IB Business Formative Quiz Study Guide

Business Entities

Acronym- Spnn Fe

• Sole Trader/Proprietor
  
  

• Partnerships
  
  

• NGO (Non-Governmental Organization)
  
  

• NPO (Non-Profit Organization)
  
  

• For-Profit Business
  
  Entrepreneur

• Sole Trader/Proprietor

• Business Entities – Owned and run by one person. Keeps all profits, has full control, but also unlimited liability (personal assets at risk)

Partnership

• Business Entities 2–20 owners (varies by country). Share profits, workload, and liability. Often easier to raise finance than sole traders.

NGO (Non-Governmental Organization) –

• Business Entities Non-profit, not controlled by government, aims to address social, environmental, or humanitarian causes.

NPO (Non-Profit Organization)

• Business EntitiesFocused on collective/social benefits instead of profits. Any surplus is reinvested in the mission.
  
  

• For-Profit Business –

Business Entities Main purpose is to generate profits for owners/shareholders. Profits may be reinvested, distributed, or donated. Must pay taxes.

Entrepreneur –

Business Entities Risk-taker and innovator who starts a business. Drives growth, spots market trends, may work as CEO or be self-employed.

Public vs. Private Sector

• Public Sector – Owned/controlled by government. Provides services for citizens (e.g., healthcare, education, transportation). Goal = service, not profit.
  
  

Private Sector – Owned by individuals or groups. Aim = generate profit. Includes sole traders, partnerships, corporations, and private social enterprises.

Private Sector –

Owned by individuals or groups. Aim = generate profit. Includes sole traders, partnerships, corporations, and private social enterprises.

• Public Sector –

Owned/controlled by government. Provides services for citizens (e.g., healthcare, education, transportation). Goal = service, not profit.

Vision vs. Mission Statements

• Vision Statement – Long-term, inspirational statement of what the business wants to achieve in the future (e.g., “To be a global leader in clean energy”).
  
  

Mission Statement – Shorter-term, practical statement of purpose and how the business will achieve its vision (e.g., “Provide affordable solar solutions worldwide”).

• Vision Statement –

Long-term, inspirational statement of what the business wants to achieve in the future (e.g., “To be a global leader in clean energy”).

Mission Statement –

Shorter-term, practical statement of purpose and how the business will achieve its vision (e.g., “Provide affordable solar solutions worldwide”).

Corporate Social Responsibility (CSR)

• Businesses consider social, environmental, and ethical concerns in decision-making.
  
  

• Examples: fair wages, reducing carbon footprint, community projects, ethical sourcing.
  
  

  • Profit (financial performance),
    
    

  • People (social responsibility),
    
    

Planet (environmental sustainability).

Business Objectives

• Operational – Day-to-day goals (e.g., increase daily output, reduce waste).
  
  

• Tactical – Short- to medium-term goals, set by middle managers, help achieve strategic objectives (e.g., launch new marketing campaign within a year).
  
  

• Strategic – Long-term, broad goals set by senior managers to guide the business (e.g., become market leader in 5 years).
  
  

Vision – Overall long-term dream or ideal future of the company.

• Strategic –

Long-term, broad goals set by senior managers to guide the business (e.g., become market leader in 5 years).

• Tactical –

• Short- to medium-term goals, set by middle managers, help achieve strategic objectives (e.g., launch new marketing campaign within a year).
  

SWOT Analysis

• Strengths (S) – Internal advantages (e.g., strong brand, loyal customers).
  
  

• Weaknesses (W) – Internal disadvantages (e.g., poor cash flow, limited staff).
  
  

• Opportunities (O) – External chances for growth (e.g., new markets, tech trends).
  
  

• Threats (T) – External risks (e.g., competition, changing regulations).
  
  

• Helps businesses make strategies that build on strengths, reduce weaknesses, seize opportunities, and avoid threats.

Ansoff Matrix (Growth Strategies)

• A tool for deciding growth strategy:
  
  

  1. Market Penetration – Sell more existing products to current customers (low risk).
     
     

  2. Market Development – Enter new markets with existing products (medium risk).
     
     

  3. Product Development – Create new products for existing customers (medium risk).
     
     

Diversification – New products + new markets (highest risk, highest potential).