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, May, 2009, TZ0, Solved Past Paper
Master the 2009 IB May for Paper 2 Business Management SL with examiner tailored solutions and comments for TZ0
Question 1 [Explained]
Joomin Kim operates a beauty shop named Nails by Joomin, which specializes in manicures and pedicures. The business is currently structured as a sole proprietorship, meaning Joomin is the sole owner and is personally responsible for all aspects of the business. Given the growth and positive reputation of the business, Joomin is considering expanding by opening a second store located approximately 10 kilometers from the original shop. While a friend suggested franchising as a method to grow the business and benefit from economies of scale, Joomin prefers to maintain ownership and control by opening the new store herself. She is contemplating restructuring the business as a private limited company to facilitate this expansion.
To finance the new store, Joomin plans to use $25,000 from her personal savings and secure a $50,000 bank loan. She has projected the revenues and expenses for the first six months of operation, from January to June 2010. The initial balance, comprising her savings and the loan, is $75,000. The start-up expenses are estimated at $15,000, with monthly rent set at $2,000. The store manager's salary is $2,000 per month, with a 6% increase in the third month. Monthly loan payments are $1,000, and additional labor costs start at $1,000 for the first month, increasing by 20% each month. Initial revenue is projected at $2,000 per month, also increasing by 20% each month. Joomin was able to secure the loan due to her strong personal financial position, as she owns her home outright without a mortgage.
Question 1 [a] [Explanation]
This section requires you to define specific business terms related to the scenario. Understanding these terms is crucial for analyzing the business decisions Joomin is considering.
Question 1 [a] [i] [Explanation]
The term franchise refers to a business model where an individual or group (the franchisee) is granted the rights by a company (the franchisor) to operate a business using the franchisor's brand, products, and operational methods. This model allows the franchisee to benefit from the established brand and support of the franchisor while maintaining some degree of independence in running the business.
Question 1 [a] [ii] [Explanation]
The term economies of scale refers to the cost advantages that a business can achieve by increasing its scale of production. As a business grows, it can reduce its average costs per unit through various efficiencies in production, purchasing, and management.
Question 1 [b] [i] [Explanation]
This part of the question requires you to prepare a cash flow forecast for the first six months of the new store's operation. A cash flow forecast is a financial tool used to predict the inflows and outflows of cash over a specific period, helping businesses manage their finances and plan for future expenses.
Question 1 [b] [ii] [Explanation]
This part of the question asks you to analyze the projected cash flow forecast for the new store. Consider the implications of the forecast on the store's financial health and potential challenges that may arise.