Augment’s own questions for Business, written in the style of IB exams, each with its markscheme. They are not past papers. One from each topic is below to try.
Every question has a markscheme.
The paper each question is written for, so you can practice one paper at a time.
Each topic in syllabus order, with its subtopics. Lines with notes link to them. Under each topic is one question to try, its markscheme folded until you open it.
Kestrel E-Bikes
[1] Kestrel E-Bikes (Kestrel) is a private limited company based in Utrecht, the Netherlands. It was founded in 2016 by Daan Visser and Femke de Groot, two engineers who designed a lightweight electric cargo bike for parents carrying children around the city. Kestrel assembles 9 000 bikes a year in a small factory and sells them online and through 40 independent bicycle shops in the Netherlands and Belgium.
[2] Demand has grown quickly. Kestrel’s order book is full for the next seven months and some customers have cancelled their orders because of the waiting time. Kestrel buys its battery packs in small quantities from a supplier in Germany and pays a higher price per pack than its larger rivals. Daan believes that Kestrel’s average costs are too high for it to compete on price as the market becomes more crowded.
[3] Daan and Femke have set a strategic objective of selling 30 000 bikes a year within four years. They are considering two ways of growing:
[4] Option 1: build a second, larger assembly line next to the existing factory and recruit 60 more workers. This would be financed by a bank loan and retained profit, and would take about two years to complete.
[5] Option 2: acquire Velomaas, a struggling family-owned bicycle maker in Rotterdam. Velomaas has a modern factory that is only half used, an experienced workforce of 85 people and a network of 120 retailers in Germany and France. Velomaas makes traditional bicycles, has had three different managing directors in five years, and its workers fear that Kestrel would close their factory.
[6] Femke is worried that rapid growth could change Kestrel’s informal, close-knit way of working, where every employee knows the founders personally and suggests design improvements.
Define the term economies of scale.
2 marks
With reference to Kestrel, explain two internal economies of scale that Kestrel could gain by producing 30 000 bikes a year.
4 marks
Explain two diseconomies of scale that Kestrel might face as it grows (paragraphs 5 and 6).
4 marks
Discuss whether Kestrel should choose Option 1 (internal growth) or Option 2 (acquiring Velomaas) to achieve its strategic objective.
10 marks
Award [1] for a partial definition that shows some understanding, e.g. “costs fall when a business gets bigger” without reference to average/unit cost.
Award [2] for a full definition, e.g. the reduction in average (unit) costs of production that a business gains as it increases its scale of operations (output).
N.B. Do not credit answers that refer only to a fall in total costs.
Candidates are not expected to word their definition exactly as above.
Possible internal economies of scale include:
Purchasing (bulk-buying) economies: Kestrel currently buys battery packs in small quantities at a higher price than rivals; ordering for 30 000 bikes would give it bargaining power for discounts, lowering the cost per bike.
Technical economies: a larger assembly line could use more specialised and automated equipment, raising output per worker and spreading the cost of machinery over more bikes.
Financial economies: as a larger business with more assets, Kestrel may be able to borrow (for example the bank loan in Option 1) at lower interest rates.
Managerial (specialization) economies: Kestrel could employ specialist managers (for example in purchasing or quality) instead of relying on the two founders.
Marketing economies: the cost of advertising and the online store would be spread over more bikes.
Accept any other relevant internal economy of scale.
Mark as 2 + 2. For each economy: award [1] for identifying a relevant internal economy of scale and [1] for explaining how it would reduce Kestrel’s average costs, in the context of Kestrel.
Award a maximum of [2] in total for a theoretical answer with no reference to Kestrel. Do not credit external economies of scale.
Possible diseconomies of scale include:
Communication problems: with 60 or 85 more workers (or two sites in Utrecht and Rotterdam), messages pass through more layers and become slower or distorted; the founders could no longer speak to every employee directly.
Coordination and control problems: managing two factories in different cities, or a much larger single site, makes it harder to monitor quality and costs; Velomaas already has a history of unstable leadership.
Poor motivation / alienation: employees who are used to knowing the founders and suggesting design improvements may feel less valued in a larger organization; Velomaas staff already fear closure.
Bureaucracy and slower decisions: more formal procedures may slow down the design changes that made Kestrel successful.
Accept any other relevant diseconomy of scale.
Mark as 2 + 2. For each diseconomy: award [1] for identifying it and [1] for explaining how it could raise average costs or reduce efficiency at Kestrel.
Award a maximum of [2] in total for a theoretical answer with no reference to Kestrel.
Option 1 (internal/organic growth): for
Kestrel keeps full control and protects its informal, close-knit way of working that Femke values.
Lower risk: no need to integrate a struggling business with a history of management problems.
The new line is next to the existing factory, so communication and coordination diseconomies are smaller.
Financed partly by retained profit, so less debt and no payment for Velomaas.
Option 1: against
Slow: about two years to complete, while the order book is already full for seven months and customers are cancelling; competitors may take the market.
Recruiting and training 60 workers takes time; Kestrel gains no new retailers or markets.
The bank loan adds interest costs and risk.
Option 2 (external growth by acquisition): for
Fast: Velomaas’s factory is only half used, so capacity is available almost immediately to clear the backlog.
Gains 85 experienced workers and 120 retailers in Germany and France: access to new markets that helps reach 30 000 bikes.
Larger combined purchasing volumes could reduce battery costs (purchasing economies).
Velomaas is struggling, so it may be bought at a low price.
Option 2: against
Velomaas makes traditional bicycles, not e-cargo bikes: the factory and workforce may need retooling and retraining.
Management instability at Velomaas (three managing directors in five years) suggests deeper problems.
Differences in the way the two firms work, and Velomaas workers’ fear of closure, could cause resistance and lower productivity.
Two sites increase communication and control diseconomies; Daan and Femke have no experience of running an acquisition.
The price of the acquisition and how it would be financed are not given.
Possible conclusion: Option 2 offers speed and market access that Option 1 cannot match, which matters given the seven-month backlog, but carries greater risk. A candidate might recommend the acquisition only if the price is low and Kestrel keeps the Velomaas site and staff, or Option 1 if the founders value control and culture above speed. Any well-supported judgement can achieve full marks.
Limitations of the case that strong answers may note: no figures for the cost of either option, the price of Velomaas or the expected savings; no information on competitors’ plans or how long the demand growth will last.
Marks should be allocated according to the markbands below.
Additional guidance: if only one option is discussed (even if balanced), award a maximum of [5]. If only one option is discussed and the argument is one-sided, award a maximum of [3]. An answer without a conclusion is typically limited to [6].
Markbands (10-mark extended response, Papers 1 and 2)
Marks | Level descriptor |
|---|---|
0 | The response does not reach the standard described below. |
1–2 | Little understanding of what the question demands. Business management tools and theories are barely used, or are irrelevant or inaccurate. Little or no reference to the stimulus material. No arguments are made. |
3–4 | Some understanding of what the question demands. Some use of tools and theories, but mostly inaccurate or not relevant. Use of the stimulus is superficial, often no more than the name of the organisation or person. Arguments are mostly unsubstantiated. |
5–6 | Understands what the question demands but addresses it only partially. Some relevant, accurate use of tools and theories. Some relevant use of the stimulus beyond names, but it does not effectively support the argument. Arguments are substantiated but mostly one-sided. |
7–8 | Mostly addresses what the question demands. Mostly relevant, accurate use of tools and theories. The stimulus generally supports the argument, with some lapses in clarity or relevance. Arguments are substantiated and show some balance. |
9–10 | Clear focus on what the question demands. Relevant, accurate use of tools and theories. Relevant stimulus material is integrated effectively to support the argument. Arguments are substantiated and balanced, and the limitations of the case or stimulus material are explained. |
A response with no judgement or conclusion is unlikely to reach the top band of a discuss, evaluate, examine or recommend question.
Mwendo Couriers
[1] Mwendo Couriers (MC) is a private limited company that delivers parcels for online retailers across Nairobi, Kenya. It was founded in 2016 by Chebet Rotich and now employs 140 motorcycle riders, 22 warehouse staff and 9 managers. Riders are paid a piece rate of KES 85 for each parcel delivered. There is no basic wage, and riders pay for their own fuel.
[2] Operations manager Peter Otieno runs MC using methods he describes as “scientific”. Each morning, delivery routes are planned by software that calculates the fastest sequence of stops. Riders must follow the route exactly, and a GPS tracker records any stop longer than four minutes. Peter believes that “riders are motivated by money, so the more they deliver, the more they earn, and everyone wins”.
[3] In 2025 the number of parcels delivered per rider rose by 11 %, but customer complaints about damaged parcels and rude riders doubled. Two riders were injured in road accidents after riding through red lights to keep to schedule. A local newspaper published an article titled “Racing for shillings”.
[4] Chebet is considering replacing the piece rate with a time rate of KES 450 per four-hour shift, plus a monthly bonus for riders with no complaints and no damaged parcels. Peter warns that output will fall and that MC’s prices, already the lowest in Nairobi, would have to rise.
Define the term piece rate.
2 marks
Explain two features of Taylor’s scientific management that are evident at MC (paragraph 2).
4 marks
Explain two problems that MC’s piece-rate system may have caused (paragraph 3).
4 marks
Using motivation theories, discuss whether MC should replace the piece rate with a time rate and a quality bonus (paragraph 4).
10 marks
Award [1] for a partial definition that shows some understanding, e.g. “paid for what you make/deliver”.
Award [2] for a full definition, e.g. a payment system in which employees are paid a fixed amount for each unit of output they produce or complete (here, each parcel delivered), so that pay varies directly with output.
Candidates are not expected to word their definition exactly as above.
Features evident at MC include:
Payment by results / economic man: Taylor assumed workers are motivated mainly by money; Peter believes “riders are motivated by money” and pays KES 85 per parcel.
Finding “the one best way”: Taylor used time-and-motion study to find the most efficient method; MC’s software calculates the fastest route and riders must follow it exactly.
Close supervision and control: Taylor recommended close monitoring of workers; GPS trackers record any stop longer than four minutes.
Separation of planning from doing: managers (and software) plan the work; riders simply carry it out.
Accept any other relevant feature applied to MC.
Mark as 2 + 2: award [1] for identifying a feature of Taylor’s approach and [1] for explaining how it is evident at MC.
Award a maximum of [2] for a theoretical answer with no reference to MC.
Problems include:
Quality has been sacrificed for quantity: riders are paid per parcel, not for care, so complaints about damaged parcels doubled even though deliveries per rider rose 11 %.
Health and safety risks: riders rush to complete more deliveries; two were injured after riding through red lights, which may lead to legal costs and the loss of staff.
Poor customer service: rushing leads to rude behaviour, which damages MC’s relationship with the online retailers it serves.
Damage to reputation / ethics: the newspaper article “Racing for shillings” may harm MC’s image with retailers, customers and potential recruits.
Insecurity of income: with no basic wage and riders paying for fuel, pay is unpredictable, so security needs are unmet, which may raise stress and staff turnover.
Accept any other relevant problem.
Mark as 2 + 2: award [1] for identifying a problem and [1] for explaining it with reference to MC.
Arguments for the change:
Maslow: a guaranteed KES 450 per shift meets riders’ physiological and safety needs; at present income is uncertain and riders pay their own fuel, so security needs are unmet.
Herzberg: pay is a hygiene factor; a fair, stable wage may remove dissatisfaction, while a bonus linked to no complaints could act as recognition (a motivator) for good work.
The bonus rewards quality rather than speed, addressing the doubling of complaints and damaged parcels.
Safety: riders no longer have an incentive to ride through red lights; fewer accidents means fewer injuries, lost riders and legal risks.
Ethics and reputation: responding to “Racing for shillings” may protect MC’s relationships with online retailers, who may not want their brand associated with unsafe delivery.
Arguments against the change:
Taylor: if riders are motivated mainly by money, removing the link between pay and output may reduce the number of parcels delivered, as Peter warns; the 11 % productivity gain could be lost.
Labour costs per parcel may rise; MC competes on having the lowest prices in Nairobi, so its competitive advantage could be weakened if prices rise.
A time rate needs more supervision of effort; the existing GPS tracking may make riders feel controlled rather than trusted, limiting any motivational gain.
Some fast, high-earning riders may earn less and leave.
A monthly bonus may be too far in the future to influence daily behaviour; complaints may also be outside a rider’s control (for example, poor packaging by the retailer).
Possible conclusion: MC could adopt the change, perhaps with a smaller time rate plus a reduced piece rate, so that both quantity and quality are rewarded; or pilot it with some riders first. Any well-supported judgement can achieve full marks.
Limitations of the case: no data on the cost of the change, on how much riders currently earn per shift, or on how many parcels a rider delivers in four hours.
Marks should be allocated according to the markbands.
Additional guidance: a one-sided answer is unlikely to exceed [5]. If no motivation theory is used, award a maximum of [4]. An answer without a conclusion is unlikely to exceed [6].
Markbands (10-mark extended response, Papers 1 and 2)
Marks | Level descriptor |
|---|---|
0 | The response does not reach the standard described below. |
1–2 | Little understanding of what the question demands. Business management tools and theories are barely used, or are irrelevant or inaccurate. Little or no reference to the stimulus material. No arguments are made. |
3–4 | Some understanding of what the question demands. Some use of tools and theories, but mostly inaccurate or not relevant. Use of the stimulus is superficial, often no more than the name of the organisation or person. Arguments are mostly unsubstantiated. |
5–6 | Understands what the question demands but addresses it only partially. Some relevant, accurate use of tools and theories. Some relevant use of the stimulus beyond names, but it does not effectively support the argument. Arguments are substantiated but mostly one-sided. |
7–8 | Mostly addresses what the question demands. Mostly relevant, accurate use of tools and theories. The stimulus generally supports the argument, with some lapses in clarity or relevance. Arguments are substantiated and show some balance. |
9–10 | Clear focus on what the question demands. Relevant, accurate use of tools and theories. Relevant stimulus material is integrated effectively to support the argument. Arguments are substantiated and balanced, and the limitations of the case or stimulus material are explained. |
A response with no judgement or conclusion is unlikely to reach the top band of a discuss, evaluate, examine or recommend question.
Okanagan Cedarworks
[1] Okanagan Cedarworks Ltd (OCW) is a private limited company in Kelowna, Canada. It makes garden tables, chairs and loungers from western red cedar and sells them to garden centres and home-improvement retailers across western Canada. Retailers are given 30 days’ credit. Most sales are made between March and June.
[2] In 2025 OCW’s managing director, Daniel Tremblay, increased the range from 40 to 75 designs, hoping to attract younger customers. Several of the new designs sold slowly, and by December the warehouse was full of finished furniture. Two large retailers have also started to pay later than agreed.
[3] OCW’s finance manager, Aiko Sato, is worried that too much cash is tied up in stock. She has suggested two strategies: making the slow-selling designs only to order, and holding a clearance sale of the unsold designs at a 25 % discount before the next spring season.
Table 1: Extracts from OCW’s final accounts for the years ending 31 December (C$000)
2024 | 2025 | |
|---|---|---|
Sales revenue | 6 200 | 6 500 |
Cost of sales | 3 650 | 3 800 |
Opening stock | 720 | 880 |
Closing stock | 880 | 1 020 |
Debtors | 510 | 640 |
Trade creditors | 300 | 290 |
Table 2: Selected efficiency ratios for OCW, 2024
Ratio | 2024 |
|---|---|
Stock turnover | 4.56 times |
Debtor days | 30.02 days |
Creditor days | 30.00 days |
Using Table 1, calculate for 2025 OCW’s stock turnover (number of times) (show all your working).
2 marks
Using Table 1, calculate for 2025 OCW’s debtor days (show all your working).
2 marks
Using Table 1, calculate for 2025 OCW’s creditor days (show all your working).
2 marks
Using your answers to (a) and Table 2, comment on the change in OCW’s efficiency between 2024 and 2025.
4 marks
Discuss the two strategies suggested by Aiko Sato for improving OCW’s stock turnover (paragraph 3).
10 marks
= 4.00 times
Award [1] for correct working (including the average stock) and [1] for the correct answer.
If a candidate uses closing stock (C$1 020 000) instead of average stock and arrives at 3.73 times, award [1].
= 35.94 days (accept 35.9 or 36 days)
Award [1] for correct working and [1] for the correct answer. The unit (days) must be present for [2].
= 27.86 days (accept 27.9 or 28 days)
Award [1] for correct working and [1] for the correct answer. Do not penalize a missing unit again if it was penalized in (a)(ii).
Stock turnover fell from 4.56 to 4.00 times: stock is now held for about 91 days (950 ÷ 3 800 × 365) on average, compared with about 80 days in 2024. This is consistent with the wider range of 75 designs and the slow-selling new designs filling the warehouse (paragraph 2).
Debtor days rose from 30.02 to 35.94 days, above the 30 days’ credit OCW allows; this reflects the two large retailers paying late, so cash is received more slowly.
Creditor days fell from 30.00 to 27.86 days, so OCW is paying its suppliers slightly faster than before.
Taken together, OCW collects cash from customers about 8 days after it pays its suppliers (35.94 − 27.86), and cash is also tied up in stock for longer, so its working capital cycle has lengthened and its cash flow is under pressure.
However, the year-end figure of 31 December may overstate stock for a seasonal business that builds stock for the March–June peak, so the ratios should be compared with other furniture makers.
Award [1]–[2] for a comment that identifies that efficiency has worsened with limited use of the ratios.
Award [3]–[4] for a comment that uses at least two of the ratios with reasons or implications in the context of OCW. Apply OFR from (a).
Making slow-selling designs only to order:
Advantages: finished stock of slow designs falls to near zero, so the 91 days of stock holding falls and stock turnover rises; less cash is tied up and warehouse costs fall; less risk of designs going out of fashion; OCW can keep the full range of 75 designs, which supports Daniel’s aim of attracting younger customers.
Disadvantages: retailers and customers must wait for delivery, which matters in a short March–June season; production must be flexible (a move towards job or batch production), which may raise unit costs; OCW may still need stocks of cedar, so raw material stock does not disappear; reliance on suppliers delivering timber quickly, as in JIT.
A clearance sale at a 25 % discount:
Advantages: quickly turns slow-moving stock into cash before the spring season, improving liquidity; frees warehouse space for the best-selling designs; one-off and simple to carry out.
Disadvantages: lowers the gross profit margin on the sold items and may sell some below cost; may damage the brand image of premium cedar furniture and teach retailers to wait for discounts; it treats the symptom, not the cause (too many designs, poor forecasting), so stock may build up again next year; selling in winter, outside the season, may not clear much stock.
Other relevant points: the strategies can be combined (clear the existing stock once, then make slow designs to order); reducing the range back towards the best sellers; better sales forecasting; the increase in debtor days also needs attention, as faster stock turnover alone will not fix the cash position.
Possible conclusion: making to order is a longer-term solution that addresses the cause, whereas the clearance sale is a short-term fix for cash. Any well-supported judgement can gain full marks.
Limitations of the stimulus: no data on the profit margin of the slow designs, on how long customers would wait, or on how competitors’ stock turnover compares; one year of data for a seasonal business.
Marks should be allocated according to the markbands below.
Additional guidance:
If only one of the two strategies is discussed, award a maximum of [5].
If the response makes no use of the data in Tables 1 and 2 or the answers to (a), award a maximum of [4].
A response without a conclusion or judgement is usually limited to [6].
Markbands (10-mark extended response, Papers 1 and 2)
Marks | Level descriptor |
|---|---|
0 | The response does not reach the standard described below. |
1–2 | Little understanding of what the question demands. Business management tools and theories are barely used, or are irrelevant or inaccurate. Little or no reference to the stimulus material. No arguments are made. |
3–4 | Some understanding of what the question demands. Some use of tools and theories, but mostly inaccurate or not relevant. Use of the stimulus is superficial, often no more than the name of the organisation or person. Arguments are mostly unsubstantiated. |
5–6 | Understands what the question demands but addresses it only partially. Some relevant, accurate use of tools and theories. Some relevant use of the stimulus beyond names, but it does not effectively support the argument. Arguments are substantiated but mostly one-sided. |
7–8 | Mostly addresses what the question demands. Mostly relevant, accurate use of tools and theories. The stimulus generally supports the argument, with some lapses in clarity or relevance. Arguments are substantiated and show some balance. |
9–10 | Clear focus on what the question demands. Relevant, accurate use of tools and theories. Relevant stimulus material is integrated effectively to support the argument. Arguments are substantiated and balanced, and the limitations of the case or stimulus material are explained. |
A response with no judgement or conclusion is unlikely to reach the top band of a discuss, evaluate, examine or recommend question.
Kalinda Surf Wax
[1] Kalinda Surf Wax (KSW) is a partnership based in Byron Bay, Australia, owned by Jarrah Collins and Linh Dao. Since 2012 KSW has made surfboard wax from beeswax and coconut oil, sold in recyclable cardboard tins through 60 independent surf shops along the east coast of Australia. KSW’s brand is well known among local surfers, and its wax has won two industry awards for grip in warm water.
[2] For the past three years KSW’s sales volume has hardly changed, at about 180 000 tins a year. Two larger competitors have launched cheaper waxes, and surf-shop owners report that most surfers in the region already buy KSW or a rival brand. Profit is still healthy, but Jarrah worries that the product is close to the end of its maturity stage.
[3] Jarrah wants to extend the product life cycle by selling KSW wax in Indonesia and Portugal, two growing surf markets. This would mean finding distributors abroad, translating the packaging and paying for export shipping. Linh prefers to modify the product: she has developed a “cold-water” formula and a wax for stand-up paddle boards, which could be sold through the existing surf shops. Her version would need AUD 45 000 of new equipment and some retraining of KSW’s six production workers.
[4] The partners have AUD 70 000 of retained profit available and do not want to borrow. Both agree that KSW must not lose its reputation for high quality and natural ingredients.
Define the term product life cycle.
2 marks
Explain two pieces of evidence that KSW’s surf wax is in the maturity stage of its product life cycle (paragraph 2).
4 marks
Discuss whether KSW should extend the life of its product by entering new markets abroad (Jarrah’s option) or by modifying the product (Linh’s option).
10 marks
Award [1] for a partial definition that shows some understanding, e.g. “the stages a product goes through” with no further detail.
Award [2] for a full definition, e.g. the stages a product passes through from its development and launch, through growth and maturity, to its decline, typically shown by its sales over time.
Award [0] for a tautological answer that only repeats the term.
Candidates are not expected to word their definition exactly as above.
Evidence may include:
Sales have levelled off: sales volume has been roughly constant at about 180 000 tins a year for three years, so growth has stopped.
Market saturation: surf-shop owners report that most surfers already buy KSW or a rival, so there are few new customers left to win.
Increased competition: two larger rivals have entered with cheaper waxes, typical of a mature market where firms compete on price.
Healthy profit: profit remains high because development costs have been recovered, which is typical of maturity (the product is a likely cash cow).
Accept any other relevant evidence from the case.
Mark as 2 + 2. For each piece of evidence, award [1] for identifying it from the case and [1] for explaining why it indicates maturity.
Award a maximum of [2] for a description of the maturity stage that makes no use of KSW’s case.
Jarrah’s option: new markets in Indonesia and Portugal
For: Indonesia and Portugal are growing surf markets, so KSW could move into a market where the product is at an earlier stage of its life cycle and sales can grow again; the existing product, process and brand are used, so no new production equipment is needed; geographical diversification spreads risk away from the saturated east-coast market.
Against: KSW has no experience abroad and must find reliable distributors; translating packaging and export shipping raise costs and may absorb much of the AUD 70 000; it is a small partnership, so managing at a distance is difficult; established local and global brands may compete strongly; the award-winning warm-water grip suits Indonesia but may suit Portugal’s colder water less well.
Linh’s option: product modification (cold-water and paddle-board waxes)
For: it uses KSW’s existing distribution through 60 surf shops and its strong local brand (brand extension), so launch costs are lower; the AUD 45 000 is within the AUD 70 000 available, so no borrowing is needed; it adds new reasons for existing customers to buy (winter surfing, paddle boarding) and widens the product portfolio.
Against: it still targets the same saturated regional market, and new variants may cannibalize sales of the original wax; the equipment and retraining of six workers carry risk and could disrupt production; demand for cold-water wax in a warm-water region may be limited; quality must be maintained to protect the brand.
Other points: Ansoff (market development vs product development, both riskier than penetration); the two strategies are not mutually exclusive in the longer term; both must protect the reputation for natural ingredients.
Possible conclusion: for example, Linh’s option may be preferred because it is cheaper, lower-risk and within KSW’s funds; or Jarrah’s option may be preferred because only new markets offer real growth. Any well-supported judgement can earn full marks.
Limitations that strong answers may note: there is no market research on demand in Indonesia or Portugal or for the new formulas; the costs of exporting are not given; no data on competitors’ prices or KSW’s margins.
Marks should be allocated according to the markbands below.
Additional guidance:
If only one option is discussed, even with balance, award a maximum of [5]; one option, one-sided, a maximum of [3].
A response that makes no use of the data or case details the question refers to cannot be awarded more than [4].
A response with no conclusion or judgement will typically not be awarded more than [6].
Markbands (10-mark extended response, Papers 1 and 2)
Marks | Level descriptor |
|---|---|
0 | The response does not reach the standard described below. |
1–2 | Little understanding of what the question demands. Business management tools and theories are barely used, or are irrelevant or inaccurate. Little or no reference to the stimulus material. No arguments are made. |
3–4 | Some understanding of what the question demands. Some use of tools and theories, but mostly inaccurate or not relevant. Use of the stimulus is superficial, often no more than the name of the organisation or person. Arguments are mostly unsubstantiated. |
5–6 | Understands what the question demands but addresses it only partially. Some relevant, accurate use of tools and theories. Some relevant use of the stimulus beyond names, but it does not effectively support the argument. Arguments are substantiated but mostly one-sided. |
7–8 | Mostly addresses what the question demands. Mostly relevant, accurate use of tools and theories. The stimulus generally supports the argument, with some lapses in clarity or relevance. Arguments are substantiated and show some balance. |
9–10 | Clear focus on what the question demands. Relevant, accurate use of tools and theories. Relevant stimulus material is integrated effectively to support the argument. Arguments are substantiated and balanced, and the limitations of the case or stimulus material are explained. |
A response with no judgement or conclusion is unlikely to reach the top band of a discuss, evaluate, examine or recommend question.
Vembanad Hospital
[1] Vembanad Hospital (Vembanad) is a privately held company that runs a 180-bed hospital in Kochi, India. It was founded in 2011 by two doctors, Anjali Menon and Ravi Pillai. Vembanad’s mission is “to give every patient the care we would want for our own families”. It offers general surgery, maternity care and a 24-hour emergency department, and employs 410 staff, including 95 nurses.
[2] Vembanad’s operations manager, Suresh Nair, is responsible for turning the hospital’s resources (staff time, medicines, equipment, beds and energy) into patient care. In 2025 patient numbers rose by 14 %, but the average waiting time in the emergency department rose from 40 minutes to 95 minutes. Online reviews began to complain about delays, and two senior nurses resigned, saying that their workload had become “unsafe”.
[3] Suresh believes that part of the problem lies in the hospital’s support services. The laundry and the kitchen are run in-house by 48 employees and use old equipment that consumes large amounts of electricity and water. Suresh has received an offer from CleanServe, a large national company, to take over both functions. CleanServe would cut Vembanad’s annual laundry and catering costs by 22 %, and the laundry building could be turned into a new outpatient clinic.
[4] Anjali is unsure. Several of the laundry and kitchen staff have worked at Vembanad since it opened, and patients often praise the hospital’s food, which is cooked to meet each patient’s dietary needs. CleanServe would deliver meals prepared in a central kitchen 60 km away. Vembanad’s finance director points out that the money saved could pay for 12 additional nurses.
Define the term operations management.
2 marks
Explain two ways in which operations management at Vembanad is linked to other functions of the business (paragraphs 2 and 4).
4 marks
Explain one economic and one social sustainability issue in Vembanad’s current operations.
4 marks
Discuss whether Vembanad should outsource its laundry and catering services to CleanServe.
10 marks
Award [1] for a partial definition that shows some understanding, e.g. “managing production” or “making the products a business sells”.
Award [2] for a full definition, e.g. the planning, organizing and controlling of the processes that transform inputs (resources such as labour, materials, equipment and energy) into outputs (goods and services) efficiently and to the quality customers require.
Candidates are not expected to word their definition exactly as above.
Possible links include:
Human resources: longer waiting times and higher patient numbers have increased nurses’ workload; two senior nurses resigned, so operations decisions (staffing levels, patient flow) affect recruitment, retention and motivation.
Marketing: delays have led to negative online reviews, which damage Vembanad’s reputation and its ability to attract patients; the quality of food is praised by patients and is part of the service offered.
Finance: the cost of running the in-house laundry and kitchen affects Vembanad’s costs and profit; the 22 % saving could fund 12 additional nurses.
Strategy/mission: operations must deliver care that matches the mission “the care we would want for our own families”.
Accept any other relevant link explained in the context of Vembanad.
Mark as 2 + 2. For each link, award [1] for identifying a relevant function linked to operations and [1] for explaining the link with reference to Vembanad.
Award a maximum of [2] for a theoretical answer with no reference to Vembanad.
Economic sustainability issues may include:
The laundry and kitchen use old equipment with high electricity and water consumption, which raises costs and reduces profit that could fund patient care.
Long waiting times and negative reviews could reduce patient numbers and revenue in the long run.
The resignation of senior nurses increases recruitment and training costs.
Social sustainability issues may include:
Nurses describe their workload as “unsafe”, which threatens staff well-being and patient safety.
Waiting times of 95 minutes in the emergency department may harm patients.
The jobs of 48 long-serving laundry and kitchen employees are at risk if the work is outsourced.
Accept any other relevant issue. Accept environmental points only if they are clearly linked to an economic or social effect.
Mark as 2 + 2. For each issue, award [1] for identifying a relevant issue and [1] for explaining it in the context of Vembanad.
Arguments for outsourcing:
A 22 % saving on laundry and catering costs could pay for 12 additional nurses, reducing workload and waiting times (up from 40 to 95 minutes) and improving patient care, the core of Vembanad’s mission.
The laundry building could become an outpatient clinic, a new revenue stream and extra capacity as patient numbers rise by 14 %.
CleanServe is a specialist and may have modern, more efficient equipment, cutting energy and water use (environmental and economic sustainability).
Managers such as Suresh could focus on core medical operations rather than support services.
Arguments against outsourcing:
Loss of control over quality: meals cooked 60 km away may not meet each patient’s dietary needs, and patients currently praise the food; this may harm reputation.
Job losses or transfer of 48 long-serving employees could damage morale among the remaining staff, who are already under pressure after nurse resignations; social sustainability and Vembanad’s caring image may suffer.
Dependency on one supplier: any failure by CleanServe (late deliveries, hygiene problems) would directly affect patient safety.
Transport of meals and laundry over 60 km adds emissions and delays.
The real cause of the waiting times may be medical staffing and patient flow, so outsourcing support services may not solve the main problem.
Possible conclusion: candidates may recommend outsourcing only the laundry (less customer-facing) while keeping catering in-house, or outsourcing with strict service-level agreements and a trial period. Any well-supported judgement can gain full marks.
Limitations of the case that strong answers may note: the 22 % saving is CleanServe’s estimate; no information on the cost of converting the laundry building, on the contract length, or on whether the extra nurses can be recruited.
Marks should be allocated according to the markbands below.
Additional guidance:
If the candidate considers only the advantages or only the disadvantages of outsourcing, award a maximum of [5].
If there is no reference to the case (e.g. the 22 % saving, the 12 nurses, meals cooked 60 km away, 48 employees), award a maximum of [4].
A response without a conclusion is unlikely to gain more than [6].
Markbands (10-mark extended response, Papers 1 and 2)
Marks | Level descriptor |
|---|---|
0 | The response does not reach the standard described below. |
1–2 | Little understanding of what the question demands. Business management tools and theories are barely used, or are irrelevant or inaccurate. Little or no reference to the stimulus material. No arguments are made. |
3–4 | Some understanding of what the question demands. Some use of tools and theories, but mostly inaccurate or not relevant. Use of the stimulus is superficial, often no more than the name of the organisation or person. Arguments are mostly unsubstantiated. |
5–6 | Understands what the question demands but addresses it only partially. Some relevant, accurate use of tools and theories. Some relevant use of the stimulus beyond names, but it does not effectively support the argument. Arguments are substantiated but mostly one-sided. |
7–8 | Mostly addresses what the question demands. Mostly relevant, accurate use of tools and theories. The stimulus generally supports the argument, with some lapses in clarity or relevance. Arguments are substantiated and show some balance. |
9–10 | Clear focus on what the question demands. Relevant, accurate use of tools and theories. Relevant stimulus material is integrated effectively to support the argument. Arguments are substantiated and balanced, and the limitations of the case or stimulus material are explained. |
A response with no judgement or conclusion is unlikely to reach the top band of a discuss, evaluate, examine or recommend question.
Sentier Vertical Inc. (SV)
[1] SV is a private limited company that runs an indoor climbing gym in Montréal, Canada. It was founded in 2017 by Émilie Gagnon, a former competition climber, and her business partner Karim Haddad. SV has 2 100 members, who pay a monthly fee, and also sells day passes and climbing courses for beginners.
[2] Climbing has become much more popular since it was included in the Olympic Games, and SV’s gym is full at peak times on weekday evenings. However, two new climbing gyms have opened in Montréal in the last two years, and SV’s membership has stopped growing. Its vision statement is “to make climbing part of everyone’s life”.
[3] Émilie and Karim have identified four possible growth strategies:
offering a family membership and a loyalty scheme with discounts for members who bring friends
opening a second gym in Ottawa, 200 km away, which has only one climbing gym
adding yoga, strength and physiotherapy classes for existing members in unused morning hours
launching a travel business that organizes outdoor climbing holidays in Europe and Asia
[4] Karim prefers the second gym, which would cost CAD 2.8 million and require a bank loan. Émilie prefers the new classes, which would cost CAD 180 000, because she does not want to “lose the community feeling” that members value. Several experienced instructors have said they would like to teach yoga and strength classes.
Define the term market penetration.
2 marks
Construct an Ansoff matrix for SV showing the four growth strategies in paragraph 3.
4 marks
Explain why the climbing holidays strategy would carry more risk for SV than the family membership and loyalty scheme.
4 marks
Discuss whether SV should open a second gym in Ottawa or add the new classes in Montréal.
10 marks
Award [1] for a partial definition that shows some understanding, e.g. selling more of the same product.
Award [2] for a full definition, e.g. a growth strategy in which a business aims to increase sales of its existing products in its existing markets, for example by attracting competitors’ customers or persuading current customers to buy more often.
Award [0] for a tautology such as “penetrating the market”.
Candidates are not expected to word their definition exactly as above.
Existing products | New products | |
|---|---|---|
Existing markets | Market penetration: family membership and loyalty scheme for current Montréal customers | Product development: yoga, strength and physiotherapy classes for existing members |
New markets | Market development: second gym in Ottawa | Diversification: outdoor climbing holidays in Europe and Asia |
Award [1] for a correctly labelled matrix (products: existing/new; markets: existing/new) and [1] for each two options correctly placed, up to [3]; award the fourth mark for a fully correct, labelled matrix with all four strategies named and placed.
Alternatively: award [1] for correct axes and [1] for each of three correctly placed options, up to [4].
The climbing holidays are diversification: a new product (travel) in a new market (holidaymakers, possibly outside Montréal). SV has no experience of travel, safety abroad, licensing or tour operations, and no knowledge of these customers, so the chances of misjudging demand and costs are high. The family membership and loyalty scheme is market penetration: SV sells its existing product to the existing Montréal market, which it knows well, using existing staff and facilities, so the risk is lowest.
Award [1] for identifying each strategy correctly in Ansoff terms and up to [2] for explaining the difference in risk with reference to SV’s knowledge, experience or resources. Award a maximum of [2] for an answer with no reference to SV.
Second gym in Ottawa (market development):
Ottawa has only one climbing gym, so demand may be strong; climbing is growing in popularity since the Olympics.
It removes the capacity constraint (the Montréal gym is full at peak times) and could double membership.
Economies of scale in purchasing and marketing; spreads risk away from a Montréal market with two new rivals.
But CAD 2.8 million and a bank loan create high financial risk and interest costs; managing a site 200 km away; risk to the community culture Émilie values; SV lacks knowledge of Ottawa customers.
New classes (product development):
Low cost (CAD 180 000) and uses unused morning hours, so capacity utilization improves without new premises.
Adds value for existing members, increasing loyalty against the two new competitors; fits the vision “part of everyone’s life”.
Instructors want to teach these classes: motivation (e.g. Herzberg’s responsibility and growth).
But limited growth potential: morning demand may be low; does not solve peak-time crowding; yoga studios and gyms are strong competitors.
Possible conclusion: the classes are lower risk and could be started first, building cash and evidence before a later decision on Ottawa. Any well-substantiated judgement can reach the top band.
Limitations: no data on forecast revenue, Ottawa demand or SV’s current profits and cash.
Additional guidance: award a maximum of [5] if only one option is discussed. To reach [7]–[8], candidates must use Ansoff terminology (market development, product development) accurately. Without a conclusion, the mark is usually no more than [6].
Marks should be allocated according to the markbands below.
Markbands (10-mark extended response, Papers 1 and 2)
Marks | Level descriptor |
|---|---|
0 | The response does not reach the standard described below. |
1–2 | Little understanding of what the question demands. Business management tools and theories are barely used, or are irrelevant or inaccurate. Little or no reference to the stimulus material. No arguments are made. |
3–4 | Some understanding of what the question demands. Some use of tools and theories, but mostly inaccurate or not relevant. Use of the stimulus is superficial, often no more than the name of the organisation or person. Arguments are mostly unsubstantiated. |
5–6 | Understands what the question demands but addresses it only partially. Some relevant, accurate use of tools and theories. Some relevant use of the stimulus beyond names, but it does not effectively support the argument. Arguments are substantiated but mostly one-sided. |
7–8 | Mostly addresses what the question demands. Mostly relevant, accurate use of tools and theories. The stimulus generally supports the argument, with some lapses in clarity or relevance. Arguments are substantiated and show some balance. |
9–10 | Clear focus on what the question demands. Relevant, accurate use of tools and theories. Relevant stimulus material is integrated effectively to support the argument. Arguments are substantiated and balanced, and the limitations of the case or stimulus material are explained. |
A response with no judgement or conclusion is unlikely to reach the top band of a discuss, evaluate, examine or recommend question.
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