IB BUSINESS PAPER 1

Brand

A brand is an individual name, symbol, image, or trademark unique to a product or business organization. As an intangible asset, the brand differentiates the product or organization from competing products and firms in the industry. RDM's brand name is outdated

Define business.

A business is a decision-making organization involved in the production of goods and/or services to satisfy the needs and wants of customers. It combines human, capital, and financial resources to create such product. Radeki de Dovnic Manufacturing (RDM) is a family-owned business, founded in 1873.

Company

A business owned by shareholders who have limited liability. Companies are incorporated institutions, they are legally separate entities from their owners. RDM is currently a private limited company.

Define Bloc.

A group of countries with a common interest, they're by forming an alliance to achieve a common goal. Examples include political blocs and Regional trading blocs. The former Soviet Bloc countries comprised of Bulgaria, Cuba, Czechoslovakia, East Germany, Hungary, Poland, and Romania. The European Union is a regional trading Bloc.

Human resource plan

A long-term plan to ensure that the labor force within an organization has the correct skills and expertise to carry out its roles within the business, so that it meet its organizational goals. At present, RDM does not have human resource plan.

Markets

A market refers to the collective groups of existing and potential buyers and sellers of a particular good or a service. At present, RDM is not very price competitive in potentially lucrative markets that are located in over 700-km radius, due to the relatively high cost of delivery.

Define private sector.

A private sector is the section of the economy run by private individuals and firms, rather than by the public (government) sector. Firms in the private sector tend to strive to maximize their profit. RDM is a private sector business, owned by Radeki de Dovnic family members as private shareholders.

Define products.

A product is a good or service which is sold on the market to satisfy the needs and wants of customers. It can be a tangible goods (such as RDM's healthcare devices) or an intangible service.

Production facility

A production facility refers to a building or area where physical products are made, such as in a factory or manufacturing plant. The production facility usually consists of buildings, machinery, capital equipment, and commercial vehicles. One of the options for growth at RDM is to build an additional production facility outside of the Czech Republic.

Democratic leadership style

A style that embraces a participative role in decision-making. Everyone in the organization has the the opportunity to participate their thoughts and ideas, in an open and collegial way. Collaboration and professional discussions are encouraged. The management team then synthesize all the available info in order to make the best informed decision. Jan Radeki de Dovnic used a paternalistic leadership style during his time as CEO of RDM.

What are the phases in the product life cycle?

A typical product life cycle has the following phase: introduction, growth, maturity/saturation, and decline.

Define shop floor.

A workshop floor is an area in a manufacturing facility ( such as a workshop or factory) where production is carried out. This includes automated production system and / or manual work carried out by employees. The shop floor area may include Capital equipment, machinery, inventory (stock) and storage facilities. RDM's shop for includes robots, which are used configure the tooling for the production process of medical devices.

Define specifications.

A written statement of the requirements of a product, including information such as product design, functionality, and quality and/or safety standards that apply to the item. The specifications are sometimes accompanied by product images that visually illustrate functionality and product features. RDM's customers use a template on the company's web page to enter details of their product specifications for the healthcare devices.

Define Artificial Intelligence.

AI is an aspect of computer science focusing on the ability of smart machines to perform tasks that's typically require human intelligence, eg voice commands on a smartphone. AI enables intelligent machines to work and react like humans. At RDM, AI is used in robotics to handle tasks such as object manipulation and navigation in order to customize the production of healthcare devices.

Define customized production.

Also known as job production, this production method involves the manufacturing of unique or one-off orders. RDM's Highly automated processes and enables the company to produce 500 aluminum water bottles, customized for each employee.

Redundant

Also known as retrenchment, this occurs when workers are legally dismissed because their job no longer exists. Redundancy at RDM was inevitable as the business downsized from around 500 workers back in the 1970s to just above 100 workers today.

Define automated manufacturing process.

An automated manufacturing process, or automated manufacturing system, refers to the integration of software, equipment, robots and Machinery to autonomously produce physical products, such as medical devices or aluminum water bottles. RDM's highly automated processes include the use of digitized communications between robots, 3D printing, cloud computing, mobile devices, big data and artificial intelligence.

Define marketing economy.

An economic system with very minimal government intervention, we're private individuals and firms have incentives to work hard to reap monetary gains. Is based on the foundations of capitalism, rather than communism. The Czech Republic operates as a stable market economy and democracy.

Executives

An executive is a senior manager or director with autonomous decision-making responsibility in an organization. Having seen the success of the order for customized aluminum water bottles from a large medical customer, several executives at RDM encouraged Jan Radeki de dovnic to make the producation of such a product as a distinct division of the business.

Employer

An individual or organization the employs (hires) labor for the production of goods and/or services. RDM was the largest employer in Lobjanec during the 1970's, but only employs 177 workers today.

Define industry.

An industry consists of businesses involved in a similar business activity so are indirect competition as they cater for the same client base. RDM operates in an industry that produces Healthcare (medical) devices.

Corporate strategic plan

An organization's proposal of its business strategy, outlining its strategic direction and including the necessary resources to pursue the strategy. As a management tool, strategic planning starts with strategic analysis (an examination of its current position in the market), followed by strategic choice (the possible options through which the firm can pursue its strategy) an ending in strategic implementation (deciding how to get to where the firm wants to be). Currently, RDM does not have a corporate strategic plan.

Loan Capital

Any external source of finance that incurs interest charges, such as overdrafts, commercial bank loans, mortgages and debentures. One way to finance RDM's expensive expansion plan is through loan capital.

Define big data.

Big data refers to extremely large volumes of data sets, which may or may not be structured. Big data analysts study the data sets to discover patterns and trends related to customer habits and behaviors. The analysis can lead to better strategic decision making. RDM uses big data as part of its automation process.

Define commercial enterprises.

Commercial Enterprises are private sector businesses that operate primarily for profit. A core objective is to learn a return for their owners shareholders. RDM is run as a commercial business, although it was nationalized during the of Communism in Czechoslovakia.

Innovation

Commercial development, adoption, and exploitation of an invention or creative idea that appeals to customers in a profitable way for the business. It can give any business a huge competitive advantage, so Jan Radeki de Dovnic has tried to create an environment that fosters innovation at RDM.

Define communications.

Communication refers to the transfer of information from one party to another. RDM Uses digitize Communications between robots as part of its automated production process.

Corporate strategy

Corporate strategy refers to the intended direction and scope of a business over the long-term. It entails on-going consideration of both internal factors (such as the organization's mission statement) and external factors (namely the external business environment). At present, RDM does not have a corporate strategy beyond a vision in Jan Radeki de Dovnic's mind.

Define costs.

Cost are items of expenditure by a business when producing its goods and / or Services. Examples include the cost of wages, salaries, rent, raw materials, advertising and taxes. RDM faces competition from Asian manufacturers with lower costs.

Define customers.

Customers are the individuals or organizations that purchase goods or services from a business. They are a key external stakeholder group of an organization. All businesses strive to meet the needs and wants of their customers. RDM's customers can personalize the production of their desired healthcare devices by using a template on the company's web page.

Define demand.

Demand refers to the total amount of a good or service purchased at a particular price. as the demand for kerosene stoves have been declining for many years, Adriana Radecki de Dovnic decided to add healthcare devices in 1993.

Finance

Finance refers to the monetary finds required for business purposes, such as loan capital and share capital. Finance for a business can be categorized as internal (such as share capital or mortgages). To finance RDM's expensive expansion , the company could use share capital or loan capital.

Define globalization.

Globalization is the growing integration and interdependence of economic, social, Technical, and cultural issues of the world's economies, thereby making the world a smaller place. For example, mobilization has been fueled by the free movement of Labour and Regional trading blocs and the growing presence of multinational corporations. This has intensified competition for RDM, including price-competitive manufacturers in Asia.

Define goods.

Goods are physical products business sells, example medical devices. With the baby boomer generation approaching retirement age, RDM expected the demand for goods in the healthcare industry to grow.

Define infrastructure.

Infrastructure refers to the physical structures and facilities, needed for the economic and social operations of a country. Examples include network of: telecommunications, electricity, roads, bridges, airports and transportation. The Czech Republic is amongst the best in the world for its it infrastructure .

European Union

Is an economic and political union between 27 member countries, located primarily in Europe. Committed to regional integration, it has developed a single market through a standardized system of laws which apply in all member states, ensuring the free movement of people, goods, services, and capital. It maintains common policies on trade, agriculture, fisheries, and regional development.

Operations Management

Is concerned with processing resources (land, labor, capital, and enterprise) to provide outputs in the form of goods and/or services. It aims to provide the right quantity and quality of goods or services in a cost-effective and timely manner. RDM's operations focus on the production of healthcare devices.

Define management.

Management encompasses several roles: planning, commanding, controlling, coordinating, and organizing human and capital resources to achieve organizational objectives. Prior to 1949, the management at RDM had switched from producing coal-burning stoves to oil-burning stoves as the former had reached the final stages of their product life cycle.

What do managers focus on?

Managers focus on problem solving and decision-making so that goals can be achieved within a set time frame

Define mass production.

Mass production is a method of production which relies on Capital Equipment an animation to manufacture Goods on a large scale, on a continual basis. These products are targeted at Mass markets, rather than Niche markets. In the past, RDM mass-produced it's stove to cater for residences and wholesalers.

Define price.

Price refers to the value of a good or service that is paid by the Consumer. Price will usually cover the cost of production, allowing the business to gain profit margin. RDM offers competitive prices for its domestic customers and those in neighboring Germany.

Define raw materials.

Raw materials are natural resources used in the manufacturing process to produce finished goods. Examples include wood, metal ores, minerals, and crude oil. Raw materials are collected and loaded for production using robots and automated Machinery on the shop floor at RDM.

Mission Statement

Refer to a declaration of an organization's overall goal and its purpose. It forms the foundation for setting the aims and objectives of an organization. RDM does not have a written declaration of its mission.

Hierarchical

Refers to tall organization structures, with many levels of rankings in the organization, based on their level of responsibilities and decision-making power for different ranks within the organization. Traditionally, RDM had been hierarchical, but is far less so today due to its highly automated manufacturing processes and much smaller workforce.

Marketing Strategy

Refers to the management process of formulating a firm's marketing goals and activities to increase sale sand to achieve a sustainable competitive advantage. It is usually drawn from market research and focuses on all aspects of the firm's marketing mix in order to achieve its strategic goals. At present, RDM does not have a marketing strategy.

Sales

Refers to the volume of products sold by business, per time period. Alternatively, it can refer to the total value of income earned from selling a good or service over a given period of time. RDM diversified into the production of healthcare products following the steady decline in the sales of its coal-burning and oil-burning stoves.

Define services.

Services are intangible products provided by organizations. With many more people retiring in the Czech Republic, RDM expected the demand for goods and services in the healthcare industry to grow.

Share Capital

Share capital is a source of finance, raised by selling shares in a company to shareholders (who become part-owners of the company). Share capital is the most important source of finance for private and public limited companies. One way to finance RDM's expensive expansion plan is through the use of share capital.

Stakeholders

Stakeholders are the individuals and/or other organization that have a direct interest in the operations and business affairs of the firm in question. They include internal stakeholders (such as executives, employees, managers and shareholders) and external stakeholders (such as customers, suppliers, the local community, and the Czech government). RDM's relationship with its stakeholders has changed since the move to automation, especially with a much smaller workforce.

Define Chief Executive Officer (CEO)

The CEO of a company is the most senior person at the top of the organization hierarchy. the CEO is supported by a team of senior executives, which typically includes a CEO and CFO. The last three CEOs of RDM are Jan, Kristian, and Adriana Radeki de Dovnic.

Chief financial officer (CFO)

The CFO is a senior executive with overall responsibility for the organization's finances. This includes the management of the firm's financial planning, master budgets, record-keeping, and financial reporting. RDM's CFO has suggested that the company should build an additional production facility elsewhere in Europe to cater for a larger market.

Corporate Social Responsibility (CSR)

The conscience of a business with consideration of the organization's actions on its various stakeholder groups and the natural environment. It consists of responsible business behavior towards the natural environment, consumers, suppliers, employees and local communities. CSR has always been a key aspects of the culture and practices at RDM.

Motivation

The desire, effort, and willingness to complete a task or to achieve something. It can be extrinsic (such as pay and financial rewards) or intrinsic (such as pride, self-esteem, or altruism - the desire to help others). The highly trained engineers and computer experts at RDM are motivated significantly differently from the workers who survived the Second World War and had worked under the Communist regime in RDM's factories.

Changes

The modification or transformation in the way business is conducted as a response to internal factors or external influences. Changes arise when factors that influence the operations of an organization do not stay the same. Jan Radeki de Dovnic introduced many changes at RDM in his attempt to foster a culture of innovation

Define privately-owned

The opposite of state-owned, this refers to the private (sector) ownership of assets and enterprises. Following the collapse of Communism of Czechoslovakia in 1989, many businesses (including RDM) became privately owned.

Human Resource

The personnel or the employees of a business, often regarded as an asset for their skills and abilities. RDM employs highly trained engineers from universities across Europe, computer experts and skilled manual laborers. It employs a total of 117 workers (line 75)

Define product life cycle.

The product life cycle of a business measures sales over time. \Both coal-burning stoves and oil-burning stoves had reached the end of their product life cycle, driving RDM to diversify and produce healthcare (medical) devices.

Operations management strategy

The production team's plan to achieve its operations management objectives, such as production targets and the use of integrated automated production processes. RDM does not currently have an operations management strategy

Define nationalized.

The purchase of private sector possessions and enterprises by the government, thereby effectively converting them into state-owned assets. Following communist rule in Czechoslovakia, over 95% of private-sector commercial Enterprises were nationalized.

Profits

The surplus from sales revenue after all production costs have been deducted. It is a fundamental objective of most private sector organizations. In its most simplistic form: Profit = sales revenue - total costs. Despite all the issues facing RDM and concerns from Jan Radeki de Dovnic, the company is currently enjoying health profits.

Brand identity

The way in which a business wants its products to be perceived by the consumers. It includes the visual elements of a brand that together identify and distinguish it in the consumers' minds. RDM has a weak brand identity

Teamwork

This is a form of non-financial reward, which occurs when employees work with fellow colleagues to achieve organizational goals. Teamwork can build a sense of belonging and help to raise labor productivity as employees support each other in their work. Jan Radeki de Dovnic places heavy emphasis on teamwork at RDM.

Define accounting.

This is a key business function, involves all aspects of Finance in an organization. Examples of accounting functions include preparing Financial reports and final accounts provide accurate and timely information to a decision-making. The accounting and marketing teams work together to determine a competitive price for each customer.

Grow (expansion)

This is the expansion of a business due to an increase in the size of the organization and/or growth in the industry. It is usually measured by an increase in a firm's sales revenue, number of employees or profits. For RDM to continue to grow, the CFO has proposed building an additional production facility elsewhere in Europe.

Define marketing.

This is the management process of identifying, anticipating, and satisfying consumers requirements in a profitable way. Involves meeting consumers needs and wants by focusing and ensuring the product, price, place and promotion are effective in encouraging sales of the good or service. The marketers of RDM work with the accountants to determine the price of consumers, and a salesperson from the marketing team confirm the order with each customer.

Relocation

This means changing from one business location to another. Relocation usually happens because of rising costs at the existing location or other beneficial reasons in a different location (such as improved logistics from being nearer to the firm's customers). Relocating RDM's production facility could be extremely expensive, and perhaps unfeasible.

Price competitive

This pricing strategy entails a business setting the price of its products at the same or similar level as their competitors. Typically, this pricing strategy is used by businesses selling similar products, although the services they provide can differ markedly. Being able to charge competitive prices enables RDM to access lucrative markets such as Germany.

Sales Person

This refers to a person who sells goods and/or services directly to customers on behalf of the business they work for. The sales person, often from the marketing department, informs and persuades existing and potential customer to make purchases. At RDM, a sales person confirms the customer's order once the accounting and marketing departments can determine a price for the customized healthcare device.

Define competition.

This refers to the Rivalry within an industry. RDM faces Fierce competition from Asian manufacturers, who have lower cost structures. Globalization has also exposed RDM two more competition.

Location

This refers to the geographical position of a business. The location decision is a crucial one, as it can have profound implications on the profitability and survival of the organization. RDM can usually offer a competitive price to its clients located within a a 700-kilometer radius of Lobjanec

Define state-owned.

This refers to the government or the private sector ownership of assets and enterprises. In 1989 when communism in Czechoslovakia collapsed, many businesses (including RDM_ were privatized so were no longer state-owned.

Define manufacturing.

This refers to the process of combining and transforming raw materials and/or components into final goods, ready for sale to customers. RDM manufactures medical (healthcare) devices.

Define product portfolio.

This refers to the range or collection of goods and services produced or sold by an organization. RDM's product portfolio includes healthcare devices.

Define trade relations.

This refers to the terms and conditions of international trade between two or more countries. Having good trade relationships tend to benefit all parties involved you to the increase exchange between countries, bring economic benefits such as employment, economic growth and higher gross domestic product GDP. The Czech Republic has good trade relations with Germany, the largest economy in Europe.

Skilled manual Laborers

This refers to workers with special knowledge, training, and experiences to carry out physical work (rather than by machines). Most of the 117 workers at RDM are not skilled manual laborers, but highly trained engineers and computer experts.

Go public

To "go public" means to become a public limited company through an initial public offering (IPO), thus becoming a publicly traded entity. Businesses usually go public to raise capital in hopes of expanding.

Define training.

Training is the process of developing a Knowledge and Skills of workers in order to enhance their confidence and competence in the workplace. Dr. Kristian Radeki de Dovnic's training and experiences as a professor in the USA had not prepared him well to take on the role of CEO of RDM in 1995.

Define unionized.

Unionized workers are those who belong to a recognized labor union. They are represented by their Trade union ( or employee Representatives) in order to deal with employment disputes, conflicts or negotiations with their employees. In the past, and for many decades, RDM had a large labor force who belong to labor unions.

Business functions

Various types of work carried out in a business. At RDM, these functions include accounting (finance), operations management (production), human resource management, and marketing.

Wages

Wages are time-based payment system frequently used to pay works a fixed amount on an hourly basis. Workers receive this payment for the work or services provided. It is commonly used to pay manual or unskilled workers.

Sourcing

Where stocks (inventory) or products for sale are obtained from. As a part of its CSR program, RDM sources components from suppliers that have good CSR practices.

Vision

Where the business aspires to be in the future; the vision is therefore the long term and ultimate aim of a business. Having a vision gives an organization a clear sense of purpose and direction. Jan Radeki de Dovnic has an idea of a vision has an idea of a vision (in his mind), which he clearly communicates with the employees, but RDM does not have a written vision statement.

Define wholesalers.

Wholesalers are businesses that buy large quantities of products from a manufacturer, and then separate or break the book into smaller units for sale by retailers. They sell Goods to retailers or other commercial businesses rather than two individual customers. RDM had previously used wholesalers as Distributors for selling its stoves.

Division

a division is a strategic business unit (SBU) of a business organization. Several executives at RDM have proposed a separate division of the company to focus on the production of customized aluminium water bottles.

Define employees.

a type of internal stakeholder, employees are the people who work for an organization. They are employed buy a business to carry out specific tasks within the organization. RDM Employees 117 workers, most of whom love the culture that has been created by Jan Radeki de Dovnic.

Private limited company

an incorporated business with a minimum of two, and a maximum of 50 private shareholders, and whose shares are offered only to those people whom the business wishes to have as part owners RDM is 100% owned, as a private limited company, by Radeki de Dovnic family.

Define capital expenditure.

capital expenditure refers to the spending of a business on acquiring, maintaining and/or upgrading its fixed assets. It represents a financial investment in the business, such as RDM's capital expenditure on Automation and integrated manufacturing processes.

Define cloud computing.

cloud computing is the use of remote computer networks and servers hosted on the internet, enabling users to access, store, manage, and process data. It replaces the need for users to do all of this using a local server or a personal computer. The cloud enables users to have on demand Computing resources. It dates back to the 1950s, when first pioneered by IBM. RDM uses big data as part of its automation processes.

Paternalistic (leadership) style

one who treats employees as if they were family members by guiding them through a process of consultation. The leader has extensive authority over employees but decisions are made which she believes are in the best interest of the workforce.

Vocational school

provides post-secondary education and career-focused training. People learn how to do a job that requires special skills and to perform the tasks of a particular and specific occupation. The local vocational school no longer liaises with RDM regarding the required skills of workers, due to the significant decline in manual workers required at RDM.

organizational structure

refers to the various ways that a business organizes its human resources. The framework for this is typically hierarchical (as was the case for RDM) and presented as an organizational chart, showing lines of authority (rights, duties and responsibilities) and the channels of communication within the organization, Jan Radeki de Dovnic, being the CEO, is at the top of the organization structure at RDM.

Define accountants.

these people work in the accounting department of an organization ( or are outsourced personnel responsible for the financial accounting of their client). they carry out an important business function, such as the preparation of financial reports and find all accounts. At RDM, accounts work with marketers to determine the prices charged to customers.

Define delivery.

this is part of an organization's operations management and marketing processes of getting Goods to their customers involves Logistics and Supply-chain management process, such as distribution and transportation. At RDM, delivery is done by human driven Lorry (truck) drivers.

Define 3D Printing.

this is the manufacturing process of making solid, physical output using digital computer Technologies.

Define costing.

this refers to the process of calculating the cost producing a particular good or service. At RDM, this is carried out by human accountants rather than being automated.

Define labor force.

this refers to the workforce of an organization, i.e. the total number of people employed by the business. In the past, our DM employed as many as 500 workers, but it's labor force today only consist of 117 employees.