Certified Supply Chain Professional (CSCP) Practice Exam

Which of the following is a key justification factor for electronic business?

1. Security measures

2. Market share

3. Costs and benefits

4. Customer preferences

The correct answer is: Costs and benefits

Costs and benefits is considered a key justification factor for electronic business because it fundamentally assesses the financial implications of adopting e-business strategies. Organizations need to evaluate the costs associated with implementing and maintaining electronic business systems against the potential benefits they can derive. This includes considerations such as reduced operational costs, increased efficiency, and improved revenue streams through expanded reach and sales opportunities. Understanding the cost-benefit analysis helps businesses make informed decisions on investing in technology and digital infrastructure. A thorough analysis can reveal how electronic business can lead to cost savings through automation, improved supply chain efficiencies, and enhanced customer experiences, ultimately affecting the company’s bottom line positively. In contrast, while security measures, market share, and customer preferences play important roles in shaping e-business strategies, they serve as supporting factors rather than primary justification for the overall investment in electronic business. Security is critical for operations but is more related to risk management than justifying e-business in itself. Market share reflects competitive positioning, which can be a result of e-business but does not directly justify the shift to electronic operations. Customer preferences are vital for tailoring services but again do not serve as a standalone justification for making such a fundamental shift in business operations.