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Summary Unit 1 Introduction to Business - IB Business Management

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Institution
Senior / 12th Grade

Book
Business and Management

According to the new Business Management textbook (Paul Hoang's IB Business Management 5th Edition), from the cohort M2024 onwards. These summary notes cover: - Topic 1.1: What is a Business? - Topic 1.2: Types of Business Entities - Topic 1.3: Organisational Objectives - Topic 1.4: Stakeho...

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Summarized whole book? No
Which chapters are summarized? Unit 1 - introduction to business
Uploaded on November 1, 2023
Number of pages 24
Written in 2023/2024
Type Summary

ib business
business management
introduction to business
ib business management
ibdp business
ib grade 11 business
ib

Book Title:Business and Management

Author(s):Paul Hoang

Edition:2007
ISBN:9781876659639
Edition:Unknown

Exam (elaborations)
BUSS_421_FT BUSINESS AND MANAGEMENT STUDIES Latest Update
Exam (elaborations)
IB Business Unit 5 Summary (SL)
Summary
IB Business and management HL Revision notes. Chapter 2: Functions and evolutions of human resource planning.

Institution Secondary school
Course Unknown
School year 4

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1.1 Introduction to Business
The nature of business
A business either:

Produces goods - tangible, physical products

Provides services - intangible products

Resources (inputs) used (land, labour, capital, enterprise):

Physical resources- raw material/ semi-finished goods a business may need to
start production

Financial resources- funds needed to start and keep the business running

Human resources- people needed to run the business

Entrepreneur: the individual who plans, organises and manages a business and its
operations, taking on financial risks in doing so.

Traits of an entrepreneur: creative, innovative and highly passionate

Nature of a business is to generate added value- products are appealing to
customers, create customers- satisfy the wants and needs of people.

Needs: basic necessities

Wants: people’s desires

Customers: people or organisations that purchase a product

Consumers: people or organisations that actually use the product

Consumer goods: products sold to the general public (B2C)

Capital/producer goods: goods bought by other businesses to produce other goods
(B2B)

Functional areas of a business:

1. Human Resource Management: responsible for managing the personnel of the
organisation (recruit, induct and train employees)

1.1 Introduction to Business 1

, 2. Finance and Accounts: responsible for managing the organisation’s money,
ensuring compliance with legal requirements and informing those interested in
the financial position of the business.

3. Marketing: responsible for identifying and satisfying the needs and wants of a
customer, ensuring that the company’s product sells.

4. Operations management: responsible for the process of converting raw materials
into finished goods, ensure that services are delivered at the lowest cost possible
given the standards of quality expected by customers.

Primary, Secondary, Tertiary and
Quaternary Sectors
Categories based on the stage of production:

Primary Sector: Involved with extracting, harvesting and converting natural
resources. Eg: agriculture, fishing, mining, forestry and oil extraction. Large
percentage of output and employment in low-income countries. Has very little
added value.

Secondary Sector: Involved in manufacturing or construction. Eg: clothes
manufacturers, publishing firms, construction firms, electronic manufacturers.
Output is sold to other businesses, governments, etc. Value is added to the
natural resources.

Tertiary Sector: Provide services to the general population and other
organisations. Eg: retailing, banking, insurance, healthcare, entertainment.
Dominant in high-income countries.

Quaternary Sector: Involved in intellectual and knowledge-based activities that
generate and share information. Eg: research, consultancy services, ICT. Sub-
category of tertiary.

Chain of production: Primary production —> Manufacturing —> Services (tertiary and
quaternary output) —> Consumers

Challenges and opportunities for starting a
business
Challenges:

1.1 Introduction to Business 2

, 1. Lack of finance: Finance for purchasing fixed assets (premises, buildings,
machinery and equipment). Entrepreneurs receive insufficient funds or high
interest rates.

2. Unestablished customer base

3. Cash flow problems

4. Marketing problems: arise when businesses fail to meet customer needs,
resulting in poor sales and no or very little profit.

5. People management problems: lack experience in hiring the right staff.

6. Production problems: overproduction - stockpiling, wastage and increased cost;
underproduction - dissatisfied customers, loss of potential sales

7. Legalities: paperwork / legal requirements are confusing, time consuming and
expensive

8. High production cost

9. Poor location: busy areas have more customers but are expensive.

10. External influences: a global financial crisis or an outbreak of a pandemic can
cause problems.

Potential opportunities (GET CASH):

1. Capital Growth- their business has value, property and land increases over time

2. Earnings- entrepreneurs might earn far more than salaries from any other job.

3. Transference and inheritance- entrepreneurs can pass their businesses to their
children to give them financial security.

4. Challenge- some people start a business because they want to challenge
themselves. It satisfies them and makes them perform better.

5. Autonomy- working for someone else doesn't give people the independence,
freedom, choice and flexibility that they might want.

6. Security- Greater job security and financial security

7. Hobbies- some people turn their hobbies and interests into a business.

Definitions

1.1 Introduction to Business 3

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