MIDTERM STUDY GUIDE Information Goods What is an information good An information good is a collection of symbols Provide examples Examples of information goods are books movies music and financial reports What are the key characteristics of Information Goods Experience goods Unique Variable valuations With digitization Information Goods take on new characteristics Infinitely replicable Easy to distribute High fixed costs low marginal costs Intellectual Property Protection Creations of the mind inventions literary and artistic works and symbols names images and designs used in commerce Examples scientific discoveries engineering ideas formulas slogans etc The characteristics of IP Info Goods make them similar to public goods Nonrival one person s consumption doesn t diminish the amount Nonexcludable it is costly to exclude people who do not pay from available to another consuming the good This leads to need for special treatment different from physical property rights protection Copyright 75 95 years Automatic does not require formal filing Fair use copyrighted material is permitted without the author s consent SOMETIMES Guidelines for Fair Use Purpose of use Nature of the work Amount Effect Patent 20 years Must be approved Exclusive rights 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 Digital Rights Management Subsidize creation of IP military projects design of new rockets aircrafts 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 Goal Create sustainable competitive advantage by doing things in a unique way Strategy in the industry Resource based view of competitive advantage IP Data Brand Scale Network Effects etc Generic Strategies Cost Leader reducing costs Differentiation different and more attractive Horizontal can not be easily evaluated in terms of quality Vertical measurable Value Chain know each component of the value chain Gathering Information Organizing Information Selecting Information Synthesizing Information Distributing Information How IT adds value The Virtual Value Chain Visibility the ability to see physical operations more effectively through information Mirroring virtual activities are substituted for physical ones and parallel value chain in the virtual space evolves New Customer Relationships value is provided to customers in different ways that were not possible without the integration of IT 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 of IT Buyer power high when buyers have many choices of whom to buy from and low when their choices are few Threat of New Entrants depends on how easy difficult it is for a new company to enter the industry Supplier Power high when a company has few choices of whom to buy from and low when the choices are many Threat of Substitute Products or Services depends on alternatives Rivalry among Existing Competitors depends on current competitors Types of rivalry price discounting new product innovation marketing campaigns service provision What were the sources of advantage for Netflix Competitive advantage doing things differently For Netflix Brand Cinematch Scale Built the Brand from good customer experience wide selection and good recommendations NETFLIX HAD MORE SUBSCRIBERS What is Collaborative Filtering and how does it work Customer returns are scanned and an email is generated asking the customer to rate it Compare to other ratings Recommend based on inventory What is meant by the Long Tail and how does the Internet influence companies in Long Tail industries Long Tail phenomenon whereby firms can make money be selling a near limitless selection of less popular products Can make money The internet overcomes these problems of limited shelf space and enables easy searching for that information Netflix Case Hardware Basic computer components Input storage processing output what are examples of each What is binary Why is it important How is data stored Bits bytes types of storage primary secondary Moore s law and implications and challenges Moore s Law chip performance per dollar doubles every 18 months Challenges include Multi Core Massively parallel computing and Grid computing Networking and Internet Database fundamentals What does a client do What does a server do Client desktop runs interface operating system may run certain programs store some data individual resource Server powerful central stores many application programs stores data files manages shared resources runs complex programs connect to client via network shared resource How is data transmitted on the Internet What is TCP IP and why is it important TCP Transport Control Protocol insures that packets are received in the order they are sent and that lost packets are retransmitted IP Internet Protocol figures out how to get packets to their destination when receiving packets it figures out where they belong Packet switching vs circuit switching Packet switching breaks each message into small packets sends these packets one after the other using the lines and switches efficiently as needed Circuit switching dedicated path each packet may take a different path Why is information quality important What are the characteristics of high quality information What problems costs are associated with poor quality information Characteristics of high quality information accuracy completeness consistency uniqueness timeliness security Problems with poor quality information difficulty identifying valuable customers inability to identify selling opportunities marketing to nonexistent customers inability to build strong customer relationships difficulty tracking revenue due to inaccurate invoices Entities attributes instances of an entity Entity a person place or thing Ex customer order item distributor Attribute a category of data that describes an entity Ex first name last name phone number Instances of an entity Tables columns fields rows records Table collect of records rows instances of an entity Column Field an attribute of an entity Record a collection of fields containing
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