Chapter 1 part 2 - E -com

What is a business model?

• An independent digital marketplace where suppliers and commercial purchasers can conduct transactions

• A document that describes a firm's business model

• A set of planned activities designed to result in a profit in a marketplace

• A company that supplies products and services directly to individual businesses

Answer explanation

The correct choice is a business model is a set of planned activities designed to result in a profit in a marketplace.

What does the term 'value proposition' refer to?

• Describes how a company's product or service fulfills the needs of customers

• Describes how the firm will earn revenue, generate profits, and produce a superior return on invested capital

• A company that offers its users content or services and charges a subscription fee for access to some or all of its offerings

• A company that receives a fee for enabling or executing a transaction

Answer explanation

The term 'value proposition' refers to how a company's product or service fulfills the needs of customers, making it the correct choice.

What is the definition of 'market opportunity'?

• The area of actual or potential commercial value in which a company intends to operate

• An effort to understand and describe the nature of competition in an industry, the nature of substitute products, the barriers to entry, and the relative strength of consumers and suppliers

• The difference between the price a firm is able to charge for its products and the cost of producing and distributing goods

• Refers to the company's intended marketspace and the overall potential financial opportunities available to the firm in that marketspace

Answer explanation

The correct definition of 'market opportunity' is the company's intended marketspace and the overall potential financial opportunities available to the firm in that marketspace.

What is 'competitive advantage' in business?

• Occurs when one firm develops an advantage based on a factor that other firms cannot purchase

• Achieved by a firm when it can produce a superior product and/or bring the product to market at a lower price than most, or all, of its competitors

• Efficiencies that arise from increasing the size of a business

• An independent digital marketplace where suppliers and commercial purchasers can conduct transactions

Answer explanation

Competitive advantage in business is achieved by a firm when it can produce a superior product and/or bring the product to market at a lower price than most, or all, of its competitors.

What is the purpose of 'Porter's 5 forces' analysis?

• To understand and describe the nature of competition in an industry, the nature of substitute products, the barriers to entry, and the relative strength of consumers and suppliers

• To describe how a company's product or service fulfills the needs of customers

• To coordinate the value chains of several firms

• To offer products and services at a lower cost than competitors

Answer explanation

Porter's 5 forces analysis is used to understand and describe the nature of competition in an industry, the nature of substitute products, the barriers to entry, and the relative strength of consumers and suppliers.

What is the main focus of 'e-tailer' as a B2C business model?

• Creates an online environment where people with similar interests can transact

• Distributes information content, such as digital news, music, photos, video, and artwork

• Operates as an online retail store

• Processes transactions for consumers that are normally handled in person, by phone, or by mail

Answer explanation

The main focus of 'e-tailer' as a B2C business model is to operate as an online retail store, selling products directly to consumers over the internet.

What does 'e-distributor' do as a B2B business model?

• Builds a digital environment where buyers and sellers can meet, display products, search for products, and establish a price for products

• Creates and sells access to digital markets

• Sells business services to other firms

• Supplies products and services directly to individual businesses

Answer explanation

The correct choice 'Supplies products and services directly to individual businesses' accurately describes the role of an e-distributor as a B2B business model.

What is the definition of 'industry value chain'?

• The set of activities a firm engages in to create final products from raw inputs

• A set of planned activities designed to result in a profit in a marketplace

• A networked business ecosystem that coordinates the value chains of several firms

• The set of activities performed in an industry or in a firm that transforms raw inputs into final products and services

Answer explanation

The correct choice defines 'industry value chain' as the set of activities performed in an industry or in a firm that transforms raw inputs into final products and services.

What is the purpose of 'business strategy'?

• To describe how a company's product or service fulfills the needs of customers

• To coordinate the value chains of several firms

• To offer products and services at a lower cost than competitors

• To achieve superior long-term returns on the capital invested in a business firm

Answer explanation

The purpose of 'business strategy' is to achieve superior long-term returns on the capital invested in a business firm.

What are 'disruptive technologies' in the context of e-commerce?

• Technologies that underpin a business model disruption

• Technologies that enable the incremental improvement of products and services

• A business model disruption that is driven by changes in information technology

• Efficiencies that arise from increasing the size of a business

Answer explanation

Disruptive technologies in e-commerce refer to technologies that underpin a business model disruption, driving significant changes in how businesses operate and deliver value to customers.