Question

1)When an industry consists of [Raw material producer]-[Supplier]-[Firm]-[Channel], which stage is a downstream player?

Select one:

1. Channel

2. Supplier

3. Raw material producer

4. Firm

2)Which one is not a benefit of vertical integration strategy?

Select one:

1. Control over production timing across stages

2. Secure flexibility to choose alternative transaction partners

3. A secure source of new materials

4. Simplified procurement and administrative procedures

3)_____________ comprise all the expenses that network users incur in order to establish and maintain platform affiliation.

Select one:

1. Opportunity costs

2. Diversified costs

3. Multi-homing costs

4. Average costs

4)Which one is not a source of first-mover advantages?

Select one:

1. Preemption of assets

2. Significant learning curve effect

3. High level of technological and market uncertainty

4. Buyer switching costs

5. Reputation and brand awareness by consumers

5)In traditional businesses, growth beyond some point usually leads to diminishing returns. However, in the digital age, successful platforms enjoy increasing returns to scale. So we observe mature two-sided network industries are dominated by a handful of large platforms. This phenomenon is called __________________.

Select one:

1. Innovator's dilemma

2. Winner's curse

3. Winner-takes-all

4. Market disruption

Answer 1

1) 1. Channel

Raw material producer and supplier are upstream players to the firm and channel is the downstream player in which the product goes to the distributors to reach the end customer.

2) 2. Secure flexibility to choose alternative transaction partners

Vertical integration does not provide the flexibility to choose any alternative transaction partner and thus cannot accommodate the increased demands of the buyer.

3) 3. Multi-homing costs

When users use more than one platform to make a "home" they increase the cost of using multiple products serving the same purpose, by using all of them simultaneously or one after the other.

4) 3. High level of technological and market uncertainty

It is a disadvantage for the first movers that they have to face the risks of technological and market uncertainties when they first enter the market unaware of how the market and customers will treat their products. Later-movers will evaluate these risks from the first mover and thus will not face the same intensity of risks as first movers.

5) 3. Winner-takes-all

Such large platforms that use various strategies to drive out weaker competitors take almost all the market and emerge as a single leading company over these rivals in mature two-sided network industries.