Computers Crowdsourcing Questions

"Doing things right does not equal doing the right things but doing things right is important". What does this mean in the context of operational effectiveness? How about in strategic positioning?

→ "Doing things right" refers to operational effectiveness, performing the same tasks better than rivals perform them. Doing things right or operational effectiveness occurs when a company is effectively and efficiently carrying out the tasks relevant to their business, e.g. marketing, production, human resources management, etc. → However, doing those tasks well does NOT mean that the company is "doing the right things" as "doing the right things"refers to strategic positioning. Doing the right things in the context of strategy means doing the tasks that will differentiate a company and support sustained competitive advantage. → Lastly, "but doing things right is important" means that operational effectiveness IS important. Even a company doing unique, strategic tasks very different from their rivals won't have advantage for long if they are not effective and efficient in the processes/tasks that do define their business. → "Doing things right" and operational effectiveness are necessary, but not sufficient, for sustained competitive advantage.

How has technology caused many large firms to converge and compete? Apply our study of Google to your answer.

- Google is converging into industries such as self driving cars, Office-style software, technological glasses, social media, cell phones, video streaming, and more. A prime example of large firms converging with a smaller firm is Google's acquisition of YouTube. - Furthermore, firms must compete due to increased technology and scale. Apple's iPhone has to compete with Google's mobile phone, Snapchat Spectacles compete with Google Glass, and Facebook/Twitter/Instagram compete with Google+ as a social platform.

Name the THREE ways that the internet has shifted bargaining power among the five forces.

1. information accessibility closes the knowledge gap between suppliers and buyers, giving them BOTH more power 2. much higher potential for new entrants 3. easy duplication means higher threat of substitutes

Provide three of the switching costs with examples and give explanations as to how they are applicable to Amazon.

1. learning-- if someone switches from Amazon to a diff company they are going to have to learn all the new ways of purchasing things, etc. takes time. 2. financial- cancel things you're paying for, might have to pay more for a diff service 3..loyalty programs- loses all deals they got with Amazon Three possible examples of switching costs are information and data, contractual commitments and search costs. Information and data could include reentering credit card data and not having all the recommendations and customized databases that you had at the previous site. For many people, this is a big reason they stick with Amazon as it gives recommendations based on past purchases and remembers all inputed billing and shipping info, making buying just a few quick clicks. Contractual commitments could come up if you pay a termination fee, or in Amazon's example, if you leave and you have a prime account you essentially paid for a year and used it for less, much like a sunk cost you cannot get back. And finally searching costs are costs to time, effort, and possible money by looking online trying to find another site, which may not be as readily or as popular. Amazon is usually one of the highest listed in Google's search query, and so if you have to scroll and search for another site this could dissuade other people from using that site. These are three switching costs and how they relate to Amazon.

Apply Porter's Five Forces to Netflix.

1. rivalry among current customers- Amazon Prime Video, Hulu 2. threat of substitutes- for Netflix threat of substitutes is high but cost and product diversity set Netflix apart from other companies that could substitute it. 3. barriers to entry- high because of netflix long tail and scale advantages. 4. bargaining power of suppliers-controls prices, content availability, supplier content very high because some suppliers don't allow their content to be streamed on netflix, but suppliers that do MAKE netflix. Netflix however does use BACKWARD integration by creating some of its own series such as Orange is the New black 5. bargaining power of buyers: they are able to switch if they want to but Netflix can avoid this by having high switching costs.

Explain the difference between a one sided and two sided market.

A one sided market is one that derives most of its value from a single class of users. It has same-side benefits, so the more people that participate the more value there is. For example, messaging is a one sided market because the more people that message the more value there is to message and more people will message each other. A two sided market is one comprised of 2 different categories of participants. It supports complementary benefits, so for example if video games are being purchased more more people will purchase video game consoles.

Critics say that Blockbuster "killed itself." Why? In the context of operational effectiveness and strategic positioning, give some suggestions of what Blockbuster's management team could have done to maintain a sustainable competitive advantage over Netflix.

After Netflix's IPO, Blockbuster and many speculators shrugged off the company as a stock that would only reach a $3 target and plummet (it reached over $400 per share). Blockbuster relied on its strong consumer awareness, but this did not translate into any advantage when competing with Netflix. Blockbuster's name was not synonymous with DVD-by-mail business; rather, it was known as a DVD-rental store. By contrast, Netflix was known as the best provider of customer experience for the DVD-by-mail service. Netflix had the largest selection, the largest network of distribution centers, and the industry-leading strength in brand and data assets (collaborative filtering). This is why Netflix gained the largest customer base over companies like Blockbuster, and Blockbuster failed to effectively compete in an early and effective manner--"killing itself." In the context of operational effectiveness, Blockbuster's management team should not have initially ignored the threat of Netflix. Blockbuster also should have improved the same tasks it was already doing--its long tail of movie selection and customer experience, so that the company's customers would stay with them and not switch to Netflix in their transition to the DVD-by-mail and live-streaming services. The switching costs were low here, and Blockbuster didn't try to increase switching costs through strategic positioning services like consumer data gathering. The case of Blockbuster shows that operational effectiveness is simply not enough to compete (unless the good is a commodity), and Blockbuster was not doing much technological innovating. In the context of strategic positioning, Blockbuster should have moved earlier in creating its DVD-by-mail service, opened more distribution centers, and created a collaborative filtering service that would be able to compete with Netflix's exceptional offerings.

Use Amazon's warehouses to exemplify the relationship between technology and strategic positioning

Amazon has a bazillion fulfillment centers across the nation and they use Kiva robots that carry shelves to workers so that they optimize space in the warehouses because aisles in the shelves can be thinner for the robots. They also have "problem solver switches" and warning lights that you can use if someone makes a mistake, and people will come respond to the switch to help resolve the problem. This shows how technology helps someone's strategic positioning because they are selling many products that numerous firms sell but in a more efficient way. There's also a software that enforces a rule that no 2 similar products can sit next to each other which eliminates the potential issue of the product being packaged the wrong color or size, maximizing efficiency.

Imagine you are a new start-up firm entering a new market. What courses of action should you take for competing in markets with network effects? Provide three possible strategies you could use to your advantage.

As always, it is best if the start-up firm moves as early as possible, because being first allows a firm to start the network effects snowball rolling in their direction. For example, although Sony's PS2 is inferior to the Xbox, consumers still purchased the PS2 over the Xbox since it came out first. Subsidizing product adoption is a way to try to start off network effects by essentially bribing consumers with price reductions, rebates, or other giveaways. For example, PayPal gave users a modest rebate as a sign-up incentive to encourage adoption of its new effort. Many online friendly and popular companies leverage viral promotion (such as Uber), so happy consumers can share word of the good service and promote it through the internet with easy-to-use tools such as social media. Social proof (this concept must be mentioned to receive points for this example) is most especially used since people are advertised these products by people whose opinion they respect and trust. A firm can also redefine a market to its advantage to bring in new categories of users. For example, Nintendo unified older generations and women with the younger shoot-'em up boy consumer base through the Nintendo Wii with a blue ocean strategy. Instead of competing in the typical male consumer base, Nintendo reached out to a large range of people and benefited off of that. If there is already a defined leader of a market, rival firms can work together to take out the leader. For example, competitor ATMs partnered up and agreed to share their ATM operations through NYCE and took out CitiBank's reign.

In your opinion, which firm has the strongest imitation resistant value chain: Amazon or Netflix and why? Discuss sources of competitive advantage in both firms and explain why one is more successful than the other.

Both firms have value chains that are resistant to imitation, so both sides can be argued. For Netflix: Netflix can be argued to be a more successful firm than Amazon due to its success in a specific market. Netflix focuses solely on DVD delivery and online streaming, while Amazon's market is broad and has been proven unsuccessful in many areas (such as Fire Phone, Amazon Destinations, WebPay, and Askville). Nettle's use of scale and brand has attributed to the firm's tremendous success. Through collaborative filtering, Netflix utilizes collected data on customers to recommend movies or TV shows based on consumer preferences. The positive and convenient customer adds to the brand's reputation, a large source of competitive advantage. When customers are pleased with their Netflix experience and the recommendations the company offers, consumers recommend the firm to friends, increasing the company's consumer base. Furthermore, Netflix's size and scale gives the firm leverage over supply companies. With a larger company, Netflix has greater distribution channels that generate more customers. When more customers use Netflix, Netflix acquires more money to purchase a greater variety of movies and videos for consumers to watch. The large variety, referred to as the long tail, attracts more customers to the firm and continues the cycle. This double sided network effect significantly has attributed to the firm's success. For Amazon: Amazon is successful in areas similar to Netflix, however the firm operates on a much bigger scale. Amazon dominates the online retail industry in many areas (books, media, etc). However unlike Netflix, Amazon does not find itself straddling multiple markets. Rather, Amazon builds its brand through its inclusion of complimentary benefits and positive customer experiences. By leveraging the data asset, Amazon is able to make recommendations to users based on their previous purchases or browsing history. Furthermore, Amazon offers consumers many complimentary benefits through its well renowned program: Amazon Prime. Prime users benefit from free shipping, access to the Amazon cloud service, and much more. By building its brand, Amazon gains customers and grows in size. When more customers are purchasing from Amazon, more suppliers selling their products to Amazon. This dual-sided network effect is a huge asset for Amazon since it contributes to the firms long tail. More suppliers simply mean more products and more variety for consumers to purchase, a huge source of competitive advantage over competing firms such as Ebay or Walmart. Overall, both companies can be argued to have a stronger value chain over the other. Both firms utilize brand, scale, and data collection to build their customer's experiences and the long tail of their firm to seek competitive advantage.

Provide three examples where data mining can be used to identify hidden patterns and build models from large data sets for corporations to use and access. Relate one of these examples to a company that we have studied in class.

Can be any 3 of the following 8 Customer segmentation Marketing and promotion targeting Market basket analysis Collaborative filtering Customer churn Fraud detection Financial modeling Hiring and promotion Example: Netflix uses collaborative filtering to discern the likes and dislikes of its individual consumers and, using this information, determines what actions to take as a result of these identified preferences. They, for example, may find an upward trend in popularity in action movies via higher viewer-count, so they will seek to add more action movies to their wide supply of films.

What exactly caused Prada's failures and how can managers learn from their struggles?

Chapter 3: Prada serves to show that simply using IT does not ensure success. The high-end clothing company implemented a system in which all items for sale in the store would sport radio frequency identification (RFID) tags. Dressing rooms would determine what item was being tried on and could recommend other items. Cameras in the dressing room could let customers see a front and back view of themselves as they tried on clothes. While this sounded like a good system, it was poorly executed; people did not understand how to work the foot pedals that controlled the doors and there were many other technological malfunctions that had dire consequences (e.g. costumers changing in the open). The inventory database was inaccurate and both workers and costumers stopped using PDAs. As a result, there is an important lesson to be learned from Prada. Information systems are built on data, people, and procedures on top of technological implementation. Because Prada focused on simply investing in new technology and not on data collection or execution as well as how people would use it, they ultimately failed. The most significant takeaway from this is that using technology is not sufficient to guarantee a competitive advantage.

How do switching costs play a role in determining the strength of network effects?

Consumers who are taking part of a company or service with strong network effects would suffer high switching costs if they went to a different company because everyone is in the other company and this makes the company very valuable.

Give an example of a time that crowdsourcing effectively helped a company find a solution.

Crowdsourcing is using a diverse group of people's input to come to a conclusion about something. Netflix used crowdsourcing when the offered a prize of money to a group of participants that would find the best way to improve their collaborative filtering in Cinematic, a way to find out more about their customers preferences to give them better recommendations.

Pitch an idea for a start-up where crowdsourcing would be beneficial in creating a foothold in a high competitive market. Explain why crowdsourcing would be possible more cost effective (or not). Take a stance for 4-5 sentences.

Developing an APP for malls that let you know wait times for entertainment, food, and stores. It would notify you when your favorite stores are having deals or attractions and what has been most popular in purchases. In addition, the app would tell you if there is an item running out of stock and new releases just by being geographically close to the store. In effect, you are peering into the store without actually walking in, saving time. The crowdsourcing would be beneficial as it would offer realtime data for users and keeps store turnover efficient. It would keep more customers and develop new ones.

Random-access memory (RAM) is to volatile memory, as ____________ is to non-volatile memory.

Flash memory

What were some of the issues facing Twitter as an open platform? (Chapter 9)

If users are not visiting twitter.com, it is difficult to count users and in turn make money from advertising. This creates a "free rider problem" where the third parties benefit from using Twitter's open platform but Twitter doesn't benefit. It also makes it harder to promote new features and products if users aren't visiting the actual website.

What is an example of a situation where a firm straddles two or markets efficiently? How are they able to do this?

In the case of Alphabet, they have made their operations separate from their main company, Google. Google, a search engine division that gains revenue through ads, focuses primarily on maintaining servers and improving search accuracy while providing a platform for advertisers to be more accurate in their target audience (this is done through research and engineering algorithms based on a consumer's clicks and queries). Meanwhile, Alphabet itself focuses on a wide array of markets, including, but not limited to, self driving cars, VR, home entertainment, renewables, smart homes, and fiber optics. By separating Google from Alphabet, Alphabet can focus on innovating and attempting to enter new markets while maintaining their "one trick pony" in Google search revenue.

How did Netflix create its vast customer base, and how does the company continue to maintain and grow its customer base? Why is it important for Netflix and other companies to have a large customer base?

It created a sustainable competitive advantage through good customer experience. It maintain its customer base through high switching costs because of its collaborative filtering techniques (Cinematch, and using data from when people pause things, ratings, etc). They have also established a great brand, Netflix is used basically as a verb nowadays "netflix and chill" or "lets watch netflix" it's part of culture. It's long tail is also what has maintained its vast customer base. Selection attracts customers, and the internet allows large-selection inventory efficiencies that offline firms can't matc.. It's important to have a large customer base because of network effects, the more people using Netflix the more value there is. Netflix started as a DVD rental business that was known for the best-in-class service. Netflix remained the segment leader as it had an early market entry and effective execution. Having a bigger customer base allows firms to: -Have a better cost structure. -Have better profit prospects. -Offer better pricing.

Why are loyalty cards a great way for businesses to leverage data analytics and sustain competitive advantage, while benefitting the consumer at the same time?

Loyalty cards benefit consumers by giving them either discounts or points whenever they make a purchase. Loyalty cards enhance a business's ability to track and record consumer activity and data, which can then be used by the company. Loyalty cards act as a switching cost for consumers because they will not want to make a purchase at a another store where they cannot use their loyalty card to earn points or discounts.

What is Moore's Law, what are some factors that have been slowing down the growth of Moore's law, and what happens if chips are too small?

Moore's Law is the theory that chip performance per dollar will double every eighteen months. This is because as chips grow smaller, pathways are closer together and electrons are able to travel shorter distances. If electrons travel half the distance to make a calculation, then the chip becomes twice as fast. However, nowadays people are predicting that this growth is slowing down to a doubling time of 2.5 years. Although packaging pathways tightly together may have its benefits, problems arise in factors including size, heat, and power. If passageways become too small, then a phenomenon known as quantum tunneling kicks in and electrons start to slide off their paths.

How are Amazon and Netflix partners and competitors?

Netflix utilizes the cloud computing services of Amazon. This is one of Netflix's marginal costs, and it is more cost-effective to partner with Amazon than specialized cloud providers. Netflix does lose control of certain aspects of their infrastructure because it cooperates with its competitor Amazon, and the company risks errors that shut off service availability.

Does Netflix have an infinitely long long-tail? Are there any barriers or restrictions that are preventing Netflix from growing and increasing in scale? Provide an answer with 2-3 sentences.

Netflix, although having a very significant long-tail, does not have an infinitely long tail. The increasing costs of purchasing licenses from studios are definitely deterring the company from further growth due to the added marginal costs of adding each product. Premium television networks such as HBO also try to maintain their brand-name in its exclusivity by adamantly refusing to sell their licensing rights, limiting the bits Netflix can buy. This may even go as far as to studios refusing to renew a contract in licensing rights to Netflix after the contract is expired.

Would Uber be considered an example of a "Disruptive Technology" Why or why not?!

No, although Uber disrupted the taxi cab industry, Uber would not be considered an example of a "Disruptive Technology". In order to be a "Disruptive Technology", according to Harvard Professor Clayton Christensen, the technology needs to come to market with two key aspects. First the technology has to have a set of performance attributes that existing customers don't value, and second, over time the performance attributes need to improve to the point where they invade established markets. Uber does not meet these criteria because right from the beginning of Uber's existence it was better than any kind of taxi cab alternative; Uber's performance attributes were already valued by customers when it came to the market and it invaded the established taxi market right from the beginning, not overtime.

Explain operational effectiveness and strategic positioning using a firm as an example

Operational effectiveness is performing the same tasks better than rivals while strategic positioning is performing different activities from those of rivals or the same activities in a different way. Zara uses operational effectiveness when it comes to customer feedback and what they should put in stores. They use mobile devices to see what their customers would like to see in stores. They also use the POS system to gather data from the sales to see which products are being sold and which aren't as popular. By recording customer feedback and actually using it to provide customers what they want, they are able to have better sales. They can also see what customers at different locations want on the shelves and will cater to customers at different locations. They use strategic positioning with their RFID tags. These tags are able to track each individual item when it moves around and lets Zara know where it is. This allows them to help customers more easily when they are looking for a specific item. These RFID tags also allow Zara to take inventory better and faster.

What is Porter's Five Force Analysis for Industry and Competitive Advantage? Apply it to one of the businesses we have studied this semester.

Porter's Five force analysis is a framework that attempts to analyze the level of competition within an industry and business strategy development. Applied to Zara: Threat of New entrants: zara has high fixed costs, their brand equity is valued by its customers with use of viral marketing instead of advertising (whereas new entrants may have to pay more money for advertising), they average 15 days from garment inspection to store appearance Bargaining Power of Customers: Highly differentiated products, customers tend to be middle-upper class and therefore have more money, there are other companies who sell similar products to Zara so customers will want more fashionable or innovative products for a certain price, that being said Zara is faster than rivals in getting fashion-forward designs and improving sales using PDAs Bargaining Power of Suppliers: with vertical integrating and owning several parts of their supply chain they have relatively high bargaining power Threat of Substitutes: weak because Zara's products are more affordable and made with high quality materials which is hard to mimic Intensity of Competitive rivalry: It has many direct competitors such as GAP and H&M but they have highly loyal customers, GAPs prices are higher and H&M quality is not up to par to Zara

Robotics in the automotive manufacturing industry increases production efficiency, quality, and costs, while acting as a disruptive technology to the labor market. The US Government provided a bailout of $85 billion to save the industry and all those dependent on it; primarily, the industry's work force. If it was your job to restructure General Motors' operations, how would you invest the Government funding: towards more efficient technology or towards maintaining the work force's payroll to prevent mass unemployment? Explain your reasoning.

Pro-disruptive technology answer: I would use the funds to invest and rebuild the industry with robotics. The disruptive technology (being the robotics) provides cheaper operation costs and is a long-term solution for manufacturing. Assuming that the other major automotive companies are in the same position, using the funds for labor would put General Motors at an operational disadvantage in the long-run. The optimal solution is to adopt the disruptive technology as soon as possible to keep GM's competitive advantage or at least an equal technology-oriented state of operation. Neutral answer: Although robotics are the future of the manufacturing industry, it is not responsible for a company to layoff the majority of their work force to gain a competitive advantage. Given the Government funding, I would allocate a portion of the funds to maintaining the majority of the workforce's payroll and another portion towards investing in technology. Eventually people would have to be let go since their role would become unnecessary, so people in the workforce would be given a defined time for employment, allowing them to seek work elsewhere after their employment contract expires. The whole plan would be to promote a smoother transition to adopting the disruptive technology, without affecting the laborers' lives as much (compared to an immediate switch).

What problems persist in the Sharing Economy? What has helped the rise of it? Do they relate? What factors have helped ease one of the problems?

Problems: risk for sharing with strangers. could be creepy. you don't know them! you have to trust them. there's also problems with who pays for damages (legal issues), lobbying between Uber and taxi. unfair that uber has taken over. Blurred distinction between employees and independent contractors. Independent contractors don't get as many working rights, important workplace protections. Economic recession has helped the rise of it so people are willing to save money by sharing with people. Ratings has raised this problem because if people have bad ratings, no one is going to pay them for their services or share with them or anything like that.

What method of computing is predicted to, and has already begun to, replace traditional chip computing when chips eventually reach their minimum size? What effect will the spread of this new method of computing have on systems of interpreting massive amounts of data through computers, such as analytics and mining, and why?

Quantum computing. In this method of computing, code can be 1's and 0's simultaneously, allowing for much larger amounts of data to be stored in smaller areas. This would greatly expand the horizons for data analytics and data mining by leading to much faster and more complex computers with larger databases stored with information.

What benefits does Zara gain by implementing limited runs in its inventory model?

Saves time, high inventory turns save money, source of competitive advantage because it makes their clothes highly exclusive since the clothes change so many times so customers rarely wear the same outfits as other customers and it encourages them to go back to the store multiple times in short periods of time. People also feel the need to buy something right away because of the fear of losing the opportunity of purchasing them in the future. They also rarely have sales so consumers can only buy at full price. Zara rarely makes errors-makes a production error during 1% of its productions.

What is social proofing? What's an example of how it is used in the sharing economy?

Social proofing is the effect word-of-mouth has on attracting customers to a business. When someone finds out that others are doing something, this creates a positive influence towards the service or product. It makes customers into "brand ambassadors" and saves time and money for the companies themselves. An example of this in the sharing company is for Uber. When people find out that their friends ride in cars with strangers, this increases their willingness to as well because of their friends' "endorsement" that it is safe.

Define straddling and give an example of a company that was negatively affected by straddling.

Straddling is defined as attempts to occupy more than one position, while failing to match the benefits of a more efficient, singularly focused rival. One example of a company that tried to straddle a market is Blockbuster. When Netflix was developing their online streaming service that would disrupt the DVD renting market, Blockbuster at first attempted to watch to see if Netflix was successful. After, they started to put some money into development, but did not want to abandon their revenues from their take home DVD market. Because they did not firmly commit to online streaming, Netflix was able to build a better brand and beat out Blockbuster.

What are switching costs? Provide an example of a company that leveraged switching costs in order to gain sustainable competitive advantage.

Switching costs are the costs a consumer incurs when moving from one product to another. These can include learning costs, data, financial commitments, contractual commitments, search costs, and loyalty programs. Netflix leverages their data asset as a switching cost thanks to their collaborative filtering software, CineMatch. CineMatch gathers data regarding what the user generally watches and rates well, then uses the information to provide them with recommendations. If the user were to switch to another streaming service, they would lose all the data gathered about their viewing preferences over the years, thus losing the accurate recommendations as well. Therefore, this data asset acts as a switching cost, providing additional staying power for Netflix users.

What is Fair Factories Clearinghouse and how does it gain value from Network Effects?

The Fair Factories Clearinghouse started as an information system developed by Reebok that it used to track audits of suppliers having to do with aspects such as labor, safety and environmental practices. At first Reebok used this information system solely for its personal use to find "bad-apples" among contracted manufactures but it later donated the system to be used by other firms. Now The Fair Factories Clearinghouse is a non-profit organization that many of the top clothing brands in the world use. The system gains value from network effects because as more and more companies join the non-profit they add their own data and experiences with different contracted manufacturers, which grows and strengthens the available data making it more valuable for the network of companies involved.

What is the cash conversion cycle and why is it a source of competitive advantage for Amazon?

The cash conversion cycle is the period between a firm paying with cash for their inventory and collecting cash from their customers (Inventory period + AR period - AP period). The CCC is a source of competitive advantage for Amazon because Amazon is the only one of its peers that has a negative CCC, which means that it is selling goods and collects money weeks before it has to pay for supplies. This gives amazon additional cash on hand to invest in operations or in financial markets etc.

Explain why Amazon has high revenue but low profits. Why might this be the key to Amazon's immense success, even though it doesn't always translate on paper? Think about this firm's CEO and what his ultimate goals for the company are.

The company takes most of its revenue and reinvests it in research and development of the firm in order to make it bigger and better for the consumer. CEO Jeff Bezos values the experience of the customer above profits or anything else, which is why he reinvests so much of the company's revenue and is also probably why Amazon is so popular and successful.

What is the embassy approach toward social media and why is it useful for businesses? What are the benefits of a business and what should they look out for (potential pitfalls)?

The embassy approach is an established online presence with a significant name where customers can reach and interact with the the firm. The benefit of the embassy approach is that it allows a firm to establish a presence and engage in respond on social, which is becoming expectation for a younger more digitalized generation. When setting up a social media platform, firms need to professionalize their social media accounts on all platforms. Further social media is an interdisciplinary practice and the team should hire specific qualified professionals with experience in technology, marketing, PR, customer service, legal, and human resources. Firms should realize that it is crucial to ensure that all social media responses need to be an authentic conversation and this isn't a job for just the standard PR-style corporate spokesperson.

The value derived from network effects comes primarily from which three sources? Explain and relate each of them to Facebook.

The first is exchange, which is the idea that every product or service that is subject to network effects fosters some kind of exchange, and usually the more users there are, the more value it has. This relates to Facebook in that the more users there are to interact with, the more value it has, and the more information can be shared. The second is staying power, which is the long term viability of a product or service. Staying power can stem from high switching costs, which are the costs a customer incurs when moving from one product to another. This relates to Facebook because there are already so many people on Facebook, that switching to a new social media site would induce a loss of value to the customer. For example, when Google+ was created, people didn't use it because it provided basically the same service as Facebook, but with less people. The third is complementary benefits, which are products or services that provide additional value to the primary product or service. These complementary benefits are often in the form of platforms, which are products or services that allow for the development and integration of software. Examples of platforms for Facebook would be the iPhone, Windows, or Android, because they all provide a source through which Facebook could create an app and widen their demographic.

The term "disruptive", as we have seen, can be very overused. Are either Netflix or Amazon "disruptive" companies? Why or why not?

To be disruptive a firm has to come to the market with a set of performance attributes that existing customers don't value and then over time the performance attributes improve to the point where they invade established markets. Netflix is a disruptive firm because it came to the market with the dvd-by-mail business and through leveraging its brand, scale, and data/switching costs it was able to overtake the traditional DVD renting business (Blockbuster and Walmart). Amazon is a disruptive firm because it originally was written off, people thought that it wouldn't be able to make as much money as traditional larger retailers arrived to compete online. It declared losses for its 1st 7 years but during that time built up the infrastructure of the company. It eventually began to overtake the traditional brick-and-mortar stores due to its three pillars: large selection, customer experience, and lower prices. Now it is the world's most valuable retailer!

List the four characteristics that make up a resource-based view of competitive advantage and name a company who satisfies all four characteristics giving an example of each.

Valuable Rare Inimitable Non-substitutable Zara fulfilled all of the parts required for a resource-based view of competitive advantage. The company's products are valuable because they are designer clothing offered at an inexpensive price. Zara positions it's stores next to luxury clothing shops and also has celebrities wearing their items to make the clothes more valuable. Next, Zara's clothes are rare because Zara does not mass produce their clothes. They make limited supplies of items so it is unlikely you will find many people wearing the same Zara product. They are able to do this because they can get an idea from "the cube" to stores in 15 days due to manufacturing through vertical integration. Zara's process is difficult to imitate in many ways; no company can compete with Zara's quickness and strategy. Other companies cannot imitate the skill that Zara has working in "the cube", and they also cannot produce a limited number of a product as Zara does. Zara can do this since 60% of their merchandise is produced in house. It would be far too costly for other companies to own so much of their supply chain as Zara does. Lastly, Zara's production line would be extremely hard to switch to for other companies, making it non-substitutable. Since Zara only has a few warehouses they are able to keep track of their items more easily while they are being stored before hitting the shelves. It would be almost impossible for other companies to locate all of their products in one or two warehouses as Zara has done.

How does Google incorporate their CPC (cost per click) structure to attract as many advertisers as possible?

When someone clicks on their advertisement this is the ONLY time they have to pay. This is a way to save money. Advertisers establish their own CPC (bid how much they are really willing to pay) but Google doesn't even make them pay that much. They give them a discount based on their ad ranking process (which is based on their quality score). They will make the ad's CPC cost the minimum it needs to be to create profit. It also serves as a way for the advertisers to see how effective their ads are because they can see the impressions and how many times people purchase something after see the ad. All of this encourages more advertisers to put their advertisements on Google.

Provide an example of how each firm uses IT to create competitive advantage for their company: Zara, Netflix, Amazon

Zara: Use of RFID tags to track inventory, PDA system to gather data Netflix: Collaborative filtering (Cinematch software technology), A/B testing to gather data, Amazon: Robotic technology to improve efficiency in warehouses, AWS is a complimentary benefit to Amazon Prime users that attracts consumers

a) Pick a company from the following list: Netflix, Zara, Facebook b) Assume you are the CTO of [the company you chose] and you are looking to sell data (to another company) that you have exclusive access to, since it is collected from your company's service. Name one company you would sell the data to, the category of data you would offer, and provide one reason for why this data would be helpful to their company.

a) Netflix b) I would market my data to Warner Brothers. I would offer data on streaming volume by genre and demographics, which could then be interpreted into information on trends and popularity. Reason: Warner Bros could use the data to detect trends in genre and determine the strength of the trend to project how long it will last. They could then use the information to advise the best alternatives for future movie productions.

Advertising can build awareness, but brands are built through ________.

customer experience

What is the deal with the "atoms to bits" phenomenon" and which companies have adjusted to this?

netflix and amazon. Atoms to bits is the change from physical stores/items to online. It helps with scale advantages because it establishes a long tail. sustainable competitive advantage! online websites harming newspapers. kindle harming books. spotifiy harming music.

synonyms for sharing economy

peer to peer commerce, recommerce, collaborative consumption, collaboration economy

The one market that Amazon can't enter right now due to decade-long contracts

sports streaming