M13-PMN

Question 1

how are PMN companies different than tradiitonal?

Answer 1

-platforms are cheaper, because owner no longer has 100% control, and it fully depends on # of users or network effects

Question 2

what is a network

Answer 2

system of interconnected nodes

-nodes can be people, companies, places, or things

-in platform mediated networks, the nodes are called network users.

Question 3

what are network users

Answer 3

independant actors who participate in a network in order to interact with each other

Question 4

what is a PMN

Answer 4

network users access a common platform that facilitates their interactions

Question 5

PLatforms

Answer 5

subset of components and rules employed by users in most of their transactios

Question 6

Platform, components

Answer 6

hardware, software, services

Question 7

platforms, rules

Answer 7

technical standards, protocols for info exchange, policies and contracts that govern transactions

Question 8

users rely on a platform when doing so is more effecient than unmediated bilateral dealings

Question 9

How does eBay work- what are components

Answer 9

browser and internet access (From 3rd parties)

Website design

bid tracking softawre

shipping servicees (from 3rd parties)

links to paypal

etc

Question 10

How does eBay work- what are rules

Answer 10

-registration requirements

-dispute resolution processes

-feedback system

-policies for bidding

Question 11

what do PMNs not encompass

Answer 11

1/ physical networks
2/ social networsk (Freind groups)
3/ supply networks (Ecosystems) comprised of large ifirms and most committed suppliers and customers

Question 12

why study PMNs

Answer 12

1. Large and growing share of global economy:
2. distinctive management challenges
3. PMN are expected to provide some of the following services
4. network effects

Question 13

What are network effects

Answer 13

the effects of the network

-can be pos or neg
-they emerge if the value of the network perceived by a user depends on the number of interactions among the users of the network

Question 14

how are PMNs large and growing share of global economy

Answer 14

-not just digital industries but also, financial services, transportation, retail, energy, real estate, health care, ent admin

60/100 biggest companies earn their revenue from pmns

Question 15

How do PMNs create distinctive management challenges

Answer 15

-new concept
-complex but people oversimplify them (over or underestimate strength of network effect)
-errors can be fatal!!!!

Question 16

what services can PMNS provide

Answer 16

1. connectivity: facilitating transfer or goods and info
2. variety: get offers from supply side users that vary
3. match heterogenous needs with suitable transaction partners
4. offer price setting services where users disclose what price they are willing to seellat

Question 17

what is a network effect

Answer 17

the effect that one user of a g/s has on the value of that product to OTHER PPL

When a customers willingness to pay depends on the # of others they can interact w on that network

Question 18

what is wtp

Answer 18

max one is willing to pay for a seervice/prod

Question 19

When a network’s user base expands, the resulting increase in
user WTP does not automatically imply that platform providers
will charge higher prices

Question 20

network effect: pos feedback

Answer 20

self-reinforcing mechnaism (strong get stronger, weak get weaker)

Question 21

network effect: neg feedback

Answer 21

strong get weaker
weak get stronger

Question 22

how is neg feedback possible

Answer 22

Past a certain size, the dominant firm encounters
difficulties, such as coordination costs and
increasing overhead, that limit further growth.

Question 23

one sided network

Answer 23

homogenous users who all perform same functions

(liek in stock market, ppl can be either buyer or seller)

Question 24

two sided network

Answer 24

when you have two distinct user groups

Credit card: card holders and merchangts

Question 25

three sided networks

Answer 25

content consumers, content providers, and advertisers

Members of each group
exhibit a strong preference regarding number of members in other groups (cross
sided network effects) as well as in their own group (same sided network effects)

Question 26

what does netwoerk effect result in the long run

Answer 26

increasing returns, and winner takes all!!! because one platform prevails

think: windows, eBay, PDF

if most customers using one netwokr then it wins

Question 27

WTA vs WTM

Answer 27

WTA: implies loser is out
WTM: winnter takes most of the customer base

Question 28

platform structure: x axis (# of providores) y axis (# of sponsors)

one provider, one sponsor

Answer 28

proprietary platform

Apple

Question 29

platform structure: x axis (# of providores) y axis (# of sponsors)

one provider, many sponsor

Answer 29

Joint venture platform (created by many groups)

Orbitz (CReated by several airlines)

Question 30

platform structure: x axis (# of providores) y axis (# of sponsors)

many provider, one sponsor

Answer 30

licensor platform

(american experss)

Question 31

platform structure: x axis (# of providores) y axis (# of sponsors)

many provider, many sponsor

Answer 31

share platform

linuz open source
visa
real estate

Question 32

when is networked market more likely to be serve d by a single platform?

Answer 32

1. natural monopoly
2. multi homing costs are high andd network effects are positive and strong, demand for differentiated features is weak (or a dom platform can offfer features selectively to users willignto pay premium)