BMGT 301 Lecture Notes - Lecture 4: Open Innovation, The Takeaway, Switching Barriers

• School: University of Maryland
• Department: Business and Management
• Course: BMGT 301
• Professor: Wei Chen

Document Summary

They knew that digital streaming was the future so split into 2: internet based streaming and traditional dvd by mail. Transition resulted in: drop in customer base, drastic fall of price share. Fix this and bring back profits: expand customer base domestically and internationally, sponsor creation of original and critically acclaimed content. -> this meant disclosing financial position and statements which attracted competitors! (blockbuster & walmart) Advantage came from scale of firm"s selection: long tail- large selection of content beneficial for internet retailers, selection attracts customers. Internet allows large selection inventory efficiencies that offline can"t match. Internet enables near 0-cost dissemination of information about products. Overcomes problem of limited shelf space and geographically distributed audiences. Ex: total inventory of songs (audio files vs cd"s) is much more on the internet than physical (same for books) Netflix increased its revenue and net income from 2007-2011 but blockbuster decreased revenue and went bankrupt 9/2010. Walmart and blockbuster could not create competitive advantage.