Practice Unit 1: Introduction to Business Management - Core operational components and business functions 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
FreshSteps Foundation
FreshSteps Foundation is a non-profit social enterprise based in Kenya that installs small-scale water filtration systems in rural communities. It operates as a private limited company (Ltd) but reinvests all surplus profits to expand its social impact rather than paying dividends.
Its business objectives include achieving financial sustainability and maintaining a minimum return on capital employed (ROCE) of 5% to fund future installations without relying heavily on grants.
Table 1: Statement of Profit or Loss for FreshSteps Foundation for the year ending 31 December 2024 (figures in $000)
| Item | Amount ($000) |
|---|---|
| Sales revenue | 2,600 |
| Cost of sales | 1,300 |
| Operating expenses | 1,050 |
| Depreciation expense | 100 |
| Interest expense | 40 |
| Tax | — (tax-exempt) |
Table 2: Additional Financial Information
| Item | Amount ($000) |
|---|---|
| Capital employed | 3,500 |
| Current assets | 480 |
| Current liabilities | 400 |
| Initial investment for new project | 800 |
| Net annual cash inflow from project | 220 |
1.[2]
Calculate the gross profit for FreshSteps Foundation. Show all your working.
2.[2]
State why FreshSteps Foundation is tax exempt.
3.[2]
Calculate the current ratio for FreshSteps Foundation. Show all your working.
4.[2]
Calculate the payback period for the new project. Show all your working.
5.[2]
Explain one financial challenge that FreshSteps Foundation may face by relying on project-based cash inflows.
Question 2
SLPaper 2
EcoPod Ltd.
EcoPod Ltd. is a private limited company that designs and installs compact eco-friendly garden offices. The company was started by two friends who wanted to promote sustainable working spaces as an alternative to traditional home offices. One of their main business objectives is to expand production while maintaining their commitment to sustainability.
To finance its growth, EcoPod Ltd. reinvested retained profit and also secured a bank loan. However, the company has recently experienced cash flow difficulties due to late payments from customers and rising material costs.
Table 1 shows EcoPod Ltd.’s financial data for the previous month.
Table 1: Financial data for EcoPod Ltd. (Previous month)
| Item | Amount ($) |
|---|---|
| Revenue | 120,000 |
| Cost of goods sold | 70,000 |
| Operating expenses | 30,000 |
| Cash inflows | 45,000 |
| Cash outflows | 60,000 |
| Opening cash balance | 5,000 |
1.[2]
State two sources of finance used by EcoPod Ltd.
2.[2]
Calculate the net profit for the month. Show all your working.
3.[2]
Calculate the closing cash balance. Show all your working.
4.[2]
Identify one internal stakeholder and explain how they may be affected by EcoPod Ltd.’s cash flow problems.
5.[2]
Outline one advantage of operating as a private limited company.
Question 3
HLPaper 2
TechCare Solutions (TS)
TechCare Solutions (TS) is a tech company that provides software solutions to improve accessibility for people with disabilities. The company’s vision is "Empowering lives through technology." Its mission is to create innovative and affordable products that help individuals with disabilities access technology.
TS has business objectives that include expanding globally, maximizing shareholder value, and setting ethical objectives related to digital inclusion.
1.[4]
Explain how TechCare Solutions’ vision statement influences its business objectives.
2.[4]
Identify one tactical objective that TechCare Solutions could pursue to support its mission.
3.[6]
Analyze the impact of setting ethical objectives on TechCare Solutions' growth strategy.
4.[10]
Discuss the potential conflicts that may arise between TechCare Solutions' strategic objectives to maximize shareholder value and its commitment to ethical objectives.
Question 4
HLPaper 3
SparkFit Apparel Ltd.
Resource 1 - Newspaper Article
"Local Apparel Brand, SparkFit, Strives to Compete in the Global Activewear Market"
Resource 2 - Financial Statement (Income Statement 2023)
Income Statement for the Year Ending December 31, 2023
Operating Expenses:
| Item | Amount |
|---|---|
| Sales Revenue | £1,200,000 |
| Cost of Sales | £800,000 |
| Gross Profit | £400,000 |
| Expense | Amount |
|---|---|
| Marketing | £50,000 |
| Administrative Expenses | £100,000 |
| Total Operating Expenses | £150,000 |
| Item | Amount |
|---|---|
| Operating Profit | £250,000 |
| Interest | £20,000 |
| Retained Profit | £230,000 |
Despite a 20% increase in revenue compared to 2022, SparkFit faces pressure from production and marketing expenses, impacting profitability.
Resource 3 - Marketing Strategy Flowchart
Market Research - Identify target demographics interested in eco-friendly activewear.
Product Development - Focus on sustainability and quality in material sourcing.
Digital Advertising - Emphasis on social media platforms like Instagram and TikTok.
Influencer Partnerships - Engage with eco-conscious influencers for brand authenticity.
Customer Feedback Loop - Integrate customer feedback for continuous product improvement.
Resource 4 - Consumer Research Summary
A survey conducted by MarketWatch Research among 5,000 UK-based consumers aged 18-34 reveals that 73% of respondents favor brands with sustainable practices. However, only 45% are willing to pay a premium for these options. For SparkFit, this signals both opportunity and challenge, as the eco-conscious market may not guarantee increased sales without pricing strategies that resonate with young buyers.
Competitors have also increased eco-friendly offerings, emphasizing SparkFit’s need for a compelling brand identity and distinct positioning.
Resource 5 - Marketing Campaign Report
1.[2]
Using an appropriate business management theory, identify a human need that SparkFit’s products satisfy for their target consumers.
2.[6]
Outline two challenges SparkFit faces in scaling their digital marketing efforts. Support your answer with evidence from the resources.
3.[17]
Based on the resources and your business knowledge, recommend a comprehensive marketing strategy to improve SparkFit’s brand awareness and competitiveness over the next five years. Your strategy should consider product positioning, digital marketing channels, pricing, and brand partnerships.
Question 5
HLPaper 2
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.
1.[6]
Analyze two ways in which GI can address the challenges of high initial costs and market resistance to biophilic design.
2.[8]
Discuss how entrepreneurship and innovation could play a role in GI’s efforts to achieve sustainable growth.
Question 6
HLPaper 2
EcoTech Innovations
EcoTech Innovations is a company that specializes in developing sustainable technology solutions for urban environments. The company is committed to reducing environmental impact by integrating renewable energy sources and smart technology into urban infrastructure projects.
EcoTech Innovations is currently in the growth phase and aims to strengthen its relationships with stakeholders to enhance its market presence and drive sustainable urban development.
1.[4]
Explain two ways EcoTech Innovations can engage with its stakeholders to enhance its market presence.
Question 7
HLPaper 2
UrbanRide (UR)
UrbanRide (UR) is a ride-sharing company that operates in major cities. The company has grown rapidly through aggressive marketing and technology development. However, it now faces significant challenges in scaling further, as larger competitors dominate the market.
To continue its growth, UR is exploring different strategies, including forming strategic alliances with local governments to expand its services or acquiring smaller ride-sharing companies in niche markets.
1.[4]
Explain one external diseconomy of scale that UrbanRide might face as it continues to grow.
2.[6]
Analyze two reasons why UrbanRide might choose to pursue strategic alliances rather than mergers or acquisitions for its growth.
3.[10]
Discuss the potential impact of external growth through acquisitions on UrbanRide’s organizational culture and brand reputation.
Question 8
HLPaper 2
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.
1.[4]
Explain the benefits and drawbacks of expanding into robotics and VR for TechyKids.
2.[6]
Analyze how keeping up with rapid technological changes could impact TK’s operations and business strategy.
3.[8]
Discuss the role of entrepreneurial leadership in helping TK navigate the challenges of expanding and staying competitive.