Session 2 Digital Business Model

Question 1

Explain what is Long tail strategy and how it happens

Answer 1

retailing strategy of selling a large number of different items which each sell in small quantities (Amazon)
niche items that are low in popularity

Question 2

What is causing the long tail

Answer 2

Supply side: virtual shelf space, made-to-order production, electronic delivery, aggregation of consumers
Demand side: Search tools, recommendation systems, web-based tools
customer reviews, online communities

Question 3

How does long tail affect the industry dynamics

Answer 3

supply side: increased incentive to develop new products, new marketing strategies, new intermediaries and industry structures
Demand side: change in consumer tastes and demand patterns, positive feedback

Question 4

Explain Christensen’s theory of disruptive innovation

Answer 4

Transforms a product that historically is so expensive/complicated that only a few people could access. Disruptive tech allow more people to access it easily

Question 5

Explain Innovator dilemma

Answer 5

Disruptive tech are often not for existing customers, harder to convince as product owner. And for upper-management: expensive products vs new less expensive products for broader consumers (vice-versa)

Question 6

What is unbundling

Answer 6

focus on product, broken the products by offering the most valuable part to customers (buying a song instead of the entire albums)

Question 7

What is disintermediation

Answer 7

focus on supply chain, broken the links of supply chain by going directly to consumers or jumping steps in the supply chain, skip retailers, etc. Ex. Dell direct-to-sell model

Question 8

what is decoupling

Answer 8

focus on customer side of the supply chain. identify activities consumer perform in the customer value chain that can be broken, consumers are disrupting the markets not startup. example: amazon (consumer compare prices)

Question 9

two responses to disruption

Answer 9

re-coupling and re-balancing: capture value where it is created

Question 10

Elements of A business model canvas

Answer 10

Key partners, key activities, key resources, value proposition, customer relationship, channels, customer segments, cost structure, revenue streams

Question 11

four types of digital business models

Answer 11

1. supplier model: have little knowledge of their customers
2. omnichannel model: they own the customer relationship and have a lot of data on their customers
3. modular producer: paypal can be embed into different platforms, but don’t know their customers but work in the ecosystems
4. Ecosystem Driver: Amazon, establish ecosystem, provide platforms, own the most customer data

Question 12

what are the different components of digital business model

Answer 12

1. Content (what is consumed) - Information and product
2. Experience: (how is it packaged) - Customer experience
3. Platform: (how is it delivered)- internal and external