MBA 823

Exam 2 Guidelines

The exam is planned as 80 minute closed book exam. The questions will be multiple choice type. The
exam will include the material from Sessions listed below.

Generally, you should study the assigned readings and cases for that day and also material covered in
the course lecture and the slides handout. Read the quiz questions once again.

Here is additional detail about what you should study for the exam.

QUIZ QUESTIONS:
Quiz 5:
Consider a career placement firm such as Monster or Career
Builder. Which one of the following statements best fits their two-sided
network strategy?

A) People seeking jobs are the money side and the potential employers are the subsidy side

B) Both people seeking jobs and potential employers who use the platform represent the subsidy side so t

C) People seeking jobs are the subsidy side and the potential employers are the money side

D) Both people seeking sides and the potential employers who use the platform are sources of revenue in

2.5 /
Quest
2.5
ion 2
points
Which one of the following statements best captures the reason why
Walmart CANNOT be considered to be a multisided platform operator in
a two-sided network?

A) Walmart only sells physical products in its stores

B) Walmart takes possession of goods and owns the inventory for selling to its customers

C) Walmart only sells to customers through its stores and not through the web
 D) Walmart has only digitized its logistics and selling processes and does not have fully digitized value s

2.5 /
Quest
2.5
ion 3
points
Which of the following factors is NOT responsible for the growing
profitability of offering long-tail, niche products?

A) Recommendation systems make it easier for customers to learn from others' experiences with niche pr

B) Sophisticated search engines make it easier for customers to discover their unique needs

C) Declining costs of production and replication make it easier for retailers to produce smaller quantities

D) The growth of mega-stores provides greater floor space for stocking niche products in addition to the p

2.5 /
Quest
2.5
ion 4
points
Which one of the following factors is NOT a reason why digital markets
exhibit winner-take-all effects?

A) First movers in digital markets can create significant technological barriers against their rivals

B) The dominant platform attracts a majority of the participants entering the market due to peer effects

C) Platform's participants experience significant positive network effects

D) Platform's participants are usually reluctant to move to a rival platform

2.5 /
Quest
2.5
ion 5
points
Which one of the following statements best captures Apple's strategy in
the pure digital markets?
 A) Apple's outsourcing of manufacturing to Flexconn

B) Apple's expanding ecosystem of Apps developers and mobile ads

C) Apple's expansion of branded retail stores

D) Apple's launch of the new iPad

2.5 /
Quest
2.5
ion 6
points
What is a distinctive characteristic of a two-sided market?

A) Suppliers gain greater value in selling products and services in the market when there are more other s

B) Buyers and suppliers gain greater value from the market when there are more suppliers and buyers res

C) Buyers find a variety of products and services that they can bundle into personalized solutions.

D) Buyers gain greater value in buying products and services in the market when there are more other buy

2.5 /
Quest
2.5
ion 7
points
Why did Adobe choose to give its PDF reader away for free to its users?

A) It exploited the low costs of making software copies in creating a new market

B) It drove competitors out of business and became a monopoly for document services

C) It created a large user base and was able to charge corporations for the PDF writer

D) It believed that it could charge users a price for the reader once PDF became the industry standard

2.5 /
Quest
2.5
ion 8
points
Which of the following definitions is MOST appropriate for a multisided
platform?

A) They provide products or services that other companies can use to build their own products or services

B) They provide financial support for other companies to fund their operations

C) They provide services to reduce the transaction costs for other companies

D) They provide services to connect multiple buyers with multiple suppliers

2.5 /
Quest
2.5
ion 9
points
Two-sided markets have subsidy-side and money-side users. With
respect to these two groups of users, what are positive “cross-side”
network effects in a two-sided market?

A) The price of a product or service to the money side reduces with greater number of money-side users

B) The value of the product or service to the subsidy-side increases with greater number of money-side u

C) The value of the product or service to the subsidy-side increases with greater number of subsidy-side

D) The value of the product or service to the subsidy-side users decreases with greater number of money

2.5 /
Questi
2.5
on 10
points
After the initial adoption of LinkedIn, the platform has introduced
premium services whereby users pay fees to have access to value-
added services (e.g., resume critiques, interview practice). Which one of
the following statements best captures this strategic move by LinkedIn
relative to their platform model?
 A) Premium service users are a new source of revenue for LinkedIn as it tries to capture new revenue source

B) Premium services are being offered as a way to discourage excessive numbers of free services users on th

C) Premium services are being offered as a means of differentiating services, so that new users might not be
effects

D) Premium service users emerge as a money side to subsidize the other users who only use the free service

Quiz 6:

Platform models
Read Article: Competing in Digital Markets
Finding the platform in your product

Questions to think about

1. What are the unique characteristics of digital markets?
2. What is unique about long-tail effects in digital markets?
3. What is the concept of network externality? When is it positive or negative?
4. What is a two-sided market? What is unique about the economics of such a market?
5. What is the different between the subsidy and money sides of a two-sided market?
6. What are the four different types of network effects in a platform model?
7. What are the approaches for mobilizing the subsidy side of a platform model?
8. What is the winner-take-all effect in a platform model? What factors influence the ability to
capture the winner-take-all effects in a platform?
9. What strategies can firms adopt in order to disrupt a platform leader’s winner-take-all
advantage?
10. What is the envelopment approach for overcoming a platform leader’s advantage?
11. How can a platform leader defend against envelopment attacks?
12. Use the example of Google, EBay or any other leading platform firm to explain the above
concepts of same side network effects, cross-side network effects, winner-take-all advantage,
and envelopment attacks
13. How do you identify platform opportunities in existing products or services
14. How do you create platform governance rules?

Some of the questions may require you to apply the concepts learned in this class in the context of
specific companies, such as the ones that we had discussed in class.

Disruptive Innovations and Transformational Business Models

Read: Cutting through the Fog: A future with Fintech

Questions to think about
1. What are the differences between disruptive and sustaining innovations?
2. How are disruptive growth opportunities created? How are sustaining innovations created?
3. What is the role of a value network in the creation of a disruptive or sustaining innovation?
4. Why should the internet be viewed as an opportunity for business model innovation or industry
transformation (explain how the internet is a platform for content, commerce, and connection)?
5. What lessons can be learned from the music industry about the transformation opportunities in
other industries?
6. Which industries are likely to be candidates for transformation due to digitization?