Unit 1 test IB Business Management Notes
Business: decision-making organization established to produce goods and/
or provide services.
Purpose of a business: to provide goods and/or services that meet the
needs or wants of the customers usually in return for a profit.
Goods: physical products
Services: intangible products
Services are:
- Intangible: not physical
- Inseparable: from their production because they are typically
produced and consumed at the same time
- Perishable: they don't last, they are consumed at the time of
purchase
- Variable: heterogeneous
To produce goods and services, businesses need to combine the 4 factors
of production:
- Land: natural resources needed to produce goods and services.
- Labour: human resources
- Capital: manufactured resources used in the production process.
They are funded by money- sometimes referred to as financial resources.
- Entrepreneurship: knowledge, skills and experiences of individuals
who have the capability to manage the production process. Entrepreneurs
want and are able to take risks in order to produce goods and services to
customers making profit<.
Departments of a business:
- Human resources: business operations related to staff (personnel)
within an organisation.
,e.g. recruitment, training, promotion, dismissal of staff…
They also have to follow the legal aspects of: minimum wages, working
hours, equal opportunities and anti-discrimination.
- Finance and accounts: responsible for managing the organization's
money and maintain financial records of the firm's funds.
- Marketing: identifies the needs and wants of customers so that the
business can provide goods and services that meet these requirements.
Marketing activities:
1. Market research (to discover what consumers want)
2. Determine appropriate pricing methods to sell products
3. Promotion and advertising
4. Distributing the products efficiently
- Operation management (production): process of making goods and
services from the resources available to meet the needs and wants of a
customer. It makes sure that the goods and services meet the deadlines
and quality standards.
All four of these function of a business are interdependent: they depend
on one another.
Businesses produce new goods and services because of the new tastes
and preferences of customers and the changes in technology.
They have to stay competitive- they introduce new goods and services to
fill in gaps in the market.
Customers: people or other businesses that purchase goods and services.
Adding value: process of producing goods or services that is worth more
than the cost of resources used to produce it.
e.g. a good textbook is worth far more to customers rather than the paper
and ink used to produce it.
, Economic sectors/ economic activities:
Primary sector: extraction of natural resources.
e.g. oil and natural gas have to be drilled from the ground, rubber needs
to be extracted from trees…
This sector is also known as extractive production.
Examples:
- Agricultural farming (crops)
- Fishing
- Hunting
- Mining
- Extraction of oil and gas
Primary sector is predominant in the less economically developed
countries or low-income economies. It accounts for the majority of gross
domestic product in these economies.
Secondary sector: business activity involved with the manufacturing or
construction of finished products.
It transforms the primary outputs into finished goods.
e.g. plastic into oil
It also occupies in transforming secondary outputs into finished goods
e.g. assembling parts of motor vehicles, laptops, smartphones.
Examples:
- Engineering
- Construction
- Food processing
- Road construction
- Car manufacturing
It is the predominant sector in economically developing countries.
Secondary sector is the "engine of growth"- importance of manufacturing
and construction for a country's economic growth.
Largest manufacturers:
Business: decision-making organization established to produce goods and/
or provide services.
Purpose of a business: to provide goods and/or services that meet the
needs or wants of the customers usually in return for a profit.
Goods: physical products
Services: intangible products
Services are:
- Intangible: not physical
- Inseparable: from their production because they are typically
produced and consumed at the same time
- Perishable: they don't last, they are consumed at the time of
purchase
- Variable: heterogeneous
To produce goods and services, businesses need to combine the 4 factors
of production:
- Land: natural resources needed to produce goods and services.
- Labour: human resources
- Capital: manufactured resources used in the production process.
They are funded by money- sometimes referred to as financial resources.
- Entrepreneurship: knowledge, skills and experiences of individuals
who have the capability to manage the production process. Entrepreneurs
want and are able to take risks in order to produce goods and services to
customers making profit<.
Departments of a business:
- Human resources: business operations related to staff (personnel)
within an organisation.
,e.g. recruitment, training, promotion, dismissal of staff…
They also have to follow the legal aspects of: minimum wages, working
hours, equal opportunities and anti-discrimination.
- Finance and accounts: responsible for managing the organization's
money and maintain financial records of the firm's funds.
- Marketing: identifies the needs and wants of customers so that the
business can provide goods and services that meet these requirements.
Marketing activities:
1. Market research (to discover what consumers want)
2. Determine appropriate pricing methods to sell products
3. Promotion and advertising
4. Distributing the products efficiently
- Operation management (production): process of making goods and
services from the resources available to meet the needs and wants of a
customer. It makes sure that the goods and services meet the deadlines
and quality standards.
All four of these function of a business are interdependent: they depend
on one another.
Businesses produce new goods and services because of the new tastes
and preferences of customers and the changes in technology.
They have to stay competitive- they introduce new goods and services to
fill in gaps in the market.
Customers: people or other businesses that purchase goods and services.
Adding value: process of producing goods or services that is worth more
than the cost of resources used to produce it.
e.g. a good textbook is worth far more to customers rather than the paper
and ink used to produce it.
, Economic sectors/ economic activities:
Primary sector: extraction of natural resources.
e.g. oil and natural gas have to be drilled from the ground, rubber needs
to be extracted from trees…
This sector is also known as extractive production.
Examples:
- Agricultural farming (crops)
- Fishing
- Hunting
- Mining
- Extraction of oil and gas
Primary sector is predominant in the less economically developed
countries or low-income economies. It accounts for the majority of gross
domestic product in these economies.
Secondary sector: business activity involved with the manufacturing or
construction of finished products.
It transforms the primary outputs into finished goods.
e.g. plastic into oil
It also occupies in transforming secondary outputs into finished goods
e.g. assembling parts of motor vehicles, laptops, smartphones.
Examples:
- Engineering
- Construction
- Food processing
- Road construction
- Car manufacturing
It is the predominant sector in economically developing countries.
Secondary sector is the "engine of growth"- importance of manufacturing
and construction for a country's economic growth.
Largest manufacturers:
