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 ($) |
|---|---|
| Revenue | 120,000 |
| Cost of goods sold | 70,000 |
| Operating expenses | 30,000 |
| Cash inflows | 45,000 |
| Cash outflows | 60,000 |
| Opening cash balance | 5,000 |
1.[2]
State two sources of finance used by EcoPod Ltd.
2.[2]
Calculate the net profit for the month. Show all your working.
3.[2]
Calculate the closing cash balance. Show all your working.
4.[2]
Identify one internal stakeholder and explain how they may be affected by EcoPod Ltd.’s cash flow problems.
5.[2]
Outline one advantage of operating as a private limited company.
Question 2
SLPaper 2
VerdeLeaf
VerdeLeaf is a worker co-operative that produces compostable packaging for small food businesses. All employees are members who share in profits and help make decisions. As the business grew, VerdeLeaf introduced a more formal functional organisational structure, which has created friction between departments.
The business’s original objective was to remain local and values-driven, but it has recently started supplying national chains. While some members support this shift, others worry it goes against VerdeLeaf’s founding purpose. Recent feedback suggests rising demotivation in the production team, especially due to poor communication across departments and inconsistent involvement in decision-making.
The finance team has provided partial data for Q1 2024 and tasked a trainee to complete the statement of profit or loss.
Table 1: Financial data for VerdeLeaf – Q1 2024
| Item | Amount ($) |
|---|---|
| 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 3
SLPaper 2
FreshBurst Ltd.
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]
Using Figure 1, identify the break-even level of output for FreshBurst Ltd.’s new product.
2.[2]
Explain one advantage of using batch production for FreshBurst Ltd. as it grows.
3.[2]
Outline one conflict that may arise between two stakeholder groups as a result of FreshBurst Ltd.’s expansion.
4.[2]
Explain one way the company’s objective to increase market share could influence operational decisions.
5.[2]
Using Figure 1, calculate the profit earned if FreshBurst Ltd. produces and sells 6,000 units. Show all your working.
Question 4
SLPaper 2
Global Beans Ltd. (GBL)
Global Beans Ltd. (GBL) is a multinational company (MNC) that sources, roasts, and sells premium coffee in over 30 countries. The company started as a family-run business and experienced rapid internal growth before expanding overseas through joint ventures and franchising.
GBL recently released its final accounts. Table 1 shows selected financial data.
Table 1: Selected financial data for GBL
| Item | Amount ($ million) |
|---|---|
| Revenue | 300 |
| Gross profit | 120 |
| Net profit | 30 |
| Current assets | 90 |
| Current liabilities | 60 |
GBL’s plans for further growth have sparked concerns from local stakeholders in some developing countries where it operates. Local farmers fear that expansion could shift sourcing to cheaper markets, reducing their income. Meanwhile, GBL’s investors are pressuring the company to boost profitability.
1.[2]
Identify two stakeholder groups affected by GBL’s growth.
2.[2]
Calculate GBL’s gross profit margin and net profit margin. Show all your working.
3.[2]
Outline one reason why GBL’s investors might be concerned about its net profit margin.
4.[2]
State one advantage and one disadvantage of using franchising as a method of growth for GBL.
5.[2]
Explain one ethical conflict that may arise when a multinational company like GBL tries to cut costs in developing countries.
Question 5
HLPaper 2
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
| Item | Amount (£) |
|---|---|
| Opening balance | 10,000 |
| Cash inflows | 82,000 |
| Cash outflows | 96,000 |
| Closing balance | — |
1.[2]
Explain one reason why CleanCurrent Ltd. may have changed from a sole trader to a private limited company.
2.[2]
Calculate the net cash flow and closing balance for August 2024. Show all your working.
3.[2]
Suggest one conflict that might arise between two stakeholder groups as a result of CleanCurrent’s recent expansion.
4.[2]
Analyse how cash flow challenges could affect CleanCurrent’s ability to meet its business objectives.
5.[2]
Suggest one short-term strategy CleanCurrent Ltd. could implement to manage cash flow more effectively.
Question 6
SLPaper 2
FreshBurst Ltd.
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]
Using Figure 1, identify the break-even level of output for FreshBurst Ltd.’s new product.
2.[2]
Explain one advantage of using batch production for FreshBurst Ltd. as it grows.
3.[2]
Outline one conflict that may arise between two stakeholder groups as a result of FreshBurst Ltd.’s expansion.
4.[2]
Explain one way the company’s objective to increase market share could influence operational decisions.
5.[2]
Using Figure 1, calculate the profit earned if FreshBurst Ltd. produces and sells 6,000 units. Show all your working.
Question 7
HLPaper 3
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)
Note: Fixed assets are fully depreciated and no longer productive.
| Item | Amount (USD) |
|---|---|
| Current assets | $230,000 |
| Current liabilities | $180,000 |
| Non-current liabilities | $50,000 |
| Retained profit | $40,000 |
| Total equity | $100,000 |
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.
1.[2]
With reference to the stimulus, describe one internal issue that might arise from EHT’s current ownership structure.
2.[6]
Explain one human resource challenge and one financial challenge that EHT may face if it accepts the DIB loan and scales up
3.[17]
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for EHT over the next five years.
Question 8
SLPaper 2
OceanMist
OceanMist is a coastal tourism and eco-resort business based in Southeast Asia. It was originally established as a partnership between two environmental scientists who prioritised sustainable travel and community integration. As demand for its services has grown, OceanMist is considering restructuring into a private limited company (Ltd) to formalise operations and attract long-term investment.
The business currently operates with a flat organizational structure, but as staffing needs increase, one of the co-founders has proposed introducing department managers to improve communication and supervision. The other co-founder is concerned this may dilute the collaborative culture that guests and employees value.
OceanMist’s growth strategy includes expanding to a second site on a nearby island. The expansion would require external finance. The company has strong brand loyalty but limited retained earnings. A potential investor has offered capital but requested representation in decision-making.
Table 1: Selected financial data for OceanMist (2024)
| Item | Amount ($) |
|---|---|
| Revenue | 1,050,000 |
| Cost of goods sold | 400,000 |
| Operating expenses | 500,000 |
| Net profit | ? |
| Current assets | 120,000 |
| Current liabilities | 100,000 |
1.[2]
Calculate the net profit for OceanMist in 2024. Show all your working.
2.[2]
Explain how the financial data might influence OceanMist’s ability to secure external financing for expansion.
3.[2]
Outline one benefit and one drawback of OceanMist changing from a partnership to a private limited company.
4.[2]
Suggest one internal stakeholder and one external stakeholder that may be affected by the decision to expand, and explain why.
5.[2]
Explain how OceanMist’s leadership and structure might affect communication during expansion.
Question 9
SLPaper 2
HydroGlow Ltd.
HydroGlow Ltd. is a fast-growing manufacturer of smart hydration devices. Founded by two engineers, it recently expanded into Southeast Asia and North America, marking its transition into a multinational company (MNC). Its business objective is to grow sustainably while maintaining high product innovation and employee well-being.
Due to expansion, the company adopted a divisional organisational structure, with separate regional heads managing operations. However, concerns have emerged about inconsistent leadership styles and uneven motivation levels across regional teams. Some managers use autocratic approaches to meet targets, while others encourage more inclusive practices.
HydroGlow Ltd. secured venture capital and a long-term loan to finance its growth, but now faces rising fixed costs and pressure to deliver strong returns. The finance team has compiled the following performance data from one of its new regional divisions.
Table 1: Financial data for HydroGlow Ltd. – Q1 2024 (North American Division)
| Item | Amount ($) |
|---|---|
| Units sold | 2,500 |
| Selling price per unit | 110.00 |
| Variable cost per unit | 45.00 |
| Salaries (admin, regional management) | 60,000 |
| Marketing and advertising | 35,000 |
| Logistics and warehousing | 20,000 |
| Office rent and utilities | 25,000 |
| Loan interest | 6,500 |
| Tax rate | 20% |
| Dividends paid | 15,000 |
1.[2]
Suggest one stakeholder group that may be most concerned about inconsistent leadership styles across HydroGlow’s divisions
2.[2]
Explain one way HydroGlow’s current organisational structure may help or hinder motivation across its international teams.
3.[2]
Construct a statement of profit or loss for HydroGlow Ltd.’s North American Division for Q1 2024 using the data in Table 1.
4.[2]
Suggest, using your profit and loss account, whether this regional division appears financially strong enough to support further growth.
5.[2]
HydroGlow is considering investing $120,000 in automated production to reduce labour costs. The project is expected to generate net cash inflows of $40,000 per year for four years.
Calculate the payback period for this investment. Show all your working.
Question 10
HLPaper 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]
Explain one reason why FlexiFreeze Ltd. may have changed from a partnership to a private limited company.
2.[2]
Calculate the actual net profit for Q2 2024 Show all your working.
3.[2]
Comment on how the company’s cash flow and profit results might affect its relationship with stakeholders.
4.[2]
Suggest one risk FlexiFreeze Ltd. may face as it expands.
5.[2]
Outline how the company’s business purpose may influence strategic financial decisions as it grows.