MIS 301 Exam 1
understand why the click-through rates at facebook are substantially lower than on google
hiking! facebook users are browsing to engage with friends while google users are hunting for something specific
www
host name
what is URL?
uniform resource location - address of a WWW page
is netflix's recommendation software successful?
yes b/c it's DATA - switching cost! if consumer switches, they will lose all of the films they watched/recommended how netflix built its recommendation software: - 60% of movie requests come from the recommendation system - crowd sourced by offering 1 mil for best design
/index.html
file
what is open source software?
free software where anyone can look and potentially modify the code
who are the rivals to the netflix streaming effort? do any of these firms have advantages that netflix lacks and what are they?
- HBO, Hulu, YouTube - unique/exclusive relationships with their content producers
what "class" of software does Netflix use to make movie recommendations? which key competitive resource does this software "create"? what kind of benefits does this provide to the firm? how does the long tail effect interact with its recommendation software?
- Netflix uses Cinematch -- harnesses powerful, detailed data -- improves customer experience, building brand, creating switching cost - long tail suggests obscure movies since it knows customer better (better relations with supplier)
what is the difference between TCP and UDP? why would you use one over the other?
- TCP checks for errors slowly and perfectly - UCP checks for errors fast but has mistakes use UCP in a rush
understand why adobe allows the free download of acrobat reader and why indeed.com allows free access by job seekers. understand how to decide the money side and the subsidy side for a market with a two-sided network.
- adobe: gives away the acrobat reader to build a market for the sale of software that creates acrobat files - each side may be analyzed in willingness to pay, price sensitivity & quality, quantity sensitivity -- money: employer -- subsidy: customer
what are the strategies for competing in markets with strong network effect?
- encourage complements [android developer challenge] - viral promotion [facebook] - leverage bundling [skype and windows] - redefine market to include customers [apple smartphones] - subsidize adoption [uber and lyft]
razor-blade strategy
- buying a reusable product for cheap but being forced to buy complementary product - ex. cell phone plans, printers, etc.
what are the challenges of adopting enterprise software? what are the diff. types of costs involved with enterprise software adoption? why many firms have failed when attempting large-scale enterprise system integration?
- challenges: large up front costs, high failure rate, high switching costs - costs: licensing, designing, training - reasons of failure: unrealistic goals, poor leadership, poor estimates of resources, poor communication
moore's law in relation to processing speed, communication speed, storage capacity
- chip performance doubles every 18 months (# of transistors) - optical fiber doubles every 9 months (bits per second) - data storage doubles every year (bits per square inch)
understand the key reasons explaining Kodak's downfall
- cognitive inertia: chemists not wanting to change their business - CEO failure (unachievable goals) - strong competitors (commodification of cameras)
what are the impacts of digital cameras on the entire imaging chain?
- complete removal of the processing portion of the imaging chain - storage and photo manipulation market introduced
what is coopetition? what are the risks and benefits to netflix in using amazon's cloud computing platform?
- coopetition: both partners and competitors (frenemies) - benefits: amazon's powerful platform is cheaper than building their own - risks: netflix could be slowed or kicked out by amazon
explain why facebook acquired instagram, whatsapp and oculus VR
- creation of more user data - preventing rivalry - point of entry into new markets
how IT increases customers' switching costs?
- data helps lock in customers -- ex. Netflix, account knows what you like and is already set so you won't want to switch to new streaming app
what is digital and social strategy?
- digital: using platform to target customers -- ex. geico ads - social: using platform to improve/increase social relationships while acquiring new customers -- ex. eBay group gifts
what are the major factors explaining netflix's success in its DVD-by-mail business?
- economies of scale allowed for cheaper customer membership - no brick and mortar reduced overhead costs - long tail system allowed for more options in movies
how does Uber leverage data in its service? what aspects of the firm's operations are improved through data analytics? does this provide the firm with sustainable competitive advantage?
- expanding globally to power the firm's operational model, alert drivers, improve service, set pricing and identify possible cities to enter - yes! have larger user database + able to outcompete their competitors by targeting specific user types
how do facebook, microsoft, and apple benefit from strong network effects? what role did network effects play in your choice?
- facebook: complementary product developers for apps and viral promotion from their large user base of personal friends - microsoft: can leverage bundling w/ skype since windows presence is so high already - apple: OS and features are compatible w/ only their products so people will purchase more of their products - more likely to choose a product that most friends/family have to interact with them (iPhone/texts)
understand why established firms fail to recognize and react to potentially disruptive innovations
- failure to see disruptive innovations as a threat -- do not dedicate resources to developing the potential tech since these markets don't look attractive -- do not nurture the needs of a new customer base - startups amass expertise quickly -- firms forced to play "catch-up"
secondary components of value chain
- firm infrastructure --functions that support the whole firm including general management, planning, IS, finance - human resource management --recruiting, hiring, training, development - technology/research and development --new product and process design - procurement --sourcing and purchasing functions
what is the "resource-based" view of competitive advantage? what are the characteristics of resources that may yield sustainable competitive advantage?
- firm must control a set of exploitable resources that have four critical characteristics -- valuable -- rare -- hard to imitate -- non substitutable
what advantage does FreshDirect have that insulate the firm from serious competition from startups copying its model?
- high entry costs - complex and highly customized software -- handles delivery scheduling, orchestrating preparation - relationship building w/ suppliers - customer data - speed reorders - helpful recommendations
what should managers always ask before launching an innovative (but possibly disruptive) product?
- how big is this market? - how much of an investment is required? - will existing products suffer? - will existing business models change?
under what conditions can the internet strengthen supplier bargaining power?
- if firm has network effects and highly differentiable goods - crowdfunding: collective effort of individuals who pull their money (via internet) to support efforts initiated by others - ex. Apple dominance in tech has allowed the firm to lock up 60% of world's supply w/ better pricing - ex. eBay can raise auction fees due to dominance
primary components of value chain
- inbound logistics --getting needed materials and other inputs into the firm from suppliers - operations --turning inputs into products or services - outbound logistics --delivering products or services to consumers, distribution centers, retailers or other
list examples of computer input devices, processing devices, output devices, storage devices
- input devices: mouse, keyboard - processing devices: CPU (intel AMD, ARM), RAM - output devices: monitor, printer, speaker - storage devices: hard disk drives, optical disks, flash drive
how does "faster and cheaper computing" affect areas such as IT production and inventory decisions and how does it affect IT adoption decisions?
- inventory depreciates fast - computing capital must be bought w/ utility expiration in mind, upgrading IT budget must be allocated wisely for training - production cannot overproduce - adoption: consider how long equipment will remain useful and budget for updating software
why can't netflix secure a long tail of streaming content that is the same size as its content catalog in the DVD-by-mail business? what is netflix doing to make its streaming catalog more appealing than rival offerings?
- licensing has increased + exclusive relationships with competitors - partnering with networks and making original content
what are the challenges for netflix to move from atoms to bits?
- licensing movies has increased content costs every year - legal issues in other countries don't allow netflix - increasing rivalry
what is "long tail"? how does Netflix benefit from the long tail? why can't the traditional brick-and-mortar retailers capture the long tail effect?
- long tail: large selection of content; demand exists even though products aren't popular enough for stores to carry them - Netflix benefits: -- low cost on shelf space (inventory efficiencies) -- 75% of DVDs are not new releases -- geographic constraints go away
what are the main factors explaining why firms choose open source products over commercial alternatives?
- low costs - scalability - reliability - faster time to market
understand why a software company could potentially generate high profit margin
- lower marginal cost since software is just code and can be changed easily at low costs - exhibits complementarity - learning/training contribute to switching costs - highly competitive market early on (can't sell = company will die fast) - huge economies of scale
partner components of value chain
- marketing and sales --customer engagement, pricing, promotion and transaction - service --service, maintenance, customer support
what are the characteristics of disruptive innovation?
- new set of attributes - initially not as good as incumbent product - higher rate of improvement - ex. guns, digital camera, smartphone
what is crowdsourcing and its benefits?
- outsource a job to an undefined, generally large group of people in the form of an open call - cheaper and more options
how does Uber ensure rider and passenger quality? how would you feel? how does this change the service dynamic compared with cabs?
- passengers can rate drivers -- below a 4.7 is bad and risk of being fired - passengers feel safer about the drivers - cab drivers are filtered out like a regular job but people cannot rate
what is strategic positioning
- performing different tasks than rivals or the same tasks in a different way -- related to offerings, customer requirements and geography/market -- FreshDirect used this strategy
what are the players in the ecosystem built around iPhone/iPad? how does each player benefit? do we see strong network effects in this ecosystem and why?
- players + benefits -- users: free OS + free app store -- content providers: strong platform to provide apps + lots of users -- app store: bundled w/ apple products + takes % of sales -- iPad: able to leverage bundles w/ app store - strong network effects: users increase = more content = more buyers
porter's five forces
- potential new entrants - power of buyers - power of suppliers - rivalry among existing competitors - threat of substitute products or services
evaluate the effectiveness of different advertising strategies on facebook.
- precise targeting: details about you opens up all sorts of targeting opportunities -- "hashing" - offline and online data can find a match - ads in feeds: puts a message in the middle of a screen that a user is using -- 26x higher than ads on side -- firms compete for rare ads on facebook = higher profits - mobile install ads
what diff. business models can be built around open source software?
- providing consultancy, services, training - promote complementary products - undercut competitors - software updates - support services - dual licensing
what are the benefits for netflix to move from atoms to bits?
- reduction of shipping costs - less storage and production - available on more platforms - allows for more detailed data to be harvested
what is a value chain
- set of activities through which a product or service is created and delivered to customers - can be used to map a firm's efficiency and to benchmark it against rivals, revealing opportunities to use technology to improve processes and procedures -- when a firm is resistant to imitation, a superior value chain may yield sustainable competitive advantage
what is the social graph? why is facebook's social graph considered to be stronger than the social graph created by the sites of its early competitors?
- social graph: diagram that illustrates interconnections among people in social networks/ability to collect, press and leverage the connections between the sites's users - facebook was much stronger b/c no fake accounts allowed so all relationships are verified
how has the rise of the internet and the advance in IT impacted the competitive landscape of music CDs and printed book industry?
- substitute products, digital files/streaming replaced CDs - 60% of books aren't found in stores anymore
what is apple's digital hub strategy and its motivations?
- to make the Mac an essential piece of hardware to integrate Apple peripherals like the iPod/iPhone/iPad -- everything goes together - motivated by success of the iPod
what is viral marketing? how can companies leverage social media to build a brand inexpensively?
- viral marketing: leveraging the enthusiasm of consumers to promote a product/service through social connections - companies offer discounts or rewards as incentive - ex. FaceBook and Twitter
what is the difference between volatile and nonvolatile memory? what is the basic function of CPU?
- volatile: storage that is wiped clean when power is cut - nonvolatile: storage that retains even when powered down - CPU: selects instructions, processes them, performs arithmetic/logical comparisons, stores operations in memory
what are economies of scale?
- when costs can be spread across increasing units of production or in serving multiple customers (increase in production = lower costs) - favorable economies of scale = highly scalable - cost advantage that arises with increased output of a product
FreshDirect Business Model 1. factors to success? 2. IT impact on value chain? 3. similar business work in rural areas?
1. ability to buy directly from the suppliers which allows lower prices, better relationships w/ supplies, ability to have a wider selection 2. customers have a better shopping experience, company produces better marketing, can use more platforms (apps) 3. would not work in rural area b/c housing is too spread out to justify delivery costs and leaves few customers in delivery radius
what are the three primary sources of value for network effects?
1. exchange value: users can potentially communicate with more people 2. staying power: long term viability of a product or service - greater # of users = stronger staying power - switching costs, total cost of ownership 3. complementary benefits: products or services that add additional value to the primary product or service that makes up a network - platforms: allow for development and integration of all products
what are the major functions performed by a content delivery network (CDN) provider?
CDN: 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 [CNN, MTV] - distributed CDN servers that store popular content - software that ensure data elements to be synchronized - algorithms that routed end-users' requests to the optimal CDN server
what is HTTP and HTML?
HTTP: hypertext transfer protocol - defines communication between web browsers and services [sent to request info and is sent back with it] HTML: hypertext markup language - provides content for web page [code]
what are the two of the leading ERP vendors? functions of a business that might be impacted by ERP?
SAP and Oracle - credit checking - loan covenant writing - pricing - streamlining business processes - making data more usable - reducing labor costs and errors
what is distributed computing?
a form of communication where systems in different locations communicate and collaborate to complete a task - yield enormous efficiencies in speed, error reduction, cost savings
what is a router and its basic functions?
a computing device that connects networks and exchanges between them - speaks to each other and other computers using IP
how does the market share for desktop OS differ from server OS?
desktop - 91% Windows - 7% Mac server - 46% Windows - no Mac
example of technology based company
amazon - enjoys strong relationships with its suppliers and has a massive data collection and a recommendation system to use the data (competitive advantage) *understand that technology alone will not yield sustainable competitive advantage
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application transfer protocol
why do certain business entry barriers decrease as a result of cloud computing?
b/c of lower costs to access powerful systems and software, making it easier for start-ups to launch and smaller firms to leverage the backing of powerful technology
what are the benefits of buying the packaged one and what are the benefits of getting the on-demand one? understand how the size of your organization affects your choice.
benefits of packaged: more control, customized [better for large companies] benefits of on-demand/SaaS: less control, less customization, already set up [better for small companies]
what are the benefits to users from cloud computing? what are the barriers to cloud computing adoption? when you decide if you want to get service from a particular cloud vendor, why should you consider the long term viability of cloud vendor?
benefits to users: efficient, flexible & rapid access, scalable barriers: availability, total cost of ownership, switching costs, interoperability with own system, less flexibility consideration: switching costs are high, so you will be locked in for a long time to the vendor that you choose
what are the benefits and challenges to vendors from offering cloud computing?
benefits to vendors: instantly deploy bug fixes and product enhancements, accessible to anyone with an internet connection, reduction of costs challenges: most cloud computing efforts focus on new software development projects rather than options for old software, stringent regulatory compliance issues
is netflix a friend or foe to the studios? why?
both! - friend: -- advertise their movies (cinematch) -- pay for licensing - minimalist control - foe: -- take studio sales
what are the potential benefits of adopting enterprise software?
cheaper in long run faster than humans efficient less mistakes
understand what is client and which is server in a distributed computing environment. understand how client browsers on various machines interact with a company's systems.
client: software program that makes requests of a server program -- WWW scenarios: client = browser (chrome, safari) -- apple siri server: program that fulfills the requests of a client -- hardware context: computer that has been configured to support requests from other computers -- software context: program that fulfills requests -- resides on server-class hardware
what are switching costs and its sources?
costs incurred by consumers when switching from one product to another - learning costs: switching technologies may require an investment in learning a new interface - info and data: users may have to re enter data, convert files or even lose earlier contributions - financial commitment: can include investments in new equipment, the cost to acquire and the loss of investment in prior technologies - contractual commitments: breaking contracts can lead to compensatory damages and harm an organization's reputation as reliable - search costs: finding and evaluating a new alternative costs time and money - loyalty programs: switching can cause customers to lose out on program benefits
CRM
customer relationship management - integrates sales and marketing to customers
what are the major factors contributing to Uber's success?
data, network effects, convenience, cost
what is the difference between desktop application and enterprise application software?
desktop applications: run on personal devices and accommodate a single user - ex. excel enterprise application software: used on organizational devices and accommodate multiple users - ex. oracle/SAP
why did Apple want to switch to new chip architecture for its Mac? pros and cons?
differentiation! - pros: -- more powerful -- lighter -- run windows - cons: -- have to rework the OS
why is the iPhone successful?
digital hub, switching costs, network effects, protected innovations, buyer loyalty
"nytimes"
domain name
what is DNS?
domain name service: ISP service that looks up IP addresses - root server name to name server *basic function of DNS and how a computer interacts with DNS to find IP address of given URL
why do some collaborative consumption firms choose to take possession of inventory rather than allow the "crowd" to provide it peer-to-peer style?
end users simply can't be relied on to consistently manage inventory and logistics successful "collaborative consumption" efforts own inventory to ensure quality and gain control over customer experience
what is the rationale for Apple to open physical stores?
enhances customer experience - creates stronger brand identity -- customer enticed to buy more products when surrounded by them
what is ERP?
enterprise resource planning: integrates multiple functions in an organization, manages day-to-day business processes
understand that advances in chip technology doesn't work alone - OS and apps must be written to take advantage of new capabilities
everything must be compatible to be successful
understand the two major 3G standards (GSM and CDMA) are being replaced by 4G!
global system for mobile communications (GSM - more popular) - most of europe and rest of world - US: AT&T and T-mobile code division multiple access (CDMA) - US: verizon and sprint - can't use voice and data at same time
is Uber good or bad for the economy?
good - high level of profit creates jobs - increases tax revenue for gov't - create competition in a market sect
can facebook turn graph search into a money maker?
graph search: allows users to draw meaning from the site's social graph and find answers from social connections - can look for job placements, travel information, places to eat, and dating - can monetize how people look at things
what is IaaS? resources vendor will manage? resources user will manage? basic question is it essentially addressing?
infrastructure as a service - vendor manages: virtualization, servers, storage, networking - user manage: apps, data, runtime, middleware, OS - "i need a server" *amazon is the pioneer to officially offer IaaS to public
who are the major players in the CPU market and their key strategies?
intel - technology innovation: fast innovation cycle, intellectual property protection - uses dual sourcing w/ semiconductor suppliers - allocate products in new supply b/c of moore's law - will depreciate fast and customers willing to pay premium AMD - price war - first imitating then innovating - target server market - legal actions against intel for anti-competitive practice
what is the difference between the internet and the web?
internet - massive connection of devices worldwide web - HTML pages on the internet
understand the slowest part of the internet is typically the last mile, not the backbone
internet backbone: high speed data lines provided by many firms all across the world that interconnect and collectively form the core of the internet last mile: technologies that connect end users to the internet (slowest)
what is an IP address?
internet protocol address: value used to identify a device connected to the internet - 32 binary number - divided into 4 parts, 8 bit (one byte) each part - converted to decimal numbers - 0-255 *every device on internet needs to be assigned with an IP address
what is ISP and peering?
internet service provider peering: when diff. ISPs connect their networking equipment to share traffic on the internet *carriers usually don't charge one another for peering. Instead, "the money is made" in the ISP business by charging the end-points in a network—the customer organizations and end users that an ISP connects to the Internet.
once a firm can detect disruptive technologies, what techniques can it use to nurture and develop these technologies?
investment on research & development - build portfolio of options on emerging technologies, investing in firms, startups, internal efforts - options give the firm the right to continue & increase funding as a technology shows promise - if a firm has a stake in a startup, it may consider acquiring the firm - encourage new market & technology development
why did the sharing economy become so popular?
it allows firms to pool resources, products and services in ways that create new markets and market opportunities - 47% learned about services through word of mouth
what are the three biggest strategic moves by Steve Jobs in the tech business?
new chip architecture: motorola to intel new OS: Mac OSX new distribution channel: fancy brick-and-mortar stores
what is an operating system? basic functions?
operating system: software that controls the hardware & sets standards of execution of apps - arbitration: manages tasks and allocates resources - abstraction: interface hardware and apps *value of OS determined by functionality and availability on apps
understand the motivations for large incumbents to contribute to the development of open source software
motivations: lowering cost of computing, open source efforts make more computing options accessible to smaller firms, more reliable/secure computing = lower costs for users, OSS diverts funds that firms would spend on fixed costs to innovation complications: competing reports cite certain open source products as being difficult to install and maintain and the varying open source license agreements
what is cloud computing and its characteristics?
on demand network access to a pool of shared resources - multi-tenancy model: resources are assigned and reassigned - location independence: little or no control over exact location of hardware - measured service: resource usage can be monitored/measured - rapid elasticity: resources can be rapidly and elastically provisioned to quickly scale out when needed - on demand self service, broad network access, resource pooling
how does one-sided market differ from two-sided market?
one-sided market: market that derives most of its value from a single class of users - users gain benefits from interacting w/ a similar category of users - benefits: derived by interaction among members of single class participants - ex. pharmaceutical company, messaging apps two-sided market: network markets comprising two distinct categories of participants - both need to deliver value for the network to function - user gains benefits from interacting with a separate, complementary class of users - benefits: an increase in the # of users on one side of the market, creating a rise on the other side - ex. credit card companies, video game platforms, FaceBook, LinkedIn
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path
what is PaaS? resources vendor will manage? resources user will manage? basic question is it essentially addressing?
platform as a service - vendor manages: runtime, middleware, OS, virtualization, servers, storage, networking - user manage: applications, data - "i have an app, but i need a place to run it" *windows azure and google app engine are vendors
apply the five forces framework to assess the competitive landscape in the PC industry
power of suppliers - some power, not too strong - most suppliers of components only have power over OS and CPU power of customers - very powerful - depends on # of choices, sensitivity to price, knowledge potential new entrants - many (low barriers of entry) rivalry of existing - vicious - almost commodity possible substitutes - varies
what are commodities?
products/services that are nearly identically offered from multiple vendors - consumers focus highly on price since there are similar choices - break commodity trap: firms leverage technology to differentiate - data plays a critical role in differentiation
what are the key challenges to the sharing economy?
safety issues, payment collection, risk of hackers
what is SaaS? resources vendor will manage? resources user will manage? basic question is it essentially addressing?
software as a service - vendor manages: applications, data, runtime, middleware, OS, virtualization, servers, storage, networking - user manages: nothing - "i want access to the software app via my thing client interface" (web browser) *cloud user will not manage or control
SCM
supply chain management - integrates supplier relations, inbound/outbound logistics
.com
top level domain
what is TCP and its basic functions? what is IP and its basic functions? how do they work together?
transmission control protocols (TCP): controls packets that get sent through internet, works at both ends of internet communication to ensure perfect copy is sent internet protocol (IP): forwards data packets over internet TCP cuts up info, checks and rearranges it then IP send packets
what are network effect and examples?
value of product or service increases as its number of user increases (metcalfe's law) - Uber, Wikipedia, Instagram, Yelp
