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1.2 Types of business entities

 Reading task

Unit 1.2 Types of business entities

“Business shapes the world. It is capable of changing society in almost any way you can imagine.”
- Dame Anita Roddick (1942 - 2007), Founder of The Body Shop

Businesses exist to satisfy the needs and wants of their customers by selling goods and services, usually in return for profit. This section of the syllabus considers the main functions of business organizations (HRM, finance, marketing and operations management).

The learning outcomes (or assessment objectives) for this section of the IB Business Management syllabus are:

  • Distinction between the private and the public sectors (AO2)
  • The main features of the following types of organizations (AO3):

• Sole traders

• Partnerships

• Privately held companies

• Publicly held companies

  • The main features of the following types of for-profit social enterprises (AO3):

• Private sector companies

• Public sector companies

• Cooperatives

  • The main features of the following type of non-profit social enterprise (AO3):

• Non-governmental organizations (NGOs).

 Teacher only box

Note to teachers

Please note the following changes to this section of the syllabus (first exams M24).

  • The wording for the two types of limited liability companies has changed from (i) private limited company to privately held company, and (ii) public limited company to publicly held company. This is a critical change to note.

  • Microfinance providers are no longer featured as types of for-profit social enterprises. However, do not discard of your resources for microfinance providers as they feature in the new Unit 3.2 as an external source of finance.

  • Public-private partnerships (PPP) are also removed as types of for-profit social enterprises. The term is no longer explicit in the new guide, but note that PPPs are a classic example of public sector companies run for profit. Hong Kong Disneyland and Shanghai Disneyland are real world examples of this.

  • Charities have been removed as a type of non-profit social enterprises. Charities (surprisingly) are not explicitly referred to in the new guide, although they could work well for aspects of corporate social responsibility in Unit 1.3, preparing for the new Paper 3 (HL only), as well as the key concept of ethics.

Please be aware of the above updates if/when using resources for the previous course, such as past IB exam papers and mark schemes.

 InThinking resources

Click the hyperlinks below to access the InThinking resources for this particular section of the IB Business Management syllabus.

 As a preview and/or review, the video below is a summary of the main types of business organizations:

The video can be used as a starter activity (especially if you have student who have taken a pre-IB course such as IGCSE Business Studies) or use this video for review after the sub-topics have been covered. The business organizations covered include:

  • Sole traders

  • Partnerships

  • Limited liability companies (privately and publicly held companies)

  • Franchising (which is covered in more detail in Unit 1.5 in the IB Business Management syllabus).

Return to Unit 1 - Introduction to Business Management homepage


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