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Questions and Answers
What primarily determines a business’s overall economic value?
Which strategy involves promoting existing products to new customers who may use similar products from competitors?
What is required for a company to develop new products through research and development?
What does selling existing services to consumers in a different sector require?
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What is one method a business might use to enter a completely new market with new products and services?
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What role does innovation play in a business environment?
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How do technology platforms contribute to business development?
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What is machine learning primarily characterized by?
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What is a primary benefit of using collaborative ecosystems in business?
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What challenge do physical marketing channels face compared to digital channels?
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Study Notes
Business Value
- A business's economic value is determined by its profitability and growth.
- Profitability is the ability to generate long-term positive cash flows and provide a suitable return on invested capital.
- Growth is the rate of increase in net cash flows year-over-year.
Managing Growth
- Existing products & customers: Sell more to existing customers, offering incentives like discounts to foster a strong customer base.
- Gaining new customers: Adopt a share-building or market development strategy, targeting new customers who might be unfamiliar with the product or using competitors' products.
- New products & existing or new customers: Develop new products through R&D or acquisition, requiring investment in R&D and legal capabilities.
- Existing services & new sectors: Identify and enter new markets where the existing services are marketable.
- New markets with new products & services: This requires unique capabilities and can be achieved through joint ventures. It is also possible to enter new markets due to surplus cash.
Innovation Defined
- An idea that addresses a challenge, providing value for both developers and users.
- Innovation is employed to create new and improved products and processes.
Common Innovation Practices Throughout Businesses
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Artificial Intelligence (AI): Computer systems capable of performing tasks traditionally requiring human intelligence.
- Examples: McDonald's utilizes AI to dynamically adjust their menus.
- Machine Learning (ML): An AI application enabling systems to learn and improve from experience without explicit programming.
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Technology Platforms: Provide the foundation for developing new business opportunities.
- Examples: Computing (e.g., Android OS), Technology (e.g., Cloud), Service (e.g., Netflix), Content, and Marketplace (e.g., Amazon).
- Collaborative Ecosystems: Multiple organizations cooperate to accelerate the development of new technologies, products, and services.
- Data Collection and Usage: Businesses leverage their offerings to simplify the process of data collection and utilization.
- IP Access (Intellectual Property): Access to know-how or creative content protected by trademarks or copyrights.
- Blending Physical & Digital Marketing: Digital channels have a monopolistic advantage due to their accessibility on the web. Physical channels face challenges due to the physical nature of their products and services.
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Description
This quiz explores the concepts of economic value in business, focusing on profitability and growth. It covers strategies for managing growth through existing and new products, services, and customer bases. Test your understanding of how businesses can develop and sustain their market position.
