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IB® Business Management HL/SL
Master business frameworks, case study technique, and strategic tools for IB® Business Management.
Start Unit 1 free. 1. Introduction to Business Management is open to everyone, no account needed. Other topics are locked.
1. Introduction to Business Management
SL/HL: all of Unit 1 is SL/HL: no AHL-only content here.
FOUR KEY CONCEPTS in Unit 1. The 2024 syllabus is built around four interdisciplinary concepts that examiners want you to apply in every answer
- CHANGE: business objectives evolve as a business grows; MNCs reshape markets; the external environment shifts (STEEPLE).
- CREATIVITY: entrepreneurship, opportunity recognition, new business models, innovative responses to STEEPLE pressures.
- ETHICS: CSR, stakeholder conflicts, the ethics of MNC behaviour in host countries, ethical objectives beyond profit.
- SUSTAINABILITY: the triple bottom line, B-Corps, circular business models, the long-run viability of growth strategies.
For every case study question, ask which of these four lenses the answer should foreground.
THE BIG PICTURE. Unit 1 establishes the FOUNDATIONS of business management. It covers what a business IS and the role of ENTREPRENEURSHIP (1.1), the different LEGAL FORMS a business can take (1.2), the OBJECTIVES businesses pursue (1.3), the STAKEHOLDERS who care about them (1.4), how businesses GROW or deliberately STAY SMALL (1.5), and the role of MULTINATIONAL COMPANIES (1.6). Together, these give you the language and frameworks to analyse any business in the case study.
WHAT IS A BUSINESS? (1.1)
A business is an organisation that COMBINES FACTORS OF PRODUCTION to produce goods and/or services to satisfy human wants. The four classical FACTORS:
- LAND: natural resources (raw materials, sites, water, oil).
- LABOUR: the human effort, both physical and mental.
- CAPITAL: the man-made resources used to produce goods (machinery, factories, tools, technology).
- ENTERPRISE: the entrepreneur who organises the other factors and bears the risk.
Businesses produce goods (tangible: cars, food) or services (intangible: banking, education). Most aim for PROFIT, but social enterprises and NGOs pursue social/environmental objectives.
SECTORS OF THE ECONOMY
Businesses operate in different sectors based on their activity:
- PRIMARY: extracts natural resources (farming, mining, fishing, forestry). Dominant in developing economies.
- SECONDARY: manufactures and processes raw materials into finished goods (factories, construction). Drives industrialisation.
- TERTIARY: provides services (retail, banking, healthcare, transport). Dominant in developed economies.
- QUATERNARY: knowledge and information services (R&D, IT, consulting, biotech). Growing rapidly in advanced economies.
A single supply chain often crosses all four sectors: e.g., iron ore (primary) → steel (secondary) → car dealership (tertiary) → automotive software (quaternary).
ENTREPRENEURSHIP (1.1)
Henry Ford (1863–1947), founder of the Ford Motor Company. A classic entrepreneur, he combined the factors of production in a new way (the moving assembly line) to make cars affordable for a mass market.
An ENTREPRENEUR is someone who identifies an opportunity, takes on the financial and personal RISK of starting a business, and combines the factors of production to deliver a product or service. INTRAPRENEURS do the same within an existing company. Common traits: risk-taking, creativity, resilience, initiative, leadership, opportunity recognition. Entrepreneurship drives CREATIVITY in the economy: new business models, new technologies, and new markets are usually launched by entrepreneurs rather than incumbents. COMMON ROUTES TO ENTREPRENEURSHIP:
- START-UP from scratch: Steve Jobs and Wozniak in a garage (Apple); Sara Blakely cutting the feet off pantyhose (Spanx).
- BUY AN EXISTING BUSINESS: lower risk; existing customers and systems.
- FRANCHISE: established brand + system in exchange for fee + royalties.
- SOCIAL ENTREPRENEURSHIP: start a business to address a social or environmental problem.
CHALLENGES of starting a business:
- Lack of FINANCE (limited collateral; reluctant lenders).
- MARKET RESEARCH / understanding customer needs.
- Strong COMPETITION from incumbents.
- INTELLECTUAL PROPERTY protection.
- LEGAL / TAX / regulatory compliance.
- PRODUCTION decisions (make vs buy, scale, location).
- Managing PERSONAL RISK (savings, time, mental health).
OPPORTUNITIES today:
- GAPS in the market: emerging needs (e.g., remote work tools, sustainability services).
- TECHNOLOGY lowering barriers (e-commerce, social media, low-cost cloud infrastructure).
- Global market access via the internet.
- Flexible work models and the gig economy.
- Government support: grants, accelerators, tax incentives for start-ups.
FAILURE RATES are high: a significant share of new businesses fail within the first few years, with the exact figures varying by country, sector, and economic conditions. The risk is real and entrepreneurs need both vision AND careful planning (the business plan, a toolkit item, is built for exactly this).
TYPES OF BUSINESS ENTITIES (1.2)
The 2024 IB syllabus uses a nested taxonomy: core organizations, plus social enterprises (for-profit and non-profit).
ORGANIZATIONS:
- SOLE TRADER: one owner; UNLIMITED liability; full control; quick set-up; limited finance options. Owner = business legally. Examples: freelancers, plumbers, small shops.
- PARTNERSHIP: 2+ partners share ownership; usually unlimited liability (Limited Partnerships limit some); shared decisions and capital; partnership agreement governs split. Examples: law firms, medical practices, accounting firms.
- PRIVATELY HELD COMPANY (Ltd): separate legal entity; LIMITED liability; shares sold PRIVATELY (not on a stock exchange); more setup complexity. Examples: IKEA, Mars, Cargill (all stay private).
- PUBLICLY HELD COMPANY (PLC / Inc / Corporation): shares traded on a stock exchange; can raise large capital via IPO; subject to disclosure and regulation; risk of HOSTILE TAKEOVER. Examples: Apple, Coca-Cola, Walmart, BP.
FOR-PROFIT SOCIAL ENTERPRISES (trade commercially but pursue a primary social or environmental mission; the syllabus lists three sub-types)
- PRIVATE SECTOR companies: privately owned social enterprises. Examples: TOMS (one-for-one shoe model), The Big Issue, Patagonia (B-Corp), Ben & Jerry's.
- PUBLIC SECTOR companies: state-owned commercial enterprises that trade for a public/social purpose. Examples: national broadcasters, postal services, public utilities and transport operators.
- COOPERATIVES: owned and democratically controlled by members (workers, customers, or producers); surplus shared among members; values-driven. Examples: agricultural co-ops, Mondragon (Spain), credit unions, John Lewis Partnership (UK).
NON-PROFIT SOCIAL ENTERPRISES:
- NGO (NON-GOVERNMENTAL ORGANISATION): pursues social or environmental missions; surplus reinvested into mission rather than distributed; relies on donations, grants, government funding, and earned income. Examples: Oxfam, Red Cross, WWF, Médecins Sans Frontières.
Note: 'charities' (e.g. the UK legal form for non-profits) are treated in the syllabus as a type of NGO.
Three families of business entity The 2024 syllabus groups entities by purpose. Sole traders and most partners have unlimited liability; company shareholders have limited liability.
PRACTICE: WHICH ENTITY FITS?
| Situation | Best-fit entity | Why |
|---|---|---|
| A plumber working alone who wants full control and little paperwork | Sole trader | Quick to set up and keeps all the profit, but liability is unlimited |
| Three architects pooling their clients and capital | Partnership | Shared skills and finance; a partnership agreement sets the profit split |
| A family food brand that wants limited liability but no outside shareholders | Privately held company | Limited liability; shares are sold only privately, so the family keeps control |
| A fast-growing firm that needs a very large sum from investors | Publicly held company | Can sell shares on a stock exchange, at the cost of disclosure rules and takeover risk |
| Dairy farmers who want to sell their milk together and share the surplus | Cooperative | Owned and democratically run by its members, usually one member, one vote |
| A state-owned railway run to provide a public service | Public sector company | Owned by government but trades commercially for a public purpose |
| A charity funding clean-water projects from donations | NGO | Non-profit: any surplus goes back into the mission |
PRIVATE vs PUBLIC SECTOR
- PRIVATE: owned by individuals/shareholders; profit motive; market discipline; can fail.
- PUBLIC: owned by government; provides essential or strategic services (defence, healthcare, public transport in many countries); funded by taxes; political accountability.
Governments may PRIVATISE (move from public to private: UK railways, telecoms) or NATIONALISE (move from private to public: UK rail operators LNER in 2018 and Northern in 2020; Royal Bank of Scotland during the 2008 crisis).
BUSINESS OBJECTIVES (1.3)
Objectives drive everything a business does. Hierarchy:
- VISION: long-term aspirational picture of what the business wants to become.
- MISSION: current purpose; why the business exists today.
- AIMS: broad goals (e.g., "be market leader in Europe").
- OBJECTIVES: SPECIFIC, MEASURABLE, ACHIEVABLE, RELEVANT, TIME-BOUND (SMART) targets that operationalise aims.
- STRATEGIES: long-term plans for achieving objectives (e.g., differentiation, low-cost leadership).
- TACTICS: short-term actions that implement strategy (e.g., a specific promotion).
COMMON BUSINESS OBJECTIVES:
- PROFIT MAXIMISATION: primary for many private businesses.
- GROWTH: increasing market share, revenue, or geographic reach.
- SURVIVAL: especially in early years or during crisis.
- MARKET SHARE: dominance over rivals.
- CSR / ETHICAL OBJECTIVES: beyond profit (covered below).
- SHAREHOLDER RETURNS: for public companies.
How objectives cascade Each level makes the one above it more specific. Strategic objectives set long-term direction for the whole business; tactical objectives are short-term steps that deliver them.
WORKED EXAMPLE (Paper 1 style): TURNING AN AIM INTO SMART OBJECTIVES
A case study describes a café chain whose aim is "to become more sustainable". A typical task: explain one strategic and one tactical objective the chain could set.
- Weak answer: "Be greener." It is not specific, not measurable and has no deadline.
- Strategic objective (long term, whole business): "Cut the chain's total food waste by 40% by 2030, measured in kilograms per café per week." It is specific (food waste), measurable (kilograms), achievable over several years, relevant to the aim and time-bound.
- Tactical objective (short term, one area): "Reduce unsold pastries in each café by 15% within six months by baking two smaller batches a day." It is one step towards the strategic objective.
Tie both objectives back to the case. A chain with thin profit margins might start with the tactical objective because it also saves money, which shows how ethical and profit objectives can support each other rather than conflict.
ETHICAL OBJECTIVES & CSR
Many businesses now pursue CORPORATE SOCIAL RESPONSIBILITY (CSR): operating ethically and contributing to society/environment beyond legal obligations.
- TRIPLE BOTTOM LINE (PEOPLE, PLANET, PROFIT): measure success not just financially but also socially and environmentally.
- B-CORPS: certified businesses meeting rigorous social/environmental standards (Patagonia, Ben & Jerry's).
DEBATE: Milton Friedman argued "the social responsibility of business is to INCREASE PROFITS": that any other goal misuses owners' money. Others counter that long-term profit DEPENDS on a healthy society and environment. DRIVERS of CSR adoption: reputation, ethical investors, talent attraction, customer expectations, regulatory pre-emption.
CASE STUDY: PATAGONIA GIVES AWAY ITS OWNERSHIP (2022)
In September 2022 Yvon Chouinard, the founder of the outdoor-clothing company Patagonia, and his family transferred ownership of the privately held business. All the voting shares (about 2% of the total) went to a new Patagonia Purpose Trust, created to protect the company's values, and all the non-voting shares (about 98%) went to the Holdfast Collective, a non-profit that works on the environmental crisis. The company said that every dollar not reinvested in the business would be paid out as a dividend to protect the planet, projecting roughly $100 million a year depending on how the business performs.
- Concept: ethical objectives and CSR (1.3); ownership and control of a privately held company (1.2).
- What it shows: owners can lock an ethical mission into the ownership structure itself, not just into a mission statement.
- Exam link: weigh the benefits (credibility with customers and staff, a long-term focus) against the limits: the business must still make a profit, or there is nothing to give away.
STAKEHOLDERS (1.4)
A STAKEHOLDER is any individual or group with an interest in, or affected by, a business's activities.
INTERNAL stakeholders (within the business)
- OWNERS / SHAREHOLDERS: want returns (dividends, share price growth).
- MANAGERS: want bonuses, status, control.
- EMPLOYEES: want fair pay, security, conditions, satisfaction.
EXTERNAL stakeholders
- CUSTOMERS: want quality products at fair prices.
- SUPPLIERS: want timely payment, ongoing orders.
- CREDITORS / BANKS: want repayment with interest.
- GOVERNMENT: wants taxes, employment, compliance.
- LOCAL COMMUNITY: wants jobs, environmental responsibility, no nuisance.
- PRESSURE GROUPS / NGOs: want ethical business practices.
- COMPETITORS: affected by the business's actions.
STAKEHOLDER CONFLICTS
Different stakeholders often want DIFFERENT things: managing this is core to leadership:
- SHAREHOLDERS vs EMPLOYEES: cost cuts to boost profits vs job security and wages.
- CUSTOMERS vs SHAREHOLDERS: lower prices vs higher margins.
- LOCAL COMMUNITY vs SHAREHOLDERS: environmental protection vs cheap production.
- MANAGERS vs SHAREHOLDERS: agency problem; managers may prioritise their own interests (large salaries, empire-building) over shareholder returns.
MANAGEMENT must IDENTIFY, PRIORITISE (using power-interest matrices), and BALANCE stakeholder interests: usually with limited information and political constraints.
WORKED EXAMPLE (Paper 1, Section B style): ANALYSING A STAKEHOLDER CONFLICT
Case extract: Harbour Fresh, a publicly held seafood processor in a small harbour town, plans to automate its filleting line. The change would cut 120 of its 400 jobs and raise its profit margin. Discuss the likely conflict between stakeholders.
- Identify the groups: shareholders (want higher returns), employees (want job security), the local community (depends on the jobs) and customers (may benefit from lower prices).
- Analyse the conflict: shareholders gain from a higher margin, while 30% of the workforce () loses its jobs. Strikes, bad publicity or a damaged local reputation could eat into the expected gains.
- Evaluate: the conflict is sharpest in the short run. If rivals are automating too, automation may protect the remaining 280 jobs in the long run. Retraining some workers to maintain the new machines, or redeploying them, would reduce resistance.
- Judgement: go ahead, but phase the change and invest in retraining. Note the limits of the case: it does not say how much the margin rises or how many workers could be redeployed, and the best answers point this out.
EXTERNAL ENVIRONMENT: STEEPLE ANALYSIS
A framework for analysing MACRO factors that affect a business:
- SOCIAL: demographics, lifestyles, values, attitudes (e.g., aging population, sustainability concerns).
- TECHNOLOGICAL: automation, AI, e-commerce, biotech, social media.
- ECONOMIC: interest rates, inflation, exchange rates, growth/recession, unemployment.
- ENVIRONMENTAL: climate change, regulations, resource scarcity, sustainability.
- POLITICAL: government stability, trade policies, taxation, regulation.
- LEGAL: laws on employment, consumer protection, competition, IP, data protection.
- ETHICAL: societal expectations of fairness, honesty, respect.
Use STEEPLE in case studies to identify EXTERNAL OPPORTUNITIES and THREATS.
SWOT ANALYSIS
A strategic tool for assessing a business's position:
- STRENGTHS (internal, positive): strong brand, skilled workforce, IP, financial reserves.
- WEAKNESSES (internal, negative): high costs, weak distribution, poor reputation.
- OPPORTUNITIES (external, positive): growing market, new technology, weakened competitors.
- THREATS (external, negative): new entrants, recession, regulation, substitutes.
USE: identify how Strengths can EXPLOIT Opportunities; how Weaknesses MAKE the business vulnerable to Threats; what Strategic priorities follow.
GROWTH AND EVOLUTION (1.5)
INTERNAL (organic) growth: through own activities: opening new outlets, expanding production, R&D, increased marketing. Slower but more controlled.
EXTERNAL growth, through deals with other firms
- MERGER, two firms combine into one new entity.
- ACQUISITION / TAKEOVER: one firm buys a controlling stake in another. The syllabus lists takeovers separately: an acquisition is usually agreed, while a takeover is typically HOSTILE (against the target's wishes).
- JOINT VENTURE: two firms create a new entity together for a specific project.
- STRATEGIC ALLIANCE: formal cooperation without merging (e.g., airline alliances).
- FRANCHISE: one firm (franchisor) licenses brand, system, products to another (franchisee) for a fee + royalty (e.g., McDonald's, Subway).
ECONOMIES OF SCALE drive growth: falling unit costs as output rises
- Internal: technical (bigger machines), purchasing (bulk discounts), managerial, financial (cheaper finance).
- External: industry-wide (skilled labour pool, infrastructure).
DISECONOMIES OF SCALE: beyond optimal size, unit costs can rise (communication breakdowns, slow decisions, bureaucracy).
Economies and diseconomies of scale The curve passes through the three cost points in the worked example. On this illustrative curve, average cost is lowest at about 56,000 loaves a month; beyond that, coordination problems push it up again.
WORKED EXAMPLE (Paper 2 style): ECONOMIES OF SCALE IN NUMBERS
Kora Bakery's total monthly costs are $16,000 at 10,000 loaves, $44,000 at 40,000 loaves and $121,500 at 90,000 loaves. Calculate the average cost at each output and explain the pattern.
- Average cost = total cost ÷ output: ; ; (dollars per loaf).
- From 10,000 to 40,000 loaves average cost falls by 50 cents: economies of scale such as bulk-buying flour and larger ovens that use energy more efficiently.
- From 40,000 to 90,000 loaves average cost rises by 25 cents: diseconomies of scale such as a third shift, extra supervisors and slower communication.
The lowest average cost lies between these outputs. Growing to 90,000 loaves would make sense only if it brought other benefits, such as a large supermarket contract or a bigger market share, that outweigh the higher cost per loaf.
WHY SOME BUSINESSES DELIBERATELY STAY SMALL. Growth is not always the right strategy. The 2024 syllabus expects you to argue both sides
- MAINTAINING CONTROL: staying small lets founders preserve full ownership and decision-making (e.g., many craft producers, boutique consultancies).
- SERVING A NICHE MARKET: small specialised markets do not support large competitors (e.g., bespoke jewellery, niche software, artisanal food).
- AVOIDING DISECONOMIES OF SCALE: beyond an optimal size, costs rise and quality often falls.
- LIFESTYLE / PERSONAL GOALS: many entrepreneurs run "lifestyle businesses" deliberately sized to fund a chosen way of life, not maximise growth.
- LIMITED ACCESS TO FINANCE: without external capital, organic growth is constrained.
- PERSONAL RISK AVERSION: growth means borrowing, hiring, longer hours, more legal exposure.
- REGULATORY THRESHOLDS: crossing certain size thresholds triggers extra regulation (audited accounts, disclosure, employment law obligations).
- PROXIMITY TO CUSTOMERS: small businesses can offer personalised service that large firms cannot match.
Key IB framing: a business decision to grow or stay small is a STRATEGIC choice involving trade-offs, not a default toward "bigger is better."
PRACTICE: NAME THE EXTERNAL GROWTH METHOD
| Scenario | Method | Key trade-off |
|---|---|---|
| Two regional banks combine to form one new bank with a new name | Merger | Scale and shared costs, but a risk of culture clash |
| A technology giant buys a start-up with the founders' agreement | Acquisition | Fast access to new technology; risk of overpaying |
| A rival buys a controlling stake against the board's wishes | Takeover (hostile) | Quick control; resentment and loss of key staff |
| Two carmakers set up a new, jointly owned firm to build batteries | Joint venture | Shared cost, risk and expertise; possible disputes over control |
| Airlines share lounges and sell seats on each other's flights but stay independent | Strategic alliance | Cheap, flexible cooperation; weaker commitment |
| A burger chain lets local owners run outlets in return for fees and royalties | Franchising | Rapid growth using others' capital; less control over quality |
MULTINATIONAL CORPORATIONS (MNCs) (1.6)
Companies with operations in MORE THAN ONE COUNTRY. EXAMPLES: Apple, Toyota, Unilever, Nestlé, Samsung, Shell.
REASONS FOR BECOMING AN MNC
- Access to NEW MARKETS for sales growth.
- Lower production costs (LABOUR, taxes, raw materials).
- Avoid trade barriers by producing locally.
- Acquire foreign expertise/technology.
- Diversify risk across countries.
IMPACTS ON HOST COUNTRIES (positive): jobs, foreign investment, infrastructure, technology transfer, tax revenues. IMPACTS ON HOST COUNTRIES (negative): exploitation of labour/resources, profits repatriated, displacement of local firms, cultural homogenisation, tax avoidance. MNCs are powerful and controversial: many have revenues exceeding small countries' GDP.
CASE STUDY: INTEL IN COSTA RICA
The chipmaker Intel began assembling and testing microprocessors in Costa Rica in March 1998, and by 2000 microchips made up about 36% of the country's total exports. In 2014 Intel closed its chip assembly plant there, laying off about 1,500 workers, while keeping its research and development centre and services operations. In 2020 it announced a $350 million investment over three years to restart assembly and testing, projecting more than 200 new jobs; at the time it employed over 2,200 people in the country.
- Concept: the impact of MNCs on host countries (1.6).
- What it shows: an MNC can bring jobs, exports, skills and a reputation as a technology hub, but decisions taken at headquarters can remove thousands of jobs quickly, leaving a small economy exposed to one firm.
- Exam link: in a question on the impact of an MNC, balance export earnings and technology transfer against dependence and footloose investment, and say which matters more for the host country in the case.
EXAM CONNECTIONS. Compare the syllabus business forms: sole trader, partnership, privately held (Ltd) and publicly held (PLC) companies, for-profit social enterprises (private sector, public sector, cooperatives), and non-profit social enterprises (NGOs). Discuss ENTREPRENEURSHIP: traits, routes, challenges, opportunities. Apply STEEPLE and SWOT to a specific case study business: generic answers lose marks. Identify STAKEHOLDERS and analyse CONFLICTS. Distinguish AIMS, OBJECTIVES, STRATEGIES, TACTICS hierarchically. Distinguish INTERNAL vs EXTERNAL growth AND be ready to argue REASONS TO STAY SMALL. For every answer, identify which of the FOUR CONCEPTS (change, creativity, ethics, sustainability) is most relevant.
Key Terms
Sole Trader
A business owned and run by one individual who has UNLIMITED liability. Simple to set up; owner keeps all profits; no legal distinction between owner and business. Common for freelancers, plumbers, small shops.
Limited Liability
Shareholders can only lose what they invested in a company: personal assets are protected if the business fails. Distinguishes Ltd/PLC from sole traders/partnerships. Encourages investment.
Stakeholder
Any individual or group with an interest in or affected by a business's activities. Internal: owners, managers, employees. External: customers, suppliers, government, community, pressure groups, competitors.
STEEPLE Analysis
A framework for analysing the external environment: Social, Technological, Economic, Environmental, Political, Legal, Ethical factors. Identifies opportunities and threats outside the business's control.
SWOT Analysis
A strategic planning tool examining: Strengths, Weaknesses (internal); Opportunities, Threats (external). Used to identify how internal strengths can exploit external opportunities, and how weaknesses expose vulnerability to threats.
Corporate Social Responsibility (CSR)
Voluntary commitment to operate ethically and contribute to society/environment beyond legal obligations. Key concept: triple bottom line (people, planet, profit). B-Corps formalise this commitment.
Mission Statement
A formal statement of a business's purpose, values, and primary objectives: communicates what the organisation exists to do TODAY. Vision statement is more aspirational about the future.
SMART Objectives
Specific, Measurable, Achievable, Relevant, Time-bound. The criteria for well-designed business objectives. Replaces vague aims with quantifiable targets that can be evaluated.
Mergers and Acquisitions
Mergers: two firms combine into one new entity (often equal partners). Acquisitions: one firm buys another (usually agreed; a hostile acquisition is a takeover). Both forms of EXTERNAL growth: faster than organic but with integration risks.
Multinational Corporation (MNC)
Company operating in more than one country. Examples: Apple, Toyota, Unilever. Pursues global markets, lower costs, diversification. Both benefits and costs to host countries.
Economies of Scale
Falling average cost per unit as output rises. Internal types: technical (bigger machines), purchasing (bulk discounts), financial (cheaper finance), managerial (specialisation). External: industry-wide infrastructure.
Diseconomies of Scale
Rising average costs beyond optimal size: communication breakdowns, slow decisions, bureaucracy, poor coordination. Why bigger isn't always better. Counterargument to relentless growth.
Entrepreneur
A person who identifies an opportunity, takes on the financial and personal RISK of starting a business, and combines factors of production to deliver a product or service. Key traits: risk-taking, creativity, resilience, opportunity recognition. Intrapreneurs do the same inside an existing firm.
For-profit Social Enterprise
A business that trades commercially but pursues a primary SOCIAL or ENVIRONMENTAL mission, reinvesting profits into that mission. In the 2024 syllabus it is a social-enterprise category with three sub-types: private-sector companies, public-sector companies, and cooperatives. Examples: TOMS, The Big Issue, Patagonia (B-Corp), Ben & Jerry's.
Reasons to Stay Small
Strategic motivations not to grow: maintaining control, serving a niche, avoiding diseconomies of scale, lifestyle goals, limited access to finance, regulatory thresholds, closer customer relationships. IB expects balanced argument vs growth strategies.
Exam Tips
- Case studies: read carefully: IB Business always requires APPLICATION to the specific business in the scenario, not generic theory. Generic answers lose marks.
- Always EVALUATE: structure answers as "This strategy is effective because... However, it has limitations because... Overall, given [specific context]..." Examiners reward balanced analysis.
- SWOT for evaluation: link S to O (how can strengths exploit opportunities?) and W to T (how do weaknesses expose vulnerabilities?). A SWOT without strategic implications is incomplete.
- Define key terms accurately at the start of each answer: marks are allocated for correct terminology. Use IB-specific language consistently.
- For 1.6 (MNCs), be ready to evaluate IMPACT on host countries: both positive (jobs, technology) and negative (exploitation, profit repatriation, tax avoidance). Balanced.
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