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.
Paper
Level
Question 1
SLPaper 2
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 |
1.[2]
Calculate the net profit for the business.
Show all your working.
2.[2]
Calculate the net profit margin.
Show all your working.
3.[2]
Calculate the current ratio.
Show all your working.
4.[2]
Calculate the break-even output per month.
Show all your working.
5.[2]
Outline one factor that BiteFresh Ltd. should consider when choosing between the urban and rural location options.
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
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 5
SLPaper 2
ChillBrew Ltd.
ChillBrew Ltd. produces canned cold brew coffee for retail and online sale. The company is planning to expand production by opening a second facility. Management is deciding between two potential locations:
- Location A is in a city centre, with higher rent but closer to suppliers and major distribution hubs.
- Location B is in a rural area, offering cheaper rent but with higher transportation costs and fewer skilled workers.
To support the decision, the finance team has reviewed the company’s recent performance and calculated the cost structure for a new product line.
Table 1: Financial data for ChillBrew Ltd.
| Item | Amount ($) |
|---|---|
| Revenue | 480,000 |
| Cost of goods sold | 290,000 |
| Expenses | 130,000 |
| Current assets | 75,000 |
| Current liabilities | 60,000 |
| Selling price per unit | 4.00 |
| Variable cost per unit | 1.50 |
| Fixed costs per month | 10,000 |
1.[2]
Calculate the net profit for ChillBrew Ltd. Show all your working.
2.[2]
Calculate the net profit margin. Show all your working.
3.[2]
Calculate the number of units ChillBrew Ltd. must sell to achieve a target profit of $5,000. Show all your working.
4.[2]
Calculate the current ratio. Show all your working.
5.[2]
Outline one factor ChillBrew Ltd. should consider when choosing between the two location options.
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
SLPaper 2
BerryBliss Ltd.
BerryBliss Ltd. is a growing business that produces frozen fruit snacks. The company recently decided to expand by opening a second production facility. Management is considering two potential locations: one in a rural area with lower rent, and one closer to the city with better access to transport links and suppliers.
BerryBliss currently uses a flat organizational structure, where communication flows easily and employees have wide spans of control. The company’s production manager follows a laissez-faire leadership style, allowing employees to take initiative in their daily work.
Table 1 shows cost and revenue data for one of BerryBliss’s snack products.
Table 1: Cost and revenue data per unit of BerryBliss snack
| Item | Amount ($) |
|---|---|
| Selling price per unit | 5.00 |
| Variable cost per unit | 2.00 |
| Fixed costs per month | 9,000 |
1.[2]
Identify two features of a flat organizational structure.
2.[2]
State two reasons why a business like BerryBliss might want to expand.
3.[2]
Calculate the break-even output.
Show all your working.
4.[2]
Identify one advantage and one disadvantage of a rural location for the new facility.
5.[2]
Explain one possible benefit of a laissez-faire leadership style in the context of production.
Question 8
SLPaper 2
ChillBrew Ltd.
ChillBrew Ltd. produces canned cold brew coffee for retail and online sale. The company is planning to expand production by opening a second facility. Management is deciding between two potential locations:
- Location A is in a city centre, with higher rent but closer to suppliers and major distribution hubs.
- Location B is in a rural area, offering cheaper rent but with higher transportation costs and fewer skilled workers.
To support the decision, the finance team has reviewed the company’s recent performance and calculated the cost structure for a new product line.
Table 1: Financial data for ChillBrew Ltd.
| Item | Amount ($) |
|---|---|
| Revenue | 480,000 |
| Cost of goods sold | 290,000 |
| Expenses | 130,000 |
| Current assets | 75,000 |
| Current liabilities | 60,000 |
| Selling price per unit | 4.00 |
| Variable cost per unit | 1.50 |
| Fixed costs per month | 10,000 |
1.[2]
Calculate the net profit for ChillBrew Ltd.
Show all your working.
2.[2]
Calculate the net profit margin.
Show all your working.
3.[2]
Calculate the number of units ChillBrew Ltd. must sell to achieve a target profit of $5,000.
Show all your working.
4.[2]
Calculate the current ratio.
Show all your working.
5.[2]
Outline one factor ChillBrew Ltd. should consider when choosing between the two location options.
Question 9
SLPaper 2
AquaSphere Ltd.
AquaSphere Ltd. designs and manufactures compact water purification systems for use in developing countries. The company began as a small domestic manufacturer but has recently opened two international distribution centres in Southeast Asia and South America. Its long-term business objective is to increase access to clean water globally while maintaining financial sustainability.
To support this growth, AquaSphere Ltd. obtained a low-interest development loan and used a sale and leaseback arrangement to improve liquidity. The finance team is evaluating the financial viability of producing a new portable filter model at a new facility. Two location options are being considered:
- Location A: Near a port in an urban area with high rent and labour costs
- Location B: Inland rural zone with lower costs but poor access to infrastructure
AquaSphere's expansion into multiple markets has also introduced exchange rate risks, legal complexity, and new staffing challenges. The board is reviewing how well the company’s financial structure, operations decisions, and growth strategy align with its social mission and long-term objectives.
Table 1: Financial data for the new portable filter (per month)
| Item | Amount ($) |
|---|---|
| Fixed costs | 22,000 |
| Variable cost per unit | 8.00 |
| Selling price per unit | 18.00 |
| Maximum expected output | 5,000 units |
1.[2]
Explain how AquaSphere Ltd.’s choice of financing methods might influence its financial flexibility during international expansion.
2.[2]
Suggest one operational consideration and one financial consideration AquaSphere Ltd. should evaluate when choosing between Location A and Location B.
3.[2]
Draw a fully labelled break-even chart using the data in Table 1. Include the total cost line, total revenue line, and mark the break-even point.
4.[2]
Based on the chart, calculate the margin of safety if the company sells 4,500 units per month. Show all your working.
5.[2]
Explain how AquaSphere Ltd.'s growth might create tension between its social mission and business objectives.
Question 10
HLPaper 2
EcoBlade Ltd.
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: Income and Expenses for EcoBlade Ltd. – Year Ended 2024
(All figures in $m)
| Statement of Profit and Loss (excerpt) | |
|---|---|
| Revenue | 14.0 |
| Cost of goods sold | (9.0) |
| Gross profit | 5.0 |
| Operating expenses | (3.0) |
| Net profit before tax | 2.0 |
| Statement of Financial Position (excerpt) | |
|---|---|
| Current assets | 4.0 |
| Current liabilities | 2.0 |
| Current ratio | 2:1 |
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.
1.[2]
Calculate EcoBlade Ltd.'s net profit before tax
2.[2]
Calculate the ARR for both Project A and Project B.
3.[2]
Explain one advantage of using NPV instead of payback period alone for investment decision-making.
4.[2]
Distinguish between quality control and quality assurance using EcoBlade Ltd. as an example.
5.[2]
Outline one operational reason why EcoBlade Ltd. is considering locating its second factory near suppliers.