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Lecture 5

MGCR 331 Lecture Notes - Lecture 5: Natural Selection, Power Law, Recommender System

Management Core
Course Code
MGCR 331
Imad Mansour

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Lecture 5 Netflix & Digital Goods
Clicker Q:
1. Which of the following is a source of bargaining power for buyers?
1) Greater choice of products
2) High switching costs
3) Loyalty programs
4) Network effects
5) Differentiated products
2. A value chain is a set of
1) similarly profitable firms competing against each other in any given industry
2) large firms that are vertically integrated
3) interdependent activities that bring a product to the market
4) profitable products or services, the market for which is dominated by a large
number of small firms
3. In an industry where nearly every major player outsources manufacturing to low-cost
countries, Zara is highly _____, keeping huge swaths of its production process in-house
1) Privatized
2) Vertically integrated
3) Publicly traded
4) Subsidized
5) Autonomous
4. An information system consists of hardware, software, data, procedures, and the people
who interact with and are impacted by the system.
1) True
2) False
5. Zara’s dominance in the fashion industry is due to its horizontally integrated structure
accompanied by a globally dispersed production model
1) True
2) False it’s vertically integrated and not globally dispersed
6. _____ are critical for capturing sales data, and are usually linked to inventory systems to
subtract out
1) Point-of-sale systems
2) Legacy systems
3) CRM systems
4) Server farms
5) Data aggregators
7. _____ is a decision situation where one party has more or better information than its
1) Strategic superiority

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2) Positional awareness
3) Choice Three
4) Data redundancy
5) Operational precedence
6) Information asymmetry
8. In retail in general and fashion in particular, having _____ is considered the kiss of death
1) Excess inventory
2) Too many storefronts
3) A large labor-force
4) Limited production runs
5) Dispersed production facilities
9. _____ are small chip-based tags that wirelessly emit a unique identifying code for the item
that they are attached to
1) PDAs
2) Smart adaptors
3) Trackbacks
4) Bar codes
5) RFID tags
Today’s class
- Netflix
- Long tail
- Begin economics of digital goods
- What are Netflix’s sources of competitive advantage?
- Leverage time and key resources to technology
o What are those key resources?: - data
o Based on the resources, bargaining power of supplier for netflix is low due to
movie/no channels, but it starts to increase because they are trying to
distribute their channel through other contents *** read books!!
o Supplier: providing contents
o Bargaining power of buyers are increasing because of
o 4 forces: (reducing) threat of substitutes, threat of new entrants, bargaining
power of buyers, bargaining power of suppliers
How Netflix Works
- Users make their video choices in their “request queue” at
- Consumers use the Web site to:
o Rate videos
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