INFO SYSTEMS EXAM 1
the number of US patent applications waiting for approval has ______ in the past decade
TRIPLED
Crowdsourcing
the practice of obtaining info or input into a task by enlisting the services of a large number of people, either paid or unpaid, typically via the internet
envrionmental scanning
the process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends
Churn rate
the rate at which customers leave a product or service Netflix churn rate fell the year after Walmart and Blockbuster launched copycat efforts
Business Intelligence/ Data Analytics are
driving discovery and innovation, redefining modern marketing, and creating a shifting knife edge of privacy concerns that can shred corporate reputations if mishandled
Switching Costs-
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 ex: taking the time to learn how to use a product so they are reluctant to switch Other examples: info and data switch, financial commitment, contracvtual commitment, search costs, loyalty programs
Fast follower problem-
exists when savvy rivals watch a pioneer's efforts, learn from their successes and missteps, then enter the market quickly with a comparable or superior product at a lower cost before the first mover can dominate
Imitation-resistant value chain-
firms developed a way of doing business that others will struggle to replicate, in nearly every successful effort of this kind, technology plays a key enabling role
Greige
goods to be further customized based on designer/manager collaboration (partially finished goods)
Contract manufacturing-
outsourcing production to third parties. Firms that use contract manufacturers don't own the plants or directly employ the workers who produce the requested goods.
Operational Effectiveness-
performing the same tasks better than rivals perform them.
Strategic Positioning-
refers to performing different activities from those of rivals, or the same activities in a different way -while technology can be copied, technology can also play a critical role in creating and strengthening strategic differences —-> advantages that rivals will struggle to match
The fundamental strategic question in the internet era is:
"How can I possibly compete when everyone can copy my technology and the competition is just a click away?"
Tech in the law
# of US patent applications has tripled
Commodity
(PRICE FOCUSED) a basic good that can be interchanged with nearly identical offerings by others example:milk, coal, OJ *******the more commoditized an offering, the greater likelihood that competition will be based on price
Marginal Costs in terms of digital products
*******(Digital products have near $0 marginal cost)
Open Source Software:
-Apple, Google, Netflix, IBM, and Oracle are among the firms that collectively pay thousands of programmers to write code that is given away for free -today open source software powers most of the websites you visit -the rise of open source has rewritten the revenue models for the computing industry and lowered computing costs for startups to blue chips worldwide
Why Do Big Firms Fail?
-They fail to see the disruptive innovations as a threat, they listen to their customers and focus on the bottom line (BECAUSE THEY ARE FOCUSED ON PROFIT)
Zara's IT key factors:
-custom data collection (PDA) -an incentive for success (commissions 70% of salary) -track unsold items -linked to POS system -used to plan styles and issue order based on feedback -RFID Tags
Nonprogramming roles for experts in areas such as:
-user interface design (work to make sure systems are easy to use) - process design (leverage technology to make firms more efficient) -strategy (specialize in technology for competitive advantage)
Disruptive Innovation-
2 charcteristics: -they come to market with a set of performance attributes that existing customers dont value -over time the performance attributes improve to the point where they invade established markets —> often started by former employees —> lower price/lower profit margins (can even take a loss in the beginning)
Advertising
A written or spoken media message designed to interest consumers in purchasing a product or service ads build awareness, but brands are built through customer experience
FOUNDERS: Amazon Uber FaceBook AirBNB Alibaba Google Apple
Amazon- Jeff Bezos Uber- Garrett Camp and Travis Kalanick Facebook- Mark Zuckerberg AirBnB- Brian Chesky, Nathan Blecharczyk, and Joe Gebbia. Alibaba- Jack Ma Google- Sergey Brin and Larry Page Apple- Steve Jobs
Netflix Act 2
Atoms to Bits —-> 2010: Netflix had 19.5 million DVD subscribers —----> had fallen by 3 million subscribers by 2018 Digital Products: —-> fixed costs: costs that do not vary according to production volume —-> marginal cost- the cost associated with each additional unit —--> coopetition: the idea that you can cooperate and compete at the same time, EX: Netflix streaming through Amazon
fixed costs
Costs that do not vary with the quantity of output produced include buying land and building a manufacturing plant
collaboration filtering in Netflix
Ex: Cinematch is a recommendation system that monitors trends among customers and use this data to personalize an individual customers experience ex for Netflix: recommended titles became 60% of what people were watching as recommendations —--> this data is also a switching cost, if they drop netflix, the user abandons all the films they have rated
Zara Key Takeaways
Fast fashion -15 day production cycle -nontraditional business model: instead of designing a collection long before the season, Zara tries to understand what the customers like and then they design and produce it -products are exclusive and full price Zaras value chain is difficult to copy, but it is not invulnerable
4 supporting components of the value chain:
Firm Infrastructure- functions that support the whole firm, including general management, planning, IS, and finance Human resource development- recruiting, hiring, training, and development Technology/ Research Development- new product and process design Procurement- sourcing and purchasing functions
Tech in Finance
IPO Markets need new firms and the tech industry is a fertile ground that continually sprouts new businesses Tech has outpaced all other US M&A deals Modern finance simply wouldn't exist without tech
5 primary components of the Value Chain:
Inbound logistics- getting needed materials and other inputs into the firm from suppliers Operations- turning inputs into products or services Outbound Logistics- delivering products or services to consumers, distribution centers, retailers, or other partners Marketing and Sales- customer engagement, pricing, promotion, and transaction Support- service, maintenance, and customer support
Tech in HR
Knowledge management systems are morphing into social media technologies HR directors are using technology for employee training, screening, and evaluation Keywords to screen resume In many ways, social media is the "new resume"
App Stores
LOW COST DISTRIBUTION TO MARKETERS
How did Netflix have a triple advantage
Largest Selection, largest network distribution, largest customer base ALL BASED ON SCALE also had FIRST MOVER ADVANTAGE
Tech in IS
Many firms are developing so-called C-Level specialties in emerging areas with a technology focus EX: Chief Privacy Officer (CPO) Demand for scarce technical talent has led to high salaries
Netflix Act 1
Netflix DVD-by-mail business —> Built brand strength from customer service: became synonymous with DVD by mail —> Nationwide network of 58 highly automated distribution centers {Blockbuster had 7800 stores } —--> Overnight to 97% of US population —---> Economies of Scale
Exclusives at Netflix
Netflix realized early that it couldn't rely on partners for long term relationships and consistent pricing, so they have aggressively backed the development of multiple original offerings for debut on its service
Taking Netflix Public
One of the biggest strategic regrets of Netflix was taking the company public too early. Once public, the firm was required to disclose its financial position and the whole world soon knew learned that netflix was on a profit march with remarkable growth trajectory. After this came Walmart and Blockbuster
Tech in Marketing
Online channels have provided a way to track and monitor consumer activities The success of a campaign can often be immediately assessed based on online activity such as website visit patterns Social media has also had a huge impact Search Engine Marketing (SEM), Search Engine Optimization (SEO), Customer Relationship Management (CRM)
Tech in Operations
Quality programs, process redesign, supply chain management, etc are all tech-centric Example: RFID tag in Zara
Examples of crowdsourcing
Quora - relies on crowdsourcing for Questions and Answers —-> allows firms to reach out for expertise beyond their organizations Kickstarter- fundraising platform
Tech in Accounting
Sarbanes Oxley Act- raises executive and board responsibility & ties criminal penalties to certain accounting violations (emphasizes the importance of making sure accountants and execs get their numbers right
Porter 5 Forces
The intensity of rivalry among existing competitors The threat of new entrants The threat of substitute goods or services The bargaining power of buyers Bargaining power of suppliers
collaborative filtering
a classification of software that monitors trends among customers and uses the data to personalize the customer experience
cryptocurrency
a digital asset where a secure form of mathematics (crypotgraphy) is used to -handle transactions -control the creation of additional units -verify the transfer of assets.
Blockchain
a distributed and decentralized ledger that records and verifies transactions and ownership, making it difficult to tamper with or shut down tracking transactions as a chain of signatures, or hashes (hashing algorithm), time stamp system → fingerprint: unique code → organized by blocks of time in chronological order
Sustainable competitive advantage-
a financial performance that consistently outperforms their industry peers -timing and technology alone will not yield sustainable competitive advantage, yet both of these can be enablers for competitive advantage.
First Sale Doctrine
a firm can distribute physical copies of legally acquired copyright protected products. For Netlfix, this means that if studios sell their DVD's retail they can't prevent Netflix or anyone else from buying DVD's at full price and distributing the discs to others —-> only applies to the atoms of the physical disc... not the bits needed in streaming (title availability is subject to windowing)
Straddling
attempts to occupy more than one position, while failing to match the benefits of a more efficient, singularly focused rival Example: traditional grocers can fully copy the firm (Fresh Direct's) delivery business because this would leave them straddling two markets (both low-margin storefront and high-margin delivery), unable to gain optimal benefits from either
Point of Scale (POS) System
cash registers that ring up sales and deduct sold items
Resource-based view of competitive advantage-
if a firm is to maintain sustainable competitive advantage, it must control an exploitable resource, or set of resources that have 4 critical characteristics. V-Valuable R-Rare I- Imperfectly Imitable (tough to imitate) S- NonSubstitutable -can help you avoid carelessly entering markets simply because growth is spotted
Information System-
interrelated components that manage information to support decision making and control. Actually made up of more than hardware and software. IS also includes data used or created by the system, as well as the procedures and the people who interact with the system HARDWARE SOFTWARE DATA PROCEDURES PEOPLE
The downside of contract manufacturing
keep the cost of goods low, firms can keep their profit margins high —> yet there is an ugly downside... contract firms skimp on safety, ignore environmental concerns, employ child labor etc.
viral marketing
leveraging consumers to promote a product or service Examples of viral marketing machines include: Google, Facebook, Snapchat, etc
Economies of Scale
leveraging the cost of investment across increasing units of production
long tail
limitless selection allows for retailers to leverage, tail refers to the large number of products unavailable through conventional retail stores (demand exists even though products arent popular enough for stores to carry them)
how can firms break the commodity trap
many firms leverage technology to differentiate their goods and services
Fair Factories Clearinghouse-
nonprofit that provides systems where industries can share audit information on contract manufacturers
Outsourcing
obtain (goods or a service) from an outside or foreign supplier, especially in place of an internal source.
Zara's IT expenditure is less than _______ of the average industry
one quarter
Distribution Channel
the path through which products or services get to customers-can be critical to a firms success
how is technology used for competitive advantage?
rewires a businesses internal operations
Value Chain-
set of interrelated activities that bring products or services to market
Enterprise resource planning (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 the suppliers and customers
Competitive Advantage-
the ability of a firm to outperform its competitors in financial measures
ROI
the amount earned from an expenditure (What will we get for our money and how long will it take to receive payback?)
Price transparency-
the degree to which information is available -in markets where commodity products are sold, the internet can increase buying power by increasing price transparency
Brand
the symbolic embodiment of all the information connected with a product or service *A strong brand can be an exceptionally powerful resource for competitive advantage
Vertical Integration
when a firm owns several layers in its value chain Requires coordination of suppliers —> raw materials
Windowing
when content is available to a given distribution channel for a specified time window, usually under a different revenue model ex: theatre—-> retail —--> rental—-> streaming
Information asymmetry-
where customers often didn't know enough information about a product to bargain effectively.