MIS 302F exam 1 questions

What contributed to Microsoft's gained network effects in created with Windows?

Bundling What about Office(Word, Excel, etc...)? Bundling- by offering these products together at a cheaper price than its competitors, all kinds of people could use these products (analysts and

What factors made Microsoft so successful between 1990 and 2000?

Bundling MS's products to Windows (media player, Internet Explorer, etc), lowered switching costs by giving a free converter, making the product cheap OEMs teamed up with IBM who made 90% of hardware (leverage distribution channel)

What is an operating system (OS) and why do computer devices require an OS? What are the major OS brands?

The role of the OS is to control the computing hardware. OS provides a common set of controls for managing computer hardware, running programs, and making it easier for users to interact with computers and for programmers to write application software. What are the key OS leaders in Desktop, Server, and Mobile markets? desktop: windows, mac mobile: mac OS, android tablet: mac Server: UNIX and Linux and Windows

Markets where network effects are at play experience what kind of competition?

We see fierce competition, winner-take- all mentality Fighting for top 1 or 2 spots ex: · Google+ vs. Facebook · Amazon vs. Barnes&Noble

What are some examples of barriers to entry? Be able to recognize the difference between low barriers to entry and the prospects for sustainability of new entrant's efforts? (Just because it might be easy to START a business doesn't mean it is easy to STAY in business.) Relate this to Fresh Direct and straddling.

● An example of a barrier to entry would be the cost of owning a football team Cost of pro team= huge barrier to entry.

What are characteristics of complex adaptive systems (CAS)? How do these characteristics show themselves in the world and in business?

● Contain large numbers of elements ● No one element understands entire system ● Have rich interaction ● Operate in an open system, one of many ● Affected by positive and negative feedback loops ● Operate far from equilibrium ● Any agent can influence and be influenced by other agents ● Demonstrate emergent behavior ● Are unknowable and unpredictable ● Self-Organize into patterns ● Can experience big change from small causes ● co-evolve with environment in nonlinear ways ● Operate best at the Edge of Chaos ● All systems are a function of their history ● leads to disruption

How did Microsoft increase it's chances of winning OS War as it relates to RAS?

● If OS/2 won, he would share the wealth with IBM. If the Mac won, he would lose the operating system but win in applications. If Unix won, he would no longer be the major player, but at least with SCO, he could be a contender. In addition to making bets on multiple horses, he also took steps that would pay off no matter what the outcome. So, for instance, he invested heavily in building skills in graphical user interface design and object-oriented programming -- two technologies that would be a factor no matter which operating system won. ● This scenario is playing itself out again as Microsoft makes a bid to lead the Internet. Microsoft's constantly shifting portfolio of development projects, investments, acquisitions, and joint ventures with software, cable TV, telecommunications, and media companies looks quite confusing if we ask, "What is Microsoft's strategy?" It makes a lot more sense if we ask, "What are Microsoft's strategies?"

What is commonly seen in situations of disruption, specifically with the life and death of industries?

● Industries fail to be innovative and move with the change of technology ● If you continue with the horse industry (even after the cars have been invented) you will get chewed up Life- is a new mental model

What are arguments against RAS? What are counter arguments for RAS?

● Lack of money is rarely an issue with creating portfolio of strategies, its culture and mindset ● Doesn't have to be all or nothing -ex. Frozen Yogurt companies jumping into Smoothie business. Low cost and effective.

How does RAS relate to the method one would use to invest in an unpredictable stock market?

● Must balance peaks and valley to ensure overall stability; take some risk in some places and no risk in others; allows for overall balance in an unpredictable industry``

What do we know about control in CAS?

● No one is in control, everything is coevolving together: one person makes something which gives someone else an idea and so on... (Napster leads to Ipod + music) ● Who controls the music industry?---Listeners? Record Labels? Apple? ---NOPE! NO ONE IS IN CONTROL

How is operational effectiveness different from strategic positioning? If I give you an example of a company please be able to recognize on which methods of these they are competing.

● Operational effectiveness refers to performing the same tasks better than the rivals perform them. Strategic positioning refers to performing the same activities in different ways or different activities all together. ● For an example of the relationship between technology and strategic positioning, consider FreshDirect. The New York City-based grocery firm focused on the two most pressing problems for Big Apple shoppers: selection is limited and prices are high. Both of these problems are a function of the high cost of real estate in New York. The solution? Use technology to craft an ultraefficient model that makes an end-run around stores.

What are the five forces that affect competitive advantage? Be able to apply the five forces framework to an industry, assessing the competitive landscape and the role of technology in influencing the relative power of rivals, buyers, suppliers, new entrants and substitutes.

● Potential for new entrants, power of suppliers, rivalry among existing competitors, power of buyers, threat of substitution products or services.

Explain what it means to manage your business at the "Edge of Chaos"

● Structure leads to stability; change and new information lead to instability; must continue to react and change structure to survive be ready for unexpected change

Why is competitive advantage derived from operational effectiveness hard to sustain? (Think Dell)

● Technology can be copied very easily; ex: buying the same stuff as your rival, hiring people with similar backgrounds, copy the look of a rival's website, etc. Why is it hard for companies to be successful by straddling different positions? What is an example? ● Hard to get optimal benefits from two markets at the same time; traditional grocers can't copy the delivery system of Fresh Direct and manage brick and mortar Straddling requires resources to maintain. Example: Netflix entered the market as a online source for DVD's. Blockbuster tried maintain their position in the DVD market by adding the online as well as the brick and mortar shops. The straddling couldn't be maintained because they didn't have the resources and infrastructure.

Does technology only make our lives better? If not then how can it disrupt?

● Technology does make our lives better but it does disrupt and confuse ● When DVDs came out (we felt like we would use it forever) but then Netflix comes along and disrupts DVD industry. ● Cars disrupted the Horse economy ● Borders (bookstore) was disrupted by when Amazon came along (with its Kindle Fire) ● Music records/CDs was disrupted by iPods, iPhones, etc... ● Newspaper --radio, television, cable, Internet

What is the difference between a theory and a strategy? Explain how CAS and RAS relate.

● Theory is the model of how the world works ● Strategy -plan, method, or series of maneuvers for obtaining specific goal or result ● CAS is a theory and RAS is a strategy ● Strategies must reflect knowledge of complex systems.

How can barriers be a good thing for you in business? How can they be a bad thing?

● They make it difficult for other firms to enter an industry and compete. ● When barriers to entry stop your competitors, then sustainable profits are more likely. o conversely if you are looking to start a business, you want low barriers to entry

What are the four characteristics of a resource that might possibly yield sustainable competitive advantage?

● Valuable, rare, imperfectly imitable, non-substitutable

What are the 5 waves of computing that we've seen over the evolution of IT and where are we now?

● Wave I: 1960s room-sized computers ● Wave II: 1970s refrigerator sized 'mini' computers ● Wave III: 1980s personal computers ● Wave IV: 1990s Internet computing ● Wave V: Ubiquitous computing

How has Moore's Law contributed to the evolution of IT over the years? Has it affected the speed

● as chips get faster and cheaper, they will go into everything (ubiquitous computing) ● There are now chips in everything from refrigerators to cell phones to pets

Incentives: Change behavior, both in individuals and organizations ex: "sign up for this"

● due to increasing performance they cost less but investors continue to invest more. Spendi more on tech

Does Value Chain focus externally or internally?

● internally focused on how we handle products and deliver them to the customers

What does punctuated equilibrium mean and what are examples of it in business world?

● long periods where nothing changes followed by a short, revolutionary transitions (shock) ● examples of this is the stock market (occasional major upheavals like stock market crashing), music industry, media industry

What does path dependence mean? What are examples of this in business?

● small, random changes can lead to radically different outcomes (the butterfly effect) Path dependence in business- napster leads to digital music, leads to itunes, leads to devices, leads to digitalizing EVERYTHING. Ipad would have flopped in the 90's;

What is the difference between a competitive advantage and a sustainable competitive advantage? How can companies create a sustainable competitive advantage?

● sustainable competitive advantage is financial performance that outperforms their industry peers. competitive advantage could be lowering your prices, but this is not sustainable because competitors will do the same immediately after. A sustainable advantage needs to last, and the best way to do that is to change or make something that can't be easily copied.

What is the concept of "wisdom of crowds" or "group brain" about? How does something like Wikipedia apply when talking about this concept?

● the power of 10 brains is better than the power of one really smart brain. ● Wikipedia is better than one smart source because it is multiple sources in one place. ● Wisdom of Crowds must be: ○ Diverse- (not ethnic diversity) participants are bringing different pieces of info to the table ○ Decentralized- no one at the top is dictating the crowds answer ○ Collective verdict - summarizes participants opinions ○ Independent- each focuses on information rather than the opinion of others

What is the difference between a desktop and enterprise application?

desktop: app that is downloaded, only one user (Excel, Angry Birds) enterprise: app that networks others (UTDirect)

What does it mean for our chances in creating sustainable profits and advantage when the forces in Porter's 5 Forces model goes up or down?

if the power of the forces increase, then the power of competitive advantage decreases therefore causing profits to decrease

Are staying power and switching cost talking about the same general thing? ARE they the exact same thing? Please explain...

no, staying power is possessed by the company, while switching is something you incur. that's the only difference I can

What is product uniqueness and process uniqueness? What can be harder to imitate?

o Product uniqueness- Apple; the product is different from anything else o Process uniqueness- a general strategy to business model; Fresh Direct; harder to imitate

What are types of barriers and examples of these?

§ brand: the symbolic embodiment of all the information connected with a product or service. · new Mexican restaurant "Clint's Salsas" will have trouble competing w/ established, trusted, well known/recognized brands like Torchy's and Chuy's § differentiation · Apple's screen-only interface o Edge over nokia, blackberry § patents · Only pharmaceutical company Merck can produce NASONEX § distribution channels (how a product's distributed) · AT&T and Comcast convinced you not to need a Tivo § Scale · Starting new business may take more $ than you have or are even willing to bet · Ex: even if prof had billions of dollars lying around, why would he even try to start "Clintel" to compete w/Intel, when they've already invested SO much? We use facebook over google+ thanks to WHAT barrier? ● network effects Why is the world a Windows OS driven world? ● switching costs

How does a platform contribute to network effects? (Think "Made for iPod")

· Platform is a way to encourage benefits w/iPod or iPhone, you can now also get... · Cases, accessories · iHome, iPod speakers · compatible cars · Apps · Nike + running · Waterproof cases and headphones · Etc, - SO many compliments built by people outside of Apple

How does Moore's Law apply to storage and fiber speed?

● -storage has become so cheap compared to what it was that some don't even bother to buy it Fiber speed doubles every 9 months

What are the ways we find peaks?

● 1) Keep Moving If you don't constantly explore you wont find new profitable peaks Be uncomfortable with the status quo You can't be profitable forever 2) Deploy Platoon of Hikers Increase odds of success small experiments (FB chat, etc) population of strategies-failure not a risk don't have to bet the farm 3) Mix short/long jumps Adaptive walks-look at short term long pogo jumps- look at long term Horizon 1: Initiatives to extend or defend your current business Horizon 2: Initiatives to build off existing capabilities to build new business Horizon 3: Initiatives to create potential business not in existence

What is the importance of grounding competitive advantage in strategic positioning?

● Being different can lead to consistently outperforming rivals

How does co-evolution in nature relate to the business world?

● Birds eat bugs. Over time, bugs adapt and get harder shells. Birds get stronger beaks. Maybe then bugs adapt and get camo or venom, so the birds get a new digestive system. ● Facebook is main social network. Google+ launches and has better privacy settings. Facebook improves privacy settings. Google+ integrates with email. Facebook changes default email to [email protected]. (kind of like the feedback loops)

What kind of leadership do we need in a CAS?

● Bottom Up- letting everyone control leaders who can respond quickly and adapt to new changes ● ???Example of this -Hurricane Katrina hit Louisiana and Wal-Mart prepared, responded, and rebuild 2,498 emergency truckloads of supplies.

How does diversity play a role creating a population of strategies?

● Build and manage evolving population of strategies ● Bring market inside; be unbiased ● Map your jumps of your initiatives: timeframe, risk, relation to current business ● Test a population of strategies Diverse people = diverse ideas = diverse strategies

What do we know about equilibrium?

● Business is never in equilibrium ● when critical problems arise and the world changes companies must change too.

What has been the impact of Moore's Law to data, metrics and incentives?

● Data: record terabytes of data about products, transactions, and people. Metrics=Measurements: People pay attention to what you measure, so picking the right metric is key ex: facebook check-ins. Incentives: Change behavior, both in individuals and organizations ex: "sign up for this"

IT is about strategic Business Value.........hmmm......what does that MEAN?

● Don't use IT to resolve problems. You need to have a plan, strategy first, and then you can use IT to realize your strategy. It's just a tool.

How does cross-side exchange benefit similar to a feedback loop?

● Example: Xbox 360 benefits from cross-side benefits in that more users of that console attract more developers writing more software titles and vice versa.

What are all the different methods noted in class and in book of how one can acquire network effects? Can you spot the method if I gave you an example of a company's stategy?

● Exchange, Staying Power and Complementary benefits ○ Exchange: any standard that allows things to plug into one another, interconnect, or otherwise communicate will live or die based on its ability to snare network effects ○ Staying Power: long-term viability. A user invests in learning how to use a system, if a product isnt supported anymore, their investment is lost. This concept is directly related to switching costs; the cost a consumer incurs when moving from one product to another, and switching costs can strengthen the value of network effects as a strategic asset. ○ Complementary benefits: those products or services that add additional value to the network, such as "how-to" books, software, and feature add-ons, even labor. Blue Ocean

What are the five parts of an Information System? Which parts are the hardest to change and why?

● Hardware, Software, Data, Process, People (in increasing difficulty to change)

What are characteristics of Horizon 1, 2, and 3? Which horizon(s) do leading companies focus on? What horizon(s) do short-sighted companies tend to focus on?

● Horizon 1: initiatives are efforts to extend and defend existing businesses (adaptive walks) Short-sighted companies tend to focus here. ● Horizon 2: initiatives seek to build off existing capabilities to create new businesses (medium jumps) ● Horizon 3: initiatives plant seeds for future businesses that do not yet exist (long jumps) Leading companies tend to focus here.

When talking about products or services you provide, what's the difference between Competitive Strategy model and Value Chain model?

● I think it's: value chain is the overall process of product to customer, but competitive strategy model only covers how to gain a competitive advantage. seems like competitive strategy model is in the "operations" part of the value chain is you're differentiating by creating a new product. it could also be in the marketing and sales part if you focus on the cost of your product. it could also be part of other parts of the value chain, depending on the specific strategy.

Is IT about Technology for the sake of technology? Is it magic?

● IT is about how to use it to expand info, add efficiency, increase competitive advantage

How does something that is imitation-resistant provide a sustainable competitive advantage?

● If others can copy what you have then any seemingly advantageous differences will be undercut - You will not be able to sustain your advantage if people can create the same product as you

Define and diagram the value chain model. What are the main primary functions? What are components or examples of activities that exist within each of the primary functions?

● Inbound logistics>Operations>Outbound Logistics>Marketing and Sales>Service ● Infratstructure: General management,planning, finance, and IS ● HRM: recruiting, hiring, training and development ● Technology: research and development ● Procurement

What does the concept of small experiments mean in a business strategy?

● Increase odds of success by only spending a little amount towards a strategy that may turn into something good or bad

What does Moore's Law state and what are different ways you can state it in terms of speed or price?

● Moore's Law states that chips capacity for transistors (a factor of performance) doubles every 18 months ● The more transistors in a chip the faster and more space it has (better performance) ● The cost is cut by half (exponentially) ○ if a device cost $1000, then in 18 month another faster device is made costing half (1000→500 →250→and so on...)

Does 5 Forces focus externally or internally? What about Competitive Strategy model?

5 Forces: externally Competitive strategy model is internally

Describe, diagram, and understand the hardware/software stack (called as layer cake in the textbook)

Computing hardware is at the bottom of the layer cake, next layer is the operating system, the collection of programs that control the hardware. Next layer is the applications, at the top of the cake are users.

Is Groupon an example of a one-sided market or a two-sided market? What's the difference between one and two sided markets?

Groupon is a two-sided market One-Sided Markets- derive most of their value from a single class of users Two-Sided Markets- derive their value from two classes of users. Ex. Ebay More buyers=more sellers more sellers=more buyers

What is the model of the hardware/software ecosystem entail? What are its layers? What does control over certain layers provide in terms of competitive advantage, staying power, and network effects?

Hardware is the center, then OS, then Consumer Application When you go with a certain hardware you are defaulted to a software (PC-windows, Mac-OS Lion) as well as other defaulted settings such as internet explorer or itunes when you buy into one layer you automatically buy into others when the network effects are high...winner takes all

Why did Harvard write a case about the Fire at Mann Gulch? What mental models can we draw from it?

Harvard wrote this to compare the similarities between this team of paratroopers and many business organizations. Also it is a great case to learn from... ● The youngest and the most expert paratroopers survived. The youngest one ran the fastest (probably) but the expert survived because he reasoned how to deal with the fire ● in business if you cant adapt to changes then you cant survive (be prepared that someone else might come along and take your place) ● Can't always rely on leadership (you might be the most seasoned person) ● belief that you will always win and never fail is a wrong mental model

In the past decade, how has technology helped bring about radical changes across industries and throughout societies?

In the prior decade, firms like Google and Facebook have created profound shifts in the way firms advertise and individuals and organization communicate ● New technology has fueled globalization, redefined our concepts of software and computing, crushed costs, fueled data-driven decision making, and raised privacy and security concerns.

How can a product with less technical functionality end up being the overall winner over a better product and don't just tell me "because of network effects".

Move early Being first-to-market, is one strategy to becoming the dominant provider Redefine the market Use blue ocean strategy ex: Wii Subsidizing adoption Giving things for free to get people get them hooked on your product

What comes before Technology? Why do we care?

STRATEGY ● NASA had no strategy therefore the shuttles are gone now ● Southwest airlines and IKEA have good strategies therefore are still in