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IB BUSINESS MANAGEMENT - Coggle Diagram

- - - - Human resources
        
        Organising, managing & developing all of the human resources
        Eg: quantity of workers; recruitment & selection; dismissal
      - Marketing
        
        Promoting products/services & brand
        Eg: market research (needs+wants); development & implementation of marketing mix strategies (promotion, price, distribution, packaging)
      - Finance
        
        Managing resources (financial) + ensure financial stability
        Eg: securing external finance (loans); financial reports; budgeting
      - Operations
        
        Efficient management of the core activities & production process required to deliver products/ services
        Eg: managing production process; sourcing raw materials; managing stock; overseeing quality
      - Other
        
        Larger companies may also include: administration, IT support, legal services etc.
    - - Inputs -> production -> outputs
        
        Production:
        capital-intensive - machinery cost > other resource inputs
        labour-intensive - labour costs > other resource inputs
        
        Inputs:
        Human - employees & managers
        Physical - materials, equipment and premises
        Financial - capital required
        Enterprise - idea + desire to turn idea into business
        
        Outputs:
        Goods - tangible
        Services - intangible
    - - Purpose: organisation of human, physical and financial resources to produce goods/ services that meets customer's needs/wants while adding value
    - - The four business sectors
        
        Primary
        
        Extraction of raw materials
        
        Secondary
        
        processing raw materials + manufacture of goods
        
        Tertiary
        
        provision of a wide range services for customers/other busineses
        
        Quaternary
        
        provision of knowledge based services
      - Chain of production
        
        Sectors linked to transform raw materials to finished product
        
        Raw materials are farmed; perfumes are manufactured; products sold in shops; ingredients undergo scientific testing
      - Sectoral change
        
        Less developed economies
        
        focused on primary sector
        
        Emerging economies
        
        more people working in secondary sector; improved technology requires less human labour
        
        Developed economies
        
        high proportion of workforce employed in provision of services
    - - Entrepreneur: person who is willing and able to create a new business idea/ invention and take risks in pursuing risks
      - What they do
        
        make decisions that will determine the success/ failure of business
        
        takes financial, personal or professional risks
      - Intrapreneurship
        
        promoting entrepreneurial thinking and behaviour within an existing business
      - Characteristics
        
        Skills: communication, team working, problem solving, organisation
        
        Characteristics: creativity, hard working, resilience, initiative
    - - Reasons to start a business
        
        FInancial
        
        Rewards; independence; necessity
        
        Non-financial
        
        Gap in market; ineterst; personal challenge
      - Steps of starting a business
        
        Identify essential elements
        
        Conduct market research
        
        Construct a business plan
        
        Check legal constraints
        
        Raising the finance
        
        Test the market
      - Challenges of start-ups
        
        Lack of funding
        
        Lack of market demand
        
        Business plan too vague
        
        Competition
        
        Finding workforce
        
        Legal requirements
  - - - Owned and controlled by the government; aim to provide a public service
    - - Owned and controlled by individuals/ groups of individuals to maximise profits
    - - Government owned firms sold to private sector
    - - Sole traders
        
        business that has a single owner (may still hire employees); run their business alone and require a varied skillset
        
        Advantages
        
        easy+ inexpensive to set up; owner has complete control; all profits belong to owner; simple tax arrangements/ minimal legal formalities; decisions can be made quickly; privacy
        
        Disadvantages
        
        unlimited liability; limited access to finance and capital; limited skill set; limited "time off"; challenge to compete against established businesses
      - Partnerships
        
        business that has two or more owners; a deed or partnership sets out the rules of partnership (distribution of profits, voting rights of partners)
        
        Advantages
        
        shared responsibilities & decision making; more expensive; higher access to finance; more chance of continuity
        
        Disadvantages
        
        each partner has unlimited liability; less access to loans; individuals have to rely on goodwork of others; profits must be shared; partners might disagree
      - Privately held companies (private limited: Ltd)
        
        often has family/ friends as shareholders (shares not traded on stock exchange); shares can't be sold without approval of other shareholders; requires a Memorandum of Association (company details) and Articles of Association (rules, ownership, voting rights, responsibilities)
        
        Advantages
        
        limited liability; access to greater finance and capital; financial records are private; control and ownership is shared to small group of people (2 - 20)
        
        Disadvantages
        
        profits shared between several shareholders; more costly and time consuming; less privacy; more complex legal requirements; shares can be publicly traded to raise finance
      - Publicly held companies (publicly limited: PLC)
        
        private companies may "go public" through Initial Public Offering (IPO) to raise large amounts of capital for growth; freely transferable; requires a Memorandum of Association (company details) and Articles of Association (rules, ownership, voting rights, responsibilities)
        
        Advantages
        
        finances can be raised by selling shares to public; risks are sared amongst large numbers of shareholders; continuity if someone dies; limited liability; increased liquidity of shares; increases the visibility of the company
        
        Disadvantages
        
        profits are shared between many shareholders; expensive+ time consuming to set up; outsiders can become largest shareholders and get control; accounts are publicly available to be viewed
    - - larger organisation than sole traders and partnerships; owned by shareholders
        
        when businesses are incorporated they become legal entities separate from their shareholders
      - Advantages
        
        finance more readily available than for sole traders/ partnerships; investor has limited liability; continuity if a shareholder dies; possibilities for expansion; established organisational structure;
      - Disadvantages
        
        setting up to fulfil necessary requirements can be expensive & time consuming; selling shares doesn't guarantee desired amount of finance will be raised; owners risk partial/entire loss of control of business; loss of privacy; no control over the stock market; limited control over who buys its shares
    - - someone who owns part of a business
      - Advantages
        
        price of shares they hold may increase in value; company issues a portion of the company profits as dividents; limited liability
      - Disadvantages
        
        price of shares they hold may decrease in value; company may choose to not issue dividends; owning shares may not mean an individual shareholder has any meaningful say in decision
    - - Social enterprises in the private sector
        
        Look to make profit whilst improving one or more aspects of society
      - Social enterprises in the public sector
        
        Provide socially focused services with the aim of making a profit
      - Cooperatives
        
        Owned and run by and for their members with the principle that working together means more power
        
        Types of cooperatives:
        Employee
        Community
        Retail
        Producer
        Financial
        Housing
      - Evaluation
        
        Advantages
        
        Positive impact on world; creates jobs; can become financially self-sustaining; work with wide range of stakeholders
        
        Disadvantages
        
        Decision making is difficult & time consuming; capital may be insufficient for growth; difficult to measure success
    - - NGOs
        
        Voluntary, community based organisations which seek to provide services not make profits
        
        Evaluation
        
        Advantages
        
        Can gain support from global public & wealthy governments; specialists working increase efficiency of aid; help develop human skills which breaks families out of poverty
        
        Disadvantages
        
        Can become overly dependent on donors; may be focused on one segment of population; funding can be irregular
      - Charities
        
        Specific form of NGO who aims to provide who can't help themselves
      - Evaluation
        
        Disadvantages
        
        Funding can be irregular; employees can have passions that ill serve the organisation's cause; competition for grants is high; limited employee salary
        
        Advantages
        
        Help people/ causes in need; foster informed discussions in the community about allocation of resources; can innovate; limited liability
  - - - Vision
        
        Long-term aspirations and future goals;
        What do we want?
        Points to future
      - Mission
        
        Fundamental purpose of an organisation;
        Why are we doing what we are doing?
        Focused on the present
    - - Aims
        
        Long-term goals (Vision statement is a summary of the aims)
      - Objectives
        
        Medium-to-short-term goals (Mision statement is a summary of these objectives)
        
        Without objectives have no real sense of purpose; important to:
        
        Measure and control performance
        
        Motivate workforce
        
        Direct all individuals to same focus
      - Strategy
        
        Plan an organisation creates to reach an objective
        
        Long-term plan to achieve strategic objectives;
        
        involves analysis, planning, implementation and review
        
        approved by owner, executed by senior managers
      - Tactics
        
        Smaller actions that help reach business goals
        
        Short term methods to achieve tactical objectives;
        
        more flexible
        
        managed by middle managers
    - - profit maximisation
        
        growth
        
        survival
        
        protecting shareholder value
        
        ethical/social responsibility
      - Businesses operate in changing environments so objectives evolve
        
        Internal factors
        
        leadership
        
        HR
        
        Organisation
        
        Product performance
        
        Finance
        
        Operations
        
        External factors
        
        STEEPLE (social, technological, economic, ethical, political, legal, ecological)
      - Ethical objectives
        
        build customer loyalty
        
        create positive reputation
        
        attract & motivate employees
        
        avoid legal issues
        
        meet rising customer expectations
        
        may increase short-term costs
        
        pressure competitors to do same
    - - Business acting responsibly beyond profit and legal compliance
      - Benefits of CSR
        
        improves reputation and media image
        
        adds value and supports premium pricing
        
        boosts employee morale
        
        contributes to solving societal problems
        
        competitive advantages and stakeholder loyalty
      - Costs of CSR
        
        increased expenses, sometimes passed to customers
        
        possible short-term profit reduction
    - - SWOT
        
        SO (growth) - use strengths to exploit opportunities
        
        WO (reorientation) - fix weaknesses to capture opportunities
        
        ST (defusing) - use strengths to reduce threats
        
        WT (defensive) - protect business agains combined weaknesses and threats
      - Ansoff matrix
        
        Market penetration - increase share in existing market
        
        Market development - expand into new markets/ segments
        
        Product development - new/modified products for existing markets
        
        Diversification - new products in new markets (riskiest)
  - - - 'stake' can be financial or non-financial
      - Businesses must consider stakeholders to operate successfully and ensure long-term sustainability
    - - owners
      - employees
      - management
      - shareholders
    - - customers
      - suppliers
      - local community
      - government (local/national)
      - pressure groups
      - banks/ financiers
      - media
      - competitors
    - - Market and non-market
        
        Market - those with commercial/ financial relationship with the business
        
        Non-market - those without a direct financial exchange but still affected
      - Primary and secondary
        
        Primary - directly affect or are affected
        
        Secondary - indirect relationship with business
    - - Economic sustainability - business must be profitable to survive
      - Sociocultural sustainability - distributing value fairly among stakeholders
      - Environmental sustainability - protecting planetary boundaries and resources
    - - When the objectives/interests of stakeholder groups contradict
        
        Common examples:
        
        Shareholders vs. local community
        
        Customers vs suppliers
        
        Managers vs employees
      - Conflict management
        
        communication, transparency and compromise are needed
        
        stakeholder grey area - some stakeholders have overlapping interests (eg: employee who owns shares)
    - - Group A - Minimal effort: Can usually be ignored/given minimal attention
      - Group B - Keep informed: Keep updated to build loyalty and support
      - Group C - Keep satisfied: Must be acknowledged and included
      - Group D - Key players: Must be fully informed and included
  - - - factors outside the business can affect growth and evolution
      - purpose - identify and prioritise external influences to develop strategies
      - not all external changes affect every business equally
    - - Importance of scale
        
        larger businesses can produce at lower costs than smaller competitors -> can lower prices while maintaining profit (increase market share)
      - Economies of scale
        
        benefits gained as business increases output, lowering average cost per unit
      - Diseconomies of scale
        
        when further growth leads to higher average costs due to inefficiencies
- - - - Intrinsic - satisfaction of carrying an activity
        Extrinsic - motivation coming from external factors
      - Theories
        
        Frederick Winslow Taylor - Scientific Management
        
        workers are naturally lazy and only work efficiently for pay incentives (piece-rate pay or close supervision)
        
        ad: increases productivity in repetitive tasks
        
        dis: ignores job satisfaction and intrinsic motivation
        
        Maslow - hierarchy of needs
        
        employees have a hierarchy of needs and motivation occurs as each level is satisfied
        
        Physiological, Safety, Social, Esteem, Self-actualisation
        
        ad: holistic; considers needs beyond money
        
        dis: hierarchy may not be universal
        
        Herzberg - Two-factor theory
        
        job satisfaction and dissatisfaction arise from different factors
        
        hiegine needs: prevent dissatisfaction
        
        motivational needs: actively motivate
        
        ad: differentiates between motivation and demotivation
        
        dis: factors can overlap; subjectivity
        
        McClelland - acquired needs
        
        people are motivated by different dominant needs
        
        achievement: desire for success
        
        power: desire to influence others
        
        affiliation: desire for social relationships
        
        ad: focuses on individual differences
        
        dis: needs may change over time
        
        Deci and Ryan - self-determination theory
        
        people are motivated by intrinsic and extrinsic factors and have three key needs
        
        autonomy: control over how tasks are controlled
        
        competence: feeling capable and skilled
        
        relatedness: connection to colleagues
        
        Equity theory - John Adams
        
        motivation depends on perceived fairness between inputs and outputs
        
        responses to inequality: reduced effort, ask for higher pay, leave org
        
        Expectancy theory - Victor Vroom
        
        motivation = effort performance reward
        expectancy: effort=>performance
        instrumentality: performance=>outcome
        valence: valence of outcome to employee
      - Labour turover
        
        percentage of employees leaving a business in a period
        number of staff leaving over a year / number of staff employed in a year * 100
        
        cause: internal (low pay, poor management) external (relocation, competitors)
        
        consequences: increased training costs, loss of skill, opportunity for fresh start
      - Labour retention
        
        percentage of people staying in a business
        total number of remaining employees / total number of original employees * 100
        high % => productivity, experience, stability
        low % => disruption, lower morale, higher costs
      - Recruitment and selection
        
        Methods of recruitment
        
        Internal recruitment: promotion, transfer
        advantages: cheaper, guicker, known skills
        disadvantages: limited candidates, resentment
        
        External recruitment: advertiserts, agencies, online
        advantages: larger talent pool, fresh ideas
        disadvantages: costly, risk of unknown performance
        
        Recruitment process
        
        job descripton a person speciaon -identify role reguinements application: CV or form
        Shortlisting: Select candidates matching reguirements
        testing: aptitude psychometric, skill assessment
        interviews: panel, structured, multi-stage
      - Training - upolate skills, prevent deskilling, motivate, improve productivity
        Induction: introduction to culture, policies, role expectations
        On-the-job: mentoring, shadowing, practical experience
        Off-the-job: workshops, seminars, formal courses
        Ad/dis: on-the-job: practical, relevant, cost-effective but may disrupt productivity
        • off the job broader learning, hash ideas but expensive; may not be directly applicable
      - Appraisal - review performance, provide feedback, identity training needs, motivate
        
        Methods
        
        Formative: ongoing feedback, improvement -oriented, low stakes
        
        2. Summative: ond-of-cyde evaluation, high stakes
        
        3. 360-degree: feedbach from managers, peers, suordinates, customers
        
        4. Self-appraisal: employee refleds on aun performance, strengins, weaknesses, goals.
        
        advantages: motivation, recognition, career development, feedback
        disadvantages: subjectivity, stress, time - consuming
      - Rewards
        
        Financial
        
        Salary: regular (mohthly) pay, Security
        
        Performance-related pay (PR$): bonus for targets, motivates output
        
        Employee share schemes: awnership, engagement
        
        Fringe benefits: health insurance, perks, non-taxed benefits
        
        Non-financial
        
        Job enrichment: more meaningful responsibilities
        
        Job rotation/ enlargement: Skill variety, reduces monotony
        
        Empowerment: autonomy, decision-making
        
        Purpose & teamwork: sense of meaning, collaboration
        
        Cultural considerations
        
        developed countries: non-financial rewards
        
        developing countries: financial rewards