MIS Test #1
Apple's growing business of consumer services—Apple Music, Arcade, Apple TV+, Apple Fitness, News, and iCloud—now bring in so much coin that if it were a separate division, it'd be deep into the Fortune 100, bigger than Pfizer, Coke, Nike, Oracle, or Delta Airlines. True/False
True
When offerings are roughly the same, they are more commodity than differentiated. True/False
True
___________________________________________ are driving discovery and innovation, redefining modern marketing, and creating a shifting knife-edge of privacy concerns that can shred corporate reputations if mishandled.
Data analytics and business intelligence Many organizations today collect and seek insights from massive datasets, which are often referred to as "Big Data." Data analytics and business intelligence are driving discovery and innovation, redefining modern marketing, and creating a shifting knife-edge of privacy concerns that can shred corporate reputations if mishandled.
Many business students aspire to careers in investment banking. Tech firms may very well influence their careers, given that the tech sector comprises a high number of __________________ and __________________.
IPOs (initial public stock offerings); M&A (mergers and acquisitions) deals Many i-bankers will work on IPOs (initial public stock offerings), in effect helping value companies the first time; and the tech industry is a fertile ground that continually sprouts new businesses. Other i-bankers will be involved in valuing merger and acquisition (M&A) deals, and tech firms are active in this space, too.
What is considered the most influential piece of open source software was created by ________________ of _____________________.
Linus Torvalds; Finland Finland's Linus Torvalds wrote the first version of the Linux operating system when he was just twenty-one. Today Linux has grown to be the most influential component of the open source arsenal, powering everything from cell phones to supercomputers.
A value chain refers to:
The set of activities through which a product or service is created and delivered to customers.
We're in a golden age of tech entrepreneurship where ________________ means a startup can rent the computing resources one previously had to buy at great expense.
"the cloud" or cloud computing We're in a golden age of tech entrepreneurship where "the cloud" means a startup can rent the computing resources one previously had to buy at great expense.
Jeff Bezos is credited as the founder of _____.
Amazon Jeff Bezos hadn't yet reached thirty when he began working on what would eventually become Amazon.
FreshDirect should be safe from competition with traditional grocery stores (since they would be straddling two models instead of getting FreshDirect's singular efficiency), and new startups are likely going to struggle to match FreshDirect's scale and brand. However, Amazon presents a particularly strong challenger to FreshDirect. Why?
Amazon has deep pockets and is aggressively seeking to expand into groceries One threat successful firms face is the potential entry of even better-funded, growth-seeking rivals to try to squeeze them out of the current market. For years, the king of e-commerce, Amazon, has had its eye on tapping the $700 billion market for grocery retail.
Which of the following describes the relationship between Apple's iOS and Google Maps.
Apple's control of iOS gave it control of the distribution channel to reach its users, kicking Google out as the default mapping app and capturing the majority of user engagement. Apple eventually launched its own map service, kicking out Google as a default option and relegating it to an iOS also-ran. Two years after the change, fewer than one in six iOS users had installed the Google Maps app on their devices, even though Apple's mapping product was initially considered inferior.
Which of the following is one of Porter's five forces?
Bargaining power of buyers The five forces in Porter's framework are (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.
Why did it seem that Gap was plagued by a lack of accurate data?
By using contract manufacturers and seasonal orders, the firm was forced to place bets on guesses of what customers would be interested in, months in advance. Gap, like most fashion retailers place orders for a seasonal collection months before these lines make an appearance in stores. While overseas contract manufacturers may require hefty lead times, trying to guess what customers want months in advance is a tricky business. See Drexler's purple leather pants problem.
Many firms are developing so-called "C-level" specialties in emerging areas with a technology focus, such as _____.
CISO Within a firm, technology specialists can rise to be chief information officer (CIO) or chief technology officer (CTO) - positions focused on overseeing a firm's information systems development and deployment. Many firms are also developing so-called "C-level" specialties in emerging areas with a technology focus, such as chief information security officer (CISO), and chief privacy officer (CPO).
For today's collegiate job seeker, public participation in social media is strongly discouraged. True/False
False While many students have been wisely warned that inappropriate social posts can ruin their job candidacy, also know that the inverse is true and in many ways social media is "the new résumé." Thoughtful blog posts, a compelling LinkedIn presence, Twitter activity reflecting an enthusiastic and engaged mind, and, for tech students, participation in collaborative coding communities like GitHub all work to set apart a candidate from the herd.
In an effort to promote much-needed industry diversity, many tech firms and heavy users of tech have launched programs specifically targeted at skills development, hiring of women, and hiring of groups that would foster ethnic diversity of their workforce. True/False
False Apple, Etsy, Square, Facebook, and Google are among the firms with programs to prep and encourage more women and minorities to pursue tech careers.
The founding technology entrepreneurs behind many leading firms, such as Apple, Microsoft, and Facebook, got their start in their early 30s, leveraging university study and knowledge from their first post-college jobs to create disruptive new firms. True/False
False Bill Gates was an undergraduate when he left college to found Microsoft. Steve Jobs was just twenty-one when he founded Apple. Mark Zuckerberg founded Facebook as a nineteen-year-old college sophomore. The intersection where technology and business meet is both terrifying and exhilarating. But if you're under the age of thirty, realize that this is your space.
Facebook leads social media innovation and rarely imitates products from competitors. True/False
False Facebook apps routinely mimic Snap features, implementing some in as little as four months after their appearance in Snapchat, leading TechCrunch to quip Facebook's development mantra, formerly "Move Fast and Break Things" should now be "Move Last and Take Things."
In recent years, activity has dramatically declined in the areas of intellectual property, patents, piracy, and privacy. True/False
False For those looking for careers in corporate law, many of the hottest areas involve technology. Intellectual property, patents, piracy, and privacy are all areas where activity has escalated dramatically in recent years. The number of U.S. patent applications waiting approval has tripled in the past decade, while China saw a threefold increase in patent applications in just five years.
Technology means FreshDirect's labor costs are higher than rivals', but the firm makes up for this in other ways. True/False
False FreshDirect's labor costs that are 60 percent lower than at traditional grocers.
One sign of the global digital divide is the slow rate at which electronic banking and financial services have proliferated to nations such as Kenya. True/False
False Kenya's M-PESA and Somaliland's Zaad use text messages to replace cash, bringing the safety and speed of electronic payment and funds transfer to the unbanked and leveraging mobile money at rates that far outstrip any nation in the West.
Most successful firms typically leverage a single key resource for competitive advantage to create lasting, above-average industry profits. True/False
False Oftentimes, a firm with an effective strategic position can create an arsenal of assets that reinforce one another, creating advantages that are particularly difficult for rivals to successfully challenge.
It is unlikely that Internet giants Uber and Airbnb will ever be displaced because these firms own such large and expensive inventories of infrastructure (e.g. automobiles and hotels). True/False
False - "Uber, the world's largest "taxi service," owns no vehicles for hire. Airbnb, the world's largest accommodations provider, doesn't own a single hotel or rental property."
Which of the following observations is true?
Internet businesses have relatively low barriers to entry. Some have correctly argued that the barriers to entry for many tech-centric businesses are low. This argument is particularly true for the Internet, where rivals can put up a competing Web site seemingly overnight. But it's absolutely critical to understand that market entry is not the same as building a sustainable business and just showing up doesn't guarantee survival.
Facebook was founded by _____.
Mark Zuckerberg Mark Zuckerberg founded Facebook as a nineteen-year-old college sophomore.
The rise of _____ software has lowered computing costs for startups to blue chips worldwide.
Open Source Today, open source software powers most of the websites you visit. The rise of open source has rewritten the revenue models for the computing industry and lowered computing costs for startups to blue chips worldwide.
_____ are handheld computing devices meant largely for mobile use outside an office setting.
PDAs Personal digital assistants (PDAs) are handheld computing devices meant largely for mobile use outside an office setting. PDAs were initially (non-phone) handheld computing devices, but sophisticated computing capabilities have now been integrated into other mobile device classes such as smartphones and tablets.
What are the two information systems Zara uses to gather data in-store, and what is the purpose of the data gathered by each.
PDAs gather information on customer preferences, POS gathers information on sales In essence, the POS tells the firm what's selling, while PDA and related data tell the firm what customers at a given location want to see on shelves.
Which of the following has been a consistent source of concern related to the use of contract manufacturers in the apparel industry?
Poor practices put workers at risk and threaten the brand of partners leveraging their services. Global competition among contract firms has led to race-to-the-bottom cost-cutting measures. Too often, this means that in order to have the low-cost bid, contract firms skimp on safety, ignore environmental concerns, employ child labor, and engage in other ghastly practices.
For providers of commodity products, how does the Internet typically impact price transparency and information asymmetry?
Price transparency increases while information asymmetry decreases 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. So price transparency increases, causing information asymmetry to decrease.
Which of the following is NOT true regarding tech during the COVID-19 pandemic?
Profits were pushed even higher at Apple, Microsoft, and Amazon; a triopoly that rakes in more than half of all digital ad revenue. As we emerge from a global pandemic, tech has become even more deeply embedded into our lives. Our screen time has skyrocketed, boosting online ad revenue to make up over half of all ad spending for the first time ever, and pushing profits even higher at Google, Facebook, and Amazon; a triopoly that rakes in more than half of all digital ad revenue. Streaming services boomed, and e-commerce exploded. Online grocery delivery, a segment that had seen slow consumer adoption in the U.S. prior to COVID-19, saw demand double in just a few months. Tech was also front-and-center, responsible for the acceleration of vaccine development, allowing a handful of treatments to hit the market in record-shattering time, and almost certainly saving multimillions of lives.
_______________ refers to a technology which can (among other things) be used to "track your luggage at the airport".
RFID As computing gets both faster and cheaper, it gets "baked into" all sorts of products and shows up everywhere, including in radio frequency identification (RFID) tags track your luggage at the airport.
Name the technology that makes Zara's inventory smart is called _________.
RFID Zara inventory is smart. Security tags are custom made to also include RFID (Radio Frequency Identification) tags that wirelessly emit a unique identifying code for the individual item that they are attached to.
The resource-based view of competitive advantage states that for a firm to maintain sustainable competitive advantage it must control a set of exploitable resources that have four critical characteristics. What are these characteristics?
Rareness, value, imperfect imitability, nonsubstitutability
Which technology is cited as raising the ethics and service bar for modern managers?
Social Media When mobile phones are cameras just a short hop from social media sites such as YouTube, Facebook, Instagram, and Twitter, every ethical lapse can be captured, every customer service flaw graffiti-tagged on the permanent record that is the Internet. The service and ethics bar for today's manager has never been higher.
YouTube was started by _____ and _____.
Steve Chen; Chad Hurley Steve Chen and Chad Hurley were in their late twenties when they launched YouTube.
This piece of U.S. legislation was enacted in the wake of the accounting scandals of the early 2000s. Although often criticized, it is also seen as raising stakes for mismanagement and misdeeds related to a firm's accounting practices.
The Sarbanes-Oxley Act Also known as Sarbox or SOX, the Sarbanes-Oxley Act was enacted in the wake of the accounting scandals of the early 2000s. The act raises executive and board responsibility and ties criminal penalties to certain accounting and financial violations. Although often criticized, SOX is also seen as raising stakes for mismanagement and misdeeds related to a firm's accounting practices.
Which of the following is a radical change brought about by new technologies?
The growth of privacy and security concerns Data analytics and business intelligence are creating a shifting knife-edge of privacy concerns that can shred corporate reputations if mishandled. And the pervasiveness of computing has created a set of security and espionage threats unimaginable to the prior generation.
Unlike rival offerings from Microsoft and Google, Apple mobile and computer operating systems only run on Apple hardware. True/False
True Apple is another firm that has distinguished itself through differentiation. Unlike rival offerings from Microsoft and Google, Apple mobile and computer operating systems only run on Apple hardware. This allows the firm to tightly integrate the experience across Apple products.
Cloud computing and software as a service are turning sophisticated, high-powered computing into a utility available to even the smallest businesses and non-profit organizations. True/False
True Cloud computing and software as a service are turning sophisticated, high-powered computing into a utility available to even the smallest businesses and non-profit organizations.
The tech-centric consulting practices of firms such as Deloitte Consulting and Accenture are larger than the accounting firms where they were initially launched.
True Deloitte's tech-centric consulting division is larger than the firm's audit, tax, and risk practices. At the time of its spin-off, Accenture was larger than the accounting practice at former parent Arthur Andersen.
IPO markets need new firms, and the tech industry is a fertile ground that continually sprouts new businesses like no other.
True Many investment bankers will work on IPOs, or initial public stock offerings, in effect helping value companies the first time these firms wish to sell their stock on the public markets. IPO markets need new firms and the tech industry is a type of fertile ground that continues to sprout new businesses.
The apparel industry in particular has been plagued by accusations of sweatshop labor and unsafe working conditions.
True The apparel industry in particular has been plagued by accusations of sweatshop labor and unsafe working conditions. Incidents such as the Spring 2013 Bangladesh Rana Plaza disaster, which killed more than 1,100 people in the collapse of an illegally constructed eight-story building housing multiple contract garment factories, underscore the human toll of unacceptable contract manufacturing practices. Walmart, The Children's Place, and Benetton were among the firms said to have purchased clothing from firms operating in Rana Plaza.
Firms are using social media to generate sales, improve their reputations, better serve customers, and innovate.
True The rise of social media is part of this blown-apart marketing landscape. Now all customers can leverage an enduring and permanent voice, capable of broadcasting word-of-mouth influence in ways that can benefit and harm a firm. Savvy firms are using social media to generate sales, improve their reputations, better serve customers, and innovate. Those who don't understand this landscape risk being embarrassed, blindsided, and out of touch with their customers.
Which of the following help Zara respond quickly to fashion trends?
all of the above PDA and related data tell the firm what customers at a given location want to see on shelves. The firm is able to be so responsive due to a competitor-crushing combination of vertical integration. Fabric is cut and dyed by robots in twenty-three highly automated factories.
Another contributor to the easy with which young entrepreneurs can have success is low-cost distribution to massive markets worldwide. This is enabled by:
app stores App stores give code jockeys immediate, nearly zero-cost distribution to a potential market of hundreds of millions of people worldwide.
A firm's__________is the symbolic embodiment of all the information connected with a product or service.
brand A strong brand can also be an exceptionally powerful resource for competitive advantage. Consumers use brands to lower search costs, so having a strong brand is particularly vital for firms hoping to be the first online stop for consumers.
Zara's limited production runs cause customers to:
buy the products right away at full price. Limited runs allow Zara to cultivate the exclusivity of its offerings and encourage customers to buy immediately and at full price. The constant parade of new, limited-run items also encourages customers to visit often.
_____ are products or services that are nearly identically offered from multiple vendors.
commodities Commodities are products or services that are offered nearly identically from multiple vendors. Consumers buying commodities are highly price-focused since they have so many similar choices.
Moving first pays off when lead time is used to create:
critical resources for competitive advantage Moving first pays off when the time lead is used to create critical resources that are valuable, rare, tough to imitate, and lack substitutes. Anything less risks the arms race of operational effectiveness.
Zara designs follow evidence of:
customer demand Rather than create trends by pushing new lines via catwalk fashion shows, Zara designs follow evidence of customer demand. Data on what sells and what customers want to see goes directly to "The Cube," where teams of some three hundred designers crank out an astonishing thirty thousand items a year.
The Harvard Business Review declared _______________ the "Sexiest Job of the Twenty-First Century."
data scientist
In retail, and the fashion industry, in particular, there is a saying: inventory = _____________.
death 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.
Sometimes technology can sound geeky and so technical that executives might think that it doesn't require managerial or investor attention. However, many investing in the telecom sector suffered from a lack of insight into how a key technology was impacting their industry. Telecom firms failed to anticipate the impact of a technology known as ____________ which enabled existing fiber to carry more transmissions than ever before.
dense wave division multiplexing (DWDM) A technology called dense wave division multiplexing (DWDM) enabled existing fiber to carry more transmissions than ever before. The end result: these new assets weren't rare and each day they seemed to be less valuable.
Zara makes sure that, before items depart a warehouse for stores, all clothes are ironed in advance and packed on hangers, with security and price tags affixed. This is done to ensure that: the firm's celebrity partner designers get feedback on where their fashions are going and the price items are sold at, worldwide.
employees spend more time focusing on customers In Zara factories, clothes are ironed in advance and packed on hangers, with security and price tags affixed. This system means that instead of wrestling with inventory during busy periods, employees in Zara stores simply move items from shipping box to store racks. Therefore, they can spend most of their time on value-added functions, such as helping customers find what they want.
Firms such as Walmart and JCPenny have had greater success deploying RFID because they work so closely with a diverse group of product suppliers.
false 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 (a challenge for other retailers that have third-party suppliers ship to multiple warehouses or directly to stores).
Zara is able to save costs in many parts of its business, but the firm's highly automated, tech-centric model does mean tech spending is heavier than rivals. Despite this, the tradeoff is worth it, given other savings.
false 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.
Businesses benefit from economies of scale when the cost of an investment can be spread across increasing units of operational effectiveness or in serving a small supplier base. True/False
false Businesses benefit from economies of scale when the cost of an investment can be spread across increasing units of production or in serving a growing customer base.
FreshDirect's tech-efficient model actually leads to lower margins than its traditional grocery peers, but the firm makes this up with a greater sales volume. True/False
false FreshDirect does it all with margins in the range of 20 percent (to as high as 45 percent on many semiprepared meals), easily dwarfing the razor-thin 1 percent margins earned by traditional grocers.
Your firm had better lawyer up! Studies have shown that patents are the single most-important factor for enabling a firm to profit from innovations. True/False
false In a study of the factors that were critical in enabling firms to profit from their innovations, patents were only the fifth most important factor. Secrecy, lead time, sales skills, and manufacturing all ranked higher.
Zara sees the link between online and off-line sales as being fluid. Thus, they have a system that blends online and off-line sales.
false Inditex sees e-commerce as a critical part of the firm's omnichannel strategy, which blends online and offline sales in ways that best benefit the customer. The company sees the link between online and off-line sales as being so fluid, it doesn't even breakout online sales as a separate category.
OpenTable's network effects are due entirely to the large number of consumers who use the service. True/False
false OpenTable has what strategists call a two-sided market. In the firm's case, both restaurants and diners create the strong network effects, which has resulted in one clear winner ahead of all other competitors. Diners are attracted to a service with more restaurants, restaurants are attracted to the service that has the most diners.
Zara's efficiency is due, in part, because technology allows the firm to manufacturers fewer unique fashion items than rivals like Gap and H&M.
false The average time for a Zara concept to go from idea to appearance in store is fifteen days; compare that to their rivals, who receive new styles once or twice a season. Smaller tweaks arrive even faster. To put that in perspective, Zara is twelve times faster than Gap despite offering roughly ten times more unique products! At H&M, it takes three to five months to go from creation to delivery—and they're considered one of the best.
Zara's efficiency allows it to increase markdowns.
false The fashion industry average markdown ratio is approximately 50 to 70 percent, and less than 1 percent of JCPenney revenue came from items bought at full price. By contrast, at Zara, 85 percent of products are sold without a discount. Markdowns are usually bad since they mean goods are selling below their full retail price.
The _____ problem exists when savvy rivals watch a pioneer's efforts, learn from their successes and missteps, and then enter the market quickly with a comparable or superior product at a lower cost.
fast follower
What are the five components of an information system?
hardware, software, data, procedures, and people
Which of the following factors can weaken buyer bargaining power?
high switching costs Switching costs weaken buyer bargaining power. When buyers are reluctant to move to other products or services due to high switching costs, their bargaining power is lowered considerably.
A decision situation where one party has more or better information than its counterparty is known as _____.
information asymmetry The Internet increases the bargaining power of buyers and lowers the bargaining power of suppliers in industries. Examples are auto sales and jewelry, where the products are commodities and the price transparency of the Internet counteracts a previous information asymmetry. This leads to customers often not knowing enough information about a product to bargain effectively.
Which of the following refers to an integrated solution that combines the five components of hardware, software, data, procedures, and people?
information system An information system refers to an integrated solution that combines five components: hardware, software, data, procedures, and the people who interact with and are impacted by the system.
An organization's _____ department ensures that systems get built and keep running. It also takes on strategic roles targeted at proposing solutions for how technology can give the firm a competitive edge.
information systems Nearly every large organization has its own information systems department. That group not only ensures that systems get built and keep running but also increasingly takes on strategic roles targeted at proposing solutions for how technology can give the firm a competitive edge.
The phrase __________ refers to the number of times inventory is sold or used during the course of a year.
inventory turns Inventory turns, also known as stock turnover or stock turns. Higher inventory turns mean a firm is selling product faster, so it collects money quicker than rivals. And those goods are fresher since they have been in stock for less time.
Coordinating and enabling the flow of goods, people, information, and other resources among locations is known as
logistics
Search engine marketing (SEM), search engine optimization (SEO), customer relationship management (CRM), and personalization systems are all central components of the new _____ toolkit.
marketing Search engine marketing (SEM), search engine optimization (SEO), customer relationship management (CRM), personalization systems, and a sensitivity to managing the delicate balance between gathering and leveraging data and respecting consumer privacy are all central components of the new marketing toolkit.
During the COVID-19 pandemic, Zara:
mobilized staff to retrieve clothes and accessories from store shelves and stockrooms so that these products could be used to fulfill e-commerce orders. With 88 percent of its stores closing during spring 2020, Inditex sales nosedived. A 44 percent drop in quarterly sales led to the firm's first ever loss as a public company. However, because of the strength and responsiveness of the firm's integrated inventory and omnichannel systems, the damage was not nearly as bad as its rivals'. The firm's strengthened e-commerce efforts, which had grown to account for 14 percent of sales pre-pandemic, shot up 95 percent in April 2020, and increased 50 percent that same quarter. The RFID-powered ability of the firm to surface inventory regardless of its location helped the company shift inventory from closed stores so that it could be used to meet increased e-commerce demand. The firm quickly mobilized staff to retrieve clothes and accessories from store shelves and stockrooms so that these products could be used to fulfill e-commerce orders.
Moore's Law corollary that is taking place with people, too. As technology becomes faster and cheaper and developments like open source software, cloud computing, software as a service (SaaS), and outsourcing push technology costs even lower, tech skills are being embedded inside ___________ job functions.
more Moore's Law corollary that's taking place with people, too. As technology becomes faster and cheaper and developments like open source software, cloud computing, software as a service (SaaS), and outsourcing push technology costs even lower, tech skills are being embedded inside more and more job functions.
The phenomenon of _________________________ exists when the value of a product or service increases along with a growing number of users.
network effects Network effects (sometimes called network externalities or Metcalfe's Law) exist when a product or service becomes more valuable as more people use it.
Performing the same tasks better than how rivals perform them is known as ______.
operational effectiveness Operational effectiveness refers to performing the same tasks better than how rivals perform them. According to Michael Porter, many firms can suffer from margin eroding competition because they have defined themselves according to operational effectiveness rather than strategic positioning.
Non-Practicing Entities(NPEs), more commonly known as _________, hold intellectual property not with the goal of bringing novel innovations to market but instead in hopes that they can sue or extort large settlements from others.
patent trolls The patent system is often considered to be unfairly stacked against start-ups. U.S. litigation costs in a single patent case average about $5 million, and a few months of patent litigation can be enough to sink an early-stage firm. Large firms can also be victims.
Transaction processing systems that capture customer purchases are known as:
point-of-sale systems. Cash registers and store checkout systems are examples of point-of-sale systems. These systems are critical for capturing sales data, and are usually linked to inventory systems to subtract out any sold items.
Contract manufacturing is the process by which:
production is outsourced to third-party firms. Contract manufacturing refers to outsourcing production to third-party firms. Firms that use contract manufacturers do not own the plants or directly employ the workers who produce the requested goods.
The amount earned from an expenditure is known as:
return on investment Return on investment (ROI) is the amount earned from an expenditure. Financial considerations should forecast the ROI of any organizational expenditure (i.e., what will we get for our money and how long will it take to receive a payback?).
Advantages related to a firm's size are referred to as _____.
scale advantages Scale advantages are related to the size of a firm. Many Internet and tech-leveraging businesses are highly scalable since, as firms grow to serve more customers with their existing infrastructure investment, profit margins improve dramatically.
The Fair Factories Clearinghouse provides resources for: locating low-cost contract manufacturers.
sharing audit information on contract manufacturers.
_____ refer(s) to the payments made by suppliers to retailers for prime shelf space.
slotting fees Slotting fees refer to the payments by suppliers for prime shelf space, which is common in traditional retail.
Another reason that is fueling the boom in fast-growing technology services is ___________________, which, when done right, can virally spread awareness of a firm with nary a dime of conventional ad spending.
social media Social media done right can virally spread awareness of a firm with nary a dime of conventional ad spending.
_____ refers to attempts by an organization to occupy more than one position while failing to match the benefits of a more efficient, singularly focused rival.
straddling
______ is performing different tasks than rivals or the same tasks in different ways.
strategic positioning Strategic positioning refers to performing different activities from those of rivals, or the same activities in a different way. Strategic positioning can allow for businesses to be defensibly different, as opposed to operational effectiveness with its inherent risks of "sameness."
Experts in the area of _____ specialize in technology for competitive advantage.
strategy Opportunities for programmers abound, particularly for those versed in new technologies, but there are also roles for experts in areas such as user-interface design (who work to make sure systems are easy to use), process design (who leverage technology to make firms more efficient), and strategy (who specialize in technology for competitive advantage).
______ is financial performance that consistently outperforms the industry average.
sustainable competitive advantage Firms strive for sustainable competitive advantage - financial performance that consistently outperforms their industry peers. It can be difficult to sustain a competitive advantage because of new competitors with new copycat products which cause a cut in prices and costs.
_____ are costs that customers incur when moving from one product to another.
switching costs Switching costs exist when consumers incur an expense to move from one product or service to another. Switching costs can involve money spent, investments in time, any data loss, and so forth.
For Zara, _________has made all the difference in its rise to dominate the fashion industry.
technology The blend of technology-enabled strategy that Zara has unleashed deviates widely from the standard fashion retail playbook. Unlike rivals, Zara shuns advertising, rarely runs sales, and while nearly every other major player outsources manufacturing to low-cost countries, Inditex is highly vertically integrated, keeping huge swaths of its production process in-house. These counterintuitive moves are part of a recipe for success that's beating the pants off the competition.
The Apple Store represents a key distribution channel for the firm and the single most successful retail chain as defined by sales-per-square-foot in the United States. True/False
true Apple Stores show firm-crafted retail distribution channels at their most effective. Apple products offered at the Apple store give firm-trained employees an opportunity to present advantages of the company's unique products and how they work together, and offer free on-site customer support. This formula has resulted in the single most successful retail chain in the United States on a sales-per-square-foot basis.
Zara encourages employee use of technology by tying employee salaries to sales performance.
true Managers are motivated to use in-store systems because they have skin in the game. The firm is keen to reward success—as much as 70 percent of salaries can come from commissions.
Internet and tech-leveraging businesses are said to be highly scalable when profit margins often improve as firms leverage their infrastructure base across a growing number of customers. True/False
true Many Internet and tech-leveraging businesses are highly scalable since, as firms grow to serve more customers with their existing infrastructure investment, profit margins improve dramatically.
While competitors falter, Zara is undergoing one of the fastest global expansions the fashion world has ever seen, opening one store per day and entering new markets worldwide with ninety-six markets so far. True/False
true The chain's profitability is among the highest in the industry. The fashion director for luxury goods maker LVMH calls Zara "the most innovative and devastating retailer in the world."
Zara saves money on advertising in part because limited runs of unique items encourage repeat visits, lessening the need to run sales and ad campaigns.
true The constant parade of new, limited-run items also encourages customers to visit often. The average Zara customer visits the store seventeen times per year, compared with only three annual visits made to competitors. Even more impressive, Zara puts up these numbers with almost no advertising.
A larger number of skilled workers who can use a given technology exists as a result of network effects. True/False
true Third-party add-on products, books, magazines, or even skilled labor are all attracted to networks of the largest number of users, making dominant products even more valuable.
Technology experts in the area of _____ work to make sure systems are intuitive and easy to use.
user-interface design Opportunities for programmers abound, particularly for those versed in new technologies, but there are also roles for experts in areas such as user-interface design (who work to make sure systems are easy to use), process design (who leverage technology to make firms more efficient), and strategy (who specialize in technology for competitive advantage).
The __________is the set of activities through which a product or service is created and delivered to customers.
value chain The value chain is the set of interrelated activities that bring products or services to market. Firms that craft an imitation-resistant value chain have developed a way of doing business that others will struggle to replicate, and in nearly every successful effort of this kind, technology plays a key enabling role.
When a single firm owns several layers in its value chain, it is said to be:
vertically integrated
The term _________________ refers to leveraging consumers to promote a product or service.
viral marketing If a firm performs well, consumers can often be enlisted to promote a product or service (so-called viral marketing).