Technology for Strategic Positioning in Business
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Questions and Answers

How has the introduction of electric cars affected competition in the automotive industry?

  • It has intensified competition among existing competitors. (correct)
  • It has eliminated new entrants in the market.
  • It has reduced competition for established automakers.
  • It has created a monopoly for electric vehicle manufacturers.

    • What challenge do new entrants face when trying to develop electric vehicles?

  • Lack of technological advancements.
  • Low consumer demand.
  • High barriers to entry due to investment in R&D. (correct)
  • High production costs.

    • Which of the following is considered a substitute product for electric vehicles?

  • Standard gasoline cars.
  • Hybrid vehicles. (correct)
  • Motorcycles.
  • Luxury sedans.

    • How has consumer power changed in the automotive market with the rise of electric vehicles?

    <p>Consumers have more bargaining power due to increased options.</p> Signup and view all the answers

    What factor has enhanced the bargaining power of suppliers in the electric vehicle industry?

    <p>The crucial role of batteries in electric vehicles.</p> Signup and view all the answers

    What defines a fully connected graph?

    <p>Every pair of nodes is connected by an edge.</p> Signup and view all the answers

    What characterizes a community within a network?

    <p>Nodes are densely connected internally with few connections to outside nodes.</p> Signup and view all the answers

    How is modularity related to network partitioning?

    <p>Modularity quantifies the effectiveness of a network's partition into communities versus a random configuration.</p> Signup and view all the answers

    Which statement about subgraphs is true?

    <p>All endpoints of the edge subset must be included in the node subset of a subgraph.</p> Signup and view all the answers

    What is a primary feature of community structure in networks?

    <p>Communities exist with non-overlapping sets of nodes.</p> Signup and view all the answers

    What is the primary reason operational effectiveness is not enough for sustainable dominance over competitors?

    <p>It can be easily replicated by rivals.</p> Signup and view all the answers

    Which of the following is a key advantage FreshDirect has over traditional supermarkets?

    <p>Same-day and next-day delivery options.</p> Signup and view all the answers

    What is a significant aspect of FreshDirect's business model that supports competitive pricing?

    <p>Eliminating middlemen by purchasing directly from suppliers.</p> Signup and view all the answers

    What strategic approach does FreshDirect take to deal with the high cost of real estate in New York City?

    <p>Using a larger warehouse and online storefront.</p> Signup and view all the answers

    What was the collective impact that contributed to FreshDirect's success?

    <p>Different activities and business approaches compared to rivals.</p> Signup and view all the answers

    How did FreshDirect influence building design in New York City?

    <p>By necessitating secure freezers for deliveries in apartment buildings.</p> Signup and view all the answers

    Why can novel business approaches enabled by technology be difficult for competitors to copy?

    <p>They often require specific technological knowledge.</p> Signup and view all the answers

    What impact did FreshDirect’s larger selection have on its customers?

    <p>It encouraged more frequent shopping.</p> Signup and view all the answers

    What is a primary challenge for firms in today's competitive landscape?

    <p>Identifying competitors</p> Signup and view all the answers

    Which factor can significantly affect a firm's competitive advantage?

    <p>New innovations and international government policies</p> Signup and view all the answers

    How do consumers typically compare firms in social media?

    <p>By features or services offered</p> Signup and view all the answers

    What is the main purpose of generating network data of stocks based on tweets?

    <p>To identify closely connected communities of competitors</p> Signup and view all the answers

    In graph analysis, what does a 'node' represent?

    <p>An entity of interest, such as a firm or person</p> Signup and view all the answers

    Which type of graph allows for directed relationships, meaning one entity knows another without reciprocity?

    <p>Directed graph</p> Signup and view all the answers

    What does 'in-degree' refer to in a directed graph?

    <p>The number of incoming edges to a node</p> Signup and view all the answers

    What is the shortest path in graph terms?

    <p>The sequence of nodes with minimum connecting edges</p> Signup and view all the answers

    What type of analysis is primarily concerned with discovering patterns and communities in data structured as graphs?

    <p>Community detection</p> Signup and view all the answers

    How can edges in a graph be characterized?

    <p>By their weight and direction</p> Signup and view all the answers

    What is the first phase of the Louvain algorithm?

    <p>Optimizing modularity through local changes in community memberships</p> Signup and view all the answers

    What does the weight between two stocks represent in the network?

    <p>The probability of two stocks occurring together in a tweet based on co-occurrences</p> Signup and view all the answers

    What does the final community results reveal about firms' sectors?

    <p>Consumers view them differently than their reported SEC filings indicate</p> Signup and view all the answers

    What is the final outcome of the Louvain algorithm's iterations?

    <p>The optimization of modularity with no further increase possible</p> Signup and view all the answers

    How is the weight between two stocks calculated?

    <p>Through the product of their individual occurrences in tweets</p> Signup and view all the answers

    What do nodes represent in the context of the network described?

    <p>Stocks of different companies</p> Signup and view all the answers

    What happens after phase 1 of the Louvain algorithm?

    <p>Super-nodes are created by aggregating identified communities</p> Signup and view all the answers

    Which library is utilized to run the Louvain Community detection?

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

    Study Notes

    Technology for Strategic Positioning

    • Performing different activities than rivals, or the same activities in different ways
    • Using technology to create novel business approaches that are difficult for competitors to copy
    • FreshDirect uses technology to offer a wider selection of fresh goods at lower prices compared to local supermarkets
    • FreshDirect operates an efficient warehouse for same-day and next-day deliveries
    • FreshDirect buys directly from suppliers, eliminating middlemen and reducing prices
    • Consumers are drawn to FreshDirect because of its unique business model and benefits

    Example - 2: Automotive Industry

    • The introduction of electric cars has impacted the automotive market with a shift towards intensified competition
    • Electric vehicle (EV) production requires significant research and development (R&D) investment
    • Existing automakers have an advantage due to their established resources and economies of scale
    • Hybrid and alternative fuel technologies are becoming increasingly viable substitutes for EVs
    • Consumers have more choices in the EV market, which increases their bargaining power
    • Suppliers of battery technology have gained significant leverage in the EV market
    • Automakers are investing in battery technology and exploring alternative resources to combat supplier bargaining power

    Analyzing the Competition Structure

    • The boundaries of firms have become more fluid, making it challenging to identify actual competitors
    • Consumers use social media to compare firms that serve similar needs or have similar features
    • Consumers engage in online word-of-mouth discussions regarding competitor firms
    • StockTwits is a microblogging website where users share and discuss stocks
    • Users on StockTwits frequently discuss S&P 500 companies
    • Users on StockTwits are often impacted by new entrants, government policies, and technological innovations

    Data Extraction and Analysis

    • Extract data from StockTwits on S&P 500 companies
    • Generate a network data of stocks based on their mentions in tweets
    • Identify closely connected communities of stocks within the network
    • Each community represents a group of competitors
    • Unsupervised machine learning techniques (Graph or Network Analysis) are beneficial for community detection

    Networks: Examples

    • Social networks such as friendship circles
    • Networks in medicine, for example infectious disease transmission
    • Technological networks like computer networks and power grids
    • Business networks including strategic alliances

    Network Analysis

    • Processing data structured as graphs
    • Studying properties of the network
    • Identifying central nodes, highly connected components, and overall network shape

    Graph

    • A graph represents a network with nodes connected by edges
    • Nodes can represent people, companies, or other entities
    • Edges represent relationships, such as friendships or comparisons

    Types of Graphs

    • Directed graph: edges have a direction and asymmetry
    • Undirected graph: edges have no direction and symmetry
    • Edges can be weighted or unweighted
    • The weight of an edge represents the strength of the relationship

    Graph Representation

    • Graphs can be represented as adjacency matrices or lists of pairs of nodes and their attributes

    • An adjacency matrix (A) displays the edge weight between two nodes (i, j)

    • Example:

                         0   1   1   0   0                Node1   Node2   Weight
                   1   0   0   1   1                 A       B        1
                   1   0   0   0   0
                                                     A       C        1
                   0   1   0   0   1
                                                     …
                   0   1   0   1   0

    Degree

    • Represents the number of edges connected to a node
    • In-degree refers to the number of incoming edges in a directed graph
    • Out-degree refers to the number of outgoing edges in a directed graph
    • Edge weights can be associated with each edge in the graph

    Path

    • A path in a graph is a sequence of nodes connected by edges
    • Shortest path: The path between two nodes with the minimum number of edges (for unweighted graphs) or the minimum sum of edge weights (for weighted graphs)

    Connected Components

    • A connected graph means there is a path between every pair of nodes
    • A fully connected graph means each pair of nodes is connected by an edge
    • Fully connected graphs are also called complete graphs

    Subgraphs and Communities

    • A subgraph is a subset of nodes and edges from a graph
    • Subgraphs must include all endpoints of the edge subset
    • Communities are subgraphs where nodes within a community are densely connected. They have few connections to the rest of the network

    Communities

    • Community structure is a prominent feature of networks
    • Nodes inside a community share a high degree of connectivity
    • Example: On Facebook, you might have different communities: school, college, hometown communities

    Modularity

    • Modularity is a measure of how well a network can be partitioned into groups compared to a random network
    • Community Detection: Identifying sets of nodes with strong internal connections and few external connections. This can be accomplished using algorithms such as the Louvain Algorithm

    Louvain Algorithm

    • Iteratively optimizes modularity to detect communities
    • Begins by considering each node as its own community
    • Each iteration involves two phases:
      • Phase 1: Optimizing modularity through local changes in node-community membership
      • Phase 2: Aggregating identified communities into super-nodes and constructing a new network

    Application: Identifying Competition

    • Using a network of companies to identify competitors
    • Nodes represent companies
    • Edges are weighed and undirected, representing the probability of two companies being mentioned together in a tweet--calculated based on the co-occurrence of stocks
    • Louvain Community Detection can be used in conjunction with Python's networkx library to identify communities
    • Comparing the sectors within communities to those provided in SEC filings can provide insights into how companies are perceived by the market, versus their self-reported sectors

    Final Result

    • Findings from the analysis of S&P 500 companies on StockTwits reveal discrepancies between how firms categorize their industries and how consumers perceive them
    • Firms with strong community connections (Tesla, PayPal, Netflix, and Amazon) are often associated with different sectors than their self-reported classifications
    • Communities are dynamic and constantly evolving, reflecting changing market trends and consumer perceptions

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    W11 - Competitive Strategy Lecture Notes PDF

    Description

    This quiz explores how businesses leverage technology to differentiate themselves from competitors and enhance their strategic positioning. It discusses practical examples, such as FreshDirect's innovative approach to online grocery delivery and the impact of electric vehicles in the automotive industry. Test your understanding of these concepts and their implications for competition and business models.

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