MBA 703 AP1 Darban || 100% Error-free Answers.
The value of a product or service ______ as it's number of users expands. correct answers
INCREASES - More users = MORE VALUE
Presence of ______ effects influences the choice of one product or service over another correct
answers NETWORK
Why is network effect important? correct answers The more customers you have the more
attractive the marketplace is for the providers and vice versa.
What is network effect? correct answers -When a person buys a good or service, (s)he becomes
part of a network
-The network increases in size
-utility that people derive depends on size of network
-By joining I make everyone else in the network better off
What is staying power? correct answers The long-term viability of a product or service.
What is switching costs? correct answers Incurred when moving from one product to another
*directly related to staying power
*strengthens the value of network effects a strategic asses
Total cost of ownership (TCO) correct answers An economic measure of the full cost of owning
a product (typically computing hardware and/or software). TCO includes direct costs such as
purchase price, plus indirect costs such as training, support, and maintenance.
What is the third part to sources of network effect? correct answers Complementary benefits:
Products or services that add additional value to the primary product or services that makes up a
network.
What are platforms? correct answers Allow for development and integration of software products
and other complementary goods.
What are some key takeaways from Chapt 9? correct answers Products and services subject to
network effects get their value from 1) Exchange, 2) perceived staying power 3) complementary
products and services
What is a one-sided market? correct answers Market that derives most of it's value from a
SINGLE CLASS of users
What are same-side exchange benefits of a one-sided market? correct answers Benefits derived
by interaction among members of a single class of participants
What is a two-sided market? correct answers Network markets comprised of TWO distinct
categories of participant. BOTH need to deliver value for the network to function
, What is a cross-side exchange benefit of a two-sided market? correct answers When the strength
of one side has an impact on the growth of the other
What is an example of a one sided market? correct answers WhatsApp - has the same properties
everyone else has and provides value the same way everyone else does
What is an example of a two sided market? correct answers Uber: Needs drivers & riders
*More examples:
eBay: connects buyers & sellers
Google: Connects searching consumers w/ advertisers
Are mobile payments a two-sided market? correct answers YES: Apple Pay/ Android Pay - more
people use a payment platform the more attractive platform will be to business
What is important w/ a two sided network? correct answers BALANCE - Growth for both sides
needs to be balanced. if one market side grows too fast the other side becomes a major bottleneck
and this decreases the satisfaction of both user types
Network markets: correct answers Experience early, fierce competition - caused by positive-
feedback loop inherent in network effects
What is a monopoly? correct answers Market where there are many buys but only one dominant
seller
What is a oligopoly? correct answers a market dominated by a small number of powerful sellers
What is technical leapfrogging? correct answers Competing by offering a superior generation of
technology, can be really tough
What are strategies for competing in markets w/ network effects? correct answers 1. Move early
2. Subsidize product adoption
3. Leverage viral promotion
4. Expand by redefining the market
5. Alliances & partnerships
6. Seed the market
7. Encourage development of complementary goods
8. Maintain backward compatibility
9. Rivals: Maintain compatibility w/ larger networks
10. Incumbents: close off rival access and constantly innovate
11. Large Established firms: Make pre announcements
What does it mean to move early? correct answers Being first allows your firm to start the
network effects snowball rolling in your direction
The value of a product or service ______ as it's number of users expands. correct answers
INCREASES - More users = MORE VALUE
Presence of ______ effects influences the choice of one product or service over another correct
answers NETWORK
Why is network effect important? correct answers The more customers you have the more
attractive the marketplace is for the providers and vice versa.
What is network effect? correct answers -When a person buys a good or service, (s)he becomes
part of a network
-The network increases in size
-utility that people derive depends on size of network
-By joining I make everyone else in the network better off
What is staying power? correct answers The long-term viability of a product or service.
What is switching costs? correct answers Incurred when moving from one product to another
*directly related to staying power
*strengthens the value of network effects a strategic asses
Total cost of ownership (TCO) correct answers An economic measure of the full cost of owning
a product (typically computing hardware and/or software). TCO includes direct costs such as
purchase price, plus indirect costs such as training, support, and maintenance.
What is the third part to sources of network effect? correct answers Complementary benefits:
Products or services that add additional value to the primary product or services that makes up a
network.
What are platforms? correct answers Allow for development and integration of software products
and other complementary goods.
What are some key takeaways from Chapt 9? correct answers Products and services subject to
network effects get their value from 1) Exchange, 2) perceived staying power 3) complementary
products and services
What is a one-sided market? correct answers Market that derives most of it's value from a
SINGLE CLASS of users
What are same-side exchange benefits of a one-sided market? correct answers Benefits derived
by interaction among members of a single class of participants
What is a two-sided market? correct answers Network markets comprised of TWO distinct
categories of participant. BOTH need to deliver value for the network to function
, What is a cross-side exchange benefit of a two-sided market? correct answers When the strength
of one side has an impact on the growth of the other
What is an example of a one sided market? correct answers WhatsApp - has the same properties
everyone else has and provides value the same way everyone else does
What is an example of a two sided market? correct answers Uber: Needs drivers & riders
*More examples:
eBay: connects buyers & sellers
Google: Connects searching consumers w/ advertisers
Are mobile payments a two-sided market? correct answers YES: Apple Pay/ Android Pay - more
people use a payment platform the more attractive platform will be to business
What is important w/ a two sided network? correct answers BALANCE - Growth for both sides
needs to be balanced. if one market side grows too fast the other side becomes a major bottleneck
and this decreases the satisfaction of both user types
Network markets: correct answers Experience early, fierce competition - caused by positive-
feedback loop inherent in network effects
What is a monopoly? correct answers Market where there are many buys but only one dominant
seller
What is a oligopoly? correct answers a market dominated by a small number of powerful sellers
What is technical leapfrogging? correct answers Competing by offering a superior generation of
technology, can be really tough
What are strategies for competing in markets w/ network effects? correct answers 1. Move early
2. Subsidize product adoption
3. Leverage viral promotion
4. Expand by redefining the market
5. Alliances & partnerships
6. Seed the market
7. Encourage development of complementary goods
8. Maintain backward compatibility
9. Rivals: Maintain compatibility w/ larger networks
10. Incumbents: close off rival access and constantly innovate
11. Large Established firms: Make pre announcements
What does it mean to move early? correct answers Being first allows your firm to start the
network effects snowball rolling in your direction
