IB Business Management HL Unit 1

business

any organisation that uses resources to meet the needs of customers by providing a product or service that they need.

goods vs services

goods: what is produced (tangible). e.g. cars, soap.

services: what is offered (intangible). e.g. accommodation, insurance.

customers vs consumers

customers: buy the product

consumers: use the product

four business functions

HR management: identify business needs, recruit, select & train new employees, contracts of employment, etc.

finance & accounts: take care of the 'flow' of finance in and out of the business, analyse accounts, providing financial information to other departments.

marketing: market research, consider pricing, promotion, etc.

operations management: ensure adequate resources are available for production, maintain production and quality levels and achieve high levels of productive efficiency

sole trader

a business in which one person provides the permanent finance and, in return, has full control of the business and is able to keep all of the profits

unlimited liability

partnership

a business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities

unlimited liability

unlimited liability

the owner's personal possessions and property can be taken to pay off the debts of the business should it fail

limited liability

the only liability - or potential loss - a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder

share

a certificate confirming part ownership of a company and entitling the shareholder to dividends and certain shareholder rights

shareholder

individuals or institutions that buy/own shares in a limited company

private limited company

a small to medium-sized business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public

public limited company

a limited company, often a large business, with the legal right to sell shares to the general public; its share price is quoted on the national stock exchange

social enterprise

a business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners

triple bottom line

the three objectives of social enterprises:

economic, social and environmental

cooperative

a group of people acting together to meet the common needs and aspirations of its members, sharing ownership and making decisions democratically

microfinance

the provision of very small loans by specialist finance businesses, usually not traditional commercial banks

public-private partnership

involvement of the private sector, in the form of management expertise and/ or financial investment, in public sector projects aimed at benefiting the public

private finance initiative

investment by private sector organisations in public sector projects

non-governmental organisation

a legally constituted body with no participation or representation of any government which has a specific aim and purpose, e.g. supporting disadvantaged groups in developing countries or advocating the protection of human rights

charity

an organisation set up to raise money to help people in need or to support causes that require funding

mission statement

a statement of the business's core aims, phrased in a way to motivate employees and to stimulate interest by outside groups

vision statement

a statement of what the organisation would like to achieve or accomplish in the long term

corporate aims

the long-term goals which a business hopes to achieve

divisional/operational objectives

short- or medium-term goals or targets - usually specific in nature - which must be achieved for an organisation to attain its corporate aims

SMART goals

Specific, Measurable, Attainable, Realistic, Timely

ethical code (code of conduct)

a document detailing a company's rules and guidelines on staff behaviour that must be followed by all employees

stakeholders

people or groups of people who can be affected by, and therefore have an interest in, any action by an organisation

corporate social responsibility

a business's concern for society's welfare

social audit

an independent report on the impact a business has on society. This can cover pollution levels, health and safety record, sources of supplies, customer satisfaction and contribution to the community

SWOT analysis

a form of strategic analysis that identifies and analyses the main internal strengths and weaknesses and external opportunities and threats that will influence the future direction and success of a business

s: strengths

w: weaknesses

o:opportunities

t: threats

ansoff's matrix

a model used to show the degree of risk associated with the four growth strategies of: market penetration, market development, product development and diversification

market penetration

achieving higher market shares in existing markets with existing products

product development

the development and sale of new products or new developments of existing products in existing markets

market development

the strategy of selling existing products in new markets

diversification

the process of selling different, unrelated goods or services in new markets

STEEPLE analysis

a framework for analysing the external environmental factors affecting business objectives and strategies

s: social

t: technological

e: economic

e: environmental

p: political

l: legal

e: ethics

economic growth

increases in the level of a country's gross domestic product or GDP (total value of output)

recession

six months (two quarters) of falling GDP (negative growth)