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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, 2002, TZ0, Solved Past Paper

Master the 2002 IB May for Paper 2 Business Management HL with examiner tailored solutions and comments for TZ0

Question 1 [Explained]

Chissano Prints is a textile business that specializes in creating fashionable products from unique cotton prints and laces. The company employs 182 staff members and sells its products at premium prices due to their distinctive materials and designs. The owner, Winnie Chissano, is proactive in keeping up with customer trends by constantly seeking new prints and styles. Recently, the tax authorities have requested a change in the method of stock valuation from LIFO (Last-In-First-Out) to FIFO (First-In-First-Out), which prompted Winnie to reassess her business strategy. She is considering franchising and has also received a merger proposal from a large clothing wholesaler. Additionally, management consultants have suggested internal changes to improve competitiveness, such as reducing overheads through homeworking and flexible work practices, and introducing just-in-time stock management and improved quality controls. However, the staff's reaction to these proposed changes and the merger was not positive, indicating potential challenges in implementing new strategies.

Question 1 [a] [Explanation]

This question requires you to demonstrate how the LIFO method of stock valuation can result in lower profits and tax liabilities compared to the FIFO method. By using hypothetical figures and examples, you will illustrate the differences in profit calculations under each method, highlighting the impact on tax liabilities. This involves preparing comparative profit and loss accounts to show the effects of using LIFO and FIFO methods on net profit.

Question 1 [b] [Explanation]

This question asks you to discuss the advantages and disadvantages of two strategic options for Chissano Prints: merging with a large clothing wholesaler or franchising the business. You need to evaluate both options in terms of their potential impact on the business, considering factors such as growth, market power, control, and risk. Finally, you should recommend which option the firm should select based on your analysis.

Question 1 [c] [i] [Explanation]

This question asks you to outline three reasons why the staff at Chissano Prints might have reacted negatively to the proposed merger and the management consultant's recommendations. Consider factors such as job security, changes in work practices, and the impact on the work environment.

Question 1 [c] [ii] [Explanation]

This question requires you to explain the process of implementing the proposed internal changes at Chissano Prints and to detail methods for overcoming or minimizing resistance among staff. Consider strategies for involving employees, communicating changes, and addressing concerns to ensure a smooth transition.

Question 2 [Explained]

The question revolves around the multinational corporation, 3M, which is renowned for its innovative products across various markets. The extracts provided give insights into 3M's philosophy, emphasizing the importance of initiative, respect for individuals, and a culture that fosters innovation. The company values its employees as its most valuable asset and encourages a work environment that respects individual dignity, encourages initiative, challenges capabilities, and provides equal opportunities.

The question is divided into several parts, each focusing on different aspects of 3M's corporate culture and management strategies:

Part (a): This part asks you to identify three personal characteristics that would be essential for a person specification when recruiting a management trainee at 3M. The focus here is on traits that align with 3M's innovative and entrepreneurial culture.

Part (b): This part is divided into two sub-parts:

(i) Describe 3M's corporate culture and assess how it encourages innovation and new product development. This requires an understanding of how 3M's culture promotes creativity and risk-taking.

(ii) Analyze how 3M's corporate culture influences its organizational structure and communication systems. This involves examining how the culture affects the hierarchy, communication flow, and overall organizational dynamics.

Part (c): As the Human Resources Director at 3M, you are tasked with producing a memorandum for operational managers. This memo should include:

(i) Six practical suggestions to implement the ideals for organization and work climate as stated in Figure 1. These suggestions should be actionable and align with the company's philosophy.

(ii) How benchmarks could be established and used to measure and reward performance. This involves setting standards that align with organizational goals and evaluating performance effectively.

Question 2 [a] [Explanation]

This part of the question requires you to identify three personal characteristics that are crucial for a management trainee at 3M. These characteristics should align with the company's emphasis on innovation, initiative, and teamwork. Consider traits that would support an individual's ability to thrive in 3M's dynamic and entrepreneurial environment.