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IB BUsiness MAnagement:
1.1 Intro to Business Management

This topic introduces IB Business Management. It explains what a business is and what businesses do. It outlines the main business functions and explains the different sectors of industry. Entrepreneurship and the reasons for setting up a business are examined.

Key Learning Outcomes

  • Explain the role of organisations in combining human, physical and financial resources to create a product.
  • Analyse the main business functions: human resources, finance and accounts, marketing and operations.
  • Explain the nature of business activity in the primary, secondary, tertiary and quaternary sectors. 
  • Examine the role of entrepreneurship and intrapreneurship in business activity.
  • Identify the reasons for starting a business, the common steps involved and likely problems a new business may face.
  • Analyse the elements of a business plan.
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What is a business exactly, and what functions do they perform?

What is a business?

A business is any organisation that uses resources to meet the needs of customers by providing a product or service that they demand. 

Not for profit organisations are classified as businesses.

What do businesses do?

Businesses identify the needs of consumers or other firms. They then purchase resources, which are the inputs of the business or factors of production, in order to produce output. The 'outputs' of a business are the goods and services that satisfy consumers' needs, usually with the aim of making a profit.

teach everyone to start businesses

Everyone can now be an entrepreneur

Starting a business: Role of the entrepreneur

An entrepreneur is someone who takes the financial risk (and reaps the rewards!) of starting and managing a new venture. These people have:
  • Had an idea for a new business
  • Invested some of their own savings and capital
  • Accepted the responsibility of managing the business
  • Accepted the possible risks of failure

Qualities of the Entrepreneur:

  • Innovative
  • Commitment and self-motivation
  • Multi-skilled
  • Leadership skills
  • Belief in oneself
  • Risk taker

Why start a business? Reasons for starting a business may include:

  1. Losing a job may provide the needed push
  2. Desire for independence
  3. Financial security
  4. Identification of a market opportunity
  5. Social connections may encourage and facilitate the move
  6. Having a risk-taking or challenge-seeking personality

Problems faced by Start-Ups

Even if an entrepreneur has all of the right qualities, success with a new business can never be guaranteed. Many businesses fail during the first year of operation, because of:
  • Competition
  • Building a customer base
  • Lack of record keeping
  • Lack of working capital
  • Poor management skills
  • Changes in the business environment

Adventures of the Mini Entrepreneur - A cute animated series about a budding entrepreneur

The reasons for business failure could apply at any stage of the development of a business, but the first few months are the riskiest of all.

Starting your own business: summary notes

Summary notes on the reasons for starting up a business, common steps in the process of business start up, and the problems associated with starting anew business (including reasons why most new business won't last 18 months).

Best countries to be in business

A fantastic interactive map of the best and worst countries to do business in can be found here.

The Business Plan

The business plan is a written document that describes a business, its objectives and its strategies, the market it is in and its financial forecasts
The contents of a typical business plan include:
  • The executive summary - an overview of the new business and its strategies.
  • Description of the business opportunity - what is going to be sold, why and to whom?
  • Marketing and sales strategies - details of why the entrepreneur thinks customers will buy what the business plans to sell and how the business plans to sell to them.
  • Management team and personnel - the skills and experience of the entrepreneur and the staff he/she tends to recruit.
  • Operations - premises to be used, production facilities, It systems.
  • Financial forecasts - the future projection of sales, profit and cash flow.
The main advantage of preparing a business plan is that it allows you to fully investigate your own business idea and clarify your thoughts and ideas. It will also enable others to examine your idea and provide you with feedback. Investors will probably only look at the Executive Summary.

Do you need a business plan?

Intrapreneurship
An intrapreneur takes an existing idea or develops a new one, and through all of the obstacles that exist, drive it forward.

Business Functions

Most businesses have four functional departments. These will be staffed by people with specific qualifications skills and experience in the work of the functional areas. A small business entrepreneur may have to cover all of these functions by themselves or outsource these functions to specialist firms.

Marketing

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The commercial processes involved in creating and designing, promoting and selling and distributing a product or service. The management task that links the business to the customer by identifying and meeting the needs of customers profitably. It does this by getting the right product at the right price at the right place with the right promotion.

Human Resource Management

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The process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees to achieve organisational objectives.

What is Profit?
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The four functional departments in any business.

Finance

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Finance is the management of money and credit and banking and investments.The accounts and finance section also provides the business with an array of tools for keeping track of cash flows, judging the viability of an investment and being able to prepare and analyse a financial records to both report on and evaluate the health of a business.

Operations Management 

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Sometimes referred to as production. Operations management is concerned with supervising, designing and controlling the procedures of the production process. It is the management of processes used to design, supply, produce, and deliver goods and services to customers. 

Capital Goods

Goods used in the production of other goods and services.

Opportunity Cost

One of the most important business concepts to understand.

Sectors of Industry

All production can be classified into three broad types of business activity, or sectors of industry: primary, secondary and tertiary sectors - the quarternary sector is a specialised area of services based on providing knowledge services.

Primary sector

Tertiary sector

Secondary sector

Quaternary Sector

Sectors and Changes in Sectors

An informative video of the different industrial sectors and how they have changed over time. The focus is primarily the UK. Over time the primary sector of the economy shrinks as a relative proportion of total economic activity and the tertiary sector increases.

Not-for-profit organisations

If an organisation is taking resource inputs (e.g. labour and capital) and then turning it into outputs (e.g. feeding the hungry) they are, by definition, a business. A charity will use the time of volunteers and paid help and use the charitable donations to produce services which fulfill the objectives of the organisation.

Economic development

Production and employment tends to shift from primary through to secondary through to tertiary the more developed an economy becomes.
Developing economies (e.g. South Sudan) will have most businesses operating in primary industries such as farming and mining.
As economic development progresses, more businesses will shift into manufacturing. Newly industrialised economies (e.g. Vietnam) will having a manufacturing sector that is growing proportionally larger as a total share of economic activity.
Developed economies (e.g. the UK) will be primarily service sector focused. The majority of businesses and people employed by businesses will be operating in the service industries, including the quarternary sector.

1.1 Intro to Business management:
Summary PowerPoint notes I

1.1 INTRO TO BUSINESS MANAGEMENT:
SUMMARY POWERPOINT NOTES II

INTRO TO BUSINESS MANAGEMENT:
MR BURTON EXPLAINS I 

INTRO TO BUSINESS MANAGEMENT:
Mr Burton explains II 

Progress check - test your understanding by completing the activities below

You have below, a range of practice activities, flash cards, exam practice questions and an online interactive self test to ensure you have complete mastery of the IB Business Management requirements for the Business Organisation and Environment 1.1: Introduction to Business Management  topic.

Test yourself

Use the Flashcards in ALL THREE STUDY MODES

Keep yourself up-to-date  with the latest business news
During your IB Business Management course it is a good idea to keep yourself up-to-date with business news. This will help you to apply the work you have done in class to the world outside.   
Business News: Our business news section has an RSS feed for articles, videos and podcasts that keeps the important business news current  and easily accessible. 

IB BUSINESS MANAGEMENT QUIZZES AND TWO CLASSROOM GAMES

Test how well you know the IB Business Management Business Organisation and Environment - 1.1 Introduction to Business Management topic with the self-assessment tool. Aim for a score of at least 80 per cent.
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