IB Business Management HL flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Public limited company

A company whose shares are traded on a stock exchange, allowing large-scale capital raising from the public; it must publish audited financial statements and risks hostile takeover.

Limited liability

A legal protection meaning shareholders can lose only the amount they invested, not their personal assets, if the business fails; available to owners of incorporated companies.

Ansoff matrix

A tool plotting growth options by product and market novelty: market penetration, product development, market development and diversification, ranked by increasing risk.

STEEPLE analysis

A framework for external influences on a business: Social, Technological, Economic, Environmental, Political, Legal and Ethical factors, used to anticipate opportunities and threats.

Porter's Five Forces

A model of industry attractiveness based on rivalry intensity, threat of new entrants, threat of substitutes, supplier bargaining power and buyer bargaining power.

Economies of scale

The fall in average cost per unit as output increases, arising from bulk purchasing, technical efficiency and financial advantages; it improves competitiveness and margins.

Social audit

A structured assessment of a firm's performance against its stated social, ethical and environmental objectives, often reported to stakeholders alongside financial results.

Labour turnover

The proportion of employees leaving during a period, calculated as leavers divided by average employees times 100; high rates raise recruitment and training costs.

Span of control

The number of subordinates directly reporting to one manager; a wide span creates a flat structure with fewer management layers and greater employee autonomy.

Delayering

Removing one or more management levels to flatten the structure, reducing overhead cost and speeding decisions, but widening spans and reducing promotion opportunities.

Herzberg's two-factor theory

Hygiene factors such as pay and working conditions prevent dissatisfaction; motivators such as achievement, recognition and responsibility create genuine job satisfaction and effort.

Job enlargement

Increasing the range of tasks an employee performs at the same level, adding variety without added responsibility; it differs from job enrichment, which adds authority.

Induction training

Introductory training for new employees covering company policies, culture, safety and role expectations, intended to speed integration and reduce early resignation.

Labour productivity

Output produced per worker in a period, calculated as total output divided by the number of employees; it is a key measure of operational efficiency.

Accounting equation

Assets equal liabilities plus equity; it must remain balanced after every transaction, forming the basis of the balance sheet and double-entry bookkeeping.

Gross profit

Revenue minus cost of goods sold; it measures profit from trading before overheads, interest and tax are deducted, and is expressed as a margin percentage.

Acid-test ratio

Current assets excluding stock, divided by current liabilities; a stricter liquidity test than the current ratio because stock may be hard to convert to cash quickly.

Stock turnover

Cost of goods sold divided by average stock, showing how many times stock is replaced in a period; a low figure suggests slow-moving inventory.

Straight-line depreciation

An annual charge equal to cost minus residual value, divided by useful life; it spreads an asset's cost evenly over its expected working life.

Cash flow forecast

A projection of expected cash inflows and outflows by period, used to identify shortfalls in advance so that overdraft or credit arrangements can be made.

Net present value

The sum of future cash flows discounted to today's value minus the initial investment; a positive NPV indicates a project adds value.

Break-even output

The quantity at which total revenue equals total cost, calculated as fixed costs divided by contribution per unit; profit is zero at this level.

Market segmentation

Dividing a market into groups with similar characteristics or needs, such as by age, income, location or lifestyle, so marketing can target each group effectively.

Market share

A firm's sales as a percentage of total market sales, calculated as firm sales divided by market sales times 100; it indicates competitive strength.

Penetration pricing

Setting a low launch price to attract customers quickly and build market share, often later raised; it suits price-sensitive markets and mass-produced goods.

Price elasticity of demand

The percentage change in quantity demanded divided by the percentage change in price; if the absolute value exceeds one, demand is elastic and price cuts raise revenue.

Boston matrix

A portfolio tool classifying products by market growth and relative market share into stars, cash cows, question marks and dogs, guiding investment and divestment decisions.

Product life cycle

The stages a product passes through: development, introduction, growth, maturity and decline; sales and profits change at each stage, requiring different marketing decisions.

Just-in-time stock

A lean approach where inputs arrive as needed for production, minimising holding costs and waste but leaving the firm exposed to supply delays.

Total quality management

A whole-organisation approach making every employee responsible for quality, using continuous improvement and customer focus rather than end-of-line inspection.

Critical path analysis

A network technique identifying the longest sequence of dependent activities, which sets the minimum project duration and shows where delays affect completion.

Capacity utilisation

Actual output as a percentage of maximum possible output; low utilisation means wasted fixed costs, while very high utilisation leaves little room for maintenance or demand spikes.