Chapter 4 Managing Information Technology and E-Business
OBJECTIVES
1. Summarize the role and impact of technology in the global economy.
2. Specify how information is managed and explain a management information system.
3. Describe the Internet and explore its main uses.
4. Define e-business and discuss the e-business models.
5. Identify the legal and social issues of information technology and e-business.
6. Assess the opportunities and problems faced by an individual in an e-business and suggest a course of
action.
KEY TERMS AND DEFINITIONS
business-to-business Use of the Internet for transactions and communication between organizations.
(B2B)
business-to-consumer Delivery of products and services directly to individual consumers through the
(B2C) Internet.
consumer-to- Market in which consumers market goods and services to each other through
consumer (C2C) the Internet.
customer relationship Focuses on using information about customers to create strategies that develop
management (CRM) and sustain desirable long-term customer relationships.
data Numerical or verbal descriptions related to statistics or other items that have not
been analyzed or summarized.
database A collection of data stored in one place and accessible throughout the network.
e-business Carrying out the goals of business through utilization of the Internet.
extranet A network of computers that permits selected companies and other
organizations to access the same information and may allow collaboration and
communication about the information.
information Meaningful and useful interpretation of data and knowledge that can be used in
making decisions.
information Processes and applications that create new methods to solve problems, perform
technology tasks, and manage communication.
Internet Global information system that links many computer networks together.
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Chapter 4 Managing Information Technology and E-Business
intranet A network of computers similar to the Internet that is available only to people
inside an organization.
knowledge An understanding of data gained through study or experience.
management Used for organizing and transmitting data into information that can be used for
information system decision making.
spam Unsolicited commercial e-mail.
technology The application of knowledge, including the processes and procedures to solve
problems, perform tasks, and create new methods to obtain desired outcomes.
World Wide Web A collection of interconnected Web sites or pages of text, graphics, audio, and
video within the Internet.
LECTURE OUTLINE AND NOTES
(PPT notations below refer to the Premium Content slides.)
I. Introduction
PPT4.05
A. Information technology (IT) relates to processes and applications that create
new methods to solve problems, perform tasks, and manage communication. Its
impact on the economy is powerful with regard to productivity, employment, and
working environments.
B. Information technology’s impact on the economy is very powerful especially with
regard to productivity, employment, and working environments.
II. The Impact of Technology on Our Lives
PPT4.06
A. Technology relates to the application of knowledge, including the processes and
procedures to solve problems, perform tasks, and create new methods to obtain
desired outcomes. It includes intellectual knowledge as well as the computer
systems devised to achieve business objectives.
B. Technology has been a driving force in the advancement of economic systems and
the quality of life.
1. Technology has changed the way consumers take vacations, make purchases,
drive cars, and obtain information.
2. In the workplace, it has improved productivity and efficiency, reduced costs,
and enhanced customer service.
PPT4.07
3. It has also changed many traditional products.
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Chapter 4 Managing Information Technology and E-Business
4. Information technology has improved global access by linking people in
businesses through telecommunications.
PPT4.08
5. Productivity, the amount of output per hour of work, has more than doubled
in the last 10 years with most of the gains coming from the information
technology sector.
III. Managing Information
PPT4.09
A. Data refers to numerical or verbal descriptions related to statistics or other items
that have not been analyzed or summarized.
PPT4.10
B. Knowledge refers to an understanding of data gained through study or
experience.
PPT4.11
C. Information includes data and knowledge that can be used in making
decisions.
1. The less information available, the more risk associated with a decision.
2. Businesses often engage in data processing efforts to improve data flow
and the usefulness of information.
D. Management Information Systems
PPT4.12
1. Because information is a major business resource, it should be viewed as an
asset that must be developed and distributed to managers.
2. A management information system (MIS) is used for organizing and
transmitting data into information that can be used for decision making.
3. The purpose of the MIS is to obtain data from both internal and external
sources to create information that is easily accessible and structured for user-
friendly communication to managers.
PPT4.14
4. The MIS breaks down time and location barriers, making information
available when and where it is needed to solve problems.
E. Collecting Data
PPT4.15
1. To be effective, an MIS must be able to collect data, store and update data,
and process and present information.
a. Internal data can be obtained from company records, reports, and
operations.
b. External sources of data include customers, suppliers, industry
publications, the mass media, and firms that gather data for sale.
2. A database is a collection of data stored in one place and accessible
throughout the network.
PPT4.16
3. Databases developed by external firms may allow businesses to tap into an
abundance of information on sales, pricing, and promotion for consumer
products using data from scanners at checkouts in stores.
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Chapter 4 Managing Information Technology and E-Business
IV. The Internet
PPT4.17
A. The Internet, the global information system that links many computer networks
together, has profoundly altered the way people communicate, learn, do
business, and find entertainment.
1. Although many people believe the Internet began in the early 1990s, its
origins can be traced to the late 1950s.
PPT4.18
2. The World Wide Web is a collection of interconnected Web sites or pages of
text, graphics, audio, and video within the Internet.
PPT4.19
3. An intranet is a network of computers similar to the Internet that is available
only to people inside an organization.
a. Businesses establish intranets to make the MIS available for employees
and to create interactive communication about data.
b. Development of an intranet saves time and money because paper is
eliminated and data becomes available on an almost instantaneous basis.
PPT4.20
4. Some businesses open up their intranets to other selected companies through
an extranet, a network of computers that permits selected companies and
other organizations to access the same information and may allow different
managers in various organizations to collaborate and communicate about the
information.
B. Emerging Technologies
PPT4.22
1. Wireless fidelity (Wi-Fi) networks are changing the way individuals and
businesses use the Internet.
2. Wireless mesh networks are answering the need for more product
differentiation and diverse technological advancements.
3. Radio frequency identification (RFID) systems use radio waves to identify
and track resources and products within the distribution channel.
4. The growth of wireless voice communications and the increasing integration
with Internet technologies generates opportunities for further innovations and
applications.
V. E-Business
A. The nature of the Internet has created tremendous opportunities for businesses to
forge relationships with consumers and business customers, target markets more
precisely, and even to reach previously inaccessible markets.
B. The Nature of E-Business
PPT4.23
1. In general, e-business has the same goal as traditional business.
2. E-business can be distinguished from traditional business as carrying out the
goals of business through utilization of the Internet.
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Chapter 4 Managing Information Technology and E-Business
3. E-commerce uses the Internet to carry out marketing activities, including
buying and selling activities conducted online, marketing research, providing
and obtaining price and product information, advertising, and online selling.
4. E-business has changed our economy with companies that could not exist
without the technology available through the Internet (e.g., DoubleClick).
5. Many companies that attempted to transact business on the Internet (often
called dot-coms) had problems making a profit and found that no single
technology could completely change the nature of business.
a. Some dot-coms failed because they thought the only thing that mattered
was brand awareness created through advertising.
b. The reality is that Internet markets are more similar to traditional markets
than they are different.
c. Successful e-business strategies, like traditional business strategies,
depend on creating products that customers need or want.
6. Instead of e-business changing all industries, it has had much more impact in
certain industries where the cost of business and customer transactions is very
high.
7. E-business can use many benefits of the Internet to reduce the cost of both
customer and business transactions.
a. A recent trend to help companies control the rising labor costs associated
with providing customer service and support is the practice of
outsourcing service jobs.
b. E-business can improve coordination within and across businesses.
c. E-Business Models
PPT4.24
1. Business-to-Business
PPT4.25
a. Business-to-business (B2B) e-business, sometimes called collaborative
commerce, is the use of the Internet for transactions and communications
between organizations.
b. B2B activities are the largest and fastest growing area of e-business.
c. Typical ways that a company might join the B2B world range from the
easiest—going online with an electronic catalog—to the more complex—
creating a private trading network, using collaborative design, engaging
in supply chain management, and creating a public exchange.
d. The forces unleashed by the Internet are particularly important in B2B
relationships, where uncertainties are being reduced by improving the
quality, reliability, and timeliness of information.
2. Business-to-Consumer
PPT4.26
a. Business-to-consumer (B2C) e-business means delivering products and
services directly to consumers through the Internet.
b. The Internet provides an opportunity for mass customization, meaning
that individuals can communicate electronically over the Internet and
receive responses that satisfy their individual needs.
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Chapter 4 Managing Information Technology and E-Business
c. Services provided in e-business relationships are often referred to as e-
services—efforts to enhance the value of products through an experience
that is created for the consumer.
PPT4.27
3. Consumer-to-Consumer. The consumer-to-consumer (C-to-C) market is one
in which consumers market goods and services to each other through the
Internet (e.g., eBay).
C. Customer Relationship Management
PPT4.29
1. Customer relationship management (CRM) focuses on using information
about customers to create strategies that develop and sustain desirable long-
term customer relationships.
a. This focus is possible because today’s technology helps companies target
customers more precisely and accurately than ever before.
b. CRM technology allows businesses to identify specific customers,
establish interactive dialogs with them to learn about their needs, and
combine this information with their purchase histories to customize
products to meet those needs.
2. Advances in technology and data collection techniques now permit firms to
profile customers in real time and thereby assess their lifetime value to the
firm.
PPT4.30
3. CRM focuses on building satisfying relationships with customers by
gathering useful data at all customer-contact points and analyzing those data
to better understand customers’ needs and desires.
4. Sales automation software can link a firm’s sales force to applications that
facilitate selling and providing services to customers.
VI. IT Legal and Social Issues
A. Privacy
PPT4.31
1. Current technology has made it possible to amass vast quantities of personal
information, often without consumers’ knowledge, and allows for the
collection, sharing, and selling of this information to interested third parties.
2. Many sites follow users’ online tracks by storing a ―cookie,‖ an identifying
string of text, on their computers that permits site operators to track how
often a user visits a site, what he or she looks at while there, and in what
sequence.
3. Some measure of protection of personal privacy is provided by the U.S.
Constitution, as well as Supreme Court rulings, and federal laws.
4. The U.S. Federal Trade Commission regulates and enforces privacy standards
and monitors Web sites to ensure compliance.
5. Businesses are beginning to recognize that the only way to circumvent further
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Chapter 4 Managing Information Technology and E-Business
government regulation with respect to privacy is to develop systems and
policies to protect consumers’ interests.
6. Some nonprofit organizations help companies develop privacy policies (e.g.,
TRUSTe, BBBOnline).
B. Spam
PPT4.32
1. Spam, or unsolicited commercial e-mail has become a major source of
discontent with the Internet among consumers and businesses.
2. Most businesses and online service providers are attempting to filter out
spam.
3. Some firms have filed suit against spammers under the Controlling the
Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Law,
which bans fraudulent or deceptive unsolicited commercial e-mail and
requires senders to provide information on how recipients can opt out of
receiving further messages; it has proven ineffective, however.
C. Identity Theft
PPT4.36
1. Identity theft, which occurs when criminals obtain personal information that
allows them to impersonate someone else in order to use their credit to obtain
access to financial accounts and make purchases, is a growing concern.
2. The Internet’s relative anonymity and speed fosters access to databases that
make identity theft easier to commit.
3. Typically, it takes 14 months before a victim discovers identity theft.
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D. Intellectual Property and Copyrights
PPT4.37
1. Internet users and others are concerned about protecting their rights to
property they may create, including songs, movies, books, and software.
2. Intellectual property consists of the ideas and creative materials developed to
solve problems, carry out applications, and educate and entertain others.
3. Intellectual property is generally protected via patents and copyrights.
4. The issue has become a global concern because of disparities in enforcement
of laws throughout the world.
5. U.S. copyright laws protect original works in text form, pictures, movies,
computer software, musical multimedia, and audiovisual work
BOXED TEXT DISCUSSION QUESTIONS
Going Green Box for chapter 4: Protesting Virtually Saves the Environment
1. What are the advantages for groups that use the Internet as a method to stage protests about
their concerns?
Such groups may reach a wider, more diverse audience. The borderless nature of the Internet allows
groups to reach members across the world. For workers’ protests, the Internet allows workers to
protest while not losing work time or pay, which is also an advantage to the employers.
2. How may a virtual protest have limitations compared to a personal, on-site protest?
It is much easier for someone to join a virtual protest than to participate in person. This may
weaken the protest’s influential power if the virtual protest is not perceived to be as legitimate.
There may be legal implications, particularly if a protest ―crosses‖ international borders. There may
not be widespread coverage of a virtual protest outside of its circle of supporters.
3. Because virtual protests are environmentally friendly, is it possible that this green method of
communication may become much more popular?
It is likely that this form of protest and communication may increase, particularly with regard to
environmental causes that wish to be seen as green even when staging protests.
Responding to Business Challenges: The Internet Provides the Opportunity for a Real Second Life
1. Why do you think that Second Life has become so popular?
Answers will vary based on students’ perceptions and experiences with Second Life.
2. Why do some people view Second Life as not a game, but a real life experience?
Answers will vary, but may include ideas such as: Second Life allows visitors to create an avatar to
represent themselves as they interact with each other, purchase land, build houses, run businesses.
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Chapter 4 Managing Information Technology and E-Business
Second Life has its on economy, with residents spending real dollars to buy Linden dollar in order
to buy, sell, and trade products with each other.
3. What are some of the opportunities for companies to promote their products on Second Life?
Second Life provides companies opportunities for market research, such as testing products and
gathering customer opinions and desires. Store fronts allow companies to ―sell‖ their merchandise
in Second Life. Both the store fronts and the purchased merchandise are forms of advertising for
companies. This type of interaction gives companies a good opportunity for customer relationship
management as they gather and maintain information on sales in Second Life.
Solve the Dilemma
1. As a consultant, what would you do to help Paul figure out what went wrong with IOWatch?
Paul needs to understand the nature, size and characteristics of the potential users of his freeware. It
may be unreasonable to develop freeware based on personal interests and expect success.
2. What ideas for new freeware can you give Paul? What potential uses will the new software
have?
Freeware needs to solve a problem or provide an application (e.g. Netscape’s Adobe). Ideas for Paul
include: children’s games, financial analysis for specific target groups (e.g. small businesses, doctors,
farmers, etc.), etc. Students can conduct an online search to see what types of freeware are currently
available and brainstorm from there.
3. How will it make money?
Paul can sell advertisements that accompany the download. Working in conjunction to develop
applications with software companies could provide additional revenue.
SUPPLEMENTAL LECTURE
Garden.com: The Rise and Fall of an Internet Startup
Garden.com was a leading online specialty retailer of gardening products. The company’s Web site served
as a virtual community where members could go to design their dream gardens with online software; find
the best plants and tips for their particular garden conditions; get help from a ―gardening doctor‖; read
articles about gardening trends and view photos of successful gardens; and chat with other gardeners about
their favorite hobby 24 hours a day. They could also shop from among 15,000 products, including
perennials, annuals, bulbs, containers, ornaments, outdoor furniture, greenhouses, tools, and other supplies.
Members could even buy the progeny of famous trees throughout the country. There was also an exclusive
Garden.com gift shop. Members could order online and have products delivered to their doors in as little as
three days. To ensure satisfaction, Garden.com offered a one-year, 110 percent product guarantee.
Membership was free.
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The seed for Garden.com was sown in 1995 by Cliff and Lisa Sharples and Jamie O’Neill, who were
looking for an idea for an Internet-based business. The Sharples had just moved to Austin, Texas, to work
at a local software company, and they soon found they needed help starting a garden in central Texas’s
tough gardening environment. Lisa Sharple thought, ―Wouldn’t it be cool to go on the Internet and be able
to find the most appropriate plants for your area—and how to grow them?‖ A gardening Web site seemed
like a great idea. Gardening is America’s third-leading leisure activity, and the industry has annual sales of
$40 billion. With today’s consumers looking for ways to escape the stress of fast-paced lives, gardening has
become part of a larger trend known as ―cocooning,‖ which also includes cooking and home decorating.
Additionally, the market for gardening products is not dominated by any one company. In fact, most
gardeners buy plants and accessories from local nurseries or through mail-order catalogs, and few of these
firms operate beyond a local or regional scale. Sensing a market opportunity, the Sharples and O’Neill
decided to strike out on their own to launch a Web site to cater to gardeners on a national level.
They set up their firm in the Sharples’ garage apartment with seed money from O’Neill’s credit card. They
viewed their idea for a Web community, initially called Garden Escape, as a sort of super infomercial or
combination gardening library/catalog/magazine/talk show/superstore that would help gardeners find
success and enjoy their hobby. They decided they wouldn’t actually grow or store goods themselves but
would instead contract with established growers and suppliers to fill customers’ orders. They would earn
revenues by taking a percentage of profits from product sales. They secured additional start-up funding
from venture capital firms and began signing up suppliers, including such well- known firms as Burpee and
Milaeger’s Gardens. They also recruited Andy Martin to serve as the firm’s chief technology officer. Martin
immediately set to work creating a state-of-the-art Web site and a secure electronic ordering system, as well
as an extranet to interact with suppliers. He also worked with a landscape architect to develop garden
planning software that would let visitors to the site design their own gardens. Garden Escape went online in
March 1996.
The founders worked hard to build their brand, gain exposure, and cultivate loyal customers. The company
moved to larger facilities, a renovated warehouse with room for a garden. It opened a Midwestern office
and test garden in Iowa under the expertise of Doug Jimerson, a former editor at Better Homes and
Gardens. The Web site changed its name to Garden.com in 1999 to reflect its Web-based status and large
product selection. The company also began advertising on cable television networks, and it established a
cross-promotional deal with Horticulture magazine’s Web site. It launched its own magazine, Garden
Escape, to extend the brand.
At its peak, Garden.com cultivated 450,000 members, and the Web site logged 600,000 hits a month. Sales
were growing at a rate of 300 percent annually, and in its last year of operation, the firm rang up sales of
$5.4 million. However, despite the state-of-the-art Web site and rapidly growing sales, the company never
became profitable, and it quickly burned through the $49 million raised in its 1999 initial public offering
(IPO). Like so many Internet startups, Garden.com failed to provide sufficient financial resources to fuel its
growth and high-flying cash appetite. It began a phased shut down in November 2000, selling assets and
laying off employees. The Garden.com URL was later acquired by Burpee.
Sources: ―About Garden.com,‖ Garden.com, www.garden.com (accessed July 12, 1999); ―Company
Briefing Books,‖ The Wall Street Journal, http://interactive.wsj.com (accessed May 22, 2000); Carol Flake
Chapman, ―In Full Flower,‖ Texas Monthly Biz, June 1999, pp. 20-23; Beth Cox, ―Garden.com Shuts
Down,‖ InternetNews.com, November 15, 2000, www.internetnews.com/ec-news/article.php/4_512601;
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Chapter 4 Managing Information Technology and E-Business
John Weisman, ―What’s in a Dot-Com Name?‖ E-Commerce Times, December 14, 2000,
www.ecommercetimes.com/story/6080.html.
Question: Discuss possible reasons for Garden.com’s failure.
Like many dot-coms, Garden.com seems to have been more concerned about building a recognizable brand
than earning profits. Although the company succeeded at building a strong brand with a start-of-the-art
Web site and robust gardening community, it failed to generate sufficient sales and other financial resources
to cover expenses related to its rapid growth. In the end, while gardeners liked the community they found at
Garden.com, they seemed to prefer buying plants they could look at from knowledgeable, local growers.
CONTROVERSIAL ISSUE
Internet Privacy
Privacy has become a major concern on the Internet. The extraordinary growth of the Internet has created a
number of privacy issues that society has never encountered before and therefore has been slow to address.
For example, some Web sites, such as peoplesearch.com, allow anyone to do background searches, asset
verification checks, and criminal background checks on any individual for a fee of $39 to $125.
Additionally, whowhere.com allows users to order a background check on any individual in its database for
only $39.95. This public record report includes property ownership, civil judgments, driver’s license
physical description, and a summary of assets.
Privacy issues on the Internet relate to two major concerns. The first concern is users’ ability to control the
rate, type, and sequence of the information they view. Spam, or unsolicited commercial e-mail, is a control
concern because it violates privacy, steals resources, and compares to receiving a piece of direct mail with
postage due. A second concern relates to the ability of users to address and understand how organizations
collect and use personal information on the Internet. Many Web sites require visitors to identify themselves
and provide information about their wants and needs. Some Web sites track visitors’ ―footsteps‖ through
the site by storing a cookie, or identifying string of text, on their computers. The use of cookies can be an
ethical issue, especially because many users have no idea that this transfer of information is even occurring.
Internet privacy is an important issue that is requiring that organizations engaging in e-business develop
policies to address these concerns.
Questions
1. Define the pros and cons of using a site such as peoplesearch.com to do a background check on a
potential employee.
2. What should companies do to minimize privacy concerns with respect to consumer information?
3. If the firm you worked for used ―cookies‖ to learn more about customers, would you defend this
practice? If so, how?
REVISIT THE WORLD OF BUSINESS (PPT4.04)
1. Why is the Internet so useful in locating where to find the lowest price on comparable
products?
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Chapter 4 Managing Information Technology and E-Business
Business-to-consumer e-business has grown so that many retailers now have stores online. This
makes it is easy to browse multiple stores very quickly to compare prices. Online services such as
Shopstyle.com also make the comparison shopping experience much easier online than it would be
in person.
2. Why do many online retailers provide codes that give discounts on their sometimes already
low-priced merchandise?
Companies try to make online shopping experiences easy for consumers as part of customer
relationship management. Providing discount codes or price matching is an effective way to keep
customers satisfied while tracking their shopping patterns. Competition is very strong in online
retailing, so offering discounts is one way for companies to attract and retain customers.
3. Do you think that online discount codes and coupons develop customer retail loyalty?
Student responses will vary according to their experiences, but they should defend their answer. Some
possible ideas are that customer loyalty is not built because customers may shop only with discount
codes, or that customer loyalty is built if a customer can reliably use codes to find a better price.
CHECK YOUR PROGRESS
1. What is information technology? How has technology influenced the economy?
Information technology relates to processes and applications that create new methods to solve
problems, perform tasks, and manage communications. It has influenced our economy in many ways,
some positive, some negative.
2. Define data, knowledge, and information. Why is information important in business?
Data refers to numerical or verbal descriptions related to statistics or other items that have not been
analyzed or summarized. Knowledge refers to an understanding of data gained through study or
experience. Information includes data and knowledge that can be used in making decisions.
Information is important in business because less available information results in a riskier decision.
3. What is the purpose of a management information system and how is it used?
The purpose of the MIS is to obtain data from both internal and external sources to create information
that is easily accessible and structured for user-friendly communication to managers.
4. How has the evolution of the Internet impacted the world?
The Internet has profoundly altered the way people communicate, learn, do business, and find
entertainment. It is available on a constant basis and has no geographic boundaries.
5. What is an intranet? An extranet? How are they used?
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Chapter 4 Managing Information Technology and E-Business
An intranet is a network of computers similar to the Internet that is available only to people inside an
organization. An extranet is a network of computers that permits selected companies and other
organizations to access the same information and may allow collaboration and communication about
the information. Businesses establish intranets to make the MIS available for employees and to create
interactive communication about data. An extranet allows users to share data, process orders, and
manage information.
6. What are the four main uses of the Internet? Provide examples of each.
The Internet is used mainly for communication, information, entertainment, and e-business. Examples
will vary.
7. What is e-business? Describe the e-business models.
E-business can be distinguished from traditional business as carrying out the goals of business through
utilization of the Internet. The e-business models are business-to-business (use of the Internet for
transactions and communications between organizations), business-to-consumer (delivery of goods and
services directly to individual consumers through the Internet), and consumer-to-consumer (market in
which consumers market goods and services to each other through the Internet).
8. What are some of the privacy concerns associated with the Internet and e-business? How are
these concerns being addressed in the United States?
Privacy concerns relate to the gathering and dissemination of personal information from consumers,
often without their knowledge. Some measure of protection of personal privacy is provided by the U.S.
Constitution, Supreme Court rulings, and federal laws. The U.S. Federal Trade Commission regulates
and enforces privacy standards and monitors Web sites to ensure compliance. Several nonprofit
organizations have helped companies develop privacy policies.
9. What is identity theft?
Identity theft occurs when criminals obtain personal information that allows them to impersonate
someone else in order to use their credit to obtain financial accounts and make purchases.
10. Why is protection of intellectual property a concern? Provide an example on the Internet where
intellectual property may not be protected or where a copyright has been infringed.
Protection of intellectual property is a global concern because of losses to the owners of the property
and because of disparities in enforcement of laws throughout the world. Examples will vary (e.g.,
Napster and other music-sharing sites).
GET INVOLVED
1. Amazon.com is one the most recognized e-businesses. Visit the site (www.amazon.com) and identify
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Chapter 4 Managing Information Technology and E-Business
the types of products the company sells and explain its privacy policy.
2. Art.com (www.art.com) displays and sells art prints via its online store. GE (www.geappliances.com)
displays its appliances but does not sell them online. Visit the two sites and compare how each
company uses the Internet.
3. It has been stated that information technology is to business today what manufacturing was to business
during the Industrial Revolution. The information technology revolution requires a strategic
understanding greater than learning the latest software or determining which computer is fastest.
Leaders in business can no longer delegate information technology to computer information systems
specialists and must be the connectors and the strategists of how information technology will be used in
the company. Outline a plan for how you will prepare yourself to function in a business world where
information technology will be important to your success.
BUILD YOUR SKILLS
Web site objective:
Student answers will vary, but some possible objectives include: (1) to create company awareness; (2)
to obtain e-mail addresses or ―leads‖ from linked sites; and (3) to create online purchasing ability for
potential customers.
URL (Web site name):
Student answers will vary based on the name they have created. Ideas may be gained from accessing
existing Web sites in the company’s market.
Overall image and graphic design of your Web site:
Student answers will vary based on their research and creativity.
Images you will use to increase Web site stickiness:
Again, answers will vary. The best ideas will come from students who apply principles and ideas from
Web sites they frequent to this company.
Potential virtual partners where your customers may be browsing:
Possible answers include environmental sites, socially responsible manufacturers and retailers’ sites,
and trade magazines, such as Inbound Logistics.
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Chapter 4 Managing Information Technology and E-Business
So You Want a Job in Information Technology
What characteristics are important in people interested in a career in information technology?
Important characteristics include flexibility, adaptability, and keeping up-to-date on current and expected
changes in the world of information technology.
BUILD YOUR BUSINESS PLAN
To illustrate the power of internet marketing, cite an example of a retailer who started as a ―brick‖ store,
added a catalog, and now offers a ―click‖ alternative. An example you might use would be
Bloomingdale’s. They started off as an upscale department store, added a catalog primarily for the
Christmas season, and in the past decade now offer on-line shopping. This three prong strategy allows
Bloomingdales to reach customers they were unable to reach 20 years ago.
However, students need to know about the dangers of electing to start a ―click‖ alternative to their
business without understanding their customer and having experience with replenishment issues.
Remind them of the dot com failure.
SEE FOR YOURSELF VIDEOCASE: Viacom and YouTube Fight Over Copyrighted Material
Case Overview
This case explores the ongoing legal troubles between Viacom and Google concerning YouTube. Viacom
accuses that YouTube contains hundreds of thousands of their copyrighted video clips. Google contends
that YouTube has safe harbor under the Digital Millennium Copyright Act (DCMA), which frees them
from liability for clips posted by third parties if they remove the clip when notified of the copyright
infringement. Google additionally accuses that Viacom’s accusations, if found to be valid, would threaten
internet freedom for everyone. Viacom, which represents ―old media,‖ is fighting with a new generation of
―new media‖ like Google and YouTube. As new media increases in popularity, old media has begun
fighting for a piece of the pie. What has remained constant through technological changes in media is the
importance and ferocity of the fight for advertising dollars.
Questions for Discussion
1. Why do new media outlets like YouTube threaten traditional media entertainment
companies such as Viacom?
New media is becoming more and more popular as a communication means, particularly with
younger markets. YouTube and others are taking the role for these viewers that traditional media
once exclusively filled. Along with viewer ship come advertising dollars, so as YouTube grows,
Viacom and other see a threat to their revenue streams.
2. Which side do you think will prevail in this lawsuit? Google or Viacom?
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Answers will vary, but students must support either answer.
3. What can traditional media companies do to keep up in the Web 2.0 digital age?
Traditional media can incorporate Web 2.0 tools and functions. Offering online versions of
televised episodes allows traditional networks an additional place for advertising. Offering extra
content and additional stories online can enhance a viewer’s experience, encouraging them to delve
further into favorite television series, for example, and again offering additional places for
advertising.
TERM PAPER OR PROJECT TOPICS
These topics could be assigned as individual or collaborative projects:
1. Worldwide Access and Use of the Internet
2. The Future of Dot-coms in the American Economy
3. The Role of Information Technology in the American Economy
4. An Assessment of Methods of Improving Internet Privacy
GUEST SPEAKER SUGGESTIONS
1. A management information system manager of a local company to speak on data management
within the organization.
2. A manager of a local retailer with a Web presence (e.g. Circuit City, Best Buy, Container Store,
Gap, etc.) to discuss the complexity of managing bricks and mortar and e-business entities.
3. A salesperson from a technology company to discuss the impact of current hardware and software
development on his/her job.
TEACHING SUGGESTIONS
1. This chapter is very important to students’ understanding of information technology and its impact
on the economy. Most instructors will stress the chapter content in a lecture interspersed with
PowerPoint slides and/or transparencies.
2. The Supplemental Lecture and Controversial Issue illustrate problems in this important area of
business.
3. The ―Check Your Progress‖ section in the textbook will help in understanding chapter content. The
questions may be given as an outside class assignment or reviewed in class using PowerPoint slide
or transparency master.
4. The boxed material and video case will help students achieve the objectives of the chapter.
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DESTINATION CEO VIDEO NOTES
(The Destination CEO Videos can be found on the OLC at www.mhhe.com/ferrell7e.)
Adobe Corporation – Bruce Chizen, CEO
Summary:
Adobe is synonymous with innovation. Adobe has revolutionized the way we use our computers.
Adobe technology is responsible for the software that is responsible for the fabric design of a chair to
the label on a soft drink bottle. Twenty-five years ago Adobe pioneered the concept of desktop
publishing and is now employed throughout the world in all aspects of digital communications from
magazine publishing to television graphics. Bruce Chizen, CEO attributes the profound success of
Adobe to listening to the customer, watching future technological trends, and anticipating what
customers will want from technology in the future. Adobe’s Flash is installed on over 700 million
computers across the globe. You Tube, for example, makes use of Flash in order to stream media. The
amount of information continues to explode and much of it is in digital form. Adobe is committed to
finding innovative and interactive ways of delivering and using that information.
Bruce Chizen, CEO focuses on the future particularly as it relates to the way that information is
communicated and developing technology that will facilitate better interaction with the information. In
other words, more effective human interfaces. Adobe is known for its innovation and is considered
ubiquitous in terms of all aspects of desktop publishing that has an impact across virtually all industries.
Some of the more well-known Adobe products include: Photoshop, Adobe reader, and Flash.
Discussion Questions:
1. Why is Adobe’s Flash technology considered to be ubiquitous?
Answer: Over 700 million computers around the world have Flash installed on them. Flash
technology allows media to be streamed quickly. The very popular web site, You Tube, makes
extensive use of the technology in making digital video and audio available instantaneously.
2. Adobe has had a tremendous impact across all industries. Provide some examples of how
Adobe has had improved magazine publishing, television broadcasts, and upholstery design.
Answer: The innovation pioneered by Adobe has resulted in applications across all sorts of industries.
For example, their software can be used to design and model fabrics for furniture, has revolutionized
the way that magazines are prepared and printed for mass distribution, and is used extensively in
television broadcasts through eye-catching graphics.
3. Explain why Adobe is considered an IT company.
Answer: Information technology, or IT, describes processes and applications that create new methods
to solve problems, perform tasks, and manage communication. Adobe fits this definition in the truest
sense. The impact that Adobe’s products and innovations have had across all industries is impressive.
Adobe is synonymous with innovation. Adobe has revolutionized the way we use our computers.
Adobe technology is responsible for the software that is responsible for the fabric design of a chair to
the label on a soft drink bottle. Twenty-five years ago Adobe pioneered the concept of desktop
publishing and is now employed throughout the world in all aspects of digital communications from
magazine publishing to television graphics. Bruce Chizen, CEO attributes the profound success of
Adobe to listening to the customer, watching future technological trends, and anticipating what
customers will want from technology in the future. Adobe’s Flash is installed on over 700 million
computers across the globe. You Tube, for example, makes use of Flash in order to stream media. The
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Chapter 4 Managing Information Technology and E-Business
amount of information continues to explode and much of it is in digital form. Adobe is committed to
finding innovative and interactive ways of delivering and using that information.
Bruce Chizen, CEO focuses on the future particularly as it relates to the way that information is
communicated and developing technology that will facilitate better interaction with the information. In
other words, more effective human interfaces. Adobe is known for its innovation and is considered
ubiquitous in terms of all aspects of desktop publishing that has an impact across virtually all industries.
Some of the more well-known Adobe products include: Photoshop, Adobe reader, and Flash.
Additional Discussion Questions:
1. Adobe CEO Bruce Chizen is committed to innovation particularly in the area of future digital
information packaging, distribution, and interactivity. Could this be considered an emerging
technology?
Answer: Yes. Various emerging technologies have included Voice over Internet protocols, WI FI
technologies, RFID technology and the growth of wireless voice communications and their increasing
integration with Internet technologies. The impact of Flash technology on You Tube demonstrates how
Adobe is committed to innovation and emerging technologies.
2. What are some of the concerns that Adobe may face as it makes information retrieval and
sharing more effective and accessible?
Answer: There are potentially legal and social Issues that Adobe should be concerned with as
technology increases the accessibility and distribution of information. The areas of personal privacy,
identity theft, and intellectual property and copyrights should be considered as Adobe develops its
strategy for product innovation and development.
Multiple Choice Questions:
1. Adobe is an example of a company that applies knowledge, including the processes and
procedures to solve problems, perform tasks, and create new methods to obtain desired
outcomes. Adobe uses which of the following to accomplish this?
a. MIS
b. Technology
c. Human interface
d. Knowledge management
e. CAD/CAM
Answer: b. Technology
2. Adobe products are used in a wide range of applications. A R&D engineer uses Adobe
software to design and select the fabric for the upholstery for a furniture line. The use of
Adobe technology could be considered an example of a(n):
a. Knowledge management system
b. Rational decision making process
c. Management information system (MIS)
d. Company intranet
e. RFID application
Answer: c. Management information system (MIS)
3. Streaming media is used to drive You Tube. The technology behind that application is called:
a. HTML
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b. HXML
c. Flash
d. Extranet
e. Meta Language
Answer: c. Flash
4. A key challenge for Adobe in the future is to enhance the delivery and interactivity of
information. In order to facilitate this, Adobe technology will use which of the following?
a. World Wide Web (www)
b. Intranet servers
c. Knowledge management
d. Digital information
e. HTML tags
Answer: d. Digital information
5. Adobe creates, manufactures, and sells its Photoshop product through its web site. Which of
the following E-business models does Adobe use?
a. B2B (business to business)
b. B2C (business to consumer)
c. C2C (consumer to consumer)
d. eBay model
e. None of the above
Answer: b. B2C (business to consumer)
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