Comp/Man Midterm

Why do platforms for collaborative consumption work particularly well for fragmented markets?

- It lengthens the value chain, despite this seeming like it would be worse, and increases productivity by breaking the cycle down more - Positioning between buyers and sellers can sometimes add value to both parties - Suppliers gain reach and encourage discovery at a lower marketing spend, consumers see search costs lowered, and both sides can benefit from services such as scheduling and payment

What does it mean to be "data rich, information poor"? Why do some firms with access to data struggle to gain information advantages?

- It means that they have more than enough data but it isn't in a form/organized so that it can be used, analyzed, and turned into information. - Systems not designed to share data - Aren't compatible with newer technologies - Aren't aligned with the firm's current business needs

What are the "four Ms" of engagement and establishing an effective social media presence?

- It's a Megaphone allowing for outbound communication - It's a Magnet drawing communities inward for conversation - It allows for Monitoring and Mediation of existing conversations

What are the three pillars of firm focus in Jeff Bezos's "Wheel of Growth"?

- Large selection - Customer experience - Lower prices

A/B Test

A randomized group of experiments used to collect data and compare performance among 2 options studied (A and B).

Semiconductor

A substance such as silicon dioxide used inside most computer chips that is capable of enabling as well as inhibiting the flow of electricity. The semiconductor business is the computer chip business.

Business Intelligence

A term combining aspects of reporting, data exploration and ad hoc queries, and sophisticated data modeling and analysis.

Analytics

A term describing the extensive use of data, statistical and quantitative analysis, explanatory and predicative models, and fact-based management to drive decisions and actions.

Machine Learning

A type of artificial intelligence that leverages massive amounts of data so that computers can improve the accuracy of actions and predictions on their own without additional programming.

Grid computing

A type of computing that uses a special software to enable several computers to work together on a common problem, as if they were a massively parallel supercomputer

Porter's Five Forces

- Intensity of rivalry among existing competitors - The potential for new entrants to challenge incumbents - The threat posed by substitute products or services - The power or buyers - The power of suppliers

Blue Ocean strategy

An approach where firms seek to create and compete in uncontested "blue ocean" market spaces, rather than competing in spaces and ways that have attracted many similar rivals.

Flash memory

Nonvolatile, chip-based storage, often used in mobile phones, cameras, and MP3 players; sometimes called flash RAM, it's slower than conventional RAM but holds its charge when the power goes out

Recognize or define: Owned Media, Paid Media, Earned Media, Inbound Marketing

OWNED MEDIA = communication channels that an organization controls. These can include firm-run blogs and websites, any firm-distributed corporate mobile website or app, and organization accounts on social media such as Twitter, Facebook, Pinterest, youtube, and Instagram. PAID MEDIA = refers to efforts where an organization pays to leverage a channel or promote a message. Paid media effort include things such as advertisement and sponsorships. EARNED MEDIA = promotions that are not paid for or owned but rather grow organically from customer efforts or other favorable publicity. Social media can be a key driver or earned media. Other forms of earned media include unsolicited positive press and positive consumer word of mouth. INBOUND MARKETING = refers to leveraging online channels to draw consumers to the firm with compelling content rathe than conventional forms of promotion such as advertising, email marketing, traditional mailings, and sales calls.

Understand the importance of looking beyond current winning strategies in pursuit of sustained competitive advantage

Understand that timing and technology alone will not yield sustainable competitive advantage, but firms can use them strategically by creating differences that cannot be easily matched

Explain why markets governed by network effects might be described as "winner-take-all"

Typically one firm controls the monopoly so whoever wins gets the whole market

Congestion effects

When increasing numbers of users lower the value of a product or service.

Recognize Google's stated mission

"To organize the world's information and make it universally accessible and useful"

Information asymmetry and price transparency

- A decision situation where one party has more or better information than its counterparty - The degree to which complete information is available

Internet of things

- A vision where lost cost sensors, processors, and communications are embedded into a wide array of products and our environment, allowing a vast network to collect data, analyze input, and automatically coordinate collective action - making all sorts of products "smart" - ex. Disney with magic bands

What is A/B testing? How is it used at Amazon?

- A/B testing = A randomized group of experiments used to collect data and compare performance among the two options studied - At first they compared the results of what customers bought when they were given recommendations vs. when they weren't and it was clear that recommendations would drive up revenue - They run many of these tests for all kinds of different things (font, size, color, etc.) in order to zero in on things to help drive profits and to bring the number of "abandoned shopping carts" down

What are APIs? How do APIs support value creation from complementary benefits? How can APIs lower barriers to entry for programmers/entrepreneurs?

- 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. - Complimentary Benefits = products or service that add additional value to the primary product or service that makes up a network - Platforms = products and services that encourage others to offer complementary goods. Many firms do this by providing APIs that allow third parties to integrate with their products and services - It lowers barriers because it's easier to integrate when you don't need to pay boat loads of money in order to get in on the tech and develop your own apps, etc.

Understand Amazon's expansion into the consumer cloud-based offerings (AWS) and the size of this business compared to other divisions (now and potentially in the future)

- AWS = Amazon Web Services - Allows anyone with a credit card access to rent industrial strength computing capacity on an as-needed basis - Bezos thinks AWS can be as big as their retail offerings - Highly profitable and the fastest growing section of Amazon's company some how moving faster than it's retail pace

How does Google profit? What advertising industry trend does this reflect?

- Advertisements on its own sites specifically search engine ads - Search ads on Google are both more effective (in terms of click-through rate) and more sought after by advertisers, because they are often associated with a user's purchasing intent.

Why does Google offer many of its popular services for free?

- Advertising drives profits and lets the firm offer most of its services for free - The variety of services encourage users to spend more time on Google, leading to more advertising opportunities

Understand why some collaborative consumption firms control inventory while others outsource inventory/management to citizen supplies. Provide an example of each.

- Airbnb and Rent the Runway ^^^^

Name a few examples of sharing economy firms. What competitive advantages do they seek?

- Airbnb makes profit off of other people renting out their houses to strangers - Charges both the guests and the hosts a fee - Doesn't own a single piece of property to reduce overhead - Rent the Runway owns thousands of designer pieces, in particular gowns and other dresses, and rents them to customers to wear for events over a couple week period to then be returned - Control over their product to maximize customer experience and quality

Provide/recognize a few ways Amazon benefits from economies of scale and scale advantages.

- Allows them leverage to negotiate lower prices and longer payment terms - They have a much larger pool of finances in order to keep the margins razor thin and the prices very low - It allows Bezos to play the long game he wants

What is Alphabet? Recognize the diverse endeavors that this company is pursuing and/or provide 1 - 2 specific examples of Alphabet business holdings (other than Google itself).

- Alphabet is the American multinational conglomerate that controls Google as well as other smaller companies like YouTube and Android - Nest = smart homes - Calico = life longevity

Define Network Effects (also known as _________ or _________)

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

Software industry forces that have driven/ accompanied/ followed the advent of cloud computing include lower marginal costs, network effects, switching costs, decline in high-end server sales, shift from hardware sales to service, lower tech barriers to entry supporting entrepreneurship and innovation

- Amazon, Netflix, Google, LinkedIn, and Facebook - Smaller firms now have access to computing technologies and services that previously were only available to ultra successful companies so it gives them a chance to infiltrate the market easier

Provide one example of a firm that uses Amazon Web Services.

- Instagram - AWS allowed 13 guys to scale Instagram to tens of millions of users and a billion-dollar price acquisition in just 15 months - Target was also once a part of AWS but they left to create their own infrastructure but 3 weeks later the website crashed after a promotion brought many people to the site

Recognize how Amazon uses tech and systems in fulfillment operations to get products from suppliers to customers quickly and with minimum error; provide or recognize a few specific examples of technology that Amazon uses for efficiencies / advantages in the growing warehouse and logistical system

- As soon as products arrive at the warehouse they are scanned packaged and shelved ready to be sent when an order comes in - Teams used to inspect products for damages and if there's an issue a switch is flipped and a "problem solver" swoops in - Kiva robots - Human pickers when the shelves are brought to them

What is the Cash Conversion Cycle and how does Amazon use it to their advantage?

- Cash conversion cycle = period between distributing cash and collecting funds associated with a given operation (sales) - Amazon consistently reports a negative CCC because they sell their inventory usually weeks before they need to pay suppliers - Liquidity problems are when firms buy too much product that they are unable to sell and liquidize their money in order to pay the supplier - This gives them a major advantage because they have a large pool of cash that they can use to expand operations, make investments, etc.

How does Amazon use Collaborative Filtering?

- Compares your data with other people's data and giving you suggestions for what they think you might like next time you're on the site - About 35% of sales come from recommendations Amazon claims - Retargeting = you look at something on Amazon and suddenly it's popping up on ads for other websites

What is crowdsourcing? How have tech firms taken advantage of crowdsourcing?

- Crowdsourcing = 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 poplin the form of an open call - Waze = a crowdsourcing app built around help from fellow drivers to create a better map app - Facebook = leveraged its users to create translations of the site for various international markets - Netflix = solicitation of improvements to its movie recommendation software

What does it take for data/analytics to be a source of sustainable competitive advantage? When might data/analytics fail to sustain competitive advantage?

- Data obtained form outside sources combined with the firm's internal data assets can give a company a competitive advantage - If a firm only uses one of the two methods than they will not have enough information to get out in front of their competitors

What are a few basic cloud computing services available to individual consumers and firms of all sizes?

- Device app stores - Covering smartphones, tablets, and TV's - Makes the tech far more accessible to small firms because it no longer costs a fortune in order to be a part of the market - Many highly successful companies started because of the app store

What other aspects of computing are advancing as well? (Do not need to know specific rates...)

- Disc drive storage - Equipment to speed transmissions over fiberoptic lines

The value derived from network effects comes primarily from what three sources?

- Exchange (needing other people to participate i.e. Facebook would be pointless if only one person used it) - Perceived staying power (long term viability of a company) - Complementary products or services (products or services that add additional value to the primary product or service that makes up the network)

Recognize large firms investing in/partnering with collaborative consumption initiatives (or starting their own); or provide one specific example

- Google and Conde Nast are two very large companies that have taken an interest in investing in collaborative consumption start-ups - Google has invested a significant amount of money in Uber (almost a quarter of a billion) - Conde Nast has invested in Rent the Runway

What are main sources of competitive advantage for Google? (some good insights in 18.10.1)

- Google has nearly unlimited resources in brand, recognition, finances, etc. so they are able to try riskier investments and they are also able to poach ideas from pioneers - Their name is synonymous with what they do ("google" is literally a verb) - The business continues to grow rapidly but they are maturing at the same time

What are the five components of an Information System (IS)?

- Hardware - Software - Database - Network - People

Key resources for competitive advantage, including: imitation-resistant value chain, brand, differentiation, network effects, distribution channels, patents

- Imitation-resistant value chain = a way of doing business that competitors struggle to replicate and that frequently involves tech in a key enabling role - Brand = symbolic embodiment of all the information connected to a product or service; proxies quality and inspires trust - Differentiation = leverage tech to make their products or services unique - Network effects = when the value of a product or service increases as its number of users expands - Distribution channels = if no one sees your product they won't buy it - Patents = protection for copycats

Six sources of switching costs identified by textbook

- Learning costs = switching tech may require an investment in learning a new interface and commands - Information and data = users may have to reenter data, convert files or databases, or even lose earlier contributions on incompatible systems - Financial commitment = can include investments in new equipment, the cost to acquire new software, consulting or expertise, and the devaluation of any investment in prior tech thats no longer used - Contractual commitments = breaking contracts can lead to compensatory damages and harm an organizations reputation as a reliable partner - Search costs = finding and evaluating a new alternative costs time and money - Loyalty programs = switching can cause customers to lose out on program benefits (think "miles" or "points"

How do blogs exhibit the long tail phenomenon?

- Long tail = in this context, refers to an extremely large selection of content or products. The long tail is phenomenon whereby firms can make money by offering a near limitless selection. - Blogs are loaded with niche content that remains "discoverable" through search engines and is often shared via other types of social media - Tumblr reported hosting nearly 228 million sites

Recognize the rise and impact of social media and peer production systems (supported by the rise of mobile computing) for individuals, businesses, and society. The examples in Section 9.1 would be great fodder for an optional essay question about the impact and reach of social media.

- More ways to connect with others for individuals - Firms can advertise, promote, and connect with customers over social networks - Viral marketing - Leverages the wisdom of the crowd to provide insight, products, or ideas that can be far more accurate or valuable than those provided by a small group of professionals - Wikipedia = only has 7 full-time employees and less than 1 million in budgeting costs yet is the 5th most visited site with over 30 million articles that are created, edited, and fact-checked by volunteers

To what extent does competition in markets with network effects differs from competition in conventional markets? E.g., the presence of monopolies and oligopolies

- Network markets experience early and fierce competition and usually result in a winner-take-all so people move fast to try an establish that advantage - Competition in conventional markets is typically a little less competitive because it isn't so important to establish an early lead and people aren't so quick to jump on the bandwagon - More bargaining power and the ability to charge higher prices when you're firm is the one who commands the network market - Monopoly = a market where there are many buyers but only one dominant seller - Oligopoly = a market dominated by a small number of powerful sellers

What are some potential problems with overreliance on "big data" and limitations to analytics in general? For example, overfitting (aka "over-engineering" in textbook), black swans, or false positives

- Over-Engineer = build a model with so many variables that the solution arrived at might only work on the subset of data you've used to create it - Analytics may not always provide the total solution for a problem. Sometimes a pattern is uncovered, but determining the best choice for a response is less clear.

What is peer production? What is a general trend or business model that leverages peer production and the internet? What is a specific example of a product or service based (all or in part) on peer production?

- Peer production = when users collaboratively work to create content, products, and services. Includes social media sites, open source software, and peer-produced services, such as Skype and BitTorrent, where the participation of users provides the infrastructure and computational resources that enable the service - Crowdsourcing = where initially undefined groups of users can band together to solve problems, create code, develop series, etc.

Define strategic positioning and the importance of grounding competitive advantage in this concept. - According to the resource-based view, what are four characteristics of a resource that could yield sustainable competitive advantage?

- Performing different tasks than rivals or the same task but in a different way - valuable, rare, imperfectly imitable (hard to imitate), and non substitutable

Define operational effectiveness and understand the limitations of technology-based competition leveraging this principle. What are the dangers of competing on operational effectiveness?

- Performing the same tasks but better than rivals perform them - It leads to "sameness" which causes products to be commoditized and consumers then just choose based on the lowest price bringing down profits for everyone

Application Programming Interface (APIs)

- Programming hooks or guidelines that allow other firms to tap into their services - Amazon provides APIs to let developers write their own applications and websites that can send the firm orders

What are several factors that have contributed to the rise of the sharing economy?

- Recession & Wage Stagnation have boosted consumer interest in low cost alternatives to conventional products and services and more people tried their hand at offering their services for hire - Social Media is good for collecting and sharing ratings - Environmental Concerns are troubling to many people so a sharing economy reduces carbon footprint - Proliferation of Smart Phones

The "sharing economy" has many synonyms (e.g. Peer Economy, Gig Economy, Uberification). No need to memorize any of the names other than SE and CC, but it is important to understand what these phenomena have in common. One example: reducing transaction costs. Know that and a few other examples.

- SE = Sharing Economy - CC = Collaborative Consumption - Reduces transaction costs - Allows for potential dynamic prices - Creates value for both buyers and sellers - Fosters market-based transactions

What is a "SMART" team? Recognize the skills and issues involved in creating and staffing an effective "SMART" team.

- SMART Team = "Social Media Awareness and Response Team" is a team tasked with creating policies and providing support, training, guidance, and development expertise for and monitoring of a firm's social media efforts - The team should include professionals experienced in tech, marketing, PR, customer service, legal, and HR because social media is interdisciplinary - Authentic individuals need to engage on behalf of the firm it can't be a PR spokesperson type relationship

Scale advantages and economies of scale

- Scale advantages = advantages related to size - Economies of scale = when costs can be spread across increasing units of productions or servings of customers

Recognize the three major categories of cloud computing: Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).

- Software as a Service = a form of cloud computing where a firm subscribes to a third party software and receives a service that is delivered online - Platform as a Service = delivers tools (aka a platform) so an organization can develop, test, and deploy a software in the cloud (these could include programming languages, database software, and product testing and deployment software) - Infrastructure as a Service = offers an organization an alternative to buying its own physical hardware. Computing, storage, and networking resources are instead allocated and made available over the internet and are paid for based on the amount of resources used. This form offers the most customization, with firms making their own choices on what products to install, develop, and maintain on the infrastructure they license.

What is one example of the mistakes, scandals, and pitfalls that Uber has brought upon itself in the past year?

- Surge pricing = the company operates on a supply and demand price scale but establish no cap for prices so the price get astronomically high - Tracking data and adjusting the price by person - If they can see that every time you open the app you immediately order the uber no matter what the price is they will make sure that your price will be higher than someone who always seems to deliberate more or gets rid of the request

Understand exponential growth of the digital universe and the volume of data available to firms today

- The amount of data being created doubles every two years - In many organizations, available data is not exploited to advantage. However new tools supporting big data, business intelligence, and analytics are helping managers make sense of this data torrent.

What is the role of network effects in sharing economy markets?

- The more people use the product or service the more value it has - Airbnb wouldn't work if plenty of people were renting out their homes but no one was actually renting them - The give and take has to be there in order for it to work

What are two critical conditions required for data mining to work? Or—in other words—what critical assumptions do we make when using data mining to inform decisions?

- The organization must have clean and consistent data - The events in the data should reflect current and future events

Describe/recognize a few of the challenges associated with of safety and regulation facing firms and markets in the sharing economy. Who are the stakeholders?

- The rise in sharing economy has completely flipped insurance on its head - Insurers aren't sure who should be covered and who handles the pay out is something goes wrong - Certain companies offer additional insurance - Tax and regulatory issues - Ex. New York taxi system - It can sometimes cost over a million dollars to get one cab certified and a driver certified and ready to serve but companies like uber are able to do their jobs without any of the same fees or regulations - Residents, homeowners, government, company, etc. is a stakeholder

Understand Amazon's inconsistent financial performance as well as their long-term outlook with respect to investing in initiatives and commitment to building scale and growing a profitable business

- They went 7 years without turning a profit and lost over 3 billion - Overtime passed all of the previously widely popular brick and mortar stores - Invests heavily in other avenues and sometimes that hurts them but it has paid off in other ways too - Lengthen time horizon to around 7 years instead of the typical 3 because your competition will be drastically reduced

Name several scale advantages associated with the Netflix digital streaming business

- huge library to choose from - the customer base with subsequent finances to pay for it - because they have a lot of money they can afford to drop the price to attract more customers

Understand how/why Amazon is increasingly taking over aspects of its own logistics business

- They're building their own shipping/delivery infrastructure which includes PrimeAir jets, long haul trailers, local trucks, transoceanic shipping operations, and plans for drone delivery - Gives them more control over customer experience - Saves them a lot of money on each packages delivery costs - Starting caring about logistics after UPS couldn't take all of the Amazon holiday orders and they had to refund and took a rep hit - Aggressively poaching top executives from delivery companies like UPS and FedEx in order to help with the operations - The shipping market is huge so they're making a lot of money off of the change to do it themselves

Heavy is the head that wears the crown, and with scale and influence come increased scrutiny. What are some legal/regulatory issues facing Google? How (generally) has Google handled these challenges?

- They've become a major target of anti-trust regulators - No one is locked in an exclusive user or advertising contract and switching costs are pretty low - There is little evidence of deliberate, predatory pricing or other "red-flag" activity that usually brings government regulation

What roles do trust and reputation play in the sharing/collaborative economy?

- Trust and reputation are major roles in the sharing economy - Companies like uber include pictures, ratings, etc. about their drivers so the customer knows who's car they're getting into - Trust doesn't mean that everything is guaranteed to be 100% safe but it helps protect the reputation is a safety issue does occur - Sharing economies are based entirely off of consumer opinion so if you are deemed to be an untrustworthy company than people will learn about it and won't spend money on your products or services

How is Amazon Marketplace offer two-sided network effects? How else does Amazon benefit from goods sold via Marketplace versus those goods of which Amazon takes inventory control and sells directly?

- Two-sided network effects = products or services that get more valuable as two distinct categories of participants expand (i.e. buyers and sellers) - It creates an even bigger pool of products without the costly risk of owning the product and not being able to sell it - More buyers attract more sellers - The get collect a fee from sellers when something is sold even if it outsells Amazon's own product

How does Uber use data and APIs for competitive advantage? Recognize/provide 1—2 examples.

- Uber offers a published guideline for how companies can embed Uber into their own apps - Companies like United Airlines, Hyatt Hotels, and TripAdvisor all now have partnerships with Uber - If your flight just arrived you can skip the airport taxi line and get an Uber straight from the United app

What role does social media play in the sharing/collaborative economy?

- Virality offered by social media can accelerate the growth of sharing economy marketplaces - Customers can become brand ambassadors - Programs where customers can receive discounts for sharing the company attracts new customers and builds trust

Recognize the scope of technology-enabled products/services that leverage artificial intelligence or machine learning as well as business applications of AI and machine learning

- Voice and image recognition, enabling self-driving cars, writing news articles and other content, and making scientific discovery are all being employed by machine learning and AI - The LA Times uses a robot called "Quakebot" to analyze geological data and it broke the story about an earthquake

What is an example of a specific product or general industry that was "disrupted"? Explain using Christensen's definition/the 2 characteristics

- Yahoo! - been built for desktop and there was no more mobile team because it was underperforming - needed nurturing and time to see what it could've invented

What is one distinctive aspect of Netflix corporate culture?

- compensation vests are given immediately - there's no vacation day limit - very trusting

What is one reason that Netflix decided not to develop its own set-top box to deliver streaming content?

- customers didn't want to add another box to their already full tv sets - so they decided to create a way for the software to be built into boxes and sold through companies who already manufacture them

Size, heat, and power: three forces challenging the continued advancement of Moore's Law

- eventually the chips won't be able to get any smaller - overheating is huge concern because theres such a high volume of power in such a small space that it heats up very fast - if it gets small enough the power has no structure and who knows what it'll do

Consider advantages and disadvantages for a first mover in an industry/product space.

- first one there and they can establish themselves as the dominating force - no prior experience to go off of - creates innovation - much less safe

Understand the basics of Zara's operations and be able to provide a few specific examples of sources of competitive advantage.

- introducing new designs twice a week - mobile devices and POS systems to gather and analyze customer preference data - RFID tags help to keep track of inventory to find things faster for the customer

Understand the shift from atoms to bits, and how this is impacting a wide range of industries

- its impacting all media industries particularly those relying on print, video, and music - everyone is impacted - ex. kindle

Fair Factories Clearinghouse

- nonprofit that creates a network where companies can share information about contractors that have good working conditions but also to weed out the bad ones so people don't use them - also records the misdeeds of companies who are not using ethical contracting

Recognize and/or provide an example of how is the Internet of Things currently impacting your day-to-day life

- smart phones - not everyday but magic bands

What downsides might a firm experience from "going public" early?

- the public has access to everything so other people start trying to compete - ex. blockbuster and walmart tried to outdo them

Understanding how Netflix sustained competitive advantage and won the DVD-by-mail business is a useful example of effective tech-enabled strategy. Know the three critical (and mutually reinforcing) resources that DVD-by-mail rivals failed to imitate: brand, scale, and a data asset

- they became the best in customer service no matter the cost - they also entered the tech market early with the DVD business so they were synonymous with tv/movie watching - the others were too late and despite having more customers that didn't translate when they wanted to stream because they didn't get in front of the tech earlier - Netflix had 58 highly automated distribution centers that could get DVDs to 97% of the population overnight - the data from how customers were rating things they watched and their queues kept updating so the suggestions were usually on point - Cinematch

How does marketing differ at Zara relative to that of other large fashion companies?

- they can't push specific pieces because they will only be there for a short time so they have to push the theme - they should emphasize the newness of everything - catwalk demand

Name the two characteristics of disruptive technologies (aka disruptive innovations).

- they come to the market with a set of performance attributes that existing customers don't value - over time the performance attributes improve to the point where they invade established markets

What are some potential weaknesses of Zara's vertically integrated value chain?

- they have no backup plan if they ever couldn't use their facility in Spain because everything passes through there - financial vulnerabilities when the euro strengthens relative to other countries

How have the costs of entrepreneurship changed over the past decade? What are some of the tech- enabled forces are behind these changes?

-anyone has the potential to build an impactful business. Entrepreneurship has no minimum age requirement -the ranks of technology are filled with young people, with several leading firms and innovations launched by entrepreneurs who started while roughly the age of the average college student

Provide 1—2 examples of how technology has helped to bring about radical changes across industries and society

1. Agriculture industry: farmers now can purchase drones that include infrared sensors which can show them things like irrigation variation, crop success, plant damage, fungal and insect infestations, and offer other insights to improve crop yields, stave off crises, improve farmer profits, and cut consumer costs 2. Silicon Valley's Zipline is delivering medical supplies and blood to remote regions like Rwanda at lightning speed

Collaborative Filtering

A classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience

Omni-channel

A approach to retail that offers consumers and integrated and complimentary set of shop, sales, and return experiences (retail store, online, and sometimes even phone and catalog)

Commodities. How do consumers make decisions when evaluating similar products?

A basic good that can be interchanged with nearly identical offerings by others (think milk, coal, oj, windows, PC, android). The more commoditized the offering, the greater the likelihood that competition will be based on price

First Sale Doctrine

A court ruling that states that a firm can distribute physical copies of legally acquired copyright-protected products

Dashboard

A heads-up display of critical indicators that allow managers to get a graphical glance at key performance metrics.

What is Bitcoin? Name one strength/benefit of Bitcoin as well as one limitation/concern

An open-source, decentralized payment system that operates in a peer-to-peer environment, without a bank or central authority. There's no transaction fees by cutting out credit card companies. Bitcoin is very difficult to understand.

What are four criteria necessary for a crowd to be "wise"?

BE DIVERSE - so that participants are bringing different pieces of information to the table BE DECENTRALIZED - so that no one at the top is dictating the crowd's answer OFFER A COLLECTIVE VERDICT - that summarizes participant opinions BE INDEPENDENT - so that each focuses on information rather than the opinions of others

Cluster computing

Connecting server computers via software and networking so that their resources can be used collectively to solve computing tasks

How does Zara incentivize employees to use in-store technology?

As much as 70% of salaries are based on store performance with an additional 10% of the firm's overall profit increase being shared across all firm employees

Straddling

Attempts to occupy more than one position, while failing to match the benefits of a more efficient, singularly focused rival

Know the six major social media tools outlined in Table 9.3 and recognize key uses and primary features of these tools.

BLOGS: - Key Uses: share ideas, obtain feedback, and mobilize a community - Primary Features: immediate publication and distribution, reverse chronology, comment threads, persistence, search ability, tags, trackbacks WIKIS: - Key Uses: collaborate on common tasks or to create a common knowledge base - Primary Features: collaborative content creation, all changes are attributed, revision history with the ability to rollback changes and revert to previous versions, automatic notification of updates, search ability, tags, monitoring ELECTRONIC SOCIAL NETWORK: - Key Uses: discover and reinforce affiliations, identify experts, message individuals or groups, virally share media - Primary Features: detailed personal profiles using multimedia, affiliations with groups & Individuals & organizations, messaging and public discussions, media sharing, "feeds" of recent activity among members MICROBLOGGING: - Key Uses: distribute time sensitive information, share opinions, virally spread ideas, run contests and promotions, solicit feedback, provide customer support, track commentary on firms/products/issues, organize protests - Primary Features: 140 character messages sent and received from mobile devices, ability to respond publicly or privately, can specify tags to classify discussion topics for easy searching and building comment threads, follower lists MESSAGING SERVICES: - Key Uses: communication can be public or private (anonymous or identifying), some focus on a specific media type (i.e photos/Instagram & videos/vine), others focus on ephemeral nonpermanent posts that go away typically after they're read (Snapchat) QUESTION-AND-ANSWER SITES: - Key Uses: knowledge sharing, discovery, learning, reputation building - Primary Features: public member-posted questions, permanent listing with searchable repository, community voting on "best" or most appropriate answer, reputation building/ranking/badging to encourage active participation

What are a few benefits for firms that use cloud computing services/platforms? What are some of the risks associated with giving up control of certain infrastructure?

Benefits: - Increased scalability, reliability, & security - Lower labor costs and hardware costs - The ability to shift computing from large fixed cost investments to those with variable costs Risks: - Errors or crashes caused by the cloud provider could shut off or scale back vital service availability - Despite the risks that come with relinquishing control most companies believe that they would not be able to do a better job

Big Data

Big Data = a general term used to describe the massive amount of data available to today's managers. Big data are often unstructured and are too big and costly to easily work through use of conventional databases, but new tools are making these massive datasets available for analysis and insight.

What is one specific example or tech provider for each of the six major social media tools? (E.g., Twitter as a specific example of Microblogging).

Blogs = tumblr Wikis = socialtext Electronic social network: facebook (public) & salesforce.com (private) Microblogging: twitter (public) and slack (enterprise) Messaging services: whatsapp (sms replacement, instagram (photo), hipchat (enterprise), whisper (anonymous) Question-and-answer sites: quora (general) and stack exchange (favored by technical professionals)

Name at least one strategy for firms that seek to improve their radar for recognizing potentially threatening disruptive technologies

By paying attention to the trajectory of fast/cheap technology advancement and nee and emerging tech is critical

Recognize internal and external sources for firms to collect data

Carnival Cruise Line tracks it's own internal customer data with third party data about household income and other measures in order to determine whether or not they should spend time marketing to you.

Who was the Harvard professor who defined disruptive technologies?

Clayton Christensen

Technological leapfrogging

Competing by offering a new technology that is so superior to existing offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits.

Artificial Intelligence

Computer software that seeks to reproduce or mimic (perhaps with improvements) human thought, decision making, or brain functions.

Massively parallel

Computers designed with many multiprocessors that work together, simultaneously, to solve problems

Supercomputers

Computers that are among the fastest of any in the world at the time of their creation

Convergence and Envelopment

Convergence = When two or more markets, once considered distinctly separate, begin to offer similar features and capabilities (markets for phones and media players converging) Envelopment = When one market attempts to conquer a new market by making it a subset, component, or feature of its primary offering

Describe basics of the two separate Netflix business models: DVD-by-mail and digital streaming

DVD-by-mail: - monthly flat-rate subscription - no mailing expenses or late fees - the discs arrive in a disc sleeve and are sent back whenever the customer is done with it - video sections are in a request queue and if a title isn't available they just move down the list - customers use the website to rate movies, get recommendations, etc. - mainly a 1 day turn around Digital streaming: - less than $10 a month with access to the entire digital library - able to be viewed on just about everything

Data versus Information versus Knowledge

Data = raw facts and figures Information = data presented in a context so that it can answer a question or support decision making Knowledge = insight derived from experience or expertise

What is e-Waste? Name one managerial consideration for e-Waste.

Discarded, often obsolete technology (electronic waste). Managers must consider and plan for the waste created by their products, services, and tech used by their organization.

What is an example of a product or service characterized by network effects?

Etsy, eBay, etc.

Convey a few reasons that Moore's Law is relevant to managers (even those at non-tech companies)

Everything advances rapidly and these trends influence inventory value, depreciation accounting, employee training, and other managerial functions. They also help improve productivity and keep interest rates low.

Fast follower problem

Exists when a savvy rival watches a pioneers efforts, learns from their successes and missteps, then enters the market with a comparable or superior product at a lower cost before the first mover can dominate

What is one substantive way that Moore's Law (and subsequent falling prices of tech products) impacted developing economies?

Falling tech prices make it easier for poorer people in developing economies to purchase them. The smaller the devices get the cheaper they get.

Sustained competitive advantage

Financial performance that consistently outperforms the industry average

Recognize fixed costs and marginal costs associated with (1) the DVD-by-mail business and (2) the digital streaming business model.

Fixed: costs that do not change Marginal: cost associated with each additional unit produced ???????????????????????????????

Recognize or provide several examples of key areas where businesses are leveraging data mining (see section 5.6.2)

Fraud Detection = uncovering patterns consistent with criminal activity Customer Churn = determining which customers are likely to leave, and what tactics can help the firm avoid unwanted defections Customer Segmentation = figuring out which customers are likely to be the most valuable to the firm

What are a few of the strategic issues and competitive challenges facing Alphabet in the emerging multi-front tech industry battlefield on which it is situated?

Google's reorganization as a holding firm named Alphabet with a Google subsidiary breaks many of the new, smaller, riskier but potentially growth-oriented efforts into separate businesses. Says co-founder Page, the firm chose the name alpha-bet as a bet on the financial term alpha, which refers to "investment return above benchmark." [2] An additional way to think of this is that Google is hoping to be the first (alpha) big player to double-down (bet) on risky but promising new markets. [3]

To what extent do you think Alphabet's investment in innovative ventures across such a broad portfolio is a wise business decision? What are some risks?

I think it was pretty wise in most senses. They have money in a lot of different baskets instead of all in one so if something fails the conglomerate doesn't fail. However, sometimes too many investments and too random investments can spread a company's finances too thin and think if google keeps investing in certain companies that probably won't yield very tangible returns in the next few years then they may run into problems.

What is the Long Tail?

In this context it refers to an extremely large selection of content or products. The long tail is a phenomenon that whereby firms can make more money but offering a near limitless selection

IPO

Initial public offering - the first time a firm makes shares available via public stock exchange

What does it mean to be characterized as part of the sharing economy or participating in collaborative consumption?

It is allowing firms to pool resources, products, and services in ways that create new markets and market opportunities .

What is Moore's Law? To what industry does it apply?

It roughly states that for the same money, in about 18 months from now you should be able to purchase computer chips that are twice as fast or store twice as much information. Or over that same time period, chips with the same speed or storage as today's chips should cost half as much as they do now. It applies to the semiconductor industry. (chip performance per dollar doubles every 18 months)

How does streaming potentially strengthen the Netflix data asset (relative to data collection with the DVD-by-mail business)?

It's automatically entered every time someone views something. Netflix no longer relies on customers to remember to go onto the website to fill in their opinions so its constantly updating.

What are some specific strategies that may be useful for firms competing in markets characterized by network effects? There are as many as 12 strategies outlined in section 8.5. You do not need to memorize them all, but describing 3—4 of the strategies with specific tech-related examples could make a great short essay question option. To what extent does application of these strategies differ for established incumbent firms versus new entrant rivals?

MOVE EARLY: - Yahoo! - Being the first to move allows your firm to start the network effects snowball rolling in your direction - Yahoo! established its auction service in Japan just 5 months before eBay and eBay was unable to compete and ended up pulling out of Japan all together - No incumbents because it's whoever moves first LEVERAGE VIRAL PROMOTION: - Skype and WhatsApp - Leverage a firm's customers to promote the product or service - Both firms' customers were recruited by users who shared the word on free and low cost internet calls and texts - Facebook and Twitter allow you to integrate your contact list in with your friends list - Incumbents may have a harder time because they don't have a lot of resources to pull from but new entrants can use pre-existing companies to advertise EXPAND BY REDEFINING THE MARKET: - Bring in more users even if there already is a lot - Sony and Microsoft were catering to hardcore male gamers but Nintendo decided to develop the Wii to cater to everyone including women, children, and families - New entrants would have a hard time making a more inclusive version because they never had the original but incumbents can take the tech they already have and use it to further develop new products ALLIANCES AND PARTNERSHIPS: - Aligning your company with others can be a great way to take down and overpower a monopoly - Citibank was the first to establish a large ATM network in New York City but only customers of Citi could use it - To counter their success, competing banks agreed to band together and formed the New York Cash Exchange (NYCE) - They made it far more accessible for everyone to get money and eventually Citi even joined the NYCE - Alliances work best for new entrants because the have some other companies that can help them get started with pooled resources and incumbents would be less likely to engage in alliances because they already have an advantage

Has Google been successful with its social media efforts?

No they are seriously lagging behind other social media giants like Facebook and Twitter in both overall users and user engagement. Integrating Google+ into its core products has not done much to help it grow.

To what extent is there a shift in digital distribution supplier power associated with the shift from atoms to bits?

Moving from atoms to bits is about moving from hardcopy to digital so in doing so there is no need for a third party so it closes the gap between the supplier and the customer (streaming licenses so there's no monopoly)

Name an emerging computing trend that may buy time for and/or extend the progress of Moore's Law. For example: 3-D transistors, Quantum Computing, Multicore microprocessors...

Multicore microprocessors = made by putting 2 or more lower power processor cores on a single chip. A lot of times they outperform a single chip while running cooler and drawing less power.

Legacy System

Older information systems that are often incompatible with other systems, technologies, and ways of conducting business. Incompatible legacy systems can be a major roadblock to turning data into information, and they can inhibit firm agility, holding back operational and strategic initiatives.

To understand the key sources of network value, it's important to recognize the structure of the network. Define (and provide or recognize an example of): - One-sided markets (same-side exchange benefits) - Two-sided markets;(cross-side exchange benefits)

One-sided Markets: - A market that derives most of its value from a single class of users (e.g. messaging apps where people can send and receive texts) Two-sided Markets: - Network markets that comprise two distinct categories of participant, both of which that are needed deliver value for the network to work (e.g. video game console owners and video game developers) - Ex. mobile payment business because users needing to make payments are attracted to apps that make the process easier and merchants like payment systems that people actually use and yields clear benefits over cash - Cross-side exchange benefits = when an increase in the number of users on one side of the market (console owners) creates a rise in the other side (software developers)

Contract manufacturing

Outsourcing production to third party firms. Firms that use contract manufacturing don't own the plants or directly employ the workers who produce the requested goods.

How does Amazon's infrastructure compare with that of competitors? How does Amazon compare in terms of revenue and profitability?

Plowed cash into... - Expanding warehousing capacity - Building e-commerce operations worldwide - Growing one of the Internet's most widely used cloud computing platforms - Leading the pack in e-readers - Developing the first credible threat to Apple's dominant iPad in tablets - Launching video streaming/gaming devices for television - Defining a successful new product category with Echo, a voice-response speaker platform - The company's logistics and shipping efforts include a leased fleet of cargo jets (Prime Air), hundreds of tractor trailers, an expanding local delivery infrastructure, a forray into trans-oceanic shipping, and a much-publicized commitment to delivery by unmanned drone. - Lost a lot of money in the beginning but turned the corner as brick and mortar stores were starting to go bankrupt

What is a prediction market?

Polling a diverse crowd and aggregating opinions in order to form a forecast of an eventual outcome.

Dynamic Pricing

Pricing that shifts over time, usually based on conditions that change demand (i.e. charging more for something that's scarce)

Dynamic pricing

Pricing that shifts over time, usually based on conditions that change demand (i.e. charging more for something that's scarce)

What are platforms? How do they support value creation from complementary benefits?

Products and services that allow for the development and integration of software products and other complementary goods. Windows, iPhone, Wii, and the standards that allow users to create Facebook apps are platforms. By providing API's (Application Programming Interfaces) that allow third parties to integrate with their products and services it helps to boost your offerings because other firms are paying to enhance your offerings.

What social media gaffe was associated with splitting the Netflix brand into two firms?

Qwikster: - 60% price increase by making the streaming and DVD by mail $8 each - split the websites which made it harder for customers to access - qwikster was the new name of the DVD by mail service

What are the "three Rs" covered by a good social media policy?

REPRESENTATION = employees need clear and explicit guidelines on expectations for social media engagement. Are they employed to speak on behalf of the firm? If they are it is critical that they disclose this information to avoid legal action. US Federal Trade Commission rules require disclosure of relationships that may influence online testimonial or endorsement. On top of this, many industries have additional compliance requirements (e.g., governing privacy in the health and insurance fields, retention of correspondence and disclosure for financial services firms). Firms may also want to provide guidelines on initiating and conducting dialogue, when to respond online, and how to escalate issues within the organization. RESPONSIBILITY = employees need to take responsibility for their online actions. Firms must set explicit expectations for disclosure, confidentiality, and security, and provide examples of engagement done right, as well as what's unacceptable. An ineffective social voice is based on trust, so accuracy, transparency, and accountability must be emphasized. Consequences for violations must be clear RESPECT = respect includes the firms, the customers, and the competitors. Many firms tell employees to honor differences and act ethically and responsibly. Sure customer service is a tough task and every rep has a story about an unreasonable client. But there's a difference between letting off steam around the water cooler and venting online.

Disintermediation

Removing an organization from a firm's distribution channel. It collapses the path between supplier and customer

What is cloud computing?

Replacing computing resources - either an organization's or individual's hardware or software - with services provided over the internet

Name at least one strategy for firms to contend with or neutralize a potentially disruptive technology once it has been identified.

Seeking external conversations with pioneers on the frontier of innovation (researchers and venture capitalists) and internal conversations with the firm's engineers and strategists who have a keen and creative eye on technical developments that the firm has not yet exploited.

Solid state

Semiconductor based devices (no moving parts). They're less likely to fail and draw less power.

Generally, what are some challenges facing firms in mature industries as they try to maintain growth?

Slower growth will put pressure on the firm's stock prices so with a firm of Google's size they need to pursue very large and very risky new markets - markets that are also attractive to well-financed rivals, smaller partners, and entrepreneurs

RFID

Small chip-based tags that wirelessly emit a unique identifying code for the item that they are attached to

Inventory turns

Sometimes referred to as inventory turnover, stock turns, or stock turnover. It is the number of times inventory is sold or used during a given period. A higher figure means that a firm is selling products quickly

Volatile memory

Storage (such as RAM chips) that is wiped clean when the power is cut from the device

Nonvolatile memory

Storage that retains data when the power is cut from the device (such as flash memory, hard drive, and DVD storage)

Structured data and Unstructured data

Structured Data - refers to information with a high degree of organization, such that inclusion in a relational database is seamless and readily searchable by simple, straightforward search engine algorithms or other search operations Unstructured Data - essentially the opposite. The lack of structure makes compilation a time and energy-consuming task. Unstructured data adds unnecessary costs to a company.

RAM

The fast, chip-based volatile storage in a computing device

Last-mile delivery

The final stage of getting the product to the consumer - typically via a smaller delivery van or vehicle

Explain the idea known as the "wisdom of crowds"

The idea that a group of individuals, often consisting of untrained amateurs, will collectively have more insight than a single or small group of trained professionals.

Microprocessor

The part of the computer that executes the instructions of a computer program (random access memory)

Social proof

The positive influence created when someone finds out that others are doing something.

Data Mining

The process of using computers to identify hidden patterns in, and to build large models from, large data sets.

Churn rate

The rate at which customers leave a product or service

What is price elasticity (definition)? To what extent are tech products typically price elastic?

The rate at which the demand for a product or service fluctuates with price change. Goods and services that are highly elastic (tech) see a demand spike when prices drop and subsequently goods and services that are not very elastic (heart surgery) are less responsive to price changes. Tech products are highly price elastic, meaning consumers buy more products as they become cheaper.

What is the "value chain"?

The set of activities through which a product or service is created and delivered to customers

Artificial intelligence

The theory and development of computer systems able to perform tasks that normally require human intelligence

Windowing

The use of windows for the simultaneous display of more than one window

Market capitalization

The value of a firm calculated by multiplying its share price by the number of shares

Non-practicing entities (aka patent trolls)

These firms make money by acquiring and asserting patents rather than bringing products or services to the market

Provide an example of how Zara is using technology to defy fashion industry conventions

They are actively asking customers on how to improve their product or their preferences in order to quickly design the next batch of clothes instead of waiting to see if the customer likes their collection

How are design decisions typically made at Zara?

They get feedback from customers and the intel goes directly to a group of 300+ long scrappy designers who work as a team to crank out 30000 designs a year

Name at least one reason that big firms often fail to recognize disruptive innovations as a threat.

They listen to their customers and only look at the bottom line instead of seeing these "innovations" as a potential threat

How has Google made an effort to catalyze Internet use worldwide? (18.10.2)

They offer free software to device manufacturers and several telecommunications and lobbying initiatives meant to lower the cost for people to get online

How has tech impacted the Five Forces?

Virgin music - intensified rivalries because it became more online centered - lead Amazon to join the game - digital music is now the substitute to cds

How has Moore's Law (and related advances in faster/cheaper technologies) shaped the six "waves of computing"?

We started with massive main frame computers that only governments and big corporations could afford but over time, and through many waves, the computers became smaller, faster, cheaper, and more accessible and Moore's Law describes this transition based on price and size.

What is meant by the umbrella term "Web 2.0"? What is one specific example of how Web 1.0 differs from Web 2.0?

Web 2.0 is a term broadly referring to internet services that foster collaboration and information sharing; characteristics that distinctly set "Web 2.0" efforts apart from the static, transaction-oriented websites of "Web 1.0." The term is often applied to websites and internet services that foster social media or other sorts of peer production.

Vertical integration

When a single firm owns several layers in its value chain