BUSINESS
MANAGEMENT IB
Study guide
2022
0
,Table of Contents
Unit 1: Business organization and environment ..................................................................................... 7
1.1 Introduction to business management ........................................................................................... 7
The role of business ........................................................................................................................ 7
Business functions .......................................................................................................................... 7
Types of Integration ........................................................................................................................ 8
Entrepreneur vs. Intrapreneur ......................................................................................................... 8
Starting a business........................................................................................................................... 8
Business plan ................................................................................................................................ 10
1.2 Types of organisations ................................................................................................................ 11
Profit organisations ....................................................................................................................... 11
For-profit social enterprises .......................................................................................................... 12
Co-operatives ................................................................................................................................ 12
Micro-financers ............................................................................................................................. 12
Public-private partnerships ........................................................................................................... 13
Non-profit social enterprises ......................................................................................................... 13
Non-governmental organisations (NGOs) .................................................................................... 13
Charities ........................................................................................................................................ 13
1.3 Organisational objectives ............................................................................................................ 13
Business strategy ........................................................................................................................... 13
Objectives ..................................................................................................................................... 14
SMART objectives........................................................................................................................ 14
Ethical objectives .......................................................................................................................... 14
SWOT analysis ............................................................................................................................. 16
Ansoff matrix ................................................................................................................................ 16
1.4 Stakeholders ................................................................................................................................ 17
Internal and external stakeholders................................................................................................. 17
1.5 External enviroment .................................................................................................................... 18
Impact of external enviroment on a business ................................................................................ 18
Impact of changes in any of the STEEPLE factors ....................................................................... 18
1.6 Growth and evolution ................................................................................................................. 18
Economies and diseconomies of scale .......................................................................................... 18
Small versus large organisations ................................................................................................... 19
Difference between internal and external growth ......................................................................... 19
Impact of globalization ................................................................................................................. 20
Reasons for the growth of multinational companies ..................................................................... 20
Impact of MNC on the host country ............................................................................................. 20
1
, 1.7 Organisational planning tools ..................................................................................................... 20
Fishbone diagram .......................................................................................................................... 20
Decision Trees .............................................................................................................................. 21
Advantages.................................................................................................................................... 21
Disadvantages ............................................................................................................................... 22
Force field analysis ....................................................................................................................... 23
Unit 2: Human resource management ................................................................................................... 24
2.1 Functions and evolution of HR management .............................................................................. 24
HR planning .................................................................................................................................. 24
Labour turnover ............................................................................................................................ 24
Internal and external factors that influnce HR planning ............................................................... 24
HR plan ......................................................................................................................................... 24
Outsourcing and offshoring as HR strategies................................................................................ 27
2.2 Organisational structure .............................................................................................................. 27
Organisational charts .................................................................................................................... 27
Actions relevant to Organisation Structure ................................................................................... 28
Types of Organizational Charts .................................................................................................... 28
Changes in Organizational Structure ............................................................................................ 29
Types of Communication .............................................................................................................. 29
Terminology.................................................................................................................................. 29
Tall structure ................................................................................................................................. 30
Flat structure ................................................................................................................................. 31
2.3 leadership and management ........................................................................................................ 31
Key functions of managers ........................................................................................................... 31
Key features of leaders.................................................................................................................. 31
Syles of leadership ........................................................................................................................ 31
Laissez ........................................................................................................................................... 33
Ethical considerations ................................................................................................................... 33
Factors Influencing which style of Leadership is the most appropriate ........................................ 34
2.4 motivation ................................................................................................................................... 34
Importance .................................................................................................................................... 34
Intrinsic and Extrinsic Motivation ................................................................................................ 34
Taylor ............................................................................................................................................ 34
Maslow.......................................................................................................................................... 35
Herzberg........................................................................................................................................ 35
Adams ........................................................................................................................................... 36
Pink ............................................................................................................................................... 36
2
, Types of Rewards ......................................................................................................................... 36
2.5 Organisational (corporate) culture .............................................................................................. 38
Charles Handy ............................................................................................................................... 38
Edgar Schein ................................................................................................................................. 38
Cultural clashes ............................................................................................................................. 39
2.6 Industrial/employee relations ...................................................................................................... 39
Collective Bargaining ................................................................................................................... 39
Sources of Conflict within an Organisation .................................................................................. 39
Reasons for Resistance to Change ................................................................................................ 40
HR Strategies to reduce the impact of change .............................................................................. 40
Outsourcing and Offshoring as an HR strategy ............................................................................ 40
Labour Turnover ........................................................................................................................... 40
Unit 3: Finance and Accounts ............................................................................................................... 41
3.1 Source of Finance ....................................................................................................................... 41
Internal Finance ............................................................................................................................ 41
External Finance ........................................................................................................................... 42
Short-term and long-term finance. ................................................................................................ 44
How businesses decide.................................................................................................................. 45
3.2 Costs and revenues ...................................................................................................................... 45
Definitions..................................................................................................................................... 45
Types of Costs............................................................................................................................... 45
Costs can be classified by: ............................................................................................................ 46
Revenues ....................................................................................................................................... 46
Sales Figures ................................................................................................................................. 46
Other potential revenue streams .................................................................................................... 46
3.3 Break-even analysis .................................................................................................................... 47
Break-even graph .......................................................................................................................... 48
Advantages of the Break even ...................................................................................................... 48
Limitations of break-even charts................................................................................................... 48
Formulas ....................................................................................................................................... 49
3.4 Final Accounts ............................................................................................................................ 49
Profit and loss account .................................................................................................................. 49
Balance sheet ................................................................................................................................ 50
Depreciation .................................................................................................................................. 51
3.5 Profitability and liquidity ratio analysis ...................................................................................... 51
Ratio analysis ................................................................................................................................ 51
Profitability ratios ......................................................................................................................... 51
3
MANAGEMENT IB
Study guide
2022
0
,Table of Contents
Unit 1: Business organization and environment ..................................................................................... 7
1.1 Introduction to business management ........................................................................................... 7
The role of business ........................................................................................................................ 7
Business functions .......................................................................................................................... 7
Types of Integration ........................................................................................................................ 8
Entrepreneur vs. Intrapreneur ......................................................................................................... 8
Starting a business........................................................................................................................... 8
Business plan ................................................................................................................................ 10
1.2 Types of organisations ................................................................................................................ 11
Profit organisations ....................................................................................................................... 11
For-profit social enterprises .......................................................................................................... 12
Co-operatives ................................................................................................................................ 12
Micro-financers ............................................................................................................................. 12
Public-private partnerships ........................................................................................................... 13
Non-profit social enterprises ......................................................................................................... 13
Non-governmental organisations (NGOs) .................................................................................... 13
Charities ........................................................................................................................................ 13
1.3 Organisational objectives ............................................................................................................ 13
Business strategy ........................................................................................................................... 13
Objectives ..................................................................................................................................... 14
SMART objectives........................................................................................................................ 14
Ethical objectives .......................................................................................................................... 14
SWOT analysis ............................................................................................................................. 16
Ansoff matrix ................................................................................................................................ 16
1.4 Stakeholders ................................................................................................................................ 17
Internal and external stakeholders................................................................................................. 17
1.5 External enviroment .................................................................................................................... 18
Impact of external enviroment on a business ................................................................................ 18
Impact of changes in any of the STEEPLE factors ....................................................................... 18
1.6 Growth and evolution ................................................................................................................. 18
Economies and diseconomies of scale .......................................................................................... 18
Small versus large organisations ................................................................................................... 19
Difference between internal and external growth ......................................................................... 19
Impact of globalization ................................................................................................................. 20
Reasons for the growth of multinational companies ..................................................................... 20
Impact of MNC on the host country ............................................................................................. 20
1
, 1.7 Organisational planning tools ..................................................................................................... 20
Fishbone diagram .......................................................................................................................... 20
Decision Trees .............................................................................................................................. 21
Advantages.................................................................................................................................... 21
Disadvantages ............................................................................................................................... 22
Force field analysis ....................................................................................................................... 23
Unit 2: Human resource management ................................................................................................... 24
2.1 Functions and evolution of HR management .............................................................................. 24
HR planning .................................................................................................................................. 24
Labour turnover ............................................................................................................................ 24
Internal and external factors that influnce HR planning ............................................................... 24
HR plan ......................................................................................................................................... 24
Outsourcing and offshoring as HR strategies................................................................................ 27
2.2 Organisational structure .............................................................................................................. 27
Organisational charts .................................................................................................................... 27
Actions relevant to Organisation Structure ................................................................................... 28
Types of Organizational Charts .................................................................................................... 28
Changes in Organizational Structure ............................................................................................ 29
Types of Communication .............................................................................................................. 29
Terminology.................................................................................................................................. 29
Tall structure ................................................................................................................................. 30
Flat structure ................................................................................................................................. 31
2.3 leadership and management ........................................................................................................ 31
Key functions of managers ........................................................................................................... 31
Key features of leaders.................................................................................................................. 31
Syles of leadership ........................................................................................................................ 31
Laissez ........................................................................................................................................... 33
Ethical considerations ................................................................................................................... 33
Factors Influencing which style of Leadership is the most appropriate ........................................ 34
2.4 motivation ................................................................................................................................... 34
Importance .................................................................................................................................... 34
Intrinsic and Extrinsic Motivation ................................................................................................ 34
Taylor ............................................................................................................................................ 34
Maslow.......................................................................................................................................... 35
Herzberg........................................................................................................................................ 35
Adams ........................................................................................................................................... 36
Pink ............................................................................................................................................... 36
2
, Types of Rewards ......................................................................................................................... 36
2.5 Organisational (corporate) culture .............................................................................................. 38
Charles Handy ............................................................................................................................... 38
Edgar Schein ................................................................................................................................. 38
Cultural clashes ............................................................................................................................. 39
2.6 Industrial/employee relations ...................................................................................................... 39
Collective Bargaining ................................................................................................................... 39
Sources of Conflict within an Organisation .................................................................................. 39
Reasons for Resistance to Change ................................................................................................ 40
HR Strategies to reduce the impact of change .............................................................................. 40
Outsourcing and Offshoring as an HR strategy ............................................................................ 40
Labour Turnover ........................................................................................................................... 40
Unit 3: Finance and Accounts ............................................................................................................... 41
3.1 Source of Finance ....................................................................................................................... 41
Internal Finance ............................................................................................................................ 41
External Finance ........................................................................................................................... 42
Short-term and long-term finance. ................................................................................................ 44
How businesses decide.................................................................................................................. 45
3.2 Costs and revenues ...................................................................................................................... 45
Definitions..................................................................................................................................... 45
Types of Costs............................................................................................................................... 45
Costs can be classified by: ............................................................................................................ 46
Revenues ....................................................................................................................................... 46
Sales Figures ................................................................................................................................. 46
Other potential revenue streams .................................................................................................... 46
3.3 Break-even analysis .................................................................................................................... 47
Break-even graph .......................................................................................................................... 48
Advantages of the Break even ...................................................................................................... 48
Limitations of break-even charts................................................................................................... 48
Formulas ....................................................................................................................................... 49
3.4 Final Accounts ............................................................................................................................ 49
Profit and loss account .................................................................................................................. 49
Balance sheet ................................................................................................................................ 50
Depreciation .................................................................................................................................. 51
3.5 Profitability and liquidity ratio analysis ...................................................................................... 51
Ratio analysis ................................................................................................................................ 51
Profitability ratios ......................................................................................................................... 51
3
