Practice 1.4 Stakeholders 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
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 2
SLPaper 2
FreshBurst Ltd. is a rapidly expanding company that produces natural fruit juices. The company began as a small family business but has experienced significant internal growth over the past three years. Its long-term business objective is to increase market share in the premium health drink sector. Recently, it invested in new equipment to transition from job production to batch production, aiming to improve efficiency and meet rising demand.
The finance team has created a break-even chart to support a proposal for further investment in production facilities. Senior managers are also considering how the expansion may impact stakeholder groups.
Figure 1: Break-even chart for FreshBurst Ltd.’s new product line
1.[2]
Explain one advantage of using batch production for FreshBurst Ltd. as it grows.
2.[2]
Outline one conflict that may arise between two stakeholder groups as a result of FreshBurst Ltd.’s expansion.
3.[2]
Explain one way the company’s objective to increase market share could influence operational decisions.
Question 3
SLPaper 2
VerdeLeaf
VerdeLeaf is a worker co-operative that produces compostable packaging for small food businesses. All employees are members who share in profits and help make decisions. As the business grew, VerdeLeaf introduced a more formal functional organisational structure, which has created friction between departments.
The business’s original objective was to remain local and values-driven, but it has recently started supplying national chains. While some members support this shift, others worry it goes against VerdeLeaf’s founding purpose. Recent feedback suggests rising demotivation in the production team, especially due to poor communication across departments and inconsistent involvement in decision-making.
The finance team has provided partial data for Q1 2024 and tasked a trainee to complete the statement of profit or loss.
Table 1: Financial data for VerdeLeaf – Q1 2024
| Item | Amount ($) |
|---|---|
| Units sold | 4,000 |
| Selling price per unit | 6.50 |
| Variable cost per unit | 2.10 |
| Salaries (production + sales) | 38,000 |
| Marketing and promotion | 14,000 |
| Office rent and overheads | 16,000 |
| Tax rate | 25% |
| Dividends paid to members | 12,000 |
Figure 1: Statement of profit or loss (partially completed)
VerdeLeaf Statement of profit or loss
for the quarter ended 31 March 2024
| Item | $ |
|---|---|
| Sales revenue | __________ |
| Cost of sales | __________ |
| Gross profit | __________ |
| Expenses: | |
| - Salaries | (38,000) |
| - Marketing and promotion | (14,000) |
| - Office rent and overheads | (16,000) |
| Profit before tax | __________ |
| Tax (25%) | __________ |
| Profit for period | __________ |
| Dividends | (12,000) |
| Retained profit | __________ |
1.[2]
Outline one challenge VerdeLeaf may face as it grows from a local co-operative to a national supplier.
2.[2]
Identify one external stakeholder and who may be interested in VerdeLeaf’s current situation.
3.[2]
Using the data in Table 1, calculate the blanks in the profit and loss account shown in Figure 1. Show all your working.
4.[2]
Explain what the profit and loss account suggests about VerdeLeaf’s cost and revenue structure.
5.[2]
Suggest one way VerdeLeaf could improve internal communication to support motivation among staff.
Question 4
HLPaper 2
BloomBites Ltd.
BloomBites Ltd. is a company specializing in healthy café food. After strong success in its home market, the company has recently begun franchising internationally. As part of its growth strategy, BloomBites is evaluating its financial performance and expansion model.
The management has set a strategic objective to achieve 100 outlets worldwide within five years, and tactical objectives focused on improving average customer spend.
Below are extracts from BloomBites Ltd.'s final accounts for 2024:
| Statement of Profit and Loss 2024 (in $'000) |
|---|
| Revenue |
| Cost of goods sold (COGS) |
| Gross profit |
| Expenses |
| Net profit before tax |
| Statement of Financial Position 2024 (in $'000) |
|---|
| Non-current assets |
| Current assets |
| Current liabilities |
| Net assets |
Additional data:
- 30% of BloomBites Ltd.'s revenue comes from franchising fees and royalties.
- The company is facing minor tensions between franchise owners and senior management regarding pricing strategies.
Answer all the questions.
1.[2]
Calculate the missing figures for: (i) Revenue (ii) Net profit before tax
2.[2]
Outline one internal growth method and one external growth method BloomBites Ltd. could pursue.
3.[2]
Identify one internal economy of scale and one external economy of scale relevant to BloomBites Ltd.
4.[2]
Explain one example of stakeholder conflict that may arise in BloomBites Ltd.’s franchising model.
5.[2]
Distinguish between a strategic objective and a tactical objective for BloomBites Ltd.
Question 5
HLPaper 2
Question 14: ClearWave Ltd.
ClearWave Ltd. is a UK-based start-up that designs and installs water purification systems for rural communities and NGOs. Its long-term business objectives include expanding into three African markets by 2026, maintaining ethical sourcing practices, and achieving an annual growth rate of 20%.
To support its growth and evolution, the company secured a government development grant, a bank loan, and retained profits. However, some stakeholders—particularly NGO clients and community partners—have raised concerns about whether expansion could compromise product quality and service support.
ClearWave’s finance team has shared Q2 2024 final accounts, alongside the business’s budgeted figures, to assess how growth pressures are impacting profitability.
Table 1: Budgeted vs Actual Figures – Q2 2024
| Item | Budgeted (£) | Actual (£) |
|---|---|---|
| Sales revenue | 1,250,000 | 1,100,000 |
| Cost of goods sold | 600,000 | 670,000 |
| Operating expenses | 420,000 | 430,000 |
| Net profit | 230,000 | — |
1.[2]
Calculate the total cost variance and the sales revenue variance for ClearWave Ltd. in Q2 2024.
Show all your working.
2.[2]
Calculate the actual net profit for Q2 2024.
Show all your working.
3.[2]
Analyse how ClearWave’s current financial performance may affect its ability to meet its growth objectives.
4.[2]
Suggest one internal and one external stakeholder group that may be concerned about the company’s expansion and explain why.
Question 6
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 7
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 8
HLPaper 3
GreenTech Innovations
Resource 1 - Company Overview
GreenTech Innovations is a renewable energy firm founded in 2018, focusing on developing and deploying solar and wind energy solutions for both residential and commercial clients. With a mission to combat climate change and promote sustainable energy consumption, the company has seen significant growth due to increasing demand for green technologies.
CEO Rachel Thompson emphasizes, "Our goal is to make renewable energy accessible and affordable for everyone, but we face challenges in maintaining profitability while expanding our operations." Despite positive market reception, rising operational costs and competition in the renewable energy sector are pressing issues for GreenTech.
Resource 2 - Financial Performance Report (2023)
GreenTech Innovations
Financial Performance Summary for 2023
| Metric | Amount |
|---|---|
| Revenue | £5,000,000 |
| Gross Profit | £2,000,000 |
| Operating Expenses | £1,200,000 |
| Net Profit | £800,000 |
| Total Assets | £3,500,000 |
| Total Liabilities | £1,500,000 |
| Equity | £2,000,000 |
The company's revenue has increased by 25% from the previous year, but operating expenses have also risen due to investments in new technology and increased staffing costs, raising concerns about long-term profitability.
Resource 3 - Letter from the CFO
Subject: Financial Strategy Update
Dear Rachel,
As we analyze our current financials, it’s essential to develop strategies that balance our growth with profitability.
Here are my suggestions:
Streamline Operations: Assess areas where we can reduce costs without compromising service quality.
Explore New Markets: Consider expanding into regions with lower competition for renewable energy.
Invest in Technology: Leverage automation to enhance operational efficiency and reduce labor costs.
Looking forward to discussing this at our next meeting.
Best,
John Miller, CFO
Resource 4 - Interview with the CEO
In an interview with Eco Business News, CEO Rachel Thompson discussed GreenTech's vision and challenges. "The renewable energy sector is rapidly evolving, and while we are excited about our growth, we must remain vigilant about our operational efficiency.
Our commitment to sustainability and customer satisfaction drives our decisions, but profitability is critical for our long-term success. We're considering partnerships with other tech firms to innovate further."
Resource 5 - Social Media Announcement
1.[2]
Using an appropriate business management theory, identify a human need that GreenTech Innovations products satisfy for their target consumers.
2.[6]
Outline two challenges GreenTech Innovations faces in maintaining profitability. Support your answer with evidence from the resources.
3.[17]
Based on the resources and your business knowledge, recommend a comprehensive strategy to enhance GreenTech Innovations profitability and sustainability over the next five years. Your strategy should consider cost management, market expansion, technological innovations, and consumer engagement initiatives.
Question 9
SLPaper 2
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 income statement 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 Income Statement – Q2 2024
| Item | Budgeted (£) | Actual (£) |
|---|---|---|
| Sales revenue | 950,000 | 900,000 |
| Cost of goods sold | 520,000 | 580,000 |
| Operating expenses | 310,000 | 330,000 |
| Net profit | 120,000 | — |
Table 2: Cash Flow Forecast – July 2024
| Item | Amount (£) |
|---|---|
| Opening balance | 40,000 |
| Cash inflows | 250,000 |
| Cash outflows | 295,000 |
| Closing balance | — |
—
1.[2]
Calculate the actual net profit for Q2 2024 Show all your working.
2.[2]
Comment on how the company’s cash flow and profit results might affect its relationship with stakeholders.
3.0
Suggest one risk FlexiFreeze Ltd. may face as it expands.
4.[2]
Analyse how the company’s business purpose may influence strategic financial decisions as it grows.
Question 10
SLPaper 2
EcoPulse Ltd (EP)
EcoPulse Ltd (EP) is an innovative company founded in Germany, specializing in sustainable electronic devices. After rapid domestic growth, EP aims to expand internationally, transforming into a multinational company (MNC) by establishing subsidiaries in Brazil and India.
EP's international growth strategy focuses heavily on acquiring local businesses to quickly achieve market presence. However, rapid expansion has generated concerns among key stakeholders, notably employees and environmental organizations. Employees worry about changes in organizational culture and job security, resulting in signs of demotivation. Environmental groups fear that EP's rapid growth may undermine its original commitment to sustainability.
To manage international expansion effectively, EP’s board is reconsidering its predominantly autocratic leadership and management style. The board believes adopting a more democratic leadership style may improve employee motivation and stakeholder relationships during this critical growth phase.
1.[2]
Define the term ‘stakeholder’.
2.[4]
Explain two benefits for EP of becoming a multinational company (MNC).
3.[4]
Explain two potential sources of employee demotivation resulting from EP’s rapid growth.
4.[4]
Explain two advantages for EP of adopting a democratic leadership style during international expansion.
5.[10]
Recommend whether EP should continue expanding internationally through acquisitions or pursue organic growth instead.