{"id":34,"date":"2018-06-14T19:04:18","date_gmt":"2018-06-14T19:04:18","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/bus3060\/chapter\/ch01-4\/"},"modified":"2026-02-14T17:37:21","modified_gmt":"2026-02-14T17:37:21","slug":"ch01-4","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/bus3060\/chapter\/ch01-4\/","title":{"raw":"1.5 The Pages Ahead","rendered":"1.5 The Pages Ahead"},"content":{"raw":"
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Learning Objective<\/h3>\r\n<\/header>\r\n
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After studying this section you should be able to do the following:<\/p>\r\n\r\n

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  1. Understand the structure of this text, the issues and examples that will be introduced, and why they are important.<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n

    Hopefully this first chapter has helped get you excited for what\u2019s to come. The text is written in a style meant to be as engaging as the material you\u2019ll be reading for the rest of your management career\u2014articles in business magazines and newspapers. The introduction of concepts in this text are also example rich, and every concept introduced or technology discussed is always grounded in a real-world example to show why it\u2019s important. But also know that while we celebrate successes and expose failures in that space where business and technology come together, we also recognize that firms and circumstances change. Today\u2019s winners have no guarantee of sustained dominance. What you should acquire in the pages that follow are a fourfold set of benefits that (1) provide a description of what\u2019s happening in industry today, (2) offer an introduction to key business and technology concepts, (3) offer a durable set of concepts and frameworks that can be applied even as technologies and industries change, and (4) develop critical thinking that will serve you well throughout your career as a manager.<\/p>\r\n

    Chapter summaries:<\/p>\r\n

    Chapter 2 \u201cStrategy and Technology: Concepts and Frameworks for Understanding What Separates Winners from Losers\u201d<\/a> focuses on building big-picture skills to think about how to leverage technology for competitive advantage. Technology alone is rarely the answer, but through a rich set of examples, we\u2019ll show how firms can weave technology into their operations in ways that create and reinforce resources that can garner profits while repelling competitors. A mini case examines tech\u2019s role at FreshDirect, a firm that has defied the many failures in the online grocery space and devastated traditional rivals. BlueNile, Dell, Lands\u2019 End, TiVo and Yahoo! are among the many firms providing a rich set of examples illustrating successes and failures in leveraging technology. The chapter will show how firms use technology to create and leverage brand, scale economies, switching costs, data assets, network effects, and distribution channels. We\u2019ll introduce how technology relates to two popular management frameworks\u2014the value chain and the five forces model. And we\u2019ll provide a solid decision framework for considering the controversial and often misunderstood role that technology plays among firms that seek an early-mover advantage.<\/p>\r\n

    In Chapter 3 \u201cZara: Fast Fashion from Savvy Systems\u201d<\/a>, we see how a tech-fed value chain helped Spanish clothing giant Zara craft a counterintuitive model that seems to defy all conventional wisdom in the fashion industry. We\u2019ll show how Zara\u2019s model differs radically from that of the firm it displaced to become the world\u2019s top clothing retailer: Gap. We\u2019ll see how technology impacts product design, product development, marketing, cycle time, inventory management, and customer loyalty and how technology decisions influence broad profitability that goes way beyond the cost-of-goods thinking common among many retailers. We\u2019ll also offer a mini case on Fair Factories Clearinghouse, an effort highlighting the positive role of technology in improving ethical business practices. Another mini case shows the difference between thinking about technology versus broad thinking about systems, all through an examination of how high-end fashion house Prada failed to roll out technology that on the surface seemed very similar to Zara\u2019s.<\/p>\r\n

    Chapter 4 \u201cNetflix: The Making of an E-commerce Giant and the Uncertain Future of Atoms to Bits\u201d<\/a> tramples the notion that dot-com start-up firms can\u2019t compete against large, established rivals. We\u2019ll show how information systems at Netflix created a set of assets that grew in strength and remains difficult for rivals to match. The economics of pure-play versus brick-and-mortar firms is examined, and we\u2019ll introduce managerial thinking on various concepts such as the data asset, personalization systems (recommendation engines and collaborative filtering), the long tail and the implications of technology on selection and inventory, crowdsourcing, using technology for novel revenue models (subscription and revenue-sharing with suppliers), forecasting, and inventory management. The case ends with a discussion of Netflix\u2019s uncertain future, where we present how the shift from atoms (physical discs) to bits (streaming and downloads) creates additional challenges. Issues of licensing and partnerships, revenue models, and delivery platforms are all discussed.<\/p>\r\n

    Chapter 5 \u201cMoore\u2019s Law: Fast, Cheap Computing and What It Means for the Manager\u201d<\/a> focuses on understanding the implications of technology change for firms and society. The chapter offers accessible definitions for technologies impacted by Moore\u2019s Law, but goes beyond semiconductors and silicon to show how the rate of magnetic storage (e.g., hard drives) and networking create markets filled with uncertainty and opportunity. The chapter will show how tech has enabled the rise of Apple and Amazon, created mobile phone markets that empower the poor worldwide, and has created five waves of disruptive innovation over five decades. We\u2019ll also show how Moore\u2019s Law, perhaps the greatest economic gravy train in history, will inevitably run out of steam as the three demons of heat, power, and limits on shrinking transistors halt the advancement of current technology. Studying technologies that \u201cextend\u201d Moore\u2019s Law, such as multicore semiconductors, helps illustrate both the benefit and limitation of technology options, and in doing so, helps develop skills around recognizing the pros and cons of a given innovation. Supercomputing, grid, and cloud computing are introduced through examples that show how these advances are changing the economics of computing and creating new opportunity. Finally, issues of e-waste are explored in a way that shows that firms not only need to consider the ethics of product sourcing, but also the ethics of disposal.<\/p>\r\n

    In Chapter 6 \u201cUnderstanding Network Effects\u201d<\/a>, we\u2019ll see how technologies, services, and platforms can create nearly insurmountable advantages. Tech firms from Facebook to Intel to Microsoft are dominant because of network effects\u2014the idea that some products and services get more valuable as more people use them. Studying network effects creates better decision makers. The concept is at the heart of technology standards and platform competition, and understanding network effects can help managers choose technologies that are likely to win, hopefully avoiding getting caught with a failed, poorly supported system. Students learn how network effects work and why they\u2019re difficult to unseat. The chapter ends with an example-rich discussion of various techniques that one can use to compete in markets where network effects are present.<\/p>\r\n

    Chapter 7 \u201cPeer Production, Social Media, and Web 2.0\u201d<\/a> explores business issues behind several services that have grown to become some of the Internet\u2019s most popular destinations. Peer production and social media are enabling new services and empowering the voice of the customer as never before. In this chapter, students learn about various technologies used in social media and peer production, including blogs, wikis, social networking, Twitter, and more. Prediction markets and crowdsourcing are introduced, along with examples of how firms are leveraging these concepts for insight and innovation. Finally, students are offered guidance on how firms can think SMART by creating a social media awareness and response team. Issues of training, policy, and response are introduced, and technologies for monitoring and managing online reputations are discussed.<\/p>\r\n

    Chapter 8 \u201cFacebook: Building a Business from the Social Graph\u201d<\/a> will allow us to study success and failure in IS design and deployment by examining one of the Web\u2019s hottest firms. Facebook is one of the most accessible and relevant Internet firms to so many, but it\u2019s also a wonderful laboratory to discuss critical managerial concepts. The founding story of Facebook introduces concepts of venture capital, the board of directors, and the role of network effects in entrepreneurial control. Feeds show how information, content, and applications can spread virally, but also introduce privacy concerns. Facebook\u2019s strength in switching costs demonstrates how it has been able to envelop additional markets from photos to chat to video and more. The failure of the Beacon system shows how even bright technologists can fail if they ignore the broader procedural and user implications of an information systems rollout. Social networking advertising is contrasted with search, and the perils of advertising alongside social media content are introduced. Issues of predictors and privacy are covered. And the case allows for a broader discussion on firm value and what Facebook might really be worth.<\/p>\r\n

    Chapter 9 \u201cUnderstanding Software: A Primer for Managers\u201d<\/a> offers a primer to help managers better understand what software is all about. The chapter offers a brief introduction to software technologies. Students learn about operating systems, application software, and how these relate to each other. Enterprise applications are introduced, and the alphabet soup of these systems (e.g., ERP, CRM, and SCM) is accessibly explained. Various forms of distributed systems (client-server, Web services, messaging) are also covered. The chapter provides a managerial overview of how software is developed, offers insight into the importance of Java and scripting languages, and explains the differences between compiled and interpreted systems. System failures, total cost of ownership, and project risk mitigation are also introduced. The array of concepts covered helps a manager understand the bigger picture and should provide an underlying appreciation for how systems work that will serve even as technologies change and new technologies are introduced.<\/p>\r\n

    The software industry is changing radically, and that\u2019s the focus of Chapter 10 \u201cSoftware in Flux: Partly Cloudy and Sometimes Free\u201d<\/a>. The issues covered in this chapter are front and center for any firm making technology decisions. We\u2019ll cover open source software, software as a service, hardware clouds, and virtualization. Each topic is introduced by discussing advantages, risks, business models, and examples of their effective use. The chapter ends by introducing issues that a manager must consider when making decisions as to whether to purchase technology, contract or outsource an effort, or develop an effort in-house.<\/p>\r\n

    In Chapter 11 \u201cThe Data Asset: Databases, Business Intelligence, and Competitive Advantage\u201d<\/a>, we\u2019ll study data, which is often an organization\u2019s most critical asset. Data lies at the heart of every major discipline, including marketing, accounting, finance, operations, forecasting and planning. We\u2019ll help managers understand how data is created, organized, and effectively used. We\u2019ll cover limitations in data sourcing, issues in privacy and regulation, and tools for access including various business intelligence technologies. A mini case on Wal-Mart shows data\u2019s use in empowering a firm\u2019s entire value chain, while the mini case on Harrah\u2019s shows how data-driven customer relationship management is at the center of creating an industry giant.<\/p>\r\n

    Chapter 12 \u201cA Manager\u2019s Guide to the Internet and Telecommunications\u201d<\/a> unmasks the mystery of the Internet\u2014it shows how the Internet works and why a manager should care about IP addresses, IP networking, the DNS, peering, and packet versus circuit switching. We\u2019ll also cover last-mile technologies and the various strengths and weaknesses of getting a faster Internet to a larger population. The revolution in mobile technologies and the impact on business will also be presented.<\/p>\r\n

    Chapter 13 \u201cInformation Security: Barbarians at the Gateway (and Just About Everywhere Else)\u201d<\/a> helps managers understand attacks and vulnerabilities and how to keep end users and organizations more secure. Breaches at TJX and Heartland and the increasing vulnerability of end-user systems have highlighted how information security is now the concern of the entire organization, from senior executives to front-life staff. This chapter explains what\u2019s happening with respect to information security\u2014what kinds of attacks are occurring, who is doing them, and what their motivation is. We\u2019ll uncover the source of vulnerabilities in systems: human, procedural, and technical. Hacking concepts such as botnets, malware, phishing, and SQL injection are explained using plain, accessible language. Also presented are techniques to improve information security both as an end user and within an organization. The combination of current issues and their relation to a broader framework for security should help you think about vulnerabilities even as technologies and exploits change over time.<\/p>\r\n

    Chapter 14 \u201cGoogle: Search, Online Advertising, and Beyond\u201d<\/a> discusses one of the most influential and far-reaching firms in today\u2019s business environment. As pointed out earlier, a decade ago Google barely existed, but it now earns more ad revenue and is a more profitable media company than any firm, online or off. Google is a major force in modern marketing, research, and entertainment. In this chapter you\u2019ll learn how Google (and Web search in general) works. Issues of search engine ranking, optimization, and search infrastructure are introduced. Students gain an understanding of search advertising and other advertising techniques, ad revenue models such as CPM and CPC, online advertising networks, various methods of customer profiling (e.g., IP addresses, geotargeting, cookies), click fraud, fraud prevention, and issues related to privacy and regulation. The chapter concludes with a broad discussion of how Google is evolving (e.g., Android, Chrome, Apps, YouTube) and how this evolution is bringing it into conflict with several well-funded rivals, including Amazon, Apple, Microsoft, and more.<\/p>\r\n

    Nearly every industry and every functional area is increasing its investment in and reliance on information technology. With opportunity comes trade-offs: research has shown that a high level of IT investment is associated with a more frenzied competitive environment (Brynjolfsson, et. al., 2008). But while the future is uncertain, we don\u2019t have the luxury to put on the brakes or dial back the clock\u2014tech\u2019s impact is here to stay. Those firms that emerge as winners will treat IT efforts \u201cas opportunities to define and deploy new ways of working, rather than just projects to install, configure, or integrate systems\u201d (McAfee & Brynjolfsson, 2007). The examples, concepts, and frameworks in the pages that follow will help you build the tools and decision-making prowess needed for victory.<\/p>\r\n\r\n

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    Key Takeaways<\/strong><\/p>\r\n\r\n<\/header>\r\n

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