Advanced Platform Strategy Quiz

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Questions and Answers

What is the Chicken and the Egg problem in the context of platform development?

The issue of subsidizing and exclusivity in platform development.
The problem of getting a platform started when both sides depend on one another. (correct)
The challenge of balancing the costs of setup and termination in platform development.
The difficulty of choosing between low, medium, and high-cost options in platform development.

What are the solutions to the Chicken and the Egg problem?

Subsidizing, exclusivity, seeding, providing cheap/free tools, and offering standalone value to one side. (correct)
Developing complements, providing cheap/free tools, and offering standalone value to one side.
Balancing costs, maximizing network effects, and prioritizing growth.
Lowering switching costs, prioritizing growth/network effects, and providing cash bonuses.

What is the problem with solutions to the Chicken and the Egg problems?

Both subsidizing and exclusivity can be expensive. (correct)
The complexity of balancing costs and maximizing network effects.
The challenge of lowering switching costs and providing cash bonuses.
The issue of developing complements and providing cheap/free tools.

How should platforms price each side?

Platforms should profit from the side with the more inelastic demand or higher WTP that adds least value (or diminishes value) for others. (A) Signup and view all the answers

What did Uber do differently compared to Sidecar?

Lowered switching costs and prioritized growth/network effects. (D) Signup and view all the answers

When starting a platform, firms should always begin with as many sides as possible to maximize the network effects. Is this statement true or false?

False (C) Signup and view all the answers

What are the pros of having more sides in a platform?

Potentially stronger network effects and access to more sources of creativity, value, and revenue. (D) Signup and view all the answers

What are the cons of having more sides in a platform?

Conflicts of interest and less control & integration. (A) Signup and view all the answers

What costs matter the most in switching when considering platform development?

Setup and termination costs (B) Signup and view all the answers

How many sides should firms bring on board when starting a platform to maximize network effects?

The optimal number of sides varies and may not always be the maximum. (B) Signup and view all the answers

What is the primary factor that leads to a more concentrated platform industry?

High Minimum Efficient Scale relative to mature market size (B) Signup and view all the answers

What characterizes heterogeneous consumer preferences?

Consumers want different things (C) Signup and view all the answers

What are multi-homing costs?

Costs/investments incurred by user due to platform affiliation (D) Signup and view all the answers

What does mono-homing refer to?

The practice of only affiliating with a single platform at a time (C) Signup and view all the answers

What happens when multi-homing costs are high?

Users are more likely to mono-home (D) Signup and view all the answers

What are the components of Platform Affiliation?

Setup, Ongoing, and Termination (B) Signup and view all the answers

What costs matter the most in multi-homing?

Multi-homing costs (D) Signup and view all the answers

What characterizes the side of the market in terms of multi-homing?

Each “side” of the market may home differently (B) Signup and view all the answers

What is multi-homing?

The practice of simultaneously affiliating with multiple platforms (B) Signup and view all the answers

What are the four quadrants of customer preferences based on?

Open vs. Curated and Category Specific vs. Broad (A) Signup and view all the answers

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