Business Value Creation Flashcards
What does Paul Graham sugggest is the important element in the businesss creation?
Unmet needs that are becoming fixable represent a significant opportunity
Why is value creation cnetral to any successful behaviour?
Without value creation, businesses can’t exist; they rely on creating something others need or want
How can a business create value differently for large vs small groups of people?
A business can create a small amount of value for many or a lot of value for a few
According to Paul Freet, what makes a business different from a hobby?
A business is a repeatable process that makes money. Without profit, it’s a hobby
What are the five fundamental processes of a business?
Value Creation, Marketing, Sales, Value Delivery, and Finance.
How can missing one of the five processes impact a business?
Without any of the five processes (e.g., no value creation or finance), the business cannot function properly and may fail.
What is the “Iron Law of the Market” and why is it necessary for a business to succeed?
Markets that don’t exist don’t care how good your product or team is - without demand,a business will fail
How does Deam Kamen Segway’s example illustrate the importancr of market demand?
Despite sophisticated technology, the Segeay failed due to limited market cost demand and high costs
Why is market research critical before launching a product?
It helps identify whether there is demand, preventing the waste of time and money on products no one wants
How do the “Core Human Drives” impact business decisions?
These drives (Acquire, Bond, Leproductsarn, Defend, and Feel) guide consumer behavior and the types of and services that businesses offer.
What are some examples of businesses built on the Drive to Acquire?
Retailers, investment brokerages, and political consulting companies.
How can a business appeal to the Drive to Bond?
By providing products or services that help people form relationships, such as restaurants or dating apps.
Why is the Drive to Feel an essential motivator in consumer choices?
People seek sensory stimulus, excitement, or entertainment, so businesses in entertainment and leisure industries thrive by fulfilling this drive.
How does status-seeking behavior influence purchasing decisions?
Consumers choose products or services that enhance their perceived status among peers.
What role does “status-seeking” play in business strategies?
Businesses often market products or services as status symbols, making them more attractive to customers.
How do successful businesses tap into multiple core human drives at once?
They create offers that satisfy more than one drive, such as combining status, pleasure, and security.
What is the difference between a well-marketed product and a poorly marketed one?
A well-marketed product attracts attention and creates demand, while a poorly marketed product fails to gain visibility or interest.
Why is value delivery important in maintaining a business’s reputation?
Delivering on promises builds trust and ensures repeat customers, while failing to deliver damages credibility.
How can a business ensure it satisfies customer needs and expectations?
By continuously refining products or services based on customer feedback and maintaining high-quality standards.
What does it mean to create “Economically Valuable Skills”?
Skills that directly relate to the Five Parts of Every Business—such as value creation, marketing, or finance—are considered economically valuable.
Why are some skills considered non-economically valuable, even if they’re enjoyable?
Skills that don’t relate to creating, marketing, or selling products/services don’t usually generate income.
What is the relationship between unmet human needs and business markets?
Whenever there’s an unmet need, a business opportunity exists to provide a solution.
Why is financial management critical to a business’s sustainability?
Without managing income and expenses well, even a successful business in terms of sales can fail due to financial mismanagement.
How does understanding human needs help a business meet market demand?
By knowing what people want and why, businesses can tailor products to meet these needs and thrive.
