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IB Syllabus 1.1
IB Syllabus 1.1
The learning outcomes (or assessment objectives) for this section of the IB Business Management syllabus are:
The nature of business (AO1)
Primary, secondary, tertiary and quaternary sectors (AO2)
Entrepreneurship (AO2)
Challenges and opportunities for starting up a business (AO2)
Inclass activities
Inclass activities
Class 1: What is a business?
What is the production process of a pencil?
Activity: Businesses in Action
Groups of 3-4
Choose an object in the room
Act out the production process from start until it reaches you, the customer
Describe which sector of the economy each production process is
Describe inputs and outputs
Questions:
What are your favourite 3 companies? What do they sell? Why are they so awesome?
What sector of the economy are they in?
What are the inputs and outputs of your favourite companies?
What kinds of businesses are the most useful?
What is the best way to be successful humans and to make the earth healthy?
How can businesses be sustainable?
Class 2: Start a Business
What is a business?
What is the best way to have a successful business?
Which is the most important of the 4 main business functions?
What are five reasons why you would want to become an entrepreneur?
What are five challenges you might face starting a business?
Let’s start a business!
You're an Entrepreneur starting a business!
What will your business be?
What opportunities do you see?
What challenges will there be?
What will you need for your business? Describe in regards to the different business functions: (human resource management, finance and accounts, marketing, and operations management) .
Business Toolkit:
Convert to a Business Plan!
What would you need to add to make this an effective business plan?
Share!
Share with your group (small group of 2-3).
Share with the class: Combine your answers to share your group’s answers with the class (just share 1 set of answer per group)
Submit your individual answers on managebac
Or
What you should know
By the end of this subtopic, you should be able to:
define the following terms: (AO1)
primary sector
secondary sector
tertiary sector
quaternary sector
describe the nature of business as a creative endeavour that responds to changes in the external environment and considers the ethical implications of its work (AO1)
describe the role of business in meeting human needs and protecting the natural environment (AO1)
describe the structure of the economy using the model of the embedded economy (AO1)
distinguish between the primary, secondary, tertiary and quaternary sectors (AO2)
describe the dynamic nature of business sector activity (AO1)
explain the opportunities and challenges of starting a business (AO2)
outline the steps involved in starting a new business (AO1)
apply a SWOT/STEEPLE analysis in a given context (AO2)
outline the elements of a business plan (AO1)
apply a business plan in a given context (AO2)
https://quizlet.com/pa/724170971/12-what-is-a-business-flash-cards/?new
https://www.gimkit.com/view/632923644dfe8d0021fd5882
Adding value
The process of producing a particular good or service that is worth more than the cost of the resources used to produce it.
Business
A decision-making organization established to produce goods and/or provide services.
Consumers
The individuals or organizations that actually use a product.
Customers
The individuals or organizations that purchase a product.
Entrepreneurs
The individuals who take risks in overseeing a business organization or business venture, usually in pursuit of profit.
Entrepreneurship
The knowledge, skills and experiences of individuals who have the capability to manage the overall production process.
Factors of production
The collective term for the resources used in the production process, i.e. land, labour, capital and entrepreneurship.
Finance and accounts
Function of an organization responsible for ensuring that the business has sufficient funds in order to conduct its daily operations.
Goods
These are physical (tangible) products, such as cars, clothes, flowers, food, furniture, smartphones, and toys.
Human resources (HR)
The business function that handles all aspects relate to the workforce, involving all aspects of a firm's operations related to staff (personnel) within an organization.
Marketing
Business function of identifying the needs and wants of customers so that the organization can provide goods and services to meet these requirements and desires, usually in a profitable way.
Needs
The basic necessities that an individual must have in order to survive, such as food, water, and shelter.
Operations (or operations management)
The business function referring to the process of making goods and providing services from the available resources of a business to meet the needs and wants of its customers.
Primary sector
Business activity involved with the extraction of natural resources, e.g. fishing, mining and agriculture.
Production
The process of creating goods and/or services using the factors of production available to the business.
Quaternary sector
Business activity involving the creation or sharing of knowledge and information.
Secondary sector
Business activity involved with the manufacturing or construction of finished products.
Services
Intangible products, such as haircuts, tourism, public transport, banking, insurance education, and healthcare.
Tertiary sector
Business activity that involves providing services to customers, i.e. consumers and business clients.
Value added
The numerical difference between the cost of factor inputs in the production process and the price that the final output is sold for.
Wants
These are the desires of individual customers, i.e., the goods and services that they would like to have (rather than things they need to survive), such as a new smartphone, a family holiday in an overseas location, fresh flowers, or jewellery.
Extra Notes
Extra Notes
The nature of business (AO1)
The nature of business (AO1)
What is a business?
Why do businesses exist?
What do they do?
How do they do this?
Business
an organisation that provides goods and services and satisfies needs and wants in a profitable or non-profitable way
Goods
physical products, e.g., food, clothes, furniture, cars and smartphone
Services
intangible products, e.g., haircuts, tourism, public transport, banking, insurance education, and healthcare.
Intangible – Unlike goods, services are not physical in their nature.
Inseparable – The service received is attached to the people who deliver the service and the processes used to deliver the service.
Perishable – Services do not last but are usually consumed at the time of purchase.
Variable – services are heterogeneous, i.e., each customer experience is unique.
Inputs -> Processes -> Outputs
The nature of business can be summarized using the input-output model:
Inputs: The resources or factors of production that a business uses including land, labour, capital and entrepreneurship.
Transformation Process: Adding value to inputs through production and provision of goods and services. Production can be capital-intensive or labour-intensive.
Outputs: The products created, which can be tangible goods or intangible services sold to consumers (B2C) or other businesses (B2B).
Factors of Production 🡪 Production 🡪 Output
(inputs) (Add value) (goods & services)
Business Functions
All businesses have four core functions:
Human resource management (HRM) — making sure that the right people are employed and paid by the business, regularly trained, appraised and treated in accordance with Health & Safety regulations.
Finance and accounts — planning for the future costs, revenues and cash flow and keeping records of the costs, revenues and cash flow in the past, as well as financial analysis and budgeting, and the investment and management of money.
Marketing — making sure the right product is sold at the right price, in the right place, to the right customers using the most effective promotion methods.
Operations management — All businesses have a core business process (making a product, constructing houses, selling clothes, growing crops, etc.). Operations refers to how this core activity is carried out. Operations must plan how and in what quantity goods and services are to be produced.
Primary, secondary, tertiary and quaternary sectors (AO2)
Primary, secondary, tertiary and quaternary sectors (AO2)
Primary Sector (Raw Materials)
Primary sector refers to all the businesses that extract raw materials: mining, fishing, forestry, agriculture, oil extraction, etc.
Secondary Sector (Manufacturing)
Secondary sector businesses transform raw materials, extracted by primary sector businesses, into processed or finished goods, i.e. secondary sector refers to manufacturing.
Tertiary Sector (Service)
Tertiary sector refers to provision of services: retail stores, cinemas, transportation, grocery stores, etc.
Quaternary (Research, Consultants, Knowledge, IT)
Quaternary sector is quite similar to tertiary, because it also includes services, but exclusively those services that relate to data, knowledge and IT.
Example:
Education, Banking, Management Consultants, R&D, IT, Legal services
For example, app and video game development would be an example of quaternary sector activity. However, selling these apps and video games in retail stores would be an example of tertiary sector activity.
Entrepreneurship (AO2)
Entrepreneurship (AO2)
People who start businesses are known as entrepreneurs.
Entrepreneurship — skillset that combines all the factors of production in order to transform them into products (goods and services).
Entrepreneurship refers to the traits of individuals who run their own business or businesses
Entrepreneurs take risks by starting new businesses or ventures
They are visionaries who can see opportunities and trends before others
Entrepreneurship contributes to economic success by creating jobs and wealth
Common Traits of Successful Entrepreneurs
Creativity, decisiveness, motivation, communication skills
Flexibility, leadership abilities, planning skills
Tolerating risk while also managing risk
Ability to work well with a team
Strong time management
Entrepreneurial Mindset
Willing to take risks and make changes
Creative problem-solving to identify opportunities
Designing solutions through research and planning
Taking action to implement solutions
Sharing ideas to increase their impact
Benefits of an Entrepreneurial Mindset
Starting your own business
Creating new products or ventures within an existing company
Solving social, environmental or other challenges
Improving your personal or professional goals
Examples of highly successful entrepreneurs:
Anita Roddick, founder of The Body Shop, who showed the world that entrepreneurs can succeed in business at the same time as maintaining an ethical profile.
Bill Gates, co-founder and the face of Microsoft - which owns products and brands as Windows, Microsoft Office, Internet Explorer and Skype.
Cher Wang co-founded the Taiwanese smartphone-maker High Tech Computer (HTC) with her husband Wen-Chi Wang in 1997. She is credited as being one of the world’s richest self-made billionaires.
Coco Chanel, the French designer and costume maker who revolutionised and defined feminine style and dress during the 20th Century.
Elon Musk, who was born and raised in South Africa, and later decided not to complete his Ph.D. at Stanford University in order to focus on his business career, later becoming co-founder of Tesla.
Henry Ford, the pioneer who never let his dyslexia hinder him and introduced assembly lines and mass production in the car manufacturing industry, making Ford motor cars affordable for the average consumer.
Ingvar Kamprad, who started business at the age of just five (by bulk buying matches and reselling them at a low price but with a profit margin), Ingvar Kamprad became the founder of IKEA as a teenager, aged 17. Despite being one of the wealthiest men in the world, Kamprad lived a relatively humble life, in a small home, eating at IKEA (where else?!) and taking the bus regularly.
Jack Ma, a self-made billionaire as founder of Alibaba Group, the world’s largest business-to-business (B2B) and consumer-to-consumer (C2C) e-commerce business. Almost everything made in China can be traded globally on Alibaba and Taobao. In September 2014 the company floated its shares on the New York Stock Exchange, raising a world record $25 billion at the time. Jack Ma's net worth as of May 2020 was $41.3 billion.
James Dyson, the British entrepreneur who invented the bag-less Dyson vacuum cleaner, revolutionising the industry with his company’s innovative designs.
Jeff Bezos, the founder of Amazon, is a self-made billionaire (being the richest man in the world). He came up with his business idea in the back of a car whilst on a road trip.
Kylie Jenner – Founder of the highly successful Kylie Cosmetics, Kylie Jenner became the world’s youngest self-made billionaire at just 21 years old.
Li Ka-shing dropped out of school but succeeded in business through his sheer hard work and entrepreneurial spirit. From a humble background as a poor immigrant to a self-made multi billionaire and the status of Asia's richest entrepreneur, it is little wonder that the Chinese called him 'chiu-yan', or 'Superman'.
Lakshmi Mittal, India’s richest man, was born in a village without electricity but went on to establish one of the world’s largest steel companies (and founder of an IB World School in India!)
Mark Zuckerberg, the founder of Facebook - the world’s largest social media network, with over 2 billion registered users.
Mary Kay Ash, who married at just 17 but this didn’t stop her from succeeding in life or business (later on in her life). At the age of 45 with just $5,000 she formed what became one of the USA’s largest cosmetics businesses, Mary Kay Cosmetics, Inc.
Michelle Mone, founder of Ultimo, the UK’s largest bra and lingerie company. In 2010, aged only 38, Baroness Mone was awarded an OBE (by Her Majesty the Queen) for her outstanding contribution to business.
Richard Reed, co-founder of Innocent Drinks, the British multinational company that produces fresh fruit smoothies and vegetable pots.
Richard Branson was a high-school drop-out, but went on to build over 400 companies as part of the Virgin Group. Hw owns his own island (but not The Virgin Islands!)
Steve Jobs, co-founder of Apple - which makes products such as MacBook computers, iPads, iPhones, Apple TV, and iTunes.
Walt Disney – The boy told by his teacher that he lacked imagination and creativity, who went on to build the largest entertainment company in the world.
Warren Buffett came from humble beginnings and went on to be an extraordinary and successful entrepreneur, investor and philanthropist. In 2008 he claimed the status of being the world's richest man. He has donated billions of dollars to charity.
Challenges and opportunities for starting up a business (AO2)
Challenges and opportunities for starting up a business (AO2)
With the right combination of business idea, skills and resources, entrepreneurs can turn opportunities into successful startups despite the challenges. Being aware of both helps aspiring entrepreneurs realistically assess the risks and rewards of starting their own business.
Reasons for Starting a Business
Financial rewards - Opportunity to earn profits and keep profits as the business owner
Autonomy - Being your own boss and able to make your own decisions
Pursue passions/interests - Start a business related to hobbies or causes you care about
Recognizing unfilled market gaps - Spotting consumer needs that are not being met
Family tradition - Running a business passed down through generations
Make a difference - Provide important services to the local community
Self-employment option - Becoming an entrepreneur if unable to find paid work
Challenges for Startups
Lack of experience running a business
Limited finance/funding
Recruitment issues - difficulty hiring qualified employees
Competition from other similar businesses
Lack of business and organisation skills
Long hours
Lack of market research
Poor marketing strategy
Inexperienced entrepreneurs may lack skills needed for business success such as strategic planning, financial management, marketing, HR management etc. This can lead to huge losses for the startup business.
What can help improve chances of business success?
Team (Human Resources): there is a skilled and collaborative team of employees in place;
Funding (Finance) : there is enough funding to run the business;
Marketing: the marketing has been researched well; and
Operations: the operations are efficient and resilient.
Steps for Starting a business
Most Popular Reasons to Start a Business in Every State
Book Recommendation:
The E Myth Revisited - Why Most Small Businesses Don't Work
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