IB-BUSINESS
MANAGEMENT
1.1 INTRODUCTION TO BUSINESS MANAGEMENT
Class rules
Come to class prepared
Always try your best
Be on time
Be kind and fair to others
Raise your hand before speaking
Be respectful to the school grounds
What is a business?
Businesses are organizations that exist to satisfy the needs and the
wants of customers using resources with the aim of making
profits.
Needs are basic necessities for survival
Examples: food, water, shelter
Wants are things that people would like to have
Examples: Steak, Fiji water, Tesla
What do businesses do?
Identify the needs/ wants of consumers or other firms
Purchase resources (which are inputs of the business) ( Factors
of production)
Process the inputs to produce output
The output of the business are the goods and services that satisfy
consumers’ needs
Usually with the aim of making a profit
The nature of a business
Resources
labor : the effort/ work done by people. The quality of their work depends on their skills, knowledge
and experience.
Capital: capital goods needed to operate a business, such as machines, buildings, equipment,
vehicles.
(capital goods are used in production, consumer goods are sold to the public to meet their
needs and wants)
land: raw materials and natural resources needed to produce goods and services.
Enterprise: involves identifying an opportunity, starting a company, taking risks, and efficiently
using the other three inputs (often Referred to as entrepreneurship =master-mind)
products
Products are the output of a business activity
Goods: physical products (Ex: iPhone, iPad)
Services: intangible products (Ex: AppleCare)
Business process and functional areas
All businesses, from start-ups to
huge companies, are organized by 4
key functions.
A business can gain a competitive
advantage by strategically focusing
on one or more functional areas
Ex: if a competitive priority is to be
the lowest-cost producer, then a
business should focus on operations,
maximizing efficiency and reducing
costs by implementing smart
operation management system
Business functions
Case study on Business functions
Questions on case study
What did Kodak do wrong?
Lack of market research
Slow in entering the digital photography scene
Failed innovation and transformation
Unwilling to change
Four Business sectors
Primary sector
Secondary sector
Tertiary sector
Quaternary sector
The four sectors are typically linked in what is referred to as the production chain or chain of
production
(the steps through the different sectors that have to occur in order to turn raw materials into a
consumer good that is marketed)
Primary sector
This sector of the economy extracts or harvests products from the earth
Activities associated with this sector includes :
Agriculture
Mining
Farming
Hunting
Fishing
The type of products produced by this sector have a lower value added
Secondary sector
This sector of the economy manufactures goods for customers
Activities associated with this sector includes:
Metal working
Automobile production
Textile production
Chemical and engineering industries
Energy utilities
Construction
Ship-building
Tertiary sector
This sector of the economy is the service industry, it provides services to the general population and
to businesses
Activities associated with this sector includes:
Retail and wholesale
Transportation and distribution
Restaurants, Tourism
Security
Media
Education
Insurance
Healthcare
Law
banking
Quaternary sector
This sector of the economy consists of industries providing information services
such as :
computing, ICT (information and communication technologies)
consultancy (offering advice to businesses), R&D (research, particularly in scientific
fields)
It is known as the knowledge-based sector of the economy
This sector is sometimes included with the tertiary sector, as they are both service sectors
Business sectors
Challenges and opportunities in starting up a
business
Financial challenges: entrepreneurs need to know what needs to be paid and when, and whether the
business will be able to pay it from it’s revenue or if there’s a need to ask banks for loans or credit, and
this may require a collateral.
Marketing challenges:
The product doesn't meet the needs/wants
The price doesn’t align with competitors/market
Product/brand awareness, consumers might not be aware of the brand existence
Location of the product doesn’t match the targeted consumer
Challenges and opportunities in starting up a
business
Human resources challenges:
Lack of suitable candidates or appropriate skills (can be a result of expansion cycle, so suitable labor is already
employed)
Working conditions and salaries offered are not attractive
Production balance: the right level of production
If entrepreneurs are too cautious and don’t produce much, and the demand is higher than expected, there will be a supply
shortage leading to a negative impact on the business’ image
If a business is too optimistic in its sales forecasts, this will generate excess in supply, they will have to reduce prices to
sell available stock, which will negatively affect its profit and make it difficult to survive
Challenges and opportunities in starting up a
business
External factors (exogenous influences):
factors that a business cant control
Natural disasters
Economic situation of a country/region
Pandemic
Opportunities
Identifying a gap in the market:
If the business is able to meets the demands with their products, they are presented with a chance to succeed by
being the first to produce these goods and services
Operating in niche markets:
Niche market: A segment of a larger market with a shared identity that makes it unique
Ex: organic food, handmade jewelry, eco-friendly products
The market is relatively small, and with few competitors the chances of succeeding are greater if the entrepreneur
has knowledge needed regarding these G&S
Acting as innovators: bringing innovative G&S to the market will insure the future success, whether by
innovating on existing products or creating new products
Stand up Count up
1. Choose a number
2. You have to count to that number
3. One student must stand and say the number 1
4. Then another student must stand up and say the number 2, and so on until the chosen
number
5. Any student can stand up at any time and say the next number, but if 2 students stand up
at the same time you lose and we start again from 1
6. If the class is able to get to the chosen number without 2 students standing up at the
same time then you win.
