IB Business Management 1.1 What Is a Business? Questionbank

CleanCurrent Ltd.

CleanCurrent Ltd. is a renewable energy start-up that installs solar panels for residential and small business clients. Initially formed as a sole trader, the business recently transitioned into a private limited company (Ltd) to scale operations and attract investment. Its primary business objectives are to increase market share in suburban regions, reduce customer acquisition costs, and achieve positive monthly cash flow by the end of the fiscal year.

The business recently launched a referral programme and expanded into two new districts. While customer inquiries have increased, installation capacity has been strained, leading to delays in payments and project backlogs. This has created tension with certain stakeholders, including installers and suppliers, who are now facing late payments.

The finance manager has prepared a simple cash flow forecast for August 2024 to assess the immediate impact of CleanCurrent’s growth and financial decisions.

Table 1: Cash Flow Forecast – August 2024

Elevate Health Tech (EHT)

Resource 1 – Background of the organization

Elevate Health Tech (EHT) is a social enterprise based in Peru. Founded in 2021 by two biomedical engineers, it develops low-cost, portable diagnostic devices (such as digital stethoscopes and glucose meters) for use in rural and underserved communities across Latin America. EHT reinvests all profits into R&D and local employment programs.

EHT has grown quickly, scaling from 5 to 38 employees in two years. It operates as a private limited company, with both founders holding equal ownership and decision-making authority.

Resource 2 – Statement from the HR Director

"Our team is motivated by our mission, but we’re facing growing pains. We’ve recently hired 12 new staff, many with limited technical background. We have no formal training programme or organizational structure. Employees report confusion about job roles, and productivity varies significantly across teams. The co-founders are very hands-on, but this is becoming unsustainable."

Resource 3 – Loan proposal from the Development Impact Bank (DIB)

DIB is prepared to offer EHT a $750,000 low-interest loan to expand production and distribution across four Andean countries. The loan would cover machinery upgrades and recruitment but requires EHT to submit quarterly financial statements and maintain a current ratio of at least 1.5 throughout the term.

A grace period of 18 months will apply before repayments begin.

Resource 4 – Excerpt from EHT’s financial summary (unaudited, 2024)

Item	Amount (USD)

Resource 5 – Email from the Head of R&D

"To remain competitive, we need to launch two new diagnostic products within the next 18 months. The current design lab is at capacity. We either need to lease a second lab or invest in automation. The team is overworked and we’ve lost two engineers to burnout. I’m also concerned about our lack of appraisal or performance review systems."

Resource 6 – Mission statement (from company website)

We believe affordable diagnostics are a human right. We exist to empower healthcare workers and communities with reliable tools, local jobs, and dignity-driven innovation.

FlexiFreeze Ltd.

FlexiFreeze Ltd. is a medium-sized business that manufactures portable solar-powered refrigeration units for off-grid medical and disaster relief use. It was originally set up as a partnership but restructured into a private limited company (Ltd) after receiving a contract from an international NGO. The company's business purpose is to deliver low-cost, high-impact refrigeration solutions to underserved communities while achieving sustainable long-term growth.

In Q2 2024, the business launched a new production facility to meet rising demand. While this supported its growth and evolution, it also strained liquidity. Some stakeholders, including suppliers and staff, have expressed concerns about delayed payments and overtime demands.

The finance team has provided the final statement of profit or loss for Q2 2024 and a comparison with budgeted figures, alongside a cash flow forecast to assess short-term financial pressures.

Table 1: Budgeted vs Actual Statement of Profit or Loss – Q2 2024

Table 2: Cash Flow Forecast – July 2024

EcoCharge Ltd (EC)

EcoCharge Ltd (EC) is a private limited company that manufactures and sells electric vehicle (EV) charging stations. The company was founded in the UK in 2016 and has since expanded operations into France and Germany. EC is considering expanding into the United States (US) and China, where demand for EV infrastructure is growing.

To finance this expansion, EC is debating whether to convert into a public limited company (PLC) and raise capital through an initial public offering (IPO) or secure a large bank loan. Some managers believe an IPO would provide long-term financial security, while others argue that converting into a PLC would mean EC could lose control over decision-making.

EC has relied on a standardized marketing strategy in Europe, promoting its products through digital ads and partnerships with local governments. However, the US and Chinese markets have different consumer behaviors, regulations, and competition levels. Some managers believe EC should adapt its marketing strategy to each market, while others argue that maintaining a standardized approach will help reduce costs and maintain brand consistency.

Additionally, EC is concerned about competition from large multinational companies (MNCs) such as Tesla and BYD, which already dominate EV charging networks in these regions.