BADM 350 1ST EditionExam # 1 Study Guide Lectures: 1 - 13Lecture 3 (September 9)Understanding Moore’s Law and the IT Value ParadoxMoore’s Law- computing power has been doubling roughly every 18-24 months while the price for performance has become more favorable for consumers- If products are radically improving in a short period of time, then these products rapidly falli n value; it is deadly to overproduce and have excess inventory sitting in a warehouse too long- The cheapness of technology has allowed some poorer areas of the world to have access to technology- Moore’s law can’t last forever because chip pathways can’t be shorter than a single molecule and the physicalIT Value Paradox- a discussion started on the question of if productivity increased with the amount of IT used- It is difficult to measure the value of IT investments- Time lags are important to consider- Management practices- Decentralized organizations performed much better than those with centralized organizations because it allows for flexibility- Many companies don’t use ROI evaluation on IT projects or evaluate projects after implementation- Overall idea: IT spending does pay off and managers should be concerned about how they should maximize their return on investment- Aligning IT investments with business strategy is critical to success- IT is most effective when implemented in conjunction with complementary practices like total quality management and process redesignLecture 4 (September 8) Internet of things, and how much IT is enough?Internet of Things- low cost sensors, computing, and communication put embedded technology in everyday objects so that these products can communicate with each other- Used for data collection, analysis, and collective actionWhen aligned with business strategies and managed well, IT is beneficialProcess standardization and deployment, assurance of compliance, optimization, automation, monitoring, analysis, control reporting are all extremely difficult or impossible to attain without ITTechnology initiatives should begin from within based on business needComputerization should be standardized and targeted“IT is a critical component of thoughtful management- but is not a substitute for it”Lecture 5 (September 10)IT doesn’t matterOverarching themes: We need to spend less on ITContext: This article was written after the .com bust in the 1990’s. All of the statistics are from 2002.We need IT, but since now every company has it, it doesn’t give an advantage to companies anymore. It just brings companies on a level playing field.Follow others, don’t lead. Once the technology has been invented, figure out how to make the technology betterProprietary technologies- can be owned, actually or effectively, by a single company. Ex. Patents,rights to material- They can be the foundations of long term strategic advantages, enabling companies to reap higher profits.Infrastructural technologies- offer far more value when shared than when in isolation. - Ex. Rail roads, telegraph lines, power generators- it is far more valuable when shared than when in isolationOperational risks include technical glitches, obsolescence, service outages, unreliable vendors orpartners, security breaches, even terrorism. They can paralyze production, destroy reputations, and usually, cost companies huge amounts of money.Data storage has become more than half of many companies IT expenses.Lecture 6 (September 15)Sustainable competitive advantage- financial performance that consistently outperforms industry averagesResource –based view of competitive advantage- firms must control exploitable resources- Must be 1. Valuable 2. Rare 3. Imperfectly Imitable 4. Non-substitutable- Does not say which of the four are most important, up for discussionNetwork effects/ Metcalfe’s Law- when a product or service becomes more valuable as more people use it- In cases where network effects are strong or a seller’s goods are highly differentiated, the Internet can strengthen supplier bargaining power- Ex. The customer base of an antique dealer used to be limited by how many likely purchasers lived within driving distance of a store. Now with eBay, the dealer can take a rare good to a global audience and have a much larger customer base bid up the price. - Value from three sources: exchange, staying power, and complimentary benefitsPorter’s five forces- The five forces this framework considers are (1) the intensity of rivalry among existing competitors, (2) the threat of new entrants, (3) the threat of substitute goods or services, (4) the bargaining power of buyers, and (5) the bargaining power of suppliersEconomies of scale- When the cost of an investment can be spread across increasing units of production to serve a growing customer baseSwitching costs - when consumers incur an expense to move from one product or service to anotherLecture 7 (September 17)Long Tail- large selection of products/content beneficial for internet retailersCollaborative Filtering- classification of software that monitors trends among customers and uses this data to personalize customer experienceComplementary benefits- products or services that add to the value of the network- iTunes store to the iPod One-sided market- a market that derives most of its value from a single class of users- Instant messaging usersTwo sided market- markets comprised of two distinct categories of participants, both of which are needed to deliver value for the network to workBrokerage Model- bring buyers and sellers together to facilitate transactions (B2B or C2C)Advertising Model- A website provides content and services mixed with advertising messages Infomediary Model- a company has data about consumers that can be sold to other companies in order for them to understand a given marketMerchant Model- Wholesalers and retailersManufacturer/ Direct Model- using the internet to allow a manufacturer to reach buyers directlywhich compresses the distribution channelAffiliate Model- offering financial incentives to advertise on partner websites- There is no cost if the affiliate does not generate sales- Banner exchange, pay per click, revenue sharing programsCommunity Model- based on user loyalty and contextual advertising/ subscriptions for premiumservicesSubscription Model- Users are charged a periodic feeUtility Model- Based on pay as you go usageInnovative Dilemma: Do you make bigger, better