UNIT 1 - IB BUSINESS MANAGEMENT: INTRODUCTION

• Three steps of the transformational process


  • Land
  • Labour
  • Capital
  • Enterprise
• Land


  All things supplied by nature
• Labour


  What people do to make the product
• Capital


  Money and anything that makes money
• Enterprise


  Planning, organizing, and producing
• Adding value


  Transformation process when outputs are produced that are worth more than the inputs brought in to provide them
• Branding


  Anything that makes a product recognizable and distinguishes it from the competition in the eyes of the customer
• Unique Selling Proposition (USP)

  A feature of a product that makes it different from competition from the customer
• Sectors


  • Primary sector
  • Secondary sector
  • Tertiary sector
  • Quaternary sector
• Opportunity cost


  The sacrifices made by choosing one option in terms of the next best alternative
• Market forces


  • Forces of supply and demand which determine the price of the product and the quantity bought and sold in a market
• Steeple analysis


  1. Social

  2. Technological

  3. Economical

  4. Environmental

  5. Political

  6. Legal

  7. Ethical
• Public sector


  A company that is owned by the government
• Examples of public sectors

  • Essential services
  • Merit goods (health and education)
• Nationalization


  A government takes ownership of a business from the private sector into the public sector
• Privatization


  A government transfers ownership of a business from public to private sector
• Sole trader


  Exclusive owner of a business (one person) entitled to keep all profits when tax is paid but liable for all losses
• Partnership


  Between 2-20 people set up to create a business
• Private sector company


  Business which has its own legal identity with limited liability (personal items are safe because you can lose what you put into the business)
• Public sector company


  Government-owned and assisted
• Privately held company


  Not on the share market, choose who buys their shares
• Publicly held companies


  Sold in the general share market
• Pros of companies


  Easy to transfer ownership, stakeholders can be employed by the company, tax rates more favorable
• Cons of companies


  Expensive to establish and maintain, reporting requirements complex, financial affairs public, profits distributed to shareholders are taxable
• Non-profit social enterprise (NGO)


  Non-governmental charities with no government funding
• Multinational company (MNC)


  At least one in another country other than its own company's base
• Pro of MNCs


  Improving the standard of living by employing new people from these
• Vision statements


  Outlines an organization's aspirations
• Mission statement


  Declaration of the underlying purpose, how, why, and where the company will get to their vision statement
• SMART Objectives


  Specific, measurable, agreed, realistic, time-specific
• Private sector objectives


  Growth, survival, cash flow, profits, and diversification
• Public sector objectives


  Providing service to the company, development, financial objectives, ethical objectives
• Corporate Social Responsibility (CSR)


  The conscientious consideration of ethical and environmental practices related to business activity, involves the triple bottom line
• The triple bottom line

  A company that cares for people, profit, and the planet
• Decision-making process


  Setting objectives, gathering information, selecting a sustainable strategy, implementing the strategy, reviewing
• Internal changes


  • Owners and management, employers, company culture or vision, company structure
• External changes


  • Macro environment and operating environment (suppliers, customers, and competitors)
• SWAT


  Strengths, weaknesses, opportunities, and threats
• Decision-making tool (Ans off Matrix)

  Market penetration, market development, product development, diversification
• Internal stakeholders


  • Employees, owners, and managers