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2008 ICFAI University M.B.A Business Administration E-Business (MB351IT) Question paper



Course: M.B.A Business Administration   University/board: ICFAI University







Question Paper
E-Business (MB351IT) : April 2008
Section A : Basic Concepts (30 Marks)
• This section consists of questions with serial number 1 - 30.
• Answer all questions.
• Each question carries one mark.
• Maximum time for answering Section A is 30 Minutes.

1. ARPANET stands for
(a) Aided Representation Projects Agency Networking
(b) Advanced Research Protocols Agency Networking
(c) Advanced Research Projects Agency Networking
(d) Aided Research Projects Agency Networking
(e) Advanced Representation Protocols Aided Networking.

2. Which of the following is not a database marketing strategy?
(a) Targeting
(b) Tailoring
(c) Transaction
(d) Tying
(e) Tapping.

3. E-buying can be carried out using certain steps. Which of the following is the correct sequence of steps for e-
buying?
(a) Provide e-catalog, determine price, configure solution, accept order, check inventory, process order,
order tracking, payment
(b) Provide e-catalog, configure solution, determine price, accept order, check inventory, process order,
order tracking, payment
(c) Determine price, provide e-catalog, configure solution, accept order, check inventory, process order,
order tracking, payment
(d) Provide e-catalog, determine price, configure solution, accept order, process order, order tracking, check
inventory, payment
(e) Determine price, provide e-catalog, configure solution, accept order, process order, order tracking, check
inventory, payment.

4. Which of the following invokes a function ”call‘ which is executed on a remote server?
(a) Remote Monitoring
(b) Remote Distribution
(c) Remote Integration
(d) Remote Procedure Call
(e) Remote Performance.

5. Which of the following are the key characteristics of e-business?
I. Customer is king.
II. E-business leads to intermediation.
III. Entry barriers are low.
IV. Economies of scale.
(a) Both (I) and (II) above
(b) Both (II) and (III) above
(c) Both (III) and (IV) above
(d) (I), (III) and (IV) above
(e) (II), (III) and (IV) above.

6. Which of the following business model(s) for infomediaries offer guidance to buyers in fragmented markets by
providing information at a single online contact point?
I. Aggregators.
1

II. Online auctioneers.
III. Online exchanges.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) Both (II) and (III) above.

7. Optimize the value of every customer is one of the principles of e-business. Optimizing value for a customer
operates at different levels. Which of the following involves the strategic use of resources to extend maximum
value to customers?
(a) Micro level
(b) Medium level
(c) Macro level
(d) Both (a) and (b) above
(e) Both (b) and (c) above.

8. A huge amount of information is available in organizations, but it is difficult to use the information since it is
scattered across different files, in different formats and different locations. This is referred to as
(a) Compression effect
(b) Silo effect
(c) Logistic effect
(d) Transition effect
(e) Ripple effect.

9. Which of the following are the key drivers of convergence?
I. Technology.
II. Deregulation of markets.
III. Increasing expectations of customers.
IV. Competitive imperatives.
(a) Both (I) and (II) above
(b) Both (II) and (IV) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

10. Which of the following is an effective convergence strategy in which the suppliers attempt to eliminate the
number of mediators between themselves and the final customer?
(a) Bundling
(b) Gatekeeping
(c) Cross-industry competence
(d) Disintermediation
(e) Brand acquisition.

11. Which of the following types of e-business projects is/are known as improvement projects, which focus on
enhancements to the existing system?
(a) Incremental projects
(b) Breakthrough projects
(c) Platform projects
(d) Both (a) and (b) above
(e) Both (b) and (c) above.

12. Which of the following e-supply chain component enables organizations to coordinate product flows across their
business units, optimize resource utilization and optimize inventory levels through integration of operations
across the suppliers and partners in the value chain?
(a) Supply chain replenishment
(b) Collaborative planning
(c) Collaborative product development
(d) E-procurement
(e) E-logistics.

13. The time gap between the receipt of the order and the delivery of the product is known as
2

(a) Lead time
(b) Lapse time
(c) Cycle time
(d) Processing time
(e) Execution time.

14. Which of the following is not an advantage of implementing an Enterprise Resource Planning (ERP) system for
an organization?
(a) Increase in lead time
(b) Punctuality in shipment
(c) Reduction in cycle time
(d) Enhanced customer satisfaction
(e) Flexibility and reduction in quality cost.

15. Which of the following ”Online Analytical Processing‘ (OLAP) functions refer to the process of changing the
dimension of analysis to suit the analyst‘s requirements?
(a) Drilling
(b) Scattering
(c) Changing displays
(d) Clustering
(e) Slicing and dicing.

16. Which of the following is not a type of Online Analytical Processing (OLAP)?
(a) Desktop OLAP
(b) Multidimensional OLAP
(c) Digitized OLAP
(d) Relational OLAP
(e) Hybrid OLAP.

17. Which of the following is/are not basic e-business model(s)?
I. B2B.
II. B2C.
III. C2C.
IV. C2B.
(a) Only (II) above
(b) Only (IV) above
(c) Both (II) and (III) above
(d) Both (I) and (IV) above
(e) (II), (III) and (IV) above.

18. Generally there are five levels of data transmission in an internet connection. What is the level2 data
transmission which has high speed data lines and cables, connected by high speed routers in different cities, laid
down by long distance exchange carriers?
(a) Interconnect levels
(b) National backbone networks
(c) Regional networks
(d) Internet service providers
(e) End users.

19. Which of the following is the guided media that have highest bit rates among all the telecommunication media?
(a) Open wire
(b) Twisted pair
(c) Coaxial cable
(d) Optical fiber
(e) Communication satellites.

20. Different programming models are supported by different middleware programs. ”OMG‘s CORBA‘ and
Microsoft‘s Distributed COM is/are
I. Object based middleware.
II. Event based middleware.
III. Message based middleware.
3

(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) Both (II) and (III) above.

21. CORBA is an acronym for
(a) Common Object Request Broker Architecture
(b) Content Object Retail Broker Authentication
(c) Content Object Request Broker Architecture
(d) Common Outside Remote Basic Authentication
(e) Common Object Retail Business Authentication.

22. In OSI reference model, which of the following layers is also called as syntax layer?
(a) Physical layer
(b) Data link layer
(c) Network layer
(d) Transport layer
(e) Presentation layer.

23. The ability of the system to handle numerous users concurrently and allow them to complete transactions in the
minimum possible time is referred as
(a) Authentication
(b) Scalability
(c) Reliability
(d) Reusability
(e) Convergence.

24. Which feature of a secure and trusted infrastructure, makes sure that when a message is send over the internet,
the message sender is the same as the person who created the message?
(a) Authentication
(b) Privacy
(c) Non-repudiation
(d) Transaction integrity
(e) Time stamping.

25. Which of the following principle(s) governing the TRUSTe initiative states that the consumers have the right to
be informed about the security and privacy consequences of any online transaction before undertaking it?
I. Informed consent.
II. No privacy without appropriate security.
III. Privacy standards vary according to context of use.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) Both (II) and (III) above.

26. Which of the following category of business models is based on metering the actual usage of a service?
(a) Brokerage model
(b) Advertising model
(c) Affiliates model
(d) Utility model
(e) Subscription model.

27. In value network management, which of the following produce components and subassemblies in huge quantities
and offer them at relatively cheap rates to requesting companies?
(a) Strategic Service Partners (SSP)
(b) Value Added Suppliers (VAS)
(c) Commodity Suppliers (CS)
(d) Non-strategic Service Partners (NSP)
(e) Network Operations Partner (NOP).
4


28. Key Solutions Company having branches all over India wants their systems to be in network. So, which of the
following should be used to connect those systems?
(a) Message area network
(b) Metropolitan area network
(c) Local area network
(d) Mail application network
(e) Internet.

29. Which of the following statements is/are true about ”Direct Attached Storage‘ (DAS) devices?
I. DAS do not have much dependence on network bandwidth.
II. DAS does not have centralized data storage.
III. DAS support remote storage connectivity.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

30. Electronic Data Interchange (EDI) is a quick, inexpensive and relatively safe method to transmit invoices,
purchase orders, customs documents, shipping notices and other business documents between different firms.
Which of the following is/are the benefit(s) of EDI?
I. Reduced paper based system.
II. Improved problem resolution and customer service.
III. Enhanced partnership.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
END OF SECTION A
Section B : Caselets (50 Marks)
• This section consists of questions with serial number 1 œ 5.
• Answer all questions.
• Marks are indicated against each question.
• Detailed explanations should form part of your answer.
• Do not spend more than 110 - 120 minutes on Section B.
Caselet 1
Read the caselet carefully and answer the following questions:

1. What are the components Ms. Jacob might have considered while designing their
( 10 marks)
agency‘s website?

2. What other principles Ms. Jacob might have kept in mind before starting their e-
( 8 marks)
business project?

3. In what way do you think the server will play an important role in the given case? ( 8 marks)
Evelyn Tours
Evelyn Tours was founded in 1988. From the outset, the travel agency has made it
a company policy to offer personalized service to individual customers and groups.
As the company‘s reputation has grown, it has successfully entered several
European markets, offering a variety of tours to satisfy the tastes and interests of
5

the most demanding travellers.
The head office for Evelyn Tours is located in Calgary, Alberta. It is a small travel
agency with annual sales under $1 million. During the past year, the company
saved $40 000 by servicing its customers through its Web site. This has enabled
the travel agency to be in direct contact with its customers, and in so doing, to
realize considerable savings on European tour wholesalers' fees.
The programs that Evelyn Tours offers cover western Canada. All groups are
accompanied by experienced guides which allows travellers to discover (with
complete peace of mind) the marvels of western Canada, and American sights such
as Yellowstone Park, the Grand Canyon, Zion National Park, Bryce Canyon
National Park, and Alaska.
Context and Favourable Conditions
Rising promotional costs at tour, wholesalers trade fairs encouraged Evelyn Tours
to seek an alternative solution to conducting its own promotion. The estimated
$40 000 increase was considerable for a small travel agency with sales under $1
million. In addition to the increase in promotional costs, other related costs
encouraged Evelyn Tours to turn to the Internet in order to reduce these costs.
The growing size of wholesalers in Europe and North America also encouraged
Evelyn Tours to seek a new way of doing business. Guaranteed service is a sales
condition that small travel agencies like Evelyn Tours cannot meet without
reduced profitability.
Development Phases
Ms. Jacob, the President and founder of Evelyn Tours, developed the agency's Web
site. She personally undertook to learn the basics of Web site design to facilitate
development and updating activities.
One crucial step was the search for a server. The first server chosen did not
specialize in tourism and was not a suitable choice. The second server selected
specialized in the tourism sector and was satisfactory choice, making it possible to
promote Evelyn Tours Web site at an annual cost of $1,800.
Scope of Functionalities and Services
Ms. Jacob regards the Internet as a transaction accelerator. More specifically,
several functionalities provide services superior to those obtained through
traditional means:
1. Prospective travellers have access to photographs depicting the itineraries
being offered on the travel agency's Web site.
2. Road maps and suggested itineraries are available on the Web site.
3. The Internet makes it possible to offer tailor-made services at lower cost
while at the same time maintaining the operation's profitability. This was
impossible to do using traditional technology.
Market Scope
One of the key changes stemming from direct reliance on a Web site is that the
travel agency deals directly with consumers instead of wholesalers. This has
significantly changed Evelyn Tours' positioning in the market by opening up the
direct market.
Formerly, Evelyn Tours' clientele was made up entirely of groups, whereas today
80 percent of its customers are individuals. This represents a radical shift in its
customer profile.
Paradoxically, the travel agency's Web site has also enabled it, to a lesser extent, to
attract new customers, including wholesalers. For example, a Belgian wholesaler
recently confirmed a reservation for 48 people in September 2004 and the
transaction was completed using the Internet.
Scope of Skills
The Evelyn Tours Web site was developed and implemented almost exclusively in-
house. The only outside expertise required was the use of a specialized server. Ms.
Jacob, the travel agency's owner, designed the site and updates it regularly.
Key Success Factors
6

One of the key success factors has been the visibility generated by the search
engine. Such visibility was not possible through mailings.
1. The site is simple and reflects the traditional buying logic pertaining to travel.
Users can easily navigate and find their way around the site. Moreover, the
photographs give the site a dynamic character.
2. Transactions using the Internet are completed quickly. Ms. Jacob offers
service 12 hours a day to her customers who are price shopping and wish to
obtain prompt confirmation of their reservations. By offering this support,
Evelyn Tours provides considerable availability.
3. Ms. Jacob personally greets visitors at the airport. This touch-and-feel
approach, as she calls it, helps offset the impersonal nature of the Internet and
to enhance the service provided.
Evelyn Tours does not provide prices on its Web site, thus avoiding a major source
of conflict stemming from the considerable difference between the prices offered
to individual consumers and those offered to wholesalers. This approach also
makes it possible for them to avoid facing last-minute discounts offered by
hotelkeepers and losing credibility with travellers.
END OF
CASELE
T 1
Caselet 2
Read the caselet carefully and answer the following questions:

4. What are the benefits derived by TNT and its customers with the implementation
of e-CRM Architecture? Explain the e-CRM components essential while
( 12 marks)
implementation.

5. What are the functions and objectives of e-CRM? ( 12 marks)
TNT Card Services, formerly American Express Bank International, the overseas
operation of Bank One Corporation, entered a highly competitive market when it
began to offer its low-cost credit cards to USA consumers in 2003. Operating from
a call center in Herdon, Virginia, it differentiated its products on price and by its
range of affinity schemes, partnering with organizations like Yahoo!, Washington
DC, the World Olympics, and Simpson Lloyd Spa to offer attractive, co-branded
cards.
By May 2004, the company had attracted thousands of credit card customers, but
competition was becoming fiercer. To be able to continue competing on price,
TNT Card Services needed to keep its operating margins down while maintaining
a high level of customer service that would ensure its cardholders remained loyal.
The solution was to embrace the Web as self-service sales and support channel.
In May 2004, TNT Card Services selected Blesso Software Co. to provide the e-
CRM software for the self-service web front end. The new system would
encompass a credit card application form for new customers and a facility for
existing customers to view their account details and make online payments, as well
as the underlying integration structure that would present customer information to
TNT's Customer Service Representatives (CSRs) via the company's intranet.
Additionally, the Blesso Software solution would interface to TNT Card Services
USA legacy mainframe systems, which hold all customer account and product
details.
A Tightly-Integrated e-CRM Architecture: Blesso Software was selected for its
open and scalable architecture, which could easily integrate with TNT Card
Services legacy systems, and for its ability to provide both a robust front-end and
an integration framework that would ensure that CSRs would always have a single
view of each customer. Blesso Software‘s object-oriented architecture meant that it
could be implemented quickly, an essential feature given that the project was
scheduled to go live in just 12 weeks. Finally, TNT Card Services realized that
7

Blesso Software Co. could be easily extended to support new sales and support
channels should the company wish to expand in the future into WAP or digital TV.
Implementation and Integration: Work began in June 2003 with a team composed
of representatives from Blesso Software Co., TNT Card Services. The TNT Card
Services web site is hosted by Kvadrat Telecom (KT) on a Microsoft server. KT
also provides the security for the web pages. Blesso developed Java servlets to run
inside the Netscape Enterprise Server on the KT web server, to provide front-end
login screens and an online application form, as well as to make cardholders
account information viewable on the Web site. The Java servlets communicate
with the Blesso server via VIOP. The Blesso server runs on two clustered HP 9000
N-series servers at TNT Card Services' Virginia headquarters. Blesso integrates
tightly via IBM MQ Series message-queuing middleware with TNT Card Services
IBM mainframe, which houses all customers, account and product data. This
integration ensures that all information input by customers on the web site is stored
in the mainframe, and also enables existing TNT Card Services card customers to
view their balance information and recent transaction details on the TNT Card
Services web site.
Online Payments: Running alongside the Blesso web application on the TNT Card
Services site is an application provided by World Pay, which allows existing
customers to pay their credit card bills over the Internet using a Switch or Delta
card. World Pay provides payment reports daily to TNT Card Services. As well as
being used by TNT Card Services customers on the web site, the Blesso system is
also used by TNT Card Services fifty Cardiff-based CSRs, who have access to the
system via the company's intranet. This means that when a customer phones in,
they can call up that customer's account details and transaction history, regardless
of whether previous interactions were by telephone or on the Internet. As Blesso
Software Co. presents all customer information in one single view, customers
receive informed and intelligent treatment from CSRs, ensuring a higher level of
satisfaction. The system went live on time and on budget in September 2003, after
a successful implementation period of just twelve weeks.
END OF CASELET 2
END OF SECTION B
Section C : Applied Theory (20 Marks)
• This section consists of questions with serial number 6 - 7 .
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 - 30 minutes on Section C.

6. Companies adopting for e-business need to follow some steps. Discuss the
various steps in designing the e-business. ( 10 marks)

7. What are the properties of digital currencies? Explain. ( 10 marks)
END OF SECTION C
END OF QUESTION PAPER
8

Suggested Answers
E-Business (MB351IT) : April 2008
Section A : Basic Concepts
Answer Reason
1. C ARPANET stands for Advanced Research Projects Agency Networking.
< TOP >
2. C Transaction is not a database marketing strategy.
< TOP >
3. B In e-buying the correct order of steps carried out in the sequence are:
< TOP >
Provide e-catalog, configure solution, determine price, accept order, check inventory,
process order, order tracking, payment.
4. D Remote Procedure Call invokes a function call which is executed on a remote server.
< TOP >
5. D The key characteristics of e-business are:
< TOP >
I. Customer is king.
II. Entry barriers are low.
III. Economies of scale.
E-business leads to disintermediation.
6. A Aggregators offer guidance to buyers in fragmented markets by providing
< TOP >
information at a single online contact point.
7. C At macro level, optimizing value for a customer operation involves the strategic use
< TOP >
of resources to extend maximum value to customers.
8. B A huge amount of information is available in organizations, but it is difficult to use
< TOP >
the information since it is scattered across different files, in different formats and
different locations. This is referred to as Silo effect.
9. E The key drivers of convergence are:
< TOP >
I. Technology.
II. Deregulation of markets.
III. Increasing expectations of customers.
IV. Competitive imperatives.
10. D Disintermediation is an effective convergence strategy, in which the suppliers attempt
< TOP >
to eliminate the number of mediators between themselves and the final customer.
11. A Incremental projects are known as improvement projects, which focus on
< TOP >
enhancements to the existing system.
12. B Collaborative planning enables organizations to coordinate product flows across their
< TOP >
business units, optimize resource utilization and optimize inventory levels through
integration of operations across the suppliers and partners in the value chain.
13. C The time gap between the receipt of the order and the delivery of the product is
< TOP >
known as cycle time.
14. A Advantages by implementing an Enterprise Resource Planning (ERP) are:
< TOP >
Punctuality in shipment.
Reduction in cycle time.
Enhanced customer satisfaction.
Flexibility and reduction in quality cost.
Increase in lead time is not an advantage by implementing ERP.
15. E Slicing and dicing of OLAP function refer to the process of changing the dimension
< TOP >
of analysis to suit the analyst‘s requirements.
16. C Except (c) all the other are the types of Online Analytical Processing (OLAP).
< TOP >
9

17. B C2B is not the basic e-business model.
< TOP >
18. B National backbone networks (level2) - these are of high speed data lines and cables,
< TOP >
connected by high speed routers in different cities, laid down by long distance
exchange carriers.
19. D Optical fibers is the guided media that have highest bit rates among all the
< TOP >
telecommunications media and can conduct light pulses generated by lasers at
transmission rates of as high as 30 billion bits per second.
20. A OMG‘s CORBA and Microsoft‘s Distributed COM are Object based middleware.
< TOP >
21. A CORBA is an acronym for Common Object Request Broker Architecture.
< TOP >
22. E In OSI reference model, Presentation layer is also called as syntax layer.
< TOP >
23. B Scalability refers to the ability of the system to handle numerous users concurrently
< TOP >
and allow them to complete transactions in the minimum possible time.
24. C Non-repudiation makes sure that when a message is send over the internet, the
< TOP >
message sender is the same as the person who created the message.
25. A Informed consent states that consumers have the right to be informed about the
< TOP >
security and privacy consequences of any online transaction before undertaking it.
26. D Utility model is based on metering the actual usage of a service.
< TOP >
27. C In value network management, commodity suppliers produce components and
< TOP >
subassemblies in huge quantities and offer them at relatively cheap rates to requesting
companies.
28. E Key solutions company having branches all over India wants their systems to be in
< TOP >
network. So, internet should be used to connect those systems.
29. C The statements true about Direct Attached Storage (DAS) devices are:
< TOP >
DAS do not have much dependence on network bandwidth. DAS does not have
centralized data storage. DAS does not support remote storage connectivity.
30. E The benefits of Electronic Data Interchange (EDI) are reduced paper based system,
< TOP >
improved problem resolution and customer service and enhanced partnership.
10

Section B : Caselets
1. A well-designed website helps customers and business partners find the information they want
< TOP >
as quickly and easily as possible. When designing a website for tours and travels for selling
packages and services, Ms. Jacob might ensure that the site contains following information:
Catalogs are documents that contain information about the services offered. E-catalogs can
provide more information about the services than traditional (paper) catalogs. Paper catalogs
generally provide a brief description of packages, their prices (to facilitate placing an order).
E-catalogs provide links to additional information such as the photographs along with their
videos. Some e-catalog software providers offer additional features like cross - and up-selling
capabilities, special pricing structures (that provide incentives for customers taking in bulk)
and other customization features. Thus, a seller should choose the package that is functionally
compatible with his business goals.
Merchandising is the process of promoting sales by advertising, displaying and making
special offers like discounts for frequent customers. In e-commerce, sellers can send
electronic discount coupons via e-mail to their customers and encourage them to make repeat
purchases.
A simple package without any complicated features can be demonstrated easily using a simple
e-catalog. A catalog cannot supply all the information that a customer wants to obtain about
the package before purchasing it. They contain many interconnected elements, which are
assembled according to the customer's choice and are priced accordingly.
In the physical world, customers move around the different travels, choose packages of their
choice, collect information and decide. A similar facility is offered by an e-shopping cart. A
customer can select the packages of his choice one after another, add them to the cart, reduce
or remove some from the cart. Some online sites allow the customer to select the places where
he wants to go and purchase the ticket.
Customers have to pay sales tax at various levels like local, state, etc. They transfer a part of
the tax to buyers. Sellers should select a package that can be easily embedded.
Shipping charges are generally determined on the basis of the number of purchases, their
price. International sellers should have access to real-time global shipping charges to collect
the appropriate charges from global customers. They should also be able to provide the status
of order on the customer's demand. In e-commerce, sellers assign a tracking number to the
shipment once a customer places an order. Because of the wider connectivity that the web
offers and its ability to integrate discrete systems, e-nabled sellers can access shipping charges
in real time and estimate precisely the time taken to deliver the product to the specified
destination. Customers can keep track of the status of the order processing and sellers can
provide the real time status of the shipment to customers.
In e-commerce systems, credit card payments are common. Sellers need to adopt high security
standards to prevent the misuse of customer information. They have to implement Secure
Sockets Layer (SSL) or Secure Electronic Transaction (SET) security standards and acquire
fraud detection software. To avoid these complexities, some sellers choose to outsource the
payment function. The seller should ensure that the payment system is absolutely secure
because it is one of the biggest barriers in making e-commerce a big success especially in the
B2C segment.
Some other components that Ms.Jacob might have considered while designing the travel
agency‘s website are: holiday packages, hotels, rail to customers, flights and customers
contact numbers.
2. E-business can significantly benefit the functional processes of an organization and enhance
< TOP >
their profits. Therefore more and more businesses are adopting online sales and marketing.
There are several principles of e-business which an organization must follow to reap the full
benefits of its online initiatives. The e-business principles that Ms. Jacob might have kept in
mind before starting their business to make it as customer loyal are:
Know Your Customer
At the core of e-business is the ability to capture and use information to understand customer
needs and preferences. It is impossible to build a good relationship with customers in the
absence of customer information. Information on customers helps travels determine the
packages and services they should produce and the distribution channels they should use.
Knowledge of customers is not confined to the sales process alone. It includes information
regarding customers after sales preferences as well. Thus information on customers includes
11

the following:
• Customer profiles and preferences.
• The combination of packages and services to be offered to customers.
• The best method for providing customer support.
• The marketing efforts suitable for different customer segments.
• The new packages and services that should be developed.
Travels must systematically capture and use customer information. The first step in this
process involves collecting information on them. This information can be obtained directly
from the customer, or by using the transaction data that has been captured and stored, or by
collecting information from third parties like data syndicates, credit bureaus, etc. The type of
data that needs to be collected varies from industry to industry, depending on the packages or
services that they offer. Generally, data on customers includes demographic information,
purchasing history, and the industry in which the customer is operating (if the customer is a
business customer). The data collected must be analyzed to derive meaningful results.
Earlier, the collection and storage of customer information was not possible for most
organizations. Now, emerging e-business technologies have made it possible for them to
effectively collect and manage customer data. E-business technologies not only help in the
collection and management of data, they also enable the updating of customer information.
Changes in customer preference behavior can be assessed using these e-business technologies.
Without thorough customer knowledge, it would be impossible to' offer personalized services
to customers, providing value addition in products and services and ensuring 100% customer
satisfaction.
Develop a Customer Profile
Developing a customer profile is another important step. This profile should give the
organization insights into:
• The package/service feature that must be valued by the customer
• Customer spending in the past and the likely future spending
• Effective segmentation and predictive modeling
Avoid the 'Silo' Effect
Although a huge amount of information is available in travels, it is difficult to use the
information since it is scattered across different files, in different formats and at different
locations. This is referred to as ”Silo Effect‘. E-business technologies help travels integrate
these islands of information and overcome silo effect. The silo effect occurs when an travels
customer and prospect information is spread across different areas, divisions, and product
lines.
Use Multiple Channels to Interact with Customers
The emergence of new communication channels (such as the Internet and mobile devices) is
having a significant impact on the way in which travels interact with their customers. The
number of travels, that use the Internet to do business or communicate with customers, has
increased significantly in the last few years. The increase in communication channels has
given rise to some problems. One of these problems is the synchronization of the customer
interaction that takes place at different times and through different channels. Customers do not
always confine themselves to a particular channel; they use the channel that is most
convenient for a given situation. The implementation of effective e-business architecture will
help travels overcome channel conflict. It also helps travels to track orders in real time.
3. I think the server will play an important role in the given case for building a well designed
< TOP >
architecture as discussed below:
Centralized storage of customer and package information is required to develop sound strategies.
Though it seems simple, not many travels have managed to build such a data repository.
Consolidated customer information can be of great use to travels. It will give them a
comprehensive view of customers that will enable them to create customer experience. E-Business
systems allow travels to create a centralized repository that can be accessed by employees of
different functional areas, divisions, working at different locations.
A key feature of systems architecture is the capability to dynamically update customer information.
Customer information should be updated real time, irrespective of the channel used by customers.
Such updating is essential for channel synchronization. If a customer lodges a query regarding the
packages through a travels web site and then makes a call to find out the status of the query, the
customer service executive should be able to instantly answer the customer's queries on the basis
of customer information stored in the system.
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The processes that directly interact with customers are sales, marketing, customer service, etc.
Back end -processes are order fulfillment, billing etc. The online ordering system must be linked
with the fulfillment, accounting and distribution system.
As services grows; its e-business systems should also adopt and grow along with the travels. To be
able to adapt, e-business systems should use scalable technology. Scalable refers to the
ability of the system to handle numerous customers concurrently and allow them to complete
transactions in the minimum possible time.
A wide range of communication and information devices are in use today. Regardless of the
hardware and operating system used, e-business systems should be able to integrate with all
devices. For example, mobile devices should be able to link up with a travels centralized
database. Without these capabilities, there will be customer dissatisfaction.
Web server software is commonly known as HTTP server. The HTTP server handles the data
flow in computers connected to the internet or an intranet. HTTP is an application level
protocol that handles communication between clients and servers on the web. A web server
receives an HTTP request, then establishes the requested connection and returns it to the
listening function. To speed up the process, HTTP handles more than one request at a time.
The performance of a server is dependent on its capacity, the network load, the bandwidth and
the speed of the client machine.
An application server is a type of software which handles interactions between a user and a
system. The user‘s requests are accepted through a web browser and serviced by the
company‘s database. The tasks of an application server include receiving client requests,
executing business logic and interacting with transaction server or database server.
4. The benefits are: New customers have an easy-to-follow, convenient online channel for
< TOP >
applying for a credit card, and can browse the site for the best deal and compare savings
against other popular credit cards before applying. They also receive an immediate offer that
has been checked against their credit rating in real time and is personalized to their exact
requirements. Existing card members have the added benefit of being able to view their
account status and pay their bills over the Internet. For TNT Card Services, the addition of a
new web channel enabled the company to acquire thousands of new customers without having
to invest in a larger call center. The Blesso system is readily adaptable too, so that new
products, special offers and promotions can be rolled out easily to customers, and customer
communications can be easily personalized.
The e-CRM components which are essential for implementation are:
Cross selling and up selling software
The purpose of using cross-selling and up-selling software is to identify prospective
customers, track their details and forward them to the salespersons. The software can be used
to schedule sales calls, track order progress, and to record sales transactions. To make the
software more effective, it can be integrated with inventory and customer service software.
Cross-selling and up-selling efforts of an organization can be linked with the life cycle of
customers.
Direct Marketing and fulfillment
Direct marketing includes advertising campaigns and other sales promotion techniques that
provide product information and enable customers to make purchases. Automating this
function is essential when there are multiple marketing programs that need to be handled
across multiple channels. For instance, campaign management is a marketing process that
uses automated systems to handle responses, manage logistics and to convert leads into
purchases.
The objective of fulfillment is to handle customer‘s request for information quickly and
effectively irrespective of the type of information requested. Fulfillment has to be integrated
well with sales and marketing functions. A good fulfillment package provides timely reply to
customers‘ inquiries on products and services.
Customer support and service
Customer support consists of several activities like service request management, customer
surveys, accounts management and detailed service agreements. Customer service essentially
handles customer problems related to products and services. Help desk software is used to
handle customers‘ queries and solve their problems efficiently. The software helps in
verification of customer status, tracking specific tasks, maintaining history of inquiries and
monitoring support level agreements.
Field service operations
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Field service is an extension of customer support and service. It is used when problems cannot
be resolved over telephone or through e-mail. A field service executive is sent to the
customer‘s site for repair or maintenance. Field service executives can render good customer
service at reasonable cost. The field service software supports activities like scheduling and
sending service personnel, managing logistics and inventory, and also handling contracts and
accounting problems.
Retention Management.
An effective CRM application helps in distinguishing customers based on the number of years
of association with the company and the business given by each customer. A decision support
system (DSS) helps in customer segmentation. A good DSS gathers detailed customer
information and helps the organization in understanding their highly profitable customers.
5. E-CRM involves three important functions. These include:
< TOP >
Attracting New Customers
Organizations must develop a well-planned e-CRM strategy and implement it to attract new
customers. They can attract new customers by continuously offering latest, innovative
products and services. Innovative products must also be coupled with good customer service.
Customers are pleased when there is a quick response to their queries/problems. For example,
IBM‘s website provides comprehensive information about its products and services.
Customers can fill up an online requisition form for more information about products/services
and for sales support. As soon as the online request is received by IBM, the IBM‘s Customer
Service Executive (CSE) calls back to the customer. If required, CSE shows an online product
demo as well.
Generating More Business from Existing Customers
Customer relationships can be further enhanced by cross-selling and up-selling. Cross-selling
is suggesting customers to buy products complementary to the purchases made by them. For
example, when a customer purchases a camera, suggestions can be made about suitable film
rolls. Up-selling involves suggesting a better quality product to customers on what they have
purchased earlier.
With increased competition, all companies are now realizing that call center applications with
e-CRM capabilities are essential Best Buy, for example, a specialty electronics retailer in the
US has more than 300 stores spread across 32 states. The company‘s call centers receive about
3000 calls a day. These calls may pertain to specific product information or queries related to
hardware/software problems, repairs, and exchange policies. Best Buy‘s call center
representatives are asked not only to handle customer queries but also to continuously look
for opportunities for cross-selling and up-selling.
Retaining Profitable Customers
According to studies conducted by independent research agencies, about 80% of
organizations‘ business is derived from their top 20% customers. Hence, organizations must
give top priority to these customers and put all efforts to retain them.
Building and maintaining customer relationships is not an easy task, but the benefits certainly
justify the efforts. Customer retention requires a thorough understanding of customers. For
example, the US based State Farm Insurance Company has taken few steps with the primary
objective of retaining its existing profitable customers. The steps are:
• Policyholders with more than two years of association with the company are charged
lower premiums.
• The company pays higher incentives to those agents who have managed to retain
customers than those who have acquired new customers.
• The company involves agents in taking decisions that affect the customers.
The objectives of e-CRM business framework are:
• Strengthening Relationships with Existing Customers
The costs involved in retaining existing customers are much lower as compared to the
cost of attracting new customers. Hence, organizations should try to increase profits by
retaining existing customers.
• Using Customer Information to Provide Better Service
The information collected by organizations about customers must be used effectively to
provide better service to customers. Customers‘ requests for information about any
product/service and for sales support must be attended immediately. The e-CRM tools
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help in prompt handling of all aspects related to customer service.
• Creating Customer Value and Loyalty
Organizations can build customer loyalty by personalizing and customizing their
products/services to meet customer requirements. Personalization can be achieved by e-
CRM tools like inference based and rules based software. Inference based software is
generally used for cross-selling. It tracks customer behavior and groups together
customers who have similar behavior. Rules based personalization is used for selling
specific products and services. The software keeps track of the products/services that an
online visitor has browsed for. This would enable organization to offer customized
products/services to the visitors.
• Implementing Integrated CRM Solution Strategy
Organizations must focus on reliable and convenient customer interaction. This requires
an integrated e-CRM application development strategy which involves integration of
software related to sales, marketing, and servicing functions. Organizations that fail to
integrate e-CRM solutions into their front-end business processes are at a competitive
disadvantage.
Section C: Applied Theory
6. STEPS IN E-BUSINESS DESIGN
< TOP >
Companies adopting for e-business need to follow the steps given below.
Self Diagnosis
The first step in e-business design is self-diagnosis by the company. The management should
evaluate the effect changing customer preferences and business environment, and the
emerging technology trends have on the company. Organizations can be divided into three
categories based on the steps they take to tackle the changing business environment:
• Market leaders/innovators who anticipate the changes and are the first movers in
technological innovations.
• Early adaptors/visionaries who achieve competitive advantage by exploiting new
technological innovations. An example is Charles Schwab who pioneered a discount
brokerage firm, whose business model works on an e-business infrastructure. To
compete in modern markets, companies large or small need to adapt to the changing
environment.
• The third category is the silent majority category. It has three types of firms:
Pragmatists who notice the changes that are happening in the market and will take
action only if they feel that these changes are long term. They try to retain their existing
customers and deliver the best value to them.
Conservative companies are those that are not ready to accept changes are happening
around them. They are skeptical about the value that new technology will add to their
businesses. They only take action when their continued persistence with the old business
model leads them to near collapse.
Die-hard skeptic companies are those that not bothered about the changes in technology.
They find it hard to survive in the new economy.
The management should know where the company stands when compared to the market
leaders in their segment. The company should understand the customer preferences, and
align themselves to the changing needs by substituting the old design with a new e-
business design. .
Reversing the Value Chain
In e-business, the emerging technology has to be linked with new business designs. Both
technology and business are developing. The technological advancement influences customer
needs and customer needs in turn affect business designs. So a firm has to design new
processes to support these designs. These processes will pave the way for a new generation of
technology. The development of new business design is difficult for traditional managers.
Traditional managers are used to dealing with improvement in product designs, revenue
growth and market share. In e-business, there is not much difference between products and
services.
To be successful in the e-marketplace, companies need to not only add value to their existing
products/services, but also continuously invent new products and services to provide new
15

value to the customers. Companies need to reverse their value chain: In a reverse value chain,
companies define their businesses by the products they offer. They need to change to a
business design which has an outside in approach. The central focus of a company changes
from competencies to the customer. Also, all the business processes need to focus on the value
they are adding for the customers.
The companies which do not reinvent themselves will find new firms, which cater to the
changing customer needs, gaining market shares suddenly. Due to structural transitions, the
traditionar-h1mtels become obsolete. The reconfigurations of business processes and
integration of competencies, channel, infrastructure etc. can lead to a new business design. In
e-business, however, these processes have to be reinvented.
Choosing a Narrow Focus
Companies should choose a narrow focus of their business operations to control the change,
since it is difficult to excel in all the areas of a business. Successful companies try to narrow
the circle of competence. To narrow creative thinking and to retain leadership, the companies
rely on three types of competencies. These are:
• Service excellence;
• Operational excellence; and,
• Continuous innovation excellence.
Service excellence
To achieve service excellence, a company should choose high-value customers and make
focused efforts to serve them well. Companies should respond to the customers requirements
quickly and efficiently. It will lead to excellent customer relationship management practices in
the organization. The principles of service excellence are to:
• Prepare the company for unforeseen circumstances which can follow as a result of new
entrants coming into the market.
• Maintain up-to-date, accurate information. This will enable a company to take strategic
decisions from the information available.
• Put into action excellent customer contact management system, which stores information
such as, when the customer transacted with the company, which channel was used, the
outcome of the transaction, etc. This gives a better understanding of the customers, their
preferences and expectations.
• Develop a corporate philosophy of customer service, which will change the outlook of
the firm and introduce new ways of customer service.
Operational excellence
Organizations need to break organizational barriers, so that information flows freely between
the vendors, suppliers, customers, end users, etc. If the raw material suppliers are provided
real-time information regarding inventory level, production schedule, delivery dates, etc. they
can plan their delivery schedules accordingly. If a supplier knows the company's production
plans, it can arrange its production schedule accordingly. Therefore, companies need to work
with the organizations (they deal with) like a single virtual organization. This will decrease
the cost, facilitate prompt service to the customers and minimize customer inconvenience. A
firm will be at an advantage because it can be closer to the customers. The key principles of
operational excellence are:
• Optimization of resource utilization: Organization resources should be allocated in a
manner that their utilization is optimal.
• Integration of supply chain operations: Organizations should integrate their supply chain
operations so that they can service their customers efficiently and speedily.
• Management of market information: Organizations should keep track of trends in the
market and economy and use this information to develop new products and services
satisfy their customers better.
• Management of control systems: Organizations need to have efficient and effective
control systems to achieve operational excellence. These systems should measure and
monitor the business process so that the costs of the products and services can be
reduced and quality can be improved.
• Customer expectation: For better customer satisfaction, a firm should have a variety of
product offerings. It should take care that a larger number of products do not affect the
quality.
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Continuous innovation excellence
Firms should continuously adapt to changes, innovate new products and services and offer
superior value to their customers. The principles guiding continuous innovation are:
• Risk-oriented management style - Companies, which are product innovators, often face
greater risks when they undertake new ventures.
• Mergers and acquisitions - Companies can achieve their growth objectives through
mergers and acquisitions especially the companies who design new products.
• Market education style - Firms should try to educate the customers about using the new
products and how they are useful to them.
• Encourage innovation - Firms should allow their people to experiment, reward
successful people and thus foster an environment for continuous innovation.
7. Properties and Specifications of Digital Currencies
< TOP >
The digital currencies and payment systems should have the monetary properties of cash and
the requirements of digital communication networks. Following are some fundamental
properties, which digital currencies should have:
• Monetary value
• Convenience
• Security
• Authentication
• Accessibility and Reliability
• Anonymity
Monetary value
Digital currency should have a value, which can be exchanged for other goods and services. It
should be transferable and one should be able to use it to pay for other obligations. Digital
currency does not have an intrinsic value and therefore it has to be linked to another system
of value. The most common method is to base the value of digital currency on bank deposits,
credits or pre-payments using the real currency. As digital currency becomes more and more
acceptable, the full functionality of a currency like exchangeability and transferability may be
achieved.
Convenience
Digital currency should be convenient to use, store, access and transport. It should be scalable
and interoperable and‡ compatible with different platforms and operating systems.
Security
Digital currencies should be very secure because they are more susceptible to theft. Some
online digital currencies use encryption technology. Others use smart cards which store the
digital currency in tamper proof hardware. These smart cards should withstand accidents and
careless handling like washing, etc.
Authentication
Digital currency is verified by authenticating the digital signatures of banks or payers
attached to the digital currency or by contacting a, trusted third party each time a transaction
is made.
Accessibility and reliability
Digital currency has the advantage over physical cash because it can be transported over a
network conveniently. A person may have digital cash at his home PC and can access it
through modem and telephone line from anywhere. As a network is used for payment, digital
payment systems should be reliable and easy to access.
Anonymity
Unlike non-cash transactions, cash transactions are anonymous. An anonymous payment
system is required to hide customer purchasing pattern and other related information. The
degree of anonymity can vary between different digital-currencies. Some systems can hide
only payee information, while others can hide bank's information or both. In case of strong
anonymity, it becomes difficult to trace the user's identity. But, in case of weak anonymity,
the user's identity can be traced. Anonymity is a controversial aspect because it may result in
tax evasion, money laundering and other criminal usage of this currency. But anonymity in
17

tax evasion, money laundering and other criminal usage of this currency. But anonymity in
digital currencies reduces transaction costs by eliminating third party verifications and
prevents information from being exposed to third parties or merchants, which may be used
for price discrimination against consumers/users.
< TOP OF THE DOCUMENT >
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