Syllabus: International Baccalaureate - Individuals and societies - Business management (Standard Level)
Module: Unit 3: Finance and Accounts
Lesson: 3.1 Introduction to Finance

Introduction

The International Baccalaureate (IB) Business Management Standard Level course emphasises real-world business understanding. Unit 3.1, Introduction to Finance, provides foundational financial knowledge essential for students to understand how organisations manage money to remain sustainable and competitive.

Aligned with the IB’s goal of developing internationally-minded learners, this unit introduces financial objectives, sources of finance, and the decision-making processes involved. It links strongly with commercial awareness and workplace readiness, themes central to Enterprise Skills’ framework.

This unit also plays a crucial role in helping schools meet Gatsby Benchmark 4 (Linking curriculum to careers), by demonstrating the financial literacy students need across multiple sectors.

Key Concepts

The IB syllabus outlines the following key areas within Unit 3.1:

• Purpose of Finance
  Understanding why finance is needed in a business context (e.g. start-up capital, working capital, expansion).

• Capital Expenditure vs. Revenue Expenditure
  Distinguishing between long-term investment and day-to-day operational spending.

• Internal Sources of Finance
  Retained profit, sale of assets, personal funds.

• External Sources of Finance
  Loan capital, share capital, overdrafts, trade credit, subsidies, leasing, venture capital.

• Short-Term vs. Long-Term Finance
  Aligning the duration of finance with business needs.

• Suitability of Sources
  Evaluating appropriate finance options based on factors like cost, control, repayment terms and financial situation.

• Finance Decision-Making
  How managers assess funding sources and the implications of their choices.

Each of these areas is designed to build financial literacy in a commercial context, helping students to make reasoned financial decisions within both simulated and real environments.

Real-World Relevance

Understanding sources of finance is directly applicable across multiple industries. For example:

• Start-Ups and Crowdfunding: The success of platforms like Crowdcube and Kickstarter shows how start-ups are increasingly turning to public investment as an alternative to traditional bank loans.

• SMEs Post-COVID: Many small businesses had to weigh the pros and cons of taking on government-backed loans during the pandemic, highlighting real trade-offs between debt and equity.

• Corporate Finance Decisions: Companies like Tesla and Amazon have made strategic use of retained earnings to fund research and growth without diluting ownership through new equity.

These examples demonstrate the practical significance of choosing the right type of finance and understanding its consequences — vital for career readiness and real-world problem solving.

How It’s Assessed

The IB assesses finance content through both Paper 1 (case study-based) and Paper 2 (data response and structured questions). Expect:

• Command Terms:
  Terms like explain, evaluate, discuss, recommend are central. For example:

  • Explain two sources of finance suitable for a start-up.

  • Evaluate the use of loan capital versus share capital.

• Application-Driven Questions:
  Questions are typically context-based, often requiring reference to a case study or business scenario.

• Quantitative Elements:
  While calculations are limited in 3.1, students must interpret financial data and justify decisions based on cost, control, and risk.

Teaching should reinforce structured responses that balance knowledge, application, and evaluation — ideally scaffolded through realistic business scenarios.

Enterprise Skills Integration

Finance-related decision-making is a core skill across sectors. This unit directly supports:

• Decision-Making & Problem-Solving
  Evaluating funding options develops risk assessment and strategic thinking, key components of Enterprise Skills’ decision-making framework.

• Commercial Awareness
  Understanding how finance decisions affect business operations links to broader commercial literacy — how businesses sustain themselves and grow in competitive environments.

• Workplace Readiness
  Students build confidence in reading and applying financial language, aligning with employer expectations for budget literacy and fiscal responsibility.

The unit aligns with our Skills Hub Futures content on “Financial Literacy” and “Understanding Business Models,” both available as 45-minute careers sessions mapped to Gatsby Benchmarks.

Careers Links

This unit supports Gatsby Benchmark 4 by linking curriculum content with career realities:

• Roles:
  Finance Officer, Business Analyst, Entrepreneur, Accountant, Operations Manager.

• Sectors:
  Finance, Retail, Tech Start-Ups, Non-Profits, Manufacturing.

• Skills Developed:
  Budgeting, risk analysis, cost management, funding strategy.

Enterprise Skills simulations and sessions map directly to these pathways, providing evidence for Gatsby Benchmarks 4, 5, and 6 through industry-validated experiences.

Employer challenges within Skills Hub Futures include finance-related decision-making with feedback from real professionals — a concrete way to show impact and enhance careers provision.

Teaching Notes

Delivery Tips:

• Use mini case studies for each funding method (e.g. Dragons’ Den clips, SME crowdfunding stories).

• Encourage comparative analysis using a decision matrix (e.g. cost, control, repayment time).

• Incorporate simulation tools (e.g. Skills Hub Finance Pathway) to help students test scenarios.

Common Pitfalls:

• Confusing capital vs. revenue expenditure — use visual aids and repetition.

• Over-generalising suitability of finance sources — students must justify based on context.

Extension Opportunities:

• Ask students to pitch a finance strategy for a fictional business.

• Introduce real annual reports for students to explore funding decisions and shareholder equity.

Active Learning Strategies:

• Peer teaching (students explain funding types to each other).

• Decision tree activities for funding choices.

• Role-play scenarios (e.g. CFO making a funding pitch to a board).

Incorporating active learning is shown to improve comprehension by 73% over traditional methods, making lessons more engaging and effective.