What we’ll learn - an overview

Unit name and title GLH GHL

Unit 1: Business organization and environment 40 50

1.1 Introduction to business management
1.2 Types of organizations
1.3 Organizational objectives
1.4 Stakeholders
1.5 External environment
1.6 Growth and evolution
1.7 Organizational planning tools (HL only)

Unit 2: Human resource management 15 30

2.1 Functions and evolution of human resource management
2.2 Organizational structure
2.3 Leadership and management
2.4 Motivation
2.5 Organizational (corporate) culture (HL only)
2.6 Industrial/employee relations (HL only)

Unit 3: Finance and accounts 35 50

3.1 Sources of finance
3.2 Costs and revenues
3.3 Break-even analysis
3.4 Final accounts (some HL only)
3.5 Profitability and liquidity ratio analysis
3.6 Efficiency ratio analysis (HL only)
3.7 Cash flow
3.8 Investment appraisal (some HL only)
3.9 Budgets (HL only)

Unit 4: Marketing 35 50
4.1 The role of marketing
4.2 Marketing planning (including introduction to the four Ps)
4.3 Sales forecasting (HL only)
4.4 Market research
4.5 The four Ps (product, price, promotion, place)
4.6 The extended marketing mix of seven Ps (HL only)
4.7 International marketing (HL only)
4.8 E-commerce

Unit 5: Operations management 10 30

5.1 The role of operations management
5.2 Production methods
5.3 Lean production and quality management (HL only)
5.4 Location
5.5 Production planning (HL only)
5.6 Research and development (HL only)
5.7 Crisis management and contingency planning (HL only)
Specific unit breakdown and level of detail

Unit 1: Business organization and environment

In this first introductory unit, business management is set in context: students learn to analyse
organizations’ internal environment (for example, stakeholders, strategic objectives and CSR) and
external environment (for example, the impact of technological change and globalization). Unit 1 covers
traditional business areas such as the different types of organization and the idea of economies of scale,
but it also includes more contemporary topics such as the features of social enterprises, the nature of
business activity in the quaternary sector and the distinction between entrepreneurship and
intrapreneurship.

Both SL and HL students learn to apply fundamental strategy models such as social, technological,
economic, environmental, political, legal and ethical (STEEPLE) analysis as well as the strengths,
weaknesses, opportunities and threats (SWOT) analysis; HL students also learn to apply and evaluate
more specific tools such as fishbone diagrams, decision-trees and force field analysis. However, given the
importance of the overarching business themes introduced in unit 1, most content is common to both
levels.

As this unit provides students with an overview of business management both as a topic of study (what
the subject covers overall) and as a professional practice (what business managers do), it lends itself to
many TOK considerations. On the one hand, students may inquire into how and why a particular model
becomes established as a mainstream strategy model. On the other hand, they may ask on what basis
business managers make decisions in the real world.

Unit 1 is also an open invitation to consider a range of international examples, especially in relation to
issues of globalization, and to address businesses’ ethical, social or environmental obligations, which fits
well with the IB learner profile in terms of developing principled thinkers. It may also provide the impetus
for entrepreneurial service learning projects in the local community as part of students’ CAS requirement.

SL/HL content Depth of HL Only Depth of NOTES

teaching teaching

1.1 Introduction to business management

The role of businesses in combining AO2

human, physical and financial resources
to create goods and services

The main business functions and their AO2

roles:
1. human resources
2. finance and accounts
3. marketing
4. operations
Primary, secondary, tertiary and AO2
quaternary sectors

The nature of business activity in each AO2 y

sector and the impact of sectoral change
on business activity

The role of entrepreneurship (and AO3

entrepreneur) and intrapreneurship (and
intrapreneur) in overall business activity

Reasons for starting up a business or an AO2

enterprise

Common steps in the process of starting AO2 y

up a business or an enterprise

Problems that a new business or AO2

enterprise may face

The elements of a business plan AO2 y

1.2 Types of organizations

Distinction between the private and the AO2

public sectors

The main features of the following types AO3

of for-profit (commercial) organizations:
● sole traders
● partnerships
● companies/corporations

The main features of the following types AO3 y

of for-profit social enterprises:
● cooperatives
● microfinance providers
● public-private partnerships (PPP)

The main features of the following types AO3 y

of non-profit social enterprises:
● non-governmental organizations
(NGOs)
● charities

1.3 Organizational objectives

Vision statement and mission statement AO2 y

Aims, objectives, strategies and tactics, AO3

and their relationships

The need for organizations to change AO3 y

objectives and innovate in response to
changes in internal and external
environments

Ethical objectives and corporate social AO1 y

responsibility (CSR)

The reasons why organizations set AO3

ethical objectives and the impact of
implementing them

The evolving role and nature of CSR AO3 y

SWOT analysis of a given organization AO3,

AO4

Ansoff matrix for different growth AO3, y

strategies of a given organization AO4

1.4 Stakeholders

The interests of internal stakeholders AO2

The interests of external stakeholders AO2

Possible areas of mutual benefit and AO3

conflict between stakeholders’ interests

1.5 External environment

STEEPLE analysis of a given AO2, Y

organization AO4

Consequences of a change in any of the AO3 Y

STEEPLE factors for a business’s
objectives and strategy

1.6 Growth and evolution

Economies and diseconomies of scale AO2 Y

The merits of small versus large AO3

organizations

1.7 Organizational planning tools (HL Y

only)

The following planning AO2, AO4

tools in a given
situation:
● fishbone
diagram
● decision tree
 ● force field
analysis
● Gantt chart

The value to an AO3 Y

organization of these
planning tools
Unit 2: Human resource management

In this unit, students explore how businesses recruit, organize, develop and lead their arguably most
important resource—their people. In unit 2, students also learn what motivates individuals to perform well
at work. Given the pace of change in modern business, the unit looks at how structural changes and
changes in the business environment or in key people impact on human resource management. Ethical
considerations and cross-cultural understanding are particularly relevant for unit 2, and especially in
examining global corporations that have a multinational workforce and diverse stakeholder groups.

Although cultural issues are addressed throughout this unit, HL students also examine organizational
(corporate) culture as well as industrial/employee relations. This gives them more tools to analyse the
relationship between different stakeholder groups as well as the role of individuals in a business.
While unit 2 focuses primarily on "people issues", these also form part of the discussions in other units of
the course. For example: in unit 1, social and demographic changes are discussed as drivers of strategy;
in unit 4, customers are in focus; while in unit 5, innovation is examined.

As the unit deals with the interactions between humans and their environments, students have an
opportunity to reflect critically and creatively on many TOK considerations. Students may ask how
knowledge is generated individually and collectively within an organization, how it is internally and
externally validated, and how it may or may not be questioned. Similarly, topics such as persuasion
(essential for leadership and collective bargaining) and the consequences of actions and decisions (for
instance, in relation to recruiting or dismissing staff) can be examined. In terms of the IB learner profile, it
may be interesting to study to what extent the characteristics of the profile are present (and valued) in
business contexts.

SL/HL content Depth of HL only Depth of NOTES

teaching teaching

2.1 Functions and evolution of

human resource management

Human resource planning AO1

(workforce planning)

Labour turnover AO2

Internal and external factors that AO3 Y

influence human resource planning
(such as demographic change,
change in labour mobility, new
communication technologies)

Common steps in the process of AO2 Y

recruitment

● The following types of AO2

training:
● on the job (including
 induction and mentoring)
● off the job
● cognitive
● behavioural

The following types of appraisal: AO2 Y

● formative
● summative
● 360-degree feedback
● self-appraisal

Common steps in the processes AO1

of dismissal and redundancy

How work patterns, practices AO2 Y

and preferences change
and how they affect the
employer and employees
(such as teleworking,
flexitime, migration for work)

Outsourcing, offshoring and re- AO3 Y

shoring as human resource
strategies

How innovation, ethical AO3

considerations and cultural
differences may influence
human resource practices
and strategies in an
organization

2.2 Organizational structure

The following terminology to AO1

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 organization AO2, AO4 Y

charts:
1. flat/horizontal
2. tall/vertical
3. hierarchical
4. by product
 5. by function
6. by region

Changes in organizational structures AO2 Y

(such as project-based organization,
Handy’s "Shamrock Organization")

How cultural differences and AO3

innovation in communication
technologies may impact on
communication in an organization

2.3 Leadership and management

The key functions of management AO2

Management vs leadership AO2 Y

The following leadership styles: AO3 Y

● autocratic
● paternalistic
● democratic
● laissez-faire
● situational

How ethical considerations and AO3

cultural differences may influence
leadership and management styles
in an organization

2.4 Motivation

The following motivation theories: AO3 Y

● Taylor
● Maslow
● Herzberg (motivation–
hygiene theory)
● Adams (equity theory)
● Pink

The following types of financial AO2

rewards:
● salary
● wages (time and piece
rates)
● commission
● profit-related pay
● performance-related pay
(PRP)
● employee share ownership
schemes
● fringe payments (perks)

The following types of non-financial AO2 Y

rewards:
● job enrichment
 ● job rotation
● job enlargement
● empowerment
● purpose/the opportunity to
make a difference
● teamwork

How financial and non-financial AO2

rewards may affect job satisfaction,
motivation and productivity in
different cultures

2.5 Organizational (corporate)

culture (HL only)

Organizational culture AO1

Elements of AO2
organizational culture

Types of AO2
organizational culture

The reasons for, and AO3 Y

consequences of,
cultural clashes within
organizations when
they grow, merge and
when leadership styles
change

How individuals AO3

influence
organizational culture
and how organizational
culture influences
individuals

2.6 Industrial/employee relations (HL

only)

The role and AO2

responsibility of
employee and
employer
representatives

The following AO3

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 AO2

the workplace

The following AO3 Y

approaches to conflict
resolution:
● conciliation
and arbitration
● employee
participation
and industrial
democracy
● no-strike
agreement
● single-union
agreement

Reasons for resistance AO2

to change in the
workplace (such as
self-interest, low
tolerance,
misinformation and
interpretation of
circumstances)

Human resource AO3

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 AO3

considerations and
cultural differences
may influence
employer– employee
relations in an
organization
 .
Unit 3: Finance and accounts

Irrespective of their size, scope and sector, all organizations need robust accounting systems, making
finance a core business function. In unit 3, students examine finance and accounts through both
quantitative and qualitative methods. They learn how businesses represent themselves numerically
through accounts; they also learn how to construct basic balance sheets and profit and loss accounts
themselves. By the end of the unit, they will be able to explain the meaning of these accounts by
calculating ratios (for example, gross profit margin, net profit margin and return on capital employed
(ROCE)) and interpreting the results.

HL students explore aspects of finance and accounts in more depth through the study of further efficiency
ratios, investment appraisals and budgets.
Finance transcends mere numbers and connects to the six concepts underpinning the course. The
profitability and financial health of an organization may significantly influence its strategy, ethics, and need
and willingness to change — and vice versa. The challenge of accounting is for an organization to
represent itself through the common language of financial statements, which raises many TOK
considerations, for example in relation to the "truth" that may or may not be found in numbers.

Unit 3 also provides opportunities for students to think about the attributes of the IB learner profile. They
may inquire which characteristics of the learner profile are and, in their view, ought to be valued in
accounting and, more broadly, in the financial markets.

SL/HL content Depth of HL only Depth of NOTES

teaching teaching

3.1 Sources of finance

Role of finance for businesses: AO2 Y

capital expenditure
revenue expenditure

The following internal sources of AO2

finance:
● personal funds (for sole
traders)
● retained profit
● sale of assets

The following external sources of AO2

finance:
● share capital
● loan capital
● overdrafts
● trade credit
● grants
● subsidies
 ● debt factoring
● leasing
● venture capital
● business angels

Short, medium and long-term AO1 Y

finance

The appropriateness, advantages AO3

and disadvantages of sources of
finance for a given situation

3.2 Costs and revenues

The following types of cost, using AO2 Y

examples:
● fixed
● variable
● semi-variable
● direct
● indirect/overhead

Total revenue and revenue streams, AO2

using examples

3.3 Break-even analysis

Total contribution versus AO2 Y

contribution per unit

A break-even chart and the following AO2, AO4

aspects of break-even analysis:
● break-even quantity/point
● profit or loss
● margin of safety
● target profit output
● target profit
● target price

The effects of changes in price or AO2, AO4

cost on the break-even quantity,
profit and margin of safety, using
graphical and quantitative methods

The benefits and limitations of AO3

break-even analysis

3.4 Final accounts (some HL only)

The purpose of accounts to different AO3

stakeholders
The principles and ethics of AO3
accounting practice

Final accounts: AO2, AO4 Y

● profit and loss account
● balance sheet

Different types of intangible assets AO1

Depreciation AO2, AO4 Y

using the
following
methods:
● straight
line
method
● reducing
/declinin
g
balance
method

The strengths and weaknesses of AO2 Y

each method

3.5 Profitability and liquidity ratio

analysis

The following profitability and AO2, AO4 Y

efficiency ratios:
● gross profit margin
● net profit margin
● ROCE

Possible strategies to improve these AO3 Y

ratios

The following liquidity ratios: AO2, AO4 Y

● gross profit margin
● net profit margin
● ROCE

Possible strategies to improve these AO3 Y

ratios

3.6 Efficiency ratio analysis (HL

only)

The following AO2, AO4 Y

further efficiency
ratios:
 ● inventory
/stock
turnover
● debtor
days
● creditor
days
● gearing
ratio

Possible AO3
strategies to
improve these
ratios

3.7 Cash flow

The difference between profit and AO2

cash flow

The working capital cycle AO2

Cash flow forecasts AO2, AO4

The relationship between AO2

investment, profit and cash flow

The following strategies for dealing AO3

with cash flow problems:
● reducing cash outflow
● improving cash inflows
● looking for additional finance

3.8 Investment appraisal (some HL

only)

Investment opportunities using AO3, AO4

payback period and average rate of
return (ARR)

Investment AO3, AO4

opportunities
using net present
value (NPV)

3.9 Budgets (HL only)

The importance AO2

of budgets for
organizations

The difference AO1

between cost
and profit
centres

The roles of cost AO2

and profit
centres

Variances AO2, AO4

The role of AO2

budgets and
variances in
strategic
planning
Unit 4: Marketing

Marketing is an essential business function: it creates a bridge between an organization and its
customers. In our everyday speech, the word marketing is often associated with advertisements and
finding innovative ways of getting people to buy a product or service. However, unit 4 shows students that
marketing is much more than that. Effective marketing requires consideration of everything from product
quality to consumer perceptions and increasingly, engagement with people’s everyday lives to uncover
needs that customers may not even be aware of themselves.

Both SL and HL students learn the marketing mix of the four Ps—the essential ingredients of marketing
planning: product, price, promotion and place (distribution). At HL, this model is expanded to the seven
Ps: students also explore how people, processes and physical evidence can be applied to the marketing
of services. HL students also examine international marketing in greater depth. This gives them an
appreciation for how marketing strategies and practices are both a reflection of and an influence on the
culture in which they are applied.

Given the strategic nature of marketing, unit 4 is closely linked to the other business functions students
study in the business management course. For instance, market research may lead to new strategic
objectives (unit 1) that impact on production (unit 5), human resource planning (unit 2) and profitability
(unit 3).

Unit 4 provides an ideal opportunity for teachers and students to explore case studies and examples that
are contemporary, relevant and of direct interest to students. Marketing also allows students to develop
their conceptual understanding. The unit ties to all concepts underpinning the course: marketing decisions
are strategic and have ethical and cultural implications. Here, the degree to which marketing is globalized
can be examined. Innovating and being aware or even ahead of social changes are essential elements of
effective marketing. Thus, students learn to discuss and evaluate marketing decisions from a range of
perspectives, combining inquiry, critical thinking and cross-cultural understanding.

SL/HL content Depth of HL only Depth of NOTES

teaching teaching

4.1 The role of marketing

Marketing and its relationship with AO1

other business functions

The differences between marketing AO2

of goods and marketing of services

Market orientation versus product AO2

orientation

The difference between commercial AO2 Y

marketing and social marketing

Characteristics of the market in AO1

which an organization operates
Market share AO4 Y

The importance of market share and AO3 Y

market leadership

The marketing objectives of for-profit AO3

organizations and non-profit
organizations

How marketing strategies evolve as AO3

a response to changes in customer
preferences

How innovation, ethical AO3 Y

considerations and cultural
differences may influence marketing
practices and strategies in an
organization

4.2 Marketing planning (including

introduction to the four Ps)

The elements of a marketing plan AO1 Y

The role of marketing planning AO2 Y

The four Ps of the marketing mix AO2 Y

An appropriate marketing mix for a AO2, AO4 Y

particular product or business

The effectiveness of a marketing mix AO3

in achieving marketing objectives

The difference between target AO2 Y

markets and market segments

Possible target markets and market AO4

segments in a given situation

The difference between niche AO2

market and mass market

How organizations target and AO2 Y

segment their market and create
consumer profiles

A product position map/perception AO2, AO4 Y

map

The importance of having a unique AO2

selling point/proposition (USP)
How organizations can differentiate AO3 Y
themselves and their products from
competitors

4.3 Sales forecasting (HL only)

Up to four-part AO4 Y
moving
average, sales
trends and
forecast
(including
seasonal,
cyclical and
random
variation) using
given data

The benefits AO3 Y

and limitations
of sales
forecasting

4.4 Market research

Why and how organizations carry AO2 Y

out market research

The following methods/techniques of AO2 Y

primary market research:
● surveys
● interviews
● focus groups
● observations

The following methods/techniques of AO2 Y

secondary market research:
● market analyses
● academic journals
● government publications
● media articles

Ethical considerations of market AO3 Y

research

The difference between qualitative AO2 Y

and quantitative research

The following methods of sampling: AO2 Y

● quota
● random
 ● stratified
● cluster
● snowballing
● convenience

Results from data collection AO2 Y

4.5 The four Ps (product, price,

promotion, place)

Product

The product life cycle AO4 Y

The relationship between the AO2 Y

product life cycle and the marketing
mix

Extension strategies AO3 Y

The relationship between the AO2 Y

product life cycle, investment, profit
and cash flow

Boston Consulting Group (BCG) AO3, AO4 Y

matrix on an organization’s products

The following aspects of branding: AO2 Y

● awareness
● development
● loyalty
● value

The importance of branding AO3 Y

The importance of packaging AO3 Y

Price Y

The appropriateness of the following AO3

pricing strategies:
● cost-plus (mark-up)
● penetration
● skimming
● psychological
● loss leader
● price discrimination
● price leadership
● predatory

Promotion

The following aspects of promotion: AO2 Y

 1. above the line promotion
2. below the line promotion
3. promotional mix

The impact of changing technology AO3 Y

on promotional strategies (such as
viral marketing, social media
marketing and social networking)

Guerrilla marketing and its AO3 Y

effectiveness as a promotional
method

Place Y

The importance of place in the AO2 Y

marketing mix

The effectiveness of different types AO3 Y

of distribution channels

4.6 The extended marketing mix of

seven Ps (HL only)

People Y

The importance AO3

of employee–
customer
relationships in
marketing a
service and
cultural
variation in
these
relationships

Processes Y

The importance AO3

of delivery
processes in
marketing mix a
service and
changes in
these
processes

Physical Y
evidence

The importance AO3 Y

 of tangible
physical
evidence in
marketing a
service

The seven Ps AO2 Y

model in a
service-based
market

4.7 International marketing (HL only)

Methods of AO2 Y
entry into
international
markets

The AO3
opportunities
and threats
posed by entry
into
international
markets

The strategic AO3 Y

and operational
implications of
international
marketing

The role of AO3

cultural
differences in
international
marketing

The implications AO3 Y

of globalization
on international
marketing

4.8 E-commerce

Features of e-commerce AO1 Y

The effects of changing technology AO2 Y

and e-commerce on the marketing
mix

The difference between the following AO2 Y

types of e-commerce:
1. business to business (B2B)
2. business to consumer (B2C)
 3. consumer to consumer
(C2C)

The costs and benefits of e- AO3 Y

commerce to firms and consumers
Unit 5: Operations management

In this unit, students return to the fundamental rationale of business management: to make goods and
services that meet consumers’ needs and wants. Without efficient operations leading to products and
experiences customers are satisfied with, success in the other business functions is unsustainable. In unit
5, students learn how organizations manage their operations, whether in terms of achieving an optimal
cost– quality ratio or the shortest supply chain; using the most ethical means or the latest innovative
techniques; or applying the highest levels of quality assurance.

Unit 5 is the part of the business management course where the relative weight of the HL material is
greatest. Both SL and HL students look at different production methods and their implications as well as
different ways of organizing production. At HL, students explore additional areas such as lean production,
quality management, and research and development.

Operations management is the "how to" of business management. Still, it ties intimately to the "what"
question of an organization’s objectives (unit 1): a new strategic direction means adjustments in
operations. Good human resource management at all levels in an organization, in turn, is a pre-requisite
of successful operations (unit 2). Cooperation between marketing, with the closest relation to customers,
and operations, which put new ideas into practice, is also significant (unit 4).

Unit 5 can be taught through case studies in a variety of settings; visits to factories or service businesses
are a good way to make the topic come alive. This unit has a very concrete dimension that invites
students to explore and understand the importance of manufacturing and other types of operations,
bringing the other units of the course together in a dynamic way. The nature of operations is varied and
rapidly evolving across industries and locations, and thus there are plenty of opportunities to explore the
concepts of change, culture, ethics, globalization and innovation.

SL/HL content Depth of HL only Depth of NOTES

teaching teaching

5.1 The role of operations

management

Operations management and its AO1

relationship with other business
functions

Operations management in AO2

organizations producing goods
and/or services

Operations management strategies AO3 Y

and practices for ecological, social
(human resource) and economic
sustainability

5.2 Production methods

The following production methods: AO2 The following AO2 Y
● job/customized production production methods:
● batch production ● job/customiz
● mass/flow/process ed
production production
● cellular manufacturing ● batch
production
● mass/flow/pr
ocess
production
● cellular
manufacturin
g

5.3 Lean production and quality

management (HL only)

The following AO1 Y

features of lean
production:
● less waste
● greater
efficiency

The following AO2 Y

methods of lean
production:
● continuous
improvement
(kaizen)
● just-in-time
(JIT)
● kanban
● andon

Features of cradle to AO2 Y

cradle design and
manufacturing

Features of quality AO1 Y

control and quality
assurance

The following AO2 Y

methods of managing
quality:
● quality circle
● benchmarkin
g
● total quality
 management
(TQM)

The impact of lean AO3 Y

production and TQM
on an organization

The importance of AO2 Y

national and
international quality
standards

5.4 Location

The reasons for a specific location of AO2

production

The following ways of re-organizing AO3 Y

production, both nationally and
internationally:
● outsourcing/ subcontracting
● offshoring
● insourcing

5.5 Production planning (HL only)

The supply chain AO2 Y

process

The difference AO2 Y

between JIT and just-
in-case (JIC)

Stock control charts AO2, AO4 Y

based on the
following:
● lead time
● buffer stock
● re-order level
● re-order
quantity

Capacity utilization AO2, AO4 Y

rate

Productivity rate AO2, AO4 Y

Cost to buy (CTB) AO2, AO4 Y

Cost to make (CTM) AO2, AO4 Y

5.6 Research and Development (HL

only)

The importance of AO3 Y

research and
development for a
business

The importance of AO2 Y

developing goods
and services that
address customers’
unmet needs (of
which the customers
may or may not be
aware)

The following types AO2 Y

of innovation:
● product
● process
● positioning
● paradigm

The difference AO2 Y

between adaptive
creativity (adapting
something that
exists) and
innovative creativity
(creating something
new)

How pace of change AO3 Y

in an industry,
organizational culture
and ethical
considerations may
influence research
and development
practices and
strategies in an
organization

5.7 Crisis management and

contingency planning (HL only)

The difference AO2 Y

between crisis
management and
contingency planning
The following factors AO2 Y
that affect effective
crisis management:
● Transparenc
y
● Communicati
on
● Speed
● Control

The following AO2 Y

advantages and
disadvantages of
contingency planning
for a given
organization or
situation:
● Cost
● Time
● Risks
● Safety