Summary IB Business Management 1.5 - External Environment
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Course
IB Business Management (BM1.5)
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High School
Book
Business Management for the IB Diploma Coursebook
IB Business Management summary of Chapter 1.5 - External Environment made from Cambridge IB Business Management for the IB Diploma (2nd edition). Easy to understand with dynamic charts.
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IB business management, 2.4 Motivation
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Business Management 1.5 – EXTERNAL ENVIRONMENT
STEEPLE ANALYSIS
Useful when planning new business strategies. Used in order to review its objectives and
strategies. Regular STEEPLE monitors changes in external environment. The managers will
decide which factors are more important to be considered.
SOCIAL AND CULTURAL INFLUENCES
Social: population in size and structure, lifestyle, age groups and education levels
Ageing population (reduced birth rates, longer life expectancy) or falling average age
(many births)
+ population over the age of retirement
- population in lower age ranges (0-16)
- workers in the economy but + dependants = higher tax burden on the workers
Changes in objectives and strategies
Patterns of demand: elder consumers than teenagers, meaning a change in
demand of the products / portfolio
Change in age structure of the workforce: less youthful employees, so they may
plan to employ older workers, or keep them beyond retirement age. Young: easy to
train and adapt; Old: more loyal and have years of experience.
Changing patterns of employment / role of women
+ women in employment and in the range of occupations in which they are
employed. By promoting women, they will be motivated to reach those posts
+ student employment on part-time basis
+ temporary, part-time and flexible employment contracts (reduce fixed-costs of
full-time and salaried posts and to allow for flexibility when faced with seasonal
demand or uncertainties caused by increasing globalisation). Can be difficult to
mould into a team
Women taking maternity leave and then returning to work. + Costs of maternity
leave and of providing staff to cover her
Improved education facilities (+ literacy; + skilled and adaptable workforce)
Early retirement in high-income countries (+ leisure time)
Rising divorce rates (single-person households)
Job insecurity (temporary and part-time employment)
Increased levels of immigrations (different ethnics = different tastes)
IMPACT OF TECHNOLOGY – use of tools, machines and science in industry
Information technology (IT): use of electronic technology to gather, store, process and
communicate information. The use of technology and advances in technological knowledge are
opening up new products markets
Technological: technological advancement and introduction to new technologies
1
, Business Management 1.5 – EXTERNAL ENVIRONMENT
Impact on objectives and strategies
Focus on new product development: establish product requirements by gathering market
information from databases, customers and sales representatives. CAD and CAM software
speed up manufacturing, and communication technology allow different people to work
simultaneously
Improve stakeholder communication: 24/7 interconnectivity. Plc use their investor
relations´ websites to communicate with shareholders or financial analysts
Developing new and better process: Enterprise resource planning (ERP) system allows
managers to review sales, costs and other data on one integrated software platform and
communicate with suppliers and customers about each order. Makes internal processes
more efficient and cost-efficient
Cost Benefits: purchase, implementation and employee training costs. But long-term cost
savings (reduce operational costs, save costs of duplication, postage and promotion, while
maintaining and improving product quality and customer service)
Competitive advantage: companies use rapid software simulations to bring a product to
market cost-effectively and rapidly to compete to other products
Outsourcing and offshoring (impact of globalisation): outsource most of its non-core
functions (human resources and call centres) to offshore companies and use network
technologies to stay in contact.
IT APPLICATION COMMON BUSINESS APLICATION IMPACT
Spreadsheet Financial and management Flexibility and speed
programs accounting records updated What if? Scenarios in
and amended budgeting and sales
Cash flow forecasts and forecasting can be
budgets updated constantly demonstrated
Changes in expected
performance inputted to the
spreadsheet and total figures
update automatically
Income statements and
balance sheets can be drawn
up frequently
Computer-aided Use programs to make and Saves on expensive designer
design (CAD): using display designs salaries, quickly done
IT when designing 3D designs and turned around More flexibility of design,
products to show effect from all angles requirements can be added
Linked to other programs to
obtain its costs and to order
of required supplies
Computer-aided Programs that operate robotic Less labour costs
manufacturing equipment, replacing labour- Increased productivity,
(CAM): use of intensive lower costs per unit
computers and Used in operations More accuracy
computer-control management in Flexibility of production
machinery to speed manufacturing businesses increase: variations of a
up the production different product (meet
process and make it individual needs)
more flexible. More competitive
2
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