The logic of firm and market - Essay Example

The Logic of Firm and Market Table of Contents The Logic of Firm and Market Table of Contents 2 Question1: 3 Question 2: 4 Question 3: 5 Question 4: 6 Question 5: 7 References 8 Question1: Watch the following clip: http://www.wreg.com/videobeta/?watchId=8ba6f8fc-90a2-4711-90ea-1884ec348310 comment! The video clip shows an innovative way of pick pocketing using high end technology like RFID. RFID stands for Radio Frequency Identification Device which has been used by organizations to improve their supply chain management. RFID is a wireless technology which is used for identifying goods using electromagnetic waves for receiving and sending information from a source. This technology offers widespread features like higher reading rate, beyond visual range identification, embedding tags. The large scale advantage of this technology has found widespread acceptance of this product in industries like logistics, retail, management of passports, driving license. The most vital aspect of this technology is that it enables access to real time information which makes it an indispensable tool in modern business organizations (Li Yang &Tentzeris, 2010, p.18,19). The clip shown in the above link shows the misuse of RFID technology. The clip shows how RFID can be used by unauthorized persons to steal valuable information from individuals without actually stealing the purse or wallet. Individuals using RFID equipped credit cards are more vulnerable to this kind of thefts as it is very easy pick for unauthorized persons to gather information about the credit cards by just using a reader which just needs to be touched to the purse or wallet. This would generate instant information about the card present inside the wallet of an individual and can be misused in multiple ways without the actual owner even getting a hint of the misuse of the object. The problem has become more compounded in nature as sensitive documents like passports and driving licenses are also being issued bearing an RFID tag which makes them vulnerable to misuse. The video clip shows that in a very short span of time numerous customers can be duped of their sensitive documents without the customer even getting the slightest hint of the events happening around him/her. It has therefore tried to draw the attention of card makers and other such organizations to ensure preventive measures so as to prevent large scale misuse of this technology. Question 2: What is meant by value proposition in a business model? Give at least three examples and explain them. Value Proposition is defined as “the business or marketing statement which summarizes the reasons as to why a customer should purchase the products and services of a firm, the nature of the statement should be such that it would be able to persuade a customer that a particular product or service offering is better than the other alternatives of the product or service available in the market” (Investopedia, “What Does Value Proposition Mean”). Value proposition serves as an important aspect in the business model of an organization. The value proposition segregates the products and services of a firm from its competitors present in the market. Value proposition can be based on four aspects namely, low cost, speed, quality, innovation and service standards. Organizations must essentially include each of these above stated elements in their value proposition and must specialise in any one of the aspects which would serve as the Unique Selling Proposition of the firm. An example in this regard is Mont Blanc pens is an example of an organization whose value proposition in based on quality aspects. The company produces pens which come at a premium price range (above 75 dollars). The firm justifies its premium price range with the excellent product features which includes the looks and feel of the product along with the brand name. Federal Express is an organization that provides courier and parcel logistics services to clients based across the world. The company projects speed as its value proposition as it positions itself as an organization that provides faster delivery as compared to any of its competitors (Ulrich, Zenger & Smallwood, p.40). Wal-Mart is a retailer which has operations spread across the world. The core competence of the firm lies in its efficient management of logistics and supply chain. The company uses high end technologies like ERP to augment its supply chain. This has generated cost advantage for the firm which has been used by the company to provide goods at cheaper rates. The company’s value proposition is based on low cost as it aims to provide everyday low prices to its customers. Question 3: Give two examples of what is meant by ambivalent nature of complex information technology-intensive firms Technology has created a revolution for business organizations in the modern world. Advancements in technology have generated large scale innovation in organizations. Organizations like Apple and Intel’s core competence is based on innovation which is a direct consequence of advancement in technology. Firms like Wal-Mart have revolutionised logistics management by using high end information technology tools like RFID and cross docking which are primarily based on use of information technology. However many debates have surfaced recently over the real benefits to a firm from the use and application of technology in business operations. Technology intensive firms like Google as well as popular online social networking sites like face book are highly technologically driven firms. The business models of these kinds of firms are largely unfinished in nature as they show growth trends but also do not have a well defined business model. Companies like e-bay have their entire business and revenue model based on information technology. Facebook a popular social networking site is a highly technologically intensive firm whose business model is based on innovations using information technology. It business model is based on the morphing technology which again shows the ambivalent nature of the business model of technologically intensive firms. The ambivalent nature of complex information systems can be explained by analysing the business models of Amazon (Once click stop shop) and the relevance platform in the search engine operations of Google. Firms have gone about protecting their advances made in the field of information technology by patenting their innovations. This implies the nature of competitive advantage that can be achieved by organizations while implementing technology in their business processes (Jelen & Kolakovic, p.1-21). Question 4: How does Edmunds.com generate profits? Edmunds.com is an online web portal whose business model is based on sale of used cars. The robust business model of the firm can be analyzed by the impressive growth rate of the company whose revenues have grown by approximately 43 percent over a period of seven years. Since its inception in 2005 the company’s customer base has grown to approximately 3.5 million. The ‘true market value’ section of the website provides a unique platform where user’s can compare different models of cars (Bloomberg, “Maintaining Edmunds Edge”). The profits of the firm come from its unique services like extensive information about products and the margins from the products sold to the customers. The business model of the firm is an example to highlight the role of information technology in profitability of the organization. Question 5: Check out www.khanacademy.org/; analyze in the context of this course. Khanacademy.org is an online web portal which is dedicated towards providing online tutoring on different aspects of academics. The site caters to a wide array of subjects ranging from complex mathematical topics like algebra, calculus and trigonometry to topics of MBA like finance and economics apart from papers in biology, humanities and science segments. Study materials are also available for competitive tests like GMAT, CASHEE and SAT MATH. Some other aspects of this web portal include interactive videos, online tests and feedbacks apart from options of getting an online tutor who acts like a virtual teacher to the student. The contents of the courseware range from tutorials and practice papers which are prepared and updated by highly experienced individuals of the academic industry. The chapters focus from understanding of basic concept to complex problems and cases on the topics covered by the academy. The site also has options for pre recorded web tutorials which provide a classroom ambience for students enrolled with the academy (Khanacademy.org, “Browse 1800+ videos by topic”). The analysis of the web portal reflects the power and scope of information technology in generating profits for organizations. References Bloomberg. Maintaining Edmunds Edge. November 26, 2007. Special Report. December 16, 2010.. Investopedia. What Does Value Proposition Mean?. 2010. Value Proposition. December 16, 2010. < http://www.investopedia.com/terms/v/valueproposition.asp>. Khanacademy.org. Browse 1800+ videos by topic. 2010. Khan Academy. December 16, 2010. < http://www.khanacademy.org/#>. Li Yang &Tentzeris. RFID-Enabled Sensor Design and Applications. Artech House. 2010. Ulrich, D. Zenger, J.H. & Smallwood, W.N. Results-based leadership. Harvard Business Press, 1999. Jelen, J & Kolakovic, M. Complex information technology-intensive firms - A new paradigmatic firm-theoretical imperative. Ekonomski Fakultet Zagreb, Croatia & Parsons The New School for Design, USA. Read More