IB Business Management Unit 1: Introduction to Business Management - Core Operational Components and Business Functions Key Definitions

A business idea is the fundamental activity a business will undertake to meet customer needs and generate revenue.

The unique attributes or capabilities that allow a business to outperform its competitors. It enables a company to offer superior value to customers, whether through lower costs, differentiated products, superior quality, brand reputation, or innovation.

Diseconomies of scale occur when a business's average cost per unit increases as its production scale grows.

Economies of scale occur when a business's average cost per unit decreases as its production scale increases.

External growth involves collaborating with or acquiring other businesses.

External stakeholders are individuals or groups outside the organization who are affected by its activities or have an interest in its performance. They do not directly work for the business but can influence or be influenced by its actions.

Franchising allows a business (the franchisor) to license its brand and business model to independent operators (franchisees).

Growth refers to the expansion of a business in terms of sales, market share, profits, or operations over time.

Internal growth refers to expanding a business through its own resources and capabilities.

Internal stakeholders are individuals or groups directly involved in the organization and its operations. They have a direct interest in the business’s performance and decision-making.

A joint venture involves two or more companies creating a new, separate entity to pursue a specific project or goal.

Liquidity refers to a business's ability to convert assets into cash quickly to meet short-term obligations.

Market share is the percentage of total sales in a market that is attributed to a particular business.

A mission statement defines the current purpose of a business.

A multinational corporation (MNC) or multinational company is a company that operates in multiple countries while having its headquarters in one country.

A niche market is a small, specialized segment of a larger market that focuses on specific customer needs, preferences, or interests.

Non-governmental organizations (NGOs) are non-profit entities that operate independently of governments, focusing on social, environmental, or humanitarian causes.

The primary sector involves acquiring natural resources.

Profit maximization is the process of achieving the highest possible difference between total revenue and total costs.

A measure of how well a business turns revenue into profit.

The quaternary sector is a subset of the tertiary sector, focusing on knowledge-based activities such as:

The secondary sector focuses on transforming raw materials into finished products.

Sectoral change refers to the shifting importance of these sectors within an economy over time.

Shareholder value refers to the financial worth that a business delivers to its shareholders, typically measured through dividends, share price appreciation, and overall profitability.