Management information systems revision question and answer

CPA-Quantitative-Analysis-Section-4 BLOCK RELEASE

Electronic Commerce (e-commerce) is an emerging concept that describes the buying and selling of products, services and information via the computer networks including the internet.

Required:
a) Brief explanation of the following concepts as relates to e-commerce:
i) Electronic market.
ii) Electronic purse.
iii) Cyber banking.
iv) Cyber mall.

b) Examine the benefits of e-commerce to consumers.
ANSWER
a) Explanations of the following concepts as relates to e-commerce.
Electronic commerce (e-commerce) refers to the use of information technology such as computers and telecommunications to automate the process of buying and selling of goods and services.
1. Electronic market
This refers to a situation wherebuyers and sellers who have subscribed to a networked system trade through their terminals. A buyer is able to access the webs of his suppliers and make orders through the internet.
2. Electronic purse
This refers to a vital envelope used to wrap electronic cash when it is being sent to the bank. When a customer makes an online purchase, electronic cash software creates a
‗coin‘ in an amount specified the user and sends it to the users bank wrapped in a virtual purse. The bank withdraws the amount specified from the user‘s account and deposits it to the seller‘s account.
3. Cyber banking
This refers to the use of electronic technology to facilitate banking transactions. For example the use of magnetic character readers (MCR) to accept and clear cheques. Also the use of automated teller machines.
4. Cyber mall
This refers to a collection of computer services offered an external organisation in one roof. For example, services such as bureaus, internet access services, teleconferencing facilities etc.
b) Benefits of e-commerce to consumers.
1. E-commerce reduces the amount of paperwork and clerical work that accompanies it. For example, the printing postage processing handling costs related to bills payment is reduced.
2. Transaction time is a significant factor and electronic transactions can save valuable time. Bills payment and cheques clearance can be sped up.
3. Networks such as the internet can transform a local business into a global distributor. In this case, consumers are better placed to access more suppliers who could offer them better terms more cheaply.
4. Consumers are saved of staff and other costs. Unlike paper based buying and selling which requires large clerical staffs to open envelops, enter details of purchases etc. This improves organisation‘s profitability.
5. Closer consumer/supplier relationship is achieved thus consumers can negotiate for better terms such as discounts. This also speeds up transactions, for example, where a mechanic accesses an online catalogue of a spare part supplier so as to buy a particular one and fix it within the shortest duration possible.
6. E-commerce is easy to use and improves control. Online markets are easy to use because of the fact that systems are so easy to use compared with placing of telephone orders. Orders can be entered at any time 24 hours a day. This is convenient for the customer.
7. E-commerce improves the security of handling cash, for example, the use of e-cash is more reliable than the use of tangible cash which might be intercepted.

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