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href="../page/21699/unit-2.html" title="Unit 2">Unit 2</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21753/21-functions-evolution-of-hrm.html" title="2.1 Functions & evolution of HRM">2.1 Functions & evolution of HRM</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25388/glossary.html" title="Glossary">Glossary</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21754/22-organizational-structure.html" title="2.2 Organizational structure">2.2 Organizational structure</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25471/glossary-organizational-structure.html" title="Glossary: Organizational structure">Glossary: Organizational structure</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21755/23-leadership-and-management.html" title="2.3 Leadership and management">2.3 Leadership and management</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/24733/glossary-leadership-management.html" title="Glossary: Leadership & Management">Glossary: Leadership & Management</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/24745/24-motivation.html" title="2.4 Motivation">2.4 Motivation</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/24719/glossary-motivation.html" title="Glossary: Motivation">Glossary: Motivation</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa 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relations</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21670/unit-3.html" title="Unit 3">Unit 3</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21744/31-sources-of-finance.html" title="3.1 Sources of finance">3.1 Sources of finance</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/24501/glossary-sources-of-finance.html" title="Glossary: Sources of finance">Glossary: Sources of finance</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21745/32-costs-and-revenues.html" title="3.2 Costs and revenues">3.2 Costs and revenues</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22092/glossary-costs-revenues.html" title="Glossary: Costs & revenues">Glossary: Costs & revenues</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21746/33-break-even-analysis.html" title="3.3 Break-even analysis">3.3 Break-even analysis</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22270/contribution-analysis.html" title="Contribution analysis">Contribution analysis</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22093/glossary-break-even-analysis.html" title="Glossary: Break-even analysis">Glossary: Break-even analysis</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21747/34-final-accounts.html" title="3.4 Final accounts">3.4 Final accounts</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/31367/glossary-final-accounts.html" title="Glossary: Final accounts">Glossary: Final accounts</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21748/35-profitability-and-liquidity-ratio-analysis.html" title="3.5 Profitability and liquidity ratio analysis">3.5 Profitability and liquidity ratio analysis</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25111/glossary-profitability-and-liquidity-ratio-analysis.html" title="Glossary: Profitability and liquidity ratio analysis">Glossary: Profitability and liquidity ratio analysis</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21749/36-efficiency-ratio-analysis-hl-only.html" title="3.6 Efficiency ratio analysis (HL only)">3.6 Efficiency ratio analysis (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25114/glossary-efficiency-ratios.html" title="Glossary: Efficiency ratios">Glossary: Efficiency ratios</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21750/37-cash-flow.html" title="3.7 Cash flow">3.7 Cash flow</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25118/cash-flow-forecasts.html" title="Cash flow forecasts">Cash flow forecasts</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/31376/glossary-cash-flow.html" title="Glossary: Cash flow">Glossary: Cash flow</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21751/38-investment-appraisal.html" title="3.8 Investment appraisal">3.8 Investment appraisal</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/31377/glossary-investment-appraisal-.html" title="Glossary: Investment appraisal ">Glossary: Investment appraisal </a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21752/39-budgets-hl-only.html" title="3.9 Budgets (HL only)">3.9 Budgets (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/31378/39-budgets-hl-only-glossary.html" title="3.9 Budgets (HL Only) Glossary">3.9 Budgets (HL Only) Glossary</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21684/unit-4.html" title="Unit 4">Unit 4</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21767/41-the-role-of-marketing.html" title="4.1 The role of marketing">4.1 The role of marketing</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25618/glossary-the-role-of-marketing.html" title="Glossary: The role of marketing">Glossary: The role of marketing</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21768/42-marketing-planning.html" title="4.2 Marketing planning">4.2 Marketing planning</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/28328/glossary-marketing-planning.html" title="Glossary: Marketing planning">Glossary: Marketing planning</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21769/43-sales-forecasting-hl-only.html" title="4.3 Sales forecasting (HL only)">4.3 Sales forecasting (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25713/glossary-sales-forecasting.html" title="Glossary: Sales forecasting">Glossary: Sales forecasting</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21713/44-market-research.html" title="4.4 Market research">4.4 Market research</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25208/glossary-market-research.html" title="Glossary: Market research">Glossary: Market research</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21770/45-the-four-ps.html" title="4.5 The four Ps">4.5 The four Ps</a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Product">Product</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22627/glossary-product.html" title="Glossary: Product">Glossary: Product</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22525/price.html" title="Price">Price</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22548/glossary-price.html" title="Glossary: Price">Glossary: Price</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22567/promotion.html" title="Promotion">Promotion</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22704/45-promotion-glossary.html" title="4.5 Promotion - Glossary">4.5 Promotion - Glossary</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22745/place.html" title="Place">Place</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/23813/45-place-glossary.html" title="4.5 Place - Glossary">4.5 Place - Glossary</a></li></ul></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21774/46-the-extended-marketing-mix-7-ps-hl.html" title="4.6 The extended marketing mix (7 Ps) (HL)">4.6 The extended marketing mix (7 Ps) (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/23814/glossary-the-extended-marketing-mix-hl.html" title="Glossary: The extended marketing mix (HL)">Glossary: The extended marketing mix (HL)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21772/47-international-marketing-hl-only.html" title="4.7 International marketing (HL only)">4.7 International marketing (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/23815/glossary-international-marketing-hl.html" title="Glossary: International Marketing (HL)">Glossary: International Marketing (HL)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21773/48-e-commerce.html" title="4.8 E-commerce">4.8 E-commerce</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/23797/glossary-e-commerce.html" title="Glossary: E-commerce">Glossary: E-commerce</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21688/unit-5.html" title="Unit 5">Unit 5</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21937/51-the-role-of-operations-management.html" title="5.1 The role of operations management">5.1 The role of operations management</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/24843/glossary.html" title="Glossary">Glossary</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21938/52-production-methods.html" title="5.2 Production methods">5.2 Production methods</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/24848/glossary.html" title="Glossary">Glossary</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21939/53-lean-production-quality-management-hl.html" title="5.3 Lean production & quality management (HL)">5.3 Lean production & quality management (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/24839/glossary-lean-production-and-quality-management.html" title="Glossary: Lean Production and quality management">Glossary: Lean Production and quality management</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21700/54-location.html" title="5.4 Location">5.4 Location</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/24959/glossary.html" title="Glossary">Glossary</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21695/55-production-planning-hl.html" title="5.5 Production planning (HL)">5.5 Production planning (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25032/glossary-production-planning.html" title="Glossary: Production planning">Glossary: Production planning</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/33222/56-research-development-hl.html" title="5.6 Research & development (HL)">5.6 Research & development (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/34014/glossary-research-development.html" title="Glossary: Research & Development">Glossary: Research & Development</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21941/57-crisis-management-contingency-planning-hl.html" title="5.7 Crisis management & contingency planning (HL)">5.7 Crisis management & contingency planning (HL)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25042/glossary.html" title="Glossary">Glossary</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/25115/cuegis.html" title="CUEGIS">CUEGIS</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="The 6 CUEGIS concepts">The 6 CUEGIS concepts</a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Ethics">Ethics</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/21954/mcdonalds-supersize-me.html" title="McDonald's - Supersize Me">McDonald's - Supersize Me</a></li></ul></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="The CUEGIS essay">The CUEGIS essay</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22876/planning-your-cuegis-essay.html" title="Planning your CUEGIS essay">Planning your CUEGIS essay</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/33806/paper-2-section-c-questions.html" title="Paper 2 Section C Questions">Paper 2 Section C Questions</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/33959/the-ia.html" title="The IA">The IA</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="HL IA">HL IA</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22190/35-sample-research-questions-for-the-hl-ia.html" title="35 sample research questions for the HL IA">35 sample research questions for the HL IA</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22200/hl-ia-student-checklist.html" title="HL IA - Student Checklist">HL IA - Student Checklist</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/33508/ia-hl-poster.html" title="IA HL Poster">IA HL Poster</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="SL IA">SL IA</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22146/sl-ia-20-sample-titles.html" title="SL IA - 20 Sample Titles">SL IA - 20 Sample Titles</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38181/faq-about-the-sl-ia.html" title="FAQ about the SL IA">FAQ about the SL IA</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22114/exams.html" title="Exams">Exams</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/22115/command-terms.html" title="Command Terms">Command Terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/36599/glossary-of-key-terms.html" title="Glossary of key terms">Glossary of key terms</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38059/flashcards-revision.html" title="Flashcards - Revision">Flashcards - Revision</a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38060/flashcards-revision-unit-1.html" title="Flashcards - Revision (Unit 1)">Flashcards - Revision (Unit 1)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38056/unit-11-revision-flashcards.html" title="Unit 1.1 Revision Flashcards">Unit 1.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38061/unit-12-revision-flashcards.html" title="Unit 1.2 Revision Flashcards">Unit 1.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38067/unit-13-revision-flashcards.html" title="Unit 1.3 Revision Flashcards">Unit 1.3 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38092/unit-14-revision-flashcards.html" title="Unit 1.4 Revision Flashcards">Unit 1.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38096/unit-15-revision-flashcards.html" title="Unit 1.5 Revision Flashcards">Unit 1.5 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38102/unit-16-revision-flashcards.html" title="Unit 1.6 Revision Flashcards">Unit 1.6 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38103/unit-17-revision-flashcards.html" title="Unit 1.7 Revision Flashcards">Unit 1.7 Revision Flashcards</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38114/flashcards-revision-unit-2.html" title="Flashcards - Revision (Unit 2)">Flashcards - Revision (Unit 2)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38121/unit-21-revision-flashcards.html" title="Unit 2.1 Revision Flashcards">Unit 2.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38125/unit-22-revision-flashcards.html" title="Unit 2.2 Revision Flashcards">Unit 2.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38126/unit-23-revision-flashcards.html" title="Unit 2.3 Revision Flashcards">Unit 2.3 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38144/unit-24-revision-flashcards.html" title="Unit 2.4 Revision Flashcards">Unit 2.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38146/unit-25-revision-flashcards.html" title="Unit 2.5 Revision Flashcards">Unit 2.5 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38147/unit-26-revision-flashcards-hl-only.html" title="Unit 2.6 Revision Flashcards (HL only)">Unit 2.6 Revision Flashcards (HL only)</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38149/flashcards-revision-unit-3.html" title="Flashcards - Revision (Unit 3)">Flashcards - Revision (Unit 3)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38153/unit-31-revision-flashcards.html" title="Unit 3.1 Revision Flashcards">Unit 3.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38154/unit-32-revision-flashcards.html" title="Unit 3.2 Revision Flashcards">Unit 3.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38182/unit-33-revision-flashcards.html" title="Unit 3.3 Revision Flashcards">Unit 3.3 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38183/unit-34-revision-flashcards.html" title="Unit 3.4 Revision Flashcards">Unit 3.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38191/unit-35-revision-flashcards.html" title="Unit 3.5 Revision Flashcards">Unit 3.5 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38192/unit-36-revision-flashcards-hl.html" title="Unit 3.6 Revision Flashcards (HL)">Unit 3.6 Revision Flashcards (HL)</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38193/unit-37-revision-flashcards.html" title="Unit 3.7 Revision Flashcards">Unit 3.7 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38194/unit-38-revision-flashcards.html" title="Unit 3.8 Revision Flashcards">Unit 3.8 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38195/unit-39-revision-flashcards.html" title="Unit 3.9 Revision Flashcards">Unit 3.9 Revision Flashcards</a></li></ul><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38196/flashcards-revision-unit-4.html" title="Flashcards - Revision (Unit 4)">Flashcards - Revision (Unit 4)</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38198/unit-41-revision-flashcards.html" title="Unit 4.1 Revision Flashcards">Unit 4.1 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38203/unit-42-revision-flashcards.html" title="Unit 4.2 Revision Flashcards">Unit 4.2 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38217/unit-43-revision-flashcards.html" title="Unit 4.3 Revision Flashcards">Unit 4.3 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38218/unit-44-revision-flashcards.html" title="Unit 4.4 Revision Flashcards">Unit 4.4 Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/38219/unit-45a-product-revision-flashcards.html" title="Unit 4.5a Product Revision Flashcards">Unit 4.5a Product Revision Flashcards</a></li><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" 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fa-caret-right "></i><a class="" href="../page/44046/16-multinational-companies.html" title="1.6 Multinational companies">1.6 Multinational companies</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/43530/unit-2-hrm.html" title="Unit 2 - HRM">Unit 2 - HRM</a></li><ul class="level-1 "><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/44253/21-introduction-to-hrm.html" title="2.1 Introduction to HRM">2.1 Introduction to HRM</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/43875/22-organizational-structure.html" title="2.2 Organizational structure">2.2 Organizational structure</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/44338/23-leadership-and-management.html" title="2.3 Leadership and 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International marketing (HL)">4.6 International marketing (HL)</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/43565/unit-5-operations-mgt.html" title="Unit 5 - Operations Mgt">Unit 5 - Operations Mgt</a></li><ul class="level-1 "><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/44817/51-introduction-to-operations-management.html" title="5.1 Introduction to operations management">5.1 Introduction to operations management</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/44812/52-operations-methods.html" title="5.2 Operations methods">5.2 Operations methods</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../page/44861/53-lean-production-quality-management-hl.html" title="5.3 Lean production & quality management 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<div id="main-column" class="span9"><article id="common-business-objectives" style="margin-top: 16px;"><h1 class="section-title">Common business objectives</h1><div class="row-fluid" style="margin-bottom: 14px;"><div class="span12 scrollToTask shadow" data-target="" style="cursor: default; pointer-events: none"><div class="std-taskbar task-not-done"><i class="fa fa-file fa-fw" style="margin-left: 4px;"></i> Reading task</div></div></div><div class="row-fluid"><section class="span12" id="main-content"><div class="panel panel-purple"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>Common business objectives (AO2)</strong></p></div></div><div class="panel-body"><div><p><span style="color:#696969;"><img alt="" src="../../ib/businessmanagement/images/aims4.jpg" style="width: 400px; height: 197px;"></span></p><p><span style="color:#696969;"><em>"Unless you dream, you’re not going to achieve anything.”<br>-</em> Sir Richard Branson (b.1950), Founder of the Virgin Group</span></p><p><span style="color:#696969;"><em>"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary."</em><br>- Steve Jobs (1955 - 2011), Co-founder of Apple</span></p><hr class="hidden"><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Business objectives</strong> (or simply <strong>objectives</strong>) are the clearly defined and measurable targets of an organization, used to to achieve its overall goals. Examples include "to generate greater shareholder value by targeting new market segments" or "</span>to achieve sales growth of $500 million in the Asia Pacific region in 2022”.</p><p>Business objectives are essential for all businesses so that people know where they are striving to go or what they are trying to accomplish. They give people a sense of common purpose, thus promote a greater sense of belonging and team spirit (cohesiveness). They also enable managers and entrepreneurs to measure progress towards to their stated vision or mission statement.</p><p><span style="font-family:arial,helvetica,sans-serif;">They are often based on the Peter Drucker’s SMART objectives acronym:<strong> S</strong>pecific, <strong>M</strong>easurable, <strong>A</strong>greed<strong>, R</strong>ealistic, and <strong>T</strong>ime specific. An example of a SMART objective for a multinational company might be "to achieve sales of €10 million in European markets by 2023."</span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">Alternatives for the 'A' and 'R' in SMART are: specific, measurable, <strong><em>a</em></strong><em>chievable</em>, <strong><em>r</em></strong><em>elevant</em> and time-related.</span></p></li></ul><p><span style="font-family:arial,helvetica,sans-serif;"><img alt="" height="70" src="../../ib/businessmanagement/images/smart-objectives.png" width="280"> </span></p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">To achieve sales of growth of €10 million in European markets by 2023 is a SMART objective because:</span></p><ul class="branded"><li><p><span style="color:#FF0000;">It is specific - to achieve <strong>sales to grow by €10 million</strong> in <strong>European markets</strong> by <strong>2023</strong>.</span></p></li><li><p><span style="color:#FF0000;">It is measurable - to achieve sales growth of <strong>€10 million</strong> in European markets <strong>by 2023</strong>.</span></p></li><li><p><span style="color:#FF0000;"> It is achievable - if this objective is for a large multinational company, striving to achieve sales growth of €10 million may be realistically achievable.</span></p></li><li><p><span style="color:#FF0000;">It is relevant - for a large multinational company operating in European markets, this objective is clearly relevant. </span></p></li><li><p><span style="color:#FF0000;">Time bound - the objective is to achieve this amount of money by the end of 2023.</span></p></li></ul></section><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">Objectives can be long-term (<em>strategic objectives</em>) or short-term (<em>tactical</em> <em>objectives</em>).</span></p></li></ul><ol><li><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Tactical objectives</strong> are easier to change or reverse than strategic objectives. They are specific targets with definitive timelines.</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Strategic objectives</strong> are </span>targets that the whole organization is striving to achieve. It <span style="font-family:arial,helvetica,sans-serif;">require a greater investment in human and financial resources than tactical and operational objectives. It is </span>often related to what the owners of the business want to focus on, such as business survival, growth, or profit maximization.</p></li></ol><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;"></span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Like vision and mission statements, business objectives can give employees and managers a genuine sense of direction (and purpose). Hence, they </span>can help to motivate employees and raise labour productivity.</p><p><span style="font-family:arial,helvetica,sans-serif;"></span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Business objectives are essential in all organizations so that people know where they are striving to go or what they are trying to accomplish.</span></p></li><li><span style="font-family:arial,helvetica,sans-serif;">They give people a sense of common purpose, thus promote a greater sense of belonging and team spirit (cohesiveness).</span></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Business </span>objectives also enable organizations to measure progress towards to their stated goals and targets.</p></li></ul><hr class="hidden"><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-lightbulb-o fa-lg" style="color: rgb(103, 7, 124);"> </span> Top tip!</span></span></h5><p>It can be useful for students (both SL and HL) to learn this topic prior to starting their <a href="../page/42836/the-new-internal-assessment.html" title="New syllabus 2022 » The new internal assessment">Internal Assessment</a>. This is because an organization's vision, mission, and objectives form the foundation for decision making and business strategy. Everything a business does and strives to achieve evolves around its vision, mission, and organizational objectives.</p></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-linode fa-lg" style="color: rgb(103, 7, 124);"> </span> ATL Activity 1 (Research skills) - TNT</span></span></h5><p><img alt="" src="../../ib/businessmanagement/images/transportation.jpg" style="width: 300px; height: 204px;"></p><p><span style="font-family:arial,helvetica,sans-serif;">Using real-world examples in a critical part of the IB conceptual framework and curriculum model for the Business Management course (see page 6 of the IB guide).</span></p><p><span style="font-family:arial,helvetica,sans-serif;">Ask students to investigate the mission statement and SMART objectives of TNT, the global logistics company. You can use this <a href="https://www.academia.edu/30227671/Mission_aims_and_objectives_TNT">link</a> as a starter. This also works well for the content covered in <a href="../page/44890/56-production-planning-hl.html" title="New syllabus (first teaching 2022) » Unit 5 - Operations Management » 5.6 Production planning (HL)">Unit 5.6 Production planning</a> (HL only) - the <a href="../page/44902/the-local-global-supply-chain-process.html" title="New syllabus (first teaching 2022) » Unit 5 - Operations Management » 5.6 Production planning (HL) » The local & global supply chain process">local and global supply chain process</a> (AO2).</span></p></div><p><span style="font-family:arial,helvetica,sans-serif;">Organizations will have varying objectives. For example, public sector organizations, charities and cooperatives will not primarily strive for profit maximization, whereas private sector firms are likely to do so. Organizational objectives also change due to changes in the external business environment.</span></p><p>The syllabus states the following four common business objectives:</p><div class="row-fluid"><div class="span6 col-left"><div><ul class="branded"><li><p>Growth</p></li><li><p>Profit</p></li></ul></div></div><div class="span6"><div><ul class="branded"><li><p>Protecting shareholder value</p></li><li><p>Ethical objectives</p></li></ul></div></div></div><section class="tib-hiddenbox"><p><span style="color:#FF0000;">These are the only four business objectives that can be examined. In reality, there are other common business objectives too, of course.</span></p><p><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Examples of organizational objectives include:</span></span></p><div class="row-fluid"><div class="span6 col-left"><div><ul class="branded"><li><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Being environmentally </span><span style="font-family:arial,helvetica,sans-serif;">friendly</span></span></li><li><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"></span>Customer loyalty / Brand loyalty</span></li><li><span style="color:#FF0000;">Customer satisfaction</span></li><li><span style="color:#FF0000;">Diversification</span></li><li><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Greater market share</span></span></li></ul></div></div><div class="span6"><div><ul class="branded"><li><span style="color:#FF0000;">Improved competitiveness</span></li><li><span style="color:#FF0000;">Improved corporate image / reputation</span></li><li><span style="color:#FF0000;">Improved efficiency</span></li><li><span style="color:#FF0000;">Improved quality</span></li><li><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Survival</span></span></li></ul></div></div></div><span style="color:#FF0000;"></span><span style="color:#FF0000;"></span><hr class="hidden"><span style="color:#FF0000;">As the previous guide did not specify which business objectives needed to be taught in Unit 1.3, please make sure students from 2022 only learn the four specified in the guide: (i) growth, (ii) profit, (iii) protecting shareholder value, and (iv) ethical objectives.</span></section></div></div></div><div class="panel panel-expandable panel-purple"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong><span style="font-family:arial,helvetica,sans-serif;">Growth (AO2)</span></strong></p></div></div><div class="panel-body"><div><p><span style="font-family:arial,helvetica,sans-serif;"><img alt="" height="180" src="../../ib/businessmanagement/images/evo.png" width="260"></span></p><p><span style="color:#696969;"><em>“Change is inevitable. Growth is optional.”</em><br>- John C. Maxwell (b. 1947), American leadership author</span></p><div><p>Many businesses strive to grow in order to gain from the benefits of growth. <strong>Growth </strong>refers to an increase in the size of a business and its operations. These benefits include:</p><ul class="branded"><li>Higher sales revenue and profit - as a firm grows, its sales revenue increases, thereby improving the changes of higher profits.</li><li>Economies of scale - these are cost-saving benefits for firms as they grow larger, such as being able to purchase raw materials in bulk at a discounted price from their suppliers.</li><li>Reduced risks - larger firms tend to be less vulnerable to changes in the external environment (see <a href="../page/44027/bmt-3-steeple-analysis.html" title="New syllabus 2022 » Business Management Toolkit (BMT) » BMT 3 - STEEPLE analysis">BMT 3 - STEEPLE analysis</a>), such as an economic recession in the economy.</li></ul></div><p>Growth can be pursued by internal and/or external methods. <strong>Internal growth</strong> (also known as <strong>organic growth</strong>) takes place when an organization expands without the help of an external partner firm. Instead, it uses its own resources to do so, such as using retained profits to invest in production facilities in new locations.</p><p><span style="font-family:arial,helvetica,sans-serif;"><strong>External growth</strong> (also known as <strong>inorganic growth</strong>) refers to the expansion and evolution of a business by using third party resources and organizations rather than relying on internal sources and activities. Read more about methods of external growth <a href="../page/23968/methods-of-external-growth.html">here</a>.</span></p><p>Methods of measuring the growth of a business include:</p><ul class="branded"><li><p>Sales revenue - the monetary value of the products that the business has sold, per time period).</p></li><li><p>Sales volume - the number of products that the business sells, per time period).</p></li><li><p>Profits - the financial surplus that remains after all costs of production have been deducted from a firm's sales revenue).</p></li><li><p>Customers - the more customers that the business has, the larger it tends to be).</p></li><li><p>Number of employees (size of the workforce) - the more people that are hired by the business, the larger it tends to be.</p></li><li><p>Market share - this measures the firm's sales revenue as a proportion of the whole industry's sales revenue.</p></li></ul><ul class="branded"></ul><p>An increase in any of the above measures suggests that the business will have grown. It is common for managers to work out the percentage change in the variable being measured in order to determine the size or magnitude of growth. Take the example below which shows the growth in the number of DP Business Management candidates.</p><p><img alt="" src="../../ib/businessmanagement/images/misc/growth-in-dp-bm.jpg" style="width: 600px; height: 340px;"></p><p>The IB DP Business Management course continues to grow each year. In 2005, there were just 3,622 students who took the Business Management course. By the end of 2022, a total of <strong>32,773 </strong>candidates sat the exams for the subject. The chart above shows that the number of BM candidates has grown by <strong>804.8%</strong> during the given time period (a highly impressive growth rate by any measure!)</p><ul><li><p>Percentage change = (New - Old) / Old × 100</p></li><li><p>(32,773 - 3,622) / 3,622 = 8.048 = <strong>804.8%</strong></p></li></ul><p>In 2020, there were 1,136 IB World Schools that offered the DP Business Management course. In 2021, this had increased to 1,367 schools. What is the percentage growth rate in the number of schools that offered the course?</p><section class="tib-hiddenbox"><ul><li><p><span style="color:#FF0000;">(1,367 - 1,136) / 1,136 = 0.2033</span></p></li><li><p><span style="color:#FF0000;">0.2033 × 100 = 20.33</span></p></li><li><p><span style="color:#FF0000;">Hence, the growth rate was (an impressive) 20.33% in the number of IB World Schools offering the course</span></p></li></ul></section><hr class="hidden"><p>The benefits of business growth include:</p><ul class="branded"><li><p>It is necessary for a firm’s survival in a dynamic and competitive business environment.</p></li><li><p>Larger firms benefit from cost-saving benefits known as <a href="https://www.thinkib.net/businessmanagement/page/44212/economies-diseconomies-of-scale" title="Unit 1 - Intro to BM » 1.5 Growth and evolution » Economies & diseconomies of scale">economies of scale</a>, enabling them to charge lower prices and therefore attract more customers.</p></li><li><p>Employees are more likely to motivated working for larger and growing businesses as they have a greater degree of job security as well as increased remuneration.</p></li><li><p>Larger businesses are more likely to be able to attracts investors and represent lower risk to financial lenders.</p></li></ul><p>Ultimately, given the continual challenges and changes in the corporate world, growth is crucial to an organization's long-term success and survival.</p></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-expandable panel-purple"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong><span style="font-family:arial,helvetica,sans-serif;">Profit (AO2)</span></strong></p></div></div><div class="panel-body"><div><p><img alt="" src="../../ib/businessmanagement/images/profit.jpg" style="width: 300px; height: 200px;"></p><p><strong>Profit </strong>(or financial surplus) is the positive difference between a firm's sales revenue and its total costs of production, per time period. Profit as a business objective is important for two main reasons:</p><ul class="branded"><li><p>It acts as a reward for the owners and investors of the business.</p></li><li><p>It provides an internal source of finance to further develop the business.</p></li></ul><p>Profit acts as an incentive for entrepreneurs to take risks and start up new businesses. It also provides incentives for them to remain in business and pursue growth in order to reap greater financial returns. Profit as an internal source of finance enable the business to grow further without the need to over rely on external sources of finance that incur interest and debt.</p><p>It is assumed that profit maximization is a top priority for traditional commercial (for-profit) businesses. For many businesses and their owners/shareholders, profit is the most important organizational objective. They strive to operate at the optimal size that enables them to sell their output where the difference between total revenue and total costs is maximised.</p><p>There could be liquidity issues for a business that does achieve profit in the long-term, which could possibly lead to bankruptcy and business closure.</p><div class="yellowBg"><h5><span class="snippet-fa fa fa-leaf fa-lg" style="color: rgb(103, 7, 124);"> </span> <span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">Key concept - Sustainability</span></span></h5><p>Is it possible for an organization to remain in business without being profitable?</p></div><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><span class="snippet-fa fa fa-exchange fa-lg" style="color: rgb(103, 7, 124);"> </span> Key concept - Change</span></span></h5><p>Investigate real-world example of how and why business objectives might change over time.</p></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-cogs fa-lg" style="color: rgb(103, 7, 124);"> </span>Theory of Knowledge (TOK)</span></span></h5><p>How can business owners know just how much profit is enough?</p></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-cogs fa-lg" style="color: rgb(103, 7, 124);"> </span> Theory of Knowledge (TOK)</span></span></h5><p>To be successful and remain operational, both profit and growth are important and necessary for any business. How can we know if profit or growth is the most important business objective?</p></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong><span style="font-family:arial,helvetica,sans-serif;">Protecting shareholder value (AO2)</span></strong></p></div></div><div class="panel-body"><div><img alt="" src="../../ib/businessmanagement/images/1-intro-to-business/business-plan-2.jpg" style="width: 300px; height: 184px;"></div><p><span style="color:#696969;"><em>The CEO is responsible for protecting shareholder value</em></span></p><p>A <a href="399687.html" title="New syllabus 2022 » Unit 1 - Introduction to Business Management » 1.2 Types of organizations » Types of for-profit organizations">company</a> is owned by its shareholders. Protecting shareholder value is about safeguarding the interests of the owners of a limited liability company (one owned by shareholders either as a private or publicly traded company). Protecting shareholder value is ultimately the responsibility of the company's chief executive officer (CEO) and board of directors, based on their strategic plans to earn a healthy return on the capital invested in the business.</p><div><p>Free market economists argue that above all else, businesses exist to protect the interests of their owners. For example, Milton Friedman's (1912 - 2006) <em>Shareholder Value Theory</em>, states that <em>"The business of business is... business"</em>, that is, leave businesses to get on with what they do best - business. Beyond that, said Friedman, businesses should not concern themselves with <a href="399677.html" title="New syllabus 2022 » Unit 1 - Introduction to Business Management » 1.3 Business objectives » Corporate social responsibility">corporate social responsibilities</a> (CSR). It is not, according to this school of thought, for businesses to decide and take responsibility for the needs of society - so long as they operate within the law and the customs of the country(ies) in which they operate.</p><p>This view is supported by Jack Welch (former Chairman and CEO of GE - General Electric) who said:<em> "Even in these uncertain times, every company should practise good corporate citizenship post op but they also need to face the reality that's you first have to make money before you can give it away."</em></p><p><span style="font-family:arial,helvetica,sans-serif;">Protecting shareholder value </span>encompasses both short- and long-term objectives, including survival, profit, and growth in order to give owners a financial reward/return on their investments.</p><ul class="branded"><li><p><em>Survival </em>- This is the most basic of all business objectives as nothing else matters if the business cannot survive. Every business must earn enough revenue to keep it operating or else it will collapse. A business cannot protecting shareholder value if it cannot survive, perhaps due to a prolonged economic recession or fierce competition from larger companies.</p></li><li><p><em>Profit </em>- The profit motive provides a financial return for shareholders in the form of dividend payments. Most private sector, for-profit businesses have this as their main organizational objective in order to provide value for their owners.</p></li><li><p><em>Growth </em>- Enlarging the business can help to increase sales revenues, profits, and customer loyalty. These combined benefits of business growth help to generate improved shareholder value over time.</p></li><li><p><em>Market share</em> - Firms may aim to increase their market share (their sales revenue as a proportion of the entire market's sales revenue) in order to gain the benefits of being the market leader. These advantages include enhanced brand awareness, brand value, and brand loyalty, all of which help a company to protect the interests of their shareholders.</p></li><li><p><em>Ethical objectives and </em> <a href="399677.html" title="New syllabus 2022 » Unit 1 - Introduction to Business Management » 1.3 Business objectives » Corporate social responsibility">corporate social responsibility</a><em> </em>- For a business to remain relevant, profitable, and competitive, it is not enough to only sell more goods and services. Changing social attitudes and expectations mean that businesses have to operate in a socially acceptable and responsible way, such as ensuring business activities do not cause damage to the planet or people. Doing so can also improve the corporate image of the company. Only then, can the business generate and protect shareholder value in the long term.</p></li></ul><div class="yellowBg"><h5><span style="font-family:arial,helvetica,sans-serif;"> <span style="color:#FF0000;"><span class="snippet-fa fa fa-linode fa-lg" style="color: rgb(103, 7, 124);"> </span> ATL Activity 2 (Research skills) - Coronavirus and change</span></span></h5><p><img alt="" src="../../ib/businessmanagement/images/coronavirus1.jpg" style="width: 400px; height: 216px;"></p><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-exchange fa-lg" style="color: rgb(103, 7, 124);"> </span> Key concept - Change</span></span></h5><p>For any organization of your choice, investigate how the coronavirus pandemic (COVID-19) caused changes to its organizational objectives (such as protecting shareholder value and ethical objectives) as well as its business operations.</p><p>Be prepared to present your findings to the rest of the class.</p><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><div class="header" readonly="true"><img class="icon" src="../../thinkib/icons/teacher-only.svg"> Teacher only box</div><div class="content" readonly="false"><p><span style="color:#FF0000;">Encourage students to consider possible positive changes, rather than just the negative impacts or changes on the organization - some businesses have managed to thrive during/since the global pandemic.</span></p><p><span style="color:#FF0000;">If some students find this too challenging, suggest to them that they can refer to their IB World School as an example of an organization affected by the coronavirus pandemic.</span></p><p><span style="color:#FF0000;">Some examples that students could investigate include:</span></p><ul class="branded"><li><p><span style="color:#FF0000;">A record high of over 44 million people registered as unemployed in the USA in June 2020.</span></p></li><li><p><span style="color:#FF0000;">Oil giant BP announcing 10,000 job cuts following the global slump in demand for oil (as people were stuck at home due to lockdown laws in most parts of the world. This represented job losses for 15% of BP's global workforce.</span></p></li><li><p><span style="color:#FF0000;">Rolls-Royce announced 9,000 job cuts around the world due to the global decline in air travel, hurting demand for its jet engines and maintenance services.</span></p></li><li><p><span style="color:#FF0000;"> According to analysis from the <em>New Economics Foundation (NEF)</em>, the coronavirus pandemic could cause up to 124,000 job losses in the UK aviation industry without direct government support.</span></p></li><li><p><span style="color:#FF0000;">Frankie & Benny's (a bar and grill restaurant chain owned by the Wagamama group) closed 125 restaurants in the UK, causing 3,000 people to lose their jobs.</span></p></li><li><p><span style="color:#FF0000;">Airbus cut 15,000 jobs, mainly in Germany and France due to the decline in demand for its aeroplanes as a result of the stagnant air travel industry. The European aircraft manufacturer had previously furloughed 3,200 workers due to a </span><a href="../page/25120/strategies-for-dealing-with-cash-flow-problems.html" title="Unit 3 » 3.7 Cash flow » Strategies for dealing with cash flow problems"><span style="color:#FF0000;">cash flow crisis</span></a><span style="color:#FF0000;">. Read more about this story </span><a href="https://www.bbc.co.uk/news/business-52436741"><span style="color:#FF0000;">here</span></a><span style="color:#FF0000;">, from the BBC. Commercial air travel did not resume until July 2020, and much later in other parts of the world.</span></p></li><li><p><span style="color:#FF0000;">Data from the <em>Australian Bureau of Statistics (ABS) </em>showed that Australia went into a recession for the first time in almost 30 years. Retail sales in the country fell by US$5.38 billion between March to April 2020, causing unemployment across the economy in every sector. The coronavirus crisis was to blame.</span></p></li></ul></div></section></div><div class="yellowBg"><h5><span class="snippet-fa fa fa-cubes fa-lg" style="color: rgb(103, 7, 124);"> </span> <span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Key concept - Creativity</span></span></h5><p>What is the role of creativity in protecting shareholder value?</p></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-briefcase fa-lg" style="color: rgb(61, 30, 128);"> </span> Business Management Toolkit</span></span></h5><p>Examine how <a href="399697.html" title="New syllabus (first teaching 2022) » Business Management Toolkit (BMT) » BMT 2 - Ansoff matrix">Ansoff’s matrix</a> can support decision making about common business objectives.</p></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-briefcase fa-lg" style="color: rgb(103, 7, 124);"> </span> Business Management Toolkit (HL only)</span></span></h5><p>With reference to <a href="../page/42216/bmt-11-hofstedes-cultural-dimensions-hl.html" title="New syllabus 2022 » Business Management Toolkit (BMT) » BMT 11 - Hofstede's cultural dimensions (HL)">BMT 11 - Hofstede's cultural dimensions</a>, discuss:</p><ol><li><p>how the model can help managers of <a href="../page/44046/16-multinational-companies.html" title="New syllabus 2022 » Unit 1 - Introduction to Business Management » 1.6 Multinational companies">multinational companies</a> to protect shareholder value.</p></li><li><p>whether long-term or short-term orientation is more important for protecting shareholder value.</p></li></ol></div></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-purple panel-expandable"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong><span style="font-family:arial,helvetica,sans-serif;">Ethical objectives (AO2)</span></strong></p></div></div><div class="panel-body"><div><table><tbody><tr><td><span style="font-family:arial,helvetica,sans-serif;"><strong><img alt="" height="169" src="../../ib/businessmanagement/images/ethics.jpg" width="240"></strong></span></td><td><p><span style="color:#696969;"><em>"The one responsibility of business towards society is the maximisation of profits to shareholders within the legal framework and the ethical custom of the country."</em><br>- Milton Friedman (1912 - 2006), American economist and 1976 Nobel Memorial Prize in Economic Sciences</span></p><p><span style="color:#696969;"><em>“Educating the mind without educating the heart is no education at all.”</em><br>- Aristotle (384BC - 322BC), Greek philosopher</span></p></td></tr></tbody></table><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-question-circle fa-lg" style="color: rgb(103, 7, 124);"> </span> Starter Activity - An ethical dilemma?</span></span></h5><p><img alt="" height="195" src="../../ib/businessmanagement/images/rain-bus-stop.jpg" width="295"></p><p>You are driving along in your two-seater sports car on a cold, wet, and stormy night.</p><p>You pass by a bus stop, and you see three people waiting for the bus:<br> <br>1. An old lady who looks as if she is about to die.<br> <br>2. An old friend who once saved your life.<br> <br>3. The perfect partner you have been dreaming about.<br> <br>Which <strong>one </strong>would you choose to offer a ride to, knowing that there can only be one passenger in your two-seater sports car? And why?</p><p>Think carefully before you continue reading ...</p><section class="tib-hiddenbox"><p><span style="color:#FF0000;">This is a moral/ethical dilemma that was once actually used as part of a job application for management trainees at the multinational retailer Marks & Spencer. The task was intended to be used to judge the cognitive thinking of the applicants in a customer-focused business.</span></p><ul><li><p><span style="color:#FF0000;">You could pick up the old lady, because she is going to die, and thus you could save her life. This suggests the job applicant is focused on customer care.</span></p></li><li><p><span style="color:#FF0000;">Or you could take the old friend because he once saved your life, and this would be the perfect chance to pay him back. Choosing this option suggests loyalty.</span></p></li><li><p><span style="color:#FF0000;">However, you may never be able to find your perfect dream partner again... this option might suggest the applicant is a motivated and driven manager who sets out to achieve his/her goals.</span></p></li></ul><p><span style="color:#FF0000;">The story goes that the candidate who was hired (out of over 2,000 applicants) had no trouble coming up with an answer.</span></p><p><span style="color:#FF0000;">He simply answered:</span></p><p><span style="color:#FF0000;"><em>"I would give the car keys to my old friend, and let him take the lady to the hospital. Then I would stay behind and wait for the bus with the woman of my dreams."</em></span></p><p><span style="color:#FF0000;">Sometimes, we gain more if we are able to give up our stubborn thought limitations and act for the greater good.</span></p></section></div><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Ethics </strong>are, essentially, about what is deemed to be right and what is considered to be wrong, i.e. morality from society's point of view.</span> They are <span style="font-family:arial,helvetica,sans-serif;">based on the values of the organization, in accordance to society’s norms and beliefs. Read more about ethics as a key concept <a href="../page/43631/ethics.html" title="New syllabus 2022 » The 4 key concepts » Ethics">here</a>.</span></p><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Business ethics</strong> are the guiding principles that provide moral guidelines for the conduct of business activities. <strong>Ethical objectives</strong> are organizational goals based on moral guidelines in order to influence or determine business decision-making. <span style="font-family:arial,helvetica,sans-serif;">Ethical decision-making considers more than just calculating costs, benefits and profits. </span>This means such businesses act morally towards their various stakeholder groups, including employees, managers, customers, shareholders, suppliers, financiers, <span style="font-family:arial,helvetica,sans-serif;">local community (including <span style="font-family:arial,helvetica,sans-serif;">consideration for the natural environment)</span></span>, the government, and even <span style="font-family:arial,helvetica,sans-serif;">competitors.</span></span></p><p><span style="font-family:arial,helvetica,sans-serif;">Examples of ethical objectives include:</span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">improving the overall wellbeing of workers</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">honesty and fair treatment with regards to dealings with customers and suppliers</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">adopting green (clean / renewable) technologies</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">pursuing sustainable growth strategies</span></p></li><li><p>observing and respecting intellectual property rights of others</p></li><li><p><span style="font-family:arial,helvetica,sans-serif;"> using socially responsible advertising, and corporate governance (such as financial integrity and transparency).</span></p></li></ul><p><span style="font-family:arial,helvetica,sans-serif;">As part of its <a href="399677.html" title="New syllabus 2022 » Unit 1 - Introduction to Business Management » 1.3 Business objectives » Corporate social responsibility">corporate social reasonability</a> (CSR) strategy, businesses may establish an <strong>ethical code of practice </strong>- a formal documented policy setting out the way the business believes it should behave, including how to respond to situations that challenge its integrity or social responsibility or accusations/situations of unethical business practices.</span></p><p>Read more about developing an ethical code of practice by clicking the icon below.</p><section class="tib-hiddenbox"><p><strong>The importance of an ethical code of practice in business organizations</strong></p><p><img alt="" height="146" src="../../ib/businessmanagement/images/aims2-1.jpg" width="240"></p><p>Typically, a business organization faces pressures to act ethically from internal and external factors. For example, employees may demand better terms and conditions of employment, such as more opportunities for professional development and progression, whilst customers demand integrity and transparency (as they do not want to be associated with any business that earns profit through immoral or illegal activities).</p><p>Due to the ever-growing awareness of ethical business practices and corporate social responsibility (CSR) in the corporate world, a larger number of businesses have chosen to adopt an ethical code of practice in order to achieve their ethical objectives. The ethical code of practice is a formal document produced by the business which sets out the ways it believes its employees, and managers should behave in order to act ethically. For example, there should be guidelines about how to respond to situations such as bribery, discrimination, and/or exploitation in the workplace, that do not align with society's views on ethics, integrity, and social responsibilities. The ethical code of practice is usually published in the annual reports and often on company websites.</p><p>Note that an ethical code of practice is <u>not</u> a legal requirement but provides a framework for how a business should operate in order to fulfil its CSR goals and ethical objectives. However, it does provide clear details and guidelines on the organization's rules and policies on expected behaviour and practices, as well as how business decisions are taken. To work effectively, the ethical code of practice must be followed by all employees, manager, and directors as it provides a framework for consistency and uniformity across the organization.</p><p>Also note that values and principles of each organization may differ (as there is no legal requirement for businesses to have an ethical code of practice). Furthermore, moral values and ethical objectives are different in different part of the world; what is morally acceptable or expected in one country is not necessarily the case in others. Therefore, different businesses will have their own ethical codes of practice, although the guiding principles of such written documents are the same.</p></section><hr class="hidden"><p><span style="font-family:arial,helvetica,sans-serif;">Examples of unethical business practices include:</span></p><ul class="branded"><li><p><span style="font-family:arial,helvetica,sans-serif;">the exploitation of stakeholders (such as low-paid workers, child labour, suppliers being paid late, and poor delivery of services to customers)</span></p></li><li><p>misleading marketing gimmicks, including direct advertising aimed at young children</p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">exploitation of the natural environmental and ecosystems, and</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">fraudulent business activities (such as financial deception).</span></p></li></ul><p>There are both advantages and limitations of businesses pursuing ethical objectives.</p><h5><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-check-circle-o fa-lg" style="color: rgb(103, 7, 124);"> </span> Advantages of ethical business objectives</span></h5><p>Pursuing ethical objectives is an ongoing and long-term journey for businesses. However, there can be substantial advantages from doing so. These interrelated benefits include:</p><ul class="branded"><li><p><em>Improved corporate image</em> - Being known as an ethical business can help to enhance the corporate image and reputation of an organization. This can generate additional long-term gains for the business such as improved sales and consumer loyalty. By contrast, acting unethically (see ATL Activity 4 below) can certainly lead to negative publicity from the mass media, leading to serious damage to the organization’s reputation.</p></li><li><p><em>Higher sales revenue</em> - Due to improvements in education and the growing use of social media platforms, customers tend to prefer to buy from businesses that act morally and have ethical goals. They do not tend to knowingly purchase products from businesses that cause significant harm to the natural environment or exploit child labour, for example. Hence, ethical businesses can gain from higher sales revenue in the long-term.</p></li><li><p><em>Increased customer loyalt</em>y - Similarly, customers are more likely to be loyal to businesses that look after their customers, employees, suppliers, and local communities. For example, customers are likely to prefer to be loyal to cosmetics companies that do not test their products on animals but actively take actions to protect the natural environment.</p></li><li><p><em>Reduced costs</em> - Despite the costs of compliance, acting ethically can help a business to cut certain costs in the long-term. For example, acting in the best interest of the environment can help to reduce the costs of excessive packaging and waste.</p></li><li><p><em>Higher staff morale - </em>Employees feel better working for a business that does the "right" things, from society's point of view, beyond just obeying the laws of the country. Higher staff morale also helps to improve labour productivity and the level of employee motivation.</p></li><li><p><em>Increased employee loyalty</em> - Similarly, ethical business practices help to attract and retain highly motivated employees. In particular, highly qualified and skilled employees may not be willing to work for unethical businesses. Having a good corporate image and reputation for ethical business practices makes it significantly easier for organizations to attract, hire, and retain employees.</p></li><li><p><em>Avoiding fines and penalties</em> - Acting unethically can result in lawsuits (legal action taken against the businesses) and expensive fines as well as other penalties imposed by the courts.</p></li><li><p>Ultimately, actively pursuing ethical business objectives can be beneficial for the organization's triple bottom line (people, planet, and profits).</p></li></ul><h5><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-times-circle-o fa-lg" style="color: rgb(103, 7, 124);"> </span> Limitations of ethical business objectives</span></h5><p>Pursuing ethical business objectives also have their limitations and can be challenging and expensive to accomplish. These limitations include:</p><ul class="branded"><li><p><em>Compliance costs</em> - There are costs associated with implementing ethical behaviours and corporate social responsibility. These costs are potentially extremely high. For example, supermarkets have to spend more on purchasing organic fruits, vegetables, and meats rather than genetically modified produce. The costs of production are also higher for ensuring employees are paid fair wages rather that exploiting workers.</p></li><li><p><em>Higher prices</em> - High compliance costs can lead prices having to be raised in order to maintain profit margins. Furthermore, rival businesses might not implement ethical objectives and could have lower costs as a result. This can reduce the price competitiveness of the business as it pursues its ethical objectives and corporate social responsibilities.</p></li><li><p><em>Lower profits</em> - The compliance costs of acting ethically, such as the adoption of green technologies or the sourcing of fair trade raw materials, means higher production costs for the business and hence lower profitability. This would then lead to lower dividend payments made to shareholder or business owners.</p></li><li><p><em>Subjectivity </em>- The notion and concept of ethics is subjective. People and businesses in different parts of the world may have varying views about what is and what is not considered ethical behaviour (refer to BMT 11 - Hofstede's cultural dimension).</p></li><li><p><em>Stakeholder conflict</em> - Although customer might prefer to purchase from businesses with ethical objectives and employees might prefer to work for ethical business, the directors and owners of the business might not be so keen due to some of the disadvantages outlined above. Many for-profit organizations aim to profit maximize in order to meet the needs of their shareholders and financiers or investors. Shareholders may be reluctant to accept lower profits, at least in the short term. Hence, this can put pressure on managers to pursue other business objectives other ethical objectives and CSR practices.</p></li></ul><p>Overall, there is an ethical dilemma for managers if higher compliance costs resulting from ethical business activities cannot be covered by higher prices which customers are willing and able to pay for. Decision makers will need to decide whether they can accept adopting ethical practices with the potential risk of lower profitability, at least in the short-term.</p><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-file-text-o fa-lg" style="color: rgb(103, 7, 124);"> </span> Case Study 1 - The Coca-Cola Company</span></span></h5><p><img alt="" height="212" src="../../ib/businessmanagement/images/businesses/coca-cola(1).jpg" width="305"></p><p>Coca-Cola is the world’s most successful consumer drinks company, with over $40 billion in sales revenue (which equates to $109,589,041 every day of the year!). However, this also means the company is the planet’s largest plastic polluter. Although the multinational giant is often associated with fuelling child obesity, the company is increasingly being linked with plastic waste and pollution, with over 100 billion plastic bottles produced each year – that’s the equivalent of <strong>273,972,602</strong> plastic bottles every single day of the year!</p><p>In response to negative media exposure, the company’s global chief executive, James Quincey, stated that the Coca-Cola Company aims to recover every plastic bottle that the company sells, and to use 50% of this for new bottles, by 2030. The company also announced that it would replace the plastic shrink wraps used in multipacks with 100% recyclable cardboard.</p><p><span style="color:#696969;">Source: adapted from </span><a href="https://www.bbc.co.uk/news/business-50175594"><span style="color:#696969;">BBC News</span></a></p></div><div class="yellowBg"><h5><span class="snippet-fa fa fa-file-text-o fa-lg" style="color: rgb(103, 7, 124);"> </span> <span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Case Study 2 - Theranos</span></span></h5><p>Theranos was an American privately held company that claimed to have invented breakthrough health technologies that could detect diseases using only one drop of blood. The company was founded by 19-year old Elizabeth Holmes in 2003, raising more than $600 million from venture capitalists and private investors. In 2014, the company was valued at $9 billion.</p><p>By 2016, Theranos was forced to shut down after an investigation showed major flaws in the firm's technologies that generated widespread inaccurate results. In 2018, Elizabeth Holmes was charged with "massive fraud" by government authorities.</p><p><span class="snippet-fa fa fa-youtube fa-lg" style="color: rgb(202, 72, 26);"> </span> Watch the feature-length documentary of the Theranos disaster story here.</p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/3CccfnRpPtM" title="YouTube video player" width="640"></iframe></p><p>Click the icon below for a list of questions to accompany the video.</p><section class="tib-hiddenbox"><p><span class="snippet-fa fa fa-question-circle-o fa-lg" style="color: rgb(61, 30, 128);"> </span> <strong>Questions</strong></p><ol><li><p>What was Elizabeth Holmes's goal in life from childhood?</p></li><li><p>At what age did Elizabeth Holmes drop out of Stanford University to start her own company?</p></li><li><p>How much did Elizabeth Holmes receive as a seed investment, from a neighbour?</p></li><li><p>By the end of the year, how much had Elizabeth Holmes acquired in funding?</p></li><li><p>In which year did Theranos develop its first prototype, Theranos 1.0?</p></li><li><p>Which other large company conducted Theranos tests on cancer patients?</p></li><li><p>How did Elizabeth Holmes approve the trialling of her products?</p></li><li><p>Who was Avie Tevanian?</p></li><li><p>What did a member of the sales team discover that the financial projections were based on?</p></li><li><p>How long did it take for all former employees of Apple to leave Theranos?</p></li><li><p>How much did Richard Fuisz sell his demonstration video company for?</p></li><li><p>How much had Safeway invested in accommodating shelf space for Theranos products by 2012?</p></li><li><p>What was the pay of the lawyer hired by Richard Fuisz?</p></li><li><p>Who was Angela Ha?</p></li><li><p>For how long did Theranos operate without a CFO (chief financial officer? 14:45</p></li><li><p>Who is Rupert Murdoch?</p></li><li><p>Which magazine released a front page cover featuring Elizabeth Holmes with the title "This CEO is out for blood"?</p></li><li><p>Following a visit from the FDA, how many tests did the Edison blood testing machine perform correctly, out of 250 tests?</p></li><li><p>How much did Walgreens sue Theranos for?</p></li><li><p>When was Theranos dissolved?</p></li></ol></section><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><div class="header" readonly="true"><img class="icon" src="../../thinkib/icons/teacher-only.svg"> Teacher only box</div><div class="content" readonly="false"><p><span style="color:#FF0000;"><strong>Answers</strong></span><span style="color:#B22222;"></span></p><p><span style="color:#B22222;"></span><span style="color:#FF0000;"><em>Timings included for reference only</em></span><span style="color:#B22222;"></span></p><p>1. What was Elizabeth Holmes's goal in life from childhood? 1:31</p><p><span style="color:#FF0000;">To become a billionaire</span></p><hr class="hidden"><p>2. At what age did Elizabeth Holmes drop out of Stanford University to start her own company? 2:18</p><p><span style="color:#FF0000;">19</span></p><hr class="hidden"><p>3. How much did Elizabeth Holmes receive as a seed investment, from a neighbour? 2:33</p><p><span style="color:#FF0000;">$1 million</span></p><hr class="hidden"><p>4. By the end of the year, how much had Elizabeth Holmes acquired in funding? 3:15</p><p><span style="color:#FF0000;">$6 million</span></p><hr class="hidden"><p>5. In which year did Theranos develop its first prototype, Theranos 1.0? 5:07</p><p><span style="color:#FF0000;">2006</span></p><hr class="hidden"><p>6. Which other large company conducted Theranos tests on cancer patients? 5:51</p><p><span style="color:#FF0000;">Pfizer</span></p><hr class="hidden"><p>7. How did Elizabeth Holmes approve the trialling of her products? 6:21</p><p><span style="color:#FF0000;">Lying to investors and clients about the product's effectiveness</span></p><hr class="hidden"><p>8. Who was Avie Tevanian? 7:14</p><p><span style="color:#FF0000;">The former Senior Vice President of Software at Apple</span></p><hr class="hidden"><p>9. What did a member of the sales team discover that the financial projections were based on? 8:37</p><p><span style="color:#FF0000;">Dishonest pilot tests</span></p><hr class="hidden"><p>10. How long did it take for all former employees of Apple to leave Theranos? 9:09</p><p><span style="color:#FF0000;">A couple of years</span></p><hr class="hidden"><p>11. How much did Dr. Richard Fuisz sell his demonstration video company for? 9:25</p><p><span style="color:#FF0000;">$50 million</span></p><hr class="hidden"><p>12. How much had Safeway invested in accommodating shelf space for Theranos products by 2012? 12:10</p><p><span style="color:#FF0000;">$350 million</span></p><hr class="hidden"><p>13. What was the pay of the lawyer hired by Richard Fuisz? 13:07</p><p><span style="color:#FF0000;">$1,000 an hour</span></p><hr class="hidden"><p>14. Who was Angela Ha? 14:28</p><p><span style="color:#FF0000;">The Software Product Manager for Theranos</span></p><hr class="hidden"><p>15. For how long did Theranos operate without a CFO (chief financial officer? 14:45</p><p><span style="color:#FF0000;">7 years</span></p><hr class="hidden"><p>16. Who is Rupert Murdoch? 18:23</p><p><span style="color:#FF0000;">The owner of <em>The Wall Street Journal </em>(who invested $125 million in Theranos)</span></p><hr class="hidden"><p>17. Which magazine released a front page cover featuring Elizabeth Holmes with the title "This CEO is out for blood"? 16:41</p><p><span style="color:#FF0000;">Fortune</span></p><hr class="hidden"><p>18. Following a visit from the FDA, how many tests did the Edison blood testing machine perform correctly, out of 250 tests? 20:32</p><p><span style="color:#FF0000;">Only 12</span></p><hr class="hidden"><p>19. How much did Walgreens sue Theranos for? 20:54</p><p><span style="color:#FF0000;">$140 million</span></p><hr class="hidden"><p>20. When was Theranos dissolved? 22:46</p><p><span style="color:#FF0000;">September 2018</span></p></div></section></div><div class="yellowBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-linode fa-lg" style="color: rgb(103, 7, 124);"> </span>ATL Activity 3 (Communication skills) - Ethical or Unethical, that is the question</span></span></h5><p><span style="font-family:arial,helvetica,sans-serif;">Recommended time: <strong>20 minutes</strong></span></p><p>In groups of 2 - 4 students, debate whether you feel the following business practices are ethical or unethical, and provide justified reasons for your arguments.</p><ol><li><p>Charging customers premium prices at the cinema (theatre) for drinks, popcorn and other movie snacks.</p></li><li><p>Airlines charging customers higher prices for air travel during school holidays, such as Christmas or the summer break.</p></li><li><p>Using pesticides in agricultural food production (pesticides are the manufactured chemicals used to control weeds and insects that cause damage to farm crops).</p></li><li><p>Reducing portion sizes so as to avoid having to increase prices due to the rise in the cost of raw materials (a practice known as "shrinkflation").</p></li><li><p>Private fee-paying schools and universities choosing not to reduce tuition fees during nationwide closure of schools and universities due to the global Coronavirus pandemic in 2020.</p></li></ol></div><div class="greenBg"><h5><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;"><span class="snippet-fa fa fa-linode fa-lg" style="color: rgb(103, 7, 124);"> </span> ATL Activity 4 (Research skills) - Unethical business practices</span></span></h5><p><span style="font-family:arial,helvetica,sans-serif;">Recommended time: <strong>45 minutes</strong></span></p><p>Is 'business ethics' an oxymoron? If the primary purpose of businesses is to generate profit for its owners, does this necessarily mean that they will operate in an ethical way. For example, businesses in many parts of the world sell counterfeit products (the illegal imitation of goods sold to customers), which is regarded as deceitful, dishonest and fraudulent.</p><table><tbody><tr><td><h5><span style="font-family:arial,helvetica,sans-serif;"><span style="color:#FF0000;">Inquiry task</span></span></h5><ul class="branded"><li><span style="font-family:arial,helvetica,sans-serif;">Select one of the companies shown</span></li><li><span style="font-family:arial,helvetica,sans-serif;">Find evidence of unethical business behaviour, such as:</span></li></ul><ol style="margin-left: 40px;"><li><p><span style="font-family:arial,helvetica,sans-serif;">Walmart's unequal pay for women</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">McDonald's sale of fast food and the association with health issues</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">The market power of Starbucks over coffee growers in low-income countries</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">KFC's food hygiene scandals</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Nike's employment policies</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">Volkswagen's diesel emissions scandal</span></p></li><li><p><span style="font-family:arial,helvetica,sans-serif;">BP's oil spillage.</span></p></li></ol><ul class="branded"><li><span style="font-family:arial,helvetica,sans-serif;">Find evidence of objectives / actions to support the company's ethical business behaviour</span></li><li><span style="font-family:arial,helvetica,sans-serif;">Students should report their findings to the rest of the class.</span></li></ul></td><td><span style="font-family:arial,helvetica,sans-serif;"><img alt="" height="311" src="../../ib/businessmanagement/images/ethics(1).png" width="231"></span></td></tr></tbody></table><section class="tib-hiddenbox"><p><span style="color:#FF0000;">An example, the VW diesel scandal, is outlined below for illustrative purposes:</span></p><p><span style="color:#FF0000;"><strong>The VW diesel scandal</strong></span></p><p><span style="color:#FF0000;">One of the worst cases of unethical business behaviour in the corporate world and motor vehicle industry is the Volkswagen diesel scandal. The German car maker - Europe's largest - had installed emissions software on more than 500,000 diesel cars in the USA and around 10.5 million more cars worldwide that allowed VW vehicles to pass environmental standards regulated by the USA’s Environmental Protection Agency (EPA).</span></p><p><span style="color:#FF0000;">In test mode, the VW vehicles were fully compliant with all of the EPA’s emissions levels. However, when driving these vehicles normally, it was discovered that the emissions from VW cars were actually up to <strong>40</strong> times higher than the government’s limit. Official estimates vary, but the VW diesel scandal has been reported to the car manufacture in the region of $35 billion in fines, and a tarnished brand name.</span></p></section></div><div class="yellowBg"><h5><span class="snippet-fa fa fa-leaf fa-lg" style="color: rgb(103, 7, 124);"> </span> <span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;">Key concept - Sustainability</span></span></h5><p>Using real-world examples, discuss how ethical business objectives contributes to the sustainability of businesses.</p></div><div class="greenBg"><h5><span style="color:#FF0000;"><span style="font-family:arial,helvetica,sans-serif;"><span class="snippet-fa fa fa-pencil-square-o fa-lg" style="color: rgb(61, 30, 128);"> </span> Exam Practice Question</span></span></h5><table><tbody><tr><td>(a)</td><td>Define the term <em>ethical objectives.</em></td><td><em>[2 marks]</em></td></tr><tr><td>(b)</td><td>State <strong>two </strong>examples of ethical business objectives.</td><td><em>[2 marks]</em></td></tr><tr><td>(c)</td><td>Explain <strong>two </strong>reasons why an organization might choose to set ethical business objectives.</td><td><em>[4 marks]</em></td></tr></tbody></table></div><section class="tib-teacher-only" readonly="true" title="This box is not visible to students"><div class="header" readonly="true"><img class="icon" src="../../thinkib/icons/teacher-only.svg"> Teacher only box</div><div class="content" readonly="false"><p><span style="color:#FF0000;"><strong>Answers</strong></span></p><p><strong>(a) Define the term ethical objectives. <em> [2 marks]</em></strong></p><p><span style="color:#FF0000;"><span class="ILfuVd"><span class="hgKElc">Ethical objectives can be defined as the moral principles and values that underpin human behaviour in an organization, country, or region. Morals are concerned with that society deems to be 'right' or 'wrong'. Hence, <span class="ILfuVd"><span class="hgKElc">ethical objectives</span></span> are the moral principles that guide business behaviour. </span></span></span></p><p><span style="color:#FF0000;">Award <em>[1 mark] </em>for a definition that shows some understanding of the term <em>ethical objectives.</em></span></p><p><span style="color:#FF0000;">Award <em>[2 marks] </em>for a clear definition that shows good understanding of the term <em>ethical objectives, </em>similar to the example above.</span></p><hr class="hidden"><p><strong>(b) State <u>two</u> examples of ethical business objectives. <em> [2 marks]</em></strong></p><p><span style="color:#FF0000;">Possible answers could include:</span></p><div class="wDYxhc" data-md="61" style="clear:none"><div aria-level="3" class="LGOjhe" data-attrid="wa:/description" data-hveid="CAYQAA" role="heading"><p><span style="color:#FF0000;"><span class="ILfuVd"><span class="hgKElc"></span></span></span></p><ul class="branded"><li><p><span style="color:#FF0000;">Ecological (environmental), social (cultural), and economic sustainability</span></p></li><li><p><span style="color:#FF0000;"><span class="ILfuVd"><span class="hgKElc">The fair treatment of employees</span></span></span></p></li><li><p><span style="color:#FF0000;"><span class="ILfuVd"><span class="hgKElc">High standard of health and safety in the workplace</span></span></span></p></li><li><p><span style="color:#FF0000;">Ethical accounting practices</span></p></li><li><p><span style="color:#FF0000;"><span class="ILfuVd"><span class="hgKElc">The fair treatment of suppliers</span></span></span></p></li><li><p><span style="color:#FF0000;"><em>Accept any other valid example</em></span></p></li></ul></div></div><p><span style="color:#FF0000;"> <span class="ILfuVd"><span class="hgKElc"></span></span> Award <em>[1 mark] </em>for each appropriate example given.</span></p><p><br><strong>(b) Explain <u>two</u> reasons why an organization might choose to set ethical business objectives.<em> [4 marks]</em></strong></p><p><span style="color:#FF0000;">Possible reasons could include an explanation of:</span></p><p><span style="color:#FF0000;"></span></p><ul class="branded"><li><p><span style="color:#FF0000;">Improved corporate image</span></p></li><li><p><span style="color:#FF0000;">Higher sales revenue</span></p></li><li><p><span style="color:#FF0000;">Increased customer loyalty</span></p></li><li><p><span style="color:#FF0000;">Reduced costs</span></p></li><li><p><span style="color:#FF0000;">Higher staff morale</span></p></li><li><p><span style="color:#FF0000;">Increased employee loyalty</span></p></li><li><p><span style="color:#FF0000;">Avoiding fines and penalties</span></p></li><li><p><span style="color:#FF0000;">Improved triple bottom line</span></p></li><li><p><span style="color:#FF0000;"><em>Accept any other valid reason that is clearly explained</em></span></p></li></ul><p><span style="color:#FF0000;"></span></p><p><span style="color:#FF0000;">Mark as a 2 + 2</span></p><p><span style="color:#FF0000;">For each reason, award <em>[1 mark] </em>for a valid reason and an additional <em>[1 mark] </em>for a clear explanation.</span></p></div></section></div></div><div class="panel-footer"><div></div></div></div><div class="panel panel-expandable panel-purple"><div class="panel-heading"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p><strong>Key terms</strong></p></div></div><div class="panel-body"><div><ul class="branded"><li><p><strong>Business ethics</strong> are the principles that provide moral guidelines for the conduct of business activities.</p></li><li><p><strong>Ethics </strong>are about what is deemed to be right and what is considered to be wrong, i.e. morality from society's point of view.</p></li><li><p>An<strong> ethical code of practice</strong> is a formal documented policy that sets out the way a business believes it should behave, including how to respond to situations that challenge its integrity or social responsibilities.</p></li><li><p><strong>Ethical objectives</strong> are organizational goals based on moral guidelines in order to influence or determine business decision-making.</p></li><li><p><strong>Growth </strong>refers to an increase in the size of a business and its operations, using measures such as market share, sales revenue, or the number of customers.</p></li><li><p><span style="font-family:arial,helvetica,sans-serif;"><strong>Objectives </strong>(or <strong>business objectives</strong>) are the clearly defined and measurable targets of a business, used to to achieve its overall organizational goals.</span></p></li><li><p><strong>Profit</strong> is the positive difference between a firm's sales revenue and its total costs of production, per time period</p></li><li><p><strong>Shareholder value </strong>is about safeguarding the interests of the owners of a limited liability company (one owned by shareholders either as a private or publicly traded company).</p></li><li><p><span style="font-family:arial,helvetica,sans-serif;"><strong>SMART objectives </strong>are organizational targets that are<strong> s</strong>pecific, <strong>m</strong>easurable, <strong>a</strong>greed,<strong> </strong><strong>r</strong>ealistic, and <strong>t</strong>ime specific.</span></p></li><li><p><strong>Strategic objectives </strong>are long-term goals that the whole organization continually strives to achieve.</p></li><li><p><strong>Tactical objectives </strong>are short-term specific goals of a business with definitive timelines for specific functional areas of an organization.</p></li></ul></div></div><div class="panel-footer"><div></div></div></div><p><span style="font-family:arial,helvetica,sans-serif;">Return to the <a href="../page/44041/13-business-objectives.html" title="New syllabus 2022 » Unit 1 - Introduction to Business Management » 1.3 Business objectives">Unit 1.3 - Business objectives</a> homepage</span></p><p>Return to the <a href="../page/43522/unit-1-introduction-to-business-management.html" title="New syllabus 2022 » Unit 1 - Introduction to Business Management">Unit 1 - Introduction to Business Management</a> homepage<span style="font-family:arial,helvetica,sans-serif;"></span></p><p><span style="font-family:arial,helvetica,sans-serif;"><a href="../index.htm"><img alt="" src="../../ib/businessmanagement/logo-blue-black-1.png" style="width: 170px; height: 54px;"></a></span></p><script>document.querySelectorAll('.tib-teacher-only').forEach(e => e.remove());</script></section></div></article><br><div class="done-task"><input id="task-type" value="read" type="hidden"><a href="#" class="btn btn-success btn-large mark-as-done"><i class="fa fa-fw fa-check-square-o"></i> Mark as done</a><span id="task-done-badge" title="You have successfully submitted this task" class="badge badge-info" style="display: none"><i class="fa fa-fw fa-check"></i> Submitted</span><br><a id="return-my-tasks" style="display: none;" 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