mis 301 midterm 1 - joglekar
Network Effects/Metcalfe's Law/Network Externalities - correct answer
✔When the value of a product or service increases as its number of users
expands
platforms - correct answer ✔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
examples of platforms - correct answer ✔Windows, iOS, Kindle
value derived from network effects comes from - correct answer ✔three
sources: exchange, staying power, and complementary benefits
exchange - correct answer ✔creates value in network effects
staying power - correct answer ✔the long-term viability of a product or
service; networks with greater numbers of users are stronger
switching costs - correct answer ✔relates to staying power; the cost a
consumer incurs when moving from one product to another. aka sticky,
creating friction, lock-in
total cost of ownership (tco) - correct answer ✔an economic measure of the
full cost of owning a product (typically computing hardware and/or software).
includes direct costs such as purchase price, plus indirect costs such as
training, support, and maintenance
,complementary benefits - correct answer ✔products or services that add
additional value to the primary product or service that makes up a network
application programming interfaces (APIs) - correct answer ✔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
daily active users (dau) - correct answer ✔refers to the number of unique
visitors, on average, who use a product or service
customer acquisition costs (cac) - correct answer ✔the amount of money a
firm spends to convince a customer to buy (or in the case of free products, try
or use) a product or service
one-sided market - correct answer ✔a market that derives most of its value
from a single class of users (e.g. instant messaging)
same-side exchange benefits - correct answer ✔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)
two-sided market - correct answer ✔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)
cross-side exchange benefit - correct answer ✔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)
, network markets experience what type of competition? - correct answer
✔early, fierce competition; the positive feedback loop inherent in network
effects causes this. firms are aggressive in early stages because once a
leader becomes clear, bandwagons form, and new adopters overwhelmingly
favor the leader product over rivals
monopolistic tendencies - correct answer ✔network markets are often
winner-take-all or winner-take-most, where one firm dominates all rivals
monopoly - correct answer ✔a market were there are many buyers but only
one dominant seller
natural state of markets where strong network effects are present - correct
answer ✔for there to be one major player; best product doesn't always win.
firms with a commanding network effects advantage enjoy substantial
bargaining power over partners
oligopoly - correct answer ✔a market dominated by a small number of
powerful sellers
technological leapfrogging - correct answer ✔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; often is not successful
network effects ____ rivals and _____ innovation - correct answer ✔limit;
encourage
strategies for competing in markets with network effects - correct answer ✔-
move early (amazon vs microsoft in cloud computing)
- subsidize product adoption (paypal, zoom)
Network Effects/Metcalfe's Law/Network Externalities - correct answer
✔When the value of a product or service increases as its number of users
expands
platforms - correct answer ✔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
examples of platforms - correct answer ✔Windows, iOS, Kindle
value derived from network effects comes from - correct answer ✔three
sources: exchange, staying power, and complementary benefits
exchange - correct answer ✔creates value in network effects
staying power - correct answer ✔the long-term viability of a product or
service; networks with greater numbers of users are stronger
switching costs - correct answer ✔relates to staying power; the cost a
consumer incurs when moving from one product to another. aka sticky,
creating friction, lock-in
total cost of ownership (tco) - correct answer ✔an economic measure of the
full cost of owning a product (typically computing hardware and/or software).
includes direct costs such as purchase price, plus indirect costs such as
training, support, and maintenance
,complementary benefits - correct answer ✔products or services that add
additional value to the primary product or service that makes up a network
application programming interfaces (APIs) - correct answer ✔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
daily active users (dau) - correct answer ✔refers to the number of unique
visitors, on average, who use a product or service
customer acquisition costs (cac) - correct answer ✔the amount of money a
firm spends to convince a customer to buy (or in the case of free products, try
or use) a product or service
one-sided market - correct answer ✔a market that derives most of its value
from a single class of users (e.g. instant messaging)
same-side exchange benefits - correct answer ✔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)
two-sided market - correct answer ✔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)
cross-side exchange benefit - correct answer ✔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)
, network markets experience what type of competition? - correct answer
✔early, fierce competition; the positive feedback loop inherent in network
effects causes this. firms are aggressive in early stages because once a
leader becomes clear, bandwagons form, and new adopters overwhelmingly
favor the leader product over rivals
monopolistic tendencies - correct answer ✔network markets are often
winner-take-all or winner-take-most, where one firm dominates all rivals
monopoly - correct answer ✔a market were there are many buyers but only
one dominant seller
natural state of markets where strong network effects are present - correct
answer ✔for there to be one major player; best product doesn't always win.
firms with a commanding network effects advantage enjoy substantial
bargaining power over partners
oligopoly - correct answer ✔a market dominated by a small number of
powerful sellers
technological leapfrogging - correct answer ✔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; often is not successful
network effects ____ rivals and _____ innovation - correct answer ✔limit;
encourage
strategies for competing in markets with network effects - correct answer ✔-
move early (amazon vs microsoft in cloud computing)
- subsidize product adoption (paypal, zoom)
