Master of Business Administration MBA/04/PT - Year 2 Resit Examinations for 2004 - 2005 / Semester 2 MODULE: INTERNET BUSINESS STRATEGY MODULE CODE: MBA 3415 Duration: 3 Hours Instructions to Candidates: 1. This paper consists of Sections A and B. 2. Section A is compulsory. 3. Answer any two questions from Section B. 4. Always start a new question on a fresh page. 5. Total marks 100. This question paper contains 5 questions and 4 pages. Page 1 of 4 SECTION A: COMPULSORY (Recommended time: 1.5 hour) QUESTION 1: (40 MARKS) Consider the company profile of Yahoo!, a search engine and web portal company. (Source : http://docs.yahoo.com/info/misc/overview.html) The Company When Yahoo! was founded in 1994 by Stanford Ph.D. students, David Filo and Jerry Yang, it began as their hobby and has evolved into a global brand that has changed the way people communicate with each other, find and access information, and make purchases. Today, Yahoo! Inc. is the Internet’s leading global consumer and business services company, offering a comprehensive network of essential services for Web users around the globe as well as businesses of all sizes. As the first online navigational guide to the Web, Yahoo! (www.yahoo.com) is the leader in traffic, advertising, household and business user reach. Yahoo! is also the most recognized and valuable Internet brand globally, reaching over 345 million unique users in 25 countries and 13 languages. (a) Where will you position Yahoo! In the Internet Value Network? Give reasons for your answer. (10 marks) (b) Yahoo! started as a company providing search engine services for free. (i) Explain what is a search engine? (ii) Describe the impact of the following Internet properties on Yahoo!’s development: Network Externality, Mediating Technology, Universality and Distribution Channel (20 marks) (c) Yahoo! acquired Broadcast.com, a company specialized in online audio and video streaming, in 1999. In the light of your answer in (a) above and an assessment of the competitive forces on Yahoo!, comment on the possible motivation behind this acquisition. (10 marks) Page 2 of 4 SECTION B: ANSWER ANY TWO QUESTIONS (Recommended time: 1.5 hour) QUESTION 2: (30 MARKS) (a) Compare and contrast the traditional value chain configuration with that of the value shop. Give appropriate examples to illustrate your answer. (15 marks) (b) Given that the Internet can shrink information asymmetry, explain how does this property impact on the value chain and value shop configurations? (15 marks) QUESTION 3: (30 MARKS) Amazon.com’s vision is to build “the earth’s most customer-centric company” (Source: Jeff Bezos, CEO, Guest Lecture at Massachusetts’s Institute of Technology, November 2002) (a) Using Amazon.com, or any other appropriate company, as a model, describe how the Internet enables a company to adopt more customer centric marketing techniques. (15 marks) (b) Explain how can the Internet be used as a business intelligence tool? (15 marks) (Please turn over) Page 3 of 4 QUESTION 4: (30 MARKS) (a) What are the components of a firm’s intellectual capital? (15 marks) (b) Consider the following extract from Apple Computer, Inc. The iTunes Music Store from Apple Computer allows Mac and PC users to legally discover, purchase and download music online. It features more than one million songs from the major music companies and 600 independent record labels, over 9,000 audiobooks, gift certificates and exclusive music not found anywhere else online. Since its inception, Apple customers have purchased and downloaded more than 250 million songs from the iTunes Music Store. iTunes users are now downloading one and a quarter million songs per day, which is an annual run rate of almost half a billion songs per year. The iTunes Music Store is now available in fifteen countries, which together represent more than 70 percent of the global music market. [Source: Apple Computer, Inc., January 2005] (i) Explain why cost-based pricing would not be appropriate in such a business model. (ii) The only portable player on which the downloaded music will play is called the iPod, which is also manufactured by Apple Computer Inc. Discuss Apple’s strategy in terms of its positioning in this market segment. (15 marks) QUESTION 5: (30 MARKS) a) What are the cost advantages of an online retailer (e.g. Amazon.com) over a “brick and mortar” retailer (e.g. Wal-Mart) ? (15 marks) b) Describe the main components of the e-Commerce transaction cycle. (15 marks) ***END OF QUESTION PAPER*** Page 4 of 4 .