IB Business Exam

Economies of Scale

Economies of Scale

Cost advantages that businesses achieve due to size, scale, or efficiency of their operation.

Diseconomies of Scale

Inefficiencies and increased unit costs that occur when a business grows too large.

Internal Growth

Growth that occurs when a company develops itself.

External Growth

Growth that occurs when the overall industry expands, benefiting the company.

Merger

Combination of two or more companies into one, typically to increase market share or efficiency.

Acquisition

A process where one business takes control of another by purchasing a sufficient number of shares.

Strategic Alliance

A formal agreement between two or more companies to work toward a common goal.

Franchise

A business model where a company allows others to operate businesses using its brand.

Globalization

The process by which businesses and cultures become interconnected and interdependent.

Multinational Corporation (MNC)

A company that operates in multiple countries beyond its home country.

Benefits of becoming an MNC

Access to new markets, increased profitability, tax benefits, and cheaper resources.

Drawbacks of becoming an MNC

Increased competition, higher operational costs, and various risks related to environmental and social responsibilities.

Benefits of Free Trade

Lower prices for consumers, access to larger markets, job creation, and economic growth.

Impact on host countries by MNCs

Positive impacts such as infrastructure development, but also negative impacts like regulatory challenges.

Stakeholder

Any individual or group with an interest in an organization and its outcomes.

Shareholder

An individual or institution that invests money in a corporation in exchange for ownership shares.

Internal Stakeholder Examples

Employees, suppliers, investors, executives, creditors, customers.

External Stakeholder Examples

Regulatory bodies, communities, government, general public.

STEEPLE

A framework analyzing Social, Technological, Economic, Environmental, Political, Legal, and Ethical factors.

Purpose of STEEPLE analysis

To measure external factors affecting the business environment to predict economic growth.

SWOT

A strategic planning tool that stands for Strengths, Weaknesses, Opportunities, and Threats.

Internal factors in SWOT

Financial and human resources, intangible assets, and operational efficiencies.

External factors in SWOT

Factors such as competitors, market conditions, and the political environment.

CSR

Corporate Social Responsibility, the accountability a company has towards its stakeholders.

CSR and ethical code

Companies voluntarily uphold accountability to their stakeholders and the wider community.

Benefits of ethical objectives

Positive work environment and improved employee morale.

Drawbacks of ethical objectives

Potential reduction in a company's ability to maximize profits.

Changes in CSR

The rise of social media has led to rapid information sharing about companies and their practices.

Sole Proprietorship

A business owned by a single individual who is personally responsible for its debts.

Partnership

An arrangement between two or more individuals to manage and operate a business together.

Private Limited Company

An organization owned by shareholders with limited liability.

Public Limited Company

A company that has offered its shares to the general public and has limited liability.

Charity

An organization aimed at philanthropy and social well-being.

NGO

Non-Governmental Organization that operates independently of governmental influence.

Cooperative

A business owned and controlled by the users who share in the benefits.

Social Enterprise

A business focused on achieving specific social objectives.

Microfinance Company

A financial service targeting low-income individuals or groups lacking access to traditional banking.

Triple Bottom Line

A sustainability framework focusing on three P’s: people, planet, and profit.