IB Business Unit 1 Test (Intro to Business Management)

Business

Decision-making organization involved in the process of using inputs to produce goods and or provide services

Customer

Buys the product

Consumer

Uses the product

Four factors of production

Land, labour, capital, entrepreneurship

Four functional areas of business

operations/productions, marketing, finance, human resources

Primary sector

extraction of natural resources, poorer countries

Secondary sector

production, developing countries

Tertiary sector

service business

chain of production

tracks stages of an item production from extraction of raw materials used to produce the product all the way to being delivered to the consumer

factors in starting a business

business idea, finance, human resources, enterprise, fixed assets, suppliers, customers, marketing, legal issue

reasons for starting a business

growth, earning, transference & inheritance, challenge, autonomy, security, hobbies

business plan

6 pages of less. contains: business, product, market, finance, personnel, marketing

CUEGIS

change, culture, ethics, globalization, innovation, strategy

goods

physical product

service

intangible product

entrepreneurs

individual who plans, organizes and manages a business

intrapreneurship

act of being an entrepreneur

sole trader

individuals who start the business owns the business. they receive all the profits

partnership

2 or more people start up a business

private limited company

financed by shareholders and owned by private stockholders. not affected by status of owner

public limited company

shareholders own the business. financed by stockholders. limited liability. board of directors have percent owning/controlling a section of the business

NGO's and Charity

not owned or controlled by government. non profit organization

(SE) cooperative

members (customers and employees) own and control the business.

(SE) microfinance

owned by investors/clients/lenders. controlled by board members. unethical operation (for profit organizations)

(SE) public private enterprise

government owns with the private sector to jointly provide certain goods or services

Strength (SWOT)

things that a business does well

Weaknesses (SWOT)

things that a business does poorly or has a poor reputation for doing

Opportunities (SWOT)

potential for growth of increased profit

Threats (SWOT)

things that hinder the prospects for an organization

Ansoff matrix

planning tool to help businesses determined its product and market growth strategy. represents the different options open to a marketing manager when considering new opportunities for sales growth

market penetration

selling existing products into existing markets. focuses on markets and products it knows well

product development

business aims to introduce new products into existing markets. requires business to develop modified products

market development

business seeks to sell existing products into new markets. more risky than market penetration because it's targeting new markets

diversification

new products in new markets. very risky because business is moving into markets in which it has little or no experience

stakeholders

have a direct interest in and are affected by an organization's actions

internal stake holders

members of the organization (employees, shareholders, managers, directors)

external stake holders

not a part of the organization but have an interest (local community, customers, competitors, environment, trade unions, suppliers, pressure groups, government)

employee

if a business performs well employees reap the benefits

shareholders

private and public limited companies are owned by shareholders and as such share in the profits when the business is successful

managers

in charge of day to day business operations

internal growth

from within a company's own resources to increase sales and to reinvest the profits back into the business

external growth

dealing with outside organizationn

joint venture

two or more businesses joining together to form a new entity in which they split cost, risks, control and rewards of a business project

strategic alliance

similar to a joint venture except the firms remain independent

merger

two firms agree to form a new company

acquisition

one company buys controlling interest in another (purchase enough shares to hold majority stake - entice shareholders with prices above market)

vertical integration

takes place between businesses that are at different stages of production. helps lower costs of raw materials

horizontal integration

firms operating in the same industry

lateral intergation

two firms that have similar operations but do not directly compete with each other

conglomerate

in different markets

management buy out

managers purchase controlling interest in company, usually to avoid hostile take over

brand acquisition

alternative to complete take over, buy just one of the brands produced by a firm

advantages of mergers/acquisitions

greater market share, economies of scale, synergy, survival, diversification

disadvantages of mergers/acquisitions

loss of control, organizational culture clashes, conflict, redundancies, discectomies of scale, regulatory issue

economies of scale

lower average costs of production as firms operate on a larger scale due to gains in productive effiency

diseconomies of scales

cost disadvantages of growth. unit costs are likely to eventually rise as a firm grows due to a lack of control, coordination, and communication

globalization

growing integration and the interdependence of the world's economies, causing consumers around the globe to have increasingly similar habits and tastes

fiscal policy

government adjusts its spending levels and tax rates to monitor and influence a nation's economy.

monetary policy

actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates