IB Business Exam

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Economies of Scale

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38 Terms

1

Economies of Scale

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

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2

Diseconomies of Scale

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

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3

Internal Growth

Growth that occurs when a company develops itself.

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4

External Growth

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

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5

Merger

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

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6

Acquisition

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

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7

Strategic Alliance

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

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8

Franchise

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

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9

Globalization

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

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10

Multinational Corporation (MNC)

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

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11

Benefits of becoming an MNC

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

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12

Drawbacks of becoming an MNC

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

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13

Benefits of Free Trade

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

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14

Impact on host countries by MNCs

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

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15

Stakeholder

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

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16

Shareholder

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

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17

Internal Stakeholder Examples

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

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18

External Stakeholder Examples

Regulatory bodies, communities, government, general public.

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19

STEEPLE

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

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20

Purpose of STEEPLE analysis

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

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21

SWOT

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

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22

Internal factors in SWOT

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

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23

External factors in SWOT

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

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24

CSR

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

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25

CSR and ethical code

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

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26

Benefits of ethical objectives

Positive work environment and improved employee morale.

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27

Drawbacks of ethical objectives

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

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28

Changes in CSR

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

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29

Sole Proprietorship

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

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30

Partnership

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

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31

Private Limited Company

An organization owned by shareholders with limited liability.

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32

Public Limited Company

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

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33

Charity

An organization aimed at philanthropy and social well-being.

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34

NGO

Non-Governmental Organization that operates independently of governmental influence.

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35

Cooperative

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

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36

Social Enterprise

A business focused on achieving specific social objectives.

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37

Microfinance Company

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

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38

Triple Bottom Line

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

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