Practice 5.2 Operations methods 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.
Paper
Level
Question 1
HLPaper 3
Global Solar Solutions (GSS)
Resource 1 – Background of the social enterprise
Three years ago, electrical engineer and entrepreneur Nadira Khan founded Global Solar Solutions (GSS) as a social enterprise in Morocco. Her goal was to provide affordable, modular solar lighting kits to off-grid rural communities. These kits, manufactured at GSS’s urban facility, include rechargeable LED lights and mobile charging ports. GSS reinvests 100% of profits into R&D and local hiring.
GSS operates in partnership with local NGOs and community councils. Its workforce includes 40 technicians and 20 community trainers who educate households about solar usage and maintenance. GSS applies lean production, Kaizen, and maintains a strong internal emphasis on quality control and after-sales support.
Resource 2 – Recent internal report on workforce issues
"High staff turnover and trainer burnout have increased over the past 12 months. Trainers, who work in remote villages for weeks at a time, report fatigue and a lack of recognition. Some have requested additional health support and clearer promotion opportunities."
The HR department suggested non-financial incentives such as increased job rotation and monthly feedback sessions but reported mixed engagement.
Resource 3 – Email from the Director of Rural Development (DRD)
To: nadira.khan@GSS.org
Subject: Expansion proposal
Dear Ms. Khan,
We are impressed by GSS’s impact. The Ministry would like to propose a contract to expand the solar program to 80,000 homes across North and West Africa over five years. Your team would need to train local technicians and build capacity in three new countries. Please note, the contract requires local sourcing of at least 60% of parts.
We will require an initial trial rollout in 5,000 homes and evidence of social impact.
Regards,
Director, DRD
Resource 4 – Extract from a marketing audit summary
GSS currently relies on word-of-mouth and NGO referrals. Its brand is associated with trust and affordability. However, a 2024 brand perception survey in new markets revealed low awareness and concerns about product durability compared to larger multinationals such as SolarX.
GSS’s marketing team is small (3 staff) and has no formal digital strategy. There is also no localized messaging for francophone West African markets.
Resource 5 – Operations update from the Head of Production
Our current facility is operating at 92% capacity. To meet a major scale-up, we would need to either expand production or outsource subassembly. We have identified two regional partners with experience in sustainable component manufacturing. However, we are concerned about quality assurance if we lose full process control.
Resource 6 – Excerpt from a local newspaper article
“Access to solar power has transformed daily life in remote villages. Children now study at night, families charge phones to access mobile banking, and kerosene usage has dropped. However, NGOs report that replacement parts for some GSS kits have been slow to arrive, creating frustrations in isolated regions.”
1.[2]
With reference to business management motivation theory, describe one need that GSS satisfies for rural households requiring solar lighting.
2.[6]
Explain one human resource challenge and one operations challenge GSS may face if it accepts the DRD expansion contract.
3.[17]
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for GSS over the next five years.
Question 2
SLPaper 2
FreshBurst Ltd.
FreshBurst Ltd. is a rapidly expanding company that produces natural fruit juices. The company began as a small family business but has experienced significant internal growth over the past three years. Its long-term business objective is to increase market share in the premium health drink sector. Recently, it invested in new equipment to transition from job production to batch production, aiming to improve efficiency and meet rising demand.
The finance team has created a break-even chart to support a proposal for further investment in production facilities. Senior managers are also considering how the expansion may impact stakeholder groups.
Figure 1: Break-even chart for FreshBurst Ltd.’s new product line
1.[2]
Using Figure 1, identify the break-even level of output for FreshBurst Ltd.’s new product.
2.[2]
Explain one advantage of using batch production for FreshBurst Ltd. as it grows.
3.[2]
Outline one conflict that may arise between two stakeholder groups as a result of FreshBurst Ltd.’s expansion.
4.[2]
Explain one way the company’s objective to increase market share could influence operational decisions.
5.[2]
Using Figure 1, calculate the profit earned if FreshBurst Ltd. produces and sells 6,000 units. Show all your working.
Question 3
SLPaper 2
FreshBurst Ltd.
FreshBurst Ltd. is a rapidly expanding company that produces natural fruit juices. The company began as a small family business but has experienced significant internal growth over the past three years. Its long-term business objective is to increase market share in the premium health drink sector.
Recently, it invested in new equipment to transition from job production to batch production, aiming to improve efficiency and meet rising demand.
The finance team has created a break-even chart to support a proposal for further investment in production facilities. Senior managers are also considering how the expansion may impact stakeholder groups.
Figure 1: Break-even chart for FreshBurst Ltd.’s new product line
1.[2]
Using Figure 1, identify the break-even level of output for FreshBurst Ltd.’s new product.
2.[2]
Explain one advantage of using batch production for FreshBurst Ltd. as it grows.
3.[2]
Outline one conflict that may arise between two stakeholder groups as a result of FreshBurst Ltd.’s expansion.
4.[2]
Explain one way the company’s objective to increase market share could influence operational decisions.
5.[2]
Using Figure 1, calculate the profit earned if FreshBurst Ltd. produces and sells 6,000 units. Show all your working.
Question 4
HLPaper 3
Alpha Robotics – Optimizing HR and Operations for Growth
Resource 1 – News Article
Alpha Robotics Struggles with HR and Operational Efficiency
Alpha Robotics, a technology firm specializing in AI-powered industrial robots, is experiencing rapid expansion as demand for automation increases globally. The company was founded in 2015 and has since grown to 2,500 employees across four locations: the United States, Germany, Japan, and India.
Key Challenges:
(1) HR management issues – Employees complain about unclear leadership, poor communication, and lack of motivation due to a highly hierarchical structure.
(2) Production inefficiencies – The company’s batch production method is increasing lead times and reducing product quality.
(3) Location challenges – With rising costs in the US and Germany, Alpha Robotics must decide whether to expand in India (lower labor costs) or develop a new R&D facility in Singapore.
CEO Daniel Carter is considering the following strategic changes:
(1) Restructuring the organization to improve communication and motivation.
(2) Shifting to lean production and just-in-time (JIT) inventory management.
(3) Relocating part of production to India or Singapore while maintaining efficiency.
Resource 2 – Internal HR Survey Results
Key Insights:
(1) Employees feel disconnected from leadership, affecting productivity.
(2) A lack of career growth opportunities is reducing motivation and increasing turnover.
(3) Middle management struggles with effective communication due to a rigid hierarchical structure.
| Issue | Percentage of Employees Concerned |
|---|---|
| Lack of leadership clarity | 42% |
| Poor communication from managers | 38% |
| Low motivation and workplace morale | 45% |
| Limited career advancement | 41% |
Resource 3 – Cost-Benefit Analysis for Production Relocation
Alpha Robotics – Cost Analysis for Facility Expansion
Key Considerations:
(1) India offers lower costs, but efficiency gains are lower compared to Singapore.
(2) Singapore provides greater efficiency but has significantly higher setup costs.
| Location | Labor Costs per Hour ($) | Setup Costs ($M) | Expected Efficiency Gains |
|---|---|---|---|
| India | 12 | 30 | 10% increase |
| Singapore | 22 | 50 | 18% increase |
1.[2]
Using an appropriate business management theory, describe an HR challenge that Alpha Robotics is facing.
2.[6]
Explain two operational challenges Alpha Robotics faces in improving production efficiency.
3.[17]
Using all the resources provided and your knowledge of business management, recommend a possible plan of action to improve both HR and operations management at Alpha Robotics.
Question 5
SLPaper 2
FreshFields Organic Farm
FreshFields Organic Farm (FreshFields) is a family-owned business that produces and sells organic fruits and vegetables to local supermarkets and farmers' markets. The business has experienced steady growth in recent years due to increasing consumer demand for organic products.
FreshFields is considering expanding its operations by opening a new production site to meet the growing demand. However, the owners must decide between two potential locations: (1) a rural area with lower costs but farther from key markets, or (2) an urban location closer to customers but with higher rent and labor expenses.
Additionally, FreshFields is evaluating its current operations methods, which are highly labor-intensive, and exploring whether switching to a more mechanized process could improve efficiency and reduce costs. However, the family is concerned about maintaining the farm’s reputation for high-quality, hand-harvested produce.
1.[2]
Outline two key objectives of operations management that FreshFields should focus on as it considers expanding its production capacity.
2.[4]
Discuss the factors FreshFields should consider when deciding between the two potential locations for its new production site.
3.[4]
Suggest the advantages and disadvantages of FreshFields transitioning from a labor-intensive production method to a more mechanized process.
4.[10]
To what extent should FreshFields prioritize customer proximity over cost savings when selecting the location for its new production site?
Question 6
HLPaper 2
TerraCraft Ltd (TC)
TerraCraft Ltd (TC) manufactures sustainable furniture products in Sweden. Due to increasing demand, TC is considering investing in a new production facility. To determine the viability of this investment, TC’s finance team has performed an investment appraisal, calculating payback periods and net present value (NPV).
To enhance efficiency and productivity, TC is also evaluating its current operations methods, debating a shift from job production to batch or flow production. The company recently analyzed its operational performance using efficiency ratio analysis, revealing lower-than-expected inventory turnover and declining productivity ratios.
TC has a strong, environmentally-driven organizational culture valued by its stakeholders. However, stakeholders, including employees and environmental activists, are concerned that rapid operational expansion and changes in production methods could negatively affect this culture and TC’s sustainability commitments.
1.[2]
Define the term ‘investment appraisal’.
2.[4]
Explain two potential stakeholder conflicts that might result from TC changing its operations methods.
3.[4]
Explain two benefits for TC of using efficiency ratio analysis.
4.[4]
Outline two ways TC’s strong organizational culture contributes to its business success.
5.[10]
Examine whether TC should switch from job production to flow production to improve efficiency, considering stakeholder concerns, organizational culture, and investment appraisal results.
Question 7
SL & HLPaper 2
NatureBlend Ltd (NB)
NatureBlend Ltd (NB) manufactures natural skincare products and has experienced rapid growth due to increasing consumer demand. The latest final accounts indicate strong profitability, but NB is struggling with significant cash flow problems. The company often lacks sufficient cash to pay suppliers, despite showing high net profits.
NB currently uses job production, producing customized skincare items individually for premium clients. Management believes switching to batch production could resolve cash flow issues by increasing efficiency and reducing costs.
The CEO uses a predominantly laissez-faire leadership style, allowing managers significant autonomy. However, the recent cash flow issues and inefficiencies have caused the Board to consider adopting a more autocratic leadership style to regain control and improve financial management.
1.[2]
Define the term ‘batch production’.
2.[4]
Explain two possible reasons why NB is profitable yet experiencing cash flow problems.
3.[4]
Explain two advantages for NB of switching from job production to batch production.
4.[4]
Explain two limitations of using final accounts to measure NB’s business performance.
5.[10]
Recommend whether NB should switch from a laissez-faire to an autocratic leadership style.
Question 8
HLPaper 2
Wellness Eats Ltd (WE)
Julia Thompson and a group of seven friends founded Wellness Eats Ltd (WE), a private limited company specializing in healthy, ready-to-eat meals designed for individuals with specific dietary needs, such as low-sodium options for people managing high blood pressure. WE adopted a cost-plus pricing model, aiming to provide affordable meals that are widely accessible and help customers monitor their sodium intake precisely. Despite relying mainly on cost-effective social media marketing, WE expanded rapidly. However, this growth led to quality issues, with some meals containing different sodium levels than indicated on the packaging. Negative feedback quickly surfaced on WE's social media accounts. Julia responded promptly, reassuring customers and offering refunds, which ultimately earned the company a recognition award for ethical conduct within the industry.
To cut costs, Julia introduced flow production, which significantly changed WE's operational scale and raised its gearing ratio. However, Julia had limited experience with flow production, leading to various operational challenges. The situation attracted attention from external stakeholders, who began scrutinizing WE's practices.
A large grocery chain, Healthy Harvest (HH), reached out to Julia with a proposal to acquire WE. The acquisition would enable production at a lower cost and expand distribution to a broader customer base. HH also offered to fund research and development efforts to improve meal consistency, ensuring more accurate sodium levels. However, if the takeover proceeded, WE as an independent brand would cease to exist, which could lead to negative publicity. In response, some shareholders have expressed plans to start a new venture, launching their own line of specialized low-sodium meals in direct competition with HH.
1.[2]
Define the term cost-plus (mark-up) pricing strategy.
2.[4]
Describe two benefits for WE of using social media marketing.
3.[4]
Explain one benefit and one cost to WE of using a flow production method.
4.[10]
Evaluate whether Julia should accept HH's offer of a takeover.
Question 9
HLPaper 3
Resource 1 – News Article
EcoCharge Solutions (ECS) revolutionizes sustainable energy storage!
EcoCharge Solutions (ECS), a privately owned social enterprise, specializes in affordable, sustainable power banks made from recycled materials.
The company’s mission is “to provide sustainable energy solutions to reduce electronic waste and bridge the energy gap in rural areas.”
ECS has developed an innovative buy-one-give-one model: for every solar-powered power bank purchased, a second one is donated to a rural community where access to electricity is unreliable.
ECS started as a student-run initiative at a university in 2019.
In four years, it has grown into a medium-sized business with manufacturing facilities in Vietnam and Kenya.
Table 1: ECS’s Key Operational Challenges
| Challenge | Details |
|---|---|
| Production Bottlenecks | Increasing delays in assembly and quality checks |
| Supply Chain Issues | Limited access to sustainable materials due to rising costs |
| Logistics Constraints | High shipping costs and customs delays affecting donations |
Resource 2 – Social Media Post from an Employee
💬 Anonymous Employee on LinkedIn:
"I love ECS’s mission, but our production process is falling apart! We’re constantly running out of recycled materials, causing delays. Some donated power banks are reaching communities late or not at all. Management needs to fix this before we lose our credibility!"
Resource 3 – Internal Email from ECS CEO
📩 Subject: Scaling ECS Operations
Dear Team,
We are growing rapidly, but our supply chain and production inefficiencies are threatening our ability to meet demand.
I propose two options:
(1) Automating part of our assembly line to reduce bottlenecks.
(2) Forming a joint venture with a large electronics manufacturer.
Both options have risks. Automation is expensive, and a joint venture might compromise our social enterprise values. We need a decision soon.
Best,
CEO, EcoCharge Solutions
1.[2]
Using an appropriate business management theory, describe a human need that ECS meets through its business model.
2.[6]
Explain two possible challenges ECS faces in balancing its ethical objectives with its operational growth.
3.[17]
Using all the resources provided and your knowledge of business management, recommend a possible plan of action to ensure the sustainability of ECS for the next five years.
Question 10
HLPaper 3
AeroTech Drones – Scaling Production While Maintaining Financial Stability
Resource 1 – News Article
AeroTech Drones Faces Challenges Scaling Its Production Line
AeroTech Drones, a technology start-up specializing in high-performance drones for commercial use, has seen rapid demand growth in the last two years. The company was founded in 2018 as a private limited company, but it is now considering an IPO (initial public offering) to raise additional capital for expansion.
Despite strong revenue growth, AeroTech is facing operational bottlenecks and financial pressures.
Key Challenges:
(1) High production costs due to inefficiencies in manufacturing and inconsistent supplier lead times.
(2) Limited cash flow despite strong revenues, causing delays in R&D investments for next-generation drones.
(3) Difficulty in deciding whether to expand the current factory or relocate to a larger facility to accommodate increasing orders.
The CEO, Jake Mitchell, is considering three key strategies:
(1) Raising capital through an IPO or alternative external funding sources.
(2) Optimizing production efficiency through lean production techniques to reduce costs.
(3) Expanding into a new location with greater production capacity while balancing cost and operational feasibility.
Resource 2 – Financial Report Summary
AeroTech Drones – Financial Data (Last Fiscal Year)
Key Insights:
(1) The low current ratio (0.9) suggests short-term liquidity risks, meaning the company may struggle to meet immediate obligations.
(2) The high gearing ratio (62%) indicates heavy reliance on debt financing, increasing financial risk if interest rates rise.
(3) Profit margins remain solid, but production inefficiencies are increasing costs, reducing overall profitability.
| Financial Indicator | Value |
|---|---|
| Revenue | $200 million |
| Gross Profit Margin | 40% |
| Net Profit Margin | 8% |
| Current Ratio | 0.9 |
| Gearing Ratio | 62% |
Resource 3 – Break-even Analysis for Factory Expansion
Key Takeaways:
(1) Expanding the current factory has lower fixed costs, but it may not support long-term growth.
(2) A new facility reduces variable costs, but has higher fixed costs and a higher break-even point.
| Option | Fixed Costs ($M) | Variable Cost per Unit ($) | Selling Price per Unit ($) | Break-even Output (Units) |
|---|---|---|---|---|
| Expand Current Facility | 20M | 200 | 400 | 100,000 |
| Relocate to New Facility | 35M | 180 | 400 | 116,667 |
1.[2]
Using an appropriate business management theory, describe a financial challenge AeroTech Drones is facing.
2.[6]
Explain two operational challenges AeroTech Drones faces in scaling its production efficiently.
3.[17]
Using all the resources provided and your knowledge of business management, recommend a possible plan of action to ensure AeroTech Drones achieves both financial stability and operational efficiency.