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Figure 9.21: The structure of the Resource Use pattern. Participants Process/Activity represents the process or activity that consumes, produces, or refines the resources and resource types. Process Instance/Activity Instance represents the actual execution of the processes and the activities. Unit of Measure specifies in which unit the resource use should be measured. It is typically gallon, inch, ampere, and so on. Resource Use is the use of the resources or the resource types. A Resource is typically produced, consumed, or refined, or acts as a catalyst. A Resource Type is typically produced or refined, or acts as a catalyst. However, a Resource Use object refers to only one Resource object or (xor) one Resource type object. Resource represents the objects and information used in a Process or an Activity. Resource Type represents the type of objects and information used in a Process or an Activity. Consumption refers to the use of a Resource or Resource Type. Electricity, oil, and food are consumed, for example. Refinement refers to the improvement of a Resource or a Resource Type. For example, a piece of metal can be refined into a cable. Production is when a Resource or a Resource Type is created. Computers, printers, and mobile phones are examples of objects that are produced. Catalyst is a Resource or a Resource Type that is used to initiate another event. A catalyst is not affected by but is necessary for production, consumption, or refinement. For example, production tools are necessary to produce products, but the tools themselves are not necessarily affected by the production process (e.g., a laser measuring instrument is normally not affected by the object it measures). Consequences The Resource Use pattern connects the actual use of the resources to the process and its instances. This connection eliminates the gap between process orientation and object orientation. The resources are modeled as objects, both outside and inside information systems. Example The production process at Phonz R Us uses raw materials and production equipment to deliver phones. The production process takes an order as input and delivers a product (one of phones in Phonz R Us product line). By studying in detail how the different resources are used, it is possible to establish that what is consumed are raw materials and what is refined are also raw materials. Similarly, the order initially placed is refined as a completed order. What is produced are products, and the production equipment is
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pains, but time is scarce, so you just let them linger and distract you. Our massage taxi driver decided to change the rules and align his value with the customer experience. He did not follow the rules of taxis as commodities. He did not read the industry s publications, which would have guided him on how to squeeze customers for more money. He simply put himself in the shoes of the customer, imagined the experience, and then went ahead and responded to it. Needless to say, I used the service, enjoyed it, and tipped him handsomely. It was worth it. He surprised me and pleased me and solved a real problem. For that I was willing to pay more. He was smart not to put a price tag on the new massage experience, but to provide it for free. If there had been a price, most of the passengers would have skipped the massage. This way, everyone used it, without exception, the driver told me. As for the pay, they all paid him more in tips than he could imagine charging for a massage. The value in the passengers eyes was much greater, as it usually is with great experiences, than a middle-of-the-road price would have been. When I asked him whether he could pick me up on the way back to the airport, he said he was already fully booked in the afternoon. I wasn t surprised. Usually rule-breakers who invent new experiences are suffering from high demand and repeat business. Be your own leader. Through experiences, you can change the rules. You are actually expected to do it. You chart your own new path and force the competition to follow. And if you do your job well and do not succumb to success (while your competition scrambles to figure out how you changed the rules and how to match the new ones), you will be busy creating even newer rules. This is the ultimate choice: you can either lead, through powerful, unique, and personalized experience, follow the leader of the efficiency model, or get out of the way, as you will most likely do if you make the wrong choice.
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will be insuf cient incentive to supply and there is likely to be unsatis ed demand. If prices are set too high then suppliers may over-supply the market and nd there is insuf cient demand at that price. The correct price should be market-clearing . That is, it should be the price at which demand exactly equals supply. A second rationale for setting prices comes about when it is the producer who sets prices and his objective is to deter potential competitors. Imagine a game in which an incumbent rm wishes to protect itself against competitors who might enter the market. This game takes place under certain assumptions about both the incumbent s and entrants production capabilities and costs. We nd that if the rm is to be secure against new entrants seducing away some of its customers, then the charges that it makes for different services must satisfy certain constraints. For example, if a rm uses the revenue from selling one product to subsidize the cost of producing another, then the rm is in danger if a competitor can produce only the rst product and sell it for less. This would lead to a constraint of no cross-subsidization. A third rationale for setting prices comes about when a principal uses prices as a mechanism to induce an agent to take certain actions. The principal cannot dictate directly the actions he wishes the agent to take, but he can use prices to reward or penalize the agent for actions that are or are not desired. Let us consider two examples. In our rst example the owner of a communications network is the principal and the network users are the agents. The principal prices the network services to motivate users to choose services that both match their needs and avoid wasting network resources. Suppose that he manages a dial-in modem bank. If he prices each unit of connection time, then he gives users the incentive to disconnect when they are idle. His pricing is said to be incentive compatible. That is, it provides an incentive that induces desirable user response. A charge based only on pricing each byte that is sent would not be incentive compatible in this way. In our second example the owner of the communications network is now the agent. A regulator takes the role of principal and uses price regulation to induce the network owner to improve his infrastructure, increase his ef ciency, and provide the services that are of value to consumers. These are three possible rationales for setting prices. They do not necessarily lead to the same prices. We must live with the fact that there is no single recipe for setting prices that takes precedence over all others. Pricing can depend on the underlying context, or contexts, and on contradictory factors. This means that the practical task of pricing is as much an art as a science. It requires a good understanding of the particular circumstances and intricacies of the market. It is not straightforward even to de ne the cost of a good. For example, there are many different approaches to de ning the cost of a telephone handset. It could be the cost of the handset when it was purchased (the historical cost), or its opportunity cost (the value of what we must give up to produce it), or the cost of the replacing it with a handset that has the same features (its modern equivalent asset cost). Although, in this chapter, we assume that the notion of the cost is unambiguously de ned, we return to the issue of cost de nition in 7. In this chapter we review the basic economic concepts that are needed to understand various contexts for de ning prices. We focus on de ning the various economic agents that interact in a marketplace. In the following chapter we analyze various competition scenarios. We begin by considering the problem that a consumer faces when he must decide how much of each of a number of services to purchase.
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Definition Conflicts are translated into action, with little or no intervening reflection. Refusal to acknowledge some painful external or subjective reality obvious to others. Attributing unrealistic negative qualities to self or others, as a means of punishing the self or reducing the impact of the devalued item. Conflicts are displaced from a threatening object onto a less threatening one. Conflict is dealt with by disrupting the integration of consciousness, memory, or perception of the internal and external world. Avoidance of conflict by creating imaginary situations that satisfy drives or desires. Attributing unrealistic positive qualities to self or others. Conflict is defused by separating ideas from affects, thus retaining an awareness of intellectual or factual aspects but losing touch with threatening emotions. An image of oneself as incredibly powerful, intelligent, or superior is created to overcome threatening eventualities or feelings. Unacceptable emotions or personal qualities are disowned by attributing them to others. Unpleasant feelings and reactions are not only projected onto others, but also retained in awareness and viewed as a reaction to the recipient s behavior. An explanation for behavior is constructed after the fact to justify one s actions in the eyes of self or others. Unacceptable thoughts or impulses are contained by adopting a position that expresses the direct opposite. Forbidden thoughts and wishes are withheld from conscious awareness. Opposite qualities of a single object are held apart, left in deliberately unintegrated opposition, resulting in cycles of idealization and devaluation as either extreme is projected onto self and others. Unacceptable emotions are defused by being channelled into socially acceptable behavior. Attempts to rid oneself of guilt through behavior that compensates the injured party actually or symbolically. Example A student disrupts class because she is angry over an unfair grade. A woman refuses to acknowledge a pregnancy, despite positive test results. The formerly admired professor who gives you a D on your term paper is suddenly criticized as a terrible teacher. A student who hates his history professor sets the textbook on fire. After breaking up with a lover, a suicidal student is suddenly unable to recall the periods of time during which they were together. A student from a troubled home daydreams about going to college to become a famous psychologist. A student worried about intellectual ability begins to idolize a tutor. A biology student sacrifices a laboratory animal, without worrying about its right to existence, quality of life, or emotional state. A student facing a difficult final exam asserts that there is nothing about the material that he doesn t know. A student attributes his own anger to the professor, and thereby comes to see himself as a persecuted victim. A student attributes her own anger to the professor, but sees her response as a justifiable reaction to persecution. A professor who unknowingly creates an impossible exam asserts the necessity of shocking students back to serious study. A student who hates some group of persons writes an article protesting their unfair treatment by the university. A student s jealous desire to murder a rival is denied access to conscious awareness. A student vacillates between worship and contempt for a professor, sometimes seeing her as intelligent and powerful and himself as ignorant and weak, and then switching roles, depending on their interactions. A professor who feels a secret disgust for teaching instead works ever more diligently to earn the teaching award. A professor who designs a test that is too difficult creates an excess of easy extra-credit assignments.
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