WEEK 3 - Digital Advantages, Competition & Business Models

Vocabulary flashcards reviewing concepts on digital advantages, eBusiness models, digital darwinism, network effects, and winner-take-all dynamics from MIS 303 Week 3.

Search Costs

The costs and effort required by consumers or businesses to find, compile, and compare data and information regarding products and services.

Reach

A metric representing the total number of people or potential customers connected across a communication or data network.

Richness

The quality, detail, and depth of information processed and delivered to a user.

Long Tail

A market phenomenon referring to the large number of niche products unavailable through conventional retail stores, made commercially viable by the infinite shelf space of digital markets.

Intermediary

Any agent, software, or business that provides a trading infrastructure to bring buyers and sellers together while charging overhead for the service.

Disintermediation

The elimination of channel intermediaries in a supply chain, allowing manufacturers and producers to access customers directly to increase profit margins or lower prices.

Clickstream Data

Data tracking the exact navigation path of a consumer through a website, including page views, visit patterns, stay duration, date/time, and abandoned shopping carts.

Digital Darwinism

The concept that organizations failing to adapt to the demands and speed of the digital marketplace are doomed to fail as technology reduces market frictions.

Sustaining Technology

An incremental technology that produces an improved product existing customers are eager to buy, such as faster processing, enhanced quality, or lower cost.

Disruptive Technology

A novel approach or product that initially fails to meet the needs of mainstream customers but improves more rapidly than incumbent technologies, eventually displacing established markets.

DARPANet

An emergency military communications network created by the U.S. Department of Defense that served as the foundational precursor to the modern Internet.

eBusiness Model

A comprehensive plan detailing how a digitally mediated firm creates, delivers, and generates revenues or rents on the Internet.

B2B (Business to Business)

An eBusiness model representing commercial transactions conducted between two or more business entities, forming the largest digital commerce sector.

B2C (Business to Consumer)

An eBusiness model in which businesses sell products or services directly to individual end consumers.

C2B (Consumer to Business)

An eBusiness model where individual consumers offer goods, services, or value directly to commercial entities.

C2C (Consumer to Consumer)

An eBusiness model facilitating transactions directly between individual consumers, typically enabled by an online third-party platform.

Distributor Model

A fundamental business model in which a firm purchases goods from sellers and resells them to buyers, using digital capabilities to offer broader selection and superior information.

Creator Model

A fundamental business model where a firm designs and manufactures products from raw materials and components, bypassing middlemen to maximize margins.

Extractor Model

A platform-based business model that provides free or subsidized services to engage users on one side while generating revenue from buyers or advertisers on the other side.

Broker Model

A fundamental business model that facilitates matches between buyers and sellers for products, services, or people without taking title or holding inventory.

Metcalfe's Law

A mathematical formulation stating that the total value or potential connections of a network with $n$ nodes is equal to $\frac{n(n-1)}{2}$.

Network Effects

Also called network externalities; a condition where the value of a product or service to a user increases automatically as the total number of participants on the network grows.

Same-Side (Direct) Network Effect

A network effect where user value on a specific side of a platform changes based on the number of other users on that exact same side.

Cross-Side (Indirect) Network Effect

A network effect where user value on one side of a platform changes based on the number of participants on the opposite side of the platform.

Winner-Take-All (WTA) Market

A market environment influenced by strong positive network effects where a single dominant platform captures almost the entire market share, leaving competitors with little to nothing.

Multi-Homing Costs

The economic, operational, or effort-based costs incurred by users when simultaneously maintaining active participation across multiple competing platforms.