23-Ind-B4 Design of Information Systems · December 2017
Nivaar worked solution (AI-drafted; not reviewed by a licensed engineer)
National Exams — December 2017 — 98-Ind-B4, Design of Information Systems. 3 hours; closed book, no calculator permitted. The exam comprises four parts: Part A (select 20 terms from the list given and explain each in a sentence or two, no more than 50 words, 2 marks each = 40 marks), Parts B and C (select 2 of 5 questions in each part, 11 marks each = 22 marks per part), and Part D (select 1 of 2 questions, 16 marks). Complete answers to every term and every question in all four parts follow below, not only the minimum selection a candidate would submit on exam day.
Reference texts: Laudon & Laudon, Management Information Systems: Managing the Digital Firm, 15th ed.; Schwalbe, Information Technology Project Management, 9th ed.
Question text not reproduced: the examination questions are © Engineers and Geoscientists BC. Open the official past paper (linked at the top of this page) to read the question, then follow the worked solution below.
Costs: traditional markets carry significant search costs (Question 1) for buyers to find and compare offerings, and significant transaction costs (physical distribution, retail overhead, paperwork) for sellers; digital markets collapse both dramatically — a buyer can compare many sellers in seconds, and a seller can reach a global market without a proportional physical-retail footprint. Pricing: traditional markets typically use relatively fixed, list-based pricing set well in advance; digital markets enable dynamic pricing (adjusted in real time based on demand, inventory, or even the individual customer), price discrimination at far finer granularity, and radically easier direct price comparison across sellers by the buyer, which pressures margins on any product without meaningful differentiation. Marketing: traditional marketing is largely one-directional and broad (print, television, mass mailing); digital marketing is interactive, individually targetable (location analytics, browsing history), and measurable in real time (click-through and conversion rates), letting a much smaller marketing spend be aimed with much greater precision. Distribution: traditional distribution moves a physical good through a chain of intermediaries (wholesaler, distributor, retailer), each adding cost and time; digital markets enable disintermediation — a producer selling directly to the end customer — or reintermediation, where a new digital intermediary (a marketplace platform) replaces the traditional ones with a different, often lower-cost, value-added role.
A digital good (software, an e-book, streaming media, a downloadable game) is characterized by near-zero marginal cost of reproduction (once the first copy exists, producing another costs almost nothing), near-zero cost and near-instantaneous speed of distribution over the internet, and the fact that the good itself, and the infrastructure needed to consume it, are both digital, so there is no physical inventory, warehousing, or shipping cost at all. This radically alters the traditional cost structure of a good: virtually all cost is now fixed (the cost of creating the first copy — writing the software, filming the movie), and variable cost per additional unit sold is close to zero, meaning profitability scales almost entirely with volume once the fixed cost is covered. It also enables pricing models a physical good cannot support as easily — subscription access instead of per-unit purchase, freemium tiers, and bundling — because the marginal cost of serving one more subscriber, or of including one more item in a bundle, is negligible.
