BA 320 Midterm Questions

Network effect vs. cross-side network effect

(Cross-Side) Network Effect The impact that the number of users of a platform has on the value created for each user. In economics, a network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Network effects are typically positive, resulting in a given user deriving more value from a product as more users join the same network.

Please fill the name of the industry in the chart that summarizes the profit ratio between 1996 and 2004.

1) Airline Industry 2) Airport Industry 3) GDS

In 2020, Uber announced that it was purchasing PostmatesLinks to an external site. , a delivery platform, for $2.65 billion. Before being acquired, Postmates was facing a serious competitors, including Uber, in the same target market. The company's strategy is to focus on radically lowering the price per order so that can 1) build larger customer base faster than their competitors so that it can attract the participation of more restaurants, and make such restaurant focus solely on Postmates rather than 2) also participating in other similar platforms such as Uber EatsLinks to an external site.. Which of the following terms are the closest to describe 1) and 2) above?

1) cross side network effects, 2) multihoming

An Uber-commissioned study claims the firm's impact on the US economy tops $____________ a year.

2.8 billion

In the chart below, which description is not relevant to the category of jobs that is pointed by the red arrow?

26 % of activities of this job-category is automatable with the curently available technologies

First mover advantage: what are the factors in the knowledge industry that make the first mover advantage important?

A first mover is a service or product that gains a competitive advantage by being the first to market with a product or service. Brand name recognition is the main first-mover advantage, Economies of scale, particularly those regarding manufacturing or technology-based products, is a massive advantage for first movers, Switching costs let a first-mover build a strong business foundation. Disadvantages: For example, other businesses can copy and improve upon a first mover's products, thereby capturing the first mover's share of the market.

Please fill the blank with a word that best describes the underlying belief of business model such as Uber or Classpass? "Consumer demand based on the needs for OWNERSHIP will shift to the needs for _______________" Read this article by Kevin KellyLinks to an external site. to think more on this notion.

ACCESS

On page 39 to 40 of the HBS article ("What is strategy), classic examples from southwest airlines were presented to illustrate the concept of formulating a unique fit among tailored activities that collectively contributes to deliver low-cost, convenient services to their short-customers targets that full-service airline could hardly imitate due to the unavoidable trade-offs of adopting such choices. Which of the following is not among such activities?

Adopting a hub-and-spoke operation to reach large number of destinations

Which of the following statements is true about Airbnb's revenue model?

Airbnb charges both property owners and guests as part of transactions on their website.

_______ refers to the technology used to integrate Uber with other services, including OpenTable, Google Maps, and Spotify.

Application Programming Interface

According to N. Carr, Attention Residue , cognitions about a Task A that persist even though one has stopped working on Task A, transitioned to Task B, leads to a lower cognitive engagement and creates an environment of "shallow work" where people can hardly develop a well digested knowledge.

Attention Residue

According to Carr, a deep engagement in reading on a subject physically reinforces the neural pathways around the subject within our brain , structurally reinforcing our intelligence. Which of the following does NOT facilitate such process?

Automation Complacency

____________________ occurs when a computer lulls us into a false sense of security and allows our attention to drift.

Automation complacency

In the face of lowered profitability, some U.S airlines initiated frequent- flier programs that accumulates mileage for their customers. From the Porter's five forces perspective, which of the following results was most likely to be expected by those airlines?

Bargain power of buyers was lowered

Which of the following is most likely to be considered information?

Best-selling item by month

Which role within a company is responsible for overseeing all uses of MIS and ensuring that MIS strategic aligns with business goals and objectives?

Chief Information Officer (CIO).

Which of the following is closest to Michael Porter's definition of the "competitive advantage?"

Comparative positional superiority that leads a firm to outperform its rivals

In his controversial article, IT doesn't matter, Carr argues that as IT becomes increasingly ubiquitous and commoditized, the value of IT as a source of ___________________ is diminished.

Competitive advantage

Which of the followings is NOT considered the four advantages a successful platform model should cultivate?

Control of Internal Asset

Which of the following does NOT constitute the four advantages that a successful platform business can enjoy?

Control of Production Cost

Which of the following does NOT correctly compare the conventional (value-system) model vs. platform business model?

Conventional model relies on network effect

What is Information?

Data converted into a meaningful context that is relevant to your "problem"

Which of the followings is NOT one of Carr's contention appeared in his highly controversial HBR article, "IT doesn't matter", which instigated severe criticisms from IS academics and IT industry leaders?

Delaying IT investment is good because there is always first-mover advantage.

Which of the following companies can be considered in the category "b" in the Airline Distribution Channel Diagram below?

Expedia, Travelocity, Priceline, Orbitz

According to Friedman, which of the following symbolizes the unification of ideology in the global scale?

Fall of the Berlin Wall

According to the "theory of a firm" by Ronald Coase (1937), which of the following is NOT correct?

Firm size tends to stop expanding when the external transaction costs increase

In value chain analysis, Porter emphasizes establishing a set of "internally consistent configuration activities" that can set apart a firm from its competitors. Which of the following concepts explains it most closely?

Fit

According to Friedman, the global expansion of supply chaining contributes to a more peaceful international relationship beneficial to all participants. Which of the following view suggests an opposing view?

Free trade dries up domestic jobs in the U.S.

GDS, OTA, and emerging online business models in airline ticket distribution.

GDS is a Global Distribution Systems (e.g., SABRE, Amadeus, Galileo, Worldspan). A worldwide computerized reservation network used as a single point of access for reserving airline seats, hotel rooms, rental cars, and other travel related items by travel agents, online reservation sites, and large corporations. OTA is Online Travel Agency (e.g., Travelocity[SABRE], Expedia[MS, Worldspan], Orbitz[started by 5 Airlines : DL,CO, NW,UA,AA acquired by Expedia in 2015 ], Priceline). For Airlines, OTA better than Offline but less desirable than Direct Online.

Which of the following four strategic direction for successful platform is supported by the number one reason why people use OTA as shown above?

Good control of user interface

Friedman is often called a "neoliberalist" or a "globalist."Which of the following is not consistent with these perspectives?

Govermernt should play ana active role in maintaining the stability of free market economy.

Which of the following is a source of bargaining power of buyers?

Greater choice of products

In the following sales share per distribution channel chart in Europe, select category name for each color.

Grey:Other, Green:OTA, Blue:Airports' Direct online

Which of the following does not characterize the organizations of increasing return world?

Hierarchical organization

According to B. Arthur, which of the following is not a reason that information economy follows the assumption of "increasing -return" ( instead of "decreasing return")?

High marginal cost

The following is a part of five forces analysis on airline industry conducted by Cook and Billig (2017), which suggests that the airline industry is intensely competitive and, therefore, a challenging environment for profitability. Please fill in the blank. Bargaining power of supplier: High . Aircraft and engine producers are concentrated oligopolies and airports are local monopolies. Labor unions are powerful in most countries. Global distribution systems GDS(Global Distribution Systems) are still powerful although direct distribution is a rising alternative. The price of fuel, the largest expense for most airlines, is determined by global marketforces leaving airlines little power to bargain for lower prices.

High, GDS(Global Distribution Systems)

Which of the following is not among three generic strategy of a firm?

Hybrid Strategy

Which of the following is NOT a correct statement about "Technological Unemployment ?"

In the long run, the demand increases sufficiently to offset the reduced jobs through increased investment in other industries

Which of the following is NOT one of the common directions of strategic shift that platform business model has facilitated?

Increase the Ownership of Resources

In an effort to save money, Kevin opened a Facebook group finding other college students who need to purchase laptops. Soon, Kevin's Facebook group has close to 300 students. Kevin decides to approach computer stores to see if his group qualifies for a special discount. Which of the following represents the change in "the five forces" that the local computer store experiences?

Increasing bargain power of buyer

Which of the following is not one of the Three Generic Competitive Strategies?

Innovation

Which four elements are included in systems thinking?

Input, Process, Output, and Feedback.

According to Friedman, which of the following would commoditize the logistics capabilities and enable small companies and individuals to engage in trading of physical goods in global scale?

Insourcing

The following is a part of five forces analysis on airline industry conducted by Cook and Billig (2017), which suggests that the airline industry is intensely competitive and, therefore, a challenging environment for profitability. Please fill in the blank. Bargaining power of buyers: High Although there are millions of individual passengers, information on airlineproducts and prices is now rapidly available, cheap, and transparent because ofInternet Distribution . Switching costs are row and many leisure passengers viewthe airline coach seat as a commodity.

Internet Distribution, row

______________ includes the skills, experience, and expertise coupled with information and intelligence that creates a person's intellectual resources

Knowledge

Which of the following is not true regarding the competitive dynamics of most sharing economy marketplaces?

Late-movers have a substantial advantage in this market since inventory should be cheaper to acquire for those firms that have entered markets more recently.

_______ is an OSS version of Microsoft Office.

LibreOffice

The following is a part of five forces analysis on airline industry conducted by Cook and Billig (2017). Please fill in the blanks. Threat of new entrants: Medium. In the mature economies of North America and Europe, there are few new entrant airlines, but in the developing economies, new entrants, especially Low Cost Carriers (LCC) , continue to emerge. Threat of substitute products or services: Low to Medium. Although there are no substitutes for rapid, long-distance travel, high-speed rail is a competitor for short-hauls in Europe, Japan, China, and the U.S. northeast corridor. For short distances, the automobile is a strongsubstitute. Web Conferencing is also a competitor for some business travel.

Low Cost Carriers (LCC), Web Conferencing

Rethink innovation claims Baxter would rescue US manufacturing by lowering cost of production through technological innovation. Under which of the following conditions, the prediction could become false?

Manufacturers in other countries successfully introduce the Baxter-like robots in their factories better than (and before) the US manufacturing companies do.

Which of the following does not constitutes "transaction costs?"

Material Costs - counting the cost of material

According to Thomas L. Friedman, the first wave of globalization (Globalization 1.0) started with Columbus's discovery of the New World in 1492, the second wave (Globalization 2.0) came along with Industrial Revolution in 1800, and the third wave (Globalization 3.0) is ongoing with the global electronic interconnectivity beginning around 2000. In Globalization 1.0, _________ dominated global expansion. Globalization 2.0 was driven by the _______. In 3.0, major software advances are allowing an unprecedented number of _______ worldwide to work together with unlimited potential.

National Governments-Companies-Individuals

According to Friedman, which of the following foretold the beginning of the massive investments in IT infrastructure ?

Netscape IPO

According to Barney (1991), valuable, rare, inimitable resources can produce sustainable competitive advantage if they are also ____ resources.

Non-substitutable

_____ refers to software that is free and where anyone to look at and potentially modify the code.

Open source software

Which of the following led to the rise of new way of collaboration among large number of "prosumers?

Opensourcing

According to Brian Arthur, which of the following is not considered a characteristic of information economy?

Optimization is more critical than adaptation

Which of the followings are not the characteristics of popular platform model?

Optimized control of internal inventory

Essay: Platform business model vs. pipeline business model

Platform model creates value by creating an Ecosystem of two-sided markets strengthening the multi-sided Network effect. "Business environments that bring together individuals and organizations so they can innovate or interact in ways not otherwise possible, with the potential for nonlinear increases in utility and value (due to the cross- side network effects)? High potential to Scale the value: By eliminating gatekeepers & physical constraints, By leveraging network effect. Unlocking new source of value creation. Creating community feedback loops. "Products or services that create value by enabling direct interactions between (at least) two markets." Pipeline model: Conventional- Supply-side economies of scale Fending off challenges from Five Forces by erecting barriers External forces are considered "depletive" Assumption of competition: a zero-sum-game Five Forces are relatively stable (i.e., 5 forces around an airline)

What is data?

Raw facts that describe the characteristics of an event or object.

Which of the following companies can be considered in the category "a" in the Airline Distribution Channel Diagram below?

Sabre, Amadeus, Galileo, Wordspan

Which of the following is one of the sources of revenue for open source vendors?

Selling support and consulting services

Cloud vendors that are hosting hardware, operating system, database, and other software, which clients can then use to build their own applications, are said to be providing:

Software as a Service.

Why were fashion firms initially threatened by Rent the Runway and why has their position evolved over time?

Some designers were threatened by the thought that the service would kill sales since it is a renting company. Their position evolved because of Rent the Runway has become one of the largest online subscription companies. It makes these items more accessible to consumers.

_____ refers to performing different tasks than rivals or the same tasks in a different way.

Strategic positioning

Firms in the so-called "sharing economy" fuel more efficient matching of _______ and __________, lower costs, enable more efficient resource use, and provide a level of reach and services heretofore unavailable.

Supply, demand

What is the strategic management term that refers to the cost that customer incurs as a result of changing suppliers, brand or products ?

Switching costs

A system is a collection of parts that link to achieve a common purpose. ______________ is a way of monitoring the entire system.

Systems thinking

Which of the following points are NOT directly supported by the two charts below ?

Techical Unemployment is a "Capital-biased change"

Which of the following statements about technology is true?

Technological improvements can often be copied by rivals, leading to a profit-eroding arms race.

Which of the following does not rely on platform model?

Tesla

Which of the following is not among the critiques against the article, "IT doesn't matter?"

The computer age was everywhere except for the productivity statistics

Which of the following statements relating to open source software is true?

The flagship OSS product is the Linux operating system, now available on all scales of computing devices.

Classpass collects the "unused time slots" of classes at lower prices than their normal price, and provide the time slots to its customers since they have a digital capacity for highly efficient "revenue management algorithm" -- maximizing revenue by dynamic balancing of demand and prices" -- which is similar to that of airline companies. What is the common nature among the Classpass service, airline tickets, and hotel rooms that makes such a revenue management capacity so important.

They are selling "perishable" goods

Within a few years, Classpass has rapidly expanded its presence accross 28 countries, generating over 60 million reservations a year (2018) . Which of the following would be the most critical reason for this "massive scalability" of its business model?

They do not own the studios

Which of the following is one of Porter's five forces?

Threat of new entrants

Which of the following description is not consistent with the information shown in the chart below.?

Traditional Carriers save more money in selling the tickets

A firm can benefit from high switching costs, even when rivals offer free products.

True

Conventional software firms treat their intellectual property as closely guarded secrets and almost never provide the source code for their commercial software products.

True

To the question of "why are some companies more profitable than others", Michael Porter explains that the industry structure offers the first answer and it can be analyzed through five force analysis. Porter suggests that the second answer to the question would come from analyzing a firm's relative position within its industry to identify the differences in their activities. This analysis is called:

Value Chain Analysis

Which of the following refers to "breakdown of business processes (set of activities) of a firm to identify cost drivers and evaluate the strategic effectiveness of its business processes?

Value Chain Analysis

Which of the following is not highlighted as a source of switching costs?

Viral marketing

The sharing economy consists of which of the following?

all of the above

Uber's commitment to data allow the firm to:

all of the above

In discussing BPR (Business Process Reengineering), Hammer & Champy (1993) argued that "The design of workflow in most large corporations was based on ____________ about technology, people, and organizational goals that were no longer valid."

assumptions

Blindly adopting computers without considering the Process Reengineeering perspective could merely "reinforce" the old way of doing things with no improvement. In their discussion of BPR, Hammer and Champy famously stated that : "Automating a mess yields an ______ _______ "

automated mess

70% of industrial robots are utilized in ___________.

automobile factories

According to Brynjolfsson(2016), there are three observable characteristics of IT driven change that shapes technological unemployment . Which of the followings is not one of them?

business model inovation

MIS is _____________ function that ensures the ______________ to help companies operate cross functionally as a system to achieve a common purpose.

business, system thinking

Which of the following category is mostly specialized for servicing corporate travel accounts? And what is the name of this category of companies?

c: TMC

According to Porter, strategy is fundamentally about being _____.

different

The paths through which products or services get to customers are known as _____.

distribution channels

The following conditions are often referred to as the four factors that constitute a great work environment.Which of the four can be most substantially reinforced by information technologies.

efficient exchange of information

In the metaphor "world is flat," the "flatness" implies _______ ?

fair competition among people

Which of the diagrams would be used to explain the historical mechanism in which the technological unemployment did not happen.

graph with blue line

Which of the following diagrams suggests that the overall wage level will go down as the low cost general purpose robotics penetrate into labor market significantly increasing the labor supply.

graph with red line

The patent system is often considered to be unfairly stacked against startups because:

high litigation costs coupled with a few months of litigation can sink an early stage firm.

The more High forces you identify in the five force analysis of an industry, the less attractive the industry becomes. So it is strategic mandate for all companies to keep the five forces as High as possible.

high, high

One of the major concerns for firms in the sharing economy is uncertainty around the ability of these firms to continue to consider their workers as ____________ and not employees.

independent contractors

Which of the following is NOT one of the reasons that, unlike automobile industry, small & medium sized companies(SME) are NOT actively adopting industrial robots yet?

industrial robots are adaptable and flexible to use

Which of the following example does not explain the 'increasing returns?'

it converges on a market equilibrium

Open source software products often have fewer bugs than their commercial counterparts because of the:

large number of persons who have looked at the code.

Which of the followings will not be considered an upside of remote work environment design.

less connection to colleagues

The following is a part of five forces analysis on airline industry conducted by Cook and Billig (2017) which suggests that the airline industry is intensely competitive and, therefore, a challenging environment for profitability. Please fill in the blank. Rivalry among existing competitors: High. Even though most markets are oligopolies, airlines are highly competitive due to thelimited product differentiation and a perishable product provoke price competition .

limited product differentiation, price competition

The cost of producing an additional unit of a product is known as its:

marginal cost.

Which of the following is NOT considered a tactic for nurturing network effect of a digital platform?

optimize the internal processes

Platforms have existed for a long time (e.g., tuxedo rental shops, shopping malls) but in the platforms in the digital economy are completely new business model since information technology has removed physical constraints and created nearly frictionless participation for rapid scaling up .

physical constraints, frictionless participation for rapid scaling up

In 1980, when Microsoft allowed IBM to use MS Dos operating systems for free of royalty payments as long as only Microsoft alone could license the software to other computer manufacturers. Microsoft was thinking of attaining platform whereas IBM was thinking of attaining product .

platform, product

Below is a quote from Digital Economy (Tapscott, 2014 ed). Choose the words that can lead to understand the blurring of organizational boundaries of platform business models of today. But the Internet has caused transaction costs to plunge ........ Transaction costs still exist, but now they're often more onerous in corporations than in the marketplace. This is leading to the biggest change in the corporation in a century and how we orchestrate capability to innovate, create goods and services, and engage with the world........... From now on, the ecosystem , not only the conventional value chain of a corporation, should serve as the point of departure for business strategists.

plunge, ecosystem

The three generic strategies (Cost leadership, differentiation, and focus) are essentially ____ strategies

positioning

Through the classic Ford's example of BPR, Hammper and Champy emphasized that simply adding computers to an existing process will not improve anything by stating that : "What's reengineered was not simply the accounts payable function but the entire procurement _____________. "

process

Cloud computing refers to:

replacing computing resources with services provided over the Internet.

The CEO of Baxter argues that the emerging information technologies may create an opportunity for the US firms to bring the factories back to US. What is the term that describes such practice of bringing back the the manufacturing and services from overseas?

reshoring

Benefits related to a firm's size are referred to as _____.

scale advantages

Which of the following description is NOT correct about the services in "b" and "d?"

services in "b" send the users to airline webpage whereas services in "d" make booking for the users in their own sites.

Choose a word that best describes the meaning of "workflow software."

standardization of informatin flow

A firm's financial performance that consistently outperforms its industry's peers is known as _____.

sustainable competitive advantage

If a new entrant hopes to attract customers from an established incumbent, the new entrant must ensure that the value they offer exceeds the incumbents' value in addition to any perceived _____.

switching costs

"We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, __________________________ . This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour"- John Maynard Keynes, 1930

technological unemployment

The software business is extremely profitable compared to the hardware business because:

the marginal cost to produce an additional copy of a software product is effectively zero.

Which of the following is NOT true for the blank. Some economists suggest that the recent concern about the possibility of massive technological unemployment is invalid (i.e., it is a Luddite Fallacy) because____________________.

total number of jobs will decrease by the new technologies

Platform refers to: 1) "Product or services that create value by enabling direct interaction between (at least) two markets." 2) "Business environments that bring together individuals and organizations so they can innovate or interact in ways not otherwise possible, with the potential for non-linear increases in utility and value."

two, non-linear

The set of activities through which a product or service is created and delivered to customers is known as a(n) _____.

value chain

value chain refers to the collection of all activities a firm performs to create value. The purpose of value chain analysis is to identify a unique configuration of activities that distinguishes a firm from its competitors.

value chain, unique configuration of activities

A server running _____ can create smaller compartments in memory that each behave as a separate computer with its own operating system and resources.

virtualization software