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IB Business Management Unit 1 - Introduction to BM Cheat Sheet by

Topic 1.1 Business Management Cheat Sheet for First Assessment 2024.

What is a business?

A decisi­on-­making organi­zation establ­ished to produce goods and/or provide services.

Businesses exist;

To produce goods and services to satisfy the needs and wants of their customers.
To make profit.
To survive.
To increase market share.
To be the market leader.
For socially respon­sib­ility.

Business as a transf­orm­ation process

Adding­/Cr­eating value

This occurs in the transf­orm­ation process when outputs are produced that are worth more than the inputs brought in to provide them.

Factors of Production

Amount of money needed to run a business
Man-made goods like machines, buildings, vehicles, and equipment needed for business to operate
Investment – increasing spending on capital
Space where a business operates
Raw materials and natural resources that are used in making a product
Physical & mental efforts of people to produce produc­ts/­ser­vices
Manage­ment, organi­zation, and planning of other three factors of production
Actions of entrep­reneur who shows initiative and takes risks to set up, invest, and run a business

Business functions & their roles

Human Resources
Manages the workforce and laborers of the company
Deals with recrui­tment, wages, commun­ica­tion, and motivation of employees
Finance and Accounts
In charge of managing the organi­zat­ion’s money and assets
Ensures accurate recording and reporting of financial docume­ntation (to comply with legal requir­ements)
Ensure that a company’s products sell
Concerned with identi­fying and satisfying consumers’ needs/­wants
In charge of promot­ions, advert­ise­ments, etc.
In charge of business functions and processes that produce the actual goods
Concerned with research & develo­pment, delivery, stock manage­ment, etc.

Economic Sectors

Involves the harvesting of naturally available resources
e.g. mining, agricu­lture, livestock, drilling, and logging
Regulated and protected by the government
Involves manufa­cturing of raw products to finished or component goods
Finished goods – exported or sold to domestic consumers
Component goods – sold to companies in the tertiary sector
Involved with service and retail
Delivering final goods to customer
Includes retail sales, transp­ort­ation, entert­ain­ment, restau­rants, media, health­care, banking, etc.
Involved with knowledge and the movement of inform­ation.
Includes govern­ment, education, libraries, scientific research, inform­ation techno­logy, etc.

Impact of sectoral change

Change in economic structure (primary to secondary, secondary to tertiary, etc.)
↳ When a country moves towards the manufa­cturing sector as its principal output and employment (primary to secondary)
↳Products become more refined and have more export potential
↳Raises the standard of education
↳Opens better job opport­unities
Developed nation
↳Exploits the tertiary sector as the national output of employment
↳ Further raises the standard of education
Examples of effects of shifting to the tertiary sector
For a labor intensive manufa­cturer of aluminum cans
↳ Quality of products improve
↳ More Distri­butors
↳ Less employees and higher wages for employees
↳ Can consider turning to robots and machines, as well as outsou­rcing

Entrep­ren­eurship vs. Intrap­ren­eurship

The process of starting a business, company, or organi­zation
The Entrep­reneur
The founder, and usually owner
Big risk, big reward
Organizes inputs of production into goods and services (outputs)
Obtains money, buys the inputs needed and makes decisions.
Takes risks and provides the vision for the business idea
Assumes large financial risk
Provides sufficient resources
Similar to entrep­ren­eurship but is done in an existing organi­zation
The Intrap­reneur
Is an employee of the organi­zation
Uses resources of company to undertake projects and therefore risks very little
Rewarded in the form of a paycheck
Does not act autono­mously like an entrep­reneur as he is dependent on other employees or the organi­zation he works for

Reasons for starting up a business

New business idea
Passion to make change
Market need
Earning a living
Greater financial reward
Work-life balance
Autono­my/Own boss

Common steps in starting up a business

Businesses often start up by looking for market opport­unities (market gaps or niches)
Niche markets are where small businesses can easily compete
Factors to consider: What questions would busine­ssmen ask about the factors?
↳ Business idea
↳ 4 Factors of Production (capital, land, labor, and enterp­rise)
↳ Four depart­men­ts/­fun­ctional areas

Possible problems faced by a start-up

Lack of working capital
Poor management skills
Unskilled employees
Economic, enviro­nmental or political shocks
Market too small / no market
Strong compet­ition

Business plan

Report detailing aims and objectives of a business
Planning tool that serves as a blueprint to address the issues of a startup business
Meant for invest­ors­/banks to help them decide on whether to invest­/ap­prove loans

Elements of a business plan

Name of the business, type of the business, statement of aims and object­ives, details of the owner
Details of goods/­ser­vices, operations and equipment needed, suppliers, price
Who you’re selling to, market profile, compet­ition (strengths and weakne­sses)
Money, start-up costs
Employees and workforce, skills
Marketing mix employed by business


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