Business
Management
for the IB Diploma
SECOND EDITION
Peter Stimpson
and Alex Smith
,Business
Business and
Management
Management
for the IB Diploma
for the IB Diploma
SECOND EDITION
Peter Stimpson and
Peter Stimpson and
AlexSmith
Alex Smith
Cambridge University Press’s mission is to advance learning,
Cambridge University Press’s mission is to advance learning,
knowledge
knowledge andand research
research worldwide.
worldwide.
OurOur IB Diploma
International resources aim
Baccalaureate to:
Diploma resources aim to:
• encourage
• encourage learners
learners to explore
to explore concepts,
concepts, ideasideas
and and
topics
topics thatthat
havehave
locallocal
and and global
global significance
significance
• help
• help students
students develop
develop a positive
a positive attitude
attitude to learning
to learning in preparation
in preparation
for higher education
for higher education
• assist students in approaching complex questions, applying
• assist students in approaching complex questions, applying
critical-thinking
critical-thinking skillsskills
and and forming
forming reasoned
reasoned answers.
answers.
,University Printing House, Cambridge CB2 8BS, United Kingdom
Cambridge University Press is part of the University of Cambridge.
It furthers the University’s mission by disseminating knowledge in the pursuit of
education, learning and research at the highest international levels of excellence.
XXXDBNCSJEHFPSH
*OGPSNBUJPOPOUIJTUJUMFFEVDBUJPODBNCSJEHFPSH
© Cambridge University Press 2015
This publication is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without the written
permission of Cambridge University Press.
First published 2011
Second edition 2015
Printed by Latimer Trend in the United Kingdom
A catalogue record for this publication is available from the British Library
ISBN 978-1-107-46437-7 Paperback
Cambridge University Press has no responsibility for the persistence or accuracy
of URLs for external or third-party internet websites referred to in this publication,
and does not guarantee that any content on such websites is, or will remain,
accurate or appropriate. Information regarding prices, travel timetables, and other
factual information given in this work is correct at the time of first printing but
Cambridge University Press does not guarantee the accuracy of such information
thereafter.
NOTICE TO TEACHERS IN THE UK
It is illegal to reproduce any part of this work in material form (including
photocopying and electronic storage) except under the following circumstances:
(i) where you are abiding by a licence granted to your school or institution by
the Copyright Licensing Agency;
(ii) where no such licence exists, or where you wish to exceed the terms of a licence,
and you have gained the written permission of Cambridge University Press;
(iii) where you are allowed to reproduce without permission under the provisions
of Chapter 3 of the Copyright, Designs and Patents Act 1988, which covers, for
example, the reproduction of short passages within certain types of educational
anthology and reproduction for the purposes of setting examination questions.
, Contents
Introduction v
UNIT 1: BUSINESS ORGANISATION AND ENVIRONMENT 1
1.1 Introduction to business management 2
1.2 Types of organisations 18
1.3 Organisational objectives 34
1.4 Stakeholders 61
1.5 External environment 70
1.6 Growth and evolution 88
1.7 Organisational planning tools (HL only) 105
UNIT 2: HUMAN RESOURCE MANAGEMENT 118
2.1 Functions and evolution of human resource management 119
2.2 Organisational structure 142
2.3 Leadership and management 161
2.4 Motivation 174
2.5 Organisational (corporate) culture (HL only) 194
2.6 Industrial/employee relations (HL only) 205
UNIT 3: FINANCE AND ACCOUNTS 224
3.1 Sources of finance 225
3.2 Costs and revenues 240
3.3 Break-even analysis 247
3.4 Final accounts (some HL only) 257
3.5 Profitability and liquidity ratio analysis 277
3.6 Efficiency ratio analysis (HL only) 288
3.7 Cash flow 298
3.8 Investment appraisal (some HL only) 313
3.9 Budgeting (HL only) 326
UNIT 4: MARKETING 335
4.1 The role of marketing 336
4.2 Marketing planning 354
4.3 Sales forecasting (HL only) 369
iii
Management
for the IB Diploma
SECOND EDITION
Peter Stimpson
and Alex Smith
,Business
Business and
Management
Management
for the IB Diploma
for the IB Diploma
SECOND EDITION
Peter Stimpson and
Peter Stimpson and
AlexSmith
Alex Smith
Cambridge University Press’s mission is to advance learning,
Cambridge University Press’s mission is to advance learning,
knowledge
knowledge andand research
research worldwide.
worldwide.
OurOur IB Diploma
International resources aim
Baccalaureate to:
Diploma resources aim to:
• encourage
• encourage learners
learners to explore
to explore concepts,
concepts, ideasideas
and and
topics
topics thatthat
havehave
locallocal
and and global
global significance
significance
• help
• help students
students develop
develop a positive
a positive attitude
attitude to learning
to learning in preparation
in preparation
for higher education
for higher education
• assist students in approaching complex questions, applying
• assist students in approaching complex questions, applying
critical-thinking
critical-thinking skillsskills
and and forming
forming reasoned
reasoned answers.
answers.
,University Printing House, Cambridge CB2 8BS, United Kingdom
Cambridge University Press is part of the University of Cambridge.
It furthers the University’s mission by disseminating knowledge in the pursuit of
education, learning and research at the highest international levels of excellence.
XXXDBNCSJEHFPSH
*OGPSNBUJPOPOUIJTUJUMFFEVDBUJPODBNCSJEHFPSH
© Cambridge University Press 2015
This publication is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without the written
permission of Cambridge University Press.
First published 2011
Second edition 2015
Printed by Latimer Trend in the United Kingdom
A catalogue record for this publication is available from the British Library
ISBN 978-1-107-46437-7 Paperback
Cambridge University Press has no responsibility for the persistence or accuracy
of URLs for external or third-party internet websites referred to in this publication,
and does not guarantee that any content on such websites is, or will remain,
accurate or appropriate. Information regarding prices, travel timetables, and other
factual information given in this work is correct at the time of first printing but
Cambridge University Press does not guarantee the accuracy of such information
thereafter.
NOTICE TO TEACHERS IN THE UK
It is illegal to reproduce any part of this work in material form (including
photocopying and electronic storage) except under the following circumstances:
(i) where you are abiding by a licence granted to your school or institution by
the Copyright Licensing Agency;
(ii) where no such licence exists, or where you wish to exceed the terms of a licence,
and you have gained the written permission of Cambridge University Press;
(iii) where you are allowed to reproduce without permission under the provisions
of Chapter 3 of the Copyright, Designs and Patents Act 1988, which covers, for
example, the reproduction of short passages within certain types of educational
anthology and reproduction for the purposes of setting examination questions.
, Contents
Introduction v
UNIT 1: BUSINESS ORGANISATION AND ENVIRONMENT 1
1.1 Introduction to business management 2
1.2 Types of organisations 18
1.3 Organisational objectives 34
1.4 Stakeholders 61
1.5 External environment 70
1.6 Growth and evolution 88
1.7 Organisational planning tools (HL only) 105
UNIT 2: HUMAN RESOURCE MANAGEMENT 118
2.1 Functions and evolution of human resource management 119
2.2 Organisational structure 142
2.3 Leadership and management 161
2.4 Motivation 174
2.5 Organisational (corporate) culture (HL only) 194
2.6 Industrial/employee relations (HL only) 205
UNIT 3: FINANCE AND ACCOUNTS 224
3.1 Sources of finance 225
3.2 Costs and revenues 240
3.3 Break-even analysis 247
3.4 Final accounts (some HL only) 257
3.5 Profitability and liquidity ratio analysis 277
3.6 Efficiency ratio analysis (HL only) 288
3.7 Cash flow 298
3.8 Investment appraisal (some HL only) 313
3.9 Budgeting (HL only) 326
UNIT 4: MARKETING 335
4.1 The role of marketing 336
4.2 Marketing planning 354
4.3 Sales forecasting (HL only) 369
iii
