5.7 Crisis management and contingency planning questions for IB Business Management

Ralún Alimentos SA (RA)

[1] RA is a public limited company in Santiago, Chile, that makes chilled ready meals and empanadas for supermarket chains. It employs 310 people and buys most of its chicken from a single supplier in the Maule region.

[2] In March 2026 a supermarket’s own laboratory found listeria* in a batch of RA’s chicken empanadas. RA’s chief executive, Patricio Lagos, at first told journalists that “the problem cannot have come from our factory”. RA needed four days to work out which batches had used the contaminated chicken, because its batch records were kept on paper. During those four days, two supermarket chains learned of the recall from the news before RA contacted them, and RA’s website still advertised the empanadas. RA finally recalled 41 000 packs.

[3] RA’s monthly sales revenue is shown in Table 1 and the direct costs of the crisis in Table 2.

*listeria: bacteria that can cause serious food poisoning

Table 1: RA’s monthly sales revenue, January to June 2026 (CLP million)

Table 2: Direct costs of the crisis (CLP million)

[4] In July 2026 RA’s head of operations, Javiera Soto, proposed a contingency plan (Table 3). Patricio is unsure. He points out that RA had operated for 22 years without a recall, and that the board wants RA’s profit margin, which fell from 9% in 2025 to 4% in the first half of 2026, restored quickly.

Table 3: Javiera’s proposed contingency plan

Neblina Norte (NN)

Read the resources and answer the questions that follow.

Neblina Norte (NN) is a community-owned social enterprise in a fishing village on the coast of the Atacama Desert, Antofagasta region, Chile. The village has no piped water and almost no rain, and until 2018 its 85 homes depended on expensive water delivered by truck. NN collects water from the thick sea fog (camanchaca) that rolls in from the Pacific: large mesh nets on the hills catch fog droplets, which drip into pipes and tanks and are filtered for drinking. NN sells the water to households at a price that covers its costs. It is run by Carolina Rojas, a local engineer, and owned by the village’s neighbourhood association.

Image: tall rectangles of black mesh net stretched between poles on a bare brown hillside, with a bank of white fog rolling in from the ocean below. A label on a blue water tank reads “Neblina Norte – agua de la niebla”.

Resource 1 – News article from *Diario Costa Norte*

The village that drinks the clouds

Fog-catching has given NN’s village a cheaper, more reliable water supply than trucks. But scientists warn that the amount of fog varies from year to year: during El Niño years, warmer sea water means less fog. “In 2023 our nets collected about 30 % less water than normal,” says Carolina Rojas.

Table 1: Water in the village

CLP = Chilean pesos. USD 1 ≈ CLP 950. 1 m³ = 1 000 litres.

Resource 2 – Social media posts from Don Eliseo, a fisherman in the village

Forty years I paid the water truck – and some weeks it never came. Now my grandchildren drink fog water that costs a quarter of the price. Proud of our village! [1/2]

But I hear NN wants to make BEER with our water? In a dry year will the brewery get water before the families on the hill who still have no connection? Water is for people first. [2/2]

Resource 3 – Internal email from Carolina Rojas to the neighbourhood association’s board

From: Carolina Rojas, Manager

To: Board of the neighbourhood association

Subject: Investment options for 2027

NN makes only a small surplus, and the nets and tanks will need replacing in about five years. We have three proposals:

A. Fog-net expansion (CLP 60 million): 30 new nets, adding about 3 000 litres a day, and pipes to connect the 40 homes on the upper hill that still buy trucked water. They would use about 2 800 litres a day and pay the same price as other homes.

B. Our own brewery (CLP 160 million): a small brewery making “fog beer” for restaurants and tourists in Antofagasta and Santiago. It would use about 2 500 litres of water a day. Profits would fund water projects.

C. Sell surplus water to Cervecería Altiplano, a Santiago craft brewery, under a three-year contract. No investment is needed.

A regional development fund would lend up to CLP 120 million at 6 % a year.

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

Resource 4 – Financial forecasts prepared by NN’s accountant (CLP million)

Residual values at the end of year 5: fog nets and tanks CLP 20 million; brewery equipment CLP 10 million.

Resource 5 – Survey of village households (78 replies)

Resource 6 – Extract from a university study of fog-catching in northern Chile

“Fog water yields in the region varied between 70 % and 115 % of the long-term average over the past decade, with the lowest yields in El Niño years. Communities that commit fog water to commercial users should agree in advance who has priority in dry years. Well-maintained nets last 8–10 years.”

Kadriorg Pay AS (KP)

[1] KP is a private limited company in Tallinn, Estonia, that processes card payments for about 3 000 small online shops in the Baltic states. KP earns a fee on every payment. If KP’s systems stop, its clients cannot take payments at all, and many would move to a rival processor within days.

[2] In 2025 a rival Latvian processor was hit by a ransomware attack*. Its systems were down for ten days, and it lost a quarter of its clients. KP’s chief technology officer, Kristjan Mägi, estimates that the probability of KP suffering a serious attack in any one year is 0.15. He has prepared the information in Table 1.

*ransomware attack: criminals encrypt a firm’s data and systems and demand payment to unlock them

Table 1: KP’s contingency options for a serious cyber-attack

Wai Bula Refill (WBR)

Read the resources and answer the questions that follow.

Wai Bula Refill (WBR) is a social enterprise in Nadi, Fiji, founded in 2014 by Losana Tuilau. Wai means water in Fijian. WBR installs stations that sell filtered drinking water by the litre at resorts, ferry terminals and markets, so that tourists and local people can refill bottles instead of buying plastic ones. Each station is run by a woman from a nearby village, who earns a commission on sales. WBR uses part of its profit to repair and build water systems in villages. It has 34 stations, mainly on the main island, Viti Levu.

Image: a turquoise refill station shaped like a wave, standing under palm trees beside a resort pool. A tourist fills a steel bottle while a Fijian woman in a floral dress smiles behind the counter. Sign: “Wai Bula – refill, not landfill. FJD 1 per litre”.

Resource 1 – News article from *Fiji Business Today*

Plastic ban could make refill a big business

The government has announced plans to ban the sale of single-use plastic water bottles at hotels and resorts from 2027, although the date may change after objections from bottlers. Tourism, which collapsed during the COVID-19 pandemic, has fully recovered. The tourism authority expects arrivals to reach 1.15 million by 2028, but airline analysts warn that limited flight capacity could keep numbers close to 1 million.

Table 1: Visitor arrivals and WBR sales

FJD = Fiji dollars.

Resource 2 – Social media posts from a visitor from New Zealand

Loved Wai Bula! Filled my bottle at the resort, the ferry and the market for a dollar a litre. Mere at the resort station told us about the water tank her village built with WBR’s profits. Bula vinaka! [1/2]

Only problem: no stations on the smaller islands we visited, so we were back to buying plastic bottles. Please expand! [2/2]

Resource 3 – Internal email from Losana Tuilau to WBR’s board

From: Losana Tuilau, Founder

To: Board of directors

Subject: Planning for 2026–2028

I propose that we open 20 new stations over the next three years, at about FJD 18 000 each, including eight on the outer islands. Our bank needs a sales forecast before it will lend.

Islands Resorts Group, an international hotel chain with 11 resorts in Fiji, has also offered to buy 20 stations for its own resorts, branded with its name, and pay WBR a management fee. It would not want WBR stations in competing resorts nearby.

Cyclone season remains a risk: in 2016 a cyclone closed half our stations for six weeks.

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

Resource 4 – Station economics (average station, 2025)

Resource 5 – Survey of resort managers (45 replies)

Resource 6 – Interview with Mere, a WBR station operator

“My commission pays my children’s school fees. On a busy resort day I sell 80 litres; when the cruise ships come to the ferry station I can sell 200. But in February, when there are cyclone warnings, sometimes I sell nothing all week. On my home island there are no stations and the village has no tap – we would love one, even if tourists are fewer there.”

Kirchwald Bergbahnen GmbH (KB)

[1] KB is a family-owned private limited company that runs a small ski area in Styria, Austria, with slopes between 1 100 m and 1 700 m above sea level. It has 9 lifts and employs 85 seasonal staff. Most visitors are families from Graz.

[2] In three of the last six winters there was not enough natural snow to open before late January. In the worst winter KB opened for only 61 days instead of the usual 110, and the lower slopes never opened at all.

[3] KB’s managing director, Lena Hofer, wants a contingency plan for snow-poor winters. She proposes a €2.4 million snowmaking system: a reservoir filled from a mountain stream, pipes and 40 snow cannons. Snow cannons need temperatures below about −2°C, and they use large amounts of water and electricity. A local environmental group has objected to the reservoir.

[4] Lena’s forecast of the extra net cash flows from snowmaking is shown in Table 1.

Table 1: Forecast extra net cash flows from snowmaking, and discount factors

The system is expected to last 5 years before major parts must be replaced. Cash flows assume that three in every five winters are snow-poor.

Nodi Data Services Ltd (NDS)

Read the resources and answer the questions that follow.

Nodi Data Services Ltd (NDS) is a social enterprise in Kurigram, one of the poorest districts in northern Bangladesh, where the Brahmaputra river floods most years. It was founded in 2019 by Farhana Islam, an IT engineer who grew up there. NDS employs 140 young local people – 60 % of them women – who carry out work outsourced by companies in Dhaka and abroad: data entry, tagging images for artificial intelligence systems and answering customer emails. Most staff would otherwise have moved to Dhaka to work in garment factories. Nodi means river in Bengali.

Image: a row of young women and men wearing headsets work at computers in a bright room with tin-roofed houses and green rice fields visible through the window. Wall poster: “Nodi Data – the world’s work, done here”.

Resource 1 – News article from *Bengal Business Review*

Village data centres challenge the move to the city

Millions of young Bangladeshis migrate to Dhaka for work every year. Rural IT centres like NDS offer an alternative, but they face unreliable electricity and internet. During last year’s floods, NDS lost four working days. Meanwhile, the city of Rangpur, two hours away by road, has attracted IT firms with a new technology park, a university and a stable fibre-optic network.

Resource 2 – Social media posts from Shirin, an NDS team leader

Three years ago I thought my only choice was a garment factory in Dhaka, far from my mother. Today I lead a team of 12 tagging images for a European company – from my own district! [1/2]

Many of my team are married women. Their families agreed they could work at NDS because it is close to home. If NDS moves to the city, most of them will have to stop. [2/2]

Resource 3 – Internal email from Farhana Islam to NDS’s board

From: Farhana Islam, Founder and CEO

To: Board of directors

Subject: Where should we put 100 new jobs?

Skovlund Retail, a Danish online retailer, wants us to handle its customer emails 24 hours a day. The contract is worth USD 30 000 a month (about BDT 3.6 million) and needs 100 new staff. Skovlund requires internet uptime of at least 99 %; each month we fall below it, it deducts 5 % of the fee. Skovlund has also said that if quality is poor it could bring the work back to Denmark or give it to an AI system.

We have three location options (see the comparison). I want the contract – but I also want to stay true to why NDS exists.

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

Resource 4 – Comparison of location options for 100 new staff (BDT)

Resource 5 – Survey of NDS staff (126 replies)

Resource 6 – Statement from the district administration of Kurigram

“We value NDS’s contribution to keeping young people in the district. If NDS opens a second centre here, the district will provide a building rent-free for three years and help with a connection to the new high-voltage power line, which should reduce power cuts from next year. Flood protection for the town centre is planned but not yet funded.”