IB Business Management practice questions.

Which activity best represents the quaternary sector?

• extracting coal from a mine
• manufacturing cars in a factory
• selling groceries in a shop
• research and knowledge services

Answer: research and knowledge services

The quaternary sector involves knowledge-based, intellectual services such as research, information and consultancy, one step beyond the service (tertiary) sector.

The span of control refers to:

• the number of layers in the hierarchy
• the number of subordinates directly accountable to a manager
• the route along which instructions pass down the organisation
• the degree to which decisions are delegated

Answer: the number of subordinates directly accountable to a manager

Span of control = number of people directly reporting to one manager. A wide span suits a flat structure; a narrow span suits a tall one.

Which of the following is an INTERNAL source of finance?

• a long-term bank loan
• retained profit
• share issue
• trade credit

Answer: retained profit

Internal finance comes from within the business (retained profit, sale of assets, working capital). Loans, share issues and trade credit are external sources.

A market-oriented business is one that:

• focuses mainly on its production process and technical quality
• bases its decisions on the needs and wants of customers
• ignores market research to reduce costs
• sells only to other businesses

Answer: bases its decisions on the needs and wants of customers

Market orientation puts customer needs first and uses market research to guide decisions; product orientation focuses on the product itself and its quality/innovation.

Which production method involves creating a single, unique, one-off item to a customer's specification?

• job production
• batch production
• flow production
• mass production

Answer: job production

Job production makes one bespoke item at a time (e.g. a tailored suit or a bridge). Batch makes groups; flow/mass produce continuously in large volumes.