Practice 2.5 Organizational (corporate) culture (HL only) 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 3
LuminaCare
Resource 1 – Company profile and financial context
LuminaCare is a Ghana-based, for-profit social enterprise that manufactures solar-powered medical devices for rural clinics and maternal health centers across Sub-Saharan Africa. Its flagship product is a solar fetal heart monitor, which allows midwives to detect complications during pregnancy without relying on grid electricity. The company raised seed capital from impact investors but has now reached an inflection point: demand has grown by 300%, and LuminaCare must decide whether to pursue a $2.5M Series A equity round or take on $1.2M in concessional debt from a development bank.
Resource 2 – CFO’s internal memo (Finance)
“Our burn rate is steady, but we’ve reached our credit limit with suppliers. We operate on 90-day payment terms with clinics, so cash flow is always tight. Series A equity gives us the scale to meet demand and build a second facility—but would dilute founder control and introduce board-level oversight. The concessional loan is low-interest and non-dilutive but comes with covenants: quarterly EBITDA targets, strict capex limits, and donor-style reporting. Any miss could trigger loan restructuring or early repayment.”
Resource 3 – HR performance dashboard (Q1–Q2 2025)
| Metric | Value |
|---|---|
| Staff turnover (last 6 months) | 22% |
| Time to fill technical roles | 49 days (↑ 24%) |
| % of roles with formal job descriptions | 58% |
| Managerial span of control | Avg. 12 direct reports |
| Avg. team engagement score | 67/100 (↓ from 78) |
| The head of HR notes that burnout and unclear career paths are leading to attrition, especially among product engineers and field deployment staff. |
Resource 4 – Marketing team proposal
“Clinics love our mission—but most have no idea who we are until we show up at trade shows. We need to invest in inbound marketing, including a multilingual website, CRM tools, and a referral rewards program for midwives. More crucially, we’re perceived as a donor-funded nonprofit, not a serious tech company. To attract hospital procurement officers and larger buyers, we must reposition the brand to emphasize product quality, not just affordability and ethics.”
Resource 5 – Email thread: CEO to CFO and Marketing Lead
Resource 6 – Feedback from key field partners
“We rely on LuminaCare’s devices, but their response time for repairs has worsened.” “Sometimes we get different pricing from different reps. There’s no standard process.” “I love the mission—but our procurement officer wants a brand that feels serious. A logo change isn’t enough.”
1.[2]
With reference to Resource 3, describe one HR issue that may be impacting LuminaCare’s ability to scale sustainably.
2.[6]
Explain one financial challenge and one marketing challenge LuminaCare may face if it accepts the concessional loan.
3.[17]
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for LuminaCare over the next five years.
Question 2
HLPaper 2
TerraNova Ltd.
TerraNova Ltd. is an agricultural technology company based in New Zealand that develops vertical farming systems for urban food production. The company has a strong innovative corporate culture that values experimentation, sustainability, and cross-functional collaboration. However, as TerraNova scaled operations to meet increasing demand, it introduced stricter performance targets across departments.
These changes, including the removal of flexible working arrangements in the production team, led to a deterioration in industrial relations. Employee representatives submitted a formal grievance to management, citing the lack of consultation and increased stress levels among staff. Senior leaders are now reviewing TerraNova’s budget and financial performance for Q2 2024 to assess whether further cost-cutting is needed.
The company is also exploring external sources of finance to fund a new training and automation programme aimed at improving long-term efficiency and reducing employee workload.
Table 1: Budgeted vs Actual Figures – Q2 2024
| Item | Budgeted (NZD) | Actual (NZD) |
|---|---|---|
| Sales revenue | 2,400,000 | 2,200,000 |
| Cost of goods sold | 1,050,000 | 1,160,000 |
| Operating expenses | 920,000 | 980,000 |
| Net profit | 430,000 | 60,000 |
1.[2]
Calculate the sales variance and total cost variance for TerraNova Ltd. in Q2 2024.
Show all your working.
2.[2]
Comment on how the variances and final accounts reflect the financial impact of TerraNova’s internal changes.
3.[2]
Explain how TerraNova’s corporate culture may have clashed with recent changes to working conditions.
4.[2]
Suggest one internal and one external source of finance TerraNova Ltd. could consider to fund its employee training and automation programme.
5.[2]
Analyse how improved industrial relations could contribute to TerraNova’s long-term financial performance.
Question 3
HLPaper 2
EcoStruct Ltd. is a Scandinavian firm that designs and manufactures modular eco-housing units. The company has a strong person-oriented corporate culture, emphasising collaboration, open communication, and sustainability. However, after expanding into Eastern Europe, the firm experienced growing tensions between senior managers and factory workers over wage structures and shift allocations.
The operations director believes that poor communication across sites and a lack of clarity in decision-making have worsened the situation. Local labour unions have begun to raise concerns, and there are early signs of deteriorating industrial relations, with threats of formal disputes if pay equity issues are not addressed.
The board is evaluating a proposed investment in a new automated timber-cutting line to improve production efficiency. The finance team has provided the following data to assist in evaluating performance and decision-making.
Table 1: Financial Data – EcoStruct Ltd (2024)
| Item | Amount (€) |
|---|---|
| Revenue | 9,000,000 |
| Cost of goods sold | 5,400,000 |
| Operating expenses | 2,900,000 |
| Net profit | 700,000 |
| Capital employed | 5,600,000 |
| Average stock | 1,100,000 |
| Initial investment (machinery) | 2,200,000 |
| Net cash inflow (Years 1–4) | 700,000 p.a. |
1.[2]
Explain one way organizational culture can influence employee response during periods of industrial tension.
2.[2]
Calculate the return on capital employed (ROCE)
Show all your working.
3.[2]
Calculate the payback period for the proposed investment in the timber-cutting line.
Show all your working.
4.[2]
Analyse how internal communication and employee relations could impact the implementation of the new machinery.
5.[2]
Suggest one action EcoStruct’s leadership could take to uphold its culture and improve operational efficiency simultaneously.
Question 4
HLPaper 3
Global Solar Solutions (GSS)
Resource 1 – Background of the social enterprise
Three years ago, electrical engineer and entrepreneur Nadira Khan founded Global Solar Solutions (GSS) as a social enterprise in Morocco. Her goal was to provide affordable, modular solar lighting kits to off-grid rural communities. These kits, manufactured at GSS’s urban facility, include rechargeable LED lights and mobile charging ports. GSS reinvests 100% of profits into R&D and local hiring.
GSS operates in partnership with local NGOs and community councils. Its workforce includes 40 technicians and 20 community trainers who educate households about solar usage and maintenance. GSS applies lean production, Kaizen, and maintains a strong internal emphasis on quality control and after-sales support.
Resource 2 – Recent internal report on workforce issues
"High staff turnover and trainer burnout have increased over the past 12 months. Trainers, who work in remote villages for weeks at a time, report fatigue and a lack of recognition. Some have requested additional health support and clearer promotion opportunities."
The HR department suggested non-financial incentives such as increased job rotation and monthly feedback sessions but reported mixed engagement.
Resource 3 – Email from the Director of Rural Development (DRD)
To: nadira.khan@GSS.org
Subject: Expansion proposal
Dear Ms. Khan,
We are impressed by GSS’s impact. The Ministry would like to propose a contract to expand the solar program to 80,000 homes across North and West Africa over five years. Your team would need to train local technicians and build capacity in three new countries. Please note, the contract requires local sourcing of at least 60% of parts.
We will require an initial trial rollout in 5,000 homes and evidence of social impact.
Regards,
Director, DRD
Resource 4 – Extract from a marketing audit summary
GSS currently relies on word-of-mouth and NGO referrals. Its brand is associated with trust and affordability. However, a 2024 brand perception survey in new markets revealed low awareness and concerns about product durability compared to larger multinationals such as SolarX.
GSS’s marketing team is small (3 staff) and has no formal digital strategy. There is also no localized messaging for francophone West African markets.
Resource 5 – Operations update from the Head of Production
Our current facility is operating at 92% capacity. To meet a major scale-up, we would need to either expand production or outsource subassembly. We have identified two regional partners with experience in sustainable component manufacturing. However, we are concerned about quality assurance if we lose full process control.
Resource 6 – Excerpt from a local newspaper article
“Access to solar power has transformed daily life in remote villages. Children now study at night, families charge phones to access mobile banking, and kerosene usage has dropped. However, NGOs report that replacement parts for some GSS kits have been slow to arrive, creating frustrations in isolated regions.”
1.[2]
With reference to business management motivation theory, describe one need that GSS satisfies for rural households requiring solar lighting.
2.[6]
Explain one human resource challenge and one operations challenge GSS may face if it accepts the DRD expansion contract.
3.[17]
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for GSS over the next five years.
Question 5
HLPaper 2
SteelForm Ltd. is a manufacturer of prefabricated steel components for the construction industry. The company recently hired a new operations director to improve productivity and staff performance. She introduced a range of human resource practices, including performance-linked bonuses, internal promotions, and a revamped recruitment process.
The new director also noticed that the company’s leadership style across middle management was inconsistent and often lacked accountability. To address this, she initiated workshops to develop a more task-oriented culture focused on meeting deadlines and production quotas. However, some staff have expressed frustration, stating that the company’s previously person-oriented culture is being lost.
To evaluate the company’s financial performance during the transition, the finance team prepared a statement of financial position and income statement for 2024.
Table 1: SteelForm Ltd. – Financial Data for 2024
| Item | Amount ($) |
|---|---|
| Revenue | 4,200,000 |
| Cost of goods sold | 2,300,000 |
| Gross profit | 1,900,000 |
| Operating expenses | 1,250,000 |
| Net profit | 650,000 |
| Current assets | 340,000 |
| Current liabilities | 200,000 |
| Non-current liabilities | 400,000 |
| Total equity | 1,000,000 |
1.[2]
Explain one way human resource management practices can improve business performance.
2.[2]
Calculate the net profit margin and current ratio for SteelForm Ltd.
Show all your working.
3.[2]
Analyse how changes in leadership style and corporate culture might affect employee motivation at SteelForm Ltd.
4.[2]
Comment on how the net profit margin might influence future HR investment decisions.
Question 6
HLPaper 2
2.3 Leadership and management 2.4 Motivation and demotivation 2.5 Organizational (corporate) culture (HL only 3.4 Final accounts 3.6 Efficiency ratio analysis (HL only) 3.2 Sources of finance 3.1 Introduction to finance
Question 17: BrightPath Ltd.
BrightPath Ltd. is a private limited company that provides digital career coaching platforms to secondary schools and universities. The business is at a transitional stage: after rapid early growth, profits have started to plateau. In response, the board has appointed a new CEO with a highly authoritarian leadership style and a focus on efficiency and results.
However, this shift in management approach has clashed with BrightPath’s historically person-oriented corporate culture, which emphasised innovation, inclusivity, and autonomy. Employee morale has declined, and recent internal surveys suggest that staff are increasingly demotivated due to perceived lack of recognition and limited input in decision-making.
The finance department has provided the final accounts and key data from 2024, and the company is also considering raising capital to fund an AI-integrated platform upgrade. The CEO has asked for a financial and cultural analysis to support future strategic decisions.
Table 1: Selected Financial Data – BrightPath Ltd. (2024)
| Item | Amount (£) |
|---|---|
| Revenue | 2,200,000 |
| Cost of goods sold | 1,000,000 |
| Operating expenses | 950,000 |
| Net profit | 250,000 |
| Capital employed | 1,800,000 |
| Average stock | 200,000 |
1.[2]
Explain how a mismatch between leadership style and corporate culture might affect employee motivation.
2.[2]
Calculate the return on capital employed (ROCE) for BrightPath Ltd.
Show all your working.
3.[2]
Comment on how BrightPath Ltd.'s financial performance may affect its ability to raise external finance.
4.[2]
Suggest one internal and one external source of finance BrightPath could consider to fund its AI platform upgrade.
5.[2]
Analyse how leadership style could influence BrightPath Ltd.’s financial efficiency
Question 7
HLPaper 3
FreshFusion Ltd
Resource 1 - Industry Article
“FreshFusion Tackles High Turnover in the Health Food Sector”
Resource 2 - Balance Sheet (2023)
FreshFusion Ltd. Balance Sheet - As of December 31, 2023
| Item | Amount |
|---|---|
| Cash | £500,000 |
| Inventory | £250,000 |
| Property, Plant & Equipment | £3,000,000 |
| Other Current Assets | £100,000 |
| Total Assets | £3,850,000 |
| Item | Amount |
|---|---|
| Accounts Payable | £1,000,000 |
| Accrued Salaries | £200,000 |
| Long-Term Debt | £2,500,000 |
| Shareholders’ Equity | £1,150,000 |
| Total Liabilities & Equity | £3,850,000 |
FreshFusion’s equity has steadily increased, thanks to its brand appeal and expanding customer base. However, accrued salary expenses reveal the strain on payroll, and accounts payable remains high, indicating potential cash flow challenges in meeting obligations.
Resource 3 - Excerpt from Employee Satisfaction Survey (2023)
Summary of Employee Feedback:
Positive Comments: Employees appreciate FreshFusion’s commitment to sustainability, especially through using local suppliers and eco-friendly packaging. They feel aligned with the company’s values and are proud of their work.
Negative Comments: Concerns were raised about long hours, inconsistent scheduling, and lack of growth opportunities. Employees express a need for career progression and better work-life balance.
Resource 4 - Social Media Post (Instagram) @FreshFusionUK:
Resource 5 - Market Report Excerpt
"Health Food Retailers Face Staffing Struggles in Competitive Market"
Health food retail is a high-turnover sector, with 35% of employees leaving within their first year. Companies like FreshFusion are encouraged to adopt new employee-centric strategies, such as internal promotions, career development programs, and employee wellness initiatives, to remain competitive.
The report highlights that companies with lower turnover rates have successfully implemented flexible scheduling and robust training programs to build a committed workforce.
1.[2]
Using an appropriate business management theory, describe a human need that FreshFusion fulfills for its employees.
2.[6]
Explain two challenges FreshFusion faces in managing its human resources effectively. Support your answer using information from the case study and resources provided.
3.[17]
Using all the resources provided and your knowledge of business management, recommend a strategic plan to improve employee retention at FreshFusion over the next three years. Your response should consider employee development, scheduling flexibility, wellness initiatives, and compensation.
Question 8
HLPaper 3
UrbanEats Ltd.
Resource 1 - Excerpt from Company Website
Resource 2 - Balance Sheet (2023)
UrbanEats Ltd.
Balance Sheet as of December 31, 2023
Assets
Current Assets
Non-Current Assets
Liabilities
Current Liabilities
Non-Current Liabilities
Total Assets | £5,800,000 |
Total Liabilities | £2,500,000 |
Equity
Despite recent revenue growth, UrbanEats’ increasing liabilities raise concerns about long-term financial sustainability.
| Item | Amount |
|---|---|
| Cash | £1,200,000 |
| Inventory | £600,000 |
| Accounts Receivable | £800,000 |
| Total Current Assets | £2,600,000 |
| Item | Amount |
|---|---|
| Property, Plant & Equipment | £3,000,000 |
| Intangible Assets | £200,000 |
| Total Non-Current Assets | £3,200,000 |
| Item | Amount |
|---|---|
| Accounts Payable | £700,000 |
| Short-term Debt | £300,000 |
| Total Current Liabilities | £1,000,000 |
| Item | Amount |
|---|---|
| Long-term Debt | £1,500,000 |
| Total Non-Current Liabilities | £1,500,000 |
| Item | Amount |
|---|---|
| Shareholder Equity | £3,300,000 |
| Total Liabilities & Equity | £5,800,000 |
Resource 3 - Email from CFO to CEO
Resource 4 - Interview Excerpt with the CEO
In a recent interview with Finance Today, CEO Maya Simmons shared her vision for UrbanEats. “We are excited about our growth but know we must be strategic to maintain profitability.
Our commitment to sustainability and affordability is essential, but we also recognize the importance of financial health. Exploring franchising is one option, though I want to ensure it aligns with our brand values.”
Resource 5 - Social Media Post by UrbanEats (Instagram)
1.[2]
Identify a human need that UrbanEats Ltd. fulfills through its mission of providing plant-based and sustainable meals. Explain how UrbanEats addresses this need through its products and initiatives.
2.[6]
Discuss two significant challenges UrbanEats Ltd. faces in maintaining profitability and competitive advantage in the fast-casual dining sector. Use relevant resources from the case study to support your answer.
3.[17]
Based on the resources provided and your knowledge of business management principles, outline a strategic plan for UrbanEats Ltd. to enhance its financial performance and market positioning over the next five years. Your plan should include recommendations on product differentiation, digital marketing strategies, consumer engagement initiatives, and adaptability to market trends.
Question 9
HLPaper 2
FreshEats Ltd (FE)
FreshEats Ltd (FE) is a rapidly expanding healthy fast-food chain based in Australia. The company has recently experienced significant growth, opening numerous outlets nationwide. This expansion has led to changes in organizational culture, shifting from a family-oriented culture to a more profit-driven environment. Some employees feel alienated, resulting in tensions and declining morale.
FE’s expansion required significant investment, financed through debt, affecting the company's profitability and liquidity ratios. Recent financial analysis indicates decreasing liquidity, causing concern among stakeholders about FE’s short-term financial health.
FE management is considering franchising as an alternative growth strategy, believing it could improve both liquidity and operational efficiency. However, employees are worried franchising could negatively impact their job security and working conditions, increasing risks of industrial action.
FE currently faces uncertainty regarding how many units they need to sell to break even at the new locations. Accurate break-even analysis is critical for financial planning during the ongoing expansion.
1.[2]
Define the term ‘franchising’.
2.[4]
Explain two ways rapid growth may negatively affect FE’s organizational culture.
3.[4]
Explain two reasons why profitability ratios might improve while liquidity ratios worsen.
4.[4]
Calculate the break-even quantity for FE if fixed costs are USD 120,000, average selling price per unit is USD 8, and average variable cost per unit is USD 5. Show all working.
5.[10]
Recommend whether FE should pursue franchising as a growth strategy, considering industrial relations and financial factors.
Question 10
HLPaper 3
Alpha Robotics – Optimizing HR and Operations for Growth
Resource 1 – News Article
Alpha Robotics Struggles with HR and Operational Efficiency
Alpha Robotics, a technology firm specializing in AI-powered industrial robots, is experiencing rapid expansion as demand for automation increases globally. The company was founded in 2015 and has since grown to 2,500 employees across four locations: the United States, Germany, Japan, and India.
Key Challenges:
(1) HR management issues – Employees complain about unclear leadership, poor communication, and lack of motivation due to a highly hierarchical structure.
(2) Production inefficiencies – The company’s batch production method is increasing lead times and reducing product quality.
(3) Location challenges – With rising costs in the US and Germany, Alpha Robotics must decide whether to expand in India (lower labor costs) or develop a new R&D facility in Singapore.
CEO Daniel Carter is considering the following strategic changes:
(1) Restructuring the organization to improve communication and motivation.
(2) Shifting to lean production and just-in-time (JIT) inventory management.
(3) Relocating part of production to India or Singapore while maintaining efficiency.
Resource 2 – Internal HR Survey Results
Key Insights:
(1) Employees feel disconnected from leadership, affecting productivity.
(2) A lack of career growth opportunities is reducing motivation and increasing turnover.
(3) Middle management struggles with effective communication due to a rigid hierarchical structure.
| Issue | Percentage of Employees Concerned |
|---|---|
| Lack of leadership clarity | 42% |
| Poor communication from managers | 38% |
| Low motivation and workplace morale | 45% |
| Limited career advancement | 41% |
Resource 3 – Cost-Benefit Analysis for Production Relocation
Alpha Robotics – Cost Analysis for Facility Expansion
Key Considerations:
(1) India offers lower costs, but efficiency gains are lower compared to Singapore.
(2) Singapore provides greater efficiency but has significantly higher setup costs.
| Location | Labor Costs per Hour ($) | Setup Costs ($M) | Expected Efficiency Gains |
|---|---|---|---|
| India | 12 | 30 | 10% increase |
| Singapore | 22 | 50 | 18% increase |
1.[2]
Using an appropriate business management theory, describe an HR challenge that Alpha Robotics is facing.
2.[6]
Explain two operational challenges Alpha Robotics faces in improving production efficiency.
3.[17]
Using all the resources provided and your knowledge of business management, recommend a possible plan of action to improve both HR and operations management at Alpha Robotics.