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).

2. Business Functions

  • 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.

3. Types of Organizations

  • 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.

4. Business Objectives

  • 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.

5. Growth & Evolution

  • 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.

6. Stakeholders

  • Stakeholders – Individuals or groups affected by business activity.

    • Internal Stakeholders: Employees, managers, owners.

    • External Stakeholders: Customers, suppliers, government, community.

  • Stakeholder Conflict – When different stakeholders have opposing objectives.

7. Business Environment

  • 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

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

S – Social
→ Demographics, lifestyle trends, cultural attitudes, education levels.

T – Technological
→ Innovation, automation, digitalization, research and development.

E – Economic
→ Inflation, unemployment, interest rates, exchange rates, GDP growth.

E – Environmental (Ecological)
→ Sustainability, pollution, climate change, resource availability.

P – Political
→ Government policies, trade regulations, taxes, political stability.

L – Legal
→ Labor laws, health and safety, consumer protection, intellectual property.

E – Ethical
→ Morals, fair trade, animal welfare, corporate transparency.