Practice 5.7 Crisis management and contingency planning (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 2
TerraVolt Ltd.
TerraVolt Ltd. is a European company specialising in the production of modular battery storage systems for renewable energy projects. After identifying an opportunity to expand into off-grid African markets, TerraVolt invested heavily in a new research and development (R&D) project to develop a lightweight, durable battery model.
However, unexpected production delays caused by supply chain disruptions forced TerraVolt to activate parts of its contingency plan, including outsourcing key components at higher costs. The finance team has prepared the company's final accounts and depreciation schedules to assess the financial impact and to plan for future investment needs.
Table 1: Statement of Profit or Loss for TerraVolt Ltd. for the year ending 31 December 2024 (figures in €000s)
| Item | Amount (€000) |
|---|---|
| Sales revenue | 10,200 |
| Cost of sales | 6,300 |
| Gross profit | 3,900 |
| Operating expenses | 2,400 |
| Depreciation expense | 400 |
| Interest | 150 |
| Profit before tax | — |
| Tax | 150 |
| Profit for the year | — |
Table 2: Statement of Financial Position for TerraVolt Ltd. as at 31 December 2024 (figures in €000s)
| Item | Amount (€000) |
|---|---|
| Non-current assets (at cost) | 2,000 |
| Accumulated depreciation | (800) |
| Current assets | 1,100 |
| Current liabilities | 750 |
| Long-term borrowings | 600 |
| Share capital | 700 |
| Retained earnings | — |
Additional information:
- The initial investment in machinery was €2,000,000.
- Machinery has an expected useful life of 5 years and a residual value of €0.
1.[2]
Calculate the profit before tax in 2024 for TerraVolt Ltd. Show all your working.
2.[2]
Calculate TerraVolt Ltd.’s net book value of non-current assets as at 31 December 2024. Show all your working.
3.[2]
Using the straight-line depreciation method, calculate TerraVolt Ltd.’s annual depreciation expense based on the machinery investment. Show all your working.
4.[2]
Calculate the current ratio for TerraVolt Ltd. as at 31 December 2024. Show all your working.
5.[2]
Comment on what the financial statements reveal about TerraVolt Ltd.’s profitability and liquidity position.
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
HLPaper 2
PulseTech Ltd.
PulseTech Ltd. is a mid-sized electronics manufacturer that produces wireless health-tracking wristbands. It recently shifted to partial automation and invested in research and development to enhance the accuracy of its sensors. PulseTech’s board is reviewing whether to scale up R&D spending further in response to emerging customer demand for more personalized health data.
To manage inputs, PulseTech uses stock control charts and a reorder system. Figure 1 shows the stock level for PulseTech’s microchips, and Table 1 provides selected operational and financial data.
Figure 1: PulseTech Ltd.'s stock control chart
Table 1: Selected operational data for 2024
| Metric | Value |
|---|---|
| Total annual output | 160,000 units |
| Machine investment cost | $4 million |
| Total labour hours | 40,000 hours |
| Total machine hours | 20,000 hours |
| Defect rate | 2% |
| Maximum capacity | 200,000 units |
1.[2]
Using Figure 1, state: (i) PulseTech Ltd.’s lead time (ii) PulseTech Ltd.’s reorder quantity
2.[2]
Calculate for PulseTech Ltd.: (i) Capacity utilization rate (ii) Number of defective units produced
3.[2]
Calculate for PulseTech Ltd.: (i) Labour productivity (units per labour hour) (ii) Capital productivity (units per $ of machine investment)
4.[2]
Explain one difference between contingency planning and crisis management, using PulseTech Ltd. as a context.
5.[2]
Explain one reason why investing in R&D may help PulseTech Ltd. better meet customer needs.
Question 5
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 6
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 7
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 8
HLPaper 2
TechNova Innovations
TechNova Innovations is a mid-sized technology company specializing in developing software solutions for small and medium-sized enterprises. The company has built a strong reputation for its innovative products and excellent customer service. However, TechNova recently faced a major crisis: a cybersecurity breach that compromised customer data. The breach caused a temporary shutdown of operations and significant reputational damage.
To prevent such crises in the future, the company is considering two strategies: (1) investing in advanced management information systems (MIS) to strengthen data security and streamline operations, or (2) increasing its research and development (R&D) budget to create more secure and innovative software products.
As part of its recovery, TechNova is also revising its contingency planning processes to improve its response to future crises.
1.[2]
Outline two ways that management information systems (MIS) could help TechNova Innovations improve its data security and operational efficiency.
2.[4]
Explain the importance of contingency planning for TechNova Innovations in managing crises like the cybersecurity breach.
3.[4]
Explain the advantages and disadvantages of increasing the R&D budget to improve TechNova’s product offerings and competitive position.
4.[10]
To what extent should TechNova prioritize investing in MIS over R&D to address the challenges it faces?
Question 9
HLPaper 2
PureActive Ltd (PA)
PureActive Ltd (PA) produces fitness apparel and accessories, based in New Zealand. PA recently faced a major public relations crisis after a popular product line had safety issues, leading to product recalls and reputational damage. Management acknowledged the need for improved crisis management and contingency planning.
PA’s leadership has traditionally been autocratic, but employee dissatisfaction has grown, prompting management to consider alternative management and leadership styles. Employees have also expressed concerns about insufficient financial rewards, affecting morale and productivity.
To finance the relaunch of their improved product line without external borrowing, PA is evaluating various internal sources of finance. Management is currently analyzing sales performance using both total contribution and contribution per unit, as they plan pricing and sales targets for the relaunched product.
1.[2]
Distinguish between total contribution and contribution per unit.
2.[4]
Explain two benefits of effective crisis management and contingency planning for PA.
3.[4]
Explain two advantages of using internal sources of finance for PA’s product relaunch.
4.[4]
Explain two ways financial rewards could improve employee motivation at PA.
5.[10]
Evaluate whether PA should shift from an autocratic to a democratic leadership style to address employee dissatisfaction and manage future crises effectively.
Question 10
HLPaper 3
TalentNet Solutions (TNS)
Resource 1 - Excerpt from a Company Newsletter
Resource 2 - Employee Satisfaction Survey Results (2024)
In a recent survey of TNS employees:
60% of staff reported they felt “well-supported” by management in their roles. 35% stated they experienced “moderate to high levels of stress” due to heavy workloads and pressure to meet placement targets.
70% indicated that they valued the company's mission, but 40% felt that TNS’s rapid growth had impacted the sense of camaraderie within teams. These results indicate a high commitment to the mission but reveal challenges with workload and team morale, pointing to areas for HR improvement.
Resource 3 - Excerpt from TalentNet Solutions’ Employee Handbook
Resource 4 - Interview with a Regional Manager
In an interview with Workforce Development Today, Regional Manager Ella Robinson highlighted TalentNet’s current recruitment strategies:
“Attracting qualified trainers who align with our values is tough, especially as we expand to new locations. Although our mission resonates with many, low starting salaries deter some candidates. With more resources, we could improve retention by enhancing salaries and expanding our professional development programs.” Robinson also noted that training demand has surged, creating high workloads for existing staff.
Resource 5 - Job Advertisement for TNS’s New Positions
1.[2]
Identify a human need that TalentNet Solutions fulfills through its mission of upskilling individuals from disadvantaged communities. Explain how TNS addresses this need through its programs and initiatives.
2.[6]
Discuss two key challenges TalentNet Solutions faces in maintaining its workforce and achieving its mission. Use relevant resources from the case study to support your answer.
3.[17]
Based on the resources provided and your knowledge of business management principles, outline a strategic plan for TalentNet Solutions to enhance its organizational effectiveness over the next five years. Your plan should include recommendations on recruitment, employee well-being, professional development, and internal communication.