Marketing and the Internet

Readings and Discussion Questions

Term 4 1997
Professor John M. McCann

Class Schedule

M March 24 Course Overview, WWW, Digital Technologies

Th March 27 Internet

  1. "The Silicon Age? It's Just Dawning," Business Week, December 9, 1996
  2. "Networks" Scientific American, Special Issue: The Computer in the 21st Century
  3. "The Economics of the Internet," The Economist , October 19, 1996

M March 31 Conceptual Frameworks

  1. "Evaluating the World Wide Web: A Study of 1000 Commercial Sites,"

Th April 3 Distribution

  1. "The Airline of the Internet," Wired, December 1996
  2. "Exploiting the Virtual Value Chain," Harvard Business Review, Nov-Dec, 1995

M April 7 Retailing

  1. "The Birth of Digital Commerce," Fortune, December 9, 1996
  2. "Interactive Home Shopping: Issues Concerning Consumer Acceptance and Impact on the Retail Industry" (handout; not in course pack)

Th April 10 Advertising

  1. "Advertising Webonomics 101," Wired, February, 1996
  2. "Beyond the Banner," Wired, December, 1996
  3. "Reclaim the Deadzone," Wired, December, 1996

M April 14 Business to Business

  1. "GE: The Net Pays Off," InformationWeek, Jan. 27, 1997
  2. "Underwear, Activewear, Now Web-ware," PC Week , Feb. 10, 1997
  3. "The Internet Inside Your Company," Fortune, Nov. 27, 1995

Th April 17 Netpreneneurs

  1. "Making Money on the Net," Business Week, September 23, 1996
  2. "Rosabeth Moss Kanter: Can Giants Dance in Cyberspace," Forbes ASAP, December 2, 1996
  3. "The Only Thing That Matters," Fast Company, February-March 1997 (handout)

M April 21 Technologies 2, Telecommunications EXAM

  1. "Scott McNealy: Steps to a Digital World," Forbes ASAP, Dec. 2, 1996
  2. "Craig McCaws Sees an Internet in the Sky," Fortune , May 27, 1996
  3. "ADSL: Another Pipe Dream," Computer Shopper , May 1996

Th April 24 The New Media

  1. "Going Digital Means Sharper Boob Tubes," USA Today, Jan. 8, 1997
  2. "The End of TV As We Know It," Fortune, Dec. 23, 1996
  3. "Technology and the Future of Broadcasting," Web-Star (Internet web site)
  4. "Intercast Brings the Web to TV," PC Magazine , Jan. 21, 1997

M April 28 The New Ways We Work

  1. "Computers, Networks, and the Corporation," Scientific American, Special Issue: The Computer in the 21st Century
  2. "Computers, Networks, and Work," Scientific American, Special Issue: The Computer in the 21st Century
  3. "Charles Handy Sees the Future," Fortune, Oct. 31, 1994

Th May 1 The New Ways We Live

  1. To be distributed

Discussion Questions

"Networks" Scientific American, Special Issue: The Computer in the 21st Century

  1. What is a computer communications protocol?
  2. What is distributed computing?
  3. What is a knowbot? What role are they expected to play?
  4. What is circuit switching? What is packet switching?
  5. What are the pros and cons of circuit switching and packet switching?
  6. How does Ethernet work? How does Token Ring work?
  7. What is Asynchronous Transfer Mode?
  8. Why is current cellular technology (not wireless, but cellular wireless) not well suited for the Internet?

"The Silicon Age? It's Just Dawning," Business Week, December 9, 1996

  1. Why is the chip so important?
  2. What did Andy Grove mean when he said "we are only at the beginning of this revolution-in-progress?
  3. What metric do we commonly use to measure the speed of chips? If you bought a new PC today, what would be the likely speed of the chip? What will it be in 15 years?
  4. (How is a chip's speed related to the number of transistors in the chip?)
  5. What is the size of a transistor on today's chip? What problems do such sizes cause?
  6. What is a Net Computer? How does it differ from the ones we use at Fuqua?
  7. What is the meaning and implication of the closing sentence: "After the turn of the century, everything you touch will have a chip in it."

"The Economics of the Internet," The Economist, October 19, 1996

  1. Why is the Internet swamped today? Has it always been so?
  2. What is the financial model used by the Internet?
  3. What is an intranet? An extranet? Why are they becoming popular?
  4. What does the phrase "too cheap to meter" mean?
  5. What is the relationship between fixed and variable costs in a telecommunications network?
  6. What is expected to "bring prices closer to real costs?"
  7. Why do some economists argue to use-based pricing of the Internet?
  8. In the early days of the Internet (e.g., 1990) delays meant that different parts of a file would be sent through different routes and thus might arrive at the receiving computing with various delays. Why are such delays more bothersome today?
  9. What is a settlement mechanism? What has been the common mechanism among telephone companies, and where are telephone companies going?
  10. What has been the Internet's settlement model? Why has this model led to a major disagreement among small Internet Service Providers (ISPs) and the large Internet backbone providers? Why is this settlement model so bad for non-US ISPs?
  11. What schemes are being proposed to overcome the settlement and congestion problems?
  12. (Where are the bottlenecks; in the wires/cables/fibers or in the electronics?)

"Evaluating the World Wide Web: A Study of 1000 Commercial Sites"

This article reports on an evaluation of 1000 commercial or business web sites by James Ho, an MIS professor (and probably his students). He addresses the question what value is being created at each site and develops a framework to evaluate web sites from a customer's perspective. The paper first lays out the framework in the form of a 3x4 matrix, and then applies it by examining 1000 web sites in 40 industries. Your assignment is to 1) first understand how Professor Ho classifies companies by studying his article and visiting his example web sites and sites of your choosing, 2) determine if you agree with his framework, and 3) suggest a revised or new framework for determining the value created by a web site. You should undertake the following steps:

  1. Read the article in the following way: study the first three pages, skim the material in the Results and Observations by Industry section, and study the Aggregate Results and Observations section.
  2. Go to the Dr. Ho's Way of the Web page ( and study his examples.
  3. Select one of the forty industries in the paper, use Yahoo to find and visit web sites of companies in that industry, and evaluate each in terms of Ho's framework. Evaluate at least 10 web sites.
  4. Evaluate his classification framework and answer the question: "If one of my early job assignments for my firm was to perform a comparative analysis of the firms in our industry, would I use Professor Ho's framework? If not, what framework would I use?"

The Airline of the Internet

  1. Why is logistics the next phase of the digital revolution?
  2. What is the meaning of the phrase "bits, not atoms, will be the bedrock of economic activity in the Information Age"?
  3. Since 1980, more and more goods are moving via jet airplanes, which is the most expensive way to move items from one point to another. Why, then, has the expenditure on logistics in the US dropped from 17.2% of GDP to 10.8% in 1995?
  4. What business was FedEx in, and what business is it in today?
  5. FedEx rose to a large company by "riding the leading edge of two trends that have revolutionized the shipping business since the late 1970s: the deregulation airline and trucking industries in the US, and the rise of information technology." Why do you think it took a new firm, one outside both the technology and the airline & trucking industries, to ride the leading edge of these two trends?
  6. The telecommunications industries are just now undergoing a deregulation, and there new information technologies are rising. Do you think that a new firm will come along and take over large portions of this industry, just as FedEx did in the shipping industry?
  7. "It's a core tenet of the FedEx gospel that the data about each shipment is just as valuable as the shipment itself." Is that really true? Why?
  8. Why is the Internet an answer to their prayers? What are FedEx's plans for the Internet?
  9. Smith says "The way to substitute information for mass is to make a distribution system that's as good as a warehouse." What does he mean?
  10. Smith says "The Internet is going to make it very difficult for anybody in a middleman position to stay in business." Reflect on this statement. IS it true? Identify five middlemen who are exposed to such elimination.
  11. Will the Internet (and FedEx's vision of its impact) increase or decrease the role of marketing in the future operation of most firms?

Exploiting the Virtual Value Chain

  1. What is the value chain?
  2. How is information treated in the value chain process?
  3. What is the virtual value chain?
  4. What activities are involved in creating value in any stage of the virtual value chain?
  5. The authors observe that companies adopt value-adding information processes in three steps. What are they?
  6. What is the Law of Digital Assets? Provide an example not mentioned in the paper.
  7. What are the New Economies of Scale? Provide an example not mentioned in the paper
  8. What are the New Economies of Scope? Provide an example not mentioned in the paper
  9. What is Transaction-Cost Compression? Provide an example not mentioned in the paper
  10. What is Rebalancing Supply and Demand. Provide an example not mentioned in the paper
  11. Which of these five "new principles" apply to Fed Ex?

The Birth of Digital Commerce

  1. The article discusses how a Web art gallery is "spawning new ways to make and get a deal." Go to their Web page at and determine for yourself if you believe that sites such as this will cause "the harried masses to begin surfing to save time and money."
  2. Answer question #1 for and some of the other sites mentioned in the article.

Interactive Home Shopping: Issues Concerning Consumer Acceptance and Impact on the Retail Industry

For discussion purposes, we will make the following assumptions:

  1. Will retail sales through IHS exceed the present sales through catalogs? If so when?
  2. Will IHS account for more than 20% of non-food merchandise sales in five years? Ten years? Why and why not do you think it will be a significant factors in retailing? What can be done to stimulate the growth of IHS?
  3. Are electronic malls attractive to consumers? Why or why not? What can be done to make them more attractive to both consumers and retailers?
  4. What types of merchandise are most amenable to sales through IHS channels?
  5. What will be the response by in-store retailers to this new retail format?
  6. What concerns do in-store retailers have about the potential growth of the IHS channel?
  7. Which retailers and vendors will be the winners and losers if consumers are attracted to the IHS channel? Why?
  8. Will disintermediation be significant -- vendors selling directly to consumers, bypassing retailers?
  9. Who are the vendors most likely to bypass retailers and sell directly to consumers? Why?
  10. What skills and resources will be needed to effectively compete as an IHS retailer?
  11. If the IHS retail channel does account for significant retail sales, how will this impact in-store retailers? Will they close stores? Will stores be transformed? How?

Making Money on the Net

  1. This article starts by pointing to the failures and then describes some success stories. We will try to put a little structure on this topic by rewording the title and seeing what insights we can gain. The title of this article includes the word "on". First, change "on" to "Building" and determine who is making money building the net. Then change "on" to "with" and determine who is making money with the net. Does it really matter if no one ever makes money on the net?
  2. What is the magic formula that companies are using to make money on the net? What are their secrets?
  3. The article describes as a success story. Visit the site and experience for yourself the secret weapon of creating virtual communities. For instance, look at sites for particular books such as Kiss, Bow, or Shake Hands : How to Do Business in Sixty Countries ( Is this really the "secret weapon of an electronic merchant"?
  4. Most of you are GenXers, and the article tells us that Tripod, Inc. has been successful appeal to you. Visit the site to see if you agree (
  5. What is the future of charging subscription fees for Internet sites?
  6. The last page of the article contains the sentence: "The explosive growth of electronic commerce will depend on better payment systems." What has happened in this area since the article was published in September, 1996?
  7. Why do almost all the success stories in the article involve small and/or start-up firms ... and thus not the large firms who have the money to launch successful Web businesses?

Can Giants Dance in Cyberspace

  1. What are the "expansive human possibilities of cyberspace"?
  2. Outline Kanter's "webs of cyberspace versus chains of bureauspace" argument. Do you find it believable? Compelling?
  3. On the first page, she makes a big deal of the notion that in today's world "customers tell producers" what to do. Is this a wide spread trend, or has she found the only three examples (software, pharmaceuticals, supermarkets) where this is true? Why did she make this point? What role does this point play in her overall argument?
  4. What are her three major assets of successful companies?
  5. She says: "Large companies can breed might-makes-right arrogance." Identify several examples not mentioned by her.
  6. She says "Large organizations must tear down the confining vertical structures that shape bureauspace -- skyscrapers, towers, silos, walls, and tunnel vision." Does she literally mean that big companies should get rid of their skyscrapers, their large buildings?
  7. She says that big companies "must focus on the people factor at the center of the information revolution." Are the people in these companies the real problem, not the bureaucratic organizational structure? That is, have these companies attracted and promoted people who like and excel in bureauspace, and are likely to dislike and fail operating in the "webs of cyberspace"? If so, what are the implications?

The Only Thing That Matters

  1. What is "the only thing that matters"?
  2. The article starts by describing a couple of startups (F5 and Zombie) and then saying that the companies and the people behind them "are simply not exceptional. Which is why they're exceptionally important." What does he mean by this statement. Why are un-exceptional firms and people exceptionally important?
  3. Why and how has Seattle established itself as the "ground-zero" for startups? Why not Raleigh, or Boston or Austin?
  4. For the last couple of years, I have been pondering why almost all of our students are interested in a job in a corporation or consulting firm during a period of time when other people their background are spurning jobs and pursuing start-up opportunities. Why is this the case? For instance, are we attracting very few students who share the interest of the people depicted in this article? Or, are we attracting people from the same pool of recent college graduates and then "indoctrinating" them (you) to value the corporate world and not the entrepreneurial world? Are our students in it for the money, and they are in it for the freedom?
  5. Let's continue to examine #4, this time from Bar-Zeev's story (on page 72) of going from a failed Worldesign to a successful Disney, and then becoming disenchanted because he "wanted to keep pushing the edge" while "there are a lot of people at Disney, like at a lot of big companies, whose sole function is to slow things down. They're spending hundreds of millions of dollars, they want to make sure you're doing the right thing. They have evaluations all the time, they're very careful about everything. The buy-off process there is amazing. ... To stay there and do what I wanted to do, I'd have to move up the management chain, get allies, get resources, hire people, and sell ideas." Bar-Zeev did not want to do this. But this seems to be exactly what most MBA grads want to do. Thus is the different attitudes about moving up the management chain the key factor that causes our students to want the corporate life and not the start-up life?
  6. Given your answers to the questions 4 and 5, what changes, if any, should we undertake at Fuqua?

Reclaim the Deadzone

  1. The net has an "information wants to be free culture" created by a situation of abundant supply of redundant content (at o charge and on nearly every conceivable subject) that outruns demand. Given that situation, why are so many business people claiming that the web is doomed if we don't find a way to pay for all the content? Will all the content providers leave the net if they cannot make money?
  2. What are the steps that the author believes advertisers can take to improve their fortunes.
  3. Why will today's banner ads not generate the revenue necessary to support a content provider such as Wired or USA Today?
  4. What is the purpose of today's banner ad: an invitation to link to the advertiser's web site, or a place to create a vivid brand experience? Visit a few banner ads at Pathfinder, Wired, Yahoo, etc. before answering.
  5. Advertisers such as P&G only want to pay for the number of people who "click through" a banner ad and not pay for people who only view or are exposed to the ad. If this practice becomes wide spread, what impact will it have on the future of banner ads?
  6. The author believes that "infotainment providers can restore the belief that real advertising can be done on their sites." What is his prescription and do you believe it will work?
  7. What are brand modules, and how do they differ from today's typical corporate web site?
  8. What is cobranding?

Beyond the Banner

  1. The author says that advertisers "want to abolish the Web as we know it." What does he mean and is that true?
  2. The author says "Banner ads are tired, boring, and too much like junk mail." Visit a few sites that have banner ads and form our own opinion
  3. Consider the hierarchy of affects model: consumers move through various stages in relation to a brand: unaware, aware, interested, positive attitude, purchase, adoption, loyalty. In which of these stages, if any, would banner ads be an effective communication tool?
  4. Sponsorships are discussed on page 200. Visit some of the sites described there (and others) and form your own opinion abut such advertising approaches. Will sponsorship be more or less successful than banner ads?
  5. What is Double Click? How might it change the nature of web advertising?
  6. One site,, gives a child prizes for providing basic information about his family, household size, hobbies, and buying habits." What do you think of such practices? Where might they lead?
  7. What is a "microsite"?

Advertising Webonomics 101

  1. What is webonomics?
  2. Who are the four main groups setting the digital landscape? What are their motivations?
  3. About a year ago I had a late night debate with a marketing professor at another university who said that we could easily understand the Internet by applying stand economic models. For instance,
  4. What are the five principles of webonomics and why are they true (or believed to be true by the author)?
  5. Do you think micropayments have a big future on the net?
  6. We do not see many email links on large corporate web sites. Why?
  7. Do you believe "the most important things the web can deliver is a fully qualified lead or customer"?
  8. How do you "turn a site into an online focus group"?
  9. Is the ultimate goal of marketers to make the web like TV?

Scott McNealy: Steps to a Digital World

  1. McNealy tells us to "Do the math" and we will find that corporations are spending too much money on personal computers. What is his solution?
  2. McNealy says that "we've all got to speed up the corporate body clock to get on Internet time." That seems fairly clear for a firm like Sun that makes products for the Internet, as well as selling and providing service over the Internet. But is that true for the industrial-era firms such as Ford, Hartford Insurance, Boeing, etc.? Why should they have to get on Internet time?
  3. McNealy says that inside companies CIOs "are already starting to use their intranet to disintermediate the brokers and the bureaucrats. These technologies create incredible opportunities to drive cycle time out of your business and to improve communication."
  4. He says "Don't be a bug on the windshield of the car behind you. Be the windshield." Who is he talking to ... companies or individuals? If the latter, what does that mean for you?
  5. He says "Go webtop. Publish all your information on your Internet web." Who is he talking to ... the CIO, CEO, or you? What are the implications?
  6. Where does McNealy think the puck is heading? Do you agree? Go to a web site such as Infoworld ( or PC Week (, search for articles about the network computer, and form an intelligent, informed opinion.

Craig McCaws Sees an Internet in the Sky

  1. What is Teledesic and what makes it "so breathtakingly audacious"?
  2. Visit the Teledesic web site ( and gain an understanding of "why the Teledesic Network represents an inherently egalitarian technology."
  3. Some people say this is a silly project, one that will never be successfully completed and implemented. What are the foundations of their arguments? What is your position ... will it be successful?
  4. McCaw says that "you arrive at moments in time when an entrepreneur, a technology, and the needs of people coincide." That seems to describe what happened when he formed McCaw Cellular: microprocessor technology had evolved to the point where small cell phones and transmitters made it economically possible to serve the communication needs of mobile people. Is the Teledesic project at a similar stage? What are the technologies and what are the needs of people that will be met?
  5. Explain how the Teledesic satellites will differ in operation from most of today's existing satellites.
  6. McCaw conceived Teledesic "as a rural cellular telephony project that would extend the reach of wireless phone networks." What is his current conceptualization of it? Why did he switch? Do you think his current model or his original one would have a better chance of success? Why?
  7. The Teledesic homepage indicates that the following opportunities: Building the Teledesic Network will require a Team of dedicated individuals. We are constantly seeking exceptional candidates with many different skill sets. Although some opportunities exist in business development, marketing, finance, legal, and administrative, the bulk of our hiring needs are in technical areas. Would you go to work for them?
  8. This article, and more recent ones, indicate that the senior managers at Teledesic have a vision of solving the world's urban congestion problems. This argument is laid out in the last few paragraphs of page 70, where McCaw describes a Guatemala village without communications in which people must migrate to cities. He says: "Whenever you add urban infrastructure, you ultimately destroy everything that came before. It's like dragging the plague around behind you. The beauty of electronic technology, unlike cars and freeways, is that we can resolve problems that are completely intractable when you move people physically. Moving electrons gives us flexibility." Will this Teledesic project really have an impact on such situations?

ADSL: Another Pipe Dream

  1. What is ADSL?
  2. ADSL is a form of a DSL ... a digital subscriber line. What are the other forms and how does ADSL differ from them?
  3. Why might ADSL service grow rapidly? What is it about the technology that could allow telephone companies to quickly roll it out in a city such as Durham?
  4. This article uses a lot of jargon (4khz DC region, frequency division multiplexing, etc.) that we will ignore. But it does mention MPEG and MPEG-2. A search of the web using the phrase "mpeg definition" led me to Interleave site ( where I found the material shown below. What are the implications of being able to move multiple MPEG streams into the home via existing telephone wires?

Technology and the Future of Broadcasting

This article describes the technology that underlies the new digital and HDTV. Read it as background so that the other articles will be clearer.

Going Digital Means Sharper Boob Tubes

  1. What are the main differences between digital TV and analog TV?
  2. What is the difference between High Definition TV (HDTV) and digital TV (DTV)?
  3. Broadcasters have been given new spectrum and the freedom to use it as they wish. This article says they could use it to "broadcast a fantastically sharp, wide-screen picture with six-channel surround sound" or the same station could "choose to split its signal into five to 15 digital channels that would look better than current analog channels." Which of the two do you think they will do? If they do the latter, what does it mean for broadcasters, advertisers, producers of TV video, and for consumers?
  4. The article says that cable operators will probably go digital and thus be able to start offering 700 channels. What is about "going digital" that allows them to move from today's 50 or so channels to 700 channels?
  5. Is all of this just a dramatic increase in the number of TV channels that the current television broadcast industry will fight over? Or, will it lead to fundamental changes? If so, changes in what?

The End of TV As We Know It

  1. How did Bill Gates ruin everything for the people who had worked for years on HDTV?
  2. Near the end of page 60, the author says: "Even now the networks continue to hemorrhage viewers: NBC came in first last season with a Nielsen rating of 11.7 -- a 40% drop from the numbers CBS enjoyed when it was on top 20 years ago." What has caused this drop?
  3. How much longer will we use the word "broadcasting" and what will replace it.
  4. Do you think it is true that people really want their TV to act like a PC? Isn't this silly? Don't most people, at least in America, want to flop down in front of one of their 3.4 TV sets, select a channel to watch, and be entertained? Haven't all the trials of interactive TV shown that people just do not want to interact with a television?
  5. When this article was published, WebTV was just coming onto the market. What has happened to it, and what is its likely future?
  6. On page 68, Harry Motoro, CNN's vice president, says "We're actually better off in a 5,000 channel universe. Even more will people want someone who's accurate and timely." Do you believe CNN will be better off in that 5,000 channel universe, or in today's 50 channel universe?

Intercast Brings the Web to TV

  1. What is Intercast?
  2. Is Intercast really going to "change the way we watch television"?
  3. The article describes several uses of Intercast technology. What other uses can you envision?

Computers, Networks, and the Corporation

  1. The authors tell us that dramatically reducing the costs of coordination and increasing its speed and quality, these new technologies will enable people to coordinate more effectively, to do much more coordination and to form new, coordination-intensive business structures." By this time in the course, we have discussed how many companies are using the Internet. Reflect on those discussions and identify firms that have "formed new, coordination-intensive business structures"
  2. On page 143, the authors predict that we will see "an overall shift from internal decisions within firms toward the use of markets to coordinate economic activity." The day that I was writing this question (3/13/97), USA Today had a story (Del Jones, "Growing Gray Area Where Blue- Meets White-Collar") that contained the following statement: "tens of thousands of workers are shifting each year from traditionally permanent jobs to nomadic careers as independent contractors. The shift is one of the powerful forces transforming the American workplace today." Is this shift from employee to nomadic contractor a direct example of the use of markets to coordinate economic activity? What are examples not cited by the authors?
  3. Once a firm or industry moves coordination tasks into computer networks and out of physical locations, do they not open themselves up to more competition? That is, they seem to get an early competitive advantage but not a continuing one. The authors tell us that "one way to maintain an upper hand is to keep innovating so rapidly that other firms always lag a step behind." This is easy to say but very hard for large firms to do. So, would not most large firms be better off if they ignored the computer networks?
  4. What is the "information metabolism" of an organization?
  5. In the right hand column of page 145, the authors describe changes at Phillips Petroleum, in which both senior managers and local managers could gain access to detailed data and thus make local decisions. First, the senior managers made the decisions, and then they were given to the local managers. Do you think this decision is unique to this firm? Or do you think the trend is to (a) pull decisions from the field to the corporate headquarters, or (2) push decisions down to the lowest levels?
  6. At the end of the article, the authors tell us that "when the costs of information and coordination are not a barrier to fulfilling people's needs and wants, other values may emerge to shape the workplace and society." What values do you believe will emerge to shape our workplace and society?

Computers, Networks, and Work

  1. On page 131 of this article, which first appeared in 1991, the authors describe how Newsday, in an attempt to control exploding email use, changed their email system so that reporters could receive but not send email. Do you think this is a viable solution to the general problem of people working with over 100 email messages a day? Do you think there really is a problem?
  2. I recently overhead an exposition by a fellow who is a psychiatrist and an occasional user of email but none of the other Internet facilities. He was heatedly arguing that you could never really know another person unless your interaction with them was in person. What does this article have to say about that position, if anything?
  3. Why does research by the authors show that when groups interact in electronic networks, they find the following:
  4. At the bottom of page 133, the authors describe how Tandem Computers, Inc. Used a network system to ask & answer "Does anyone know ..." questions, and to build a repository of the answers. Thus they allowed any one person in the firm to tap into the expertise and knowledge of the other workers. What problems do you see in implementing such a system in most firms?
  5. This article, and the previous one, describe how electronic networks are allowing firms to build new organizational structures that are replacing hierarchies. At the same time, it is common to read other articles about how workers and managers are not happy because they have lost a sense of "place" and stability. Are people happier with a neat and tidy hierarchical structure and thus unhappy with its replacement, or are they simply unhappy because so much change is occurring?

Charles Handy Sees the Future

  1. In the early 1980s, Handy predicted that "by 2000 half the working population would be making a living outside traditional organizations." How is that prediction holding up? Will he be correct when 2000 rolls around?
  2. In The Age of Unreason, Handy gives us some insight into the changes facing various generations in the amount of time each spends in work. He said that when he entered the work force, it was expected that he would work for about 100,000 hours (47 hours/week X 47 weeks/year X 47 years). He then showed that if you reduced each of these numbers to 37, you would find that his children can expect to work half that amount (37 X 37 X37). In this article, he says that you should "expect to work intensively for 25 years, not 45 years. Plan for your less intensive years now." What is or would cause you to only work intensively for 25 years? Where does Handy get this number?
  3. Do you agree with Handy's depiction of MBA programs? Is it a true reflection of Fuqua?
  4. Handy tells us "What is happening now is equivalent to what happened when the printing press was invented in the 1400s." What happened then, and what is happening now?
  5. In the upper left corner of page 162, Handy tells us that pretty soon, one-half the work force in the developed world will be outside the organization, and that the livelihood of those people will depend upon their competencies and education. He says that few of them will take the time to educate themselves and thus they will become a burden on those of us who are still employed and/or who keep their skills up to date. Do you agree with this assessment of our future?
  6. Handy says that the property concept of a company is out of date when the primary assets of the firm are its intellectual capital (its people). What is his proposed solution to corporate ownership? Do you concur?
  7. We have seen a common pattern in firms for the past ten years, a seeming paradox. During the same year, they will be going through a major downsizing of their managerial work force, and aggressively interviewing MBA students at the leading business schools. Use Handy's writing to explain this behavior.
  8. If the pattern described in question #8 continues, what should be your plans for the future?
  9. What does Handy mean when he advises aging baby boomers to "Look for customers, not bosses"?
  10. What does Handy mean when he says "In ten years, more education will take place outside of schools and universities than inside"?

GE: The Net Pays Off

  1. Why did GE want to "create a consulting practice that will provide electronic-commerce services to GE Capital units and, eventually, outside customers"? Why outside customers? Why did they create the unit in the first place, as opposed to out-sourcing it?
  2. What is a "web-based automated procurement system?
  3. How does GE "make money on the Internet"?
  4. When GE does web-based purchasing, it "results in prices that are 10% to 15% lower." Why? Do you think this is a short-run situation that will go away as the web becomes more established?
  5. What is the future of supply-chain management? Is it going electronic and into the Internet? Totally?
  6. Compare business-to-business e-commerce with business-to-consumer e-commerce. Which one is bigger? Why?
  7. The article describes GE's Trading Process Network. Visit the web site and see for yourself why GE thinks this will change the ways people work (

Underwear, Activewear, Now Web-ware

  1. Describe the system built by Fruit of the Loom (FL)? How does it differ from GE's system?
  2. Why did the company build it?
  3. FL set up a subsidiary to build web sites. Why? Was it a good idea? What are the issues involved in such a decision?
  4. Is FL using the system to "disintermediate" their distributors? Explain.

The Internet Inside Your Company

  1. Go to the Netscape Intranet Solutions web page (, and click on Visit the Virtual Intranet site. This leads to a registration process which gets you into the site. Explore the site, with particular attention to the Marketing and the Sales Support areas. Be prepared to report on your findings in class.
  2. This article, which was published in late 1995, starts by describing the Internet's "abysmal reputation among business executives." What caused that bad reputation? Does the Internet still have such a reputation?
  3. Why does applying Internet technology within a company "finally let computers work the way they are supposed to"?
  4. Prior to the introduction of intranets, technologies such as mainframes (and even local area networks) were easy to use within a building or group of contiguous buildings, but difficult to use from a distance. As this article says, with an intranet, "updating a spreadsheet that resides on a workstation in Hong Kong is almost as easy as working on one in your desktop computer." What kind of organizational structure did the mainframe-style technology dictate, and what new structures will intranet technologies enable?
  5. What is the difference between Lotus Notes and an intranet?
  6. Describe how US West's Global Village "has transformed the way the company operates." Can this result at US West be generalized to most firms, or is it unique to an American telecommunications firm?
  7. Netscape maintains a site that describes intranets in many firms ( Visit that site, read about one firm, and be prepared to talk about that application in class. OR Visit one of the live demos provided at another Netscape site: