IB Business and Management Business Organisation and Environment 1

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IB Business and Management .com IB Business and Management T he IB Diploma Business and Management course delivered IN STYLE , ONLINE . ©

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z Organizational planning tools 1.6

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z 3 levels of decision- making Strategic decisions Tactical decisions Operational decisions Owners/board of directors managers Most employees

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z Business plans Includes the following info … A report detailing how a business sets out to achieve its aims & objectives . It requires, among other things, managers to plan their marketing , financial & human resources. The business: Name & address of the proposed business Type of business organization (e.g. sole proprietorship or partnership) A statement of quantifiable aims & objectives of the proposed business Cost of premises and other start up costs Details of the owner(s)n & their past business experience The product: Details of the goods & services being offered The forecast level of demand (present & future) with any supporting evidence why customers will pay for this product How & where production will take place, such as the equipment needed Details of suppliers & resources such as raw materials or stocks Cost of production (i.e. the running costs of operating the business) Pricing strategy to be used The market: The size of the market as determined by the potential number of customers or the product The nature of the market such as the customer profile & market segmentation The recent growth rate of the market & the expected growth rate in the foreseeable future An outline of both direct & indirect competitors, including their market share, strengths & weaknesses The finance: Proposed sources of finance to show how the business will be funded Break-even analysis to project the firm’s break-even level of sales Steps to be taken to deal with cash flow problems Security (financial guarantee) that can be offered to lenders in case the borrower defaults on the loan A cash flow forecast showing the projected earnings from sales and the expected monthly cash payments for the on-going cost of the business A projected profit & loss account showing the estimated profit or loss at the end of the first year A projected balance sheet for the end of the year showing the firm’s assets and liabilities Forecast rate of return for investors in the business venture The personnel: The number & positions of the workers likely to be employed Organizational chart showing the internal structure of human resources Details of payment systems such as wage rates, salaries & Remuneration packages The marketing: Details of the promotional mix that will be used to reach customers & make sales The distribution plan, detailing where the products will be sold Evidence of whether any market research has been carried out Any unique selling point that the business can use to differentiate itself from its competitors

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z Business plans New businesses Different aspects Show Done research Financial backing

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z Business plans

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z s.W.O.T . - Analysis When using a SWOT analysis in the exam DO not present the swot in a table It encourages you to squeeze info into a restricted space Examiners prefer written explanations & justifications Its reasonable to write in bullet form under each swot heading

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z s.W.O.T . - Analysis Simple & effective tool for decision making Evaluating business proposals or ideas Should we put in a new computer system? Assessing opportunities Should we open another high street store? Strategic planning Should we find a product to target at men? Competitor analysis How does honda affect us? Reviewing strategy Should we be changing strategic goals? Risk assessment Should we go with cloud computing? Question 1.6.1: p. 99

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z Decision-making frameworks C.B.A. – financial costs & benefits Break-even analysis (5.3) Investment appraisal (3.2) Ignore the non-financial aspects Effects on staff??? Ethical??? s.w.o.t. unit 1.6 p.e.s.t. unit 1.5 Ansoff matrix unit 1.7 Ratio analysis unit 3.6 5-forces analysis unit 3.6

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z Decision-making: scientific vs. intuitive Beliefs, perceptions, instincts, emotions, gut feelings HL Rational & logical, reasoned & justifiable Best decisions use both More experienced Quick, lots of info Generally better Need to justify

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z Decision trees $500K Sale price -$8K Costs: solicitor + agent =$492K net HL $550K Sale price -$10K Costs: solicitor + agent =$540K net now 1 year 70% prices ↑ $500K Sale price =$492K net 20% Prices stable =$450K net 10% Prices ↓ 540K x o.70 492K x o.20 450K x o.10

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z Decision trees HL a b Sell property next year Prices ↑ Prices un ∆ed Prices ↓ Sell property now $492K $378K $98.4K $45K $521.4K Decision node ■ Choice node ●

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z Decision-making trees Question 1.6.3: p. 106

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z Ishikawa fishbone HL Primary cause Find the key source (s) of a problem Secondary cause Clearly stated Concise Contributors Methods good place to start b/c most primary causes identified External vs. internal constraints HL Barriers that hinder decision-making but are uncontrollable by the business Barriers that hinder decision-making and are controllable by the business

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z Organizational planning tools & business strategy It’s the responsibility of management to forecast & predict change Highly likely to face constraints on business planning & decision-making; including … Organizational culture Availability of finance Dynamics of workforce External constraints Question 1.6.4: p. 108

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