Repaso IB Business and Managment PDF

**[Human Resources]** Definition: The area in charge of administrating the worker\'s performance and motivation inside the company. **[Organizational Structure]** CEO Chief Executive Officer (HEAD OF ALL) HRHuman Resources CMO Chief Marketing Officer CFO Chief Financial Officer COO Chief Oper...

**[Human Resources]** Definition: The area in charge of administrating the worker\'s performance and motivation inside the company. **[Organizational Structure]** CEO Chief Executive Officer (HEAD OF ALL) HRHuman Resources CMO Chief Marketing Officer CFO Chief Financial Officer COO Chief Operation Officer **[Motivational Theory]** 1. Maslow Pyramid (HIGHEST TO LOWEST) Need to satisfy the lower level to continue to the next one Self-Actualization I work because I know it's right Esteem I want to have more so people can still congratulate me Love and belonging I work because I have family to support Safety Needs I work because I want a safe home Basic NeedsI work because I need food, water and clothes 2. Herzberg Motivational Theory **hygiene factors** prevent dissatisfaction, and **motivators** create satisfaction. To have a happy and motivated workforce, both need to be managed well. 3. Taylor's Motivational Theories Money is the only motivation needed **[Marketing]** Segmentation Separate your customers by preference Types of Segmentation - Demographic (Age, Gender, Religion, Ethnic and Family) - Geographic Divide the mark by the weather/country/region - Psychographic Segmentation by social and economic status KEY CONCEPTS: Target Market Consumer group you target Mass Market Promote a product that all people would buy by equal Niche Market Specific Market, for example Insuline (target to diabetic persons) Unique Selling Point What makes your product different from others. Types of Differentiation Product DifferentiationPhysical Differentiation like performance Service Differentiation Service quality like delivery time Price Differentiation Different prices for the same product Example of Price Differentiation N+S+F= 15 Dollars Alone: N: 5 / S:7 / F:6 **[Sales Forecasting]** This refers to predicting future sales but depends on the season and trends Marketing Mix: 4p's Place: Where are you selling the product Product: What are you selling Price: What is the price of the product Promotion Where are you promoting the product **[Market Research]** Primary Market Research: 1to1 Consumer Supervisor talk (Focus Groups) Secondary Market Research: Reading from an article (newspaper), there is where you get the data **[BCG MATRIX]** **Stars**: High market growth and high market share. - These are successful products in growing markets. They generate a lot of revenue but may require significant investment to maintain their position. Over time, they can become Cash Cows. **Cash Cows**: Low market growth but high market share. - These are established, profitable products that don't need much investment. They generate consistent cash flow, which can be used to fund other parts of the business. **Question Marks** (or Problem Children): High market growth but low market share. - These are new or struggling products in a growing market. They need investment to improve their position. The business must decide whether to invest heavily to turn them into Stars or discontinue them. **Dogs**: Low market growth and low market share. - These are products that aren't growing and don't generate much profit. Businesses often decide to phase these out as they tie up resources with little return. **[Ansoff Matrix: ]** **Market Penetration (TOP LEFT)**: Sell more of what you already have to current customers. **Product Development(TOP RIGHT)** : Make new products for your existing customers. **Market Development(LOW LEFT)**: Find new customers for your existing products. **Diversification(LOW RIGHT)**: Try something completely new with new products and new markets. **[FINANCE]** **Statement of Profit and Loss** Structure: \+ Sales Revenue -COGS -Gross Profit -Expenses -Depreciation =EBIT(Earning Before Interes and Taxes) -Interest =EBT (Earning Before Taxes) -Taxes =Net Profit -Dividens =Retained Profit Definitions: - Assets: All where you can produce cash - Liability: Is debt, it is divide it by Current (short term) and Non-Current (long term) - Equity: Capital and Reserves of the cash of the company **BALANCE SHEET** [Non Current Assests ] -Property,Plant and equipment \- Accumulated Depreciation [Current Assests:] -Cash -Debtors -Stock [Current Liabilities ] -Bank Overdraft -Creditors -Long Term loans [Non current liabilities] -Borrowing long term [Equity:] Share Capital Retained Earnings FOR A SUCCESFUL BALANCE SHEET NET ASSETS = NET LIABILITIES+ EQUITY [Net Present Value] *Formula* **[RATIOS:]** Stock Turnover RatiosTime to sell and restock you inventory Debtor daysAmount of days the debtor would pay you Creditors Days Amount of time I need to pay another person Gearing Ratio To what extend the capital its financed by the loan Liquidity Ratios In how much time you can pay your short term debt with your current assests. Acid Test (quick ratio) Same as liquidity ratio but you take out the doubt of the stock ROCE Profitability by capital **[Depreciation]** Definition: Value reduced by time or usage to an Asset Formula: [\$\\frac{Original\\ cost - residual\\ value}{\\text{expected\\ useful\\ life\\ of\\ asset}}\$]{.math.inline} **[CASH FLOW]** - Money that flows in and out of a business over a givren period of time. Formulas: Closing Balance: = Net Cash Flow + Opening Balance Net Cash Flow: Cash flow INFLOW + Cash outflows **[OPERATIONS:]** Know the cost of production Key concepts:\ \ Job Production Create a product customized for the customer Batch Production Create products by groups (100 green and 100 red) Mass Production Create a product that is the same for everyone Outsourcing Employing another business as a 3rd party Off shoring Contract people overseas Insourcing Contract people from your area Just in Time (JIT) Extra stock when you have extra demand Just in Case (JIC) Save RAW materials when you have extra demand **[COST:]** Fixed CostSame payments for the time period Variable Cost Different payments for the time period Price The amount of money you would charge for the product to the customer Contribution: Formula: Price- Variable Cost Formulas: Margin of Safety= Output- Break even quantity Break Even quantity: [\$\\frac{\\text{Fixed\\ Cost}}{Contribution\\ (per\\ unit)}\$]{.math.inline} Source of finance Definition ------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Microfinance Microfinance refers to the provision of financial services to low-income clients, including consumers and the self-employed. Leasing A source of finance that allows a firm to use an asset without having to purchase it with cash. Share capital This is money from the sale of shares of a limited company and is also known as equity capital. Buyers of these shares are known as shareholders and may be entitled to dividends when profits are made. Sale of assets This is when a business sells off its unwanted or unused assets to raise funds. Sale of assets ------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- Benefits Limitations Good way of raising cash from capital that is tied up in assets which are not being used. This option is only available to established businesses as new businesses may lack excess assets to sell. No interest or borrowing costs are incurred. It can be time-consuming to find a buyer for the assets, especially for obsolete machinery Loan ----------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Benefits Limitations Loan capital is accessible and can be arranged quickly for a firm's specific purpose. The capital will have to be redeemed even if the business is making a loss. Its repayment is spread out over a predetermined period of time, reducing the burden to the business of having to pay it in a lump sum. In some cases will have to be redeemed even if the business is making a loss. +-----------------------------------+-----------------------------------+ | ORGANISATIONAL STRUCTURE | | +===================================+===================================+ | Tall | Flat | +-----------------------------------+-----------------------------------+ | A tall organizational structure | A flat organizational structure | | features many hierarchical | has minimal hierarchical levels, | | levels, resulting in a clear | fostering collaboration and | | chain of command but potentially | faster decision-making by | | slower decision-making due to | empowering employees and reducing | | multiple layers of management. | the layers of management. | | | | | boss | | +-----------------------------------+-----------------------------------+ Decision Tree ---------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------- Benefits Limitations Decision trees are easy to understand, making it simple for everyone in the business to follow along with the decision-making process. Decision trees may not be as accurate as more advanced prediction methods, which could lead to missing important insights. They are quick to implement and cost-effective, requiring less computing power compared to more complex models. They can favor larger groups in the data, potentially overlooking smaller but significant categories. Term Definition --------------------------------------------------------------- ------------------------------------------------------------------------------ Conglomerate Company that owns different business that aren't related to others Internal growth Company expands by increasing its own operations. External growth Company that grows by merging with other business. Multinational company Company that operates in multiple countries all around the world Franchising Expand by allowing other to run business using its brand in change for fees. Joint venture Two or more business work together sharing risk rewards Strategic Alliance Partnership to achieve goals that they could reach alone Product orientated approach to marketing Benefits Limitations Focus on quality, concentrating in making the best product Customer needs ignores, it is not focus in customer needs Innovation, they encourage creating new and improved products Limited marketing success, their success depends on product quality alone Market orientated approach to marketing ---------------------------------------------------------------------------- --------------------------------------------------------------- Benefits Limitations Better Sales, aligning product to people wants Costs, may be expensive to know and understand customer needs Adaptability, company can quickly adjust to change in customers preference Complexity, managing customers data is complex CSR ----------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------ Benefits of implementing CSR Limitations of implementing CSR Better sales, company seen as socially responsible have better public image, so it actually improves brand image and their sales. Costs, implementing CSR activities are expensive Builds customer loyalty, people likely to support and stay loyal to companies that care about environment issues Complexity, reporting CSR activities can be time consuming Private limited company ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations Limited Liability: Owners (shareholders) of a private limited company enjoy limited liability, meaning their personal assets are protected from business debts, reducing financial risk. **Limited Number of Shareholders**: There are usually restrictions on the maximum number of shareholders. More Control: A private limited company has fewer shareholders, allowing for more centralized control and decision-making, which can facilitate faster and more efficient business operations. **Higher Costs**: Setting up and running a private limited company can be more expensive than other business structures, due to legal and administrative fees. Public limited company ------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations **Access to Capital**: Can raise money by selling shares to the public. This helps them grow and expand their business. **Costly to Set Up and Maintain**: Starting a PLC involves significant costs, including legal fees and compliance with regulations. Ongoing costs can also be high due to reporting requirements. **Easier to Transfer Ownership**: Shares in a PLC can be easily bought and sold on the stock market, making it easier for shareholders to exit their investment. Loss of Control: Shareholders in a public company can influence decisions, which may lead to a dilution of control for original founders and management, as they must cater to the interests of a broader group of investors. Sole trader ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations Full Control: A sole trader has complete control over business decisions, allowing for quick decision-making and a clear vision for the business direction. Unlimited Liability: As a sole trader, the owner is personally responsible for all business debts, which means personal assets are at risk if the business fails. **Simple Setup**: Starting as a sole trader is straightforward and involves fewer legal formalities compared to other business structures. This makes it easy to get started. Limited Resources: Sole traders may have restricted access to capital and resources compared to larger businesses, making it challenging to invest in growth or weather financial difficulties. Joining a franchise --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Benefits Limitations Established Brand Recognition: Joining a franchise allows franchisees to leverage an existing brand\'s reputation and customer loyalty, leading to potentially quicker sales and success. High Startup Costs: Franchisees often face significant initial fees and ongoing royalty payments, which can reduce profitability and increase financial risk. Comprehensive Support: Franchisees typically receive training, marketing assistance, and ongoing support from the franchisor, reducing the challenges of starting and running a business independently. Limited Control: Franchisees must adhere to the franchisor\'s established rules and procedures, which can limit their ability to make independent business decisions and adapt to local market conditions. Market segmentation ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations Targeted Marketing: By dividing a broad market into smaller segments, businesses can create more tailored marketing strategies to meet the specific needs of each group, leading to higher customer satisfaction. **Increased Costs**: Segmenting a market can require additional resources, such as conducting market research, developing targeted marketing campaigns, and creating specialized products or services for each segment. **Increased Customer Loyalty**: When businesses focus on the needs of specific market segments, customers feel more understood, which can increase their loyalty and retention. **Product Development**: Segmentation can help businesses develop new products or improve existing ones by understanding the unique preferences of different customer groups. Primary market research ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations **Up-to-Date Data**: Since you collect the data yourself, it is current and reflects the latest market trends, giving you a real-time understanding of the market. **Time-Consuming**: Collecting primary data can take a lot of time, from designing surveys or interviews to gathering and analyzing responses, which can delay decision-making. **Specific to Your Needs**: Primary research is tailored to the specific needs and questions of your business, making the information highly relevant to your goals. **Costly**: Primary research can be expensive, especially if you need to conduct large-scale surveys, hire researchers, or use specialized tools for data collection. Secondary market research ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations **Cost-Effective**: Secondary research is typically cheaper than primary research because the data already exists. You don't need to spend money on surveys, interviews, or data collection. **Outdated Information**: Secondary data may be old or outdated, especially in fast-changing markets. This can make it less reliable for current decision-making. **Time-Saving**: Since the information is already available, secondary research can be done quickly, allowing businesses to gather insights without having to wait for new data to be collected. **Lack of Specificity**: Secondary research often provides broad, generalized information, which might not directly address the specific needs or questions of your business. Online sources (for secondary research) Benefits Limitations **Wide Range of Information**: The internet provides access to a vast amount of information on almost any topic, making it easier to find data, reports, and studies relevant to your research. **Credibility Issues**: Not all online sources are reliable or trustworthy. There is a risk of encountering inaccurate, biased, or outdated information, so it's important to verify the credibility of the sources. **Convenience and Speed**: Online sources are easily accessible from anywhere and at any time, allowing researchers to gather information quickly without needing to visit physical libraries or archives. **Overload of Information**: The sheer volume of available information online can be overwhelming, making it difficult to filter out irrelevant or low-quality data. Media articles (for secondary research) ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations **Wide Availability**: Media articles are easily accessible, often available online or in print, making them a convenient source of information for secondary research. **Potential Bias**: Media outlets may have political, cultural, or financial biases that can affect the objectivity of their articles. This makes it important to critically evaluate the sources. **Current Information**: Media articles tend to cover recent events, trends, and developments, providing up-to-date information that may not yet be available in academic journals or reports. **Lack of Depth**: Media articles often provide surface-level information without going into the detailed analysis or research that academic papers or reports offer. P from marketing Explanation ------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Process The systems and procedures involved in delivering products or services, which influence efficiency and customer experience. Physical evidence The tangible aspects that support the service experience, such as packaging, branding, and the physical environment where a service is delivered. People This refers to everyone involved in the service delivery, including employees, management, and customers, emphasizing the importance of staff training and customer interactions. Time rate (wages) system ------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations Predictable Earnings: Employees enjoy a consistent and stable income based on hours worked, making financial planning easier. **Lack of Incentive for Productivity**: Employees may lack motivation to increase productivity, as their pay does not change based on the amount of work completed. **Stability for Employees**: Workers know exactly what they will earn for their hours worked, providing financial stability and predictability. **Higher Labor Costs**: Employers may face higher labor costs, especially if employees work overtime or if there is a lack of productivity. Salary payment system ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Benefits Limitations **Stable Income:** Employees receive a fixed salary, providing predictable and consistent earnings, which aids in personal financial planning and enhances job security. **Lack of Flexibility**: Salaried employees are paid a fixed amount, which may not account for variations in workload. This can lead to overworking without additional pay, lowering morale. **Motivation and Retention**: A reliable salary can boost employee motivation and loyalty, as they know they'll be compensated consistently regardless of fluctuations in workload. **Higher Costs for Employers**: If business slows down, employers still need to pay the agreed salaries, which can increase financial pressure during difficult times. Term Explanation ----------------- ------------------------------------------------------------------------------------------------------------------------------------- Job enlargement Involves assigning additional tasks of equal responsibility to an employee, enhancing their role without increasing responsibility. Job enrichment Enhancing a job by increasing responsibilities and autonomy, making it more rewarding for employees. Job rotation Job rotation involves moving employees between different tasks or roles to develop skills. Financial Term Explanation --------------------- ----------------------------------------------------------------------------------------------------------- Capital expenditure  Funds used for investment in long-term assets such as buildings and significant equipment. Revenue expenditure Funds used to cover daily operational costs, including salaries, utilities, and other recurring expenses. Financial Term Explanation ---------------- ------------------------------------------------------------------------------------------------------------------------------------------ Cashflow Cash flow is the movement of money into and out of a business over a specific period. Profit A financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something. 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 Disadvantages **Job Creation:** Multinational companies generate employment opportunities in host countries. **Market Disruption:** Local businesses may struggle to compete effectively, leading to potential market exit. **Technology Transfer:** Introduction of advanced technologies enhances local industry capabilities. **Cultural Impacts:** The influx of multinational entities may lead to significant shifts in local culture and practices. **Global Market Access:** Facilitates local products entering international markets, increasing their competitiveness. **Environmental Concerns:** Operations of multinationals may result in environmental degradation in host regions. **Low Labour turnover** -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- Advantages Disadvantages **Cost Efficiency:** Reduced expenses on recruiting and training new employees. **Innovation Stagnation:** A static workforce may hinder the introduction of fresh ideas and perspectives. **Expertise Retention:** Long-term staff possess extensive knowledge and understanding of their roles. **Difficult Replacements:** Losing key long-term employees can create challenges in finding suitable replacements. **Strong Relationships:** Longevity in the workforce fosters collaboration and teamwork. **Talent Gap:** Potential missed opportunities to harness new skills and knowledge from younger professionals.