IB Business Unit 1

Business

An organization that produces goods or services to satisfy customer needs and wants, usually to make a profit.

Goods

Physical, tangible products (e.g. phones, clothes).

Services

Intangible products (e.g. banking, education).

Factors of Production

Land, labor, capital, and entrepreneurship — the resources used to produce goods/services.

Primary Sector

Extracts raw materials (e.g. mining, farming).

Secondary Sector

Manufactures products (e.g. car production, construction).

Tertiary Sector

Provides services (e.g. transport, retail).

Quaternary Sector

Knowledge-based (e.g. IT, research).

Human Resources (HR)

Manages people and employment.

Finance and Accounts

Manages money, budgeting, and records.

Marketing

Identifies and meets customer needs.

Operations Management

Produces goods/services efficiently.

Private Sector

Owned by individuals or businesses.

Public Sector

Owned and controlled by the government.

Sole Trader

One person owns and runs the business; unlimited liability.

Partnership

Owned by 2–20 people who share profits/liabilities.

Private Limited Company (Ltd)

Shares are privately owned; limited liability.

Public Limited Company (PLC)

Shares are traded on a stock exchange; limited liability.

Non-Governmental Organization (NGO)

Non-profit group promoting a social cause.

Charity

Non-profit that raises funds for a specific cause.

Vision Statement

Future goals or aspirations (“Where we want to be”).

Mission Statement

Purpose and core values (“Why we exist”).

Aims

Long-term goals.

Objectives

Short- or medium-term targets to achieve aims.

SMART Objectives

Specific, Measurable, Achievable, Relevant, Time-bound.

Ethical Objectives

Goals that consider moral principles.

Corporate Social Responsibility (CSR)

When a business acts responsibly toward society and the environment.

Economies of Scale

Cost advantages gained when output increases.

Diseconomies of Scale

Rising average costs when a business grows too large.

Internal Growth (Organic Growth)

Expansion using a firm’s own resources.

External Growth (Inorganic Growth)

Expansion by merger, acquisition, or takeover.

Merger

Two firms agree to join together.

Acquisition/Takeover

One firm buys another.

Franchise

Business allows others to use its brand and model.

Joint Venture

Two or more firms cooperate for a specific project.

Stakeholders

Individuals or groups affected by business activity.

Stakeholder Conflict

When different stakeholders have opposing objectives.

External Environment

Factors outside the business’s control that affect it.

SWOT Analysis

Strengths, Weaknesses, Opportunities, Threats (internal + external analysis).

Business Cycle

Fluctuations in economic activity (boom, recession, recovery, growth).

STEEPLE Analysis

A tool used to analyze the external environment that affects a business.

Social (STEEPLE)

Demographics, lifestyle trends, cultural attitudes, education levels.

Technological (STEEPLE)

Innovation, automation, digitalization, research and development.

Economic (STEEPLE)

Inflation, unemployment, interest rates, exchange rates, GDP growth.

Environmental (Ecological) (STEEPLE)

Sustainability, pollution, climate change, resource availability.

Political (STEEPLE)

Government policies, trade regulations, taxes, political stability.

Legal (STEEPLE)

Labor laws, health and safety, consumer protection, intellectual property.

Ethical (STEEPLE)

Morals, fair trade, animal welfare, corporate transparency.