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UMass Amherst OIM 210 - Exam 1 Study Guide

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OIM 210 1nd Edition Study Guide 1Ch. 1 Setting the Stage- Know the founders of these companieso Zappos= Tony Hsieh and Nick Swinmurno Youtube= Steve Chen and Chad Hurleyo Amazon= Jeff Bezoso Microsoft= Bill Gates and Paul Alleno Google= Sergey Brin and Larry Pageo Yahoo!= Jerry Yang and David FiloDesign Thinking in Business1. What is Design Thinking / Brando Design Thinking is the essential ability to combine empathy, creativity and rationality to meet user needs and drive business success.o Your brand is how customers feel about you.2. What is User Experienceo How your product works in the real world or how a person feels about using your product. 3. What is design?o Design can change businesso Design is more than pretty pictureso Talks benefits not featureso Doesn’t make users thinko Design is more important than technology in most consumer applications4. What makes great design?o A great design will be simple and easy for the user to understand. 5. Elements of User Experience (From surface to strategy)o Surface: Brings everything together visually: What will the finished product look like?These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.o Skeleton: Makes structure concrete: What components will enable people to use the site?o Structure: Gives shape to scope: How will the pieces of the site fit together and behave?o Scope: Transforms strategy into requirements: What features will the site need to include?o Strategy: Is where it all begins: What do we want to get out of the site? What do our users want?6. What is brand?o Your brand is how customers feel about you.7. Customer empathy mapo What does she see? Environment, friends, what the market offerso What does she think and feel? What really counts major preoccupations worries and aspirationso What does she hear? What friends, boss, other influencers sayo What does she say and do? Attitude in public, appearance, behavior toward otherso Pain- Fears, frustrations, obstacleso Gain- Wants/needs, measures of success, obstaclesCh.2 Strategy and Technology1. IS Strategy Triangleo The IS Strategy Triangle is comprised of three points: Business Strategy, Organizational Strategy, Information Strategyo Business strategy drives all other strategieso Organizational and information strategy are then dependent upon the business strategyo IS Strategy is affected by the other strategies a firm useso IS Strategy always has consequences2. Organizational Strategy Typeso Organizational strategies define the way in which a company plans to gain/sustaincompetitive advantageo There are 5 types of Organizational Strategies Overall Low Cost Leadership Strategy. Offer best prices in the industry or product/service category. Ex. Walmart Focused Low Cost Strategy. Offer best prices in the industry or product/service category. Ex. Southwest Airlines Broad Differentiation Strategy. Offer better products/services than competitors Focused Differentiation Strategy. Offer better products/services than competitors. Ex. Apple Best Cost Provider Strategy. Provide products of reasonably good quality at competitive prices. Ex. Target3. Competitive Advantage- Competitive Advantage Occurs when a firm controls a set of exploitable resources that are valuable, rare, imperfectly imitable (tough to imitate) and nonsubstitutable.- Five Forceso Porter’s Five Forces Model is a framework used to analyze competition within an industryo The 5 forces are:  Rivalry among existing firms Threat of new entrants Bargaining power of buyers Threat of substitute products or services Bargaining power of suppliers- Value Chaino Tool used by managers to identify opportunities for gaining competitive advantageo Essential that a corporation protects it’s Value Chain and prevents competitors from taking it. Rules of Innovation1. Disruptive innovation:- Brings a different value proposition to the market. Initially under performs established mainstream markets2. Sustaining Innovation:- Improves the performance of established products for mainstream customers in major markets - Sustaining innovation improves product past what people need. Disruptive innovations often win by being inferior but closer to customer needs3. Precursors to Innovation- A core business that is in control- A game plan…targeted innovation portfolio- Resource allocation- Disrupt competitors, not customer4. Test for Disruptive Ideas- Test 1: New Market disruption. Is there a large enough population? - Test 2: Low end disruption. Good enough performance?- Test 3: Sustaining innovation? Disruptive to all the incumbents.5. Other notes- Low cost strategy only works when you are fighting against a high cost competitor. Prices fall if only low cost competitors exist- Good companies survive by setting up separate businesses with an unfettered charter to kill the mother companyCh.3 Netflix1. Know about the company- Founder is Reed Hastings- Netflix exploded because of its use of a Long tail business model2. What they do- Netflix operates via a DVD subscription and video-streaming model. These started as a single subscription, but are now viewed as two separate services. Although sometimes referred to as “rental,” the model is really a substitute good for conventional use-based media rental.3. Long Tail- The Long Tail is a term used to describe a business model that covers all parts of the market. Not just centralized in one market. This technique was effectively utilized by Netflix4. Business Model- Netflix has a constantly evolving business model due to the constantly changing environment of its industry, but it began as a business which would send DVDs toconsumers for a flat subscription fee. As technology evolved, Netflix transitioned to the streaming of movies and TV business. Netflix is now even producing its own series such as Arrested Development (legendary show) to attract and retain more customers. 5. Churn Rate- Churn Rate is the rate at which customers leave a product or service- Netflix had a very good churn rate until its decision to divide the company which was a huge mistake. However, since then Netflix has regained its exceptional churn rate6. Marginal Cost / Fixed Costs- It’s often argued that the marginal cost of digital goods is effectively zero due to the ability to easily duplicate a digital product online.


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