IB Business Management Unit 1 - Introduction to BM Cheat Sheet

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What is a business? Business functions & their roles

A decisi​on-​making organi​zation establ​ished to produce goods and/or Human Manages the workforce and laborers of the company
provide services. Resources Deals with recrui​tment, wages, commun​ica​tion, and
motivation of employees
Businesses exist; Finance In charge of managing the organi​zat​ion’s money and
To produce goods and services to satisfy the needs and wants of and assets
their customers. Accounts Ensures accurate recording and reporting of financial
docume​ntation (to comply with legal requir​ements)
To make profit.
Marketing Ensure that a company’s products sell
To survive.
Concerned with identi​fying and satisfying consumers’
To increase market share.
needs/​wants
To be the market leader. In charge of promot​ions, advert​ise​ments, etc.
For socially respon​sib​ility. Operations In charge of business functions and processes that
produce the actual goods
Business as a transf​orm​ation process Concerned with research & develo​pment, delivery,
stock manage​ment, etc.

Economic Sectors

Primary Involves the harvesting of naturally available resources

e.g. mining, agricu​lture, livestock, drilling, and logging
Regulated and protected by the government
Secondary Involves manufa​cturing of raw products to finished or
component goods
Adding​/Cr​eating value Finished goods – exported or sold to domestic

This occurs in the transf​orm​ation process when outputs are consumers

produced that are worth more than the inputs brought in to provide Component goods – sold to companies in the tertiary

them. sector
Tertiary Involved with service and retail
Factors of Production Delivering final goods to customer
Includes retail sales, transp​ort​ation, entert​ain​ment,
Capital Amount of money needed to run a business
restau​rants, media, health​care, banking, etc.
Man-made goods like machines, buildings, vehicles,
and equipment needed for business to operate
Investment – increasing spending on capital
Land Space where a business operates
Raw materials and natural resources that are used in
making a product
Labour Physical & mental efforts of people to produce produc​‐
ts/​ser​vices
Enterprise Manage​ment, organi​zation, and planning of other three
factors of production
Actions of entrep​reneur who shows initiative and takes
risks to set up, invest, and run a business

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 IB Business Management Unit 1 - Introduction to BM Cheat Sheet
by fatimaaaa via cheatography.com/186493/cs/38977/

Economic Sectors (cont) Entrep​ren​eurship vs. Intrap​ren​eurship

Quaternary Involved with knowledge and the movement of inform​‐ Entrep​‐ The process of starting a business, company, or organi​‐
ation. ren​‐ zation
Includes govern​ment, education, libraries, scientific eurship
research, inform​ation techno​logy, etc. The The founder, and usually owner
Entrep​‐ Big risk, big reward
Impact of sectoral change reneur Organizes inputs of production into goods and services
Change in economic Indust​ria​liz​ation (outputs)
structure (primary to ↳ When a country moves towards the Obtains money, buys the inputs needed and makes
secondary, secondary to manufa​cturing sector as its principal decisions.
tertiary, etc.) output and employment (primary to Takes risks and provides the vision for the business idea
secondary) Assumes large financial risk
↳Products become more refined and Provides sufficient resources
have more export potential Intrap​‐ Similar to entrep​ren​eurship but is done in an existing
↳Raises the standard of education ren​‐ organi​zation
↳Opens better job opport​unities eurship
Developed nation
The Is an employee of the organi​zation
↳Exploits the tertiary sector as the
Intrap​‐ Uses resources of company to undertake projects and
national output of employment
reneur therefore risks very little
↳ Further raises the standard of
Rewarded in the form of a paycheck
education
Does not act autono​mously like an entrep​reneur as he is
Examples of effects of For a labor intensive manufa​cturer of dependent on other employees or the organi​zation he
shifting to the tertiary aluminum cans works for
sector ↳ Quality of products improve
↳ More Distri​butors Reasons for starting up a business
↳ Less employees and higher wages for
New business idea
employees
Passion to make change
↳ Can consider turning to robots and
machines, as well as outsou​rcing Market need
Earning a living
Greater financial reward
Control
Work-life balance
Autono​my/Own boss

Common steps in starting up a business

Businesses often start up by looking for market opport​unities (market

gaps or niches)
Niche markets are where small businesses can easily compete
Factors to consider: What questions would busine​ssmen ask about
the factors?
↳ Business idea
↳ 4 Factors of Production (capital, land, labor, and enterp​rise)
↳ Four depart​men​ts/​fun​ctional areas

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 IB Business Management Unit 1 - Introduction to BM Cheat Sheet
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Possible problems faced by a start-up

Internal Lack of working capital

Poor management skills
Unskilled employees
External Economic, enviro​nmental or political shocks
Market too small / no market
Strong compet​ition

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 invest​ors​/banks to help them decide on whether to
invest​/ap​prove loans

Elements of a business plan

Business Name of the business, type of the business, statement

of aims and object​ives, details of the owner
Product Details of goods/​ser​vices, operations and equipment
needed, suppliers, price
Market Who you’re selling to, market profile, compet​ition
(strengths and weakne​sses)
Finance Money, start-up costs
Personnel Employees and workforce, skills
Marketing Marketing mix employed by business

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