MIS301Exam3StudyGuide.docx - MIS 301 Exam 3 Study Guide...

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MIS 301: Exam 3 Study Guide Chapter 4: “Netflix: The Making of an E-Commerce Giant and the Uncertain Future of Atoms to Bits” Terms: Atoms to bits : The idea that many media products are sold in containers (atoms) to bits (the 1’s and 0’s that make up the file being sold). The Internet offers fast wireless delivery of bits to a variety of options (TVs, MP3 players, phones, etc) and the atoms of the container are no longer necessary. Eliminates physical inventory, which is a huge cost saving. Business model: Describes the rationale of how an organization creates, delivers, and captures value (economic, social, and other forms) Churn rate : The rate at which customers leave a product or service Collaborative filtering : A classification of software that monitors trends among customers and uses this data to personalize an individual customer’s experience Crowdsourcing : The act of taking a job typically performed by a designated agent and outsourcing it to an undefined generally large group of people in the form of an open call Fixed development costs : Costs that do not vary according to production volume Initial pubic stock offering (IPO): The first time a firm sells stock to the public. Long tail : Refers to an extremely large selection of products or content. A phenomenon whereby firms can make money by offering a near limitless selection of less-popular products Pure play: A firm that focuses on a specific product, service, or business model. Software platform : Some sort of hardware architecture and software framework that allows software to run Variable deployment costs : Expenses that change in proportion to the activity of a business Learning Objectives: What is Netflix’s business model? Rent → Receive →Watch →Exchange→ + Streaming · Uses the “long tail.” Offers an almost limitless variety of (mostly) less-popular DVDs to customers without geographic boundaries and physical store storage. Netflix can offer their wide variety of DVDs to anyone, anywhere for the same low price. · DVD-by-Mail model; DVDs ordered by customers according to their cue’s, sent from a distribution center, received by customers, then returned in a pre-paid envelope What was the downside to Netflix’s early IPO? · The early IPO revealed how profitable the long tail business model was. Because of this, many more powerful firms tried to jump on the idea and recreate it for their existing customers. (Such as Blockbuster and Walmart) Ultimately, this hindered Netflix initially. · It tipped off other public companies just how much money Netflix was making Why did other firms find Netflix’s market attractive? Why did many analysts incorrectly suspect that Netflix was doomed to fail? · Other firms saw how profitable Netflix’s market was with their IPO, and thus wanted to capitalize on
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This note was uploaded on 07/24/2012 for the course MIS 301 taught by Professor Mccleod during the Spring '08 term at University of Texas.

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MIS301Exam3StudyGuide.docx - MIS 301 Exam 3 Study Guide...

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