MIS Exam 2
Astroturfing
Engineering the posting of positive comments and reviews of a firm's product and services (or negative ones of a firm's competitors). Many ratings sites will penalize firms that offer incentives for positive feedback posts
volatility
Indicates how much and how quickly the value of an investment, market, or market sector changes.
Switching Cost
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.
What does it mean to say that early customers/users of disruptive innovations are part of a different "value network" than are customers/users of established firms in the relevant market?
The early customers are trying to get a job done, but because they lack the money or skill, a simple inexpensive solution has been beyond reach. The disruptive innovation creates a whole new value network. These customers will compare the disruptive product to having nothing at all. As a result, they are delighted to buy it even though it may not be as good as other products available at high prices to current users with deeper expertise in the original value network. The new consumers typically purchase the product through new channels and use the product in new venues. These customers care about different features and attributes than incumbent customers (e.g., a free call over a quality call; portable music over high-fidelity music). But over time, the disruptive technology becomes good enough to appeal to customers of incumbent products and invades these markets.
Social Proof
The positive influence created when someone finds out that others are doing something.
Online Reputation Management
The process of tracking and responding to online mentions of a product, organization, or individual.
Congestion Effects
Whden increasing numbers of users lower the value of a product or service.
cross-side Exchange
When an increase in the number of users on one side of the market (console owners, for example) creates a rise in the other side (software developers).
Job rotation
a job enrichment strategy that involves moving employees from one job to another to improve experience
Scale Advantages
advantages related to size
Subsidy
a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.
Election Integrity
refers to international standards and global norms governing the appropriate conduct of elections.
Prediction Market
Polling a diverse crowd and aggregating opinions in order to form a forecast of an eventual outcome.
What is "Web 2.0"? Recognize key ways that Web 1.0 (static, transaction-oriented, published content) differs from Web 2.0 (collaboration, sharing, user generated content).
"Web 2.0A term broadly referring to Internet services that foster collaboration and information sharing; characteristics that distinctly set "Web 2.0" efforts apart from the static, transaction-oriented Web sites of "Web 1.0." The term is often applied to websites and Internet services that foster social media or other sorts of peer production.," these new services are targeted at harnessing the power of the Internet to empower users to collaborate, create resources, and share information in a distinctly different way than the static websites and transaction-focused storefronts that characterized so many failures in the dot-com bubble.
How does Amazon use dynamic Pricing?
- Dynamic pricing - pricing that shifts over time, usually based on conditions that change demand - Where rivals sold out of items, Amazon responded by raising its prices an average of 10 percent - Firms should be careful using this since consumers respond angrily when they think that are being taken advantage of
Using Christensen's two defining characteristics, recognize examples of disruptive technologies (OR examples of a specific product/ industry that was "disrupted").
- Transistor Radio, had worse sound and worse battery life than a furniture radio. Then through improvements in sound quality and battery life, people began buying these new portable transistor radios -Personal Computer: before the PC, mini computers cost $200,000 and required training and experience. The PC started as a toy for children, and over time became good enough to compute. This created a huge new market and ultimately eliminated the existing minicomputer industry. -Steamboats: 1st steamships deployed on inland waters where sailing ships were less effective. They originally competed in traditional shipping lines until they demonstrated value created an advantage on both inland and seafaring routes. -Netflix: According to Christensen, Netflix is a "classically" disruptive model: initial service wasn't appealing. Quality improved and soon ran Blockbuster out of business and into bankruptcy in 2010. -Other examples with less detail: --Online Brokers - impacted full service stock brokers --online retailing - impacted brick and mortar retailing --digital textbook publishing - impacted standard textbooks --digital printing - impacted offset printing --arthroscopic and endoscopic surgery - impacted open heart surgery --tablet computing - impacted PC computing
How does Amazon use A/B Testing?
-A/B testing is how Amazon coder Greg Linden presented his idea for "impulse buy" recommendations that matched patterns associated with consumer's shopping carts ("people who bought that, also bought this..") to be added to the site/checkout process - an idea originally shot down by a senior vice president. -A/B Tests are ongoing, and what you see during your time on the website varies based on Amazon's best guess of what you'll want to see as well as any myriad of other sales and promotion goals that are currently ongoing. -Cookies allows Amazon to track your browsing behavior, as well as your buying history to make these recommendations
What are key strategic advantages in "turning a product into a platform"? How do platforms create value with complementary benefits?
-Allows the product the enhance your offerings while companies spend money on the enhancements -Creates complimentary benefits by enhancing what the product offers
Describe the importance of the grocery market and growth for Amazon in the Acquisition of Whole Foods
-Amazon says it will operate Whole Foods as a different business: retaining its CEO. -Amazon has lowered prices and offered discounts to those with Amazon Prime. -While Amazon has 43 percent of the online retail market, over 90 percent of purchases happen in physical stores, and the US grocery business alone is worth three-quarters of a trillion dollars
Explain how and why Amazon is vertically integrating to take over many aspects of its own logistics business / delivery network. Why does this move make economic sense for Amazon?
-Amazon spent $21.7 billion on shipping costs in 2017; that's nearly twice what it spent just two years earlier. Keeping packages under its own control on just the long-haul portion of routes could save Amazon around $3 or more on a typical delivery (average per-package shipping costs from FedEx and UPS is estimated at $7.81) - A delivery network also gives Amazon more control over the customer experience. -after December 2013, when UPS couldn't handle the massive volume of Amazon's holiday package delivery, costing Amazon millions in refunds, and damaging the firm's reputation for delivery reliability among those who were left with empty spaces under the tree.
What are the key benefits of Amazon's scale?
-Amazon's sales volume scale enables it to operate with thin margins and low prices. So, their retail prices are cheaper! -Amazon's retail prices aren't just cheaper than other e-commerce firms; they're usually cheaper than larger rival Walmart, too. Wells Fargo compared a diverse basket of products available at both firms and found that Walmart prices were actually 19 percent more expensive than Amazon prices. Target was 28 percent more expensive, while products purchased at specialty retailers cost 30 percent more. -While not well known for its own brands beyond Kindle, Amazon's scale has allowed it to create several of its own branded product lines. - Amazon's private-label brands include AmazonBasics (cables, batteries, and other consumer electronics accessories), Mama Bear (diapers and other baby products), Happy Belly (foodstuffs, including nuts and trail mixes), Presto! (home cleaning products), Pinzon (bedding and bath), Strathwood (outdoor furniture), Pike Street (bath and home products), Denali (tools), and at least seven private-label clothing brands.
Identify primary differences between competition in markets with network effects relative to conventional markets
-First, network markets experience early, fierce competition. The positive-feedback loop inherent in network effects—where the biggest networks become even bigger—causes this. Firms are very aggressive in the early stages of these industries because once a leader becomes clear, bandwagons form, and new adopters begin to overwhelmingly favor the leading product over rivals, tipping the market in favor of one dominant firm or standard. This tipping can be remarkably swift. Once the majority of major studios and retailers began to back Blu-ray over HD DVD, the latter effort folded within weeks. -These markets are also often winner-take-all or winner-take-most, exhibiting monopolistic tendencies where one firm dominates all rivals. --Since bigger networks offer more value, they can charge customers more. Firms with a commanding network effects advantage may also enjoy substantial bargaining power over partners.
Identify strategies for firms to respond to/contend with a disruptive technology once it has been identified.
-Investment options: Build a portfolio of options on emerging technology, investing in firms and startups may be the next big thing -Have a stake: An option allows the investors to stop investing if the new technology fades out, or keep investing if the new technology starts to break through into the market. The idea to invest may evolve into the consideration to acquire the start-up. -Create distance between parent company and experimental efforts: startups or in-house efforts otherwise isolated from the firm's core business and management distraction -4 ways to beat disruptive innovation: 1. Acquisition 2. co-option 3. spin off 4. bayesian strategy
Identify clear examples of primary network structures: One-sided markets, Same-side exchange benefits, Two-sided markets, and Cross-side exchange benefits
-One-sided market: A market that derives most of its value from a single class of users -Same-side exchange benefits: Benefits derived by interaction among members of a single class of participant -ex.) instant messaging --you might have different apps that have different messaging purposes, but you can basically choose a messaging app where you can reach the most contacts --this is same-sided exchange because the exchange value when increasing numbers of IM users gain the ability to message each other -Two-sided market: Network market that comprises two distinct categories of participant, both of which are needed to deliver value for the network to work --ex.) video games people buy video game console based on number of good game available for the system. Software developers write games based on their ability to reach the greatest number of paying customers so they'll write for popular consoles first. -cross-side exchange benefit: When an increase in the number of users on one side of the market (console owners, for example) creates a rise in the other side (software developers). --ex.)Mobile payment efforts like Square, Apple Pay, and Android Pay, however, are considered to be two-sided markets, where significant benefits come from two distinct classes of users that add value by attracting each other. In the case of mobile payments, the more people who use a given payment platform, the more attractive that platform will be to storefronts and other businesses, and if more businesses accept these forms of mobile payment, then this in turn should attract more end consumers
Identify strategies for firms to improve their radar for recognizing potentially disruptive technologies.
-Pay attention to the trajectory of the new and cheap technology -Remove shortsighted, customer focus, and bottom line obsessed blinders -Rotate staff -Have conversations with people familiar with new technology and who have experience with advancement -" These include seeking external conversations with pioneers on the frontier of innovation (researchers and venture capitalists) and internal conversations with the firm's engineers and strategists who have a keen and creative eye on technical developments that the firm has not yet exploited."
What is Peer Production? Identify general trends and/or prominent models leveraging peer production.
-Peer Production- a superset of social media—collaborative work among users to create content and/or provide services -Google uses peer production to improve maps, purchasing the five-year-old Israeli crowdsourced traffic app, Waze, for $1 billion. At the time of acquisition, the service had 50 million users in 100 countries. -Social media efforts include blogs, wikis, social networks, messaging services, Twitter, and photo- and video-sharing sites. The rise of social media has also coincided with the rise of mobile computing—meaning the worldwide Internet conversation is always in your pocket. The peer production leveraged by collaborating users isn't only used to create social media; it can be used to create services, too. Skype and BitTorrent leverage users' computers instead of a central IT resource to forward phone calls and video. This ability saves their sponsors the substantial cost of servers, storage, and bandwidth. Peer production is also leveraged to create much of the open source software that supports many of the Internet's largest sites. Techniques such as crowdsourcing, where initially undefined groups of users band together to solve problems, create code, and develop services, are also a type of peer production.
Why are tech-enabled industries are perhaps the most fertile ground for disruptive innovation? Rapid market creation from fast/cheap/readily available computing, for one.
-Rapid market creation from fast/cheap/readily available computing -The market creates price elasticity of fast/cheap technologies that act as a catalyst for the fall of tech giants
How are Kiva robots used in fulfillment operations? Have robots replaced human workers in warehouses?
-Robots powering redesigned fulfillment centers come from Kiva Systems, a Massachusetts-based firm that Amazon bought for over three-quarters of a billion dollars. Kiva robots don't look like C-3PO. They're squat, 320 lb, orange colored, rounded-rectangles on wheels, about the size of a living room ottoman. Now, instead of workers running to shelves, robots bring shelves to workers. Robots don't yet handle the bulkiest items such as flat-screen TVs or lawnmowers, but Kiva robots carry shelves stacked with upwards of 750 lb of goods, making them capable of handling the majority of what you're likely ordering from Amazon. -In robot-automated fulfillment centers, those items that are handled by Kivas are sent to one of four floors where the robots roam. A massive robot arm known as the "Robo-Stow" might be used to hoist pallets of products from one floor to another. Shelvers stand on platforms while Kiva robots line up for restocking, bearing shelf towers with open bins stacked nine-or-more slots high along on all four sides. Robots position shelves to expose the correct side for inventory placement. Shelvers scan products that are added to inventory, placing each in a specific location on a specific shelf that is also scanned. This tells Amazon's software exactly where a given item is stored. Next, the shelf is whisked away by a robot until one of the items on the shelf is needed for a customer order. The same items might be stored on dozens of different shelves throughout the warehouse. This allows different robots to simultaneously fulfill different orders for the same items. -Robot have not replaced human workers. As a matter of fact, these robots have actually lead to the increase of human workers. -Kiva's are just moving inventory around. The person is doing the complicated work, which is reaching in, identifying the right product, making sure it's the right quality, and making sure it's good enough to be a holiday gift for somebody.
To what extent does the Amazon Marketplace (third-party sellers) exhibit two-sided network effects?
-Some Marketplace products compete directly with Amazon's own offerings, but the firm doesn't shy away from allowing competitive listings, new or used, even if they're cheaper. Competition among sellers reinforces low price and lowers the chance that customers will look first to sites like PriceGrabber, Shopping.com, Google, or eBay. Even if a rival wins a sale, all products sold through Amazon allow Bezos's firm to collect a fee. Third-party sellers may send a signal to Amazon that a certain product category may be worth entering itself, all while sellers pick up the initial risk of inventory ownership. And when Amazon sells third-party goods through its site, it continues to "own" much of the customer relationship for that sale, gathering data that would have otherwise been lost if customers went elsewhere. Amazon also won't hesitate to kick out sellers with bad ratings to ensure quality and protect the Amazon brand. -more buyers attract more sellers and more sellers attract more buyers
How does Amazon use technology and systems in fulfillment operations to get products from suppliers to customers quickly and with minimum error?
-The process: -Workers examine incoming shipments for defects. If problem spotted, staffer flips a warning light from green to red. A "warehouse problem solver" comes in to fix the issue while the rest of the items are scanned and examined and move along the process. -Workers with wheel-mounted laptops observe operations and coach staff; movements logged, productivity tracked and plotted. - The Robots: -Kiva systems, bought by Amazon, are the size of a living room ottoman. Robots bring shelves to workers. Shelvers (people) scan items adding it to inventory and place it on a special location on a specific shelf, telling Amazon's software where it is located. Same item could be stored on dozens of different shelves (sometimes weighing 750lbs+) making it possible for fulfillment of the same items to be processed at the same time. -"Random stow" is when no two similar items are stored next to each other. This prevents the possibility of the worker grabbing an item of incorrect specs than what was ordered (color, size, etc.) = reducing mistakes. -To fulfill an order: -Robot takes the whole shelf to the worker. Worker grabs item off shelf; does quality check; scans items to record it as moving out of inventory; place item into yellow plastic bin. Bin goes on a conveyer belt and packaged. Software determines how much packaging tape is needed, how many airbags should go in a box, and the size of the box. About 1 minute total of human contact per order.
"Move Fast and Break Things" is one of the slogans that reflect Facebook's risk-taking, hacker-centric culture. Engineering staff are empowered to move quickly, sometimes launching innovations or services before they are perfect. What are some of the advantages to this approach?
-The willingness to take bold risks on new initiatives has allowed the firm to push forward with innovations that many users initially resisted but eventually embraced (e.g., the news feed, the messenger app). -Users will feel excited to learn of new updates or "fixes" that enhance operability and user experience.
What are a few strategies that Amazon has used to coordinate "Last Mile" deliveries?
-Today, 44 percent of the US population lives within 20 miles of an Amazon facility -These facilities are designed to take customer orders boxed up at the fulfillment centers and get them to customers as quickly as possible. Packages sorted by zip code might be dropped off at US Postal Service facilities, or Amazon could forward packages to its own facilities, where it controls the final delivery leg. -The Amazon Key delivery option uses smart home technology to allow delivery people to drop off packages inside the home.
How is the Cash Conversion Cycle related to Inventory Turns? How is it a competitive advantage for Amazon?
-When firms buy from their suppliers, they don't pay right away. This is called accounts payable. However,t hen customers buy from a firm, they pay right away. The period between shelling out cash and collecting funds associated with a given operation is called the cash conversion cycle -Inventory Turns are the number of times inventory is sold or used during a specific period. a higher number means a firm is selling more products quickly. -For amazon, their inventory turns are very high and their accounts payable term is long. This means that they sell inventory before they pay their accounts payable which means that they pertain to a negative cash conversion cycle.
Which sort of company is most likely to benefit from preannouncements? What are a few of the risks?
-While large, respected firms may be able to influence markets through preannouncements, startups often lack credibility to delay user purchases. The tech industry acronym for the impact firms try to impart on markets through preannouncements is FUD, for fear, uncertainty, and doubt. -Risk: the Osborne Effect - announce effort too early and fir experiences sharp and detrimental drop in sales of current offerings as users wait for new item
Summarize how the "social graph" and "Deep Web" are valuable for Facebook (and may be threatening to Google?)
-any search that prompts a user to start at Facebook instead of Google is a revenue and data collection opportunity -social graph- a representation of the interconnection of relationships in an online social network. --facebook can map by creating a social graph and quantitative model of how people are connected to each other which is a good way of advertising --facebook knows this more than any other firm out there --google knows what we are searching for, but don't know our social connections --these are apart of the deep web so its not apart of the search engine. facebook knows things google does not.
What are the two characteristics of disruptive technologies (also known as disruptive innovations)?
1. Disruptive technologies come to market with a set of performance attributes that existing customers do not value. 2. Over time, attributes improve to the point where the technology invades established markets.
According to Gallaugher, the value derived from network effects comes primarily from what three sources?
1. Exchange 2. Staying Power(long-term viability) -Particularly important for consumers of technology products. -Directly related to 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; switching costs can strengthen the value of network effects as a strategic asset. -The higher the value of the user's overall investment, the more they're likely to consider the staying power of any offering before choosing to adopt it. 3. Complementary Benefits -Products or services that add additional value to the primary product or service that makes up a network. -Many firms do this by providing APIs (Programming hooks, or guidelines, published by firms that tell other programs how to get a service to perform a task such as send or receive data. For example, Amazon provides application programming interfaces (APIs) to let developers write their own applications and websites that can send the firm orders.) or application programming interfaces that allow third parties to integrate with their products and services. Allowing other firms to contribute to your platform can be a brilliant strategy because those firms will spend their time and money to enhance your offerings.
Name the three pillars of firm focus in Amazon's "Wheel of Growth". How do these three pillars reinforce one another to create additional competitive assets?
1. Large selection = 3rd parties drawn by more customers 2. Customer experience - fuels brand = Amazon is the first stop for online shopping = scale 3. Lower prices = lower prices justified by scale Reinforce one another to create additional competitive assets: -Exceptional customer experience fuels a strong brand, making Amazon the first stop for consumers shopping online. -More customers = the ability to provide more products, creating scale -The larger the business, the easier it is to justify vertically integrating to become its own shipper, keeping prices and costs down while speeding up delivery (customer experience/convenience) -Amazon open itself up to 3rd party sellers, attracting more sellers which attract more customers. --buyer-seller growth = two-sided network effect. -All of this allows for data retrieval. Data movement is logged, and analysis helps fine-tune customer experience, demand predictions, squeeze out costs, and drive cash flow.
What are primary concerns/risks associated with Bitcoin? limited consumer benefits, complexity, reputation, security, lack of regulation, volatility, liquidity, and scalability .
1. Limited consumer benefits: For cryptocurrencies, consumer benefit needs to be stronger. While international remittance customers and those otherwise left out of the banking and credit card system can see immediate benefit from crypto cash replacements, most of the population isn't impacted by this market. For most, cryptocurrency is difficult to understand and often difficult to use technology that offers little benefit. Slick apps and firms offering streamlining support services that allow, for example, the easy and quick conversion from dollars (or other currencies) to cryptocurrencies and back will help, but unless this offers consumer value beyond the credit card, few will bother to switch from plastic. 2. Complexity: 3. Reputation: Cryptocurrencies have a reputation problem. Being embraced by drug dealers, extortion hackers, tax evaders, and fringe libertarians doesn't instill a lot of confidence. And it doesn't help that bitcoin was created by a mysterious, unknown entity referred to as Satoshi Nakamoto. 4. Security: Security concerns also pose a problem. While bitcoin software is considered to be solid, it's not a guarantee that other entities are as secure. The multimillion-dollar theft from Mt. Gox is a prime example. The wallets that hold your private key are also potentially vulnerable. If your computer is wiped out by a virus and you haven't written down your password or saved a backup copy in another secure and accessible location, you're hosed; it's like money burned up in a fire. Hackers that steal passwords—whether they're on your computer or the cloud—effectively have access to anything in your crypto wallet; they can walk away with all your cash and it's unlikely that there'll be a way to recover the loot. And for all of the security and anonymity promised by the blockchain, if the sender or receiver of any data is compromised, information could escape into the wild or be captured by the nefarious. 5. Lack of regulation: Many firms that hope to strengthen cryptocurrency and blockchain technologies (including rival currencies, wallet builders, exchanges, and payment processors) have struggled under an ambiguous cloud of not knowing how they will be regulated and what legal issues apply to them. 6. Volatility: Volatility is also an issue. The chart below shows bitcoin's wild ride, over a less than 18-month period, swinging from a low of $368 to nearly $20,000. The world's second largest cryptocurrency, Ethereum, saw its value increase fifty-fold during the first half of 2017, but lost 20 percent of its value shortly after an erroneous report that its founder had died in a car crash. This kind of volatility makes bitcoin and other cryptocurrencies less useful as dollar-like currencies, limiting its appeal to speculators, who often seem like get-rich-quick schemers, or the much smaller legitimate market that is looking for in-and-out transactions such as cross-border payments. Some also worry about a crypto valuation bubble. 7. Liquidity: The advantage for consumers is that a token can be instantly traded with anyone, provided the coin or token received is linked to some publicly available blockchain used by both buyer and seller. An investor that owns shares in a public company can trade those shares in the stock market for cash. But an investor that makes a private investment in a pre-IPO company has private shares that are less liquid 8. Scalability: Perhaps most troubling, early bitcoin technology couldn't handle increasing transaction volume. A limitation in the structure of underlying bitcoin software limits transaction processing, and processing times ballooned to the point where several firms that once accepted bitcoin have stopped doing so. Fixes for the scalability problem (which has also hampered other cryptocurrencies like Ethereum) are possible, and several have been proposed, but issuing a fix involves a massive upgrade of software, and certain factions of the community (including many in the large network of small-time bitcoin miners) are wary of the impact of any change.
What are key reasons that established firms often fail to recognize disruptive innovations as a threat.
1. They listen to their customers and focus on the bottom line... majority of a firm's current customers don't want the initially poor performing technology 2. Firms focus on products that bring in money, not the new low margin product 3. Firms often don't give resources to nurture new technology
What are primary benefits associated with Bitcoin?
1. Transaction costs: Transaction cost of roughly 3% are eliminated with blockchain due to no longer needing a bank middleman 2. Micropayments: Bitcoin opens up the possibility of micropayments that are now impractical because of fees. 3. International commerce: International commerce through Bitcoin allows instant money transfer and often times eliminates the up to 5 day delay period of receiving the money 4. Emerging markets: Less than one third of the population in emerging markets has any sort of credit card, bitcoin could provide a vehicle to open this market up to online purchases. 5. No single controlling entity: There is no single controlling entity which means that many people have a say and can keep harsh deals from appearing 6. Balance of privacy and transparency: One can make transactions through a blockchain and bitcoin while remaining anonymous. Participants have a specific key associated to their account that people can enter to deal with a person directly but without knowing their name.
Collaborative Filtering
A classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience.
Cryptocurrency
A digital asset where a secure form of mathematics (cryptography) is used to handle transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies usually take advantage of a technology known as a blockchain.
Blockchain
A distributed and decentralized ledger that records and verifies transactions and ownership, making it difficult to tamper with or shut down.
Sock Puppets
A fake online persona created to promote a particular point of view, often in praise of a firm, product, or individual
Microblogging
A form of blogging that allows users to write short messages (or capture an image or embedded video) and publish them.
Fullfillment center
A fulfillment center is a third-party logics (3PL) warehouse where incoming orders are received, processed and filled.
Oligopoly
A market dominated by a small number of powerful sellers
One-Sided Market
A market that derives most of its value from a single class of users (e.g., instant messaging)
monopoly
A market where there are many buyers but only one dominant seller.
A/B Test
A randomized group of experiments used to collect data and compare performance among two options studied (A and B). A/B testing is often used in refining the design of technology products, and A/B tests are particularly easy to run over the Internet on a firm's website. Amazon, Google, and Facebook are among the firms that aggressively leverage hundreds of A/B tests a year in order to improve their product offerings.
Scalability
Ability to either handle increasing workloads or to be easily expanded to manage workload increases. In a software context, systems that aren't scalable often require significant rewrites or the purchase or development of entirely new systems.
Localization
Adapting products and services for different languages and regional differences.
Name examples of tech-enabled products/ services characterized by network effects.
Airbnb, Apple, Facebook, Uber
Describe Amazon's inconsistent financial performance as well as its long-term outlook with respect to investing in initiatives and commitment to building scale and growing a profitable business. What are the main strategic benefits of this long-term view? What could go wrong?
Amazon purposely sets its prices super low so that customers keep coming back. The abundance of customers allow the firm to provide more products, creating scale. The amazing customer experience is part of their brand which keeps people coming back to the platform. Its cloud computing business also allows Amazon to cut prices on its e-commerce side which other firms cannot afford. In the short term, Amazon risked losing shareholders because they weren't making that much money.
To what extent has commitment to "Customer Obsession" created advantages for Amazon? What are some of potential challenges associated with this intense commitment to customer satisfaction?
Amazon's customer obsession has been advantageous in that it has allowed them to become the undisputed champion in both internet and retailing and across the entire department in overall customer satisfaction. The challenges associated with their intense commitment to customer satisfaction include less employee satisfaction as there is a lot of pressure in the workplace to try to make sure only nearly flawless ideas come to fruition.
Goodwill
An accounting term for an intangible asset above and beyond the operations value of the firm. Goodwill can include the perceived value of the company's brand name, customer base, and loyalty, positive employee relations, as well as proprietary technology and patents.
Blue Ocean Strategy
An approach where firms seek to create and compete in uncontested "blue ocean" market spaces, rather than competing in spaces and ways that have attracted many, similar rivals.
Liquid
An asset which is liquid can be easily turned into cash. Stocks of public companies traded on major exchanges are highly liquid. Private shares in a company that has not yet gone public are illiquid since there is not a readily available public market.
Linux
An open source software operating system.
Bitcoin
An open source, decentralized payment system (sometimes controversially referred to as a digital, virtual, or cryptocurrency) that operates in a peer-to-peer environment, without bank or central authority.
How does Amazon use data for personalization?
Because Amazon is an online retailer, it has a greater ability than its offline counterparts to acquire and leverage personal data to enhance customer experience and drive sales.
Same-Side Exchange Benefits
Benefits derived by interaction among members of a single class of participant (e.g., the exchange value when increasing numbers of IM users gain the ability to message each other).
How do blogs exhibit the Long Tail phenomenon?
Blogs- Online journal entries, usually made in a reverse chronological order. Blogs typically provide comment mechanisms where users can post feedback for authors and other readers. (short for Web logs) first emerged almost a decade ago as a medium for posting online diaries. As of early 2015, Tumblr reported hosting nearly 415 million blogs. WordPress is said to power over 30 percent of Internet sites. This is clearly a long tail-In this context, refers to 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. phenomenon, loaded with niche content that remains "discoverable" through search engines and that is often shared via other types of social media like Facebook and Twitter
Owned Media
Communication channels that an organization controls. These can include firm-run blogs, websites, apps, and organization accounts on social media such as Twitter, Facebook, Pinterest, YouTube, and Instagram.
technological leapfrogging
Competing by offering a new technology that is so superior to existing offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits.
data portability
Data portability is a concept to protect users from having their data stored in "silos" or "walled gardens" that are incompatible with one another, i.e. closed platforms, thus subjecting them to vendor lock-in. -Data portability applies to personal data. It involves access to the personal data without implying data ownership per se.
What are the definitions of disruptive and innovative?
Disruptive- to break apart or throw into disorder. Innovative- introducing new ideas; original and creative in thinking. *disruptive is not synonymous with innovative. Just because a new company/product/service is "innovative," doesn't make it "disruptive." --Disruptive innovation is the process by which technologically straightforward services and products target the bottom end of an established market, then move their way up the chain until they overtake the existing market leaders. --First automobiles were not disruptive because they were expensive luxury items that did not disrupt the market for horse-drawn vehicles.
How has Facebook leveraged its user base and desktop dominance to envelop markets and new product categories?
Due to its massive user base, any feature that FB has will by default be one of the most popular in the feature's market. For example, FB's feed system rendered other sites like Digg and Del.icio.us irrelevant overnight.
What does it mean for a company to take an "embassy approach" to social media?
In the context of social media, an established online presence where customers can reach and interact with the firm. An effective embassy approach uses a consistent firm name in all its social media properties.
Deep Web
Internet content that can't be indexed by Google and other search engines.
Identify main skills/issues in creating/staffing an effective Social Media management team
It's basically free work. Crowdsourcing tackles challenges through an open call to a broader community of potential problem solvers. Examples include Goldcorp's discovering of optimal mining locations in land it already held, Facebook's leverage of its users to create translations of the site for various international markets, and Netflix's solicitation of improvements to its movie recommendation software.
Inbound Marketing
Leveraging online channels to draw consumers to the firm with compelling content rather than conventional forms of promotion such as advertising, e-mail marketing, traditional mailings, and sales calls.
What is the scope/impact of Linux and its significance for the open source movement?
Linux makes up roughly 92 percent of servers in Amazon's AWS cloud business, while even Microsoft's Azure cloud is over 40 percent Linux. Linux forms the core of the TiVo operating system, it underpins Google's Android and Chrome OS offerings
Affiliate Marketing Program
Marketing practice where a firm rewards partners (affiliates) who bring in new business, often with a percentage of any resulting sales.
How can a network could be both one-sided and two-sided
Microsoft's Xbox benefits from cross-side benefits in that more users of that console attract more developers writing more software titles and vice versa. However, the Xbox Live network that allows users to play against each other has same-side benefits. If your buddies use Xbox Live and you want to play against them, you're more likely to buy an Xbox. Apple also created a two-sided game in messaging when it turned iOS messaging into a platform, allowing app developers to add all sorts of new capabilities, from custom emojis and animations to collaborative apps shared via what used to be simple text messaging.
Venture Capital
Money that is invested in new or emerging companies that are perceived as having great profit potential
How else does Amazon benefit from allowing third-party vendors to sell products on its platform? Why not source inventory directly from such suppliers for any product Amazon might want to include in its offerings?
Nearly half of all units sold by Amazon are from the firm's 2 million participating Amazon Marketplace sellers worldwide. Marketplace allows Amazon to build a long tail of product offerings without the costly risk of having to take ownership of unproven or slow-moving inventory, while the firm gets fat and happy in the middle of a two-sided network effect
Two-sided market
Network market that comprises two distinct categories of participant, both of which are needed to deliver value for the network to work (e.g., video game console owners and developers of video games).
What are the two primary differences between open source software and conventional software?
OSS is not only available for free, but also makes source code available for review and modification
cash conversion cycle
Period between distributing cash and collecting funds associated with a given operation (e.g., sales).
Dynamic Pricing
Pricing that shifts over time, usually based on conditions that change demand (e.g., charging more for scarce items).
Liquidity problems
Problems that arise when organizations cannot easily convert assets to cash. Cash is considered the most liquid asset—that is, the most widely accepted with a value understood by all.
Platforms
Products and services that allow for the development and integration of software products and other complementary goods, effectively creating an ecosystem of value-added offerings. Windows, iOS, the Kindle, and the standards that allow users to create Facebook apps are all platforms.
Complementary Benefits
Products or services that add additional value to the primary product or service that makes up a network.
Aplication Programming Interface (API)
Programming hooks, or guidelines, published by firms that tell other programs how to get a service to perform a task such as send or receive data.
How do APIs create value from complementary benefits? How can APIs lower barriers to entry for entrepreneurs?
Programming interfaces that allow third parties to integrate with their products and services. Allowing other firms to contribute to your platform can be a brilliant strategy because those firms will spend their time and money to enhance your offerings.
Earned Media
Promotions that are not paid for or owned but rather grow organically from customer efforts or other favorable publicity. Social media, word of mouth, and unsolicited positive press mentions are all examples of earned media.
Paid Media
Refers to efforts where an organization pays to leverage a channel or promote a message. Paid media efforts include things such as advertisement and sponsorships.
Disintermediation
Removing an organization from a firm's distribution channel. Disintermediation collapses the path between supplier and customer.
What are the "three Rs" covered by a good social media policy?
Representation, Responsibility, Respect
Open Source Software
Software that is free and whose code can be accessed and potentially modified by anyone.
Backward compatibility
The ability to take advantage of complementary products developed for a prior generation of technology.
Crowdsourcing
The act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.
Social Graph
The global mapping of users and organizations and how they are connected.
The Wisdom of Crowds
The idea that a group of individuals (the crowd), often consisting of untrained amateurs, will collectively have more insight than a single or small group of trained professionals.
Staying Power
The long-term viability of a product or service.
Inventory Turns
The number of times inventory is sold or used during a specific period (such as a year or quarter). A higher figure means a firm is selling products quickly.
Envelopment
When one market attempts to conquer a new market by making it a subset, component, or feature of its primary offering.
Collaborative Consumption
When participants share access to products and services rather than having ownership. Shared resources can be owned by a central service provider (e.g., Zipcar) or provided by a community that pools available resources (e.g., Airbnb, Uber).
Convergence
When two or more markets, once considered distinctly separate, begin to offer features and capabilities. As an example: the markets for mobile phones and media players are converging.
Peer Production
When users work, often collaboratively, to create content and provide services.
How does Amazon's infrastructure compare with that of competitors (both conventional retail and other e-commerce firms)?
While Amazon spends significantly on software, automation, and expansion of warehouses, its overall costs for land, energy, inventory, and security will be lower than costs for brick-and-mortar rivals. E-commerce players, led by the industry giant Amazon, have made it so easy and fast for people to shop online that traditional retailers, shackled by fading real estate and culture of selling in stores, are struggling to compete.
Why is it so difficult for new entrants in network-based markets with an existing dominant, proprietary standard?
Winning customers away from a dominant player in a network industry isn't as easy as offering a product or service that is better. Any product that is incompatible with the dominant network has to exceed the value of the technical features of the leading player, plus (since the newcomer likely starts without any users or third-party product complements) the value of the incumbent's exchange, switching cost, and complementary product benefit (see Figure 8.1). And the incumbent must not be able to easily copy any of the newcomer's valuable new innovations; otherwise the dominant firm will quickly match any valuable improvements made by rivals. As such, technological leapfrogging (Competing by offering a new technology that is so superior to existing offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits.), or competing by offering a superior generation of technology, can be really tough
Explain the idea known as the "Wisdom of Crowds". What are four criteria necessary for a crowd to be "wise"?
Wisdom of crowds refers to the idea that a group of individuals (the crowds), often consisting of untrained amateurs, will collectively have more insight than a single or group of trained professionals. · be diverse, so that participants are bringing different pieces of information to the table, · be decentralized, so that no one at the top is dictating the crowd's answer, · offer a collective verdict that summarizes participant opinions, · be independent, so that each focuses on information rather than the opinions of others.
Viral Promotion
a business strategy that uses existing social networks to promote a product or when things spread fast
Incubator
a company that helps new and startup companies to develop by providing services such as management training or office space
Option
contract giving investors an option to buy or sell commodities, equities, or financial assets at a specific future date using a price agreed upon today
Network Effects
increases in the value of a product to each user, including existing users, as the total number of users rises
Disruptive Technology
is one that displaces an established technology and shakes up the industry or a ground-breaking product that creates a completely new industry.
What are the "four Ms" of engagement and establishing an effective social media presence?
it's a megaphone allowing for outbound communication; it's a magnet drawing communities inward for conversation; and it allows for monitoring and mediation of existing conversation
Why does open source software usually have fewer bugs than commercial software?
more people who look at a program's code, the greater the likelihood that an error will be caught and corrected
What are the two primary sources of Facebook's competitive advantage (according to Gallaugher)?
network effects and switching costs
Preannouncement
occurs when a company or individual announces something either prior to the time that they do it or prior to the time that they would normally announce it
Micropayment
payment for a very small sum of money, often less than $10
Identifying and nurturing disruptive technologies requires constant vigilance and relentless ______________ of the competitive environment.
scanning
E-Commerce
the buying and selling of goods over the internet
Distribution Channels
the path through which products or services get to customers
The Long Tail
the portion of a distribution curve where a limited number of people are interested in buying a lot of different products, having a near limitless supply
What is one way that Facebook used crowdsourcing to support its global expansion?
users were asked to look at Facebook phrases and offer translation suggestions for their local language, helped the firm rapidly deploy versions in dozens of markets, blasting the firm past one-time rivals in global reach.
Blockchains are a mechanism to securely exchange _________ and record __________ over a network without an intermediary. It could be a disruptive force for sectors that include __________, ____________, ____________, and ________ ________
value; ownership; finance, law, government, and health care.
