IB Business Management HL cheat sheet

Public limited company: shares trade on a stock exchange, so it can raise capital from the public but must publish audited accounts and faces takeover risk.

Private limited company: shares sold only with shareholder approval, giving control and limited liability without a stock-exchange listing.

Ansoff matrix axes are products (existing/new) and markets (existing/new); diversification is the highest-risk cell because both are new.

STEEPLE covers Social, Technological, Economic, Environmental, Political, Legal and Ethical external influences on a firm.

Porter's Five Forces: rivalry, threat of new entrants, threat of substitutes, supplier power, buyer power; high combined force intensity compresses industry profitability.

Economies of scale lower average cost as output rises (purchasing, technical, financial); diseconomies arise from coordination and motivation problems.

Business cycle: boom, recession (two consecutive quarters of falling GDP), trough, recovery; demand for income-elastic goods falls fastest in recession.

CSR is a firm's voluntary duty to stakeholders beyond legal minimums; a social audit measures performance against stated social and environmental targets.

Labour turnover (%) = (number of leavers in period ÷ average number of employees) × 100.

Absenteeism (%) = (days lost to absence ÷ total possible working days) × 100.

Labour productivity = output in a period ÷ number of employees in that period.

Maslow's hierarchy ascending order: physiological, safety, social, esteem, self-actualisation; lower needs must be met before higher ones motivate.

Herzberg: hygiene factors (pay, conditions, policy) prevent dissatisfaction but do not motivate; motivators (achievement, recognition, responsibility) do.

Taylor's scientific management: standardise tasks, select and train workers, use piece rates; assumes workers are motivated primarily by money.

Training types: induction (orientation), on-the-job (coaching, job rotation) and off-the-job (courses); on-the-job is cheaper but risks transferring bad habits.

Organisational structures: tall (narrow span, many levels) versus flat (wide span, few levels); delayering widens spans and shortens the chain of command.

Accounting equation: Assets = Liabilities + Equity; every transaction keeps it balanced.

Gross profit = revenue − cost of goods sold; cost of goods sold = opening stock + purchases − closing stock.

Net profit = gross profit − expenses (including depreciation, interest and tax).

Current ratio = current assets ÷ current liabilities; ideal is roughly 1.5:1 to 2:1. Acid-test ratio = (current assets − stock) ÷ current liabilities; benchmark about 1:1.

Stock turnover (times) = cost of goods sold ÷ average stock; higher turnover means stock is sold faster.

Straight-line depreciation = (cost − residual value) ÷ useful life; units-of-production spreads cost by usage rather than time.

Cash flow forecast records expected inflows and outflows by period; a positive net profit does not guarantee positive cash flow.

Investment appraisal: payback (time to recover outlay), ARR = average annual profit ÷ investment, NPV discounts future cash flows; only NPV accounts for the time value of money.

Break-even output = fixed costs ÷ contribution per unit, where contribution = selling price − variable cost per unit.

Market share (%) = (firm's sales ÷ total market sales) × 100; market growth (%) = (change in market size ÷ original size) × 100.

Market segmentation divides a market by demographics, geographic, psychographic and behavioural variables.

Marketing mix (7Ps for services): product, price, place, promotion, people, process, physical evidence.

Pricing strategies: cost-plus, penetration (low launch price), skimming (high launch price), predatory, competitive, psychological.

Product life cycle: development, introduction, growth, maturity, decline; extension strategies include rebranding, new uses and new markets.

Boston matrix: stars (high growth, high share), cash cows (low growth, high share), question marks, dogs; cash cows fund stars and question marks.

Price elasticity of demand = % change in quantity demanded ÷ % change in price; |PED| > 1 is elastic, so price cuts raise revenue.

Distribution channels: direct (producer to consumer), one-intermediary (retailer) and two-intermediary (wholesaler then retailer); each adds cost but widens reach.

Labour productivity = total output ÷ number of workers; capacity utilisation (%) = (actual output ÷ maximum output) × 100.

Job production makes one-off bespoke items; batch production makes groups of identical units; mass production uses flow lines for high volume and low unit cost.

Lean production reduces waste via just-in-time stock (low holding cost but vulnerable to supply disruption) and kaizen (continuous improvement).

Quality control inspects output at the end; quality assurance builds quality into each process; TQM makes quality a whole-organisation responsibility.

Break-even and contribution analysis support capacity and pricing decisions: contribution per unit = price − variable cost per unit.

Buffer stock protects against demand or supply variability; reorder level = lead-time usage + buffer stock.

Location decisions weigh proximity to market, labour costs, suppliers, infrastructure and government incentives; e-commerce removes some physical constraints.

Critical path analysis: the critical path is the longest path through a network and determines the minimum project duration; float is spare time on non-critical activities.