IB Business Management SL/HL SVT Definitions

Above-the-line promotion (television, newspapers, magazines):

a paid form of promotion that is undertaken by a business by paying for communication with consumers, e.g. advertising

Acquisition:

A takeover (or acquisition) occurs when a company buys a controlling interest in another firm, i.e.. it buys enough shares in the target business to hold a majority stake. (usually more than 50%) Acquisitions are hostile.

Aquifer:

Natural, underground water storages

Below-the-line promotion (social media, sales promotions):

promotion that is not a directly paid-for means of communication but based on short-term incentives to purchase, e.g. sales promotion techniques

**Board of Directors (BOD)**:

elected by shareholders to make strategic future-focused decisions on their behalf. Directors are elected because of their skills and expertise and because shareholders do not necessarily want to get involved in the daily running/decision making of the company.

Brand Leader:

To become the brand with the highest recognition and largest market share in the market. A brand leader is a product or brand that is recognized as the most popular or dominant within a specific market or industry. It is often the first brand that comes to mind when consumers think of a particular product category and has a strong reputation and customer loyalty. A brand leader typically has a large market share and is often imitated by competitors.

Business:

An idea made to satisfy the wants and needs of customers. The 4 main types of businesses are sole traders, partnerships, private and public limited

Business Sectors (line 8):

Businesses can be classified according to the stage of production that they are engaged in - Primary Sector, Secondary Sector, Tertiary Sector, Quaternary Sector

Primary Sector - Resource Extraction (Mining, Forging etc.) gaining raw materials

Secondary Sector - Manufacturing products

Tertiary Sector- Service

Quaternary Sector - information technology, research and development, as well as consulting services and education

Capital Productivity/Productivity Rate:

This measures how efficiently an organisation’s fixed assets are used to generate output for the business.

Change:

Refers to the modification or transformation in the way business is conducted as a response to internal factors or external influences. It arises when internal and/or external factors that influence the operations of a business do not stay the same.

Charities:

A charity is a non-profit organisation that uses donations and funding to support a specific cause or mission. Charities can take various forms, including foundations, religious organisations, and community organisations. The main purpose of a charity is to serve the public good and provide assistance to those in need, rather than to make a profit for shareholders or owners.

Company → Public limited company (PLC):

It is an incorporated business with limited liability and is owned by shareholders, where shares are traded on the stock exchange.

Consumer:

The end-users of a product. This contrasts with customers who are the buyers of the product.

Contribution:

Contribution per Unit = Selling Price per Unit - Variable Cost per Unit

Corporate Social Responsibility (CSR):

It’s the conscientious consideration of ethical and environmental practices related to business activity. A business that adopts CSR acts morally towards its various stakeholder groups and the well-being of society as a whole.

Demand:

refers to the total amount of a good or service purchased at a particular price, in a given time period.

Desalination:

A process of removing salts and minerals from seawater to make it suitable for drinking or irrigation.

Director:

A person responsible for managing and leading a division or department.

Distribution Channel:

The channel of distribution refers to the means used to get a product to the consumer.

Dividends:

The distribution of a company's profit, to its shareholders, who get a certain percentage of the profit of the company, if the company allows this, according to their percentage ownership.

Division (2.2):

A part of a company that operates as a separate unit with its own management and employees.

EOS:

refer to lower average costs of production as a firm operates on a larger scale due to gains in productive efficiency. Essentially, the spreading of fixed costs across a large number of units. EOS can be:

**Internal EOS:** purchasing, operational, marketing, transportation, managerial, finance. Internal measures measure a company's efficiency of production and occur because of factors controlled by its management team.

**External EOS:** pool of skilled labour, good infrastructure, growing market no. of buyers), technological advancements. External happen because of larger changes within the industry, so when the industry grows, the average costs of business drop

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Employment:

Refers to the number of people of the working age who are in the workforce.

External Growth:

External growth (or inorganic growth) occurs when a business grows by collaborating with, buying up or merging with another firm. Main types include: \n

* Mergers and Acquisition
* Joint ventures
* Strategic alliances
* Franchises

Flexible-Working Contract:

A flexible working contract is an employment agreement that allows for a more flexible arrangement of working hours and/or location, as opposed to a traditional 9-to-5, in-office setup.

Founding:

This refers to the date of the official establishment or creation of a business organisation. The owners are called the founders or co-founders.

Horizontal Integration (line 32-33):

a business acquires another business in the same step in the chain of production (i.e. they have the same business activity). It increases market share, helps companies expand into new markets, diversity product offerings, and reduce competition.

Human Resources Department:

Department focused on dealing with issues regarding employees such as hiring and organisation. Their task is to work out business's needs for employees, given goals for strategic development.

Incentive Payment:

A payment to the employees to stimulate greater output

Income Stream (3.7):

A source of revenue for a company.

Induction Training:

Induction is training done to new recruits to familiarize them with the firm's policies as to decrease the time needed to be familiar, which impacts productivity

**Internal Growth:**

Internal growth (also known as organic growth) occurs when a business grows using its own capabilities and resources to increase the scale of its operations and sales revenue.

Labour Turnover:

Labour turnover measures the number of workers who leave a firm as a percentage of the workforce, per year. It is often used to gauge the level of motivation in an organisation.

Leadership:

Leadership is the process of influencing and inspiring others to achieve organizational goals.

**Situational Leadership:** Situational leadership is a leadership style that is not based on any single dominant approach. In essence, it is about using the right leadership style for the right situation.

**Autocratic Leadership:** An autocratic leader is one who makes all the decisions and prefers not to delegate any responsibility. Instead, the autocratic leader (or the authoritarian) simply tells subordinates what to do.

Lean Production (HL ONLY):

Producing goods in a manner that reduces waste output and time

Less-economically developed countries (LEDC):

are countries with low levels of economic development and a low standard of living for their citizens. These countries typically have a weak industrial base, low per capita income, high levels of poverty, and a lack of basic infrastructure and social services. LEDCs are often located in less developed regions of the world, such as Africa, Asia, and Latin America.

Manufactures:

This refers to the process of combining and transforming raw materials and/or components into final goods, ready for sale to customers. SVT's Engineering Division produces water treatment equipment and power turbines.

Market Research:

Market Research is designed to discover and gather the opinions, beliefs and preferences of the thinking pattern and buying habits of customers. Market research can either be primary or secondary.

Market share

measures the value of a firm's sales revenues as a percentage of the total sales revenue in the industry. Market share can be calculated in volume (quantity) or value (monetary value).

Market

A place or system where goods and services are bought and sold.

Marketing Budget:

How much money a business allocates to spend on marketing purposes.

Mission Statement:

A declaration of the underlying purpose of an organisation’s existence and its core values. This statement is updated more frequently than a vision statement.

Monopoly:

A market structure characterised by a single seller of a product that faces no competition from other firms and it has substantial market power and is the price maker of the product in that region.

Motivation:

The managerial process/aspect where intrinsic and extrinsic factors are used to increase employees’ satisfaction as to reflect on improving their productivity.

**Financial methods of Motivation**


1. **Salaries**
2. **Wages**
3. **Commissions -** Getting a certain percentage of what YOU as the employee sold
4. **Performance related pay** - depending on how you perform you get paid
5. **Profit-related pay**
6. **Fringe payments -** bonus payments
7. **One time incentive payments**
8. **Employee Share-ownership schemes**

**Non-financial methods of Motivation**


1. **Job Enrichment:** Employees have full control over their jobs with little supervision
2. **Job Empowerment** - when an employee performs well they get recognition and can have more say in decisions etc, may also get promotions
3. **Job Rotations:** Employers work in different divisions of the business
4. **Job Enlargement:** Employees have more tasks to do
5. **Teamwork -** everyone working together allows for encouragement

Narrow Span of Control:

A narrow span of control means that there are fewer subordinates who are accountable to a manager. It is therefore easier to communicate and the decision making process doesn't take time.

Non-governmental organisations (NGOs):

type of non-profit organisation that operates independently from any government. NGOs are established to serve a specific social cause or address a particular issue, and they may focus on areas such as human rights, poverty alleviation, environmental protection, or disaster relief. They are funded through donations, grants, and other forms of support, rather than by government agencies.

One-Time Incentive Pay:

A bonus or a form of compensation for employees in exchange for going above and beyond their normal duties

Operational Authority:

refers to the power given to an individual or a group within an organisation to make decisions and take action related to the day-to-day operations of the business. This authority allows the individuals or group to manage and direct the resources of the organisation to achieve the desired goals and Objectives.

Order Book (Line 80):

An order book shows the buy and sell prices in real-time (constantly being updated)

Organization by product:

refers to structuring a workforce according to the goods or services produced or sold. Each department focuses on a different product within the organisation's overall product portfolio

**Outreach program:**

An outreach program is an initiative or effort by an organisation to reach out to and engage with a specific target audience or community.

PLC:

A business organisation owned by shareholders with limited liability. The shares are traded on a public stock exchange.

**Potable Water:**

Water that is safe for human consumption.

Pricing Strategy:

Pricing strategies are the methods and procedures companies employ to determine the rates they charge for their goods and services. \n Pricing strategies include: \n

**Cost-plus pricing** \n **Price discrimination** \n **Skimming pricing** \n **Penetration pricing** \n **Loss leading pricing** \n **Predatory pricing (illegal do not use)** \n **Psychological pricing**

Product:

A broad term that refers to any physical or non physical item that is purchased by either commercial or private customers.

**Product Portfolio**:

all products produced by the firm with different product lines and ranges.

**Product Line:** Group of connected products marketed under a single brand name by the same company.

**Product Range:** Refers to the different models of the product line."

Productivity per Employee:

The output of a company divided by the number of employees.

Productivity:

Refers to the level of efficiency in the production process. The more productive resources are, the more output they generate.

**Productivity per Employee:** The output of a company divided by the number of employees.

**Capital Productivity:** This measures how efficiently an organisation’s fixed assets are used to generate output for the business."

Quality management (HL ONLY):

A set of methods used to ensure and improve quality as well as ensure reliability.

Recruitment:

is the process by which the HR department identifies its needs and vacancies to be filled, and begins the processes of finding most suitable candidates until the contract has been signed.

Redundancy:

when a job is no longer required so the employee doing this job becomes redundant through no fault of their own.

Regional Monopoly:

Where a business controls 80% or more of market share and has barriers of entry (such as special licensing from the government, or a high startup cost).

Reservoir:

A large tank or basin used for storing water or other liquids.

Sales revenue:

refers to the income of a business derived from the purchase of its goods and/or services from customers. It is calculated by multiplying the selling price of the product by the quantity sold.

Secondary data:

Involves the collection of second hand data and information that already exists. Secondary research is a cheaper and faster method of data collection.

Share Price:

 The value of the share of a company.

Source:

To acquire a product or resource from a specific place.

Specialised Employees:

Employees who are experts in a specific field

Stakeholders

are individuals, groups or organizations that have an interest or are affected by the operations and decisions of a business.

Store:

 To keep a product or resource in a safe place for later use.

Subsidize

Governmental grants given to businesses which allows them to purchase raw materials at a cheaper rate.

Supplies:

This refers to the good or service that an organisation is willing and able to produce, usually for commercial gain. In general, the higher the price the greater the quantity supplied as the business can earn higher profit margins.

Tactical Authority (line 15):

refers to the power given to an individual or group within an organization to make decisions and take action related to the implementation of the organization's strategy. This authority is focused on the intermediate-term goals of the organization, typically spanning several months to a few years.

Takeover:

When a company buys a controlling interest in another firm, i.e.. it buys enough shares in the target business to hold a majority stake.

**Friendly takeover:** occurs with the consent of the target company's management and board of directors. The acquiring company and the target company work together to negotiate a deal that is mutually beneficial to both parties.

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**Hostile takeover:** Occurs when the acquiring company attempts to take over the target company without the consent of its management and board of directors. The acquiring company may make a public offer to the target company's shareholders to purchase their shares, or may attempt to gain control of the target company through other means, such as a proxy fight."

Transport:

To move a product or resource from one place to another.

Treat:

To purify or process a product or resource.

Unit costs:

refers to cost incurred by a company to produce/ acquire one unit of a product/ service. It is calculated by dividing total cost of production by total number of units produced.

Vacancies:

exists when a job position becomes available, often due to resignations or growth of an organization.

Vertical Integration (line 8-9):

occurs when a business grows by acquiring other businesses in earlier or later stages in the chain of production. It is divided into backwards vertical integration and forward vertical integration.

Vision Statement (1.3):

A statement that defines an organisation's goals and aspirations. Outlines the long term aspirations of a business and what it aims to achieve, usually vague , qualitative and inspiring; forms the foundation for the objectives of a business, including its core values and sense of direction, essentially guiding decision-making and setting the tone of how managers and employees behave

Voluntary Redundancy Payments:

Compensation offered by a company to employees who voluntarily choose to leave their jobs as a part of a redundancy program.