2.2 STRATEGY AND TECH

brand, search costs, customer experience, proxies quality, inspires trust, promote, viral marketing, social sharing, Early, free

A firm's _______ is the symbolic embodiment of all the information connected with a product or service, and a strong brand can also be an exceptionally powerful resource for competitive advantage. Consumers use brands to lower ________ _______, so having a strong brand is particularly vital for firms hoping to be the first online stop for consumers. Want to buy a book online? Auction a product? Search for information? Which firm would you visit first? Almost certainly Amazon, eBay, or Google. But how do you build a strong brand? It's not just about advertising and promotion. First and foremost, __________ ___________ counts. A strong brand _________ _________ and __________ ________, so if consumers can't rely on a firm to deliver as promised, they'll go elsewhere. As an upside, tech can play a critical role in rapidly and cost-effectively strengthening a brand. If a firm performs well, consumers can often be enlisted to __________ a product or service (so-called ______ ____________). Firms that grew to gargantuan size before committing any substantial investment on advertising include Google, Skype, eBay, Facebook, LinkedIn, Twitter, and YouTube. Social services like Facebook and Twitter are viral marketing machines. Instagram, Pinterest, and Spotify are just some of the firms that have built thriving businesses with millions of followers by increasing its public awareness through _________ _________. ______ customer accolades for a novel service often mean that positive press (a kind of ______ advertising) will also likely follow.

bargaining, 60, raise, pricing power

A growing firm may also gain ___________ power with its suppliers or buyers. Apple's dominance of smartphone and tablet markets has allowed the firm to lock up ____ percent of the world's supply of advanced touch-screen displays, and to do so with better pricing than would be available to smaller rivals. Similarly, for years eBay could ______ auction fees because of the firm's market dominance. Auction sellers who left eBay lost _________ ______ since fewer bidders on smaller, rival services meant lower prices.

imitation-resistant value chain

A way of doing business that competitors struggle to replicate and that frequently involves technology in a key enabling role.

scale advantages

Advantages related to size.

network effects

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

weaknesses, supply chain management, customer relationship management, enterprise resource planning software

An analysis of a firm's value chain can also reveal operational __________, and technology is often of great benefit to improving the speed and quality of execution. Firms can often buy software to improve things, and tools such as ________ ______ ____________ (SCM; linking inbound and outbound logistics with operations), _________ ________ _______________ (CRM; supporting sales, marketing, and in some cases R&D), and ________ _______ _________ _________ (ERP; software implemented in modules to automate the entire value chain), can have a big impact on more efficiently integrating the activities within the firm, as well as with its suppliers and customers. But remember, these software tools can be *purchased by competitors*, too. While valuable, such software may not yield lasting competitive advantage if it can be easily matched by competitors as well.

differentiation, comparisons, advantages

Apple Stores show firm-crafted retail distribution channels at their most effective. As mentioned earlier, one of Apple's key competitive strengths lies in the firm's ________________ vs. rival products, however firms offering highly differentiated offerings may face difficulty convincing potential customers of a product's unfamiliar benefits. Apple gear at a Best Buy might face price or simple feature checklist ___________. However, Apple products offered at the Apple store give firm-trained employees an opportunity to present ________________ of the company's unique products, how they work together, and free on-site customer support. While many in the business press thought the Apple store would be a dismal failure (it was introduced at a time when PC maker Gateway was shuttering its own failed retail experiment), for Apple this formula has resulted in the single most successful retail chain in the United States on a sales-per-square-foot basis. Apple Store sales dwarf not just consumer electronics categories, but also clothing retailers, high-end jewelers, and every other store regardless of category.

tightly integrate, easier, secure, privacy, commodity-based, 9, 92

Apple is another firm that has distinguished itself through differentiation. Unlike rival offerings from Microsoft and Google, Apple mobile and computer operating systems only run on Apple hardware. This allows the firm to _________ __________ the experience across Apple products. Apple systems consistently receive high customer satisfaction ratings, are considered _________ to use, are more _________, and have fewer ___________ issues. While Apple's market share in computer operating systems is less than Microsoft Windows, and Apple's worldwide smartphone market share is less than Google's Android, Apple's differentiation (and the ability to avoid price-eroding, _____________-_______ competition of other hardware rivals) has helped make Tim Cook's firm the most profitable and valuable company in the United States. Consider that in recent years, ____ out of ten premium priced PCs sold in the United States are Macs; and with the iPhone, Apple takes in an astonishing ____ percent of smartphone industry profits.

Google, 1/6, 3

Being dependent on distribution channels provided by other firms can present challenges if distribution partners suddenly decide to cut you off. When the iPhone was introduced, ____________ was Apple's exclusive map provider. However, Apple eventually launched its own map service, kicking out Google as a default option and relegating it to an iOS also-ran. Two years after the change, fewer than ___ iOS users had installed the Google Maps app on their devices, even though Apple's mapping product was initially considered inferior. Fear of losing out on access to iPhone users is one reason why Google spends a reported $__ billion dollars to keep its search engine on Apple's mobile products. And if Google can't buy itself into a distribution channel it can create one. Even though Microsoft and Apple embed their browsers with their operating systems, Google's Chrome remains the most widely used Web browser in the world.

Contractual commitments

Breaking contracts can lead to compensatory damages and harm an organization's reputation as a reliable partner.

Yahoo!, Microsoft's Bing, microprocessor

But show up late and you may end up paying much more to counter an incumbent's place in the consumer psyche. Google's brand is so strong that it has become a verb, and the cost to challenge it is astonishingly high. _________ and _____________ ______ each spent $100 million on Google-challenging branding campaigns, but the early results of these efforts seemed to do little to grow share at Google's expense. Branding is difficult, but if done well, even complex tech products can establish themselves as killer brands. Consider that Intel has taken an ingredient product that most people don't understand, the _____________, and built a quality-conveying name recognized by computer users worldwide.

efficiency, contract manufacturers, fell, outpaced, commoditized

But then Dell's killer model, one that had become a staple case study in business schools worldwide, began to lose steam. Nearly two decades of observing Dell had allowed the contract manufacturers serving Dell's rivals to improve manufacturing _________. Component suppliers chose to locate near ____________ __________, and assembly times _____ dramatically. And as the cost of computing fell, the price advantage Dell enjoyed over rivals also shrank in absolute terms. That meant savings from buying a Dell weren't as big as they once were. On top of that, the direct-to-consumer model also suffered when sales of notebook PCs ________ the more ______________ desktop market. Notebooks can be considered to be more differentiated than desktops, and customers often want to compare products in person—lift them, type on keyboards, and view screens—before making a purchase decision, leading Dell to work with retailers instead of being direct-only. In time, these shifts knocked Dell from its ranking as the world's number one PC manufacturer.

Financial commitment

Can include investments in new equipment, the cost to acquire any new software, consulting, or expertise, and the devaluation of any investment in prior technologies no longer used.

Non-Practicing Entities

Commonly known as patent trolls, these firms make money by acquiring and asserting patents, rather than bringing products and services to market.

Blue Nile, operating costs, economies of scale, margins, web rooms, multichannel, comparison, 20-40, Dream Box

Consider that in just one year during the firm's early growth, the Internet firm ______ ______ sold as many diamond rings with just 115 employees and one website as a traditional jewelry retailer would sell through 116 stores. And with lower ___________ ______, Blue Nile can sell at prices that brick-and-mortar stores can't match, attracting even more customers and further fueling its advantages in ______________ ____ _______. Profit ___________ improve as the cost to run the firm's single website and operate its one warehouse are spread across increasing jewelry sales. The firm has begun to experiment with "______ _______"—consumer-education-focused storefronts that carry samples for inspection. "Web rooms" operate leanly with no for-sale inventory, no staff working for commission, and even in-store sales are handled from an iPad. The no-pressure, lean, _____________ approach and a 30-day money-back guarantee help first-time diamond buyers gain confidence, offering experiences and tools targeted at learning, inspection, and customization. The firm even encourages customers to ____________ shop rivals with the Blue Nile app open, confident the firm's prices, touted as ____-____ percent below traditional retailers, will beat the price of any rock certified by the industry-standard GIA ratings agency. And the firm's "________ _____" mobile app uses augmented reality to allow a customer to see how their hand will look with custom-designed Blue Nile bling. Blue Nile has helped fuel over half a million wedding proposals, making the firm the largest online jewelry retailer, by far. With cost economics stacked against traditional jewelry stores it's no wonder 465 closed in a single year during Blue Nile's rise.

international regulators, unbundle, favoring

The ability to distribute products by bundling them with existing offerings can be a key advantage. But beware: sometimes these distribution channels can provide firms with such an edge that ______________ ________ have stepped in to try to provide a more level playing field. European regulators have forced Microsoft to ___________ the firm's own Web browser and media player from Windows, and Google is also being fined for allegedly ___________ its own products in searches over those provided by rivals.

switching costs

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

profile, preferences, recommendations, value chain

Data can be a particularly strong switching cost for firms leveraging technology. A customer who enters her ______ into Facebook, movie __________ into Netflix, or grocery list into FreshDirect may be unwilling to try rivals—even if these firms are cheaper or offer more features—if moving to the new firm means she'll lose information feeds, __________________, and time savings provided by the firms that already know her well. Fueled by scale over time, firms that have more customers and have been in business longer can gather more data, and many can use this data to improve their _________ ______ by offering more accurate demand forecasting or product recommendations.

changing

Dell's struggles as computers, customers, and the product mix changes all underscore the importance of continually assessing a firm's strategic position among __________ market conditions. There is no guarantee that today's winning strategy will dominate forever. As you study firms including FreshDirect, Zara, Netflix, and others, it's important to remember that the advantages that were sustainable for years in earlier competition might not line up with market realities and the competitive environment going forward.

strategic position

Management has no magic bullets. There is no exhaustive list of key resources that firms can look to in order to build a sustainable business. And recognizing a resource doesn't mean a firm will be able to acquire it or exploit it forever. But being aware of major sources of competitive advantage can help managers recognize an organization's opportunities and vulnerabilities, and can help them brainstorm winning strategies. Also, these assets rarely exist in isolation. Oftentimes, a firm with an effective _______ ________ can create an arsenal of assets that reinforce one another, creating advantages that are particularly difficult for rivals to successfully challenge.

uniqueness, defend, tech, noninfringing, Microsoft

Even if an innovation is patentable, that doesn't mean that a firm has bulletproof protection. Some patents have been nullified by the courts upon later review (usually because of a successful challenge to the __________ of the innovation). Software patents are also widely granted, but notoriously difficult to _________. A unanimous ruling of the US Supreme Court recently ruled that simply taking an existing, well-known business method and applying _______ to the process is no longer patent eligible. Also, in many cases, coders at competing firms can write substitute algorithms that aren't the same, but accomplish similar tasks. For example, although Google's PageRank search algorithms are fast and efficient, Microsoft, Yahoo!, and others now offer their own __________ search that presents results with an accuracy that many would consider on par with PageRank. Patents do protect tech-enabled operations innovations at firms like Netflix, and design innovations like the iPod click wheel. And because of patents that overlap with Google's Android system and related mobile innovations, ____________ actually makes more money from Samsung than from Skype, Windows Phone, and Xbox combined.

Search costs

Finding and evaluating a new alternative costs time and money.

outsourcing

Firms may consider adopting packaged software or _________ value chain tasks that are not critical to a firm's competitive advantage. A firm should be wary of adopting software packages or outsourcing portions of its value chain that are proprietary and a source of competitive advantage.

distribution channels

If no one sees your product, then it won't even get considered by consumers. So ____________ __________ —the path through which products or services get to customers—can be critical to a firm's success.`

value

In order to win customers from an established incumbent, a late-entering rival must offer a product or service that not only exceeds the value offered by the incumbent, but also exceeds the incumbent's _____ and any customer switching costs.

exceeds, switching costs

It is critical for challengers to realize that in order to win customers away from a rival, a new entrant must not only demonstrate to consumers that an offering provides more value than the incumbent, they have to ensure that their value added _________ the incumbent's value plus any perceived customer ___________ ________ (see Figure 2.2). If it's going to cost you and be inconvenient, there's no way you're going to leave unless the benefits are overwhelming.

viral marketing

Leveraging consumers to promote a product or service.

scale advantages, economies of scale, scalable, improve

Many firms gain advantages as they grow in size. Advantages related to a firm's size are referred to as _______ __________________. Businesses benefit from ________________ ____ ___________ when the cost of an investment can be spread across increasing units of production or in serving a growing customer base. Firms that benefit from scale economies as they grow are sometimes referred to as being __________. Many Internet and tech-leveraging businesses are highly scalable since, as firms grow to serve more customers with their existing infrastructure investment, profit margins _________ dramatically.

vertically integrated, direct to consumer

Michael Dell enjoyed an extended run that took him from assembling PCs in his dorm room as an undergraduate at the University of Texas at Austin to heading the largest PC firm on the planet. For years Dell's super efficient, __________ ___________ manufacturing (where it built its own PCs rather than outsourcing manufacturing like nearly all other competitors) and _________-___-_______ sales combined to help the firm earn seven times more profit on its own systems when compared with comparably configured rival PCs. And since Dell PCs were usually cheaper, too, the firm could often start a price war and still have better overall margins than rivals.

iTunes, distribution channel, Apple Music, 60, US

More recently, Apple has leveraged its__________ platform as a ______________ ____________ to launch a new subscription service. Just nine months after launching ____________ _______, the firm had attracted over 13 million paying subscribers to its streaming service. Subscribing was easy, as anyone who had iTunes and who had bought something with Apple could sign up with a few taps, no download required. Today Apple has over ____ million subscribers worldwide, and while Spotify has more subscribers overall, Apple Music has overtaken its Swedish rival in the ____.

OpenTable's, value

Network effects earned through making a market more efficient are at the center of _____________ dominance in restaurant reservations. By getting between restaurants and their customers, and adding lots of ______ along the way, OpenTable has built the world's largest online restaurant reservation system, one so dominant it is effectively a monopoly. OpenTable can get you a reservation at over 32,000 restaurants worldwide (as recently as 2013, its largest US rival had only 1,000), and the firm handles roughly 99 percent of all online reservations in North America.

Secrecy, lead time, sales skills, manufacturing, patents

Patents can be extremely important and even lucrative, but in a study of the factors that were critical in enabling firms to profit from their innovations, Carnegie Mellon professor Wes Cohen found that patents were only the fifth most important factor. (5)

APIs

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

apps, 2.6

Roughly half of all reservations are made from the firm's mobile _____. Network effects make OpenTable the first place diners go for reservations. It is also the first choice for restaurants seeking diners. This dynamic helped the firm build a business valued at over $___ billion.

Loyalty programs

Switching can cause customers to lose out on program benefits. Think frequent purchaser programs that offer "miles" or "points" (all enabled and driven by software).

add-ons, inferior, closed

Switching costs also play a role in determining the strength of network effects. Tech user investments often go far beyond simply the cost of acquiring a technology. Users spend time learning a product; they buy ____-___, create files, and enter preferences. Because no one wants to be stranded with an abandoned product and lose this additional investment, users may choose a technically _________ product simply because the product has a larger user base and is perceived as having a greater chance of being offered in the future. The virtuous cycle of network effects doesn't apply to all tech products, and it can be a particularly strong asset for firms that can control and leverage a leading standard. Consider Apple's iPhone and iPad with their ___________ systems versus the once-dominant but now rarely used Netscape browser, which was almost entirely based on open standards. Yet, in some cases where network effects are significant, they can create winners so dominant that firms with these advantages enjoy a near-monopoly hold on a market.

Learning costs

Switching technologies may require an investment in learning a new interface and commands.

application programming interfaces

Technology also opens up opportunities to leverage products provided by others to create new distribution channels to reach customers. Many firms offer APIs (________________ __________ ___________), essentially programming hooks that allow other firms to tap into their services. By publishing APIs, Uber has managed to add its service to apps and websites provided by United Airlines, OpenTable, and TripAdvisor.

sustainable advantage, imitation-resistant, brand, switching costs, network effect, scale advantage, differentiation, distribution channels

Technology can play a key role in creating and reinforcing assets for ____________ __________ by enabling an _____________-______________ value chain; strengthening a firm's _______; collecting useful data and establishing __________ ________; creating a network effect; creating or enhancing a firm's ________ _________; enabling product or service ______________; and offering an opportunity to leverage unique _______________ __________.

value chain, sustainable competitive advantage

The ______ _______ 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 _____________ __________ ___________.

scale of tech, AMD, IBM,

The _________ ___ _______ investment required to run a business can also act as a barrier to entry, discouraging new, smaller competitors. Intel's size allows the firm to pioneer cutting-edge manufacturing techniques and invest $7 billion on next-generation plants. Rivals such as ______ and ______ once made their own chips, but sold off manufacturing when their smaller market shares couldn't justify the Intel-sized multi-billion dollar table stakes needed to stay in the game. And although Google was started by two Stanford students with borrowed computer equipment running in a dorm room, the firm today runs on an estimated 1.4 million servers. The investments being made by Intel and Google would be cost-prohibitive for almost any newcomer to justify.

distribution channels

The path through which products or services get to customers.

Firm infrastructure, Human resource management, Technology / research and development, procurement

The secondary components are: ____________ ______________—functions that support the whole firm, including general management, planning, IS, and finance _________ ___________ ____________—recruiting, hiring, training, and development _________/___________ _____ ______________—new product and process design _______________—sourcing and purchasing functions

value chain

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

brand

The symbolic embodiment of all the information connected with a product or service.

inventory, search costs, two-sided, distribution channel, Priceline Group

The system delivers high value to the industry by exposing ___________ and lowering _________ _____, thereby reducing frustration. Customers are attracted to the service that has the most restaurants, and restaurants are attracted to the service with the most customers. Strategists call this a ____-_____ market, and the strong network effects that result often crown one clear winner ahead of all other competitors. OpenTable's captive audience of restaurants and diners effectively creates a new ____________ ___________for introducing all sorts of additional value-added services, including loyalty programs to encourage repeat use and payments to lower customer wait times and free up more table inventory. The firm's industry dominance is so complete that _____________ _______ (a firm that includes over half a dozen brands, including Booking.com, RentalCars.com, and Kayak.com in addition to Priceline.com) offered $2.6 billion to acquire the firm.

inbound logistics, operations, outbound logistics, marketing and sales, service, support,

The value chain is the "set of activities through which a product or service is created and delivered to customers." There are five primary components of the value chain and four supporting components. The primary components are: ____________ ___________—getting needed materials and other inputs into the firm from suppliers ______________—turning inputs into products or services _________ _________—delivering products or services to consumers, distribution centers, retailers, or other partners ___________ _____ _________—customer engagement, pricing, promotion, and transaction _________—service, maintenance, and customer support

accounting, scm, crm, erp

There's potential danger here. If a firm adopts software that changes a unique process into a generic one, it may have co-opted a key source of competitive advantage, particularly if other firms can buy the same stuff. This isn't a problem with something like ___________ software. Accounting processes are standardized and accounting isn't a source of competitive advantage, so most firms buy rather than build their own accounting software. But using packaged, third-party ____, ____, and _____ software typically requires adopting a very specific way of doing things, using software and methods that can be purchased and adopted by others. Many of the firms covered in this text, including Netflix and Amazon, have elected to develop their own proprietary software solutions in large part because they see their uniqueness in certain operations as key to creating difficult-to-imitate competitive advantages.

affiliates

Third parties that promote a product or service, typically in exchange for a cut of any sales.

associates, affiliates, advertisements

Users can also be recruited to create new distribution channels for your products and services (usually for a cut of the take). You may have visited websites that promote books sold on Amazon. Website operators do this because Amazon gives them a percentage of all purchases that come in through these links. Amazon now has over one million of these "____________" (the term the firm uses for its _____________, yet it only pays them if a promotion gains a sale. Google similarly receives some 30 percent of its ad revenue not from search ads, but from _________________ distributed within third-party sites ranging from lowly blogs to the New York Times.

Information and data

Users may have to reenter data, convert files or databases, or even lose earlier contributions on incompatible systems.

asset, distinctiveness, Fresh Direct, Amazon, Zara

When a firm has an imitation-resistant value chain—one that's tough for rivals to copy in a way that yields similar benefits—then a firm may have a critical competitive ______. From a strategic perspective, managers can use the value chain framework to consider a firm's differences and ________________ compared to rivals. If a firm's value chain can't be copied by competitors without engaging in painful trade-offs, or if the firm's value chain helps to create and strengthen other strategic assets over time, it can be a key source for competitive advantage. Many of the examples used in this book, including __________, __________, and ______, illustrate this point.

economies of scale

When costs can be spread across increasing units of production or in serving multiple customers. Businesses that have favorable economies of scale (like many Internet firms) are sometimes referred to as being highly scalable.

stronger, imitation-resistant, value chain, straddled

While many of the resources below are considered in isolation, the strength of any advantage can be far more significant if firms are able to leverage several of these resources in a way that makes each ________ and makes the firm's way of doing business more difficult for rivals to match. Firms that craft an ___________-_________ value chain have developed a way of doing business that others will struggle to replicate, and in nearly every successful effort of this kind, technology plays a key enabling role. The _______ ________is the set of interrelated activities that bring products or services to market (see below). When we compare FreshDirect's value chain to traditional rivals, there are differences across every element. But most importantly, the elements in FreshDirect's value chain work together to create and reinforce competitive advantages that others cannot easily copy. Incumbents trying to copy the firm would be __________ across two business models, unable to reap the full advantages of either. And late-moving pure-play rivals will struggle, as FreshDirect's lead time allows the firm to develop brand, scale, data, and other advantages that newcomers lack (see below for more on these resources).

inbound logistics

While the value chain is typically depicted as it's displayed in Figure 2.1, goods and information don't necessarily flow in a line from one function to another. For example, an order taken by the marketing function can trigger an _________ _______ function to get components from a supplier, operations functions (to build a product if it's not available), or outbound logistics functions (to ship a product when it's available). Similarly, information from service support can be fed back to advise research and development (R&D) in the design of future products.

FB, Microsoft Windows, eBay, valuable, apps

____ is by far the dominant social network worldwide. ______________ ___________- has a 90 percent market share in operating systems._______ has an 80 percent share of online auctions. Why are these firms so dominant? Largely due to the concept of network effect. Network effects (sometimes called network externalities or Metcalfe's Law) exist when a product or service becomes more __________ as more people use it. If you're the first person with a Facebook account, then Facebook isn't very valuable. But with each additional user, there's one more person to communicate with. A firm with a big network of users might also see value added by third parties. Apple's iOS devices (the iPhone, iPod touch, and iPad) and Google's Android dominate rivals from Microsoft and BlackBerry in part because Apple and Google have tens of thousands more _____ that run on and enhance these devices, and most of these apps are provided by firms other than Apple and Google. Third-party add-on products, books, magazines, or even skilled labor are all attracted to networks of the largest number of users, making dominant products even more valuable.

Patents

_______ are not necessarily a surefire path to exploiting an innovation. Many technologies and business methods can be copied, so managers should think about creating assets like the ones previously discussed if they wish to create a truly sustainable advantage. Nothing lasts forever, and shifting technologies and market conditions can render once strong assets obsolete.

Switching costs, Netscape, 80, Microsoft

___________ ______ exist when consumers incur an expense to move from one product or service to another. Tech firms often benefit from strong switching costs that cement customers to their firms. Users invest their time learning a product, entering data into a system, creating files, and buying supporting programs or manuals. These investments may make them reluctant to switch to a rival's effort. Similarly, firms that seem dominant but that don't have high switching costs can be rapidly trumped by strong rivals. _________ once controlled more than ___ percent of the market share in Web browsers, but when __________ began bundling Internet Explorer with the Windows operating system and (through an alliance) with America Online (AOL), Netscape's market share plummeted. Customers migrated with a mouse click as part of an upgrade or installation. Learning a new browser was a breeze, and with the Web's open standards, most customers noticed no difference when visiting their favorite websites with their new browser.

Commodities, price-focused, differentiation, experience

_____________ are products or services that are nearly identically offered from multiple vendors. Consumers buying commodities are highly _______-_________ since they have so many similar choices. In order to break the commodity trap, many firms leverage technology to differentiate their goods and services. Data is not only a switching cost, it also plays a critical role in _________________. Each time a visitor returns to Amazon, the firm uses browsing records, purchase patterns, and product ratings to present a custom home page featuring products that the firm hopes the visitor will like. Customers value the _____________ they receive at Amazon so much that the firm received the highest score ever recorded on the University of Michigan's American Customer Satisfaction Index (ACSI). The score was not just the highest performance of any online firm; it was the highest ranking that any service firm in any industry had ever received.

Intellectual property protection, patent, useful, novel, and nonobvious, 20, startups, litigation, patent trolls, patent portfolio acquisition

______________ ________ __________can be granted in the form of a _______ for those innovations deemed to be __________, _________, and __________. In the United States, technology and (more controversially with certain restrictions) even business methods (processes) can be patented, typically for periods of ____ from the date of patent application. Firms that receive patents have some degree of protection from copycats that try to identically mimic their products and methods. The patent system is often considered to be unfairly stacked against __________. US__________ costs in a single patent case average about $5 million, and a few months of patent litigation can be enough to sink an early-stage firm. Large firms can also be victims. Non-Practicing Entities (NPEs), more commonly known as ________ ______, hold intellectual property not with the goal of bringing novel innovations to market but instead in hopes that they can sue or extort large settlements from others. A $612 million settlement paid by BlackBerry (at the time known as Research in Motion) to the little-known holding company NTP is often highlighted as an example of the pain trolls can inflict. Litigation threats are pushing rivals to cooperate in ________ _______ ___________. Apple, EMC, Ericsson, Microsoft, RIM, and Sony pooled resources for a $4.5 billion purchase of some 6,000 patents formally held by the bankrupt telecom equipment firm Nortel.

Learning costs, Information and data, Financial commitment, Contractual commitments, Search costs, Loyalty programs

switching costs (6)