Unit 1
Which type of business organization has unlimited liability and is owned by one individual?
Sole trader
Which management function involves setting goals and deciding how to achieve them?
What are the 4 elements of the marketing mix (the 4Ps)?
A: Product, Price, Place, Promotion
Which production method is used to create custom, one-off products (e.g., a bespoke wedding dress)?
Job production
Which type of finance comes from a business’s own profits, not from external lenders?
Internal source of finance
Name two external stakeholders that would be directly affected by a factory closing in a small town.
Local suppliers (lost revenue) and the local government (lost tax revenue/rising unemployment)
Which leadership style gives employees full autonomy to make decisions, with minimal manager intervention?
Laissez-faire
Define "unique selling proposition (USP)" and give one example.
A feature that makes a product stand out from competitors; e.g., "waterproof smartphone"
State the exact IB SL formula for capacity utilization and define what it measures for a service business
Formula: (Actual output / Maximum possible output) × 100
Measures: % of a business’s maximum operational capacity being used
Which financial statement shows a business’s revenues, costs, and profits over a period of time?
Income statement (profit and loss account)
Explain one conflict that could arise between a company’s shareholders and its employees regarding dividend payments.
Shareholders may want higher dividends (short-term profit), while employees may want higher wages/reinvestment (long-term growth)
According to Herzberg’s Two-Factor Theory, what are the two categories of factors that affect employee motivation?
Hygiene factors (e.g., salary, working conditions) and motivator factors (e.g., recognition, achievement)
Name 2 pricing strategies suitable for a new, innovative tech product.
Price skimming, penetration pricing
Distinguish mass customization from standard mass production, using one real‑world example for each
Mass customization: Flexible flow production to make personalized standard goods (e.g., Nike By You custom shoes)
Mass production: Standardized, identical continuous output (e.g., Coca‑Cola bottles)
Calculate the gross profit margin if a business has sales revenue of $80,000 and cost of goods sold of $56,000.
(Gross profit = $24,000) → ($24,000 ÷ $80,000) × 100 = 30%
Evaluate the ethical implications of a multinational corporation (MNC) using child labor in a low-income country to reduce production costs.
Ethical issues: Exploitation of vulnerable workers, violation of human rights; Counterarguments: Provides income to families, but long-term harm to children’s education/health
Analyze why a democratic leadership style might slow down decision-making in a fast-paced tech startup.
Requires consensus-building, which takes time; startups need rapid pivots, so autocratic or paternalistic styles may be more effective
Explain how social media can be used as a promotional tool for a local café.
E.g., Running Instagram Reels of menu items, offering discount codes for followers, and engaging with customer reviews
Analyse two key operational trade‑offs a bakery faces when switching from batch production to mass customization
1) Higher unit costs (customization = more labour/setup time) vs. higher selling prices (premium for personalization)
2) Longer lead times vs. better customer loyalty/unique selling point (USP)
A business has current assets of $45,000 and current liabilities of $60,000. Calculate its current ratio and explain what this indicates about liquidity.
Current ratio = 0.75 → Indicates poor liquidity (current assets < current liabilities; high risk of defaulting on short-term debts)
Evaluate how a change in government policy (e.g., minimum wage increase) might affect a small restaurant’s stakeholders.
Employees gain higher income (positive); Owners face higher costs (negative); Customers may face price rises (negative)
Evaluate the suitability of Maslow’s hierarchy of needs for motivating employees in a low-wage factory in a developing country.
Limited suitability: Employees prioritize physiological/safety needs (basic wages, job security) over self-actualization; Herzberg’s hygiene factors may be more relevant
Evaluate the impact of lean production (including kaizen and 5S) on a manufacturing business’s efficiency and employee morale.
Pros: Reduces waste, improves efficiency; Cons: May increase worker stress from continuous improvement demands
Evaluate whether a labour-intensive batch production factory should implement 5S lean methodology with no extra training budge
Short-term: poor staff adherence, workflow disruption; Long-term: waste reduction possible only if basic training exists—unfeasible without budget in labour-heavy batch settings
A business has a net profit margin of 12% and sales revenue of $250,000. Calculate its net profit, then explain how a 10% increase in rent would affect this margin.
Net profit = $30,000 → Rent increase raises costs, reducing net profit → Margin falls below 12% (lower profitability)