Question 1

By shifting to a streaming model, Netflix stands to eliminate shipping and handling costs.

Accepted Answer

A) True 
 B)False  True

Question 2

Netflix offers its subscribers a selection of over one hundred thousand titles, while other video rental firms can only offer as much as three thousand. This presents a significant _____ for Netflix over its rivals.

Accepted Answer

A)  marginal cost 
B)  price advantage 
C)  variable cost 
D)  studio preference 
E)  scale advantage 
A)  marginal cost 
B)  price advantage 
C)  variable cost 
D)  studio preference 
E)  scale advantage E

Question 3

When firms enjoy economies of scale they:

Accepted Answer

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. 
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

Question 4

The shift from atoms to bits does not stand to impact content creators, middlemen, and retailers.

Accepted Answer

A) True 
 B)False

Question 5

Netflix DVD-by-mail differs from Netflix stream, in that Netflix DVD-by-mail:

Accepted Answer

A)  is expensive to replicate infrastructure regionally. 
B)  has numerous competitors with different models. 
C)  is more appealing for new entrants. 
D)  allows for unlimited monthly subscription to all content. 
E)  provides opportunities for new content and revenue models. 
A)  is expensive to replicate infrastructure regionally. 
B)  has numerous competitors with different models. 
C)  is more appealing for new entrants. 
D)  allows for unlimited monthly subscription to all content. 
E)  provides opportunities for new content and revenue models.

Question 6

Which of the following statements is true about retailing?

Accepted Answer

A)  Internet retailers stock their shelves with only popular items. 
B)  More money can be made through the sale of latest products than obscure items. 
C)  Accessibility rather than selection attracts customers. 
D)  Nearly limitless selection allows Internet retailers to leverage the long tail. 
E)  Both traditional and internet retailers face limitations such as shelf space and geography. 
A)  Internet retailers stock their shelves with only popular items. 
B)  More money can be made through the sale of latest products than obscure items. 
C)  Accessibility rather than selection attracts customers. 
D)  Nearly limitless selection allows Internet retailers to leverage the long tail. 
E)  Both traditional and internet retailers face limitations such as shelf space and geography.

Question 7

Costs that do not vary according to production volume are called _____.

Accepted Answer

A)  total costs 
B)  marginal costs 
C)  switching costs 
D)  variable costs 
E)  fixed costs 
A)  total costs 
B)  marginal costs 
C)  switching costs 
D)  variable costs 
E)  fixed costs

Question 8

The high degree of customer satisfaction that Netflix enjoyed is tightly linked with the firm's sized-based advantages.

Accepted Answer

A) True 
 B)False

Question 9

Firms target high churn rates to boost their profitability.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Internet retailers serve a larger geographic area with comparably smaller infrastructure and staff. This fact suggests that Internet businesses are more _____.

Accepted Answer

A)  centralized 
B)  decentralized 
C)  capitalized 
D)  vertically integrated 
E)  scalable 
A)  centralized 
B)  decentralized 
C)  capitalized 
D)  vertically integrated 
E)  scalable

Question 12

Title availability is complicated by a distribution practice known as _____.

Accepted Answer

A)  audience finding 
B)  windowing 
C)  customer filtering 
D)  disintermediation 
E)  viral marketing 
A)  audience finding 
B)  windowing 
C)  customer filtering 
D)  disintermediation 
E)  viral marketing

Question 13

Netflix has used the long tail to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from these ties with Netflix?

Accepted Answer

A)  Discounted fees for marketing some of the less-popular titles from the studios 
B)  A cut of the subscription revenue from every disk sent out by Netflix 
C)  Greater bargaining power with movie rental firms such as Netflix, Blockbuster, and Wal-Mart 
D)  Lower costs related to screening movies in cinemas by releasing them straight on DVD 
E)  An equal share of revenue from the digital distribution model through online streaming 
A)  Discounted fees for marketing some of the less-popular titles from the studios 
B)  A cut of the subscription revenue from every disk sent out by Netflix 
C)  Greater bargaining power with movie rental firms such as Netflix, Blockbuster, and Wal-Mart 
D)  Lower costs related to screening movies in cinemas by releasing them straight on DVD 
E)  An equal share of revenue from the digital distribution model through online streaming

Question 14

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:

Accepted Answer

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)  customers are primarily attracted to the stores which offer a larger selection of titles. 
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. 
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)  customers are primarily attracted to the stores which offer a larger selection of titles. 
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.

Question 15

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?

Accepted Answer

Netflix has proved that there is both de

Question 16

Even if Netflix gave Cinematch away to its rivals, they would still not be able to make the same kind of accurate recommendations as Netflix. This is because of Netflix's _____.

Accepted Answer

A)  technological superiority 
B)  customer loyalty 
C)  movie expertise 
D)  data advantage 
E)  large inventory 
A)  technological superiority 
B)  customer loyalty 
C)  movie expertise 
D)  data advantage 
E)  large inventory

Question 17

Netflix gets to retain the entire subscription revenue for every disk sent out to a customer.

Accepted Answer

A) True 
 B)False

Question 18

For traditional retailers selling physical goods, _____ is the biggest constraint limiting a firm's ability to offer customers what they want and when they want it.

Accepted Answer

A)  shelf space 
B)  video piracy 
C)  shipping costs 
D)  distribution rights 
E)  disintermediation 
A)  shelf space 
B)  video piracy 
C)  shipping costs 
D)  distribution rights 
E)  disintermediation

Question 19

_____ refers to removing an organization from a firm's distribution channel.

Accepted Answer

A)  Disbarment 
B)  Repudiation 
C)  Annulment 
D)  Disintermediation 
E)  Revocation 
A)  Disbarment 
B)  Repudiation 
C)  Annulment 
D)  Disintermediation 
E)  Revocation

Question 20

By going public, Netflix encountered stiff competition from firms such as Wal-Mart and Blockbuster. What aspect of Netflix going public lured these firms into the market?

Accepted Answer

A)  By going public, Netflix was required to disclose its financial position. 
B)  By going public, Netflix was forced to reveal the Cinematch algorithm used to classify user ratings. 
C)  Netflix's model of flat-rate monthly subscriptions was found to be more profitable than a per-disc rental fee model. 
D)  Netflix's plan to enter the online movie streaming market alerted rivals to the possibility of losing their market share. 
E)  The migration of Netflix services to cover the Blu-ray disc market opened up opportunities for rivals. 
A)  By going public, Netflix was required to disclose its financial position. 
B)  By going public, Netflix was forced to reveal the Cinematch algorithm used to classify user ratings. 
C)  Netflix's model of flat-rate monthly subscriptions was found to be more profitable than a per-disc rental fee model. 
D)  Netflix's plan to enter the online movie streaming market alerted rivals to the possibility of losing their market share. 
E)  The migration of Netflix services to cover the Blu-ray disc market opened up opportunities for rivals.

By shifting to a streaming model, Netflix stands to eliminate shipping and handling costs.

Netflix offers its subscribers a selection of over one hundred thousand titles, while other video rental firms can only offer as much as three thousand. This presents a significant _____ for Netflix over its rivals.

When firms enjoy economies of scale they:

The shift from atoms to bits does not stand to impact content creators, middlemen, and retailers.

Netflix DVD-by-mail differs from Netflix stream, in that Netflix DVD-by-mail:

Which of the following statements is true about retailing?

Costs that do not vary according to production volume are called _____.

The high degree of customer satisfaction that Netflix enjoyed is tightly linked with the firm's sized-based advantages.

Firms target high churn rates to boost their profitability.

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

Internet retailers serve a larger geographic area with comparably smaller infrastructure and staff. This fact suggests that Internet businesses are more _____.

Title availability is complicated by a distribution practice known as _____.

Netflix has used the long tail to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from these ties with Netflix?

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:

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?

Even if Netflix gave Cinematch away to its rivals, they would still not be able to make the same kind of accurate recommendations as Netflix. This is because of Netflix's _____.

Netflix gets to retain the entire subscription revenue for every disk sent out to a customer.

For traditional retailers selling physical goods, _____ is the biggest constraint limiting a firm's ability to offer customers what they want and when they want it.

_____ refers to removing an organization from a firm's distribution channel.

By going public, Netflix encountered stiff competition from firms such as Wal-Mart and Blockbuster. What aspect of Netflix going public lured these firms into the market?

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Exam 4: Netflix in Two Acts: the Making of an E-Commerce Giant and the Uncertain Future of Atoms to Bits

By shifting to a streaming model, Netflix stands to eliminate shipping and handling costs.

Netflix offers its subscribers a selection of over one hundred thousand titles, while other video rental firms can only offer as much as three thousand. This presents a significant _____ for Netflix over its rivals.

When firms enjoy economies of scale they:

The shift from atoms to bits does not stand to impact content creators, middlemen, and retailers.

Netflix DVD-by-mail differs from Netflix stream, in that Netflix DVD-by-mail:

Which of the following statements is true about retailing?

Costs that do not vary according to production volume are called _____.

The high degree of customer satisfaction that Netflix enjoyed is tightly linked with the firm's sized-based advantages.

Firms target high churn rates to boost their profitability.

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

Internet retailers serve a larger geographic area with comparably smaller infrastructure and staff. This fact suggests that Internet businesses are more _____.

Title availability is complicated by a distribution practice known as _____.

Netflix has used the long tail to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from these ties with Netflix?

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:

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?

Even if Netflix gave Cinematch away to its rivals, they would still not be able to make the same kind of accurate recommendations as Netflix. This is because of Netflix's _____.

Netflix gets to retain the entire subscription revenue for every disk sent out to a customer.

For traditional retailers selling physical goods, _____ is the biggest constraint limiting a firm's ability to offer customers what they want and when they want it.

_____ refers to removing an organization from a firm's distribution channel.

By going public, Netflix encountered stiff competition from firms such as Wal-Mart and Blockbuster. What aspect of Netflix going public lured these firms into the market?

Setting the Stage: Technology and the Modern Enterprise

Strategy and Technology: Concepts and Frameworks for Understanding What Separates Winners From Losers

Zara: Fast Fashion From Savvy Systems

Moores Law and More: Fast, Cheap Computing, Disruptive Innovation, and What This Means for the Manager

Amazoncom: an Empire Stretching From Cardboard Box to Kindle to Cloud

Understanding Network Effects: Strategies for Competing in a Platform-Centric, Winner-Take-All World

Social Media, Peer Production, and Web 20

Facebook: Building a Business From the Social Graph

Understanding Software: a Primer for Managers

Software in Flux: Partly Cloudy and Sometimes Free

The Data Asset: Databases, Business Intelligence, Big Data, and Competitive Advantage

A Managers Guide to the Internet and Telecommunications

Information Security: Barbarians at the Gateway and Just About Everywhere Else

Google in Three Parts: Search, Online Advertising, and Beyond

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