Solution Manual for Information Systems A Manager's Guide to Harnessing Technoloby v.10 by John Gall

Chapter 1 Setting the Stage: Technology and the Modern Enterprise Section 1.1 True/False Questions 1. Apple’s growing business of consumer services bring in so much revenue that if they were a separate division from Apple, they would be ranked as a Fortune 100 firm.

True; Easy 2. While Amazon and UPS efforts to offer drone-to-doorstep delivery for the masses remain a work in progress, Silicon Valley’s Zipline is leading the charge for the humanitarian community.

True; Moderate 3. Ireland’s data centers use 18 percent of the country’s electricity’s needs.

True; Moderate 4. The rise of open source software has lowered computing costs for startup and blue chip companies worldwide.

True; Easy 5. Data analytics, business intelligence, and so-called machine learning are driving discovery and innovation.

True; Easy 6. Technology has proliferated in Kenya and Somaliland, with text messages used to replace cash, creating mobile money use that, on a population percentage basis, exceeds any nation in the West.

True; Moderate 7. Social media does not play a key role in organizing uprisings.

False; Easy 8. The United States and China are both currently investigating several tech companies for influence and non-competitive practices.

False; Easy 9. The market cap of a publicly traded firm is its total value. Market cap can be calculated by multiplying the number of a firm’s shares by its current share price.

True; Easy 10. A server farm is a massive network of computer servers running software to coordinate their collective use. Server farms provide the infrastructure backbone to SaaS and hardware cloud efforts, as well as many large-scale Internet services.

True; Easy 11. It took telephones seventy-five years to get to 50 million users, but it took ChatGPT 3.5 just four years to gain double those users.

False; Easy 12. Meta, Facebook's parent, has an astonishing 3.6 billion monthly users—a reach no media firm or government had ever remotely approached.

True; Easy

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Multiple Choice Questions 13. A recent report in Forbes suggests that _____ percent of firms are failing at digital transformation. a. 89 b. 72 c. 40 d. 23 e. 12 b; Easy 14. Select the accurate statement(s).

1) The world’s most valuable retailer, China’s Alibaba, also carries the world’s largest product inventory.

2) Uber, the world’s largest taxi service, owns no vehicles for hire.

3) Airbnb, the world’s largest accommodation provider, owns several major hotel corporations.

4) Facebook does not create media content. a. All statements are accurate. b. Statements 2 and 4 are accurate. c. Statement 4 is accurate. d. Statement 1 is accurate. e. Statements 1 and 3 are accurate. b; Hard 15. Some of the radical changes brought about by new technologies include a. the stagnation of advertising. b. the proliferation of telecommunications into the hands of a few. c. an increase in computing costs owing to the growth of licensed software. d. a decrease in the standards of corporate ethics. e. the creation of an unprecedented set of security and espionage threats. e; Moderate 16. Tech firms are among the best performing firms in the world. Which firm is the most valuable firm in the United States and has also posted some of the most profitable quarters of any business in any industry? a. Amazon b. Apple c. Google d. IBM e. Salesforce b; Easy 17. Zuckerberg got so excited by the Metaverse that he renamed his company _____ and has so far lost over $46 billion on the concept without seeing a penny in profits. a. Facebook 2.0 b. ChatGPT c. NFT d. Meta e. Instagram d; Easy 18. The global pandemic caused which industries to boom? a. telehealth b. work-from-home

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c. online grocery d. contactless payment e. All of the above are true. e; Easy Short Answer Questions 19. How are entrepreneurs in sub-Saharan Africa leveraging technologies to serve local needs? Give examples.

Ghanaian firm Esoko leverages mobile phones to empower the agrarian poor with farming info and commodity pricing, raising incomes and lowering the chance of exploitation by unscrupulous middlemen. The firm Sproxil uses text message verification to save lives by fighting drug counterfeiting in developing nations around the world. Kenya’s M-Pesa and Somaliland’s Zaad use text messages to replace cash, bringing the safety and speed of electronic payment and funds transfer to the unbanked and leveraging mobile money at rates that far outstrip any nation in the West.

Moderate 20. How has social media emerged as a catalyst for global social change?

With Facebook and Twitter playing key organizing roles in uprisings worldwide, technology can capture injustice, broadcast it to the world, disseminate ideas, and rally the far-reaching.

Moderate 21. Uber and Airbnb are larger than any taxi firm or hotel chain on the planet. In what important way does the infrastructure used by these firms to deliver services differ from more traditional rivals?

Uber, the world’s largest “taxi service,” owns no vehicles for hire. Airbnb, the world’s largest accommodations provider, doesn’t own a single hotel or rental property. (Don’t accept “mobile” or “uses smartphones” as answers since traditional rivals also heavily leverage technology, including smartphone apps.)

Moderate 22. How have microprocessors and server farms allowed for AI usage to grow in technology companies?

Microprocessors allow for massive server farms to handle an increase in AI applications, while server farms allow for faster and quicker applications that are backed by AI. Moderate Fill in the Blanks 23. _____ and _____ are turning sophisticated, high-powered computing into a utility available to even the smallest businesses and nonprofits.

Cloud computing, software as a service; Moderate 24. _____ has emerged as a catalyst for global change, with Youtube, Facebook, Instagram, Twitter, and TikTok playing key organizing roles in uprisings worldwide.

Social media; Easy 25. It took _____ just two months to gain 100 million users.

ChatGPT; Easy 26. Over the span of a decade, Apple was able to transition from washed up to industry leader by creating _____ instead of _____. platforms, products; Easy

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27. The rise of _____ has rewritten the revenue models for the computing industry and lowered computing costs for startups to blue chips worldwide. open source; Easy 28. _____ refers to the portion of a firm focused on innovation, typically pioneering advances that will eventually arrive as new products and technologies.

Research and development (R&D); Easy Section 1.2 True/False Questions 29. Founders should be wary of crowdfunding sites like Kickstarter, because these efforts require founders to give up large ownership stakes to a large number of contributors before they can raise funds to bring products to market.

False; Easy 30. The founding technology entrepreneurs behind many leading firms, such as Apple, Microsoft, and Facebook, got their start in their early 30s, leveraging university study and knowledge from their first post-college jobs to create disruptive new firms.

False; Easy 31. Palmer Luckey, the founder of Oculus, was able to get early funding for his product via Kickstarter, exceeding the fundraising goal set by his campaign without giving up a share of equity from this campaign.

True; Easy 32. Facebook was founded by Sergey Brin.

False; Easy 33. Linus Torvalds created the Linux operating system.

True; Easy 34. David Karp, founder of the website Tumblr, sold the website to Google for $1.1 billion.

False; Moderate 35. Everyone benefits from an accelerator.

False; Moderate 36. You should always ask people to sign non-disclosure agreements.

False; Moderate Multiple Choice Questions 37. One contributor to the ease with which young entrepreneurs can have success is low-cost distribution to massive markets worldwide. This is enabled by: a. legacy systems b. big data and business analytics c. Esoko and M-Pesa d. app stores e. Sproxil d; Easy

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38. Another reason fueling the boom in fast-growing technology services is _____, which, when done right, can virally spread awareness of a firm with nary a dime of conventional ad spending. a. app stores b. big data and business analytics c. Esoko and M-Pesa d. Sproxil e. legacy systems a; Easy 39. Yahoo! was started by _____ and _____. a. Sergey Brin; Larry Page b. Jerry Yang; David Filo c. Steve Chen; Chad Hurley d. Kevin Rose; Mark Zuckerberg e. Catherine Cook; Shawn Fanning b; Easy 40. _____ was just a sophomore when he began building computers in his dorm room at the University of Texas. His firm would one day claim the top spot among PC manufacturers worldwide. a. Bill Gates b. Steve Jobs c. Michael Dell d. Shawn Fanning e. Mark Zuckerberg c; Easy 41. Steve Chen and Chad Hurley are credited as the founders of: a. Google b. Zappos c. Facebook d. YouTube e. Yahoo! d; Easy 42. Tony Hsieh served as CEO of _____, and eventually sold the firm to Amazon for $900 million. a. Zappos b. LinkExchange c. MyYearbook.com d. Napster e. Yahoo! a; Easy 43. Sergey Brin and Larry Page were both twenty-something doctoral students at Stanford University when they founded: a. Yahoo! b. YouTube c. Google d. Amazon e. Napster c; Easy 44. Amazon was started by: a. Jeff Bezos b. Catherine Cook

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c. Shawn Fanning d. Linus Torvalds e. Kevin Rose a; Easy Short Answer Questions 45. Name at least three technology firms that were founded by people in their twenties or younger.

Facebook was founded by Mark Zuckerberg when he was a nineteen-year-old college sophomore.

Sergei Brin and Larry Page of Google, Jerry Yang and David Filo of Yahoo!, Steve Chen and Chad Hurley of YouTube are all in their late twenties when they launched their firms. Jeff Bezos hadn’t yet reached thirty when he began working on what would eventually become Amazon. The founders of Dropbox, Box, and Spotify were all younger than thirty when they founded businesses that would go on to be worth billions.

Easy 46. What factors contribute to the current “golden age” of young entrepreneurship, allowing innovators to create and deploy services with less expense than prior generations?

We’re in a golden age of tech entrepreneurship where ideas can be vetted and tested online, and funding crowdsourced, Kickstarter-style; “the cloud” means a startup can rent the computing resources one previously had to buy at great expense; app stores give code jockeys immediate, nearly zero-cost distribution to a potential market of hundreds of millions of people worldwide; and social media done right can virally spread awareness of a firm with nary a dime of conventional ad spending.

Easy 47. What are some things you should do if you would like to start a startup?

Attend high-quality startup-focused events, attend tech events if you are building a tech startup, and start building a product.

Easy Fill in the Blanks 48. Funding projects via online efforts such as Kickstarter are referred to by the term _____. crowdsourcing; Hard 49. The technology known as _____ is helping to fuel the current age of fast-growth technology entrepreneurship. This technology means that a startup can rent the computing resources one previously had to buy at great expense. cloud computing, or the cloud; Moderate 50. Shawn Fanning’s _____ was widely criticized as a piracy playground.

Napster; Easy 51. Facebook was founded by _____.

Mark Zuckerberg; Easy 52. _____ was just twenty-one when he founded Apple.

Steve Jobs; Easy 53. _____ means to redefine the market, business, and/or product offering.

Pivoting; Easy 54. Spending a lot of time on a “pitch deck,” logo design, or seeking funding is almost always a sign of a “_____.”

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wantrepreneur; Easy Section 1.3 True/False Questions 55. Researchers in China and the United States have shown an AI approach that performed better than major trading indices as well as traditional investment portfolio allocation strategies.

True; Easy 56. SEO and SEM are key tech industry acronyms that have become vital parts of the accounting professional’s operating toolkit.

False; Moderate 57. Many of the careers in marketing are highly tech-centric.

True; Easy 58. Firms are increasingly shifting spending from the Web to other media such as print, radio, and television as these are often easier to track and analyze.

False; Easy 59. While process redesign, supply chain management, and factory automation are all tech-centric operations, service operations are not.

False; Easy 60. Today’s job seekers are writing resumes with keywords in mind, aware that the first cut is likely made by a database search program, not a human being.

True; Moderate 61. The number of U.S. patent applications awaiting approval has significantly declined in the past decade.

False; Easy 62. Technology experts in the area of user-interface design specialize in technology for competitive advantage.

False; Moderate 63. The field of accounting will not be impacted by AI due to newly introduced data security laws.

False; Easy Multiple Choice Questions 64. Within roughly four years, _____ were in the hands, backpacks, purses, and pockets of over two hundred million people worldwide, delivering location-based messages and services and even allowing for cashless payments. a. Fitbits b. smartwatches c. android devices d. iOS devices e. tablets d; Easy 65. A company tracks user’s activities on their website. This is an example of the impact of technology in the area of: a. accounting

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b. operations c. marketing d. finance e. human resources c; Moderate 66. Crowdsourcing tools and question-and-answer sites such as _____ allow firms to reach out for expertise beyond their organizations. a. Quora b. Oculus VR c. Alibaba d. Twitter e. M-Pesa a; Moderate 67. Technology experts in the area of user-interface design a. work to make sure systems are intuitive and easy to use. b. leverage technology to make legacy systems more efficient. c. specialize in technology for competitive advantage. d. focus on effective back-up systems for critical business data. e. provide direction on technology-related security issues. a; Easy 68. Technology experts in the area of process design a. work to make sure systems are easy to use. b. leverage technology to make firms more efficient. c. specialize in technology for competitive advantage. d. focus on systems dealing with critical business data. e. provide direction on technology-related security issues. b; Easy 69. Technology experts in the area of _____ specialize in technology for competitive advantage. a. user-interface design b. process design c. strategy d. database design e. hardware c; Easy 70. Experts working in the area of _____ work to make sure systems are easy to use, while people working in the area of _____ work to leverage technology to make firms more efficient. a. user-interface design; process design b. process design; user-interface design c. strategy; process design d. process design; strategy e. strategy; user-interface design a; Hard 71. Which area of corporate law is connected to technology? a. privacy b. patents c. piracy d. intellectual property e. All of the above are true. e; Moderate

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Short Answer Questions 72. How has technology changed the marketing landscape?

The skill set of today’s marketers is radically different from what was leveraged by the prior generation. Online channels have provided a way to track and monitor consumer activities, and firms are leveraging this insight to understand how to get the right product to the right customer, through the right channel, with the right message, at the right price, and at the right time. Savvy firms are using social media to generate sales, improve their reputations, better serve customers, and innovate. Search engine marketing (SEM), search engine optimization (SEO), customer relationship management (CRM), personalization systems, and a sensitivity to managing the delicate balance between gathering and leveraging data and respecting consumer privacy are all central components of the new marketing toolkit.

Moderate 73. What kind of an impact has technology had in the area of human resources?

Technology helps firms harness the untapped power of employees. Knowledge management systems are morphing into social media technologies—social networks, wikis, and Twitter-style messaging systems that can accelerate the ability of a firm to quickly organize and leverage teams of experts. Crowdsourcing tools and question-and-answer sites like Quora and Stack Overflow allow firms to reach out for expertise beyond their organizations. Human resources directors are using technology for employee training, screening, and evaluation. Sites like LinkedIn can help HR quickly target a wider group of qualified employees. Potential hires are sharing online material with HR, hoping that thoughtful blog posts, a compelling LinkedIn presence, Twitter activity reflecting an enthusiastic and engaged mind, and, for tech professionals, participation in collaborative coding communities like GitHub and Stack Overflow, all work to set apart a candidate from the herd. The hiring and retention practices of the prior generation are also in flux. Recruiting hasn’t just moved online; it’s now grounded in information systems that scour databases for specific skill sets, allowing recruiters to cast a wider talent net than ever before.

Job seekers are writing resumes with key words in mind, aware that the first cut is likely made by a database search program, not a human being.

Moderate 74. Provide a brief overview of the different careers in the area of information systems.

Students studying technology can leverage skills in ways that range from the highly technical to those that emphasize a tech-centric use of other skills. Opportunities for programmers abound, but there are also roles for experts in areas such as user-interface design, process design, and strategy. Careers that involve consulting and field engineering are often particularly attractive for those who enjoy working with clients and problems across various industries and in different geographies. Consultants can become partners who work with the most senior executives of client firms, helping identify opportunities for those organizations to become more effective. Technology specialists can rise to be chief information officer or chief technology officer and many firms are developing so-called C-level specialties in emerging areas with a technology focus, such as chief information security officer (CISO) and chief privacy officer (CPO).

Moderate Fill in the Blanks 75. The _____ department in an organization that not only ensures that systems get built and keep running but also take on strategic roles targeted at proposing solutions for how technology can give the firm a competitive edge. information systems; Easy 76. Aspiring investment bankers should study the tech industry since tech firms represent a large portion of firms selling shares on public stock markets for the first time. This process is known as

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_____.

IPO, initial public offering, or going public; Easy 77. The number of U.S. patent applications awaiting approval has _____ in the past decade. tripled; Easy Section 1.4 True/False Questions 78. A firm that is late in adopting a technology may find itself unable to create the competitive advantages of early movers.

True; Easy 79. ChatGPT was invented by OpenAI. True; Moderate 80. The hype cycle is described as a curve with market expectations plotted against time.

True; Easy 81. IBM Watson did not beat Jeopardy champ Ken Jennings.

False; Easy 82. Xerox invented the graphical user interface.

True; Easy Multiple Choice Questions 83. Which of the following is not a key to competitive assets that an early mover may be able to create over its slow-moving rivals? a. scale b. network effects c. switching costs d. technology effects e. None of the above are true. d; Moderate 84. “Uh, where’s the ROI?” is which stage of the Hype Cycle Curve? a. trough of disillusionment b. emerging innovation c. inflated expectations d. slope of enlightenment e. plateau of productivity c; Easy 85. Which tech company founder stated “the tech industry is more fashion-driven than women’s fashion”? a. Bill Gates b. Larry Ellison c. Mark Zuckerberg d. Jeff Bezos e. Sergey Brin b; Easy Short Answer Questions

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86. What causes an innovation trigger in a Hype Cycle?

A stage of emerging innovation, sometimes referred to as an innovation trigger, is where a new tech or other concept arrives. If interest accelerates, expectations rise and the curve slopes sharply upward. This typically happens as early proofs-of-concept show promise, early-stage venture capitalists plow money into startups focused on this area, and firms launch experimental efforts.

Moderate Fill in the Blanks 87. A firm may give up _____ or sour on an early, unrealized _____ only to see some characteristics of technologies and markets change the game for adoption. tech, investment; Easy

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Chapter 2 Zara: Fast Fashion from Savvy Systems Section 2.1 True/False Questions 1. The U.S. Department of Justice needed to provide a special exemption to the Fair Factories Clearinghouse, and before doing so, had to be convinced that the effort wouldn’t be used by buyers to collude and further squeeze prices from competitors.

True; Easy 2. The Fair Factories Clearinghouse is subject to network effects.

True; Easy 3. Making seasonal apparel decisions is a challenge because it often involves making predictions on what customers will be interested in, months in advance of clothing appearing on store shelves.

True; Easy 4. Zara’s dominance in the fashion industry is due to its horizontally integrated structure accompanied by a globally dispersed production model.

False; Easy 5. Zara’s clothing looks high fashion but is comparatively inexpensive.

True; Easy 6. Most fashion retailers place orders for a seasonal collection a few days before these lines make an appearance in stores.

False; Easy 7. Maintaining large inventories is highly essential for the viability of the fashion industry.

False; Easy Multiple Choice Questions 8. 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. a. privatized b. vertically integrated c. publicly traded d. subsidized e. autonomous b; Easy 9. What was considered the source of Mickey Drexler’s inventory problems at Gap? a. He personally approved sweatshop-affiliated contract manufacturers. b. He wrote the code for Gap’s disastrously broken inventory system. c. The firm guessed wrong about fashion, placing big bets on trends that consumers didn’t want. d. He led a botched merger with Disney in the hopes that combining technology with the Disney Store would create a super-efficient set of shopping mall destination stores.

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e. All of the above are true. c; Easy 10. Zara holds a competitive advantage over its rivals in spite of a. refusing to implement technology in its operational model. b. conducting business only through online storefronts. c. its globally distributed contract manufacturing model. d. operating through fewer stores across the world than its closest rivals. e. keeping large portions of its production processes in-house. e; Easy 11. _____ involves outsourcing production to third-party firms. a. Vertical integration b. Long tailing c. Peer production d. Contract manufacturing e. Viral production d; Easy 12. In retail in general and fashion in particular, having _____ is considered the kiss of death. a. excess inventory b. storefronts in expensive districts with costly rents c. a large labor force d. limited production runs e. dispersed production facilities a; Easy 13. Contract manufacturers used by the apparel industry are often criticized because a. they hike up the costs of producing goods. b. firms cannot maintain high profit margins by employing them. c. they charge exorbitant labor costs that drive down sales. d. they are known to grossly overprice their services. e. of poor working conditions. e; Easy 14. _____ is a non-profit organization that shares audit information on contract manufacturers among members of the apparel industry and other industries. a. Fair Factories Clearinghouse b. PricewaterhouseCoopers c. Amnesty International d. Klynveld Main Goerdeler e. Transparency International a; Easy Essay Questions 15. What were the problems encountered by Gap in the early part of the decade following the 1990s?

What were the measures taken to overcome these problems?

Gap was an industry leader for much of the 1990s in apparel retail, with over $1 billion in profits.

However, sales declined in the early part of the following decade, prompting the firm to try revitalizing the brand. Chasing the youth market, Gap filled its stores with miniskirts, low-rise jeans,

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and other offerings. But the throngs of teenagers they sought to attract never showed up, and the shift in offerings sent Gap’s mainstay customers to retailers that easily copied the styles that Gap had made classic. Gap’s same-store sales declined for twenty-nine months straight and profits vanished.

The firm’s debt was downgraded to junk status.

Closing down hundreds of stores did not work either and Gap was forced to write off much of its inventory. The marketing model used by Gap to draw customers in via big-budget television promotion also collapsed. The firm has since ceded its position as the market leader.

Moderate 16. What is contract manufacturing? What advantages can a firm expect to gain from contract manufacturing? What are the downsides associated with this practice?

Contract manufacturing refers to outsourcing production to third-party firms. Firms that use contract manufacturers do not own the plants or directly employ the workers who produce the requested goods. Conventional wisdom suggests that leveraging cheap contract manufacturing in developing countries can keep the cost of goods low and allow firms to leverage specialized manufacturing expertise if production is not seen as core to competitive advantage. Firms can lower prices and sell more products or maintain higher profit margins.

Many firms have also experienced the ugly downside to this practice. Global competition among contract firms has led to race-to-the-bottom cost-cutting measures. Too often, this means that in order to have the low-cost bid, contract firms skimp on safety, ignore environmental concerns, employ child labor, and engage in other ghastly practices. Incidents such as the Spring 2013 Bangladesh Rana Plaza disaster, which killed more than 1,100 people in the collapse of an illegally constructed eight-story building housing multiple contract garment factories, underscore the human toll of unacceptable contract manufacturing practices. Big firms are big targets and those that fail to adequately ensure their products are made under acceptable labor conditions risk a brand-damaging backlash that may turn off customers, repel new hires, and leave current staff feeling betrayed.

Moderate Short Answers 17. The U.S. Justice Department initially reviewed the Fair Factories Clearinghouse but eventually approved the effort as described in readings and class. What was the government initially concerned about?

The government was initially concerned about price-fixing or price collusion.

Easy Fill in the Blanks 18. Leveraging cheap _____ in developing countries can keep the cost of goods low. contract manufacturing; Easy 19. _____ is a non-profit organization that shares audit information on contract manufacturers.

Fair Factories Clearinghouse; Easy 20. Outsourcing production to third-party firms is called _____. contract manufacturing; Easy 21. Retailers can lose profits if they have excess _____. inventory; Easy

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22. In recent years, _____has closed operations in Myanmar due to labor concerns and has shed stores in Russia due to the war in Ukraine and Venezuela due to ongoing political strife.

Inditex; Moderate Section 2.2 True/False Questions 23. Zara’s high-fashion styles are inspired by customer tastes, with technology used to gather data on preferences at given store locations.

True; Easy 24. Elaborate customer surveys help Zara designers predict fashion trends months into the future and design products accordingly.

False; Easy 25. Limited production runs ensure customers do not have to visit Zara’s stores as often as they visit other stores, allowing the firm to save money through staff reductions when compared to peers.

False; Easy 26. Zara’s IT expenditure, measured by IT workers as a percentage of total employees, is only slightly higher than the industry average.

False; Moderate 27. Zara's use of technology across the value chain allows the firm to manufacture more unique items than rivals H&M and Gap. True; Easy 28. Zara encourages employee use of technology by tying employee salaries to sales performance.

True; Easy 29. Goods to be further customized based on designer/manager collaboration are called greige.

True; Easy 30. RFID tags allow Zara staff to take in-store inventory less frequently than rivals, saving money on staffing.

False; Easy 31. An information system consists of hardware, software, data, procedures, and the people who interact with and are impacted by the system.

True; Easy Multiple Choice Questions 32. Personal digital assistants are a. transaction processing systems that capture customer purchases. b. small chip-based tags that wirelessly emit a unique identifying code for the item that they are attached to. c. systems that provide rewards and usage incentives, typically in exchange for a method that provides a more detailed tracking and recording of customer activity. d. handheld computing devices meant largely for mobile use outside an office setting.

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e. artificial intelligence systems that leverage rules or examples to perform a task in a way that mimics applied human expertise. d; Easy 33. Zara’s staff members regularly collect data from customers at its stores. This data is used to a. decide the designs and styles of Zara’s products for the next few seasons. b. determine the in-store soundtrack and layout. c. inform designers of customer preferences and staff on store sales results. d. determine where future Zara stores should be located. e. identify the products that customers would like to buy through discounted sales. c; Easy 34. _____ are critical for capturing sales data and are usually linked to systems that manage a firm’s inventory. a. Point-of-sale systems b. Legacy systems c. CRM systems d. Server farms e. Data aggregators a; Easy 35. Many firms have developed and deployed innovative information systems, only to see these systems go unused by key staff members. How has Zara helped ensure its systems will be used by staff? a. Employees are monitored by in-store cameras. b. Employee time on information systems is recorded each time the system is engaged. c. System use drives store success and as much as 70 percent of salaries are tied to sales performance d. All employees must have a Fair Factories Clearinghouse account, which is used to log and report employee activity e. The systems were designed by employees, who feel a sense of ownership in the technology deployed c; Moderate 36. Zara’s clothing lines are designed a. by star designers like Stella McCartney. b. in collaboration with celebrities and pop artists. c. by design school graduates to suit customer demand. d. by designers who win talent shows sponsored by Zara. e. mostly by foreign designers in European design hotspots of Paris and Milan. c; Easy 37. How does Zara differ from its competitors in converting ideas into products? a. Zara concepts appear in stores in fifteen days on average compared to rivals who receive new styles once or twice a season. b. Zara’s ideas are inspired by social media, compared to the intrinsic design processes followed by its competitors. c. Zara’s design and concept teams use data from customers to predict fashion trends many months into the future and stock up inventory accordingly, as opposed to its rivals. d. Collaborations with celebrities help Zara churn out a limited, yet profitable, volume of items every year, while rivals produce a higher volume of less fashionable items.

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e. By focusing on a smaller number of products than rivals like Gap, Zara manages to limit exposure to wrong guesses. a; Moderate 38. A value chain is a set of a. similarly profitable firms competing against each other in any given industry. b. large firms that are vertically integrated. c. activities through which a product or service is created and delivered to customers. d. a large number of small firms that dominate a given market. e. robotically controlled conveyor belts that deliver products quickly from manufacturing stations to shipping containers. c; Easy 39. Which of the following is not a benefit achieved through Zara’s integration of technology throughout the firm? a. limited product runs of many unique products b. higher markdowns c. fewer write-offs d. less need for advertising e. All of the above are true. b; Moderate 40. Zara store staff gain as much as three hours in prime selling time to assist customers at stores. Which of Zara’s practices is instrumental in these time savings? a. concepts going from ideas to appearances in stores in fifteen days on an average b. three hundred member-strong design teams churning out up to thirty thousand items a year c. distribution centers iron clothes in advance and packing them on hangers, with security and price tags affixed d. collecting data from customers on what kind of clothes to stock in stores, using PDAs e. tweaking shipping models through Air France–KLM Cargo to coordinate outbound shipments with return legs loaded with raw materials. c; Easy 41. Due to limited production runs, Zara’s customers a. tend to delay their shopping until the products go on sale. b. visit the stores more often. c. buy products at discounted rates after a few weeks. d. visit stores less often. e. create a greater opportunity for increased markdowns and write-offs. b; Easy 42. According to an independent study, Zara books some 85 percent of its products at full price compared to the industry average markdown ratio of 50 to 70 percent. This is made possible by a. keeping a major part of the production processes under direct proprietary control. b. coordinating the outbound shipments of all Inditex brands with return legs loaded with return materials and half-finished items. c. applying data analytics to purchase trends. d. the practice of having limited production runs of its designs. e. leveraging contract manufacturers to produce only staple items with longer shelf-lives, which account for one-eighth of dollar volume. d; Moderate

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43. Zara’s IT expenditure is low by fashion industry standards and is also highly effective. Which of the following makes this possible? a. targeting technology investment at points in the value chain where it has the most significant impact b. utilizing the money spent on IT infrastructure to improve the IT skills of its employees through training programs c. using the best and most expensive software and hardware in the market, as it lowers any maintenance costs later on d. outsourcing IT management to third-party firms that provide IT services at lower costs e. investing IT funding in improving the infrastructure and cutting down employee overhead costs a; Easy 44. Small chip-based tags that wirelessly emit a unique identifying code for the item that they are attached to are called: a. personal digital assistants b. smart adaptors c. trackbacks d. legacy labels e. RFID tags e; Easy 45. High-end fashion house Prada’s experiment of implementing the latest technology in its flagship store failed because a. Prada targeted technology investment only at points in its value chain where it would have the most significant impact. b. the execution of the technological advancements was poor and didn’t work well during customer interactions, so managers and staff stopped using it. c. the effort was unlike Prada’s signature style, being more functional than fashionable. d. Prada skimped on spending with its IT expenditure being less than one-fourth the fashion industry average. e. the RFID technology used on items in the store were not state of the art and suffered from legacy system problems. b; Moderate 46. _____ represents an integrated solution that combines hardware, software, data, procedures, and the people who interact with and are impacted by the system. a. A neural network b. Artificial intelligence c. An information system d. Supercomputing e. Cloud computing c; Easy 47. ROI is a term used to represent the: a. return on information b. rate of information-generated c. regular order intake d. return on investment e. relay-ordered inventory d; Easy

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48. The e-commerce strategy that blends online and offline sales is called: a. sales channel b. betterline c. omnichannel d. blended sales e. omniline c; Moderate 49. At Zara, clothes are ironed in advance and packed on hangers, with security and price tags affixed.

This system means that employees in Zara stores simply move items from shipping box to store racks, spending most of their time on a. outsourcing their sales activities. b. value-added functions like helping customers find what they want. c. wrestling with inventory during busy periods. d. packing unsold merchandise that needs to be returned to the distribution center. e. whisking items from their stores to the staging areas. b; Moderate

50. Zara ensures they are selling items that customers want by a. using PDAs to collect data from customers on what kind of clothes to stock in stores. b. sending surveys to their customers via email. c. completing rigorous research on items sold by their rivals. d. following trends created by influencers. e. All of the above are true. a; Moderate Essay Questions 51. What are some of the new technologies that Zara is rolling out in its stores? Why do you think Zara is rolling out these new technologies?

Self-checkout, fitting room reservations, and robot-delivered online orders highlight some of the tech rolling out in Zara stores. A store like Zara might implement technologies such as self-checkout, fitting room reservations, and robot-delivered online orders to enhance customer experience and operational efficiency. Self-checkout allows customers to avoid long lines, offering a faster, more convenient checkout process. Fitting room reservations can streamline the shopping experience by reducing wait times and personalizing the service. Meanwhile, robot-delivered online orders can expedite the delivery process, reduce labor costs, and minimize human error, ensuring that customers receive their purchases more quickly and accurately. Overall, these technologies aim to meet the growing consumer demand for efficiency, convenience, and a seamless integration of online and offline shopping experiences.

Moderate 52. Walmart is a large firm, but some suggest that Zara has had more success implementing effective RFID. Why? Firms from Walmart to JCPenney have struggled to effectively implement RFID, but Zara’s vertical integration is an advantage here, as well. Since the entire supply chain is under Zara control and all items flow through one of two warehouses, Zara can affix tags to all products before sending them out to stores (a challenge for other retailers that have third-party suppliers ship to multiple warehouses or directly to stores). Stores then send tags back to Zara warehouses for reuse

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(reassigning a tag’s unique item to a new clothing item). Although tags only cost ten cents, with hundreds of millions of items sold each year, these costs would easily add up, so the reusable tag system makes solid financial sense (Zara bought so many tags at launch that it actually consumed one in every six tags produced for the entire apparel industry that year).

Moderate 53. How does RFID improve in-store customer service?

RFID lets Zara know where products are, so if a customer asks for an item in a store (perhaps in a different size or color), staff using custom apps on an iPod Touch can immediately tell if a product is in store, in a nearby store, or if it can be ordered from the distribution center or Zara.com.

Moderate 54. Briefly explain the intelligence-gathering exercises carried out by Zara in its stores and the role of technology in such efforts.

Zara’s designs are based on the evidence of customer demand. Zara’s store managers lead the intelligence-gathering effort that ultimately determines what ends up on each store’s racks. Armed with personal digital assistants (PDAs) to gather customer input, staff members regularly chat up customers to gain feedback on what they’d like to see more of.

Once stores are closed, the staff looks for trends in the piles of unsold items that customers tried on but didn’t buy to spot any preferences in cloth, color, or styles offered among the products in stock.

PDAs are also linked to the store’s point-of-sale (POS) system showing how garments rank by sales. Managers send updates that combine the hard data captured at the cash register with insights on what customers would like to see. All of this valuable data allows the firm to plan styles and issue rebuy orders based on feedback rather than hunches and guesswork. The goal is to improve the frequency and quality of decisions made by the design and planning teams.

Moderate 55. Describe how Zara’s counterintuitive practice of making limited production runs is profitable and effective in maintaining a competitive advantage over the firm’s rivals.

While running out of bestsellers might be seen as a disaster at most retailers, at Zara the practice delivers several benefits.

Limited runs allow the firm to cultivate the exclusivity of its offerings. Each Zara store is stocked with items tailored to the tastes of its local clientele. Limited runs encourage customers to buy right away and at full price. Customers realize that waiting for items to go on sale means the products have almost certainly been sold or moved to make room for newer stock. Zara rarely runs discount sales and this is evidenced in data that suggests that Zara books some 85 percent of its products at full price, compared to the industry average of just 50 percent.

The constant parade of new, limited-run items also encourages customers to visit often. The average Zara customer visits the store seventeen times per year, compared with only three annual visits made to competitors. This ensures that Zara spends almost nothing on advertising.

Finally, limited production runs allow the firm to reduce to a minimum the risk of making mistakes, such as stocking up on inventory with items customers would not buy and incurring losses.

Moderate 56. What role does Zara’s headquarters play in the running of its stores?

Zara’s store managers, armed with personal digital assistants (PDAs), gather customer input. Staff members regularly chat up customers to gain feedback on what they’d like to see more of. The staff looks for trends in the piles of unsold items that customers tried on but didn’t buy to spot any preferences in cloth, color, or styles offered among the products in stock. Managers send this valuable data to Zara’s headquarters, which allows the firm to plan styles and issue rebuy orders based on feedback rather than hunches and guesswork. The goal is to improve the frequency and

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quality of decisions made by the design and planning teams. While stores provide valuable front-line data, headquarters plays a major role in directing in-store operations. Software is used to schedule staff based on each store’s forecasted sales volume, with locations staffing up at peak times such as lunch or early evening. This constant refinement of operations throughout the firm’s value chain has helped reverse a prior trend of costs rising faster than sales.

Even the store displays are directed from the firm’s headquarters outside, where a basement staging area known as “Fashion Street” houses a Potemkin village of bogus storefronts meant to mimic some of the chain’s most exclusive locations throughout the world. It is here that workers test and fine-tune the chain’s award-winning window displays, merchandise layout, even determine the in-store soundtrack. Every two weeks, new store layout marching orders are forwarded to managers at each location.

Moderate 57. Why has Zara been more effective in leveraging technology to enhance its operating strategies than its rivals? Provide an example to contrast Zara’s handling of technology in its operations.

Whether measured by IT workers as a percentage of total employees or total spending as a percentage of sales, Zara’s IT expenditure is less than one-fourth the fashion industry average. Zara excels by targeting technology investment at the points in its value chain where it will have the most significant impact, making sure that every dollar spent on tech has a payoff.

High-end fashion house Prada’s efforts at its flagship Manhattan store contrast Zara’s efforts. The firm used radio frequency identification (RFID) tags on clothes in its store. By wirelessly reading the tags on each garment, dressing rooms would recognize what was brought in and make recommendations of matching accessories as well as similar products that patrons might consider. Customers could check inventory, and staff sporting PDAs could do the same. A dressing room camera would allow clients to see their front and back view side-by-side as they tried on clothes. However, as slick as it sounded, the effort had disastrous consequences and the investment in Prada’s in-store technology was simply too high, with estimates suggesting the location took in just one-third the sales needed to justify expenses. At Prada’s Manhattan flagship store, the effort looked like tech was chosen because it seemed fashionable rather than functional.

Moderate 58. Many firms have developed innovative information systems, only to find that employees fail to adopt these tools. How does Zara encourage store managers to effectively use the systems deployed in stores?

Managers have “skin in the game,” with compensation tied to overall store performance. Store performance is improved through managers’ use of information systems that help ensure that fashions arrive in store tailored to customer feedback, requests, and preferences.

Easy 59. Prada’s venture of designing a technology enhanced store in Manhattan was described as fashionable over functional. What issues did Prada face with the new concept? What did managers fail to consider when implementing the new technology?

Prada made a considerable investment in the technology used for the Manhattan store.

Unfortunately, they experienced issues when customers did not understand the technology of the smart dressing rooms. The store was also a high-traffic location, and the technology was not built to withstand the abuse. In addition, the inventory database did not accurately stock items causing missed opportunities for sales. The store failed to meet the return on investment in the technology.

The managers invested in hardware and software, but failed to consider the need for data, procedures, and people.

Moderate

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Short Answers 60. Our analysis of Inditex’s Zara stores showed the power of data to fuel competitive advantage. List the two acronyms for technologies that Zara uses to collect data in stores and describe what the data from each of these respective systems “tells” the firm.

The two acronyms are POS, which tells what the store is selling, and PDA, which tells what customers want to see on the shelves.

Easy Fill in the Blanks 61. A(n) _____ is a transaction process that captures customer purchase information. point-of-sale system; Easy 62. Coordinating and enabling the flow of goods, people, information, and other resources among locations is known as _____. logistics; Moderate 63. An information system is an integrated solution that combines five components: hardware, software, data, _____, and the people who interact with and are impacted by the system. procedures; Moderate 64. _____ are goods to be further customized based on designer/manager collaboration.

Greige; Easy 65. When a single firm owns several layers in its value chain, it is said to be _____. vertically integrated; Easy 66. Zara's new in-store technology includes self-checkout using the _____.

app; Easy Section 2.3 True/False Questions 67. The strengthening of the euro relative to the dollar has insulated Zara against financial vulnerabilities.

False; Moderate 68. Rising fuel costs are likely to make Zara’s model of twice-weekly deliveries more expensive to maintain.

True; Easy 69. Zara also saves money by simplifying pricing. An item sold in Bangkok is likely to cost the same as a similar item sold in Barcelona.

False; Moderate 70. Zara’s vertically integrated model is easier for rivals to copy compared to Dell’s, as computing is more complex than clothing in terms of number of new models offered.

False; Moderate

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71. Inditex has invested in several firms to help improve sustainability.

True; Easy Multiple Choice Questions 72. Which firm is trying to get out in front of both legislation and critics by setting aggressive sustainability goals? a. Amazon b. Inditex c. Wal-Mart d. Google e. All of the above are correct. b; Moderate 73. Factors such as weather, natural disaster, terrorism, labor strife, or political unrest can shut down a firm’s operations. Which of the following is one of the measures taken by firms to hedge such risks? a. driving up profitability by increasing prices of market goods b. spreading productions facilities across the globe c. requesting government intervention in the form of subsidies or nationalization d. sourcing raw materials from countries with low labor costs e. diverting marketing and advertising budgets to accommodate greater production b; Moderate 74. Zara is susceptible to any disruption in northern Spain because a. it moves all of its deliveries through just two locations, both in Spain. b. it conducts its trade operations based on the American dollar rather than the stronger euro. c. most of Zara’s products are sold in markets outside Spain and Europe. d. Zara’s products are sold at much lower costs around the world than in Spain, and this harms profitability. e. Zara’s production facilities in Asia and Central America are threatening employment in Spain. a; Easy 75. Zara’s production costs could rise at higher rates than its competitors because many of the firm’s costs are tied to the: a. euro b. dollar c. yen d. pound e. franc a; Easy 76. The Zara experience involves a regular supply of new stock on the shelves, because of which customers tend to visit Zara’s stores more often than they visit other retailers’ stores. However, such a policy will become more expensive to maintain if a. star designers demand a higher fee for its designs. b. PDAs are not used. c. fuel costs rise. d. Zara’s horizontal integration fails. e. Zara outsources its production process. c; Easy

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77. Zara implements limited production runs to a. offer exclusivity. b. encourage full price purchases. c. increase customer visits. d. reduce the risk of making a mistake with a collection. e. All of the above are true. e; Moderate 78. Who is demanding that clothing companies make efforts to be more planet-friendly? a. customers b. employees c. vendors d. All of the above are true. e. None of the above are true. d; Moderate Essay Questions 79. What are the operational and financial challenges that Zara faces?

In spite of its effectiveness, Zara’s Spain-centric, just-in-time manufacturing model has certain defects. By moving all of the firm’s deliveries through just two locations, both in Spain, the firm remains hostage to any disruption in the region, such as weather, natural disaster, terrorism, labor strife, or political unrest. Firms often hedge risks that could shut down operations by spreading facilities throughout the globe. If problems occur in northern Spain, Zara has no such fall back.

Moreover, this model also leaves the firm potentially more susceptible to financial vulnerabilities as the euro has strengthened relative to the dollar. Many low-cost manufacturing regions have currencies that are either pegged to the dollar or have otherwise fallen against the euro. This situation means that Zara’s Spain-centric costs rise at higher rates compared to competitors, presenting a challenge in keeping profit margins in check. Rising transportation costs are another concern. If fuel costs rise, the model of twice-weekly deliveries that has been key to defining the Zara experience becomes more expensive to maintain.

Zara is liable to be overtaken by rivals who might, in time, succeed in copying its vertically integrated value chain, despite the difficulty involved. Dell’s loss of market share due to the same reason can be cited as precedent for Zara’s potential vulnerability in this regard.

Finally, the firm’s financial performance can also be impacted by broader economic conditions.

When the economy falters, consumers simply buy less and may move a greater share of their wallet to less-stylish and lower-cost offerings from deep discounters like Walmart. Zara is particularly susceptible to conditions in Spain, in particular, and Western Europe, in general.

Hard 80. Although Inditex was a latecomer to e-commerce, they have grown their online sales by implementing an omnichannel strategy. Describe how the firm’s omnichannel strategy contributes to Zara’s e-commerce success.

Implementing an omnichannel strategy helped Zara blend online and offline sales to best benefit the customer. For example, customers can return and pick up online orders in store. While in store, staff can locate out-of-stock items or alternatives to ensure the customer has a successful trip. To meet the demand for online orders, Zara added e-commerce stockrooms and collection stations where robots deliver packages to customers via conveyor belt. Sales at Zara are flourishing online and in store.

The omnichannel strategy provides customers with a seamless shopping experience and aligns with the company’s strategy to utilize technology.

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Moderate Fill in the Blanks 81. The organizational activities that are required to produce goods or services are known as _____. operations; Moderate 82. _____ targets for the end of the decade include a commitment to use 40 percent recycled fibers across the product line.

Inditex; Moderate 83. _____ occurs when customers browse a retailer but buy competing items online.

Showrooming; Easy

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Chapter 3 Strategy and Technology: Concepts and Frameworks for Achieving Success Section 3.1 True/False Questions 1. When offerings are roughly the same, they are more commodity than differentiated.

True; Easy 2. A firm’s financial performance that consistently outperforms its industry’s peers is known as operational effectiveness.

False; Easy 3. According to Michael Porter, the reason many firms suffer margin-eroding competition is because they have defined themselves according to strategic positioning rather than operational effectiveness.

False; Moderate 4. When technology can be matched quickly, it is rarely a source of competitive advantage.

True; Easy 5. According to the resource-based view of competitive advantage, if a firm is to maintain sustainable competitive advantage, it must control a set of exploitable resources that are valuable and can be substituted easily.

False; Moderate 6. Fast growing Groupon was able to dissuade rivals from entering its market because the firm’s technology was so difficult to replicate.

False; Easy 7. In the crowded market space of 175 mattress firms, CNBC’s claim that “you can’t tell them apart” reinforces the idea that similar offerings become commoditized.

True; Easy 8. Cisco’s acquisition of Pure Digital, makers of the Flip video camera line, was largely considered a flop because comparable technology soon became a feature in other popular consumer electronics products.

True; Easy 9. Nortel was one of the dominant firms providing telecom equipment during the early Internet buildout.

True; Easy Multiple Choice Questions 10. Which entrepreneur said, “Advertising is the price you pay for having an unremarkable product or service”? a. Steve Jobs b. Jeff Bezos c. Bill Gates d. Michael Dell

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e. Jerry Yang b; Easy 11. A firm’s financial performance that consistently outperforms its industry’s peers is known as: a. comparative advantage b. absolute advantage c. sustainable competitive advantage d. first mover advantage e. operational efficiency advantage c; Easy 12. Which of the following statements about technology is true? a. Technology alone is enough to provide sustainable competitive advantage to a firm. b. Technology plays a marginal role in creating strategic differences. c. Technological improvements are not important in strengthening a firm’s strategic advantages. d. Technological improvements can often be copied by rivals, leading to a profit-eroding arms race. e. Technology cannot be used by late entrants to gain a share of the industry. d; Moderate 13. Technology that super-imposes content, such as images and animation on top of real-world images is called: a. alternative imaging b. strategic design c. illustration editing d. augmented reality e. product placement d; Hard 14. Operational effectiveness refers to a. the implementation of technology in a business context. b. performing the same tasks better than rivals perform them. c. the number of times inventory is sold or used during the course of a year. d. performing different tasks or the same tasks in different ways. e. matching the benefits of a successful position while maintaining an existing position. b; Easy 15. The _____ problem exists when rivals watch a pioneer’s efforts, learn from their successes and missteps, and then enter the market quickly with a comparable or superior product at a lower cost. a. late entrant b. early starter c. first mover d. intellectual property e. fast follower e; Easy 16. _____ refers to performing different tasks than rivals or the same tasks in a different way. a. Straddling b. Operational effectiveness c. Strategic positioning d. Vertical integration e. Scale advantage

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c; Easy 17. A firm is said to be _____ when it attempts to match the benefits of a successful position while maintaining its existing position. a. switching b. straddling c. dovetailing d. streamlining e. vertically integrating b; Easy 18. According to Porter, strategy is fundamentally about being: a. different b. efficient c. superior d. scalable e. profitable a; Easy 19. The resource-based view of competitive advantage states that for a firm to maintain sustainable competitive advantage it must control a set of exploitable resources that have four critical characteristics. What are these characteristics? a. inventory turns, high margins, long account payable periods, brand building relationships b. operational effectiveness, strategic positioning, scale, distribution channels c. rareness, value, imperfect imitability, non-substitutability d. a website, an app, cloud-based systems, a savvy technology staff e. low margin, high delivery, infrastructure, customizable c; Moderate 20. Many telecom firms began digging up the ground and laying webs of fiberglass to meet the growing demand for Internet connectivity. However, rivals and startups began to imitate these firms and soon these new assets were not so rare and each day they seemed to be less valuable. It can be inferred from this example that a. resource-based thinking can help avoid the trap of carelessly entering markets simply because growth is spotted. b. the telecommunications market is only big enough to support one or two major players. c. the immense scale advantages enjoyed by major firms can help them fight off competition from newer entrants. d. technology assets that require high investment and maintenance are liable to becoming obsolete much quicker than others. e. the scale of technology investment required to run a business is not a huge enough factor to act as a barrier to entry for new, smaller competitors. a; Moderate 21. In _____, the light inside fiber is split into different signal-carrying wavelengths in a way similar to how a prism splits light into different colors. a. polarization b. time-division multiplexing c. space-division multiplexing d. frequency hopping spread spectrum e. dense wave division multiplexing

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e; Easy 22. Sometimes technology can sound geeky, and so technical that executives might think that it doesn’t require managerial or investor attention. However, many investing in the telecom sector suffered from a lack of insight on how a key technology was impacting their industry. Telecom firms failed to anticipate the impact of a technology known as _____, which enabled existing fiber to carry more transmissions than ever before. a. radio frequency identification (RFID) b. dense wave division multiplexing (DWDM) c. cloud computing d. open source software e. resource-based software b; Moderate 23. As a small business owner, you might use an affiliate to promote your products and services online.

What is a potential challenge of working with a single affiliate? a. The affiliate may limit your ability to work with others. b. The affiliate may discontinue use of your product or service. c. The affiliate may increase traffic to your website. d. The affiliate might have a targeted audience for your brand. e. All of the above are true. b; Moderate Essay Questions 24. What are Porter’s views in relation to operational effectiveness and strategic positioning? Contrast the two concepts.

According to Porter, the reason so many firms suffer aggressive, margin-eroding competition is because they’ve defined themselves according to operational effectiveness rather than strategic positioning.

Operational effectiveness refers to performing the same tasks better than rivals perform them.

Everyone wants to be better, but the danger in operational effectiveness is “sameness.” This risk is particularly acute in firms that rely on technology for competitiveness, as technology can easily be acquired. Because of this, operational effectiveness is usually not sufficient enough to yield sustainable dominance over the competition.

In contrast to operational effectiveness, strategic positioning refers to performing different activities from those of rivals, or the same activities in a different way. According to Porter, strategy is fundamentally about being different. While technology itself is often very easy to replicate, it can also play a critical role in creating and strengthening strategic differences—advantages that rivals will struggle to match.

Moderate 25. One of the key questions posed by 21st century managers is “How can we possibly compete when everyone can copy our technology and the competition is a click away?” One path to take involves creating a resource or set of resources for sustainable competitive advantage. List the four characteristics that such resources must have for the possibility of sustainable competitive advantage to exist. Why is it important to have all four simultaneously?

These resources must be (1) valuable, (2) rare, (3) imperfectly imitable (tough to imitate), and (4) non-substitutable. Having all four characteristics is key. Miss value and no one cares what you’ve got. Without rareness, you don’t have something unique. If others can copy what you have, or others can replace it with a substitute, then any seemingly advantageous differences will be undercut.

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Moderate 26. Suppose you are in the market for a new laptop. You already own three devices in the Apple ecosystem and your account information and content is synced across all devices. However, you have come across a great deal offering a $200 rebate from a rival. What are the potential switching costs if you move to the rival? How likely are you to stay with the incumbent?

There may be several costs associated with a move to the rival. First, I may need to invest time in learning the new interface or commands. There might also be a loss of information and data since the incumbent laptop may not be compatible with the rival laptop. Lastly, duplicating the convenience of having my information and data on all of my devices might require an investment in new equipment.

Ideally, the $100 rebate appears to be a good deal. However, investing time, possible information and data loss, and fees associated with upgrading additional devices outweighs the rebate.

Moderate Fill in the Blanks 27. According to TechCrunch, Facebook’s development mantra, formerly, “Move Fast and Break Things” should now be “_____.”

Move Last and Take Things; Moderate Section 3.2 True/False Questions 28. In commodity industries, data is not the only substantive differentiator.

False; Moderate 29. Bundling is not effective when a software product or service is included with a hardware product.

False; Easy 30. Firms that build an imitation-resistant value chain develop a way of doing business that others struggle to replicate.

True; Easy 31. A trademark is the symbolic embodiment of all the information connected with a product or service of a firm.

False; Easy 32. A salesperson’s ability to effectively bargain with his/her consumers is called viral marketing.

False; Easy 33. Businesses benefit from economies of scale when the cost of an investment can be used in serving a niche customer base.

False; Easy 34. The scale of technology investment required to run a business can act as a barrier to entry by discouraging new, smaller competitors.

True; Easy 35. Commodities are products or services that vary across multiple vendors.

False; Easy

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36. Network externalities exist when a product or service becomes less expensive as more people use it.

False; Moderate 37. Metcalfe’s Law is used to explain the concept of switching costs.

False; Moderate 38. Many firms choose not to implement operational components of ERP software and instead elect to create their own propriety solutions in part because they see their uniqueness in certain operations areas as key to creating difficult-to-imitate competitive advantages.

True; Moderate 39. When firms see distribution partners as rivals, this is known as Channel Conflict.

True; Moderate 40. Bundling can give a firm a key advantage.

True; Easy 41. A firm can benefit from high switching costs, even when rivals offer free products.

True; Moderate Multiple Choice Questions 42. The set of activities through which a product or service is created and delivered to customers is known as a(n): a. marketing plan b. value chain c. inventory turnover d. strategic position e. pure play b; Easy 43. How did Apple trump Google to become the dominant mapping platform on iOS? a. Apple’s control of iOS gave it control of the distribution channel to reach its users, kicking Google out as the default mapping app and capturing the majority of user engagement. b. Apple sued Google for copyright infringement related to the look and feel of Apple Maps. c. Apple sued Google for privacy violations related to the collection of map data. d. Apple hasn’t trumped Google Maps. Google’s Map app is used by the majority of iOS customers, whereas most users ignore Apple Maps. e. None of the above are true. a; Moderate 44. Which of the following represents one of the primary components of the value chain? a. outbound logistics b. firm infrastructure c. human resource management d. research and development e. procurement a; Moderate

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45. Dell, previously the world’s number one PC manufacturer, has seen its market share shrink because of rivals copying its value chain and reducing the price advantage it enjoyed over rivals. Dell’s present struggles a. underscore the importance of continually assessing a firm’s strategic position among changing market conditions. b. are a result of rivals adopting supply chain management of software products that have yielded competitive advantages. c. imply that publicly traded firms are at a disadvantage in the technology sector. d. highlight the fact that scale advantages of an established firm are a huge factor in discouraging newer entrants to the market. e. demonstrate that resource-based thinking can help firms avoid the trap of carelessly entering markets simply because growth is spotted. a; Moderate 46. A(n) _____ is the symbolic embodiment of all the information connected with a product or service. a. trademark b. copyright c. patent d. brand e. advertisement d; Easy 47. A strong brand can be an exceptionally powerful resource for competitive advantage by lowering _____, proxying _____ and inspiring _____. a. price; strategy; innovation b. switching costs; quantity; performance c. expenses; marketing; respect d. search costs; quality; trust e. customer concern; investment; profits d; Moderate 48. Leveraging consumers to promote a product or service is known as: a. straddling b. affiliating c. long tailing d. crowdsourcing e. viral marketing e; Easy 49. Benefits related to a firm’s size are referred to as: a. network effects b. brand recall c. scale advantages d. vertical integration e. disintermediation c; Easy 50. Businesses benefit from economies of scale when the cost of an investment can be a. spread across increasing units of production. b. used in serving a niche and loyal customer base. c. used to build a brand image for products through advertising.

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d. leveraged to recruit consumers to promote a product or service. e. diverted to implementing technology upgrades in the business model. a; Moderate 51. _____ exist when consumers incur an expense to move from one product or service to another. a. Network effects b. Switching costs c. Economies of scale d. Competitive advantages e. Profit margins b; Easy 52. Apple’s dominance of smartphone and tablet markets has allowed the firm to lock up 60 percent of the world’s supply of advanced touchscreen displays, and to do so with better pricing than would be available to smaller rivals. This is an example of a. network externalities that make Apple valuable. b. high switching costs for suppliers. c. a complex tech product establishing itself as a killer brand. d. a growing firm gaining bargaining power with its suppliers. e. low search costs associated with a famous brand. d; Easy 53. The acronym API stands for: a. access programming interface b. application processing inquiry c. access processing interface d. application programming inquiry e. application programming interface e; Easy 54. Netscape, which once controlled more than 80 percent of the market share in Web browsers, lost its dominant position when customers migrated to Internet Explorer, Microsoft’s Web browser. Internet Explorer was easy to install and had no significant differences in terms of usability. This example serves to illustrate that a. fast-following smaller firms are always ready with newer and possibly superior products. b. customers of technology companies are becoming increasingly savvy and more demanding. c. the open source nature of technology ensures that no firm can expect to monopolize a market. d. firms need to employ increasingly stringent intellectual property norms to guard against infringements from smaller, competitive rivals. e. firms with low switching costs can sometimes be rapidly overtaken by strong rivals with additional competitive advantages. e; Moderate 55. Which of the following is not highlighted as a source of switching costs? a. learning costs b. information and data c. search costs d. viral marketing e. loyalty programs d; Moderate

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56. If a new entrant hopes to attract customers from an established incumbent, the new entrant must ensure that the value they offer exceeds the incumbents’ value in addition to any perceived: a. switching costs b. market depreciation c. brand benefits d. advertising expenses e. scale advantages a; Easy 57. Consumers buying commodities are highly _____ since they have so many similar choices. a. quality-conscious b. price-focused c. brand-driven d. technologically discriminating e. loyal b; Easy 58. The acronym NPE stands for: a. non-practicing entities b. non-practicing exhibits c. normal practicing entities d. neo-practicing entities e. normal-practicing exhibits a; Easy 59. _____ Law is said to be at play when the value of a product or service increases as its number of users expands. a. Amdahl’s b. Turing’s c. Zuckerberg’s d. Metcalfe’s e. Moore’s d; Easy 60. The paths through which products or services get to customers are known as: a. information pathways b. vertical markets c. distribution channels d. proxy networks e. horizontal markets c; Easy 61. The patent system is often considered to be unfairly stacked against startups because a. bigger multinational firms enjoy patent protection in all countries as opposed to startups, which are domestic firms that do not get such protection for the most part. b. the intellectual property laws are not adequate to protect the interests of smaller firms from infringements. c. the patent system grants patents for innovations on a differential basis, with bigger firms getting precedence over start-ups. d. high litigation costs coupled with a few months of litigation can sink an early stage firm.

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e. patents are granted by the patent system on an ad hoc basis wherein firms that have been in business longer get patent protection for longer periods of time. d; Moderate Essay Questions 62. List the various components of a value chain and give a brief description for each.

The value chain is the “set of activities” through which a product or service is created and delivered to customers. There are five primary components and four secondary components.

The primary components are: • inbound logistics - getting the needed materials and other inputs into the firm from suppliers • operations - turning inputs into products or services • outbound logistics - delivering products or services to consumers, distribution centers, retailers, or other partners • marketing and sales - customer engagement, pricing, promotion, transaction • support - service, maintenance, and customer support The secondary components are: • firm infrastructure - functions that support the whole firm, including general management, planning, IS, and finance • human resource management - recruiting, hiring, training, and development • technology/research and development - new product and process design • procurement - sourcing and purchasing functions Moderate 63. Diagram and label the value chain, listing all primary and secondary components.

Moderate Fill in the Blanks 64. A _____ is the path through which products or services get to customers. distribution channel; Easy 65. The category of enterprise software known as _____ is implemented in modules, offering the potential of automating an organization’s entire value chain.

ERP or enterprise resource planning; Easy 66. Rivals such as _____ and _____ once made their own chips but sold off manufacturing when their smaller market shares couldn’t justify the Intel-sized multi-billion-dollar table stakes needed to stay in the game.

AMD, IBM or IBM, AMD; Moderate 67. _____ are products or services that are nearly identically offered from multiple vendors.

Commodities; Easy

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68. _____ exist when a product or service becomes more valuable as more people use it.

Network effects; Easy 69. _____ hold intellectual property not with the goal of bringing novel innovations to market but instead in hopes that they can sue or extort large settlements from others.

Patent trolls; Easy 70. More recently, Apple has leveraged its _____ platform as a distribution channel to launch a new subscription service. Just nine months after launching the Apple Music, the firm had attracted over 13 million paying subscribers to its streaming service. iTunes; Easy 71. Apple operating systems run exclusively on Apple products, which _____ their products from rivals. differentiates; Easy Section 3.3 True/False Questions 72. Timing and technology alone will not yield sustainable competitive advantage.

True; Easy 73. Market entry is the same as building a sustainable business.

False; Easy Multiple Choice Questions 74. Firms like Blockbuster, Sotheby’s, and Barnes & Noble were put at risk by operating under the following platitude: a. There is no “I” in team. b. Follow, don’t lead. c. What’s done is done. d. Better late than never. e. Work smarter, not harder. b; Moderate 75. Moving first pays off when the time lead is used to create a. the latest technology at a firm’s production plant. b. operational effectiveness to harness maximum profitability. c. critical resources for competitive advantage. d. high stock value to generate funds for expansion. e. market entry to ensure sustainable competitive advantage. c; Easy 76. Which platform contributed to Apple and Google's domination of the mobile market? a. music services b. app stores c. social media d. video streaming e. All of the above are true.

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b; Easy Essay Questions 77. “Time and technology can be enablers for competitive advantage,” explain this statement.

Even though barriers to entry for tech-centric industries are rather low, it’s absolutely critical to understand that market entry is not the same as building a sustainable business and just showing up doesn’t guarantee survival. Timing and technology alone will not yield sustainable competitive advantage. Yet both of these can be enablers for competitive advantage. Put simply, it’s not the time lead or the technology, it’s what a firm does with its time lead and technology. True strategic positioning means that a firm has created differences that cannot be easily matched by rivals. Moving first pays off when the time lead is used to create critical resources that are valuable, rare, tough to imitate, and lack substitutes. Anything less risks the arms race of operational effectiveness. Building resources like brand, scale, network effects, switching costs, or other key assets can provide firms with a shot. But guessing wrong about the market or botching up execution means failure or inviting direct competition. It is true that most technologies can be copied. But the lead that each of the most successful tech-enabled firms had was leveraged to create network effects, switching costs, data assets, and helped build solid and well-respected brands.

Moderate 78. Discuss the role of timing and technology as it relates to competitive advantage.

Timing and technology alone will not yield sustainable competitive advantage. Yet both of these can be enablers for competitive advantage. Put simply, it’s not the time lead or the technology; it’s what a firm does with its time lead and technology. True strategic positioning means that a firm has created differences that cannot be easily matched by rivals. Moving first pays off when the time lead is used to create critical resources that are valuable, rare, tough to imitate, and lack substitutes. Anything less risks the arms race of operational effectiveness.

Easy 79. Assume you are the owner of a start-up firm and you obtained a patent for new software. It was recently brought to your attention that a large firm introduced a software that appears to be a duplicate of your patented software. What protections are provided to you by the patent? What is the likely outcome if you take legal action against the large firm?

As the patent holder, I expect my intellectual property to be protected for at least 20 years. My software should be protected from copycats even if they are from large firms. Ideally, I would take legal action against the large firm. However, as the owner of a small technology start-up, I may be in for an uphill battle. The average cost in a single patent case averages about $5 million, which would sink my small firm.

Moderate Section 3.4 True/False Questions 80. Stack Overflow saw a 50 percent increase in usage following the introduction of ChatGPT. False; Moderate 81. If a firm’s goods are highly differentiated, the Internet typically lessens the firm’s bargaining power as a supplier.

False; Moderate

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82. If there is the availability of a wide variety of undifferentiated commodity goods in a given market, and these products are available online, then bargaining power typically shifts to the buyer.

True; Moderate 83. The Internet is largely seen as lowering the entry barrier for new entrants, but firms that enter may have little chance of success unless they have a competitive advantage over existing rivals.

True; Easy 84. Uber is an example of a business model that has strengthened the bargaining power of suppliers (cab drivers) with respect to middlemen who took a cut of their services (e.g. cab companies).

True; Easy 85. Porter’s five forces model identifies Gen AI as a technology capable of creating substitute

goods.

True; Easy Multiple Choice Questions 86. Which technology is used to generate answers in services like ChatGPT? a. virtual reality b. augmented reality c. 3D printing d. Gen AI e. smartphones d; Moderate 87. Which of the following is one of Porter’s five forces? a. availability of competitors in the market b. total cost of ownership c. purchasing power parity of consumers d. threat of new entrants e. strength of intellectual property laws d; Moderate 88. Which of the following is a source of bargaining power for buyers? a. greater choice of products b. high switching costs c. loyalty programs d. network effects e. unique and highly differentiated products a; Moderate 89. The degree to which complete information is available is known as: a. information assurance b. data proximity c. operational alertness d. price transparency e. data consolidation d; Easy

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90. How does the Internet typically impact price transparency and information asymmetry? a. both price transparency and information asymmetry increase b. both price transparency and information asymmetry decrease c. price transparency increases while information asymmetry decreases d. price transparency decreases while information asymmetry increases e. None of the above are true. c; Easy 91. What new technology tool may soon take the market share in Internet search advertising? a. virtual reality b. augmented reality c. ChatGPT (Gen AI) d. Apple Vision Pro e. None of the above are true. c; Moderate Essay Questions 92. Diagram and label all components in the Porter’s Five Forces model (also known as the Industry and Competitive Analysis model).

Easy 93. Relate your understanding of the Porter’s Five Forces model to describe how the Internet affects the bargaining power of buyers and sellers according to whether offers are commodity or differentiated products.

It is often suggested that the Internet increases bargaining power of buyers and lowers the bargaining power of suppliers. This suggestion is true for some industries like auto sales and jewelry where the products are commodities, and the price transparency of the Internet counteracts a previous information asymmetry where customers often didn’t know enough information about a product to bargain effectively. But it’s not true across the board.

In cases where a seller’s goods are highly differentiated, the Internet can strengthen supplier bargaining power. The customer base of an antique dealer used to be limited by how many likely purchasers lived within driving distance of a store. Now with eBay, the dealer can take a rare good to a global audience and have a much larger customer base bid up the price. Switching costs also weakens buyer bargaining power.

Moderate Fill in the Blanks

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94. _____, also known as the Industry and Competitive Analysis, is a popular framework for examining a firm’s competitive environment.

Porter’s Five Forces model; Easy 95. A decision situation where one party has more or better information than its counterparty is called a(n) _____. information asymmetry; Easy

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Chapter 4 FreshDirect: A Tech-Heavy Online Grocer Succeeds Where Others Fail Section 4.1 True/False Questions 1. FreshDirect's success in the New York City grocery market is attributed to its use of technology to create an ultra-efficient model that provides farm-to-table freshness and massive product choice.

True; Easy 2. FreshDirect's domination of the New York City grocery market is primarily due to its extensive network of multiple facilities strategically located throughout the city.

False; Easy 3. Online grocery shopping has historically been unsuccessful due to consumers' reluctance to entrust others to pick their produce and their preference for the immediacy of shopping in person.

True; Easy Multiple Choice Questions 4. CEO and co-founder David McInerney’s main goal of launching FreshDirect was to a. create the first online grocery platform. b. address the quality gap between store-bought and restaurant goods. c. offer consumers an online bulk grocery option. d. offer customers the largest selection of pantry staples in the region. e. bring more technology into the industry. b; Easy 5. Early attempts at the online grocery business were unsuccessful because a. consumers were fine with the conventional way of shopping. b. web browsers did not deliver a user-friendly experience. c. product quality suffered due to inefficient delivery methods. d. selections were smaller than traditional grocery stores. e. All of the above are true. a; Moderate 6. What two problems did New Yorkers experience prior to the arrival of FreshDirect? a. limited hours and freshness b. limited locations and high prices c. high prices and limited freshness d. limited freshness and bulk options e. high prices and limited selection e; Easy 7. Perceived switching costs may prevent a long-term FreshDirect customer from a. visiting the convenient mart down the street. b. subscribing to a rival online grocer. c. ordering dinner using restaurant order delivery. d. picking up grocery items on a trip to a big box store. e. renewing their subscription.

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b; Easy 8. Which of the following describes competitive advantage related to data that a firm can leverage, and rivals are not able to match? a. data branding b. data asset c. data repository d. data advantage e. data profiling b; Easy 9. Why do online grocers have a competitive advantage over traditional grocery stores? a. Online grocers offer more products than traditional grocers. b. Online grocers prioritize the needs of customers more than traditional grocers. c. Online grocers are more efficient at grocery delivery. d. Online grocers do not run out of stock. e. Online grocers collect data to customize the shopping experience. e; Moderate 10. FreshDirect’s three-tier model a. eliminates the need for multiple suppliers. b. improves the quality of products being delivered to their customers. c. eliminates middlemen, which allows them to work directly with suppliers. d. reduces the merchant fees associated with credit card transactions. e. allows them to easily expand their operation to new markets. c; Easy 11. Suppose you own a mid-size berry farm in upstate New York. You can sell your crops to FreshDirect or a traditional store. Why would you choose to work with FreshDirect over the traditional grocer? a. Your profits would be higher since FreshDirect works directly with suppliers. b. You can pay FreshDirect slotting fees to obtain prime shelf space. c. You would be pit against other farms for the lowest price. d. You would be required to cobrand products to strengthen the FreshDirect brand. e. You can set your own price for your product. a; Moderate 12. The number of times average warehouse inventory sells out and is replenished is referred to as: a. inventory rollout b. inventory switching c. inventory rollover d. inventory churn e. inventory turns e; Easy 13. Suppose you are the CEO of a new online meal-kit delivery service. How would you determine the best location for your customer base? a. find a geographic area that does not have a similar service b. find a location were customers desire this type of service c. start the delivery service then select a location where you see heavy traffic d. find an inexpensive facility and start the business e. None of the above are true.

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b; Hard 14. FreshDirect was acquired by which of the following? a. Ahold Delhaize b. Shoplink c. Webvan d. Google Express e. Home Runs a; Easy Essay Question 15. What challenges did early entrepreneurs face when entering the online grocer market? How did FreshDirect overcome these challenges?

Early entrants into the online grocer market encountered several challenges. Entrepreneurs did not consider the consumers’ desire or need to order groceries online. The needs of city inhabitants were quite different from those living in suburban areas. Consumers were also hesitant about allowing someone else to pick their produce items. Early entrants focused more on the goals of the organization than the needs of the consumers. FreshDirect was able to overcome the challenges of their predecessors by offering a solution that fit the desires and needs of the consumers. FreshDirect entered the New York area, which was suffering from high costs and low selection. They were able to bring fresh produce to the doorsteps of consumers who had barriers to quality low-cost groceries. In addition, FreshDirect leveraged technology to add value to the added experience.

Hard 16. Explain how FreshDirect's strategic use of technology has enabled it to succeed in the competitive online grocery market, particularly in New York City. Discuss the various technological innovations employed by FreshDirect to enhance its operations, supply chain efficiency, customer experience, and competitive advantage.

FreshDirect's success in the online grocery market is attributed to its strategic integration of technology across various aspects of its operations. By leveraging technology to optimize supply chain efficiency, enhance customer experience, and foster closer partnerships with suppliers, FreshDirect has been able to offer a wide selection of fresh products at competitive prices, undercutting traditional grocers by up to 35 percent. Key technological innovations include AI-driven order fulfillment systems, climate-controlled warehouses, data-driven personalization, and direct sourcing from suppliers. These innovations have not only enabled FreshDirect to dominate the New York City market but also to achieve consistent profitability and fuel geographic expansion, serving as a model for success in the online grocery industry.

Moderate Fill in the Blanks 17. The degree to which a product satisfies market demand is known as _____. product–market fit; Easy 18. The cost incurred by a consumer when moving from one product to another is referred to as _____. switching cost; Easy 19. Traditional grocers are not able to build a _____ due to their inability to capture information regarding all customer transactions. data asset; Moderate

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20. The symbolic embodiment of all the information connected with a product or service is referred to as _____. brand or brand asset; Easy 21. FreshDirect’s _____ warehouses are energy efficient, keep food fresh, and reduce waste. climate-controlled; Easy 22. With an increase in customers, FreshDirect uses fewer _____ to serve more customers in smaller areas. trucks; Easy 23. FreshDirect uses teams to inspect and sample hundreds of items daily to provide customers a _____ to inform shopping on the website. rating or freshness rating; Moderate 24. FreshDirect faces more challenges than non-food e-commerce firms because they specialize in selling _____. perishables; Easy 25. FreshDirect does not fully rely on artificial intelligence to fulfill orders. Workers hand-inspect orders for optimal _____. quality; Easy 26. FreshDirect’s _____ has grown to over 60,000. customer base; Easy 27. FreshDirect’s seafood stock turns _____. each day or daily; Easy 28. FreshDirect uses data for _____, which improves the brand and creates switching costs. customer profiling; Moderate 29. The system at FreshDirect’s Bronx facility is highly efficient and has ____ packing times by 75 percent. cut, decreased; Easy Section 4.2 True/False Questions 30. Acquisitions in the grocery delivery industry have a high success rate, with most companies experiencing significant growth after being acquired.

False; Easy 31. FreshDirect's success in New York City may not be easily replicated in other markets due to differences in customer preferences and competition from larger chains like Trader Joe's and Whole Foods.

True; Easy

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32. Expanding into new geographies typically requires startups to invest in large fixed-cost infrastructure, which can be challenging due to limited cash and time.

True; Easy Multiple Choice Questions 33. What was the overarching reason FreshDirect encountered issues with the move to the larger facility? a. They did not upgrade the technology to meet the demands of the new facility. b. They did not consider the need for additional employees. c. They did not fully test the new technology before switching to the new system. d. They assumed that customers would remain loyal rather than switching to a closer rival. e. None of the above are correct. c; Hard 34. FreshDirect opted for customer-focused error handling because a. it was less expensive than focusing on technology issues. b. it was less expensive than losing a lifetime of orders from the customer. c. the CEO wanted to connect directly with unhappy customers. d. it would have been more expensive to offer credit on future orders. e. All of the above are correct. b; Moderate 35. At the start of the pandemic, FreshDirect saw an increase in online orders. Website traffic increased by _____ percent. a. 50 b. 80 c. 200 d. 500 e. 800 e; Easy 36. After the move to the new facility, FreshDirect switched _____ percent of the orders from the old system to the new. a. 20 b. 40 c. 60 d. 80 e. 100 e; Easy 37. Which of the following would be the best way to minimize the issues experienced by FreshDirect with the move to the new facility? a. roll out the new system in phases, test the increased workload, and keep the old system as a backup b. pause orders until the new system is working properly c. staff both warehouses and run them concurrently d. increase the staff at the new warehouse just in case issues arise e. switch operations back and forth between the facilities to make sure they can meet current demand a; Hard

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38. FreshDirect lost _____ percent market share of the New York grocer market after the move to the larger facility. a. 75 b. 45 c. 20 d. 15 e. 5 c; Easy 39. FreshDirect regained customer trust by a. offering incentives to retain customers. b. doing nothing and waiting for dissatisfaction to blow over. c. addressing the problem head on and correcting errors as quickly as possible. d. creating a platform for all dissatisfied customers to address issues with the CEO. e. None of the above are true. c; Moderate 40. Which of the following is the best way to attempt to regain market share after losing customers to failed technology systems? a. provide discounts and future credits to ensure that customers return b. use internal and external resources to solve the technical issues and focus on meeting the immediate needs of customers c. provide customers information about the challenges the organization is facing d. remind customers of the better days and inform them of the costs of switching to a rival e. keep information about any issues internal and do not allow customers to become aware of problems with failed technology b; Moderate 41. A major threat to the FreshDirect model is a. smaller grocery stores entering the online grocer market. b. potential entry of better-funded, growth-seeking rivals. c. brick-and-mortar big box stores offering larger selections. d. more bulk warehouses opening in the region. e. people using meal delivery services more frequently. b; Moderate 42. As an essential service during the pandemic, FreshDirect met the growing demands by a. partnering with rival firms to ensure all orders were fulfilled. b. doubling their work force in order to leave operations otherwise unchanged. c. opening food pantries to provide food to displaced, laid-off food service employees. d. doing nothing; they did not adjust their practices and continued operating under the existing model. e. limiting variety, working with the boroughs to address food insecurity, and adding jobs. e; Moderate 43. To compete with services offered to Amazon’s Prime subscribers, FreshDirect now offers _____ in some markets. a. more non-grocery items b. curb-side pick-up services c. same-day delivery d. cashierless shops

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e. bundle discounts c; Easy 44. FreshDirect was able to correct system issues before the pandemic, which resulted in a. regaining lost customers and accelerated growth. b. being the exclusive online grocer for the area. c. decreasing market share because customers lost confidence. d. expanding to different regions. e. less customer retention. a; Easy 45. Entry into the online grocery market can be costly for FreshDirect competitors because a. New York real estate is expensive. b. regional grocers would protest another large-scale grocer entering their service area. c. infrastructure is extremely expensive and FreshDirect has established relationships with suppliers and customers. d. it would be challenging to obtain a distribution facility in the same area. e. FreshDirect has already partnered with all of the best vendors in the area. d; Moderate 46. One month into the pandemic, FreshDirect was a. having difficulty fulfilling orders. b. expanding to new regions. c. partnering with similar service providers to help fulfill orders. d. reducing staff due to slowed operations at the facility. e. meeting the demands of increased business. a; Easy Essay Questions 47. How did FreshDirect turn the pandemic into an opportunity to improve brand and accelerate growth?

City lockdown and work-from-home mandates increased the number of consumers needing alternative grocery solutions. FreshDirect’s web traffic increased by 800 percent and suburban orders doubled. FreshDirect adjusted operations to meet the increased demand from existing, returning, and new customers. To reduce strain on their workforce, they limited variety such as meat cuts to allow employees to keep up with the increased demand. In addition, FreshDirect worked with the boroughs of New York to address rising food insecurity and increased their workforce.

FreshDirect also supported the community by donating ready-to-eat meals for each meal sold while employing laid-off food service employees to prepare the meals. In light of the challenges of the pandemic, FreshDirect was able to grow the business and provide an essential service.

Hard 48. Discuss the challenges and considerations involved in expanding a successful business like FreshDirect into new markets, particularly in the context of its acquisition by Getir. How might factors such as product–market fit, competition, and operational scalability impact FreshDirect's ability to maintain its success in new locations?

Expanding a successful business like FreshDirect into new markets presents several challenges, including assessing product–market fit, navigating competition from established players like Trader Joe's and Whole Foods, and managing the operational scalability required for growth. The acquisition by Getir introduces uncertainties regarding the integration of warehouse capacity and

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potential changes in product offerings, raising questions about whether the partnership will enhance FreshDirect's competitive position or distract from its core focus.

Moderate Fill in the Blanks 49. FreshDirect encountered problems when they moved their operations from their original facility in _____ to a new facility in _____.

Queens, the Bronx; Easy 50. If your local brick-and-mortar grocery store attempted to dive into the online grocery business, they would be _____ since they are attempting to occupy more than one position, while failing to match the benefits of a singularly focused rival. straddling; Moderate 51. The issues caused by the move created an opportunity for rivals _____ and _____ to gain market share in the online grocery market.

Amazon, Instacart; Easy 52. FreshDirect’s CEO added _____ to internal teams to troubleshoot the challenges suffered after the move. external consultants or consultants; Moderate 53. FreshDirect deployed a _____ from Splunk to centralize data from the separately developed products. software; Easy 54. Although it was costly, FreshDirect employed _____ error handling to address the issues reported by dissatisfied shoppers. customer-focused; Moderate 55. During the pandemic, customer orders from _____ areas doubled overnight. suburban; Easy 56. _____ purchased a distribution center in Northern New Jersey that may be able to move ten times the dollar volume of FreshDirect’s Bronx facility.

Amazon; Easy 57. FreshDirect has leveraged time and technology to gain strategic advantage in the online grocer market. Over time, they built _____ to address the unique needs of the market. strategic assets; Moderate 58. New York City authorities deemed FreshDirect a(n) _____. essential service; Easy 59. Google shuttered its anemically performing Google Express service, and _____ has begun to close some of its “just walk out” convenience stores.

Amazon; Easy

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Chapter 5 Netflix in Two Acts: Sustaining Leadership in an Epic Shift from Atoms to Bits Section 5.1 True/False Questions 1. Even though Netflix is now mainly focused on digital distribution, it continues to offer the DVD-bymail service in its base-price product.

False; Easy 2. Netflix’s initial revenue model was based on a flat-rate monthly subscription fee rather than a per-disc rental fee.

True; Easy 3. Netflix’s new model is about providing a “short-enough tail” to attract and retain subscribers.

False; Moderate 4. A major factor in Netflix’s success is its competitive advantage.

True; Easy 5. The business of streaming video is radically different from DVD-by-mail in several key ways, including content costs, content availability, revenue opportunities, rivals, and their motivation.

True; Easy Essay Questions 6. Describe Netflix’s streaming video business model.

Today the firm is focused on digital distribution and offers its streaming-only subscription as the default option for consumers. The default page at Netflix.com doesn’t even mention DVDs; the disc subscription service that Netflix built its user-base with had become an optional add-on that the firm is actively discouraging new consumers from joining. For less than $10 a month ($12 if you want Ultra HD with 4 simultaneous streams), customers gain unlimited access to the entire Netflix streaming library (which is smaller than the number of DVDs available for mailing). Netflix streaming is now available on PCs, as well as all major tablets, smart phones, and Internetconnected televisions, DVD players, and video game consoles.

Moderate 7. Provide a brief description of the basics of the Netflix DVD-by-mail business model.

Netflix was started as a DVD-by-mail service that charged a flat-rate monthly subscription rather than a per-disc rental fee. Customers do not pay a cent in mailing expenses, and there are no late fees. Videos arrive in red Mylar envelopes, which contain the requested DVD, prepaid postage, and return address. When done watching videos, consumers just slip the DVD back into the envelope, and drop the disc in the mail. Users make their video choices in their “request queue” at Netflix.com. If a title is not available, Netflix simply moves to the next title in the queue. Consumers use the website to rate videos they’ve seen, specify their movie preferences, get video recommendations, check out DVD details, and even share their viewing habits and reviews. This model helped Netflix grow into a giant, but Hastings knew that if his firm was to remain successful, it would have to transition from mailed DVDs to streaming video.

Moderate

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Fill in the Blanks 8. After more than 25 years as CEO, _____ co-founder Reed Hastings stepped down from his leadership role in early 2023.

Netflix; Easy 9. In fall 2023, Netflix finally shuttered its _____ business, allowing customers to keep any DVDs they already possessed, mailing them a "bonus surprise 10 DVDs" as a customer loyalty gift, and ending a business that was once dominant.

DVD-by-mail; Easy Section 5.2 True/False Questions 10. Physical retailers are limited by shelf space and geography (meaning the density of customers around a particular location).

True; Easy 11. Once Netflix became a public company, the firm was required to disclose its financial position and reveal it was on a profit march.

True; Easy 12. To counter rivals, Netflix does not offer exclusive content of its own.

False; Easy 13. Brand and advertising are synonyms for the same concept.

False; Easy 14. The high degree of customer satisfaction that Netflix enjoyed is tightly linked with the firm’s sizedbased advantages.

True; Moderate 15. Firms with high churn rates are likely to be more profitable.

False; Easy 16. Netflix has the largest streaming share versus other streaming services.

False; Easy 17. Netflix shows have a success rate of 80 percent, compared to traditional television shows, which have a success rate of 30 to 40 percent.

True; Easy 18. Collaborative filtering is a technology that allows customers to meet and select titles for viewing parties.

False; Moderate 19. While it may be possible for rivals to match technology, the true exploitable resource created and leveraged through collaborative filtering technology is the data asset.

True; Easy

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20. Since only 5 percent of the world’s population are native English speakers, Netflix content team can dub a title in upward of twenty-seven languages.

True; Easy 21. Netflix has launched over 6,600 originals and regularly releases more than one original program each day.

True; Easy 22. Only 10 percent of what people watch on Netflix comes from Netflix recommendations.

False; Easy 23. Netflix is one of the leading players in live sports.

False; Easy Multiple Choice Questions 24. Which type of tier did Netflix introduce when it was implementing a stricter password-sharing policy? a. high ad tier b. low ad tier c. pay per view tier d. discount tier e. six-month tier b; Easy 25. What rule states that a firm can distribute physical copies of legally acquired copyright-protected products? a. First Sale Doctrine b. Third Sale Doctrine c. Unlimited Sale Doctrine d. Limited Sale Doctrine e. Second Sale Doctrine a; Easy 26. HBO, Showtime, and Starz are considered what type of television networks? a. mainstream b. exclusive c. premium d. gold e. high ranking c; Easy 27. The long tail is a phenomenon whereby firms can make money by a. selling the same product at different prices with only minor tweaks in their design. b. leveraging customers to promote their products or services. c. reselling multiple versions of a single product under different brand names. d. offering a selection of products or services vastly greater than conventional retailers. e. selling the same product to virtually every customer the Internet can reach. d; Easy

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28. While the size of the tail in the long tail phenomenon is disputable, one fact that is critical to remain above this debate is that a. traditional brick-and-mortar retailers offer selections that cannot be rivaled by Internet pure plays. b. energy costs and worker wages drive up the costs of running stores like Netflix. c. selection attracts customers, and the Internet allows large-selection inventory efficiencies that offline firms can’t match. d. the turnover rate of obscure titles in traditional video rental stores is only slightly higher than those for Internet pure plays. e. the cost of store maintenance and real estate makes stores such as Netflix unattractive. c; Moderate 29. What is the concept where consumers avoid selection decisions with an overwhelming number of choices and fall back on known brands? a. selection fatigue b. saturation fatigue c. market fatigue d. decision fatigue e. shopping fatigue d; Easy 30. Brands are built through: a. customer awareness b. data assets c. excessive advertising d. customer profiling e. customer experience e; Easy 31. Collaborative filtering is a classification of software that a. is used to gather user ratings and calculate a gross average user rating for each movie. b. provides Netflix users with parental controls and other options while streaming movies online. c. selectively sorts movies based on their censor ratings and delivers age-appropriate search results. d. monitors trends among customers to personalize an individual customer’s experience. e. collates user ratings for a movie and creates a ranked list of movies most liked by users. d; Moderate 32. Which streaming service has leveraged the world’s most recognized content pool? a. Netflix b. Amazon c. Apple d. YouTube e. Disney e; Easy 33. Which of the following technologies is a marginal cost for streaming services? a. VoIP b. 5G c. cloud computing d. fiber Internet e. cybersecurity services

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c; Moderate 34. User ratings act as _____ for Netflix’s customers. a. marginal costs b. fixed costs c. switching costs d. variable costs e. barriers to entry c; Easy 35. Churn rate is a term that refers to the a. average number of recommended titles in a user’s queue. b. rate at which the demand for a product or service fluctuates with price change. c. number of movie titles that are difficult to assign reliable user ratings. d. rate at which customers leave a product or service. e. number of new users that each existing user attracts through word-of-mouth and social sharing. d; Easy 36. A low _____ is usually key to a firm’s profitability because acquiring a customer is more expensive than keeping one. a. subscription fee b. inventory size c. churn rate d. switching cost e. opportunity cost c; Easy 37. Which streaming service has/had exclusive broadcasting rights to the first NFL playoff game in 2024? a. Netflix b. Amazon c. YouTube d. Comcast's Peacock e. Paramount+ d; Moderate 38. When firms enjoy economies of scale they a. have a greater share of liquid assets than rivals. b. have bigger production facilities than their competitors. c. have a wider employee base than their competitors. d. leverage the cost of an investment across increasing units of production. e. leverage investment costs to decrease their subscriber acquisition costs. d; Easy 39. Amazon and Netflix are both in the digital distribution market. In addition, Netflix uses Amazon's cloud computing services to deliver streaming video. This phenomenon is known as: a. cooperation b. coopetition c. competition d. contesting e. codependence

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b; Moderate Essay Questions 40. Explain the long tail phenomenon at Netflix.

The long tail is a phenomenon whereby firms can make money offering a near-limitless selection, which allows Internet retailers to leverage what is often called the long tail. While traditional retailers stock their shelves with the most popular items, it turns out there’s actually more money to be made selling obscure stuff (the stretched-out, but larger area right-side of the curve) if you can reach the greater customer base provided by the Internet.

Moderate 41. How does Netflix use collaborative filtering software to match movie titles with customer tastes? In what ways does this software help Netflix garner sustainable competitive advantage?

Netflix has proved that there is both demand and money to be made from the vast back catalog of film and TV show content by addressing the biggest inefficiency in the movie industry—“audience finding.” To do this, Netflix leverages some of the industry’s most sophisticated technology—a proprietary recommendation system. Using this system, the Netflix website gathers user ratings of movies that are viewed by its customers, and also prompts new users with a list of movies. The data also offers Netflix operational advantages. The firm examines inventory availability in the warehouse closest to a given customer, and tailors recommendations to favor movies that are in stock so that users aren’t frustrated by a wait. Netflix has also learned to make studios happy by leveraging this service to help them find an audience for their back catalog of movies and TV shows. The firm developed a revenue-sharing system where studios could offer Netflix their streaming catalog at a wholesale price in exchange for a cut of Netflix subscriber revenues each time someone requests a given title. This is huge for studios—suddenly they had a way to extend the profit-earning life of their movie and TV catalogs, and all without requiring a dime extra in additional marketing.

Hard 42. How do factors such as supplier power, product characteristics, and customer access influence pricing dynamics in markets for digital media products like music and books?

Factors such as supplier power, product characteristics, and customer access play pivotal roles in shaping pricing dynamics within markets for digital media products like music and books. In these markets, where offerings are often highly differentiated and controlled by the artist or owner, firms with access to a larger customer base typically wield greater pricing power. However, if access to customers is limited and controlled by a single dominant intermediary, suppliers may find themselves negotiating with a formidable force that can dictate pricing terms. For instance, during the presmartphone, pre-streaming era, Apple's dominance with iPods and Amazon's Kindle market share allowed these firms to exert significant influence over pricing. They could dictate terms to record labels and publishers, leveraging their control over customer access to shape pricing structures in their favor. This underscores the intricate interplay between supplier power, product uniqueness, and customer access in determining pricing dynamics within digital media markets.

Hard 43. Discuss the concept of windowing. Why do you think some streaming services like this concept, while others do not?

Windowing, a distribution strategy where content is released or made available at different times across various platforms, is favored by some streaming services for its ability to secure exclusivity, optimize revenue streams, create marketing opportunities, and align with content licensing agreements. However, other streaming services may eschew windowing due to subscriber expectations for immediate access, competitive pressure to offer a wide range of content, concerns

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about piracy, and the importance of subscriber retention. Ultimately, the decision to employ windowing strategies depends on factors such as the nature of the content, existing agreements, competitive landscape, and audience preferences, as streaming services aim to balance revenue generation with subscriber satisfaction and market competitiveness.

Moderate Fill in the Blanks 44. In the context of the Netflix case, _____ refers to an extremely large selection of content or products. long tail; Easy 45. _____ is a classification of software that monitors trends among customers and uses this data to personalize an individual customer’s experience.

Collaborative filtering; Easy 46. The term _____ refers to the rate at which customers leave a product or service. churn; Easy 47. After expanding into the global market, Netflix's _____ subscribers make up more than half the firm’s user base. international; Easy Section 5.3 True/False Questions 48. Netflix’s personalization engine saves the firm almost $1 billion USD a year.

True; Easy 49. Binge-watching is viewing one episode of a program in a single sitting.

False; Easy 50. Streaming firms view an ad tier as “revenue neutral.”

True; Easy 51. During a natural disaster Netflix’s code help shift computing needs to the West Coast from the East Coast.

True; Moderate 52. Apple broke the record for the most expensive streaming service produced.

False; Moderate 53. Licensing costs and legal requirements are a barrier to entry for Netflix in global markets.

True; Moderate 54. ViacomCBS has rebranded the CBS “All Access” streaming service as Paramount Plus.

True; Easy 55. Netflix’s marketing team began showing thumbnails featuring black actors only when they play lead roles in the film.

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False; Easy 56. Dropping “HBO” from the service title has allowed Max to increase subscribers.

False; Easy 57. Netflix’s new ad tier is not working for customers.

False; Easy 58. Netflix feeds data into the firm’s collaborative filtering software to classify viewers.

True; Easy 59. Due to its content and pricing, Netflix has a scale advantage over Amazon.

True; Moderate Multiple Choice Questions 60. Choose the correct answer: Why is the “First Sale Doctrine,” including understanding when it does and doesn’t apply, relevant to Netflix? a. It means content acquisition costs for DVDs are more predictable than streaming costs. b. It means content acquisition costs for streaming are more predictable than DVDs. c. It facilitates a shift of bargaining power to content suppliers. d. It facilitates a shift of bargaining power to content suppliers, and it means content acquisition costs for DVDs are more predictable than streaming costs. e. It means content acquisition costs for DVDs are more predictable than streaming costs, and it facilitates a shift of bargaining power to content suppliers. e; Hard 61. A manager’s decision making is often shaped by its perception of the competition. Which of the following does Netflix see as being in competition with the firm? a. video games b. magazines c. DVD watching d. Amazon Prime e. All of the above are true. e; Moderate 62. How is scale important to Netflix streaming business? a. A larger firm with more customers can spend more on content licenses. b. The firm can build larger data centers as it competes with the likes of Amazon Prime. c. Netflix can continue to expand its network of nationwide distribution centers to overseas locations. d. Scale allows the firm to improve the marginal cost of its titles, which will also improve profitability. e. All of the above are true. a; Moderate 63. Which of the following is true of Netflix streaming? a. Its content acquisition cost is fixed. b. Its competitors have been mostly vanquished. c. It has little appeal for new entrants. d. Content providers enjoy greater bargaining power as the sole source for unique titles.

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e. None of the above are true. d; Moderate 64. Costs that do not vary according to production volume are called: a. total costs b. marginal costs c. switching costs d. variable costs e. fixed costs e; Easy 65. Marginal costs are a. minor, insignificant costs. b. associated with each additional unit produced. c. the costs incurred as a result of choosing one option over another. d. constant and do not vary according to production volume. e. also known as overhead. b; Easy 66. Netflix can send out any DVD it buys because of a Supreme Court ruling known as the: a. clickwrap agreement b. Betamax ruling c. fair use law d. First Sale Doctrine e. Copyright Directive d; Easy 67. The practice of windowing involves a. making content available to a distribution channel for a specified time period under a different revenue model. b. scheduling movies to be streamed online at primetime periods to pull in more revenue from advertising. c. relaying advertisements for limited time periods during online movie steaming, as opposed to frequent ad breaks. d. displaying content in apps and browser windows. e. streaming movies to customers’ computers beforehand and then relaying them on television. a; Moderate 68. Which of the following is true about the Netflix streaming business? a. Its marginal cost for title acquisition is zero as it is currently focusing on distributing digital content. b. It has the support of major studios, such as Fox and Warner, that have allowed it to stream any content the firm buys on DVD. c. Its cost of acquiring streaming content has fallen in the recent past due to its long tail advantages. d. It has attempted to counter rivals with exclusive content by securing exclusive streaming rights for several popular shows. e. From the beginning it has experimented with various streaming revenue models, including payper-view, download-to-own, and ad-supported content. d; Moderate

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69. An internal team at Netflix developed a prototype set-top box to enable the direct streaming of content to customers’ television sets. However, the idea of offering it to Netflix customers was dropped because a. the market for online streaming was nascent and unprofitable. b. all major U.S. cable firms built Netflix streaming into their set-top boxes. c. the Blu-ray standard requires streaming features as well. d. of the brutally competitive nature of the consumer electronics business. e. the entire software team was recruited by TiVo after LinkedIn made it easy to target and poach rival talent. d; Moderate 70. Some 75 to 80 percent of what people watch on the service comes from Netflix: a. searches b. original content c. DVD viewer suggestions d. recommendations e. All of the above are true. d; Difficult 71. What solution has Netflix come up with to address the need to deliver content to customers’ televisions? a. Netflix has entered into a revenue-sharing agreement with Apple to produce customized set-top boxes. b. Netflix makes custom chips for television makers so they can offer Netflix in a way that replicates Google Chromecast and Amazon Fire TV. c. Netflix launched a self-branded hardware division to build and market its own set-top boxes. d. Netflix has acquired Vudu, a firm that specializes in the online streaming business. e. Netflix provides tools to firms seeking to build Netflix access into their devices. e; Moderate 72. _____ refers to removing an organization from a firm’s distribution channel. a. Disbarment b. Repudiation c. Annulment d. Disintermediation e. Revocation d; Easy Essay Questions 73. How does Netflix leverage its data asset, even as it has shifted from atoms to bits?

Netflix uses its substantial data asset to recommend movies, drive software redesign to improve the user experience, evaluate potential licensing deals, and tailor promotions of existing content.

Moderate 74. In context to Netflix, what are the scale advantages associated with streaming?

Despite rising costs, a difficult-to-control cost structure, and increased competition, there are still key advantages that can be created by a leading player in the streaming business, and Netflix hopes that its advantages will be large enough to sustain it as the dominant firm for years to come. First on scale—while studios may charge more for deals involving more users, the firm with more users is likely to be able to pay far more than smaller rivals. A studio would rather accept a $200 million

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check from Netflix than three $50 million checks from smaller players. Start talking exclusives, and advantage once again goes to the biggest player. Size-based advantages come from both the scale of a firm’s streaming library (a longer tail) and the scale of the customer base (the ability to pay for that tail). Once a firm gets big, there’s a virtuous cycle where more titles attract more customers, and more customers increase a firm’s ability to bid on attractive content. Netflix doesn’t just see growth as a way to advance profitability; it sees it as a vital competitive asset to keep competitors at bay.

Hard 75. Why is bargaining power shifting to content providers as the video content industry shifts from atoms to bits?

Video content is perfectly differentiated, and as we learned in the Strategy and Technology chapter, providers of differentiated goods also have stronger bargaining power. There are only a small number of firms offering high-demand content, essentially operating as an oligopoly with concentrated supplier power. Over the past several years the ranks of bidders jostling elbows at the streaming media negotiating table has increased. When you buy a DVD you own it for life, but streaming costs are usually licensed for a limited time period.

Moderate 76. Why are streaming services considered more appealing to creative content creators than traditional TV? For producers, writers, and directors, the creative side feels less constrained. Netflix execs state, “If you give people a more creative format, then they can tell their stories better.” With streaming, there’s no need to plan cliff-hangers at the end of a program or even write for the standard time lengths, like the 22-minute standard for commercial sitcom television. “In the world of weekly serialized television you get fifty minutes of joy watching a show and then 10,000 minutes of waiting for the next one.” With binge watching, users can keep track of more complex plot lines and series with many characters. It also removes standard episode length (like 22 minutes for commercial broadcast sitcoms). The kind of artistic creativity offered by streaming makes Netflix, as stated by the Hollywood Reporter, “one of the most attractive buyers of original programming in town.”

Moderate 77. Netflix was able to differentiate themselves from rivals by offering exclusive shows during the early days of streaming. However, as more rivals entered the market, competition for high-demand content grew. How did rivals leverage the power of content ownership? What strategies did Netflix employ to offset the loss of popular content?

Netflix countered rivals by offering exclusive content such as Friends, The Office, and Disney shows.

Unfortunately, as licenses expired, rivals jumped in to leverage the power of content ownership.

Rivals such as Disney and Comcast were growing their own streaming services and began increasing prices and exclusively offering their own content. Netflix lost a host of content belonging to Disney, Comcast, and AT&T, among others. In order to counteract the loss and continue to differentiate themselves from rivals, Netflix started offering original content. When Netflix realized they couldn’t rely on partners, they developed original offerings covering multiple genres and signed deals with hit-makers like Ryan Murphy, Shonda Rhimes, and Kenya Barris to secure original content for years to come.

Hard Short Answer 78. How is Comcast vertically integrated?

The firm owns a cable provider, broadcast channels such as NBC, and studios that produce content.

Moderate

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Fill in the Blanks 79. The marginal cost of digital goods for content owners is typically considered to be _____. zero; Moderate 80. _____ refers to the rate at which customers leave a product or service.

Churn or Churn rate; Easy 81. _____ refers to a ruling that states a firm can distribute physical copies of legally acquired copyrightprotected products. This enables services such as libraries and video rental, but this right does not apply to streaming digital copies.

First Sale Doctrine; Moderate 82. _____ refers to the media industry practice of making content available through a given distribution channel for a specified time period, usually under a different revenue model.

Windowing; Easy 83. _____ is a situation where two or more firms are both competitors and collaborators, or “frenemies.”

Coopetition; Easy 84. About 85 percent of all new spending on content goes toward _____ where Netflix controls the rights. original programming or original content; Moderate 85. _____ refers to a limit, imposed by the Internet service provider (e.g. cable or telephone company) on the total amount of traffic that a given subscriber can consume (usually per each billing period).

Bandwidth cap; Easy 86. Netflix now offers _____, but less than one percent of Netflix customers play on a regular basis. free games; Easy

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COPYRIGHT PAGE: Published by: FlatWorld © 2025 by FlatWorld. All rights reserved. Your use of this work is subject to the License Agreement available here catalog.flatworldknowledge.com/legal. No part of this work may be used, modified, or reproduced in any form or by any means except as expressly permitted under the License Agreement.

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Chapter 6 Moore’s Law and More: Fast, Cheap Computing, and What This Means for the Manager Section 6.1 True/False Questions 1. The managerial definition of Moore’s Law suggests that computing costs related to chips (microprocessors and silicon-based storage) double every eighteen months.

False; Easy 2. Moore’s Law, although it can be presented in graphs like the Newtonian Laws, Boyle’s Laws, or others you may have learned about in physics class, is not a true law; rather, it is a prediction based on past observations.

True; Easy 3. Flash memory is slower (meaning it transfers data at a slower rate) than conventional disk-based hard drives.

False; Moderate 4. Random-access memory is an example of nonvolatile memory.

False; Easy 5. Moore’s Law applies to all types of technology components including hard drives and fiber optic cable transmission speeds.

False; Easy 6. Moore’s Law has impacted the camera industry such that the firms that sell the most cameras aren’t camera companies, but phone manufacturers.

True; Easy 7. A microprocessor is a fast chip-based volatile storage in a computing system.

False; Moderate 8. RAM is temporary storage.

True; Easy 9. Moore’s Law applies to other non-silicon-based technology components.

False; Easy 10. Hard drive storage is considered a solid state electronic.

False; Easy 11. AI is moving at a faster pace than Moore's Law. True; Easy 12. When Android introduced the A17Pro chip in its Pro line, the firm stated that the 3nm process had electrical pathways that were only ten atoms wide.

False; Easy 13. The M1 chip is so impressive, it’s been referred to as “black magic.”

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True; Easy 14. The seventh wave in the evolution of computing is where AI, via computing in the cloud and enabled by fast telecom, pushes remote brains out to all sorts of “edge” devices.

True; Moderate 15. Most of the implementation of Siri is AI since a smartphone has ample processing power and storage to efficiently handle natural language interpretation or translation between dozens of languages.

False; Moderate 16. Medtronic used PillCam for telehealth remote diagnosis during the pandemic.

True; Easy Multiple Choice Questions 17. Zara’s use of RFID tags can be considered an example of: a. Kryder’s law b. the IoT c. volatile memory d. Carver Meade’s Corollary e. vertical integration b; Easy 18. Moore’s Law states that a. magnetic disk storage density doubles annually. b. the cost per unit of useful light emitted by an LED falls by a factor of 10 every decade. c. the value of a telecommunications network is proportional to the square of the number of connected users of the system. d. chip performance per dollar doubles every eighteen months. e. the cost of a semiconductor chip fabrication plant is cut in half every four years. d; Easy 19. The _____ is the part of a computer that executes the instructions of a computer program. a. software b. flash memory c. DWDM d. random-access memory or RAM e. microprocessor e; Easy 20. Storage that is wiped clean when power is cut off from a device is known as: a. flash memory b. read-only memory c. holographic memory d. volatile memory e. non-volatile memory d; Easy 21. Which of the following is an example of volatile memory? a. random-access memory b. flash memory

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c. optical disk drive d. nanodrive e. read-only memory a; Easy 22. _____ is a nonvolatile, chip-based storage, often used in mobile phones, cameras, and MP3 players. a. Random-access memory b. Cache memory c. Optical storage memory d. Holographic memory e. Flash memory e; Easy 23. Solid state components are less likely to fail because they a. are driven by precise sets of software instructions. b. have the capability to both enable and inhibit the flow of electricity. c. have no moving parts. d. are composed of germanium instead of silicon. e. contain storage that retains data even when powered down. c; Easy 24. _____ are substances that are capable of enabling as well as inhibiting the flow of electricity. a. Insulators b. Semiconductors c. Resistors d. Inductors e. Thermostats b; Easy 25. Price elasticity refers to the a. change in the demand for goods in response to a change in income. b. rate at which product prices vary in response to changes in customer demand. c. range of production costs that change as a direct function of the availability of raw materials. d. rate at which demand for a product or service fluctuates with price change. e. numerical measure of the responsiveness of the supply of a product to a change in its production cost. d; Moderate 26. One of the implications of price elasticity of technology products is that a. the cost of a semiconductor chip fabrication plant doubles every four years. b. the magnetic disk areal storage density doubles annually. c. not only do customers buy more products as they become cheaper, but also whole new markets employing new technology open up. d. the value of chips in semiconductor-based devices appreciates every six months. e. firms stock up on tech products and sell them once their prices increase. c; Easy 27. The third wave of computing was characterized by the introduction of: a. personal computers b. mainframe computers c. minicomputers

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d. Internet computing e. laptops a; Easy 28. Sony, a firm once synonymous with portable music, has ceded its market dominance to Apple because a. it did not provide tracks from Sony Music artists to the Apple iTunes store. b. its technology offerings were too futuristic and out of sync with the waves of computing to appeal to customers. c. it failed to take advantage of opportunities presented by Moore’s Law. d. its music players contradicted the price/performance phenomenon predicted by Moore’s Law. e. it attempted to straddle the twin markets of online music retail and electronic music players and could not capitalize on either. c; Moderate 29. 1 _____ = 1 billion bytes a. terabyte b. gigabyte c. megabyte d. petabyte e. zettabyte b; Easy 30. 1 petabyte = 1 _____ bytes a. million b. billion c. trillion d. quadrillion e. sextillion d; Easy 31. Moore’s Law kicked in during the 1970s for the _____, and minicomputers were a hit. a. first wave b. second wave c. third wave d. big corporations e. government b; Easy 32. Which of the following statements is a valid reason for chip manufacturers to carry minimal inventory? a. Rising transportation costs greatly increase the costs of manufacturing and make moving inventory between locations highly expensive. b. Chip manufacturers maintain low inventories to hedge the move of semiconductor technology away from silicon-based chips. c. The potential physical and electronic damage to silicon chips if left unused for extended periods of time deters manufacturers from maintaining higher inventories. d. Chip manufacturers leverage the higher costs of chip-based products to their advantage by keeping supply low compared to demand. e. Products with a significant chip-based component rapidly fall in value and can cause huge losses when overproduced.

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e; Moderate 33. What differentiates microcontrollers from general-purpose computers? a. Microcontrollers have no processor, memory, or input/output. b. Microcontrollers are composed of several tiny chips. c. Microcontrollers have no operating system. d. Microcontrollers are faster than general-purpose computers. e. None of the above are true. c; Moderate 34. Which type of memory is often used in mobile phones? a. read-only memory b. nonvolatile memory c. solid memory d. flash memory e. USB memory d; Moderate 35. Video gamers may desire _____ latency in order to have a more realistic player experience. a. low b. high c. medium d. fast e. slow a; Moderate 36. One yottabyte is equal to: a. one quintillion bytes b. one quadrillion bytes c. one septillion bytes d. one billion bytes e. A yottabyte has no quantitative measurement. c; Difficult 37. Raspberry Pi Pico W is a Wi-Fi device capable of running: a. Java b. Python c. AI d. Siri e. Linux b; Moderate Essay Questions 38. What is Moore’s Law? How has it impacted the electronics industry? What economic trend has it inspired?

The popular definition of Moore’s Law states that chip performance per dollar doubles every eighteen months. Moore’s Law applies to chips (processors). For processors, Moore’s Law means that next-generation chips should be twice as fast in eighteen months but cost the same as today’s models (or from another perspective, in a year and a half, chips that are same speed as today’s models should be available for half the price). Strictly speaking, Moore’s Law does not apply to other

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technological components. But other computing components are also seeing their price versus performance curves skyrocket exponentially. Data storage doubles every twelve months. Networking speed is on a tear, too. With an equipment change at the ends of the cables, the amount of data that can be squirted over an optical fiber line can double every nine months.

When technology gets cheap, price elasticity kicks in. Tech products are highly price elastic, which means that consumers buy more products as they become cheaper. And it’s not just that existing customers load up on more tech; entire new markets open up as firms find new uses for these new chips. The digital shifts that characterize the five waves of computing can also rearrange entire industries.

Moderate 39. What is M-PESA and what advantages does this bring to Kenya’s population?

The M-PESA mobile banking service run by Kenya’s Safaricom, allows customers to transfer cash using text messages. Nearly every Kenyan adult has an M-PESA account, paying for everything from groceries to cab rides to school tuition. The service can also allow family members to quickly and securely send cash across the country. Far fewer Kenyans have traditional bank accounts, while many millions more have M-PESA. Today, a very large percentage of Kenya’s GDP flows through the service, lubricating financial transactions for an entire population, including the nation’s unbanked.

Moderate 40. Vitality Corporation’s GlowCaps and the firm AdhereTech showed how the Internet of Things can potentially impact health care. Briefly describe the effort and the benefit to individuals and firms.

Vitality Corp’s GlowCaps is an example of the potential for low-cost computing to improve health care quality while lowering costs. The GlowCap from Vitality, Inc., is a “smart” pill bottle that will flash when you’re supposed to take your medicine. It will play a little tune if you’re an hour late for your dose and will also squirt a signal to a night-light that flashes as a reminder (in case you’re out of view of the cap). GlowCaps can also be set to call or send a text if you haven’t responded past a set period of time. And the device will send a report to you, your doc, or whomever else you approve.

The GlowCap can even alert your pharmacy when it’s time for refills. Insurance companies have an incentive to subsidize the bottles or provide them for free. The business case for that? The World Health Organization estimates drug adherence at just 50 percent, and analysts estimate that up to $300 billion in increased medical costs are due to patients missing their meds. GlowCap users reported a 98 percent medication adherence rate. While GlowCap is a consumer solution,

AdhereTech works directly with pharmacies and pharma companies. Sometimes, the reason for a missed dose is "I forgot," while other times a patient might stop taking a med due to side effects or a complex insurance reason. AdhereTech’s system will dispatch expert follow-up to help resolve issues so that patients stay on their meds. Incident data is collected for analysis and used in improving care regimes. The AdhereTech system is also free.

Moderate

41. What is the sixth wave of computing and what new types of technology have been introduced as a result of the sixth wave?

The sixth wave of computing introduced us to technology that is so fast and inexpensive, it is spreading into new places. This technology is popping up in everyday scenarios. For example, homeowners can install a Nest smart thermostat that connects wirelessly to the Internet and senses indoor and outdoor temperatures and can determine if anyone is in a room. The thermostat can automatically adjust making energy use more efficient. Low-cost sensors, computing, and communication are embedded into items from neckties to umbrellas allowing devices to communicate with one another and collect data. These smart devices are known as the Internet of Things (IoT). IoT

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devices such as Zara’s RFID tags, smart watches, smart cars, and personal assistants such as Amazon’s Alexa incorporate computing technology into general-purpose items.

Moderate Short Answers 42. What are the two main advantages of using solid state storage vs. a conventional hard disk?

The two advantages are as follows: (1) chips are solid-state electronics (meaning no moving parts), so they’re less likely to fail, and they draw less power; and (2) data can also be accessed faster from flash memory than from conventional hard drive.

Moderate 43. Why is Moore’s Law seen as having a “special kind of price elasticity”?

Fast-cheap technology means that consumers not only buy more technology as it gets cheaper, but technology also becomes embedded in new products and enables new services so that whole new markets open up.

Hard Fill in the Blanks 44. A(n) _____ is referred to as the calculating brain of the computer that executes the instructions of a computer program. microprocessor; Easy 45. Storage that retains data even when powered down is known as _____ memory. nonvolatile; Easy 46. Semiconductor-based devices are also known as _____. solid-state electronics; Easy 47. The Medtronic _____, which comes with up to two cameras that, once swallowed, can relay images of your innards, has been approved for being used to diagnose intestinal and colon problems.

PillCam; Moderate 48. A(n) _____ is a high-speed glass or plastic-lined networking cable used in telecommunications. optical fiber line or fiber optic line/cable; Easy 49. The 1980s brought wave three in the form of _____.

PCs or personal computers; Easy 50. Devices without moving parts are often described as _____. solid state; Easy 51. The phenomenon of fast/cheap computing is often referred to as Moore’s Law, after the late _____, Intel co-founder.

Gordon Moore; Easy 52. A _____ is a program that turns the code that a software developer writes into the instruction sets that a processor understands. compiler; Easy

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53. In computing, _____ means delay. latency; Easy Section 6.2 True/False Questions 54. Moore’s Law is possible because the distance between the pathways inside silicon chips gets smaller with each successive generation.

True; Moderate 55. The shrinking of the pathways inside silicon chips that enables Moore’s Law is an indefinite process.

False; Easy 56. The flattest objects in the world are silicon ingot wafers.

True; Moderate 57. Multicore processors can run older software written for single-brain chips.

True; Easy 58. A next-generation high-end chip fab can cost several thousand dollars.

False; Moderate Multiple Choice Questions 59. _____ refer to the multibillion-dollar factories used to manufacture semiconductors. a. Grids b. Platforms c. Lecterns d. Fabs e. Kilns d; Easy 60. Which of the following factors is responsible for enabling the advance of Moore’s Law? a. The distance between pathways inside silicon chips gets smaller with each successive generation. b. Silicon is commonly available in the form of sand or silicon dioxide, which helps keep the costs of chip production low. c. Constant interaction among three forces—size, heat, and power—makes Moore’s Law practical and ensures that it will endure for decades to come. d. The availability of better cooling technologies ensures that chips can continue growing smaller and more power efficient. e. With the exponential growth in information technology-enabled businesses, the demand for computers makes Moore’s Law possible. a; Moderate 61. Which of the following sets of interrelated forces threatens to slow down the progression of Moore’s Law? a. weight, speed, and capacity b. density, clock speed, and wafer thickness c. size, heat, and power d. silicon availability, efficiency, and energy

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e. memory, cache size, and speed c; Easy 62. Multicore processors are formed by a. connecting identical processors in a parallel combination and drawing power from the same source. b. putting two or more lower power processor cores on a single chip. c. connecting a series of high-powered processors through a single power source. d. slicing a flat chip into pieces and reconnecting the pieces vertically. e. connecting a combination of parallel and series-connected processors to a single larger processor to supplement its functioning. b; Easy 63. What problem is faced by multicore processors running older software written for single-brain chips? a. Multicore processors usually run older software by using only one core at a time. b. Multicore processors draw more power than single-brain processors to solve the same problem. c. Multicore processors require greater cooling to run the same software as single-brain processors. d. Individual cores in multicore processors have smaller memories than single-brain chips and are consequently slower. e. Multicore processors still have some fair distance to go before going mainstream. a; Easy 64. If electronics now travel half the distance to make a calculation, that means the chip is: a. half as big b. easier to keep cool c. twice as fast d. very expensive e. All of the above are true. c; Moderate 65. _____ are the super tiny on-off switches in a chip that work collectively to calculate or store things in memory. a. Transistors b. Multicore processors c. Single-core processors d. Conductors e. Inductors a; Easy Essay Questions 66. Give a brief description of each of the factors that are impeding the continued validity of Moore’s Law. Moore’s Law is possible because the distance between the pathways inside silicon chips gets smaller with each successive generation. While chip plants are incredibly expensive to build, each new generation of fabs can crank out more chips per silicon wafer. And since the pathways are closer together, electrons travel shorter distances. Electrons traveling half the distance to make a calculation mean the chip is twice as fast. Three interrelated forces—size, heat, and power—threaten to slow down Moore’s Law. When processors are made smaller, the more tightly packed electrons will heat up a chip—so much so that unless today’s most powerful chips are cooled down, they will

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melt inside their packaging. To keep the fastest computers cool, most PCs, laptops, and video game consoles need fans, and most corporate data centers have elaborate and expensive air conditioning and venting systems to prevent a meltdown. The need to cool modern data centers draws a lot of power and that costs a lot of money. It’s also important to realize that chips cannot get smaller forever. At some point Moore’s Law will run into the unyielding laws of nature. Chip pathways certainly cannot be shorter than a single molecule, and the actual physical limit is likely larger than that.

Moderate 67. According to Moore’s Law, chip performance per dollar doubles every eighteen months. However, smaller processors come with challenges. What are the physical limitations of advancing chips and processors according to Moore’s Law, and what are firms doing to address the limitations?

The limitations impacting Moore’s Law are size, heat, and power. As processors decrease in size, the tightly packed electrons will heat up requiring the need for cooling methods. If the smaller and faster chips are not cooled down, they will melt, causing overall system meltdowns. To address the issue, firms are adding fans to devices such as PCs and extensive cooling and ventilation systems to data centers. Air conditioning systems are a solution that comes with a sizeable price tag. Cooling data centers costs a lot of money and as technology advances, there will be greater need to power systems to cool data centers. For example, Google stated that they are spending more money on cooling servers than the costs of the servers themselves. Firms like Google and Apple are building server farms in locations where they can take advantage of hydroelectric power to reduce costs. In addition, chips will also reach a point where they cannot get smaller, and eventually reach their physical limits. Firms are addressing these limitations by designing multicore processors to achieve the same goals while using less power.

Hard Fill in the Blanks 68. _____ are the super tiny on-off switches in a chip that work collectively to calculate or store things in memory.

Transistors; Easy 69. For many applications, the _____ will outperform a single speedy chip, while running cooler and drawing less power. multicore chips; Moderate 70. A thin, circular slice of material used to create semiconductor devices is known as a(n) _____. silicon wafer; Easy Section 6.3 True/False Questions 71. Modern supercomputing is typically done via a technique called massively parallel processing.

True; False 72. Grid computing, though faster and more efficient, is an expensive alternative to supercomputers.

False; Easy 73. The multiple-brain approach is best suited for problems of a linear nature.

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False; Easy Multiple Choice Questions 74. The term _____ refers to computers that are among the fastest of any in the world at the time of their introduction. a. mainframes b. quantum computers c. supermini computers d. minisuper computers e. supercomputers e; Easy 75. _____ is a technique in which computers are designed with many microprocessors that work together, simultaneously, to solve problems. a. Nanocomputing b. Quantum computing c. Grid computing d. Massively parallel processing e. Cloud computing d; Easy 76. Grid computing is a type of computing in which a. special software is installed on several computers enabling them to work together on a common problem. b. computers are designed with many microprocessors that work together, simultaneously, to solve problems. c. quantum properties, such as superposition and entanglement, are used to represent data and perform operations on these data. d. microprocessors with two or more (typically lower power) calculating processor cores are fabricated on the same piece of silicon to solve multiple problems. e. computer software seeks to reproduce or mimic human thought, decision making, or brain functions. a; Moderate 77. Which of the following problems is least likely to be solved through grid computing? a. financial risk modeling b. gene analysis c. linear problems d. parallel problems e. manufacturing simulation c; Moderate 78. Aerospace firms are likely to use _____ computing for product design. a. mega b. HPC c. grid d. cluster e. latency b; Easy

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Essay Questions 79. Describe massively parallel computing and grid computing and discuss how they transform the economics of supercomputing.

Modern supercomputing is typically done via a technique called massively parallel processing (computers designed with many microprocessors that work together, simultaneously, to solve problems). The fastest of these supercomputers are built using hundreds of microprocessors, all programmed to work in unison as one big brain. While supercomputers use special electronics and software to handle the massive load, the processors themselves are often of the off-the-shelf variety that is found in a typical PC. Such implementations greatly reduce the costs of computing hardware involved in supercomputing, while offering comparable performance. Grid computing is further transforming the economics of supercomputing. With grid computing, firms place special software on their existing PCs or servers that enables these computers to work together on a common problem.

Large organizations may have thousands of PCs, but they’re not necessarily being used all the time, or at full capacity. With grid software installed on them, these idle devices can be marshaled to attack portions of a complex task as if they collectively were one massively parallel supercomputer. While a middle-of-the-road supercomputer could run as much as thirty million dollars, grid computing software and services to perform comparable tasks can cost as little as twenty-five thousand dollars, assuming an organization already has PCs and servers in place. These techniques help bring down research and development time, which means products can be introduced in the market sooner.

Moderate Fill in the Blanks 80. A(n) _____ refers to a massive network of computer servers running software to coordinate their collective use and to provide a common set of services. server farm; Easy 81. _____ is a form of cloud computing where a firm subscribes to a third-party software and receives a service that is delivered online.

Software as a Service; Easy 82. _____ takes advantage of special software and networking hardware to more tightly link them together to function as one.

Cluster computing; Moderate 83. Replacing computing resources—either an organization’s or individual’s hardware or software—with services provided over the Internet is known as _____. cloud computing; Easy 84. Your employer provides all staff members with a subscription for Microsoft Office 365. This online software delivery is known as _____.

SaaS or Software as a Service; Moderate Section 6.4 True/False Questions 85. Electronic waste is expected to decrease with the rise of living standards worldwide.

False; Moderate

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86. Electronic waste is valuable because it contains small bits of metals such as silver, platinum, and gold.

True; Easy 87. The process of separating out the densely packed materials inside tech products so that the value in ewaste can be effectively harvested is extremely skill intensive.

False; Easy 88. E-waste management is extraordinarily difficult to monitor and track, and loopholes are rampant.

True; Easy 89. The United States has the best environmental legislation to cover e-waste and recycling standards.

False; Easy 90. E-waste site, Agbogbloshie has now been shut down, resulting in scrappers losing their only form of wage-earning.

True; Easy Multiple Choice Questions 91. E-waste is particularly difficult to address because of a. multiple international agencies like the Fair Factories Clearinghouse. b. morals and ethics that dictate firms to put principles above profits. c. environmental advocates being appointed to influential positions on company boards. d. the complexity of the modern value chain. e. the increased longevity of electronic products. d; Moderate 92. Which of the following statements regarding the current electronic waste scenario is true? a. Electronic waste increases with the rise of living standards worldwide. b. The content of gold in a pound of electronic waste is lesser than that in a pound of mined ore. c. The process of separating densely packed materials inside tech products to effectively harvest the value in e-waste is skill intensive. d. Sending e-waste abroad can be much more expensive than dealing with it at home. e. E-waste trade is mostly transparent, and stringent guidelines ensure that all e-waste is accounted for. a; Moderate 93. Based on the author’s take on e-waste management, a manager would do well to learn that a. dealing with e-waste at home can be ten times cheaper than sending it abroad. b. disposal and recycling partners must be audited with the same vigor as suppliers and other partners. c. environmentalists target only the big firms as they can afford to compensate for any environmental damage wrought by their practices. d. it is simple enough for firms to monitor and track e-waste management through international agencies such as Fair Factories Clearinghouse. e. appointing environmentalists like Al Gore to the firm’s board of directors helps avoid legal action and brand tarnishing due to bad e-waste management practices. b; Moderate

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94. Managers looking for advice on properly dealing with obsolete technology hardware can a. consult the e-Stewards program. b. seek advice from the International Association of Electronics Recyclers. c. look for partners with ISO 9001 and ISO 14001 certifications. d. investigate resources provided by the Basel Action Network. e. All of the above are true. e; Easy Essay Questions 95. What is electronic waste? What are the factors that aggravate this problem?

Discarded, often obsolete technology is known as electronic waste (e-waste). Rapid obsolescence of technology products such as PCs and cell phones is a major reason for the constant growth of mountains of discarded tech junk. Consumer electronics and computing equipment can be a toxic cocktail that includes cadmium, mercury, lead, and other hazardous materials. Once called the “effluent of the affluent,” e-waste will only increase with the rise of living standards worldwide. Not only does e-waste contain mainstream recyclable materials we’re all familiar with, like plastics and aluminum, but it also contains small bits of increasingly valuable metals such as gold, silver, platinum, and copper. The complexities of the modern value chain, the vagaries of international law, and the nefarious actions of those willing to put profits above principle show how difficult addressing this problem can be.

Moderate 96. What are the implications of e-waste management from an organizational and managerial perspective?

Thinking deeply about the ethical consequences of a firm’s business is an imperative for the modern manager. A slip up can, in seconds, be captured and broadcast to the world, exposing firms to legal action and tarnishing a brand for years. Managers must consider and plan for the waste created by the products, services, and technology used by the organization. Consumers and governments are increasingly demanding that firms offer responsible methods for the disposal of their manufactured goods and the technology used in their operations. Managers must audit disposal and recycling partners with the same vigor as their suppliers and other corporate partners. If not, an organization’s equipment may end up in environmentally harmful disposal operations.

Moderate 97. What will increased e-waste legislation mean for tech firms? In what ways have some firms already innovated to be proactive in their e-waste management?

Globally, European legislation is requiring many tech firms to reclaim products at end-of-life.

Already sixty-seven countries have enacted legislation to deal with the e-waste they generate.

Managers and product designers are beginning to think about end-of-life as part of the overall design process. It's not much of a leap to imagine a requirement to equip the most toxic or high-valued equipment with yet-to-be-set standard sensor technologies that would make it easier to refuse an item at pickup or separate an item before it hits the landfill. Apple, Google, Samsung, and many other brands have set ambitious targets for recycling and for the use of recycled and renewable materials.

Apple claims its Daisy recycling robot can take apart 200 iPhones every hour, and says it diverted 48,000 metric tons of electronic waste from landfills in its first year. Apple has publicly stated it has set a goal to make all of its products only from recycled or renewable material.

Moderate Section 6.5

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True/False Questions 98. Disney’s MagicBand can be used both at their theme parks and with home computer applications.

False; Easy 99. Disney’s MagicBand can be used for everything except as a hotel room key.

False; Easy 100. Disney says the MagicBand and supporting systems have cut turnstile transaction time by 60 percent.

False; Moderate 101. Disney says the MagicBand now costs less than $5 to manufacture.

True: Easy Multiple Choice Questions 102. Which of the following is not true about the development of MyMagic+? a. The firm had the backing of executive leadership who also provided resources to support the complex and expensive project. b. Many disparate teams were impacted by the project, presenting political challenges in a project so large. c. It is estimated that Disney spent over $1 billion on these systems. d. Contrary to what one would expect from Moore’s Law, the cost of the MagicBands themselves actually rose past original per-unit estimates. e. All of the above are true. d; Moderate 103. Studying MyMagic+ helps one understand the costs associated with information systems deployment at scale. According to your reading, one major expense was that 70,000 “cast members” (Disney’s name for its employees) received MyMagic+: a. bands b. readers c. training d. iPod Touch PDAs e. rewards c; Moderate 104. MagicBand’s 3rd iteration, MagicBand+, offers additional customer experiences such as: a. color-changing lights b. haptic feedback c. gesture recognition with designated attractions d. firework synchronization e. All of the above are benefits of the MagicBand+ device. e; Easy Essay Questions: 105. Describe some of the physical hardware and infrastructure improvements that were necessary throughout the Disney World resort in order to make MagicBand and MyMagic+ work. [Note: Specifics of numbers expected only at faculty discretion.]

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More than 28,000 hotel doors needed replacement locks to work with MagicBand. Two dozen workers spent eight months upgrading 120 doors per day, trying to be unobtrusive in properties that boast an 80 percent average guest occupancy rate. Two hundred eighty-three park-entry points also had to be upgraded. More than 6,000 mobile devices (mostly iPod Touch and iPads with custom apps) were deployed to support new park systems. Disney World also needed to install more than 30 million square feet of Wi-Fi coverage.

Hard 106. Describe some of the benefits customers receive from using MagicBands.

Some of the benefits include the following: bands can be used for park and attraction admission; for keyless entry into your Disney hotel room; to pay for rides; to locate your group to deliver restaurant meals, personalized greetings, and service; and match you to photos taken by park photographers and attraction cameras. Lines should also appear shorter, service more efficient, payment easier, and the overall park experience will seem improved.

Moderate 107. How does Disney manage privacy and payment concerns with the possibility of lost or stolen bands?

A band that tracks users and contains payment information can lead to privacy concerns, but Disney seems to have this covered. The band doesn’t store any personal information; instead, it contains a code that identifies users within Disney’s internal encrypted databases. Lose a band and it can be disabled and replaced. Purchases also require a PIN, and parents concerned with free-spending children can disable purchasing on their bands or set a spending limit.

Moderate Fill in the Blanks 108. _____ is usually expressed as a tap or vibration delivered by a device as part of the user interface, offering a cue that actions have been taken or a result is available.

Haptic feedback; Easy 109. The newer MagicBand+ devices have both short- and long-range _____, and a 2.4 GHz radio, akin to what you’d find in an old cordless phone.

RFID chip; Moderate

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Chapter 7 Disruptive Technologies: Understanding the Giant Killers and Tactics to Avoid Extinction Section 7.1 True/False Questions 1. Disruptive innovations don’t need to perform better than incumbents; they simply need to perform well enough to appeal to their customers (and often do so at a lower price).

True; Moderate 2. Many disruptive firms were started by former employees of the disrupted giants.

True; Easy 3. At the dawn of commercial mobile phone technology AT&T hired storied consulting firm McKinsey & Company to forecast U.S. cellphone use.

True; Easy 4. An option is a right and an obligation to make an investment.

False; Easy 5. Identifying and nurturing potentially disruptive technologies requires constant vigilance and relentless and broad environmental scanning.

True; Easy 6. Profit margins for disruptive innovations are usually worse than those for incumbent technologies.

True; Moderate 7. Firms that listen to existing customers and tailor offerings based on this input are far more likely to identify potentially disruptive technologies than those that experiment with products that existing customers do not demand.

False; Moderate 8. ARM is one of the only firms, aside from Intel, that has scale allowing it to own and operate its own fabs.

False; Moderate.

9. Firms might not want to use ARM chips because they are incompatible with Intel chips.

True; Easy 10. Firms may want to use ARM chips because they draw less power than Intel chips.

True; Easy 11. ARM provides logic in the majority of smartphones, including products by Apple and Samsung.

True; Moderate 12. Nvidia has also been surpassed in both value and profits by Intel.

False; Easy Multiple Choice Questions

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13. Which of the following is true of disruptive technologies? a. The tech industry is the least fertile ground for disruptive technologies. b. Over time, initially underperforming incumbents improve performance attributes to the point where they invade established markets. c. They come to market with a set of performance attributes that existing customers have demanded. d. Disruptive technologies and disruptive innovations are independent concepts. e. The term disruptive technologies is a simple one because few technologies are able to create market shocks and catalyze growth. b; Moderate 14. Big firms fail to see disruptive innovations as a threat because they a. primarily focus on the bottom line. b. fail to listen to customer needs. c. overestimate the impact of these innovations. d. don’t indulge in playing catch-up. e. concentrate only on future financial performance. a; Moderate 15. The acronym VoIP is considered by many to be a disruptive innovation. It refers to: a. the technology used in Internet telephony b. cloud computing c. semiconductor manufacturing technology d. DWDM e. data grams a; Moderate 16. Which of the following is a way to recognize potentially disruptive innovations? a. pay attention to slow-expensive advancements in technology b. seeking the opinions of venture capitalists, research academics, and passionate internal engineering staff c. become more consumer focused d. indulge in bottom-line obsession e. increase conversation within same product groups b; Moderate 17. Yahoo!’s mobile team didn’t have an executive champion to protect and nurture the team during the pioneering phase when financial results couldn’t be realized. It couldn’t show substantial results, so managers were reassigned. This is an example of: a. social engineering b. the creosote bush effect c. overspending on unproven projects d. the options portfolio of innovation e. a portfolio of options b; Moderate Essay Questions 18. What are the characteristics of disruptive technologies? Give an example of disruptive technology.

In Christensen’s view, true disruptive technologies have two characteristics that make them so threatening. First, they come to market with a set of performance attributes that existing customers

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don’t value. Second, over time the performance attributes improve to the point where they invade established markets. These attributes are found in many innovations that have brought about the shift from analog to digital. The first digital cameras were terrible—photo quality was laughably bad (the first were only black and white), they could only store a few images and did so very slowly, they were bulky, and they had poor battery life. Much the same could be said about the poor performance of early digital music, digital video, mobile phones, tablet computing, and Internet telephony (voiceover IP or VoIP), just to name a few examples. But today all of these digital products are having a market-disrupting impact. Digital cameras have all but wiped out film use, the record store is dead, mobile phones for many are their only phone, tablets are selling faster than laptops, Internet phone service is often indistinguishable from conventional calls, and Skype can be considered the world’s largest long-distance phone company.

Moderate 19. Why do big firms fail to see disruptive technologies as a threat?

Those running big firms fail to see disruptive innovations as a threat not because they are dumb, but in many ways because they do what executives at large, shareholder-dependent firms should do—they listen to their customers and focus on the bottom line. And because the majority of a firm’s current customers don’t want the initially poor-performing new technology. The most disruptive technologies also often have worse margins than the initially dominant incumbent offerings. Since these markets don’t look attractive, big firms don’t dedicate resources to developing potential technology or nurturing the needs of a new customer base. Your best engineers are likely going to be assigned to work on cash-cow offerings, not questionable new stuff. This results in a sort of blindness created by an otherwise rational focus on customer demands and financial performance.

Moderate 20. Why can’t big firms simply wait until disruptive innovations prove themselves before they invest in these new areas?

By the time the new market demonstrates itself, start-ups have been at it for quite some time. They have amassed expertise and often benefit from increasing scale and a growing customer base. The brands of firms leading in developing disruptive innovations may also now be synonymous with the new tech. If this happens, big firms are forced to play catch-up, and few ever close the gap with the new leaders.

Moderate Fill in the Blanks 21. Disruptive technology is also called disruptive _____. innovation; Easy 22. A(n) _____ is a right, but not the obligation to make an investment. option; Easy 23. Chips based on designs from the firm _____ dominate the market for smartphones, but they are not compatible with the most popular instruction set used in Intel’s desktop and laptop chips. They do, however, draw far less power than Intel chips.

ARM; Easy 24. Those early customers for disruptive technology are part of a different “_____” than anything addressed by incumbent market leaders. value network; Easy

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25. One way the package software firm Intuit has approached the future and avoided disruptive innovation was to _____ mint.com. purchase or buy; Moderate 26. Facebook was famously late to the mobile revolution and felt forced to make billion and multibillion purchases for _____ and _____, even as SnapChat rises as a threatening rival.

Instagram, WhatsApp or WhatsApp, Instagram; Moderate 27. OpenAI, the firm behind ChatGPT, used some 10,000 _____ processors to train its industry-changing AI model.

Nvidia; Moderate Section 7.2 True/False Questions 28. Microsoft’s purchase of Nokia to influence the mobile market was well worth the $7.6 billion price tag.

False; Easy 29. Analysts doubting that a rideshare app would catch on is a good example of the McNamara fallacy.

True; Easy 30. Intuit has avoided disruption in the shift away from packaged software by developing products that leverage cloud computing, some of which are initially provided for free.

True; Easy Multiple Choice 31. The McNamara fallacy relies on what type of observations? a. qualitative b. quantitative c. personal d. random e. foreign b; Moderate 32. By heavily focusing on its software and operating systems, Microsoft missed the opportunity to dominate the disruptive: a. game market b. mobile market c. enterprise systems market d. prediction market e. viral market b; Moderate 33. Researchers at Deloitte University suggested that blockchain could a. completely replace money as a means of payment. b. improve financial transactions. c. increase the need for more security when using cash alternatives.

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d. increase the number of intermediaries in most legal transactions. e. All of the above are true. b; Moderate Fill in the Blanks 34. It’s important to recognize that entirely new markets will continually open up, creating _____ where past experiences provide few metrics or guidance. disruptions; Moderate 35. The McNamara fallacy can by summarized as errantly looking mainly at _____ events when making decisions for the future. past; Easy Essays Questions 36. Firms should always be on the lookout for disruptive innovations. How can firms improve their radar and what should be done once a disruptor is spotted?

Firms must pay attention to the movements of fast and cheap technological advancements.

Recognizing what is moving and working for others can help nudge firms in the direction of the next big thing. Firms should invest time in talking with top researchers and venture capitalists about what is on the horizon. In addition, conversations within organizations can lead to better understanding of new technologies and opportunities for new business. Many disruptive innovations could have been birthed within existing firms. For example, former employees from Xerox, Hewlett Packard, and the like went on to start disruptive firms including Adobe and Apple. Conversations bring awareness and managers need to have a plan once disruptive innovations are spotted. Christensen suggests firms build a portfolio of options on emerging technologies. Investing internally and externally can lead to being a part of the next big thing. According to Christensen, firms will not see ROI overnight and should plan to nurture these new efforts.

Hard 37. How did Yahoo! miss the mark on the advancement of mobile, and what could have been done differently?

Yahoo! missed the mark on mobile advancements by focusing too heavily on its already successful web browser for desktop. Mobile was on the radar for Yahoo!, but they made minimal investment and moved talented engineers because the projects were underperforming. They failed to listen to disbanded team members who insisted that mobile was the future. Yahoo! should have taken a page from Christensen’s book and focused on nurturing their mobile business. Yahoo! was ahead of its time in mobile and prematurely jumped ship on what was truly the next big thing.

Moderate Section 7.3 True/False Questions 38. High-end home 3D printers create parts by heating plastic.

False; Moderate 39. Quality and complexity have both caused 3D printing to flounder.

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True; Moderate 40. Almost all custom hearing aids are 3D printed.

True; Easy Multiple Choice Questions 41. Which company currently uses printed jet engine fuel nozzles? a. Boeing b. General Dynamics c. Airbus d. GE Aerospace e. Embraer d; Easy 42. What is another common term for 3D printing? a. process manufacturing b. additive manufacturing c. assembly manufacturing d. vertical manufacturing e. integrated manufacturing b; Easy 43. Which of the following statements about Vulcan Labs is true? a. With their lasers they are able to craft single-piece metal parts using half the energy of a traditional factory. b. Their methods use a tenth of the material that would be needed in a traditional factory. c. The firm additively prints jet engine fuel nozzles for GE Aerospace. d. The firm additively prints spinal implants for Stryker. e. All of the above are true. e; Moderate Essay Question 44. List the benefits of building 3D printed houses.

Building houses using 3D printing technology offers a multitude of advantages. First and foremost, it significantly slashes construction costs by minimizing material waste and reducing labor expenses.

With fewer workers required compared to traditional construction methods, the overall expenditure decreases substantially. Additionally, 3D printing expedites the construction process, completing houses in a matter of days or weeks rather than months. This rapid pace not only saves time but also allows for quicker occupancy, addressing housing needs more promptly. Moreover, 3D printing provides unparalleled design flexibility, enabling architects and designers to create intricate and customized structures that might be unfeasible with conventional techniques. This level of customization fosters innovation and facilitates the realization of unique architectural visions.

Furthermore, the sustainability aspect of 3D printing cannot be overstated. Many materials used in 3D printing are environmentally friendly, and the technology itself reduces construction waste. Some printers even utilize recycled materials, aligning with sustainability goals and reducing the environmental footprint of construction projects.

Moderate Fill in the Blanks

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45. _____homes are structurally very strong and hold up better than wood houses when faced with natural disasters.

Concrete; Moderate 46. Additive manufacturing _____ 3D printing where material is built up, layer by layer, as material is progressively added to shape an object. industrial; Moderate Section 7.4 True/False Questions 47. Incentives for U.S. consumer adoption of Bitcoin are quite high.

False; Easy 48. Bitcoin transactions are recorded in a public ledger known as the Bitcoin wallet.

False; Moderate 49. Cross-border bank transfers are not likely to adopt Bitcoin since these functions are already electronic and highly automated.

False; Easy 50. The governments of El Salvador and the Central African Republic (CAR) were the first two nations to accept Bitcoin as legal tender.

True; Easy 51. By fall 2023, Fidelity Investments had a crypto group of over six hundred employees and had pioneered multiple financial innovations using crypto and Bitcoin technologies.

True; Easy 52. An NFT is a new-fungible token.

False; Easy 53. Low-margin retailers are interested in Bitcoin because it may allow the elimination of fees associated with credit card transactions.

True; Easy 54. Like most open-source efforts, Bitcoin was created by a consortium of for-profit corporations hoping to fuel adoption of a beneficial new standard.

False; Moderate Multiple Choice Questions 55. Which group is concerned that a widely adopted e-CNY would give the Chinese government unprecedented surveillance capabilities? a. the Chinese government b. privacy advocates c. social media firms d. the United Arab Emirates

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e. the Bank of International Settlements b; Hard 56. Which of the following statements about DeFi are true? a. DeFi efforts have strengthened beneficial financial regulations. b. After a rough start, DeFi is ready to go mainstream. c. Most DeFi efforts lack consumer protection. d. All of the above are true. e. None of the above are true. c; Moderate Essay Questions 57. List the benefits of blockchains along with possible markets for early adoption.

Low transaction fees increase blockchain’s appeal to retailers and for cross-border financial transfers among those most concerned with lowering electronic transaction costs. Crypto may also become useful as a currency for micropayments, purchases currently too small to justify a credit card purchase. Civil libertarians like the idea of transactions happening without the prying eyes of data miners inside card companies, having their transaction history shared by others, or the government.

All transactions are recorded in the open, via the blockchain, but individuals can be anonymous. There’s also no central organization to “freeze” a Bitcoin account.

At its core, blockchains are a standard for exchanging value over the Internet without an intermediary. This has the potential to disrupt all sorts of systems that rely on intermediaries, including the transfer of property, execution of contracts, and identity management.

Moderate 58. List and briefly discuss current concerns that are limiting the adoption of cryptocurrencies.

Consumer benefit needs to be stronger. While international remittance customers and those otherwise left out of the banking and credit card system can see immediate benefit from crypto cash replacements, most of the population isn’t impacted by this market. Cryptocurrency is difficult to understand and often difficult to use tech that offers little benefit. Cryptocurrencies have a reputation problem, since it is a currency favored by the online underworld and was created by a mysterious, unknown entity referred to as Satoshi Nakamoto. Security concerns also pose a problem. High-profile hacks, such as the Mt. Gox breach, create a public perception that Bitcoin is unsafe. Government regulations also remain uncertain in many regions of the world. The currency is highly volatile, fluctuating wildly in relation to major world currencies. The initial Bitcoin support network does not allow for anywhere near the transaction volume of competing systems like global credit card networks.

Moderate Fill in the Blanks 59. Bitcoin transactions are recorded in a public ledger known as the _____. blockchain; Moderate 60. Individuals known as _____ participate in verifying and maintaining transactions and are occasionally awarded for their efforts through the receipt of Bitcoins. miners (or Bitcoin miners); Moderate 61. _____ are cryptocurrencies that do not independently float in value.

Stablecoins; Moderate

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62. _____ are the digital equivalent of central bank money.

CBDC; Moderate 63. As of 2023, _____’s highest daily transaction volume was approximately 710,000.

Bitcoin; Moderate 64. Cryptocurrencies that have their _____ pegged to a currency or commodity, rather than have currency value float independently, are referred to as stablecoins. value; Moderate 65. DeFi stands for _____. decentralized finance; Easy 66. Getting rid of card companies cuts out _____, which can top 3 percent. Overstock.com was one of the first large online retailers to accept Bitcoin. transaction fees; Moderate

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Chapter 8 Amazon: An Empire Stretching from Cardboard Box to Kindle to Cloud Section 8.1 True/False Questions 1. Initially, Amazon adopted the domain of a non-profit organization.

False; Easy 2. Amazon went nine whole years without turning a profit.

True; Easy 3. Amazon’s success strategy is based on the focus on its quarterly results.

False; Easy 4. Amazon Prime Air is the name of Jeff Bezos’s commercial rocketry and aviation firm.

False; Easy 5. Tech-fueled operations cannot yield greater profits than off-line players.

False; Easy 6. Amazon is now the third-largest seller of online advertisements, behind only Google (aka Alphabet) and Meta, but it also buys more advertising than any other firm in history.

True; Easy Multiple Choice Questions 7. Many pundits assumed Amazon would fail. Why? a. The firm was losing money and competing against established, well-known, offline brands who were going online. b. Amazon was too short-term focused. c. The firm was based in Seattle, rather than Silicon Valley. d. Amazon sales were not increasing. e. All of the above are true. a; Easy 8. Which of the following strategies was followed by Amazon’s founder? a. He focused more on Amazon’s quarterly results. b. He postponed profit harvesting. c. He reduced warehousing capacity. d. He consciously ignored cloud computing platforms. e. He built e-commerce operations only for Amazon’s customers in the United States. b; Moderate 9. Which of the following is true of Amazon? a. Amazon made profits from the first year of its operation. b. It has limited its products to only electronic devices. c. Its cloud computing business is one of the largest players in that category. d. Its profitability has remained constant over the years and analysts continue to predict profits for the firm’s future. e. Amazon concentrates more on its quarterly results and is inflexible on details about its vision. c; Moderate

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10. Which of the following is not a firm that has received an investment from Jeff Bezos? a. Uber b. Twitter c. The Washington Post d. Bezos has not invested in any of these businesses. e. Bezos has invested in all of these businesses. e; Easy Fill in the Blanks 11. Today, Amazon is the nation's second largest private employer, behind only _____.

Walmart; Easy 12. For Amazon, the margins on selling someone else's stuff are far _____ than when Amazon buys and resells products itself. better; Easy Section 8.2 True/False Questions 13. Dynamic pricing is described as pricing that shifts over time, usually based on conditions that change demand (e.g., charging more for scarce items).

True; Easy 14. The three pillars of Amazon’s business are large selection, convenience, and lower prices.

True; Easy 15. Amazon got its start selling games online.

False; Easy 16. Amazon does not open its website up to third-party sellers.

False; Easy 17. In order to automate profit-pushing hyper-efficiency, Amazon warehouses are powered by at least as much code as the firm’s website.

True; Easy 18. The use of Kiva robots has also allowed Amazon to radically reduce headcount, saving the firm additional money by cutting its workforce.

False; Moderate 19. Amazon’s relentless efficiency has streamlined its entire order process to involve only about a minute of human contact.

True; Easy 20. In a set of steps called SLAM (scan, label, apply, manifest), and taking only about 2 minutes, packed boxes are weighed, and the software does an additional check to see if the weight is what’s expected.

False; Easy 21. Accounts payable periods do not vary.

False; Easy

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22. Amazon owns the inventory that third-party sellers provide via the “Fulfillment by Amazon” service.

False; Easy 23. Amazon shelves are specifically stocked so that similar items are not placed next to each other.

True; Easy 24. One of the reasons Amazon has struggled to achieve profitability is because the firm has a negative cash conversion cycle.

False; Easy 25. While so many managers focus on what’s changing in tech-fueled industries, Bezos feels that building strategy based on factors that are not going to change is critically important.

True; Moderate 26. By allowing third parties to make products available through Amazon, the firm strengthens network effects for competitive advantage.

True; Easy 27. The Amazon Prime service provides consumers with next-day delivery on roughly 10 million products and reinforces Amazon as a first-choice shopping destination for Prime members.

True; Easy 28. Robot–human interaction is not a concern within Amazon’s warehouses.

False; Easy 29. Amazon’s games offer participating workers prizes, like Amazon SWAG (stuff we all get), additional days off, and 50% discounts on Amazon Prime service.

False; Moderate 30. According to the FTC, advertised products are forty-six times more likely to get clicks.

True; Easy Multiple Choice Questions 31. Which of the following is considered one of the three “pillars” critical to Amazon’s business success? a. large selection b. niche customers c. inimitable technology d. dynamic pricing e. firm-owned brands a; Easy 32. Which of the following is true of Amazon? a. Amazon’s early warehousing was a model of efficiency and was critical to the firm being profitable from the start. b. Amazon is the last place most consumers shop online. c. The three pillars of Amazon’s business are large selection, convenience, and lower prices. d. Amazon, only recently, has started selling directly to customers. e. Amazon concentrates on niche customers, low brand assortment, and higher prices to gain competitive advantage. c; Moderate

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33. Allowing third-party sellers to list their products on Amazon is controversial. Why would Amazon allow products sold by others to appear on its site? a. Selection attracts consumers. b. A network effect competitive advantage is created where more buyers attract more sellers, giving Amazon an advantage over any rival attempting to create a similar marketplace. c. Although products are sold by third parties, Amazon gains valuable data on things such as customer browsing habits and sales. d. Amazon’s brand is reinforced as a first-choice shopping destination. e. All of the above are true. e; Moderate 34. Which of the following is true of Amazon’s warehousing process? a. Autonomous robots are in charge of building an order from a warehouse’s inventory without any human intervention. b. Amazon’s items that produce the most sales volume are stocked on shelves, alphabetically, to speed selection and packing. c. Amazon’s systems stamp names and addresses on boxes so they can be filled by pickers directly from shelves. d. When stacking shelves in its warehouses, Amazon ensures that no two similar products sit next to each other. e. Amazon’s items that are heavily discounted and about to be written off as “unsellable inventory” are dropped in an area called “mass land” in one last-ditch effort to move underperforming warehouse stock. d; Easy 35. Money owed for products and services purchased on credit to be paid at a later date is known as: a. accounts payable b. net profit c. pre-paid expense d. gross profit e. earnings before depreciation and tax a; Easy 36. The firm’s period between paying suppliers for products and collecting funds from customers who purchase these products is referred to as the: a. earnings cycle b. cash conversion cycle c. inventory turnover cycle d. liquidity period cycle e. trade cycle b; Easy 37. Firms that can’t generate cash quickly enough are referred to as having: a. liquidity problems b. sagging problems c. high inventory turns d. stock-outs e. vertical integration problems a; Easy 38. Which of the following is the most liquid asset? a. plant machinery b. retail locations c. goodwill d. cash

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e. office furniture d; Easy 39. Which of the following statements is true? a. The concept of accounts payable is applicable only when a customer buys from a retailer. b. The Amazon Associates program is the second largest affiliate marketing program in the world. c. Amazon does not allow third-party sellers to sell products through its website. d. Amazon has always sold products to customers using middlemen. e. It is not uncommon for a big retailer like Amazon to be able to hold products for a month or longer without having to pay for them. e; Moderate 40. The phrase inventory turns refers to a. the stock of inventory returned to a manufacturer due to poor quality. b. also known as gross-profit margin turnover. c. the number of times an inventory item moves within a warehouse. d. the time it takes a product to be replaced by a newer model or upgraded product. e. the number of times inventory is sold or used during a specific period. e; Moderate 41. In order to achieve a negative cash conversion cycle, a firm would want to a. increase its account payable period and its inventory turns. b. decrease its account payable period and its inventory turns. c. increase its account payable terms and decrease its inventory turns. d. decrease its account payable terms and increase its inventory turns. e. analyze systems and stop whatever processes are causing this, since a negative cash conversion cycle is associated with losses, not profits. a; Moderate 42. Dynamic pricing refers to a. pricing that shifts over time based on conditions associated with product supply and demand. b. pricing that is always a notch higher than competition. c. pricing strategies that focus on consistency even if environmental conditions fluctuate wildly. d. the bargaining power of customers. e. pricing that is always a notch below competition. a; Moderate 43. What advantage does Amazon get by creating its own branded products? a. It allows the firm to cut some of the costs that would otherwise go to a branded supplier. b. It gives Amazon even more negotiating leverage with suppliers. c. It allows Amazon products revealed on site and in the firm’s product search results to eliminate costly advertising and other awareness-building spending that many rival products invest in. d. It reduces reliance on well-known suppliers that otherwise sell commodity products. e. All of the above are true. e; Moderate 44. Amazon’s moves are largely motivated by: a. relentless customer focus b. cost-cutting c. the focus on making immediate supplier payments d. internal leadership e. technology advancements a; Easy

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45. _____ is a randomized group of experiments used to collect data and compare performance among two options studied. a. Bucket testing b. Multivariate testing c. A/B testing d. Choice modelling e. Web usability testing c; Easy 46. A(n) _____ is a line of identifying text, assigned and retrieved by a given web server, and stored by your browser. a. domain b. session bean c. header d. cookie e. URL d; Easy 47. Amazon may soon replace the “robot-carried tall shelves” with newer robots toting waist-high bins in order to: a. cut down on worker injuries b. lower insurance premiums c. improve worker ergonomics d. All of the above are true. e. None of the above are true. d; Easy Essay Questions 48. How is Amazon using robotics technology to streamline their warehouse and fulfillment process?

When items arrive in an Amazon warehouse, robots line up to accept new inventory while carrying four-sided shelf towers with open bins (known as pods, internally). Shelves may have nine or more levels of goods on each side, with multiple pods per level, but robots know to spin shelves and face workers with sides that will accept incoming goods. Shelf-carrying bots travel around in an area caged off from humans. When orders go out, robots are dispatched to find shelves containing an ordered product and carry it to the picker. Robots rotate shelves so the side containing the desired item facing the worker. All of this increases safety within the warehouse, accuracy, and efficiency.

Moderate 49. How does Amazon gain bargaining power over its suppliers?

Selling more goods often gives Amazon bargaining power with suppliers. The size of Amazon’s business provides the firm with negotiating leverage to secure lower prices and longer payment terms. Amazon’s cost-structure for operations is also superior to rivals. While Amazon spends significantly on software, automation, and expansion of its warehouses, its overall costs for things like real estate, energy, inventory, and security will be lower than brick-and-mortar rivals.

Moderate 50. Describe Amazon’s customer obsession.

For a firm that does so much, Amazon’s moves are largely motivated by relentless customer focus. Bezos, the founder of Amazon, is known to insist that one seat be left open at the conference table as a symbol representing ‘the most important person in the room,’ the Amazon customer. To keep even the most senior executives empathetic to the customer experience, every two years every employee from Bezos must spend two days at the service desk answering customer calls. It’s

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an eye on improving the customer experience that has motivated so many of Amazon’s pioneering efforts, among them are 1-click ordering (which the firm patented), customer reviews, recommendations, bundles, look and search inside the book, where’s my stuff, and free supersaver shipping. While pioneered by Amazon, many of these efforts are now accepted as must-have features across e-commerce categories.

Easy 51. Describe the benefits Amazon has received by deploying Kiva robots in its fulfillment centers.

Kiva robots allow shelves to be slotted closer together and can be queued up for rapid, nevercolliding, constant roundtrips. This helps Amazon store as much as 50 percent more product in Kiva-equipped warehouses (greater selection at lower cost); it has reduced unload time for inbound inventory from “hours” to as little as thirty minutes, and it has cut average order fulfillment time from about an hour and a half to as little as fifteen minutes.

Easy Fill in the Blanks 52. The term _____ refers to showing ads for products and services from a site that a user has previously visited. retargeting (or remarketing, an alternate term introduced in the Google chapter); Easy 53. The phrase _____ refers to a randomized group of experiments used to collect data and compare performance among two options studied.

A/B Test; Easy 54. Third-party products of Amazon are referred to as being part of the _____.

Amazon Marketplace; Easy 55. _____ is a classification of software that monitors trends among customers and uses this data to personalize an individual customer’s experience.

Collaborative filtering; Easy 56. A(n) _____ is a marketing practice where a firm rewards partners (affiliates) who bring in new business, often with a percentage of any resulting sales. affiliate program; Easy 57. Amazon doesn’t share spending habits of its Prime customers, but many estimates have Prime customers spending _____ as much as non-Prime. twice; Easy 58. _____ problems are problems that arise when organizations cannot easily convert assets to cash.

Liquidity; Easy 59. _____ is the number of times inventory is sold or used during a specific period.

Inventory turns; Easy 60. The online retailing technique known as _____ offers deep discounts of a limited quantity of inventory, often for a fixed period of time or until inventory runs out. flash sales; Easy 61. One of Amazon's most lucrative advertising lines is selling a higher _____ to vendors who want to appear higher in search results. ranking; Moderate

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62. Amazon has cut dozens of brands and tens of thousands of products, focusing on a few betterdistinguished brands like “Amazon Basics” and “_____.”

Amazon Essentials; Easy 63. PicksInSpace, Mission Racer, Tamazilla, and CastleCrafter are all examples of Amazon’s efforts to _____ the workplace to improve worker performance. gamify; Easy 64. _____ is a type of machine learning that uses multiple layers of interconnections among data to identify patterns and improve predicted results.

Deep learning; Easy 65. Offering deep discounts of a limited quantity or inventory is known as a _____. flash sale; Easy Section 8.3 True/False Questions 66. In December 2013, Amazon proved its reliability and fast shipping capability during the holiday package rush.

False; Moderate 67. Despite Amazon’s network expansion in recent years, it can still only service about fifty percent of the US with next-day or same-day delivery.

False; Easy 68. Reports suggest that Amazon cargo jets are flying full, but with lighter loads, cutting fuel costs.

True; Easy 69. Amazon’s goal is to eventually use copter-style drones to deliver small packages to consumers in thirty minutes or less.

True; Easy Multiple Choice Questions 70. Amazon’s _____ ballooned to over 83 billion in 2020. a. new customer count b. total wages c. transactions d. shipping costs e. lawsuits d; Easy 71. Which of the following is not a data factor Amazon considers in delivering packages to customers? a. weather b. traffic c. employee job satisfaction d. fuel prices e. fleet availability c; Moderate 72. Amazon delivers _____ of its own packages.

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a. none b. one-third c. half d. two-thirds e. the vast majority e; Easy 73. Amazon offered $10,000 and up to three months’ salary to existing Amazon employees for them to quit and become “delivery entrepreneurs” as part of their _____ service. a. Flex b. Key c. Sea and Global d. Last Mile e. All of the above are correct. a; Easy Essay Question 74. Briefly describe the primary benefits of Amazon building out its shipping and delivery infrastructure.

The primary benefits of Amazon building its delivery and logistics business are cost and control.

Amazon has been able to save about a third of shipping and delivery costs by utilizing its services.

Amazon simultaneously reduced costs and generated revenue with its delivery infrastructure.

Amazon also uses data to determine the most cost-effective and efficient methods for shipping and delivery. By reducing the use of intermediaries such as UPS and USPS, Amazon has greater control over the customer experience.

Moderate Section 8.4 True/False Questions 75. In recent years, Amazon has increased its number of pop-up stores and temporary kiosk-style spots in malls or other heavy-traffic retail spaces.

False; Easy 76. Amazon briefly opened Amazon Style clothing stores, packed with all sorts of fancy tech to improve the in-person fashion experience.

True; Easy 77. The Amazon One palm payment technology does not provide age verification for alcohol purchases.

False; Easy 78. Some Amazon Fresh stores offer drive-through “click-and-collect” pickup, while others have counters to grab-and-go pre-orders.

True; Easy Multiple Choice Questions 79. Which of the following is the purpose of Amazon Dash Cart? a. to speed items throughout Amazon’s warehouse b. to rapidly restock Amazon’s fulfillment center shelves c. to speed delivery to consumers using drones

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d. to allow consumers to skip traditional checkout lines e. to deliver products using autonomous, driverless cars d; Easy Essay Question 80. What are the benefits of opening brick-and-mortar Amazon bookstores? In what ways is Amazon Go changing the face of physical retail?

These stores have no cashiers or cash registers. Instead, customers scan an app (tied to a credit card, of course) when entering. Image recognition, motion detection, weight sensors, and other advanced artificial intelligence can tell what a customer picks up, and charges them when they leave the store. The commercial viability of this technology underscores points on the impact of machine learning fueled by cloud-based server farms (and increasingly powered by special graphics processors, ASICs and FPGAs).

Moderate Fill in the Blank 81. The scanning hardware used for _____ quickly maps the uniqueness of an individual's hand, including lines, ridges, and vein patterns, to make the identification in seconds.

Amazon One palm payment; Moderate Section 8.5 True/False Questions 82. Kindle owners buy fewer books than they did prior to owning the device.

False; Moderate 83. Amazon’s Kindle and Fire businesses are meant to create a channel for media sales as that segment rapidly shifts from atoms to bits.

True; Easy 84. Amazon’s Kindle is described as an e-reader, but these devices are also effective storefronts, directly linking consumers to purchase opportunities for Amazon products.

True; Easy 85. Amazon today sells fewer electronic books overall than their print counterparts.

False; Easy 86. If an author uses Amazon as a publisher, their titles will only be available through Kindle.

False; Easy 87. Amazon’s digital publishing ambitions have extended beyond the printed word to include video content and video games.

True; Easy 88. Amazon, as a company, is susceptible to channel conflicts, but less so if it can deliver suppliers a greater revenue than all other channels combined.

True; Moderate 89. Amazon has significantly changed the cost-structure of the publishing industry.

True; Easy

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90. U.S. Courts have ruled that it is illegal for Apple to charge app developers a 30 percent fee for digital products sold through apps.

False; Moderate 91. Amazon will not have to worry about government antitrust concerns in eBook publishing since there are so many real-world bookstores, both chains and independents.

False; Easy 92. Amazon Echo refers to Amazon’s audiobook division, an especially lucrative business because of the company’s text-to-speech expertise.

False; Moderate 93. Amazon’s Alexa has 70 percent of the smart speaker market.

True; Easy Multiple Choice Questions 94. Which of the following is true of the Kindle? a. An individual who owns a Kindle cannot purchase books provided by non-Amazon publishers. b. The Kindle is only about digitally reading books and not about linking customers to other physical products offered by Amazon. c. By the holiday season of the product’s second year, the number of Kindles sold began to decline steadily. d. Amazon doesn’t look to make money directly from Kindle hardware sales. e. Amazon today sells fewer electronic books overall than their print counterparts. d; Moderate 95. Amazon Fire Phone came with the following features: a. one-handed operation b. 3D perspective that shifted when the phone was tilted c. software that used the phone’s camera to recognize various objects d. song and movie recognition e. All of the above are true. e; Moderate 96. Identify the true statement. a. Agency pricing is illegal. b. Rivals colluding to set prices is illegal. c. Wholesale pricing is illegal. d. In agency pricing, the seller pays publishers for titles and then sells those titles at whatever price it wished. e. Wholesale pricing is also known as agency pricing. b; Moderate 97. Which of the following is an example of agency pricing? a. A department store gets a cut on the selling price of a product, which is set by the product’s manufacturer. b. A retail store purchases merchandise from a manufacturer and sells the merchandise at whatever prices it wishes to charge. c. The government of a country sets the minimum price for certain agricultural products to cover the costs incurred by the farmers. d. A manufacturer and a retailer work in a collaborative manner to decide the price of the final product.

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e. The government of a country sets the maximum price for a certain product that retailers cannot exceed. a; Moderate 98. Which of the following devices is Amazon’s Alexa embedded in? a. Echo Dot b. Hyundai vehicles c. Amazon Smart Oven d. All of the above are correct. e. None of the above are correct. d; Easy Essay Questions 99. Briefly explain the success of the Kindle.

The success of the Kindle is staggering. By the holiday season of the product’s second year, the Kindle was Amazon’s top-selling product in both dollar volume and unit sales. Even more noteworthy for competitors in the eBook and tablet space, Amazon doesn’t look to make money directly from Kindle hardware sales. But once that cash register is in the hands of consumers, the sales ring up. As an always-on bookstore, the Kindle works pretty well. Over 5.5 million titles are offered, with “search inside the book” features and the first chapter downloadable for free.

Estimates of the firm’s Kindle-generated revenue bump vary, but all point to positive Kindlefueled sales gains.

Easy 100.

What is Twitch and why did Amazon buy it?

Twitch allows gamers to stream their gameplay live and offer real-time commentary to viewers. Is watching other people play video games really a big business? You bet! The service boasted 55 million unique viewers before its third birthday, with 1.1 million broadcasters bringing in 16 billion minutes of total videos watched in a single month. In terms of Internet traffic, only Netflix, Google, and Apple are bigger bandwidth hogs than Twitch. The service has nearly as many viewers as the established cable networks MTV, Comedy Central, and MSNBC. Twitch shares ad revenue with broadcasting gamers, and while few are big earners, some Twitch stars have been known to pull in six figures a year. The 32 million people who tuned in to watch the “League of Legends” championships comprised an audience bigger than the finales of Breaking Bad, 24, and The Sopranos combined!

Moderate 101.

What are the two primary advantages of using e-ink versus a traditional laptop or smartphone display? What is the main reason e-ink isn’t being used for laptops or tablets?

E-ink is legible in sunlight and only draws power when flipping a dot from black to white or vice versa, offering exceptionally long battery life. On the downside, e-ink can’t refresh fast enough for animation or video.

Easy 102.

How has Amazon become a victim of channel conflict?

Amazon has become a victim of channel conflict when other retailers have dropped its offerings.

Barnes & Noble and other book retailers have refused to carry titles from Amazon’s publishing arm. Walmart and Target once carried the Kindle but stopped, fearing Amazon’s e-reader would also be a conduit for stealing physical sales. Authors and firms partnering with Amazon can also suffer channel conflict. When Amazon announced a partnership with DC Comics involving exclusive digital rights to Superman and Batman comics, Barnes & Noble and other book retailers pulled DC titles from their shelves.

Easy

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Fill in the Blanks 103. _____ Law has allowed Amazon to radically drop the price of Kindle offerings.

Moore’s; Easy 104.

The term _____ refers to the situation where software developers start with a copy of a project’s program source code, but modify it, creating a distinct and separate product from the original base. fork; Easy 105. _____ refers to the industry practice where the publisher sets the price and the reseller gets a cut (usually around 30 percent in electronic book markets).

Agency pricing; Moderate 106.

The publishing practice known as _____ pricing allows a retailer to buy products from suppliers, but then sell these products to consumers at whatever price they’d like. wholesale; Moderate 107. _____ exists when a firm’s potential partners see that firm as a threat.

Channel conflict; Easy 108.

All of the technology products and services used to build and run a single information technology solution is known as a _____. technology stack; Easy 109.

A _____ product is a fully supported product or service that's made by one company but sold by another. white label; Easy Section 8.6 True/False Questions 110.

In order to ensure security, Amazon Web Services allows only pre-approved, technically sophisticated firms to rent the firm’s industrial-strength computing capacity on an as-needed basis.

False; Easy 111.

Amazon Web Services came out of Amazon’s desire to make money from the firm’s excess computing capacity.

False; Easy 112.

AWS is acting as an entrepreneurship catalyst, enabling startups to host and scale their efforts without the added cost associated with buying and maintaining large quantities of computing hardware.

True; Easy 113.

A cloud computing model that allows a software developer to create systems without having to think about servers is known as serverless.

True; Easy Multiple Choice Questions 114.

Which of the following is true of Amazon Web Services (AWS)?

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a. It only allows firms and not individual customers to rent industrial-strength computing capacity. b. It does not offer corporate-quality computing as a service. c. It allows anyone with a credit card to access industrial-strength, scalable computing resources. d. It is a foolproof system. e. It is just a single-digit percentage of Amazon’s overall revenue. c; Easy 115.

Amazon Web Services (AWS) a. was introduced after rival efforts from leading computing giants Microsoft and Google. b. forms a majority percentage of Amazon’s overall revenue. c. doesn’t provide services such as programming environments. d. is a fool-proof system. e. offer several advantages, including increased scalability, reliability, and security. e; Moderate 116.

Why would a customer choose the Amazon Workspaces product? a. They are good for firms seeking an alternative to expensive end-user software such as Microsoft Word and Adobe Photoshop. b. They are good choices for clients that want securely locked down PCs. c. They are helpful in bringing the efficiency Amazon developed in the layout of offices at its headquarters to other office environments. d. They are effective as a collaborative, team platform for co-creating professional documents. e. They allow third-party sellers to use Amazon’s expertise for warehousing and shipping products. b; Moderate 117.

Amazon decided to enter the cloud computing market to a. make money from the firm's excess computing capacity. b. monetize the firm’s expertise in scalability and reliability. c. oversee the computing infrastructure of rival firms. d. join the cloud platform market against rivals Google and Microsoft. e. control the standard in the eBook market. b; Moderate Fill in the Blanks 118.

Amazon’s industrial strength cloud computing offerings are better known by the acronym _____.

AWS; Moderate 119.

Fire TV and Alexa services are examples of _____, with very little computing in the devices themselves, and the bulk of computing (apps, recommendation software, media storage) happening at a remote location, over the Internet. thin devices; Easy 120.

Cloud computing architectures that combine on-premise infrastructure with public cloud services is called a(n) _____. hybrid cloud; Easy 121.

A set of databases designed to support decision-making in an organization is referred to as a(n) _____. data warehouse; Easy

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122.

A service that allows companies to create virtual servers as needed is known as _____.

EC2 or Elastic Compute Cloud; Moderate Essay Questions 123.

Briefly describe Amazon Web Services (AWS).

Amazon Web Services (AWS) is a cloud computing platform that offers a wide range of computing services over the Internet. Instead of purchasing and maintaining hardware and software on-site, users access computing resources provided by AWS on a pay-as-you-go basis. AWS services include Elastic Compute Cloud (EC2) for creating virtual servers, Lambda for serverless computing, and Workspaces for remote desktop access. Data storage services like Simple Storage Solution (S3) and data warehouse services like Redshift are also provided. AWS operates a global infrastructure with data centers in multiple geographic regions, offering redundancy, fault tolerance, and low-latency access to resources. With a vast array of services tailored to various industries, AWS dominates the cloud computing market, serving major corporations, startups, and government agencies alike.

Moderate 124.

Amazon launched its cloud computing offerings ahead of rivals Google and Microsoft. What are the advantages of moving early in markets for cloud computing?

There are advantages to moving early as a platform provider. An early lead with a marketserving product creates a big share, customer lock-in, internal learning, and a network effect derived from complementary offerings ranging from the employment base provided by a growing number of AWS-skilled developers to a rich assortment of software capable of using the platform.

Moderate 125.

What advantages does cloud computing offer corporate customers?

Cloud services offer several advantages, including increased scalability, reliability, security, lower labor costs, lower hardware costs, and the ability to shift computing from large fixed-cost investments to those with variable costs.

Moderate 126.

Amazon has gotten into the book publishing business. What are the advantages of publishing with Amazon over a traditional publisher?

Publishing with Amazon has several advantages. Amazon offers higher royalty options than traditional publishers. Authors can publish smaller works such as fiction, essays, and magazine articles. Digital offerings can come to market quickly, and there is potential for authors to be exposed to Amazon’s millions of readers.

Moderate Section 8.7 True/False Questions 127.

While Amazon has a host of its own AI tools, it's also tool agnostic and provides products from a wide variety of vendors, including Meta's Llama 2, AI21 Labs, Anthropic, Cohere, and Stability AI. True; Easy 128.

Amazon Org is a ChatGPT-like generative AI service that can be tailored to the specifics of your organization.

False; Moderate 129.

Titan is an example of a foundational model.

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True; Moderate 130.

CodeWhisperer is Amazon's AI programming companion, akin to Microsoft's GitHub CoPilot and Meta's CodeCompose.

True; Easy 131.

HIPAA laws do not apply to AI services because they are not human, which makes the healthcare industry a perfect application.

False; Easy 132.

Sports X-Ray enhances NFL games with real-time access to live stats and data.

True; Easy 133.

AI-focused server farms that firms are building require a nominal amount of GPU chips, which are relatively inexpensive, but in increasingly short supply.

False; Easy Fill in the Blanks 134.

A _____ is a type of general-purpose AI that can be further refined and built upon to perform a wide variety of specific tasks. foundation model; Easy 135. _____ is a set of AWS tools to allow developers and data scientists to build, train, and deploy machine learning models.

SageMaker; Easy 136.

Amazon has rolled out services into so-called _____, which are products that serve a particular industry. vertical solutions; Moderate 137.

Most AI uses what’s referred to as _____. In this technique, humans work with models, providing ratings based on feedback that is used for further refinement. reinforcement learning through human feedback (RLHF); Easy 138.

Anthropic claims using ____ produces a safer AI that is less likely to “hallucinate” or provide answers that seem authoritative but that aren’t based in fact. constitutional AI; Moderate 139.

Amazon has launched free courses via a program known as “_____.”

AI Ready; Easy 140.

Amazon’s _____ chip is used to run models after they have been trained.

Inferentia; Moderate Multiple Choice Questions 141.

AWS HealthScribe is an example of a(n): a. vertical solution b. accurate EMR c. CodeWhisperer d. hallucination e. AI chipset a; Moderate

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142.

Which of the following does the Bedrock service provide? a. hidden underlying infrastructure b. third party tools c. pretrained AI models d. All of the above are true. e. None of the above are true. d; Moderate Section 8.8 True/False Questions 143.

The Federal Trade Commission and seventeen states are bringing some twenty different charges against Amazon, accusing the firm of harming consumers by artificially inflating prices and by locking sellers into their platform and making it effectively required for sellers to purchase additional services from the firm.

True; Easy 144.

Amazon owns The Washington Post.

False; Moderate 145.

Shopify, Shein, and Temu are strong competitors of Amazon.

True; Easy Fill in the Blanks 146.

Regulators cite the “_____” nature of Amazon's business, including charging not just for listings, but also advertising, warehousing, and fulfillment services in order to be considered as part of Prime programs. pay-to-play; Moderate 147.

The FTC position on Amazon is that it punishes _____ who provide products that are cheaper than Amazon’s products. third-party suppliers; Easy Multiple Choice Question 148.

Which of the following is true of U.S. antitrust inquiries? a. U.S. antitrust inquiries don’t apply to technology companies. b. U.S. antitrust inquiries tend to go on for many years. c. U.S. antitrust inquiries tend to not scrutinize acquisitions in core businesses. d. All of the above are true. e. None of the above are true. b; Easy Section 8.9 Multiple Choice Questions 149. a. b. c.

Which of the following does Shopify provide for its users? cloud-based tools products to sell online classes

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d. All of the above are true. e. None of the above are true. a; Moderate 150.

Which of the following caused Shopify’s business to struggle? a. inflation b. a global shipping crisis c. a rise in interest rates d. All of the above are true. e. None of the above are true. d; Easy True/False 151.

Shopify is a leading direct reseller of goods.

False; Easy 152.

Shopify's market cap soared during the pandemic-fueled e-commerce boom, reaching a value of over $200 billion.

True; Easy Fill in the Blanks 153.

Drop shipping is when a seller acts as an order-taking middleman and the _____ ships the product directly to the consumer. manufacturer; Easy 154.

Amazon’s “_____” was a response to Shopify’s service of allowing firms to create their own storefronts and sell through social media.

Buy with Prime; Moderate

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COPYRIGHT PAGE: Published by: FlatWorld © 2025 by FlatWorld All rights reserved. Your use of this work is subject to the License Agreement available here catalog.flatworldknowledge.com/legal. No part of this work may be used, modified, or reproduced in any form or by any means except as expressly permitted under the License Agreement.

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Chapter 9 Shein and Temu: E-Commerce Giants from Asia Grow Globally Section 9.1 True/False Questions 1. Chris Xu is the CEO-founder of Shein.

True; Easy 2. Shein and Temu both face challenges related to government regulations that are unfavorable to Chinese businesses.

True; Easy 3. Shein operates physical stores in addition to its online platform.

False; Easy 4. Shein primarily sells its products within China's borders.

False; Easy 5. Shein's headquarters are located in Nanjing, China.

False; Moderate 6. Shein's sales primarily come from the United States, Europe, and Brazil.

True; Moderate 7. In 2022, Shein surpassed both H&M and Inditex in sales as of 2022.

False; Moderate 8. Shein's use of AI is limited to marketing strategies and does not extend to product design.

False; Easy 9. Shein's iPhone app became the leading shopping app in over fifty countries by 2021.

True; Easy 10. Shein's valuation exceeded the combined market capitalizations of Inditex and H&M at one point in 2022.

True; Moderate 11. Temu's shopping app has surpassed Shein's popularity in the United States.

True; Easy 12. Shein and Temu have been accused of violating intellectual property rights.

True; Easy 13. Shein has faced legal issues related to anti-competitive practices.

True; Easy 14. Shein and Temu are both known for their ethical business practices.

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False; Easy 15. Shein and Temu hope to challenge Amazon primarily in the fashion retail sector.

False; Easy Multiple Choice Questions 16. What aspect of Shein's rapid rise is not highlighted in the text? a. utilizing data for predictive manufacturing b. reliance on traditional advertising methods c. generating vast amounts of wealth d. shifting consumer behavior towards online shopping e. challenging established incumbents in the fashion industry b; Moderate 17. What contributed to Shein's success in becoming the world's number two fashion retailer? a. using a different approach than Inditex to get products to market quickly b. reducing inventory handling through traditional supply chains c. leveraging social media for targeted advertising d. mimicking the business model of established fashion retailers e. emphasizing brick-and-mortar store expansion a; Easy 18. What is not listed as a challenge for Shein and Temu in the passage? a. fierce competition in the fast-fashion market b. government regulations unfavorable to Chinese businesses c. ethical concerns related to their business practices d. difficulty in maintaining profitability e. lack of access to funding for further expansion e; Easy 19. Which statement accurately reflects the market response to Shein and Temu? a. Both companies have received unanimous praise for their innovation and ethical standards. b. Shein and Temu have faced minimal competition from other e-commerce giants. c. Investors have expressed confidence in Shein and Temu's long-term profitability. d. Shein's valuation has consistently exceeded market expectations. e. Temu's shopping app has surpassed Shein's popularity in the United States. e; Easy Essay Questions 20. Discuss the factors contributing to Shein and Temu’s rapid ascent to becoming two of the world's top fashion retailers. How do their business models differ from traditional brick-and-mortar fashion retailers?

Shein's rapid rise as a global fashion retailer stems from its innovative direct-to-consumer business model and adept use of technology, particularly AI and data analytics. By leveraging e-commerce platforms and automation, Shein swiftly scales its operations and tailors its offerings to meet consumer demand. Temu competes with heavy discounting and wide product offerings. Shein and Temu both challenge established players through agile, data-driven approaches and aggressive growth strategies.

Easy

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21. Evaluate the ethical and legal challenges Shein faces in its global expansion.

The company faces ethical and legal challenges, including accusations of forced labor and intellectual property infringement, highlighting the need for careful consideration of its business practices and regulatory compliance in its global expansion efforts.

Easy Fill in the Blanks 22. By 2021, Shein's iPhone app had surpassed _____ to become the leading shopping app in over fifty countries.

Amazon’s; Moderate 23. Shein and Temu have been accused of violating _____ by creating nearly indistinguishable knockoffs. intellectual property; Easy 24. Temu's shopping app has leaped past Shein to become the most popular in the _____.

United States; Easy 25. Shein's rapid rise underscores how lots of e-commerce innovation is coming from _____ the United States. outside; Easy 26. When a privately held company is thought to be “worth less” than it was during the previous financing round this is known as a “_____.” down-round; Moderate 27. Shein and Temu hope to challenge Amazon in cross-category e-commerce, but many challenges remain, including reliable _____. profitability; Moderate Section 9.2 True/False Questions 28. Shein has become the world's number one fashion retailer.

False; Easy 29. Shein's model closely resembles that of Inditex.

False; Easy 30. Shein relies on AI for its product design.

True; Easy 31. Reliable profitability is a challenge faced by both Shein and Temu.

True; Easy 32. The U.S. Tariff Act of 1930 imposes import duties on orders below $800.

False; Moderate

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33. Shein often keeps large warehouses stocked with inventory.

False; Moderate 34. Shein's business model heavily relies on physical stores for sales.

False; Easy 35. Shein has faced criticism for its labor and manufacturing practices.

True; Easy 36. Shein operates primarily within China's borders.

False; Easy 37. Shein's suppliers ship products directly to consumers' homes.

True; Easy 38. Shein's designers are primarily traditional fashion designers.

False; Easy 39. Shein works closely with social media influencers for marketing purposes.

True; Easy 40. The Shein app emphasizes search-centric product discovery.

False; Moderate 41. Shein's average customer spends less than $50 a month on clothing.

False; Moderate 42. Shein's growth was unaffected by the COVID-19 pandemic.

False; Easy Multiple Choice Questions 43. How long does it take Shein to go from identifying a trend to shipping a product? a. 3 days b. 6 days c. 2 weeks d. 20 days e. 24 weeks a; Easy 44. What technology does Shein primarily use for product design? a. blockchain b. artificial intelligence c. virtual reality d. 3D modeling e. augmented reality b; Easy 45. How does Shein avoid import duties on orders shipped to the United States? a. by setting up warehouses in the United States

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b. by restricting sales to China c. by keeping orders under $800 in value d. by paying extra fees to customs e. by charging extra fees to consumers c; Moderate Essay Questions 46. What are the main ways that Shein is able to detect which of their items are most popular as well as the latest trends?

Shein gets feedback from the massive amount of online advertising it runs. Flash promotions and tweaked pop-up ads are opportunities for A/B testing on what customers are more likely to respond to and what an individual customer sees as most compelling. By cycling through different designs and seeing what customers respond to, or ignore, Shein is able to flag items as being more popular and worthy of a larger production run. Social media also presents a huge knowledge base to filter and distill for product design insights. The company has built its own proprietary deep-learning AI that browses TikTok and other social media sites and uses a neural network-based image recognition system to identify popular clothing design trends across both still images and video. Shein’s proprietary data is also combined with third-party data and insights from tools such as Google Trend Finder, providing the firm with real-time mapping between customer behavior and purchasing decisions in a way that can be used for both product design and more accurate manufacturing production levels.

Moderate Fill in the Blanks 47. The _____ provision of the U.S. Trade Facilitation and Trade Enforcement Act only assesses import duties on imports valued above $800. de minimis; Moderate 48. The Shein app emphasizes _____ over search-centric apps like Amazon and Google. discovery; Moderate 49. Shein primarily relies on _____ to gather data for product creation and customer profiling. social media; Easy 50. Manufacturing in response to a customer's order is known as _____. just-in-time manufacturing; Easy 51. Shein's rapid growth was accelerated by its ability to take advantage of import _____, allowing it to avoid customs duties on many orders. loopholes; Moderate Section 9.3 True/False Questions 52. Shein is known for its high level of transparency, especially compared to other major fashion retailers.

False; Easy

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53. Shein's failure to disclose supply chain working conditions has led to scrutiny from advocacy groups and legislators.

True; easy 54. Shein has faced accusations of cultural insensitivity due to its product designs.

True; Easy 55. Some of Shein's products have been recalled due to being deemed a burn hazard and containing toxic levels of lead.

True; Moderate 56. The fashion industry is considered one of the least environmentally damaging industries in the world.

False; Easy 57. Shein's use of AI in its design process has helped ensure that their designs are culturally sensitive and appropriate.

False; Easy 58. Shein has been accused of copying designs from small designers without their consent.

True; Easy 59. Legislation may eventually require fashion firms to accept and properly dispose of goods sold.

True; Moderate 60. Shein's commitment to safety and worker welfare in its supply chain has been widely praised and endorsed by independent audits.

False; Easy 61. Shein has largely been applauded for its influencer promotional efforts.

False; Easy 62. Shein has been accused of using cotton from China's Xinjiang region, despite such imports being banned under U.S. law.

True; Moderate 63. Shein's rapid growth has shielded it from scrutiny and criticism from advocacy groups and legislators.

False; Easy 64. Shein's heavy reliance on AI in its design process has helped to eliminate the risk of intellectual property violations.

False; Easy Multiple Choice Questions 65. What was the outcome of Shein's invitation of social media influencers to visit partner factories? a. The influencers praised Shein's transparency and ethical practices. b. The influencers faced criticism for their participation in the trip. c. Shein received positive feedback from advocacy groups. d. The trip helped Shein improve its supply chain traceability index score. e. The influencers remained neutral regarding Shein's practices. b; Moderate

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66. Which statement about Shein product designs is true? a. They use environmentally friendly materials. b. Their designs are insensitive to cultural symbols. c. They have an over-reliance on traditional design methods. d. They strictly adhere to copyright laws. e. The consistently innovate design practices. b; Easy 67. How has Shein responded to accusations of using intellectual property without consent? a. by denying all allegations and refusing to change its practices b. by outsourcing design work to external agencies c. by ceasing production of offending products immediately d. by ignoring legal actions taken by affected designers e. by leveraging additional image-recognition AI to improve compliance e; Moderate 68. What environmental impact does the fashion industry have, according to the passage? a. minimal contribution to carbon dioxide emissions b. reduced water usage compared to other industries c. heavy reliance on ecologically friendly materials d. significant carbon dioxide emissions and water usage e. negligible impact on environmental resources d; Moderate 69. What is a potential future requirement for fashion firms according to the passage? a. elimination of product recalls b. mandatory use of synthetic materials c. proper disposal of goods sold d. exemption from environmental regulations e. increased reliance on fast fashion practices c; Easy Essay Questions 70. Discuss Shein's approach to addressing accusations of unethical supplier working conditions and intellectual property violations. Evaluate the effectiveness of their responses and propose potential improvements.

Shein has faced accusations of unethical supplier working conditions and intellectual property (IP) violations. In response, the company claims to have robust compliance systems, including a code of conduct, independent audits, and third-party testing. However, investigations have revealed instances of poor working conditions and IP theft. Shein's attempt to counter criticism through influencer trips backfired, highlighting the need for more transparent and informative approaches. To address these issues effectively, Shein could enhance oversight of its supply chain by implementing stricter monitoring mechanisms and ensuring ethical labor practices. Additionally, investing in systems to detect and prevent IP violations, along with fostering better communication and collaboration with designers, could help improve the company's reputation and mitigate future controversies.

Moderate Fill in the Blanks

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71. According to the passage, Shein is seen as the least transparent of all major fashion retailers, scoring a complete zero on the Supply Chain _____ Index published by the trade site Fashion Revolution.

Traceability; Moderate 72. Shein has faced accusations of _____ violations, including using images without consent from artists and designers. intellectual property; Easy 73. Shein's heavy reliance on _____ in its design process has sometimes led to the unintentional creation of offensive products.

AI; Easy 74. Some of Shein's products have been recalled due to safety concerns, including a girl's toddler trench coat and bag found to have toxic levels of _____. lead; Moderate Section 9.4 True/False Questions 75. Shein's move of its headquarters from China to Singapore indicates a decrease in its reliance on China.

True; Moderate 76. Shein's expansion plans include opening international suppliers in Brazil, India, Mexico, and Turkey.

True; Moderate 77. Shein's marketplace strategy involves taking possession of goods and booking ownership of inventory.

False; Easy 78. Amazon derives over 60 percent of its business from marketplace resellers rather than goods it buys from wholesalers.

True; Easy 79. Shein's collaboration with Forever 21 involves Shein acquiring a two-thirds interest in Sparc.

False; Moderate 80. Temu became the most downloaded e-commerce app in the United States within five months of its launch.

True; Easy 81. Temu is making significant profits from its operations.

False; Easy 82. Many of Temu's suppliers, most of which are in China, are unhappy with Temu's increasing demands.

True; Moderate 83. Both Shein and Temu have filed lawsuits against each other, claiming violations of intellectual property and anti-competitive practices.

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True; Easy 84. Shein's marketplace strategy involves Shein owning and managing all inventory listed on its platform.

False; Easy 85. Temu has not been successful in its efforts to become the most downloaded e-commerce app in the United States.

False; Easy 86. Shein's revenue growth in 2023 surpassed its growth in 2022.

False; Moderate 87. ByteDance has launched an e-commerce effort similar to Shein's marketplace business, with the added benefit that you'll be able to buy directly from within the social media app.

True; Easy 88. Shein's acquisition of a one-third interest in Sparc indicates a strengthening of its collaboration with Forever 21.

True; Easy Multiple Choice Questions 89. What is the main purpose of Shein's marketplace strategy? a. to increase revenue per item b. to mimic the business model of Zara c. to allow third-party firms to list their own brands on the Shein site d. to decrease profits e. to focus on traditional retail practices c; Easy 90. Which of the following firms is not considered to be a major competitor of Shein? a. Amazon b. Alibaba c. TikTok d. Temu e. Shopify c; Moderate 91. What is one risk associated with Temu's aggressive marketing strategy? a. increased customer loyalty b. higher initial losses c. decreased brand recognition d. lower customer acquisition e. reduced competition b; Moderate 92. How many fast fashion sales currently happen online? a. about 10 percent b. about 20 percent c. one-third of all sales d. about 40 percent

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e. two-thirds of all sales c; Moderate Essay Questions 93. Discuss the implications of Shein's marketplace strategy on its business model and competitive position in the e-commerce industry. How does this strategy compare to that of Amazon?

Shein's adoption of a marketplace strategy, akin to Amazon's model, signifies a significant shift in its business approach, enabling third-party sellers to list products on its platform without direct inventory ownership. This move aims to diversify offerings, attract more consumers, and capitalize on data insights, potentially reshaping the competitive landscape in e-commerce. While mirroring Amazon's success, Shein's marketplace strategy underscores its ambition to expand globally and compete with traditional retailers and e-commerce platforms.

Easy 94. Analyze the challenges and opportunities presented by Shein's collaboration with Forever 21. What are the potential benefits and risks for both companies involved in this partnership?

Shein's collaboration with Forever 21, including a one-third interest in Sparc, presents opportunities to extend its reach into physical retail spaces, albeit with potential risks. Integrating Shein's ultra-fast fashion model with Forever 21's retail presence raises questions about brand alignment and effectiveness. Despite the strategic advantages of physical presence, the success of this partnership depends on Shein's ability to navigate challenges and integrate online and offline retail models effectively amidst evolving consumer preferences.

Moderate Fill in the Blanks 95. Shein's headquarters move from China to _____, signifying its reduced reliance on China.

Singapore; Easy 96. Shein's marketplace strategy allows third-party firms to list their own brands on the Shein site, similar to the business model of _____.

Amazon; Moderate 97. Temu has become the most downloaded _____ app in the United States within just five months of its launch. e-commerce; Moderate 98. “Meatspace” is a term for a _____ retail space. physical; Moderate 99. Selling products or providing services directly to the consumer without an intermediary in between is known as selling _____. direct-to-consumer; Easy 100.

Both Shein and Temu have filed lawsuits against each other, claiming violations of intellectual property and _____ practices. anti-competitive; Moderate

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COPYRIGHT PAGE: Published by: FlatWorld © 2025 by FlatWorld. All rights reserved. Your use of this work is subject to the License Agreement available here catalog.flatworldknowledge.com/legal. No part of this work may be used, modified, or reproduced in any form or by any means except as expressly permitted under the License Agreement.

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Chapter 10 Platforms, Network Effects, and Competing in a Winner-Take-All World Section 10.1 True/False Questions 1. In the context of network effects, the term “network” refers to either wired or wireless systems that connect computing components.

False; Easy 2. In the absence of network effects, the value of a product or service increases as the number of users grows.

False; Easy 3. Network effects do not influence all consumer products or services.

True; Easy 4. Investors have poured over $60 billion into Indian startups hoping to leverage network effects to build giants in one of the world’s largest and fastest-growing markets.

True; Easy Multiple Choice Questions 5. Metcalfe’s Law is also known as: a. systemic events b. cluster effects c. group impressions d. herd instincts e. network externalities e; Easy 6. Which of the following products or services is not subject to network effects? a. banking services b. snack chip manufacturing c. video game consoles d. social networks e. cell phone services b; Easy Essay Questions 7. What are “network effects”? Define the term and briefly explain the relevance they hold in an economic context.

Network effects are sometimes referred to as “Metcalfe’s Law” or “network externalities.” In this context, a network refers to a common user base that is able to communicate and share with one another. When network effects are present, the value of a product or service increases as the number of users grows. Network effects are the most important reasons why users pick one product or service over another. They are among the most powerful strategic resources that can be created by technology-based innovation. Many category-dominating organizations and technologies owe their success to network effects, including Microsoft, Apple, NASDAQ, eBay, Facebook, and Visa. Network effects are also behind the establishment of most standards, including Blu-ray DVD, Wi-Fi, and Bluetooth.

Moderate

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Fill in the Blanks 8. Network effects are also known as _____ Law or Network _____.

Metcalfe’s, Externalities; Medium Section 10.2 True/False Questions 9. Every product or service subject to network effects fosters some kind of exchange.

True; Easy 10. High switching costs serve to weaken the value of network effects as a value asset.

False; Moderate 11. The higher the value of a user’s overall investment, the more they are likely to consider the staying power of any offering before choosing to adopt it.

True; Moderate 12. Staying power is important for consumers of technology products because investment over time usually greatly exceeds the initial price paid for a product or service.

True; Easy 13. Many firms attempt to enhance their network effects by creating a platform for the development of third-party products and services that enhance the primary offering.

True; Easy 14. Roblox was one of those few firms that was helped by the pandemic.

True; Easy 15. The virality of Roblox’s older fan base has helped Roblox grow to its current massive size.

False; Easy 16. The term metaverse was coined by Facebook founder, Mark Zuckerberg.

False; Easy Multiple Choice Questions 17. Which of the following factors represents one of the sources of value derived from network effects? a. congestion b. price transparency c. information symmetry d. staying power e. complementary costs d; Easy 18. Staying power refers to the a. relative abilities of parties in a situation to exert influence over each other. b. energy demands required to run a product or service. c. ability of a firm to produce a good or service at a lower opportunity cost than a rival. d. long-term viability of a product or service.

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e. ability to take advantage of complementary products developed for a prior generation of technology. d; Easy 19. Which of the following terms is used as an alternative to switching costs? a. lock-in b. complementary benefits c. exchange benefits d. straddling costs e. network impedance a; Moderate 20. _____ are products or services that add additional value to the primary product or service that makes up a network. a. Quantum efforts b. Substitute components c. Complementary benefits d. Orthogonal gains e. Standby additions c; Easy 21. Windows OS, the iPhone, the Wii, and Facebook’s application programming interfaces allow for the development and integration of complementary goods by third parties. Based on this evidence, all these products or services are said to be: a. pure plays b. competitors c. adaptors d. platforms e. venture capitalists d; Easy 22. A firm can spend no money and time, yet expect to enhance its offerings by a. allowing other firms to contribute to its platform. b. going public through an initial public stock offering. c. outsourcing critical processes to third parties. d. adopting an envelopment strategy. e. preannouncing a forthcoming product to lower sales of current offerings. a; Moderate 23. For network effects to occur, value must be gained from the _____ of products or services. a. exchange b. growth c. increase d. decrease e. infusion a; Easy 24. DAU, or the number of unique visitors on average who use a product or service, stands for: a. daily activity unicode b. daily account user c. daily active user d. dominant account unicode e. dominant active user c; Easy

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Essay Questions 25. What are the primary sources of value for network effects? Give a brief description of how each of these factors provides value for network effects.

The value derived from network effects comes from three sources: exchange, staying power, and complementary benefits.

Exchange: Every product or service subject to network effects fosters some kind of exchange. Just about any standard that allows things to plug into one another, interconnect, or otherwise communicate will live or die based on its ability to snare network effects.

Staying power: Staying power refers to the long-term viability of a product or service. Networks with greater numbers of users suggest a stronger staying power.

Complementary benefits: Complementary benefits are those products or services that add additional value to the network. These products might include “how-to” books, software add-ons, and even labor.

These three value-adding sources—exchange, staying power, and complementary benefits—often work together to reinforce one another in a way that makes the network effect even stronger.

When users exchanging information attract more users, they can also attract firms offering complementary products. When developers of complementary products invest time writing software—and users install, learn, and customize these products—switching costs are created that enhance the staying power of a given network. From a strategist’s perspective this can be great news for dominant firms in markets where network effects exist. The larger your network, the more difficult it becomes for rivals to challenge its leadership position.

Moderate 26. How has Roblox become a significant platform for both entertainment and education, and what opportunities does it offer for its users?

Roblox has become a significant platform by offering a virtual world where users can create games and experiences, fostering both entertainment and education. Users can customize avatars and engage in various activities, from attending virtual parties to creating their own games.

Roblox Studio empowers users to develop their creations and share them with others.

Additionally, the platform provides opportunities for users to monetize their creations through Robux, its online currency. Overall, Roblox offers a unique combination of creativity, entertainment, and learning, making it a popular choice for millions of users worldwide.

Moderate Fill in the Blanks 27. _____ are products and services that allow for the development and integration of complementary goods.

Platforms; Easy 28. One way firms seek to strengthen their platforms and encourage third parties to develop complementary goods is by offering _____.

APIs or application programming interfaces; Easy 29. _____, _____, and _____ are the three sources of value (cited in our textbook & in class) that fuel the competitive advantage of network effects.

Exchange, staying power, complementary benefits; Moderate 30. _____ allows Apple to use iOS as a platform for exercise and personal health measurement.

HealthKit; Easy 31. _____ allows iOS to control home products including locks, lighting, and thermostats.

HomeKit; Easy

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32. When developers of complementary products invest time writing software—and users install, learn, and customize these products—_____ are created that enhance the _____ of a given network. switching costs, staying power; Moderate 33. Some parents who typically object to screentime for their kids are less apprehensive about their children playing Roblox since it often involves learning to _____. code; Moderate 34. Customer _____ cost is the amount of money a firm spends to convince a customer to buy or use its product or service. acquisition; Moderate Section 10.3 True/False Questions 35. Almost all networks derive most of their value from a single class of users.

False; Easy 36. An instant-messaging standard is an example of a one-sided market.

True; Easy 37. Cross-side benefits arise due to interaction among members of a single class of participants.

False; Easy 38. Messaging is considered a one-sided market.

True; Easy 39. Google and Apple leveraged their mobile operating systems to jump-start their respective payment apps.

True; Easy 40. Tesla's charging standard, NACS, was initially favored by the U.S. government and was required at federally funded charging stations.

False; Easy 41. Tesla's charging stations are known for their prime locations, ample charging connectors, and automated billing system, making them more convenient compared to CCS stations.

True; Easy 42. In mid-2023, Tesla opened its once-proprietary charging standard, allowing any company to use its patented designs for a large fee, leading to increased support for NACS. False; Easy 43. Starbucks' payments app struggled until it offered incentives such as accepting Bitcoin and direct deposits.

False; Easy Multiple Choice Questions 44. A market is said to be _____ if it derives most of its value from a single class of users. a. a pure play

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b. a long tail c. core competent d. one-sided e. convergent d; Easy 45. Which of the following is an example of a two-sided market? a. Instagram b. Twitter c. Square d. WhatsApp e. GoodRx c; Moderate Essay Questions 46. Distinguish between one-sided and two-sided markets. Provide examples for each and mention the benefits derived from these markets.

A one-sided market is a network market that derives most of its value from a single class of users.

In one-sided markets, users gain benefits from interacting with a similar category of users (for example, instant messaging, where everyone can send and receive messages to one another). The network effects derived from a one-sided market are referred to as same-side exchange benefits.

A two-sided market is a network market comprised of two distinct categories of participants, both of which are needed to deliver value for the network to work. In two-sided markets, users gain benefits from interacting with a separate, complementary class of users (for example, in the video game industry, console owners are attracted to platforms with the most games, while innovative developers are attracted to platforms that have the most users). When an increase in the number of users on one side of the market (say console owners) creates a rise in the other side (software developers), that’s called a cross-side exchange benefit.

Easy 47. Are the markets for mobile payments one-sided or two-sided? Describe why you chose your answer.

Mobile payment efforts like Square and Google Wallet, however, are considered to be two-sided markets, where significant benefits come from two distinct classes of users that add value by attracting each other. In the case of mobile payments, the more people that use a given payment platform, the more attractive that platform will be to storefronts and other businesses, and if more businesses accept these forms of mobile payment, then this in turn should attract more end consumers (and so on).

Moderate 48. Explain the factors that contributed to Tesla's victory in the electric vehicle charging standards competition.

Tesla's victory in the electric vehicle charging standards competition can be attributed to several key factors. Firstly, Tesla had a significant head start with its established user base, representing about two-thirds of EVs sold in the United States by the end of 2022. This user base, coupled with Tesla's aggressive rollout of charging stations, resulted in a far greater number of charging ports compared to rival standards. Additionally, Tesla strategically located its charging stations near major roadways with convenient amenities, minimizing user frustration. Tesla's charging system, characterized by its simplicity, reliability, and automated billing, further enhanced its appeal.

Furthermore, despite being an older technology, Tesla's standard was perceived as superior by many industry insiders, offering smaller, more powerful, and more durable connectors compared to CCS equipment. Tesla's decision to open its once-proprietary standard to other firms also contributed to its victory, garnering support from major automakers and charging networks.

Overall, Tesla's combination of a robust user base, extensive charging infrastructure, strategic

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location planning, superior technology, and industry support propelled its standard, NACS, to success in the North American market.

Moderate 49. What distinguishes a one-sided market from a two-sided market?

In a one-sided market, the value-creating network effects primarily stem from interactions within a single group, while in a two-sided market, significant benefits arise from interactions between two distinct classes of users.

Easy 50. How did Square Cash overcome its initial struggles in gaining traction?

Square Cash gained traction by offering features that provided incentives for users, such as accepting Bitcoin and direct deposits, which differentiated it from competitors and attracted more users to the platform.

Moderate Fill in the Blanks 51. Firms need a _____ for users to download apps and setup payments. strong incentive; Easy 52. _____ exchange benefits are derived by interaction among members of a single class of participant.

Same-side; Moderate Section 10.4 True/False Questions 53. Large firms like Facebook and Amazon are powerful enough to get away with a “move fast, break things” attitude and chalk their missteps up to essential entrepreneurial experimentalism, while small startup firms are more closely scrutinized as they build their reputations.

False; Easy 54. The natural state of a market where network effects are present is for there to be intense competition between several rivals that come to an equilibrium where their respective market shares are roughly identical.

False; Moderate 55. In a market influenced by network effects, the winning product or service is often determined by its technical superiority, with technically strong newcomers able to unseat the dominant incumbents.

False; Moderate 56. Mobile software developers often find iOS more attractive than the Android operating system, because Android runs on many more types of devices than iOS and the Android operating system is fragmented into different versions, each combination of which needs to be tested.

True; Easy 57. Technological leapfrogging is offering a new technology that is superior to existing offering that the value overcomes the total resistance.

True; Easy Multiple Choice Questions

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58. Apple, which controls over 75 percent of digital music sales, was able to dictate song pricing for years, despite the tremendous protests of the record labels. This implies that a. despite the presence of network effects, the music industry is not dominated by any single leader. b. the presence of multiple new entrants forces leading firms to drop prices of their offerings. c. firms with strong market dominance can enjoy substantial bargaining power over partners. d. a dominant market share does not necessarily translate to greater profitability for a firm. e. there were cross-side network effects between the various music labels. c; Moderate 59. A market dominated by a small number of powerful sellers is known as a(n): a. oligopoly b. pure play c. short tail d. blue ocean e. greenfield a; Easy 60. The video game console market offers important lessons for the strategist. The video game console market is a network market in which Sony’s PlayStation 2 (PS2) dominated over Microsoft’s Xbox offering. This has been possible due to a. the low pricing of Xbox, which eroded users’ confidence in the product. b. game developers favoring PS2 for its larger user base obtained because the PS2 was launched months before the Xbox. c. the presence of several cheap, rival imitations that ate into Xbox’s market share. d. PS2’s technical superiority over the Xbox. e. the straddling strategy adopted by Microsoft to expand in both video game and DVD player markets. b; Moderate 61. Which statement best describes the relationship between network effects and innovation? a. Network effects decrease innovation within a standard but increase the number of innovative offerings that compete against a strongly established standard. b. Network effects increase innovation within a standard but decrease the number of innovative offerings that compete against a strongly established standard. c. More often than not, network effects foster innovation. d. More often than not, network effects limit innovation. e. Network effects and innovation do not affect one another. b; Moderate Essay Questions 62. What are some of the arguments for supporting big firms versus calling for their increased regulation and control?

One camp argues that technology, infrastructure, and economics have created capitalism steroids that have released monopolistic monsters. The influence of Apple, Google, Facebook, and Amazon as vehicles for communication, information seeking, and purchasing is unprecedented. And along with the power and wealth of these firms is the potential to seek influence through lobbying, advertising, and other efforts. Others point out that creative destruction has always been a tenant of capitalism. Additionally, it’s not the firms that compete doing the same thing as a dominant firm that will unseat it—but the innovator that offers a fundamentally new product or new innovation delivered in such a way that marks a decisive quality or cost break from previous industrial output. Even firms that have seemed to dominate markets with tech products and standards: IBM, Kodak, Apple with iTunes, Microsoft with

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Internet Explorer, in ways that have raised antitrust concerns in the past, have been displaced not by government action, but by nimble competitors and short-sighted managers.

Moderate 63. What is the role of a responsible global citizen and a manager?

Your goal as a citizen will be to consider if and when capitalism needs help in guiding a harmful invisible hand, but your role as a manager is to pilot a firm to new markets using tools for dominance and disruption, while also stewarding a firm’s accrual of power in responsible and ethical ways. The wise manager won’t fall into a trap of blindly embracing a political philosophy but will instead work hard to identify the concerns and merits of the scorn and praise foisted on the giants and use this to build a firm that is a paragon of success, not just financially, but also in its concern for the customers and society that it serves.

Moderate 64. Explain the nature of competition in markets influenced heavily by network effects.

When network effects play a starring role, competition in an industry can be fundamentally different than in conventional, non-network industries.

First, network markets experience early, fierce competition. The positive-feedback loop inherent in network effects, where the biggest networks become even bigger, causes this. Firms are very aggressive in the early stages of these industries because once a leader becomes clear, bandwagons form, and new adopters begin to overwhelmingly favor the leading product over rivals, tipping the market in favor of one dominant firm or standard.

These markets are also often winner-take-all or winner-take-most, exhibiting monopolistic tendencies where one firm dominates all rivals. The natural state of a market where network effects are present is for there to be one major player. Since bigger networks offer more value, they can charge customers more. Firms with a commanding network effects advantage may also enjoy substantial bargaining power over partners.

Moderate 65. Markets where strong network effects are present often exhibit a winner-take-all or winner-takemost dynamic. What network effects-related advantages can a dominant incumbent enjoy that help it repel rivals, and why is it so difficult for a newcomer to displace the dominant player in these markets?

Winning customers away from a dominant player in a network industry is not as easy as offering a product or service that is better. Any product that is incompatible with the dominant network has to exceed the value of the technical features of the leading player, plus (since the newcomer likely starts without any users or third-party product complements) the value of the incumbent’s exchange, switching cost, and complementary product benefit. And the incumbent must not be able to easily copy any of the newcomer’s valuable new innovations; otherwise, the dominant firm will quickly match any valuable improvements made by rivals. As such, technological leapfrogging, or competing by offering a superior generation of technology, can be really tough.

Moderate Fill in the Blanks 66. A market where there are many buyers but only one dominant seller is known as a(n) _____. monopoly; Easy 67. _____ involves competing by offering a new technology that is so superior to existing offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits.

Technological leapfrogging; Easy Section 10.5

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True/False Questions 68. Moving first plays a significant role in markets influenced by network effects.

True; Easy 69. A blue ocean strategy often works best when combined with operational effectiveness.

False; Hard 70. Envelopment is a management strategy where a dominant firm acquires all the layers in its value chain to increase profitability.

False; Moderate 71. Regional anti-trust authorities may consider product bundling by dominant firms to be anticompetitive.

True; Moderate 72. Social proof is defined as the negative influence created when someone finds out that others are doing something.

False; Moderate 73. Firms that constantly innovate do so to develop open standards for competitors to become compatible.

False; Easy 74. Startup firms that find new markets attractive but do not yet have products ready for delivery preannounce efforts causing potential adaptors to delay a purchasing decision until the new effort rolls out.

False; Moderate 75. Congestion effects often result when a key resource becomes increasingly scarce with the arrivals of more and more users.

True; Moderate 76. SwagBucks offers users money and prizes for completing surveys or watching videos.

True; Easy 77. Shein and Temu have attempted to leverage viral promotion to rapidly expand their brands but have not had much success.

False; Easy 78. The Temu app is ranked the most popular shopping app in the United States.

True; Easy 79. SyncOnSet eventually became so important that its technology was taught in university film programs, endorsed by unions.

True; Easy Multiple Choice Questions 80. How did PayPal get users to adopt their service? a. by offering a rebate as a sign-up incentive b. by collaborating with large retailers c. by offering a freemium d. by creating a viral promotion

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e. All of the above are true. a; Moderate 81. Worldwide auction leader eBay started operations in Japan just five months after Yahoo! launched its Japanese auction service. But eBay was never able to mount a credible threat and ended up pulling out of the market. This example shows that a. online auction markets are characterized by constant shifts in market dominance. b. market dominance in the global marketplace translates to an equivalent position in national markets. c. national markets tend to be influenced by factors that are not necessarily localized. d. it’s imperative to move first in markets influenced by network effects. e. firms should always subsidize initial adoption of their products and make them cheaper than their competitor’s products. d; Easy 82. Viral promotion involves a. offering rebates and incentives to customers for adopting a product or service. b. paying celebrities to use a product visibly to lure customers into unwittingly buying the product. c. emphasizing customer retention and satisfaction, rather than a dominant focus on sales transactions. d. leveraging a firm’s customers to promote a product or service. e. sending a pre-written set of messages to customers or prospects over time. d; Moderate 83. While Sony and Microsoft focused on the graphics and raw processing power favored by hardcore male gamers, Nintendo chose to develop a machine to appeal to families, women, and age groups that normally shunned violent games. The strategy adopted by Nintendo in this example is the _____ strategy. a. straddling b. customer engagement c. blue ocean d. mass customization e. convergence c; Moderate 84. Two distinctly separate markets are said to undergo convergence when they a. are dominated by a small group of powerful sellers. b. derive most of their value from two distinct categories of participants. c. offer products and services designed to target a specific industry. d. are characterized by many buyers, but a single, dominant seller. e. begin to offer similar features and capabilities. e; Moderate 85. Uber and PayPal used similar strategies when trying to jumpstart network effects that were vital in creating their dominance. What did each do? a. leveraged viral customer promotions by giving incentives to consumers who helped recruit friends to the service b. operated in “Blue Ocean” that, to this day, remains free of competitors c. preannounced their products, discouraging rivals from entering with competing offerings d. created services that were backward-compatible with rivals e. reduced switching costs for anyone interested in leaving incumbents for their services a; Easy

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86. _____ is said to occur when one market attempts to conquer a new market by making it a subset, component, or feature of its primary offering. a. Acquisition b. Greenfield investment c. Envelopment d. Market leapfrogging e. Monopolization c; Easy 87. Apple deftly morphed the iPod into the iPhone, a device that captures all of these product categories in one device. This is an example of: a. envelopment b. product customization c. market diversity d. product development e. market innovation a; Easy 88. You are in a packed stadium for the big game. and you want to upload a photo of your team’s touchdown using Instagram. Your mobile phone shows five bars of service, but you still can’t access the Internet. This is likely an example of: a. the Osborne Effect b. envelopment c. network effects d. congestion effects e. rival access d; Easy 89. Adobe gives away the Acrobat Reader to build a market for the sale of software that creates Acrobat files. This is an example of a. one market attempting to conquer a new market by making it a subset, component, or feature of its primary offering. b. firms giving away products for half of a two-sided market to seed the market. c. markets, once considered distinctly separate, beginning to offer similar features and capabilities. d. firms taking advantage of complementary products developed for a prior generation of technology. e. firms spreading costs across increasing units of production or in serving multiple customers. b; Moderate 90. Which of the following is an example of a measure taken by a firm to encourage the development of complementary goods? a. Adobe giving away the Acrobat Reader for free b. Microsoft bundling new products into Windows, Internet Explorer browser, and other offerings c. The Twitter Fail Whale d. Apple offering a regular conference and online materials for its software developers, and an online app store where they can sell their products. e. Nintendo’s Wii games targeted at families, women, and older age groups d; Easy 91. Customers who owned Nintendo’s 8-bit video game console were unable to play the same games on the firm’s new 16-bit Super Nintendo system. There was little incentive for existing Nintendo fans to stick with the firm. In this case, Nintendo’s new offering suffered from a lack of: a. switching costs

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b. backward compatibility c. staying power d. effective pricing e. network effects b; Moderate 92. Microsoft’s Live Maps and Virtual Earth 3D was a late entrant to the Internet mapping game.

Users had already put in countless hours building resources that meshed with Google Maps and Google Earth. However, by adopting the same keyhole markup language (KML) standard used by Google, any work done by users for Google in KML could be used by Microsoft. What strategy of Microsoft has allowed it to catch up with Google? a. making a new market a subset of its main offering b. taking advantage of complementary products developed for a prior generation of technology c. entering an uncontested, low-profit market instead of competing in saturated, high-profit markets d. exchanging technical expertise in one area with another firm to effectively suit resource capabilities e. making a new product compatible with the leading standard e; Moderate 93. Large firms often find new markets attractive but might not have products ready for delivery.

What strategy do such firms use to get potential adopters to delay their purchasing decisions? a. preannounce forthcoming efforts b. make their new products compatible with the leading standard c. spread costs across increasing units of production or in serving multiple customers d. give away products for half of a two-sided market to seed the market e. leverage customers of their other products to promote a new product a; Moderate 94. _____ occur(s) when increasing number of users lower the value of a product or service. a. Network internalities b. Market inflexibility c. Congestion effects d. Backward incompatibility e. Convergence c; Easy 95. Compared to X, which of the following features did Threads lack? a. robust hashtags b. direct messages c. search functionality d. a chronological feed e. All of the above are correct. e; Moderate Essay Questions 96. eBay dominated worldwide markets for auctions. Yahoo! entered the Japanese online auction market just five months before eBay, yet eBay never matched Yahoo!’s lead and it eventually pulled out of the Japanese market, ceding a multibillion-dollar market to its rival. Why didn’t the network effects-derived value from eBay’s other markets help it in Japan?

Exchange depends on the ability to communicate. eBay’s huge network effects in the United States and elsewhere didn’t translate to Japan because most Japanese aren’t comfortable with English, and most English speakers don’t know Japanese. The language barrier made Japan a

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“greenfield” market with no dominant player, and Yahoo!’s early move provided the catalyst for victory.

Moderate 97. With the help of examples explain how firms have used the strategies of alliances and partnerships to try to strengthen and develop network effects.

Alliances and partnerships: Firms can use partnerships to grow market share for a network.

Sometimes these efforts bring rivals together to take out a leader. For example, Citibank was the first major bank in New York City to offer a large ATM network. But the Citi network was initially proprietary, meaning customers of other banks could not take advantage of Citi ATMs. Citi’s innovation was wildly popular and being a pioneer in rolling out cash machines helped the firm grow deposits fourfold in just a few years. Competitors responded with a partnership. Instead of each rival bank offering another incompatible network destined to trail Citi’s lead, competing banks agreed to share their ATM operations through NYCE (New York Cash Exchange). While Citi’s network was initially the biggest, after the NYCE launch a Chase bank customer could use ATMs at a host of other banks that covered a geography far greater than Citi offered alone.

Network effects in ATMs shifted to the rival bank alliance, and Citi eventually joined NYCE. Also, as mentioned earlier in this chapter, many of the nation’s largest retailers are also working together on mobile payments standards.

Moderate 98. Firms must leverage distribution channels to get products to consumers if they want success. How did Apple improve its positioning in retail and services markets?

Apple became a giant in retail and services markets by creating its own distribution channels.

Apple opened storefronts that served as a platform to differentiate Apple products from market rivals. Stores were filled with products from the Apple ecosystem and experts to help guide customers in the decision-making process. Apple retail stores generate billions in revenue and are among the highest performing retail stores worldwide on a sales-per-square-foot basis. Apple also leveraged its own devices as a distribution channel for services. Apple uses its proprietary operating system for music, gaming, streaming, and even fitness. These services launched Apple into new markets and propelled them to the position of industry giant.

Hard 99. In 2020, Zoom surfaced from sleeping giant to industry leader in the video calling market.

Describe how Zoom’s CEO was able to position the company to rise above well-established industry leaders. What tips can start-ups learn from this leap?

Like many disruptor CEOs, Eric Yuan left an industry leader to start his own firm. Yuan spent many years at WebEx, which was later acquired by Cisco, and after having his ideas dismissed by leaders, he moved on to start Zoom. Yuan listened to the challenges customers faced with existing platforms and came up with customer-focused solutions. Zoom had the advantage of being userfriendly with a simple cost structure and offered a freemium model that included the same features as the paid version, which appealed to users who needed a simple inexpensive option.

After launching in 2013, Zoom grew quietly until the pandemic. When the pandemic hit, organizations needed a fast and easy solution. Zoom provided the professional-tier product to K12 schools for free, which snowballed, and network effects took over. Zoom quickly became known as the superior product and infiltrated organizations and homes around the world. Zoom’s overnight success was not without challenges—they were met with security issues; however, they were quickly addressed. Start-ups can learn from Zoom by taking a customer-focused approach.

By listening to customers at Cisco, Yuan was able to build a platform that is a great product– market fit.

Hard Fill in the Blanks 100.

The rise of social media has made _____ promotion a tool that many firms can exploit.

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viral; Easy 101.

The phrase _____ refers to positive influence created when someone finds out that others are doing something. social proof; Moderate 102.

The phenomenon of _____ exists when increasing numbers of users lower the value of a product or service congestion effects; Moderate 103.

Samsung also leveraged _____ to make Samsung Pay accepted at more retailers than either Apple Pay or Android Pay. backward compatibility; Easy 104.

If a firm’s claim in the blue ocean is based on easily _____ resources (like technology features), then holding off rivals will be tougher. imitated; Easy 105.

The ability to take advantage of complementary products developed for a prior generation of technology is known as _____. backward compatibility; Easy 106.

A firm is said to have suffered from the _____ when it preannounces a forthcoming product or service and experiences a sharp and detrimental drop in sales of current offerings as users wait for the new item.

Osborne Effect; Easy 107.

The more Groupon users, the more likely firms will offer _____ through the service. deals; Easy 108.

Elon Musk's acquisition of Twitter led to outrage among power users who lost the exclusive “_____,” which was now available to anyone for a monthly subscription fee of $6. blue checkmark; Easy 109.

Threads, Meta's stand-alone Twitter competitor, was built on the account system of _____, boasting over 500 million DAUs at the time.

Instagram; Moderate 110.

Within five days of its launch, _____ had amassed 100 million users, making it the most rapidly adopted app of all time.

Threads; Easy 111.

Elon Musk made Twitter a more hostile place for both users and advertisers after acquiring the firm and rebranding it as _____.

X; Easy Section 10.6 True/False Questions 112.

Jamie Dimon, the head of JP Morgan Chase, expressed concern about the threat posed by new financial technologies (fintech).

True; Easy

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113.

When using Apple Pay, banks pay Apple a fee for every credit card transaction facilitated by the service.

True; Easy 114.

Apple’s credit card and savings accounts offer a number of benefits that are more competitive than most standard bank offerings.

True; Easy 115.

Seven major banks have formed a rival service called Paze to counteract the increasing presence of Apple Pay, Google Pay, PayPal, and Amazon Pay. True, Easy 116.

The Apple Card had no late fees, no annual fees, no international fees, and no over-limit fees.

True; Easy Multiple Choice Questions 117.

Which group of banks formed a rival service called Paze to counteract the presence of Apple Pay and other digital payment rivals? a. BB&T, Citibank, and HSBC b. Wells Fargo, SunTrust, and Regions c. Bank of America, CapitalOne, and Chase d. Goldman Sachs, Morgan Stanley, and Barclays e. All of the above are correct. c; Moderate 118.

Which of the following is a feature that distinguishes the Apple Card Credit Card from traditional credit cards issued by banks? a. no late fees b. no annual fees c. no international fees d. no over-limit fees e. All of the above are correct. e; Easy Fill in the Blanks 119.

Apple's _____ program involves short-term loans that are handled entirely by an Appleowned subsidiary, Apple Financing LLC. buy-now-pay-later (BNPL); Easy 120.

Apple devices present a powerful _____ channel for the firm’s fintech services. distribution; Easy Section 10.7 True/False Questions 121.

Zoom claimed 1 million users in its first five months and 10 million by the next year.

True; Easy 122.

Yuan’s attempts to refocus Cisco on addressing customer dissatisfaction and growing the market led Yuan to leave Cisco and start Zoom.

True; Easy

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123.

Zoom's ease-of-use but feature-rich offering occupied a space that appealed to both professional corporate customers and consumers.

True; Easy Multiple Choice Questions 124.

What factor contributed to Zoom's decrease in revenue growth in 2022? a. decreased market demand b. failure to adapt to changing technology c. staff layoffs d. return to in-person activities e. CEO's pay cut d; Easy 125.

What lesson does the rise of Zoom provide for business students? a. Focusing on customer needs is unnecessary for success. b. A complex pricing structure is preferred for attracting customers. c. Maintaining a startup's nimbleness is not important for a public company. d. Having a rapid response to unforeseen circumstances is essential. e. Frequent layoffs are indicative of strong leadership. d; Easy 126.

Which comparison is made to highlight the risk of market leaders losing their position? a. Google in search b. Facebook in social networking c. Zoom in web meetings d. Apple in mobile phones e. Amazon in e-commerce c; Moderate Fill in the Blanks 127.

Before the pandemic, the biggest name in video calling on the corporate side was Cisco's _____.

WebEx group; Easy 128.

When the global shutdown occurred due to COVID-19, IT departments scrambled for an easy solution, with many migrating to _____, which emerged as best-in-class and one of the cheapest options.

Zoom; Easy 129.

Offering Zoom free to _____ customers in the pandemic was a risky move and the subsidy led to lots of work and expense for the firm with no direct revenue.

K-12; Moderate 130.

A _____ is a no-cost product that typically has limited features or that stops working after a specified period of time. freemium; Easy

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Chapter 11 Social Media, Peer Production, and Leveraging the Crowd Section 11.1 True/False Questions 1. TikTok rose with global influence from Silicon Valley.

False; Easy 2. By 2023, TikTok was estimated to have 1.7 billion monthly active users (MAUs), and revenues hit $9.4 billion in 2022—a 100 percent year-over-year increase.

True; Easy 3. During COVID-19, social apps exploded, with the most notable being Zoom.

True; Moderate 4. Roughly one in three people on Earth are Facebook users.

True; Easy 5. Snapchat pioneered ephemeral “stories”, and both Instagram and WhatsApp each have tried duplicating the trend but have been unsuccessful.

False; Easy 6. According to Pew research reports, half of U.S. adults get news from social media.

False; Moderate 7. Apple’s AirTags functionality is an example of peer production.

True; Moderate 8. Tumblr, a firm that was once a top ten site in the United States, was purchased by Yahoo! for over $1 billion and sold to WordPress parent, Automattic, for a paltry $3 million.

True; Moderate 9. Web 2.0 services are targeted at creating resources and sharing information based on transactionfocused storefront models.

False; Moderate 10. Many social media websites have emerged as top destinations on the Internet; however, the category has remained volatile, with many one-time leaders losing popularity over time.

True; Moderate 11. Crowdsourcing can be considered a type of peer-production.

True; Moderate 12. Building brands online can be expensive. This has proven especially true for successful social media sites, which have built brand awareness through expensive advertising campaigns.

False; Moderate 13. Blogs are used to collaborate on common tasks or to create a common knowledge base.

False; Easy 14. Peer-produced services like Skype and BitTorrent leverage a central IT resource instead of users’ computers to forward phone calls and video.

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False; Easy 15. Despite the rise of messaging apps and other forms of social media, these efforts are focused on consumer efforts, with corporations yet to find a viable way to leverage these services in an organizational setting.

False; Easy 16. Social media refers to content that is peer produced and shared online.

True; Easy 17. Meta-owned Instagram has just under 2 million monthly active users (MAUs) who share over 95 million photos each day.

False; Easy Multiple Choice Questions 18. Which of the following statements about Web 2.0 is true? a. It is important to joust over the precise definition of Web 2.0. b. Social media turned Wikipedia into one of the most profitable sites on the Internet. c. It is significant how quickly the Web 2.0 revolution started and failed in a short span of time. d. It refers to the static websites and transaction-focused storefronts. e. Peer production is leveraged to create much of the open source software that supports many of the Web 2.0 efforts. e; Easy 19. A professional or student looking for guidance with a programing problem is likely to be best served by posting questions to: a. Snapchat b. WhatsApp c. Stack Overflow d. Twitter e. Orkut c; Moderate 20. Marketers can leverage social media channels for: a. competitive intelligence b. generating customer input c. disseminating information d. reinforcing a customer’s relationship with the firm e. All of the above are true. e; Easy 21. Peer production refers to a. the process of tracking and responding to online mentions of a product, organization, or individual. b. graphical editing tools, such as those found in a wiki, page layout program, or other design tools. c. programming hooks, or guidelines published by firms that tell other programs how to get a service to perform a task such as send or receive data. d. content that is more complex than simple text or photos and includes animation, audio, and video. e. users collaboratively working to create content, products, and services. e; Easy

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22. Social media apps are taking the workplace by storm and creating billion-dollar firms. Which of the following tools has grown and is primarily known as a leading workplace productivity tool? a. Tinder b. Secret c. Slack d. WhatsApp e. Pew c; Easy 23. Which of the following statements holds true for Wikis? a. Their key use is to anonymously share ideas in an unattributed manner. b. Their key use is creating an effective form for online advertising, customer tracking, and service personalization. c. Their key use is to discover and reinforce affiliations, identify experts, message individuals or groups, and virally share media. d. Their key use is to poll a diverse crowd and aggregate opinions to form a forecast of an eventual outcome. e. Their key use is to collaborate on common tasks or to create a common knowledge base. e; Moderate 24. Which of the following statements holds true for electronic social networks? a. Their key use is to anonymously share ideas in an unattributed manner. b. Their key use is to share access to products and services as an alternative to ownership. c. Their key use is to discover and reinforce affiliations, identify experts, message individuals or groups, and virally share media. d. Their key use is to poll a diverse crowd and aggregate opinions to form a forecast of an eventual outcome. e. Their key use is to collaborate on common tasks or to create a common knowledge base. c; Moderate 25. Which of the following statements is true about microblogging? a. Their key use is to share ideas, obtain feedback, and mobilize a community. b. Their key use is to distribute time-sensitive information, share opinions, virally spread ideas, run contests and promotions, solicit feedback, provide customer support, track commentary on firms/products/issues, and organize protests. c. Their key use is as a tool for the creation and maintenance of open source and other software products. d. Their key use is to poll a diverse crowd and aggregate opinions to form a forecast of an eventual outcome. e. Their key use is to collaborate on common tasks or to create a common knowledge base. b; Moderate 26. Which of the following is an example of collaborative consumption? a. Airbnb b. Enterprise Rental c. university housing d. taxi cab e. All of the above are true. a; Easy Fill in the Blanks 27. Microsoft’s largest acquisition in the firm’s history was _____, the world’s dominant professional social network, for $26.2 billion.

LinkedIn; Moderate

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28. Just twenty months after its founding, YouTube was purchased by _____ for $1.65 billion.

Google; Moderate 29. _____ boasts some 61 million articles in over 334 different languages, all of them contributed, edited, and fact-checked by volunteers.

Wikipedia; Easy 30. At only 541 million monthly users, _____ is smaller than other social media sources.

X (formerly Twitter); Easy 31. Google uses _____ to improve maps. peer production; Moderate 32. Services like Yelp and Tripadvisor provide an avenue for _____, which are now incorporated into search results and maps, making them the first thing many customers see when encountering a brand online. reviews; Easy 33. By its first birthday, workgroup productivity app _____ had over half a million daily active users sending 300 million messages each month on the platform.

Slack; Moderate 34. _____ refers to content that is created, shared, and commented on by a broader community of users.

Social media or user-generated content; Easy 35. _____ refers to efforts that allow participants to share access to products and services rather than having ownership.

Collaborative consumption or the sharing economy; Easy 36. One example of the rapid rise and broad, disruptive impact of social media is the mobile messaging service _____. The service has grown to the point where its massive user base sends more instant messages than the entire worldwide SMS messaging standard. Facebook acquired the firm at a valuation of $19 billion.

WhatsApp; Moderate Essay Questions 37. Compare paid and earned media. Explain how both can impact a start-up technology firm.

When using paid marketing, firms pay to leverage a channel or promote messages. This can be done in the form of advertisements or sponsorship. The firm can target their audience. Earned media is quite different from paid. Earned media grows organically based on the efforts of others.

Customers can share their experiences and draw attention to the firm. This is especially valuable if the customer has a large online following. The biggest difference between paid and earned marketing is that the firm can only control the message when they pay. As the owner of a start-up, both paid and earned marketing can benefit a company. Paid marketing can reach targeted potential customers, which will help to grow the business, while earned media can be extremely valuable because customers often look to others for advice when trying new products and services. Therefore, positive feedback will be great for business.

Moderate 38. Explain how Apple’s AirTag works.

Many think Apple’s AirTags support GPS—they don’t. GPS is costly, both in terms of hardware and battery life. Instead, AirTags simply broadcast their signal using Bluetooth Low Energy and

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any nearby Apple device will pick up the broadcast and forward it to the Cloud so that its location can be identified. So, if you’re an Apple device owner, you are peer-producing the “Find My” AirTag feature.

Easy Section 11.2 True/False Questions 39. While blogs are effective for communicating with the public, firms shouldn’t use blogs for internal communication since everyone can see them.

False; Easy 40. Most mainstream news outlets have begun supplementing their content with blogs that can offer greater depth, more detail, and deadline-free timeliness.

True; Easy 41. Blog posts are listed in forward order of creation, making it easy to see the most recent content.

False; Moderate 42. A vigorous community of commenters would help keep a blogger honest as they will quickly expose a blogger’s errors of fact or logic.

True; Easy 43. Pinterest pins and Twitter retweets are examples of earned media.

True; Easy 44. Blogs do not hold any attraction for corporations because they hinder immediate and unfiltered distribution of ideas.

False; Moderate 45. The “author unbundling” platform Substack offers free content and allows authors to charge paid subscriptions.

True; Easy 46. Emily Weiss, the founder of Glossier, formed her own brand to appeal to the Millennial generation.

True. Easy 47. Content adjacency problem refers to when an advertiser is concerned that their brands may appear next to unflattering content.

True; Easy 48. Generative AI will never pose a threat to Wikipedia because the platform embraces a strict policy banning non-human contribution.

False; Moderate Multiple Choice Questions 49. Which of the following statements is true about corporations and blogging? a. Corporations that blog have to be careful about editors filtering their ideas. b. Since corporate blogging offers a one-sided dialogue, people outside the corporation cannot provide feedback about the corporation’s products or services. c. Corporate blogs have a limit on page size and word count.

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d. CEOs use blogs for purposes that include a combination of marketing, sharing ideas, press response, image shaping, and reaching consumers directly. e. Corporate blogs can be published to the public only through the mainstream media. d; Moderate 50. The long tail nature of the blogging phenomenon is demonstrated by a. many blogs, which are more popular than most mainstream media publications. b. the niche content that is discoverable through search engines and that is often shared via other types of social media. c. most popular blogs offering cutting-edge news and commentary on a wide range of political, social, and economic topics. d. the higher valuation of many top-ranked blogs compared to that of publicly traded papers. e. top blogs operating on shoestring budgets yet snaring several hundred thousand dollars a month in ad revenue. b; Moderate 51. Which of the following statements about blogging is true? a. Firms can ignore blogs without any consequences because blogs do not reflect real concerns of people. b. Blog comments can be a hothouse for spam and the disgruntled. c. Despite their popularity, blogs do not offer more detail than mainstream media outlets do. d. Newspapers offer greater depth than blogs. e. Current and archived posts are not easily searchable in blogs. b; Easy 52. Advertisement and sponsorships are components of: a. earned media b. paid media c. unearned media d. peer production e. social media b; Easy 53. _____ are links in a blog post that refer readers back to cited sources, which allows bloggers to follow the popularity of their posts among other bloggers. a. Blog rolls b. Trackbacks c. Virtual world d. Blogospheres e. Folksonomies b; Easy 54. Which of the following is not a key feature of a blog? a. searchability b. predictability c. ease of use d. reverse chronology e. comment threads b; Easy 55. Three recent customers posted Tweets about their satisfaction with your products and as a result your website traffic has increased. This is an example of: a. paid media b. earned media c. owned media

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d. mainstream media e. coerced media b; Easy Essay Questions 56. What are blogs? What features does a typical blog offer to its users? How are these features a source of value for the users?

Blogs are online journal entries, usually made in a reverse chronological order.

While the feature set of a particular blog depends on the underlying platform and the preferences of the blogger, several key features are common to most blogs: •

Immediate and unfiltered publication - The ability to reach the public without limits on publication size and without having posts filtered, edited, or cut by the mainstream media.

• Ease of use - Creating a new post usually involves clicking a single button.

• Reverse chronology - Posts are listed in reverse order of creation, making it easy to see the most recent content.

• Comment threads - Blogs typically provide comment mechanisms where users can post feedback for authors and other readers.

• Persistence - Posts are maintained indefinitely at locations accessible by permanent links.

• Searchability - Current and archived posts are easily searchable.

• Tags - Posts are often classified under an organized tagging scheme.

• Trackbacks - Allows an author to acknowledge the source of an item in their post, which allows bloggers to follow the popularity of their posts among other bloggers.

In the end, the value of any particular blog derives from a combination of technical and social features. The technical features make it easy for a blogger and his or her community to reach out for an ongoing conversation on some topic of shared interest. But the social side means that unless a reader base discovers a blog and is engaged, an effort will have little impact.

Hard 57. What is inbound marketing and how does it differ from traditional marketing methods? How can online media help a firm with inbound marketing efforts?

Inbound marketing refers to leveraging online channels to draw consumers to the firm with compelling content rather than conventional forms of promotion such as advertising, e-mail marketing, traditional mailings, and sales calls. Inbound marketers look to attract traffic that is converted to leads that result in sales and hopefully repeat business.

Popular blog posts and other forms of social media play a critical role in inbound marketing, as do other online material such as free whitepapers and eBooks. Material deemed useful is likely to gain more Web links and cause firm-affiliated content to rise in search results rankings (search engine optimization), making a firm easy to find and solidifying perception of a firm as an expert.

A catchy viral campaign can also bring in customers to an owned channel and gain earned media referrals.

Hard Fill in the Blanks 58. Glossier’s goal was to sell mostly without _____ and avoid selling through chains, building instead the world’s first socially driven beauty brand, leveraging social media to share, promote, and co-create. physical stores; Easy 59. Glossier became a “_____,” a private firm valued at over $1 billion, and its following is often described as "cult-like." unicorn; Easy

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60. TikTok’s record-breaking #GuacDance campaign by _____ generated over 450 million views.

Chipotle; Easy 61. _____ is the process of improving a page’s organic page rankings in search results.

Search engine optimization; Moderate 62. Links in a blog post that refer readers back to cited sources are called _____. trackbacks; Easy 63. The phrase “_____” refers to communication channels that an organization controls, which includes firm-run blogs and websites, apps, and organization accounts on social media such as Twitter, Facebook, Pinterest, YouTube, and Instagram. owned media; Easy 64. The phrase “_____” refers to efforts where an organization pays to leverage a channel or promote a message, such as advertisement and sponsorships. paid media; Easy 65. The phrase “_____” refers to promotions that grow organically from customer efforts or other favorable publicity (e.g. think positive tweets, shared Facebook posts, and pins on Pinterest). earned media; Easy 66. The phrase “_____” refers to leveraging online channels to draw consumers to the firm with compelling content rather than conventional forms of promotion such as advertising, e-mail marketing, traditional mailings, and sales calls. inbound marketing; Moderate 67. Bloggers and other users of social media often refer to the MSM, which stands for _____. mainstream media; Easy Section 11.3 True/False Questions 68. The larger and more active a wiki community, the more likely it is that information will be distorted and that errors will creep in.

False; Easy 69. The unstructured nature of wikis is both a source of strength and weakness.

True; Moderate 70. Allowing users to see who made what edits, the version history, and roll back features of wikis are considered to be clearer than collaborating simultaneously in a tool such as Google Docs or Office365.

True; Moderate 71. Corporations will want to be cautious about what is posted to wikis since wikis can be accessed by anyone.

False; Easy 72. Wikipedia sells tools to provide fast access to updated information.

True; Moderate Multiple Choice Questions

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73. The term wiki refers to a(n) a. record of online journal entries, usually made in a reverse chronological order. b. link in a blog post that refers readers back to cited sources. c. online community that allows users to establish personal profiles and communicate with others. d. website that can be modified by permitted users, from directly within a Web browser. e. type of short-message blogging, often made via mobile device and designed to provide rapid notification to their readership. d; Easy 74. What is the likely implication of a large and active wiki community? a. It becomes easier for most users to contribute without training or knowledge of arcane code or markup language. b. It makes it easier to maintain a history of any changes so they can be compared and rolled back as needed. c. It becomes more likely that content is up-to-date and errors are quickly corrected. d. It becomes more difficult to track alterations made to data by users and errors can creep in owing to that. e. It removes boundaries between functional areas and flattens preexisting hierarchies between user classes. c; Moderate 75. Which of the following refers to a feature of wikis that allows the restoration of earlier work in the event of a posting error, inaccuracy, or vandalism? a. what you see is what you get b. roll back c. neutral point of view d. organized tagging scheme e. track back b; Easy 76. _____ are individuals often employed by organizations to review community website content in order to prune excessive contributions, move commentary to the best location, and edit as necessary. a. Wikimasters b. System administrators c. Astroturfers d. Database administrators e. Web masters a; Easy 77. Users who edit Wikipedia content in a manner that is biased and opinionated are said to be violating Wikipedia’s stated policy of: a. what you see is what you get b. political correctness c. neutral point of view d. public disclosure e. respect for universal human rights c; Moderate 78. Citing Wikipedia as a reference is not considered a good practice because Wikipedia: a. leverages a neutral point of view b. hosts unopinionated entries c. is proprietary in nature

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d. is not original source material, but rather a clearinghouse of information e. offers limited content d; Moderate 79. A(n) _____ refers to an Internet vandal and mischief-maker. a. avatar b. troll c. sock puppet d. poltergeist e. gadfly b; Easy 80. Which of the following is the purpose of the AI tools that Wikipedia uses? a. content review b. translation c. spelling and grammar correction d. stopping bots from spreading misinformation e. All of the above are correct. e; Moderate Essay Questions 81. With the aid of examples, briefly describe the use of wikis in a corporate environment.

Wikis can make workers more productive and informed and kill corporate time-wasters. At Disney’s Pixar, wikis are used to improve meeting efficiency, with agendas and key materials distributed in advance. Posting corrections, comments, goals, deadlines, and completion keeps everyone involved and aware of expectations and progress. Sony uses wikis for cross-functional collaboration on projects (finance, engineering, marketing), with secure access making sure that information is released on a need-to-know basis. Nonprofits, investment banks, law offices, and even the U.S. intelligence services all take advantage of the power of wikis.

Moderate 82. What are the features that form a common set for most wiki tools?

Most wikis support the following key features: • All changes are attributed, so others can see who made a given edit.

• A complete revision history is maintained so changes can be compared against prior versions and rolled back as needed.

• There is automatic notification and monitoring of updates; users subscribe to wiki content and can receive updates via e-mail or RSS feed when pages have been changed or new content has been added.

• All the pages in a wiki are searchable.

• Specific wiki pages can be classified under an organized tagging scheme.

Moderate Fill in the Blanks 83. Many wikis also serve as _____ that act as a sort of collective corporate memory that is vital for sharing skills, learning, and preserving expertise even when employees leave the firm.

Knowledge Management Systems; Hard 84. “_____” is a phrase used to describe graphical editing tools, such as those found in a wiki, page layout, or other design tools.

What you see is what you get (WYSIWYG); Moderate

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85. _____ is a term used to describe data used to train an AI model.

Corpus; Easy 86. Another term for the word griefer is _____. troll; Easy Section 11.4 True/False Questions 87. As with other types of social media, content flows in social networks are easy to control.

False; Easy 88. Social networking feeds are at times controversial with instances of feed mismanagement causing user discontent, public relations problems, and the possibility of legal action.

True; Easy 89. The use of public social networks within private organizations is growing, and many organizations are implementing their own, private, social networks.

True; Easy 90. While firms like Deloitte Consulting, Dow Chemical, and Goldman Sachs had hoped to create lasting social networks of former employees, firms saw little value in these efforts and even exposed themselves to significant legal and privacy threats.

False; Easy 91. Some networks are curating user feeds, so it’s not guaranteed that what you’re posting on social networks will even be seen.

True; Moderate 92. Workplace from Meta has replaced Facebook for workplace.

True; Easy 93. A person capable of swaying a target audience is considered an influencer.

True; Easy 94. Despite its good intentions, privacy regulations exposed the website PatientsLikeMe to significant fines and it was eventually forced to shut down.

False; Easy 95. Slack, the enterprise networking platform, is designed to maximize email efficiency.

False; Moderate Multiple Choice Questions 96. Social networks are a hothouse for “_____” media, where enthusiast-consumers can help spread the word about products and services. a. paid b. earned c. owned d. mainstream e. coerced b; Moderate

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97. The inherently _____ nature of feeds allows individuals to rapidly blast their activities to their contacts or “friends” and forward along posts they think may be of interest to others. a. static b. serial c. chronological d. decadent e. viral e; Easy 98. The controversial nature of feeds is because of: a. phishing concerns b. bandwidth concerns c. congestion concerns d. privacy concerns e. propriety concerns d; Moderate 99. Some firms are opting for internal social media platforms because a. they are seeking security and customization. b. they do not want to manage public users. c. they do not want to choose one of the dominant platforms. d. their employees are more likely to be social. e. this is the more affordable approach. a; Moderate 100. a. b. c.

Which of the following is true about Spotify Wrapped?

It sends users info graphics showing what they've listened to.

It sends users info graphics showing what type of music listener they seem to be.

It sends users info graphics showing overall trends, like the year's most-streamed artists and songs. d. Around 30 million people accessed Wrapped a year after it was introduced. e. All of the above are correct. e; Easy

Essay Questions 101.

What are the benefits and risks associated with social networks? Support your answers with relevant examples.

Benefits of social networks: • Electronic social networks help individuals maintain contacts, discover and engage people with common interests, share updates, and organize as groups.

• Modern social networks are major messaging services, supporting private one-to-one notes, public postings, and broadcast updates or “feeds.”

• Feeds can rapidly mobilize populations, and dramatically spread the adoption of applications.

• The use of public social networks within private organizations is growing, and many organizations are implementing their own, private, social networks.

• Firms are also setting up social networks for customer engagement and mining these sites for customer ideas, innovation, and feedback.

Risks associated with social networks: • Many users react negatively to the public broadcast of their online activity, and feed mismanagement can create public relations fiascos, user discontent, and potentially open up a site to legal action.

• As with any type of social media, content flows in social networks are difficult to control.

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• •

Embarrassing disclosures can emerge from public systems or insecure internal networks.

Employees embracing a culture of digital sharing may err and release confidential or proprietary information.

• Networks could serve as a focal point for the disgruntled.

• Publicly declared affiliations, political or religious views, excessive contact, declined participation, and other factors might lead to awkward or strained employee relationships.

Moderate Fill in the Blanks 102.

Much of the activity that takes place on social networks is spread via _____. Pioneered by Facebook but now adopted by most services, this feature provides a timely list of the activities of and public messages from people, groups, and organizations that an individual has an association with. feeds (or newsfeeds); Easy 103.

A(n) _____ is an online community that allows users to establish a personal profile and communicate with others. social network; Easy 104.

In the context of social media, information or applications that spread rapidly between users is considered to have gone _____. viral; Easy Section 11.5 True/False Questions 105.

Twitter originated as a side project at Odeo, a successful podcasting startup.

True; Easy 106.

Tweets on Twitter are limited to 140 characters.

False; Moderate 107.

Elon Musk acquired Twitter, rebranded it as "Alphabet," and reduced the number of active users by about 80%.

False; Easy 108.

Elon Musk reinstated many banned accounts on Twitter and eliminated content moderation teams responsible for removing hate speech and other harmful content.

True; Moderate 109.

Doxxing refers to sharing personal, identifiable information about an individual without their consent.

True; Easy 110.

Journalists and activists primarily migrated to alternative platforms like Mastodon, Threads, and Post after Musk's controversial actions on Twitter.

False; Moderate 111.

X is an important media site because it has the most amount of users of any social media platform.

False; Easy

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112.

Musk's personal tweets are boosted by a factor of 1,000, making his posts almost unavoidable.

True; Moderate Multiple Choice Questions 113. _____ represent a method for organizing tweets where keywords are preceded by the # character. a. Trackbacks b. Hashtags c. Twitter rolls d. Feeds e. Mash-ups b; Easy 114.

Gourmet food trucks, popular in many American cities, are using Twitter to share location and create hipster buzz. Starbucks uses Twitter to run contests and spread free samples of new products. These examples demonstrate the use of Twitter as a(n) a. effective tool for quickly blasting queries seeking insights and solutions to problems. b. source of breaking news on current events and warning mechanisms. c. support mechanism for activism, pushing for social change. d. means for soliciting customer complaints and representations. e. legitimate business tool. e; Easy 115.

On X, advertisers can promote posts to any user based on: a. geography b. location c. keyword d. device type e. All of the above are true. e; Easy Essay Questions 116.

How has the rise of microblogging in general, and Twitter in particular, impacted the way people communicate and do business?

Organizations have found Twitter useful for real-time promotions, for time-sensitive information, for scheduling and yield management, for customer engagement and support, for promotion, for intelligence gathering, for idea sourcing, and as a sales channel. For many, Twitter is a discovery engine, a taste-making machine, a critical source of market intelligence, a source of breaking news, and an instantaneous way to plug into the moment’s zeitgeist. Many also find Twitter to be an effective tool for quickly blasting queries to friends, colleagues, or strangers who might offer potentially valuable input.

Moderate 117.

Explain how companies can use X or other similar platforms as a business tool.

Organizations have found the site useful for real-time promotions, for time-sensitive information, for scheduling and yield management, for customer engagement and support, for promotion, for intelligence gathering, for idea sourcing, and as a sales channel.

Moderate Fill in the Blanks 118.

A _____ is the term for a Twitter post. It is limited to 280 characters.

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tweet; Easy 119.

Shortly after the acquisition, Musk announced Twitter was cash-flow negative and at risk of _____. bankruptcy; Easy 120.

Responsibility for righting X fell on Linda Yaccarino, NBC/Universal's former Chair of Global Advertising & Partnerships, who has deep operating experience within the _____ industry. media; Hard 121.

Musk's aspiration for X is to turn it into a super app similar to China's _____, which offers various services including social media, messaging, payments, and mini-sites for other firms.

WeChat; Moderate 122.

Building a robust platform for X might be a challenge as the engineering staff is only a _____ of the size it was a year earlier. quarter; Moderate 123.

Before Musk did away with it, Twitter’s “_____” helped users identify legitimate accounts from imposters. blue checkmark; Easy Section 11.6 True/False Questions 124.

Musical.ly was replaced by Spotify in 2018.

False; Moderate 125.

For years, Instagram and YouTube users had to risk banishment if their post contained a pop song, but TikTok aggressively licensed music and made it easy to mix hits into posts.

True; Easy 126.

A viral TikTok trend was started where Taylor Swift fans punked their football fan significant others, stating "Swift will make this guy's career."

True; Easy 127.

TikTok's feed is mostly served up based on insights from the service's AI algorithm.

True; Easy 128.

All of the TikTok's U.S. data is routed through Huawei.

False; Easy Multiple Choice Questions 129.

Which social media platform do its users spend the most time on? a. YouTube b. Facebook c. TikTok d. X e. Mastadon c; Moderate 130.

Taylor Swift and Travis Kelce’s relationship had the ability to do which of the following for TikTok?

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a. cause the app to crash on more than one occasion b. expose millions of TikTok users to the NFL c. violate rules and regulations set out by the firm d. All of the above are true. e. None of the above are true. b; Moderate 131.

When launching in the United States, _____ of sellers on TikTok Shop were U.S.-based. a. less than 10 percent b. close to 25 percent c. more than 50 percent d. close to 70 percent e. more than 90 percent e; Moderate Essay Questions 132.

Explain whether or not TikTok is profitable and explain your answer.

ByteDance claims TikTok is not yet profitable due in large part to its massive infrastructure build-out as governments outside of China demand data be stored in their own countries.

However, ByteDance is more profitable than China's other two Internet giants—WeChat and Alibaba.

Moderate 133.

Explain the functionality of TikTok Shops.

TikTok Shops is a marketplace that can be accessed via a dedicated tab in the TikTok app, or via links in posts. Brands can have products for purchase linked and featured directly in their profiles. Users never leave TikTok when buying through TikTok Shops. Vendors get their own store backend to see orders, message with customers, engage in live-stream promotions, and even set up a commission structure so that affiliates on TikTok can promote a store’s goods for a cut of the take. TikTok handles payment and credit card processing.

Moderate 134.

Discuss some of the reasons that governments give for wanting to ban TikTok. Provide specific examples.

TikTok's growth comes with a significant amount of criticism, with some governments threatening to ban or outright banning the service. There are valid concerns regarding the negative mental health impact of social media. TikTok's addictive nature and its ability to spread unhealthy trends and reinforce dangerous messaging are also concerns. Other governments are concerned with how virally hate speech, misinformation, or anti-government information has spread on the platform. Fair or not, by far the largest criticism comes from the firm's Chinese heritage and worries that it could be influenced by the Chinese government. Senegal has banned TikTok outright, citing hateful and subversive messages spread on the platform. Jordan blocked the app after clashes with protestors resulted in the death of a police officer. Kyrgyz officials have announced their intent to ban TikTok due to concerns over impact on child health. Somalia announced a ban based largely on the platform's use by the terrorist and rebel organization alShabaab. Kenya is discussing a ban because the app had been used to display sexual content for sexual solicitations. The United States and its “Five Eyes” security partners (Australia, Canada, New Zealand, and the United Kingdom) have cited security concerns when enacting a ban on TikTok on all federal government devices.

Moderate Fill in the Blanks

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135.

If a firm profiles a customer as they browse a website, keeping track of pages visited to better understand their preferences, then this is _____ data. first-party; Easy 136. _____ are tracking tags used by advertisers and other services that are not identified by the URL of the page that you are visiting.

Third-party cookies; Moderate 137.

When launching in the United States, TikTok Shop heavily favored _____, which eliminated an entire category of poorly designed products or cheap knock-offs from overseas.

U.S. sellers; Moderate 138.

The Guardian reported that TikTok was actively censoring content that would be seen as unfavorable by the _____ government.

Chinese; Moderate Section 11.7 True/False Questions 139.

The wisdom of crowds concept is based on the belief a group of experts is always correct in its assessment of a problem.

False; Moderate 140.

A necessary criterion for a crowd to be “smart” is that it should be homogenous to reduce incidence of polarized insights.

False; Moderate 141.

Google, which runs several predictive markets, found that predictions were more accurate when users were geographically proximate, meaning folks in the same work group who sat near one another.

False; Hard Multiple Choice Questions 142.

A prediction market involves a. leveraging customers to virally promote a firm’s products or services. b. aggregating the opinions of a specialized group of experts who analyze a problem and suggest solutions. c. making calculated estimates on the prices of goods and services based on the speculation of a group of experts. d. polling a diverse crowd and aggregating opinions to form a forecast of an eventual outcome. e. trading essential goods and services with a view of making a profit by hiking prices at a time of high demand. d; Moderate 143.

Which of the following criteria, according to James Surowiecki, is necessary for a crowd to be “smart”? a. strongly opinionated b. homogeneous c. offer a wide range of verdicts d. decentralized e. intellectually proximate d; Moderate

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144.

Which of the following represents potential ethical challenges associated with prediction markets? a. artificial inflation of product prices b. money laundering c. high-interest financing d. confiscation by government agencies e. an insider trading information e; Moderate Essay Questions 145.

What are prediction markets?

In many cases where topics are complex, problems are large, and outcomes are uncertain, a large, diverse group may bring collective insight to problem solving that an expert or a professional committee lacks. One technique for leveraging the wisdom of the crowds is a prediction market, where a diverse crowd is polled and opinions aggregated to form a forecast of an eventual outcome. The stock market is arguably a prediction market, with a stock price representing collective assessment of the discounted value of a firm’s future earnings. But Internet technologies are allowing companies to set up prediction markets for exploring all sorts of problems.

Easy 146.

What are the concerns associated with prediction markets?

Predictive markets may also hold legal and ethical challenges. For example, the Securities and Exchange Commission may look askance at an employee who gets a heads-up in a predictive market that says a certain drug is going to be approved or fail clinical trials. But lack of proper disclosure issues means that it is unclear if the employee is an insider if he/she trades on that information, and if he/she is subject to prosecution for exploiting proprietary data. Gambling laws are also murky, with uncertainty existing as to whether certain predictive markets will be viewed as an unregulated form of betting.

Moderate Fill in the Blanks 147.

Several developers are turning to _____ to decentralize large-scale prediction markets. blockchain; Moderate 148.

Many social media efforts allow firms to tap the wisdom of crowds, identifying _____ intelligence. collective; Moderate 149.

Having talented employees who can analyze _____ is very important to executives. data; Easy Section 11.8 True/False Questions 150.

Not all crowdsourcing efforts are financially motivated.

True; Easy 151. Nine of the world’s top ten brands have engaged in some form of crowdsourcing.

True; Easy

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152.

Netflix offered anonymous data to any takers, along with a $1 million prize to the first team that could improve the accuracy of movie recommendations.

True; Moderate 153.

The company InnoCentive was originally spun out of pharma giant Eli Lilly, then acquired by and rolled into the crowdsourcing app Wazoku Crowd.

True; Moderate Multiple Choice Questions 154.

What did Waze offer Google? a. better maps through crowdsourcing b. better voice-enabled search via crowdsourcing c. better advertising accuracy via crowdsourcing d. better pricing via crowdsourcing e. All of the above are true. a; Easy 155.

What is crowdsourcing? a. It is the act of taking a job traditionally performed by a designated agent and outsourcing it to an undefined generally large group of people in the form of an open call. b. It is the act of moving a job from a group of ineffective employees to an efficient employee. c. It is the process of selling products to people in the guise of conducting marketing research. d. It is the act where a group of people moves from one country to another while looking out for better work opportunities. e. It is the movement of employees from one department to another with the aim of improving their skill sets. a; Easy Essay Questions 156.

Describe how Facebook leveraged crowdsourcing to rapidly expand internationally, all while minimizing staff needs.

Facebook leveraged crowdsourcing to develop versions of its site localized in various languages.

Facebook engineers designated each of the site’s English words or phrases as a separate translatable object. Members were then invited to translate the English into other languages, and rated the translations to determine which was best. Using this form of crowdsourcing, hundreds of volunteers cranked out Spanish Facebook in about a month. It took two weeks for two thousand German speakers to draft Deutsch Facebook. All were done with a minimum of staffing, as opposed to the high cost the firm would have incurred if it had hired native language experts and enlisted focus groups to verify its translations.

Moderate Fill in the Blanks 157.

The term _____ refers to the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined generally large group of people in the form of an open call. crowdsourcing; Easy 158. There are several public markets for leveraging crowdsourcing for _____, or as an alternative to standard means of _____. innovation, production; Hard

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159.

The idea that some of the most productive ideas, answers, and participants that can help an organization solve problems exist outside the organization itself is called _____. open innovation; Moderate 160.

Amazon’s marketplace for crowdsourcing is called _____.

Mechanical Turk; Easy 161.

Facebook used crowdsourcing to develop versions of the app in different _____. languages; Moderate Section 11.9 True/False Questions 162.

Outsourcing the management of a firm’s social media presence to a third-party agency is generally considered an effective management practice as internal staff can focus on performance.

False; Easy 163.

Jax TikTok hit “I Know Victoria's Secret” had over twice as many views on TikTok in just a few months as “United Breaks Guitars” earned on YouTube in over 14 years.

True; Easy 164.

Shein’s tweet on Martin Luther King Day quoting the slain civil rights leader in its discount promotion was well-received by its customer base and led to an increase in sales.

False; Easy 165.

SMART is an acronym referring to the social media awareness and response team.

True; Easy 166.

Fake personas set up to sing your own praises are known as sock puppets.

True; Easy Multiple Choice Questions 167. _____ is tasked with creating policies, providing support, training, guidance, and development expertise for and monitoring of a firm’s social media efforts. a. SMART b. A public relations team c. A spokesperson d. API e. SWOT a; Easy 168.

A(n) _____ is a fake online persona created to promote a particular point of view, often in praise of a firm, product, or individual. a. avatar b. troll c. sock puppet d. poltergeist e. gadfly c; Easy 169.

Victoria’s Secret CEO, Amy Hauk, addressed unwanted attention stemming from the viral song “I Know Victoria’s Secret” on Instagram by a. posting a hand-written note thanking Jax for “addressing important issues in her lyrics.”

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b. doxxing Jax. c. creating a “dis-track” with unflattering lyrics directed toward Jax. d. attempting to buy rights to the song. e. suing Jax and Associates entities for negative impact to sales. a; Hard 170.

Social media guidelines emphasize the “three Rs”, which are: a. representation, record-keeping, and respect b. royalties, rate of return, and response time c. representation, responsibility, and respect d. rate of interest, random sampling, and replenishment e. ratio, redundancy, and resource-sharing c; Hard 171.

Which of the following is not one of the “four Ms” of effective social media engagement? a. megaphone allowing for outbound communication b. magnet drawing communities inward for conversation c. monitoring existing conversations d. manage user expectations e. mediating existing conversations d; Moderate Essay Questions 172.

List and describe key components that should be included in any firm’s social media policy.

Many experts suggest that a good social media policy needs to be three things: “short, simple, and clear”. Most guidelines emphasize the “three Rs” of representation, responsibility, and respect: • Representation - Employees need clear and explicit guidelines on expectations for social media engagement. Firms may also want to provide guidelines on initiating and conducting dialog, when to respond online, and how to escalate issues within the organization.

• Responsibility - Employees need to take responsibility for their online actions. Firms must set explicit expectations for disclosure, confidentiality, and security, and provide examples of engagement done right, as well as what is unacceptable. An effective social voice is based on trust, so accuracy, transparency, and accountability must be emphasized. The consequences for violations should be clear.

• Respect - Firms need to reinforce in their employees the need to honor differences in customers and to act ethically and responsibly.

Hard 173.

The social media incident involving the CEO of Whole Foods illustrated why even the most senior executives need the education and guidance of a corporate social media policy. Give the name of the term describing this incident, and briefly describe the incident that occurred.

The incident that happened is an example of sock puppetry. The Whole Foods CEO posted flattering comments about himself and his firm and disparaged rivals, using a pseudonym. The real identity of the anonymous poster was eventually discovered.

Easy Fill in the Blanks 174.

The process of tracking and responding to online mentions of a product, organization, or individual is known as _____. online reputation management; Moderate

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175. _____ refers to engineering the posting of positive comments and reviews of a firm’s product and services.

Astroturfing; Easy 176.

In the context of social media, a(n) _____ is an established online presence where customers can reach and interact with the firm. embassy; Easy 177.

Tripadvisor provides an analytics dashboard enabling _____ to track their most important visitors, competitors, and market trends. vendors; Moderate

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Chapter 12 The Sharing Economy, Collaborative Consumption, and Efficient Markets through Tech Section 12.1 True/False Question 1. The African Development Bank (AfDB) and the World Bank are examples of organizations that have provided resources to fuel circular economy efforts.

True; Moderate 2. Apple's efforts to encourage customers to return devices for purchase discounts, recycle its own products, and harvest recyclable content have allowed the firm to produce carbon-neutral Apple watches.

True; Easy 3. Apple is targeting to have all of their products be carbon neutral by 2040.

False; Moderate Multiple Choice Questions 4. Which of the following firms is an example of a circular economy? a. Rent the Runway b. ThredUp c. Poshmark d. All of the above are true. e. None of the above are true. c; Easy 5. Which of the following firms is not peer-to-peer supplied commerce? a. eBay b. Craigslist c. Chegg d. Airbnb e. LiquidSpace c; Easy 6. What is the difference between collaborative consumption firms Zilok and Chegg? a. Zilok has gone public, Chegg hasn’t. b. Zilok is a service where a person comes to your home to complete a task, Chegg is a rental firm. c. Zilok provides inventory provided by participating “citizen suppliers,” Chegg owns its own inventory. d. Zilok is the European equivalent of Chegg. e. Zilok was purchased by Chegg underscoring the “winner take all” dynamics of these markets. c; Easy 7. The sharing economy consists of which of the following? a. recirculation of goods b. increased utilization of durable assets c. exchange of services

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d. sharing of productive assets e. All of the above are true. e; Easy Essay Questions 8. Given examples of firms in the sharing economy that focus on the following categories: goods, transportation, and capital provision. List markets challenged in each of these areas.

Firms providing physical goods include Zilok (disrupting firms that sell tools and other products Zilok offers for rent), Rent the Runway (disrupting any firm that sells fashions), and Chegg (disrupting textbook sales). Transportation services are provided by Uber and Lyft (disrupting taxi firms), and car rental is provided by Zipcar and Turo (which may make it less necessary to own a car).

Moderate 9. Rent the Runway and Chegg have chosen to purchase their own inventory for rental to customers, rather than relying on inventory provided by participating citizen suppliers. This incurs an additional cost for these firms. Why would they opt to use this model if startup costs are going to be more expensive?

For some marketplaces, end users simply can’t be relied on to consistently manage inventory and logistics. In these cases, successful “collaborative consumption” efforts own inventory to ensure quality and gain more control over the customer experience. Rent the Runway meticulously oversees its dress inventory, packing product for delivery, running a massive in-house garment cleaning effort, and retiring dresses that are noticeably worn. The goal is to ensure that an experience with the firm will bring customers a “Cinderella moment” filled with delight, rather than disappointment. While some startups have attempted to allow women to rent dresses to others, none has achieved anything close to the scale of Rent the Runway’s nine million members.

Moderate Fill in the Blanks 10. Prof. Juliet Schor says that businesses considered to be part of the _____ can involve the recirculation of goods, increased utilization of durable assets, exchange of services, or the sharing of productive assets. sharing economy; Easy 11. Firms in the so-called “sharing economy” fuel more efficient matching of _____ and _____, lower costs, enable more efficient resource use, and provide a level of reach and services heretofore unavailable. supply, demand; Moderate 12. Global financial institutions have stepped up to provide coordinating resources to fuel faster and more extensive _____ efforts. circular economy; Moderate 13. The sharing economy standouts differ from earlier efforts in that their efficiency is enhanced through streamlined coordination and broader reach by leveraging the _____.

Internet; Moderate Section 12.2

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True/False Questions 14. Payment continues to represent a barrier to widespread adoption of the sharing economy, since many consumers feel uncomfortable exchanging cash or financial information with strangers.

False; Easy 15. Uber prices services according to demand. This allows the company to increase rates during peak periods in order to attract more potential suppliers into the market to meet demand.

True; Easy 16. Social media profiles can also be used to fight online fraud.

True; Moderate 17. New York City passed a law allowing more short-term rentals, effectively increasing Airbnb

offerings by about 10,000 properties.

False; Easy 18. An elevator pitch is slang for a business idea that is so strong it will send you to the upper levels of

your company structure.

False; Easy Multiple Choice Questions 19. Which of the following is not true regarding the competitive dynamics of most sharing economy marketplaces? a. Ratings represent a switching cost built over time by early participants in sharing economy marketplaces. b. Late movers have a substantial advantage in this market since inventory should be cheaper to acquire for those firms that have entered markets more recently. c. Network effects should grow over time, favoring firms that got a successful, early start over rivals who arrived late doing the same thing. d. These are two-sided markets. e. All of these statements are true. b; Moderate 20. Another major concern for firms in the sharing economy is uncertainty around the ability of these firms to continue to consider their workers as _____ and not employees. a. investors b. critics c. independent contractors d. liabilities e. None of the above are true. c; Moderate Essay Questions 21. The sharing economy is a two-sided market, and when you arrive to the market can contribute to success or failure. Describe the challenges a firm might face if they arrive to the market late.

Late arrivers to a sharing economy market might be faced with the challenge of creating a critical mass of buyers and sellers. Consumers might already have established relationships with early arrivers in the market and now switching costs are involved. Scale and brand are also a challenge if

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there are already large established firms in the market. An example of a late arriver trying to catch an early mover is Uber and Lyft. Uber was in the ride share market several years before the arrival of Lyft. The firm had exponential growth due to network effects, and their brand was quickly established. Lastly, late arrivers might also struggle getting financial resources if large firms have already invested in other firms in the market.

Hard 22. In the sharing economy, some firms leverage the power of social media for advertising and customer acquisition. Why have some firms been successful in using this method? Imagine yourself as a manager at a ride share start up. How would you use social media to increase awareness about the firm?

As a manager in a ride share start up, I would start by leveraging social media for advertising. Using popular social media platforms would have a significant impact on my advertising budget. I would have the team start using social media platforms to build brand awareness, and once it is feasible, we could consider investing in paid advertising. In addition, we could offer existing customers an incentive if they post about their experience on social media. Using existing customers as ambassadors will reduce the cost of customer acquisition. Also, online ratings and testimonials will be social proof for potential customers who are wavering on trying our service.

Hard 23. Crowdsourced ratings have a number of benefits, but problems include the potential for bias and discrimination. How can crowdsourced ratings also reflect the crowd’s bias and reinforce discrimination?

Allegations in an Uber driver forum suggest that college students rate older drivers lower; male riders give lower ratings to female drivers who don’t respond to their flirtatiousness; drivers with disabilities also experience lower ratings; and Black drivers have a lower acceptance rate than Whites. A working paper published by Harvard researchers reports bias in Airbnb, claiming that after controlling for factors like location, rental characteristics, and quality, non-Black Airbnb hosts in New York City were still able to charge 12 percent more than their Black counterparts, and Black hosts received a larger penalty for having a poor location when compared to comparable non-Black hosts.

Moderate 24. What are some concerns regulators have over the sharing economy using independent contractors and not full-time employees?

When employers improperly classify employees as independent contractors, the employees may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation. Misclassification also results in lower tax revenues for the government and an uneven playing field for employers who properly classify their workers.

Moderate 25. Why are sharing economy marketplaces so attractive to consumers?

Lower search costs—Lots of suppliers in a traditional market mean customer search costs are high.

But ratings in marketplaces help you quickly size up high-quality providers and make a lower-risk choice.

Less perceived risk—Ratings systems provide metrics for comparing supplier performance not available through conventional mechanisms of searching for suppliers, like the yellow pages or where ratings are unknown (think taxicab drivers vs. Uber drivers).

Apps also provide convenience of scheduling and payment superior to many conventional ways of engaging the old-economy alternatives that sharing economy firms compete with.

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And prices are often lower, as well, with examples including Uber and Airbnb offering services at more competitive rates than conventional taxis or hotels.

Moderate Fill in the Blanks 26. Highly _____ markets are especially ripe for rollup in electronic marketplaces. fragmented; Moderate 27. _____ mayor has voiced support for Uber, seeing it as a safe and popular service among citizens and city visitors.

Boston’s; Easy 28. Citizen suppliers in the sharing economy may find their _____ costs increase due to increased product use and an increase in perceived risk over time. fragmented; Moderate 29. _____ are especially well suited for rollup in electronic marketplaces.

Fragmented markets; Easy 30. _____ is the positive influence created when someone finds out that others are doing something.

Social proof; Easy 31. A _____ is efficient and has enough transaction volume to attract a reliable supply of goods at fair, market-rate prices. liquid market; Moderate Section 12.3 True/False Questions

32. General Motors backed Lyft with more than half a billion dollars.

True; Easy 33. General Motors/OnStar successfully partnered with car-sharing service RelayRides (now called Turo).

False; Moderate Multiple Choice Questions 34. Large firms like Alphabet and Walgreens have invested in the sharing economy because a. there is a wide belief that the sharing economy is powerful and important. b. they want to stop potential rivals in their tracks. c. it is a good way to diversify their services. d. it allows them to get closer so they can foster social relationships. e. it helps them reach niche markets to increase overall market share. a; Moderate 35. Which of the following is not an example of larger, conventional firms working with sharing economy startups? a. Apple’s purchase of Beats to give new musical artists more exposure.

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b. Condé Nast’s investment in Rent the Runway. c. Google’s investment in Uber. d. Walgreens’ partnership with TaskRabbit. e. W Hotel partnering with Desks Near Me. a; Moderate Essay Questions 36. Why were fashion firms initially threatened by Rent the Runway and why has their position evolved over time?

Rent the Runway has collaborated with Neiman Marcus, underscoring its evolution into an important industry partner. While some designers were originally worried that the service would cannibalize sales, many now realize that Rent the Runway has opened up a whole new tier of customers. An affinity with a designer gained from renting a more daring dress for a special occasion often translates into purchasing a staple, like a Black cocktail dress, at a later date. Rent the Runway’s social media engagement of its customer base also provides partners with valuable insights they’d otherwise not have access to.

Moderate Fill in the Blanks 37. _____ has invested $300 million in ride-sharing firm Gett.

Volkswagen; Moderate 38. Walgreens and TaskRabbit working together to make drug store deliveries to customers is an example of an _____. innovative partnership; Moderate Section 12.4 True/False Questions 39. While unions and hotel chains might not like Airbnb and feel threatened by its offerings, Airbnb is legal in nearly every market worldwide since private citizens are fully empowered to rent property that they own.

False; Moderate 40. While some fear Airbnb is taking jobs away from hotel chains, the firm is also creating jobs and driving demand for a whole array of platform-enhancing services, including photographers, keyexchange coordinators, in-home chefs, house cleaners, and ride-sharing services.

False; Easy 41. Airbnb’s technology does not allow the firm to monitor to see if hosts are trying to arrange a stay and payment outside of the system.

False; Easy

42. Airbnb has an AI-driven verification scheme where hosts must prove they are on-site and take realtime photos of a property in order to receive a "verification" check.

True; Easy 43. Airbnb is part of the elite group of companies that make up the S&P500 stock index.

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True; Easy Multiple Choice Questions 44. Which of the following statements is true about Airbnb’s revenue model? a. Airbnb currently does not make money via transactions, only from advertising listings on its website. b. Airbnb only charges property owners who rent on the website. c. Airbnb only charges guests who rent on the website. d. Airbnb charges both property owners and guests as part of transactions on their website. e. Airbnb doesn’t charge transactions for the three years after it enters a market, so as to generate two-sided network effects of property rents and guests searching for properties to stay in. d; Moderate 45. Entrepreneurs are scrappy in their quest to gather market intelligence and understand how customers respond to their offerings. How did Airbnb’s CEO gather additional intelligence on how the firm was being used? a. He bought several apartments to rent out under Airbnb. b. He became an Uber driver. c. He lived out of Airbnb rentals full time. d. He became a bell hop at a San Francisco Hilton Hotel. e. All of the above are true. c; Moderate 46. Which of the following lead Airbnb to make changes to their platform and include new features? a. fake listings b. additional fee scams c. listings not matching descriptions d. All of the above are correct. e. None of the above are correct. d; Easy Essay Questions 47. How does Airbnb improve customer and renter trust while reducing risks that its platform will be used for illegal purposes?

In order to build trust, no one is anonymous on Airbnb. Guest identity is verified via a two-step process. The site is integrated with Facebook, and users can also share their LinkedIn profiles.

Airbnb examines the length an online profile has been up and makes sure it matches additional information provided by the user, such as driver’s license and passport. Verified identities should also discourage bad apples that are booted out of the system from trying to reapply with new accounts. Transacting parties are otherwise on their own to work out the exchange of keys and other access information, but communication has to happen through Airbnb.

Reservations, payment, communication between host and guest, and subsequent reviewers are all handled through the firm’s technology platform. The firm’s technology also hunts for signals of fake positive reviews, money laundering, and other scams, and when suspicious activity is flagged, human monitors can take a closer look and follow up, as needed.

In the unlikely event of an incident, the firm offers a $1 million guarantee for hosts, secure payment guarantees, and 24/7 support phone service.

Hard

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Fill in the Blank 48. Airbnb will now provide an option for displaying the total price of your stay, known as _____, which includes cleaning costs and taxes, so there are no surprises. fee transparency; Moderate 49. At Airbnb, _____ helps hosts set prices and tweak offerings for optimal occupation. data; Moderate Section 12.5 True/False Questions 50. Surge pricing allows Uber to increase the supply of drivers when demand is high.

False; Easy 51. Uber’s CEO, Travis Kalanick, grew the company at a breathtaking rate due to its hyperfocus on customer and driver safety.

False; Easy 52. Advertising is growing into a $1 billion business for Uber.

True; Easy 53. Uber claims the firm’s growth is minting over 500 new jobs a month.

False; Easy 54. Job satisfaction among Uber drivers hovers around 80 percent, and the majority of drivers prefer to be independent contractors rather than employees.

True; Easy Multiple Choice Questions 55. An Uber-commissioned study claims the firm’s impact on the U.S. economy tops $_____ a year. a. 28 million b. 280 million c. 2.8 billion d. 28 billion e. None of the above are true. c; Moderate 56. While Kalanick was the CEO of Uber, the company environment was best described as a: a. close-knit family b. testosterone-fueled bad frat c. competitive team d. group of distant acquaintances e. cohesive, forward-thinking band of entrepreneurs b; Easy 57. Uber’s commitment to data allows the firm to: a. cut prices b. attract new drivers

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c. grow and expand the firm d. All of the above are true. e. None of the above are true. d; Easy 58. Uber has strengthened initial skepticism around safety and offered such solid safety features that it felt confident enough to offer the Uber Teen service that allows a. parents to share an account with kids as young as thirteen. b. caretakers to track ride progress in real time. c. only top-rated drivers to provide rides. d. automatic audio-recording by default. e. All of the above are correct. e; Easy 59. Product-market fit is a key concept in entrepreneurship and new product development that conveys the degree to which a product satisfies: a. market demand b. market supply c. profit margins d. supply margins e. demand margins a; Easy Essay Questions 60. How does Uber ensure high driver quality?

Uber drivers undergo a rigorous county, federal, and multistate background check that looks back the maximum length of time allowed by law. And while drivers supply cars, only certain late-model cars are allowed in Uber’s fleet, and only then after a company inspection (no smoke-billowing clunkers here). Users rate drivers, and drivers who fall below 4.7 stars on a five-point scale risk being fired.

Easy 61. In what ways is Uber superior to conventional cab service, both for drivers and for customers?

For drivers, Uber avoids the cost of expensive “medallion” licensees needed in many cities. Drivers can often make much more from Uber than from conventional cab firms. Payment is guaranteed by the app, so drivers don’t need to worry about carrying lots of cash or making change. And since passengers are rated, drivers feel a degree of safety when picking up fares that conventional cab drivers can’t enjoy.

Uber customers see drivers’ ratings and have a greater degree of confidence that their ride will be safe and trustworthy vs. the unknowns of a conventional cab. Customers summon Uber drivers and pay for rides within the app so they don’t have to wait outside or worry that they won’t have enough cash or that the driver won’t make change. And while surge pricing raises fares, it also brings more potential drivers out during big events, helping to increase available capacity when demand is high.

Moderate 62. Describe Uber’s API and how network effects play a role in its attractiveness to partners.

Uber offers an API (application programming interface) that is essentially a published guideline on how other developers can embed Uber into their own apps. The service launched with eleven partners, including OpenTable, United Airlines, Tripadvisor, and Hyatt Hotels. Made a dinner reservation? Summon an Uber. Flight arrived? Skip the airport cab line and take one of Travis’

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drivers with a united app tap. Other ride-sharing services can do this too, but if you’re a firm looking for a partner, you’re going to choose the top firm rather than clog your app with every available choice. Once again, network effects help solidify a firm as a winning platform.

Moderate 63. Describe how Uber is a “big data” firm and how data gives the firm advantages over traditional and new rivals.

Data drives Uber’s growth and success. The firm’s team of data scientists constantly optimizes algorithms powering a whole host of activities: determining how many drivers the firm needs, including identifying when and how to alert drivers of projected demand, pointing a subset of drivers to locations to best meet demand, and setting dynamic pricing. The firm supplements its own rich and growing trove of data with traffic-influencing feeds such as weather forecasts, and staff in each city closely track special events that could impact expectations (conventions, parades, large university commencements, a packed stadium for the home team). Data even helps the firm expand into new cities. Each time a user opens an app, even if it’s in a location Uber hasn’t operated in before, data is collected showing user interest. Data and the algorithms that refine their accuracy are improved over time, so as an early player, Uber simply has more smarts than anyone else operating in this space.

Hard Fill in the Blank 64. Uber has expanded globally, but not without challenges. Two large international markets that have presented challenges for Uber are _____ and _____.

China, India; Easy 65. _____ refers to the technology used to integrate Uber with other services, including OpenTable, Google Maps, and Spotify.

API or application programming interface; Easy 66. Uber uses AI in _____, risk tracking, and assessment by processing documents submitted by drivers. fraud detection; Easy 67. Uber offers an _____ that is essentially a published guideline on how other developers can embed Uber into their own apps.

API (application programming interface); Moderate 68. _____ is a technique where an organization will change prices in real time in order to maximize sales and profits.

Dynamic pricing; Moderate

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Published by: FlatWorld

© 2025 by FlatWorld. All rights reserved. Your use of this work is subject to the License Agreement available here catalog.flatworldknowledge.com/legal. No part of this work may be used, modified, or reproduced in any form or by any means except as expressly permitted under the License Agreement.

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Chapter 13 Facebook: Platforms, Privacy, and Big Business from the Social Graph Section 13.1 True/False Questions 1. Roughly one in every three people on the planet has a Facebook account.

True; Easy 2. Firms that grow quickly may seem less risky/more likely to succeed; therefore, fast growth may help an entrepreneur extract better ownership terms from potential investors.

True; Easy 3. Facebook founder and CEO Mark Zuckerberg maintains a majority of voting rights in the public company, virtually guaranteeing that his control of the firm continues, regardless of what investors say.

True; Moderate 4. Meta owns four of the Internet’s most widely used apps: Facebook, TikTok, WhatsApp, and Google Voice.

False; Moderate Multiple Choice Questions 5. When a firm has an IPO, it is said to have a. been liquidated due to short selling. b. gone public, selling shares on a public stock exchange for the first time. c. received government funding. d. been liquidated due to switching costs. e. issued a dividend. b; Easy 6. A stockbroker trades shares she does not own with an obligation of later repayment, and in the hope that the price of traded shares will fall. She then repays share debt with shares purchased at a lower price and pockets the spread between initial share price and repayment price. This attempt to profit from a falling stock price is known as: a. insider trading b. churning c. arbitrage trading d. short selling e. going long d; Moderate 7.

Studying Facebook provides a context for understanding which of the following: a. network effects b. platform partnerships c. privacy d. business value of social media e. All of the above are true.

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e; Easy 8. Investor groups that provide funding in exchange for an ownership stake in the firm are called: a. credit unions b. venture capitalists c. hedge fund managers d. mutual fund executives e. greenfield investors b; Easy 9. Mark Zuckerberg, the founder of Facebook, ensured that he remained in control of the firm even after it went public by a. running the organization single-handedly. b. valuing the firm at $15 billion, which exceeded investor expectations. c. employing antitrust laws and limiting the investors’ degree of control. d. appointing 3 additional directors instead of 5. e. retaining a majority of voting rights in the public company. e; Easy Essay Questions 10. Explain how Mark Zuckerberg has retained control of Facebook.

The firm’s rapid growth and high user engagement allowed Mark Zuckerberg, Facebook’s founder, to demand and receive an exceptionally high degree of control over the firm—even as the firm went public. Early backers ceded control in order to get in on the deal. At a time when Facebook’s board had only five directors, Zuckerberg appointed three of them. When Facebook filed to go public, Zuckerberg’s ownership stake was less than half (actually just 28 percent of the firm), but Facebook created two classes of shares, ensuring that Zuckerberg has a majority of voting rights in the public company, as well, virtually guaranteeing his control of the firm, regardless of what investors say.

Easy 11. Explain the reasoning behind Facebook temporarily blocking Australian news sites.

Facebook temporarily blocked links to all Australian news sites when their government threatened the firm (and other Internet services) with a poorly conceived law that would have required Facebook to pay whenever its members share links to news articles.

Easy Fill in the Blanks 12. When a firm _____, it sells stock to the public for the first time. goes public, has an IPO; Easy 13. Acqui-hire refers to acquiring a firm as a way of “hiring” _____. talent; Moderate 14. _____ technology is capable of showing both virtual and augmented reality.

Mixed reality; Easy Section 13.2 True/False Questions

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15. Facebook’s key resources for competitive advantage are the sophisticated technological tools it provides to its users.

False; Moderate 16. Facebook (and other apps the firm owns) collectively represent the largest photo-sharing service on the Web, ahead of Picasa, Flickr, and Photobucket, even though all of these other efforts got started before Facebook.

True; Easy 17. Facebook can be completely indexed by search engines, like Google and Bing, being able to index all of Facebook content.

False; Easy 18. A significant portion of Facebook’s underlying technical infrastructure consists of open source software.

True; Easy 19. Facebook’s phenomenal growth implies that it requires minimal infrastructure investment.

False; Easy 20. Facebook was one of the first social networking sites where users actually identified themselves using their real names.

True; Easy 21. Facebook purchased Oculus VR because, like Zuckerberg, the firm’s youthful founder had already built a platform with a massive customer base.

False; Easy 22. Facebook is especially appealing to organizations looking to share messages with fans since anyone who has “liked” an organization on Facebook will see all of that organization’s posts in their news feed.

False; Moderate 23. Facebook will reduce the rank of posts that request reshares.

True; Moderate 24. Facebook’s acquisition of WhatsApp was a way for Zuckerberg’s firm to gain leadership in the fastgrowing mobile messaging market.

True; Easy Multiple Choice Questions 25. _____ is the biggest photo-sharing site on the Web, taking in around three billion photos each month. a. Facebook b. Picasa c. Shutterfly d. Flickr e. Photobucket a; Easy

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26. The deep Web refers to a. peer-to-peer file sharing networks that are used to illegally share copyrighted material. b. seemingly innocent websites, containing malware that infects computers. c. sites that cannot be indexed by Google and other search engines. d. networks that allow only mutually trusted peers to participate in file-sharing activities. e. websites that advocate violence toward people of a specific race, ethnicity, or religion. c; Easy 27. Software that is free and whose code can be accessed and potentially modified by anyone is referred to as: a. shared source files b. proprietary software c. available files d. licensed documents e. open source software e; Easy 28. Systems distributed throughout the Internet that help improve the delivery speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users are known as: a. Internet exchange points b. private clouds c. colocation centers d. content delivery networks e. cookies d; Easy 29. The term “social graph” refers to a. user-generated content that is shared by a broad community of users. b. an online community that allows users to establish personal profiles. c. the global mapping of users and organizations, and how they are related. d. the sum total of the economic and social value created by a network of individuals. e. the effects that emerge from individuals who use the same products or services. c; Easy 30. Which of the following factors has helped Facebook build up trust among its users? a. superior technology compared to rivals b. mutual and reciprocal approval of friend requests c. free nature of applications available to users d. low switching costs e. availability of venture capital funds b; Easy 31. Which of the following statements is true of the term “cloud”? a. It refers to a collection of computing resources available for access over the Internet. b. It refers to the phenomenon of adapting products and services for different languages and regional differences. c. It refers to a situation when the value of a product or service increases as the number of its users expands. d. It refers to a situation when others take advantage of a user or a service without providing any sort of reciprocal benefit. e. It refers to a closed network or a single set of services controlled by one dominant firm.

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a; Easy 32. Which of the following statements holds true of network effects? a. It refers to a collection of resources available for access over the Internet. b. It refers to adapting products and services for different languages and regional differences. c. It refers to a situation when the value of a product or service increases as the number of its users expands. d. It refers to a situation when others take advantage of a user or a service without providing any kind of reciprocal benefit. e. It refers to a closed network or a single set of services controlled by one dominant firm. c; Easy 33. How are news feeds a source of value for users on Facebook? a. It fosters the virality of information sharing vital to delivering value from the social graph. b. They are innovative and Facebook is the only social network to offer the feature. c. They are effective in protecting a user’s personal information from others. d. They ensure that a single post will reach all friends and fans. e. They offer cross connectivity for users across several social networking sites. a; Easy 34. Mark Zuckerberg acquired the firm Oculus because a. it would ensure Facebook’s place in being involved on the forefront of computing's evolution. b. Oculus was the only firm in the virtual reality market. c. the acquisition would be a large asset for Facebook bringing in billions in data, customers, and revenue. d. he wanted Facebook to instantly become the industry leader in the virtual reality market. e. he wanted to eliminate Facebook’s competition in the virtual reality market. a; Moderate 35. One of Facebook’s key resources for competitive advantage is: a. technology b. network internalities c. open source software d. high switching costs e. low venture capital investment d; Easy Essay Questions 36. How has Facebook been able to gain a share in the photo-sharing and video-sharing markets at the expense of established firms?

Facebook is gradually turning on features that allow it to leverage its massive user base to encroach on a wide swath of established Internet businesses. Facebook has become the first-choice communication service for the present generation. In the field of photos, Google, Yahoo!, and MySpace spent millions to acquire photo-sharing sites (Picasa, Flickr, and Photobucket, respectively). But to become the web’s leading photo-sharing service, Facebook didn’t acquire anyone. The site simply turned on a substandard photo-sharing feature and quickly became the biggest photo-sharing site on the Web. Facebook users now post over 350 million photos each day.

When Instagram’s growth threatened Facebook’s mobile aspirations, Facebook was big enough to swallow the competitor for a cool billion. And since WhatsApp is now part of Facebook, photos shared on that network are considered within the Facebook empire.

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Easy 37. Describe the two strategic resources that are most critical to Facebook’s competitive advantage.

Facebook’s key resources for competitive advantage are network effects and switching costs. These resources make it extremely difficult for copycat firms to steal market share from Facebook.

There is a strong network effect to Facebook. People are attracted to the service because others they care about are more likely to be there than anywhere else online. Without the network effect Facebook would not exist. And it is because of the network effect that a rival cannot replicate Facebook in any market where it is the biggest player. Even an exact copy of Facebook would be a virtual ghost town with no social graph.

The switching costs for Facebook are also extremely powerful. A user moving to another service would have to recreate his entire social graph. The more time the user spends on the service, the more he invests in his graph and the less likely he is to move to a rival network.

Moderate 38. Facebook has dominated the desktop, but why is mobile, specifically apps offered on smartphones, considered different than browser-based services, potentially limiting the likelihood that browserdominant platforms will also lead with app-centric offerings?

• Smartphone apps can access a user’s address book. This makes it easier to rebuild the social graph for a new mobile service.

• Smartphones apps can access a phone’s media library and can often plug into cloud storage.

This makes it easier to share photos and video than on desktop services.

• Smartphone apps can use push notifications, a huge benefit for increasing engagement. While prior services needed to rely on e-mail notifications or hoped users remembered to return to a website, push notifications from a service instantly say, “Hey, there’s something new here for you to pay attention to,” and offer single-tap re-entry into a service.

• Smartphone apps also get an icon on the home screen. A constant visual reminder for a service.

Single-tap access is also far better than bookmarking or typing in a URL. • While a desktop site can crush a new competitor by adding a feature as a new menu item or icon, on mobile there isn’t the screen real estate for this—another reason mobile seems to favor singlepurpose, specialized apps.

Moderate Fill in the Blanks 39. _____ are systems distributed throughout the Internet (or other network) that help to improve the delivery (and hence loading) speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users.

Content delivery networks; Easy 40. Facebook followed Twitter’s _____ with its own Facebook live video streaming tool.

Periscope; Easy 41. Facebook acquired _____ for $19 billion.

WhatsApp; Easy 42. A strategy whereby a firm with a significant customer base adds a feature to an existing product or service and eliminates the need for any rival, stand-alone platform is known as _____. envelopment; Moderate

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43. Facebook’s storage needs have grown by a factor of _____ in just four years.

4,000; Moderate Section 13.3 True/False Questions 44. In the context of Facebook’s business strategy, the walled garden refers to the connections between individuals and organizations.

False; Easy 45. Most Facebook applications are focused on businesses and educational services.

False; Easy 46. The asking price for Facebook acquisition, WhatsApp, was 2 billion dollars.

False; Moderate 47. Meta attempted to counter the TikTok threat by creating a clone; an app called Lasso.

True; Easy 48. TikTok has more daily usage hours than any of Facebook’s platforms.

True; Easy 49. Facebook’s growing dominance has given rise to the fear that if increasingly large parts of the Web reside inside a single service, innovation, competition, and exchange may suffer.

True; Easy 50. Reels, a feature integrated into Instagram and Facebook, has displaced TikTok as the dominant shortvideo platform.

False; Easy 51. Meta's Reels feature offers enhanced AI tools to surface content that users are likely to be most interested in.

True; Easy 52. Since the launch of Reels, users have been spending less time on the Meta platforms.

False; Easy 53. Cross-posting between Meta platforms allows users to access TikTok features without leaving Instagram or Facebook.

True; Easy Multiple Choice Questions 54. _____ is a term that refers to a closed network or single set of services controlled by one dominant firm. a. Walled garden b. Cloud c. Network effects d. Free rider problem e. Localization

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a; Easy 55. Facebook has offered a system where website operators can choose to accept a user’s Facebook credentials for logging in. Website operators appreciate this feature because a. they can charge users for accessing their content and hence, generate revenue. b. they can afford to spend less on website maintenance. c. users can access websites without creating an account, reducing a potential barrier to customer acquisition. d. Facebook’s advertising programs offer better revenue for viewed content. e. they can associate their offerings with the Facebook brand. c; Moderate Essay Question 56. Explain the advantages of what smartphones are capable of over desktop computers.

The always-with-you phone can tell your location via GPS, iBeacons or other location-based service.

Sensors, your address book, and usage patterns can reveal more. Are you in a store? Is there a deal close by? Where are you usually at this time of day? Is there anything close by that you may be interested in? Are you sitting, walking, or running? What is the weather and traffic like where you’re headed? Who are your friends, and should we contact them? Services like Apple Pay and Google Pay allow not only one-click payment, but also one-click form fill out, making buying easier on mobile.

Custom keyboards, emojis, voice input, and other methods for creative and streamlined input came first and often work better via mobile. And APIs supplied to mobile app developers may be able to reveal or request even more. Savvy innovators don’t lament what is lost with the desktop; they recognize all of the new that can be done on mobile and set to work building disruptive businesses.

Hard 57. Explain the tactics that Facebook used to introduce Threads as a viable competitor to X. Due to distaste for Musk among Twitter users, Facebook rapidly introduced Threads. The timing of its release coupled with former Twitter users looking for a new option helped to fuel adoptions for Threads. Facebook also allowed users to use their existing Instagram logins to remove friction in adopting the new service.

Moderate Fill in the Blanks 58. If increasingly large parts of the Web reside inside a single (and, for the most part, closed) service, innovation, _____, and exchange may suffer. competition; Hard 59. Meta first tried to create a TikTok clone, an app called _____.

Lasso; Easy 60. Meta launched several tools to improve Reels content, including special AI tools for advertisers to quickly create _____ for Reels. ads; Easy 61. Meta announced that since the launch of _____, users were spending almost 24 percent more time on the platform.

Reels; Easy

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62. By 2023, Reels alone was a $10 billion business bringing in as much ad business as _____.

TikTok; Easy Section 13.4 True/False Questions 63. Metaverse is a concept where users experience an immersive, computer-generated environment where they can interact with others.

True; Easy 64. Oculus founder Palmer Luckey launched a Kickstarter campaign to generate interest in his product but failed to meet his initial goal of $250,000, which caused the product to fail before it made it to production.

False; Moderate 65. Facebook Phone and Meta Portal are examples of Meta's unsuccessful consumer electronics efforts.

True; Easy 66. Meta has introduced its second iteration of its smart glasses in a continued partnership with Ray-Ban, which features a smart screen incorporated into the lenses allowing them to be used for AR and VR. False; Easy 67. The term "metaverse" was first coined by Neal Stephenson in his 1992 novel, Snow Crash.

True; Easy 68. The term "metaverse" refers to a specific infrastructure or service provided by several firms.

False; Moderate 69. The metaverse is most commonly associated with environments created using augmented reality headsets.

False; Moderate 70. Predictions suggest that the metaverse could generate between $2.5 and $15 trillion in revenue annually.

True; Easy 71. Meta's Reality Labs, responsible for building the metaverse future, has accumulated $40 billion in losses so far.

True; Easy Multiple Choice Questions 72. Microsoft's largest acquisition in history, justified in part by their hopes to gain “building blocks for the metaverse,” was for which firm? a. KPMG b. Activation Blizzard c. EPIC Games d. Vision Pro e. Oculus b; Moderate

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73. Which of the following is an inconvenience of AR/VR headsets? a. They are heavy and uncomfortable to wear for long periods. b. They are expensive. c. They require a lot of computing power. d. They are inconvenient to have on hand. e. All of the above are true. e; Moderate Essay Question 74. Explain what haptic technology is and provide some examples.

Haptic technology simulates the sense of touch. When a phone vibrates upon a finger press or when a remote control vibrates in response to choices the user is making in the game are some examples of haptic technology.

Moderate 75. Explain the benefits of the Facebook acquisition of Oculus.

Facebook’s resources allow Oculus to build product faster and better and to better weather the onslaught of rivals. In the year after the acquisition, the firm grew its employee base fivefold, from 50 engineers to roughly 250. Facebook provides deep pockets for developing custom, high-resolution optics hardware, and VR audio and offers deep in-house technical expertise as well as the ability to leverage hundreds of thousands of Meta servers.

Moderate Fill in the Blanks 76. Meta’s smart glasses that allow photography and video have always raised _____ concerns. privacy; Easy 77. There isn’t really one “metaverse” like there is an/a _____, and there probably never will be.

Internet or World Wide Web; Easy 78. Most things that are described using the “metaverse” label run using the _____.

Internet's infrastructure; Moderate 79. Nvidia's CEO has said that metaverse GDP will eventually exceed that of “_____.” the physical world; Easy Section 13.5 True/False Questions 80. DALL-E is a term taken from the military where a trained team, unaffiliated with development staff, play the role of adversaries and try to deliberately compromise systems.

False; Easy 81. IDEs are tools used to write software and usually include an editor, debugging tools, a compiler that turns written code into something that a computer can execute, and more.

True; Easy

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82. Meta intends to have Llama AI-powered chatbots available across their messaging platforms including virtual avatars of celebrities who are ready to engage you in all sorts of domain-specific conversations.

True; Easy 83. Meta's lag in AI was in part blamed on the firm's rushed adoption of GPUs. False; Hard Multiple Choice Questions 84. Developers who make applications create _____ that have the potential to add value to Meta beyond what the firm itself provides to its users. a. switching costs b. distribution channels c. one-sided markets d. complementary benefits e. private equity shares d; Hard 85. Which of the following is a tactic that Meta used to make Llama 2 a safer AI? a. They had third-party users perform Red Team exercises. b. They had internal employees perform Red Team exercises. c. They developed Purple Llama tools to make it harder for bad actors to generate harmful code. d. All of the above are true. e. None of the above are true. d; Moderate 86. Meta’s custom ASIC chip helps to: a. improve user experience b. get videos to user devices more quickly c. use less data overall d. improve livestream performance for users e. All of the above are true. e; Moderate Essay Questions 87. What are the advantages, challenges, and risks of Llama 2, including its ability to run on edge devices?

Advantages of Llama 2: • Open and available for free - Meta's decision to make Llama 2 open and available for free, even for commercial use, allows developers with smaller services to access world-class AI technology without financial barriers.

• Customizable for various use cases - Llama 2 is designed as a general large language model (LLM) that can be customized for a wide range of applications beyond chatbot AI, offering flexibility and versatility for developers.

• Ability to run on edge devices - Llama 2 can be downloaded and run on end-user devices, including laptops, enabling local processing and functioning in situations where a reliable Internet connection may not be available or preferable.

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•

Improved security measures - Meta has introduced tools like "Purple Llama" to mitigate potential misuse of Llama 2 for generating harmful code, demonstrating a commitment to enhancing security and responsible AI usage.

Challenges of Llama 2: • Knowledge cutoff - Llama 2 has a knowledge cutoff since it was trained on a specific dataset and isn't continually refined, potentially limiting its ability to provide up-to-date information without additional add-ons.

• Dependency on cloud providers: While Llama 2 can run on end-user devices, its partnership with cloud firms like Microsoft, Amazon AWS, and Hugging Face suggests a level of dependency on these platforms for broader accessibility and support.

Risks of Llama 2: • Misuse by malicious actors - Despite efforts to enhance security and prevent misuse, the open availability of Llama 2 raises concerns about potential access to advanced AI technology by malicious actors, posing risks for generating harmful code or misinformation.

• Limited control over development - As an open-source model, Llama 2 may lack centralized control over its development and usage, potentially leading to divergent implementations and standards across different applications and platforms.

Hard Fill in the Blanks 88. Meta's expressive media universe, or EMU, allows for generative image creation and editing via _____. prompt; Moderate 89. Meta's EMU won't be _____, but will be incorporated into AI tools that developers can access for their own use, unlike Llama 2. open sourced; Easy 90. Facebook developed the popular _____ AI framework, then open-sourced the effort.

PyTorch; Moderate 91. The cutting-edge work of Meta was suddenly overshadowed when OpenAI released _____.

ChatGPT; Easy 92. Meta’s _____ is an AI tool for developers that will auto-complete suggested code and is tuned to work with a variety of programming languages.

CodeCompose; Moderate Section 13.6 True/False Questions 93. Facebook's APIs (application programming interfaces) allowed developers to write applications that could interact with Facebook's features like Feed.

True; Easy

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94. Facebook's revenue share with app vendors for some services involved taking more than half of virtual goods sales.

False; Moderate 95. Mark Zuckerberg successfully recruited the CEO of PayPal, David Marcus, to run Messenger, which has now become one of the largest messaging platforms.

True; Easy 96. Facebook's attempt to launch a gaming app platform within its iOS app was readily accepted by Apple.

False; Easy Multiple Choice Questions 97. What are APIs? a. application programming instructions b. application programming interfaces c. application program interactions d. automated programming instructions e. automated program interactions b; Easy 98. What was the primary purpose of Facebook's publication of APIs at the F8 developers conference? a. to restrict access to user data b. to limit the features available to developers c. to allow developers to create applications that interact with Facebook d. to prevent third-party applications from accessing Facebook e. to increase advertising revenue for Facebook c; Moderate Essay Questions 99.

How has Facebook tried to expand Messenger into a platform?

Messenger has expanded to become a tool for corporations to communicate with customers. Firms can now use Facebook to send customer updates (receipts, shipping information), and can use Messenger for customer support chat. Firms are finding Messenger especially attractive in the wake of Gmail segregating “Promotions and Offers” to a separate tab, a function that often hides timesensitive communication.

Moderate

100. Why is A/B Testing harder on mobile?

Google and Apple release apps and updates to all of their users at once, so experimental feature testing with a subset of users is far more difficult to accomplish on a mobile phone. The app updating process is also usually slower than the instant “it’s here” that occurs when visiting a Web page that automatically loads the latest version on a server, making fixes for app development mistakes more challenging to distribute.

Moderate Fill in the Blanks

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101. _____ can be defined as programming hooks, or guidelines, published by firms that tell other programs how to get a service to perform a task such as send or receive data.

APIs, Application programming interfaces; Easy 102. A closed network or single set of services controlled by one dominant firm is known as a _____. walled garden; Easy 103. _____’s open platform supports digital payments, shopping, gaming, banking, food delivery, Uberstyle taxi service, and open access to third-party developers.

WeChat; Moderate Section 13.7 True/False Questions 104. Every eighteen months, Meta employees are required to leave their teams and work on something different for at least a month.

True; Easy 105. Facebook’s “no-beta” culture seldom tolerates mistakes on the road to progress.

False; Easy 106. Facebook’s Beacon effort was a failure largely because it was “opt-out” instead of “opt-in.”

True; Easy Multiple Choice Questions 107. _____ is considered to be the most persuasive and valuable method of promoting products and services. a. Online advertising b. Vertical integration c. Swiping d. Word of mouth e. Search marketing d; Easy 108. Meta’s algorithms for linking like-minded users and finding what they may be interested in has: a. surfaced conspiracy theories and hate b. allowed for the spread of misinformation around COVID-19 c. given way to fast-spreading conspiracy theories around elections d. All of the above are true. e. None of the above are true. d; Moderate 109. Figures released by Meta showed its AI had a difficult time detecting: a. spam b. terrorist propaganda a c. fake accounts d. hate speech e. adult nudity and sexual activity

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d; Moderate Essay Questions 110. At Meta, members of technical teams are required to spend time on a different team every eighteen months. As a manager at Meta, what can you expect as a result of this rotation?

As the manager, I would expect the rotation on my team to introduce diversity of thought. The new members would help my team come up with new ideas and challenge us to think differently. I would expect to see innovation and an expanding knowledge base amongst my team. Also, the process would keep me on my toes as a leader because I would have to determine how to effectively lead a dynamic team where all members can play to their strengths.

Hard 111. What was the user reaction to Beacon?

User reaction to Beacon was swift and brutal. The commercial activity of Facebook users began showing up without their consent. The biggest problem with Beacon was that it was “opt-out” instead of “opt-in.” Facebook (and its partners) assumed that users would agree to sharing data in their feeds. A pop-up box did appear briefly on most sites supporting Beacon, but it disappeared after a few seconds. Many users, blind to these sorts of alerts, either clicked through or ignored the warnings. There are certainly some purchases you might not want to broadcast to the world.

Moderate Fill in the Blanks 112.

Beacon failed because it was an _____ system that was not thoroughly tested beforehand and because user behavior, expectations, and system procedures were not completely taken into account. opt-out; Moderate 113.

Meta’s initial estimate of the number of _____ was far less than the over 2 billion of them it would eventually disable and remove. fake news accounts; Moderate

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Published by: FlatWorld

© 2025 by FlatWorld. All rights reserved. Your use of this work is subject to the License Agreement available here catalog.flatworldknowledge.com/legal. No part of this work may be used, modified, or reproduced in any form or by any means except as expressly permitted under the License Agreement.

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Chapter 14 Rent the Runway: Entrepreneurs Expanding an Industry by Blending Tech with Fashion Section 14.1 True/False Questions 1. Rent the Runway rentals are often only 25 percent of a dress’s retail price.

False; Easy 2. Customers who are on the fence about a choice can choose a second style as a backup for an additional fee.

True; Easy 3. Rent the Runway has a resale business where it will sell clothes to subscribers through the firm’s own site and retailers that include Amazon, Nordstrom Rack, Saks Fifth Avenue, and ThredUp. True; Easy Multiple Choice Questions 4. Which of the following did not help create demand for Rent the Runway? a. Designers struggled to expand their market to reach younger consumers. b. Many customers were interested in high-end fashion but couldn’t afford it. c. Flash sales sites were on the rise, creating tremendous interest in the flash-sales model of Rent the Runway. d. Social media was increasing pressure on women to wear something new. e. All of the above are true. c; Moderate 5. The _____ of Rent the Runway’s operations is what cuts down on competition. a. secrecy b. complexity c. cost d. time consuming nature e. All of the above are true. b; Moderate Essay Question 6. How does the Rent the Runway model compare with firms like Uber and Spotify?

These firms also change our relationship with product ownership. Uber is used by many urban dwellers to replace the need for purchasing an automobile. Spotify’s rental scheme replaces music purchases. And Rent the Runway replaces high-end fashion purchase with rental.

Moderate Fill in the Blanks 7.

According to CEO Jenn Hyman, Rent the Runway is a “fashion company with a _____.” technology soul; Moderate

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8. The term _____ is used in the business press to refer to startups valued at $1 billion or more. unicorn; Easy Section 14.2 True/False Questions 9. Determining product-market fit is often very expensive for entrepreneurs, since it amounts, essentially, to fully building out a firm’s website and operational model.

False; Easy 10. The halo effect from a positive experience renting a designer’s more daring dresses may prompt a woman to purchase more frequently worn staples like a little black cocktail dress, leather leggings, or accessories.

True; Easy 11. Time magazine has called Rent the Runway one of the country’s 25 Best Websites.

False; Easy Multiple Choice Questions 12. Which of the following is not a reason why Rent the Runway appeals to designers? a. The firm introduces high-end designer brands to new customers. b. The firm brings in younger customers, averaging about a decade younger than department store customers. c. Most Rent the Runway customers rent brands they’ve never bought before. d. Some designers have used Rent the Runway to test new looks. e. All of the above are reasons why Rent the Runway appeals to designers. e; Moderate 13. Select the equation that is true of most firms with a profitable customer base: a. Customer Acquisition Costs < CLV = NPV (future customer profits) b. CLV < Customer Acquisition Costs = NPV (future customer profits) c. NPV (future customer profits) < CLV = Customer Acquisition Costs d. Customer Acquisition Costs < MVP = Product-Market Fit e. CLV < Customer Acquisition Costs = MVP a; Moderate 14. Rent the Runway started their business by offering minimum variable products instead of building a website or logistics system because a. they did not have a technical team to build out the infrastructure. b. they needed to generate revenue to invest in the technology infrastructure. c. they wanted to validate assumptions about product-market fit. d. they had limited inventory and decided to start with a small offering. e. All of the above are true. c; Moderate 15. Most e-commerce shoppers buy brands they are already familiar with; however, ____ percent of Rent the Runway customers rent brands they’ve never bought before. a. 75 b. 78

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c. 98 d. 50 e. None of the above are true. c; Moderate Fill in the Blanks 16. The term _____ conveys the degree to which a product satisfies market demand. Successful efforts should be desired by customers, and scale into large, profitable businesses. product-market fit; Moderate 17. The term _____ is often used in entrepreneurship and new product development and refers to a barebones offering that allows entrepreneurs and product developers to collect customer feedback and to validate concepts and assumptions that underlie a business idea. minimum viable product or MVP; Moderate 18. The term _____ refers to the current value of future profits that will accrue from acquired customers. customer lifetime value or CLV (sometimes also abbreviated as CLTV or LTV); Easy 19. _____ refers to the value of future cash flows discounted into today’s dollars (it is discounted because a dollar today should be worth more in the future assuming inflation or the potential to earn money on the dollar if it is invested).

Net present value or NPV; Moderate 20. The term _____ refers to the rate at which consumers leave a product or service. churn rate; Easy 21. _____ refers to the amount of money a firm spends to convince a customer to buy (or in the case of free products, try or use) a product or service.

Customer acquisition costs; Easy 22. The term _____ refers to when founders of a company alter their product offering, business model, or target market in hopes of crafting a more viable business. pivot; Easy Essay Questions 23. Describe the experiments Rent the Runway’s founders conducted to verify their idea even before building out their website and operations model.

One test involved purchasing 100 dresses and setting up a popup rental shop for college students.

Later tests investigated how much customers were willing to pay and verified that women were willing to rent from a photo even if they couldn’t try the product on first (in true MVP style, tests were conducted with PDF photos rather than building a full-blown website). All this helped provide confidence in their concept and armed the founders to make a persuading pitch to investors.

Moderate 24. Creating a business often involves convincing suppliers to participate in your new offering. While Rent the Runway had proven customer interest, some designers had initial concerns about Jenn Hyman and Jenny Fleiss’s firm. Briefly describe supplier concern.

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Designers needed to be convinced it was worth taking a risk on two women with an unprofitable fledgling business and little direct domain experience. Some designers were initially concerned that rental would dilute their brand. Many also feared that rental would cannibalize retail sales.

Easy 25. Describe why Rent the Runway’s customers have an especially strong lifetime customer value?

Rent the Runway customers are, on average, younger than typical department store customers. The young customer who gets hooked on the fashion rental experience may very well become a Rent the Runway lifer, delivering up what marketers refer to as high customer lifetime value. Someone who has a good first experience at a prom rental will move on to college events, graduate to weddings and engagement parties, use the firm for holiday parties or society events, she may rent a bridal dress, and use the site for high-end maternity fashions when baby is on the way.

Moderate 26. Describe why CLV is especially difficult for new firms with new models to calculate.

Firms (especially new ones) don’t really know how long a customer will remain with the firm (i.e., churn rate), how much it costs to maintain a customer, what is a reasonable rate for discounting the value of future profits into today’s dollars, and how customer purchases will change over time, especially as tastes and product offerings evolve.

Moderate Section 14.3 True/False Questions 27. Using the Rent the Runway app to manage a fashion queue on one’s phone has proven to be a time intensive commitment for busy professionals.

False; Easy 28. While Rent the Runway started with dress rental, the firm’s biggest business is now in subscription.

True; Easy Multiple Choice Questions 29. Rent the Runway makes financial sense for customers because a. the average American woman buys almost 70 pieces of clothing per year. b. the average American woman where half of her clothes only one time. c. certain clothing items are only needed seasonally. d. All of the above are true. e. None of the above are true. d; Moderate 30. Rent the Runway subscribers report shopping ____ percent less than nonsubscribers, but when they do shop, they’re buying _____. a. 20; higher quality items b. 40; lower quality items c. 50; higher quality items d. 60; lower quality items e. 80; higher quality items e; Moderate

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Fill in the Blanks 31. Prior to launching subscriptions, Rent the Runway execs made _____ with scores of women to discuss fashion and their closets. field visits; Moderate 32. Rent the Runway benefits from a deeper relationship with the customer, which generate more interactions and _____ to analyze. data; Moderate Essay Questions 33. What is Rent the Runway Unlimited?

Rent the Runway Unlimited is a flexible, subscription-based ownership model for accessories and clothing. For $159 a month, women create a queue of requested items. Customers choose the items they want first and can keep them as long as they’d like. Send an item back and choose the next item they want.

Easy 34. Explain how Rent the Runway Unlimited subscription service works.

Rent the Runway Unlimited, allows customers to continually rotate four fashion items from a massive selection of tops, skirts, dresses, and accessories, and over 450 brands for $159 a month. Build a queue of favorites and send back an item when you want something else or purchase an item you want to keep.

Moderate Section 14.4 True/False Questions 35. Rent the Runway’s mobile app provides over 40 percent of firm traffic.

True; Easy 36. Rent the Runway sees a much lower conversion rate from friend referrals than from other marketing methods.

False; Easy Multiple Choice Questions 37. Which of the following is not true about mobile app development? a. Many experimental features and A/B tests are more easily conducted on the Web than on mobile. b. Updates and bug fixes can take longer to reach mobile users than users of a firm’s web product. c. Mobile apps are considered far easier to develop than websites. In fact, most managers can create robust apps using drag-and-drop tools. d. A well-designed app can increase an e-commerce site’s customer engagement since customers always have the “store” in their pocket. e. All of the above are true. c; Easy

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38. At Rent the Runway, customers arriving at the site via _____ media have a much higher conversion rate than customers arriving via _____ media. a. search, social b. paid, social c. referral, earned d. earned, paid e. paid, earned d; Moderate Fill in the Blanks 39. The concept of “_____” refers to positive influence created when someone finds out that others are doing something. social proof; Moderate 40. Rent the Runway saw a 75 percent higher _____ from friend referrals compared to other marketing methods. conversion rate; Easy Essay Question 41. Explain how social proof contributed to the network effects of Rent the Runway.

Rent the Runway is a technology enhanced high-end fashion rental firm. Their success depends on customer experience. A positive customer service experience can generate repeat customers and referrals. Since Rent the Runway offers experience, it is important for prospective customers to envision the outcome of using the service. As satisfied customers shared their experiences, referrals began to convert into customers. Social proof was in effect because the conversion took place when customer networks were positively influenced by learning from existing customers. Prospective customers were more inclined to use the service once they found out others were using it, resulting in network effects. In addition, social media extended its reach and built the community. Customers shared photos, comments, and personal details such as measurements that served as a shopping tool for others. Sharing positive experiences can lead to high customer lifetime value.

Moderate Section 14.5 True/False Questions 42. Rent the Runway has recently incorporated AI in search, so that users can use natural language to narrow down fashion search in a more conversational manner.

True; Easy 43. Vague terms that mean something to humans but not conventional search will not be able to be used by custom Rent the Runway AI models built on the firm’s massive, proprietary data.

False; Easy 44. Rent the Runway will incorporate AI into a text-based customer concierge service for providing additional customer support.

True; Easy

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45. Rent the Runways’s chief supply chain officer is an Amazon vet and oversees a one-of-a-kind orchestration of luxury good selection, cleaning, repair, packaging, shipping, return, and inspection that’s executed over and over again.

True; Easy Fill in the Blanks 46. Like Uber, the airline industry, hotels, and other service providers with limited inventory and varying demand, Rent the Runway also leverages analytics for _____. demand pricing; Moderate 47. _____ is a systems development method in which requirements and solutions rapidly and iteratively evolve through collaboration between self-organizing, cross-functional teams, rather than a top-down, centrally managed, schedule-driven approach.

Agile software development; Hard 48. Rent the Runway uses a _____ technology method because it allows them to introduce software updates when needed instead of waiting for managed schedules. continuous deployment; Moderate 49. _____ is a software development approach where an organization’s developers release products, features, and updates in shorter cycles, when ready, rather than wait for centrally managed delivery schedules.

Continuous deployment; Moderate 50. Rent the Runway used to offer _____ returns in subscriber plans, but returns are paid for by the company, and faster-cycling customers are less profitable. unlimited; Easy 51. Key data insights helped Rent the Runway focus on profitability and avoiding promotions that might attract _____ customers. lower margin; Moderate Essay Questions 52. Describe the Agile software development methodology and explain why this methodology was the best choice for Rent the Runway.

The Agile approach is a software development methodology that leverages cross-functional, selforganizing teams designed to rapidly leverage business knowledge and software development skills.

Software is developed and updated as needed and is deployed on a continuous basis. Agile is a good fit for Rent the Runway because the business model is heavily reliant upon technology, and an agile approach allows regular updates to support and expand the infrastructure. Continuous deployment is important because it allows technology to keep up with the growing firm.

Moderate 53. How can data analytics inform operations at Rent the Runway?

Analytics have helped inform the length of a rental period, expectations on turn-around time, slack inventory needed to cover for any dresses not returned on time, methods that can encourage on-time returns, selection of optimal shipping partners, and the locations of the firm’s warehouse and stores.

Moderate

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Section 14.6 True/False Questions 54. Since product focus is so important for a startup, Rent the Runway has resisted the urge to offer anything other than high-end dress rental.

False; Easy 55. Rent the Runway’s logistics and operations are so efficient that many items arriving by 8 a.m. can be turned around in twelve hours for same-day send-out.

True; Easy 56. Rent the Runway’s primary warehouse is the largest single dry-cleaning operation in the United States.

True; Easy 57. W-Hotels struck a deal with Rent the Runway to allow customers to pay a fee and have up to four items delivered to their room to be there upon arrival.

True; Easy 58. Rent the Runway one-time competitor, Le Tote, aggressively bought Lord & Taylor as a plan to compete but has since gone bankrupt.

True; Moderate 59. Nuuly still far exceeds Rent the Runway in social media followers and other metrics, indicating brand reach, awareness, and exposure.

False; Easy 60. Rent the Runway has embedded RFID tags in 1.5 million items, tracking garments throughout the distribution center journey.

True; Easy 61. Rent the Runway is suing Urban Outfitters, claiming the firm stole RTR trade secrets when developing the Nuuly service.

False; Easy 62. While some fast-growing startup companies experience crises as they negotiate large-scale logistics, Rent the Runway’s business model has thus far allowed it to avoid mistakes.

False; Easy Essay Questions 63. Why does “overbuilding” warehouse capacity make sense for Rent the Runway?

A large distribution facility provides expansion capacity for growth and acts as a staging area for experimenting with new ideas and product lines.

Easy 64. Describe the partnerships Rent the Runway launched with other clothing retailers for selling pre-worn Rent the Runway fashions. What firms were those partnerships with?

The resale site ThredUp, founded by a classmate of Hyman’s, launched “Revive by Rent the Runway” to provide an additional channel. Nordstrom Rack and Saks Fifth Avenue have similar “Revive”

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collections, as well. But perhaps the most notable retail partnership is with Amazon. The Rent the Runway Amazon Fashion storefront carries pre-worn fashion merchandise from dozens of brands that normally aren’t carried on Amazon.

Moderate Fill in the Blanks 65. Rent the Runway’s receiving staff scans the outside of _____and a message pop up on-screen, immediately determining if an item needs to go out right away. returned envelopes; Moderate 66. Rent the Runway’s leadership elected to expand its _____ and _____ rather than harvest early profits. infrastructure, systems; Hard Section 14.7 True/False Questions 67. Project Entrepreneur, created by Facebook, aims to help female entrepreneurs build high-growth, high-impact businesses.

False; Moderate 68. The Rent the Runway Unlimited items subscription plan was a success due to the number of customers that churned through a high volume of product.

False; Easy Multiple Choice Questions 69. Rent the Runway's rental and subscription models were a huge success until the COVID-19 pandemic brought them to a screeching halt in 2020. To weather the decrease in business, Hymen a. continued operating at the same capacity in hopes that the economy would turn around quickly. b. made drastic cuts to staff and operation with the risk that she would be unprepared if the economy rebounded. c. dissolved only the retail stores since store traffic slowed to a halt. d. adjusted the subscription model to meet the needs of individuals working from home. e. None of the above are true. b; Moderate 70. Hyman and team noted that roughly 90 percent of the activity in retail locations was associated with customers picking up or dropping off garments. This is an example of: a. the first/last mile problem b. customer satisfaction c. brand awareness d. the location problem e. customer awareness a; Easy 71. Which of the following are examples of companies that women have founded or co-founded? a. Houzz and Stitch Fix b. Bumble and Canva c. Eventbrite and Poshmark

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d. Slideshare and Birchbox e. All of the above are true. e; Moderate Essay Questions 72. How is Rent the Runway working to encourage entrepreneurship among women?

The firm has partnered with investment bank UBS to run Project Entrepreneur, a venture competition that aims to help female entrepreneurs build high-growth, high-impact businesses. All managers, technologists, and would-be startup captains can learn from the Rent the Runway story, but helping to mentor and inspire broader participation in innovation is a legacy from the firm’s founders that boldly stands alongside crafting the new colossus of couture.

Moderate 73. What are examples of things Rent the Runway is doing to attract women executives and technologists to work for them?

The female-friendly and mentor-rich environment of Rent the Runway gives the firm a recruiting edge. They also offer benefits to both salaried workers and hourly workers, including expanded parental, paternity, and sick leave.

Easy

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Chapter 15 Understanding Software: A Primer for Managers Section 15.1 True/False Questions 1. Managers who understand software are better equipped to harness the possibilities and impact of technology.

True; Easy 2. Operating systems are computer programs that have a set of precise instructions that tell computer hardware what to do.

False; Easy Multiple Choice Questions 3. Computing hardware refers to a. a precise set of instructions that orchestrate the functioning of the computer. b. the physical components of information technology. c. the mechanism through which users interact with a computer. d. a program that fulfills the requests of a client. e. handheld computing devices meant largely for mobile use outside an office setting. b; Easy 4. Which of the following is an example of computer hardware? a. malware b. operating system c. application d. platform e. a video game console e; Moderate 5. _____ refers to a precise set of instructions that tell the computer hardware what to do. a. A mnemonic b. An input device c. An output device d. Software e. Desktop d; Easy 6. If a computer system can be equated to a layered cake, which of the following combinations represents the computer system in the bottom-to-top order? a. hardware, operating system, application, user b. user, application, hardware, operating system c. user, operating system, hardware, application d. application, operating system, hardware, user e. operating system, hardware, user, application a; Moderate

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7. Which of the following is an operating system? a. Linux b. USB 2.0 c. Microsoft Access d. Notepad e. Wi-Fi a; Easy Essay Question 8. What are the managerial implications with respect to information systems?

Managers who understand software can better understand the possibilities and impact of technology.

They can make better decisions regarding the strategic value of IT and the potential for technologydriven savings. They can appreciate the challenges, costs, security vulnerabilities, legal and compliance issues, and limitations involved in developing and deploying technology solutions. And since firms that cannot communicate will struggle to work in tandem, managers who understand software can appreciate the key role that technology plays in partnerships, merger and acquisitions, and firm valuation. The flexibility of the software and hardware components gives computers the customization options that managers and businesses demand. Understanding how the layers relate to each other helps managers make better decisions on what options are important to their unique business needs, can influence what they buy, and may have implications for everything from competitiveness to cost overruns to security breaches.

Moderate Fill in the Blanks 9. When referring to the “software layer cake” model, Microsoft Office, Angry Birds, and MySQL are all _____. applications; Easy 10. When referring to the “software layer cake” model, Android, Windows, and iOS are all _____. operating systems; Easy Section 15.2 True/False Questions 11. Specialty devices like video game consoles, television set-top boxes, Kindles, and smart appliances typically do not need an operating system.

False; Easy 12. The varied and heterogeneous look, feel, and functionality that operating systems enforce across various programs help make it easier for users to learn new software.

False; Moderate Multiple Choice Questions 13. Android is a software product developed by Google that allows cell phone manufacturers to control hardware and establishes standards for developing and executing applications on its platform.

Android is thus an example of a(n): a. operating system

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b. programming language c. user interface d. distributed system e. database management system a; Easy 14. Microsoft’s Xbox operating system provides Xbox programmers with a set of common standards to use to access controllers, the Kinect motion sensor, play sounds, draw graphics, save files, and more.

Without this, games would: a. be more reliable b. be a lot easier to write c. cost more d. look same e. not be restricted to just Microsoft’s platforms c; Moderate 15. Firmware refers to a. computer hardware elements visible to the human eye. b. control software stored on removable discs. c. control software stored on hard drives. d. control software stored on nonvolatile memory chips. e. computer hardware elements invisible to the human eye. d; Easy 16. Software (often on firmware) designed to make physical products and devices “smarter” by doing things like sharing usage information, helping diagnose problems, indicating maintenance schedules, providing alerts, or enabling devices to take orders from other systems is referred to as: a. desktop software programs b. enterprise resource planning systems c. embedded systems d. multi-threaded e. application servers c; Easy Essay Question 17. What is an operating system? Describe its significance for computing devices.

An operating system provides a common set of controls for managing computer hardware, making it easier for users to interact with computers and for programmers to write application software.

Most modern OS provide graphical user interface (UI) items like scroll bars and menus that enable users to interact with the computer system. Files are saved to the hardware of a hard drive or other storage device. Most OS also include control panels, desktop file management, and other support programs to work directly with hardware elements like storage devices, displays, printers, and networking equipment. The consistent look, feel, and functionality that operating systems enforce across various programs help make it easier for users to learn new software, which reduces training costs and operator error.

Moderate Fill in the Blanks 18. Control programs stored on nonvolatile memory chips are sometimes referred to as _____.

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firmware; Easy 19. Scroll bars and menus displayed on the hardware of the computer display are examples of a graphical _____. user interface; Easy 20. The _____uses embedded systems in its products to warn its service centers when the firm’s elevators, escalators, and moving walkways need maintenance or repair.

Otis Elevator Company; Easy 21. Low-level command firmware is sometimes called the _____.

BIOS, Base Input/Output System; Easy 22. Apple’s new iOS _____ features include AI-based door detection for the visually impaired, and live transcription for the deaf. accessibility; Easy Section 15.3 True/False Questions 23. The more application software that is available for a platform, the less valuable it potentially becomes.

False; Moderate 24. Desktop applications are typically designed for a single user.

True; Easy 25. Some firms write their own enterprise software from scratch as it can save time and reduce development costs.

False; Easy 26. A company does not have to install all of the modules of an ERP suite, but it might add functions over time.

True; Moderate 27. A firm can mix and match components, linking software the firm has written with modules purchased from different enterprise software vendors.

True; Moderate 28. ERP systems and enterprise software programs should be ideally configured to use different database systems to avoid the possibility of data redundancy.

False; Moderate 29. Standardizing business processes in software that others can buy means that those functions are difficult for competitors to match.

False; Easy 30. A firm’s information systems can influence the likelihood of partnering with other firms and its attractiveness as a merger or acquisition target.

True; Easy

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31. Enterprise resource planning software has proven popular in part because the standardization these products impose makes them exceptionally easy to deploy.

False; Easy Multiple Choice Questions 32. Which of the following is true of the difference between operating systems and application software? a. Operating systems control the hardware, while application software performs the work that users and firms are directly interested in accomplishing. b. Operating systems support tasks performed by a single user, while application software support tasks performed by multiple users. c. Operating systems control the hardware elements visible to the human eye, while application software controls the hardware elements invisible to the human eye. d. Operating systems are software packages that integrate the many functions of a business, while application software works with a minimal degree of overlap. e. Operating systems are software packages offered by a third party, while application software contains programs that are designed in-house. a; Moderate 33. _____ perform the work that users and firms are directly interested in accomplishing and can be thought of as places where a user’s real work is done. a. Emulators b. Applications c. Platforms d. Embedded systems e. Operating systems b; Easy 34. Which of the following is an example of application software? a. MS Word b. Mac OS c. Linux d. MS Windows e. Android a; Moderate 35. _____ refers to applications installed on a personal computer, typically to support tasks performed by a single user. a. Enterprise software b. Server program c. Desktop software d. Software as a service e. Database management program c; Easy 36. Which of the following functions is likely to be performed by enterprise software? a. Word processing b. Spreadsheet accounting c. making PowerPoint presentations d. inventory tracking

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e. Internet browsing d; Easy 37. _____ refers to a software package that integrates the many functions of a business, such as accounting, finance, inventory management, and human resources. a. Supply chain management b. Desktop software c. Customer relationship management d. Database management system e. Enterprise resource planning e; Easy 38. Systems that use data created by other systems to provide reporting and analysis for organizational decision-making are called _____ systems. a. application server b. supply chain management c. enterprise resource management d. business intelligence e. customer relationship management d; Easy 39. What are the implications for firms that do not have common database systems with consistent formats across their enterprise? a. They can save infrastructural and operational costs. b. They can expect to leverage economies of scale by serving more customers. c. They can hedge against the risk of data redundancy. d. They struggle to manage their value chain efficiently. e. They profit from the aggregation of diverse data sets and enhance their repositories. d; Moderate Essay Question 40. What is application software? What are the categories of application software that are available?

Provide brief descriptions for each category with the aid of examples.

Application software performs the work that users and firms are directly interested in accomplishing.

The more application software that is available for a platform, the more valuable it potentially becomes.

Application software is usually categorized into: Desktop software—Applications installed on a personal computer, typically supporting tasks performed by a single user. Word processors, Web browsers, spreadsheets, and presentation software are typical examples for desktop software.

Enterprise software—Applications that address the needs of multiple simultaneous users in an organization or work group. Most companies run various forms of enterprise software programs to keep track of their inventory, record sales, manage payments to suppliers, cut employee paychecks, and handle other functions. The most common types of enterprise software include enterprise resource planning (ERP) software, customer relationship management (CRM) systems, supply chain management (SCM) systems, and business intelligence (BI) systems.

Moderate Fill in the Blanks

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41. _____ refers to applications that address the needs of multiple users throughout an organization or work group.

Enterprise software; Easy 42. _____ systems help a firm manage aspects of its value chain, from the flow of raw materials into the firm, through delivery of finished products and services at the point-of-consumption.

Supply chain management; Moderate 43. Avon spent $125 million rolling out a standard _____ for sales reps to use that didn’t consider how reps actually sell.

ERP system or enterprise resource planning system; Moderate 44. Customer _____ management systems are used to support customer-related sales and marketing activities. relationship; Easy 45. _____ are software for creating, maintaining, and manipulating data.

Database management systems or DBMS; Moderate Section 15.4 True/False Questions 46. Expedia used APIs to increase the distribution of travel products that it sells, relying on partners to plug into its technology and inventory.

True; Easy 47. A PC, laptop, or any other small computer can be set up to run server software.

True; Easy 48. Communication between people results in time saving, cost reductions, and fewer errors than communication between computers.

False; Easy 49. Organizations that have created a robust set of Web services and APIs around their processes and procedures are often said to have a service-independent architecture.

False; Easy 50. Most messages sent between Web services are coded in XML. True; Easy 51. The rise of the Internet and distributed computing has led to an explosion in security losses by organizations worldwide.

True; Easy Multiple Choice Questions 52. Which of the following is not true about potential benefits to firms that create platforms? a. making their products and services more useful b. widening the reach of firms and products c. creating switching costs

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d. enhancing network effects e. All of the above are true. e; Easy 53. _____ are software systems designed to support interoperable machine-to-machine interaction over a network. a. Scripting languages b. Client servers c. Web services d. Caches e. Business intelligence systems c; Moderate 54. _____ is a set of standards for exchanging messages containing formatted data between computer applications. a. EDI b. DBMS c. CPM d. SCM e. ERP a; Easy 55. What is the most common function performed by electronic data interchanges? a. housing and serving business logic for use and reuse by multiple electronic applications b. app store downloads and the serving of other types of rich media c. providing electronic reporting and analysis for organizational decision making d. integrating various electronic functions of a business, such as accounting, finance, inventory management, and human resources e. sending electronic equivalents of structured documents between different organizations e; Moderate 56. Why does United use the Expedia Affiliate Network to offer hotel and other travel bookings to their customers? a. United does not have to invest in their own travel booking system and they get a cut of Expedia sales. b. Although costly, using the Expedia API Network improves overall customer satisfaction. c. Using APIs ensures that United can always offer their customers the ability to book hotels and other travel arrangements. d. United generates revenue when customers book hotels and lodging on their app or website. e. All of the above are true. a; Hard 57. Which of the following is(are) being used to replace the older EDI for specifying data standards? a. JavaScript object notation b. Hypertext Transfer Protocol c. Extensible Markup Language d. JavaScript object notation and Hypertext Transfer Protocol e. JavaScript object notation and Extensible Markup Language e; Moderate Essay Questions

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58. What is service-oriented architecture (SOA)? Explain how an SOA approach improved business at Expedia.

Service-oriented architecture exist when an organization builds a strong set of Web services around their processes and procedures commonly referred to as a platform. The Expedia Affiliate Network uses APIs to allow partner sites to offer their services to customers. For example, United Airlines leveraged Expedia’s Affiliate Network to offer customers the opportunity to reserve lodging and transportation on top of their flight arrangements. United enhanced the customer experience by providing a one-stop shop for their travel needs. United did this without having to build a complete travel booking system. In addition, they received a portion of the revenue earned on each booking.

United and other firms have expanded Expedia’s reach and contributed to more than $2 billion in added sales.

Hard 59. What is distributed computing? Briefly explain the various concepts used in conjunction with distributed computing.

Distributed computing is the concept of computers in different locations communicating with one another. It can yield enormous efficiencies in speed, error reduction, and cost savings and can create entirely new ways of doing business.

Client-server computing is a method of distributed computing where one program (a client) makes a request to be fulfilled by another program (a server). Server is a tricky term and is sometimes used to refer to hardware. While server-class hardware refers to more powerful computers designed to support multiple users, just about any PC or notebook can be configured to run server software. Web servers serve up websites and can perform some scripting.

Most firms serve complex business logic from an application server. Isolating a system’s logic in three or more layers (presentation or user interface, business logic, and database) can allow a firm flexibility in maintenance, reusability, and in handling upgrades.

Web services and APIs refer to pieces of code, and the request/response standards so that this code be summoned by other programs to perform a task (the term API is more in vogue today, so expect to hear that more). Web services make it easier to link applications as distributed systems and can make it easier for firms to link their systems across organizations.

Popular messaging standards include JSON and XML. Sending messages between machines instead of physical documents can speed processes, drastically cut the cost of transactions, and reduce errors.

Moderate Fill in the Blanks 60. Firms that invite other organizations to integrate with their systems via Web services and APIs are often thought of as turning their products into _____. platforms; Moderate 61. A(n) _____ is a software program that makes requests of a server program. client; Easy 62. The Expedia Affiliate Network uses _____ to share their inventory with partners. application programming interfaces (or APIs); Easy 63. _____ are programming hooks or guidelines, published by organizations tell how other programs can get a service to perform a task, such as send or receive data.

Application programming interfaces (or APIs); Easy

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64. The Expedia Affiliate Network offers _____that allow partner firms to integrate Expedia's technology and travel inventory into their own websites and apps. application programming interfaces (or APIs); Moderate 65. _____ is a popular technology standard often used to format data when being sent or received via APIs. JavaScript Object Notation (or JSON); Moderate Section 15.5 True/False Questions 66. Java programmers write code with specific commands for different operating systems, such as Windows, Mac OS X, and Linux.

False; Easy 67. Java is not preferred for programming fast-executing, native desktop applications.

True; Easy 68. Scripting languages are interpreted within their applications, thereby making them faster than the development efforts found in most commercial software.

False; Moderate 69. In recent years, there has been a noticeable decline in LCNC environments.

False; Easy Multiple Choice Questions 70. _____ are development tools that are highly graphical and allow programs to be developed by drawing interfaces on screen and dragging and dropping interfaces and other logic components. a. Low code/no code (LCNC) environments b. C programming languages c. Integrated development environments d. Scripting languages e. Compiler development environments a; Moderate 71. _____ provide the standards, syntax, statements, and instructions for writing computer software. a. Operating systems b. Application servers c. Database management systems d. Platforms e. Programming languages e; Easy 72. A(n) _____ is an application that includes an editor, a debugger, and a compiler, among other tools. a. programming language b. integrated development environment c. operating system d. Extensible Markup Language

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e. enterprise resource planning system b; Easy 73. This process of converting a code into machine-readable form is known as: a. integrating b. assimilating c. debugging d. sequencing e. compiling e; Moderate 74. Which of the following characteristics is said to be Java’s biggest selling point? a. open source nature b. interpretability c. platform independence d. service-oriented architecture e. data portability c; Easy 75. Which of the following is true of scripting languages? a. They are often designed to be interpreted within their applications. b. They are compiled to run directly by a microprocessor. c. They typically execute outside an application. d. They are faster than the development efforts found in most commercial software. e. Most of these languages are complicated with respect to user friendliness. a; Easy 76. Java is not optimized to take advantage of interface elements specific to the Mac or Windows operating systems. As a result a. Java is not platform independent. b. Java lacks a structured programming style. c. Java is unsuitable for desktop applications. d. Java code that is compiled for the native OS and processor is slower than code running through a JVM interpreter. e. Java code has to be compiled and then interpreted, before being executed by the processor. c; Moderate 77. LLMs can generate: a. passable answers for all sorts of questions b. homework essays c. rap lyrics d. code e. All of the above are true. e; Easy Essay Question 78. What is Java programming language? What are the advantages and disadvantages associated with using Java?

Java is a programming language initially developed by Sun Microsystems. Java was initially designed so that programmers didn’t write code with specific operating system commands (say for

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Windows, Mac OS X, or Linux). Instead, they use special Java commands to control their user interface or interact with the display and other hardware. Java programs can run on any computer that has a Java Virtual Machine (JVM), a software layer that interprets Java code so that it can be understood by the operating system and processor of a given computer. Java’s platform independence—the ability for developers to “write once, run everywhere”—is its biggest selling point. Many websites execute Java applets to run the animation you might see in advertisements or game. Java has also been deployed on billions of mobile phones worldwide and is popular among enterprise programmers who want to be sure their programs can scale from smaller hardware up to high-end supercomputers. As long as the machine receiving the Java code has a JVM, then the Java application should run.

However, Java has not been popular for desktop applications. Since Java isn’t optimized to take advantage of interface elements specific to Mac or Windows, most Java desktop applications look clunky and unnatural. Java code that runs through the JVM interpreter is also slower than code compiled for the native OS and processor that makes up a platform.

Moderate Fill in the Blanks 79. Some programming languages are extended by _____. These are libraries, templates, and extensions that simplify and standardize common tasks, speeding software development, reducing errors, and prompting reuse. Examples of popular frameworks used to develop websites include Rails (for Ruby), Django (for Python), AngularJS (for JavaScript), and ASP.NET (pronounced “ay-ess-pee dot net”). frameworks; Moderate 80. Programming tools that execute within an application are called _____. scripting languages; Easy 81. Adafruit has created an open source extension to the Python language called_____.

CircuitPython; Moderate 82. The vital managerial skill of understanding how _____ executes will help managers to better evaluate whether generated code may lead to security vulnerabilities. code; Moderate Section 15.6 True/False Questions 83. Scrum defines functions, or roles (for management and development, meetings, or ceremonies), and how the process is documented and tracked, or artifacts.

True; Moderate 84. A scrum master represents the “voice of the customer,” advocates for the needs of the organization, helps in setting requirements, and is ultimately held accountable for deliverables.

False; Moderate Multiple Choice Questions 85. What are software development methodologies? a. Methods to divide tasks related to software creation and deployment into tasks targeted at building better products with stronger product management guidelines and techniques.

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b. An expansion of the scope of a project. c. Developing work continually and iteratively, with a goal of more frequent product rollouts and constant improvement across smaller components of the larger project. d. An approach to organizing and managing agile projects that breaks deliverables into “sprints.” e. None of the above are true. a; Easy 86. As an IT leader in a fast-growing technology start-up, which software development methodology would you implement to ensure your firm can make adjustments when necessary? a. v-shaped b. agile c. spiral d. waterfall e. ascending b; Easy 87. Which of the following is not a component of the scrum approach? a. roles b. reviews c. artifacts d. ceremonies e. All of the above are components of the scrum approach. b; Easy Fill in the Blanks 88. The _____ method (the classic, but increasingly out-of-favor approach) is a relatively linear sequential approach to software development (and other projects). waterfall; Easy 89. The use of upfront documentation can help prevent _____, or expansion of the scope of a project. feature creep; Easy 90. The _____ is the process for planning, creating, testing, and deploying an information system. software development lifecycle (or SDLC); Moderate 91. Scrum is an approach to organizing and managing agile projects that breaks deliverables into “_____” delivered in one- to six-week increments by teams of fewer than ten. sprints; Moderate Essay Questions 92. Suppose you are a manager at a fast-growing technology start-up. Explain the advantages of implementing agile methodology in your organization.

Agile is a modern software development methodology that leverages cross-functional, self-organizing teams designed to rapidly leverage business knowledge and software development skills. As the manager of a fast-growing technology start-up, it is important to leverage the skills of all employees.

Cross-functional teams will bring multiple perspectives to the software development process and produce a knowledge base that can support innovation. The team can regularly develop and deploy software to best meet the existing needs of the business and adjust with the rapidly growing technology-driven firm.

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Moderate 93. What kind of development is replacing the waterfall method? How does it target the weaknesses of waterfall?

The agile development approach (and variants) has become a dominant software development methodology. Agile targets the weaknesses of waterfall by tackling work continually and iteratively, with a goal of more frequent product rollouts and constant improvement across smaller components of the larger project. Agile focuses on customer needs and organizational goals. Teams tackle smaller, targeted tasks with the hope of building products more quickly, with greater user input.

Goals can evolve as needs unfold and new priorities come to the fore. Agile is popular due to its speed and flexibility.

Moderate Section 15.7 True/False Questions 94. The care and feeding of information systems is usually simple and inexpensive.

False; Easy 95. Most firms spend 70 to 80 percent of their information systems (IS) budgets just to keep their systems running.

True; Easy 96. Information systems development projects fail at a startlingly high rate.

True; Easy 97. Achieving success in a project rarely lies in the strength of technology alone.

True; Easy Multiple Choice Questions 98. _____ refers to the practice of ensuring that an organization’s systems operate within required legal constraints, and organizational obligations. a. Security b. Compliance c. Integration d. Parallelism e. Immunity b; Easy 99. Which of the following statements is true about information systems? a. Most firms spend a huge portion of their information technology budgets on training and system security. b. New programs should be thoroughly tested across the range of a firm’s hardware after deployment. c. Purchase, configuration, and licensing costs for packaged software account for most information technology expenses of a firm. d. Firms need to vigilantly manage the moving target of computer security issues. e. Total cost of ownership of information systems is often a redundant concept when making technology investment decisions.

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d; Moderate 100. Which of the following is one of the reasons for the failure of technology projects? a. inadequate testing of systems before deployment b. insufficient expenditure on information systems c. use of matured technology d. prolonged project periods e. disallowing “feature creep” during development a; Moderate Essay Questions 101. What activities should a firm undertake to create and support its information systems? What does total cost of ownership refer to? What is its significance in a managerial context?

Managers should recognize that there are a whole host of costs that are associated with creating and supporting an organization’s information systems. These include a lot more than the programming costs for custom software as well as purchase, configuration, and licensing costs for packaged software.

Firms need to constantly engage in a host of activities to support the system that may also include the following: • providing training and end user support • collecting and relaying comments for system improvements • auditing systems to ensure compliance (i.e., that the system operates within the firm’s legal constraints and industry obligations) • providing regular backup of critical data • planning for redundancy and disaster recovery in case of an outage • vigilantly managing the moving target of computer security issues Firms spend 70 to 80 percent of their information systems (IS) budgets just to keep their systems running. The price tag and complexity of these tasks can push some managers to think of technology as being a cost sink rather than a strategic resource. These tasks are often collectively referred to as the total cost of ownership (TCO) of an information system. Understanding TCO is critical when making technology investment decisions. TCO is also a major driving force behind the massive tech industry changes.

Hard 102. What are some of the reasons for the high rate of failure of technology projects? What are the measures that are taken to counter project failure?

Project postmortems often point to a combination of technical, project management, and business decision blunders. The most common factors include the following: • Poor goal setting, including a lack of clarity or ability to achieve goals • Weak project leadership and project management • Non-existent or limited executive commitment • Poorly forecast resource needs and inadequate access to required resources • Project complexity • “Scope creep” or changing and increasing requirements during project development • Ineffective project reporting and poor communication across constituents that include the project customer, end users, developers, and others in firm and IS operations • Inappropriate technical choices, including immature technical offerings • Inadequate testing and deployment procedures that should catch flaws before major rollout • Internal and external politics, squabbling, and misalignment of priorities among stakeholders

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Time and delivery pressures that encourage corner cutting, ethical lapses, or other design weaknesses Managers need to understand the complexity involved in their technology investments, and that achieving success rarely lies with the strength of the technology alone. Information systems organizations can work to implement procedures to improve the overall quality of their development practices. Mechanisms for quality improvement include capability maturity model integration (CMMI), which gauge an organization’s process maturity and capability in areas critical to developing and deploying technology projects and provides a carefully chosen set of best practices and guidelines to assist quality and process improvement.

Firms are also well served to leverage established project planning and software development methodologies that outline critical business processes and stages when executing large-scale software development projects. When methodologies are applied to projects that are framed with clear business goals and business metrics, and that engage committed executive leadership, success rates can improve dramatically.

Hard Fill in the Blanks 103. _____ is a process-improvement approach that assists in assessing the maturity, quality, and development of certain organizational business processes and suggests steps for their improvement.

Capability maturity model integration (CMMI); Moderate 104. Total cost of ownership is an economic measure of the full cost of owning a _____ including direct costs, such as purchase price, plus indirect costs, such as training, support, and maintenance. product; Moderate Section 15.8 True/False Questions 105.

Volkswagon’s executives at their Wolfsberg headquarters saw “beating Tesla” at EVs as a priority.

True; Easy 106.

Tesla was started by a software entrepreneur with extensive experience at traditional car companies.

False; Easy 107.

Many of Volkswagon’s EV rollout gaffes were common to other major software rollouts, but they were exacerbated by standard practices in the auto industry.

True; Easy Multiple Choice Questions 108.

After the first quarter of 2023, Tesla EVs were outselling VW: a. in every color except black b. by nearly three to one c. two to one d. in the United States, but not in Germany e. in Japan, but not in the United States b; Moderate

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109.

VW's first large-scale foray into the EV market was the: a. Bug b. Jetta c. Atlas d. iD4 e. iD3 e; Easy 110.

EVs software requires at least ten times as much _____ as cars with regular combustion engines. a. regulation b. AI inputs c. code d. All of the above are true. e. None of the above are true. c; Easy Essay Questions 111. Discuss the challenges faced by Volkswagen in integrating software components into its electric vehicles. What lessons can companies learn from VW's experience regarding software integration in product development?

Volkswagen encountered significant challenges in integrating software components into its EVs, exacerbated by its reliance on multiple vendors and incompatible software. With various vendors providing initially incompatible components, VW faced integration issues, particularly with consumer-demanded features like Apple's CarPlay. Lessons from VW's experience include the importance of careful vendor selection, internal coordination, and in-house software expertise to ensure smooth integration and avoid delays in product development.

Hard 112. How do Volkswagen's software integration struggles highlight the need for effective management, workforce skills development, and strategic decision-making in navigating technological transitions?

Volkswagen's software integration struggles underscore broader challenges in technology adoption, particularly in traditional industries like automotive. These challenges emphasize the need for effective management in plotting technology roadmaps, workforce skills development to address evolving tech requirements, and strategic decision-making regarding outsourcing critical tech platforms. VW's experience serves as a cautionary tale for businesses, highlighting the importance of internal expertise, collaboration, and strategic planning in successfully implementing technological innovations.

Hard Fill in the Blanks 113. Companies are desperately trying to build a _____ that can figure out how to craft a set of technology assets that result in great products, and, even better, that yield competitive advantage. workforce; Moderate 114. A shift in worldwide _____ to promote electric vehicle use also helped increase EV demand. legislation; Moderate

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115. Because software updates need to be distributed reliably and automatically, EV devices need to be connected to a _____ infrastructure. communication; Moderate

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Chapter 16 Software in Flux: Open Source, Cloud, Virtualized, and App-Driven Shifts Section 16.1 True/False Questions 1. The marginal cost to produce an additional copy of a software product is effectively zero.

True; Easy 2. With the advent of cloud computing and SaaS, smaller firms no longer have access to the kinds of sophisticated computing power they had access to in the past.

False; Easy Multiple Choice Questions 3. The cost of producing an additional unit of a product is known as its: a. isocost b. transaction cost c. marginal cost d. redundancy cost e. implicit cost c; Easy 4. The software business is extremely profitable compared to the hardware business because a. the marginal cost to produce an additional copy of a software product is effectively zero. b. of the lack of market price regulations and guidelines. c. software producers serve niche businesses sectors with high profit margins. d. software development is a one-time process with no upgrade costs. e. software firms benefit from special tax exemptions that aid profitability. a; Easy 5. _____ is free and anyone can look at and potentially modify the code. a. Social software b. Proprietary software c. Licensed software d. Open source software e. Software as a service d; Easy Essay Question 6. What is open source software? How is it different from the conventional offerings of proprietary software?

Open source software (OSS) is defined as software that is free and where anyone can look at and potentially modify the code. While most OSS can be downloaded for free over the Internet, it’s also “free” as in liberated. The source code for OSS products is openly shared. Anyone can look at the source code, change it, and even redistribute it, provided the modified software continues to remain open and free. This openness is in stark contrast to the practice of conventional software firms, who treat their intellectual property as closely guarded secrets, and who almost never provide the source code for their commercial software products. While conventional software firms make money by

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selling their software products, the major source of income for OSS developers is through selling support and consulting services.

Moderate 7. Explain virtualization and provide some benefits of using this technology.

Virtualization is a type of software technology that allows a single computer (or cluster of connected computers) to function as if it were several different computers, each running its own operating system and software. Virtualization software underpins most cloud computing efforts, and can make computing more efficient, cost-effective, and scalable.

Moderate Fill in the Blanks 8. _____ refers to a form of cloud computing where a firm subscribes to third-party software and receives a service that is delivered online.

Software as a service (SaaS); Easy 9. Cloud computing involves replacing computing hardware or software with services provided over the _____.

Internet; Easy Section 16.2 True/False Questions 10. Conventional software firms treat their intellectual property as closely guarded secrets and almost never provide the source code for their commercial software products.

True; Easy 11. Some of the largest technology companies now support open source software initiatives.

True; Easy 12. A slang derogatory term for an uninformed or unskilled person is “greenie.”

False; Easy 13. A software stack is the pieces of software used to build an information system.

True; Easy 14. In client-server computing, the front-end is the client-facing code that contains the user interface while the back-end is server-side code that users do not typically see.

True; Easy Multiple Choice Questions 15. Which of the following was an outdated notion regarding open source software and has been shown to be inaccurate? a. Open source software is free and its code is available for anyone to look at and potentially modify. b. Open source software code can be changed and redistributed, provided the modified software remains open and free. c. Open source software is to technology what capitalism is to economics.

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d. The majority of persons who work on open source projects are paid by commercially motivated employers. e. Open source is fueled on the contributions of loners tooling away for the glory of contributing to better code. e; Moderate 16. Which of the following statements relating to open source software is true? a. The flagship OSS product is the Linux operating system, now available on all scales of computing devices. b. Open source software is available for anyone to download from the Internet, but the code should not be modified. c. The vast majority of people who work on efforts like Linux are now paid to do so by non-profit organizations such as the Linux foundation. d. The source code for open source software may be modified and redistributed, provided it is priced reasonably and part of the proceeds is contributed to the Linux Foundation. e. Major hardware firms no longer employ paid staff contributing to open source projects. a; Moderate 17. Which of the following sets of software represents the constituents of the LAMP stack? a. LimeWire, Acrobat Reader, Mozilla, Python b. Linux, Apache, MySQL, Perl c. Lingo, Afnix, Moby, PPL d. Linux, Android, Mac OS X, PHP e. LimeWire, AppleScript, MATLAB, Photoshop b; Moderate 18. The LAMP stack of open source products is used a. as a template for most operating systems. b. to provide guidelines for programming databases. c. in debugging most of the software tools available today. d. as a global set of standards for software product improvements and official releases. e. to power many of the Internet’s most popular websites. e; Moderate 19. The MEAN acronym that represents popular tools used to build distributed, mostly Web-based applications includes MongoDB as a database, Express.js for creating server-side API code, AngularJS as a JavaScript programming framework and: a. NoSQL.js as the server b. Nginx.js as the server c. Node.js as the server d. n00b.js as the server e. None of the above are correct. c; Moderate Fill in the Blanks 20. _____ is the flagship open source product.

Linux OS; Easy 21. The _____ of open source products is used to power many of the Internet’s most popular websites.

LAMP stack; Easy

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22. Using a software _____ allows software developers to write faster, more reliable, and more standard code because they don't have to re-create common components. framework; Easy Section 16.3 True/False Questions 23. While large groups of individuals work on key OSS projects, such as the Linux operating system, some widely used efforts have had fewer developers, creating concerns over quality and security True; Easy 24. Scalability allows a firm to scale from startup to blue chip without having to significantly rewrite its code.

True; Easy 25. One of the drawbacks of open source software is that it cannot be easily migrated to more powerful computers as circumstances dictate.

False; Easy 26. Google, ExxonMobil, Walmart, Goldman Sachs, and Meta are all firms that released their own OSS toolkits.

True; Easy Multiple Choice Questions 27. Technology products with particularly strong security features are said to be: a. integrated b. virtualized c. hardened d. scalable e. white swans c; Easy 28. The scalability of a software product is defined as the a. capability to continue operations even if a component fails. b. long-term market viability of a software product. c. ability to take advantage of complementary products developed for a prior generation of technology. d. ability to be easily expanded to manage workload increases. e. ability to replace a technically superior product upon market inception. d; Moderate 29. Open source software products often have fewer bugs than their commercial counterparts because of the a. large number of persons who have looked at the code. b. stringent quality checks undertaken by the original developers. c. emphasis placed on technological superiority of OSS products. d. relatively poorer standards of commercially programmed software. e. pyramidal programming practice followed by OSS developers.

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a; Easy 30. Vendors who use open source as part of their product offerings can expect to bring new products to the market faster because a. open source products have lower product lifecycles. b. the large number of people who look at the code help speed up product development. c. they can skip whole segments of the software development process. d. open source software programming is based on simpler code than commercial products. e. the open source nature of the products ensures they don’t have to conduct debugging tests. c; Easy 31. Which of the following was considered a contributor to vulnerabilities in the OpenSSL security product, known as the Heartbleed bug? a. Overseas hackers modified the open source code and uploaded a compromise version to the Internet, which became widely used. b. Few developers were working on the project, so the ideal that “given enough eyeballs, all bugs are shallow” wasn’t met with OpenSSL. c. Developers failed to see a major incompatibility with versions of the Windows operating system and Chrome browser. d. There was no commercial entity overseeing the project. e. A Linux update was not coordinated with OpenSSL, leaving a gaping hole when the two products were used together to transmit content over the Internet. b; Moderate 32. Widely cited benefits of using Open Source Software include: a. low cost b. interoperability c. improved security and auditing d. system scalability e. All of the above are benefits of using OSS. e; Easy Essay Questions 33. You have recently taken a technology role at a firm that is currently using legacy commercial software. Make a case for why the firm should consider switching to an open source alternative.

After reviewing the full technology infrastructure of the organization, I have determined ways that we could improve processes, leverage new technologies, and cost savings. Implementing an open source technology solution will streamline processes with our existing fragmented platform. We have several legacy systems that can be retired with the use of open source solutions. New technologies will allow us to expand our offerings and reach more customers. There will be some costs associated with support, upgrades for the open source solution, and a learning curve for our team. However, associated cost is considerably less than maintaining our current system.

Moderate 34. Why do firms prefer to use open source software products over conventional software?

There are many reasons why firms choose open source products over commercial alternatives: Cost—Free alternatives to costly commercial code can be a tremendous motivator, particularly since conventional software often requires customers to pay for every copy used and to pay more for software that runs on increasingly powerful hardware.

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Reliability—The more people who look at a program’s code, the greater the likelihood that an error will be caught and corrected. The open source community harnesses the power of legions of programmers who are constantly trawling OSS products, looking to squash bugs and improve product quality. And studies have shown that the quality of popular OSS products outperforms proprietary commercial competitors.

Security—OSS advocates also argue that by allowing “many eyes” to examine the code, the security vulnerabilities of open source products come to light more quickly and can be addressed with greater speed and reliability. Many OSS vendors offer “security focused” (sometimes called “hardened”) versions of their products. These can include systems that monitor the integrity of an OSS distribution, checking file size and other indicators to be sure that code has not been modified to include a back door, malicious routines, or other vulnerabilities.

Scalability—Many major OSS efforts can run on everything from cheap commodity hardware to highend supercomputing. Scalability allows a firm to scale from startup to blue chip without having to significantly rewrite their code, potentially saving big on software development costs. Not only can many forms of OSS be migrated to more powerful hardware, software like Linux have also been optimized to balance a server’s workload among a large number of machines working in tandem.

Agility and time to market—Vendors who use OSS as part of product offerings may be able to skip whole segments of the software development process, allowing new products to reach the market faster than if the entire software system had to be developed from scratch, in-house.

Hard Fill in the Blanks 35. Firms that deploy open source software using common standards benefit from _____ due to standardized communication and being able to use similar file formats and software components across hardware. interoperability; Moderate 36. _____ is a term used to describe technology products that contain particularly strong security features.

Security-focused; Easy Section 16.4 True/False Questions 37. Just about every type of commercial product has an open source equivalent.

True; Easy 38. One area where open source software contributions have been virtually non-existent is in tools to support the massive file systems used in so-called Big Data projects.

False; Easy Multiple Choice Question 39. Less popular open source products are not likely to attract the community of users and contributors necessary to help improve these products over time. This situation reiterates the belief that _____ are a key to success. a. proprietary products b. brand strategies

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c. network effects d. technology expenses e. advertising campaigns c; Easy Fill in the Blank 40. _____ is the name of the popular service where you’ll find millions of open source projects hosted and shared.

GitHub; Moderate Section 16.5 True/False Questions 41. Linux is one of the most used operating systems in desktop computers, but it can be found only in a tiny fraction of mobile phones, and consumer electronics.

False; Easy 42. Firms adopting OSS may be at risk if they distribute code and aren’t aware of the licensing implications.

True; Easy Multiple Choice Questions 43. Oracle, a firm that sells commercial ERP and database products, provides Linux for free, selling highmargin Linux support contracts for as much as five hundred thousand dollars. Oracle’s motivation for this lies in a. accelerating the shift of open source software towards a proprietary regime. b. using open source software to fuel sales of hardware. c. impoverishing other open source developers and furthering its own proprietary offerings. d. using open source software to wean customers away from competitors. e. protecting itself from the risks of distributing code while unaware of legal implications. d; Moderate 44. Which of the following is one of the sources of revenue for open source vendors? a. licensing OSS for incorporation into subsequent open source products b. selling open source products at prices well below commercial products c. marketing versions of open source software masked as proprietary software d. claiming royalties on software based on open source code e. selling support and consulting services e; Moderate 45. All of the costs associated with the design, development, testing, implementation, documentation, training, and maintenance of a software system are collectively termed as: a. total cost of ownership b. economies of scale c. economic value added d. return on investment e. cost to company a; Easy

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Essay Question 46. How has open source software had a disproportionate impact on the IT market?

Open source is a sixty-billion-dollar industry, but it has a disproportionate impact on the trilliondollar IT market. By lowering the cost of computing, open source efforts make more computing options accessible to smaller firms. More reliable, secure computing also lowers costs for all users.

OSS also diverts funds that firms would otherwise spend on fixed costs, like operating systems and databases, so that these funds can be spent on innovation or other more competitive initiatives. This can also help firms bring products and services to market faster. Widely used open source products have also created unified standards (e.g. in the pre-Linux days, nearly every major hardware manufacturer made its own, incompatible version of the Unix operating system).

Moderate Fill in the Blank 47. For consumers in most industrialized nations, the added complexity and _____ availability of desktop Linux just it isn’t worth the one to two hundred dollars saved by giving up Windows. limited desktop application; Hard Section 16.6 True/False Questions 48. SaaS and the utility computing-style efforts differ widely in terms of the benefits and risks they offer.

False; Easy 49. With SaaS, firms get the most basic offerings but can also do the most customization, putting their own tools (operating systems, databases, programming languages) on top.

False; Moderate Multiple Choice Questions 50. Which of the following refers to a variant of utility computing where vendors provide the operating system and supporting software like database management systems but where client firms write their own code? a. platform as a service b. host service vendor c. software as a service d. application service provider e. infrastructure as a service a; Moderate 51. Cloud computing refers to a. replacing computing resources with services provided over the Internet. b. a technology that can make a single computer behave like many separate computers. c. designing computers with many microprocessors that work together, simultaneously, to solve problems. d. designing microprocessors with two or more calculating processor cores on the same piece of silicon.

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e. manufacturing semiconductors as a stack of multiple, interconnected layers instead of in one flat plane. a; Easy Fill in the Blank 52. Infrastructure as a service (IaaS) offers an organization an alternative to buying its own physical hardware, giving them the most basic offerings but also allowing for the most _____. customization; Easy Section 16.7 True/False Questions 53. Firms using SaaS products can dramatically lower several costs associated with the care and feeding of their information systems.

True; Easy 54. Firms that adopt software as a service actually buy a system’s software and hardware, so these systems become a fixed operating expense.

False; Moderate Multiple Choice Questions 55. Which of the following is true about cloud computing? a. Cloud firms require their customers to move all of their software off site and onto the cloud in order to meet legal requirements demanded by U.S. regulators and European regulators. b. Cloud computing is not as green as traditional computing. c. Cloud infrastructure is often located in warehouse-style buildings designed for computers, not people. d. Cloud firms are usually crammed inside inefficiently cooled downtown high-rises. e. Cloud computing firms often have data centers that are not designed to pool and efficiently manage computing resources. c; Moderate 56. Which of the following is true of software as a service (SaaS)? a. Firms spend more using SaaS. b. It refers to software that is made available by a third party online. c. Due to US and European legal requirements, there are no accounting and corporate finance implications for SaaS in these regions. d. SaaS firms face diseconomies of scale. e. SaaS vendors are less attuned to customer needs. b; Moderate 57. Vendors frequently sign _____ with their customers to ensure a guaranteed uptime and define their ability to meet demand spikes. a. infrastructure provider contracts b. host vendor terms c. open source contracts d. service level agreements e. requests for information

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d; Easy 58. Products and services designed to target a specific industry are known as: a. mature markets b. commodities c. vertical niches d. parity products e. unified markets c; Easy 59. Which of the following is one of the characteristics of using software as a service model? a. longer deployment times b. scalable systems c. fixed operating expenses d. heightened financial risk e. higher maintenance costs b; Easy 60. Which of the following is one of the benefits enjoyed by SaaS vendors? a. development across multiple platforms b. limits accessibility to resources by just about anybody c. lower distribution costs d. lower hardware maintenance costs e. faster product deployment c; Moderate 61. Which of the following is a reason that several firms that adopted cloud computing early have not seen the savings that they had hoped for? a. duplicated services b. invested in unneeded services c. didn’t monitor services d. All of the above are true. e. None of the above are true. d; Moderate Essay Questions 62. Explain the benefits a firm can expect if they switch from traditional software to SaaS. Switching to SaaS can offer considerable benefits to a firm. There are typically large upfront costs when purchasing and installing software packages. Switching to SaaS will save firms on software, hardware, staff, licenses, and maintenance contracts. SaaS is also highly scalable and aligns with variance in usage. In addition, quality may increase because SaaS vendors work with many clients to resolve challenges regularly. Finally, SaaS software is accessible wherever the user has access to the Internet, and it eliminates the costs associated with piracy.

Moderate 63. Define SaaS. How do firms using SaaS products lower several costs associated with their information systems?

Software as a service (SaaS) refers to software that is made available by a third party online. The terms ASP (application service provider) or HSV (hosted software vendor) are also used to identify this type of offering. SaaS is potentially a very big deal. Firms using SaaS products can dramatically

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lower several costs associated with the care and feeding of their information systems, including software licenses, server hardware, system maintenance, and IT staff. Most SaaS firms earn money via a usage-based pricing model akin to a monthly subscription. Others offer free services that are supported by advertising, while others promote the sale of upgraded or premium versions for additional fees.

Organizations that adopt SaaS forgo the large upfront costs of buying and installing software packages, which can run into hundreds of thousands to millions of dollars for large firms. Firms also stand to save the added costs for the IT staff needed to run these systems. Firms that adopt SaaS never actually buy a system’s software and hardware, so these systems become a variable operating expense. This flexibility helps mitigate the financial risks associated with making a large capital investment in information systems.

Moderate 64. What are benefits afforded to vendors by SaaS? Vendors of SaaS products benefit by • limiting development to a single platform, instead of having to create versions for different operating systems.

• tightening feedback loop with clients, helping fuel innovation and responsiveness.

• instantly deploying bug fixes and product enhancements for all users.

• lowering distribution costs.

• providing accessibility to anyone with an Internet connection.

• greatly reducing software piracy.

Moderate Fill in the Blank 65. Many firms that adopted _____ early have not seen the expected savings they had hoped for. cloud computing; Easy Section 16.8 True/False Questions 66. Many SaaS vendors have improved system customization options and integration with standard software packages.

True; Easy 67. SaaS offerings usually work well when the bulk of computing happens at the client end of a distributed system.

False; Moderate 68. Consumerization of corporate technology stifles employee creativity.

False; Easy Multiple Choice Questions 69. One important thing that managers should understand about SaaS is that a. many of these vendors will not last in the market. b. they will have continuous access to services even if internet is an issue.

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c. laws and regulations are the same when working with international vendors. d. there will be less consumerization of technology. e. All of the above are true. a; Moderate 70. One of the risks associated with SaaS is the a. dependence on a single vendor. b. inability to migrate to new versions of software. c. reduced reliance on a network connection. d. costs associated with storing large amounts of data in-house. e. user interface of Web-based software being more sophisticated than desktop alternatives. a; Moderate 71. Employees, at their own initiative, can go to SocialText or Google Sites and set up a wiki, WordPress to start blogging, or subscribe to a SaaS offering like SalesForce.com, all without corporate oversight and approval. This _____ of technology is one of the challenges associated with the adoption of SaaS models. a. crowdsourcing b. disintermediation c. integration d. scalability e. consumerization e; Moderate Essay Questions 72. What are the risks associated with software as a service?

The risks associated with SaaS include • dependence on a single vendor.

• concern over the long-term viability of partner firms.

• users may be forced to migrate to new versions—possibly incurring unforeseen training costs and shifts in operating procedures.

• reliance on a network connection, which may be slower, less stable, and less secure.

• data assets stored off-site—with the potential for security and legal concerns.

• limited configuration, customization, and system integration options compared to packaged software or alternatives developed in house.

• the user interface of Web-based software is often less sophisticated and lacks the richness of most desktop alternatives.

• ease of adoption may lead to pockets of unauthorized IT being used throughout an organization.

Moderate Fill in the Blank 73. SaaS users may be forced to _____ to new versions, which could mean incurring unforeseen training costs and shifts in operating procedures. migrate; Moderate Section 16.9

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True/False Questions 74. Firms that want significant control over the operating system and applications they put “in the cloud” should choose an IaaS service over a SaaS offering.

True; Easy 75. The third deployment model for cloud computing is called the hybrid cloud.

True; Easy 76. Bank of America decided against building its own private cloud in order to save money.

False; Easy 77. Microsoft has invested $2 billion in Cruise, a firm also backed by GM and Honda.

True; Easy Multiple Choice Questions 78. Installing a complex set of an organization’s legacy systems on someone else’s hardware can be a brutal challenge. For that reason, we can expect most cloud computing efforts to focus on a. new software development projects. b. bettering the options for old software. c. improving the quality of existing code. d. migrating to a set of robust and well-defined standards. e. the development of large pools of in-house specially suited hardware. a; Easy 79. Cloud vendors that are hosting hardware, operating system, database, and other software, which clients can then use to build their own applications, are said to be providing: a. software as a service b. hardware as a service c. platform as a service d. service-oriented architecture e. service level agreement a; Easy 80. Cloud computing is not typically suited for situations a. involving offloading of expensive computing tasks. b. where complex legacy systems have to be ported. c. with no existing regulatory compliance issues. d. where pricing economics favor buying over renting. e. characterized by limited-time tasks. b; Moderate 81. _____ is a term used to describe unpredictable, but highly impactful events. a. Straddling b. Viral trojans c. Black swans d. Power plays e. Flash outs c; Easy

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82. Which of the following is not one of the three major cloud-computing service models? a. SaaS b. CaaS c. PaaS d. IaaS e. None of the above are major cloud-computing service models. b; Easy Fill in the Blanks 83. The term _____ describes the use of cloud computing to provide excess capacity during periods of spiking demand. cloudbursting; Easy 84. In _____, clients can select their own operating systems, development environments, underlying applications like databases, or other software packages, while the cloud firm usually manages the infrastructure. infrastructure as a service (IaaS); Moderate 85. Google Cloud, Amazon AWS, and Microsoft Azure offer tools allowing clients to choose their own programming languages and other applications, while also offering a subset of additional services, from database tools to AI modules. These efforts are often described by the phrase _____. platform as a service (PaaS); Moderate 86. AWS outages not only stopped work at Amazon and subsidiaries like Whole Foods, they also caused Roombas to stop and the education software Canvas to be unavailable since these and many other firms were _____-dependent.

AWS; Moderate 87. Use of a _____ means you are relying on a third-party provider to house all components in an information system. public cloud; Moderate Section 16.10 True/False Questions 88. Even by lowering the cost to access powerful systems and software, barriers to entry continue to increase.

False; Easy 89. When chipmaker Nvidia’s sales exploded as major cloud and AI firms purchased its chips for machine learning functions, the company vaulted into the rarified air of the trillion-dollar market cap.

True; Easy Multiple Choice Question 90. Which of the following statements regarding cloud computing is true? a. The shift to cloud computing does not alter the margin structure for many in the computing industry.

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b. Cloud computing has led to decreased hardware and software sales at many firms, while increasing service expenses. c. Cloud computing discourages innovation and therefore changes the desired skills mix and job outlook for IS workers. d. Cloud computing has raised the barriers for entry to new entrants to the information technology markets. e. Cloud computing has shifted power towards venture firms in those industries that had previously needed little startup capital. b; Moderate Essay Question 91. Explain how cloud computing’s impact across industries is proving to be broad and significant.

Although still a relatively recent phenomenon, cloud computing’s impact across industries is already proving to be broad and significant.

• Clouds can lower barriers to entry in an industry, making it easier for startups to launch and smaller firms to leverage the backing of powerful technology.

• Clouds may also lower the amount of capital a firm needs to launch a business, shifting power away from venture firms in those industries that had previously needed more VC money.

• Clouds can shift resources out of capital spending and into profitability and innovation.

• Hardware and software sales may drop as cloud use increases, while service revenues will increase.

• Cloud computing can accelerate innovation and therefore changes the desired skills mix and job outlook for IS workers. Tech skills in data center operations, support, and maintenance may shrink as a smaller number of vendors consolidate these functions.

• The market for expensive, high margin, sever hardware is threatened by companies moving applications to the cloud instead of investing in hardware.

Moderate Fill in the Blanks 92. Many firms have developed rapid-deployment _____ modules that are preconfigured and packed inside shipping containers. server farm; Moderate 93. Microsoft is developing a _____ to its cloud platform’s server hardware, recycling components for reuse or safe end-of-life after their use in the server farm is done. circular approach; Moderate Section 16.11 True/False Questions 94. Virtualization is unsuitable for use on desktop applications.

False; Easy 95. Many firms manage Docker and other container environments within an existing software layer, with Kubernetes being the largest player in this space.

True; Easy

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Multiple Choice Questions 96. A server running _____ can create smaller compartments in memory that each behave as a separate computer with its own operating system and resources. a. private clouds b. virtualization software c. genetic algorithms d. neural networks e. open source software b; Easy 97. _____ allow(s) a server to run what amounts to a copy of a PC—OS, applications, and all—and simply deliver an image of what’s executing to a PC or other connected device. a. Virtual desktops b. Cloudbursting c. Hardware clouds d. Vertical niches e. Black swans a; Easy Fill in the Blank 98. The phrase _____ refers to a type of virtualization that allows applications to share an operating system, but it still lets resources be shuttled around from low-powered hardware to massive pools of servers if capacity spikes. containers; Moderate Essay Questions 99. What is virtualization? What are the benefits afforded to firms that employ virtualization?

Virtualization software allows one computing device to function as many. The most sophisticated products also make it easy for organizations to scale computing requirements across several servers.

Virtualization software can lower a firm’s hardware needs, save energy, and boost scalability. Data center virtualization software is at the heart of many so-called private clouds, scalable corporate data centers, as well as certain public efforts. Virtualization also works on the desktop, allowing multiple operating systems (Mac OS X, Linux, Windows) to run simultaneously on the same platform.

Virtualization software can increase data center utilization to 80 percent or more. While virtualization is used to make public cloud computing happen, it can also be used in-house to create a firm’s own private cloud.

Moderate Section 16.12 True/False Questions 100. App stores can lower distribution costs compared to packaged software alternatives.

True; Easy 101. App stores are exclusively focused on smart-phone markets.

False; Easy

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Multiple Choice Questions 102. Which of the following is not true about apps and the app economy? a. App store access is limited to industrialized nations with large smartphone user populations. b. Apps have been criticized as creating consumer switching costs vs. browser-based alternatives. c. App stores are “always open.” d. Apps developed for one platform typically cannot be used on another platform. e. Apps have been vital to the rise of several high-valued efforts, including Uber, Instagram, and WhatsApp. a; Easy 103. App developers often lament the _____ created within apps where data is more tightly controlled by a service provider and where firms must comply to the usage policies of the platform provided. a. network effects b. SaaS revenues c. security vulnerabilities d. walled garden e. user interface d; Easy Essay Questions 104. List some of the advantages that app developers enjoy when compared with browser-based or packaged software development.

Apps have several advantages over packaged software and browser-based alternatives. The app store is always open, and apps are distributed at a fraction of the cost of conventional packaged software, completely cutting out costs associated with printing discs, boxes, and shipping products to retailers.

Apps offer richer, more interactive interface options than simple web-based applications. Most smartphones also allow apps to integrate with the OS and send out direct message to users, whereas the Web provides no such OS-level integration. Many products will upgrade apps in the background, ensuring that users regularly have the latest features and bug-squashing editions on their devices, further lowering software maintenance costs. And several businesses simply would not exist without apps to engage with customers. Uber, Instagram, and WhatsApp are among the billion-dollar firms that exist because of smartphones and the rapid proliferation of apps. Innovative retailers such as the high-fashion rental firm Rent the Runway are also leveraging apps to capture impulse orders when consumers have a top-of-mind task, not when they return to a desktop. And new offerings that leverage tools (such as the app-engaging, location-based technology, iBeacon) are allowing venues to guide consumers to deals, products, and even parking spaces.

Moderate 105. What are some of the disadvantages when comparing app-based software to browser-based services?

Apps also have software development disadvantages when compared to browser-based services. If a bug is detected, code served to users via a browser is available next time they visit the site, while apps need to be downloaded and installed, potentially allowing harmful bugs and security flaws to linger in the wild. Browser-based applications can also perform A/B testing more easily, sending different versions to the browsers of different users. Smartphone users would require an app that can serve either option, again requiring a software update. Others lament the walled garden created within apps where data is more tightly controlled by a service provider and where firms must comply to the usage policies of the platform provided (e.g., Apple, Google, Amazon, or Microsoft). Finally, while

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the app store allows a firm, in theory, to reach millions, crowded app stores increasingly make it more challenging for a potential star to rise above the din of the crowd and get recognized.

Moderate Section 16.13 True/False Questions 106. Most organizations do not opt for IT configurations that are purely in-house, packaged, or SaaS models.

True; Easy 107. A manager should take a vendor’s reputation and financial position into consideration while making an IT outsourcing decision.

True; Easy 108. Software automating proprietary processes considered vital to an organization’s competitive advantage are often excellent candidates for running via SaaS efforts, since SaaS vendors have additional expertise on organizational functions gleaned from knowledge of working with a vast number of customers.

False; Easy Multiple Choice Questions 109. Which of the following should an organization consider when making make/buy/rent decisions for a given software system? a. competitive advantage b. legal and compliance c. skills, expertise, and labor d. cost and time e. All of the above are true. e; Easy Essay Questions 110. What are the factors to be considered by managers when making a make, buy, or rent decision to satisfy the IT needs of their firms?

The make, buy, or rent decision may apply on a case-by-case basis that might be evaluated by firm, division, project, or project component. Firm and industry dynamics may change in a way that causes firms to reassess earlier decisions, or to alter the direction of new initiatives. Factors that managers should consider when making a make, buy, or rent decision include the following: • competitive advantage; • security, legal and compliance issues; • the organization’s skill and available labor, cost, time; and • vendor issues including financial health and reputation.

Moderate 111. Should a firm’s source or sources of competitive advantage impact its decisions to make, buy, or rent software? If no, explain why. If yes, give a reason and an example.

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Yes. Firms should ask, “Do we rely on unique processes, procedures, or technologies that create vital, differentiating competitive advantage?” If so, then these functions aren’t good candidates to outsource or replace with a package software offering. Amazon had originally used recommendation software provided by a third party, and Netflix and Dell both considered third-party software to manage inventory fulfillment. But in all three cases, these firms felt that mastery of these functions was too critical to competitive advantage, so each firm developed proprietary systems unique to the circumstances of each firm.

Moderate

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Chapter 17 Data and Competitive Advantage: Databases, Analytics, AI and Machine Learning Section 17.1 True/False Questions 1. Logistics is the term that describes the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions.

False; Easy 2. In many organizations, the majority of available data is not exploited to their advantage.

True; Easy 3. Firms that base decisions on hunches are said to be gambling, not managing.

True; Easy 4. The data a firm can leverage is a true strategic asset when it is valuable, rare, imperfectly imitable, and non-substitutable.

True; Moderate 5. Dynamic pricing is considered especially tricky in situations where consumers make repeated purchases and are more likely to remember past prices, and when they have alternative choices.

True; Easy 6. Advantages based on capabilities and data that others can acquire are long-lived.

False; Moderate 7. Beacons is a Bluetooth technology that captures purchasing data to help identify users’ shopping habits so like-items can be advertised.

False; Easy Multiple Choice Questions 8. _____ refers to the process of combining aspects of reporting, data exploration and ad hoc queries, and sophisticated data modeling and analysis. a. Logistics b. Queritic modeling c. Business intelligence d. Electronic trading e. Big Data c; Easy 9. Data can potentially be used as a strategic asset, capable of yielding sustainable competitive advantage. Which of the items below is not a characteristic of a potentially strategic asset? a. value b. rarity c. imperfect imitability d. lead time e. non-substitutability

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d; Easy Essay Questions 10. How are increasingly standardized data, access to third-party datasets, cheap/fast computing, and easier-to-use software collectively enabling a new age of decision-making?

Ninety percent of organizational data was created in the last two years, and an estimated 2.5 quintillion bytes of data are produced every day. With this flood of data comes a tidal wave of opportunity. Increasingly standardized corporate data, and access to rich, third-party datasets—all leveraged by cheap/fast computing and easier-to-use software—are collectively enabling a new age of data-driven, fact-based decision-making. The phrase of the day is business intelligence (BI), a catchall term combining aspects of reporting, data exploration and ad hoc queries, and sophisticated data modeling and analysis. Alongside business intelligence in the new managerial lexicon is the phrase analytics, a term describing the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions.

Anyone can acquire technology, but data is oftentimes considered a defensible source of competitive advantage. The data a firm can leverage is a true strategic asset when it’s rare, valuable, imperfectly imitable, and lacking in substitutes.

Moderate 11. Explain how Disney uses dynamic pricing to sell tickets to The Lion King.

The firm looks at the past performance of shows at particular dates and times to make an initial prediction. Models then refine this prediction by considering additional factors like the weather forecast, the number of people waiting in line, customer feedback, press mentions and reviews, and more. The wide availability of third-party data; computing capable of fast, reactive analysis; and online and app-based ticket sales have increased their ability to use dynamic pricing.

Moderate Fill in the Blanks 12. _____ is the general term used to describe the massive amount of data available to today’s managers.

Big data; Easy 13. The acronym “_____” refers to a technology that is often used to tag objects and inventory items so that they can “announce their presence” as they make their way along an organization’s value chain.

RFID; Easy 14. _____ refers to type of artificial intelligence that leverages massive amounts of data so that computers can improve the accuracy of actions and predictions on their own without additional programming.

Machine learning; Moderate 15. The term _____ refers to Bluetooth technology that emits location data to help identify user location.

Beacon; Moderate 16. Changing pricing based on demand conditions is known as _____. dynamic pricing; Easy 17. _____ describes the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions.

Analytics; Easy

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18. Disney used _____ to set ticket prices for the Broadway production of the musical The Lion King. dynamic pricing; Easy Section 17.2 True/False Questions 19. Data are raw facts that must be turned into information in order to be useful and valuable.

True; Easy 20. All SQL databases are relational databases.

True; Easy 21. In database systems, a column is also known as a key.

False; Easy Multiple Choice Questions 22. _____ is the term used to describe raw facts and figures. a. Information b. Knowledge c. Analytics d. Data e. Intelligence d; Easy 23. Knowledge is defined as a. raw facts and figures. b. the data presented in a context so that it can answer a question or support decision-making. c. the insight derived from experience and expertise. d. a listing of primary data. e. the process of breaking a complex topic into smaller parts. c; Moderate 24. Data becomes _____ when it is presented in a context so that it can answer a question or support decision-making. a. knowledge b. information c. a database d. wisdom e. a relational language b; Easy 25. _____ refers to software for creating, maintaining, and manipulating data. a. Extranet b. ROM c. RAM d. DBMS e. Internet 2

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d; Easy 26. _____ is by far the most popular language for creating and manipulating databases. a. XML b. HTML c. PHP d. Java e. SQL e; Easy 27. In database systems, a _____ refers to a list of data. a. file b. column c. field d. row e. record a; Easy 28. In database systems, a table is also known as a: a. field b. record c. file d. row e. key c; Easy 29. In database systems, a _____ defines the data that a table can hold. a. row b. key c. record d. file e. field e; Easy 30. In database terminology, a record represents a. a list of data, arranged in columns and rows. b. all of the data in a given column. c. a single instance of whatever the table keeps track of. d. a field or combination of fields used to uniquely identify a file. e. one or more keys that relate separate tables in a database. c; Moderate 31. In database systems, a row is also known as a: a. table b. column c. key d. record e. field d; Easy 32. Which of the following describes serverless computing?

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a. a type of cloud computing b. a third-party vendor manages servers, replication, and fault-tolerance c. a third-party vendor manages computing scalability d. a third-party vendor manages certain aspects of security e. All of the above are correct. e; Moderate Essay Questions 33. Describe “database,” “DBMS,” and “SQL.” A database is simply a list or several related lists of data. Firms often create specialized databases for recording transactions, as well as databases that aggregate data from multiple sources in order to support reporting and analysis.

Databases are created, maintained, and manipulated using programs called database management systems (DBMS), sometimes referred to as database software. Structured query language (SQL) is by far the most common language for creating and manipulating databases.

Moderate Fill in the Blanks 34. Database technology known by the term _____ is especially popular with Internet firms that rely on massive, unwieldy, and disparately structured data; and this technology is often at the heart of what are often characterized as “big data” efforts.

NoSQL; Moderate 35. _____ is a language used to create and manipulate databases.

Structured query language (SQL); Easy 36. _____ refers to a job title focused on directing, performing, or overseeing activities associated with a database or set of databases.

Database administrator; Easy 37. _____ are the most common standard for expressing databases, whereby tables (files) are related based on common keys.

Relational databases; Easy Section 17.3 True/False Questions 38. Enterprise software tends to be less integrated and standardized than the prior era of proprietary systems that many firms developed themselves.

False; Easy 39. Data obtained from outside sources, when combined with a firm’s proprietary internal data assets, can give the firm a competitive edge.

True; Easy

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40. Any data-centric effort should involve input not only from business and technical staff, but also from the firm’s legal team, as well.

True; Easy Multiple Choice Questions 41. A _____ is a system that provides rewards and usage incentives, typically in exchange for a method that provides a more detailed tracking and recording of consumer activity. a. sugging report b. canned report c. dashboard d. legacy system e. loyalty program e; Easy 42. If a customer pays a retailer in cash, he is likely to remain a mystery to the retailer because his name is not attached to the money. Retailers can tie the customer to cash transactions and track the customer’s activity if they can convince the customer to use a: a. transaction processing system b. point-of-sale terminal c. data cube d. dashboard e. loyalty card e; Moderate 43. _____ is a class of computer software that seeks to reproduce or mimic human thought, decisionmaking, or brain functions. a. Biometrics b. Artificial intelligence c. Android d. Legacy software e. Intranet b; Easy 44. Suppose you are the manager of a local coffee shop, and you are looking for a way to attract and retain new customers. You hope to leverage your TPS to keep consumers engaged with the brand.

Establishing _____ is a good way to offer incentives and rewards while collecting data. a. an in-store contest b. a customer survey c. a social media campaign d. a loyalty program e. a brand program d; Moderate 45. Firms that collect and resell data are known as: a. data barons b. data mongers c. knowledge consultancies d. data miners e. data aggregators e; Easy

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Essay Questions 46. Retailers can capture information about consumers by implementing loyalty programs. Describe how a retailer can use data to learn more about consumer behaviors.

Retailers collect large quantities of data from transaction processing systems. This data can be leveraged by implementing customer loyalty programs. Both the retailer and customer benefit from loyalty programs. Loyalty programs offer customers rewards and incentives while retailers gain detailed tracking and recording of customer activity. The goal of loyalty programs is to learn more about customer behaviors in order to convert them into loyal, satisfied customers. For example, CVS offers a point-based loyalty program that incentivizes customers to return to the store to take advantage of their earnings and additional deals.

Moderate 47. Briefly describe the different sources of enterprise data for firms.

For organizations that sell directly to their customers, transaction processing systems (TPS) represent a source of potentially useful data. Grocers and retailers can link customers to cash transactions if they can convince them to use a loyalty card which, in turn, requires the customers to give up information about themselves in exchange for some kind of financial incentive such as points or discounts.

Enterprise software (CRM, SCM, and ERP) is a source for customer, supply chain, and enterprise data. Survey data can be used to supplement a firm’s operational data.

Data obtained from outside sources, when combined with a firm’s internal data assets, can also give the firm a competitive edge. Data that can be purchased from aggregators may not in and of itself yield sustainable competitive advantage since others may have access to this data, too. However, when combined with a firm’s proprietary data or integrated with a firm’s proprietary procedures or other assets, third-party data can be a key tool for enhancing organizational performance.

Moderate Fill in the Blanks 48. Systems that record a transaction (some form of business-related exchange), such as a cash register sale, ATM withdrawal, or product return are referred to as _____. transaction processing systems (TPS); Easy 49. _____ is the term used to describe some form of business exchange.

Transaction; Easy 50. _____ systems are often used to empower employees to track and record data at nearly every point of customer contact.

CRM or customer relationship management; Easy 51. It’s believed that medical errors are the _____ leading cause of death in the United States. third; Hard 52. In some instances, firms supplement operational data with additional input from _____ and_____. surveys; focus groups; Moderate 53. Sale of what’s referred to as “_____” has been allowed under lax or unclear U.S. legislation. header data; Moderate

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Section 17.4 True/False Questions 54. Just because data is collected doesn’t mean it can be used.

True; Easy 55. Turning data into usable information is hindered by transactional databases set up to be simultaneously accessed for reporting and analysis.

False; Moderate 56. It can be said that many organizations are data rich but information abundant.

False; Easy 57. Legacy systems are popular among large firms because they have a large storage capacity and are designed to share data.

False; Easy Multiple Choice Questions 58. _____ refer to older information systems that are often incompatible with other systems, technologies, and ways of conducting business. a. Data aggregator systems b. Loyalty card systems c. Legacy systems d. Transaction systems e. Mnemonic systems c; Easy 59. Most transactional databases are not set up to be simultaneously accessed for reporting and analysis.

As a consequence a. navigational databases are being preferred over transactional databases. b. data is not efficiently transformed into information. c. firms prefer to outsource data mining operations to third-party firms. d. analysts must also become transactional specialists. e. most firms incur additional expenditure to effectively record transactions. b; Moderate Fill in the Blank 60. Airbnb’s “_____” feature helps by leveraging the firm’s industry-leading dataset, far larger and more comprehensive than rivals, and constantly updated over time, to suggest the perfect rate. smart pricing; Easy Essay Question 61. What pricing challenges does Airbnb face? How does it use data to overcome them?

Unique offerings, with different amenities, locations, and varying demand over time, make pricing a challenge, especially for new property listers. Airbnb’s “smart pricing” feature uses machine learning to constantly tweak the accuracy of models that suggest the perfect rate. Influencing factors include events

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nearby that increase demand, proximity to public transportation/the beach/local attractions, amenities, and number of reviews—Airbnb’s employees look at these factors to refine their data asset.

Moderate Section 17.5 True/False Questions 62. Systems that can absorb any type of data, structured or not, from any type of source are often called schema-less.

True; Moderate 63. Data warehouses are composed entirely of proprietary corporate data, while data marts take advantage of data purchased from third-party firms.

False; Moderate 64. In data warehousing projects, it is not uncommon for spending on consulting and services to cost five times or more than the cost of the technology itself.

True; Easy 65. OLAP technology is primarily used for transaction processing.

False; Easy Multiple Choice Questions 66. Why do firms need to create separate data repositories for their reporting and analytics work? a. Most firms store their data assets offsite to insure themselves against the possibility of data damage through natural disasters. b. Maintaining huge databases can be a cost-sink for most firms. c. Most organizations need to differentiate data derived in-house and from data aggregators. d. Running analytics against transactional data can bog down a TPS. e. Reporting and analytics are two separate functions, each requiring its own separate database specifically formatted to the needs of the management team. d; Moderate 67. _____ refer to databases focused on addressing the concerns of a specific problem or business unit. a. Data marts b. Dashboards c. Hadoop d. Data aggregators e. Data analytics a; Easy 68. E-discovery refers to a. identifying and retrieving relevant electronic information to support litigation efforts. b. something a firm does not account for in its archiving and data storage plans. c. older information systems that are often incompatible with other systems, technologies, and ways of conducting business. d. collecting and reselling data.

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e. rewards and usage incentive, typically in exchange for a method that provides a more detailed tracking and recording of consumer activity. a; Easy 69. Which of the following is not considered an advantage of Hadoop? a. flexibility b. relational structure c. scalability d. cost effectiveness e. fault tolerance b; Easy 70. Every dollar spent on technology may lead to five to seven more dollars on: a. advertising b. consulting and other services c. facility space d. All of the above are true. e. None of the above are true. b; Moderate 71. A data cube refers to a a. secure, cloud-based off-site location used for data storage, analysis, and reporting. b. heads-up display of critical indicators that allow managers to get a graphical glance at key performance metrics. c. special database used to store data in OLAP reporting. d. firm that collects data with the intention of reselling it to others. e. combination of fields used to uniquely identify a record, and to relate separate tables in a database. c; Moderate 72. Data lakes are a. storage and access technologies used in Big Data. b. systems that allow for the storage of data in both structured as well as “raw,” “unfiltered” formats. c. aggregates that provide the tools to “pipe out” data, filter it, and refine it so that it can be turned into information. d. All of the above are true. e. None of the above are true. d; Moderate Fill in the Blanks 73. The open-source project known as _____ was created to analyze massive amounts of raw information better than traditional, highly structured databases.

Hadoop; Easy 74. The three Vs of “Big Data” are _____, _____, and ______; characteristics that distinguish it from conventional data analysis problems and require a new breed of technology. volume, velocity, and variety; Moderate 75. Addressing a data need to compete in business or address future goals is known as _____.

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data relevance; Moderate 76. Addressing the data system housing, hardware and networking requirements is known as _____. data hosting; Moderate 77. ETL (Extract, Transform, Load) is a way of copying data from multiple, disparately organized data sources, transforming (or cleaning) the data into a common _____, and loading it into a combined usable structure. format; Moderate Essay Questions 78. What are data warehouses and data marts? What is their significance in terms of data organization?

A data warehouse is a set of databases designed to support decision-making in an organization. It is structured for fast online queries and exploration. Data warehouses may aggregate enormous amounts of data from many different operational systems.

A data mart is a database focused on addressing the concerns of a specific problem (e.g., increasing customer retention, improving product quality) or business unit (e.g., marketing, engineering).

Marts and warehouses may contain huge volumes of data. For example, a firm may not need to keep large amounts of historical point-of-sale or transaction data in its operational systems, but it might want past data in its data mart so that managers can hunt for patterns and trends that occur over time.

Moderate 79. What are the issues to be addressed in order to design, develop, deploy, and maintain data warehouses and data marts?

Once a firm has business goals and hoped-for payoffs clearly defined, it can address the broader issues needed to design, develop, deploy, and maintain its system: • Data relevance: What data do we need in order to compete on analytics? What data do we need to meet our current and future goals?

• Data sourcing: Can we obtain all the data we’ll need? From where? Can we get it through our internal systems or from third-party data aggregators, suppliers, or sales partners? Do we need to set up new collection efforts, surveys, or systems to obtain the data we need?

• Data quantity: How much data do we need?

• Data quality: Can this data be trusted; is it accurate, clean, complete, and reasonably free of errors? How can our data be made more accurate and valuable for analysis? Will we need to “scrub,” calculate, and consolidate data so that it can be used?

• Data hosting: Where will the data systems be housed? What are the hardware and networking requirements for that effort?

• Data governance: What rules and processes are needed to manage data, from creation through retirement? Are there operational (backup, disaster recovery), legal or privacy concerns? How should the company handle access and security?

Moderate 80. Why would a firm choose Hadoop for a big data project instead of using conventional relational databases?

Roughly 80 percent of corporate data is messy and unstructured, and it is not stored in conventional, relational formats—think of data stored in office productivity documents, e-mail, call center conversations, and social media. It’s the three Vs of “Big Data” —volume, velocity, and variety—that distinguish it from conventional data analysis problems and require a new

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breed of technology. Big data is forcing companies to rethink both the technology infrastructure and the necessary skills needed to successfully interpret and act on the information. Conventional tools often choke when trying to sift through the massive amounts of data collected by many of today’s firms. The open source project known as Hadoop was created to analyze massive amounts of raw information better than traditional, highly structured databases. While there are other technologies that can be leveraged for big data projects, Hadoop is the clear leader, growing alongside big data trends to analyze massive amounts of unstructured data.

Hadoop advantages include: • Flexibility: Hadoop can absorb any type of data, structured or not, from any type of source (geeks would say such a system is schema-less). But this disparate data can still be aggregated and analyzed.

• Scalability: Hadoop systems can start on a single PC, but thousands of machines can eventually be combined to work together for storage and analysis.

• Cost effectiveness: Since the system is open source and can be started with low-end hardware, the technology is cheap by data-warehousing standards. Many vendors also offer Hadoop as a cloud service, allowing firms to avoid hardware costs altogether.

• Fault tolerance: One of the servers running your Hadoop cluster just crashed? No big deal.

Hadoop is designed in such a way so that there will be no single point of failure. The system will continue to work, relying on the remaining hardware.

Moderate Section 17.6 True/False Questions 81. Tesco is the planet’s largest retailer.

False; Easy 82. While spreadsheets are popular tools, they cannot effectively be used for “what if” analysis.

False; Easy 83. Random occurrences in data mining results can be detected by dividing the data and building a model with one portion and using another portion to verify the results.

True; Moderate 84. Skittish and untrusting managers should realize that the first findings of analytics always reveal an optimal course of action.

False; Moderate 85. Graphical query tools allow a user to create a query through a point-and-click or drag-and-drop interface, rather than requiring programming knowledge.

True; Moderate Multiple Choice Questions 86. _____ put(s) users in control so that they can create custom reports on an as-needed basis by selecting fields, ranges, summary conditions, and other parameters. a. Canned reports b. Ad hoc reporting tools c. Dashboards

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d. Data cubes e. Online analytical processing b; Easy 87. A(n) _____ refers to a heads-up display of critical indicators that allow managers to get a graphical glance at key performance metrics. a. interstitial b. embassy c. canned report d. prediction interface e. dashboard e; Easy 88. _____ is the process of using computers to identify hidden patterns in and to build models from large data sets. a. Data harvesting b. E-discovery c. Optimization d. Report canning e. Data mining e; Easy 89. Data mining is leveraged by some firms to determine which products customers buy together, and how an organization can use this information to cross-sell more products or services. This area of application of data mining is referred to as: a. market basket analysis b. expert systems c. customer churn d. customer segmentation e. vertical integration a; Moderate 90. Which of the following conditions is essential for data mining to work? a. The data must be collected from proprietary sources and not from data aggregators. b. The organization must leverage standard relational databases as opposed to inferior hierarchical and analytical databases. c. The events in the data should reflect current and future trends. d. The data mining software must necessarily incorporate ad hoc reporting tools and dashboards. e. The data should have passed the Diehard suite of stringent tests for randomness. c; Moderate 91. Computer-driven investment models can be very effective when the market behaves as it has in the past. However, in terms of historical consistency, they are vulnerable to failure in the face of: a. brute force attacks b. black swans c. zero-day exploits d. calendar rivalry metrics e. distributed denial of service b; Moderate 92. The graphical representation of data and information is known as:

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a. data collection b. data focus c. data analysis d. data visualization e. data mining d; Easy 93. This technology “learns” the patterns and structure of data used during training and can then generate new output based on the characteristics of this input. a. data mining b. omnichannel c. generative AI d. All of the above are true. e. None of the above are true. c; Moderate 94. Building a model with so many variables that the solution arrived at might only work on the subset of data you’ve used to create it is known as: a. over-mining b. narrow engineering c. prompt engineering d. over-engineering e. omnichannel d; Easy Essay Questions 95. As a business team member or leader, you are required to work with query and reporting tools.

Provide an example of how each type of tool can be used.

Querying and reporting tools present users with subsets of data that can be used for decision making. A query tool can be used to extract data from multiple lists or databases on a specific criterion. For example, Rent the Runway could use queries to investigate the number of rental customers who converted to subscribers. Reporting tools convert data into summaries and forecasts.

An example includes ad hoc reporting tools which allow users to select fields, ranges, and other parameters to build their own reports. For example, an analyst could build custom reports and graphics for a specific project meeting.

Moderate 96. Describe how L.L. Bean’s Big Data efforts have changed and improved firm interactions with customers.

Automated tools were also developed to leverage this data in real-time (making it not just “big data” but also “fast data”), allowing Bean to serve customers online, on the phone or in stores based on what the firm knows about them. This kind of integrated shopping experience and unified customer view across channels is sometimes referred to as omnichannel. Bean’s web and app stores leverage these insights for on-the-fly personalization with a sharp-shooter aim at what the customer wants.

Additionally, iPad wielding store staff and info-armed phone reps now have access to a deeply detailed real-time view of each customer, and these profiles are served up to create more relevant offers, better-received recommendations, and to deliver overall customer delight. Need proof that customers see the benefit? Bean tied with Amazon as best in online retail customer satisfaction.

Moderate

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97. What is data mining? What are the key areas where businesses are leveraging data mining?

Data mining is the process of using computers to identify hidden patterns and to build models from large datasets.

Some of the key areas where businesses are leveraging data mining include the following: • Customer segmentation—figuring out which customers are likely to be the most valuable to a firm.

• Marketing and promotion targeting—identifying which customers will respond to which offers at which price at what time.

• Market basket analysis—determining which products customers buy together, and how an organization can use this information to cross-sell more products or services.

• Collaborative filtering—personalizing an individual customer’s experience based on the trends and preferences identified across similar customers.

• Customer churn—determining which customers are likely to leave, and what tactics can help the firm avoid unwanted defections.

• Fraud detection—uncovering patterns consistent with criminal activity.

• Financial modeling—building trading systems to capitalize on historical trends.

• Hiring and promotion—identifying characteristics consistent with employee success in the firm’s various roles.

Moderate Fill in the Blanks 98. Data mining can be used to help personalize an individual customer's experience. Businesses can leverage data mining by using _____ software which is used to monitor trends among customers. collaborative filtering; Moderate 99. An integrated shopping experience and unified customer view across channels is sometimes referred to as _____. omnichannel; Moderate 100. Query tools interrogate a data source or multiple sources and return a subset of data, possibly summarized, based on a set of _____. criteria; Moderate 101. _____ is a general purpose programming language that is also popular for data analytics, while _____ is a programming language specifically created for analytics, statistical, and graphical computing.

Python; R; Hard 102. Canned reports provide regular _____ of information in a predetermined format. summaries; Easy 103. _____ is a type of AI often broadly defined as software with the ability to learn or improve without being explicitly programmed.

Machine learning or ML; Easy Section 17.7

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True/False Questions 104. Walmart supplements its huge data assets with additional data provided by information brokers like Information Resources and ACNielsen.

False; Moderate 105. Walmart is so big that in three months it sells more than a whole year’s worth of sales at number two U.S. brick and mortar retailer Home Depot.

True; Moderate 106. Walmart’s efforts to band together with other retailers to create MCX, a pay-with-your-phone standard, was a great success for the firm and their partners.

False; Hard 107. Sam's Club Now stores don’t have cash registers or checkout lines—customers simply show their app to an employee before leaving the store.

True; Easy 108. Walmart has invested a total of $19.5 billion over several years to acquire an 80 percent share of India's largest e-commerce firm, Flipkart.

True; Moderate Multiple Choice Questions 109. Walmart has built the world’s biggest “____” with over forty petabytes of total data. a. data supply b. data chain c. private supply chain d. data cloud e. private cloud e; Easy 110. Which of the following helps firms with operational forecasts and predictions? a. AI-driven image recognition systems b. data mining c. replication d. QR codes e. third-party cookies b; Easy 111. Walmart uses _____ to help their workers to learn procedures such as stocking shelves, using newly deployed technology, or developing strategies to better serve customers. a. digital signage b. Flipkart c. virtual reality headsets d. Hadoop e. replication c; Moderate Essay Question

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112. Describe Walmart’s warehouses and how they use automation.

Walmart has invested heavily in robotics and automation in their warehouses. These warehouses are massive and include a lot of new technology, including robotic arms that unload incoming truckloads of goods. AI-driven image recognition systems scan boxes on five sides, identifying products, determining dimensions, then communicating with systems that select the optimal location to stack these goods in the warehouse. Conveyors and robotics move products to multi-level shelving. At shipment time robots retrieve products, wrap pallets of disparate products in shrinkwrap, and dispatch them to the precise truck waiting for those goods to be loaded and taken to a particular Walmart store. Walmart’s automated warehouses are able to process more than twice the volume of products as a conventional warehouse.

Moderate Fill in the Blanks 113. Requiring suppliers to ship product with _____ allows Walmart to keep extremely accurate inventory, speed reordering to avoid stockouts, and allow customers placing online orders to pick up items in stores.

RFID tags; Moderate 114. Keeping product _____ is one part of the streamlined value chain equation; prompting customers to return often and buy efficiently is another key element. stocked or in stock; Moderate 115. Walmart’s website is a marketplace, which allows it to gather more valuable first-person data that's increasingly unavailable to firms _____ by third-party cookies or limits on app-tracking technologies. blocked; Moderate 116. Walmart owns a majority stake in _____, India's largest fintech startup and a competitor to services like Google Pay. PhonePe; Moderate

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Chapter 18 Artificial Intelligence—the Tech Impacting Nearly Every Industry Section 18.1 True/False Questions 1. AI is revolutionizing industries, reshaping economies, and fundamentally altering the

way people live and work.

True; Easy 2. Enhancing productivity, improving efficiency, and automating mundane tasks are

benefits of AI. True; Easy 3. AI is hindering customer service by depersonalizing interactions through chatbots and

virtual assistants.

False; Moderate 4. Potential risks and ethical implications of AI include issues concerning job displacement,

algorithmic bias, and misuse for malicious purposes.

True; Easy 5. AI-related job displacement may create new employment opportunities and career

pathways in areas like AI development and data analysis.

True; Easy Multiple Choice Questions 6. What example of AI benefits is not mentioned in the text?

a. personalized customer service through chatbots b. optimizing production processes in a manufacturing plant c. AI-assisted vehicles maintaining healthy body temperature for passengers d. real-time support through virtual assistants e. targeted marketing campaigns with precision c; Moderate 7. Which of the following is not a potential issue related to AI's risks and unknowns?

a. algorithmic bias b. misuse for autonomous weapons systems c. job displacement and creation d. potential for manipulating social media e. overreliance on AI for decision-making e; Moderate

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8. How does the text characterize the future of AI?

a. diminished role in solving global challenges b. decreased application in various industries c. limited potential to improve human lives d. transformation of industries and creation of new opportunities e. uncertainty and stagnation in technological advancements d; Easy Essay Questions 9. What are some examples provided in Google Bard's introduction that illustrate the

transformative power of artificial intelligence (AI) across various industries? How does the text highlight the benefits of AI in areas such as manufacturing, healthcare, customer service, and innovation?

Google Bard's introduction to AI in a management textbook presents compelling examples of AI's impact. It mentions self-driving cars, virtual assistants, and financial algorithms as once-futuristic concepts now becoming a reality. The text emphasizes AI's role in revolutionizing industries like manufacturing, where AI-powered robots optimize production, and health care, where AI algorithms aid in medical diagnosis by analyzing patient data. Additionally, it discusses AI's contributions to customer service, marketing, and innovation, showcasing its ability to provide personalized interactions, target campaigns effectively, and drive scientific advancements.

Moderate 10. What major issues and concerns regarding AI are addressed in Google Bard's

introduction? How does the text discuss the risks associated with AI, including job displacement, algorithmic bias, and potential misuse for malicious purposes?

Google Bard's introduction acknowledges the potential risks and ethical implications of AI alongside its benefits. It discusses concerns such as job displacement due to automation, emphasizing the importance of preparing the workforce for the transition by providing education in AI-related skills. The text also highlights the issue of algorithmic bias, pointing out that biased data can lead to unfair outcomes in areas like hiring and criminal justice. Furthermore, it addresses the risk of AI misuse for malicious purposes, including the creation of autonomous weapons and the spread of misinformation on social media. Overall, the introduction underscores the need for responsible development and regulation of AI to ensure it serves humanity positively.

Moderate Section 18.2 True/False Questions 11. Google searches, online ads, spam filters, spell checkers, and recommendation systems

are all powered by AI. True; Moderate

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12. ChatGPT 3.5 was released to the public in fall 2022 and quickly gained 100 million

users, making it the most rapidly adopted technology of all time.

True; Easy 13. Educators worldwide embraced the use of ChatGPT by students to write essays and term

papers.

False; Easy 14. Some concerns about GenAI include its tendency to provide incorrect answers and

sometimes produce biased or harmful results.

True; Easy 15. Google introduced its own customer-facing GenAI named Bard, which allowed users to

see GenAI results as part of search queries.

True; Moderate 16. Meta made its GenAI model, Llama, open source, stirring controversy in the tech

industry.

True; Easy Multiple Choice Questions 17. Which statement about generative AI (GenAI) is not true?

a. GenAI is primarily used to generate text, images, audio, and video. b. User input, known as prompts, guides GenAI results. c. The output of GenAI is refined through follow-up prompts. d. GenAI always provides factually accurate answers. e. GenAI's output is based on the patterns and structure of data used during training. d; Easy 18. Which company declined to release its comparable GenAI over concerns about its impact

and potential for harm? a. OpenAI b. Microsoft c. Google d. Facebook e. Amazon c; Easy Essay Questions 19. Define generative AI (GenAI) and explain its process.

Generative AI, or GenAI, is a type of artificial intelligence that generates media outputs such as text, images, audio, or video based on a prompt, typically provided as typed or

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spoken text. GenAI “learns” patterns and structures from training data and generates new output based on this input. Results can be refined through further prompts.

Moderate 20. What was the controversy surrounding the public release of ChatGPT 3.5?

The controversy surrounding the public release of ChatGPT 3.5 stemmed from Google's decision not to release its comparable GenAI over concerns about its potential impact on the company's business, its potential for harm, and its tendency to provide persuasive but inaccurate answers. This decision raised questions about the power of AI products and the speed of new releases, leading to boardroom struggles at OpenAI. Moderate Fill in the Blanks 21. The public release of _____ was quite controversial.

ChatGPT 3.5; Easy 22. OpenAI attracted a shocking amount of investment from _____, rushing to invest $13

billion in OpenAI, giving it a minority stake.

Microsoft; Easy 23. Generative AI, a type of artificial intelligence, relies on user input, known as _____, to

generate creative output. prompts; Easy Section 18.3 True/False Questions 24. Large language models (LLMs) are created without the need for training on vast amounts

of data.

False; Moderate 25. Hallucinations are answers provided by generative AI systems that aren’t based in fact

and appear to be made up.

True; Easy 26. The foundation model used to train LLMs like ChatGPT-3 is the same model used for

end-user interaction.

False; Moderate 27. ChatGPT-3.5 was trained on data created no later than September 2021.

True; Easy 28. GPT-4 had 175 trillion parameters upon its release in March 2023.

True; Easy

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29. The more parameters that are in a model, the more complex and comprehensive the

resulting LLM will be.

True; Easy 30. ChatGPT was originally named Corpus.

False; Easy Multiple Choice Questions 31. What is the function of the foundation model in creating large language models (LLMs)?

a. generating prompt responses b. identifying patterns in data c. interpreting language input d. refining text elements during training e. training on vast amounts of data e; Easy 32. How are parameters described in the text?

a. values used to interpret language b. relationships between text elements c. data inputs for generative AI systems d. components of the foundation model e. determinants of text complexity b; Easy 33. What is the purpose of prompt engineering in the context of generative AI?

a. refining results through subsequent prompts b. designing inputs for optimal outputs c. training large language models d. generating accurate responses to prompts e. interpreting complex text relationships b; Easy 34. A large language model (LLM) is a type of

a. AI specialized in image recognition. b. AI used for general-purpose language understanding and generation. c. neural network used for weather forecasting. d. machine learning algorithm for speech recognition. e. generative AI limited to audio generation. b; Easy 35. What is the foundation model used to train ChatGPT-3?

a. GPT-2 b. GPT-3.5 c. GPT-4

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d. GPT-3 e. GPT-5 d; Easy 36. What does prompt engineering refer to in generative AI?

a. designing inputs for AI tools to produce optimal outputs b. developing new AI models from scratch c. tuning the parameters of a trained AI model d. creating new training data for AI systems e. testing the performance of AI systems in real-world scenarios a; Easy Fill in the Blanks 37. Many firms (including OpenAI with ChatGPT) use humans to examine an AI's results and provide correction in a technique known as _____.

reinforcement learning from human feedback (RLHF); Easy 38. Training modern LLMs requires a lot of _____ and a huge amount of computing

resources. data; Easy 39. ChatGPT 3 was trained on _____ terabytes of data, which included Wikipedia, thousands

of books, Reddit posts, and other material scraped from the Internet.

45; Easy 40. The more _____ that are in a model, the more complex and comprehensive the resulting

LLM will be. parameters; Easy 41. Generative AI allows users to input text and receive _____ as output.

generated text; Moderate 42. _____ refers to the data used to train an AI model before it can be used.

Corpus; Easy 43. Neural networks are statistical techniques used to hunt down and expose _____.

patterns; Easy 44. Prompt engineering is the practice of designing inputs for generative AI tools that will produce _____ outputs.

optimal; Easy Section 18.4

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True/False Questions 45. Generative AI is predicted to have a significant impact on various job sectors, including

knowledge-based professions like analysis, accounting, legal, medical, software development, and education.

True; Easy 46. Microsoft's GPT-powered copilot, named Microsoft 365 Copilot, has the capability to

access and utilize data from the firm's suite of tools.

True; Easy 47. Canva has incorporated generative AI tools from various vendors into its cloud-based

graphic design platform to provide options for text-to-image and text-to-video generation, among other features.

True; Easy 48. KPMG has developed a generative AI assistant specifically tailored for corporate tax

departments to assist with understanding global tax obligations and requirements worldwide.

True; Easy 49. Adobe has chosen to license generative AI technology from third parties like OpenAI or

Stable Diffusion for its suite of graphic design tools, including Photoshop and Illustrator.

False; Moderate Multiple Choice Questions 50. According to Mariam Alavi and George Westerman, which of the following is a way that

generative AI could be used to enhance work? a. Executives can now be freed up to hand over all critical business functions to generative AI. b. Generative AI helps firms synthesize large amounts of information, pulling out relevant points and examples, providing background research, and generating summaries. c. According to current laws, generative AI cannot be held liable for any copyright infringement, which can allow businesses to greatly increase their creative output without fear of lawsuits. d. Image generation AI will be able to replace entire graphic design departments, freeing up capital for IT departments. e. As firms are forced to deal with concerns over privacy and other ethical dilemmas, generative AI can be used to make moral and ethical decisions. b; Moderate Section 18.5

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True/False Questions 51. Geoffrey Hinton, often referred to as “The Godfather” of modern AI, quit his engineering

leadership role at Google due to concerns about the existential threat posed by AI. True; Easy 52. Despite initial concerns raised by tech leaders about the dangers of AI, most of them

proceeded to accelerate the development and release of advanced AI technologies.

True; Moderate 53. Generative AI, according to Professor Emily Bender and Timnit Gebru, poses a

significant existential risk due to its potential to develop self-acting, sentient threats.

False; Moderate 54. Data poisoning refers to the act of deliberately feeding incorrect data to an AI so that it

generates incorrect results.

True; Easy Multiple Choice Questions 55. Despite the transformative abilities of GenAI, why is it still crucial for individuals to

always fact check results given by a GenAI? a. Generative AI tends to seemingly make things up, a process often referred to as hallucination. b. Since AI systems “learn” based on data, then any biases in data can become part of the model, which can result in sexist and racist results. c. Results may contain copyrighted material which could open firms up to legal penalties. d. Sometimes results can give dangerous information, such as reported cases of generating recipes that would be poisonous if eaten. e. All of the above are correct. e; Moderate 56. Which of the following are sophisticated media created by AI that attempt to look or

sound like a real person or event? a. deepfakes b. hallucinations c. prompt-injections d. mirages e. facebots a; Easy 57. Why could banks using AI in their loan process potentially create unintended

consequences? a. AI approved loans have accidentally “rubber stamped” all applications resulting in everyone that applied receiving a loan.

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b. Such systems can increase disparities based on socioeconomic background, ethnic category, or education level. c. AI loan systems are fully transparent, allowing applicants to game the algorithm to guarantee their loan approval. d. All of the above are correct. e. None of the above are correct. b; Easy Essay Questions 58. Discuss the risks associated with the use of artificial intelligence (AI) in relation to

security, privacy, and legal concerns, citing examples from the text.

AI poses various risks, particularly in terms of security, privacy, and legal implications.

One significant risk is the potential for AI to memorize and inadvertently leak sensitive data, exposing firms to business and legal ramifications. For example, OpenAI's decision to allow users to build and publish tailored AI bots led to security vulnerabilities, as it was discovered that access to instructions and data used to create these bots was possible. Prompt-injection is another risk, where malicious users input prompts that cause AI models to behave in unauthorized or revealing ways. Data poisoning also presents a concern, as AI systems can be trained on incorrect or harmful data, leading to unintended consequences. Rapid adoption of AI technologies without proper testing and consideration of security measures can compromise firms, customers, and careers.

Therefore, it's crucial for organizations to assess and address these risks to mitigate potential harm.

Moderate 59. Reflecting upon the example scenario provided in the text, “The AI Turned Me White!”,

discuss AI/GenAI biased outcomes. What are some other examples? Why do these biases occur?

AI bias occurs when AI systems “learn” based on biased data, incorporating those biases into their outcomes. For example: An early version of Salesforce's “Einstein” AI model identified the top predictor of a sales opportunity as whether the client had the name “John,” reflecting a dataset with a disproportionately large number of male customers with that name. Facial recognition systems built with predominantly Caucasian faces as training data have shown weaknesses in identifying people of color, with significantly higher misidentification rates for darker-skinned individuals. AI-based pedestrian detection systems used in self-driving cars have been less likely to detect children and people of color. Bias occurs in AI-generated outcomes because AI systems learn from data, and if the training data is biased, the AI's outputs will also reflect those biases.

Moderate Fill in the Blanks 60. Feeding data into an AI for further training could pose security, privacy, or _____ risks.

legal; Easy

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61. Firms like Walmart and cloud providers Amazon and Microsoft warn employees against sharing corporate secrets or private information with _____.

GenAI, AI; Easy 62. Prompt-injection is a security risk where a malicious user creates an input that makes a language model behave in otherwise prohibited ways or reveal _____ information.

proprietary; Easy 63. Bias in data can lead to biased outcomes in AI systems, such as the early version of the

“Einstein” AI model identifying the top predictor of a sales opportunity as having the name “_____.”

John; Easy 64. Rushing untested technology, especially involving sensitive data, could severely compromise a firm, its customers, and many _____.

careers; Easy 65. AI _____ that has a limited set of images and a skewed set of words associated with those

images can create troubling, unintended consequences. training data; Easy Section 18.6 True/False Questions 66. Naked algorithms, the foundational models in AI, are typically proprietary and

inaccessible to the public.

False; Moderate 67. Change management seeks to identify how workflows and processes are to be altered,

and how to manage the worker and organizational transition from one system to another.

True; Easy 68. The lack of sufficient historical data can render machine learning efforts ineffective,

especially in predicting rare events or occurrences.

True; Easy 69. Firms need to be aware of when an AI’s “knowledge” might end.

True; Easy Multiple Choice Questions 70. What are “naked algorithms” in the context of AI?

a. algorithms without any purpose or function b. algorithms designed for visual recognition tasks

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c. starting point algorithms in the public domain or accessible from cloud provider services d. algorithms specifically trained for natural language processing e. algorithms exclusively used for machine learning model interpretation c; Easy 71. Which of the following is not mentioned as a potential challenge associated with

leveraging AI and machine learning? a. data quality and integration issues b. lack of access to historical data for training c. security and legal risks related to proprietary data d. overabundance of available training data e. technical staff requiring specialized training d; Moderate 72. What does change management involve in the context of AI systems?

a. altering data management processes b. transitioning from traditional to cloud-based AI systems c. managing organizational and worker transitions when implementing AI d. implementing software updates for AI models e. developing new algorithms for AI training c; Easy 73. In which scenario might machine learning be legally prohibited?

a. using demographic data for risk prediction b. utilizing historical data for training models c. employing cloud-based AI services d. implementing change management strategies e. developing proprietary algorithms a; Moderate 74. What analogy is used to describe the significance of data in the context of competitive

advantage? a. data as the new currency b. data as the new gold c. data as the new oil d. data as the new electricity e. data as the new invention c; Easy Fill in the Blanks 75. AI often begins with "naked algorithms," which are the foundational models that need to be _____.

trained; Easy

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76. Lack of consistent, reliable historical data can hinder AI efforts due to issues such as data quality, inconsistency, or the inability to integrate data sources into a single _____.

dataset; Easy 77. _____ is crucial in AI projects to identify how workflows and processes are to be altered,

and to manage the worker and organizational transition from one system to another, as many users may see their jobs significantly altered.

Change management; Moderate 78. Some types of machine learning may be legally prohibited due to factors such as the data

used or the inability to identify how a model works. For example, regulators may reject “black box” solutions offered by neural networks or prohibit the use of certain data or techniques based on _____. privacy protection laws; Easy Section 18.7 True/False Questions 79. Fifty-five percent of Meta's AI team is female.

False; Easy 80. Lyft reported a risk associated with medical providers under HIPAA provisions in its IPO

filings, which was unusual for a ride-sharing company.

True; Easy 81. Red Teaming involves a group affiliated with developers testing technology to ensure its

safety and integrity.

False; Easy 82. Auditing technology and training data is unnecessary, especially if a firm trusts its

developers and suppliers.

False; Easy 83. Organizations should incorporate new tools and best practices as they are developed,

rather than sticking to established methods.

True; Easy 84. Steps organizations should take to help broaden the scope of their understanding of the

implications of AI and machine learning include hiring diversely and creating a systems review board, as well as testing and auditing.

True; Easy 85. COBIT is an IT infrastructure library, which covers best practices for delivering IT

services.

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False; Easy 86. Since 2018, technologists are required to have had significant training in technology

ethics.

False; Moderate 87. OpenAI's ethics board faced challenges related to corporate profit considerations,

transparency, and board composition, leading to the dismissal and subsequent reinstatement of Sam Altman as CEO. True; Easy Multiple Choice Questions 88. Which of these is a challenge associated with training AI models?

a. limited access to cloud services b. inability to integrate data sources c. lack of skilled technical staff d. overabundance of historical data e. prevalence of consistent and reliable data b; Easy 89. What percentage of Meta's AI team is female?

a. 5 percent b. 10 percent c. 15 percent d. 20 percent e. 25 percent c; Easy 90. Which organization is not mentioned as a participant in crafting best practices and

guidelines for ethical AI? a. Google b. IBM c. Facebook d. Tesla e. Amnesty International d; Easy 91. What is the purpose of a “Red Team” in the context of AI development?

a. developing machine learning algorithms b. testing the security of systems c. conducting customer feedback surveys d. creating diverse workforce policies e. All of the above are tasks that a Red Team would do. b; Moderate

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92. Which step is not suggested for developing more ethical, less risk-prone systems?

a. hiring ethicists b. partnering to build better technology c. ignoring employee feedback d. implementing strong tech and procedural training programs e. continually evaluating best practices c; Easy Fill in the Blanks 93. AI education is predominantly led by _____ professors.

male; Easy 94. Firms should hire _____ to help weed out bias in technology efforts.

ethicists; Moderate 95. _____ involves trained teams playing the role of adversaries to deliberately compromise

systems, and the reports are shared with information systems staff to harden systems against attack and misuse.

Red Teaming; Easy Section 18.8 True/False Questions 96. The Echo Nest was founded by Brian Whitman and Tristan Jehan, who developed

systems capable of analyzing music characteristics such as pitch, tempo, and mood.

True; Easy 97. The Echo Nest relies solely on human ratings of music, which limits its scalability and

consistency compared to other services like Pandora.

False; Moderate 98. Echo Nest’s software constantly scours as many as 10 million documents each day to

develop insight into trends and genres.

True; Easy 99. The user-specific release of “Spotify Wrapped” was projected to be a viral sensation but

proved to be a complete flop.

False; Easy Multiple Choice Questions 100. What was the primary function of The Echo Nest's systems?

a. analyzing user listening habits

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b. rating music based on human judgment c. creating personalized playlists for users d. analyzing characteristics of music e. scouring the web for music blogs d; Easy 101. How does Spotify's “Discover Weekly” feature work?

a. by recommending popular tracks b. by analyzing user's social media posts c. by curating playlists based on user preferences d. by analyzing user's running tempo e. by predicting trends in music genres c; Easy 102. What did The Echo Nest primarily focus on in terms of data gathering?

a. scanning social media feeds b. analyzing user-generated content c. reading music blogs and news reports d. collecting user demographic information e. analyzing artist's social media presence c; Easy Essay Questions 103. How did Spotify enhance its AI capabilities through the acquisition of The Echo Nest,

and how does this contribute to its personalized music recommendation system?

Spotify acquired The Echo Nest in 2014, a firm known for creating an automated music analysis system. Founded by Brian Whitman and Tristan Jehan, The Echo Nest developed algorithms that could analyze music characteristics such as pitch, tempo, and mood.

Additionally, it scoured the web for music-related data, including reviews and trends.

This acquisition enabled Spotify to improve its personalized recommendation system by creating features like “Discover Weekly,” which generates custom playlists based on users' listening habits and preferences.

Moderate 104. Discuss how Spotify utilizes data from The Echo Nest to enhance user experience and

engagement and provide examples of its innovative features.

Spotify leverages data from The Echo Nest to enhance user experience by offering personalized music recommendations and features tailored to individual preferences. For example, Spotify's “Discover Weekly” playlist analyzes users' listening habits to curate a unique playlist each week. Additionally, Spotify's app can adjust playlists based on users' activities, such as running tempo or location. Furthermore, Spotify provides analytics tools for artists through the Spotify for Artists app, allowing them to target and engage with their fan base effectively.

Moderate

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Fill in the Blanks 105. Spotify gained AI skills through the acquisition of _____.

Echo Nest; Easy 106. The Echo Nest's software scours the web, “reading” music blogs, news reports, and

more, analyzing descriptions of _____, albums, tracks, and developing insight into trends and genres. artists; Easy 107. Spotify's “Discover Weekly” is essentially a custom-built “station for you” created by

examining your playlists, your listening habits, and what it learns about its millions of other _____. users; Easy

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Chapter 19 Advertising Technologies: Balancing Personalization with Privacy as Technology and Regulation Evolve Section 19.1 True/False Questions 1. Data that a customer has explicitly shared with a firm is referred to as zero-party data.

True; Easy 2. Second-party data is data that is collected by one firm and shared with a partner organization.

True; Easy 3. Second-party data is data that is collected by one firm and shared with a partner organization.

True; Easy 4. Third-party data is collected by a company that has had the customer explicitly enter a relationship with them.

False; Easy Multiple Choice Questions 5. Each time an ad is shown to a user is known as a(n): a. display ad b. view c. impression d. rich media ad e. interstitial c; Easy 6.

Display ads include: a. text b. images c. videos d. animation e. interactive media b; Easy

7. As an advertiser, you have acquired the services of Google to display your ads. You have set a budget for the campaign, and Google will charge you when users click on your ad. This form of online advertising is known as: a. CPM b. CPA c. CPC d. CRM e. ROI c; Moderate 8. An ad that runs before a user arrives at his or her intended destination on a website or in an app is known as: a. an interstitial b. an adsense

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c. a display ad d. a skyscraper ad e. an affiliate ad a; Moderate 9. The amount charged every time an ad appears 1,000 times on a website is known as which of the following? a. CPA b. CPC c. ROI d. CPM e. CRM d; Moderate 10. Data that is collected by one firm and shared with a partner organization is known as: a. zero-party data b. first-party data c. second-party data d. third-party data e. shared data c; Easy 11. Suppose you have a popular blog, and you want to leverage it to make extra money. Because your web traffic is high, you have decided to add links to direct users to online storefronts. If the user makes a purchase at the storefront, the seller has agreed to share a percentage of the revenue with you. This form of marketing is known as: a. affiliate programs b. CPC c. CPM d. rich media advertising e. display advertising a; Hard 12. Jessica has a popular YouTube channel where she does home organization and cleaning. During the videos, she shares details about the products she uses and provides product descriptions and links for the viewers to visit Amazon so they can purchase the same products. Jessica is an Amazon: a. employee b. retailer c. affiliate d. influencer e. distributor c; Moderate 13. If Rent the Runway receives an invoice for 450,000 impressions, their sales quote was for ____ CPMs. a. 45 b. 450 c. 4,500 d. 45,000 e. 450,000 b; Hard 14. Advertisers were frustrated with traditional ad channels such as print and television because a. rich media and display ads were expensive.

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b. they were only able to measure half of their views. c. they had no way of measuring effectiveness. d. they were not able to target markets. e. All of the above are true. c; Moderate Fill in the Blanks 15. In the advertising industry, “_____” refers to the design and content of an advertisement. creative; Easy 16. Erica has a lifestyle blog where she includes advertisements for popular retailers. She includes a link where visitors can sign up for an interior design consultation for a local business. Erica is paid whenever someone clicks the link and completes the form. This method of advertising is known as _____. cost-per-action; Moderate 17. Companies can use _____to replace hiring models and paying cameramen, and most significantly can create images in seconds instead of the days it might require to assemble a photo shoot the traditional way. generative artificial intelligence; Moderate 18. The _____ is a nonprofit industry trade group that evaluates and recommends interactive advertising standards and practices and also conducts research, education, and legislative lobbying.

Interactive Advertising Bureau (IAB) or IAB; Moderate 19. A rich media ad is a(n) _____ advertising that includes animation, audio, or video. online; Easy Section 19.2 True/False Questions 20. Cookies given by the website that you are visiting are known as first-party cookies.

True; Easy 21. Cookies that are served by an entity that is not the firm that owns the Web page that you are visiting are known as second-party cookies.

False; Easy 22. The Privacy Sandbox will also improve Google's ability to report that a user is, in fact, a human rather than a web-surfing program or bot.

True; Easy 23. A Privacy Sandbox that could accurately separate a user from a user-impersonating bot could significantly decrease online ad fraud.

True; Easy Multiple Choice Questions 24. Advertisers might consider using an ad network because a. they can advertise across a series of sites. b. it is the only way they can target specific clients.

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c. they have full control over ad placement. d. ad networks are more secure when it comes to data privacy. e. customers are more likely to engage with ads from an ad network. a; Moderate 25. Grouping together additional data collected from traditional browsing history in order to identify users is known as which of the following? a. indexing b. fingerprinting c. targeted searching d. networking e. clustering b; Easy 26. The use of installed viruses, malware, or other vulnerabilities to copy the behaviors of humans by visiting websites associated with specific ads is known as: a. identity fraud b. ad fraud c. click fraud d. rank fraud e. link fraud c; Easy Fill in the Blanks 27. A line of uniquely identifying text stored by a web browser is known as a(n) _____. cookie; Easy 28. Google’s _____, DoubleClick, can add third-party cookies to your computer if you visit a site that can track specific pages you’ve visited on a website. ad network; Easy 29. Suppose you visit an online retailer to research a new pair of running shoes. You find what you are looking for, but you do not plan to purchase the shoes right away. Later that day while surfing Meta, you notice there is an ad for the same shoes at the same online retailer. This is an example of _____. retargeting; Moderate 30. Suppose you visit a website to research a vacation for your family. Later while placing an online grocery order, you notice advertisements for one of the resort websites you were browsing earlier.

It is likely that _____ have been installed on your computer. third-party cookies; Moderate 31. In lieu of third-party cookies, some firms use images known as _____ to determine if a user has visited a page previously. tracking pixels; Moderate Section 19.3 True/False Questions 32. App Tracking Transparency requires all iOS apps to ask users for their permission to share their data.

True; Moderate

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33. A URL that includes additional information appended to the end, which allows activity to be tracked is known as an extended URL. False; Moderate 34. SKAdNetwork shares conversion data with advertisers without revealing any user-level or devicelevel data and is much easier to implement than old cookie schemes.

False; Moderate 35. Apple is now automatically removing link trackers from URLs sent via its email client and its text messaging platform.

True; Moderate Multiple Choice Questions 36. How will Apple’s IDFA identifier impact advertising sales in the gaming industry? a. Advertising networks will continue with targeted ads if gamers do not opt-in. b. Game developers will continue to offer free access for gamers who do not opt-in. c. Game consumers will no longer be able to use ad blockers. d. IDFA will not impact advertising from game developers. e. If gamers do not opt-in when using apps, advertising networks will not have detailed profiles for game advertisers. e; Moderate 37. Apple’s IDFA identifier is a unique snippet of random text used by developers to a. record consumer behavior on social media websites. b. display advertisements from third-party ad networks. c. freely collect consumer behavior without requesting consent. d. track consumer behaviors on iOS devices. e. provide privacy and security for apps on iOS devices. d; Moderate 38. Apple is regularly targeted by law officials because they a. do not assist in investigations. b. do not publish transparency reports. c. do nothing to discourage use of their products for illegal purposes. d. do not publish legal guidelines for government and law enforcement. e. use phone-based encryption that does not include a way for law enforcement to break into locked phones. e; Moderate Fill in the Blanks 39. Programs that enroll all customers by default but allow consumers to discontinue participation if they want is known as _____. opt-out; Easy 40. Surveys suggest that consumers are not likely to approve tracking if it's associated to _____.

Meta; Easy 41. Developers using Apple’s IDFA will be required to ask users to _____. opt-in; Moderate 42. To differentiate itself from rivals, Apple emphasizes consumer _____.

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privacy; Moderate 43. A _____ includes additional information appended to the end, which allows activity to be monitored. tracking URL; Easy Section 19.4 True/False Questions 44. A media access control address is a factory-assigned unique device identification number for any network connection.

True; Easy 45. A VPN is a service that creates a public connection across the private Internet, encrypting transmission and making your Internet communication appear as if it is connected to the organization that provides VPN software.

False; Moderate 46. A line-of-sight is signal that must have an obscured pass from source to receiver to be accurate.

True; Easy Multiple Choice Questions 47. Identifying a user’s physical location for the purpose of delivering tailored ads or other content is known as: a. GPS b. geotargeting c. geofencing d. proxy servers e. ACR b; Easy 48. Suppose you regularly leave your phone in the car when you arrive at work. You need to have you phone because it serves as the authentication device for your desktop’s multi-factor login. To avoid going back to the car daily, you set an alert that reminds you to put the phone in your bag when you are within one mile of your office. Setting this perimeter is known as: a. geofencing b. geotargeting c. proxy servers d. ACR e. GPS a; Moderate 49. Advertisers use _____ to deliver targeted ads to your television based on your profile. a. automated content recognition b. dynamic ad insertion c. social tracking d. GPS e. line-of-sight b; Moderate 50. All devices that connect to the internet are identified by an assigned numeric value. The numeric value is known as the:

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a. uniform resource locator b. IP address c. MAC address d. computer name e. line-of-sight b; Easy 51. Technology that recognizes bits that make up an image, video, or audio and identifies the content that is being played is known as: a. line-of-sight b. DAI c. ACR d. geotargeting e. GPS c; Moderate Essay Questions 52. What is ACR? Explain how advertisers can use ACR to target consumers.

Automated Content Recognition is a form of technology that recognizes parts of images, video, and audio that appear on smart televisions. A screenshot of your activity is taken then collected data is matched to a central database which identifies what you are watching. Ad networks can then use information from your profile to show you the same advertising when browsing on other devices. This form of retargeting allows advertisers to reach you based on what you choose to watch on television.

Moderate 53. Explain how geotargeting works. Provide an example of how a firm can benefit from geotargeting.

Geotargeting occurs when a computer identifies a user's physical location for the purpose of delivering tailored ads or other content. Geotargeting can be beneficial to a firm by creating an opportunity to engage with consumers who are likely to use their product or service based on physical location. For example, a regional restaurant chain may use geotargeting location advertising because travelers might be researching places to eat in the area. With geotargeting, the ads can reach users in a designated area which makes the campaign more effective.

Moderate Fill in the Blanks 54. A network of satellites and supporting technologies used to identify a device’s physical location is known as a(n) _____.

GPS or global positioning system; Easy 55. A third-party computer that passes traffic to and from a specific address without revealing the address of the connected user is known as a _____. proxy server; Easy 56. A value used to identify a device that is connected to the internet is known as the _____.

IP address; Easy 57. Suppose you are on a study abroad trip in Ireland. You will need to connect to the university VPN at your university in New York. Your geographical location will show up as _____ to websites.

New York; Hard 58. A globe-circling satellite network can identify your location if your mobile device is equipped with _____.

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GPS or a global positioning system; Easy 59. If you see a particular ad on your smart television, then later see the same ad on your laptop or smartphone, it is likely that your television has _____.

ACR or automated content recognition; Moderate 60. Wireless local-area networking devices are better known as _____.

Wi-Fi; Easy Section 19.5 True/False Questions 61. Meta has been fined $400 million for collecting Facebook and Instagram data without explicit consent.

True; Easy 62. European regulators have become much more aggressive in fining organizations that ignore the region's privacy protections but failed to fine Meta for collecting Facebook and Instagram data without explicit consent.

False; Easy Multiple Choice Questions 63. Europe regulators drafted the _____ to provide data protection for internet users. a. CAID b. IFDA c. IAB d. EPIC e. GDPR e; Easy 64. Implementation of the General Data Protection Regulations has made some user data less secure because a. users skip the request to accept cookies. b. users are developing a click-and-consent habit without paying attention to consent granted. c. firms are not abiding by the regulations. d. GDPR regulations only apply to private sites. e. All of the above are true. b; Moderate 65. Firms encounter challenges with privacy and data laws because a. firms are responsible for making their own regulations. b. firms often work with third parties. c. firms that are not heavily laden with technology are not required to abide by the laws. d. laws vary by region and there are no clear standards. e. All of the above are true. d; Moderate Essay Question 66. Describe some of the challenges the EU will face in enforcing regulations regarding privacy and protecting personal data.

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It's one thing to create laws and yet another to enforce them. Data and privacy cops require monitoring systems, experienced auditors, and analytics experts to make sure that firms operating within its borders are playing by the rules. The EU alone will need to recruit and hire a massive new staff. It's creating a European Centre for Algorithmic Transparency and will have its work cut out trying to attract world-class data scientists to work for the government instead of the deep-pocketed firms they are seeking to monitor.

Moderate Fill in the Blanks 67. So far in the United States, only the state of _____ has enacted laws based on Europe's strict privacy laws.

California; Easy 68. GoodRx was fined $1.5 million for sharing customer _____ with several firms, including Google and Meta. data; Easy Section 19.6 True/False Questions 69. Apple has imposed what it calls “Data Authorization Labels” on app developers, requiring them to have easy-to-read, consistent, and clear notices on what data is collected and how it is used.

False; Easy 70. Google has introduced its own labels for app developers that require them to have easy-to-read, consistent, and clear notices on what data is collected and how it is used.

True; Easy Multiple Choice Questions 71. Ensuring that organizations follow requirements for data protection and security is known as: a. data access b. data governance c. data compliance d. data collection e. data audit c; Easy 72. Due to the complexities of consumer data privacy policy, organizations should a. send constant emails about the updates and changes to privacy policy. b. watch for major issues to surface in the press and through social media. c. assemble an internal team that will monitor relevant and complex issues related to information systems. d. assume journalists, consumer groups, and legislators will stay up to date with changes. e. rely on knowledge of data stewards of third-party firms they share data with. c; Hard 73. The five components of information systems needed to fully understand organizational privacy policies include: a. data, software, hardware, procedures, people b. people, data, hardware, policy, procedures

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c. developers, software, hardware, mobile, policy d. software, hardware, proxy servers, developers, procedures e. policy, data, hardware, developers, people a; Moderate Fill in the Blanks 74. To ensure developers have easy-to-read, consistent, and clear notices on what data is collected and how it is used, Apple implemented a privacy policy standard known as _____.

Privacy Nutrition Labels; Easy 75. Monitoring and controlling an organization’s information technology and systems is known as _____. governance; Easy

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Chapter 20 A Manager’s Guide to the Internet and Telecommunications Section 20.2 True/False Questions 1. When the Internet really took off, much of the Internet’s operating infrastructure transitioned to be supported by government grants rather than private firms.

False; Moderate 2. The Internet has no center, and no one owns it.

True; Easy 3. In the URL, the host name is the name of the network a user tries to connect to.

False; Easy 4. The language “http” is used to create and format Web pages.

False; Easy 5. Changing the letter case when typing in host and domain names does not affect the user’s ability to reach the destination.

True; Easy 6. Dot-com domain name registration is carried out on an auction basis to ensure the highest bidder gains rights to the desired domain name.

False; Easy 7. Servers or organizations do not need to be housed within a country in order to use a country code as part of their domain name.

True; Moderate 8. A device gets its IP address from whichever organization is currently connecting it to the Internet.

True; Easy 9. Unfortunately, IPv6 isn’t backward compatible with IPv4.

True; Easy 10. IP addresses can oftentimes be used to identify a user’s geographic location.

True; Easy 11. Google dropped the padlock icon from its sites, when its own studies showed that a closed padlock conveyed potential security breach concerns.

False; Easy 12. “Cyber hygiene” refers to fairly straightforward precautions that should be taken for site safety.

True; Easy 13. Under IPv6, IP addresses are expressed as a string of four numbers between 0 and 255, separated by a period.

False; Moderate

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14. GeoTLDs are associated with a geographical, geopolitical, ethnic, linguistic, or cultural community.

True; Easy 15. A 2023 survey showed that one in five DNS records were vulnerable to some form of hijacking due to poor “cyber hygiene.”

True; Easy Multiple choice Questions 16. One of the factors that accelerated the development of the Internet during the 1990s was a. the introduction of the personal computer into households. b. the government’s taking over of the Internet’s operating structure from private players. c. Intel’s invention of low power processors used in portable computers. d. the creation of the Windows and Mac OS operating systems. e. the invention of graphical Web browsing. e; Easy 17. The address one types into a Web browser is also known as a: a. universal redirection link b. uniform resource locator c. unique resource locator d. universal redirection locator e. uniform resource link b; Easy 18. Which of the following statements holds true for the term “HTML”? a. It refers to high-speed data lines provided by many firms all across the world that interconnect and collectively form the core of the Internet. b. It refers to the broadband service provided via light-transmitting fiber-optic cables. c. It refers to the language used to create and format Web pages. d. It refers to a situation when separate ISPs link their networks to swap traffic on the Internet. e. It refers to a system that connects end users to the Internet. c; Easy 19. A _____ enables communication by defining the format of data and rules for exchange. a. nomenclature b. regulation c. protocol d. dialect e. convention c; Easy 20. The hypertext transfer protocol (http) defines the communication between: a. Web browsers and Web servers b. operating systems and Web browsers c. hardware and operating systems d. mail servers and hardware e. hardware and Web browsers a; Easy

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21. Popular sites like Google and Yahoo! have several computers assigned to their host names because a. they have operations in different countries. b. they are registered under several generic top-level domain names. c. of the different devices used to access these websites. d. hoarding all information in one server is expensive. e. it ensures that the load of requests to their sites does not overwhelm a single computer. e; Moderate 22. A firm that provides hardware and services to run websites of others is known as a(n): a. Website incubator b. Internet service facilitator c. Web domain name registrar d. Web hosting service e. Internet Web fab d; Easy 23. What is an example of cybersquatting? a. overwhelming a firm’s website by flooding it with seemingly legitimate messages b. acquiring a domain name to extort a firm, individual, product, or trademark holder c. slowing down packet transfer to an Internet-connected computer d. threatening to destroy information stored in a firm’s servers e. hacking into and defacing an organization’s public web presence and refusing to let the site’s owner regain control b; Easy 24. “HTML” is used to a. load content from default page. b. create and format Web pages. c. generate custom content for database users. d. exchange mail with other e-mail servers. e. transfer files from flash drives. b; Easy 25. The domain name service (DNS) is a distributed database that allows users to communicate with other computers by a. assigning IP addresses to different domain names. b. mapping host names to domain names. c. creating IP addresses that are unique to servers. d. assigning domain names to different IP addresses. e. mapping host and domain names to IP addresses of computers. e; Moderate 26. A(n) _____ is a temporary storage space used to speed computing tasks. a. cache b. IP address c. protocol d. domain name service e. hypertext markup language a; Easy 27. The fault-tolerant nature of the DNS ensures that

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a. if users can’t reach a host computer, they are redirected back to the previous page. b. mistyped or misspelled Web addresses are automatically corrected. c. if a document or file can’t be accessed, it won’t result in a 404 error. d. the service continues functioning even if one nameserver goes down. e. mismatched host names and domain names are still assigned with the correct IP address. d; Moderate 28. Which of the following is the host name for the website http://www.nytimes.com/tech/index.html? a. index.html b. tech c. nytimes d. www e. http d; Moderate 29. Which of the following is the domain name for the website http://www.nytimes.com/tech/index.html? a. index.html b. tech c. nytimes d. www e. http c; Moderate 30. The exploit referred to as _____ allowed hackers to leverage vulnerability in DNS software to redirect users to sites they did not request. a. cybersquatting b. phishing c. an online imposture d. cache poisoning e. a distributed denial of request d; Easy 31. A security standard that creates an encrypted link between a Web server and a browser is known as a(n): a. SSL b. FTP c. ISP d. sTLD e. DNS a; Moderate Essay Questions 32. Identify the various components in the following Web address and briefly describe each of them: http://en.wikipedia.org/wiki/Web_address • “http” is the application transfer protocol used in the Web address and stands for “hypertext transfer protocol.” The http protocol defines how Web browser and Web servers communicate and is designed to be hardware and operating system independent.

• “en” refers to the host name indicating the computer hosting the website. The host name is assigned an IP address that helps locate the host computer.

• “wikipedia” refers to the domain name and “.org” is the top-level domain.

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•

“wiki” is the path that maps to the folder location where the file is stored under the filename “Web_address.”

Moderate 33. Describe cybersquatting and the protections that may be offered to a victim of this type of crime.

Cybersquatting involves individuals acquiring a domain name that refers to a firm, individual, trademark, or product with the intention of exploiting interested individuals for financial gain. An example would be if you own a business and you decide to set up an online presence. When you check to see if the domain name is available for your website, you find out that it was recently registered.

You visit the site, and it includes a note to contact the owner. When you contact the individual, they offer to sell you the domain name. It’s evident the individual never had any intention of using the domain. Laws have been put into place to protect individuals from cybersquatters such as these.

Extorting individuals and organizations by acquiring domain names is illegal. The United States passed the Anticybersquatting Consumer Protection Act (ACPA), and international protections include the UniformDomain-Name Dispute-Resolution Policy (UDRP). Victims can take legal actions against cybersquatters which can result in loss of the domain fines.

Hard 34. Briefly describe how the DNS helps users communicate with each other.

The domain name service is a distributed database that looks up the host and domain names that a user enters and returns the actual IP address for the computer that the user wants to communicate with. It’s like a big, hierarchical set of phone books (called nameservers) capable of finding Web servers, e-mail servers, and more. When a user enters a Web address, the computer connects to the DNS resolver, the function of which is to start a lookup for the address. The resolver starts at one of the thirteen root nameservers, which, in turn, points the resolver to the top-level domain nameserver.

This lookup is repeated for the domain name and host name and finally the IP address for the combination is located and passed onto the computer. Thus, the user’s computer is ready to communicate with the computer hosting the website.

Moderate 35. Define load balancing and fault tolerance and explain the benefit of employing each.

Load balancing is distributing a computing or networking workload across multiple systems to avoid congestion and slow performance. Fault Tolerance is the ability of a system to continue operation even if a component fails. Popular websites often have several computers that work together to share the load for incoming requests. Assigning several computers to a host name offers both load balancing and fault-tolerance which helps ensure that all visits to a popular site like https://www.google.com won’t overload a single computer, or that Google doesn’t go down if one computer fails.

Hard Fill in the Blanks 36. _____ is the nonprofit organization responsible for managing the Internet’s domain and numbering systems.

ICANN (Internet Corporation for Assigned Names and Numbers); Moderate 37. The protocol used for exchange of mail between e-mail servers across the world is called _____.

Simple Mail Transfer Protocol (SMTP); Easy 38. _____ is the language used to compose Web pages.

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Hypertext markup language (HTML); Easy 39. _____ refers to the application transfer protocol that is used to copy files from one computer to another.

File transfer protocol; Easy 40. A technique known as _____ uses a gateway that allows multiple devices to share a single IP address.

This can be useful in organizations that have a limited number of conventional IP addresses.

NAT or network address translation; Easy 41. An sTLD’s use is restricted for sponsored _____ domains. top-level; Moderate 42. The “cc” in ccTLD stands for_____. country code; Easy 43. A DNS hijack of Curve Finance allowed hackers to steal over half a million dollars’ worth of _____ before the hack was discovered. crypto; Moderate 44. Firms are permitted to secure gTLDs for their own trademarks, sometimes referred to as _____ gTLDs or TLDs, and such firms don’t have to bid, nor allow other firms to access them. brand; Moderate Section 20.3 True/False Questions 45. Routers don’t have perfect, end-to-end information on all points in the Internet.

True; Hard 46. The routing protocol that is in charge of forwarding packets on the Internet is known as voice over Internet protocol.

False; Easy 47. Wall Street traders often choose a colocation facility with the goal of providing high-latency connectivity to their partners.

False; Moderate 48. TCP and IP operate above http and the other application transfer protocols.

False; Easy 49. The TCP works at both ends of Internet communication.

True; Easy 50. The User Datagram Protocol (UDP) acts as a substitute to TCP when there is a need for speed of communication, but where perfect and complete transmission quality can be sacrificed.

True; Easy

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51. Circuit-switched networks are advantageous because they offer an inexhaustible supply of bandwidth for telecommunications.

False; Easy 52. ISPs and IXPs that carry out peering are required by the FCC to charge each other fees based on their traffic contribution.

False; Moderate 53. Computer programs making decisions without any human intervention conduct most U.S. stock trading.

True; Easy 54. Wireless transmission can happen via Wi-Fi for shorter distances or via cell phone towers or satellites over longer distances.

True; Easy Multiple Choice Questions 55. The Internet Protocol Suite consists of the Internet Protocol and: a. File Transfer Protocol b. Simple Mail Transfer Protocol c. Session Initiation Protocol d. Datagram Congestion Control Protocol e. Transmission Control Protocol e; Easy 56. One of the functions of the IP is to a. route message packets to the final destination. b. slice up the message into smaller chunks of data called packets, to be sent over the network. c. check for damaged or corrupt message packets and request for replacements, if needed. d. label message packets with source and destination addresses. e. rearrange message packets in the same sequence as they were sent. a; Moderate 57. Which of the following applications is most likely to use UDP instead of TCP? a. e-mail b. Web transmissions c. file transfer d. peer-to-peer downloads e. Web-based phone calls e; Easy 58. Internet networks are: a. bit-switched networks b. circuit-switched networks c. data-switched networks d. packet-switched networks e. byte-switched networks d; Easy 59. Peering refers to

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a. high-speed data lines provided by many firms all across the world that interconnect and collectively form the core of the Internet. b. the broadband service provided via light-transmitting fiber-optic cables. c. the language used to compose Web pages. d. a situation when separate ISPs connect their networking equipment together to share traffic. e. a system that connects end users to the Internet. d; Moderate 60. _____ involves allowing voice packets to gain delivery importance over packets for applications like e-mail. a. Voice precedence b. Data rationing c. Right-of-way for voice d. Information queuing e. Packet prioritization e; Easy 61. Circuit-switched networks provide connection between two parties that a. uses a single router for each individual on either end of the connection. b. is dedicated for use by the parties for the duration of a connection. c. repeatedly switches between an open and closed state depending on whether someone is speaking, or other noise is being transmitted during a call. d. slice up the conversation into smaller chunks and transmitting them over a shared circuit that mixes content with other callers but routes and reassembles a call to the correct recipient. e. prioritize voice calls over other connections on IP networks. b; Easy 62. Peering usually takes place at neutral sites called: a. https b. IPs c. ISPs d. IXPs e. STPs d; Easy 63. _____ repeatedly sends a cluster of three packets starting at the first router connected to a computer, then the next, and so on, building out the path that packets take to their destination. a. Firewall b. Router c. Pathfinder d. Mapper e. Traceroute e; Easy 64. The acronym HFT refers to: a. High Finance Telecommunications b. High Fidelity Transmissions c. Hedge Fund Transfers d. High Frequency Trading e. Hypertext File Transfer d; Easy

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Essay Questions 65. Most trading actions have been automated. How is technology helping the financial industry meet their need for speed?

The bulk of trading in the financial industry takes place without human interactions. Nearly 80% of financial trading transactions are automated. Programmers are essential for developing systems to support algorithmic trading. Programs must build efficient systems and avoid latency whenever possible. A lag in technology may result in loss of opportunities and money. To be as efficient as possible, firms are moving their servers to colocation facilities to get fast connections and have experts manage the needs of the high-volume servers. When colocation facilities are not an option, firms are utilizing light-speed point-to-point transmission towers. Advances in financial technology have sped low latency to microseconds, but advanced technology and increased speed do come with risks. A single issue has the potential to trigger issues just as quickly as transactions.

Hard 66. Describe the process involving the transmission of a Web page from a Web server to a user’s computer.

TCP and IP operate below http and the other application transfer protocols. TCP works its magic at the start and endpoint of the trip—on both the user’s computer and on the destination computer they’re communicating with. If a Web server wants to send the user a large Web page, the Web server application hands the Web page it wants to send to its own version of TCP. TCP then slices the Web page up into smaller chunks of data called packets (datagrams). The packets are like little envelopes containing part of the entire transmission—they’re labeled with a destination address and a source address. The TCP on the Web server hands over these packets to the IP. The IP routes the packets to their final destination, and these packets might have to travel over several networks to get to where they’re going. The relay work is done via special computers called routers, and these routers speak to each other and to other computers using IP. Once the transmitted packets are received by the destination computer, that machine’s version of TCP takes over by checking to make sure that it has all of the packets it was sent and that no packets were damaged or corrupted. It also requests replacement packets (if needed), and then puts the packets in the correct order, passing a perfect copy of the transmission.

Moderate 67. Compare circuit- and packet-switched networks.

Old phone systems use a technology called circuit switching. A “circuit” is a dedicated connection between two entities. In a circuit-switched network, a call results in a circuit being opened, dedicating a specific amount of capacity between the communicating parties. The users are using that “circuit” regardless of whether they are talking or not.

Internet networks are packet-switched networks, and these can be more efficient. Since conversations can be sliced up into packets, they can be squeezed into smaller spaces. If there are pauses in a conversation or someone’s on hold, applications don’t hold up the network. And that creates an opportunity to use the network’s available capacity for other users. The trade-off is one that swaps circuit-switching quality of service (QoS) with packet switching’s efficiency and cost savings.

Moderate Fill in the Blanks

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68. A(n) _____ is a computing device that connects networks and exchanges data between them. router; Easy 69. A unit of data forwarded by a network is called _____. packet/datagram; Easy 70. A location where gear from multiple telecom firms can come together and peering can take place is called a(n) _____. colocation facility or colo, sometimes called a carrier hotel; Moderate 71. The term _____ is used by technologists to refer to delay. latency; Easy Section 20.4 True/False Questions 72. Most mobile large cell phone carriers are exempted from having to license the wireless spectrum for transmission.

False; Easy 73. When considering overall network speed, a system’s speed is determined by its fastest component.

False; Moderate 74. Many residential providers of cable technology use a system that requires customers to share bandwidth with neighbors.

True; Easy 75. DSL technology is less efficient for service providers in the United States because many of their customers live in less-densely populated suburbs and rural areas.

True; Moderate 76. Many fear that innovation might suffer as a result of the transition of Internet services from flat-rate pricing to metered usage.

True; Moderate 77. A major benefit of 5G is that its transmission points are much smaller than the massive towers used to support 4G, allowing 5G access to be built in places such as on top of traffic lights or below manhole covers.

True; Easy 78. The Biden administration has reinstated net neutrality provisions that were thrown out by the Trump administration.

True; Easy 79. Google’s efforts to provide more Internet access to underserved populations did not include CSquared due to its extreme cost.

False; Easy

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80. The U.S. Federal Aviation Administration sought to delay some 5G C-band use near airports over aviation safety concerns and has proposed additional upgrades for aircraft to prevent possible interference.

True; Easy Multiple Choice Questions 81. Which of the following is true of the term Internet backbone? a. It refers to high-speed data lines provided by many firms all across the world that interconnect and collectively form the core of the Internet. b. It refers to broadband service provided direct to a home or business using light-transmitting fiberoptic cables. c. It refers to the collection of standards used to support all Internet services. d. It refers to government-provided open spectrum that enables Internet use for all. e. It refers to a government-run system supported by telecommunication taxes, which connects end users to the Internet. a; Easy 82. _____ is the insulated copper cable commonly used by cable television providers with shielding to reduce electrical interference. a. Optical fiber cable b. Coaxial cable c. Ribbon cable d. FTTH cable e. Amdahl cable b; Easy 83. One of the disadvantages of cable technology is that a. it is more expensive than other signal-carrying systems. b. while it works well for television signals, it is ineffective for data transmissions required by the Internet. c. systems used by many providers require customers to share bandwidth with neighbors. d. it is incompatible with most modern communication systems. e. the speed of the connection rises in conjunction with the distance between the end customers from the central hub. c; Moderate 84. _____ technology is a broadband technology that can use the wires of a local telephone network. a. Fiber to the Home (FTTH) b. Digital Subscriber Line (DSL) c. Coaxial cable d. Telecom-broadband hybrid e. Broadband over power line (BPL) b; Easy 85. Which of the following statements is true of the term “FTTH”? a. It refers to high-speed data lines provided by many firms all across the world that interconnect and collectively form the core of the Internet. b. It refers to broadband service provided via light-transmitting fiber-optic cables. c. It refers to the language used to compose Web pages. d. It refers to a situation when separate ISPs link their networks to swap traffic on the Internet.

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e. It refers to a system that connects end users to the Internet. b; Moderate 86. A potential roadblock to transition of DSL to FTTH is the a. high costs of building entirely new networks. b. scarcity of the material required to create the cables. c. impracticality of switching to a technology that is not proven yet. d. location driven quality of service offered by fiber optic technology. e. high possibility of external interference and hence, fears of information security. a; Moderate 87. The frequencies licensed by telecommunication firms to provide wireless service is known as: a. GEO and LEO range b. mobile service array c. wireless spectrum d. communication backbone e. communication bandwidth c; Easy 88. The most dominant standard for 4G technology worldwide is: a. Wi-Fi b. WiMax c. GPRS d. Circuit switching e. LTE e; Easy 89. Which of the following is not a complication associated with implementing 5G services? a. 5G transmission points are much larger than even the massive towers used to support 4G. b. Building infrastructure and related operating expenses are proving much costlier than previously expected. c. Many 5G firms in the United States had planned to use technology from the Chinese firm Huawei, a firm banned by the Trump administration citing security concerns. d. Each wireless access point only covers a limited distance. e. All of the above are complications associated with implementing 5G services. a; Easy 90. Which of the following refers to wireless systems provided by earth-bound stations like cell phone towers? a. geostationary wireless b. ground wireless c. terrestrial wireless d. geosynchronous wireless e. LEO systems c; Easy 91. Mobile providers can be susceptible to poor coverage indoors as a result of a. spectrum used by most mobile phone firms that does not travel well through solid objects. b. a high degree of latency. c. network congestion that clogs up the network traffic. d. a lack of sufficient number of towers owing to the not-in-my-backyard problem.

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e. an increase in bandwidth demand placed on their networks. a; Easy 92. Supporters of net neutrality believe that a. it will improve innovation. b. it will keep costs low. c. it will level the playing field among competitive services offered over the Internet. d. All of the above are true. e. None of the above are true. d; Easy 93. The fastest last-mile technology is: a. ADSL b. CATV c. coaxial cable d. DSL e. FTTH e; Moderate Short Answer Questions 94. Briefly describe a few of the measures being taken to speed up the Internet’s last mile.

• Cable broadband: Uses a thick copper wire to offer broadband access. That wire (called a coaxial cable or coax) has shielding that reduces electrical interference, allowing cable signals to travel longer distances without degrading and with less chance of interference than conventional telephone equipment.

• Digital Subscriber Line (DSL): DSL technology uses the copper wire that phone companies have already run into most homes.

• Fiber to the Home: Uses optic fibers to transmit data in the form of light. It is the fastest lastmile technology around. It can scale up to so-called Gig-speed and can also work over long distances.

Moderate 95. Explain the evolution of satellite wireless telecommunication technology.

Wireless systems provided by earth-bound base stations like cell phone towers are referred to as terrestrial wireless, but it is possible to provide telecommunications services via satellite. The first residential satellite services were download-only, which still needed a modem or some other connection to send any messages from the computer to the Internet. Many early systems also required large antennas and were quite expensive. Finally, some services were based on satellites in geosynchronous earth orbit (GEO). GEO satellites circle the earth in a fixed, or stationary orbit above a given spot on the globe, but in order to do so they’re positioned out at a distance roughly equivalent to the planet’s circumference.

Among a new generation of satellite providers trying to overcome the weaknesses of past efforts is O3b. The name stands for the “Other 3 Billion,” of the world’s population who lack broadband Internet access, and the firm has already begun to provide “fiber-quality” wireless service to underserved portions of the developing world, as well as others needing connectivity outside traditional cell networks, such as cruise ships and the US Navy. These “middle earth orbit” (MEO) satellites will circle closer to the earth to reduce latency (only about 5,000 miles up, less than onefourth the distance of GEO systems).

Moderate

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Fill in the Blanks 96. The term _____ refers to frequencies used for wireless communication. spectrum; Easy 97. Internet services that run at download speeds of a minimum of 25 Mbps and upload speeds of three Mbps are called _____. broadband; Moderate 98. The three-letter acronym for the basic unit of expression for bandwidth is _____. bps (bits per second); Easy 99. _____ is the principle that all Internet traffic should be treated equally.

Net neutrality; Easy 100. _____ Law states that a system’s speed is determined by its slowest component.

Amdahl’s; Moderate 101. _____ makes internet, phone, and text services restrictive to much of the mobile population.

Approximately 85 percent of the World's mobile population is on a pay-as-you-go monthly plan.

Cost; Easy 102. The first residential _____services were only used for downloads, which still needed a modem or some other connection to send any messages from the computer to the Internet, required large antennas, and were quite expensive. satellite; Easy 103. _____is the principle that all Internet traffic should be treated equally, and ISPs should not discriminate, slow down access, or charge differentially by user, content, site, platform, application, type of attached equipment, or modes of communication.

Net neutrality; Easy 104. _____ accounts for more than 50 percent of all active satellites in use today.

SpaceX; Easy 105. Bluetooth is a Bluetooth is a standard for _____ wireless connectivity, typically meant to eliminate cabling used for things like speakers, printers, cameras, and other devices. short-range; Easy Section 20.5 True/False Questions 106. An alternative to terrestrial networks is Starlink.

True; Moderate 107. The Starlink Reflection Effect is a feared cascading effect when colliding space debris hits existing objects, creating additional debris and additional collisions.

False; Easy

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108. China has complained to the United Nations that SpaceX's Starlink is unfairly crowding other efforts in space.

True; Easy 109. The Starlink case raises a host of issues for business leaders, politicians, and citizens to consider with regard to positively stewarding technology with varied, widespread, highly impactful, and potentially unknown outcomes.

True; Easy 110. While Starlink has promise, it is not where the majority of SpaceX's valuation comes from.

False; Easy 111. Foreign investment in Starlink rivals has increased with China registering with international authorities to launch its own 13,000-satellite Internet service and the European Union committing 2.4 billion euros to build its own service for both military and civilian use.

True; Moderate Multiple Choice Questions 112. LEO stands for: a. low-grade electric orbiting b. lawful electronic operations c. legacy Earth orbit d. low Earth orbit e. Leo are the initials of the satellite’s inventor. d; Easy 113. How many people world-wide are not yet online? a. 500 million b. 700 million c. 1 billion d. 3 billion e. 6 billion d; Moderate 114. Starlink does not use equipment in a fixed position above a spot. The satellites zoom in and out of range, passing signals to each other using: a. antennas b. mobile networks c. lasers d. All of the above are true. e. None of the above are true. c; Moderate 115. Which of the following is not a group that regularly uses Starlink? a. members of the U.S. military b. humanitarians c. telemedicine providers d. individuals in war-torn countries e. All of the above are groups that regularly use Starlink.

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e; Moderate Essay Question 116. Define geofencing and provide an example.

A geofence is a virtual perimeter around a physical location. Geofencing is often used to send alerts when a device is detected within or outside an area of intended operation. An example of geofencing is Starbucks. The company uses geofencing to advertise their goods to potential customers by sending push notifications to users in the area/nearby a Starbucks location.

Moderate 117. Describe some of the concerns surrounding the Starlink effort.

Many are concerned about the potential for the satellites to overcrowd and collide with other objects in space. Astronomers also claim that the light pollution from Starlink's network makes it more difficult to observe objects that might potentially collide with Earth. The Starlink satellites are also keeping astronomers from being able to conduct basic ground-based astronomy using earthbound telescopes. Musk is also controversially exerting his influence to limit Starlink capabilities for groups like the Ukrainian military. Many countries, including Taiwan, are not willing to rely on Starlink due to Musk being at its helm.

Moderate Fill in the Blanks 118. The _____ Effect is a feared cascading effect that colliding space debris will hit existing objects, creating additional debris and additional collisions.

Kessler; Easy 119. GEO satellites orbit the Earth at a fixed position and this distance means _____ satellites can cover a larger geographic distance, but it also increases latency due to the time taken to send a signal from ground antennas to satellites and back. fewer or less; Hard 120. Amazon’s Project _____ is an effort to support a high-speed Internet service for residential and business customers that will include over 3,200 LEO satellites.

Kuiper; Moderate 121. Starlink requires many _____ satellites than GEO efforts. more; Easy

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Chapter 21 Information Security: Barbarians at the Gateway (and Just About Everywhere Else) Section 21.1 True/False Questions 1. A vast majority of security breaches are not preventable and happen despite the best security practices.

False; Easy 2. Almost all security breaches can be traced back to technology lapses; personnel or procedural factors rarely factor in.

False; Easy 3. The malware used to breach Target was described by one security expert as “absolutely unsophisticated and uninteresting.”

True; Easy Multiple Choice Questions 4. Which of the following is a valid statement on information security? a. Security breaches cannot be prevented despite the adoption of the best security policies. b. Technology lapses are solely responsible for almost all security breaches. c. Information security is everybody’s responsibility. d. Greater expenditure on security products is the only way to contain security breaches. e. A reactive, rather than proactive, approach is better suited for dealing with security breaches. c; Easy 5. The Equifax hack mainly impacted people from: a. the United States b. Canada c. the United Kingdom d. All of the above are true. e. None of the above are true. d; Moderate Short Answer Questions 6. Describe some of the factors at work that enabled the Target security breach to occur.

Security software notification went off shortly after unauthorized software began collecting data inside Target’s network, but Target ignored the warning. While the area where credit card transactions are processed is supposed to be walled off from other areas of the Target network, hackers found holes and eventually nestled their code in a sweet spot for grabbing customer data, disguising the code with the label “BladeLogic” the name of a legitimate data center management product. The firm’s security software has an option to automatically delete malware as it’s detected but Target’s security team had turned that function off.

Moderate 7. What are some of the key managerial takeaways from the Target security breach?

The Target security breach is a very important case in terms of how information security needs to be approached. Some of the key lessons that the case offers are: 1) Information security is everyone’s business and needs to be made a top organizational priority.

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2) Firms suffering a security breach can experience direct financial loss, exposed proprietary information, fines, legal payouts, court costs, damaged reputations, plummeting stock prices, and more.

3) Information security isn’t just a technology problem; a host of personnel, operational, and procedural factors can create and amplify a firm’s vulnerability.

Moderate Fill in the Blanks 8. Security firm FireEye notified _____ about unauthorized software collecting data inside their network, but the firm ignored the warning.

Target; Easy 9. The massive impact of the Target breach should make it clear that _____ must be a top organizational priority. security; Easy 10. The Log4j incident gives a sense of how vulnerable the _____ infrastructure is.

Internet; Easy Section 21.2 True/False Questions 11. Organized crime networks now have their own R&D labs and are engaged in sophisticated development efforts to piece together methods to thwart current security measures.

True; Easy 12. A black hat hacker looks for weaknesses in security mechanisms, with a view to help plug the holes that might be exploited by cyber-criminals.

False; Easy 13. Hackers might infiltrate computer systems to enlist hardware for subsequent illegal acts.

True; Easy 14. Data harvesters are cybercriminals who infiltrate systems and collect data for illegal resale.

True; Easy 15. Botnets can be described as hordes of surreptitiously infiltrated computers, linked and controlled remotely, also known as zombie networks.

True; Easy 16. The MOVEit exploit is considered one of the costliest hacks of all time.

True; Moderate 17. The Hydra dark web market, which at its peak did over $1 billion in annual business, is still active despite law enforcement efforts since 2022.

False; Easy 18. Defensive security professionals responsible for maintaining internal network defenses against all cyberattacks and threats are known as the blue team.

True; Moderate

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19. Some of the world’s most notorious botnet hackers started their efforts as teenagers, eventually creating a botnet four times more powerful than any previously unleashed.

True; Moderate Multiple Choice Questions 20. Cyber criminals who infiltrate systems and collect data for illegal resale are called: a. cash-out fraudsters b. data harvesters c. corporate spies d. ethical hackers e. information hoarders b; Easy 21. Which of the followings aspects of international law would enable a cyber-criminal operating across borders to evade prosecution? a. lack of technology to identify the origin of a security attack b. non-recognition of commission of a security-related crime c. unwillingness of developed countries to share technical know-how with lesser-developed countries d. non-existent extradition agreements between two countries e. technological incompatibility between the two countries d; Moderate 22. Hordes of surreptitiously infiltrated computers, linked and controlled remotely, are known as zombie networks or: a. honeypots b. zombots c. botnets d. blacklists e. megabots c; Easy 23. A research scientist with a major pharmaceutical firm in New Jersey is caught passing on sensitive information, worth millions of dollars, regarding the composition and test results of his firm’s latest drug to a rival company. What crime is he being held responsible for? a. cyber-fraud b. corporate espionage c. carrying out technology disruptions d. extortion e. illegal funds transfer b; Moderate 24. An attack on the U.S. power grid by terrorists or a foreign power is indicative of: a. DDoS attacks b. espionage c. cyberwarfare d. extortion e. phishing c; Easy 25. The term _____ originally referred to a particularly skilled programmer. a. data harvester b. white hat hacker c. hacker

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d. black hat hacker e. hacktivist c; Easy 26. A(n) _____ is someone who uncovers computer weaknesses and reveals them to manufacturers or system owners, without exploiting these vulnerabilities. a. hacktivist b. data harvester c. corporate spy d. white hat hacker e. ethical cyber criminal d; Easy 27. A protester seeking to make a political point by leveraging technology tools, often through system infiltration, defacement, or damage is called a(n): a. activist b. cyber agitator c. hacktivist d. ethical hacker e. cybersquatter c; Easy 28. Which of these would be an example of a DDoS attack? a. an extortion attempt where hackers threaten to reveal names and social security information stolen from medical records databases b. overloading a popular social networking site with inbound messages to shut down access to the site c. launching a targeted phishing campaign on a department of defense or other surveillance network. d. stealing proprietary data directly from mobile phones using a distributed network of difficultto-trace online services. e. launching tough-to-track click-fraud efforts. b; Moderate 29. Which of the following statements is consistent with ground realities regarding information security? a. Cyber-crime is not yet considered a serious enough threat to warrant the attention of lawenforcement agencies. b. Law-enforcement agencies are well-resourced to fight cyber-crimes effectively. c. Governments usually outmatch private industry in terms of retaining top talent with incentives and generous pay. d. Law-enforcement agencies struggle to hire, train, and retain staff capable of keeping pace with today’s cyber-criminals. e. Cyber-crime is not rewarding in terms of financial gain. d; Easy 30. Many U.S. technology firms believe that U.S. government surveillance techniques put them at a disadvantage relative to foreign firms because a. some customers have begun seeking alternative products and services untarnished by the perception of having (complicity or unwittingly) provided private information to authorities. b. the cost to include government surveillance technology inside their products is expensive and lowers profits compared to rivals. c. the government-required installations of software, such as Stuxnet, that U.S. tech firms must comply with inevitably take up valuable storage space, adding cost to industrial and commercial products.

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d. the cost to house government workers on-site is a burden private corporations should not have to shoulder. e. firms in foreign governments are directly contracted to perform surveillance and are compensated for their efforts with perks and tax breaks, while U.S. firms receive no such compensation. a; Easy 31. Computer criminals, state-sponsored infiltrators, corporate spies, and other malfeasants are often motivated by: a. account theft and illegal funds transfer b. terrorism c. surreptitiously hijacking hacked hardware for cryptocurrency mining d. cyberwarfare e. Any of the above are true. e; Easy 32. Which of the following is an example of Russia’s use of cyberwarfare? a. taking out Ukraine's Viasat satellite b. interrupting Internet service across Europe c. causing outages in the German wind turbine power grid d. All of the above are true. e. None of the above are true. d; Moderate Essay Questions 33. The topic of U.S. government surveillance continues to be hotly debated, with strong opinions in favor of surveillance programs, as well as vocal protestations of government overreach. Briefly give the argument for and against U.S. government surveillance practices.

The U.S. government contends that hundreds of terrorists have been captured using technology surveillance methods, implying that this surveillance makes the world more secure. The U.S. government claims that safeguards are in place to prevent widespread abuse, and these include the need to obtain a warrant from the Foreign Intelligence Surveillance Court (or FISA) when specifically targeting surveillance in the United States.

Those concerned with government surveillance state that no such warrants are required for intercepting communication between U.S.-based persons and “foreign targets,” and FISA has rejected only a small number of requests (less than 0.03 percent through 2012). Even if such surveillance programs are well intentioned, risks include having the data fall into the hands of foreign spies, rogue employees, criminals, or unscrupulous government employees. U.S. technology firms have also complained that the actions of surveillance agencies have put them at a disadvantage, with customers looking for alternatives free of the tarnished perception of having (complicity or unwittingly) provided private information to authorities.

Hard 34. What are botnets and how are criminals using this technology?

Botnets are networks of infiltrated and compromised machines controlled by a central command, and these have been used for all sorts of nefarious activity such as sending spam from thousands of difficult-to-shut-down accounts, launching tough-to-track click fraud efforts or staging what’s known as distributed denial of service (DDoS) attacks (effectively shutting down websites by overwhelming them with a crushing load of seemingly legitimate requests sent simultaneously by thousands of machines). Some criminals use botnets to extort business owners with the threat of shutdown unless they pay. Botnets have been discovered that are capable of sending out 100 billion spam messages a day, and botnets as large as 10 million zombies have been identified.

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Such systems theoretically control more computing power than the world’s fastest supercomputers.

Moderate Fill in the Blanks 35. The virtual shutdown of websites by way of overloading them with seemingly legitimate requests sent simultaneously from thousands of machines is termed as _____ attacks. distributed denial of service (DDoS); Moderate 36. _____, probably the most notorious known act of cyberwarfare effort to date (one expert called it “the most sophisticated worm ever created”), is suspected to have been launched by either U.S. or Israeli intelligence (or both), and it infiltrated Iranian nuclear facilities and reprogrammed the industrial control software operating hundreds of uranium-enriching centrifuges.

Stuxnet; Moderate 37. _____ refers to a term that either means breaking into a computer system or a particularly clever solution.

Hack; Easy 38. Former CIA employee and NSA contractor, _____ is seen by many as either a whistle-blowing hero or a traitorous villain. This person gathered sensitive digital documents from U.S., British, and Australian agencies, and leaked them to the press, exposing the extent of government surveillance efforts.

Edward Snowden; Easy 39. Corporate _____might be performed by insiders, rivals, or even foreign governments. espionage; Easy 40. _____ are criminals who purchase assets from data harvesters to be used for illegal financial gain.

Cash-out fraudster; Moderate Section 21.3 True/False Questions 41. Two-factor authentication is favored for most security situations since it’s considered to be fast and convenient for customers.

False; Easy 42. One of the reasons one should be careful about clicking on any URL in an e-mail is that hackers can easily embed a redirection in e-mail links, rerouting a user to an alternate online destination.

True; Easy 43. The information systems of several firms have been compromised by insiders that can include contract employees, cleaning staff, and temporary staffers.

True; Easy 44. Social networking sites such as Facebook and LinkedIn form valuable sources of vital information that can be used to craft a scam by con artists.

True; Easy

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45. Spear phishing attacks specifically target a given organization or group of users.

True; Easy 46. URL-shortening services such as bit.ly limit the impact of phishing posts since the shortened URL will clearly reveal the destination arrived at when clicked on.

False; Easy 47. Challenge questions offered by websites to automate password distribution and resets are formidable in protecting the privacy of email accounts.

False; Easy 48. Websites of reputed companies can also be sources of malware.

True; Easy 49. Dumpster diving refers to physically trawling through trash to mine any valuable data or insights that can be stolen or used in a security attack.

True; Easy 50. Because of Moore’s Law, widely used encryption programs currently employed by banks and ecommerce sites are now easily penetrated by brute-force attacks that can be employed by hackers using just a handful of simple desktop computers.

False; Moderate 51. In public-key encryption systems, the functions of the public and private keys are interchangeable.

False; Easy 52. It’s bad when a firm’s e-mail and password file is stolen; however, the impact is minimized because user passwords set up for one system cannot be used on others.

False; Easy 53. Worms require an executable (a running program) to spread, attaching to other executables.

False; Easy 54. The term deepfake refers to sophisticated media created by AI that attempts to look or sound like a real person or event.

True; Easy 55. While many unsophisticated phishing scams can be easily identified by poor grammar and other suspiciously worded text, scammers are now using generative AI to craft more sophisticated phishing emails.

True; Easy 56. Cybersecurity experts have just recently started using artificial intelligence and they are unsure of its promise.

False; Easy 57. Because GitHub regularly warns users if it identifies credentials in a public code repository, the site rarely finds any “secrets revealed” through public repositories.

False; Easy Multiple Choice Questions

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58. The use of public wireless connections can increase a user’s vulnerability to monitoring and compromise. _____ software can be used to encrypt transmissions over public networks, making it more difficult for a user’s PC to be penetrated. a. DDoS b. Rootkit c. Keylogging d. CAPTCHA e. VPN e; Easy 59. Which of the following types of infiltration techniques does one open up to by posting sensitive personal information and details about one’s workplace on social networking sites? a. phishing b. social engineering c. password theft d. virus infections e. physical threats b; Easy 60. Which of the following are considered sources of information that can potentially be used by social engineers? a. LinkedIn b. corporate directories c. social media posts d. contests or surveys e. All of the above are true. e; Easy 61. A bank customer receives a message, ostensibly from the bank’s website, asking her to provide her login information. Assuming the message is intended to defraud the customer, what type of infiltration technique is being used here? a. spyware b. malware c. social engineering d. phishing e. virus infections d; Moderate 62. Attacks that are so new that they have not been clearly identified, and so have not made it into security screening systems are called: a. novel attacks b. first mover attacks c. non-precedent breaches d. zero-day exploits e. brute force attacks d; Easy 63. Some of the most common guidelines issued by websites when designing a secure password include which of the following? a. The password should be at least eight characters long and include at least one number and other nonalphabet character. b. The password should be short and straightforward. c. The password should include names of family members or pets to be easily remembered.

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d. Choose a hard-to-guess password, then re-use this hardened password across websites. This minimizes instances of calling systems professionals for a password reset, hence eliminating an additional potential vulnerability. e. The password should be the same as your name to trick the hacker. a; Moderate 64. Technologies that measure and analyze human body characteristics for identification or authentication are known as: a. overlamination processes b. biometrics c. smart tags d. bio-embedded systems e. holographs b; Easy 65. Viruses are programs that infect other software or files and require a. a large file size to spread. b. the computer to be shutdown to spread. c. Windows as an operating system to spread. d. a disk-based operating system to spread. e. an executable program to spread. e; Easy 66. Computer systems are often infected with malware by means of exploits that sneak in masquerading as something they are not. These exploits are called: a. rootkits b. trojans c. viruses d. worms e. honeypots b; Easy 67. _____ can be either software-based or deployed via hardware, such as a recording “dongle” that is plugged in between a keyboard and a PC. a. Shadow keyboards b. Bootloggers c. KitRoots d. Keyloggers e. Adwares d; Easy 68. Sifting through trash to uncover valuable data or insights that can be stolen or used to launch a security attack is known as: a. trash recovery b. junk exploring c. dumpster diving d. scrap sifting e. data sieving c; Easy 69. The e-mail password of a senior employee in an organization was compromised by someone observing this user as the employee accessed his account. This is most likely a case of: a. keylogging b. shoulder surfing c. dumpster diving

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d. screen capture e. spyware b; Easy 70. Attacks that exhaust all possible password combinations in order to break into an account are called _____ attacks. a. strong arm b. permuted c. brute-force d. zero-day e. infinity c; Easy 71. Which of the following statements holds true for the term spoof? a. It refers to a con executed using technology, typically targeted at acquiring sensitive information or tricking someone into installing malicious software. b. It refers to e-mail transmissions and packets that have been altered to seem as if they came from another source. c. It refers to scrambling data using a code or formula, known as a cipher, such that it is hidden from those who do not have the unlocking key. d. It refers to a seemingly tempting, but bogus target meant to draw hacking attempts. e. It refers to highly restrictive programs that permit communication only with approved entities and/or in an approved manner. b; Moderate 72. Which of the following statements holds true for the term encryption? a. It refers to a con executed using technology, typically targeted at acquiring sensitive information or tricking someone into installing malicious software. b. It refers to e-mail transmissions and packets that have been altered to seem as if they came from another source. c. It refers to scrambling data using a code or formula, known as a cipher, such that it is hidden from those who do not have the unlocking key. d. It refers to a seemingly tempting, but bogus target meant to draw hacking attempts. e. It refers to highly restrictive programs that permit communication only with approved entities and/or in an approved manner. c; Easy 73. Which of the following is not an example of multi-factor authentication? a. using your voiceprint to access your phone b. entering a password and a chip card c. entering a password and using a fingerprint reader d. receiving a single use password on your registered personal device e. a card swipe combined with an iris scan a; Moderate 74. One of the major problems with the Heartbleed bug in OpenSSL software is that a. the software was embedded in many hardware products that could not be easily patched with automatic software updates. b. any password typed into a CAPTCHA could be monitored by a Van Eck device. c. social engineers could exploit the bug through SQL injection. d. all social media profile data was exposed, giving hackers access to the potential answers many firms ask as part of password security questions. e. it eliminated the ability to expose a URL’s destination by hovering the cursor over an address. a; Easy

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75. A common example of 2FA is a. a social security number. b. a password, plus the use of a separate verification code. c. a complex grid-patterned code established at sign-up. d. a CAPTCHA and personal question (ex: mother’s maiden name). e. asking the user to identify specific items within a photograph. b; Easy 76. _____ cryptography is a type of security where two keys are generated: a public key and a private key. a. Blue Team b. White hat c. Public-key d. DDoS e. 2FA c; Moderate 77. Which of the following is a potential drawback of using passkeys? a. Passkey libraries are tied to your device or a specific vendor. b. Passkeys do not allow you to share passwords with others. c. Passkeys are not yet being implemented by all websites. d. All of the above are true. e. None of the above are true. d; Moderate Essay Questions 78. In many organizations, a single password is used to protect valuable information. Describe multifactor authentication and how an organization can benefit from implementing a multi-level login process.

In many instances, a single password is what separates your data and information from intruders.

Implementing a multi-factor authentication can play a pivotal role in protecting an organization.

Multi-factor authentication consists of two or more items as proof of credential. For example, a user may need to enter a password and use a secondary device to approve access. Using biometric data as an access point can further secure the process. Firms can benefit from multifactor authentication because it slows down traditional attacks. However, this method of password protection is not foolproof. As Google can testify, some hackers are clever enough to get past a multi-level system.

Moderate 79. Describe social engineering and provide an example of how you may be targeted as a student.

Social engineering involves tactics that are intended to get an employee to reveal information or perform other tasks that compromise a firm. Cybercriminals can easily collect information about a firm and its employees to engineer a scam. An example would be sending an email representing themselves as a manager needing assistance opening a secured folder. By convincing the employee the login credentials are needed immediately, the employee has provided a stranger entry into firm files. As a student, I might be targeted through my student email account. A cybercriminal might request my login credentials for the class learning management platform.

These credentials can give access to my account in this instance and everywhere else I use the same credentials. The criminal could deploy a phishing attempt by using my student email account.

Hard 80. Briefly explain the steps one should take to ensure that their highest priority accounts are not compromised easily by hackers.

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A user must make it a priority to create separate, hard-to-guess passwords for each of their highest priority accounts (e.g. e-mail, financial websites, corporate network, and PC). Users should create passwords at least eight characters in length and that include at least one number and another nonalphabetic character. Passwords containing letters and symbols representing hard-to-guess phrases, rather than dictionary words, are considered less susceptible to bruteforce attacks.

Moderate 81. Describe briefly a few of the physical threats posed by hackers to information security with examples for each.

A firm doesn’t just have to watch out for insiders or compromised software and hardware; a host of other physical threats can grease the skids to fraud, theft, and damage. Most large firms have disaster-recovery plans in place that include provisions to back up systems and data to off-site locales, to protect operations and provide a fallback in the case of disaster. Such plans increasingly consider the potential impact of physical security threats such as terrorism or vandalism, as well.

Anything valuable that reaches the trash in a recoverable state is also a potential security breach.

Hackers and spies sometimes practice dumpster diving, sifting through trash in an effort to uncover valuable data or insights that can be stolen or used to launch a security attack. This might include hunting for discarded passwords written on Post-it notes, recovering unshredded printed user account listings, scanning e-mails or program printouts for system clues, recovering tape backups, resurrecting files from discarded hard drives, and more.

Other compromises might take place via shoulder surfing, simply looking over someone’s shoulder to glean a password or see other proprietary information that might be displayed on a worker’s screen.

Firms might also fall victim to various forms of eavesdropping, such as efforts to listen into or record conversations, transmissions, or keystrokes. A device hidden inside a package might sit inside a mailroom or a worker’s physical inbox, scanning for open wireless connections, or recording and forwarding conversations.

Moderate 82. Explain the work of the FIDO (Fast Identity Online) Alliance.

A consortium of leading firms, including tech giants Apple, Amazon, Google, and Microsoft, have been working together on a standard to eliminate the need for any passwords. These companies make up the FIDO Alliance (Fast IDentity Online) which has rolled out standards for a technology called passkey. With passkeys, a user will simply provide a form of identification— usually biometrically via a face recognition or fingerprint, then gain access to a virtually impossible-to-crack access code stored on a user's device.

Moderate Fill in the Blanks 83. The phrase _____ refers to security where identity is proven by presenting more than one item for proof of credentials. Multiple factors often include a password and some other identifier such as a unique code sent via e-mail or mobile phone text, a biometric reading (e.g. fingerprint or iris scan), a swipe or tap card, or other form of identification. two-factor or multi-factor authentication; Easy 84. The phrase _____ refers to security schemes that automatically send one-time use representations of a credit card that can be received and processed by banking and transaction firms at the time of payment. They are in use in ApplePay and Android Wallet. tokenization; Moderate

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85. _____ refers to malware that encrypts a user’s files (perhaps threatening to delete them), with demands that a user pay to regain control of their data and/or device.

Ransomware; Easy 86. Public wireless networks are often vulnerable to monitoring and attack. The use of _____ software can limit threats by encrypting network transmissions over a network.

VPN or virtual private network; Easy 87. Con games that trick employees into revealing information or performing other tasks that compromise a firm are known as _____ in security circles. social engineering; Easy 88. _____ refers to confidence scams executed through technology.

Phishing; Easy 89. The _____ technique zeros in on a sloppy programming practice where software developers don’t validate user input.

SQL injection; Easy 90. Fingerprint readers, retina scanners, voice and face recognition technologies are all part of _____. biometrics; Easy 91. _____ are scrambled character images used to thwart things like automated account setup or ticket buying.

CAPTCHAs; Moderate 92. John is new to his organization and he is slowly getting to know his colleagues. He received an email from Michelle asking for his help accessing one of the secure databases. In the email, she said she needed his login credentials because she was at a meeting and was having problems entering the system. Later he bumped into Michelle and she had no idea about the request for his password. They inspected the original email and realized that the message was not actually from Michelle and the email address was outside of the organization. John is a victim of _____. social engineering; Moderate 93. Michael was excited to interview for a new management role and was sure he would be selected.

He was later informed that a different candidate was selected for the opportunity. As a result, Michael resigned and before leaving, he downloaded and deleted files for several large projects.

Michael may be referred to as a rogue employee or a(n) _____. bad apple; Moderate 94. _____ refers to a trusted third party that provides authentication services in public key encryption schemes.

Certificate authority; Easy 95. _____ are attacks that are so new that they haven’t been clearly identified, so they haven’t made it into security screening systems.

Zero-day exploits; Easy 96. Tools like WormGPT, DarkBERT, DarkBART, and ChaosGPT can be used for a variety of _____. cyberattacks; Moderate 97. _____ is two-factor authentication, a type of security that requires two separate forms of identification to gain access.

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2FA; Easy 98. _____ is a term for an unsophisticated hacker that relies on scripts or downloaded programs to perpetrate hacking, rather than develop original exploits.

Script kiddies; Easy Section 21.4 True/False Questions 99. Regularly updated software lowers a system’s vulnerable attack surface.

True; Easy 100. When using a public wireless network, using VPN software is not advisable as it can reveal your communications to any network eavesdroppers.

False; Easy 101. Hardware failure is the least likely of threats to one’s data.

False; Easy 102. The term ISO 27000 refers to a series of standards representing the set of best practices for implementing, maintaining and improving organizational security.

True; Easy 103. Conforming to industry-standard guidelines and frameworks for organizational security ensures continued immunity from attacks on an organization’s information.

False; Moderate 104. A team working on organizational security should include representatives from general counsel, audit, public relations, and human resources, in addition to those from specialized security and broader technology and infrastructure functions.

True; Easy 105. Online backup services are considered a poor choice for end-users, since this only increases the likelihood that an individual’s data will be hacked.

False; Easy 106. Multiple administrators jointly controlling key systems are an unnecessary burden that adds to the complexity of managing security in an organization.

False; Moderate 107. A firm’s suppliers, buyers, or partners may also require a degree of certification.

True; Easy 108. Microsoft's Security Copilot is specifically trained and regularly updated on information security issues, techniques, and the latest vulnerabilities.

True; Easy 109. System and Organization Controls (SOC) can involve certification by a third-party organization.

True; Easy Multiple Choice Questions

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110. Information security policies would be ineffective without _____ and _____. a. audit; enforcement b. accountability; flexibility c. compliance; subjectivity d. protocols; the backing of ISO e. rigidity; adaptability a; Moderate 111. In security circles the phrase “compliance” refers to a. legal or professionally binding steps that an organization must take. b. security audit practices used by the tech divisions of Big Four accounting firms. c. a firm’s installing software to fulfill government surveillance requirements. d. the U.S. government legislation requiring organizations to share security breaches with law enforcement and industry trade organizations. e. only deploying open source software that is downloaded from approved GitHub locations. a; Moderate 112. Updates that plug existing holes in a software are called: a. patches b. compliance c. maculations d. keys e. dongles a; Easy 113. One of the reasons organizations delay patches to plug holes in their security applications is a. the rising cost of labor. b. lack of information on effectiveness of patches. c. the fear that the new technology contains a change that will cause problems down the road. d. redundancy of patches within a short span of time. e. bureaucratic inefficiency. c; Easy 114. A system that monitors network use for potential hacking attempts and takes preventative action to block, isolate, or identify attempted infiltration, and raise further alarms to warn security personnel is known as a(n): a. firewall system b. whitelist c. intrusion detection system d. honeypot system e. patching system c; Easy 115. Systems that deny the entry or exit of specific IP addresses, products, Internet domains, and other communication restrictions are said to employ a(n): a. intrusion detection software b. access restriction software c. whitelists d. anti-virus software e. blacklists e; Easy 116. What type of tool enforces access privileges and helps verify that systems are not being accessed by the unauthorized, or in suspicious ways? a. audit trails

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b. intrusion detection tools c. access control tools d. user-tracking tools e. network watching tools c; Easy 117. What is the key takeaway from the Heartland breach? a. Even widely used open source software is vulnerable. b. Compliance does not equal security and firms that have passed multiple compliance audits may remain vulnerable. c. SSL public-key encryption can be hacked. d. GitHub is a horrible place to store widely used code. e. Firms that fail to employ ISO 27000 will remain vulnerable. b; Easy 118. Artificial intelligence is a tool that empowers hackers, but can also be used to help firms become more secure through assisting in: a. threat detection b. data mining c. zero day attacks d. creation of anti-malware e. None of the above are true. a; Easy 119. Which of the following standards may be required by a merchant that accepts card payments and handles payment information? a. PCI b. GDPR c. XPRA d. FISMA e. R&D a; Moderate Essay Questions 120. What are the steps to be taken with respect to firm employees in order to ensure organizational security?

Employees need to know a firm’s policies, be regularly trained, and understand that they will face strict penalties if they fail to meet their obligations. Policies without eyes (audit) and teeth (enforcement) won’t be taken seriously. Audits include real-time monitoring of usage (e.g. who’s accessing what, from where, how, and why; sound the alarm if an anomaly is detected), announced audits, and surprise spot-checks. In addition, employees should be educated about safe practices involving handling of sensitive organization information as well as the best practices regarding personal work habits which could be targeted by attackers to gain access to the organization’s resources.

Moderate 121. Describe briefly how technology can be leveraged to offset the attempts of attackers to undermine information security.

Technology plays a most important role in helping contain the threat of attacks on an organization’s information. Technologies map back to specific business risks. Firms must be especially vigilant to pay attention to security bulletins and install software updates that plug existing holes. In addition to these, other measures, including lock down of hardware and lock down of networks, can also be carried out. Firewalls can be employed to monitor the traffic through a firm’s network. Honeypots can be used to draw attacks and resultant findings can be

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used to recognize the hacker’s exploits, identify the IP address of intrusion, and take action to block further attacks and alert authorities. Intrusion detection systems, blacklists, and whitelists are only some of the other technological tools used extensively against information attacks.

Moderate 122. Discuss some of the ways that firms can use AI to improve their security.

The AI cybersecurity toolkit is vast. Some cloud-based threat detection providers are using neural networks when monitoring organizational networking patterns across multiple client websites worldwide. Such software can recognize common patterns and can be used to detect unusual behavior from both outside and inside a firm's network. AI tools are also used to perform vulnerability audits, check that system use is in line with regulations and compliance requirements, and even adapt as new threats emerge. AI can also create honeypots that lure hackers and let hackers believe they're accessing a target. The information gained from this allows tools and security professionals to recognize new hacker behavior, the location they're operating from, and the nature of attacks. This intel can be used to automate attack prevention.

Moderate Fill in the Blanks 123. _____ are seemingly tempting but bogus targets meant to draw hacking attempts.

Honeypots; Easy 124. _____ are highly restrictive programs that permit communication only with approved entities and/or in an approved manner.

Whitelists; Moderate 125. _____ are systems that act as controls for network traffic, blocking unauthorized traffic while permitting acceptable use.

Firewalls; Easy 126. While artificial intelligence is a tool that empowers _____, it can also be used to help _____ become more secure. hackers, firms; Hard 127. _____ publishes cybersecurity guidelines for resource-strapped municipalities, offers employee training, and centralizes threat-sharing, response planning, and updated information on securing technology MassCyberCenter; Moderate 128. A _____ is a group approved by an organization to play the role of an adversary, probing for security vulnerabilities and weaknesses. red team; Easy 129. White hat hackers at DEF CON showed how a simple Raspberry Pi and over-the-counter hardware could be set up to _____ products. spoof; Moderate

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Chapter 22 Google in Three Parts: Search, Online Advertising, and an Alphabet of Opportunity Section 22.1 True/False Questions 1. Google earns more annual advertising dollars than any other U.S. media company.

True; Easy 2. In recent years, online advertising has been growing fast, but growth has not been as fast as the growth in television advertising.

False; Easy 3. Google’s largest source of income is allowing any organization to pay for higher placement in search engine query results.

False; Easy 4. Google, who has a best-in-class AI team, was not prepared to compete with the capabilities of OpenAI’s ChatGPT. True; Easy Multiple Choice Questions 5. Which of the following represents the market capitalization of a firm? a. share price × number of shares b. market share × industry size c. revenue – expenses d. earnings per share × share price e. cash and liquid assets – debt obligations a; Moderate 6. The bulk of Google’s revenue comes from: a. licensing b. advertising c. registration charges d. Android e. user fees b; Easy 7. Google’s profits from advertising allow it to: a. experiment and innovate b. tolerate failure c. acquire aggressively d. patiently build new markets e. All of the above are true. e; Easy Essay Question

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8. Discuss some of the wildly ambitious and risky multiyear undertakings, known as “moonshot” projects, that Alphabet is currently working on or investing in.

Alphabet is currently researching Waymo’s driverless cars, smart contact lenses, a better electrical grid, robotics, drones, telecommunications, and several climate-focused projects. Many of these efforts are candidates to be spun out of Alphabet as standalone firms in the years to come. Google’s massive server farms, growing data hoard, and algorithmic leadership also provide Alphabet with the fuel to power an AI future. In addition to being an innovator, Alphabet is a relentless acquirer of other firms, buying roughly two hundred firms in recent years, which is more than Apple, Microsoft, Amazon, Facebook, and Yahoo! combined. Some of these include Nest and FitBit. Easy Fill in the Blanks 9. _____ has been rated as having one of the world’s strongest brands, and it ranks among the most profitable firms in the United States.

Google or Alphabet; Easy 10. Microsoft is incorporating _____ into many of its offerings including Office, Teams, and Azure Cloud.

ChatGPT; Moderate 11. Google’s advertising revenue could be at stake if they are unable to find a way to effectively promote ads alongside search results created by using _____.

AI or artificial intelligence; Moderate 12. Google is facing _____ investigations from, among other jurisdictions, a collection of U.S. states, the U.S. Justice Department, Europe, Canada, Australia, China, India, and South Korea. antitrust; Moderate Section 22.2 True/False Questions 13. JCPenney was one of Google’s largest advertisers, spending millions a month in ads, yet Google punished the firm in search rankings when it detected that Penney violated Google’s policies on gaming search results.

True; Easy 14. When performing a search via Google or another search engine, a user actually searches what amounts to a copy of the Web, stored and indexed on the search engines’ computers.

True; Easy 15. If a website is not the first page on a public server, it can still be linked to from another public page, can be linked to Google for indexing, and will appear in Google results.

False; Easy 16. Web developers can easily block Google from indexing their otherwise publicly accessible content.

True; Easy

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17. Much of the technology used by Google consists of components such as microprocessors and hard drives that might be found in conventional home computers.

True; Moderate 18. A cache is a permanent storage space used to manage computing tasks.

False; Easy 19. Advertisers can pay to have their ads move up in organic search results.

False; Moderate 20. PageRank is an algorithm developed by Google co-founder Larry Page to rank websites.

True; Easy 21. Organic or natural search refers to search engine results returned and ranked according to relevance.

True; Easy Multiple Choice Questions 22. A(n) _____ is a search performed on Google or any other search engine. a. impression b. PageRank c. query d. link e. crawl c; Easy 23. Which of the following parameters significantly influences the rank of a Web page in Google’s search results? a. the number of other pages linking to a given page b. the maximum bid for click-through rates c. the quantity of content on a Web page d. the number of keyword matches in the content e. the quality of content on a Web page a; Moderate 24. _____ is the process of creating a series of bogus websites, all linking back to the pages one is trying to promote. a. Click scam b. Link fraud c. Phishing d. DNS cache poisoning e. SQL injection b; Moderate 25. Which of the following statements holds true for search engine optimization (SEO)? a. It refers to the process of improving an ad’s rank in Google’s online advertising listings. b. It refers to the process of improving a page’s organic search results. c. It refers to Internet content that can’t be indexed by Google and other search engines. d. It refers to a temporary storage space used to speed computing tasks. e. It refers to software that traverses available Web links in an attempt to perform a given task. b; Moderate

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26. If a firm’s pages are not near the top of query results, customers may never discover its website. This has led to _____ becoming a critical function for many marketing organizations. a. last mile access b. geotargeting c. outsourcing d. content adjacency e. search engine optimization e; Easy 27. Search engines use _____, or Web crawlers, to discover documents for indexing and retrieval. a. caches b. landing pages c. spiders d. proxy servers e. interstitials c; Easy 28. Which of the following statements holds true for the term spider? a. It refers to the Internet directory service that allows devices and services to be named and discoverable. b. It refers to the process of improving a page’s organic search results. c. It refers to Internet content that can’t be indexed by Google and other search engines. d. It refers to a temporary storage space used to speed computing tasks. e. It refers to software that traverses available Web links in an attempt to perform a given task. e; Moderate 29. Which of the following statements holds true for the term cache? a. It refers to the Internet directory service that allows devices and services to be named and discoverable. b. It refers to the process of improving a page’s organic search results. c. It refers to Internet content that can’t be indexed by Google and other search engines. d. It refers to a temporary storage space used to speed computing tasks. e. It refers to software that traverses available Web links in an attempt to perform a given task. d; Easy 30. Which of the following statements holds true for the term deep Web? a. It refers to the Internet directory service that allows devices and services to be named and discoverable. b. It refers to the process of improving a page’s organic search results. c. It refers to Internet content that can’t be indexed by Google and other search engines. d. It refers to a temporary storage space used to speed computing tasks. e. It refers to software that traverses available Web links in an attempt to perform a given task. c; Moderate 31. Which of the statements about Google’s strategy and competitive environment is true? a. Brin and Page founded Google in their 20s, following Yang and Filo of Yahoo! (also in their 20s), underscoring just how easy it is for newcomers to create new threats in today’s search market. b. The scale of server farms capable of indexing today’s Web represents a significant barrier to entry.

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c. Google has invested in proprietary components such as chips and hard drives, creating a difficultto-copy barrier to entry to any firm seeking to enter its markets. d. Bing has been gaining significant market share on Google due to Microsoft’s successful leverage of existing products (Xbox, Windows Phone, Office, and the Windows operating system) as a default distribution channel for its search. e. All of the above are true. b; Moderate 32. What is a “black hat SEO”? a. Using unauthorized (and Google-prohibited) techniques to improve a page’s search results b. Paying off a search engine firm’s engineers to lower your ad rate c. Linking to competitor websites in hopes that they will fall in search engine rankings d. Attempting to hack into a firm’s email to manipulate SLA contracts e. All of the above are true. a; Easy 33. What is the purpose of the following line of HTML code? <META NAME="ROBOTS" CONTENT="NOINDEX, NOFOLLOW, NOARCHIVE"> a. It allows for searching within archived copies. b. It allows site visitors to access the deep Web from a page. c. It allows Google to scan and creates an archive copy of a page. d. It prevents all visitors from viewing a page. e. It prevents crawlers from indexing, following links, and listing archives of a page. e; Moderate 34. Google assumes individual components that make up the servers in its server farms will regularly fail, but no single failure should interrupt the firm’s operations. By doing so, Google can ensure its network is: a. data optimized b. traffic efficient c. fault-tolerant d. service-regulated e. organically searched c; Moderate Essay Questions 35. How can Google’s PageRank contribute to network effects for a firm?

Positioning in Google’s PageRank is important because the higher you are in the ranking, the closer you are to potential customers. Google does not allow customers to pay for positioning in organic search. A page with more pages linking them will be higher in rank. In addition, a firm can improve their organic search results with the help of search engine optimization. Customers are more likely to discover a site at the top of the rankings. For example, customers may be looking for a popular style summer dress. If a firm like Zara optimizes their site to include important keywords regarding the popular item, they may appear higher in the ranking. The more popular the item, the more potential for individuals and sites to link to the item. Zara’s positioning could increase based on the popularity of the item and if Zara appears at the top of the organic search results, they will be the first stop for user searchers which will contribute to network effects.

Moderate 36. Provide a detailed description of the search mechanism employed by Google.

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Perform a search (or query) on Google or another search engine, and the results you’ll see are referred to by industry professionals as organic or natural search. Search engines use different algorithms for determining the order of organic search results, but at Google the method is called PageRank. Google does not accept money for placement of links in organic search results. Instead, Web pages that have more pages linking to them are ranked higher. In addition to in-bound links, Google’s organic search results also consider some 200 other signals, and the firm’s search quality team is relentlessly analyzing user behavior for clues on how to tweak the system to improve accuracy.

What really happens is that you’re searching what amounts to a copy of the Web that major search engines make, storing and indexing the text of online documents on their own computers. Google’s index considers over one trillion URLs. To create these massive indexes, search firms use software to crawl the Web and uncover as much information as they can find. This software is referred to by several different names: software robots, spiders, and Web crawlers. Spiders start at the first page on every public server and follow every available link, traversing a website until all pages are uncovered.

Google crawls frequently updated sites, like those run by news organizations, as often as several times an hour. Rarely updated, less popular sites might only be reindexed every few days. The method used to crawl the Web also means that if a website isn’t the first page on a public server, or isn’t linked to from another public page, then it’ll never be found.

Hard Fill in the Blanks 37. _____ refers to the search engine results that are returned and ranked according to relevance.

Organic/Natural search; Easy 38. The phrase _____ refers to the process of improving a page’s organic search results.

SEO or search engine optimization; Easy 39. _____ that traverses available websites in an attempt to perform a given task are referred to as spiders, Web crawlers, or software robots.

Software; Moderate 40. Colocation facilities or carrier hotels provide a place where the gear from multiple firms can come together and where the _____ of Internet traffic can take place. peering; Moderate 41. Building massive _____ to index the ever-growing Web is now the cost of admission for any firm wanting to compete in the search market. server farms; Easy Section 22.3 True/False Questions 42. Unlike TV, radio, and print ads, most online ad payment schemes are not linked to ad performance.

False; Easy

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43. A Pinterest link for a vintage handbag that, when clicked, jumps immediately to the bag vendor’s page within the Etsy app is an example of the technique known as deep linking.

True, Moderate 44. Google discounts ads to just one cent less than the average cost per click.

False; Moderate 45. Law firms are consistently the lowest cost-per-click rate bidders for keyword ads, but they run the most ads, making them significant contributors by volume.

False; Easy 46. Most of the time users spend on mobile phones is spent in apps, presenting a threat to Google’s dominance in search as mobile use increases.

True; Easy 47. Google has launched new formats to capture markets such as travel bookings and car shopping from within search, but by doing so, it risks alienating large advertisers who run competing services.

True; Easy Multiple Choice Questions 48. The website displayed when a user clicks on an ad is called the: a. landing page b. organic result c. home page d. start page e. redirecting page a; Easy 49. Dynamic search ads: a. are generated automatically b. are based on the content of a website c. are useful for firms with rapidly changing inventory d. All of the above are true. e. None of the above are true. d; Moderate 50. Ad rank on Google is calculated using the equation: Ad Rank = f (_____, Quality Score, expected impact of extensions and formats). a. Maximum CPC b. Maximum CPM c. CTR d. Impression e. PageRank a; Moderate 51. Which of the following statements holds true for the term cost-per-click? a. It refers to the ad rates quoted in cost-per-thousand impressions. b. It refers to the number of users who clicked an ad divided by the number of times the ad was delivered.

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c. It refers to the maximum amount of money an advertiser is willing to pay for each click on their ad. d. It refers to the cost associated with the storage and bandwidth to deliver to a website once it is clicked on. e. It refers to the opportunity cost a user incurs when they leave one website for another. c; Easy 52. Which of the following statements holds true for the term click-through rate? a. It refers to the ad rates quoted in cost per thousand impressions. b. It refers to the number of users who clicked an ad divided by the number of times the ad was delivered. c. It refers to the maximum amount of money an advertiser is willing to pay for each click on their ad. d. It refers to the cost an advertiser is willing to bear for a particular amount of time a surfer spends on an ad. e. It refers to a method of charging for advertising whenever a user performs a specified action such as signing up for a service, requesting material, or making a purchase. b; Easy 53. The _____ measures the percentage of people who clicked on an ad to arrive at a destination-site. a. click churn rate b. link c. click-through rate d. click landing-page rate e. impression score c; Easy 54. Which of the following factors contributes to a web page’s quality score? a. number of characters in the ad b. cost-per-click c. cost-per-impression d. image richness e. click-through rate e; Moderate 55. Which of the following is true of Google’s discounting scheme for advertisers? a. Advertisers get incremental discounts on their original CPC for every thousand clicks. b. Advertisers pay the average CPC of all those displayed ads that are ranked below their ad. c. Advertisers pay only ninety percent of their original CPC rate for every thousand clicks. d. Advertisers pay one cent more than the minimum needed to retain an ad’s position on a page. e. Advertisers pay the equivalent of the CPC bid by the worst performing ads, taken in a reverse sequence. d; Moderate Essay Questions 56. What factors help determine the display and ranking of advertisements in Google’s search pages?

Google determines the rank order of sponsored links appearing on search results pages based on the formula: Ad Rank = f (Maximum CPC, Quality Score, expected impact of extensions and formats) Google is deliberately vague about precisely how quality score is calculated, and the firm’s metrics are regularly tweaked, but factors that determine an ad’s quality score have included an ad’s click-

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through rate (CTR), or the number of users who clicked an ad divided by the number of times the ad was delivered (the impressions). The CTR measures the percentage of people who clicked on an ad to arrive at a destination-site. Factors that have also appeared in the quality score weighting include things like the overall history of click performance for the keywords linked to the ad, the relevance of an ad’s text to the user’s query, and Google’s automated assessment of the user experience on the landing page—the Web page displayed when a user clicks on the ad. Ads that don’t get many clicks, ad descriptions that have nothing to do with query terms, and ads that direct users to generic pages that load slowly or aren’t strongly related to the keywords and descriptions used in an ad will all lower an ad’s chance of being displayed. In general, the more relevant your ad, and the better the experience of the consumer who clicks that ad, the higher your quality score, and the higher your quality score, the better your ad’s position and the less you’ll have to pay per click.

Moderate 57. Discuss how mobile apps are threatening Google’s search dominance, what Google is doing to combat this challenge, and how Google’s approach still contains risks.

U.S. mobile users spend roughly three hours each day on smartphones and tablets. While most online desktop time happens via the Web browser, on mobile, mobile users spend an estimated 86 percent of their time in apps and only 14 percent on the Web. This shift concerns Google. In 2012, Google had an 82.8 percent share of mobile searches, but research firm eMarketer estimates that when you consider the long tail of app-based niche searches that are occurring, Google’s share was around 65.7 percent in 2014. Google has offered additional features to give users a reason to stick with its search and map products. Examples include a new hotel format offers the ability to see high-quality photos, hotel ratings and book a hotel right from within a Google listing. A new car format allows a panoramic scroll through the car, the ability to “build and price” a car and find a dealer. A mortgage format allows for side-by-side comparisons. And a new restaurant format can directly summon a food delivery service via deep link. Making Google more relevant, especially on mobile, makes sense, but the new functionality comes with risks. Google’s move into travel booking is upsetting some of the firm’s biggest customers. Priceline spends over $1.5 billion advertising with Google each year. Expedia spends over $1 billion. Just these two firms account for about a 5 percent chunk of Google revenue. Also troubling are potential legal issues. Priceline and Expedia are also members of FairSearch.org, a group that accuses Google of using its dominance in search and other products to favor its own services above those of rivals Moderate 58. Why do smartphones present an increasing challenge to Google?

U.S. mobile users spend roughly three hours each day on smartphones and tablets. While most online desktop time happens via the Web browser, on mobile, 86 percent of time is spent inside apps and not the mobile Web. This shift concerns Google. When you search for restaurant reviews in Google’s search engine, it can serve you ads and continue to build your user profile. But if you search via Yelp’s app on an iPhone, Google can’t see you at all. The growing list of context-specific apps that siphon users away from Google’s Web search include Kayak and TripAdvisor for travel, Shazam for music, and even Amazon for shopping. And Apple’s Siri is delivering results directly from its partners, making it the search broker, not Google. This fragmenting of mobile is having an impact on Google’s share of mobile advertising. App-based niche searches have grown steadily while Google’s percentage of mobile search share, when including apps, has fallen.

Moderate Fill in the Blanks 59. Three factors driving online ad growth trends are (1) increased user time online, (2) improved measurement and accountability, and (3) _____.

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targeting; Moderate 60. _____ refers to the practice of designing, running, and optimizing search engine ad campaigns.

Search engine marketing; Moderate 61. _____ refers to advertisements that are targeted based on a user’s query.

Keyword advertising; Easy 62. PPC, or _____, refers to a concept where advertisers don’t pay unless someone clicks on their ad. pay-per-click; Easy 63. _____ takes a user to a specific Web page, rather than a home page, or launches an app and brings up a unique location rather than just launching the app.

Deep linking; Easy Section 22.4 True/False Questions 64. The ad industry will sometimes refer to the text, images, video, and other content in an ad as the “ad creative.”

True; Easy 65. Google mainly only runs ads in search but limits them across their host of Google-owned sites.

False; Easy 66. Google ads can be targeted based on keywords automatically detected inside the content of a website.

True; Easy 67. The makeup of the Google Display Network has helped it to evade concerns about its growing scale and influence in the online ad market.

False; Easy 68. The base service of Google Analytics is offered free to websites of all sizes, with premium offerings and support available for a fee.

True; Easy 69. Ad networks enforce exclusivity. Once a content provider selects one ad network it cannot implement other forms of advertising on its website.

False; Moderate Multiple Choice Questions 70. Online advertising that relies primarily on a graphic element is known as a: a. buzz marketing ad b. text ad c. affiliate ad d. display ad e. All of the above are correct. d; Easy

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71. The _____ refers to a situation where ads appear alongside text the advertiser would like to avoid. a. fast follower problem b. ad network failure problem c. collaborative filtering problem d. content adjacency problem e. affiliate advertising problem d; Easy 72. Which of the following measures can advertisers take to prevent embarrassment through content adjacency issues? a. using negative keywords b. turning off the “comments” feature on websites c. migrating to contextual advertising d. switching over to graphical ads and interstitials e. using collaborative filtering software a; Easy 73. What a person sees when they encounter an ad is known as the: a. display ad b. contextual ad c. ad creative d. All of the above are correct. e. None of the above are correct. c; Moderate Essay Questions 74. Facebook experienced content adjacency problems which contributed to loss of revenue from major clients. Describe the content adjacency problem. As a business owner, how can this issue impact your business?

The content adjacency problem occurs when ads appear alongside text the advertiser would like to avoid. As the owner of a new steakhouse, I want my ads to display along text that is relevant and has the potential to improve customer awareness. For example, it would be ideal to appear alongside an article about new restaurants to try in the area. Visitors to the site are most likely searching for a new restaurant which could be great for business. On the contrary, a content adjacency issue would occur if the advertisement for my steakhouse appeared alongside content about animal cruelty and the negative effects of meat in the human diet. In this case, advertising would negatively impact my business and contribute to financial loss. It would be best for my advertising to include negative keywords to help prevent my ads from showing up next to content that would detract from my business.

Moderate 75. How do advertising networks distribute and serve ads based on website content? What are the problems associated with ads based on website content?

Google lines up the advertisers, provides the targeting technology, serves the ads, and handles advertiser payment collection. To participate, content providers just sign up online and put a bit of Google-supplied HTML code on their pages and wait for Google to send them cash (websites typically get about seventy cents for every dollar that Google collects).

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Vendors sometimes suffer from content adjacency problems when ads appear alongside text they would prefer to avoid. To combat embarrassment, ad networks provide opportunities for both advertisers and content providers to screen out potentially undesirable pairings based on factors like vendor, website, and category. Advertisers can also use negative keywords, which tell networks to avoid showing ads when specific words appear. Ad networks also refine ad-placement software based on feedback from prior incidents.

Moderate 76. Describe the competitive factors at work that help secure Google’s position as a dominant ad network.

While advertisers can use multiple ad networks, there are several key strategic factors driving the industry. For Google, its ad network is a distribution play. The ability to reach more potential customers across more websites attracts more advertisers to Google. And content providers (the websites that distribute these ads) want there to be as many advertisers as possible in the ad networks that they join, since this should increase the price of advertising, the number of ads served, and the accuracy of user targeting. If advertisers attract content providers, which in turn attract more advertisers, then we’ve just described network effects! It also doesn’t hurt that Google’s search ad business is a great way to gain exposure for its other ad offerings. More participants bringing in more revenue also help the firm benefit from scale economies—offering a better return on investment from its ad technology and infrastructure. All this has worked to help Google build an ad network that serves nearly four times the ads of its nearest rival.

Moderate 77. What benefits does Google provide to firms that use its ad network? Why is this attractive to content providers?

Google lines up the advertisers, provides the targeting technology, serves the ads, and handles advertiser payment collection. Google can typically do these functions at a far lower cost and with a far greater reach than could firms, if they wanted to fulfill these functions themselves. And Google’s network effects ensure that there will always be a strong base of potential advertisers ready to serve content on a given website.

Easy Fill in the Blanks 78. Advertising based on a website’s content is called _____. contextual advertising; Easy 79. Advertisers use _____ to indicate that an advertisement should not be shown when a query contains these terms. negative keywords; Easy 80. _____ can be defined as online advertising that relies primarily on a graphic element, like an image or animation.

Display (or image) ads; Easy 81. An _____ is an effort that links advertisers to websites and other content providers that are willing to host advertisements, typically in exchange for payment. ad network; Moderate 82. Google is aggressively offering _____ to help advertisers create image, text, and video copy, and improve websites, in ways that will speed the generation of more and richer ad creative.

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AI tools; Moderate 83. Google bundles the websites that serve ads in with its own content properties, calling this the _____.

Google Display Network; Moderate Section 22.5 True/False Questions 84. Alphabet shares increased by almost 25 percent in the months following ChatGPT's release.

False; Moderate 85. Google matched ChatGPT, launching its own chat-like generative AI tool named Bard.

True; Easy 86. Generative AI is the biggest existential threat to Google’s search business that it has ever faced.

True; Easy Multiple Choice Questions 87. The ‘T’ in ChatGPT stands for: a. transformer b. technology c. talk to text d. temporary e. text a; Easy 88. Google's Search Generative Experience (SGE) is the firm's first experiment in blending AI chat with: a. a subscription b. traditional search results c. advertisements d. All of the above are true. e. None of the above are true. b; Easy Essay Questions 89. Explain some of the issues around the possibility of Google charging users for use of a Chatbot.

Google has some experience offering subscriptions—for more storage, for YouTube Premium, FitBit, etc.—but it's not at all clear how many customers are willing to pay for yet another subscription when they've been so accustomed to getting information for free. The prospect of swapping out a massive search ad business for a potentially much smaller chat subscription business would be brutal on Alphabet's publicly traded stock. The majority of consumers have indicated that they will be unwilling to pay more than $10 a month for a high-quality chatbot, but rivals might be better positioned to bundle subscription chat into their existing offerings. It's easy to see how other firms. like Amazon or Apple could make this part of the subscription services they are already providing to their users, but Google does not have similar subscription services.

Moderate

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90. Discuss the importance of being an effective AI user.

Having an AI collaborator is great, but one of the most important twenty-first-century skills is going to be knowing how to be an effective user of AI. AI tends to hallucinate, or seemingly “make up” answers. The math that underlies AI might also simply generate a pattern that's wrong or even dangerous. Sloppy AI use could misattribute information in a meeting, generate incorrect content like corporate performance numbers, or even generate content that wasn't properly vetted for copyright or cultural offense.

Moderate Fill in the Blanks 91. Despite the sometimes antagonistic relationship the media industry has with Google, publishers have come to rely on Google search as being a primary driver of _____.

organic traffic; Moderate 92. In an effort to keep up with competitors, Google Photos now has all sorts of tools leveraging _____ for image correction, object removal, and background fill. generative AI; Easy Section 22.6 True/False Questions 93. Near field communication refers to a short-range, wireless communication standard.

True; Easy 94. Google’s Chromebook effort is a promising initiative, but so far, few consumers have adopted portable computers using the Chromebook standard.

False; Easy 95. After stalling for several years, Microsoft’s market cap has steadily marched higher, passing Alphabet’s value along the way.

True; Moderate 96. The EU has fined Google over $13.4 billion since 2017, including $4.13 billion for using its Android mobile operating system to the detriment of any rivals.

True; Moderate 97. Android is now the world’s most popular mobile operating system by a long shot.

False; Easy 98. Network effects do not apply to Google’s YouTube business, since content creators and users can easily post and view media on other services.

False; Easy 99. Most Google apps allow collaborative editing, common storage, and version control.

True; Easy

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100. Google has been prompted to block access to its services at some point in at least twenty-

five of the one hundred countries in which the firm operates.

True; Moderate 101. Google usually waits for governments to notify it that offensive content must be blocked.

True; Easy Multiple Choice Questions 102. Which of the following efforts by Google is aimed at encouraging increased smartphone access worldwide? a. team-up with Facebook to offer search capabilities across social networks b. the five-year deal with Verizon Wireless to be its preferred search engine c. collaboration with Microsoft to offer Office software over the Web d. introduction of interest-based ads e. giving the Android OS to mobile phone manufacturers for free e; Moderate 103. _____ allows users to pay for goods, store gift cards, and redeem coupons using their mobile phones. a. Google+ b. Android Pay c. Google Currents d. Google Checkout e. Takeout b; Easy 104. The health-focused Alphabet subsidiary Verily has refocused on: a. data and AI-driven precision health b. smart contact lenses c. social media hygiene d. All of the above are correct. e. None of the above are correct. a; Easy 105. The expansion of apps, hardware, and other offerings in the Android ecosystem strengthens its _____ through ever-increasing _____. a. operating system capacity; advertising capabilities b. advertising capabilities; operating system capacity c. complementary benefits; network effects d. network effects; complementary benefits e. None of the above are correct. d; Moderate 106. Google’s Cloud group is a. finally profitable. b. in third place behind AWS and Azure. c. the only firm among major cloud players to have grown market share in 2022. d. All of the above are true. e. None of the above are true.

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d; Moderate Essay Questions 107. Why don’t privacy advocates feel that Google’s “Don’t be Evil” intentions are enough protection for consumers?

Privacy advocates maintain that “Don’t Be Evil” isn’t enough, since even well-intentioned firms can make mistakes, where employee errors or a programming bug could leave data dangerously or embarrassingly exposed.

Moderate 108. Explain some of the challenges that Android faces with its platform and how it affects users and developers.

Since Google doesn’t control most of its hardware sales, Android is a fragmented platform, where only a small fraction of devices upgrades to the latest OS offerings. This hurts Android developers, since there are more devices to code and test for. It also complicates things for consumers, who may see different user experiences across devices. Amazon uses Android in its various Kindle Fire offerings and TV but has altered the OS so much that many Android apps don’t run on these platforms. Amazon also diverts customers to its own app store rather than Google Play. Google has had similar “forking” squabbles with Samsung and others. There are even efforts to offer “deGoogled” or Google-free versions of Android phones, seen as being more privacy-forward.

Hard Fill in the Blanks 109. _____ is the primary technology that enables Google Pay to make wireless payments with the wave of a phone.

NFC or near field communication; Easy 110. _____ is the primary asset for competitive advantage that is created when users load their files, content, and other data onto free cloud storage.

Switching cost; Easy 111. Google’s goodwill motto is “_____.”

Don’t Be Evil; Easy 112. Uber has dropped its self-driving car initiative and has elected to partner with _____ instead.

Waymo; Moderate 113. Under CEO Satya Nadella's leadership, _____ has radically shifted, expanding the firm’s Azure cloud platform to be a solid number two in the industry behind Amazon.

Microsoft; Easy 114.

Android is the most popular mobile ____ holding 70 percent of the world’s smartphone OS market. operating system; Easy

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