ch 11- updated
short selling
A stockbroker trades shares she does not own with an obligation of later repayment, and in the hope that the price of traded shares will fall. She then repays share debt with shares purchased at a lower price and pockets the spread between initial share price and repayment price. This attempt to profit from a falling stock price is known as _____.
Consumers must be able to review, contest accuracy of personal data
Access/participation
Third parties that promote a product or service, typically in exchange for a cut of any sales
Affiliates
Inventory optimization models ensure each store is stocked with just what it needs
Aggregation of Information Technology
Porter's three generic strategies
1. Broad cost leadership (large market) 2. Broad differentiation (large market) 3. Focused strategy (niche market)
How many people on Facbook
1.2 billion
Zara's IT expenditure is less than __ the fashion industry average
1/4
Alibaba was established in
1999
Looks at the firm as a player in the model/external environment with competitors
5 forces model
As much as ____ percent of salaries can come from commissions at Zara
70
Zara Facts
85% of sales are made at full prices Customer needs to go and frequently visit the store, tomorrow it might not be on the shelves. Sales people equipped with PDAs talk to customers about what they like (point of Sales system) Mine data trying to identify hidden patterns Pull vs push Pull business model is you pull information from the customer Flagship chain store of Inditex
Analysts are so bullish on Facebook's mobile advertising prospects because A. Mobile ad revenue from the Facebook app has grown steadily since the firm's IPO. B. Instagram is new to advertising and WhatsApp hasn't advertised much, suggesting that Facebook has lots of unrealized growth potential in its app stable. C. Ads on Facebook mobile show up in a user's feed, the area of the screen they pay most attention to, suggesting mobile ads will be tougher to ignore than those on the side of a browser screen. D. All of the above E. None of the above - analysts remain very pessimistic about Facebook's prospects for mobile advertising.
All
_____ refer(s) to the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call. A. Crowdsourcing B. Localization C. Content adjacency D. Walled garden E. Switching costs
A. Crowdsourcing
Facebook feeds A. are limiting the reach of organic posts, prompting many firms to spend on Facebook ads to connect with more users. B. ensure that any post from an organization's fan page will arrive in the feed of anyone who has "Liked" that page. C. prohibit content promoting apps that run outside the Facebook platform, since such content competes with user attention and Facebook wants users to spend as much time as possible on its own services. D. will show identical ads to all users, worldwide, if they are of the same age and gender. E. are entirely ad-free. Zuckerberg refuses to run ads in feeds because he feels this will degrade the user experience, even though Facebook would likely earn significantly more if it did so.
A. are limiting the reach of organic posts, prompting many firms to spend on Facebook ads to connect with more users.
"Users want some semblance of control over their personal data, even if they are not bothered to manage it." This is often known as: A. the paradox of privacy. B. crowdsourcing. C. Metcalfe's Law. D. uncertainty of decisions. E. free rider problem.
A. the paradox of privacy.
Studying Facebook provides a context for understanding which of the following: A. network effects B. platform partnerships C. privacy D. business value of social media E. all of the above
All
Analysts are so bullish on Facebook's mobile advertising prospects because
All of the above
What is Alibaba?
An e-commerce company that has a number of businesses all under the name Alibaba Group
All of the above
Analysts are so bullish on Facebook's mobile advertising prospects because
What makes mobile different
Apps can access a user's address book, media library, push notifications, icon on home screen
Idea that many media products are sold in containers. Moving to digital as the internet offers fast wireless delivery.
Atoms to Bits
ARPU
Average revenue per user
Which of the following factors has helped Facebook build up trust among its users? A. Superior technology compared to rivals B. Mutual and reciprocal approval of friend requests C. Free nature of applications available to users D. Low switching costs E. Availability of venture capital funds
B. Mutual and reciprocal approval of friend requests
Investor groups that provide funding in exchange for an ownership stake in the firm are called _____. A. credit unions B. venture capital firms C. hedge fund managers D. mutual fund executives E. greenfield investors
B. venture capital firms
Buying your suppliers
Backwards integration
Should a small family of 2 have to pay the same as a family of 6 for the same service
Bandwidth caps
cost per thousand impressions
Banner ads are often charged on _____.
The symbolic embodiment of all the information connected with a product or service
Brand
content adjacency
Brand advertisers largely consider user-generated content as low-quality, brand-unsafe inventory for running advertisements. This can be attributed to:
Standardized set of activities that accomplish a specific task, such as processing a customer's order
Business process
This is high when buyers have many choices of who to buy from
Buyer power
What happens if buyer's are price sensitive
Buyer power increases
Classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience
Collaborative filtering
Why are competitive advantages typically temporary?
Competitor's duplicate the competitive advantage
Demographic, Global, Technological, Socio-cultural, Political, Economic
Components of the Macroenvironment
Brand advertisers largely consider user-generated content as low-quality, brand-unsafe inventory for running advertisements. This can be attributed to:
Content Adjacency
Running near offensive posts
Content adjacency
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
Supermarkets and large retail stores use large sales data to determine what's been sold and needs to be reordered
Continuous Replenishment System
Successfully using IS to achieve and sustain competitive advantage requires precise ________ of technology, organizations, and people.
Coordination
The advertising acronym CPM is defined as ____.
Cost Per Thousand Impression
The online advertising acronym CPC is defined as
Cost per click
Act of taking a job traditionally performed by a designated agent/employee and outsourcing it to an undefined group of people in the form of an open call
Crowdsourcing
Developers who make applications create _____ that have the potential to add value to Facebook beyond what the firm itself provides to its users. A. switching costs B. distribution channels C. one-sided markets D. complementary benefits E. private equity shares
D. complementary benefits
Question 4 of 10 1.0 Points Banner ads are often billed based on _____. A. clickable numbers B. frequency tracking scores C. quality scores D. cost per thousand impressions E. their relative popularity
D. cost per thousand impressions
What does the acronym CPM stand for? A. cost per millisecond B. cost per billion impressions C. cost per thousand seconds D. cost per thousand impressions E. cost per million seconds
D. cost per thousand impressions
One of Facebook's key resources for competitive advantage is: A. technology. B. network internalities. C. open source software. D. high switching costs. E. low venture capital investment.
D. high switching costs.
Much of the site's content is in the ______ _____
Dark web
Digitized- fully digitized Semi-digitized one component can be digitized (bought online) non-digitized
Digital goods
Key concepts for Digital Markets/Goods
Digital markets reduce: Information asymmetry, search costs, transaction costs Digital markets enable: Dynamic pricing, disintermediation, price discrimination
Removing an organization from a firm's distribution channel
Disintermediation
The removal of business process layers responsible for certain intermediary steps in the value chain
Disintermediation
The path through which products or services get to customers
Distribution channels
Improve the frequency and quality of decisions made by the design and planning teams
Don't guess, gather data
Pricing of items based on real-time interactions between buyers and sellers that determine what an item is worth at any particular moment
Dynamic pricing
are limiting the reach of organic posts, prompting many firms to spend on Facebook ads to connect with more users.
Facebook feeds:
Set of principles governing collection and use of information
Fair information practices
Ads with social context attempt to take advantage of the concept of social proof- detracting legitimacy from a product through its association with your friends
False
Facebook can be completely indexed by search engines, like Google and Bing, being able to index all of Facebook content. A. True B. False
False
Facebook enjoys significantly higher click-through rates than Google.
False
Facebook purchased Oculus VR because, like Zuckerberg, the firm's youthful founder had already built a platform with a massive customer base.
False
Owning your distributors
Forward integration
Challenges of Facebook
Generating more revenue from customer base, Growing advertising, monetizing mobile, transitioning to a mobile centric world, Protecting user privacy, Competing with new competitors Rising personnel and infrastructure costs
With Beacon, Facebook hoped to
Grab consumer activity at points of purchase to post to a user's profile
How does long tail help netflix?
Industry's largest selection Selection attracts customers Internet allows large-selection inventory efficiencies that offline firms can't match
A situation where the relative bargaining power of two parties in a transaction is determined by one party of the transaction possessing more information essential to the transaction than the other party
Information Asymmetry
Competitors are numerous or are roughly equal in size and power Industry growth is slow Exit barriers are high
Intensity of rivalry is greatest
Tactical Moves in Pursuing a Strategy
Internal innovation Internal growth (economies of scale) Mergers and acquisitions Strategic alliances (partnerships)
A scenario in which objects or people are provided with unique identifiers and the ability to transfer data over a network without reuiring human to human or human to computer interaction
Internet of Things
The number of times inventory is sold or used during a given period.
Inventory turnover
venture capitalists
Investor groups that provide funding in exchange for an ownership stake in the firm are called _____.
What is Facebook's motivation for offering new features under an opt-out scheme
It ensures a large audience and helps enhance network effects and data advantage
What is Facebook's motivation for offering new features under an opt-out scheme? A. It gives users a sense of control of their online activities. B. It is easier for users to manage, as opposed to complex opt-in programs. C. It ensures a larger audience, and helps enhance network effects and data advantages. D. Internet laws stipulate that all new features offered by social networks should be based on an opt-out format. E. Users are seldom bothered about managing their personal data and tracking of their online activities.
It ensures a larger audience, and helps enhance network effects and data advantages
Which of the following statements is true of the term "cloud"?
It refers to a collection of computing resources available for access over the Internet.
Which of the following statements is true of localization?
It refers to adapting products and services for different languages and regional differences.
Adapting products and services for different languages and regional differences
Localization
What is the biggest problem confronted by Facebook in the wake of Beacon
Managers are unlikely to sign up for Facebook's future experiments
Who runs Facebook
Mark Zuckerberg and Sheryl Sandberg does stuff too
retaining a majority of voting rights in the public company.
Mark Zuckerberg, the founder of Facebook, ensured that he remained in control of the firm even after it went public by:
When the value of a product or service increases as its number of users expands
Network effects (Metcalfe's Law)
NORA
Non-obvious relationship association
Fair information practices by FTC
Notice/Awareness (core) Choice/consent (core) Access/participation Security Enforcement
Websites must disclose practices before collecting data
Notice/awareness
high switching costs
One of Facebook's key resources for competitive advantage is:
For years ______ _______ online advertising is the only major media category that has seen an increase in spending
Online Advertising
Software that is free and whose code can be accessed and potentially modified by anyone
Open Source Software, OSS
A way to gain a competitive advantage but can not be sustained
Operational Effectiveness
Performing the same tasks better than rivals perform them
Operational effectiveness
Users want some semblance of control over their personal data even if they are not bothered to manage it
Paradox of Privacy
Built into the system
Parameter
A transaction process that captures customer purchase information, showing how garments rank by sales
Point of Sale System
Identify stages and links where highest impact potential is available and use IS to bring about that potential
Point of analysis
Hard data
Point of sales
Who developed the five forces model
Porter
Selling the same goods to different targeted groups at different prices
Price discrimination
Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Service
Primary Activities
Claim of individuals to be left alone, free from surveillance or interference from other individuals, organizations or state. Claim to be able to control information about yourself
Privacy
_____ is enabling Zara to enhance the customer offering by speeding up the purchasing process and improving the availability of popular stock on the shop floor through better data collection
RFID
Information technologies Netflix uses
Reduce costs (Sorting and dropping off DVDs for the Post office lowest possible postage rates) Customer satisfaction (quality management systems) Enhance brand value (Customer satisfaction and keeping prices low)
What are the basics of the Netflix business model?
Rent, Receive, Watch, Exchange And Unlimited TV episodes and movies instantly over the internet
Alibaba sources of revenue
Retail E-Commerce (C2C&B2C) Wholesale marketplace (B2B) Payments (3rd party online payment solution) Alibaba's Ancillary Services (cloud computing, online marketing) Invested in Lyft among others
_______ _________ allows Netflix to provide studios with a costless opportunity to earn money from back catalog titles
Revenue sharing
This is high when competition is fierce in a market
Rivalry among existing competitors
Advantages related to size
Scale advantages
The time and money spent locating a suitable product or service and determining the best price for this product
Search cost
Data collectors must take steps to ensure accuracy security of personal data
Security
____ created through user verification and friend approval requiring both parties to consent encouraged Facebook users to share more and helped the firm establish a stronger social graph than other social networking rivals
Trust
6 features that make digital goods different
Ubiquity (available everywhere), Global reach, Richness, Interactivity, Personalization/Customization, Social technology,
___________ is considered to be the most persuasive and valuable method of promotion
Word of Mouth
Most companies outsource because it keeps cost of goods low but problems include:
Working conditions, quality control, longer lead times, child labor
____ is the biggest photo-sharing site on the Web, taking in around three billion photos each month.
Marginal costs for digital goods are ____
about zero
The bulk of Facebook's revenue comes from _______
advertising
The bulk of Facebook's revenue comes from:
advertising
Facebook feeds
are limiting the reach of organic posts, prompting many firms to spend on Facebook ads to connect with more users.
Users of Google and other search engines are said to be on a hunt because they: A. are acquiring profiling data which acts as ammunition to improve their search results. B. want to explore and look around. C. are there to seek information to drive a specific action. D. allocate time for activities such as looking for news and friend updates. E. are unwilling to leave the Web page when they are having conversations.
are there to seek information to drive a specific action.
Also called customer power
buyer power
Which of the following issues raises advertiser concerns on promoting products and services on social networking sites? A. Low marketing budgets B. Inflation C. DNS cache poisoning D. Phishing E. Content adjacency
content adjacency
Lack of trust in on-line transactions is one of the main reasons reported for the relatively low _________ ______ adoption today
electronic commerce
What do government regulated products have
high supplier power
An extremely large source of content or products where firms can make money by offering a near-limitless selection
long tail concept
For years, which of the following is the only major media category that has seen an increase in spending? A. Online advertising B. Radio jingles C. Television ads D. Print media E. Telemarketing
online ads
Software that is free and whose code can be accessed and potentially modified by anyone is referred to as _____.
open source software
In markets where commodity products are sold, the internet can increase buyer power with ______ _________
price transparency
Directly related to the production and distribution of the organization's products and services
primary activities
A firm that exists exclusively online (operates through the internet channel with no physical storefronts)
pure play
What do Frequent flyer programs, grocery store discount cards, coffee clubs do?
reduce buyer power
Mark Zuckerberg, the founder of Facebook, ensured that he remained in control of the firm even after it went public by:
retaining a majority of voting rights in the public company
The global mapping of users and organizations and how they are connected
social graph
"Users want some semblance of control over their personal data, even if they are not bothered to manage it." This is often known as:
the paradox of privacy
Users of google are said to be on a hunt because
they are there to seek information to drive a specific action.
Cost associated with completing a transaction
transaction cost
A significant portion of facebook's underlying technical infrastructure consists of open source software
true
Critics of Internet.org 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
Facebook's acquisition of WhatsApp was a way for Zuckerberg's firm to gain leadership in the fast-growing mobile messaging market. A. True B. False
true
Many analysts were skeptical of Facebook's ability to create a business from mobile. Mobile revenue just before the IPO was zero.
true
Roughly one in every five people on the planet has a Facebook account.
true
Investor groups that provide funding in exchange for an ownership stake in the firm are called _____.
venture capitalists
______ started using social media, encouraging costumers to blog
zara
A collection of resources available for access over the internet
Cloud
This is high when buyers have few choices of who to buy from and low when there are many
Supplier power
Organization, Human Resources, Technology, Procurement
Support Activities
Financial performance that consistently outperforms industry averages
Sustainable competitive advantage
Technology can be easy to copy so it alone rarely offers ____________________________-
Sustainable competitive advantage
Cost a consumer incurs when moving from one product to another.
Switching cost
Types of Uncertainty
System-Dependent: associated with potential technological problems and the lack of clear legal norms Transaction-Specific uncertainty: results from the decision of economic actors
Soft data
Talking with customers
Issues in privacy
Target (110 million records 40 million credit cards) Snowden (Created issues because data was not private)
Users tend to have more focused intent (often focused on purchase decision-making) when using Google as compared to Facebook.
True
Firm is able to so responsive through
Vertical integration Just-in-time manufacturing Finely tuned logistics
content delivery networks.
Systems distributed throughout the Internet that help improve the delivery speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users are known as:
The dark Web refers to: A. peer-to-peer file sharing networks that are used to illegally share copyrighted material. B. seemingly innocent Web sites, containing malware that infects computers. C. sites that cannot be indexed by Google and other search engines. D. networks that allow only mutually trusted peers to participate in file-sharing activities. E. Web sites that advocate violence toward people of a specific race, ethnicity, or religion.
C. sites that cannot be indexed by Google and other search engines.
The term "social graph" refers to: A. user-generated content that is shared by a broad community of users. B. an online community that allows users to establish personal profiles. C. the global mapping of users and organizations, and how they are related. D. the sum total of the economic and social value created by a network of individuals. E. the effects that emerge from individuals who use the same products or services.
C. the global mapping of users and organizations, and how they are related.
Facebook has offered a system where Web site operators can choose to accept a user's Facebook credentials for logging in. Web site operators appreciate this feature because: A. they can charge users for accessing their content and hence, generate revenue. B. they can afford to spend less on Web site maintenance. C. users can access websites without creating an account, reducing a potential barrier to customer acquisition. D. Facebook's advertising programs offer better revenue for viewed content. E. they can associate their offerings with the Facebook brand.
C. users can access websites without creating an account, reducing a potential barrier to customer acquisition.
HP Example, laptop designed in canada, manufactured in Taiwan, stuff with china and japan
Called extended firm, virtual firm, contract firm and so on.
Consumers must be able to choose how information is used for secondary purposes
Choice/consent
The rate at which customers leave a product or service
Churn rate
Which of the following statements is true about Facebook? A. Global growth of Facebook is saturated, with most of the planet's population already having Facebook accounts. B. Approximately 20 percent of Facebook users reside in China. C. Entrepreneurs beware: Mark Zuckerberg lost most of the value in the firm he founded to the Winklevoss twins, providing evidence that entrepreneurs should have a founder with a strong legal background. D. Facebook has largely avoided privacy concerns by allowing posts to expire over time. E. Facebook is highly profitable, with a growing ad business on mobile platforms.
E. Facebook is highly profitable, with a growing ad business on mobile platforms.
The bulk of Facebook's revenue comes from: A. data aggregation services. B. application development. C. subscription fees. D. data harvesting. E. advertising.
E. advertising.
When costs can be spread across increasing units of production or in serving multiple customers.
Economies of scale
There must be a mechanism to enforce FIP principles
Enforcement
Systems that support and are used by the entire enterprise through a centralized data base and coordinated software modules
Enterprise-wide systems
What key do you use to change from relative to absolute addressing
F4 or $_$_
Facebook ads can be precisely targeted since the firm has a large amount of actual data on users self-expressed likes
FACT
Exists when savvy rivals watch a pioneer's efforts, learn from their successes and missteps, then enter the market quickly with a comparable or superior product at a lower cost before the first mover can dominate
Fast follower problem
Privacy in the U.S. is protected by
First amendment (freedom of speech) Fourth amendment (unreasonable search and seizure) Additional federal statutes (Privacy Act of 1974)
This locks customers in
High switching costs
IF(Condition, True, False)
IF statement
A way of doing business that competitors struggle to replicate and that frequently involves technology in a key enabling role
Imitation resistant value chain
Attempts to occupy more than one position while failing to match the benefits of a more efficient singularly focused rival
Straddling
Performing different tasks than rivals or the same tasks in a different way
Strategic positioning
A set of decisions made by a firm to gain a competitive advantage
Strategy
sites that cannot be indexed by Google and other search engines.
The dark Web refers to:
a concern that an advertisement will run near offensive material, embarrassing an advertiser and/or degrading their products or brands.
The term "content adjacency" refers to:
the global mapping of users and organizations, and how they are related.
The term "social graph" refers to:
This is high when it is easy for new competitors to enter a market
Threat of new entrants
This is high when there are many alternatives to a product or service
Threat of substitutes
Zara's Three information system uses
Transaction Processing system: Point of sale and RFID Management Information System: Just in Time and logistical systems Executive/Decision support system: Expanding globally
A significant portion of Facebook's underlying technical infrastructure consists of open source software
True
Facebook (and other apps the firm owns) collectively represent the largest photo-sharing service on the Web, ahead of Picasa, Flickr, and Photobucket, even though all of these other efforts got started before Facebook.
True
Facebook's Beacon effort was a failure largely because it was "opt-out" instead of "opt-in."
True
Firms that grow quickly may seem less risky/more likely to succeed; therefore fast growth may help an entrepreneur extract better ownership terms from potential investors. A. True B. False
True
Facebook has offered a system where web developers can choose to accept a user's facebook credentials
Users can access websites without creating an account, reducing a potential barrier to customer acquisition
Facebook has offered a system where Web site operators can choose to accept a user's Facebook credentials for logging in. Web site operators appreciate this feature because
Users can access websites without creating an account, reducing a potential barrier to customer acquisition.
are there to seek information to drive a specific action.
Users of Google and other search engines are said to be on a hunt because they:
highlights primary or support activities that add a margin of value to a firm's products or services where information systems can best be applied to achieve a competitive advantage
Value Chain Analysis of Strategic Opportunities
Idea that a firm's value chain is linked to the value chains of its suppliers, distributors and customers
Value Web (collection of independent firms that use IT/IS to coordinate value chains
Views organization as a chain or series of processes.
Value chain (each step adds value to the product or service)
Looks at the firm from the inside
Value chain analysis
Something that the decision maker has control over
Variable
Leveraging consumers to promote a product or service
Viral marketing
A closed network or single set of services controlled by one dominant firm
Walled Garden
_____ is a term that refers to a closed network or single set of services controlled by one dominant firm. A. Walled garden B. Cloud C. Network effects D. Free rider problem E. Localization
Walled garden
gone public, selling shares on a public stock exchange for the first time.
When a firm has an IPO, it is said to have:
Mutual and reciprocal approval of friend requests
Which of the following factors has helped Facebook build up trust among its users?
Content adjacency
Which of the following issues raises advertiser concerns on promoting products and services on social networking sites?
It refers to a situation when the value of a product or service increases as the number of its users expands.
Which of the following statements holds true of network effects?
Facebook is highly profitable, with a growing ad business on mobile platforms.
Which of the following statements is true about Facebook?
It refers to a collection of computing resources available for access over the Internet.
Which of the following statements is true of the term "cloud"?
An industry practice whereby content is available to a given distribution channel for a specified time period usually under a different revenue model
Windowing
Facebook's "no-beta" culture seldom tolerates mistakes on the road to progress. A. True B. False
false
Facebook's phenomenal growth implies that it requires minimal infrastructure investment. A. True B. False
false