5.2 Operations methods questions for IB Business Management

Eko Frames Studio

[1] Eko Frames Studio (EFS) is a private limited company in Lagos, Nigeria, founded in 2018 by Tolu Adeyemi and Chinedu Okafor. It produces animated advertisements, music videos and short films for clients such as banks, telecoms companies and musicians. Every project is designed from scratch to the client’s brief and can take from three weeks to six months.

[2] EFS employs 22 animators and hires freelancers when it is busy. Its computers run day and night to render animations, and because of frequent power cuts the studio relies on diesel generators. Before deadlines, animators often work 14-hour days; two of the most talented left in 2025 to join a studio in London.

[3] Demand for EFS’s work is growing, but many small businesses that contact EFS cannot afford its prices, which start at NGN 8 million per advertisement. Chinedu wants EFS to offer “EFS Express”: a range of 30 standard animated advertisement templates. Customers would choose a template, add their logo, colours and text, and EFS would produce the advertisements in groups of 20 each week for NGN 600 000 each.

[4] Tolu is worried. She says EFS’s reputation is built on “original work that nobody else has” and that the best animators joined EFS for creative freedom. She also fears that EFS Express would take animators away from the high-value projects.

Leivakoda

Leivakoda OÜ is a private limited company in Tallinn, Estonia, that bakes rye bread, sourdough and seeded loaves for supermarkets. It uses batch production on one production line, which runs for 16 hours a day. Each batch is 400 loaves of one type of bread. Before each batch the line must be cleaned and the mixers, dough dividers and ovens re-set for the next recipe. Table 1 shows the times involved.

Table 1: Production data for one batch at Leivakoda

The line produces six batches a day.

Bunot Earthworks Inc. (BE)

Read the resources and answer the questions that follow.

Bunot Earthworks Inc. (BE) is a social enterprise in Albay province, in the Bicol region of the Philippines. It was founded in 2010 by Ramon dela Cruz, a civil engineer, after a typhoon destroyed many coconut farms. Bunot means coconut husk. BE buys husks from coconut farmers, separates the fibre (coir) at its small factory and weaves it into nets that hold soil in place on road embankments, river banks and old mine sites. The fibre is twisted into twine by about 600 women who work at home and are paid for each kilogram of twine they produce. BE’s mission is “turning waste husks into livelihoods and safer slopes”.

Image: a steep roadside slope covered with brown coir netting, with young green plants growing through it. Rolled nets in the foreground carry a label: “Bunot Earthworks – 100 % coconut, 100 % Bicol”.

Resource 1 – News article from the *Bicol Daily Courier*

Coir twiners demand a fair share as nets go national

Demand for natural erosion-control nets is rising as the government replaces plastic netting on roads and river banks. But the women who make the twine for BE’s nets say they earn far less than factory workers. Last month 410 of them formed the Bicol Twiners’ Association (BTA), which has joined a national labour federation. Since then, twine deliveries to BE have fallen by 40 %.

Table 1: Twiners’ earnings compared with the minimum wage

PHP = Philippine pesos.

Resource 2 – Social media posts from Marites Bañares, president of the BTA

We twist coconut fibre at home between cooking, children and farm work. That is how we like it. But PHP 27 an hour is not enough, and when a typhoon comes we have nothing – no SSS*, no sick pay. BE says it is a social enterprise. Social for whom? [1/2]

Our demands: PHP 30 per kg, SSS contributions and recognition of the BTA as our voice. Until then we will deliver only half our usual twine. We do not want to strike – but we will if we must. [2/2]

* SSS: the Philippine Social Security System, which provides sickness, maternity and retirement benefits.

Resource 3 – Internal email from Ramon dela Cruz to BE’s board

From: Ramon dela Cruz, Founder and CEO

To: Board of directors

Subject: The BTA dispute and the flood-control contract

We have been offered our biggest ever contract: 200 000 m² of nets a year for two years for a flood-control project funded by an international development bank, at our normal price of PHP 80 per m². Deliveries start in five months, with penalties for late delivery.

With the go-slow, we cannot even supply our current customers. Some board members want to buy twine-spinning machines (PHP 6 million), which could produce 150 000 kg a year at about PHP 10 per kg and would reduce our need for home twiners. Others say we should accept the BTA’s demands in full. I would prefer to negotiate – perhaps with the help of the government’s conciliation service.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 4 – Letter from the development bank’s procurement office

Suppliers to bank-funded projects must show that workers throughout their supply chain, including home-based workers, are paid at least the legal minimum wage or an agreed fair equivalent, and that they are free to join workers’ organizations. Suppliers will be audited before the contract is signed.

Resource 5 – Cost and output information

Resource 6 – Survey of twiners (240 replies)

Pamukova Towels is a textile manufacturer in Denizli, Türkiye. Until now, its 40 weavers have been paid a piece rate for each towel they weave on manual looms. To compete with low-cost imports, the company is replacing the manual looms with automated looms, leased for a fixed monthly payment. Only eight technicians, on fixed salaries, will be needed to operate them.

Explain how the move to automated looms will change Pamukova Towels’ cost structure.

Hsinchu Cycle Works

Hsinchu Cycle Works (HCW) is a private limited company in Taiwan that makes aluminium city bicycles. It currently uses batch production, making 200 bicycles of one model and colour at a time. Its maximum output is 10 000 bicycles a year, and it sells all of them to European retailers at an average price of $300 (US dollars).

European retailers have asked HCW to supply 20 000 bicycles next year. HCW’s managing director, Lin Wei-ting, is considering replacing the batch process with a flow production line using robotic welding. This would need a loan and would reduce the range from 12 colours and models to 4. Table 1 shows the cost data.

Table 1: Cost and capacity data for HCW (per year)

The selling price of $300 per bicycle is the same for both methods.

Second Grain Woodworks (SGW)

Read the resources and answer the questions that follow.

Second Grain Woodworks (SGW) is a social enterprise in Detroit, Michigan, USA, founded in 2018 by Marcus Greene, who learned carpentry during nine years in prison, and Rachel Novak, a furniture designer. SGW employs 22 “returning citizens” – people recently released from prison – who often find it very hard to get jobs. They salvage timber from houses being demolished in the city and turn it into handmade tables, benches and shelves, each made to the customer’s order. Every employee learns a full set of woodworking skills. SGW is a limited liability company that reinvests its profit.

Image: a long dining table made from planks of old timber in different shades of brown, with nail holes and saw marks still visible, standing in a bright workshop. A small brass plate on the table reads: “Made by James. Wood from 4127 Elm Street, built 1924. Second Grain – every board has a second chance”.

Resource 1 – News article from the *Detroit Enterprise Weekly*

From prison cell to workbench: the furniture firm with a 9 % re-offending rate

In Michigan, around a quarter of people released from prison return within three years. Among SGW’s former and current employees, the figure is 9 %. “A skill and a paycheck change everything,” says Marcus Greene. SGW’s furniture sells to homeowners and restaurants who value its story. But with fewer old houses now being demolished, salvaged timber is getting harder to find.

Table 1: SGW production

Resource 2 – Social media posts from a customer

Our Second Grain table arrived today with a plate saying who made it and which house the wood came from. My grandmother grew up three streets away from that house. I cried. Worth every cent. [1/2]

It did take 14 weeks to arrive, though – almost cancelled. If they could speed things up they’d sell thousands. [2/2]

Resource 3 – Internal email from Rachel Novak to Marcus Greene

From: Rachel Novak, Co-founder (design and operations)

To: Marcus Greene, Co-founder

Subject: The Lakeview Hotels order

Lakeview Hotels wants 1 800 identical bedside tables over two years (900 a year) for new hotels across the Midwest, at $310 each. To make them we would need a CNC* cutting machine ($240 000) and a production line where each person does one or two tasks. The hotels want identical tables, so we would use new plywood with an oak veneer, not salvaged timber.

A third idea: use the CNC machine for mass customization – a website where customers design a table from standard modules and choose salvaged wood and finishes, made in eight hours instead of thirty.

Our workshop has about 18 000 production hours a year; custom pieces now use about 15 600.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

* CNC (computer numerical control): a machine that cuts wood automatically from a digital design.

Resource 4 – Cost and price data

Table 2: SGW cost and price data

SGW’s fixed costs are $260 000 a year. The CNC machine would add $30 000 a year in fixed costs (maintenance, power, space). Without a CNC machine, a hotel table would take about 10 labour hours.

Resource 5 – Survey of SGW employees (20 replies)

Resource 6 – Interview with Denise Carter, a Michigan parole officer

“Employers who hire returning citizens are rare. What makes SGW special is not just the job but the craft: people finish a table and see what they are capable of. Machine operators are in demand in Michigan too, so CNC skills are valuable. But if the work becomes repetitive and the mentoring disappears, I would worry about some of my clients.”