13. Using the SEEI format for critical thinking, describe how Amazon takes advan

Question

13. Using the SEEI format for critical thinking, describe how Amazon takes advantage of Metcalfe's Law (network effects)? Provide two specific examples in your SEEI.

State:

Explain:

Example:

Illustrate:

5. The natural state (or ending state, i.e. not near the beginning) of a market where network effects are present is for there to be intense competition between several rivals.

Select one:

a. false

b. true

3. What occurs when the value of a product or service is lowered as more customers use it?

Select one:

a. Congestion effects

b. Network internalities

c. Backward incompatibility

d. Market inflexibility

e. Convergence

Explanation / Answer

3. When the value of a product or service is lowered as more customers use it, it is congestion effects. It is a market conditions, where the demand for a product increases, the suppliers reduce the price so that the customers are carried away by the new discounted price.

5. the natural state (or ending state, i.e. not near the beginning) of a market where network effects are present is for there is to be intense competition between several rivals. This statement is False. As in a network effect, the value of the products and services increases.

Amazon takes advantage of Metcalfe Law in the following ways:

State: Amazon providing equal opportunity to every customer

Example: Amazon can handle a number of customers during festival sale

Explain: Due to network congestion, Amazon has a competitive advantage over its competitors which is a supply side of economies of scale.

Illustrate: The crashes that Amazon has during Diwali sale is very less as compared to Myntra or Flipkart. It is because of availability of demand side and supply side economies.

State: information availability to all customers in Amazon

Example: any comments provided by the customers is available to everyone. It is a demand side economies of scale.

Explain: even the lowest cost provided by suppliers are available to customers by which the demand increases for the suppliers.

Illustrate: for a dry iron, if a customer is searching then the customer gets a number of options like quick delivery within one day plus some extra ?100 delivery charges, two days with ?75 delivery charges and five days with no delivery charges.

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