Info Systems exam 1

how enterprise systems change work flow of org.

- Information flows seamlessly throughout an organization, improving coordination, efficiency, and decision making. - Gives companies the flexibility to respond rapidly to customer requests while producing and stocking only that inventory necessary to fulfill existing orders. - Increases customer satisfaction by improving product shipments, minimizing costs, and improving a firm's performance. - Improves decision making by improving the quality of information for all levels of management.

What is price transparency? What is information asymmetry? How does the Internet relate to these two concepts? How does the Internet shift bargaining power among the five forces?

- Price transparency- The degree to which complete information is available. - Information asymmetry- A decision situation where one party has more or better information than its counterparty - it is often suggested that the Internet increases bargaining power of buyers and lowers the bargaining power of suppliers. This suggestion is true for some industries like auto sales and jewelry where the products are commodities and the price transparency of the Internet counteracts a previous information asymmetry where customers often didn't know enough information about a product to bargain effectively. But it's not true across the board. In cases where network effects are strong or a seller's goods are highly differentiated, the Internet can strengthen supplier bargaining power. The customer base of an antiques dealer used to be limited by how many likely purchasers lived within driving distance of a store. Now with eBay, the dealer can take a rare good to a global audience and have a much larger customer base bid up the price. - Tech plays a significant role in shaping and reshaping these five forces, but it's not the only significant force that can create an industry shock. Government deregulation or intervention, political shock, and social and demographic changes can all play a role in altering the competitive landscape. Because we live in an age of constant and relentless change, managers need to continually visit strategic frameworks to consider any market-impacting shifts.

Fast Follower 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.

powerful resources

-Imitation-Resistant Value Chains -Brand -Scale -Switching Costs -Differentiation -Network Effects -Distribution Channels -Patents

Define the value web and show how it is related to the value chain.

A value web is a collection of independent firms that use IT to coordinate their value chains to collectively produce a product or service. It is more customer driven and operates in a less linear fashion than the traditional value chain. A networked system that can synchronize the business processes of customers, suppliers, and trading partners among different companies in an industry or in related industries.

What are Porter's "five forces"?

Also known as Industry and Competitive Analysis. A framework considering the interplay between (1) the intensity of rivalry among existing competitors, (2) the threat of new entrants, (3) the threat of substitute goods or services, (4) the bargaining power of buyers, and (5) the bargaining power of suppliers. (Rivalry is in the middle)

Explain why environments are important for understanding a business.

Business environments are constantly changing. New developments in technology, politics, customer preferences, and regulations happen all the time. When businesses fail, it is often because they failed to respond adequately to changes in their environments. A firm must monitor changes in its environment and share information with key entities in that environment in order to stay in business.

To whom do cryptocurrencies appeal? Why?

Cryptocurrencies might also lubricate the wheels of commerce between nations where credit card companies and firms like PayPal don't operate, and where internationally accepted cards are tough to obtain.Civil libertarians like the idea of transactions happening without the prying eyes of data miners inside card companies, having their transaction history shared by others, or the government. companies trying to decrease their profit margins/fees for transactions

What did Prada fail to consider when it rolled out the technology in its flagship location?

Customers didn't understand

What is the "conventional wisdom" of the fashion industry with respect to design, manufacturing, and advertising?

Design- Chasing the youth market, Drexler filled Gap stores with miniskirts, low-rise jeans, and even a much-ridiculed line of purple leather pants. The throngs of teenagers he sought to attract never showed up, and the shift in offerings sent Gap's mainstay customers to retailers that easily copied the styles that Gap had made classic. Manufacturing- In retail in general and fashion in particular, there's a saying: inventory equals death. Have too much unwanted product on hand and you'll be forced to mark down or write off items, killing profits. Advertising- Firms with products manufactured under unacceptable labor conditions face multiple risks, including legal action, brand damage, reduced sales, lower employee morale, and decreased appeal among prospective employees.

Why has Zara's RFID rollout been less problematic than those at Walmart and JCPenney?How does RFID improve efficiency and customer service?

Firms from Walmart to JCPenny have struggled to effectively implement RFID, but Zara's vertical integration is an advantage here, as well. Since the entire supply chain is under Zara control and all items flow through one of two warehouses, Zara can affix tags to all products before sending them out to stores

What are the two characteristics of disruptive innovations?

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

What is the substitute for music CDs? What is the comparative sound quality of the substitute? Why would a listener accept an inferior product?

From a sound quality perspective, the substitute good of digital tracks purchased online is almost always inferior to their CD counterparts. But the additional tech-based market shock brought on by digital music players (particularly the iPod) has changed listening habits.

What are the risks and benefits to Netflix in using Amazon's cloud computing platform?

Open to the public, open to copycats . They save money by having amazon deal with most of their tech based operations so they can focus more time and money on innovative moves.

Is there such a thing as the first-mover advantage? Why or why not?

If a firm can use a time and technology lead to create valuable assets that others cannot match, it may be able to sustain its advantage. But if the work done in this time and technology lead can be easily matched, then no advantage can be achieved, and a firm may be threatened by new entrants.

How can information technology help a firm build a brand inexpensively?

If a firm performs well, consumers can often be enlisted to promote a product or service (so-called viral marketingLeveraging consumers to promote a product or service.). Firms that grew to gargantuan size before committing any substantial investment on advertising include Google, Skype, eBay, Facebook, LinkedIn, Twitter, and YouTube.

Explain how the value chain model can be used to identify opportunities for information systems.

Information systems can be used at each stage of the value chain to improve operational efficiency, lower costs, improve profit margins, and forge a closer relationship with customers and suppliers. Can use information systems to help examine how value-adding activities are performed at each stage of the value chain. Can improve the relationship with customers and with suppliers who may be outside the value chain but belong to an extended value chain.Can help businesses track benchmarks in the organization and identify best practices of their particular industries. After analyzing stages in the VC, an organization can devise a list of candidate applications for information systems.

Explain how the value web helps businesses identify opportunities for strategic information systems.

Information systems enable value webs that are flexible and adaptive to changes in supply and demand. Relationships can be bundled or unbundled in response to changing market conditions. Firms can accelerate their time to market and to customers by optimizing their value web relationships to make quick decisions on who can deliver the required products or services at the right price and location. Information systems make it possible for companies to establish and operate value webs.

What do you suppose are the factors that helped Gap to at one point rise to be first in sales in the fashion industry? Why do you suppose Gap profits collapsed?

Micky Drexler, a man with a radar-accurate sense of style and the iconic CEO who helped turn Gap's button-down shirts and khakis into America's business casual uniform, led the way. The throngs of teenagers he sought to attract never showed up, and the shift in offerings sent Gap's mainstay customers to retailers that easily copied the styles that Gap had made classic.

Could a new competitor match Netflix's recommendation software? If it did, would this create a threat to Netflix? Why or why not?

Netflix also learned to make studios happy by leveraging Cinematch to help them find an audience for their back catalog of movies and television shows. Blockbuster tried to imitate this, but failed miserably.

What is operational effectiveness?

Performing the same tasks better than rivals perform them.

Does Netflix have a strong brand? Offer evidence demonstrating why the firm's brand is or isn't strong. How is a strong brand built?

Reed Hastings's early market entry and effective execution made Netflix the first firm consumers thought of. Everyone else in the space had to spend big to try to create awareness alongside the mindshare leader.

How is data captured in Zara stores? Using what types or classifications of information systems?

Security tags are custom made to also include RFID tags wirelessly emit a unique identifying code for the individual item that they are attached to.

What are switching costs? What role does technology play in strengthening a firm's switching costs?

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. 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.

Role of Technology

Technology can play a key role in creating and reinforcing assets for sustainable advantage. this includes: powerful resources

Why is an innovation based on technology alone often subject to intense competition?

Technology is easily copied

Describe how the Internet has changed competitive forces and competitive advantage.

The Internet has nearly destroyed some industries and severely threatened others, created entirely new markets, formed the basis of thousands of new businesses, enabled new products and services, new business models, and new industries to rapidly develop. Because of the Internet, competitive rivalry has become much more intense. Internet technology is based on universal standards that any company can use, making it easy for rivals to compete on price alone and for new competitors to enter the market. Because information is available to everyone, the Internet raises the bargaining power of customers, who can quickly find the lowest-cost provider on the Web.

How has the rise of the Internet impacted each of the five forces for music retailers?

Traditional music retailers like Tower and Virgin found that customers were seeking music online. These firms scrambled to invest in new e-commerce channels out of what is perceived to be a necessity. Their intensity of rivalry increased because they not only compete based on the geography of where brick-and-mortar stores are physically located, they now compete online as well.

Describe the Fair Factories Clearinghouse. Which firm thought of this effort? Why did they give the effort away? Think in terms of strategic resources: what happens as more firms join this effort and share their data?

The data was valuable to Reebok, particularly given that the firm has hundreds of contract suppliers. But senior management realized the system would do even more good if the whole industry could share and contribute information. Reebok went on to donate this system and provided critical backing to help create the nonprofit organization Fair Factories Clearinghouse. Suppliers across industries now recognize that if they behave irresponsibly the Fair Factories system will carry a record of their misdeeds, notifying all members to avoid the firm. As more firms use the system, its database becomes broader and more valuable.

What is the "resource-based" view of competitive advantage? What are the characteristics of resources that may yield sustainable competitive advantage?

The strategic thinking approach suggesting that if a firm is to maintain sustainable competitive advantage, it must control an exploitable resource, or set of resources, that have four critical characteristics. These resources must be (1) valuable, (2) rare, (3) imperfectly imitable, and (4) nonsubstitutable.

Define and diagram the value chain.

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 secondary components. Primary- inbound logistics, operations, outbound logistics, marketing and sales, support secondary- firm infrastructure, human resource management, procurement

Define and describe the value chain model.

The value chain model highlights specific activities in the business where competitive strategies can best be applied and where information systems will most likely have a strategic impact. The model identifies specific, critical leverage points where a firm can use information technology most effectively to enhance its competitive position. The value chain model views the firm as a series of basic activities that add a margin of value to a firm's products or services. The activities are categorized as either primary or support activities. Primary activities are most directly related to production and distribution of the firm's products and services, which create value for the customer. Support activities make the delivery of primary activities possible and consist of organization infrastructure. A firm's value chain can be linked to the value chains of its suppliers, distributors, and customers.

Can scale be achieved in the streaming industry?

Yes, netflix has a large scale advantage because they are the biggest name.

What is the long tail? How "long" is the Netflix tail in the DVD-by-mail business compared to traditional video stores?

long tail- an extremely large selection of content or products. The long tail is a phenomenon whereby firms can make money by offering a near-limitless selection. two facts are critical to keep above this debate: (1) selection attracts customers, and (2) the Internet allows large-selection inventory efficiencies that offline firms can't match.

How does technology spending at Zara compare to that of rivals? Advertising spending? Failed product percentages? Markdowns?

Whether measured by IT workers as a percentage of total employees or total spending as a percentage of sales, Zara's IT expenditure is less than one-fourth the fashion industry average." Zara excels by targeting technology investment at the points in its value chain where it will have the most significant impact, making sure that every dollar spent on tech has a payoff.

Why did Google beat Yahoo! in search?

Yahoo! failed to pay attention to Google's advance. As Google's innovations in technology, interface, and advertising remained unmatched over time, this allowed the firm to build its brand, scale, and advertising network (distribution channel) that grew from network effects

What factors account for a firm's profit margin? What does Gap focus on? What factors does Zara focus on to ensure a strong profit margin?

Zara is so vertically integrated, the firm makes 40 percent of its own fabric and purchases most of its dyes from its own subsidiary. Roughly half of the cloth arrives undyed so the firm can respond as any midseason shifts in taste and trends. When cotton prices rose to record levels, Zara was able to shift offerings away from more costly fabrics, preserving margins. even though Zara has higher manufacturing costs than rivals, Inditex gross margins are nearly 60 percent, compared to 39 percent at Gap. Reducing stock doesn't just mean fewer write-offs and markdowns. Less idle stock in the backroom means less "frozen money" embedded in to-be-sold inventory, plus more store square footage for the showroom floor

Once a firm can detect disruptive technologies, what techniques can it use to nurture and develop these technologies?

a firm can build a portfolio of options on emerging technologies, investing in firms, startups, or internal efforts that can focus solely on what may or may not turn out to be the next big thing.

What is strategic positioning?

attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. Performing different tasks than rivals, or the same tasks in a different way.

Why can't Netflix secure a long tail of streaming content that is the same size as its content catalog in the DVD-by-mail business? What is Netflix doing to make its streaming catalog more appealing than rival offerings?

available movies are limited because its hard to get licensing rights from suppliers. Netflix has advantage becasue they are the biggest brand name. They are trying to expand internationally.

What were Netflix's sources of competitive advantage in the DVD-by-mail business?

brands are built through customer experience. This is especially critical online, where opinion spreads virally and competition is just a click away. During the firm's ascendency in the DVD-by-mail business, Netflix wasn't simply a provider of good customer experience; it was often ranked the best.

What is the Netflix churn rate and what are the reasons behind this rate?

churn rate-The rate at which customers leave a product or service. It seems that even though big-name rivals had arrived with shiny new offerings, the Netflix value proposition was actually growing stronger over time.

What "class" of software does Netflix use to make movie recommendations?

collaborative filtering- A classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience.(Cinematch)

What is disintermediation, and what incentives do studios have to try to disintermediate Netflix?

disintermediation-Removing an organization from a firm's distribution channel. Disintermediation collapses the path between supplier and customer. studios don't need to share revenue with third parties; they can keep all the money generated through new windows. Also critically important, if a studio goes directly to consumers, then studios get to collect and keep a potentially valuable data asset.

How can technology be a distribution channel? Name a firm that has tried to leverage its technology as a distribution channel.

distribution channels-The path through which products or services get to customers. Apple products offered at the Apple store give firm-trained employees an opportunity to present advantages 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

What risks are inherent in the conventional practices in the fashion industry? Is Zara susceptible to these risks? Is Zara susceptible to different risks?

limited production runs allow the firm to, as Zara's CEO once put it, "reduce to a minimum the risk of making a mistake, and we do make mistakes with our collections." Failed product introductions are reported to be just 1 percent, compared with the industry average of 10 percent Zara is susceptible to risks involving their European factories and dependency/costs.

Does technology lower barriers to entry or raise them? Do low entry barriers necessarily mean that a firm is threatened?

lowers- bc rivals can then figure out how to copy. No, but to sustain an advantage the firm needs to continue to stay ahead of the competition and never wait to respond to threats

What can a firm do to prepare for the inevitable expiration of a patent (patents typically expire after twenty years)?

managers should think about creating assets like the ones previously discussed if they wish to create a truly sustainable advantage.

Use the five forces model to illustrate competition in the newspaper industry. Are some competitors better positioned to withstand this environment than others? Why or why not? What role do technology and resources for competitive advantage play in shaping industry competition?

most newspaper companies are facing closure b/c online news sources(substitute service) are rising in popularity with consumers(power of buyer) and new companies such as the Skimm are joining the online news market(new entrants). There are a few newspaper companies that have adapted to the online media world such as the New York Times. Technology is now the main channel that people receive information on a daily basis, and if companies do not offer this, then they can no longer compete.

Investigate the current state of net neutrality. What is the current status of ISPs' right to offer a fast lane or impose bandwidth caps? Who would you side with, Netflix or the large ISPs? Why?

net neutrality—that is, the principle that all Internet traffic should be treated equally and that ISPs should not discriminate, slow down access, or charge differentially by user, content, site, platform, application, type of attached equipment, or modes of communication. bandwidth caps-A limit, imposed by the ISP (e.g., a cable or telephone company) on the total amount of traffic that a given subscriber can consume (usually per each billing period). Others worry that a loss of net neutrality will hurt entrepreneurship and innovation since only the largest players will be able to pay for the best access. Cable outfits see it differently, stating that their profits allow them to make investments in faster, more reliable networks, which actually empowers the next-gen Zuckerbergs.

What are network effects? Name a product or service that has been able to leverage network effects to its advantage.

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. 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 apps that run on and enhance these devices, and most of these apps are provided by firms other than Apple and Google

Make a list of recent disruptive innovations.

online movie streaming, digital cameras, video games

What are the dangers of competing on operational effectiveness? Are firms more likely to be considered commodities or differentiated offerings?

risk is particularly acute in firms that rely on technology for competitiveness. After all, technology can be easily acquired. Buy the same stuff as your rivals, hire students from the same schools, copy the look and feel of competitor websites, reverse engineer their products, and you can match them.

Why do leading firms fail to recognize and react to potentially disruptive innovations? How can a firm avoid the kind of blindness that leads to disruption?

they listen to their customers and focus on the bottom line. the majority of a firm's current customers don't want the initially poor-performing new technology. The most disruptive technologies also often have worse margins than the initially dominant incumbent offerings. Paying attention to the trajectory of fast/cheap technology advancement and new and emerging technologies is critical. Increasing conversations across product groups and between managers and technologists can also be helpful.