IB Business Managment Higher Level

This subject is broken down into 37 topics in 5 modules:

  1. Business organization and environment 7 topics
  2. Human resource management 6 topics
  3. Finance and accounts 9 topics
  4. Marketing 8 topics
  5. Operations management 7 topics
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  • 5
    modules
  • 37
    topics
  • 14,662
    words of revision content
  • 1+
    hours of audio lessons

This page was last modified on 28 September 2024.

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Business Managment

Business organization and environment

Introduction to business management

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Introduction to business management

Introduction to Business Management

Key Concepts

• Business organization: Refers to how a business is structured and managed. Includes sole traders, partnerships, corporations, and public limited companies.

• Business Environment: The factors that affect the operation and decision-making of a business, including Social, Technological, Economic, Environmental, Political, Legal and Ethical (STEEPLE).

• Stakeholders: Individuals or groups with interest in the business, e.g. employees, shareholders, customers, suppliers, and competitors.

Basic Principles

• Entrepreneurship: The process of starting, organizing, managing, and assuming the responsibility for a business.

• Management Roles: Include planning, organising, leading and controlling resources to achieve organisational goals.

• Business Functions: Core areas of business activity, such as Human Resources, Finance, Marketing, and Operations.

• Ethics in Business: Guiding principles that help define what is right or wrong in a business setting. Business ethics influence how a company makes decisions and conducts activities.

Business Organization

• Sole Traders: Individuals who own and run their own business. They have unlimited liability.

• Partnerships: Businesses owned by two or more people who share the management and financial risk.

• Companies/Corporations: Businesses owned by shareholders and run by directors. Shareholders have limited liability.

Business Environment

• Social Factors: Include societal trends, demographic changes, and lifestyle changes that impact businesses.

• Technological Factors: Include advancements in technology that can influence business strategies like marketing, production, and distribution.

• Economic Factors: Factors such as inflation, unemployment, exchange rates, and economic growth that can impact a business.

• Environmental Factors: Include climate change, waste disposal, and sustainability concerns that influence business decisions.

• Political Factors: Include government policies, regulations, and political stability that can affect businesses.

• Legal Factors: Include laws and regulations that businesses must comply with, such as health and safety, employment, and consumer protection laws.

• Ethical Factors: Might include labor practices, environmental practices, and how the business interacts with stakeholders.

Stakeholders

• Internal Stakeholders: People within the business such as employees and managers.

• External Stakeholders: People or groups outside the business, such as customers, suppliers, the local community, and competitors.

• Expectations of Stakeholders: Different stakeholders have different expectations. These expectations need to be effectively managed by the business.

Course material for Business Managment, module Business organization and environment, topic Introduction to business management

Business Managment

Finance and accounts

Cash flow

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Cash flow

Cash Flow

Concept and Purpose

  • Cash flow refers to the inflow and outflow of money in a business.

  • It is crucial in maintaining the daily operations of a business, such as paying salaries, purchasing supplies, etc.

  • Analysing cash flow enables businesses to forecast their future financial position, aiding them in decision making.

Components of Cash Flow

  • Operating Cash Flow: The cash generated from the day-to-day business operations.

  • Investing Cash Flow: The cash used or produced from investing activities, such as purchasing or selling assets.

  • Financing Cash Flow: The cash gained or spent on financing activities, such as issuing or repaying debt.

Cash Flow Statement

  • A cash flow statement is a financial document that outlines a company's cash inflows and outflows over a specific period.

  • It is divided into three sections: operating activities, investing activities, and financing activities, which reflect the cash flow from each of these areas.

Importance of Positive Cash Flow

  • A positive cash flow indicates that a business's liquid assets are increasing, enabling it to settle debts, reinvest in its business, return money to shareholders, and sustain itself through downturns.

  • Insolvency risk: If a business is constantly generating negative cash flow, it may find itself unable to pay its immediate liabilities, leading to bankruptcy.

Ways to Improve Cash Flow

  • Improve receivables collection by accelerating the collection of payments from customers.

  • Efficient inventory management can also aid in improving cash flow by preventing money from being tied up in stock.

  • Negotiate with suppliers for longer payment terms to delay outflows.

Pitfalls of Cash Flow Analysis

  • Cash flow should not be confused with profitability. A company can be profitable but have poor cash flows because of ineffective management of accounts receivable or inventory.

  • Infrequent large expenditures or receipts can distort the cash flow, giving a misleading view of the company's financial health.

Course material for Business Managment, module Finance and accounts, topic Cash flow

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