AP Business P1.T1.D1

GLITTER

I am a great subtitle, ideal for providing more context about the topic you are going to discuss.

Here you can put a highlighted title, something that captivates your audience

Contextualize your topic with a subtitle

With Genially templates, you can include visual resources to leave your audience speechless. You can also highlight a specific phrase or fact that will be etched in your audience's memory and even embed external content that surprises: videos, photos, audios... Whatever you want! Need more reasons to create dynamic content? Well: 90% of the information we assimilate comes through our sight and, moreover, we retain 42% more information when the content moves. What you read: interactivity and animation can turn the dullest content into something fun. At Genially, we use AI (Awesome Interactivity) in all our designs, so you can level up with interactivity and turn your content into something that adds value and engages.

Title 1

1.1 What is a Business?

Gas Station Dilemma

Your father tells you he is going to go fill up his gas tank at BJ’s Wholesale Club 15-minutes away rather than at Mobil down the street because the gas is cheaper. Is he making the right decision? Facts:

• Car - Toyota Rav4 Hybrid
• Miles per Gallon - 40 MPG
• Gas Needed - 7 gallons to fill his tank; 14.5-gallon tank
• Price of gas at BJ’s - $3.10
• Price of gas at Mobil - $3.30
• Distance to BJ’s - 10 miles
• Distance to Mobil - 2 miles

Question: Which gas station should he get his gas from? Why? Are there any additional questions you want to ask to help you answer the question?

Gas Station Dilemma

Did your father make the right decision driving to BJs?

What additional questions could we ask to help us answer?

1. Is $0.18 worth the 26 extra minutes?
2. Does he have a BJ’s membership? (This is a fixed cost not mentioned in the unit price).
3. Is he already going near (or to) BJ's for other shopping?
4. Will he be driving by BJs at some point in the near-future? (since he still has 300 miles left on his tank)

What is a Business?

Business: An organization or entity that produces and distributes products, inclusive of both goods and/or services. They can serve customers either face-to-face or virtually. Businesses can be categorized based on:

• Geographic reach (No size restrictions)
• Number of employees
• Yearly Revenue

Customer: An individual or business that purchases a good or service. Consumer: An individual who uses the good or service, whether they are the buyer or not.

Trivia: Why do they use the terms ”Bull” and “Bear” to describe the stock market?

Answer: Bulls lift their horns up, and bears swipe down, when they attack.

Problem- Solution Fit

Businesses identify customer problems, needs, and wants (market opportunities) and develop goods and services to address them, which achieves problem-solution fit. Businesses cannot satisfy all potential customers; they must select which problems, needs, and wants they will focus on and which customers to serve.

1. Who is your Customer? Age, gender, race, income, etc.?
2. What is the problem of the customer? Make assumptions of your customer’s problems and then go on to see if you can validate those assumptions.
3. Is the customer aware of the problem? Try to identify if the customer is aware of the problem and when the customer will run into the problem.
4. What is your product or service? Describe the benefits and functionality of your product/service.

Key Questions for Problem- Solution Fit

1. Alternative solutions for the customer? Map out the competition and what they offer.
2. Does your solution solve the customer’s problem? Measure your solution’s effectiveness.
3. “Build–Measure–Learn” Cycle: If you have found a bottleneck in one of the above steps, backtrack.

Key Questions for Problem- Solution Fit

Company SpotlightZappos

Zappos.com is a great example of a company that made use of the Build-Measure-Learn cycle.

• Build: Zappos was founded in 1999 and was originally just a site where customers can order shoes. However, it did not actually hold any inventory.
• Measure: For the first orders, the founders went to a local store to purchase the shoes that have been ordered and subsequently shipped them to the customers who placed the order.
• Learn: Using the lessons learned from the first orders, they made the necessary adjustments, applied improvements, and continued the cycle.

1999: Initial launch 2000: $1.6 million in sales; 2005: $252 million in sales 2009: Zappos acquired by Amazon for $1.2 billion

Product-Market Fit

Product-Market Fit means being in a good market with a product that can satisfy that market. Ask how your customers would feel if they could no longer use your product or service tomorrow with the following answers:

• Very disappointed
• A little disappointed
• Not disappointed

If more than 40% answer that they would be very disappointed, then you may have a Product-Market Fit

Company SpotlightNetflix

Netflix had found was that people were tired of paying fines for DVDs they rented from video stores like Blockbuster*. As a solution, Netflix offered a subscription that allowed people to start receiving DVDs through the mail and keep them for as long as they wanted without late fees.

Fun Fact: Netflix offered to sell themselves to Blockbuster in 2000 to which the CEO of Blockbuster “laughed us out of the room” according to Netflix co-founder Marc Randolph.

How much is Netflix currently worth? As of 2/6/26 $347.06 Billion

How much did they offer to sell themselves for? $50 Million

*Blockbuster went bankrupt in 2010

1. Reassess who your customer is.
2. Make sure you understand your customer’s problem(s): If you know who your customer is, you can start to figure out what kind of solution they are currently using.
3. Create a Minimum Viable Product (See 1.4 Notes): Provide an MVP and start testing whether your solution solves the customer’s problem.
4. Validate that you have a Problem-Solution Fit: Be sure you have a clear understanding of who your customer is and a product that actually solves their problem…with hard evidence.

Key Questions for Problem- Market Fit

1. Evolve into a Minimum Marketable Product: Initially, your product/service is tailored to a very specific customer, now you’re going to make sure it can be used by a larger segment.
2. Make sure you have a scalable sales process: As the Customer Validation process recommends, it is important to have a validated and scalable sales process.

Key Questions for Problem- Market Fit

Value Creation: Occurs when businesses provide a product that responds to customers’ problems, needs, and wants.

Value Creation

Value Capture

Value Capture: Occurs when businesses are able to charge customers a higher price than it cost to produce.

Company SpotlightGoogle

Google had a lot of competition in the advertising market, but in 2003 that changed. Google became dominant with a new concept called Google AdSense where companies paid to have their ads show up not only on search pages, but strategically throughout relevant websites. Google realized that companies wanted to pay for display ads outside of search pages as well.

• Take the time to research what your competition is already doing and where there is still a gap in the market.

What was Google’s original name for their business?

BackRub

1.4 How Do Business Ideas Originate?

What is an Entrepreneur?

• Entrepreneur: An individual who develops a new business and assumes the risks and rewards
• Entrepreneurs and existing businesses generate new product ideas using a variety of strategies, including:
• Observing, interviewing, and surveying potential customers to identify needs.
• Investing in marketing and technical research to identify market gaps.
• Developing new capabilities through experimentation.

Entrepreneurs and Risk

Bringing a new product to market incurs risk because it requires financial, physical, and human resources. An entrepreneur or existing business may be incentivized to bear the risk of bringing a new product to market by:

• The potential to earn future profits
• The satisfaction of solving a problem
• The ability to pursue a passion

Idea Generation: Strategies include observing, interviewing, or surveying customers to identify gaps and needs. Incurring Risk: Bringing products to market requires financial and human resources with no guarantee of profit. Motivation: Entrepreneurs are incentivized by potential profits, the satisfaction of solving a problem, or pursuing a problem.

Entrepreneurship and Product Generation

Imagine you are building a new commuting app for people who live in a city surrounded by water. The goal is to get people from Point A to Point B across the harbor. You have a blank check for whatever you want done. Step 1: Features - On your first color of sticky notes, every "cool" feature this app should have. Don't filter yourselves, write down at least 10 ideas. Step 2: Narrow Down Ideas - The "investor" just cut 90% of your budget. You can now only afford three features to prove the concept works.

1. Put your features in priority from most important to least important.
2. Identify the bare minimum features required to actually get a passenger across the water safely.
3. Write these on the second color sticky notes.

Step 3: Pitch - Present your MVP. You must explain:

• What is the one main problem this solves?
• What features did you cut? Why?
• How will you measure if this "minimal" version is a success?

MVP Challenge Problem

Don’t forget to publish!