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.
01 Hours 45 Minutes
100 Marks
Calculator NOT allowed
IB BUSINESS MANAGEMENT SL, Paper 2, November, 2011, TZ0, Solved Past Paper
Master the 2011 IB November for Paper 2 Business Management SL with examiner tailored solutions and comments for TZ0
Question 1 [Explained]
Fang Kwong, residing in a mountainous village in western China, faces the challenge of transporting large quantities of firewood for kitchen ovens. XIAN Technology offers a solution with a new type of kitchen oven that uses straw and farm waste instead of firewood. Both XIAN Technology and the Chinese government aim to assist small entrepreneurs in establishing franchises to distribute these ovens. Fang is eager to seize this opportunity and has found a suitable warehouse for storage. To secure a US $10,000 small-business loan from the government by September 2012, she must prepare a cash-flow forecast. She has estimated figures for the first six months of operation starting in September 2012. Assume each month has 30 days.
Question 1 [a] [Explanation]
This section of the question involves identifying financial sources for purchasing a lorry and defining overhead costs. Fang needs to acquire a lorry to deliver kitchen ovens to customers in remote villages. She will charge a delivery fee, but it will not cover the lorry's purchase cost, necessitating additional financing.
Question 1 [a] [i] [Explanation]
Fang needs to identify two suitable sources of finance to purchase a lorry for her business operations. Consider options that would be feasible for a small entrepreneur like Fang, taking into account her business's financial situation and potential risks.
Question 1 [a] [ii] [Explanation]
Define the term 'overhead costs' in the context of Fang's business operations. Consider how these costs impact the financial management of a business and their role in budgeting and forecasting.
Question 1 [b] [Explanation]
Prepare a monthly cash-flow forecast for the first six months of Fang's business operations. Include all relevant income and expenses, ensuring that the forecast accurately reflects the financial situation and helps in planning and decision-making.
Question 1 [c] [Explanation]
Explain why XIAN Technology requires Fang to present financial accounts every three months. Consider the implications for both parties and the benefits of regular financial reporting in a franchise relationship.
Question 1 [d] [Explanation]
Analyze the impact on Fang's business if new competition leads to a decrease in her gross profit margin. Consider the potential consequences for profitability, cash flow, and overall business sustainability.
Question 2 [Explained]
Aaliyah Ashrafuzzman owns Ashrafuzzman Manufacturing (AM), a company based in Dhaka, Bangladesh, that specializes in producing wheelchairs. The company operates in two primary markets: Bangladesh and two southern European countries. In Bangladesh, AM's wheelchairs are perceived as high-priced and high-quality, while in Europe, they are seen as low-priced and low-quality. The company employs a competition-based pricing strategy, which involves setting prices based on competitors' pricing rather than production and distribution costs. This approach helps AM remain competitive in both markets.
In 2010, AM's fixed costs were US $1,500,000, and the company had a production capacity of 44,000 wheelchairs per year. The company's revenue is divided, with one-third coming from Bangladesh and two-thirds from the European markets. Recently, the European Union (EU) introduced new regulations requiring higher quality standards for wheelchairs. To comply, AM must use higher quality materials, hire quality experts, and lease new equipment, leading to increased fixed and variable costs.
Aaliyah faces two growth options: Option 1 involves improving the quality of all wheelchairs to meet EU standards, accepting lower profitability, and continuing to sell in Europe. Option 2 involves not upgrading the wheelchairs, ceasing sales in Europe, and entering the Indian market, where wheelchairs can be sold for US $125.
Question 2 [a] [i] [Explanation]
This question asks you to define the term 'competition-based pricing.' This pricing strategy involves setting the price of a product based on the prices of competing products. It focuses on the market conditions and competitors' pricing rather than the company's own production and distribution costs. This approach can help a company maintain its market position and attract customers by offering competitive prices.