Business Study Guide

Q&A
2023

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Contents

Chapter (9) | Attracting and Retaining the Best Employees ............................................. 3

Chapter (11) | Building Customer Relationships Through Effective Marketing .............. 8

Chapter (12) | Creating and Pricing Products that Satisfy Customers .......................... 10

Chapter (13) | Distributing and Promoting Products ...................................................... 16

Chapter (14) | Exploring Social Media and e-Business ................................................... 19

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 1. List the three main HRM activities and their objectives.

Human resources management consists of all activities that involve acquiring, maintaining, and
developing an organization’s human resources. Acquiring people for the organization includes planning
and other activities that lead to hiring new personnel. Maintaining employees includes employee
relations and adequate compensation and benefits that help retain people. The development phase
includes training and development and performance appraisals.

1. Acquisition includes:
a) Human resources planning—determining the firm’s future human
resources needs
b) Job analysis—determining the exact nature of positions to be filled
c) Recruiting—attracting people to apply for positions in the firm
d) Selection—choosing and hiring the most qualified applicants
e) Orientation—acquainting new employees with the firm

2. Maintaining human resources consists primarily of encouraging employees to

remain with the firm and to work effectively by using a variety of HRM
programs, including:
a) Employee relations—increasing employee job satisfaction
b) Compensation—rewarding employee effort through monetary payments
c) Benefits—providing rewards to ensure employee well-being
3. The Development phase of HRM is concerned with improving employees’ skills
and expanding their capabilities, including:
a) Training and development—teaching employees new skills and new jobs
and more effective ways of performing their present jobs
b) Performance appraisal—assessing employees’ current and potential
performance levels
2. How is a forecast of human resources demand related to a firm’s organizational
planning?

Forecasting Human Resources Demand : Planners should base human resource

demand on all relevant information available.

1. The firm’s overall strategic plan will provide information about future business
ventures, new products, and projected expansions or contractions of particular
product lines.
2. Information on past staffing levels, evolving technologies, industry staffing
practices, and projected economic trends can also be helpful.

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HRM managers use forecasting information to determine both the number of employees required
and their qualifications.
3. How do human resources managers go about matching a firm’s supply of workers
with its demand for workers?

Forecasting Human Resources Supply. A forecast of human resources supply must take into
account both the present workforce and any changes or movements that may occur within it. Two
useful techniques for forecasting human resources supply are the replacement chart and the skills
inventory.

1. A replacement chart is a list of the key personnel, along with possible

replacements within the firm.
2. A skills inventory is a searchable database containing information on the skills
and experience of all present employees.

Matching Supply with Demand. Once they have forecasted the supply and demand for
personnel, HR planners can devise a course of action for matching one with another.

• When demand is predicted to be greater than supply, they must make plans
to recruit new employees. The timing of recruitment efforts depends on the
type of positions to be filled.
• When the supply of employees is predicted to be greater than demand, the
firm must take steps to reduce the size of its workforce.

a) When the oversupply is expected to be temporary, some employees may be laid off—
dismissed from the workforce until they are needed again.

b) Perhaps the most humane method for making personnel cutbacks is through attrition, the
normal reduction in the workforce that occurs when employees leave the firm.

c) Early retirement is another option. Under early retirement, employees who are within a few
years of retirement are permitted to retire ahead of schedule with full benefits. Buyouts are similar
to early retirement in that employees are of- fered a severance package to leave their jobs.

d) As a last resort, unnecessary employees are sometimes simply fired.

4. How are job analysis, job description, and job specification related?

Job analysis is a systematic procedure for studying jobs to determine various elements and
requirements. A job description is a list of the elements that make up a particular job duties,
working conditions, responsibilities, and tools and equipment used on the job. A job
specification is a list of the qualifications required to perform a particular job skills, abilities,
education, and experience.

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 5. Compensations are used to maintain the needed human resources. Discuss the
three decisions that need to be made to arrive at the appropriate compensation
level.
Compensation is the payment that employees receive in return for their labor. The firm’s
compensation system—the policies and strategies that determine employee compensation—must
be designed to provide for employee needs while keeping labor costs within reasonable limits. To
arrive at the appropriate compensation level, the three decisions that managers need to pay attention
to are:

1. Wage Level. Management must first position the firm’s general pay level
relative to pay levels of comparable firms. To determine what the average is, the
firm may use a wage survey, which is a collection of data on prevailing wage
rates within an industry or a geographic area.
2. Wage Structure. Next, management must decide on relative pay levels for all
the positions within the firm. The result of this set of decisions is called the
firm’s wage structure.
3. Individual Wages. The company must determine the specific payments
individual employees will receive.
6. Contrast between the employee training and management development. List the
five training methods we studied and describe two.

Employee training is the process of teaching operations and technical employees how to do their
present jobs more effectively and efficiently. Management development is the process of
preparing managers and other professionals to assume increased responsibility in both present and
future positions. To setup a proper training program managers need to study the following

1. Analysis of Training Needs

2. Training and Development Methods.
I. On-the-job methods—The trainee learns by doing the work under the supervision
of an experienced employee.
II. Simulations—The work situation is simulated in a separate area so that learning
takes place away from the day-to-day pressures of work.
III. Classroom teaching and lectures.
IV. Conferences and seminars—Experts and learners come together to discuss
problems and exchange ideas.
V. Role-playing—Participants act out others’ roles in the organization in order to
better understand them (primarily a management development tool).
VI. e-Learning—Participants train by watching videos of lectures or how-to guides
3. Evaluation of Training and Development.

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 7. Define “performance appraisal.” Contrast between the commonly used evaluation
techniques.

Performance appraisal is the evaluation of employees’ current and potential levels of performance
to allow managers to make unbiased human resources decisions. Performance appraisal has three
main objectives. First, managers use performance appraisals to let workers know how well they are
doing and how they can improve in the future. Second, it provides an effective basis for distributing
rewards, such as pay raises and promotions. Third, it helps the organization monitor its employee
selection, training, and development activities.

1. Objective Methods. Objective methods use some measurable quantity as the basis for
assessing performance. ; Units of output, dollar volumes of sales,
2. Judgmental Methods. They require that the manager judge or estimate the employee’s
performance level. using rating scales is the most popular judgmental appraisal
technique.
8. What are the advantages and disadvantages of external recruiting and of internal
recruiting?

1. External Recruiting. is the attempt to attract job applicants from outside the organization
it brings people into a firm who have new perspectives and varied business backgrounds. A
disadvantage of external recruiting is that it is often expensive and may also provoke
resentment among present employees who wish to advance within the company.
2. Internal recruiting involves considering present employees as applicants for available
positions. its advantages is that it offers motivation for current employees Promoting from
within provides strong motivation for current employees and help firms to retain their
qualified and quality employees. Disadvantages of internal recruiting are that filling from
within still leaves one other job open and that it costs more to train two employees instead
of one.
9. In your opinion, what are the two best techniques for gathering information about
job candidates?
Selection is the process of gathering information about applicants for a position and using that
information to choose the most appropriate applicant.

1. Employment Applications.
2. Employment Tests.
3. Interviews
4. References

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 10. Why is orientation an important HRM activity?

Orientation is the process of acquainting new employees with an organization. Topics that are included
in an orientation could range from the location of vending machines or the company cafeteria to career
paths and training opportunities in the firm. The orientation itself may range widely from a half-hour
informal presentation to an elaborate program involving dozens of people and lasting several days or
weeks. It makes sure that the employees are welcomed to their new position and their new environment
within the company and its culture; it would give them a sense of hospitability, comfort and
adaptability to the new workplace, work-mates and the nature of the job they are to perform
comfortably.
11. Are employee benefits really necessary? Why?

An employee benefit is a reward in addition to regular compensation that is provided to employees.

Employee benefits consist mainly of services (such as insurance) that are paid for partially or totally
by employers and employee expenses (such as college tuition) that are reimbursed by employers.

Some benefits are required by law. For example, employers must maintain workers’ compensation
insurance, which pays medical bills for injuries that occur on the job, companies offer benefits to
attract and retain employees and make sure that employee satisfaction is met so that in return the
maximum employee performance is delivered therefore the companies goals and objectives are met
and increase employees’ loyalty towards their company.
12. Why is it so important to provide feedback after a performance appraisal?
Employee performance feedback offers an employee a realistic view of his or her strengths and
weaknesses within the firm. The feedback should explain the basis for present rewards and should let
the employee know what he or she can do to be recognized as a better performer in the future. This
allows employees the opportunity to understand how they can improve and strive to be a more valued
employee.
13. Suppose that you have just opened a car sales showroom and repair shop. Which of
your employees would be paid wages, which would receive salaries, and which would
receive commissions?

1. Hourly Wage. An hourly wage is a specific amount of money paid for each hour worked.
People who earn wages are paid their hourly wage for the first 40 hours worked in any week.
Anything in excess of 40 hours is overtime, for which they are paid one-and-one-half times
their hourly wage. (Security guards, custodians and utilities’ managers)
2. Weekly or Monthly Salary. A salary is a specific amount of money paid for an employee’s
work during a set calendar period, regardless of the actual number of hours worked. (Most
professional and managerial positions are salaried.)
3. Commissions. A commission is a payment that is some percentage of sales revenue.
(Sales representatives and sales managers)

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Chapter (11) | Building Customer Relationships Through Effective
Marketing

1. Identify and describe the four major types of utility. Which one is influenced
indirectly by marketing efforts?

Form utility is created by converting production inputs into finished products.

Place utility is created by making a product available at a location desired by customers.

Time utility is created by making a product available when customers wish to purchase it.

Possession utility is created by transferring title, or ownership, of a product to a buyer.

Marketing efforts may influence form utility indirectly because the data gathered as part of
marketing research are frequently used to determine the size, shape, and features of a
product.
2. Your firm would like to implement the marketing concept. What information will you
need? Since the acquisition of information costs money, justify your need for this
information.

Your firm must obtain information about its present and potential customers and determine
not only what customers’ needs are but also how well these needs are being satisfied by
products currently in the market. You must ascertain how its products might be improved
and what opinions customers have about the firm and its marketing efforts. This information
is needed to pinpoint the specific needs and potential customers toward which it will direct
its marketing activities and resources. This focus allows for a cost savings and potential for
increased revenue in the long run.
3. Describe the two broad targeting approaches in business, and give an example of
each.

The undifferentiated approach is when a company designs a single marketing mix and
directs it at the entire market. Staple items like salt and sugar fall in this category. The
market segmentation approach is when the firm directs its attention and marketing to a
particular portion, or segment, of the total market. Categorizing cars as sports cars, family
cars, or off road is an example.

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 4. What four main elements does the marketing mix contain?
Every marketing mix contains the following:

Product, which includes product design, brand name, packaging, and warranties

Price, which is concerned with both base prices and discounts of various kinds

Place/ Distribution, which involves not only transportation and storage but also the
selection of intermediaries

Promotion, which focuses on providing information to target markets

5. What are the major forces in the marketing environment?

The economic forces affect economic conditions and customers’ ability and willingness to
buy. Sociocultural forces are influences in a society and its culture that result in changes in
beliefs and lifestyles. Political forces are the influences that arise through the actions of
elected and appointed officials. Competitive forces are the actions of competitors that
influence the process of implementing marketing plans. Legal and regulatory forces are the
laws that protect consumers, competition, and control marketing. Technological forces are
the technological changes that can create new marketing opportunities or cause products
to possibly become obsolete.
6. What are the major steps in the consumer buying decision process? Describe the
factors that are believed to affect this process.

Consumers go through recognizing the problem, searching for information, evaluating

alternatives, purchasing, and evaluating the purchase after it’s been made. There are
often situational, psychological, and social influences that factor into the consumer buying
decision process.
There are five steps in the buying decision process. It starts with the pre-purchase stage and
ends at the post-purchase stage. The buyer decision process consists of the following steps:

1. Need recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase behavior

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Chapter (12) | Creating and Pricing Products that Satisfy Customers
1. Describe the major stages of the product life-cycle.

The four stages of the product life-cycle are

(1) Introduction

This product life cycle stage involves developing a market strategy, usually through an investment in
advertising and marketing to make consumers aware of the product and its benefits.

At this stage, sales tend to be slow as demand is created. This stage can take time to move through,
depending on the complexity of the product, how new and innovative it is, how it suits customer
needs and whether there is any competition in the marketplace. A new product development that is
suited to customer needs is more likely to succeed, but there is plenty of evidence that products can
fail at this point, meaning that stage two is never reached. For this reason, many companies prefer
to follow in the footsteps of an innovative pioneer, improving an existing product and releasing their
own version.

(2) Growth,

If a product successfully navigates through the market introduction it is ready to enter the growth
stage of the life cycle. This should see growing demand promote an increase in production and the
product becoming more widely available.

The steady growth of the market introduction and development stage now turns into a sharp upturn
as the product takes off. At this point competitors may enter the market with their own versions of
your product – either direct copies or with some improvements. Branding becomes important to
maintain your position in the marketplace as the consumer is given a choice to go elsewhere. Product
pricing and availability in the marketplace become important factors to continue driving sales in the
face of increasing competition. At this point the life cycle moves to stage three; market maturity.

(3) maturity,

At this point a product is established in the marketplace and so the cost of producing and
marketing the existing product will decline. As the product life cycle reaches this mature
stage there are the beginnings of market saturation. Many consumers will now have bought
the product and competitors will be established, meaning that branding, price and product
differentiation becomes even more important to maintain a market share. Retailers will not
seek to promote your product as they may have done in stage one, but will instead become
stockists and order takers.

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(4) decline.

Eventually, as competition continues to rise, with other companies seeking to emulate your
success with additional product features or lower prices, so the life cycle will go into decline.
Decline can also be caused by new innovations that supersede your existing product, such as
horse-drawn carriages going out of fashion as the automobile took over.

Many companies will begin to move onto different ventures as market saturation means there
is no longer any profit to be gained. Of course, some companies will survive the decline and
may continue to offer the product but production is likely to be on a smaller scale and prices
and profit margins may become depressed. Consumers may also turn away from a product in
favour of a new alternative, although this can be reversed in some instances with styles and
fashions coming back into play to revive interest in an older product.

Having a properly managed product life cycle strategy can help extend the life cycle of your
product in the market.

To determine which stage a particular product is in, the characteristics of that product
(increasing sales, more competitors, falling profits, etc.) can be compared to the
characteristics that exemplify each stage of the product life-cycle.
2. At what stage in the product life-cycle would sales volume tend to decrease sharply?
Why?

The decline stage of the product life-cycle is when sales volume decreases sharply and
profits fall. The decline stage is the last stage of the product life-cycle. Decline often occurs
due to technological advances or environmental factors or because consumers have
switched to competing brands.
3. Are a product mix and a product line the same thing? Why or why not?

No, a product line (depth) is a group of similar products that differ only in relatively minor
characteristics. They are often products that are related in the way they are produced,
marketed, or used. A product mix (width) consists of all the products a firm offers for sale-
-likely with little or no relationship among them.

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 4. Discuss the major ways that a product mix can be improved.

One way of improving a product mix of a company is through product modification, the
changing of one or more of a product's characteristics. The products need to be modifiable;
the change needs to be perceived by consumers, and the modification needs to fit with
customers' needs and wants. Quality modifications are changes that relate to a product’s
dependability and durability and are usually achieved by alterations in the materials or
production process. Functional modifications affect a product’s versatility, effectiveness,
convenience, or safety; they usually require redesign of the product. Aesthetic modifications
are directed at changing the sensory appeal of a product

A second way of improving a product mix is line extension, the development of a product
closely related to one or more products in the existing product line.
5. What are the major phases involved in the new product development process?

The phases of new-product development start with idea generation, followed by screening,
concept testing, business analysis, product development, test marketing, and
commercialization.
6. What are the characteristics of shopping products, specialty products, and
convenience products. Illustrate those characteristics with examples of products that
fit the categories.

Convenience products are relatively inexpensive, frequently purchased items for which
buyers want to exert only minimal effort, such as chewing gum or newspapers.

Shopping products are items for which buyers are willing to expend considerable effort on
planning and making the purchase, such as appliances and furniture.

Specialty products are items with special or unique characteristics for which a group of
buyers is willing to expend considerable purchasing effort, such as sports cars or antique
items.

7. Why Do Products Fail?

Mainly because the product and its marketing program are not planned and tested
as completely as they should be.

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 8. What Is a Brand?

A brand is a name, term, symbol, design, or any combination of these that identifies a
seller’s products and distinguishes it from other sellers’ products. A brand name is the part
of a brand that can be spoken. It may include letters, words, numbers, or pronounceable
symbols, such as the ampersand in Procter & Gamble. A brand mark, on the other hand, is
the part of a brand that is a symbol or distinctive design, such as the Nike “swoosh.”
9. Types of Brands

A manufacturer (or producer) brand, as the name implies, is a brand that is owned by a
manufacturer.

A store (or private) brand is a brand that is owned by an individual wholesaler or retailer. A

generic product (sometimes called a generic brand) is a product with no brand at all.

10. What are the Benefits of Branding

Brands are easily recognizable; they reduce the amount of time buyers must spend
shopping; buyers can quickly identify the brands they prefer. Brand can be a way of
expressing oneself. brands can help to judge the quality of the product. Brands can
symbolize a certain quality level to a customer, allowing that perception of quality to
represent the actual quality of the item. Brands thus help to reduce a buyer’s perceived risk
of purchase. Finally, customers may receive a psychological reward that comes from owning
a brand that symbolizes status. buyers already familiar with a firm’s existing brands, helps a
firm to introduce a new product that carries the same brand name. Branding aids sellers in
their promotional efforts because promotion of each branded product indirectly promotes
other products of the same brand.

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 11. What is brand loyalty, and the levels associated with it?

Brand loyalty is the extent to which a customer is favorable toward buying a specific brand.
The stronger the brand loyalty, the greater is the likelihood that buyers will consistently
choose the brand.

There are three levels of brand loyalty: recognition, preference, and insistence.

Brand recognition is the level of loyalty at which customers are aware that the brand exists
and will purchase it if their preferred brands are unavailable or if they are unfamiliar with
available brands. This is the weakest form of brand loyalty.

Brand preference is the level of brand loyalty at which a customer prefers one brand over
competing brands. However, if the preferred brand is unavailable, the customer is willing to
substitute another brand.

Brand insistence is the strongest level of brand loyalty. Brand-insistent customers strongly
prefer a specific brand and will not buy substitutes.

12. What are the different Branding Strategies a firm may employ

Individual branding is the strategy in which a firm uses a different brand for each of its
products. For example, Procter & Gamble uses individual branding for its line of bar soaps,
which includes Ivory, Camay, Zest, Safeguard, Coast, and Olay.

Family branding is the strategy in which a firm uses the same brand for all or most of its
products. Sony, Dell, IBM, and Xerox use family branding for their entire product mixes.

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 13. Describe non-price competition. When might it be used? How does product
differentiation allow a firm to exert some control over a product's price?

Non-price competition is competition based on factors other than price. It is used most
effectively when a seller can make its product stand out from the competition by distinctive
product quality, customer service, promotion, packaging, or other features. It can be used
when buyers are able to perceive the distinguishing characteristics and consider them
desirable.

When a product is differentiated, buyers perceive the distinguishing characteristics of a

product or service and will consider buying due to those characteristics. When customers
have chosen a brand for non-price reasons, they are not as swayed by competing firms
or brands.
14. Describe the three major pricing methods that firms employ.

Cost-based pricing is the simplest method of pricing. The seller determines the total cost of
producing, or purchasing, one unit and then adds an amount to cover additional costs and
profit. Demand-based pricing is based on the level of demand of the product and results in
a high price when product demand is strong and a low price when demand is weak.
Competition-based pricing is when a company considers costs and revenue secondary to
competitors' prices.

15. What is the formula to deduce the breakeven in quantity

Break-Even point (units)

=
Fixed Costs
÷
(Sales price per unit – Variable costs per unit)

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Chapter (13) | Distributing and Promoting Products
1. What is the goal of integrated marketing communications?

Integrated marketing communications is the coordination of the promotional efforts of a

firm to make sure that the most amount of information and persuasive impact is directed
towards customers to create and send a consistent message to them. It is increasingly
becoming accepted because it helps the efficient use of promotional resources, develop
long-term customer relationships, and coordinate and manage promotions to create a
consistent message to customers.

The major goal of integrated marketing communications (IMC) is to send a consistent

coordinated message to customers. This approach fosters not only long-term customer
relationships but also the efficient use of promotional resources.
2. What is the role of promotion in the marketing mix?

The role of promotion is to facilitate exchanges directly or indirectly by informing

individuals, groups, or organizations influencing and reminding them to accept a firm’s
products or to persuade to have more positive feelings about the firm. The broader role of
promotion is to maintain positive relationships between a company and various groups in
the marketing environment. The role of promotion depends on the quality and quantity of
information available to marketers about the organization’s marketing environment.
3. What are the four primary elements in an organization’s promotion mix? Briefly
describe each of the elements.

The four primary elements in an organization’s promotion mix include:

(1) advertising-paid non-personal messages communicated to a select audience

through a mass medium;
(2) personal selling--personal communication aimed at informing customers and
persuading them to buy a firm’s products;
(3) sales promotion use of activities or materials as direct inducements to customers or
salespersons; and
(4) Public relations--a broad set of communication activities used to create and maintain
favorable relationships between an organization and various public groups.

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 4. Why would a marketer identify and analyze the target audience before defining the
advertising objectives when developing an advertising campaign?

Since the target audience is the group of people toward whom a firm’s advertisements are
directed, identification of the target market is a necessary first step. The advertising campaign
can only be designed after the target market has been clearly identified as well as analyzed to
know what will likely work as advertising and what may not. The identification of the target
market is the foundation of the ad because without it, the marketer won't exactly know who
he/she is talking to and therefore won't be able to build the rest of the ad since all of the other
steps depend on who the ad is directed towards. The marketer would then define the objectives
of the advertisement later and base those objectives on who the ad is directed towards. Such
objectives could include sending the message to a certain demographic and increasing that
specific demographic's sales. This objective would be impossible to define if the marketer did
not know who the ad is going to be directed towards in the first place. Therefore, a marketer
must identify and analyze the target market first in order to then continue developing the ad
based on that audience and define the objectives that would be based on that audience.
5. What factors determine the specific promotion mix that a firm should use?

If a firm sells multiple products, then marketers usually use multiple promotion mixes at the
same time. The other factors that determine the specific promotion mix that a firm should use
include the nature of the target market, the size, the geographic distribution, socioeconomic
characteristics, characteristics of the product, the price of the product, the amount of
promotional resources available, and the cost and feasibility of different promotional
methods.
6. Why would a firm with its own advertising department use an ad agency?

Because the firm may benefit from the expertise of the agency in certain areas in advertising.
Also, the agency may bring a fresh perspective to the company’s products and advertising
plans.

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 7. Outline the major steps involved in developing an advertising campaign.

The major steps involved in developing an advertising campaign is to

firstly

Identify and analyze the target audience. Here one must pinpoint the organization’s target
audience group of people toward which a firm’s advertisements are directed, and develop an
effective campaign. Marketers must analyze such information as the geographic distribution
of potential customers.

Next step is to define the advertising objectives, which are the goals of an advertising
campaign that should be stated precisely and in measurable terms.

The third step is creating the advertising platform. An advertising platform includes the
important selling points or features that an advertiser wishes to incorporate into an
advertising campaign.

Next up is determining the advertising appropriation, which is the total amount of

money designated for advertising in a given period.

Fifthly we have developing the media plan. A media plan specifies exactly which media
will be used in the campaign and when advertisements will appear.

Afterwards there is creating the advertising message, where an advertiser must consider
when choosing words and illustrations that will be meaningful and appealing to persons in
the advertising target.

Then we have to execute the campaign. Execution of an advertising campaign requires

extensive planning, scheduling, and coordinating because many tasks must be completed on
time.

Lastly the organization must evaluate advertising effectiveness. A campaign’s success

should be measured in terms of its original objectives before, during, and/or after the
campaign.

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Chapter (14) | Exploring Social Media and e-Business
1. Describe some of the ways that a business may choose to interact with other
businesses or existing or potential consumers through social media.

Using social content sites has become a very effective way to reach consumers and business
customers. Social content sites allow companies to create and share information about their
products and services via blogs, videos, photos, and podcasts. For businesses selling to other
businesses, social content sites can also include webinars and online informational,
promotional materials.
2. Describe how a blog could be beneficial for a company.

A blog is a website that allows a company to share information in order to increase

customers’ knowledge about its products and services, as well as to build trust. Blogs can be
effective at developing better relationships with customers, attracting new customers, telling
stories about the company’s products or services, and providing an active forum for testing
new ideas.
3. Compare podcasts and social games as social media opportunities for businesses.
Why would you as a business owner choose one over the other? Which would be most
appropriate if a company were looking to insert advertising?

Podcasts are digital audio or video files that people listen to or watch online and work well
for businesses that want to offer audio or video content that would be available at any time
or anywhere. Businesses can place advertising within games or even create their own games.
Choosing one or the other has a lot to do with the target market a company is intending to
reach. For many businesses, inserting advertising in an existing game may be more effective
than creating an entirely new social game. Also, because of their popularity, many businesses
may be able to reach more customers with social games when compared to podcasts.
4. What is a social media community? List some specific characteristics that social media
communities offer?

Social media communities are social networks based on the relationships among people.
They are electronic communities that encourage two-way communication, allowing people
to develop profiles, and identify other people to connect with by using technology and the
Internet. Examples of social media communities include forums and wikis.
5. What is inbound marketing? Mention at least four tools of inbound marketing?

Inbound marketing is a marketing term that describes new ways of gaining attention, and
ultimately, customers, by creating content on a website that pulls customers in. Tools
include search engine optimization, blogging, videos, and social media.

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 6. Provide at least two examples of how crowdsourcing can be used by a company. Be
specific and provide realistic scenarios.

Crowdsourcing, the outsourcing of tasks to a group of people in order to tap into the ideas
of the crowd, can be used by a company to gather information or to build communities.
Chipsy use of crowdsourcing for people to create and vote for their favorite flavor, or
Vodafone for Marwan Pablo’s songs and TV spot or Starbucks' building of a crowdsourcing
community called Mystarbucksidea.com, Lego Ideas are examples.
7. What are KPIs, and what role do they play for a company? What are some typical KPIs
that an online retailer might use?

KPIs are key performance indicators and are measurements that define and measure the
progress of an organization toward achieving its objectives. KPIs are generally quantitative.
KPIs could be number of unique visitors or number of views to a blog or number of fans, likes,
or comments to Facebook. Qualitative measurements include customer satisfaction scores,
issue resolution rate, and resolution time. Typically, qualitative measurements are more
subjective when compared to objective quantitative measurements.
8. Are social media measurements always quantitative? Support your answer.

Social media measurements can also be qualitative. Qualitative social media measurement
is the process of accessing the opinions and beliefs about a brand. These qualitative
measurements may include using technology to detect the mood, attitudes, or emotions of
people who experience a social media activity or customer satisfaction scores or resolution
time, defined as the amount of time taken to resolve customer service issues.
9. How do e-business and e-commerce differ?

The definition of e-business is the organized effort of individuals to produce and sell, for a
profit, the products and services that satisfy society’s needs through the facilities available
on the Internet. E-business is used when someone is focusing on all business activities and
practices conducted on the Internet by an individual firm or industry. On the other hand, e-
commerce is a part of e-business and usually refers to the buying and selling activities
conducted online.
10. What are the two options for increasing profits in a small Internet-based company?

There are two ways to increase profit: increase sales revenue or reduce expenses. It may
be best to attempt to do both simultaneously.

Company could work to expand their social media presence in order to expose its products
to a wider and more diverse audience in the attempt to increase sales while simultaneously
sourcing vendors that could offer a lower price for materials. The firm could lower expenses
in order to increase profits.

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 11. Describe the two primary models of e-business.

The business-to-business (B2B) model is when businesses conduct business through the
Internet with other businesses. Examples include Dell Computers selling to corporate
clients or Ford’s linkage with thousands of suppliers. The business-to-consumer (B2C)
model represents businesses selling goods or services to consumers. Lands’ End or Barnes
and Noble selling directly to consumers through their website are examples.
12. Describe the internal and external forces that affect e-business.

Internal forces are those that are closely associated with the actions and decisions taking
place within a firm , a firm’s planning activities, organizational structure, human
resources, management decisions, information database, and available financing.

The primary external environmental forces affecting a business include globalization,

demographic, societal, economic, competitive, technological, and political and legal
forces.

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