Practice 1.1 What is a business? with authentic IB Business Management exam questions for both SL and HL students. This question bank mirrors Paper 1, 2, 3 structure, covering key topics like systems and structures, human behavior and interaction, and sustainability and ethics. Get instant solutions, detailed explanations, and build exam confidence with questions in the style of IB examiners.
CleanCurrent Ltd.
CleanCurrent Ltd. is a renewable energy start-up that installs solar panels for residential and small business clients. Initially formed as a sole trader, the business recently transitioned into a private limited company (Ltd) to scale operations and attract investment. Its primary business objectives are to increase market share in suburban regions, reduce customer acquisition costs, and achieve positive monthly cash flow by the end of the fiscal year.
The business recently launched a referral programme and expanded into two new districts. While customer inquiries have increased, installation capacity has been strained, leading to delays in payments and project backlogs. This has created tension with certain stakeholders, including installers and suppliers, who are now facing late payments.
The finance manager has prepared a simple cash flow forecast for August 2024 to assess the immediate impact of CleanCurrent’s growth and financial decisions.
Table 1: Cash Flow Forecast – August 2024
| Item | Amount (£) |
|---|---|
| Opening balance | 10,000 |
| Cash inflows | 82,000 |
| Cash outflows | 96,000 |
| Closing balance | — |
Explain one reason why CleanCurrent Ltd. may have changed from a sole trader to a private limited company.
Calculate the net cash flow and closing balance for August 2024. Show all your working.
Suggest one conflict that might arise between two stakeholder groups as a result of CleanCurrent’s recent expansion.
Analyse how cash flow challenges could affect CleanCurrent’s ability to meet its business objectives.
Suggest one short-term strategy CleanCurrent Ltd. could implement to manage cash flow more effectively.
Elevate Health Tech (EHT)
| Item | Amount (USD) |
|---|---|
| Current assets | $230,000 |
| Current liabilities | $180,000 |
| Non-current liabilities | $50,000 |
| Retained profit | $40,000 |
| Total equity | $100,000 |
With reference to the stimulus, describe one internal issue that might arise from EHT’s current ownership structure.
Explain one human resource challenge and one financial challenge that EHT may face if it accepts the DIB loan and scales up
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for EHT over the next five years.
GreenScape Interiors (GI)
GreenScape Interiors (GI) is a new start-up founded by Olivia, an entrepreneur with a vision to promote biophilic design in office spaces. GI specializes in designing and installing indoor plant arrangements and sustainable decor solutions to improve employee well-being and productivity. The business targets companies that prioritize sustainability and employee wellness.
To differentiate itself in the competitive market, GI offers unique services, such as using artificial intelligence (AI) to monitor the health of plants and automatically adjust lighting and irrigation. However, GI faces several challenges, including high initial investment costs for the AI technology and difficulties convincing some traditional companies to adopt biophilic design concepts.
Analyze two ways in which GI can address the challenges of high initial costs and market resistance to biophilic design.
Discuss how entrepreneurship and innovation could play a role in GI’s efforts to achieve sustainable growth.
TechyKids (TK)
TechyKids (TK) is a start-up that provides coding classes and STEM workshops for children aged 7 to 14. The company was founded by Samir, who saw a growing demand for tech skills in education. TK aims to prepare the younger generation for future careers by teaching coding in a fun, engaging way. Classes are held both online and in local community centers.
While TK has received positive feedback from parents, the start-up faces challenges such as keeping up with rapid changes in technology and competition from larger educational platforms. To remain competitive, TK is considering offering new programs in areas like robotics and virtual reality (VR). However, these expansions would require significant investments in equipment and staff training.
Explain the benefits and drawbacks of expanding into robotics and VR for TechyKids.
Analyze how keeping up with rapid technological changes could impact TK’s operations and business strategy.
Discuss the role of entrepreneurial leadership in helping TK navigate the challenges of expanding and staying competitive.
CleanWave Ltd (CW)
CleanWave Ltd (CW) is a successful manufacturer of sustainable clothing based in Sweden. CW has grown significantly and now plans to expand internationally, entering markets in the United States and South Korea.
To support its international expansion, CW recently adopted a matrix organizational structure, combining functional and geographical divisions. This structure aims to enhance responsiveness to local market conditions. However, employees have reported increased confusion about their roles and responsibilities, creating challenges for communication across departments and geographical locations.
CW invests significantly in research and development (R&D) to maintain a competitive advantage through innovative, eco-friendly materials. The company's current marketing strategy focuses on environmental sustainability and quality. CW's marketing team debates whether to adopt a standardized international marketing approach or adapt specifically to consumer preferences in the US and South Korean markets.
Define the term ‘business’.
Explain two features of a matrix organizational structure at CW.
Explain two benefits for CW of effective communication within its matrix structure.
Explain two reasons why CW invests in research and development (R&D).
Evaluate whether CW should adopt a standardized or adapted international marketing strategy for the US and South Korea markets.
EcoPulse Ltd (EP)
EcoPulse Ltd (EP) is an innovative company founded in Germany, specializing in sustainable electronic devices. After rapid domestic growth, EP aims to expand internationally, transforming into a multinational company (MNC) by establishing subsidiaries in Brazil and India.
EP's international growth strategy focuses heavily on acquiring local businesses to quickly achieve market presence. However, rapid expansion has generated concerns among key stakeholders, notably employees and environmental organizations. Employees worry about changes in organizational culture and job security, resulting in signs of demotivation. Environmental groups fear that EP's rapid growth may undermine its original commitment to sustainability.
To manage international expansion effectively, EP’s board is reconsidering its predominantly autocratic leadership and management style. The board believes adopting a more democratic leadership style may improve employee motivation and stakeholder relationships during this critical growth phase.
Define the term ‘stakeholder’.
Explain two benefits for EP of becoming a multinational company (MNC).
Explain two potential sources of employee demotivation resulting from EP’s rapid growth.
Explain two advantages for EP of adopting a democratic leadership style during international expansion.
Recommend whether EP should continue expanding internationally through acquisitions or pursue organic growth instead.
Sunrise Smoothies (SS)
Sunrise Smoothies (SS) is a new start-up established by Jacob, an entrepreneur who wants to promote healthy living. SS specializes in selling freshly blended smoothies using locally sourced organic fruits. Jacob plans to open his first shop in a busy urban area where many health-conscious consumers live. He aims to differentiate SS from existing competitors by offering personalized smoothie blends and providing nutrition consultation services to customers.
Jacob faces several challenges with his start-up. The smoothie market is highly competitive, with large, well-established brands dominating. Additionally, Jacob must comply with strict local regulations regarding food safety and sourcing organic ingredients. To overcome these challenges, he is considering using a mobile app to engage customers, offer loyalty rewards, and share health tips.
Identify and explain the primary and tertiary sectors in which SS operates.
Analyze two opportunities that Jacob could explore to grow Sunrise Smoothies.
Discuss how entrepreneurship could help Jacob overcome the challenges faced by Sunrise Smoothies.
Urban Rides (UR)
Urban Rides (UR) is a start-up established by Alex, an entrepreneur passionate about sustainable transport. UR offers electric bike rentals in a busy metropolitan area, targeting commuters and tourists who want an eco-friendly and convenient mode of transportation.
The bikes can be rented through a mobile app, which also provides information on bike availability, charging stations, and route suggestions. The electric bike market is growing rapidly, but UR faces stiff competition from established companies offering similar services.
Additionally, there are significant costs associated with purchasing and maintaining the bikes, as well as complying with local government regulations for operating rental services. To differentiate UR, Alex is considering offering subscription plans with discounted rates, as well as introducing guided city tours.
Identify and explain two sectors of the economy in which UR operates.
Analyze two challenges that Urban Rides might face as a start-up in the electric bike rental market.
Discuss how Alex’s entrepreneurial skills could contribute to overcoming the challenges faced by Urban Rides.
Wellness World (WW)
Wellness World (WW) is a pharmaceutical organization that used to operate in the public sector, selling its medicines (drugs) to hospitals at very low prices. With increasing government funding over several years, WW increased the number of employees in its Research and Development Department, which was staffed by scientists, and in the Manufacturing Department. However, both departments were inflexible and inefficient. Resources were significantly under-utilized, and innovation limited.
WW's structure used to be hierarchical, with a very long chain of command and channels of communication. Senior management made the decisions and set the production levels. Consequently, the scientists in the Research and Development Department never developed decision-making skills, and development of new medicines was slow. In 2021, after many years of losses, the government sold WW to a profit-maximizing global pharmaceutical manufacturer, Universal Pharma (UP).
To improve productivity, efficiency and flexibility, the management of UP reorganized WW as a shamrock organization by:
Define the term public sector.
Explain one advantage and one disadvantage for UP resulting from the introduction of cognitive training for WW's scientists.
Explain one benefit and one limitation for UP resulting from the implementation of the shamrock organization structure for WW.
Discuss two human resource strategies that UP could use to reduce the scientists' resistance to the changes.
EcoCharge Ltd (EC)
EcoCharge Ltd (EC) is a private limited company that manufactures and sells electric vehicle (EV) charging stations. The company was founded in the UK in 2016 and has since expanded to France and Germany. EC is now considering further international expansion into the United States (US) and China, where demand for EV infrastructure is rapidly growing.
To finance this expansion, EC is debating whether to convert into a public limited company (PLC) and raise capital through an initial public offering (IPO) or secure a large bank loan. Some managers believe an IPO would provide long-term financial security, while others argue that EC would lose control over decision-making.
EC has relied on a standardized marketing strategy in Europe, promoting its products through digital ads and partnerships with local governments. However, the US and Chinese markets have different consumer behaviors, regulations, and competition levels. Some managers believe EC should adapt its marketing strategy to each market, while others argue that maintaining a standardized approach will help reduce costs and maintain brand consistency.
Additionally, EC is concerned about competition from large multinational companies (MNCs) such as Tesla and BYD, which already dominate EV charging networks in these regions.
Define the term ‘private limited company (Ltd)’.
Explain two benefits for EC of becoming a public limited company (PLC).
Explain two challenges EC may face when competing against large MNCs in the EV industry.
Recommend whether EC should standardize or adapt its marketing strategy for international expansion.