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Digital Business > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What is a digital business model?

A

A way of doing business using the internet and other technologies as underlying systems and infrastructure.

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2
Q

What are some key functions of a digital business model?

A

Understanding, mediation, evaluation, planning, and implementation.

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3
Q

Why are digital business models essential in today’s business environment?

A

They help companies adapt to rapid changes in technology, globalization, and consumer expectations.

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4
Q

What role do social media platforms play in digital business models?

A

They facilitate communication between people and influence public opinion about products and services.

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5
Q

How has digital technology impacted customer expectations?

A

Customers now demand high-quality experiences and can easily switch providers if unsatisfied.

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6
Q

What is one example of a successful digital business model?

A

Amazon, which became the largest online retailer by offering convenient online shopping and customer communication tools.

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7
Q

How do digital business models contribute to a company’s success?

A

They provide a clear framework for employees to understand their roles in creating and delivering value in a digital context.

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8
Q

What is the ‘understanding function’ in a digital business model?

A

It helps managers grasp and analyze elements of existing business models, serving as a reference point for decision-making.

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9
Q

Define the ‘mediation function’ of a digital business model.

A

Serves as a com- munication tool among key stakeholders who would like to understand key aspects of a digital business model

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10
Q

Describe the ‘evaluation function’ in digital business models.

A

This function enables managers to evaluate the technical feasibility and business potential of the digital business model

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11
Q

What does the ‘planning function’ involve in a digital business model?

A

Planning means performing a series of tasks to accomplish a business goal

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12
Q

What is the ‘implementation function’ in a digital business model?

A

A well-developed digital business model serves as a tool for benchmarking, comparing your business with the best one on the market

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13
Q

Why is transparency important in digital business models?

A

With numerous options available to customers, transparency helps companies stay competitive as switching costs are low.

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14
Q

When was the term “business model” first used in academic literature?

A

The term was first used in the academic literature in the late 1950s

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15
Q

What event led to the common use of “business model” in the 1990s?

A

The start-up boom and the commercial use of the internet in the mid-1980s made “business model” a common term in the 1990s.

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16
Q

Which companies were early innovators of business model concepts in the 1950s?

A

McDonald’s and Toyota, focusing on organizational structure, decision-making, and marketing

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17
Q

Why did start-ups in the 1990s need to explain their business models to banks and investors?

A

To secure financing by showing how they differentiated from established companies and demonstrated competitive positions

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18
Q

Which companies became successful in the 1960s and 1970s due to novel business models?

A

Walmart, FedEx, and Toys “R” Us

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19
Q

How did the COVID-19 pandemic impact the importance of business models?

A

It accelerated technology adoption, making business models critical for positioning companies against innovators.

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20
Q

What were the main reasons for Nokia’s failure according to Verma (2020)?

A

Failing to adapt to the market, lack of innovation, poor market repositioning, leadership crisis, and not switching to Android technology.

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21
Q

How did Google and Apple create competitive advantages in the digital ecosystem?

A

By building digital communities for developers, customers, and producers, while Nokia stayed outside this ecosystem.

22
Q

What lesson does Nokia’s failure illustrate about business models?

A

Past success doesn’t guarantee future competitiveness, especially during uncertain market conditions.

23
Q

What feature made Google valuable after it started as a small business in 1998?

A

Its search engine algorithm became a critical tool for information inquiry, enhancing its value over traditional brands.

24
Q

Why did Facebook invest in WhatsApp despite it not generating significant revenue?

A

Facebook saw long-term potential, anticipating that people and small businesses would use WhatsApp for payments and business communication.

25
Q

What critical lesson was learned from the dot-com bubble of the early 2000s?

A

Business models must align with customer needs and value creation, as mere internet growth is insufficient.

26
Q

Why are digital business model functions like mediation and evaluation important?

A

They help estimate company value and assess new, innovative business models lacking traditional benchmarks.

27
Q

What is the general consensus among researchers about the meaning of a “business model”?

A

It refers to “how business is done.”

28
Q

How does Dodgson et al. (2013) define a business model?

A

As a way to sell commercial technology, helping a company achieve an edge over competitors.

29
Q

What aspect does ICV (2017) emphasize in defining a business model?

A

It is a representation of the company’s activities and a reference point for long-term company objectives.

30
Q

How do Weill and Woerner (2013) define a digital business model?

A

A model where an organization interacts with customers digitally through apps, the internet, and websites.

31
Q

What are the three main elements of a digital business model according to Bradley et al. (2015)?

A

Cost value, experience value, and platform value.

32
Q

According to Bärenfänger and Otto (2015), what defines a digital business model?

A

A model that uses digitisation in both customer interaction and internal operations.

33
Q

How did digital technology impact Uber’s business model?

A

By combining cost-effectiveness and convenience, Uber redefined traditional taxi services.

34
Q

What role does big data play in digital business models, as noted by Schallmo et al. (2017)?

A

It enables companies to collect, analyze, and use data for optimizing business decisions.

35
Q

Name a characteristic of digital business models related to customer convenience and adaptability.

A

High levels of connectivity among businesses, customers, and partners.

36
Q

Why are digital business models considered to have “low switching costs”?

A

Customers can easily compare and switch between products or services online.

37
Q

What is price discrimination in digital business models?

A

The ability to adjust prices based on customer willingness to pay and competitor pricing.

38
Q

What is “High Levels of Connectivity Between Actors” in digital business models?

A

It refers to the strong connections among businesses, users, suppliers, customers, and partners, often through internet technology, as seen with Amazon, Airbnb, and Alibaba.

39
Q

What does “Globalization” mean in the context of digital business models?

A

It’s the worldwide interconnection of companies, countries, and people through international trade, travel, investments, and employment.

40
Q

What is meant by “Limited Geographical Limitations” in digital business models?

A

Internet technology allows business interactions without physical location limits, enabling global communication and transactions.

41
Q

What does “Leveraging User Data” involve in digital business models?

A

Using customer data to predict needs and personalize services, as Apple did with the iPhone, creating a competitive advantage.

42
Q

What is “High Transparency of Firms” in digital business models?

A

Enhanced visibility of business practices, with customers able to review and share opinions instantly on social media.

43
Q

What are “Low Transaction Costs” in digital business models?

A

Reduced expenses for transactions due to digital tools lowering coordination costs and geographic barriers.

44
Q

What does “Opportunities for Price Discrimination” mean in digital business models?

A

The ability to adjust prices based on customer willingness to pay, using detailed market and competitor insights.

45
Q

What are the Characteristics of Digital Business Models?

A

High levels of connectivity between actors, Limited geographical limitations, low switching cost, leveraging user data, high transparency of firms, low transaction costs, opportunities for price discrimination

46
Q

What does “Digital” mean according to Bican and Brem (2020)?

A

“Digital” refers to technology that uses sensors, controls, and electronics to automate manual processes.

47
Q

What is “Digital Technology”?

A

A segment of technology focused on electronic data acquisition, processing, or analysis.

48
Q

What is “Digitization”?

A

The process of converting analog information into digital form, such as making digital copies of hand-written documents.

49
Q

What is “Digitalization”?

A

The large-scale application of digitization tools in society and organizations to build digital infrastructure.

50
Q

What is “E-Commerce”?

A

A method of selling goods and services over the internet, including B2B, B2C, C2C, and C2B models.

51
Q

What is “Digital Transformation”?

A

A comprehensive change in business processes and models through digital technology, impacting the entire organization.

52
Q

What is “Digital Strategy”?

A

A plan or approach to achieve business objectives through specific actions and use of digital resources.

Digital Business (2 decks)

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