IB Business Management 1.1-1.5 Test Review Flashcards

Flashcard set reviewing key concepts from IB Business Management SL/HL sections 1.1 through 1.5, including business functions, objectives, stakeholder analysis, marketing principles, and macroeconomics.

What does the mnemonic G.E.T.C.A.S.H. stand for regarding reasons for setting up a business?

Growth, Earnings, Transference & Inheritance, Challenge, Autonomy, Security, Hobbies

What are the advantages and disadvantages of business specialization?

Advantages: Increased productivity & efficiency, products meet high standards, and higher profit margin. Disadvantages: Boredom & inflexibility of workers, production issues impact the entire business, and high capital costs for specialty machinery.

What key elements are involved in setting up a business start-up?

Business Idea, Finance, Human Resources, Enterprise, Fixed Assets, Suppliers, Customers, Marketing, and Legal Issues.

What are the stages in the chain of production by sector?

1) Primary (Extraction of Raw Materials), 2) Secondary (Manufacturing), 3) Tertiary (Retail stores), and 4) Customer (Consumer).

What is a business and what are its four main functional areas?

A business is an organization that produces goods or services to satisfy customer needs and wants. Its four main functions are production, marketing, finance, and human resources.

What is meant by the marketplace?

The location where buyers and sellers meet to trade, such as retail shops, restaurants, movie theaters, telephone networks, or the internet.

How is value added defined in the production process?

Value added is the difference between the value of inputs and the value of outputs. In the service sector, it applies to expertise that the consumer does not have.

How is profit calculated in business?

Profit is the difference between total revenues and total costs over a period of time.

How are profit-based and non-profit business organizations categorized?

Profit-based organizations include unincorporated businesses (sole traders, partnerships) and incorporated businesses (private limited companies, public limited companies). Non-profit organizations include non-governmental organizations (NGOs), charities, and pressure groups.

What is a business plan?

A written report that provides details as to how a business plans to achieve its aims and objectives.

What are the three main functions of organizational objectives?

1. To control the firm's plans, 2. To motivate managers and employees, and 3. To direct and give a clear focus.

What does the SMART acronym stand for when setting business objectives?

Specific, Measurable, Achievable/Attainable, Realistic, Time Constrained/Time Bound.

What is the difference between strategy and tactics?

Strategy refers to any plan or scheme used to achieve long-term aims of the business, whereas tactics are short-term ways firms use to achieve their aims and objectives.

How are stakeholders defined in business?

Stakeholders are individuals or groups that have a direct interest in and are affected by an organization's actions.

Which groups make up internal vs. external stakeholders?

Internal Stakeholders: Owners, Managers, Employees, Shareholders (stockholders), and Directors. External Stakeholders: Competitors, Customers, Suppliers, and Government.

What is the difference between a vision statement and a mission statement?

A vision statement outlines a business's aspirations where it wants to be in the future (image of an ideal situation). A mission statement is a simple declaration stating the underlying purpose, values, and principles of the organization.

What is the difference between ethics and morals?

Ethics are the moral principles that guide the decision-making process, while morals are concerned with what is right and wrong from a society's point of view.

What is Corporate Social Responsibility (CSR) and what are its three forms?

CSR is acting in an ethical manner towards all stakeholders. Its three forms are Free Market CSR, Strategic CSR, and Altruistic CSR.

What is a social audit, and what are its advantages and disadvantages?

A social audit is an independent assessment of how a firm's actions affect society. Advantages: Improves public image, meets social objectives, builds local community confidence. Disadvantages: Increased cost, may not be independently audited, risk of negative publicity if seen as 'window dressing', and not legally required.

What are the four factors of production?

Capital (money available for running the business), Enterprise/Entrepreneurship (creativity and management), Land (all natural resources), and Labor (physical & mental effort).

What are the 4 P's of marketing?

Product (goods & services meeting customer requirements), Price (pricing methods to sell products), Promotion (informing customers about products), and Place (convenience).

What is opportunity cost?

The next best alternative that was given up when a choice is made.

How does a company differ from a business generally?

A company is a specific type of business owned by shareholders that has been issued certificates of incorporation, giving it a separate legal identity from its owners.

What is the private sector?

The part of the economy under the control of private individuals in business, rather than the Government (e.g., Sole Traders & Partnerships).

What is a Stock Exchange and what is an Initial Public Offering (IPO)?

A Stock Exchange is the marketplace for buying and selling secondhand company stocks and shares. An IPO is the process by which a private limited company goes public by selling its stock on an exchange (such as the New York Stock Exchange) to the general public.

How are supply, inflation, and demand defined?

Supply: The total amount of a good or service available for purchase. Inflation: The continual rise in the general level of prices. Demand: The amount of a particular economic good or service that consumers want to purchase at a given price.

What is the difference between Fiscal Policy and Monetary Policy?

Fiscal Policy is government control through taxation and government expenditures implemented by Congress. Monetary Policy is government control of spending in the economy through changes in interest rates implemented by the Federal Reserve (Central Bank).

What is the difference between Demand Pull and Cost Push inflation?

Demand Pull inflation is caused by excessive demand exceeding business supply, whereas Cost Push inflation is caused by increased costs of production.

What is division of labor?

The specialization of workers in the provision of a good or service by breaking a job down into particular roles or components that are repeated by the same workers.

How is capital defined in terms of non-natural resources?

Non-natural resources that are used in the creation and production of other products (excluding Money, Buildings, and Equipment).