IB Business Entirety

Goods

tangible products that customers can physically take home such as agricultural products, manufactured items like cars or iPads

Services

intangible products that customers do not physically take home such as medical examinations, package delivery, karate classes or retail sales

Human resources

the right quality and quantity of people required to make a product or provide a service, even in highly automated businesses

Physical resources

the right quality and quantity of materials, machinery and land space required to make the product or service, including office space and computers

Financial resources

the right quantity of cash and other forms of finance required to make the product or service

Enterprise

the business idea and determination to turn that idea into a functioning and thriving business, also known as entrepreneurship

Capital

intensive processes

Labour

intensive processes

Primary sector

the part of the economy engaged in extraction such as minerals or oil, or production of raw materials including farming, fishing, forestry, raising livestock and quarrying

Secondary sector

the part of the economy engaged in the production of finished goods, that is the manufacturing sector of the economy

Tertiary sector

the part of the economy engaged in the delivery of services such as banking, healthcare, restaurants, retail and wholesale

Quaternary sector

the part of the economy engaged in the production, processing and transmission of information, typical of post

Production chain

the steps through the different sectors that have to occur in order to turn raw materials into a consumer good that is marketed

Sole trader

a business owned and operated by one person with no legal distinction between the business and the owner, thus having unlimited liability

Partnership

a business owned and operated by two or more people with no legal distinction between the business and the partners, each legally responsible for 100 percent of the liabilities

Unlimited liability

when the owner is personally liable for all debts of the business, meaning personal assets can be seized to pay business debts

Limited liability

when shareholders are not personally responsible for company debts and can only lose their investment in the company

Privately held company

an incorporated business offering limited liability to owners where shares cannot be traded on a stock exchange and there are limits on the number of shareholders

Publicly held company

an incorporated business offering limited liability where shares are traded on public exchanges and considerable financial information must be disclosed

Shares

units of ownership in a company, also called shares of stock or equity shares

Shareholders

owners of a company who hold shares, receiving dividends at the discretion of the company

Dividends

a portion of company profits distributed to shareholders, typically paid quarterly in large established companies

Initial Public Offering IPO

the first sale of shares to the public when a company goes public

Memorandum of association

document recording key characteristics and external activities of a company being created, including basic information on objectives and share capital required

Articles of association

document specifying how a company will be regulated internally, including organization of executives and rights and responsibilities of shareholders

Annual General Meeting AGM

a meeting open to all shareholders where the company provides information and is held accountable

Extraordinary General Meeting EGM

a special meeting called by shareholders outside the regular AGM schedule

Private sector

the portion of an economy not controlled or owned by the government

Public sector

those portions of the economy owned or controlled by the government such as government services, public schools and state

Profit

calculated as total revenues minus total costs

Revenue

all income received by a business in a specified period of time, also called sales or sales revenue

Costs

all expenses incurred by a business in a specified period of time

Social enterprise

a business that advances a social purpose in a financially sustainable way while aiming for positive social impact

For

profit social enterprise

Non

profit social enterprise

Surplus

extra revenue generated after subtracting costs, similar to profit but not distributed to owners

Cooperative

a business owned and operated democratically by its members who share profits and decision

Non governmental organization NGO

non-profit organizations with humanitarian or social purpose, independent of government but may receive government funding;

Charity

a specific form of NGO whose aim is to provide relief for those in need, focusing on philanthropy

Vision statement

a philosophy, vision or set of principles which steers the direction and behaviour of an organization

Mission statement

states a company's purpose and explains why the business exists, including the business's aims and important values

Business objectives

the articulated, measurable targets that a business must meet to achieve its aims or long

Strategic objectives

long-term goals of a business indicating how it intends to fulfill its mission, usually including performance goals

Tactical objectives

short to medium-term targets that if consistently met will help a business reach its strategic goals

Operational objectives

day-to-day objectives set by floor managers or workers to reach tactical objectives;

SMART objectives

objectives that are Specific, Measurable, Achievable, Relevant and Time

Corporate Social Responsibility CSR

the view that businesses should contribute to economic, social and environmental well

Ethical objectives

goals based on established codes of behaviour that provide social or environmental benefit

SWOT analysis

a planning tool examining Strengths internal positives, Weaknesses internal negatives, Opportunities external positives and Threats external negatives

Ansoff matrix

a tool providing a framework to analyze and plan growth strategies including market penetration, market development, product development and diversification

Market penetration

a growth strategy where a business sells more of its existing products in the same market

Market development

a growth strategy expanding the market by looking for new markets or new market segments

Product development

a growth strategy developing new products or upgrades for the existing market

Diversification

the riskiest growth strategy introducing a new product into a new market

Stakeholder

a person or organization that affects or is affected by a business

Internal stakeholder

a stakeholder inside the business such as employees, managers or shareholders

External stakeholder

a stakeholder outside the business such as suppliers, customers, government, media or community

STEEPLE analysis

a tool examining Social, Technological, Economic, Environmental, Political, Legal and Ethical external factors influencing an organization

Economies of scale

reductions in average costs per unit resulting from increased scale of production

Diseconomies of scale

increases in average costs per unit resulting from excessive growth and inefficiency

Internal growth

organic growth relying on a business's own resources and capabilities

External growth

growth through acquiring another company or forming relationships like joint ventures

Merger

when two businesses join together to form one bigger combined business

Acquisition

when one business takes over another business

Takeover

an unwanted acquisition, also called hostile takeover, only possible with publicly held companies

Joint venture

a business arrangement where two or more parties agree to pool resources for a specific task

Strategic alliance

a cooperative arrangement between businesses sharing resources without creating a new entity

Franchise

a business model where a franchisor grants rights to a franchisee to operate using its brand and system

Multinational company MNC

a business that operates in two or more countries

UNIT 2: HUMAN RESOURCE MANAGEMENT

Human resource management

the strategic approach to managing people in an organization to help achieve business objectives

Workforce planning

analyzing and forecasting the number and types of workers required

Recruitment

the process of finding and attracting capable candidates for employment

Internal recruitment

filling vacancies from within the organization by promoting or transferring existing employees

External recruitment

filling vacancies by attracting candidates from outside the organization

Selection

choosing the most suitable candidates from those who have applied

Induction training

training provided to new employees when they join an organization

On-the-job training

training that takes place while employees are doing their actual job;

Off-the-job training

training that takes place away from the work environment;

Appraisal

the process of assessing employee performance

Dismissal

terminating an employee's contract, usually due to poor performance or misconduct

Redundancy

when an employee's job is no longer required, not due to employee fault

Organizational chart

a diagram depicting reporting relationships and levels of hierarchy in an organization

Hierarchy

a system organizing or ranking people according to power or importance

Chain of command

the official hierarchy indicating who reports to which manager and who has authority

Span of control

the number of people reporting to a specific manager

Delegation

assigning authority or responsibility from a manager to someone lower in the hierarchy, though the manager remains accountable

Bureaucracy

an organization with multiple layers of authority, often with complex approval processes

Centralization

when personnel at the main office have authority for decision making

Decentralization

when decision-making authority is delegated to regional or outlying offices;

Delayering

the process of removing levels of hierarchy to improve organizational efficiency

Matrix structure

an organizational structure where people report to multiple managers based on projects and expertise

Flat organizational structure

few levels of hierarchy with wide spans of control and decentralized decision

Tall organizational structure

many levels of hierarchy with narrow spans of control and centralized decision

Management

the ongoing process of planning, decision-making, organizing, leading, motivating and controlling resources to efficiently reach organizational goals

Leadership

a process of motivating people to work towards organizational goals through charisma and other qualities

Autocratic leadership

when the leader concentrates decision-making in their own hands and does not seek input from others;

Paternalistic leadership

when the head treats employees like family, being warm and protective while expecting loyalty and obedience

Democratic leadership

when the leader regularly seeks input from employees and involves them in decision

Laissez-faire leadership

when the leader gives employees considerable freedom to make their own decisions;