Practice 5.4 Location 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.
BiteFresh Ltd.
BiteFresh Ltd. is a company that produces ready-made healthy meals for supermarkets and gyms. Due to growing demand, the business is planning to open a second production facility. Management is deciding between two locations: one in an urban area with higher rent but closer to suppliers and customers, and another in a rural area with lower operating costs but limited infrastructure.
The finance team has produced updated financial data to help evaluate the company’s performance and support the location decision.
Table 1: Financial data for BiteFresh Ltd.
| Item | Amount ($) |
|---|---|
| Revenue | 400,000 |
| Cost of goods sold | 220,000 |
| Expenses | 130,000 |
| Fixed costs (per month) | 12,000 |
| Selling price per unit | 10 |
| Variable cost per unit | 4 |
| Current assets | 70,000 |
| Current liabilities | 35,000 |
Calculate the net profit for the business.
Show all your working.
Calculate the net profit margin.
Show all your working.
Calculate the current ratio.
Show all your working.
Calculate the break-even output per month.
Show all your working.
Outline one factor that BiteFresh Ltd. should consider when choosing between the urban and rural location options.
FrostFuel Ltd. is a company that produces natural, energy-boosting frozen fruit smoothies. As part of its launch strategy for a new tropical flavour line, the marketing team conducted primary market research using focus groups and in-store product sampling. Based on the results, they developed a marketing plan targeting university students and young professionals in urban areas.
The operations team is choosing between two potential factory sites:
To assess the product’s financial viability, the finance team created a break-even chart based on estimated sales and production costs.
Figure 1: Break-even chart for FrostFuel Ltd.’s new tropical smoothie
Using Figure 1, identify the break-even level of output for FrostFuel Ltd.’s new smoothie.
Explain one reason why market research was important before launching the new product.
Outline one factor FrostFuel Ltd. should consider when choosing between Location A and Location B.
Explain one way that a marketing plan helps support the successful launch of a new product.
Using Figure 1, calculate the profit FrostFuel Ltd. would earn if it sells 10,000 units.
Show all your working.
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:
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
Using Figure 1, identify the break-even level of output for EcoHeat Ltd.
Explain one advantage of involving employees in location decisions through democratic leadership.
Outline one way that poor communication between departments could impact the success of the new facility.
Explain one non-financial method EcoHeat Ltd. could use to improve employee motivation during the expansion process.
Using Figure 1, calculate the profit or loss if EcoHeat Ltd. produces and sells 7,000 units.
Show all your working.
Global Solar Solutions (GSS)
With reference to business management motivation theory, describe one need that GSS satisfies for rural households requiring solar lighting.
Explain one human resource challenge and one operations challenge GSS may face if it accepts the DRD expansion contract.
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.
GlobalTech Manufacturing
GlobalTech Manufacturing produces electronic components for multinational companies. The business is considering expanding its operations by opening a new facility to meet increasing demand. Management has shortlisted two potential locations: (1) a developed country with excellent infrastructure but high labor costs, and (2) a developing country with lower operational costs but limited access to skilled labor and reliable utilities.
GlobalTech also plans to implement a new management information system (MIS) to improve coordination between its existing facilities and the new location. The MIS will streamline operations by integrating production, inventory, and logistics data in real-time.
Management must decide how to balance the operational benefits of the MIS with the strategic considerations of selecting the optimal location.
Outline two factors GlobalTech should consider when selecting the location for its new facility.
Analyze the benefits of implementing a management information system (MIS) for GlobalTech’s operations.
Explain the challenges GlobalTech may face in managing operations if it chooses the developing country as its location.
To what extent should GlobalTech prioritize implementing the MIS over its location decision to ensure operational efficiency and long-term success?
GreenBites Ltd (GB)
GreenBites Ltd (GB) is a fast-growing organic food manufacturer based in Canada. The company produces organic snacks and beverages, which it sells through major supermarket chains and online platforms. Due to increasing demand, GB is planning to open a new production facility to expand its manufacturing capacity.
GB is considering three possible locations for its new factory:
Toronto, Canada – Close to GB’s headquarters, with high labor costs but good infrastructure. Guadalajara, Mexico – Lower labor costs but more complex supply chain logistics. Rotterdam, Netherlands – Provides easy access to European markets but has higher taxes and environmental regulations. GB currently uses batch production, which allows it to produce a variety of organic snacks efficiently. However, some managers believe that switching to flow production could reduce costs and improve efficiency. Others worry that flow production would reduce product variety and increase waste.
Additionally, GB’s internal communication has become more difficult as the company grows. Employees complain about unclear instructions and slow decision-making, especially between the production and sales teams. Some managers suggest introducing a digital communication platform, while others believe regular face-to-face meetings would be more effective.
Define the term ‘batch production’.
Explain two factors GB should consider when choosing the location for its new production facility.
Explain two advantages for GB of using flow production instead of batch production.
Recommend how GB can improve internal communication to enhance operational efficiency.
Alpha Robotics – Optimizing HR and Operations for Growth
| 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% |
| Location | Labor Costs per Hour ($) | Setup Costs ($M) | Expected Efficiency Gains |
|---|---|---|---|
| India | 12 | 30 | 10% increase |
| Singapore | 22 | 50 | 18% increase |
Using an appropriate business management theory, describe an HR challenge that Alpha Robotics is facing.
Explain two operational challenges Alpha Robotics faces in improving production efficiency.
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.
FreshFields Organic Farm
FreshFields Organic Farm (FreshFields) is a family-owned business that produces and sells organic fruits and vegetables to local supermarkets and farmers' markets. The business has experienced steady growth in recent years due to increasing consumer demand for organic products.
FreshFields is considering expanding its operations by opening a new production site to meet the growing demand. However, the owners must decide between two potential locations: (1) a rural area with lower costs but farther from key markets, or (2) an urban location closer to customers but with higher rent and labor expenses.
Additionally, FreshFields is evaluating its current operations methods, which are highly labor-intensive, and exploring whether switching to a more mechanized process could improve efficiency and reduce costs. However, the family is concerned about maintaining the farm’s reputation for high-quality, hand-harvested produce.
Outline two key objectives of operations management that FreshFields should focus on as it considers expanding its production capacity.
Discuss the factors FreshFields should consider when deciding between the two potential locations for its new production site.
Suggest the advantages and disadvantages of FreshFields transitioning from a labor-intensive production method to a more mechanized process.
To what extent should FreshFields prioritize customer proximity over cost savings when selecting the location for its new production site?
3.5 Profitability and liquidity ratio analysis
3.8 Investment appraisal
5.3 Lean production and quality management (HL only)
5.4 Location
EcoBlade Ltd. produces biodegradable razors aimed at environmentally conscious consumers. The company is deciding whether to invest in a second production site closer to its largest market. Management is considering two investment projects and recently reviewed its operational performance.
Table 1 shows income and expenses for the year ended 20XX. Table 2 presents data for two expansion projects under consideration.
Table 1: Income and Expenses for EcoBlade Ltd. – Year Ended 20XX (All figures in $m)
| Revenue | 14.0 |
|---|---|
| Cost of goods sold | 9.0 |
| Operating expenses | 3.0 |
| Net profit before tax | ______ |
| Current assets | 4.0 | | Current liabilities | 2.0 |
Table 2: Investment Appraisal Data - Project A and Project B (All figures in $m)
| Project | A | B |
|---|---|---|
| Initial investment | 5.0 | 5.0 |
| Net cash inflows: Y1 | 2.0 | 1.0 |
| Net cash inflows: Y2 | 2.0 | 2.0 |
| Net cash inflows: Y3 | 1.5 | 2.5 |
| ARR (over 3 years) | ___ | ___ |
| NPV (@10% discount) | $0.7 | $0.5 |
Additional context:
EcoBlade currently uses quality control to catch faulty razors at the packaging stage, but rejects remain high.
The proposed new site would reduce delivery times by 50% and is near suppliers of plant-based plastic.
(a) Calculate:
(i) Net profit before tax
(ii) Current ratio
[2]
(b) Calculate the ARR for both Project A and Project B.
[2]
(c) Explain one advantage of using NPV instead of payback period alone for investment decision-making.
[2]
(d) Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
[2]
(e) Outline one operational reason why EcoBlade Ltd. is considering its second factory near suppliers.
[2]
Total marks: [10]
Calculate:
(i) Net profit before tax
(ii) Current ratio
Calculate the ARR for both Project A and Project B.
Explain one advantage of using NPV instead of payback period alone for investment decision-making.
Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
Outline one operational reason why EcoBlade Ltd. is considering its second factory near suppliers.
3.5 Profitability and liquidity ratio analysis
3.8 Investment appraisal
5.3 Lean production and quality management (HL only)
5.4 Location
EcoBlade Ltd. produces biodegradable razors aimed at environmentally conscious consumers. The company is deciding whether to invest in a second production site closer to its largest market. Management is considering two investment projects and recently reviewed its operational performance.
Table 1 shows income and expenses for the year ended 20XX. Table 2 presents data for two expansion projects under consideration.
Table 1: Income and Expenses for EcoBlade Ltd. – Year Ended 20XX (All figures in $m)
| Revenue | 14.0 |
|---|---|
| Cost of goods sold | 9.0 |
| Operating expenses | 3.0 |
| Net profit before tax | ______ |
| Current assets | 4.0 | | Current liabilities | 2.0 |
Table 2: Investment Appraisal Data - Project A and Project B (All figures in $m)
| Project | A | B | ||
|---|---|---|---|---|
| Initial investment | ||||
| Net cash inflows: Y1 2.0 | 1.0 | |||
| Net cash inflows: Y2 2.0 2.0 2.0 | ||||
| Net cash inflows: Y3 1.5 2.5 | ||||
| ARR (over 3 years) | ||||
| NPV (@10% discount) 0.5 |
Additional context:
EcoBlade currently uses quality control to catch faulty razors at the packaging stage, but rejects remain high.
The proposed new site would reduce delivery times by 50% and is near suppliers of plant-based plastic.
(a) Calculate: (i) Net profit before tax (ii) Current ratio
(b) Calculate the ARR for both Project A and Project B.
(c) Explain one advantage of using NPV instead of payback period alone for investment decision-making.
(d) Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
(e) Outline one operational reason why EcoBlade Ltd. is considering its second factory near suppliers.
Total marks: [10]
Calculate:
(i) Net profit before tax
(ii) Current ratio
Calculate the ARR for both Project A and Project B.
Explain one advantage of using NPV instead of payback period alone for investment decision-making.
Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
Outline one operational reason why EcoBlade Ltd. is considering its second factory near suppliers.
Practice 5.4 Location 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.
BiteFresh Ltd.
BiteFresh Ltd. is a company that produces ready-made healthy meals for supermarkets and gyms. Due to growing demand, the business is planning to open a second production facility. Management is deciding between two locations: one in an urban area with higher rent but closer to suppliers and customers, and another in a rural area with lower operating costs but limited infrastructure.
The finance team has produced updated financial data to help evaluate the company’s performance and support the location decision.
Table 1: Financial data for BiteFresh Ltd.
| Item | Amount ($) |
|---|---|
| Revenue | 400,000 |
| Cost of goods sold | 220,000 |
| Expenses | 130,000 |
| Fixed costs (per month) | 12,000 |
| Selling price per unit | 10 |
| Variable cost per unit | 4 |
| Current assets | 70,000 |
| Current liabilities | 35,000 |
Calculate the net profit for the business.
Show all your working.
Calculate the net profit margin.
Show all your working.
Calculate the current ratio.
Show all your working.
Calculate the break-even output per month.
Show all your working.
Outline one factor that BiteFresh Ltd. should consider when choosing between the urban and rural location options.
FrostFuel Ltd. is a company that produces natural, energy-boosting frozen fruit smoothies. As part of its launch strategy for a new tropical flavour line, the marketing team conducted primary market research using focus groups and in-store product sampling. Based on the results, they developed a marketing plan targeting university students and young professionals in urban areas.
The operations team is choosing between two potential factory sites:
To assess the product’s financial viability, the finance team created a break-even chart based on estimated sales and production costs.
Figure 1: Break-even chart for FrostFuel Ltd.’s new tropical smoothie
Using Figure 1, identify the break-even level of output for FrostFuel Ltd.’s new smoothie.
Explain one reason why market research was important before launching the new product.
Outline one factor FrostFuel Ltd. should consider when choosing between Location A and Location B.
Explain one way that a marketing plan helps support the successful launch of a new product.
Using Figure 1, calculate the profit FrostFuel Ltd. would earn if it sells 10,000 units.
Show all your working.
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:
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
Using Figure 1, identify the break-even level of output for EcoHeat Ltd.
Explain one advantage of involving employees in location decisions through democratic leadership.
Outline one way that poor communication between departments could impact the success of the new facility.
Explain one non-financial method EcoHeat Ltd. could use to improve employee motivation during the expansion process.
Using Figure 1, calculate the profit or loss if EcoHeat Ltd. produces and sells 7,000 units.
Show all your working.
Global Solar Solutions (GSS)
With reference to business management motivation theory, describe one need that GSS satisfies for rural households requiring solar lighting.
Explain one human resource challenge and one operations challenge GSS may face if it accepts the DRD expansion contract.
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.
GlobalTech Manufacturing
GlobalTech Manufacturing produces electronic components for multinational companies. The business is considering expanding its operations by opening a new facility to meet increasing demand. Management has shortlisted two potential locations: (1) a developed country with excellent infrastructure but high labor costs, and (2) a developing country with lower operational costs but limited access to skilled labor and reliable utilities.
GlobalTech also plans to implement a new management information system (MIS) to improve coordination between its existing facilities and the new location. The MIS will streamline operations by integrating production, inventory, and logistics data in real-time.
Management must decide how to balance the operational benefits of the MIS with the strategic considerations of selecting the optimal location.
Outline two factors GlobalTech should consider when selecting the location for its new facility.
Analyze the benefits of implementing a management information system (MIS) for GlobalTech’s operations.
Explain the challenges GlobalTech may face in managing operations if it chooses the developing country as its location.
To what extent should GlobalTech prioritize implementing the MIS over its location decision to ensure operational efficiency and long-term success?
GreenBites Ltd (GB)
GreenBites Ltd (GB) is a fast-growing organic food manufacturer based in Canada. The company produces organic snacks and beverages, which it sells through major supermarket chains and online platforms. Due to increasing demand, GB is planning to open a new production facility to expand its manufacturing capacity.
GB is considering three possible locations for its new factory:
Toronto, Canada – Close to GB’s headquarters, with high labor costs but good infrastructure. Guadalajara, Mexico – Lower labor costs but more complex supply chain logistics. Rotterdam, Netherlands – Provides easy access to European markets but has higher taxes and environmental regulations. GB currently uses batch production, which allows it to produce a variety of organic snacks efficiently. However, some managers believe that switching to flow production could reduce costs and improve efficiency. Others worry that flow production would reduce product variety and increase waste.
Additionally, GB’s internal communication has become more difficult as the company grows. Employees complain about unclear instructions and slow decision-making, especially between the production and sales teams. Some managers suggest introducing a digital communication platform, while others believe regular face-to-face meetings would be more effective.
Define the term ‘batch production’.
Explain two factors GB should consider when choosing the location for its new production facility.
Explain two advantages for GB of using flow production instead of batch production.
Recommend how GB can improve internal communication to enhance operational efficiency.
Alpha Robotics – Optimizing HR and Operations for Growth
| 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% |
| Location | Labor Costs per Hour ($) | Setup Costs ($M) | Expected Efficiency Gains |
|---|---|---|---|
| India | 12 | 30 | 10% increase |
| Singapore | 22 | 50 | 18% increase |
Using an appropriate business management theory, describe an HR challenge that Alpha Robotics is facing.
Explain two operational challenges Alpha Robotics faces in improving production efficiency.
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.
FreshFields Organic Farm
FreshFields Organic Farm (FreshFields) is a family-owned business that produces and sells organic fruits and vegetables to local supermarkets and farmers' markets. The business has experienced steady growth in recent years due to increasing consumer demand for organic products.
FreshFields is considering expanding its operations by opening a new production site to meet the growing demand. However, the owners must decide between two potential locations: (1) a rural area with lower costs but farther from key markets, or (2) an urban location closer to customers but with higher rent and labor expenses.
Additionally, FreshFields is evaluating its current operations methods, which are highly labor-intensive, and exploring whether switching to a more mechanized process could improve efficiency and reduce costs. However, the family is concerned about maintaining the farm’s reputation for high-quality, hand-harvested produce.
Outline two key objectives of operations management that FreshFields should focus on as it considers expanding its production capacity.
Discuss the factors FreshFields should consider when deciding between the two potential locations for its new production site.
Suggest the advantages and disadvantages of FreshFields transitioning from a labor-intensive production method to a more mechanized process.
To what extent should FreshFields prioritize customer proximity over cost savings when selecting the location for its new production site?
3.5 Profitability and liquidity ratio analysis
3.8 Investment appraisal
5.3 Lean production and quality management (HL only)
5.4 Location
EcoBlade Ltd. produces biodegradable razors aimed at environmentally conscious consumers. The company is deciding whether to invest in a second production site closer to its largest market. Management is considering two investment projects and recently reviewed its operational performance.
Table 1 shows income and expenses for the year ended 20XX. Table 2 presents data for two expansion projects under consideration.
Table 1: Income and Expenses for EcoBlade Ltd. – Year Ended 20XX (All figures in $m)
| Revenue | 14.0 |
|---|---|
| Cost of goods sold | 9.0 |
| Operating expenses | 3.0 |
| Net profit before tax | ______ |
| Current assets | 4.0 | | Current liabilities | 2.0 |
Table 2: Investment Appraisal Data - Project A and Project B (All figures in $m)
| Project | A | B |
|---|---|---|
| Initial investment | 5.0 | 5.0 |
| Net cash inflows: Y1 | 2.0 | 1.0 |
| Net cash inflows: Y2 | 2.0 | 2.0 |
| Net cash inflows: Y3 | 1.5 | 2.5 |
| ARR (over 3 years) | ___ | ___ |
| NPV (@10% discount) | $0.7 | $0.5 |
Additional context:
EcoBlade currently uses quality control to catch faulty razors at the packaging stage, but rejects remain high.
The proposed new site would reduce delivery times by 50% and is near suppliers of plant-based plastic.
(a) Calculate:
(i) Net profit before tax
(ii) Current ratio
[2]
(b) Calculate the ARR for both Project A and Project B.
[2]
(c) Explain one advantage of using NPV instead of payback period alone for investment decision-making.
[2]
(d) Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
[2]
(e) Outline one operational reason why EcoBlade Ltd. is considering its second factory near suppliers.
[2]
Total marks: [10]
Calculate:
(i) Net profit before tax
(ii) Current ratio
Calculate the ARR for both Project A and Project B.
Explain one advantage of using NPV instead of payback period alone for investment decision-making.
Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
Outline one operational reason why EcoBlade Ltd. is considering its second factory near suppliers.
3.5 Profitability and liquidity ratio analysis
3.8 Investment appraisal
5.3 Lean production and quality management (HL only)
5.4 Location
EcoBlade Ltd. produces biodegradable razors aimed at environmentally conscious consumers. The company is deciding whether to invest in a second production site closer to its largest market. Management is considering two investment projects and recently reviewed its operational performance.
Table 1 shows income and expenses for the year ended 20XX. Table 2 presents data for two expansion projects under consideration.
Table 1: Income and Expenses for EcoBlade Ltd. – Year Ended 20XX (All figures in $m)
| Revenue | 14.0 |
|---|---|
| Cost of goods sold | 9.0 |
| Operating expenses | 3.0 |
| Net profit before tax | ______ |
| Current assets | 4.0 | | Current liabilities | 2.0 |
Table 2: Investment Appraisal Data - Project A and Project B (All figures in $m)
| Project | A | B | ||
|---|---|---|---|---|
| Initial investment | ||||
| Net cash inflows: Y1 2.0 | 1.0 | |||
| Net cash inflows: Y2 2.0 2.0 2.0 | ||||
| Net cash inflows: Y3 1.5 2.5 | ||||
| ARR (over 3 years) | ||||
| NPV (@10% discount) 0.5 |
Additional context:
EcoBlade currently uses quality control to catch faulty razors at the packaging stage, but rejects remain high.
The proposed new site would reduce delivery times by 50% and is near suppliers of plant-based plastic.
(a) Calculate: (i) Net profit before tax (ii) Current ratio
(b) Calculate the ARR for both Project A and Project B.
(c) Explain one advantage of using NPV instead of payback period alone for investment decision-making.
(d) Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
(e) Outline one operational reason why EcoBlade Ltd. is considering its second factory near suppliers.
Total marks: [10]
Calculate:
(i) Net profit before tax
(ii) Current ratio
Calculate the ARR for both Project A and Project B.
Explain one advantage of using NPV instead of payback period alone for investment decision-making.
Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
Outline one operational reason why EcoBlade Ltd. is considering its second factory near suppliers.