IB Business & Management HL
GEANA
Business & Management
Higher Level
IB Notes
1
,IB Business & Management HL
Topic Page
Topic 1: Business organization and environment
1.1 Nature of business activity 2
1.2 Type of organizations 4
1.3 Organizational objectives 10
1.4 Stakeholders 14
1.5 External environment 16
1.6 Organizational planning tools 21
1.7 Growth and evolution 25
1.8 Change and the management of change 31
1.9 Globalization 35
Topic 2: Human Resources
2.1 Human resource planning 38
2.2 Organizational structure 44
2.3 Communication 49
2.4 Leadership and management 52
2.5 Motivation 56
2.6 Organizational and corporate cultures 63
2.7 Employer and employee relations 65
2.8 Crisis management and contingency planning 68
Topic 3: Accounts and finance
3.1 Sources of finance 69
3.2 Investment appraisal 73
3.3 Working capital 76
3.4 Budgeting 80
3.5 Financial accounts 82
3.6 Ratio analysis 88
Topic 4: Marketing
4.1 The role of marketing 92
4.2 Marketing planning 95
4.3 Product 107
4.4 Price 112
4.5 Promotion and place (distribution) 116
4.6 International marketing and e-commerce 118
Topic 5: Operations management
5.1 Production methods 119
5.2 Costs and revenues 122
5.3 Break-even analysis 125
5.4 Quality assurance 127
5.5 Location 130
5.6 Innovation 132
5.7 Production planning 134
5.8 Project management 138
2
,IB Business & Management HL
Topic 1: Business organization and environment
Unit 1.1 – Nature of business activity
What is a business?
An organization that uses resources to meet the needs of customers by
providing a good/service that they demand
Business activity involves adding value to resources such as raw materials and
semi-finished goods and making them more desirable to the purchaser
Business inputs:
Land – renewable and non-renewable resources of nature
Labor – manual and skilled labor, some businesses are more labor intensive
Capital – finance needed to set up and pay for operations of a business,
including resources used in production
Enterprise – driving force of a business, provided by risk-taking individuals,
which combines other factors of production into a unit that can produce goods
and services
Business functions:
Effective strategic decision-making develops from the functions working closely
together. This requires good communication, co-operation and close interrelationships
between functions.
Marketing
- Responsible for market research to analyze what consumers want and
then create a product that will be distributed for sale in the right market
Finance
- Monitoring the flow of finance into and out of a business, keeping and
analyzing accounts and providing financial information to other
departments
Human resource management
- Identifies what a workforce needs, recruits selects and trains
appropriate staff and provides motivation systems to help retain and
encourage staff
Operations management
- Responsible for ensuing adequate resources are available for
production, maintaining production and quality levels and achieving
high efficiency
Sectors of industry:
Primary sector business activity
Firms engaged in farming, fishing, oil extraction and all other industries that extract
natural resources so that they can be used and processed by other firms
Secondary sector business activity
Firms that manufacture and process products from natural resources, including
computers, brewing, baking, clothing and construction
3
, IB Business & Management HL
Tertiary sector business activity
Firms that provide services to consumers and other businesses, such as retailing,
transport, insurance, banking, hotels, tourism and telecommunications
Changes in economic structure:
Industrialization
The growing importance of the secondary sector manufacturing industries in
developing countries. The relative importance of each sector is measured in terms of
employment levels or output levels as a proportion of the whole economy.
GDP increases, raising living standards
Increased output leads to lower imports and higher exports
Expanding manufacturing businesses creates jobs
Expanding and profitable firms pay more tax to the government
Value added to country’s output of raw materials rather than only exporting these
Chance of work in manufacturing, causes huge migration from countries to towns,
which leads to housing and social problems associated with overpopulation
Expansion of manufacturing industries may make it difficult to recruit and retain
sufficient staff
Imports of raw materials needed can increase country’s import costs
Increased pollution
Much growth in the secondary sector is due to multinationals
Deindustrialization
General decline in the importance of secondary sector activity and an increase in the
tertiary sector.
Reasons:
Rising incomes associated with higher standards of living, causing consumers
to spend more
World-wide industrialization increases competition, thus rising imports of
goods are taking market away from secondary sector firms
Employment patterns change – manufacturing workers find it difficult to find
employment in other sectors (structural unemployment)
Additional definitions:
Consumer goods
Physical and tangible goods sold to the general public, such as cars and washing
machines (durable consumer goods) and food, drinks and sweets (non-durable goods)
Consumer services
Non-tangible products that are sold to the general public, including hotel
accommodation, insurance services etc.
Capital goods
4
GEANA
Business & Management
Higher Level
IB Notes
1
,IB Business & Management HL
Topic Page
Topic 1: Business organization and environment
1.1 Nature of business activity 2
1.2 Type of organizations 4
1.3 Organizational objectives 10
1.4 Stakeholders 14
1.5 External environment 16
1.6 Organizational planning tools 21
1.7 Growth and evolution 25
1.8 Change and the management of change 31
1.9 Globalization 35
Topic 2: Human Resources
2.1 Human resource planning 38
2.2 Organizational structure 44
2.3 Communication 49
2.4 Leadership and management 52
2.5 Motivation 56
2.6 Organizational and corporate cultures 63
2.7 Employer and employee relations 65
2.8 Crisis management and contingency planning 68
Topic 3: Accounts and finance
3.1 Sources of finance 69
3.2 Investment appraisal 73
3.3 Working capital 76
3.4 Budgeting 80
3.5 Financial accounts 82
3.6 Ratio analysis 88
Topic 4: Marketing
4.1 The role of marketing 92
4.2 Marketing planning 95
4.3 Product 107
4.4 Price 112
4.5 Promotion and place (distribution) 116
4.6 International marketing and e-commerce 118
Topic 5: Operations management
5.1 Production methods 119
5.2 Costs and revenues 122
5.3 Break-even analysis 125
5.4 Quality assurance 127
5.5 Location 130
5.6 Innovation 132
5.7 Production planning 134
5.8 Project management 138
2
,IB Business & Management HL
Topic 1: Business organization and environment
Unit 1.1 – Nature of business activity
What is a business?
An organization that uses resources to meet the needs of customers by
providing a good/service that they demand
Business activity involves adding value to resources such as raw materials and
semi-finished goods and making them more desirable to the purchaser
Business inputs:
Land – renewable and non-renewable resources of nature
Labor – manual and skilled labor, some businesses are more labor intensive
Capital – finance needed to set up and pay for operations of a business,
including resources used in production
Enterprise – driving force of a business, provided by risk-taking individuals,
which combines other factors of production into a unit that can produce goods
and services
Business functions:
Effective strategic decision-making develops from the functions working closely
together. This requires good communication, co-operation and close interrelationships
between functions.
Marketing
- Responsible for market research to analyze what consumers want and
then create a product that will be distributed for sale in the right market
Finance
- Monitoring the flow of finance into and out of a business, keeping and
analyzing accounts and providing financial information to other
departments
Human resource management
- Identifies what a workforce needs, recruits selects and trains
appropriate staff and provides motivation systems to help retain and
encourage staff
Operations management
- Responsible for ensuing adequate resources are available for
production, maintaining production and quality levels and achieving
high efficiency
Sectors of industry:
Primary sector business activity
Firms engaged in farming, fishing, oil extraction and all other industries that extract
natural resources so that they can be used and processed by other firms
Secondary sector business activity
Firms that manufacture and process products from natural resources, including
computers, brewing, baking, clothing and construction
3
, IB Business & Management HL
Tertiary sector business activity
Firms that provide services to consumers and other businesses, such as retailing,
transport, insurance, banking, hotels, tourism and telecommunications
Changes in economic structure:
Industrialization
The growing importance of the secondary sector manufacturing industries in
developing countries. The relative importance of each sector is measured in terms of
employment levels or output levels as a proportion of the whole economy.
GDP increases, raising living standards
Increased output leads to lower imports and higher exports
Expanding manufacturing businesses creates jobs
Expanding and profitable firms pay more tax to the government
Value added to country’s output of raw materials rather than only exporting these
Chance of work in manufacturing, causes huge migration from countries to towns,
which leads to housing and social problems associated with overpopulation
Expansion of manufacturing industries may make it difficult to recruit and retain
sufficient staff
Imports of raw materials needed can increase country’s import costs
Increased pollution
Much growth in the secondary sector is due to multinationals
Deindustrialization
General decline in the importance of secondary sector activity and an increase in the
tertiary sector.
Reasons:
Rising incomes associated with higher standards of living, causing consumers
to spend more
World-wide industrialization increases competition, thus rising imports of
goods are taking market away from secondary sector firms
Employment patterns change – manufacturing workers find it difficult to find
employment in other sectors (structural unemployment)
Additional definitions:
Consumer goods
Physical and tangible goods sold to the general public, such as cars and washing
machines (durable consumer goods) and food, drinks and sweets (non-durable goods)
Consumer services
Non-tangible products that are sold to the general public, including hotel
accommodation, insurance services etc.
Capital goods
4
