HL BUSINESS MANAGEMENT Syllabus Outline
Unit 1: Business organization and environment ↙
1.1 Introduction to business management
HL ONLY
The role of businesses in combining human, physical and financial resources to create goods and services.
• Inputs • Outputs • Processes of a business The main business functions and their roles:
• Human resources • Finance and accounts • Marketing • Operations Primary, secondary, tertiary and quaternary sectors The nature of business activity in each sector and the impact of sectoral change on business activity
Analyze the impact on business activity of changes in economic structure
The role of entrepreneurship (and entrepreneur) and intrapreneurship (and intrapraneur) in overall business activity
Reasons for starting up a business or enterprise and finding a market opportunity
Common steps in the process of starting up a business or an enterprise
Problems that a new business or enterprise may face
The elements of a business plan
Analyze and interpret business plans.
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1.2 Types of organizations
Distinction between the private and public sectors
Analyze the relationship between organizations in the private and public sectors
The main features of the following types of for-‐profit (commercial) organizations:
• • •
Sole traders Partnerships Companies/corporations
The main featured of the following types of for-‐profit social enterprises: • • •
Cooperatives Microfinance providers Public-‐private partnerships (PPP)
Explain the nature of public-‐private partnerships. Analyze the costs and benefits of cooperation between the public and
private sector.
The main features of the following types of non-‐profit social enterprises: • •
Non-‐governmental organizations (NGOs) Charities
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1.3 Organizational objectives
Vision statement and mission statement
Aims, objectives, strategies and tactics, and their relationships
The need for organizations to change objectives and innovative in response to changes in internal and external environments
Ethical objectives and corporate social responsibility (CSR)
•
•
The reasons why organizations set ethical objectives and the impact of implementing them
•
The evolving role and nature of CSR
•
Discuss why a firm’s view of it social responsibilities may change over time. Discuss why attitudes towards social responsibility may change over time. Analyze the impact that changes in societal norms have on the way that firms behave in a national and international context. Analyze the reasons why firms may choose different strategies towards their social responsibilities.
SWOT analysis of a given organization
Ansoff matrix for different growth strategies of a given organization
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1.4 Stakeholders
HL ONLY
The interests of internal stakeholders
• Employees • Managers • Shareholders The interests of external stakeholders
Suppliers Customers Special Interest Groups • Competitors Possible areas of mutual benefit and conflict between stakeholders’ interests
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1.5 External environment
• • •
Evaluate possible ways to overcome stakeholder conflict.
STEEPLE analysis of a given organization
Consequences of a change in any of the STEEPLE factors for a business’s objectives and strategy
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1.6 Growth and evolution
Economies and diseconomies of scale
The merits of small versus large organizations
The difference between internal and external growth
Evaluate internal and external growth strategies as methods of business expansion.
The following external growth methods
• • • •
Mergers and acquisitions (M&As) and takeovers Joint ventures Strategic alliances Franchising
Examine how Porter’s generic strategies may provide a framework for building competitive advantage.
The role and impact of globalization on the growth and evolution of businesses
Reasons for the growth of multinational companies (MNCs)
The impact of MNCs on the host countries
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1.7 Organizational planning tools (HL)
The following planning tools in a decision making process: •
Scientific versus intuitive decision making process
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1.8 Change and the management of change
The following planning tools in a decision making process: • Fishbone diagram • Decision tree • Force field analysis • Gantt chart The value to an organization of these planning tools.
• • • • •
Causes of change Resistance to change Modelling change Lewin’s forced field analysis Strategies to reduce the impact of change and resistance to change.
Unit 2: Human Resource Management ↙
2.1 Functions and evolution of human resources management.
HL ONLY
Human resource planning (workforce planning)
Labor turnover
Internal and external factors that influence human resource planning (such as demographic change, change in labor mobility, new communication technologies)
Common steps in the process of recruitment
Following types of training: • • • •
•
On the job (induction and mentoring) Off the job Cognitive Behavioral
•
The following types of appraisals:
• Formative • Summative • 360 degree feedback • Self-‐appraisal Common steps in the process of dismissal and redundancy
How work patterns, practices and preferences change and how they affect the employer and employees (teleworking, flextime, migration for work)
Outsourcing, off shoring and re-‐shoring as human resource strategies.
How innovation, ethical considerations and cultural differences may influence human resource practices and strategies in an organization.
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2.2 Organizational structure
The following terminology to facilitate understanding of different types of organizational structures:
• Delegation • Span of control • Levels of hierarchy • Chain of command • Bureaucracy • Centralization • Decentralization • De-‐layering The following types of organizational charts: • • • •
Flat/horizontal Tall/vertical Hierarchical By product
•
•
•
•
Analyze the impact on the firm of legal employment rights. Examine how recruitment, appraisal, training and dismissal and redundancies enable the firm to achieve workforce planning targets.
Explain how organizational structures affect employee motivation, communication and performance Discuss factors influencing the degree of centralization and decentralization.
Discuss the development of more flexible organizational structures. Evaluate the role and importance of the informal organization.
• By function • By region Changes in organizational structures (such as project based organization, Handy’s Shamrock Org)
•
Analyze the reasons for changes in work patterns and practices and the consequences of these changes for employers and employees, for example working from home, teleworking and flextime.
•
Apply appropriate management theories such as Handy’s shamrock organization.
How cultural differences and innovation in communication technologies may impact on communication in an organization.
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2.3 Leadership and management
They key functions of management
Management versus leadership
Key functions of management, applying theories of Fayol, Handy, and Drucker
The following leadership styles
Trait and situation theory – results of skills and abilities or circumstances face
• • • • •
Autocratic Paternalistic Democratic Laissez-‐faire Situational
Contingency theory – Likert, Fiedler, Blake and Mouton, Tannenbaum and Schmidt.
How ethical considerations and cultural differences may influence leadership and management styles in an organization.
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2.4 Motivation
HL ONLY
The following motivation theories:
Apply the content theories of Mayo and McClelland
• • • • •
Taylor Maslow Herzberg (motivation – hygiene theory) Adams (equity theory) Pink
The following types of financial rewards: • • •
Salary Wage (time and piece rates) Commission
Process theories: • Expectancy Theory • Equity Theory Apply theories of writers such as Vroom and Adams.
• Profit related pay • Performance related pay • Employee share ownership schemes • Fringe payment (perks) The following types of non-‐financial rewards: • Job enrichment • Job rotation • Job enlargement • Empowerment • Purpose to make a difference • Teamwork How financial and non-‐financial rewards may affect job satisfaction, motivation and productivity in different cultures.
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2.5 Organizational (corporate) culture (HL ONLY)
HL ONLY
Organizational culture
Elements of organizational culture
Types of organizational culture
The reasons for and consequences of cultural clashes within organization when they grow, merge and when leadership styles change
How individual influence org culture and how it influences individuals
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2.6 Industrial/employee relations (HL ONLY)
HL ONLY
The role and responsibility of employee and employer representatives
The following industrial employee relations methods used by: Employees: collective bargaining, slowdowns/go slows, work to rule, overtime bans and strike action • Employers: collective bargaining, threats of redundancies, changes of contract, closure and lock outs Sources of conflict in the workplace •
The following approaches to conflict resolutions: •
Conciliation and arbitration
Employee participation and industrial democracy • No-‐strike agreement • Single-‐union agreement Reasons for resistance to change in the workplace (such as self-‐interest, low tolerance, misinformation and interpretation of circumstances) •
Human resource strategies for reducing the impact of change and resistance to change (such as getting agreement/ownership, planning and timing the change and communicating the change)
How innovation, ethical considerations and cultural differences may influence employer-‐employee relations in an organization
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2.7 Crisis Management and contingency planning (HL ONLY)
HL ONLY
Explain the difference between crisis management and contingency planning Evaluate the costs and benefits of contingency planning. Discuss how far it is possible to plan for a crisis.
Unit 3: Accounts and Finance ↙
3.1 Sources of finance
HL ONLY
Role of finance for business:
• Capital expenditure • Revenue expenditure The following internal sources of finance:
• Personal funds (for sole traders) • Retained profit • Sale of assets The following external sources of finance:
• • • • • •
Share capital Loan capital Overdrafts Trade credit Grants Subsidies
• Debt factoring • Leasing • Venture capital • Business angels Short, medium and long term finance
The appropriateness, advantage and disadvantages of sources of finance for a given situation
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3.2 Costs and revenues
HL ONLY
The following types of cost, using examples:
• Fixed • Variable • Semi-‐variable • Direct • Indirect/overhead Total revenue and revenue streams, using examples.
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3.3 Break-‐even analysis
HL ONLY
Total contribution versus contribution per unit
A break even chart and the following aspects of break-‐even analysis:
• •
Cost and profit centres Contribution analysis for multi-‐product firms
• Break even quantity/point • Profit or loss • Margin of safety • Target profit output • Target profit • Target price The effects of changes in price or cost on the break-‐even quantity, profit and margin Target profit and revenue of safety, using graphical and quantitative methods.
The benefits and limitations of break-‐even analysis
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3.4 Final accounts
HL ONLY
The purpose of accounts to different stakeholders
The principles and ethics of accounting practice
Final accounts:
Profit and Loss Account (Income statements) – trading account, P/L account, Appropriation Account • Balance Sheet Different types of intangible assets •
• Goodwill • Patents and copyrights • Brands Depreciation using the following methods: • •
Straight line method Reducing/declining balance
method The strengths and weaknesses of each method
Last in first out (LIFO) First in first out (FIFO)
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3.5 Profitability and liquidity ratio analysis
HL ONLY
Profitability and efficiency ratios:
• Gross Profit margin • Net profit margin • ROCE Possible strategies to improve these ratios
Liquidity ratios:
• Current • Acid-‐test/quick Strategies to improve these ratios
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3.6 Efficiency ratio analysis (HL ONLY)
HL Only
The following further efficiency ratios:
• Inventory/stock turnover • Debtor days • Creditor days • Gearing ratios Shareholder ratios
• Earnings per share • Dividend year Possible strategies to improve these ratios
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3.7 Cash flow
HL ONLY
Difference between profit and cash flow
Working capital cycle (cash flow cycle)
Cash flow forecasts
The relationship between investment, profit and cash flow
Strategies for dealing with cash flow problems:
• • •
↙
Reducing cash outflow Improving cash inflows Looking for additional finance
3.8 Investment Appraisal
HL ONLY
Investment opportunities using payback period and average rate of return (ARR)
Discounted cash flow (DCF)
Investment opportunities using net present value.
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3.9 Budgets (HL ONLY)
HL ONLY
The importance of budgets for organization
The differences and roles between cost and profit centres
Variances
The role of budgets and variances in strategic planning
Unit 4: Marketing ↙
4.1 The role of marketing
HL ONLY
Marketing and its relationship with other business functions.
Differences between marketing of goods and services
Market orientation versus product orientation
Analyze the influence of marketing orientation on the success or failure of firms
Difference between commercial marketing and social marketing
Social marketing Asset led marketing
Characteristics of the market in which an organization operates
Market share
The importance of market share and market leadership
Marketing objectives of for profit organizations and nonprofit organizations
How marketing strategies evolve as a response to change in customer preferences
How innovation, ethical considerations and cultural differences may influence marketing practices and strategies in an organization
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4.2 Marketing planning
HL ONLY
Elements of a marketing plan
Role of marketing planning
Four P’s of marketing mix
Appropriate marketing mix for a particular product or business
Effectiveness of a marketing mix in achieving marketing objectives
Porters five forces •
Apply Porters model to classify and analyze competitive pressure in the marketplace.
Difference between target markets and market segments
Possible target markets and market segments in a given situation
Difference between niche market and mass market
How organizations target and segment their market and create consumer profiles
Product position map
Importance of having a unique selling point/proposition (USP)
How organizations can differentiate themselves and products from competitors
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4.3 Sales forecasting (HL only)
HL ONLY
Up to four-‐part moving average, sales trends and forecast (including seasonal, cyclical and random variation) using given data
The benefits and limitations of sales forecasting
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4.4 Market research
Why and how organizations carry out market research
Following methods/techniques of primary market research:
• Surveys • Interviews • Focus groups • Observations Following methods/techniques of secondary market research:
• Market analysis • Academic journals • Government publications • Media articles Ethical considerations of market research
The difference between qualitative and quantitative research
Following methods/techniques of secondary market research:
Sales forecasting and trends
• • • • •
Quota Random Stratified Cluster Snowballing
•
Seasonal cyclical and random variation
• NEW -‐ Convenience Results from data collection
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4.5 The four P’s
HL ONLY
PRODUCT
The product life cycle
Relationship between the product life cycle and the marketing mix
Extension strategies
Relationship between product life cycle, investment, profit and cash flow
Boston Consulting Group (BCG) matrix on an organization’s products
Branding:
• Awareness • Development • Loyalty • Value Importance of Branding
Importance of Packaging
PRICE
Appropriateness of the following pricing strategies: • • • • • • • •
• • • • •
• • •
Cost – plus (mark up) Penetration Skimming Psychological Loss leader Price discrimination Price leadership Predatory
• •
PROMOTION
The following aspects of promotion:
Marginal cost pricing Contribution pricing Absorption cost and full cost pricing Going rate Promotional
Elasticity • • • • •
• Above the line promotion • Below the line promotion • Promotional mix Impact of changing technology on promotional strategies (such as viral marketing, social media and social networking)
Family branding Product branding Company branding Own label branding Manufactures branding
Price elasticity Income elasticity Cross elasticity Advertising elasticity Relationship of elasticity with product life cycle
Guerrilla marketing and its effectiveness as a promotional method.
PLACE
Importance of place in marketing mix
Supply chain management/logistics How organizations can increase the efficiency of the supply chain
Effectiveness of different types of distribution channels
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4.6 The extended marking mix of sevens P’s (HL ONLY )
HL ONLY
People
The importance of employee-‐ customer relationships in marketing a service and cultural variation in these relationships
Processes
The importance of delivery processes in marketing mix a service and changes in these processes
Physical evidence
The importance of tangible physical evidence in marketing a service
The seven Ps model in a service based market
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4.7 International marketing (HL ONLY)
HL ONLY
Methods of entry into international markets
The opportunities and threats posed by entry into international markets
The strategic and operational implications of international marketing
The role of cultural differences in international marketing
The implications of globalization on international marketing
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4.8 E-‐commerce
HL ONLY
Features of e-‐commerce
Effects of changing technology and e-‐commerce on the marketing mix
Difference between types of e-‐commerce:
• Business to business (B2B) • Business to consumer (B2C) • Consumer to consumer (C2C) Costs and benefits of e-‐commerce to firms and consumers
Unit 5: Operations Management ↙
5.1 The role of operations management
HL ONLY
Operations management and its relationship with other business functions
Operations management in organizations producing goods and/or services
•
Operations management strategies and practices for ecological, social (human resources) and economic sustainability
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5.2 Production Methods
HL ONLY
The following production methods:
• Job/customized production • Batch production • Mass/flow process production • NEW – cellular manufacturing Most appropriate method of production for a given situation
Cell production, teamwork and productivity implications
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5.3 Lean production and quality management (HL ONLY)
HL ONLY
The following features of lean production:
• Less waste • Greater efficiency The following methods of lean production: Continuous improvement (kaizen) • Just in time (JIT) • Kanban • Andon Features of cradle to cradle design and manufacturing •
Features of quality control and quality assurance
The following methods of managing quality: •
Quality circle
Benchmarking Total quality management (TQM) The impact of lean production and TQM on an organization • •
The importance of national and international quality standards
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5.4 Location
HL ONLY
The reasons for a specific location of production
• Impact of globalization on location NEW -‐ The following ways of re-‐organizing production, both nationally and internationally :
• • •
Outsourcing/subcontracting Offshoring Insourcing
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5.5 Production planning (HL ONLY)
HL ONLY
The supply chain processes
The difference between JIT and Just in case (JIC)
Stock control charts based on the following:
• Lead time • Bugger stock • Re-‐order level • Re-‐order quantity Capacity utilization rate
Productivity rate
Cost to buy (CTB)
Cost to make (CTM)
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5.6 Research and Development (HL ONLY)
HL ONLY
The importance of research and development for a business
The importance of developing goods and services that address customers ‘unmet needs (of which the customers may or may not be aware)
The following types of innovation: •
Product
• Process • Positioning • Paradigm The difference between adaptive creativity (adapting something that exists) and innovative creativity (creating something new)
How pace of change in an industry, organizational culture and ethical considerations may influence research and development practices and strategies in an organization
LEAVING – patents, copyrights, and trademarks
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5.7 Crisis management and contingency planning (HL ONLY)
HL ONLY
The difference between crisis management and contingency planning
The following factors that affect effective crisis management:
• Transparency • Communication • Speed • Control The following advantages and disadvantages of contingency planning for a given organization or situation:
• •
Cost, Time Risks, Safety
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LEAVING – Quality assurance
HL ONLY
Continuous improvement Benchmarking National and international quality standards
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LEAVING – Production planning
HL ONLY
Stock control
Traditional stock control (usage patterns, lead times, buffer stocks and re-‐order levels)
• •
Just in case Just in time
Optimum stock levels
Capacity utilization
Make or buy decisions
Unit 6: Business Strategy (HL ONLY) This topic does not add new content but gathers together and synthesizes ideas, concepts and techniques from the course. The use of these ideas, concepts and techniques will allow informed decisions to be made about the future direction of an organization. This will be assessed through a question in section C of paper 1 requiring a strategic response. Student’s should apply business theories learned in class to real-‐life situations. Strategy is about asking questions: what, why, when, how, where and who? Strategic management is the management of the long term activities of the business, which includes the integration of strategic analysis, strategic choice and strategic implementation. Stage 1: Strategic analysis – where is the business now? Deciding where the business is now involves an analysis of its internal and external situation. The analysis will dictate the nature of future strategy. The opportunities and threats faced will vary according to the nature of the business. An analysis of the present market and the firms competitive situation will influence the aims, objects and principles. The starting point for the analysis will probably be through the use of a SWOT and PEST analysis. Questions to consider: • • • • • • • • • • • •
Is the business new or established? Who are the stakeholders? Is the business profit or NPO? Types of organization? What are objectives of organization? How does mission/vision statement reflect business? What are attitudes of the business to risk? What is the firms present financial situation and is it conducive to change? Financial analysis and ratio analysis? Is present product portfolio appropriate? (Boston matrix) What resources are available to the business? (Porter’s five forces market analysis) Should the organization enter international markets?
Stage 2: Strategic choice – where is the business aiming to be? Once the business has identified its position in the market, it needs to consider its objectives in the short medium and long term. To achieve this, the business must examine market opportunities, threats, and then plan for the future. Questions to consider: • • • • • • • • • •
Why are business plans important? How are markets developing? (Sales forecasting) Which new market opportunities are available? (Market research) What are the future directions available to the firm? When is expansion desirable and achievable? (Small vs large organizations, Cash flow forecasts, Gearing, Sources of finance, HR planning) How can the core competencies of the business be developed? Growth strategies? (Ansoff matrix, Investment appraisal) What are competitors doing and how can their offer be matched or improved upon? (Benchmarking) How do the processes of decision making help to direct the business? (scientific and formal, decision tree, Force field analysis? What are the measures of success? (ROCE, Market share, Motivation and productivity)
Stage 3: Strategic implementation – how is the business going to achieve its objectives? Having decided on the future direction of the business, its mission, aims and objectives, how will the business put its strategies into operation? Questions to consider: • • • • • • • • • • • •
How can the firm develop competitive advantage? (Porters generic strategies) Which new products/services should be developed? Which new technologies could be applied? How can differentiation be achieved? How should the business plan for change? (Workforce planning, recruitment and training, flexible working patterns, investment appraisal) What is the appropriate scale of operations? (economies and diseconomies of scale) Which growth methods can and should be selected? (Internal/organic growth, external growth, globalization) Which marketing strategies can be implemented? (Market leadership and market penetration pricing, segmentation, targeting and positioning, distribution chain management, e-‐commerce) What is the appropriate organizational structure? (flattening, decentralization, flexible organization such as Handy’s shamrock) What is the appropriate management and leadership style How should the firm incorporate social responsibility and ethical approaches? How can change be managed effectively? (change culture, contingency planning and crisis management)
Assessment Outline Assessment Component
Weight
External assessment (4 hours and 30 minutes total)
75%
Paper 1 ( 2 hour and 15 minutes)
40%
Based on case study issued in advance, with additional unseen material included in section B and C. Students assessed on ALL syllabus content. • • •
Section A – Answer two of three structured questions (30 marks) Section B – Answer one compulsory question including evaluative skills. (20 marks) Section C -‐ Answer one compulsory question focusing on strategic decision making through the use of extension material. (30 marks)
Paper 2 (2 hour and 15 minutes)
Students assessed on ALL syllabus content.
• •
Section A – Answer one of two structured questions with quantitative element (25 marks) Section B – Answer two of three structured questions (50 marks)
35%
Internal assessment (30 teaching hours total) This component is internally assessed by the teacher and externally moderated by the IB at the end of the course. Research proposal and action plan – a working document not part of the actual report, but part of planning. Report that addresses and issue facing an organization or analyses a decision to be made by an organization. (Maximum 2000 words) ( 25 marks)
25%
