Lec 5 ISIT224
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Questions and Answers

What are the three characteristics of innovations that deliver longer lasting and sustainable competitive advantages?

Unique products or services based on customer data, heavy customer investment in terms of time/money, high switching costs.

What differentiates sustaining innovations from disruptive innovations?

  • Sustaining innovations create new markets.
  • Disruptive innovations reinforce established performance improvements.
  • Disruptive innovations often underperform in existing markets. (correct)
  • Sustaining innovations improve in incremental ways. (correct)
  • Blindly following customer feedback is always beneficial for managers.

    False

    What is freeconomics?

    <p>The leveraging of digital technologies to provide free goods and services to customers as a business strategy for gaining competitive advantage.</p> Signup and view all the answers

    Which of the following are examples of applying freeconomics for competitive advantage?

    <p>All of the above</p> Signup and view all the answers

    How does Google make money despite providing many free services?

    <p>Google earns revenue from advertisements when users click on sponsored links.</p> Signup and view all the answers

    In the context of freeconomics, a service's sale price is reduced to sell something else of value. This is called a ______.

    <p>cross subsidy</p> Signup and view all the answers

    What is one example of a labor exchange in freeconomics?

    <p>Yahoo! Answers or Answers.com.</p> Signup and view all the answers

    In disruptive innovation theory, what happens to low-end products as product capabilities improve?

    <p>They capture more of the mainstream marketplace.</p> Signup and view all the answers

    What is the role of resource-based view to achieve competitive advantage?

    <p>To identify and leverage internal resources that can provide a sustainable edge over competitors.</p> Signup and view all the answers

    What strategies do organizations typically adopt to counter competitive forces? (Select all that apply)

    <p>Cost leadership</p> Signup and view all the answers

    What is freeconomics?

    <p>A strategy using digital technologies to offer goods and services for free to gain a competitive advantage.</p> Signup and view all the answers

    What is the purpose of the Five Forces Model?

    <p>To analyze the competitive structure of an industry and determine its attractiveness.</p> Signup and view all the answers

    What are the sources of competitive advantage?

    <p>First-mover advantage, product quality, lower costs, superior customer service, and brand reputation.</p> Signup and view all the answers

    Resource heterogeneity means that resources differ from one company to another.

    <p>True</p> Signup and view all the answers

    Which of the following is an example of an intangible resource?

    <p>Brand reputation</p> Signup and view all the answers

    What is operational agility?

    <p>Ability to achieve speed, accuracy, and cost economy in exploiting innovation</p> Signup and view all the answers

    What is the dynamic capability perspective?

    <p>The ability to detect opportunities and threats and to revise existing capabilities.</p> Signup and view all the answers

    A successful case of IT-enabled business processes is _____.

    <p>Amazon</p> Signup and view all the answers

    What can hinder organizational agility?

    <p>Inflexible legacy IT systems and information overload.</p> Signup and view all the answers

    What are the two types of resources?

    <p>Tangible resources and intangible resources.</p> Signup and view all the answers

    Study Notes

    Announcements

    • Group project instructions accessible on Moodle; group formation deadline is 30/08/2024.
    • Mid-term quiz format: paper-based, supervised, includes 25 multiple choice questions, total duration of 50 minutes, closed book.
    • Quiz schedule: Wollongong on 29/08/2024 (11:40am - 12:30pm), Liverpool on 30/08/2024 (14:40pm - 15:30pm).

    Competitive Advantage

    • Competitive forces threaten profitability and growth; includes existing competitors, new entrants, substitutes, bargaining power.
    • Competitive advantage refers to anything that enhances a company's edge, leading to increased market share and customer attraction.
    • Competitive advantage sources: first-mover advantage, superior product quality, lower costs, enhanced customer value, strong brand reputation.

    Understanding Competitive Advantage

    • Essential for survival in the market; enables firms to outperform rivals.
    • Can arise from cost efficiency, product differentiation, or superior service delivery.
    • Companies must continually innovate to maintain competitive advantage.

    Resource-Based View (RBV)

    • Focuses on internal resources rather than external competitive forces to achieve competitive advantage.
    • RBV emphasizes VRIO attributes: Valuable, Rare, Inimitable, Organized resources are key for success.
    • Types of resources: Tangible (physical assets) and Intangible (brand reputation, intellectual property).

    Impacts of Information Systems on Competitive Forces

    • Information systems can help mitigate price competition, enhance service delivery, and manage supply chain efficiencies.
    • Improves customer relationship management (CRM), inventory control, and responsiveness to market shifts.

    The Five Forces Model

    • Illustrates the competitive environment; firms must find niche markets where competitive forces are weakest.
    • Highlights the importance of adaptability and dynamic capabilities in reacting to market changes.

    Dynamic Capabilities and Organizational Agility

    • Dynamic capabilities allow firms to innovate continuously, adjusting to market shifts, and maintaining competitiveness.
    • Organizational agility requires reconfiguration of capabilities to respond to rapid changes in the environment.

    Customer and Partnering Agility

    • Customer agility involves leveraging customer feedback for product development and innovation.
    • Partnering agility focuses on collaboration across various sectors to enhance knowledge and share resources.

    Challenges of Innovation

    • Innovation is fraught with difficulty; rapid technological changes can quickly render advantages obsolete.
    • Disruptive innovations can redefine markets; established firms often fail to respond effectively to these innovations.

    The Innovation Dilemma

    • Sustaining innovations build on existing market trajectories, while disruptive innovations redefine them.
    • Established firms that ignore disruptive innovations may lose market dominance due to their focus on existing customers.

    Conclusion on Competitive Strategy

    • Successful companies align technology with strategic business processes to meet competitive pressures.
    • Understanding both the Five Forces Model and Resource-Based View is vital for developing effective competitive strategies.### Freeconomics Overview
    • Freeconomics leverages digital technologies to offer free goods and services, aiming to create competitive advantages for businesses.
    • Industries utilizing digital technologies are moving towards lower costs, potentially achieving a price point of free for consumers.

    Financing Free Products

    • Free products do not imply a lack of cost; someone is funding them, often leading to significant profits for companies.
    • Example: Google generates revenue from advertisers whose links are clicked by users during searches.

    Value Proposition

    • The value proposition of a product encompasses more than just direct transactions between buyers and sellers.
    • Google's value proposition includes a diverse ecosystem engaging multiple participants beyond just those making payments.

    Strategies to Leverage Freeconomics

    • Advertising: Free services funded by third-party advertisements (e.g., Yahoo banner ads, Google pay-per-click).
    • Freemium Model: Basic services offered for free, with special features available for a fee (e.g., Flickr, Skype, Dropbox).
    • Cross Subsidies: Reduced prices on one item encourage sales of another (e.g., free DVR with subscriptions, complimentary movie tickets with purchases).
    • Zero Marginal Cost: Products delivered at essentially no cost, benefiting from economies of scale (e.g., iTunes for music, YouTube for video content).
    • Labor Exchange: Customer use of services generates value for the company (e.g., Yahoo! Answers).
    • Gift Economy: Platforms encourage collaboration and contribution without direct payment (e.g., open-source software, Wikipedia, Freecycle for secondhand goods).

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    Quiz Team

    Description

    This announcement provides details for the upcoming mid-term quiz, including the schedule and locations at Wollongong and Liverpool campuses. Ensure to bring necessary supplies and gather in your assigned groups for project work by the specified deadline.

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