MIS CHAPTER 12 REVIEW

cloud

A collection of resources available for access over the Internet.

switching cost

The cost a consumer incurs when moving from one product to another. It can involve actual money spent (e.g., buying a new product) as well as investments in time, any data loss, and so forth.

35. Apple requires any app sales to share a _____ percent take with the firm (_____ percent for smaller developers).

30; 15 Apple requires any app sales to share a 30 percent take with the firm (15 percent for smaller developers).

colossal walled garden

A closed network or single set of services controlled by one dominant firm.

network effects

Also known as Metcalfe's Law, or network externalities. When the value of a product or service increases as its number of users expands.

13. By default, a post by a "liked" firm or friend will appear in your feed.

FALSE Not everyone sees every post to their feed; like Google, Facebook uses a secret and constantly refined algorithm that attempts to identify what you're most interested in, while cutting "spammy" content.

54. Critics worry that for billions of low-income users, Facebook will come to represent the only Internet they know and have access to, deepening the roots and entanglement vines of the firm's walled garden.

TRUE Some worry that for billions of low-income users, Facebook will come to represent the only Internet they know and have access to, deepening the roots and entanglement vines of the firm's walled garden.

28. WeChat processed 460 billion transactions in 2018—over forty-six times more than PayPal processed.

TRUE WeChat processed 460 billion transactions in 2018. That's over forty-six times more transactions than PayPal processed.

40. While Facebook has gotten even more accurate at ad targeting, its relentless string of privacy gaffes, increased public outcry, and a tightening regulatory environment have prompted the firm to halt a five-year partnership with third-party data aggregators that gave the firm access to additional data such as offline purchases and loyalty program participation.

TRUE While Facebook has gotten even more accurate at ad targeting, its relentless string of privacy gaffes, increased public outcry, and a tightening regulatory environment have prompted the firm to halt a five-year partnership with third-party data aggregators that gave the firm access to additional data such as offline purchases and loyalty program participation. It had previously worked with many of the data aggregators listed in the Data and Competitive Advantage chapter, including Acxiom, Datalogix, and Epsilon, but the effort has now been permanently halted.

46. Many leading content outlets use Facebook Instant Articles feature because:

Articles load faster, increasing the likelihood that they'll be read (and ads will be served) The "Instant Articles" service helps vendors overcome the problem of slow page loads and content that's poorly formatted for mobile. Articles usually take an average of eight seconds to load, often enough to prompt users to quit. This causes content providers to miss out on the ad revenue from a page view. Caching articles on Facebook's servers allows pages to load ten times faster.

53. One of the biggest problems facing Internet access for the world's poor is that such a small percentage of the global population living poverty lives near a mobile cellphone tower.

FALSE About 85 percent of the world's population already lives within range of a cell tower with at least a 2G data network.

open source software (OSS)

Software that is free and whose code can be accessed and potentially modified by anyone.

44. Ads on Facebook carry an average CPM of over ______.

$11 Ads on Facebook carry an average CPM of over $11, a value that has been steadily growing.

envelopment

A strategy whereby a firm with a significant customer base adds a feature to an existing product or service and eliminates the need for any rival, stand-alone platforms. Think Apple adding video to cameras, crushing the market for the Flip cam.

30. When taken together, these features enlist websites to serve as vassal states in the Facebook empire.

API to integrate Facebook logon, likes, and other open graph features into other sites Another aspect of the Facebook platform, Facebook's Open Graph, continues to project Facebook's influence beyond the site itself. The initiative allows developers to link web pages and app usage into the social graph, placing Facebook directly at the center of identity, sharing, and personalization-not only on Facebook but also across the Web.

5. Facebook COO Sheryl Sandberg's ad industry experience was cultivated at Yahoo!

False Regularly named to Fortune magazine's "Most Powerful Women in Business" list, Sandberg came to Facebook from Google (before that, she was chief of staff to U.S. Treasury secretary Larry Summers).

17. Facebook acquired Instagram for $ ___________.

1 billion Facebook acquired Instagram for a cool $1 billion, Facebook turned the potential rival into an asset for growth and another vehicle for the firm to remain central to users' lives. Since the acquisition, Instagram has continued to operate a separate brand, tripling its user base the year following acquisition.

47. Facebook has been used by over _________ different advertisers, and many of these are small businesses using the firm's self-service ad platform.

1 million It's also worth noting that big advertisers aren't the only ones Facebook (and rivals) are after. Zuckerberg's firm has been used by over 1 million different advertisers, and many of these are small businesses using the firm's self-service ad platform. Results-focused offerings for these clients, many of whom increasingly view a Facebook presence as being as important or more important than a standard Web page, bode well for future revenue growth.

39. Facebook's mobile ads now bring in more than ____ percent of the firm's ad revenue.

90 Facebook's ability to better manage supply and demand to improve pricing, leverage data for targeting, and create lucrative new ad products and formats have kept growth engines oiled and fueled for expansion. And no one doubt's Facebook's mobile ad muscle now that mobile brings in more than 90 percent of the firm's ad revenue.

localization

Adapting products and services for different languages and regional differences.

content adjacency

Concern that an advertisement will run near offensive material, embarrassing an advertiser and/or degrading its products or brands.

23. _____ refer(s) to systems distributed throughout the Internet that help to improve the delivery speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users.

Content delivery networks Content delivery networks are systems distributed throughout the Internet that help to improve the delivery speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users.

CPM

Cost per thousand impressions—the amount charged every time an ad appears 1,000 times (M is the roman numeral for 1,000).

12. In order to expand earned-media reach, organizations should include a request at the end of their Facebook posts that requests that users reshare the information.

FALSE Don't beg for likes or reshares. That'll get your post punished, decreasing its reach.

48. Facebook is so strong due to a team of domain experts. Genius developers are allowed to stay focused on a single project, perhaps throughout their career, serving as a resource for all new employees that enter that group.

FALSE Every eighteen months employees are required to leave their teams and work on something different for at least a month. Getting people into new groups helps spread the firm's geniuses' knowledge more broadly, generates idea flow, and prevents managers from developing fiefdoms.

41. Facebook has lots of upsides in part because its audience in key demographics is so much smaller than conventional television networks.

FALSE More people age eighteen to twenty-four access Facebook during evening prime time hours than watch ABC, CBS, NBC, and Fox combined.

26. The failure of China's WeChat platform shows the folly of trying to create an application platform through a mobile app.

FALSE Successful WeChat offers an open platform that supports digital payments, shopping, gaming, banking, Uber-style taxi service, and open access to third-party developers.

43. One challenge for Facebook Mobile is newsfeed ads. Users tend to ignore ads in their newsfeed even more than they do ads that appear on the side of conventional web pages.

FALSE Unlike search ads, ads in the news feed move beyond the easy-to-ignore real estate on the right side of the desktop and instead put a message right in the middle of the exact screen real estate that a user is paying attention to. News feed ads have been shown to deliver a return on investment that is twenty-six times higher than that of sidebar ads.

IPO

Initial public stock offering, the first time a firm makes shares available via a public stock exchange, also known as "going public."

deep Web

Internet content that can't be indexed by Google and other search engines.

19. A key advance of the Oculus Rift was:

It didn't make users puke. The Rift's big breakthrough is that it doesn't make you puke. Previous VR efforts had so much latency (delay) in image rendering that users would become disoriented to the point of nausea.

29. Which of the following is true about Facebook Messenger?

It is now used as a tool for customer support and service It is a Skype competitor It has become a payments platform It's also a Skype competitor, offering free VoIP (Voice over IP) Internet calls. Under Marcus, Messenger has also expanded to become a tool for corporations to communicate with customers. In addition, it has become a payments platform.

49. What was the biggest problem with the rollout of Facebook's Beacon platform?

It was an "opt-out" program. The biggest problem with Beacon was that it was "opt-out" instead of "opt-in." Facebook (and its partners) assumed users would agree to sharing data in their feeds, when such sharing was often unwelcome by users.

55. Which of these is NOT a reason that so many are offline in the world?

Many of the world's populations do not live within range of a cell tower with at least 2G data network. Many are offline for three reasons: (1) data is too expensive for many of the world's poorest citizens; (2) services aren't designed for emerging market use by populations who need ultra-low bandwidth services that run reliably on very low-end or old, recycled hardware; and (3) content is not compelling enough to draw in non-users.

50. One of the reasons behind Beacon's failure is a common one: managers failed to completely consider the components and interplay among elements in an information system. Which of the following is not a component of an information system (IS)?

None of the above, all of the above are components of IS Savvy managers look beyond technology and consider complete information systems-not just the hardware and software of technology but also the interactions among the data, people, and procedures that make up (and are impacted by) information systems. Beacon's failure is a cautionary tale of what can go wrong if users fail to broadly consider the impact and implications of an information system on all those it can reach.

APIs

Programming hooks, or guidelines, published by firms that tell other programs how to get a service to perform a task such as send or receive data. For example, Amazon.com provides APIs to let developers write their own applications and websites that can send the firm orders.

acqui-hire

Referring to "acquiring" a firm as a way to "hire" talent.

short

Short selling is an attempt to profit from a falling stock price. Short sellers sell shares they don't own with an obligation of later repayment. They do so in the hope that the price of sold shares will fall. They then repay share debt with shares purchased at a lower price and pocket the difference (spread) between initial share price and repayment price.

16. Which additional factors favor the competitive dynamics of smartphone apps over browser-based desktop services?

Smartphones apps can access a phone's media library and cloud storage. Smartphone apps can use push notifications. Smartphone apps also get an icon on the home screen. Limited screen real-estate on mobile device Photos and video shot from a phone can be shared easier than if they need to be downloaded to a desktop, first. Push notifications engage user attention in a way browsers can't. A home screen icon is more readily seen than a web bookmark. And limited screen real estate on mobile decreases likelihood that a firm will envelop rivals by offering a new feature if it means the interface will be cluttered.

6. Why is it potentially easier for services delivered over mobile apps to recreate a social graph than it is for users of a browser-based service?

Smartphones can access a user's address book Smartphone apps can access a user's address book. This makes it easier to rebuild the social graph for a new mobile service.

content delivery networks (CDN)

Systems distributed throughout the Internet (or other network) that help to improve the delivery (and hence loading) speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users. Akamai is the largest CDN, helping firms like CNN and MTV quickly deliver photos, video, and other media worldwide.

9. By mid-2018, Instagram and WhatsApp Story features were larger than all of Snapchat’s daily active user base.

TRUE By mid-2018, Instagram and WhatsApp Story features weren’t just larger than Snapchat Stories, they were larger than all of Snapchat’s daily active user (DAU) base.

27. In 2018, a research firm, Cambridge Analytica, detailed a surreptitious campaign to harvest user data on a wide scale—unleashing a big firestorm for Facebook.

TRUE By opening its platform to third parties, Facebook exposed itself to risk. The firm has had to deal with apps that infringe on copyright, that annoy, purvey pornography, step over the boundaries of good taste, and raise privacy and other concerns. In 2018, a research firm, Cambridge Analytica, detailed a surreptitious campaign to harvest user data on a wide scale, creating a firestorm in the media. Firms from Facebook to Apple have struggled to find the right mix of monitoring, protection, and approval of platform use.

2. Facebook was one of Silicon Valley's most aggressive practitioners of the acqui-hire—acquiring startups as a means of securing new talent.

TRUE Facebook is one of Silicon Valley's most aggressive practitioners of the acqui-hire—acquiring startups as a means of securing new talent.

42. In a further bid to go after YouTube, Facebook shares ad revenue with digital content creators, and to battle TikTok and Snapchat, it now allows ads to run in videos as short as one minute.

TRUE In a further bid to go after YouTube, Facebook shares ad revenue with digital content creators, and to battle TikTok and Snapchat, it now allows ads to run in videos as short as one minute.

14. To become the Web's leading photo-sharing service, Facebook didn't acquire anyone. The site simply turned on a substandard photo-sharing feature and quickly became the biggest photo-sharing site on the Web.

TRUE In photos, Google, Yahoo!, and one-time standout MySpace all spent millions to acquire photo-sharing sites (Picasa, Flickr, and Photobucket, respectively). But to become the Web's leading photo-sharing service, Facebook didn't acquire anyone. The site simply turned on a substandard photo-sharing feature and quickly became the biggest photo-sharing site on the Web. Facebook users now post over 350 million photos each day.

8. Two strategic assets considered vital to Facebook's enduring competitive advantage in social networking are switching costs and network effects.

TRUE Without the network effect, Facebook wouldn't exist. And it's because of the network effect that another smart kid in a dorm can't rip off Zuckerberg in any market where Facebook is the biggest player. Even an exact copy of Facebook would be a virtual ghost town with no social graph. The switching costs for Facebook are also extremely powerful. A move to another service means recreating your entire social graph. The more time you spend on the service, the more you've invested in your graph and the less likely you are to move to a rival.

social graph

The global mapping of users and organizations and how they are connected.

20. What reason did Mark Zuckerberg give for acquiring Oculus VR?

To start building what Zuckerberg hopes is the next major computing platform that will come after mobile. Justifying the acquisition, Zuckerberg has also said, "Strategically we want to start building the next major computing platform that will come after mobile."

18. Which of the following statements is true about Facebook's acquisition of WhatsApp?

WhatsApp's share of the global mobile messaging market was so much greater than Facebook's, Zuckerberg saw WhatsApp as the best way for Facebook to remain relevant in this market In the high-growth markets of India, Brazil, and Mexico, WhatsApp usage were twelve to sixty-four times ahead of Facebook for mobile messaging. Acquiring WhatsApp was key to ensuring Facebook wasn't relegated to being a mobile messaging also-ran.

free rider problem

When others take advantage of a user or service without providing any sort of reciprocal benefit.

36. The bulk of Facebook's revenue is earned through:

advertising If Facebook is going to continue to give away its services for free, it needs to make money somehow. Right now the bulk of revenue comes from advertising. Fortunately for the firm, online advertising is hot.

24. Programming hooks, or guidelines published by firms that tell other programs how to get a service to perform a task such as send or receive data, are known as _____.

application programming interfaces Facebook published a set of application programming interfaces (APIs) that specified how programs could be written to run within and interact with Facebook, allowing any programmer to write applications that would run inside a user's profile.

21. The term _____ refers to a collection of computing resources available for access over the Internet.

cloud The term cloud refers to a collection of resources available for access over the Internet. The Facebook cloud (the big group of connected servers that power the site) is scattered across multiple facilities, including server farms in San Francisco, Santa Clara, northern Virginia, Oregon, and North Carolina.

34. Relating the Facebook platform to sources of value from network effects, developers creating applications create ___________________ that have the potential to add value to Facebook beyond what the firm itself provides to its users.

complementary benefits Facebook's platform allows the firm to further leverage the network effect. Developers creating applications create complementary benefits that have the potential to add value to Facebook beyond what the firm itself provides to its users.

25. What feature of Facebook helps new applications gain visibility among users?

news feeds News feeds helped apps spread like wildfire and the early movers offered adoption rates never before seen by small groups of software developers.

37. _____ is the concern that an advertisement will run near offensive material, embarrassing an advertiser and degrading their brands.

content adjacency Content adjacency is the concern that an advertisement will run near offensive material, embarrassing an advertiser and degrading their brands. Consider all of the questionable titles in social networking groups. Do advertisers really want their ads running alongside conversations that are racy, offensive, illegal, or that may even mock their products? This potential juxtaposition is a major problem with any site offering ads adjacent to free-form social media.

52. Facebook's _______________ effort, where users were asked to look at Facebook phrases and offer translation suggestions for their local language, helped the firm rapidly deploy versions in dozens of markets.

crowdsourcing localization With most of its revenue coming from outside the United States, Facebook is already massively global. Facebook's crowdsourcing localization effort, where users were asked to look at Facebook phrases and offer translation suggestions for their local language, helped the firm rapidly deploy versions in dozens of markets, blasting the firm past one-time rivals in global reach. But network effects are both quick and powerful, and late market entry can doom a business reliant on the positive feedback loop of a growing user base. And global competition is out there.

15. Sites that cannot be indexed by Google and other search engines are referred to as the _____.

deep web Sites that can't be indexed by Google and other search engines are referred to as the deep Web. Since Google can't index many of Facebook's profile pages, Facebook has the opportunity to develop a search engine that could go beyond the power of Google.

11. Which of the following is perhaps the most significant contributor to Facebook's ability to strengthen and deliver user value from the social graph?

feeds While the authenticity and trust offered by Facebook was critical, offering news feeds concentrated and released value from the social graph.

33. _____ occur(s) when others take advantage of a user or service without providing any sort of reciprocal benefits.

free rider problem Facebook's increasing dominance, long reach, and widening ambition have a lot of people worried, including the creator of the World Wide Web. Sir Tim Berners-Lee recently warned that the Web may be endangered by Facebook's colossal walled garden. The fear is that if increasingly large parts of the Web reside inside a single (and, for the most part, closed) service, innovation, competition, and exchange may suffer.

22. Open source software refers to:

free software whose source code is available for modification by anyone. Open source software powers many sites like Facebook.

38. A(n) ___________________ is measured each time an ad is served to a user for viewing, i.e. each time an ad appears on someone's screen.

impression An impression is measured each time an ad is served to a user for viewing (i.e. each time an ad appears on someone's screen).

3. _____ is an attempt to profit from a falling stock price.

short-selling Short selling is an attempt to profit from a falling stock price. Short sellers sell shares they don't own with an obligation of late repayment.

7. The phrase _____ refers to the global mapping of users, organizations, and how they are connected.

social graph Social graph is the global mapping of users and organizations, and how they are connected.

10. The cost a consumer incurs when moving from one product to another is known as _____.

switching costs The cost a consumer incurs when moving from one product to another is known as switching costs. It can involve actual money spent, as well as investments in time, any data loss, and so forth.

45. Using ____________, the firm makes money off its 2 billion+ users, even when they're not on Facebook's own sites and apps.

the Facebook Audience Network Using the Facebook Audience Network, the firm makes money off its 2 billion+ users, even when they're not on Facebook's own sites and apps.

32. Facebook has offered a system where website operators can choose to accept a user's Facebook credentials for logging in. Users appreciate this feature because:

they can access content without having to create a new account. Facebook offered a system where website operators can choose to accept a user's Facebook credentials for logging in. Users like this because they can access content without the hurdle of creating a new account. Websites like it because with the burden of signing up out of the way, Facebook's login removes an impediment to user acquisition.

1. At the time of its IPO, Facebook earned no money from mobile advertising, but today mobile brings in the majority of the firm's ad revenue.

true Mobile was an early concern-the firm made no money on mobile at the time of its IPO. Today, mobile brings in over 90 percent of Facebook advertising revenue.

4. Many entrepreneurs accept startup capital from _____, investor groups that provide funding in exchange for a stake in the firm and often, a degree of managerial control usually in the form of a voting seat, or seats on the firm's board of directors.

venture capital firms Many entrepreneurs accept start-up capital from venture capitalists (VCs), investor groups that provide funding in exchange for a stake in the firm and often, a degree of managerial control (usually in the form of a voting seat or seats on the firm's board of directors).

51. From the privacy and user-content fiascos faced by Facebook, managers can learn that:

violation of public trust can lead to intense public scrutiny and regulatory consequences. Firms that violate the public trust should expect the equivalent of a high-powered investigative microscope examining their every move, a very public airing of the findings and possible governmental action, such as the US FTC's actions towards Facebook.

31. Facebook allows any developer to add a Facebook "Like" button to their site with just a few lines of HTML code. What advantage do websites leverage by integrating this feature?

viral distribution With just a few lines of HTML code, any developer could add a Facebook "Like" button to their site and take advantage of the social network's power of viral distribution.