Could not load assets. Please refresh the page.

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, 2003, TZ0, Solved Past Paper

Master the 2003 IB May for Paper 2 Business Management HL with examiner tailored solutions and comments for TZ0

Question 1 [Explained]

The Everett Rogers' Innovation Adoption Model is a framework that categorizes consumers based on their willingness to adopt new products and services. This model is linked to the stages of the product life cycle, which describes the progression of a product from its inception to its decline in the market. The model identifies five types of consumers: Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. Each group has distinct characteristics and influences the adoption rate of new products. Understanding these consumer types helps businesses tailor their marketing strategies to effectively reach and engage different segments of the market.

Question 1 [a] [Explanation]

This question asks you to describe the main features of each stage of the product life cycle. The product life cycle is a concept that describes the stages a product goes through from development to decline. Each stage has its own characteristics and challenges, influencing marketing strategies and business decisions.

Question 1 [b] [Explanation]

Define the term price elasticity of demand and explain why this is likely to change as a product or service moves through its life cycle.

Question 1 [c] [Explanation]

Analyse the major differences between the marketing strategies that could be used to attract "Innovators" and the "Late Majority".

Question 2 [Explained]

Gunwale Surfboards, a company known for its professional "Slider X6" boards, is facing challenges related to the cost and quality of its products. The boards are handcrafted by local suppliers in small batches, which leads to variations in design, quality, and price. The company is considering a proposal from Johanssons, a large overseas supplier, to mass-produce the boards at a lower cost, but with potential implications for quality and brand image.

The company had an opening stock of 12 boards at the beginning of 2003, each costing $156. Throughout the first six months of the year, they made several purchases and sales, as detailed in a table. Gunwale Surfboards is concerned about the rising purchase costs and is evaluating the option of switching suppliers to Johanssons, who offer a lower price per board but require larger batch purchases.

The questions involve calculating the value of closing stock using two different valuation methods: FIFO (First In, First Out) and LIFO (Last In, First Out). Additionally, the gross profit for the six-month period needs to be calculated using these valuation methods. Finally, the advantages of branding and the evaluation of switching suppliers are to be discussed.

Question 2 [a] [Explanation]

This part of the question requires you to calculate the value of the closing stock at the end of June 2003 using two different methods of stock valuation: FIFO and LIFO. These methods determine how the cost of goods sold and ending inventory are calculated, which in turn affects the financial statements of the company.

Question 2 [a] [i] [Explanation]

In this subpart, you are asked to calculate the closing stock value using the FIFO method. FIFO, or First In, First Out, assumes that the oldest inventory items are sold first. Therefore, the closing stock will consist of the most recently purchased items.

Question 2 [a] [ii] [Explanation]

In this subpart, you are asked to calculate the closing stock value using the LIFO method. LIFO, or Last In, First Out, assumes that the most recently purchased inventory items are sold first. Therefore, the closing stock will consist of the oldest inventory items.