IB Business Management
Lincoln High School
Goals of this chapter
 Look at the production of goods & services; needs v.





wants
Explore business functions – HR, finance, marketing,
operations
Explain the nature of business activity in sectors.
Explore entrepreneurship and the process of starting a
business
Outline the elements of a business plan
Explore options a start-up business may face
For each unit,
 Discussion of main points.
 Student workpoints presented – most will be
discussed, some will be written.
 Key Terms should be familiar
 Practice question at end of chapter will be completed
and submitted.
Definition of a Business
 Why does a business exist????
 An organization involved in the production of goods
and/or services
 Businesses exist to satisfy needs and wants
 Needs – basic necessities someone must have
 Wants – things people would like to have
Summary of Business Activity
 Inputs –
 Human, Physical, Financial, Enterprise (least
tangible)
 These inputs are PROCESSED to add value
 Outputs
 Goods and Services
 Production
 Capital v. Labor Intensive
 Products
 Goods – tangible; Services - intangible
Think About it?
 Is an organization that doesn’t have as it’s goal to make
money still a business?
 Examples, YMCA, churches, charities?
Business Functions/Departments
 Operations Management or Production
 Marketing
 Product
 Price
 Promotion
 Place
 Finance and Accounts
 Human Resources (HR)
Connections
 How are the four departments connected?
 Question #1 Working together –
 Explain how the introduction of a new product line can
impact all of the four departments.
Business Sectors
 Goods
 Primary Sectors
 Extraction, harvesting and conversion of land
 Secondary Sector
 Processing raw materials for manufacturing of goods.
Many forms – consumer goods, capital goods.
 Services
 Tertiary – all services

Quaternary – services focused on knowledge
 All linked in the “chain of production”
Student workpoint 1.1
 Everyday products – imagine their “chain of
production”
 A cherry pie you purchase
 A skateboard
 A cellphone
Chain of Production
 Steps through the different sectors to turn raw
materials into consumer goods
 Business Growth
 Horizontal Growth

Two businesses merge
 Backwards vertical integration
 Forward vertical integration
Backwards
Vertical
Horizontal
Integration
Forwards
Vertical
Horizontal
Role of profit in Bs. Activity
 Profit = Positive difference between revenue and cost
 Loss – if expenses (Costs) are greater than revenue
 Role of profit
 Incentive to produce; reward for risk takers
 Encourages invention and innovation
 Acts as an indicator of growth
 Source of finance
Sectoral Change
 Size of each sector may change
 Number of people employed in each area
 Social technologies
 The more advanced a sector is, the more complex the
needs are: Example – some sectors need higher skilled
workers
 Size of Sectors correlated to economic development of
a country.
 Graphs page 9
 Shifting of sectors can put a strain on resources.
Entrepreneurs / Intrapreneurs
 Entrepreneurs – self-employed business owners
 Intrapreneurs – Employed by large organizations to
develop products or services
 Balance risk of failure against likelihood of success
 Innovation
 New technology
 Social Changes
Reasons for Starting a Business
 Rewards
 Independence
 Necessity
 Challenge
 Interest
 Finding a Gap
 Sharing an Idea
Process of Starting a Business
You need:
A Business Idea
A Plan
Organizing
the Basics
Researching
the Market
Pages 11-13
Planning the
Business
Establishing
Legal
Requirements
Raising the
Finance
Testing the
Market
Problems a Business May Face
 What percent of small businesses fail in the first year
 After 4 or 5 years?
 Possible problems – Table 1.1.4
Student Workpoint – page 12
 Work with your row – 4 different businesses.
 Create a plan, answer the following questions:
 Where will you locate your business?
 Who is your target market?
 How will you conduct market research?
 What will be your “unique selling point”
 Where do you think you can obtain financing?
 This is just a brainstorm!
 Elements of a Business Plan
 Business Idea, Aims, Objectives
 Business Organization
 HR
 Finance
 Marketing
 Operations
Table 1.1.5
Concepts you need to know:
 Page 16 – Table 1.1.5
 Revision Checklist
 Assignment – Ch. 1
 Question #2 - “A friend is considering going into
business for themselves. What detailed advice can you
give them to hopefully ensure their success?” 10 marks