M B A 8610 Lecture Notes - Lecture 4: Walgreens, Digital Goods, Network Effect

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Wednesday 2/8/17
Information Systems 861 Class Notes #4
- Walmart Business Model
o They are customizes to the area
o No more 15 miles away but now 7 miles
o They ask their suppliers to reduce their prices 1% per year
o One of their critical process is the logistical process
o They are never out of the products people come to buy like Tide
o Amazon is their bigger competitor
- Amazon
o
- Walgreens
o Cluster to each other
o 2 pharmacies close to each other they get more traffic, same thuing with subways
- QT
o Losses money on gas ut ake oey o thigs that kill you
- When run a startup
o What kills you is the account receivable
- Physical vs Digital goods
o Initial costs high vs high
o Distribution higs vs low
o Growth constraint can be low only based on bandwidth and storage
o The difficulty with digital is at the beginning
- Platforms and their economics
o Network effects
Facebook started to suck when your grandparents joined
o Critical Mass
Whats the value proposition
How do you communicate that
Like facebook, you had to have an edu email
Therefore your parets ad gradparets ould’t joi
Invest in a standard
Using FB to authenticate other sites
o Long-tail effects
- One sided vs Two sided platforms
o One sided is for things that are new or hit a niche market
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