IB Business Management Topic 1.6 Multinational…

EcoCrate Ltd.

EcoCrate Ltd. manufactures eco-friendly modular furniture. Management is considering two options: buying prefabricated parts from a supplier (CTB) or making parts internally (CTM). They are also assessing lean production methods and ways to reorganize production internationally.

Table 1: Financial and Production Data for EcoCrate Ltd.

(a) EcoCrate Ltd.’s break-even quantity based on current in-house production costs.

(b) the margin of safety in units based on expected sales.

(e) your knowledge of depreciation methods to why the units of production method might be more appropriate for WKM than the straight-line method.

(e) 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.

the payback period for this investment. Show all your working.

(e) one ethical conflict that may arise when a multinational company like GBL tries to cut costs in developing countries.

(d) one effect of outsourcing production compared to insourcing.

(e) one reason why labour turnover may have increased at EcoCrate Ltd.

Elevate Health Tech (EHT)

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

Item	Amount (USD)
Current assets	$230,000
Current liabilities	$180,000
Non-current liabilities	$50,000
Retained profit	$40,000
Total equity	$100,000

Note: Fixed assets are fully depreciated and no longer productive.

(a) With reference to the stimulus, one internal issue that might arise from EHT’s current ownership structure.

(b) one human resource challenge and one financial challenge that EHT may face if it accepts the DIB loan and scales up

(c) 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.

WKM

WKM is a fast-growing agritech company that produces modular irrigation systems for small-scale farms. The company is exploring international expansion through partnerships with cooperatives in developing countries.

As part of this move, the board is reviewing WKM’s current vision and mission statements to ensure they reflect its long-term goals and social impact values. Some directors have raised concerns about how operations in lower-income regions could affect the brand’s reputation and stakeholder expectations.

WKM is also considering changing its accounting method for depreciation—from straight-line to units of production—to better reflect asset usage across regions. This change could impact financial statements, employee bonuses, and decision-making around asset replacement.

Management is evaluating whether the shift aligns with its strategic goals and provides more accurate cost control as the company scales globally.

(a) the term mission statement.

(b) one feature of a cooperative as a for-profit social enterprise.

(d) how the units of production method of depreciation would apply to WKM's modular irrigation systems.

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

(a) one stakeholder group that may be most concerned about inconsistent leadership styles across HydroGlow’s divisions

(b) one way HydroGlow’s current organisational structure may help or hinder motivation across its international teams.

(d) , using your statement of profit or loss, whether this regional division appears financially strong enough to support further growth.

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.

(a) two stakeholder groups affected by GBL’s growth.

(b) GBL’s gross profit margin and net profit margin. Show all your working.

(d) one advantage and one disadvantage of franchising as a method of growth for GBL.

Fixed costs (in-house production)	$300,000
Variable cost per unit (in-house)	$120
Cost to buy (CTB) per unit from supplier	$160
Selling price per unit	$250
Expected sales volume	5,000 units

IB Business Management 1.6 Multinational Companies Questionbank

IB Business Management 1.6 Multinational Companies Questionbank

IB Business Management 1.6 Multinational Companies Questionbank

IB Business Management 1.6 Multinational Companies Questionbank

IB Business Management Topic 1.6 Multinational Companies Questionbank