MIS 500 Management Information Systems- Case Study

Please help me out to answer the following case study questions and put your best wisdom on it. However, both Case Study and questions given below:

1. Evaluate Zagat using the competitive forces and value chain models. 2. Compare Zagat's and Yelp's e-commerce business models. How have those models affected each company's Web strategy? 3. Why was Zagat's content well suited for the Web and for the mobile digital platform? 4. Do you think Zagat's decision to use a pay wall for its Web site was a mistake? Why or why not? 5. Will Zagat's acquisition by Google make it more competitive? Explain your answer

[Please cite your sources, at least one In-Text Citation for every question-answer. Also, make a References section after every question-answer for all the related resources used while answering]

To Pay or Not to Pay: Zagat's Dilemma CASE STUDY F ounded by Tim and Nina Zagat, the Zagat access. One of the most prominent members of Survey has collected and published ratings the Zagat investment group was Nathan Myhrvold, of restaurants by diners since 1979. Zagat formerly the chief technology officer at Microsoft. publishes surveys for restaurants, hotels, Myhrvold supported the Zagats' decision to use a pay and nightlife in 70 major cities. Zagat has come a long wall for their content and maintained that putting way from its roots in the early 1980s, when the food- all of their content online for free would have loving Zagats started compiling lists of their favorite undermined their book sales. restaurants for personal use and to share with their Although Myhrvold and the Zagats themselves closest friends. But with the rise of the Internet, favored the pay wall, other Zagat investors argued e-commerce, and mobile technology, Zagat has strug- that placing content online for free allowed compa- gled to find a business model that stayed true to the nies like Yelp to get its results on the first page of company's origins. Google search results, which is critical for maintain- To generate their first survey, the Zagats polled ing the strength of a brand in today's advertising 200 people, and increased that number over time. environment. By not taking this approach, Zagat left Executives, tourists, and New York foodies alike itself open to be surpassed by Yelp, Groupon, Google found the list to be indispensable. Spurred by this Places, and other similar services offering free con- success, the Zagats decided to publish their survey tent supported by advertising from local businesses. themselves. The few booksellers that took a risk in Sure enough, these companies soon began attracting stocking the book were rewarded with sales so robust numbers of online visitors that dwarfed Zagat's. that the Zagat Surveys became best sellers. In 2008, the Zagats tried to sell their company. The pair also published similar lists for other They failed to do so, partially due to Yelp's growing major cities, including Chicago, San Francisco, popularity. Prospective buyers were more intrigued and Washington, D.C. In addition to print books, by Yelp's much larger online audience and growth Zagat opened a unit that creates custom guides for potential. The Zagats' failure to sell the company in corporate clients, like the ones at Citibank. For a long 2008 highlighted their failure to effectively go digi- time, this business model was sufficient to ensure tal. Food blogs and similar sites abound on the Web that Zagat Survey was successful and profitable. nowadays, but Zagat was in a unique position to get When the dot-com bubble came along, venture there first and establish itself as a market leader, and capitalists were attracted to Zagat for its brand rec- it failed to do so. ognition-the Zagat name is instantly recognizable For much of 2011, Zagat continued to lag behind to food-lovers, travelers, and restaurateurs alike. Yelp and other free review sites in the battle for Zagat was one of the first companies to popular- eyeballs. Yelp drew much greater traffic than Zagat. ize user-generated content, collecting restaurant com. From January to April 2012, Zagat.com had reviews from its readers, aggregating those reviews, only 310,000 visitors, while Yelp had 31 million. The and computing ratings. In addition to numeric rating Zagat Web site claimed it has more users, but the dis- scores, the survey also includes a short descriptive parity was still significant. paragraph that incorporates selected quotations from Zagat saw its fortunes change in September 2011, several reviewers' comments about each restaurant when Google paid $151 million to buy the company. or service. Venture capitalists saw that Zagat had Although the Zagats had sought $200 million in 2008, a golden opportunity to migrate its content from the deal was considered by analysts to be generous. offline to online, Web, and mobile. Google was seeking to establish itself in the local Of the many decisions the Zagats faced in search marketspace, and after failing to purchase bringing their content to the Web, perhaps the most Yelp for $500 million in 2009, Zagat was next on their important- was how much to charge for various types shopping list. In fact, after the Yelp deal fell through, of content. They ultimately decided to place all of Google and Yelp have become heated rivals, and Yelp their content behind a pay wall, relying on the Zagat has alleged that Google is rigging its search results to brand to entice customers to purchase full online favor its own services over those of its competitors.In the year following the acquisition, Google Yelp's strategy is to sell local advertisements wher- and Zagat worked together to allow Zagat reviews ever businesses exist and to provide free content to appear alongside Google searches on various funded by these sales. Yelp has also relied more on platforms. Google wanted to use Zagat's customer individual reviewers. Instead of distilling reviews generated guide format and apply it to any place into one coherent whole, as Zagat's does, Yelp allows that can be searched for: restaurants, retail outlets, its reviewers to post full, unaltered reviews, which nightlife, hotels, resorts, spas, golf courses, and allows top reviewers to gain followings and even more. A growing percentage of Google searches are receive invitations to special events. The drawback for information on nearby locations-20 percent of of this approach is that many reviews are far longer all searches, and 40 percent of that subset are made than necessary and individual reviews may contain using mobile phones. distortions or false claims designed to damage In May 2012, Google formally announced the reputations. Zagat reviews give a clearer and more inclusion of Zagat guides and online reviews in concise impression of a restaurant than most Yelp its new service, Google + Local. With this service, reviews, and they are aggregated and given a score. Google hopes to more effectively compete with Yelp Investors believe that Yelp is on "a different in local search. Because Google values eyeballs over trajectory' because of its unique business model. all else, the company opted to remove the pay wall Zagat sold content to consumers and corporations; from Zagat content for the first time. Zagat had been Yelp sells advertising to local businesses. Many charging $25 per year or $5 per month for access to analysts believe there is much more potential for its online reviews. Zagat will still charge $10 a year growth with Yelp's business model than with Zagat's to use its iPhone app, and after a free six-month trial, old model because it is a useful advertising vehicle it will charge $25 annually to see reviews on devices for small businesses everywhere, not just major cit- running Android. Still, normal Google searches on ies. Zagat may also have hurt itself with its slow the Web will feature Zagat content for free, and response to the emergence of the mobile digital Google is considering dropping the other subscript platform. tion fees for mobile devices. Most analysts agree that Zagat could have avoided Google hopes to combine Zagat reviews with its this state of affairs by making a more aggressive effort mapping technology to better compete with Yelp. to go digital. The choice to use a pay wall may be Trying out both services highlights some of the dif- the biggest culprit. But did it necessarily hurt Zagat's ferences between them. Zagat.com's home page is bottom line? The company has always been profitable, streamlined, with a minimal number of search boxes according to Tim and Nina Zagat. Other successful and links immediately available. Restaurant reviews Web sites have used a pay wall. Zagat book revenue are organized by several major "hub" cities as well is still strong-the New York survey is still on the as popular lists of the top restaurants of a certain New York nonfiction best-seller list, and its corporate type. Clicking on a restaurant shows visitors a por- custom guide unit is very profitable. Despite their tion of the data Zagat maintains on that restaurant. acquisition by Google, the Zagats plan to continue to For example, the site now shows the percentage of publish their physical books. Nevertheless, it's also users that "like" the restaurant, and several featured possible that going with a pay wall before establishing reviews. Many more reviews of the restaurant are a loyal online audience may not be the right time to available if the user wants to keep scrolling. make the move towards a paid model. Yelp's front page is much busier and less stream- So far, the pairing of Google and Zagat has been lined than Zagat's, but has a great deal more content successful, and will allow the two companies to available immediately. The front page has lists of better compete with Yelp in local search. But Google the most popular restaurants, retail outlets, bars and also hopes that incorporating Zagat's user-generated clubs, and many other categories, all free to the user. content model into Google + will help its fledgling Looking for a dentist in New York City? Yelp has social network to better compete with Facebook reviews of doctors and dentists that include videos by providing uniquely valuable services to its put together by the practices to give visitors more users. Google envisions Google + users searching information. Like Zagat.com, Yelp's reviews are orga- for "pizza", and being given a map with the closest nized into a similar list of larger cities, but reviews pizzerias marked with Zagat reviews, some of which exist for almost any location you can think of, include may be written by their friends on the network. For ing less prominent cities and towns. Google is also Google, acquiring Zagat was just one of a myriad working towards the goal of ubiquity. of acquisitions they made in 2011; but from Zagat'sperspective, its acquisition represents another phase for Android Features Foodspotting Photos, Foursquare Tips in a long e-commerce journey, and illustrates the and In-App Review Capabilities, ' PR Newswire, February 7, difficulty of developing just the right business model 2011; and Ron Lieber, "Zagat Survey Aims to Regain Its Online Balance, ' The New York Times, November 13, 2010. for your company. Sources: Glenn Collins, "Google to Use Zag to Refine Local CASE STUDY QUESTIONS Search, " The New York Times, May 30, 2012; Michael Liedtke, 1. Evaluate Zagat using the competitive forces and "Google's Giving Away Free Zag Ratings in Search Results," Associated Press, May 31, 2012, Samantha Murphy, "Google Plus value chain models. Local Unlocks the Power of Zag, Mashable.com, May 30, 2012; 2. Compare Zagat's and Yelp's e-commerce business Tim Carmody, "Google Buys Zagat to Reinvent Mobile Search models. How have those models affected each Engine," Wired, September 10, 2011; Adam Clark Estes, "Google company's Web strategy? Buying Zagat Makes Instant Sense, " Atlantic Wire, September 8, 2011; Leena Rao, "Zagat.com Relaunches With More 3. Why was Zagat's content well suited for the Web Free Content, Including Maps, Lists, Third-Party Reviews," and for the mobile digital platform? TechCrunch.com, February 21, 2011; Erik Berte, "As Online 4. Do you think Zagat's decision to use a pay wall for Competition Grows, Zagat.com Belaunches With More Free its Web site was a mistake? Why or why not? Features," FoxBusiness.com, February 21, 2011; Ben Parr, "Yelp's Growth is Accelerating, Despite Increased Competition From 5. Will Zagat's acquisition by Google make it more Groupon & Google," Mashable.com, February 17, 2011; ZAGAT competitive? Explain your