OIM 210 EXAM 2 QUESTIONS & ANSWERS
How did Netflix create strategic competitive advantages? - Answer --Brand (awareness
vs. Customer experience)
-Scale (more selection-long tail 4k vs. 125k)
-Data (collaborative filtering)
Churn Rate - Answer -Rate as which customers leave a product or service.
A low rate is usually key to a firm's profitability bc acquiring a customer is more
expensive than keeping one
Collaborative Filtering - Answer -Technology that monitors trends among customers
and uses this to personalize a given customer's experience
Long Tail - Answer -Build a business that can profitably offer a great volume of less
popular products
Offering a near-limitless selection of products or services
Marginal Costs vs. Fixed Costs - Answer -Marginal Costs: Costs associated with each
individual product produced
Fixed Costs: Costs that do not vary according to production volume are called
First Sale Doctrine - Answer -Firms can distribute (sale, rent, lend) legally acquired
physical products of trademarked or copyright goods- does not apply to streaming
Scale Advantages - Answer -Advantages related to size
Economies of Scale - Answer -When a firm can spread costs across increasing units of
production
Netflix Marginal Costs - Answer -0 for content owners
But costs with licensing fees, streaming costs, and telecommunication costs
Windowing - Answer -Content is available to a given distribution channel for a specified
period of time
DVD Content Acquisition - Answer -If you purchase a DVD, you can rent it forever
Content is usually available from multiple sources
, Streaming Content Acquisition - Answer -Content only available from studios or
designated distributors
Owners have little competition
Licenses are for a limited period
Many buyers with deep pockets
What Netflix did to combat streaming costs - Answer -Offered Exclusives/originals
"long tail" to "long enough tail"
Scale= more customers and more content
Net Neutrality - Answer -The principal that all internet traffic should be treated equally
and that ISP's should not discriminate, slow down access, or charge differently by user,
content, site, application, type of attached equipment or modes of communication
Bandwidth Caps - Answer -Cable companies threaten to crackdown on users -fees for
faster/direct connection
-public cloud infrastructure
Netflix Global Expansion - Answer -Scale is bigger than anyone, no warehouses,
licenses and legal issues are challenging in other countries
Qwikster Debacle - Answer -Netflix split plan into two firms with different websites,
billing items, databases, and management teams
Stock value plummeted and image was destroyed after twitter handle was taken
Crowdsourcing - Answer -Outsourcing a tast to a large, undefined population in the
form of an open call
Moore's Law - Answer -Chip performance per dollar doubles every 18 months
Moore's Law means that next generation chips should be twice as fast in about eighteen
months, but cost the same as today's models (or from another perspective, in about a
year and a half, chips that are same speed as today's models should be available for
half the price).
Semiconductors - Answer -In a business context refers to 'computer chips' (e.g. the
semiconductor industry is the chip business). Could be talking about microprocessors or
storage chips
Microprocessor - Answer -the calculating brain of a computer. Intel dominates the
market in PCs, ARM (licensed) dominates smart phones
How did Netflix create strategic competitive advantages? - Answer --Brand (awareness
vs. Customer experience)
-Scale (more selection-long tail 4k vs. 125k)
-Data (collaborative filtering)
Churn Rate - Answer -Rate as which customers leave a product or service.
A low rate is usually key to a firm's profitability bc acquiring a customer is more
expensive than keeping one
Collaborative Filtering - Answer -Technology that monitors trends among customers
and uses this to personalize a given customer's experience
Long Tail - Answer -Build a business that can profitably offer a great volume of less
popular products
Offering a near-limitless selection of products or services
Marginal Costs vs. Fixed Costs - Answer -Marginal Costs: Costs associated with each
individual product produced
Fixed Costs: Costs that do not vary according to production volume are called
First Sale Doctrine - Answer -Firms can distribute (sale, rent, lend) legally acquired
physical products of trademarked or copyright goods- does not apply to streaming
Scale Advantages - Answer -Advantages related to size
Economies of Scale - Answer -When a firm can spread costs across increasing units of
production
Netflix Marginal Costs - Answer -0 for content owners
But costs with licensing fees, streaming costs, and telecommunication costs
Windowing - Answer -Content is available to a given distribution channel for a specified
period of time
DVD Content Acquisition - Answer -If you purchase a DVD, you can rent it forever
Content is usually available from multiple sources
, Streaming Content Acquisition - Answer -Content only available from studios or
designated distributors
Owners have little competition
Licenses are for a limited period
Many buyers with deep pockets
What Netflix did to combat streaming costs - Answer -Offered Exclusives/originals
"long tail" to "long enough tail"
Scale= more customers and more content
Net Neutrality - Answer -The principal that all internet traffic should be treated equally
and that ISP's should not discriminate, slow down access, or charge differently by user,
content, site, application, type of attached equipment or modes of communication
Bandwidth Caps - Answer -Cable companies threaten to crackdown on users -fees for
faster/direct connection
-public cloud infrastructure
Netflix Global Expansion - Answer -Scale is bigger than anyone, no warehouses,
licenses and legal issues are challenging in other countries
Qwikster Debacle - Answer -Netflix split plan into two firms with different websites,
billing items, databases, and management teams
Stock value plummeted and image was destroyed after twitter handle was taken
Crowdsourcing - Answer -Outsourcing a tast to a large, undefined population in the
form of an open call
Moore's Law - Answer -Chip performance per dollar doubles every 18 months
Moore's Law means that next generation chips should be twice as fast in about eighteen
months, but cost the same as today's models (or from another perspective, in about a
year and a half, chips that are same speed as today's models should be available for
half the price).
Semiconductors - Answer -In a business context refers to 'computer chips' (e.g. the
semiconductor industry is the chip business). Could be talking about microprocessors or
storage chips
Microprocessor - Answer -the calculating brain of a computer. Intel dominates the
market in PCs, ARM (licensed) dominates smart phones
