IB Group 3 · Individuals and Societies
Business Management
2024 syllabus · Standard & higher level
The five units of the IB Business Management course, each broken into the exact topics and content the guide prescribes.
1. Unit 1: Introduction to business management
What businesses are, how they are structured, and who they serve.
1.1 — What is a business?
The nature of business — A business combines human, physical and financial resources to produce goods or provide services that satisfy customers’ needs and wants.
Sectors of economic activity
Starting up a business — Start-ups meet challenges: finance, lack of experience, competition and cash flow, but also opportunities such as spotting a market gap, first-mover advantage and personal independence.
1.2 — Types of business entities
Private vs public sector — The private sector is owned and run by individuals or companies for profit; the public sector is owned and run by the government to provide services.
For-profit commercial organizations
For-profit social enterprises
Non-profit social enterprise — Non-governmental organizations (NGOs) are private, non-profit bodies pursuing social or environmental goals, funded largely by donations and grants.
1.3 — Business objectives
Vision and mission statements
Common business objectives — Businesses pursue growth, profit, protecting shareholder value and ethical objectives, often several at once and sometimes in tension.
Strategic and tactical objectives
Corporate social responsibility (CSR) — CSR means acting in the interests of society and the environment beyond legal requirements, fair pay, lower emissions, community support.
1.4 — Stakeholders
Internal and external stakeholders — A stakeholder is any individual or group with an interest in a business. Internal stakeholders are part of the organization; external stakeholders are outside it but affected by it.
Conflict between stakeholders — Stakeholders often have competing objectives, for example shareholders seeking higher profit versus employees seeking higher pay. Businesses must balance and, where possible, reconcile these conflicts.
1.5 — Growth and evolution
Economies and diseconomies of scale
Internal vs external growth
Reasons to grow or stay small — Firms grow for higher profit, market power and economies of scale; they may stay small for flexibility, control, niche focus or to avoid diseconomies.
External growth methods
1.6 — Multinational companies (MNCs)
Impact of MNCs on host countries
2. Unit 2: Human resource management
People, structure, leadership and motivation inside organizations.
2.1 — Introduction to human resource management
Role of human resource management — HRM plans for, recruits, trains, motivates and retains the workforce a business needs to meet its objectives.
Factors influencing HR planning — HR planning must respond to internal factors (labour needs, budgets) and external factors:
Reasons for resistance to change
Strategies for reducing the impact of change
2.2 — Organizational structure
Key terminology
Types of organization chart
Appropriateness given change — The best structure depends on external factors, dynamic markets suit flatter, flexible structures; stable ones may suit taller structures.
Changing structures — Project-based organization forms teams around projects; Charles Handy’s “Shamrock Organization” combines core staff, contractors and flexible workers.
2.3 — Leadership and management
Scientific and intuitive thinking — Scientific management relies on data and analysis; intuitive management relies on experience and judgement.
Management vs leadership — Managers plan, organize and control the existing system; leaders set direction and inspire people to follow it.
Leadership styles
2.4 — Motivation and demotivation
Motivation theories
Further theories
Financial rewards
Non-financial rewards
Appraisal and training — Appraisal types: formative, summative, 360-degree and self-appraisal. Training types: induction, on-the-job and off-the-job. Recruitment can be internal or external, and labour turnover measures how fast staff leave.
2.5 — Organizational (corporate) culture
Organizational culture — The shared values, beliefs and norms that shape how people behave in an organization.
Types of culture — Charles Handy’s “Gods of Management” describe power, role, task and person cultures.
Cultural clashes when organizations change — Clashes arise when organizations grow, merge or change leadership styles and cultures collide.
2.6 — Communication
Formal and informal communication — Formal communication follows official channels; informal (“grapevine”) communication spreads through social networks. The best method depends on the situation.
Barriers to communication
2.7 — Industrial / employee relations
Sources of workplace conflict — Conflict arises over pay, conditions, job security, change and management style.
Employee approaches to conflict
Employer approaches to conflict
Approaches to conflict resolution
3. Unit 3: Finance and accounts
Sources of finance, accounts, ratios, cash flow and investment.
3.1 — Introduction to finance
Role of finance
3.2 — Sources of finance
Internal sources
External sources
Choosing short- or long-term finance — Short-term needs such as cash flow suit overdrafts and trade credit; long-term investment suits loans, share capital or leasing.
3.3 — Costs and revenues
Types of cost
Revenue and revenue streams — Total revenue = price × quantity sold. A business may earn from several revenue streams.
3.4 — Final accounts
Purpose of accounts — Different stakeholders: owners, investors, lenders, government, employees, use accounts for different decisions.
The final accounts
Intangible assets — Non-physical assets with value, goodwill, patents, trademarks and brands.
Depreciation — Straight-line spreads cost equally each year; the units-of-production method bases it on usage. The right method depends on how the asset loses value.
3.5 — Profitability and liquidity ratio analysis
Profitability ratios
Liquidity ratios
Improving the ratios — Strategies include raising prices, cutting costs, managing stock levels and controlling credit given to customers.
3.6 — Debt / equity ratio analysis
Efficiency ratios
Insolvency vs bankruptcy — Insolvency is being unable to pay debts as they fall due; bankruptcy is the legal process that can follow.
3.7 — Cash flow
Profit vs cash flow — Profit is revenue minus costs over a period; cash flow is the actual movement of money in and out. A profitable business can still run out of cash.
Cash flow forecasts — A forecast estimates future inflows and outflows so shortfalls can be spotted early.
Dealing with cash flow problems
3.8 — Investment appraisal
Appraisal methods
3.9 — Budgets
Cost and profit centres — A cost centre is a part of a business for which costs are recorded; a profit centre records revenue too, and so profit.
Budgets and variances
4. Unit 4: Marketing
Planning, research and the marketing mix.
4.1 — Introduction to marketing
Market vs product orientation
Market share and growth — Market share = a firm’s sales ÷ total market sales. Market growth measures how fast the whole market is expanding; market leadership brings pricing power and image (HL).
4.2 — Marketing planning
Role of marketing planning — A marketing plan sets objectives and the actions needed to achieve them.
Segmentation, targeting, positioning
Niche vs mass market — Niche marketing serves a small, specific segment; mass marketing targets the whole market.
USP and differentiation — A unique selling point sets a product apart; firms differentiate through product, service, price or brand.
4.3 — Sales forecasting
Benefits and limitations — Forecasting sales aids planning and cash flow, but relies on assumptions and past data that may not hold.
4.4 — Market research
Why and how research is carried out — Market research gathers data to reduce the risk in decisions.
Primary research methods
Secondary research methods
Qualitative vs quantitative — Qualitative data describes opinions and reasons; quantitative data is numerical and measurable.
Sampling methods
4.5 — The seven Ps of the marketing mix
Product — Managed through the product life cycle and portfolio; extension strategies prolong the life cycle, which links to investment, profit and cash flow.
Branding
Price
Promotion
Place — Distribution channels get the product to the customer; channel choice affects cost and reach.
People, processes, physical evidence
Appropriate marketing mixes — The right mix depends on the product, the market and the business.
4.6 — International marketing
Opportunities and threats — Operating internationally offers new markets and economies of scale but brings cultural, legal and logistical risks.
5. Unit 5: Operations management
Producing goods and services efficiently and responsibly.
5.1 — Introduction to operations management
Role of operations management — Operations management turns inputs into outputs, goods and services, efficiently, balancing cost, quality, speed and flexibility.
5.2 — Operations methods
Production methods
5.3 — Lean production and quality management
Features of lean production
Methods of lean production
Managing quality
Quality standards — National and international quality standards build trust and open up markets.
5.4 — Location
Reasons for a location — Location decisions weigh costs, proximity to markets and suppliers, labour, infrastructure and government incentives.
Reorganizing production
5.5 — Break-even analysis
Contribution — Contribution per unit = selling price − variable cost per unit. Total contribution = contribution per unit × units sold.
The break-even chart
Changes and limitations — Changes in price or costs shift the break-even point. Break-even assumes all output is sold and costs are linear, so it is a simplification.
5.6 — Production planning
Supply chain and JIT vs JIC — Supply chains can be local or global. JIT delivers stock as needed; JIC holds buffer stock just in case.
Stock control
Productivity measures
5.7 — Crisis management and contingency planning
Crisis vs contingency — Crisis management responds to an unexpected event; contingency planning prepares for it in advance.
Factors in effective crisis management
Impact of contingency planning
5.8 — Research and development
Importance of R&D — R&D develops new and improved products, keeping a business competitive and meeting customers’ unmet needs.
Intellectual property
Innovation — Incremental innovation improves existing products; disruptive innovation transforms markets.
5.9 — Management information systems
Data and databases
Advanced technologies
Using data in business
Benefits, risks and ethics — Management information systems improve decisions but raise concerns over privacy, security, bias and the impact on stakeholders.
T. The Business Management Toolkit
Situational, planning and decision-making tools applied across all five units.
T1 — SWOT analysis
SWOT analysis — Internal strengths & weaknesses; external opportunities & threats.
T2 — Ansoff matrix
Ansoff matrix — Four growth strategies across existing/new products and markets.
T3 — STEEPLE analysis
STEEPLE analysis — Scanning the external environment: social, technological, economic, environmental, political, legal, ethical.
T4 — BCG matrix
Boston Consulting Group (BCG) matrix — Portfolio analysis by market growth and share: stars, question marks, cash cows, dogs.
T5 — Business plan
Business plan — A document setting out a business’s objectives and how it will achieve them.
T6 — Decision trees
Decision trees — A quantitative tool using probabilities and expected values to choose between options.
T7 — Descriptive statistics
Descriptive statistics — Mean, mode, median, quartiles, standard deviation, and chart presentation.
T8 — Circular business models
Circular business models — Models that design out waste and keep resources in use.
T9 — Force field analysis
Force field analysis — Weighing driving forces for change against restraining forces.
T10 — Gantt chart
Gantt chart — A horizontal bar chart of project tasks against time.
T11 — Hofstede’s cultural dimensions
Hofstede’s cultural dimensions — Comparing national cultures across six dimensions.
T12 — Porter’s generic strategies
Porter’s generic strategies — Cost leadership, differentiation and focus.
T13 — Contribution
Contribution — Selling price minus variable cost; make-or-buy, contribution and absorption costing.
T14 — Critical path analysis
Critical path analysis (CPA) — Network analysis of project activities to find the critical path and float.
T15 — Simple linear regression
Simple linear regression — Fitting a line of best fit to model and forecast a relationship.
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