ISM3011 Exam 2

Identify the accurate statement about Amazon.

Amazon employees are given the freedom to challenge even the most senior managers to all the way up to the founder.

Which of the following is true?

The three pillars of Amazon's business are large selection, convenience, and lower prices.

The Fire Phone has struggled because it is fighting:

All of the above, Fire Phone is fighting against switching costs with a malnourished network effect. While Fire OS is based on Android, it's different enough, as it only runs a subset of apps.

Which of the following is a benefit derived from Amazon's use of Kiva robots in its fulfillment centers?

All of the above. Reduces unload time for inbound inventory, Cuts average order fulfillment time, and Allows warehouses to store more product.

In the context of network effects, the term "network" refers to:

A common user base, utilized to communicate and share with one another.

Amazon reports a negative cash conversion cycle, which means it:

sells goods before it has to pay its suppliers.

In which ways is Amazon becoming a publisher?

Amazon has gotten into the book publishing business as well, creating several of its own "imprints" (publishing divisions). Amazon is also pulling a Netflix, moving aggressively into original programming. And Amazon's digital publishing ambitions aren't limited to the printed word.

Identify the true statement about Amazon.

Amazon takes a relatively long-term view with respect to investing in initiatives and its commitment to grow profitable businesses.

Which of the following is true of Amazon?

Amazon went seven whole years without turning a profit.

The ability to take advantage of complementary products developed for a prior generation of technology is known as _____.

Backward Compatibility. Backward compatibility refers to the ability of a firm to take advantage of complementary products developed for a prior generation of technology. Those firms that control a standard should ensure that new products have backward compatibility with earlier offerings. If not, they re-enter a market at installed-base zero and give up a major source of advantage-the switching costs built up by prior customers.

Which of the following is not a firm that has received an investment from Jeff Bezos?

Bezos has invested in all of the above businesses. (Twitter, Uber, The Washington post, and Blueorigin).

Online journal entries, usually made in a reverse chronological order, are known as _____.

Blogs.

A company using a(n) _____ strategy would seek to create and compete in uncontested market spaces, rather than competing in spaces and ways that have attracted many, similar rivals.

Blue Ocean. (According to the blue ocean strategy, instead of competing in blood-red waters where the sharks of highly competitive firms vie for every available market scrap, firms should seek the blue waters of uncontested, new market spaces).

Why is eBay an example of a two-sided network?

Buyers attract sellers and vice versa. Two-sided markets are network markets comprised of two distinct categories of participant, both of which that are needed to deliver value for the network to work. At eBay for transactions to work the market needs both buyers and sellers, and each category attracts the other.

The phenomenon of ________________________________________ exists when increasing numbers of users lower the value of a product or service.

Congestion effects. Congestion effects occur when increasing numbers of users lower the value of a product or service. This most often happens when a key resource becomes increasingly scarce.

The phenomenon known as ___________________ exists when a firm's potential partners see the firm as a threat. This threat could come because it offers competing products or services via alternative channels or because the firm works closely with especially threatening competitors.

Channel. Channel conflict exists when a firm's potential partners see that firm as a threat. This threat could come because it offers competing products or services via alternative channels or because the firm works closely with especially threatening competitors.

The phrase ______________ refers to efforts where participants share access to products and services rather than having ownership.

Collaborative Consumption

Owned media

Communication

You are at a packed stadium for the big game and you want to upload a photo of your team's touchdown using Instagram. Your mobile phone shows five bars of service, but you still can't access the Internet. This is likely an example of _______________.

Congestion effects. Congestion effects occur when increasing numbers of users lower the value of a product or service. This most often happens when a key resource becomes increasingly scarce. In this case, the constrained resource is the carrying capacity of nearby cell phone towers.

Envelopment is a strategy in which a firm seeks to:

Conquer a new market by making it a subset, component, or feature of its primary offering.(In envelopment, a firm seeks to conquer a new market by making it a subset, component or feature of its primary offering.)

When two or more markets, once considered distinctly separate, begin to offer similar features and capabilities, they are said to undergo _____.

Convergence. When two or more markets, once considered distinctly separate, begin to offer similar features and capabilities, they are said to undergo convergence. Market expansion sometimes creates rivals, who previously did not compete on a collision course, as markets undergo convergence.

An increase in the number of subscribers of yellow pages creates a rise in the number of advertisers. This is an example of _____ exchange benefits.

Cross-side. When an increase in the number of users on one side of the market (say video game console owners) creates a rise in the other side (software developers), that's called a cross-side exchange benefit.

________ are promotions that are not paid for or owned but rather grow organically from customer efforts or other favorable publicity. Examples include positive tweets, referring Facebook posts, and pins on Pinterest.

Earned Media.

The three sources of value for network effects include __________, staying power, and complementary benefits.

Exchange, The value derived from network effects comes from three sources: exchange, staying power, and complementary benefits.

Sock Puppets

Fake online persona created to promote a particular POV( point-of-view).

A/B Testing refers to an effort where prices fluctuate based on supply and demand conditions.

False, A/B Tests are a randomized group of experiments used to collect data and compare performance among two options studied (A and B). The ability to rapidly perform and act on A/B tests is an advantage that online firms have over offline rivals.

The AWS business is promising for Amazon in that it is used by more firms than any other effort. However, like many of Amazon's other "long bet" gambits, AWS has yet to earn any money.

False, AWS makes up only about seven percent of Amazon's overall revenue, but it is already a multibillion-dollar revenue generator. It kicks off about $1 billion in profits, and it's the firm's fastest-growing business.

Amazon's AWS industrial cloud computing products have struggled to gain traction against stronger, tech-centric products offered by industry leaders Google and Microsoft, but Bezos remains undeterred and will continue to invest despite Amazon's meager cloud computing market share.

False, AWS offers five times the utilized compute capacity of the next 14 cloud providers combined. AWS is already a multibillion-dollar revenue generator and the firm's fastest-growing business.

The Amazon cloud computing product known as Workspaces allows firms to manage their inventory and fulfillment within Amazon's own warehouses.

False, Amazon WorkSpaces provides access to fully-functional, remotely served, virtual Windows PCs through the cloud-offered up in a desktop browser window, or even on an iPad or Kindle Fire-for a low monthly fee. These kinds of products are great choices for clients that want.

Computers help make sure shelvers stack similar items next to each other. The goal? Make sure that if an order picker seeks something like Legos, they'll find all of the firm's offerings in one spot.

False, Amazon software enforces an additional rule when stocking shelves: no two similar products sit next to each other. While this makes Amazon's shelves look like an unorganized hodgepodge, when a product is the only one of its type in a given area, this actually reduces the chances.

The bread of devices running iOS, and the various versions of the fragmented iOS operating system present a far greater challenge for developers than the fairly unified Android standard.

False, Android devices with different hardware specs running different versions of Google's mobile operating system create a challenge for developers. As an example, consider thant Hong Kong mobile app developer Animoca does quality assurance testing with about four hundred.

Buying Twitch was bad investment for Amazon, as far fewer users tune in to watch other people play video games than tune in to watch conventional television network shows.

False, Buying Twitch was bad investment for Amazon, as far fewer users tune in to watch other people play video games than tune in to watch conventional television network shows.

Agency pricing refers to a situation where retailers buy books at the price specified by suppliers, but can then sell at any price they want.

False, In agency pricing, the publisher sets the price and the reseller gets a cut (usually around 30 percent in the market for electronic books).

While Amazon is the largest online retailer, the firm has struggled with customer satisfaction, largely because processes are automated and the firm offers little phone support or human assistance. The firm allows this tradeoff because it helps cut costs.

False, Strong brands are built largely through customer experience. As evidence of the strength of Amazon's brand, the firm has repeatedly scored the highest rating on the University of Michigan's American Customer Service Index (ACSI). Not only was it a rating that bested all other Internet retailers; it was the highest score of any firm in any service industry.

Fire TV is a risky bet because it enters a very mature market for home television streaming devices.

False, When Fire TV was introduced, just 8 percent of consumers in the United States own any kind of television-streaming media box. That may mean TV is still anyone's game to win.

Amazon was wise to base Fire products off of Android, since this means that all Android tablet apps will work on the Kindle Fire.

False, While Fire OS is based on Android, it's what is referred to as a modified Android 'fork', with differences significant enough that fire runs only a subset of Android apps.

The use of Kiva robots has also allowed Amazon to radically reduce headcount, saving the firm additional money by cutting its workforce.

False, While robot workers are cheaper than people, Kiva isn't a job-killer; in fact, Amazon has actually increased staff since deploying the robots. Says the firm's VP of Worldwide Operations, "Kiva's doing the part that's not that complicated. It's just moving inventory around. The person is doing the complicated work, which is reaching in, identifying the right product, making sure it's the right quality, and making sure it's good enough to be a holiday gift for somebody."

Staying power is important in technology industries because technology products such as office suite software, smartphone, laptops, and servers are so pricey.

False, staying power is important for consumers of technology products because investment over time usually greatly exceeds the initial price paid for a product or service. A user invests in learning how to use a system, buying and installing software, entering preferences or other data, creating files-all of which mean that if a product isn't supported anymore, much of this investment is lost.

Bezos is regarded as such a successful CEO in part based on his relentless focus on his firm's quarterly performance.

False.

Bloggers and other users of social media often refer to the MSM. This phrase stands for Media Social Methods

False.

Don't confuse blogs with conventional search engine results. Blogs are very important, but they do not influence the content that appears in searches through Google or Bing.

False.

While blogs are effective for communicating with the public, firms shouldn't use blogs for internal communication since everyone can see them.

False.

Corporations will want to be cautious about what is posted to wikis since wikis can be accessed by anyone.

False. In addition to the hundreds of public wikis, there are many thousand more that are hidden away behind firewalls, used as proprietary internal tools for organizational collaboration.

While Amazon took several years to turn a profit, the firm has been known for consistent and growing profits ever since.

False. Massive investments crushed Amazon profits in 2012, and despite over $74 billion in 2013 sales, the firm only made $274 million. 2014 had Amazon back in the red, losing nearly a quarter of a billion dollars.

Fire OS is a _____________ of the Android operating system, a copy that has been modified so much that it has become a distinctly separate product.

Fork - in software development (sometimes also called project fork). When developers start with a copy of a project's program source code, but modify it, creating a distinct and separate product from the original base.

Wisdom of clouds

Group of individuals (crowd) will have more insight then singular small group of trained professionals.

n order to achieve a negative cash conversion cycle a firm would want to:

Increase its account payable period and its inventory turns.

Which of the following is true of Amazon Web Services (AWS)?

It allows anyone with a credit card to access industrial-strength, scalable computing resources. (AWS, or Amazon Web Services, allows firms, and really anyone with a credit card, to rent industrial-strength computing capacity on an as-needed basis. The best-known offerings are Amazon's EC2 (Elastic Computing Cloud), which provides the virtual equivalent of physical computing hardware; and S3 (Simple Storage Service) providing Web-based storage.)

Trackbacks

Links in blogs that refer ready back to cited sources.

Network effects are sometimes called _____.

Metcalfe's Law. Network effects are also known as Metcalfe's law, or network externalities, and this concept has been leveraged by many technology firms to build massive user bases.

_____ has allowed Amazon to radically drop the price of Kindle offerings, while increasing device functionality.

Moore's Law. Moore's Law has allowed Amazon to radically drop the price of Kindle offerings, while increasing device functionality. When introduced, the high-resolution color Kindle Fire offered a touch-screen tablet experience for half the price of the competing iPad and quickly became the second bestselling tablet on the market.

Which of the following summarizes network effects?

More users = more value

Which statement best describes the relationship between network effects and innovation?

Network effects increase innovation within a standard but decrease the number of innovative offerings that compete against a strongly established standard.

Which of the following would not considered as contributing to the 'complementary benefits' value of network effects.

None of the above. Complementary benefits are those products or services that add additional value to the network. These products might include "how-to" books, software, and feature add-ons, even labor. Hardware products that can plug into a 'platform', such as speakers or even automobile integration (Apple CarPlay) are complementary benefits that enhance the value of the primary product or service offer.

One way firms seek to strengthen their platforms and encourage third parties to develop complementary goods is by:

Offering APIs. Products and services that encourage others to offer complementary goods are sometimes called platforms. Many firms do this by providing APIs, or Application Programming Interfaces, that allow third parties to integrate with their products and services.

A(n) _____ refers to a market dominated by a small number of powerful sellers.

Oligopoly. An oligopoly is a market which is dominated by a small number of powerful sellers.

A(n) _____ is the one that derives most of its value from a single class of users.

One-Sided Market. A one-sided market is the one that derives most of its value from a single class of users.

Free Rider Problems

Others take advantage of a user, a service without providing any sort of reciprocal benefit.

. Amazon does not

Own the inventory of items sold through the 'Fulfilled by Amazon' program. (Amazon doesn't own an inventory of marketplace items. Sellers can warehouse and ship products themselves, or they can opt to use Amazon's warehouses as part of the 'Fulfilled by Amazon' program.)

_______ are media from communication channels that an organization controls. These can include firm-run blogs and Web sites, any firm-distributed corporate mobile Web site or app, and organization accounts on social media such as Twitter, Facebook, Pinterest, YouTube, and Instagram.

Owned Media

________ refers to efforts where an organization pays to leverage a channel or promote a message. Paid media efforts include things such as advertisement and sponsorships.

Paid Media.

The phrase _____ is used to refer to situations in which users collaboratively work to create contents, products, and services. Examples include social media as well as service like Skype and BitTorrent.

Peer- Production

Products and services that can be considered to be a 'platform' allow for the development and integration of software products and other complementary goods are known.

Products and services that encourage others to offer complementary goods are sometimes called platforms. Allowing other firms to contribute to your platform can be a brilliant strategy because those firms will spend their time and money to enhance your offerings.

The roll back feature of a wiki page allows:

Restoration of the wiki page to a prior version. The roll back feature of wikis is useful for restoring earlier work in the event of a posting error, inaccuracy, or vandalism.

The term __________________________________________________ refers to showing ads for products and services from a site that a user has previously visited.

Retargeting. Retargeting displays ads for products and services from sites that users have already visited.

Benefits derived by interaction among members of a single class of participants are called _____ exchange benefits.

Same-side. Benefits derived by interaction among members of a single class of participants are called same-side exchange benefits. An example of same-side exchange benefits is the network effects derived from existing IM users attracting more IM users.

The phrase ________________ refers to the positive influence created when someone finds out that others are doing something.

Social Proof ( PayPal and Uber are firms that have both used these incentives as trust proxies, or what is sometimes referred to as social proof. When a friend sends an invite to a service where users may otherwise have trust concerns (e.g., PayPal and sharing of financial information, Uber and stepping into a car driven by a stranger), an endorsement by a friend can ease concerns.)

GitHub and StackOverflow are websites that are especially useful for students and professionals focusing on the _______________________ industries

Software development

_____ refers to the long-term viability of a product or service.

Staying Power. Staying power, along with complementary benefits and exchange, gives value to network effects. It refers to the long-term viability of a product or service.

Network effects increase innovation within a standard but decrease the number of innovative offerings that compete against a strongly established standard.

Subsidizing product adoption. In one admittedly risky strategy, firms may offer to subsidize initial adoption in hopes that network effects might kick in shortly after.

What concept related to staying power is also known by the phrases "being sticky," "creating friction," and "lock-in"?

Switching Costs. Switching costs also go by other names. You might hear the business press refer to products as being "sticky" or creating "friction." Others may refer to the concept of "lock-in." The concept of staying power is directly related to switching costs.

Storing digital goods in the cloud via a firm-controlled standard means a company will create the competitive asset of ______________.

Switching costs, With customer media snugly stored on Amazon's servers, downloaded when it is needed, the firm creates a big sticky switching cost that keeps customers wedded to Amazon products.

_____ refer(s) to competing by offering a superior generation of technology that is so much greater to existing offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits.

Technological leapfrogging. Technological leapfrogging involves competing by offering a new technology that is superior to existing offerings. Therefore, the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits.

Which of the following is an economic measure of the full cost of owning a product?

Total cost of ownership. Total cost of ownership is an economic measure of the full cost of owning a product. It includes direct costs such as purchase price, plus indirect costs such as training, support, and maintenance.

Amazon offers personal cloud storage options for all forms of media, including books, games, music, and video. It even offers file storage akin to Dropbox and Google Drive.

True, Amazon offers personal cloud storage options for all forms of media, including books, games, music, and video. It even offers file storage akin to Dropbox and Google Drive.

Apple is allowed to charge app developers a 30 percent surcharge on digital goods sold through any apps on its devices.

True, Apple legally charges app developers 30 percent for all revenue earned through in-app purchases, a fee that would further crater Amazon's thin-to-nonexistent margins on many e-books. As a result, Amazon dropped the "purchase" button from iOS Kindle apps

Netflix runs on Amazon Web Services.

True, Even firms that might consider Amazon as a rival, including Netflix and Dropbox, rely on AWS.

"Flash sales" refers to the process of offering deep discounts on a limited quantity of inventory, often running for a limited time period or until inventory runs out.

True, Firms offering flash sales offer deep discounts on a limited quantity of inventory, often running for a limited time period or until inventory runs out.

Amazon offers free wifi-connected buttons that consumers can scatter throughout their homes for fast reordering.

True, Free Amazon Dash Buttons can be scattered about your home, allowing automatic ordering of high volume staples—things like Keurig cups, Kraft Macaroni and Cheese, Gillette razors, and Huggies diapers via a single, branded, Wi-Fi-enabled press.

All of the top ten most-used apps worldwide are social.

True, Six of the top ten apps used globally are messaging apps and all of the top ten most-used apps worldwide are social. The remaining three apps are Facebook, Instagram, and Twitter.

Customers who purchase Kindle products buy significantly more products from Amazon than those who do not own a Kindle.

True, While exact estimates of the firm's Kindle-generated revenue bump vary, all point to positive Kindle-fueled sales gains. For example, one study showed that Kindle owners buy three to four times more books than they did prior to owning the device.

Blogging can be an effective tool for firms to share opinions directly with the public without communication being filtered by a journalist or narrowed by the editor of a third-party publication.

True.

Amazon's CEO has invested in many firms, including a commercial rocketry and aviation firm that intends to send humans into space and which has already launched a suborbital capsule test.

True. His personal investments (invested as Bezos Expeditions) include Blue Origin, a commercial rocketry and aviation firm that intends to send humans into space, and which has already launched a suborbital capsule test

Apple reduced the switching costs and increased Mac adoptions when the switched from the PowerPC to using Windows-compatible Intel microprocessors.

True. Since Intel is the same standard used by Windows, Apple developed a free software adaptor called Boot Camp that allowed Windows to be installed on Macs. Boot Camp (and similar solutions by other vendors) dramatically lowered the cost for Windows users to switch to Macs. Within two years of making the switch, Mac sales skyrocketed to record levels.

When network effects are strong, the best (e.g. the highest quality or most superior product) does not necessarily win.

True. t's important to note that the best product or service doesn't always win. PlayStation 2 dominated the original Xbox in a prior generation's game console war, despite the fact that nearly every review claimed the Xbox was hands-down a more technically superior machine. Why were users willing to choose an inferior product (PS2) over a superior one (Xbox)? The power of network effects! PS2 had more users, which attracted more developers offering more games.

Network markets comprised of two distinct categories of participants, both of which are needed to deliver value for the network to work, are called _____.

Two-Side Market. Network markets comprised of two distinct categories of participants, both of which are needed to deliver value for the network to work are called two-sided markets. People buy a video game console largely based on the number of really great games available for the system. Software developers write games based on their ability to reach the greatest number of paying customers, and so they are most likely to write for the most popular consoles first. This results in the creation of a two-sided market.

Identify the accurate statement about Kindle.

Various Kindle versions are regularly sold at or below costs .(Amazon doesn't look to make money directly from Kindle hardware sales. But once that cash register is in the hands of consumers, the sales ring up. As an always-on bookstore, the Kindle works pretty well.)

_____ involves leveraging a firm's customers to promote a product or service.

Viral promotion. Since all products and services foster some sort of exchange, it's often possible to leverage a firm's customers to promote the product or service using viral promotion.

A Web site anyone can edit directly within a Web browser is known as a _______.

Wiki.A Web site anyone can edit directly within a Web browser is a wiki. Wikis can be one of the speediest ways to collaboratively create content online.