These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.
02 Hours 30 Minutes
100 Marks
Calculator NOT allowed
IB BUSINESS MANAGEMENT HL, Paper 2, May, 2007, TZ0, Solved Past Paper
Master the 2007 IB May for Paper 2 Business Management HL with examiner tailored solutions and comments for TZ0
Question 1 [Explained]
The Buenos Aires Stock Exchange has introduced a new market specifically designed for small and medium-sized enterprises. Petroquimica Argentina (S A) is the first company to list its shares on this market, following a promotional campaign known as a "road show" aimed at potential investors. In the near future, four additional companies plan to offer their shares on this market.
The process of making a company public, known as floating, involves several steps: signing a letter of intent, creating a prospectus for potential investors, and presenting balance sheets along with a Memorandum of Association for approval by the Stock Exchange authorities. Once the deadline for the share issue is reached, the selling price of the shares is determined, and the initial public offering (IPO) is made, allowing shares to be traded on the stock exchange.
Petroquimica Argentina (S A) is primarily engaged in producing and developing additives for the food industry. The company generates an annual sales revenue of US $6 million, controlling 75% of the Argentine market and over 55% of the Brazilian market for additives. It competes with multinational corporations like Basf and Hoechst in a global market for food inputs valued at US $1100 million annually.
Patlis, the CEO of the company, stated that to remain competitive, they need to raise funds for growth. However, high-interest rates make traditional financing options less viable, prompting the decision to float 15% of the company's value. The funds raised will be invested in quality control and research and development.
Question 1 [a] [Explanation]
(i) This part of the question asks you to identify two different methods that can be used to measure the size of a firm. This could involve various metrics such as financial, operational, or market-based measures.
(ii) This part requires you to explain the reasons why Petroquimica Argentina (S A) needs to grow. Consider factors such as market competition, financial health, and strategic positioning in your explanation.
Question 1 [b] [Explanation]
This question asks you to examine both the advantages and disadvantages of Petroquimica Argentina SA raising finance by floating shares on the Stock Exchange. Consider factors such as financial implications, control, and market perception in your analysis.
Question 1 [c] [Explanation]
This question requires you to evaluate the options available to Petroquimica Argentina SA: issuing more shares to finance growth or accepting a takeover bid from Basf. Consider the implications of each option for the company and its shareholders, and provide a well-supported recommendation.