IB Diploma Business Management SL · Introduction to Business Management
Mini-Lesson
Introduction to Business Management
This mini-lesson covers Unit 1 of IB Business Management: the nature of business and its functions, business sectors, entrepreneurship, forms of ownership, mission and vision, stakeholders, and growth and evolution — including mergers, acquisitions and multinationals (MNCs).
The four IB concepts — change, creativity, ethics and sustainability — run through every unit. Watch for the core flags as you go.
Work through each screen, answer the questions as you go and collect ⭐ stars. Press Start when you are ready.
Nature of business
What a business does
A business combines human, physical and financial resources to supply goods and services that satisfy customers needs and wants. It transforms inputs into outputs, adding value along the way (output value greater than the cost of inputs).
Human resources — recruiting, training and motivating people.
Finance and accounts — raising and controlling money.
Marketing — identifying and meeting customer needs profitably.
Operations — turning inputs into finished goods and services.
The factors of production are land, labour, capital and enterprise. The entrepreneur supplies enterprise, combining the other three and bearing the risk.
Sectors
Primary, secondary, tertiary (and quaternary)
Business activity is grouped by how far it is from the raw material:
Primary — extracting raw materials (farming, fishing, mining).
Secondary — manufacturing and construction (turning materials into goods).
Quaternary — knowledge and information services (R&D, ICT, consultancy).
Sectoral change: as economies develop, activity shifts from primary to secondary and then to tertiary/quaternary — a structural change that reshapes jobs and skills.
Sort it
Which sector?
Tap an activity, then tap the sector it belongs to.
⛏️ Primary
🏭 Secondary
🛎️ Tertiary
Entrepreneurship
Entrepreneurs and why firms start
An entrepreneur spots an opportunity, organises the factors of production and takes the risk of running a business. Common motives include profit, independence, a market gap, a personal interest and social aims. Typical qualities: creativity, risk tolerance, resilience and drive.
Intrapreneurship — employees acting entrepreneurially within an existing firm.
Concept — creativity: new business ideas often come from creative solutions to unmet needs.
Quick check
The entrepreneur's role
?Land, labour, capital and enterprise are the four factors of production. Which factor does the entrepreneur supply?
Forms of ownership
Who owns the business?
Key legal structures (for-profit) and their liability:
Sole trader — one owner, easy to set up, unlimited liability.
Partnership — 2+ owners share capital and profit, usually unlimited liability.
Privately held company (Ltd) — shares sold privately; limited liability; separate legal identity.
Publicly held company (plc) — shares traded on a stock exchange; can raise large capital; limited liability.
For-profit social enterprises, cooperatives, and non-profit NGOs/charities pursue social or member benefit alongside (or instead of) profit.
Limited liability means owners can only lose what they invested — personal assets are protected. Unlimited liability puts personal assets at risk.
Quick check
Limited liability
?A shareholder invests 5,000 dollars in a company that later collapses owing 2 million. Because the company has limited liability, the maximum the shareholder can lose is:
Mission and objectives
Vision, mission, aims and SMART objectives
A firm sets direction through a hierarchy of intent:
Vision — the long-term aspiration (where we want to be).
Mission — the purpose and how the vision will be pursued now.
Aims — broad goals; objectives — specific targets.
Strategies and tactics — long-term and short-term plans to hit them.
Good objectives are SMART — Specific, Measurable, Achievable, Relevant, Time-bound. Many firms also set ethical objectives and pursue corporate social responsibility (CSR).
Concept — ethics: ethical objectives may raise costs short-term but can build trust, brand value and long-run profit.
Quick check
Vision vs mission
?Which statement is a vision rather than a mission?
Stakeholders
Internal and external stakeholders
A stakeholder is any individual or group affected by, or able to affect, the business.
External: customers, suppliers, government, local community, pressure groups, competitors, banks.
Stakeholder conflict arises when interests clash — e.g. shareholders wanting higher dividends versus employees wanting higher pay, or a community wanting less pollution. Managers must balance these, not just serve shareholders.
Match it
Match the stakeholder to their main interest
Tap a stakeholder on the left, then its main interest on the right.
Stakeholder
Main interest
Growth and evolution
Economies of scale, and how firms grow
As output rises, average (unit) costs often fall — economies of scale (bulk buying, specialisation, financial and technical). Grow too far and diseconomies of scale appear (poor communication, coordination and motivation), raising unit costs.
Internal (organic) growth — expanding using the firms own resources.