Info systems Midterm Study Guide Information Goods An information good is a collection of symbols value from information Utility depends on arrangement of symbols not on material form they take easily digitized Ex Books movies music financial reports Key characteristics Experience goods have to experience it to know how good it is Unique valuations vary aspects of monopoly Variable valuations differences in value Key characteristics from digitization Infinitely replicable Easy to distribute ex e mail Easy to store ex flash drives High fixed costs sunk costs and virtually zero marginal costs Intellectual Property Protection Property rights rights of possession rights of transfer Lead to incentives to work and invest best effort improve things transfer things Intellectual Property creations of the mind inventions names images literacy works Characteristics of IP Info Goods make them similar to public goods Nonrival one person s consumption doesn t diminish amount available to another Nonexcludable Costly to exclude people who do not pay from consuming the good Degree of publicness depends on properties of technology and legal institution High Fixed costs Low variable costs Incentive Problem leads to need for special treatment different from physical property rights protection Need to protect in order to create incentives to maximize social surplus from IP Creators of IP get sufficient value from creation Facilitate future creation of IP Right balance b t creation and distribution Copyright Automatic doesn t require formal filing Grants rights for lifetime 70 years author 95 years company Need authorization to reproduce transcribe imitate distribute or perform Fair Use Under 1st amendment use of copyrighted material is permitted w e the author s consent under some circumstances ex image search Guidelines purpose and character of work nature of work amount used effect value of work Unique to IP and not physical goods b c simultaneous use is feasible Patent must be approved Right to exclude all others from making selling or using invention for up to 20 years Most comprehensive of all IP protection Requires that invention be new useful non obvious Time limited because new innovations builds on old Need to balance protection with access hard b c info is so easily accessible on Internet Alternatives to relying on IP regulation Technical Solutions DRM Digital Rights Management Allows users to replicate something a certain number of times or prevents them Public financing of research Subsidize creation of IP military projects design of new rockets aircrafts etc Alternative Business Models Make 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 sell upgrades 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 key resources for competitive adv Intellectual property data brand scale imitation resistant Value Chain Organization Network Effects Distribution Channels Alliances Generic Strategies Cost Leadership for cost conscious consumers Horizontal Differentiation differentiation based on taste ex different types of ice cream Vertical Differentiation one is better than the other Value Chain Primary Activities Inbound logistics receiving and warehousing of raw materials their distribution to manufacturing as they are required Operations process of transforming inputs into finished products and services Outbound logistics warehousing and distribution of finished goods Marketing Sales identification of customer needs generation of sales Service support of customers after the products services are sold to them Support Activities Infrastructure organizational structure control systems company culture etc HR Management employee recruiting hiring training development and compensation Technology development technologies to support value creating activities Procurement purchasing inputs such as materials supplies and equipment Margin is profit each part adds value and contributes to margin Virtual Value Chain Original VC model treats information as a supporting element but it can be a source of value itself Ex Fed Ex Amazon Role of IT in value chain Gathering Organizing Selecting Synthesizing Distributing information Creates Value Increased visibility ability to see physical operations more effectively through information Ex Managers can visualize entire chain from raw materials to ads Mirroring capability virtual activities are substituted for physical ones and parallel value chain in the virtual space evolves Ex online class New customer relationships value is provided to customers in different ways Ex info blogs Fed ex package tracking Porter s 5 Forces Model determines relative attractiveness of an industry 1 Supplier Power bargaining power of suppliers 2 Threat of substitute products or services 3 Buyer Power bargaining power of channels and end users 4 Threat of new entrants 5 Rivalry among existing competitors Supplier Power high when company has few choices and low when choices are many Determined by industry concentration switching costs ability to integrate forward Powerful supplier ex Airline industry suppliers Threat of substitutes depends on alternatives Ex express mail vs e mail Determined by relative price performance switching costs buyer propensity to substitute Buyer Power high when buyers have many choices and low when choices are few Determined by purchase volume standardized product buyer can integrate backwards make product themselves switching costs time effort money Involved in changing from one product or service to another Threat of New Entrants Depends on how easy difficult it is for a new company to enter the industry Determined by economies of scale patent protection access to distribution regulation policy expected retaliation Rivalry depends on current competitions Types of rivalry price discounting new product innovation marketing campaigns service provision Rivalry is intense when many competitors slow industry growth high exit barriers Netflix Case Sources of advantage No late fees on own time delivered to door cinematch filtering system distribution network Brand fast reliable service distribution network wide selection good recommendations list set up so customers can get what
View Full Document
Unlocking...