IB Business Management HL – Topic 1.1: What is a Business?

Vocabulary flashcards covering key terms from Topic 1.1: purposes of business activity, inputs, production methods, functional areas, industrial sectors, entrepreneurship and start-up processes.

Business Activity

The organisation of human, physical and financial resources to produce goods or services that meet customer needs while adding value.

Goods

Tangible items that can be stored, such as cars or games consoles.

Services

Intangible products, like insurance or hairdressing, provided when needed and cannot be stored.

Add Value

Enhancing a product or service through features, design or quality to create a unique selling proposition and increase customer satisfaction.

Transformation Process

The conversion of inputs into outputs that customers are willing to buy.

Inputs

Resources—financial, human, physical and enterprise—used in production.

Outputs

Finished goods or services produced for customers after the transformation process.

Financial Resources

Capital such as cash, trade credit or loans required to fund production.

Human Resources (Input)

Employees and managers with suitable skills and in sufficient quantity to meet output needs.

Physical Resources

Materials, equipment and premises necessary for production and storage.

Enterprise (Input)

The business idea plus the willingness to take risk in turning it into reality.

Capital-Intensive Production

A production method where machinery costs outweigh labour costs, e.g., nuclear power generation.

Labour-Intensive Production

A production method where labour costs exceed machinery costs, e.g., clothing manufacture in South-East Asia.

Human Resources Function

Business department responsible for recruitment, training, pay, conditions, health and safety, and staff development.

Marketing Function

Department that researches markets and develops the marketing mix—product, price, promotion and place—to attract and retain customers.

Finance & Accounts Function

Manages financial resources, secures external finance, keeps accurate records, creates budgets and processes payments.

Operations Function

Oversees efficient production, sourcing, stock, quality, waste management and delivery of goods.

Interdependence of Functions

The way business functions rely on each other to achieve overall objectives, e.g., marketing insights guiding operations.

Primary Sector

Industry sector focused on extracting raw materials from land, sea or air, e.g., farming or mining.

Secondary Sector

Sector involved in processing raw materials and manufacturing goods, e.g., vehicle production.

Tertiary Sector

Sector providing services to consumers and businesses, e.g., banking or hospitality.

Quaternary Sector

Knowledge-focused services such as IT, consultancy and research.

Chain of Production

Series of steps linking the four sectors to turn raw materials into finished products for sale.

Sectoral Change

Shift of firms or labour from one sector to another as an economy develops, often toward higher value-added sectors.

Digital Service Economy

Economic activity dominated by online and intangible services delivered via the internet and mobile devices.

Entrepreneur

An individual who creates a new business idea, organises resources, makes decisions and takes risks to pursue success.

Intrapreneurship

Encouraging entrepreneurial thinking and risk-taking within an existing business to innovate and create new value.

Intrapreneur

An employee empowered to act like an entrepreneur inside a company, developing new ideas or projects.

Necessity Entrepreneurship

Starting a business due to personal circumstances such as redundancy to secure income or flexibility.

Profit Maximisation

Establishing a business with the primary goal of generating the highest possible profit for owners.

Profit Satisficing

Running a business to achieve an acceptable profit level while prioritising other objectives like work-life balance.

Gap in the Market

An unmet customer need identified as an opportunity for a new product or service.

Ethical Stance

Basing a business on moral principles such as sustainability, fair trade or social justice.

Social Entrepreneurship

Creating a venture aimed at solving social or environmental problems while also earning a living.

Business Plan

A document outlining how objectives will be achieved, used to secure finance and guide business progress.

Market Research

Systematic collection and analysis of data about customers, competitors and market conditions to inform decisions.

Crowdfunding

Raising small amounts of capital from a large number of individuals, typically via online platforms, to finance a start-up.

Peer-to-Peer Lending

Obtaining loans directly from individuals through online platforms, bypassing traditional banks.

Business Angel

Wealthy individual who provides capital and expertise to a start-up in exchange for equity.

Test Marketing

Launching a product on a small scale to gauge customer response and identify improvements before full rollout.

Scaling

Managing increased demand and expanding into new markets as the business grows.

Operational Issues (Start-ups)

Challenges in managing finance, marketing, sales and other day-to-day activities of a new business.

Hiring & Retaining Talent

Securing and keeping skilled employees, often difficult for start-ups lacking resources for competitive packages.