Practice 2.7 Industrial/employee relations (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 3
SolvoHealth
Resource 1 – Business model and service offering
SolvoHealth is a rapidly growing mobile health company based in Vietnam. It operates a network of telehealth pods—solar-powered kiosks placed in rural communities that allow patients to consult doctors remotely, order basic diagnostics, and schedule medicine delivery.
Each pod includes a screen, smart diagnostic tools, and a local “health navigator” who guides users. SolvoHealth employs:
40 health navigators (frontline staff)
15 remote doctors (contracted)
30 staff at its operations HQ in Ho Chi Minh City (marketing, product, supply chain, HR)
SolvoHealth positions itself as affordable, hyper-local, and technology-enabled. The leadership team now plans to launch 60 pods in Indonesia and Bangladesh over the next 18 months.
Resource 2 – Internal HR report
“Navigator turnover remains high at 28% annually. Interviews cite poor training, emotional fatigue, and a disconnect between field roles and central ops decisions. Navigators receive basic onboarding but no career pathway or local adaptation in training. They also report being treated more as hardware support than as care professionals.
Headquarters recently introduced a CRM-linked performance bonus system based on call completion and upsell conversions—but this has increased pressure on already fatigued staff.”
Resource 3 – Weekly Ops Brief (March 2025)
Visual suggestion: This operations table can be converted into a bar chart or dashboard screenshot to test interpretation skills.
| Metric | Vietnam (live) | Indonesia (pilot) |
|---|---|---|
| Avg. pod uptime | 94% | 71% |
| Avg. medicine delivery time | 26 hours | 61 hours |
| Navigator-reported escalations | 9.2/week | 18.4/week |
| Inventory out-of-stock events | 3.1/week | 7.5/week |
Resource 4 – Brand perception audit (external)
In Vietnam, SolvoHealth scores high for accessibility and usefulness, but low for empathy and personalisation. Many patients feel “talked to” by doctors, not “heard.”
In Indonesia (pilot), users were confused by medical terms and unable to complete video sessions. 47% believed the navigator was “just a receptionist.”
A competitor, SehatNow, offers similar services but invests heavily in navigator-patient relationship-building and community health workshops to build trust.
Resource 5 - Email from Head of Marketing to CEO
Resource 6 – Slack thread
@Linh (HR): “One navigator resigned mid-shift—said she felt like a vending machine operator.”
@Dara (Marketing): “How are we still pushing bonuses on upsells when trust is crumbling?”
@Tung (Ops): “I’ll review the KPIs. But we can’t rebuild loyalty with posters.”
@Dara: “Maybe not. But we can’t scale a service that feels robotic either.”
*Note Slack is an internal team communications tool
1.[2]
With reference to Resource 2, describe one HR issue that may impact SolvoHealth’s service performance.
2.[6]
Explain one marketing challenge and one operations challenge SolvoHealth may face as it expands across Indonesia and Bangladesh.
3.[17]
Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for SolvoHealth over the next five years.
Question 3
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 4
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 5
SLPaper 2
FlexiFit Ltd.
FlexiFit Ltd. is a company that designs and sells adjustable home fitness equipment. The operations manager follows a democratic leadership style, encouraging employees to contribute ideas and participate in problem-solving discussions. Recently, the company introduced a non-financial motivation scheme, offering flexible work hours and job rotation to increase employee engagement.
FlexiFit is evaluating whether to invest in a new production machine that will increase output. The machine costs $30,000 and is expected to generate the following cash inflows over the next three years:
Table 1: Estimated cash inflows from new machine
| Year | Cash inflow ($) |
|---|---|
| 1 | 10,000 |
| 2 | 12,000 |
| 3 | 15,000 |
The finance team has also reviewed recent financial performance, as shown in Table 2.
Table 2: Financial data for FlexiFit Ltd.
| Item | Amount ($) |
|---|---|
| Net profit | 45,000 |
| Revenue | 300,000 |
| Current assets | 90,000 |
| Current liabilities | 60,000 |
| Selling price per unit | 100 |
| Variable cost per unit | 40 |
| Fixed costs per month | 9,000 |
1.[2]
Calculate the net profit margin for FlexiFit Ltd. Show all your working.
2.[2]
Calculate the current ratio. Show all your working.
3.[2]
Calculate the break-even output per month. Show all your working.
4.[2]
State the payback period for the new machine. Show all your working.
5.[2]
Explain one non-financial method of motivation used by FlexiFit Ltd. and how it could benefit the business.
Question 6
SLPaper 2
EcoHeat Ltd.
EcoHeat Ltd. is a company that manufactures solar-powered water heating systems. The business is currently planning to open a second production facility and is considering two possible locations:
- Location A: Near a port, with high rent but excellent access to suppliers and export markets
- Location B: In a rural area, with lower rent but limited transport infrastructure and fewer skilled workers
The operations director, who follows a democratic leadership style, has asked team leaders to involve employees in the decision-making process. However, recent internal reports show declining employee motivation, and communication between departments has been inconsistent.
To support the location decision, the finance team produced a break-even chart for the new facility.
Figure 1: Break-even chart for proposed facility
1.[2]
Using Figure 1, identify the break-even level of output for EcoHeat Ltd.
2.[2]
Explain one advantage of involving employees in location decisions through democratic leadership.
3.[2]
Outline one way that poor communication between departments could impact the success of the new facility.
4.[2]
Explain one non-financial method EcoHeat Ltd. could use to improve employee motivation during the expansion process.
5.[2]
Using Figure 1, calculate the profit or loss if EcoHeat Ltd. produces and sells 7,000 units. Show all your working.
Question 7
HLPaper 2
NovaSound Ltd.
NovaSound Ltd. is a startup specializing in advanced audio technologies, including AI-driven sound engineering software. Recently, the company secured new funding and expanded operations to meet growing international demand.
As part of its expansion, NovaSound Ltd. acquired new production equipment and registered patents for its proprietary technology. It also signed a workplace agreement with employees aimed at promoting dialogue and avoiding future strikes.
Table 1. Statement of Financial Position of NovaSound Ltd. for year ended December 31st, 2024 (in $'000)
| (in $'000) | |
|---|---|
| Non-current tangible assets | 5,000 |
| Intangible assets | _______ |
| Current assets | 3,000 |
| Current liabilities | (2,500) |
| Non-current liabilities | (3,500) |
| Net assets | _______ |
Additional information:
- Equipment purchased for $1,600,000 is expected to last 10 years.
- The sound engineering software patent is valued at $400,000.
- In its first year, the new equipment produced 2,000 units out of an expected lifetime production of 20,000 units.
- Finance was sourced through a mix of equity investments and a loan facility from a major bank.
- Employees raised concerns that management announcements were often delayed or unclear.
1.[2]
Calculate the missing figures for net assets
2.[2]
Calculate the depreciation charge for the first year using units of production method
3.[2]
Suggest one advantage and one disadvantage of using an overdraft for financing short-term cash flow needs.
4.[2]
Explain one barrier to effective communication that may exist at NovaSound Ltd.
5.[2]
Identify one conflict resolution method NovaSound Ltd. has likely implemented, based on the case information.
Question 8
HLPaper 2
SVC
SVC has expanded by merging with a regional competitor, KleanCo, in Asia. After the merger, the following financial and HR data were reported:
Table 1. Financial and HR Data for SVC-KleanCo (Year 1 after merger)
| Descriptor | |
|---|---|
| Gearing ratio | 62% |
| Current ratio | 0.8 : 1 |
| Labour turnover | 18% |
| Cash inflow from operations | $850,000 |
| Cash outflow for investments | $1,400,000 |
In addition, there have been several disputes between management and employees, partly due to cultural differences between the original SVC workforce and KleanCo’s workforce.
1.[2]
Comment on whether SVC-KleanCo's liquitity position is considered healthy.
2.[2]
Explain the relationship between investment, profit, and cash flow in SVC-KleanCo’s situation.
3.[2]
Using the data provided, suggest one strategy that SVC-KleanCo could implement to improve its cash flow situation.
4.[2]
Identify one approach an employer could use to manage conflict arising during this merger.
5.[2]
Explain one likely reason for the labour turnover figure at SVC-KleanCo.
Question 9
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]
Outline how improved industrial relations could contribute to TerraNova’s long-term financial performance.
Question 10
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.