All IB Business Management SL terminology

Business

An organization that uses inputs to produce goods and/or services to satisfy needs and wants

Goods

Tangible physical products sold to customers

Services

Intangible products provided to customers

Needs

Basic necessities required for survival such as food and shelter

Wants

Desires beyond basic needs

Factors of production

Land, labour, capital and enterprise used in production

Added value

Difference between selling price and cost of inputs

Entrepreneur

Individual who organizes and takes risks to run a business

Entrepreneurship

Skills, qualities and mindset of entrepreneurs

Production

Process of converting inputs into outputs

Output

Finished goods or services produced

Input

Resources used in production

Primary sector

Extraction of natural resources

Secondary sector

Manufacturing and construction of goods

Tertiary sector

Provision of services

Quaternary sector

Knowledge-based activities such as ICT and R&D

Chain of production

Stages from raw materials to final consumer

Interdependence

Businesses relying on each other

Stakeholders

Individuals or groups with an interest in a business

Internal stakeholders

People within the business such as employees

External stakeholders

People outside the business such as customers

Customers

People who purchase a product

Consumers

People who use a product

Private sector

Businesses owned by individuals or firms

Public sector

Businesses owned and controlled by government

Profit

Revenue minus costs

Revenue

Money earned from sales

Costs

Expenses of running a business

Sole trader

Business owned and run by one person

Partnership

Business owned by two or more people

Private limited company

Company that cannot sell shares to the public

Public limited company

Company that can sell shares to the public

Shareholder

Owner of shares in a company

Dividend

Share of profits paid to shareholders

Limited liability

Owners only lose their investment

Unlimited liability

Owners risk personal assets

Incorporated business

Separate legal entity from its owners

Unincorporated business

Business and owner are legally the same

Human resource management

Managing employees within a business

Marketing

Identifying and satisfying customer needs profitably

Finance

Managing the money of a business

Operations management

Managing the production process

Organizational structure

System showing roles and hierarchy

Hierarchy

Levels of authority in a business

Span of control

Number of subordinates per manager

Chain of command

Lines of authority and communication

Delegation

Passing authority down the hierarchy

Accountability

Being responsible for outcomes

Leadership

Influencing others to achieve goals

Management

Planning, organizing and controlling resources

Autocratic leadership

Leader makes decisions alone

Democratic leadership

Leader involves employees

Laissez-faire leadership

Hands-off leadership style

Motivation

Factors that drive employees to work

Intrinsic motivation

Internal satisfaction from work

Extrinsic motivation

External rewards like pay

Financial motivation

Money-based incentives

Non-financial motivation

Non-monetary incentives

Revenue

Money earned from sales

Sales revenue

Price multiplied by quantity sold

Costs

Expenses incurred by a business

Fixed costs

Costs that do not change with output

Variable costs

Costs that vary with output

Total costs

Fixed costs plus variable costs

Profit

Revenue minus total costs

Loss

When costs exceed revenue

Break-even

When revenue equals costs

Cash flow

Movement of money in and out of a business

Cash inflow

Money entering the business

Cash outflow

Money leaving the business

Liquidity

Ability to pay short-term debts

Market

Where buyers and sellers interact

Market share

Percentage of total sales in a market

Demand

Quantity consumers are willing to buy

Supply

Quantity producers are willing to sell

Equilibrium

Where demand equals supply

Marketing mix

Product, price, place, promotion

Product

Goods or services offered

Price

Amount customers pay

Place

Distribution channels

Promotion

Communication with customers

People

Staff involved in service delivery

Process

Method of delivering service

Physical evidence

Tangible aspects of service

Brand

Image or identity of a product

Brand loyalty

Customer commitment to a brand

USP

Unique selling point

Operations management

Managing production of goods/services

Productivity

Output per unit of input

Efficiency

Maximizing output from resources

Capacity

Maximum output possible

Capacity utilization

Actual output as percentage of maximum

Stock

Materials and goods held by a business

Buffer stock

Extra stock to avoid shortages

Just-in-time

Stock arrives when needed

Quality

Degree of excellence of a product

Quality assurance

Preventing defects during production

Quality control

Checking quality after production

SWOT analysis

Strengths, weaknesses, opportunities, threats

Strengths

Internal advantages