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ITM REVIEW CHAPTER 1: INFORMATION SYSTEMS IN BUSINESS Apple Case Setting pace in digital world with innovation and creativity. Merged technology, business, and entertainment to get pushed into the mainstream spotlight 2000 – CEO Jobs thought about video editing software, instead shifted focus to MP3 songs. Created first version of iTunes in less than four months. Sorted thousands of songs in seconds Wanted to make iTunes mobile like a Walkman. iPod was introduced nine months later 18 months after iPod release, iTunes sold one million songs in first 6 days of operation Shifted Apple from computer maker to purveyor of digital media Led to millions of iPods being sold and millions of accessories to be sold by other companies Being able to choose favorite songs instead of entire album will lead to increased sales for music business Bootleg CDs and illegal downloads have become a problem. iPod not an incentive to buy new music. What might have happened if Apple executives didn’t invest in iPods? Why is it unethical to sell iTunes customers information to other businesses? Which of Porter’s Five Forces did Apple address through the introduction of iPod/iTunes? o Buyer power: Buyers had only one choice to buy an iPod from because it was so unique and innovative o Supplier power: When first introduced, there were no products like it o Threat of substitutes: Made Walkmans and portable CD players useless o New entrants: Companies have attempted to copy the iPod, but don’t have iTunes o Rivalry: Apple still dominates MP3 market Using Porter’s Five Forces, analyze Apple’s buyer power and supplier power. Porter’s Five Forces Model : Helps determine the relative attractiveness of an industry. Buyer power : High when buyers have many choices of whom to buy from and low when their choices are few. Supplier power : High when buyers have few choices of whom to buy from and low when their choices are many. o Supply chain : Consists of all parties involved, directly and indirectly, in the procurement of a product or raw material. o B2B marketplace : Internet-based service that brings together many buyers and sellers o Private exchange : B2B marketplace in which a single buyer posts its needs and then opens the bidding to any supplier who would care to bid. o Reverse auction : Auction format in which increasingly lower bids are solicited from organizations willing to supply the desired product or service at an increasingly lower price Threat of substitute products or services : High when there are many alternatives to a product or service and low when there are few alternatives from which to choose. o
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