IB business management

• Initial public offering (IPO)

  The process where a business sells all or part of itself to external investors (shareholders)
• Advantages of IPO


  • Shares can be sold to the public
  • Efficient sources of finance are more available (bank loans)
  • Limited Liability
  • Possibility of market dominance
  • Economies of scale
  • Tax benefits
• Disadvantages of IPO


  • Takes time due to bureaucratic nature of big companies
  • Communication issues due to size
  • Final accounts are public
  • Less able to offer personal services to customers
  • Compliance costs
  • Loss of control
• For-profit (social) enterprises


  Revenue generating businesses with social objectives at the centre of business operations. These run according to business principles but do not aim at making profit.
• Social Enterprise


  Their surpluses from trading may be shared with employees and customers, passed on to a third party, used to buy resources, raise finance, employ staff etc.
• Cooperatives


  Businesses owned and run by their members, including employees and customers. The common goal is to create value for the members by engaging in socially responsible business activities.
• Advantages of Cooperatives


  • More incentive to work
  • Employees have decision making power
  • Social benefits (CSR)
  • Public support
• Disadvantages of Cooperatives


  • Disincentive effects
  • Limited sources of finance
  • Slower decision making
  • Limited promotional opportunities
• Microfinance providers


  A financial service aimed at financing disadvantaged members of society and helping to stop the poverty cycle.
• Advantages of Microfinance


  • Disadvantaged people have access to this
  • Job creation
  • Social well-being incentives
• Disadvantages of Microfinance


  • Immorality (micro-finance providers benefit from the poor/unemployed)
  • Limited finance
  • Limited eligibility (not everyone qualifies)
• Public-private partnerships


  When the government works together with the private sector to jointly provide certain goods or services.
• Non-profit social enterprises


  Businesses run in a commercial manner but without profit being the main goal. These companies use surplus revenues to achieve social goals.
• Non-Governmental Organisations (NGOs)


  Non-profit social enterprise that operates in the private sector, (i.e., it is not owned or controlled by the government). Set up to benefit society.
• Charities


  Provides voluntary support for good causes (from society's point of view), such as the protection of children, animals and the natural environment. Reliant on donors, endorsements, promotion etc.
• Advantages of Non-profit social enterprises

  • Social benefits
  • Tax exemptions
  • Tax incentives for donors
  • Limited liability
  • Public recognition and trust
• Disadvantages of Non-profit social enterprises


  • Bureaucracy
  • Disincentive effects
  • Charity fraud
  • Inefficiencies
  • Limited sources of finance
• Vision statement


  Specifies the long term aspirations of a business; where it ultimately wants to be. It often describes how the organisation wants to be perceived.
• Mission statement


  A declaration of the underlying purpose of an organisation's existence and its core values. This statement is updated more frequently than a vision statement.
• Levels of objectives


  • Strategic objectives
  • Tactical objectives
  • Operational objectives
• Factors that can change objectives

  • Changing corporate culture
  • Type and size of the organisation
  • Private vs. public organisations
  • Age of the business
  • Finance available
  • Risk Profile
  • State of the economy
  • Government constraints
  • Presence and power of pressure groups
  • New technologies
• Corporate social responsibility (CSR)

  The consideration of ethical and environmental issues relating the business activity, towards all stakeholders and not just to owners or shareholders.
• CSR aims to


  • Treat customers and suppliers fair and equally
  • Compete fairly (i.e., not engaging in predatory pricing)
  • Treat the workforce with dignity and listening carefully to their needs
• Purposes of ethical objectives

  • Altruistic attitude
  • Strategic attitude
  • Self-interest attitude
• Becomes more important as companies become more competitive
• Because of globalisation we have so much choice, meaning that companies need a competitive edge, social responsibility might be this
• More and more governments are imposing penalties on socially undesirable or unethical behaviour (e.g., carbon tax)
• Increase in education means people are more aware
• Pressure groups raise awareness and affect consumer perceptions
• SWOT analysis


  Aims to identify the key internal strengths & weaknesses and external opportunities & threats, seen as important to achieving an objective.
• Strengths


  • Products X is market leader in terms of sales
  • Customers are loyal to the brand
• Weaknesses


  • Workers are striking demanding higher wages
  • Machinery is obsolete, lowering production output
• Ansoff matrix


  A tool to help businesses decide their growth strategy
• Ansoff matrix strategies


  • Market penetration
  • Product development
  • Market development
  • Diversification
• Stakeholders


  Individuals or groups that may hold interest in the business or may be affected by its decisions.
• Internal stakeholders


  • Owners (shareholders)
  • Employees
  • Management
• External stakeholders


  • Suppliers
  • Customers
  • Communities
  • Pressure Groups
  • Competitors
  • Government
• Conflicts may arise when there are many stakeholders, each with different objectives
• PEST analysis


  Evaluates opportunities & threats on Political, Economic, Social and Technological factors.
• PEST opportunities


  • Political: political situation in the country is very stable
  • Economic: the economy is booming and people have growing income
  • Social: increasing average living conditions means more people can afford luxury items
  • Technological: faster 4G mobile internet network allows development of more complex apps like voice recognition