Chapter 3 Quiz

Marginal costs: A. are minor, insignificant costs. B. are associated with each additional unit produced. C. are the costs incurred as a result of choosing one option over another. D. are constant and do not vary according to production volume. E. are also known as overhead.

B. are associated with each additional unit produced

_____ refers to removing an organization from a firm's distribution channel. A. Disbarment B. Repudiation C. Annulment D. Disintermediation E. Revocation

Disintermediation

The three sources of scale advantage which the Netflix DVD-by-mail business had over rivals imitating its effort were: Brand, scale, data A warehouse network, customer base, and long tail selection Foresee, Nielsen, ACSI Network effects, switching costs, brand Cinematch, collaborative filtering, the long tail

A warehouse network, customer base, and long tail selection

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.

A. By going public, Netflix was required to disclose its financial position.

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.

A. Cinematch develops a map of user ratings and steers users toward titles preferred by people with similar tastes.

Crowdsourcing is: A. a phenomenon whereby firms can make money by offering a near-limitless selection. B. the act of taking a job traditionally performed by a designated agent and contracting it out to an undefined generally large group of people in the form of an open call. C. a classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience. D. the removal of an organization from a firm's distribution channel. E. an industry practice whereby content is available to a given distribution channel for a specified time period or 'window,' usually under a different revenue model.

B. the act of taking a job traditionally performed by a designated agent and contracting it out to an undefined generally large group of people in the form of an open call.

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.

D. Monitors trends among customers to personalize an individual customer's experience.

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.

D. offering a selection of products or services vastly greater than conventional retailers

Choose the correct answer: Why is the "First-Sale Doctrine," including understanding when it does and doesn't apply, relevant to Netflix? A. It means content acquisition costs for DVDs are more predictable than streaming costs. B. It means that content acquisition costs for streaming are more predictable than DVDs. C. In cases of streaming media, it facilitates a shift of bargaining power to content suppliers. D. In cases of streaming media, it facilitates a shift of bargaining power to firms paying to license content from suppliers. E. None of the above. F. a & d G. b & c H. a & c I. b & d

H. a&c

n the context of the Netflix case, ________ refers to an extremely large selection of content or products.

Long Tail

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.

Netflix's first-mover advantage

Although Netflix had a larger distribution network than rivals, other firms could build a similarly large warehouse network. What additional advantage made this more profitable for Netflix than newcomers? The size of the firm's customer base, which enabled economies of scale. The bread of the firm's physical retail store network. The extent of analyst support in the investing community. The computing power in the firm's proprietary data centers, which no rivals could replicate. The long tail of products inside warehouses that rivals could never match.

The size of the firm's customer base, which enabled economies of scale

Relate your understanding of Netflix dominance in the DVD-by-mail business to what you learned in the Strategy and Technology chapter: what three resources for competitive advantage did Netflix create in this market that rivals Blockbuster and Walmart couldn't match? bargaining power with suppliers, bargaining power with buyers, substitute goods lower search costs, proxy of quality, inspiring trust IPO, publicity, awareness brand, scale, data asset

brand, Scale, data asset

Removing an organization from a firm's distribution channel thereby collapsing the path between supplier and customer is known as _____. digital distribution privatization expulsion disintermediation outsourcing

disintermediation

What strategic asset does Netflix hope to create by getting its technology embedded in hundreds of consumer electronics devices? distribution channels information asymmetries viral marketing exclusivity churn

distribution channels

While some debate the size of the "long tail," one fact that is critical to keep above this debate is that: a large collection of titles is not important in attracting subscriptions from customers. selection attracts customers and the Internet allows large-selection inventory efficiencies that offline firms can't match. it makes business sense for offline firms to stock obscure titles. the low cost of storefront maintenance make physical retail store models attractive. more than 95 percent of the titles in the inventories of physical storefronts are viewed every three months.

selection attracts customers and the internet allows large-selection inventory efficiencies that offline firms can't match

The phenomenon whereby firms can make money by selling a near-limitless selection of less popular products is known as _____. the long tail economies of scale economies of scope the grey market the product lifecycle

the long tail

An industry practice whereby content is available to a given distribution channel for a specified time period, usually under a different revenue model is known as _____. stalling scheduling hoarding windowing pre-empting

windowing