Mba 703 Spring 24 Ap1 Darban Exam Questions Answered Correctly Latest Update 2026

MBA 703 SPRING 24 AP1 DARBAN EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026 The value of a product or service ______ as it's number of users expands. - Answers INCREASES - More users = MORE VALUE Presence of ______ effects influences the choice of one product or service over another - Answers NETWORK Why is network effect important? - Answers The more customers you have the more attractive the marketplace is for the providers and vice versa. What is network effect? - 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? - Answers The long-term viability of a product or service. What is switching costs? - 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) - 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? - Answers Complementary benefits: Products or services that add additional value to the primary product or services that makes up a network. What are platforms? - Answers Allow for development and integration of software products and other complementary goods. What are some key takeaways from Chapt 9? - 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? - 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? - Answers Benefits derived by interaction among members of a single class of participants What is a two-sided market? - 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? - 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? - Answers - 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? - Answers Uber: Needs drivers & riders *More examples: eBay: connects buyers & sellers Google: Connects searching consumers w/ advertisers Are mobile payments a two-sided market? - 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? - 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: - Answers Experience early, fierce competition - caused by positive-feedback loop inherent in network effects What is a monopoly? - Answers Market where there are many buys but only one dominant seller What is a oligopoly? - Answers a market dominated by a small number of powerful sellers What is technical leapfrogging? - Answers Competing by offering a superior generation of technology, can be really tough What are strategies for competing in markets w/ network effects? - 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? - Answers Being first allows your firm to start the network effects snowball rolling in your direction What does it mean to subsidize production adoption? - Answers Starting a network effect can be tough- there is little incentive to join a network if there is no one in the system to communicate w/. What does it mean to leverage viral promotion? - Answers Since all products & services foster some sort of exchange, it's often possible to leverage a firm's customers to promote service or product. What does it mean to expand by redefining the market? - Answers If a big market attracts more users, why not redefine the space to bring in more users. What is convergence? - Answers when two or more markets, once considered distinctly separate, begin to offer similar features and capabilities What is envelopment? - Answers When one market attempts to conquer a new market by making it a subset, component, or feature of its primary offering. *Apply Morphed the iPod into the iPhone What does alliances and partnerships do? - Answers Brings rivals together to take out a leader What does it mean to seed the market? - Answers Giving away products for half of a two-sided market *Sony launching PS3 and selling a price estimated at 300$ below unit cost Whaat does encourage development of complementary goods look like? - Answers Efforts involve some form of developer subsidy or other free or discounted service What does maintain backwards compatibility look like? - Answers Firms need to ensure that new products have backward compatibility w/ earlier offers. If not they renter the market at installed-base zero giving up a major source of advantage- switching costs built up by prior customers Rivals maintain compatibility with larger networks - Answers Companies will want to consider making new products compatible w/ leading standard Incumbents: Close Off Rival Access and Constantly Innovate - Answers firms that control dominant networks will make compatibility difficult for rivals who try to connect with their systems Large, established firms: make pre announcements - Answers Large firms that find new markets attractive but don't yet have products ready for delivery might preannounce efforts to cause potential adaptors to sit on the fence, delaying a purchasing decision until the new effect rolls out What is freemium? - Answers Product w/ free version - sometimes w/ limited features or that stops working after a period of time. Allow customers to try product and hopefully entice them into making a product purchase or subscription decision