What Is Network Effects? What Are The Other Names For This Concept?

Ashley started the discussion by explaining Lee and Kreutzer's (1982) analysis of network effects. According to Lee and Kreutzer, network effects is when the attractiveness or value of the product to buyers increases with others' use of the product. A few examples from the text are; telephones, fax machines, and computer software. (Lee & Kreutzer, 1982) Using telephones as an example: If I bought a telephone, that telephone would be useless unless someone else bought one. The value of

Externality is defined as an effect of a decision on a third party not taken into account by the decision maker. There are two types of externalities being positive and negative. Second hand smoke would be a negative externality. The smoker does not take into account the smoke emitted from their cigarette. Education would be considered a positive externality. When an individual is educated, their

As Krames describes, even though the intent was not to revolutionize, the mass customization and the providing competitive price to customer by eliminating the middleman, changed the landscape of computer business. Consumers, for

| Value Proposition:3.27-845m users, more than 70 languages(76)3.28-B2C: social network platform for connecting people with people, everywhere permitted (68)3.29-B2B: marketers, free channels; advertisers with budget, solutions to audience; developers with resource, offer platform(69)3.30-Privacy concerns: new products, marketers & developers on personal information(55), new privacy features announced(56)3.31-User friendly: search feature improvement for relevant & time saving, “See More Results” menu(70)

Clemons and Joshua S. Wilson. Both are in the faculty at the Wharton School of the University of Pennsylvania. Specifically, Clemons is a professor of operations and information management. His education includes an S.B. in physics from MIT, an M.S. and a Ph.D. in operations research from Cornell University (Clemons & Wilson, 2015). For the past 30 years, his research has revolved around the systematic study of the transformational effects of information on the strategy and practice of business (Clemons & Wilson, 2015). Clemons was also among the first scholars to do studies on online global securities trading, business process outsourcing and the effect of information on product proliferation and the transformation of consumer behavior in these new marketplaces (Clemons & Wilson, 2015). More recently, he has been studying privacy and the challenges of applying current antitrust laws to online business models (Clemons & Wilson, 2015). The second author is Joshua Wilson who is a research coordinator for Eric Clemons in the Department of Operations and Information Management at the Wharton School (Clemons & Wilson, 2015). His research and teaching interests are made up of information economics, strategic uses of information systems, online privacy and the analysis of mandatory participation third-party payer markets (Clemons & Wilson, 2015). Also, he received his B.A. in philosophy, politics and economics from the University of

(2) Three factors that influence the attribution of external or internal causation are distinctiveness, consensus, and consistency.

We are at the forefront of an information revolution. Firms are increasingly relying on data to drive strategic and business decisions. Upstart companies are giving market leaders a run for their money by tapping into advanced data analytics, statistical modeling and open source software. Multi-billion dollar companies like Uber and Airbnb have shown a groundbreaking data-driven way to connect its products & services to their customers. We are living in a world where every customer touch point with a digital device is being recorded and monetized. Every business has to reinvent, transform, and adapt its products and services to meet the demand of its digital savvy customers or face the risk of becoming obsolete.

I do not agree with Carr when he states that organizations such as IBM and Microsoft recognize this trend and have position themselves as IT utilities companies as more companies replace customized application with generic ones. That the internet has increased the commoditization of IT by providing a perfect delivery channel for generic applications and more and more organization will obtain their IT requirement by purchasing fee-based web services

Externalities…what are they, and why should I even care? According to Charlie Whelan at Dartmouth College, an externality is “any private behavior that has a spillover effect on somebody else who is not involved in the transaction. This behavior can be either positive or negative.” Positive externalities benefit those who are not involved while the opposite is true for negative externalities.

Generally speaking, externalities emerge when there is a “divergence between private and social costs or benefits”. Externalities often transpire whenever the original transaction between the consumer and the producer impacts a third-party. These influences can be either positive or negative; those who are negatively impacted are not compensated while those who profit do not have to pay for the good or service. An example of a negative externality would exist in the Tampa International Airport, as its existence adversely influences the lives of the citizens who reside near the airport. Considering that airplanes are powered by fossil fuels, the area surrounding the airport would see an increase in air pollution, a circumstance that would

Salesforce.com (NYSE:CRM) has successfully redefined the economics of enterprise software market and generated $3B in revenue and a $256M loss followed by a record quarter of $892M in their latest fiscal period (Salesforce.com Investor Relations, 2013). Salesforce.com is the global leader in enterprise CRM software sales, and has successfully redefined the economics of the market to see operating expense (OPEX) spending as the means to pay for software that would otherwise have to be paid through capital expenses (CAPEX) and lengthy financing cycles. The following is a SWOT analysis of Salesforce.com.

The content providing business is a highly capital intensive business. Therefore, the capital required to enter the strategic group and compete is extremely high. To calculate the capital required for a new entrant, we first found the average revenue of the strategic group (~$7.5 billion). We then assumed that a new entrant would have to capture about a third of this average to even make an impact in the industry. Taking this assumption into account, we figured that the new entrant would need about $2.5 billion in its first year of operation. Using this revenue, we then calculated the first year expenses the new entrant would incur.

The second opportunity comes in the form of technological advancements, more specifically, e-visits. Due to the use of e-visits a competitor has been showing an increase in market shares. Utilizing all technologies available can potentially increase the customer base, and market sharing, by providing more options for the

An Externality is when costs or benefits of certain activities spill or fall into third parties that have nothing to do with the initial situation in hand; its like a side effect or consequence of an activity that affects other parties who did not choose to incur that cost or benefit.

With the management of customer relationships in Internet networks, businesses can increase inputs by assessing what customers want from products and services, discovering new customers and retaining old customers (Bush and Rocco,