MIS 301 Chapter 3-4
C
1. A low _____ is usually key to a firm's profitability because acquiring a customer is more expensive than keeping one. a. subscription fee b. inventory size c. churn rate d. switching cost e. opportunity cost
true
1. A major factor in Netflix's success is competitive advantage.
C
1. A value chain is a set of: a. similarly profitable firms competing against each other in any given industry. b. large firms that are vertically integrated. c. activities through which a product or service is created and delivered to customers. d. a large number of small firms that dominate a given market. e. robotically controlled conveyor belts that deliver product quickly from manufacturing stations to shipping containers.
point of sale system
1. A(n) _____ is a transaction process that captures customer purchase information.
D
1. According to an independent study, Zara books some 85 percent of its products at full price compared to the industry average markdown ratio of 50 percent. This is made possible by: a. keeping a major part of the production processes under direct proprietary control. b. coordinating the outbound shipments of all Inditex brands with return legs loaded with return materials and half-finished items. c. applying data analytics to purchase trends. d. the practice of having limited production runs of its designs. e. leveraging contract manufacturers to produce only staple items with longer shelf-lives, which account for one-eighth of dollar volume.
true
1. Although sometimes referred to as "rental," Netflix's model is really a substitute good for conventional use-based media rental.
True
1. An information system consists of hardware, software, data, procedures, and the people who interact with and are impacted by the system.
procedures
1. An information system is an integrated solution that combines five components: hardware, software, data, _____, and the people who interact with and are impacted by the system.
true
1. At Netflix, the majority of the DVD titles shipped are from back-catalog titles, not new releases.
B
1. At Zara, clothes are ironed in advance and packed on hangers, with security and price tags affixed. This system means that employees in Zara stores simply move items from shipping box to store racks, spending most of their time on: a. outsourcing their sales activities. b. value-added functions like helping customers find what they want. c. wrestling with inventory during busy periods. d. packing unsold merchandise that need to be returned to the distribution center. e. whisking items from their stores to the staging areas.
false
1. Brand and advertising are synonyms for the same concept.
e
1. Brands are built through _____. a. customer awareness b. data assets c. excessive advertising d. customer profiling e. customer experience
A
1. By going public, Netflix encountered competition from the large, established firms Wal-Mart and Blockbuster. What aspect of Netflix going public lured these firms into the market? a. By going public, Netflix was required to disclose its financial position. b. By going public, Netflix was forced to reveal the Cinematch algorithm used to classify user ratings. c. Netflix's model of flat-rate monthly subscriptions was found to be more profitable than a per-disc rental fee model. d. Netflix's plan to enter the online movie streaming market alerted rivals to the possibility of losing their market share. e. The migration of Netflix services to cover the Blu-ray disc market opened up opportunities for rivals.
d
1. Churn rate is a term that refers to the: a. average number of recommended titles in a user's queue. b. rate at which the demand for a product or service fluctuates with price change. c. number of movie titles that are difficult to assign reliable user ratings. d. rate at which customers leave a product or service. e. number of new users that each existing user attracts through word-of-mouth and social sharing.
true
1. Cinematch develops a map of user ratings and steers users toward titles preferred by people with tastes that are most like theirs.
D
1. Collaborative filtering is a classification of software that: a. is used to gather user ratings and calculate a gross average user rating for each movie. b. provides Netflix users with parental controls and other options while streaming movies online. c. selectively sorts movies based on their censor ratings and delivers age-appropriate search results. d. monitors trends among customers to personalize an individual customer's experience. e. collates user ratings for a movie and creates a ranked list of movies most liked by users.
false
1. Collaborative filtering is a technology that allows customers to meet and select titles for viewing parties.
E
1. Contract manufacturers used by the apparel industry are often criticized because: a. they hike up the costs of producing goods. b. firms cannot maintain high profit margins by employing them. c. they charge exorbitant labor costs that drive down sales. d. they are known to grossly overprice their services. e. of poor working conditions.
logistics
1. Coordinating and enabling the flow of goods, people, information, and other resources among locations is known as _____.
B
1. Due to limited production runs, Zara's customers: a. tend to delay their shopping until the products go on sale. b. visit the stores more often. c. buy products at discounted rates after a few weeks. d. visit stores less often. e. create a greater opportunity for increased markdowns and write-offs.
true
1. Durable brands are built through customer experience.
False
1. Elaborate customer surveys help Zara designers predict fashion trends months into the future and design products accordingly.
D
1. Even if Netflix gave Cinematch away to its rivals, they would still not be able to make the same kind of accurate recommendations as Netflix. This is because of Netflix's _____. a. technological superiority b. customer loyalty c. movie expertise d. data advantage e. large inventory
false
1. Even though Netflix is now mainly focused on digital distribution, it continues to offer the DVD-by-mail service in its base-price product.
B
1. Factors such as weather, natural disaster, terrorism, labor strife, or political unrest can shut down a firm's operations. Which of the following is one of the measures taken by firms to hedge such risks? a. Driving up profitability by increasing prices of market goods b. Spreading productions facilities across the globe c. Requesting government intervention in the form of subsidies or nationalization d. Sourcing raw materials from countries with low labor costs e. Diverting marketing and advertising budgets to accommodate greater production
false
1. Firms with high churn rates are likely to be more profitable.
A
1. For traditional retailers selling physical goods, _____ is the biggest constraint limiting a firm's ability to offer customers what they want and when they want it. a. shelf space b. video piracy c. shipping costs d. distribution rights e. disintermediation
True
1. Goods to be further customized based on designer/manager collaboration are called greige.
B
1. High-end fashion house Prada's experiment of implementing the latest technology in its flagship store failed because: a. Prada targeted technology investment only at points in its value chain where it would have the most significant impact. b. Prada managers were enamored with technology and failed to consider implications across all components of the new information systems. c. the effort was unlike Prada's signature style, being more functional than fashionable. d. Prada skimped on spending with its IT expenditure being lesser than one-fourth the fashion industry average. e. the RFID technology used on items in the store were not state of the art and suffered from legacy system problems.
B
1. How does Cinematch offer Netflix additional operational advantages for the DVD-by-mail business? a. Cinematch offers alternate recommendations of movies based on critical acclaim and box office performance parameters. b. Cinematch is linked to warehouses and recommends movies that are likely to be in stock. c. Cinematch is often used by movie studios to plan movie scripts based on user preferences. d. Cinematch is a source of additional revenue to Netflix as a marketing tool for recommending newly-released movies. e. Netflix leases the Cinematch collaborative filtering software to smaller firms at a fee, withholding the valuable user ratings.
A
1. How does Zara differ from its competitors in converting ideas into products? a. Zara concepts appear in stores in fifteen days on average compared to rivals who receive new styles once or twice a season. b. Zara's ideas are inspired by social media, compared to the intrinsic design processes followed by its competitors. c. Zara's design and concept teams use data from customers to predict fashion trends many months into the future and stock up inventory accordingly, as opposed to its rivals. d. Collaborations with celebrities help Zara churn out a limited, yet profitable, volume of items every year, while rivals produce a higher volume of less fashionable items. e. By focusing on a smaller number of products than rivals like Gap, Zara manages to limit exposure to wrong guesses.
A
1. How does the Cinematch recommendation system work? a. Cinematch develops a map of user ratings and steers users toward titles preferred by people with similar tastes. b. Cinematch gathers user ratings to calculate a gross average user rating which is continually updated with each subsequent user rating. c. Cinematch requests users to create profiles detailing their interests and preferences and serves recommendations accordingly. d. Cinematch uses a team of professional movie critics to create a comprehensive ranking system for each movie in its inventory. e. Cinematch ranks movies in two separate lists based on their critical and box office ratings, and subsequently alters user preferences.
member of the board of directors
1. In addition to serving as CEO of Netflix, Reed Hastings has also served as _______________ for two other leading tech companies, Facebook and Microsoft.
B
1. In an industry where nearly every major player outsources manufacturing to low-cost countries, Zara is highly _____, keeping huge swaths of its production process in-house. a. privatized b. vertically integrated c. publicly traded d. subsidized e. autonomous
C
1. In exchange for a percentage of the DVD-by-mail subscription revenue for every disk sent out by Netflix, movie studios offer Netflix: a. online streaming rights free of cost. b. higher fees for marketing less-popular movies. c. DVD titles at a discounted or wholesale price. d. distribution rights to certain movies free of cost. e. strong bargaining power in negotiations for digital distribution rights.
A
1. In retail in general and fashion in particular, having _____ is considered the kiss of death. a. excess inventory b. storefronts in expensive districts with costly rents c. a large labor force d. limited production runs e. dispersed production facilities
long tail
1. In the context of the Netflix case, _____ refers to an extremely large selection of content or products.
E
1. Internet retailers serve a larger geographic area with comparably smaller infrastructure and staff. This fact suggests that Internet businesses are more _____. a. churn-prone b. asymptotic c. capitalized d. vertically integrated e. scalable
False
1. Limited production runs ensure customers do not have to visit Zara's stores as often as they visit other stores, allowing the firm to save money through staff reductions when compared to peers.
False
1. Maintaining large inventories is highly essential for the viability of the fashion industry.
True
1. Making seasonal apparel decisions is a challenge because it often involves making predictions on what customers will be interested in, months in advance of clothing appearing on store shelves.
C
1. Many firms have developed and deployed innovative information systems, only to see these systems go unused by key staff members. How has Zara helped ensure its systems will be used by staff? a. employees are monitored by in-store cameras b. employee time on information systems is recorded each time the system is engaged c. system use drives store success and as much as 70 percent of salaries are tied to sales performance d. all employees must have a Fair Factories Clearinghouse account, which is used to log and report employee activity e. systems were designed by employees, who feel a sense of ownership in the technology deployed
False
1. Most fashion retailers place orders for a seasonal collection a few days before these lines make an appearance in stores.
B
1. Netflix enjoys the triple scale advantage of the largest customer base, the largest selection, and the largest network of distribution centers. This can be attributed to: a. Netflix's specialized focus on advertising and marketing. b. Netflix's first-mover advantage. c. Netflix going public to generate funds for expansion. d. Netflix's effective and aggressive pricing strategy. e. the bargaining clout it exercises over movie studios and the government.
false
1. Netflix gets to retain the entire subscription revenue for every disc sent out to a customer.
B
1. Netflix has used the long tail in the DVD-by-mail business to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from taking advantage of the Netflix model targeted at increasing the firm's long-tail offerings? a. Discounted fees for marketing some of the less-popular titles from the studios b. A cut of the subscription revenue from every disk sent out by Netflix c. Greater bargaining power with movie rental firms such as Netflix, Blockbuster, and Wal-Mart d. Lower costs related to screening movies in cinemas by releasing them straight on DVD e. An equal share of revenue from the digital distribution model through online streaming
E
1. Netflix offered its subscribers a selection of over one hundred thousand DVD-by-mail titles, while other video rental firms can only offer as much as three thousand. This presents a significant _____ for Netflix over its rivals. a. marginal cost b. price advantage c. variable cost d. studio preference e. scale advantage
true
1. Netflix's initial revenue model was based on a flat-rate monthly subscription fee rather than a per-disc rental fee.
true
1. Once Netflix became a public company, the firm was required to disclose its financial position and reveal it was on a profit march.
false
1. One challenge that Netflix faced was that Blockbuster and Walmart were able to quickly extend their strong brands to also become synonymous with a DVD-by-mail subscription service.
contract manufacturing
1. Outsourcing production to third-party firms is called _____.
D
1. Personal digital assistants are: a. transaction processing systems that capture customer purchases. b. small chip-based tags that wirelessly emit a unique identifying code for the item that they are attached to. c. systems that provide rewards and usage incentives, typically in exchange for a method that provides a more detailed tracking and recording of customer activity. d. handheld computing devices meant largely for mobile use outside an office setting. e. artificial intelligence systems that leverage rules or examples to perform a task in a way that mimics applied human expertise.
true
1. Physical retailers are limited by shelf space and geography (meaning the density of customers around a particular location).
D
1. ROI is a term used to represent the: a. return on information b. rate of information-generated c. regular order intake d. return on investment e. relay-ordered inventory
true
1. Rising fuel costs are likely to make Zara's model of twice-weekly deliveries more expensive to maintain.
E
1. Small chip-based tags that wirelessly emit a unique identifying code for the item that they are attached to are called _____. a. Personal Digital Assistants b. Smart adaptors c. Trackbacks d. Legacy labels e. RFID tags
True
1. The Fair Factories Clearinghouse is subject to network effects.
false
1. The Netflix customer experience was always weaker than the in-store experience of DVD rental firms, which had human staff. However, consumers were willing to overlook their dissatisfaction given Netflix's other benefits.
True
1. The U.S. Department of Justice needed to provide a special exemption to the Fair Factories Clearinghouse, and before doing so, had to be convinced that the effort wouldn't be used by buyers to collude and further squeeze prices from competitors.
C
1. The Zara experience involves a regular supply of new stock on the shelves, because of which customers tend to visit Zara's stores more often than they visit other retailers' stores. However, such a policy will become more expensive to maintain if: a. star designers demand a higher fee for its designs. b. PDAs are not used. c. fuel costs rise. d. Zara's horizontal integration fails. e. Zara outsources its production process.
true
1. The business of streaming video is radically different from DVD-by-mail in several key ways, including content costs, content availability, revenue opportunities, rivals and their motivation.
C
1. The e-commerce strategy that blends online and offline sales is called_____________. a. sales channel b. betterline c. omnichannel d. blended sales e. omniline
true
1. The high degree of customer satisfaction that Netflix enjoyed is tightly linked with the firm's sized-based advantages.
D
1. The long tail is a phenomenon whereby firms can make money by: a. selling the same product at different prices with only minor tweaks in their design. b. leveraging customers to promote their products or services. c. reselling multiple versions of a single product under different brand names. d. offering a selection of products or services vastly greater than conventional retailers. e. sell the same product to virtually every customer the Internet can reach.
operations
1. The organizational activities that are required to produce goods or services are known as _____.
false
1. The strengthening of the euro relative to the dollar has insulated Zara against financial vulnerabilities.
true
1. The yearly cost to run a Netflix-comparable nationwide delivery infrastructure is about $300 million.
D
1. Today the Netflix is so focused on _____________ that it offers its streaming-only subscription as the default option for consumers. a. special promotions b. viewer feedback c. rating content d. digital distribution e. none of the above
C
1. User ratings act as _____ for Netflix's customers. a. marginal costs b. fixed costs c. switching costs d. variable costs e. barriers to entry
C
1. What was considered the source of Mickey Drexler's inventory problems at Gap? a. He personally approved sweatshop-affiliated contract manufacturers b. He wrote the code for Gap's disastrously broken inventory system c. The firm guessed wrong about fashion, placing big bets on trends that consumers didn't want d. He led a botched merger with Disney in the hopes that combining technology with the Disney Store would create a super-efficient set of shopping mall destination stores.
vertically integrated
1. When a single firm owns several layers in its value chain, it is said to be _______________.
D
1. When firms enjoy economies of scale they: a. have a greater share of liquid assets than rivals. b. have bigger production facilities than their competitors. c. have a wider employee base than their competitors. d. leverage the cost of an investment across increasing units of production. e. leverage investment costs to decrease their subscriber acquisition costs.
B
1. Which of the following is not a benefit achieved through Zara's integration of technology throughout the firm? a. limited product runs of many unique products b. higher markdowns c. fewer write-offs d. less need for advertising
B
1. Which of the following is true of Netflix? a. It started as two separate services but is now viewed as a single subscription. b. It began as a DVD subscription model and then simultaneously introduced a video streaming subscription while maintaining the legacy business. c. It isn't a substitute good for conventional use-based media rental. d. It got its start offering a DVD-by-mail service for an annual, per-disc rate subscription fee. e. It started out as an IPO.
C
1. Which of the following represents an advantage enjoyed by the Netflix DVD-by-mail business over traditional video stores? a. Lower technology overhead b. Lower shipping expenses c. Larger entertainment selection d. Higher energy costs e. Higher churn rates
true
1. While it may be possible for rivals to match technology, the true exploitable resource created and leveraged through collaborative filtering technology is the data asset.
C
1. While the size of the tail in the long tail phenomenon is disputable, one fact that is critical to remain above this debate is that: a. traditional brick and mortar retailers offer selections that cannot be rivaled by Internet pure-plays. b. energy costs and worker wages drive up the costs of running stores like Netflix. c. selection attracts customers, and the Internet allows large-selection inventory efficiencies that offline firms can't match. d. the turnover rate of obscure titles in traditional video rental stores is only slightly higher than those for Internet pure-plays. e. the cost of store maintenance and real estate makes stores such as Netflix unattractive.
true
1. Within the DVD-by-mail segment, Netflix remained bigger than both Wal-Mart and Blockbuster.
false
1. Zara also saves money by simplifying pricing. An item sold in Bangkok is likely to cost the same as a similar item sold in Barcelona.
True
1. Zara encourages employee use of technology by tying employee salaries to sales performance.
E
1. Zara holds a competitive advantage over its rivals in spite of: a. refusing to implement technology in its operational model. b. conducting business only through online storefronts. c. its globally distributed contract manufacturing model. d. operating through fewer stores across the world than its closest rivals. e. Keeping large portions of its production processes in-house.
A
1. Zara is susceptible to any disruption in northern Spain because: a. it moves all of its deliveries through just two locations, both in Spain. b. it conducts its trade operations based on the American dollar rather than the stronger euro. c. most of Zara's products are sold in markets outside Spain and Europe. d. Zara's products are sold at much lower costs around the world than in Spain, and this harms profitability. e. Zara's production facilities in Asia and Central America are threatening employment in Spain.
C
1. Zara store staff gain as much as three hours in prime selling time to assist customers at stores. Which of Zara's practices is instrumental in these time savings? a. Concepts going from ideas to appearances in stores in fifteen days on an average. b. Three hundred member-strong design teams churning out up to thirty thousand items a year. c. Distribution centers ironing clothes in advance and packing them on hangers, with security and price tags affixed. d. Collecting data from customers on what kind of clothes to stock in stores, using PDAs. e. Tweaking shipping models through Air France-KLM Cargo to coordinate outbound shipments with return legs loaded with raw materials.
A
1. Zara's IT expenditure is low by fashion industry standards and is also highly effective. Which of the following makes this possible? a. Targeting technology investment at points in the value chain where it has the most significant impact. b. Utilizing the money spent on IT infrastructure to improve the IT skills of its employees through training programs. c. Using the best and most expensive software and hardware in the market, as it lowers any maintenance costs later. d. Outsourcing IT management to third-party firms which provide IT services at lower costs. e. Investing IT funding in improving the infrastructure and cutting down employee overhead costs.
False
1. Zara's IT expenditure, measured by IT workers as a percentage of total employees, is only slightly higher than the industry average.
C
1. Zara's clothing lines are designed: a. by star designers like Stella McCartney. b. in collaboration with celebrities and pop artists. c. by design school graduates to suit customer demand. d. by designers who win talent shows sponsored by Zara. e. mostly by foreign designers in European design hotspots of Paris and Milan.
True
1. Zara's clothing look like high fashion, but are comparatively inexpensive.
False
1. Zara's dominance in the fashion industry is due to its horizontally integrated structure accompanied by a globally dispersed production model.
True
1. Zara's high fashion styles are inspired by customer tastes, with technology used to gather data on preferences at given store locations.
A
1. Zara's production costs could rise at higher rates than its competitors because many of the firm's costs are tied to the _____. a. euro b. dollar c. yen d. pound e. franc
C
1. Zara's staff members regularly collect data from customers at its stores. This data is used to: a. decide the designs and styles of Zara's products for the next few seasons. b. determine the in-store soundtrack and layout. c. inform designers on customer preferences and staff on store sales results. d. determine where future Zara stores should be located. e. identify the products that customers would like to buy through discounted sales.
True
1. Zara's use of technology across the value chain allows the firm to manufacture more unique items than rivals H&M and Gap.
false
1. Zara's vertically integrated model is easier for rivals to copy compared to Dell's, as computing is more complex than clothing in terms of number of new models offered.
A
1. _____ are critical for capturing sales data, and are usually linked to systems which manager a firm's inventory. a. Point-of-sale systems b. Legacy systems c. CRM systems d. Server farms e. Data aggregators
D
1. _____ involves outsourcing production to third-party firms. a. Vertical integration b. Long tailing c. Peer production d. Contract manufacturing e. Viral production
A
1. _____ is a non-profit organization that shares audit information on contract manufacturers among members of the apparel industry and other industries. a. Fair Factories Clearinghouse b. Pricewaterhouse Coopers c. Amnesty International d. Klynveld Main Goerdeler e. Transparency International
Fair Factories Clearinghouse
1. _____ is a non-profit organization that shares audit information on contract manufacturers.
C
1. _____ represents an integrated solution that combines hardware, software, data, procedures, and the people who interact with and are impacted by the system. a. A neural network b. Artificial intelligence c. An information system d. Supercomputing e. Cloud computing
Greige
1. _______are goods to be further customized based on designer/manager collaboration.
False
RFID tags allow Zara staff to take in-store inventory less frequently than rivals, saving money on staffing.
