Practice 5.3 Lean production and quality management (HL only) 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
SolvoHealth
Resource 1 – Business model and service offering
SolvoHealth is a rapidly growing mobile health company based in Vietnam. It operates a network of telehealth pods—solar-powered kiosks placed in rural communities that allow patients to consult doctors remotely, order basic diagnostics, and schedule medicine delivery.
Each pod includes a screen, smart diagnostic tools, and a local “health navigator” who guides users. SolvoHealth employs:
40 health navigators (frontline staff)
15 remote doctors (contracted)
30 staff at its operations HQ in Ho Chi Minh City (marketing, product, supply chain, HR)
SolvoHealth positions itself as affordable, hyper-local, and technology-enabled. The leadership team now plans to launch 60 pods in Indonesia and Bangladesh over the next 18 months.
Resource 2 – Internal HR report
“Navigator turnover remains high at 28% annually. Interviews cite poor training, emotional fatigue, and a disconnect between field roles and central ops decisions. Navigators receive basic onboarding but no career pathway or local adaptation in training. They also report being treated more as hardware support than as care professionals.
Headquarters recently introduced a CRM-linked performance bonus system based on call completion and upsell conversions—but this has increased pressure on already fatigued staff.”
Resource 3 – Weekly Ops Brief (March 2025)
Visual suggestion: This operations table can be converted into a bar chart or dashboard screenshot to test interpretation skills.
| Metric | Vietnam (live) | Indonesia (pilot) |
|---|---|---|
| Avg. pod uptime | 94% | 71% |
| Avg. medicine delivery time | 26 hours | 61 hours |
| Navigator-reported escalations | 9.2/week | 18.4/week |
| Inventory out-of-stock events | 3.1/week | 7.5/week |
Resource 4 – Brand perception audit (external)
In Vietnam, SolvoHealth scores high for accessibility and usefulness, but low for empathy and personalisation. Many patients feel “talked to” by doctors, not “heard.”
In Indonesia (pilot), users were confused by medical terms and unable to complete video sessions. 47% believed the navigator was “just a receptionist.”
A competitor, SehatNow, offers similar services but invests heavily in navigator-patient relationship-building and community health workshops to build trust.
Resource 5 - Email from Head of Marketing to CEO
Resource 6 – Slack thread
@Linh (HR): “One navigator resigned mid-shift—said she felt like a vending machine operator.”
@Dara (Marketing): “How are we still pushing bonuses on upsells when trust is crumbling?”
@Tung (Ops): “I’ll review the KPIs. But we can’t rebuild loyalty with posters.”
@Dara: “Maybe not. But we can’t scale a service that feels robotic either.”
*Note Slack is an internal team communications tool
1.[2]
With reference to Resource 2, describe one HR issue that may impact SolvoHealth’s service performance.
2.[6]
Explain one marketing challenge and one operations challenge SolvoHealth may face as it expands across Indonesia and Bangladesh.
3.[17]
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for SolvoHealth over the next five years.
Question 2
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 3
HLPaper 2
ZenMoto Ltd.
ZenMoto Ltd. is a Japanese company that manufactures electric scooters designed for city commuting. To improve operational efficiency, ZenMoto has implemented lean production techniques such as just-in-time (JIT) inventory management, kaizen (continuous improvement), and quality circles across its factories. It is also reviewing its production planning processes to better match seasonal demand fluctuations.
The company plans to expand into new Southeast Asian markets and needs funding for a new manufacturing plant. The finance department has provided key efficiency data and is evaluating whether internal cash flows are sufficient or if external sources of finance are needed.
Table 1: Selected Financial Data – ZenMoto Ltd. (2024)
| Item | Amount (¥) |
|---|---|
| Revenue | 8,500,000,000 |
| Cost of goods sold | 5,200,000,000 |
| Operating expenses | 2,700,000,000 |
| Net profit | 600,000,000 |
| Capital employed | 5,000,000,000 |
1.[2]
Explain one way lean production techniques could improve ZenMoto Ltd.'s operational efficiency.
2.[2]
Calculate the return on capital employed (ROCE) for ZenMoto Ltd. Show all your working.
3.[2]
Comment on how ZenMoto Ltd.’s ROCE result might influence its decision to use internal or external finance for expansion.
4.[2]
Suggest one internal and one external source of finance ZenMoto Ltd. could consider for the new manufacturing plant.
5.[2]
Suggest how improvements in production planning could contribute to better financial performance at ZenMoto Ltd.
Question 4
HLPaper 2
LumaTech Ltd.
LumaTech Ltd. is preparing to launch a new smart wearable device targeted at health-conscious consumers. It plans to use dynamic pricing strategies in its online sales channels and competitive pricing in retail outlets.
The management team has also conducted an internal quality review and found the following results:
| Quality Management Results |
|---|
| Quality circle meetings held monthly |
| Benchmarking performance against industry leader, FitGear Inc. |
| Initial adoption of Total Quality Management (TQM) practices |
The company’s new product focuses on detecting early health problems — addressing customer needs that may not even be fully recognized yet. Senior leadership is also concerned about how to manage potential product crises effectively.
1.[2]
Distinguish between dynamic pricing and competitive pricing as used by LumaTech Ltd.
2.[2]
Identify two types of distribution channels that LumaTech Ltd. could use to sell its smart device.
3.[2]
Explain how benchmarking and Total Quality Management (TQM) could help LumaTech Ltd. improve its product quality.
4.[2]
State two factors that affect effective crisis management.
5.[2]
Explain why developing goods that meet customers’ unmet needs is important for LumaTech Ltd.
Question 5
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 6
HLPaper 2
PureBloom Cosmetics
PureBloom Cosmetics is a medium-sized company specializing in natural, cruelty-free skincare products. The company has built a loyal customer base due to its focus on ethical practices and high product quality. However, PureBloom recently faced a major crisis: a batch of its popular moisturizer was recalled due to contamination concerns, leading to significant reputational damage and a temporary halt in production.
To address the fallout and prevent similar issues, PureBloom is considering two strategies: (1) implementing lean production techniques to improve efficiency and quality control, or (2) enhancing its contingency planning processes to respond more effectively to future crises. The company must balance restoring customer trust with improving operational performance.
1.[2]
Outline two ways that lean production techniques could help PureBloom Cosmetics improve its quality control and operational efficiency.
2.[4]
Explain the importance of contingency planning for PureBloom in managing crises such as product recalls.
3.[4]
Distinguish the advantages and disadvantages of implementing a comprehensive quality management system to rebuild customer trust and prevent future recalls.
4.[10]
To what extent should PureBloom prioritize lean production over contingency planning to address its operational and reputational challenges?
Question 7
HLPaper 2
AeroPro Components
AeroPro Components manufactures high-precision parts for the aerospace industry. The company has built a strong reputation for quality and reliability. However, recent challenges, including rising production costs, inconsistent quality standards, and delayed deliveries, have started to affect customer satisfaction.
To address these issues, AeroPro is considering three strategies: (1) adopting lean production techniques to minimize waste and improve efficiency, (2) investing in advanced management information systems (MIS) to better monitor production and quality, and (3) expanding its research and development (R&D) capabilities to design more innovative, cost-effective components.
1.[2]
Outline two ways that lean production techniques could help AeroPro improve its operational efficiency and reduce costs.
2.[4]
Explain the importance of quality management in maintaining AeroPro’s competitive advantage in the aerospace industry.
3.[4]
Distinguish the benefits and challenges of investing in MIS to improve production monitoring and quality management at AeroPro.
4.[10]
To what extent should AeroPro prioritize R&D expansion over lean production and MIS investment to address its challenges?
Question 8
HLPaper 2
SwiftTech Ltd (ST)
SwiftTech Ltd (ST) is a UK-based technology manufacturer specializing in smart home devices. The company recently experienced a product defect crisis, where a software bug in its flagship security system led to customer complaints and negative media coverage. As a result, ST had to issue refunds and recalls, leading to financial strain and reputational damage.
To improve efficiency and reduce future risks, ST is considering adopting lean production methods, such as Just-in-Time (JIT) and Kaizen, to minimize waste and improve product quality. However, some managers worry that JIT may leave the company vulnerable to supply chain disruptions.
ST is also evaluating the implementation of a management information system (MIS) to enhance decision-making and financial planning. Currently, ST’s finance department struggles with budgeting inconsistencies and poor forecasting, affecting investment decisions.
To recover from the crisis and regain financial stability, ST's senior management is reviewing its budgeting process, ensuring tighter cost control and improved financial planning.
1.[2]
Define the term ‘budget’.
2.[4]
Explain two reasons why crisis management is important for ST following the product defect crisis.
3.[4]
Explain two benefits for ST of using lean production methods.
4.[4]
Explain two advantages for ST of implementing a management information system (MIS).
5.[10]
Examine how ST should improve its budgeting process to strengthen financial planning.
Question 9
HLPaper 2
EcoHome Ltd (EH)
EcoHome Ltd (EH) manufactures environmentally friendly household cleaning products in Canada. Due to increasing competition, EH heavily invested in research and development (R&D) to create innovative products. The R&D expenditure significantly increased costs, negatively affecting profitability in the company's recent final accounts.
EH has recently faced a significant product recall crisis due to contamination discovered in one of its cleaning products. This crisis damaged EH's reputation, caused a substantial drop in sales, and negatively impacted liquidity.
Management is considering adopting lean production techniques to reduce production costs and enhance efficiency. Some stakeholders argue this could prevent future crises and restore consumer confidence. However, employees are concerned that lean production may lead to job losses and lower job security.
EH's marketing strategy historically emphasized its environmental values. Given the recent crisis, the management team is debating whether to continue highlighting environmental benefits or shift toward emphasizing product safety and quality.
1.[2]
Define the term ‘lean production’.
2.[4]
Explain two reasons why EH invests heavily in research and development (R&D).
3.[4]
Explain two impacts the product recall crisis may have on EH’s final accounts.
4.[4]
Explain two ways lean production methods could help EH manage or avoid future crises.
5.[10]
Recommend whether EH should continue emphasizing environmental benefits in its marketing strategy or shift its focus to product safety and quality following the crisis.
Question 10
HLPaper 2
GreenPath Eco Solutions
GreenPath Eco Solutions (GreenPath) is a mid-sized enterprise specializing in designing and installing energy-efficient solutions, such as solar panels and insulation. The business operates in a highly competitive market but differentiates itself through custom designs tailored to clients’ energy needs.
GreenPath has recently experienced declining operational efficiency. The CEO believes the issue lies in an outdated inventory management system and inefficiencies in converting receivables into cash. To address these challenges, the company is considering two strategies: (1) investing in an automated inventory management system or (2) offering early payment discounts to improve cash flow.
Below is selected financial data for GreenPath for the year ending December 31, 2023:
| Financial Metric | Value (USD) |
|---|---|
| Revenue | 800,000 |
| Cost of Goods Sold (COGS) | 500,000 |
| Operating Expenses | 200,000 |
| Net Profit | 100,000 |
| Average Inventory | 50,000 |
| Average Accounts Receivable | 60,000 |
| Current Assets | 100,000 |
| Current Liabilities | 50,000 |
| Inventory Turnover (times/year) | 10 |
| Receivables Days (days) | 27 |
1.[2]
Using the data provided, analyze GreenPath’s inventory turnover ratio and explain its implications for the company’s operational efficiency.
2.[2]
Calculate GreenPath’s receivables days ratio and evaluate its effectiveness in managing cash flow.
3.[4]
Explain the potential advantages and disadvantages of implementing an automated inventory management system for GreenPath
4.[10]
Evaluate whether offering early payment discounts is a better strategy than investing in automated inventory management for improving GreenPath’s efficiency