Syllabus: International Baccalaureate - Individuals and societies - Business management (Standard Level)
Module: Unit 1: Introduction to business management
Lesson: 1.2 Types of Business Entities
Jump to Section:
Introduction
This article explores Unit 1.2: Types of Business Entities from the IB Business Management Standard Level (SL) syllabus, a core component of the Individuals and Societies subject group. This unit introduces learners to the variety of legal structures organisations may adopt, helping them understand the implications of each on liability, control, growth, and purpose.
For teachers, SLT and careers leads, Unit 1.2 offers an opportunity to deliver a concept that is not only critical for exam success but also immediately applicable to real-world business understanding. The unit supports Gatsby Benchmark 4 by linking curriculum learning to real career scenarios and business roles.
Key Concepts
According to the official IB syllabus for Business Management SL, Unit 1.2 covers the following core elements:
Types of business organisations:
For-profit entities: Sole traders, partnerships, companies/corporations (private limited companies and public limited companies), and cooperatives.
Not-for-profit organisations: Charities, non-governmental organisations (NGOs), and pressure groups.
Features of each structure:
Liability: Unlimited vs limited liability.
Ownership and control: Who owns the business and how decisions are made.
Sources of finance: Vary by entity type.
Legal and tax implications: Compliance requirements differ by structure.
Advantages and disadvantages of each business type.
Changing business structures:
Why businesses may transition from one form to another (e.g. growth, funding needs, strategic changes).
Impact of stakeholders:
How different business types interact with stakeholders such as employees, customers, governments and shareholders.
Real-World Relevance
Understanding business entities isn’t just academic—it’s essential for interpreting how real-world organisations operate. For instance:
Sole trader: A self-employed graphic designer or personal trainer operates independently with full control but unlimited liability.
Private limited company (Ltd): A family-run manufacturing firm might register as an Ltd to raise capital while keeping control within a small group.
Public limited company (Plc): Large companies like Tesco Plc or Rolls-Royce Holdings Plc are publicly traded, facing shareholder accountability and rigorous regulation.
Charity/NGO: Organisations like Oxfam or Greenpeace operate as non-profit entities, with clear missions and stakeholder expectations beyond profit.
Mini Case:
In 2024, UK-based social enterprise “Too Good To Go” transitioned from a private start-up to a certified B Corporation, highlighting a growing trend where companies embed social purpose into profit-making models.
This unit helps students make sense of these transitions, evaluating the strategic reasoning behind business structure choices.
How It’s Assessed
The IB assessment model places emphasis on critical thinking and real-world application. For Unit 1.2, students can expect:
Paper 1 and Paper 2 format: Case study-based questions requiring structured responses.
Command terms often include:
Define, Explain, Compare and contrast, Discuss, Evaluate – each with a specific expectation in terms of depth and structure.
Assessment objectives include:
AO1: Knowledge and understanding of business concepts and terminology.
AO2: Application to business scenarios.
AO3: Analysis of business situations using theory.
AO4: Evaluation and reasoned judgement.
Sample Question:
“Discuss the advantages and disadvantages for a growing business of changing from a partnership to a private limited company.”
To excel, students must go beyond definition—demonstrating commercial insight and contextual reasoning.
Enterprise Skills Integration
This unit provides a natural foundation for teaching core enterprise and workplace skills:
Decision-Making & Problem-Solving: Analysing trade-offs between ownership models, risk, control, and scalability.
Commercial Awareness: Recognising how legal structures influence funding, strategic choices and stakeholder relationships.
Financial Literacy: Exploring how liability and taxation differ across entity types.
Stakeholder Analysis: Engaging with varied perspectives when evaluating not-for-profit and social enterprises.
These are not abstract skills. They are central to commercial literacy, directly mapped to Skills Hub Futures and our broader mission to build career-ready learners.
Careers Links
This unit aligns directly with Gatsby Benchmarks 4, 5 and 6:
Benchmark 4 – Linking curriculum to careers:
Students consider how business ownership affects job roles, working environments, and professional progression.
Benchmark 5 – Employer encounters:
Tools like Skills Hub Futures offer virtual employer case studies, spotlighting how CEOs and founders choose business models based on strategic goals.
Benchmark 6 – Experiences of the workplace:
Simulation tools provide real business scenarios (e.g. selecting the right entity type for a startup), offering simulated workplace decisions.
Career Pathways connected to this unit:
Business Analyst
Entrepreneur / Start-Up Founder
Charity Fundraiser or Director
Corporate Lawyer
SME Manager
Public Sector Executive
Students begin to see that business structure shapes every organisation they might one day work in—or create.
Teaching Notes
Common pitfalls:
Students may conflate profit motive with legal structure. Reinforce that not-for-profit still requires revenue generation.
Misunderstanding of liability: Use analogies and roleplay to explore what “limited” really means in practice.
Classroom strategies:
Simulated role-play: Assign students different business types and scenarios. Ask them to pitch why their structure best suits the mission.
Comparative matrix activity: Create a group table comparing control, liability, taxation, stakeholder influence, and funding options across structures.
Real business guest speakers: Invite local sole traders or NGO leaders to share their stories, or use embedded Skills Hub video content.
Extension activity:
Research a company that transitioned from one entity type to another (e.g. going public or becoming a B Corp). Evaluate the reasons and impact.
Tools to support delivery:
Skills Hub Business – includes activities aligned with syllabus points and mapped directly to IB objectives.
Skills Hub Futures – careers-linked tools requiring no extra prep time, ideal for cross-curricular integration.
This unit offers a strong bridge between theory and workplace readiness—ideal for developing commercial awareness that serves students far beyond the exam hall.
