IB Business Management Paper 1 Review
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Questions and Answers

What is human capital?

The skills, attitudes, and abilities that people bring to their jobs.

What are some benefits of a salary payment system?

  • No overtime worries (correct)
  • Flexible work hours
  • Extra pay for extra work
  • Stable income (correct)

    • What is job enlargement?

  • Assigning an employee to a leadership role
  • Moving employees between different jobs within a company
  • Giving an employee more tasks to do at the same level of responsibility (correct)
  • Adding more challenging tasks to make the job more interesting

    • Capital expenditure refers to money spent on __________.

    <p>long-term assets like buildings and equipment</p> Signup and view all the answers

    What is cash flow in business?

    <p>The movement of money in and out of the business.</p> Signup and view all the answers

    Match the advantages and disadvantages of multinational companies on host countries:

    <p>Create job opportunities = Might push local business out of the market Bring new technology = Cultural changes Help local products reach global markets = Environmental damage</p> Signup and view all the answers

    What is one advantage of low labor turnover?

    <p>Company spends less money on hiring</p> Signup and view all the answers

    What is microfinance?

    <p>Providing small loans and financial services to people without access to traditional banking</p> Signup and view all the answers

    What is share capital?

    <p>Money a company gets from selling shares.</p> Signup and view all the answers

    A __________ organization has many layers of management.

    <p>tall</p> Signup and view all the answers

    A __________ organizational structure has fewer layers of management.

    <p>flat</p> Signup and view all the answers

    Decision trees are visual and straightforward.

    <p>True</p> Signup and view all the answers

    What is a conglomerate?

    <p>A large company that owns several different businesses that aren't related.</p> Signup and view all the answers

    What is an advantage of a market-oriented approach to marketing?

    <p>Better sales through aligning products with customer needs</p> Signup and view all the answers

    Which of the following is a limitation of CSR?

    <p>High costs</p> Signup and view all the answers

    What is overtrading?

    <p>Spending more money on inventory and other costs than it's bringing in from sales.</p> Signup and view all the answers

    What is a key benefit of a public limited company?

    <p>Easier to buy/sell shares</p> Signup and view all the answers

    A sole trader has full control over the business.

    <p>True</p> Signup and view all the answers

    What is a disadvantage of joining a franchise?

    <p>Significant upfront fees and ongoing royalties</p> Signup and view all the answers

    Primary market research allows for __________ contact with customers.

    <p>direct</p> Signup and view all the answers

    What is a limitation of secondary market research?

    <p>Less control over quality</p> Signup and view all the answers

    Media articles always provide an unbiased view.

    <p>False</p> Signup and view all the answers

    What does human capital refer to?

    <p>The skills, attitudes, and abilities that people bring to their jobs.</p> Signup and view all the answers

    Match the following job-related terms with their definitions:

    <p>Job Enlargement = Giving an employee more tasks to do at the same level of responsibility Job Enrichment = Adding more challenging tasks to make the job more interesting Job Rotation = Moving employees between different jobs or tasks within a company</p> Signup and view all the answers

    Which of the following is a benefit of a salary payment system?

    <p>No Overtime Worries</p> Signup and view all the answers

    What is a disadvantage of low labour turnover?

    <p>Fewer workers bringing new ideas</p> Signup and view all the answers

    Multinational companies always harm local businesses.

    <p>False</p> Signup and view all the answers

    Which of these is considered a financial term?

    <p>Cashflow</p> Signup and view all the answers

    What is microfinance?

    <p>Providing small loans and financial services to people who don't have access to traditional banking</p> Signup and view all the answers

    What does share capital represent?

    <p>The money a company gets from selling shares to people.</p> Signup and view all the answers

    Selling assets helps to improve cash flow.

    <p>True</p> Signup and view all the answers

    Which of the following describes a tall organizational structure?

    <p>Has many layers of management</p> Signup and view all the answers

    What is a conglomerate?

    <p>A large company that owns several different businesses that aren't related to each other.</p> Signup and view all the answers

    What does CSR stand for?

    <p>Corporate Social Responsibility.</p> Signup and view all the answers

    What is one benefit of primary market research?

    <p>It gives the most current data, as it's collected firsthand</p> Signup and view all the answers

    A public limited company has more control for its management than a private limited company.

    <p>False</p> Signup and view all the answers

    Match the following business structures with their characteristics:

    <p>Sole Trader = You make all decisions and run the business Public Limited Company = Shares can be bought or sold easily Private Limited Company = Owners are not personally responsible for debts Franchise = Following a tested business model reduces risk</p> Signup and view all the answers

    A partnership between businesses to achieve goals is called a ______.

    <p>strategic alliance</p> Signup and view all the answers

    Study Notes

    Sources of Finance

    • Microfinance: Offers small loans and financial services to individuals without access to traditional banks.
    • Leasing: Involves renting an asset with the option to purchase at the end of the lease period.
    • Share Capital: Funds raised by selling shares of the company, giving investors partial ownership.
    • Sale of Assets: Involves selling company-owned items to generate cash, impacting resource availability.

    Benefits and Limitations of Financial Sources

    • Sale of Assets:
      • Benefits: Provides immediate cash flow; aids in debt reduction.
      • Limitations: Loss of potential resources; may disrupt operations.
    • Loans:
      • Benefits: Immediate funds for investments, enables large purchases.
      • Limitations: Requires repayment with interest; potential for high costs due to interest rates.

    Organizational Structures

    • Tall Structure: Features many management layers and a clear hierarchy for decision-making.
    • Flat Structure: Characterized by fewer management layers, promoting wider communication among employees.

    Decision-Making Tools

    • Decision Trees:
      • Benefits: Simple visualization of outcomes; applicable for various decision scenarios.
      • Limitations: Complexity increases with more options; may favor branches with more options.

    Business Growth Strategies

    • Conglomerate: Company owning various unrelated businesses.
    • Internal Growth: Expansion through enhancing own operations rather than acquisitions.
    • External Growth: Achieved through mergers or acquisitions.
    • Multinational Company: Operates in multiple countries worldwide.
    • Franchising: Allows others to operate businesses under a company’s brand for fees.
    • Joint Venture: Collaboration between businesses sharing risks and benefits.
    • Strategic Alliance: Partnerships to achieve shared goals, often through specific projects.

    Marketing Approaches

    • Product-Oriented: Focus on product quality and innovation, potentially ignoring customer needs.
    • Market-Oriented: Aligns products with consumer preferences, enhancing adaptability and sales.

    Corporate Social Responsibility (CSR)

    • Benefits: Improves reputation; fosters customer loyalty; enhances public image.
    • Limitations: Can be expensive; complicated management and reporting.

    Factors Affecting Cash Flow

    • Overtrading: Leads to cash shortages due to excessive inventory and costs.
    • Purchasing Fixed Assets: Reduces liquidity by tying up cash in equipment or property.
    • Giving Credit: Delays cash receipt, potentially causing cash flow issues.
    • Sale of Assets: Generating cash instantly to alleviate financial pressure.

    Business Structures

    • Private Limited Company: Offers limited liability and control with fewer shareholders but faces growth capital limitations and significant regulatory requirements.
    • Public Limited Company: Allows easy share trading and increased visibility but involves regulatory complexities and potential loss of control.
    • Sole Trader: Provides full control and easy setup but entails personal financial risk and difficulty in raising substantial funds.

    Franchising

    • Benefits: Leverages established brands, reduces failure risk, and offers known business models.
    • Limitations: Upfront fees and shared brand reputation risks.

    Market Segmentation

    • Benefits: Tailors products/services to specific groups for increased sales and targeted marketing.
    • Limitations: Can be costly and time-consuming to analyze and segment accurately.

    Market Research

    • Primary Research:
      • Benefits: Direct insights; current data.
      • Limitations: Time-intensive; costly.
    • Secondary Research:
      • Benefits: Cost-effective; quick access to existing data.
      • Limitations: Quality control issues; potential outdated information.
    • Online Sources:
      • Benefits: Easy access; often free.
      • Limitations: Varying reliability of information.
    • Media Articles:
      • Benefits: Provides current insights; reflects public opinion.
      • Limitations: Possible bias; lacks detailed data.

    Marketing Strategy Elements

    • Process: Refers to the methods and policies involved in product delivery.
    • Physical Evidence: Visual elements customers notice, shaping their impressions of the brand.
    • People: Human capital encompasses the skills and abilities employees bring to their roles.

    Wage Payment Systems

    • Time Rate (Wages) System:
      • Benefits: Ensures income security; opportunities for overtime.
      • Limitations: May reduce employee motivation; could lead to slower work pace.### Salary Payment System
    • Stable Income: Fixed monthly salary aids employees in budgeting and financial planning.
    • No Extra Pay for Extra Work: Longer hours often do not result in additional pay, potentially leading to employee dissatisfaction.
    • No Overtime Worries: Fixed salary provides peace of mind regarding hourly wage calculations.
    • Less Flexibility: Employees may feel restricted in their work hours, as they are expected to complete tasks regardless of time taken.

    Job Design Terminology

    • Job Enlargement: Involves assigning additional tasks of equal responsibility to an employee, enhancing their role without increasing responsibility.
    • Job Enrichment: Enhances job scope by adding challenging tasks, making roles more engaging for employees.
    • Job Rotation: Systematically moves employees among various tasks or jobs within the organization to diversify skills.

    Financial Terminology

    • Capital Expenditure: Investment in long-term assets such as buildings and significant equipment.
    • Revenue Expenditure: Covers daily operational costs, including salaries, utilities, and other recurring expenses.
    • Cashflow: Reflects the movement of money entering and exiting a business, critical for financial health.
    • Profit: Represents residual income after all operational expenses have been deducted from revenue.
    • Investment: Allocation of funds towards acquiring assets or improving business operations with the expectation of future returns.

    Impact of Multinational Companies on Host Countries

    • Advantages:

      • Job Creation: Multinational companies generate employment opportunities in host countries.
      • Technology Transfer: Introduction of advanced technologies enhances local industry capabilities.
      • Global Market Access: Facilitates local products entering international markets, increasing their competitiveness.

    • Disadvantages:

      • Market Disruption: Local businesses may struggle to compete effectively, leading to potential market exit.
      • Cultural Impacts: The influx of multinational entities may lead to significant shifts in local culture and practices.
      • Environmental Concerns: Operations of multinationals may result in environmental degradation in host regions.

    Low Labour Turnover

    • Advantages:

      • Cost Efficiency: Reduced expenses on recruiting and training new employees.
      • Expertise Retention: Long-term staff possess extensive knowledge and understanding of their roles.
      • Strong Relationships: Longevity in the workforce fosters collaboration and teamwork.

    • Disadvantages:

      • Innovation Stagnation: A static workforce may hinder the introduction of fresh ideas and perspectives.
      • Difficult Replacements: Losing key long-term employees can create challenges in finding suitable replacements.
      • Talent Gap: Potential missed opportunities to harness new skills and knowledge from younger professionals.

    Sources of Finance

    • Microfinance: Offers small loans and financial services to individuals without access to traditional banks.
    • Leasing: Involves renting an asset with the option to purchase at the end of the lease period.
    • Share Capital: Funds raised by selling shares of the company, giving investors partial ownership.
    • Sale of Assets: Involves selling company-owned items to generate cash, impacting resource availability.

    Benefits and Limitations of Financial Sources

    • Sale of Assets:
      • Benefits: Provides immediate cash flow; aids in debt reduction.
      • Limitations: Loss of potential resources; may disrupt operations.
    • Loans:
      • Benefits: Immediate funds for investments, enables large purchases.
      • Limitations: Requires repayment with interest; potential for high costs due to interest rates.

    Organizational Structures

    • Tall Structure: Features many management layers and a clear hierarchy for decision-making.
    • Flat Structure: Characterized by fewer management layers, promoting wider communication among employees.

    Decision-Making Tools

    • Decision Trees:
      • Benefits: Simple visualization of outcomes; applicable for various decision scenarios.
      • Limitations: Complexity increases with more options; may favor branches with more options.

    Business Growth Strategies

    • Conglomerate: Company owning various unrelated businesses.
    • Internal Growth: Expansion through enhancing own operations rather than acquisitions.
    • External Growth: Achieved through mergers or acquisitions.
    • Multinational Company: Operates in multiple countries worldwide.
    • Franchising: Allows others to operate businesses under a company’s brand for fees.
    • Joint Venture: Collaboration between businesses sharing risks and benefits.
    • Strategic Alliance: Partnerships to achieve shared goals, often through specific projects.

    Marketing Approaches

    • Product-Oriented: Focus on product quality and innovation, potentially ignoring customer needs.
    • Market-Oriented: Aligns products with consumer preferences, enhancing adaptability and sales.

    Corporate Social Responsibility (CSR)

    • Benefits: Improves reputation; fosters customer loyalty; enhances public image.
    • Limitations: Can be expensive; complicated management and reporting.

    Factors Affecting Cash Flow

    • Overtrading: Leads to cash shortages due to excessive inventory and costs.
    • Purchasing Fixed Assets: Reduces liquidity by tying up cash in equipment or property.
    • Giving Credit: Delays cash receipt, potentially causing cash flow issues.
    • Sale of Assets: Generating cash instantly to alleviate financial pressure.

    Business Structures

    • Private Limited Company: Offers limited liability and control with fewer shareholders but faces growth capital limitations and significant regulatory requirements.
    • Public Limited Company: Allows easy share trading and increased visibility but involves regulatory complexities and potential loss of control.
    • Sole Trader: Provides full control and easy setup but entails personal financial risk and difficulty in raising substantial funds.

    Franchising

    • Benefits: Leverages established brands, reduces failure risk, and offers known business models.
    • Limitations: Upfront fees and shared brand reputation risks.

    Market Segmentation

    • Benefits: Tailors products/services to specific groups for increased sales and targeted marketing.
    • Limitations: Can be costly and time-consuming to analyze and segment accurately.

    Market Research

    • Primary Research:
      • Benefits: Direct insights; current data.
      • Limitations: Time-intensive; costly.
    • Secondary Research:
      • Benefits: Cost-effective; quick access to existing data.
      • Limitations: Quality control issues; potential outdated information.
    • Online Sources:
      • Benefits: Easy access; often free.
      • Limitations: Varying reliability of information.
    • Media Articles:
      • Benefits: Provides current insights; reflects public opinion.
      • Limitations: Possible bias; lacks detailed data.

    Marketing Strategy Elements

    • Process: Refers to the methods and policies involved in product delivery.
    • Physical Evidence: Visual elements customers notice, shaping their impressions of the brand.
    • People: Human capital encompasses the skills and abilities employees bring to their roles.

    Wage Payment Systems

    • Time Rate (Wages) System:
      • Benefits: Ensures income security; opportunities for overtime.
      • Limitations: May reduce employee motivation; could lead to slower work pace.### Salary Payment System
    • Stable Income: Fixed monthly salary aids employees in budgeting and financial planning.
    • No Extra Pay for Extra Work: Longer hours often do not result in additional pay, potentially leading to employee dissatisfaction.
    • No Overtime Worries: Fixed salary provides peace of mind regarding hourly wage calculations.
    • Less Flexibility: Employees may feel restricted in their work hours, as they are expected to complete tasks regardless of time taken.

    Job Design Terminology

    • Job Enlargement: Involves assigning additional tasks of equal responsibility to an employee, enhancing their role without increasing responsibility.
    • Job Enrichment: Enhances job scope by adding challenging tasks, making roles more engaging for employees.
    • Job Rotation: Systematically moves employees among various tasks or jobs within the organization to diversify skills.

    Financial Terminology

    • Capital Expenditure: Investment in long-term assets such as buildings and significant equipment.
    • Revenue Expenditure: Covers daily operational costs, including salaries, utilities, and other recurring expenses.
    • Cashflow: Reflects the movement of money entering and exiting a business, critical for financial health.
    • Profit: Represents residual income after all operational expenses have been deducted from revenue.
    • Investment: Allocation of funds towards acquiring assets or improving business operations with the expectation of future returns.

    Impact of Multinational Companies on Host Countries

    • Advantages:

      • Job Creation: Multinational companies generate employment opportunities in host countries.
      • Technology Transfer: Introduction of advanced technologies enhances local industry capabilities.
      • Global Market Access: Facilitates local products entering international markets, increasing their competitiveness.

    • Disadvantages:

      • Market Disruption: Local businesses may struggle to compete effectively, leading to potential market exit.
      • Cultural Impacts: The influx of multinational entities may lead to significant shifts in local culture and practices.
      • Environmental Concerns: Operations of multinationals may result in environmental degradation in host regions.

    Low Labour Turnover

    • Advantages:

      • Cost Efficiency: Reduced expenses on recruiting and training new employees.
      • Expertise Retention: Long-term staff possess extensive knowledge and understanding of their roles.
      • Strong Relationships: Longevity in the workforce fosters collaboration and teamwork.

    • Disadvantages:

      • Innovation Stagnation: A static workforce may hinder the introduction of fresh ideas and perspectives.
      • Difficult Replacements: Losing key long-term employees can create challenges in finding suitable replacements.
      • Talent Gap: Potential missed opportunities to harness new skills and knowledge from younger professionals.

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    Description

    This quiz helped me with my mock for the IB Exams contains all you need to know for Paper 1

    This quiz covers key concepts from the IB Business Management syllabus, focusing on sources of finance. It includes definitions and explanations for terms like microfinance and leasing.

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