Practice 5.4 Location 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
SLPaper 2
BiteFresh Ltd.
BiteFresh Ltd. is a company that produces ready-made healthy meals for supermarkets and gyms. Due to growing demand, the business is planning to open a second production facility. Management is deciding between two locations: one in an urban area with higher rent but closer to suppliers and customers, and another in a rural area with lower operating costs but limited infrastructure.
The finance team has produced updated financial data to help evaluate the company’s performance and support the location decision.
Table 1: Financial data for BiteFresh Ltd.
| Item | Amount ($) |
|---|---|
| Revenue | 400,000 |
| Cost of goods sold | 220,000 |
| Expenses | 130,000 |
| Fixed costs (per month) | 12,000 |
| Selling price per unit | 10 |
| Variable cost per unit | 4 |
| Current assets | 70,000 |
| Current liabilities | 35,000 |
1.[2]
Calculate the net profit for the business.
Show all your working.
2.[2]
Calculate the net profit margin.
Show all your working.
3.[2]
Calculate the current ratio.
Show all your working.
4.[2]
Calculate the break-even output per month.
Show all your working.
5.[2]
Outline one factor that BiteFresh Ltd. should consider when choosing between the urban and rural location options.
Question 2
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 3
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 4
SLPaper 2
EcoHeat Ltd.
EcoHeat Ltd. is a company that manufactures solar-powered water heating systems. The business is currently planning to open a second production facility and is considering two possible locations:
- Location A: Near a port, with high rent but excellent access to suppliers and export markets
- Location B: In a rural area, with lower rent but limited transport infrastructure and fewer skilled workers
The operations director, who follows a democratic leadership style, has asked team leaders to involve employees in the decision-making process. However, recent internal reports show declining employee motivation, and communication between departments has been inconsistent.
To support the location decision, the finance team produced a break-even chart for the new facility.
Figure 1: Break-even chart for proposed facility
1.[2]
Using Figure 1, identify the break-even level of output for EcoHeat Ltd.
2.[2]
Explain one advantage of involving employees in location decisions through democratic leadership.
3.[2]
Outline one way that poor communication between departments could impact the success of the new facility.
4.[2]
Explain one non-financial method EcoHeat Ltd. could use to improve employee motivation during the expansion process.
5.[2]
Using Figure 1, calculate the profit or loss if EcoHeat Ltd. produces and sells 7,000 units.
Show all your working.
Question 5
HLPaper 2
GlobalTech Manufacturing
GlobalTech Manufacturing produces electronic components for multinational companies. The business is considering expanding its operations by opening a new facility to meet increasing demand. Management has shortlisted two potential locations: (1) a developed country with excellent infrastructure but high labor costs, and (2) a developing country with lower operational costs but limited access to skilled labor and reliable utilities.
GlobalTech also plans to implement a new management information system (MIS) to improve coordination between its existing facilities and the new location. The MIS will streamline operations by integrating production, inventory, and logistics data in real-time.
Management must decide how to balance the operational benefits of the MIS with the strategic considerations of selecting the optimal location.
1.[2]
Outline two factors GlobalTech should consider when selecting the location for its new facility.
2.[4]
Analyze the benefits of implementing a management information system (MIS) for GlobalTech’s operations.
3.[4]
Explain the challenges GlobalTech may face in managing operations if it chooses the developing country as its location.
4.[10]
To what extent should GlobalTech prioritize implementing the MIS over its location decision to ensure operational efficiency and long-term success?
Question 6
SLPaper 2
GreenBites Ltd (GB)
GreenBites Ltd (GB) is a fast-growing organic food manufacturer based in Canada. The company produces organic snacks and beverages, which it sells through major supermarket chains and online platforms. Due to increasing demand, GB is planning to open a new production facility to expand its manufacturing capacity.
GB is considering three possible locations for its new factory:
Toronto, Canada – Close to GB’s headquarters, with high labor costs but good infrastructure. Guadalajara, Mexico – Lower labor costs but more complex supply chain logistics. Rotterdam, Netherlands – Provides easy access to European markets but has higher taxes and environmental regulations. GB currently uses batch production, which allows it to produce a variety of organic snacks efficiently. However, some managers believe that switching to flow production could reduce costs and improve efficiency. Others worry that flow production would reduce product variety and increase waste.
Additionally, GB’s internal communication has become more difficult as the company grows. Employees complain about unclear instructions and slow decision-making, especially between the production and sales teams. Some managers suggest introducing a digital communication platform, while others believe regular face-to-face meetings would be more effective.
1.[2]
Define the term ‘batch production’.
2.[4]
Explain two factors GB should consider when choosing the location for its new production facility.
3.[4]
Explain two advantages for GB of using flow production instead of batch production.
4.[10]
Recommend how GB can improve internal communication to enhance operational efficiency.
Question 7
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 8
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 9
SLPaper 2
AquaPure Water Solutions
AquaPure Water Solutions is a small company that manufactures and distributes water filtration systems for homes and offices. The company is experiencing increased demand due to rising concerns about water quality and sustainability. To expand production and meet growing customer needs, AquaPure is planning to open a second production facility.
The management is evaluating two potential locations: (1) a city center location close to major suppliers and customers but with high rental and labor costs, or (2) a suburban location with lower operational costs but farther from suppliers and distribution networks. AquaPure must also ensure that its operational processes are efficient to maintain its reputation for delivering high-quality products on time.
1.[2]
Outline two key functions of operations management that AquaPure should focus on to ensure the success of its new facility.
2.[4]
Analyze two factors AquaPure should consider when deciding between the city center and suburban locations for its new facility.
3.[4]
Explain the advantages and disadvantages of choosing the suburban location for AquaPure’s new facility.
4.[10]
To what extent should AquaPure prioritize operational efficiency over proximity to suppliers and customers when selecting the location for its new facility?
Question 10
SL & HLPaper 2
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.
1.[4]
Identify and explain the primary and tertiary sectors in which SS operates.
2.[4]
Analyze two opportunities that Jacob could explore to grow Sunrise Smoothies.
3.[8]
Discuss how entrepreneurship could help Jacob overcome the challenges faced by Sunrise Smoothies.