AP Business Checkpoint

Consumer

the person who uses or consumes a product or service

• a teenager who drinks Coca-Cola is a consumer

Customer

the person who purchases a product or service

• A parent who buys the Coca Cola for their child is the customer

Value Creation

the process of providing a product or service that benefits customers and solves a problem or meets a need

• a company creates value by making an affordable meal-delivery service that saves customers time

Value Capture

the process of turning values created for customers into revenue or profit for the business

• a meal delivery company charges customers for its service and earns a profit

Problem Solution Fit

the degree to which a businesses’s products or service effectively solve a specific customer problem

• if students need affordable lunches and your business provides them, you have a problem solution fit

Problem Statement

a clear description of the specific problem or need that a business is trying to solve

• “High school students struggle to find affordable, healthy lunches during school”

Hypothesis

a testable prediction or assumption about a business idea, customer, or market

• "we believe students will pay $8 for a healthy lunch delivered at school”

Elevator Pitch

a short, persuasive explanation of a business idea, usually designed to be delivered 30-60 seconds

• explaining what your company does, who it helps, and why it's valuable in a quick conversation.

Competitive Advantage

a factor that allows a business to perform better than its competitors or provide greater value to customers

• a restaurant's lower prices, stronger brand, or faster delivery could give it a competitive advantage.

Barrier to Entry

a factor that makes it difficult or expensive for new competitors to enter a market

• high startup costs can be a barrier to entry in the airline industry

Differentiation

the process of making a product or business distinct from competitors in ways customers value

• a clothing company differentiates itself through unique designs and sustainable materials

PESTEL

a framework used to analyze external factors that can affect a business: Political, Economic, Social, Technological, Environmental, and Legal

• a new environmental law could affect how a company manufactures its products

Core Value

a special skill, capability, or area of expertise that gives a business an advantage

• a company's core value might be sustainability, honesty, or innovation

Vision

a statement describing what a business hopes to become or accomplish in the future

• "To create a world where everyone has access to clean water."

Mission

a statement explaining what a business does, who it serves, and why it exists

• "We provide affordable water-filtration systems to communities without clean drinking water."

Social Enterprise

a business that aims to solve a social or environmental problem while generating revenue

• a business that aims to solve a social or environmental problem while generating revenue.

Nonprofit

an organization created primarily to serve a social, charitable, educational, or community purpose rather than generate profits for owners.

• a food bank that uses donations to provide food to people in need

Surplus

The amount of money left after an organization covers its expenses. In a nonprofit, this money is generally reinvested into the organization's mission rather than distributed to owners.

• A nonprofit receives $100,000 and spends $80,000 → its surplus is $20,000.

Core Competency

a special skill, strength, or ability that gives a business advantage over its competitors

• What a business does especially well

Code of Ethics

a set of rules and principles that guide employees’ and business’s decisions about right and wrong

• a company has a code of ethics that prohibits employees from accepting bribes or sharing customers’ private information

Sole Proprietorship

a business owned and operate by one person. the owner is generally responsible for the business’s debts

• a person who owns and operates a small lawn-mowing business by themselves

Partnership

a business owned by two or more people who share responsibilities, profits, and losses according to their agreement

• two friends open a restaurant together and share the profits

Limited Liability Company (LLC)

a business structure that generally protect its owners’ personal assets from the company’s debts and liabilities

• two people start a photography business as an LLC. If the business cannot pay a business debt, their personal assets are generally protected, although exceptions can apply.

Corporation (separate legal entity)

a business that is legally separate from its owners. It can own property, enter contracts, and be responsible for its own debts

• Apple Inc. is a corporation that operates separately from its shareholders

Liability

a legal or financial responsibility, such as a debt or an obligation to pay for damages

• A business borrows $10,000 from a bank. The loan is a liability because the business must repay the money

Board of Directors

a group of people elected or appointed to oversee a corporation's management and make important decisions about its direction

• a corporation's board of directors reviews the company's financial performance and helps decide who should serve as CEO

Outsourcing

when a business hires another company or outside person to perform certain tasks instead of doing them internally

• a clothing company hires an outside company to handle customer service calls

Maslow Hierarchy of Needs

a theory that explains human motivation through five levels of needs, often represented as a pyramid. The levels range from basic survival needs to personal fulfillment

The five levels are:

1. Physiological needs: Basic needs for survival, such as food, water, and shelter.

   • Example: An employee needs enough money to buy food and pay rent.

2. Safety needs: The need for security, stability, and protection.

   • Example: An employee wants a safe workplace and job security.

3. Love and belonging needs: The need for friendship, relationships, and a sense of belonging.

   • Example: An employee wants to feel accepted by coworkers and be part of a team.

4. Esteem needs: The need for respect, recognition, and a sense of accomplishment.

   • Example: An employee receives an award for excellent performance.

5. Self-actualization needs: The desire to reach one's full potential and achieve personal goals.

   • Example: An employee pursues a leadership role to develop their skills and accomplish a long-term career goal.