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Ch. 2.Firms that leverage technology forstrategic positioninguse technology to create competitive assets or waysof doing business that are difficult for others to copy. （ex. Which of the initiatives by Google is the most likely anexample of strategic positioning? Answer: Google developed Google Glass, a wearable technology with an opticalhead-mounted display, which is the only one available in the market.）True sustainable advantage comes from assets and business models that are simultaneously valuable, rare, difficultto imitate, and for which there are no substitutes.competitive advantageValue chain: s a set of activities that a firm operating in a specific industry performs in order to deliver avaluableproductorservicefor themarket.. e.g.FreshDirect's suppliers, warehouse, and delivery trucks are tightlybuilt together to collectively deliver fresh food to customers in a timely way.Switching cost: the negative costs that a consumer incurs as a result of changing suppliers,brandsor products.Although most prevalent switching costs are monetary in nature, there are also psychological, effort- and time-basedswitching costs, e.g. Netflix customers are unlikely to use a different online video streaming service because theywould have lost their viewing history and taste profile from Netflix.Deferentiation：e.g. Apple's products are praised for their extremely beautiful design.Economy of scale：is the cost advantage that arises with increased output of a product,e.g.Walmart can enjoy anextremely low price from its suppliers because it orders a huge amount of products from a single supplier. Ch. 3. Zara:Zara does not collect data from any of these sourcesgather data: 1. Ask customers in stores. 2. tried but unsold items. 3. POSThen use the data: 1. Rapid design (30k/yr vs. 4k @ big chains). 2. Quick to shelf (15 days, 12 times faster thanGap). 3. Vertical integration, supply chain, just-in-time (twice-weekly shipments), logistics. 4. Limited productionrun e.g. Zara’s IT expenditure is low by fashion industry standards and is also highly effectiven by targeting technology investment at: gathering and analyzing data to predict which store should carry what inventory itemsnetwork effects:exchange: people choose eBay over Yahoo! Auction because there are more sellers and buyers on the former.Staying power: A consumer chooses a life insurance policy from the largest insurance company in the country overthat from a small insurance company operating in only several states.Complementary benefits: Windows phones are less preferred by consumers because there are less apps available forWindows phones compared to those for iOS and Android devices.Switching cost: Most cell phone carriers charge a fee if a subscriber wants to terminate contract early.