personal inspection, as in the purchases of high-fashion clothing, antiques or perishable food items.

2. Figure 1-5 lists roommate-matching services as a type of business that is well-suited to a combination of electronic and traditional commerce. In one paragraph, describe the elements of this service that would be best handled using traditional commerce and explain why. * Customers are generally concerned about lifestyle and personality factors. As a result, they would want to meet any potential roommate.

3. 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. * A major difference is the increase in broadband connections and improved hardware developments. This allows more businesses around the world to communicate with each other.

4. What are transaction costs and why are they important? * Transaction costs are the total of all costs that a buyer and seller incur as they gather information and negotiate a purchase-and-sale transaction. Reasons for being important can vary.

5. Provide one example of how electronic commerce could help change an industry’s economic structure from a hierarchy to a network. * When transaction costs were high, businesspeople would form organizations to replace market-negotiated transactions. In a network economic structure, companies coordinate their strategies, resources and skill sets by forming long-term relationships with other companies and individuals based on shared