Do you wish to do IB Business Management IA at Higher Level? It’s important to learn about the different units that you’ll cover in the course before you take the subject.
In summary, there are five units taught in IB Business Management IA at Higher Level, and they’re as follows:
- Business Organization and Environment
- Human Resource Management
- Finance and Accounting
- Marketing
- Operations Management
The rest of this article gives a simplified overview of each unit.
1. Business Organization and Environment
A business is an entity that engages in commercial, industrial, or professional activities, whether or not its primary goal is to make profit. Profitable businesses achieve revenue by effectively marketing goods or services to customers, at prices higher than their production costs.
Businesses integrate human, physical, and financial resources to produce goods and services. The aim of production of goods and services is to meet the needs and desires of customers, who can be individual consumers or other businesses.
There are different types of business structures, including service-oriented businesses, manufacturing enterprises, and retail establishments. Each nation has its own regulations and requirements governing business organizations.
2. Human Resource Management
Human Resource Management, also referred to as HRM, is the process of overseeing a company’s workforce to ensure it achieves its objectives. This encompasses managing aspects like employment terms, recruitment, training, and employee motivation.
As demand patterns and external environments fluctuate, both the number of employees and their required skill levels can change. Therefore, a company’s ability to forecast its staffing needs, with the help of the HR department, is crucial for its success.
Anticipating future needs is essential because recruiting and training qualified candidates takes time. Therefore, businesses must proactively plan their Human Resource strategies based on projected needs in the near term. This proactive approach forms the foundation for effective Human Resource Planning and Management.
3. Finance and Accounting
Finance and accounting in IB Business Management IA HL emphasize the allocation of funds for their intended purposes. There are two main categories of expenditures as taught in the subject: capital expenditures and revenue expenditures.
Capital Expenditure
Capital expenditure, also known as capital spending, occurs when businesses invest in fixed assets or enhance the value of existing fixed assets.
Fixed assets, such as machinery and vehicles, are essential for a company’s productive capacity and not intended for resale due to their nature.
The costs related to improving or converting existing assets also fall under capital expenditures.
Financing for capital expenditures typically involves medium to long-term arrangements due to their significant cost. Businesses do not expense these expenditures entirely in the year of purchase but amortized them over the useful life of the asset.
Revenue Expenditure
Revenue expenditure refers to short-term spending necessary for the day-to-day operations of the business, such as administrative expenses, selling expenses, rent, and employee salaries.
Unlike capital expenditures, revenue expenditures do not result in the acquisition of fixed assets or provide long-term benefits to the business.
Understanding and distinguishing between these two types of expenditures is crucial for financial planning and management in business, as they affect the financial statements and profitability differently.
4. Marketing
The field of marketing has evolved significantly over time, profoundly influencing consumer behavior and shopping habits. The primary objective of marketing is to cultivate customer loyalty towards an organization, its products, and its brand.
While marketing can initially persuade customers to make a first-time purchase, repeat purchases depend heavily on their satisfaction with the product and overall purchasing experience.
Marketing serves both as a core function within an organization and as a business philosophy, which prioritizes achieving business objectives through customer satisfaction. Its diverse activities apply universally across businesses of varying sizes, ages, and levels of experience.
Marketing involves identifying target markets, understanding their needs and desires, and aligning business strategies to meet those requirements effectively. It revolves around anticipating and fulfilling the demands of the target market.
It’s essential to clarify that marketing and advertising are distinct concepts. Advertising is just one facet of marketing, while marketing itself encompasses a broader spectrum of activities aimed at satisfying customer needs.
Similarly, selling and marketing are not interchangeable terms. Selling focuses on the seller’s objectives, whereas marketing focuses on meeting the buyer’s needs and preferences.
Understanding these distinctions is crucial for implementing effective marketing strategies.
5. Operations Management
Operations management encompasses the creation of products and services, as well as the oversight of processes and supply chains. This area includes both strategic and tactical activities such as acquiring, developing, and utilizing resources necessary for businesses to produce and deliver goods and services to customers.
These operations activities are essential across all sectors of the economy: primary (extractive industries), secondary (manufacturing), and tertiary (services).
In operations management, the production process involves transforming inputs, like raw materials, into finished goods that meet the needs and preferences of the target market. This transformation adds value, enabling businesses to sell finished goods at a profit.
The operations management department collaborates closely with other corporate functions:
- Marketing: The marketing department generates demand and coordinates with operations to ensure production aligns with market needs.
- Finance: While production generates revenue, it also incurs costs that affect financial outcomes, necessitating careful financial management.
- Human Resource Management (HRM): HRM ensures an adequate supply of skilled employees capable of producing the goods and services desired by customers.
This integration of operations management with other functional areas ensures businesses efficiently produce and deliver goods and services that meet market demand while managing costs and maximizing profitability.