ISC301 176-200

The most attractive industries for a vertical exchange are characterized by:

• stagnant technology
• a market in which a small number of very large orders account for more than half the total market volume per year
• many fragmented buyers and sellers
• a few very large players that totally dominate the industry

When membership fees are the basis for revenue generation in an e-exchange, it has been shown that:

• there should be a fee for every service provided; there should be no free services for members.
• the higher the fees charged, the greater the total profit.
• low membership fees often result in losses to the exchange,; however, high fees discourage participation.
• when fees are very low, the exchange sees greater utilization which leads to greater revenue and profit.

In dealing with exchange members, the management of the exchange should:

• make certain that the exchange is neutral in its dealings with all members.
• leave the management of day-to-day operations of the exchange to the members.
• strive to maximize exchange revenues through charging the highest possible fees.
• take special care of the companies that share ownership in the exchange.

Brand building is important in B2B exchanges because:

• exchange members typically buy only the best brands of product.
• information flow is poor in most exchanges, making trust of suppliers very important.
• it is easy for exchange members to change to another exchange.
• exchange members typically buy products at the lowest cost unless branded.

From 2001 to 2006, a majority of e-exchanges:

• devised new methods to increase revenues and profits
• folded due to a lack of customers, cash, or both
• increased in size due to mergers of small e-exchanges
• expanded by adding business partners

Attracting large business sellers to public exchanges is often difficult for all of the following reasons EXCEPT:

• it is sometimes difficult to recruit large suppliers
• they are required to pay transaction fees even when they engage in transactions with existing customers
• advertising costs in public exchanges are very expensive
• competitors who are also exchange member may gain access to confidential information

Using tunneling technology to improve security of communication over the Internet is called:

• electronic data interchange (EDI).
• virtual private network (VPN).
• Internet protocol (IP)
• local area network (LAN)

An exchange that handles materials used by companies in different industries is referred to as a(n):

• vertical exchange
• horizontal exchange
• commodity exchange
• lateral exchange

A company's internal operations and its relationships with suppliers and other business partners are frequently:

• much more complex than customer-facing applications such as taking an order online.
• as complex as customer-facing applications such as taking an order online.
• much less complex than customer-facing applications such as taking an order online.
• replaced by customer-facing applications.

For a manufacturer, the supply chain ends:

• when the supplier delivers raw materials and component parts to the manufacturer.
• when the product is used up and disposed of.
• when the customer buys the product.
• when the customer decides he/she is satisfied with a product.