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Showing posts with the label opportunity costs

Just my thoughts #0652

I advised a CEO to read books regularly. But he said he didn’t even have time for reading because of his business. I didn’t tell him to read a lot; I only suggested that he do it on a regular basis. It’s not easy to start with a large amount, but it’s easy to give up or refuse to continue. Still, doing a small amount consistently is also difficult, but the goal is to build a habit. Reading is an extension of management activities that managers must do, not because they have time to spare, but because neglecting it can harm management by limiting their knowledge of the world and others’ experiences. Of course, reading doesn’t guarantee success or prevent failure. However, there’s no doubt that it’s the most fundamental activity that can help individuals grow and organizations thrive through the knowledge and experience gained from reading. A fool fills 100% of his life experience. A wise man fills it with 1% inspiration, 29% reading, and 70% implementation. - Joseph’s “just my thoughts”

Just my thoughts #0651

What I spend is someone else’s income. Apple co-founder Steve Jobs discussed every morning at breakfast with his family about buying a set of Miele washing machines and dryers from Germany for two weeks. Why? Of course, it was to teach their children about economics and to illustrate a lesson about opportunity cost, a common trait among wealthy people. If you buy this washing machine, you cannot buy that one. That is the opportunity cost. It’s a form of relative value, based on the idea that choosing one option means sacrificing another, so the value of each can be compared within those limits. Wealth begins with training in understanding even trivial opportunity costs. To succeed in business, you need to learn how to measure opportunity cost first, rather than just how to make money. - Joseph’s “just my thoughts”

Just my thoughts #0626

One of the key principles of money is ‘opportunity cost.’ It means that when I buy something, I have to give up something else in return. We think we buy because we need something, but we often forget that we could buy something else instead. We rarely consider ‘opportunity cost’ when making a purchase. We do not compare other values against our needs. Buying something means giving up something else, but we often don’t realize it. When we spend money, we should also consider the ‘opportunity cost’; yet, in reality, we aren’t trained to do so. By making a purchase, we bypass the value comparison that may not offer any additional benefits. Maybe it’s because we lack knowledge, or perhaps the idea isn’t appealing. - Joseph’s “just my thoughts”

Just my thoughts #0303

We often overlook the financial concept of “opportunity costs” because there is no immediate cash expenditure involved. Typically, we invest more time and effort in purchasing cheaper products. In contrast, wealthy individuals do not have to exert as much effort as those with fewer financial resources. When we factor in opportunity costs, we often find ourselves spending a similar amount of money on the same items, regardless of wealth status. For instance, if Bill Gates picks up a dollar that someone has dropped, he actually detracts from his financial standing due to the opportunity costs associated with the value of his labor. In this regard, he might save more money by choosing to rest instead of working. Ultimately, opportunity costs are the hidden expenses that can keep us in financial distress in the real world. - Joseph’s “just my thoughts”

Just my thoughts #0132

Google founder Sergey Brin, one day asked a great question. “What will happen if we give this service for free?” The result was, as we know well, “MONOPOLY”. Google gives employees 100,000 meals a day for free. This is because Google found that providing free meals is more profitable for the company. Initially, a payment system was introduced in the cafeteria. Soon, however, Google changed its mind when it saw the people waiting in line. Google learned the “opportunity cost”. Google's technology is excellent, but they realize it is not about making money. Fate changed when they discovered that the Business Model for that technology made money. - Joseph’s “just my thoughts”

Just my thoughts #0070

In business, capital means business funds. A successful entrepreneur often says, "I started my business without any capital". It's partly true, but it's a lie. The entrepreneur just said that capital means only cash. However, all kinds of businesses need to be fundamentally business funds in any even not cash. The entrepreneur didn't count the founder's labor cost. No inputs, no outcomes. The uncounted labor costs are called "alternative costs" or "opportunity costs". This comes from comparative advantage. If the entrepreneur doesn't accept the uncounted labor cost as a debt, the entrepreneur is equivalent to losing the profit due to opportunity costs. Please always remember this. There is no free lunch in this world. - Joseph’s “just my thoughts”