IB Business Management HL

Unit 1, 2 (HRM), and 4 (Marketing)

Business

An organiztion that produces goods or services to satisfy customer needs and wants

Entrepreneur

A person who starts and runs a business while taking financial risks

Intrapreneur

An employee who develops innovative ideas within an existing business

Stakeholder

Any individual or group affected by a business

Example: Employees, customers, suppliers, and shareholders

Limited Liability

Owners can only lose the amount invested din the business
Example: shareholders in a limited company

Unlimited Liability

Owners are personally responsible for all business debts
Example: Sole traders

Economies of scale

Cost advantages gained from increasign production

Diseconomies of scale

Rising average costs caused by a business becoming too large
Example: Communication problems in huge organizations

Corporate Social Respnsibility (CSR)

Business acting ethically and considering social / environmental impacts

Example: Using recyclable packaging

Sustainability

Meeting present needs without harming future generations

Example: A company reducing carbon emissions

SMART Objectives

Objectives that are specific, measureable, achieveable, relevant, and time
Example: “Increase sales by 10% within 12 months”

Merger

Two businesses combine to form one company
Example: Two banks joining together

Acquisition

One business purchases another business
Example: Disney buying Pixar

Franchise

A business model where a franchisee buys rights to operate under another firm’s brand

Human Resource Management (HRM)

Managing employees within a business

Example: Recruitment, training, and motivation

Delegation

Passing authority and responsibility to subordinates

Example: A manager assigning tasks to team leaders

Centralization

Decision-making concentrated at top
Example: Headquarters making all important decisions

Decentralization

Decision making shared throughout the business
Example: Branch managers making local decisions

Span of control

The number of employees directly supervised by a manager

Labour turnover

The rate at which employees leave a business

Motivation

The willingness of employees to work effectively

Job rotation

Employees switching betweenjobs regularly

Job Enlargement

Increasing the number of tasks in a job

Job Enrichment

Increasing respnsibility and challenge in a job

Empowerment

Giving employees authority and responsibility

Organizational Culture

Shared value and beliefs within a business

Market research

Collecting informaiton about customers and markets

Primary Research

research collected directly for a specific purpose

Secondary research

Using existing data collected by others

Market Segmentation

Dividing a market into groups with similar characteristics

Unique Sellign Proposition (USP)

A feature that makes a product different from competitors

Branding

Creating a unique image and identity for a product

Product life cycle (PLC)

The stages a product passes through from launch to decline

1. introduction

2. growth

3. maturity

4. decline

Market share

The percentage of industry sales earned by a business

Elasticity

The respiknsivenes sof demain to price changes

Sales Forecasting

Predicting furture sales

Taylors Scientific Management

Woerkers are mainly motivated by money, efficiency increase through specilization and standardization

Maslow’s Hierarchy of Needs

Employees are motivated by fulfilling needs in stages:

1. Physiological

2. Safety

3. Social

4. Esteem

5. Self-actualization

Herzberg’s Two Factor Theory

Motivation depends on hygiene factors and motivators

Prevent dissatisfaction:

1. Pay

2. Working conditions

3. Job security

Create satisfaction:

1. Achievement

2. Recognition

3. Responsibility

McClelland’s Theory of Needs

People are motivated by different needs

1. Achievement

2. Power

3. Affiliation

Triple Bottom Line

Business should focus on people, planet, and profit

Adams’ Equity Theory

Employees compare rewards and fairness with others

Behavioral Theory

Leadership deends on learned behavior and actions

Situational Leadership Theory

Leadership style should change depending on the situation

SWOT Analysis

Analyzes internal strengths and weaknesses

External opportunities and threats

STEEPLE Analysis

Analyzes external business environment

Ansoff Matrix

Identifies business growth strategies

Boston Matrix (BCG Matrix)

Analyzes product portfolio

Positioning Map

Shows customer perceptions of products

Product life cycle diagram

Shows prodct stages over time

Division of labour

Breaking produciton into specialized tasks

Opportunity Cost

The next best alternative given up

Vission statement

A statement describing a business’ long-term aspirations

Mission statement

A statement explaining a business’ purpose

Outsourcing

Hiring external firms for business activities

Offshoring

Relocating business operations abroad

Reshoring

Bringing production back to the home country

Product orientation

Focusing mainly on producing high-quality products

Market orientation

Docusing on customer needs and wants

Behavioral Segmentation

Segmenting customers by buying behavior

Product portfolio

The collection of products sold by a business

Product mix

The range of product lines sold by a business

Product line

A group of related products

Extension strategy

Methods used to extend the maturity stage of product

• new pakaging

• promotions

• price reductions

• product improvements

Penetration pricing

Setting low prices to gain market share quickly

Price Skimming

Setting high intitial price before lowering them

Cost-plus pricing

Adding a profit margin onto production cost

Dynamic pricing

Prices changing according to demand

Predatory Pricing

Setting very low prices to drive competitors out

AIDA Model

A model explaining how promotion influences customers

• Attention

• Interest

• Desire

• Action

Above the Line Promotion

Mass media advertising

Below the Line Promotion

Direct and targeted promotion

Omni-channed distribution

Selling through intergrated online and offline channels

Supply Chain

The network involved in producing and delivering products