Useful and summarized notes for IB Business and Management SL. The notes contain important information based on IB experience that will help to gain an excellent grade. The easy way you can prepare for your exams.
International Baccalaureate
Business Management Standard Level Notes
Table of content
1.1 Introduction to business management
The role of business …………………………………………………………………… 3
The main functions of business …………………………………………………………. 4
Business sectors …………………………………………………………………………. 5
The role of entrepreneurship and intrapreneurship ……………………………………… 7
Reasons for starting up a business ………………………………………………………. 8
Steps in the process of starting up a business …………………………………………… 9
Problems that a new business may face ……………………………………………… 12
The elements of a business plan ……………………………………………………… 14
1.2 Types of organization
The private and public sector …………………………………………………………… 15
Profit-based organizations ………………………………………………………………15
For-profit social enterprises ……………………………………………………………. 21
Non-profit social enterprises …………………………………………………………… 24
1.3 Organizational objectives
Vision statements and mission statements ……………………………………………… 27
Aims, objectives, strategies and tactics ………………………………………………… 28
The need for changing objectives ……………………………………………………… 30
Ethical objectives ………………………………………………………………………. 32
SWOT analysis ………………………………………………………………………… 35
The Ansoff matrix ............................................................................................................ 37
1.5 External environment
STEEPLE analysis ……………………………………………………………………... 44
Social opportunities and threats ………………………………………………………… 44
Technological opportunities and threats ……………………………………………….. 45
Economic opportunities and threats ……………………………………………………. 48
Environmental opportunities and threats ………………………………………………. 52
Political opportunities and threats ……………………………………………………… 52
Legal opportunities and threats ………………………………………………………… 54
Ethical opportunities and threats ……………………………………………………….. 54
1.6 Growth and evolution
Economies and diseconomies of scale ………………………………………………….. 55
Small versus large organizations ……………………………………………………….. 60
Internal (organic) growth ………………………………………………………………. 63
External (inorganic) growth ……………………………………………………………. 65
External growth methods ………………………………………………………………. 66
The role and impact of globalization …………………………………………………… 71
The growth of multinational companies ……………………………………………….. 72
The impact of MNCs on the host countries ……………………………………………. 74
KEY TERMS ………………………………………………………………………………. 76
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,1.1 Introduction to business management
The role of business
: a business is a decision-making organization involved in the process of using inputs to
produce goods and/or to provide services
Ø Inputs
: are the resources that a business uses in the production process; e.g. raw materials,
components, machinery, equipment and labor
Ø Processes
: turning the inputs into manufactured goods or into the provision of services
Ø Outputs
: the output or provision of final goods and services
: the term product can refer to both goods and services
Ø Goods are physical products, e.g. cars, computers, books and food
Ø Services are intangible products, e.g. haircuts, bus rides, education and health care
: the purpose of a business is to create customers; the role of business is to combine human,
physical and financial resources to create goods and services in order to satisfy the needs and
wants of people, organization and governments
Ø Needs are the basic necessities that a person must have to survive
Ø Wants are people’s desires; the things they would like to have
Types of products
§ Consumers goods
: are products sold to the general public, rather than to other businesses
§ Capital goods (or producer goods)
: are physical products bought by businesses to produce other goods and/or services
§ Services
: are intangible products provided by businesses
3
, The main functions of business
§ Human resources
: the human resources department is responsible for managing the personnel of the
organization. In managing people, the HR department is likely to deal with the
following issues; workforce planning, recruitment, training, appraisal, dismissals and
redundancies, and outsourcing human resource strategies
§ Finance and accounts
: the finance and accounts department is in charge of managing the organization’s
money. The finance and accounts director must ensure that accurate recording and
reporting of financial documentation takes place. This is to comply with legal
requirements and to inform those interested in the financial position of the business
§ Marketing
: the marketing department is responsible for identifying and satisfying the needs and
wants of customers. It is ultimately in charge of ensuring that the firm’s products sell
- Products
: ensuring that goods and services meet the customer’s requirements. Other roles
related to the product include product differentiation and product position mapping
- Price
: using various pricing strategies to sell the products of a business. Numerous
pricing strategies can be used, depending on factors such as the level of demand,
the costs of producing the good or service, and the number of substitute products
available
- Promotion
: making sure that customers know about the firm’s products. This is done through
the mass media
- Place
: ensuring that goods and services are available in convenient places for consumers
to buy. Marketing managers must ensure that they select appropriate ways to
distribute products to the marketplace
§ Operations (operations management or production)
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