BMGT 301 Final Exam Study Guide Spring 2012 Prof Stewart The exam may consist of multiple choice fill in the blank matching and short answer questions The majority of the test will be multiple choice The exam is closed book you should have nothing on the desk except for pencils pens and erasers You must submit your exam before leaving the room and you may not come back after you leave use the restroom BEFORE the exam The test is cumulative and covers everything in the readings lectures and labs It will not include questions on student presentations or posters Approximately 70 of the test will be on the new material since the midterm You should be familiar with the examples we have discussed in class e g FreshDirect Netflix Google and how the concepts listed below apply to those examples Some recommendations for studying 1 Review the text and lecture notes Make sure you know the key terminology highlighted in the text and lectures 2 Review the questions posted by other students on Blackboard If there is a sufficient volume of high quality questions up to 30 of the test may be taken from these questions Below is an outline to help guide your preparation Information Goods What is information good Provide examples Collection of symbols Utility depends on the arrangement of the symbols not on the material form that they take thus they are easily digitized Value is derived from information more than media physical form Technology is the digitization and proliferation of information goods Books Music Movies financial reports patent What are the key characteristics of Information Goods Experience goods movies books Unique Variable valuations With digitization Information Goods take on new characteristics Infinitely replicable Easy to distribute easy to store High fixed costs low marginal costs Intellectual Property Protection The characteristics of IP Info Goods make them similar to public goods scientific designs ideas logos Nonrival one person s consumption doesn t diminish the amount available to another Nonexcludable it is costly to exclude people who don t pay from consuming the good radio This leads to need for special treatment different from physical property rights protection Copyright 75 95 years Automatic Fair use image search on Google Guidelines Purpose and character of use Nature of copyrighted mark Amount and sustainability of the portion of work used Effect on value of work Reproduction transcribe imitate in fixed form Distribution of copies Public display Preparation of derivative works Works that can t be copyrighted Works not fixed on a sufficiently permanent medium Facts Works in the public domain copyright expired Works created by the U S government Ideas Patent 20 years Must be approved Exclusive rights right to exclude all others from making selling or using invention for up to 20 years Requires that invention must be new useful non obvious Time limited because new innovation builds on old Need to balance protection with access Alternatives to relying on IP regulation Technical solutions DRM Digital Rights Management Subsidize creation of IP Alternate Business Models Make the product cheaper and easier to buy Look for alternate revenue streams advertising Offer extreme customization Reconceptualize the basic product as a service Give away the product To define a good business model you need to understand your strategy Strategy Goal Create sustainable competitive advantage by doing things in a unique way in the industry Resource based view of competitive advantage valuable rare not substitutable Generic Strategies Cost Leader lowering cost of production Differentiation Horizontal personal preferences wider selection Vertical measurable by quality of products Value Chain know each component of the value chain Primary inbound operations outbound marketing and sales service Secondary firm infrastructure HR development technology research development procurement How IT adds value The Virtual Value Chain IT gathers information organizes information selects information synthesizes information distributes information Visibility ability to see physical operations more effectively through information Mirroring virtual activities are substituted for physical ones and parallel value chain in the virtual New Customer Relationships value is provided to customers in different ways Porter s Five Forces Model determines the relative attractiveness of an industry Know the 5 forces be able to apply them to an example and understand the potential impacts space of IT Threat of new entrants entry costs Bargaining power of suppliers high when choices are low economies of scale Bargaining power of buyers high when choices are high price transparency Threat of substitutes Rivalry among existing competitors price discounting Netflix Case What were the sources of advantage for Netflix The long tail effect Cinematch gives Netflix a very low churn rate thus reduces marketing costs because viral advertising takes place customers tell family and friends Build a good name through good customer experience and advanced technology Economies of scale allows them to lower prices spend more on consumer acquisition invest more on technology development advertise more What is Collaborative Filtering and how does it work Study of consumer patterns to make the product or service more individualized to the consumer Netflix uses program called Cinematch to give accurate recommendations to consumers What is meant by the Long Tail and how does the Internet influence companies in Long Tail industries Firms make more money by selling a near limitless selection of less popular items Internet allows infinite amount of inventory Cinematch customer returns are scanned and an email is generated asking the customer to rate it it compares customer ratings to others and Cinematch is linked to warehouses that only recommends movies in suppy Crowdsourcing contest to see who could raise accuracy of Cinematch by 10 What are challenges facing Netflix now Some firms steadfastly refuse to offer Netflix streaming rights But First Sale Doctrine applies to the physical disc not to streaming so Netflix can t offer Internet streaming without separate licenses for this content The other major problem lies in getting content to the place where most consumers want to watch it the living room TV DVD by mail will diminish Network effects What are network effects Sometimes referred to as Metcalfe s Law or network externalities when the
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