IB Business Management 2.6 Communication Questionbank

(c) Explain one reason why a fall in net profit might concern the finance team.

(d) Identify one method of primary market research.

(e) Outline one problem that may arise from poor internal communication between departments.

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

Figure 1: Statement of profit or loss (partially completed)

VerdeLeaf Statement of profit or loss
for the quarter ended 31 March 2024

(a) Outline one challenge VerdeLeaf may face as it grows from a local co-operative to a national supplier.

(b) Identify one external stakeholder and who may be interested in VerdeLeaf’s current situation.

(c) Using the data in Table 1, calculate the blanks in the statement of profit or loss shown in Figure 1. Show all your working.

(d) Explain what the statement of profit or loss suggests about VerdeLeaf's cost and revenue structure.

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.\n\nThe 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.\n\nThe 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.\n\n---\n\nTable 1: Financial Data – EcoStruct Ltd (2024)\n\n| Item | Amount (€) |\n|-----------------------------------|------------|\n| Revenue | 9,000,000 |\n| Cost of sales | 5,400,000 |\n| Operating expenses | 2,900,000 |\n| Net profit | 700,000 |\n| Capital employed | 5,600,000 |\n| Average stock | 1,100,000 |\n| Initial investment (machinery) | 2,200,000 |\n| Net cash inflow (Years 1–4) | 700,000 p.a. |

(a) Explain one way organizational culture can influence employee response during periods of industrial tension.

(b) Calculate the return on capital employed (ROCE). Use net profit as the numerator. Show all your working.

(c) Calculate the payback period for the proposed investment in the timber-cutting line. Show all your working.

(d) Analyse how internal communication and employee relations could impact the implementation of the new machinery.

FlexBottle Ltd.

FlexBottle Ltd. is a sustainable consumer goods company that produces reusable, collapsible water bottles aimed at eco-conscious travellers and students. As the company scaled, it shifted from a flat to a functional organisational structure, appointing department heads to oversee operations, marketing, and finance. However, recent employee feedback from the production department suggests growing dissatisfaction due to a lack of communication and involvement in company-wide decisions.

To prepare for the launch of its latest product — a customisable bottle with modular parts — the marketing team developed a new marketing plan, changing several elements of the marketing mix, including pricing, packaging, and point-of-sale materials. The CEO, known for a laissez-faire leadership style, believes teams work best with minimal interference, though motivation among junior staff appears to be declining.

The finance department has prepared a draft statement of profit or loss for Q1 2024, and tasked the marketing and operations interns with completing the missing values using the available data.

Table 1: Financial data for FlexBottle Ltd. (Q1 2024)

Figure 1: Statement of profit or loss (partially completed)

FlexBottle Ltd . Statement of profit or loss for the quarter ended 31 March 2024

(a) Explain how the current organisational structure might affect internal communication at FlexBottle Ltd.

(b) Suggest one way the leadership style at FlexBottle Ltd. could affect employee motivation.

(c) Using Table 1, calculate the missing fields of the statement of profit or loss in Figure 1. Show all your working.

(d) Comment on what the completed statement of profit or loss reveals about FlexBottle Ltd.'s cost and revenue structure.

Global Solar Solutions (GSS)

(a) With reference to business management motivation theory, describe one need that GSS satisfies for rural households requiring solar lighting.

(b) Explain one human resource challenge and one operations challenge GSS may face if it accepts the DRD expansion contract.

(c) 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.