IB · BM SL

Business Management SL

Business organisation and environment — Unit 1

Name: ____________________Date: October 2, 2026

1.
A company is deciding whether to close a local factory and move production abroad to reduce costs. Identify two stakeholder groups affected by this decision, and explain how their interests might conflict.
[3 marks] · no calculator
Marking points
- Identifies shareholders/owners as one stakeholder group, whose interest is typically in reducing costs and increasing profit, favouring the move.
- Identifies employees (or the local community) as a second stakeholder group, whose interest is in job security and continued local employment, opposing the move.
- Explains that these interests directly conflict: the decision that maximizes shareholder returns (relocating for lower costs) comes at the direct expense of employee job security and the local community's economic wellbeing.
Examiner tip: Stakeholder conflict questions are answered best by naming two specific, clearly opposed interests rather than listing several stakeholders without explaining how their goals actually clash.
2.
Marking analysis: A learner attempts the following task: “A company is deciding whether to close a local factory and move production abroad to reduce costs. Identify two stakeholder groups affected by this decision, and explain how their interests might conflict.” Their response addresses only this point: “Identifies shareholders/owners as one stakeholder group, whose interest is typically in reducing costs and increasing profit, favouring the move.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator
Marking points
- Recognises credit for the stated point: Identifies shareholders/owners as one stakeholder group, whose interest is typically in reducing costs and increasing profit, favouring the move.
- Identifies the missing requirement: Identifies employees (or the local community) as a second stakeholder group, whose interest is in job security and continued local employment, opposing the move.
- Identifies the missing requirement: Explains that these interests directly conflict: the decision that maximizes shareholder returns (relocating for lower costs) comes at the direct expense of employee job security and the local community's economic wellbeing.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
3.
Distinguish between internal stakeholders and external stakeholders, giving one example of each for a typical company.
[2 marks] · no calculator
Marking points
- Defines internal stakeholders as individuals or groups who work directly within the organization. Gives a valid example, such as employees, managers, or owners.
- Defines external stakeholders as individuals or groups outside the organization who are nonetheless affected by, or can affect, its activities. Gives a valid example, such as customers, suppliers, the local community, or the government.
Examiner tip: Shareholders are a useful edge case to remember: they are technically owners of the company (making them highly influential) but are often external to its day-to-day operations, so some syllabi classify them separately from both groups.
4.
Marking analysis: A learner attempts the following task: “Distinguish between internal stakeholders and external stakeholders, giving one example of each for a typical company.” Their response addresses only this point: “Defines internal stakeholders as individuals or groups who work directly within the organization. Gives a valid example, such as employees, managers, or owners.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: Defines internal stakeholders as individuals or groups who work directly within the organization. Gives a valid example, such as employees, managers, or owners.
- Identifies the missing requirement: Defines external stakeholders as individuals or groups outside the organization who are nonetheless affected by, or can affect, its activities. Gives a valid example, such as customers, suppliers, the local community, or the government.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
5.
Using a PEST(LE) framework, explain how a change in government regulation (a political/legal factor) could affect a business, using a specific example.
[3 marks] · no calculator
Marking points
- States that political/legal factors are part of a business's external environment, over which the business has little or no control.
- Explains a specific, plausible example, such as a new minimum wage law raising a company's labor costs, or a new environmental regulation requiring costly changes to production processes.
- Explains the resulting impact on the business, such as higher costs reducing profit margins, or the need to adapt processes to remain legally compliant.
Examiner tip: A PEST(LE) analysis question always expects a specific, concrete example rather than a generic statement that 'the government can affect businesses' — vague answers rarely earn full marks.
6.
Marking analysis: A learner attempts the following task: “Using a PEST(LE) framework, explain how a change in government regulation (a political/legal factor) could affect a business, using a specific example.” Their response addresses only this point: “States that political/legal factors are part of a business's external environment, over which the business has little or no control.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator
Marking points
- Recognises credit for the stated point: States that political/legal factors are part of a business's external environment, over which the business has little or no control.
- Identifies the missing requirement: Explains a specific, plausible example, such as a new minimum wage law raising a company's labor costs, or a new environmental regulation requiring costly changes to production processes.
- Identifies the missing requirement: Explains the resulting impact on the business, such as higher costs reducing profit margins, or the need to adapt processes to remain legally compliant.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
7.
Distinguish between a company's mission statement and its objectives, and explain why clear objectives should be SMART.
[3 marks] · no calculator
Marking points
- Defines a mission statement as a broad, often inspirational statement of a company's overall purpose and core values.
- Defines objectives as specific, more concrete goals the company sets to help it work toward achieving its broader mission.
- Explains that SMART objectives (Specific, Measurable, Achievable, Relevant, Time-bound) are easier to plan around, monitor progress toward, and evaluate success or failure against, compared to a vague goal.
Examiner tip: A mission statement rarely changes over the long term, while specific objectives are typically reviewed and updated regularly as circumstances change — keep this difference in time horizon in mind.
8.
Marking analysis: A learner attempts the following task: “Distinguish between a company's mission statement and its objectives, and explain why clear objectives should be SMART.” Their response addresses only this point: “Defines a mission statement as a broad, often inspirational statement of a company's overall purpose and core values.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator
Marking points
- Recognises credit for the stated point: Defines a mission statement as a broad, often inspirational statement of a company's overall purpose and core values.
- Identifies the missing requirement: Defines objectives as specific, more concrete goals the company sets to help it work toward achieving its broader mission.
- Identifies the missing requirement: Explains that SMART objectives (Specific, Measurable, Achievable, Relevant, Time-bound) are easier to plan around, monitor progress toward, and evaluate success or failure against, compared to a vague goal.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
9.
Explain the difference between organic (internal) growth and inorganic (external) growth as strategies for a business to expand, giving one example method of each.
[2 marks] · no calculator
Marking points
- Defines organic growth as expansion achieved using the company's own internal resources and operations. Gives a valid example, such as opening new branches, developing new products, or expanding into new domestic markets.
- Defines inorganic growth as expansion achieved by combining with or acquiring another company. Gives a valid example, such as a merger or an acquisition/takeover.
Examiner tip: Organic growth is generally slower but lower-risk, while inorganic growth is faster but carries greater risk and integration challenges — a strong evaluation question pairs the growth type with this general risk/speed trade-off.
10.
Marking analysis: A learner attempts the following task: “Explain the difference between organic (internal) growth and inorganic (external) growth as strategies for a business to expand, giving one example method of each.” Their response addresses only this point: “Defines organic growth as expansion achieved using the company's own internal resources and operations. Gives a valid example, such as opening new branches, developing new products, or expanding into new domestic markets.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: Defines organic growth as expansion achieved using the company's own internal resources and operations. Gives a valid example, such as opening new branches, developing new products, or expanding into new domestic markets.
- Identifies the missing requirement: Defines inorganic growth as expansion achieved by combining with or acquiring another company. Gives a valid example, such as a merger or an acquisition/takeover.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
11.
Explain what is meant by corporate social responsibility (CSR), and suggest one potential business benefit of a company adopting strong CSR practices, beyond simply 'being ethical'.
[2 marks] · no calculator
Marking points
- Explains CSR as a company voluntarily taking responsibility for the social and environmental impact of its operations, going beyond its minimum legal obligations.
- Suggests a valid business benefit, such as improved brand reputation and customer loyalty, easier recruitment and retention of employees who value working for a responsible company, or reduced risk of regulatory penalties and negative publicity.
Examiner tip: Examiners reward answers that connect CSR to a concrete business outcome (reputation, recruitment, risk reduction) rather than only describing CSR as a moral or ethical obligation in isolation.
12.
Marking analysis: A learner attempts the following task: “Explain what is meant by corporate social responsibility (CSR), and suggest one potential business benefit of a company adopting strong CSR practices, beyond simply 'being ethical'.” Their response addresses only this point: “Explains CSR as a company voluntarily taking responsibility for the social and environmental impact of its operations, going beyond its minimum legal obligations.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: Explains CSR as a company voluntarily taking responsibility for the social and environmental impact of its operations, going beyond its minimum legal obligations.
- Identifies the missing requirement: Suggests a valid business benefit, such as improved brand reputation and customer loyalty, easier recruitment and retention of employees who value working for a responsible company, or reduced risk of regulatory penalties and negative publicity.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
13.
Distinguish between a sole trader and a partnership as forms of business ownership, and state one advantage a partnership has over a sole trader.
[3 marks] · no calculator
Marking points
- Defines a sole trader as a business owned and run by one person, who typically has unlimited liability for the business's debts.
- Defines a partnership as a business owned by two or more people who share responsibility, profits, and typically also unlimited liability for the business's debts.
- States a valid advantage of a partnership, such as access to more capital (from multiple owners), a wider range of skills and expertise, or shared workload and decision-making responsibility.
Examiner tip: Both sole traders and ordinary partnerships typically carry unlimited liability — this is a key similarity that is easy to mistakenly treat as a difference between the two forms.
14.
Marking analysis: A learner attempts the following task: “Distinguish between a sole trader and a partnership as forms of business ownership, and state one advantage a partnership has over a sole trader.” Their response addresses only this point: “Defines a sole trader as a business owned and run by one person, who typically has unlimited liability for the business's debts.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator
Marking points
- Recognises credit for the stated point: Defines a sole trader as a business owned and run by one person, who typically has unlimited liability for the business's debts.
- Identifies the missing requirement: Defines a partnership as a business owned by two or more people who share responsibility, profits, and typically also unlimited liability for the business's debts.
- Identifies the missing requirement: States a valid advantage of a partnership, such as access to more capital (from multiple owners), a wider range of skills and expertise, or shared workload and decision-making responsibility.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
15.
Explain one advantage and one disadvantage for a business of converting from a private limited company to a public limited company (going public, or 'floating' on a stock exchange).
[2 marks] · no calculator
Marking points
- Explains a valid advantage, such as the ability to raise much larger amounts of capital by selling shares to the general public, supporting faster expansion.
- Explains a valid disadvantage, such as a loss of control for the original owners as shares are sold to outside shareholders, or increased regulatory and reporting requirements (and associated costs) for a publicly listed company.
Examiner tip: Going public always trades increased access to capital for reduced owner control and greater regulatory scrutiny — this is the central trade-off examiners expect you to identify.
16.
Marking analysis: A learner attempts the following task: “Explain one advantage and one disadvantage for a business of converting from a private limited company to a public limited company (going public, or 'floating' on a stock exchange).” Their response addresses only this point: “Explains a valid advantage, such as the ability to raise much larger amounts of capital by selling shares to the general public, supporting faster expansion.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: Explains a valid advantage, such as the ability to raise much larger amounts of capital by selling shares to the general public, supporting faster expansion.
- Identifies the missing requirement: Explains a valid disadvantage, such as a loss of control for the original owners as shares are sold to outside shareholders, or increased regulatory and reporting requirements (and associated costs) for a publicly listed company.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
17.
A bakery owner is considering opening a second branch. Explain how a SWOT analysis could help with this decision.
[2 marks] · no calculator
Marking points
- States that strengths and weaknesses are internal factors (e.g. loyal customers, limited capital) while opportunities and threats are external (e.g. a growing neighbourhood, a new competitor).
- Explains that comparing internal capabilities with external conditions shows whether expansion is realistic and which risks to address first.
Examiner tip: Always classify each point as internal or external before drawing a conclusion for the decision.
18.
Marking analysis: A learner attempts the following task: “A bakery owner is considering opening a second branch. Explain how a SWOT analysis could help with this decision.” Their response addresses only this point: “States that strengths and weaknesses are internal factors (e.g. loyal customers, limited capital) while opportunities and threats are external (e.g. a growing neighbourhood, a new competitor).” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: States that strengths and weaknesses are internal factors (e.g. loyal customers, limited capital) while opportunities and threats are external (e.g. a growing neighbourhood, a new competitor).
- Identifies the missing requirement: Explains that comparing internal capabilities with external conditions shows whether expansion is realistic and which risks to address first.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
19.
Explain how technological change could present both an opportunity and a threat to a traditional high-street retailer.
[2 marks] · no calculator
Marking points
- Explains the opportunity, such as selling online to reach new customers and using data to personalise marketing.
- Explains the threat, such as online-only rivals with lower costs and prices drawing customers away from physical stores.
Examiner tip: External changes are rarely purely good or bad; whether they are an opportunity or threat depends on how the firm responds.
20.
Marking analysis: A learner attempts the following task: “Explain how technological change could present both an opportunity and a threat to a traditional high-street retailer.” Their response addresses only this point: “Explains the opportunity, such as selling online to reach new customers and using data to personalise marketing.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: Explains the opportunity, such as selling online to reach new customers and using data to personalise marketing.
- Identifies the missing requirement: Explains the threat, such as online-only rivals with lower costs and prices drawing customers away from physical stores.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
21.
Distinguish between a private sector business and a public sector organization in terms of ownership and main objective.
[2 marks] · no calculator
Marking points
- States that private sector businesses are owned by individuals or shareholders and typically aim to make profit.
- States that public sector organizations are owned and funded by the government and typically aim to provide services to the public.
Examiner tip: Contrast who owns the organization and what it is mainly trying to achieve.
22.
Marking analysis: A learner attempts the following task: “Distinguish between a private sector business and a public sector organization in terms of ownership and main objective.” Their response addresses only this point: “States that private sector businesses are owned by individuals or shareholders and typically aim to make profit.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: States that private sector businesses are owned by individuals or shareholders and typically aim to make profit.
- Identifies the missing requirement: States that public sector organizations are owned and funded by the government and typically aim to provide services to the public.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
23.
Explain what is meant by a social enterprise, and explain one challenge it faces compared with a purely profit-seeking firm.
[2 marks] · no calculator
Marking points
- Explains that a social enterprise trades goods or services mainly to achieve social or environmental aims, reinvesting most surplus in that mission.
- Explains a challenge, such as balancing social goals with financial sustainability, or finding investors who accept limited financial returns.
Examiner tip: A social enterprise still has to cover its costs — the difference is where the surplus goes.
24.
Marking analysis: A learner attempts the following task: “Explain what is meant by a social enterprise, and explain one challenge it faces compared with a purely profit-seeking firm.” Their response addresses only this point: “Explains that a social enterprise trades goods or services mainly to achieve social or environmental aims, reinvesting most surplus in that mission.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: Explains that a social enterprise trades goods or services mainly to achieve social or environmental aims, reinvesting most surplus in that mission.
- Identifies the missing requirement: Explains a challenge, such as balancing social goals with financial sustainability, or finding investors who accept limited financial returns.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
25.
Explain one benefit to a franchisor of expanding through franchising rather than opening its own outlets.
[2 marks] · no calculator
Marking points
- Explains that franchisees supply much of the capital for new outlets, so the franchisor can grow faster with less of its own investment.
- Explains that franchisees are highly motivated local owners and pay fees or royalties, giving the franchisor a steady income.
Examiner tip: The core benefit is growth funded by someone else's capital, at the cost of some control over how outlets are run.
26.
Marking analysis: A learner attempts the following task: “Explain one benefit to a franchisor of expanding through franchising rather than opening its own outlets.” Their response addresses only this point: “Explains that franchisees supply much of the capital for new outlets, so the franchisor can grow faster with less of its own investment.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: Explains that franchisees supply much of the capital for new outlets, so the franchisor can grow faster with less of its own investment.
- Identifies the missing requirement: Explains that franchisees are highly motivated local owners and pay fees or royalties, giving the franchisor a steady income.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
27.
Explain how diseconomies of scale could limit the growth of a large business.
[3 marks] · no calculator
Marking points
- Defines diseconomies of scale as a rise in average cost when a firm grows beyond its efficient size.
- Explains causes such as poorer communication and coordination between layers and departments, and lower worker motivation in a large impersonal organization.
- Explains that rising unit costs reduce competitiveness, so further growth may stop being profitable.
Examiner tip: Diseconomies of scale come from complexity and coordination problems, not from buying inputs more expensively.
28.
Marking analysis: A learner attempts the following task: “Explain how diseconomies of scale could limit the growth of a large business.” Their response addresses only this point: “Defines diseconomies of scale as a rise in average cost when a firm grows beyond its efficient size.” Evaluate the response against the complete 3-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[3 marks] · no calculator
Marking points
- Recognises credit for the stated point: Defines diseconomies of scale as a rise in average cost when a firm grows beyond its efficient size.
- Identifies the missing requirement: Explains causes such as poorer communication and coordination between layers and departments, and lower worker motivation in a large impersonal organization.
- Identifies the missing requirement: Explains that rising unit costs reduce competitiveness, so further growth may stop being profitable.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.
29.
Explain two reasons why a business owner might choose to keep the business small rather than grow it.
[2 marks] · no calculator
Marking points
- Explains a valid reason such as retaining personal control and a close relationship with customers and staff.
- Explains a second valid reason such as avoiding the financial risk, debt and complexity of expansion, or the niche market being too small to support growth.
Examiner tip: Not every owner's objective is maximum growth; lifestyle, control and risk preferences matter.
30.
Marking analysis: A learner attempts the following task: “Explain two reasons why a business owner might choose to keep the business small rather than grow it.” Their response addresses only this point: “Explains a valid reason such as retaining personal control and a close relationship with customers and staff.” Evaluate the response against the complete 2-mark task. Identify what earns credit and state every additional requirement needed for full marks.
[2 marks] · no calculator
Marking points
- Recognises credit for the stated point: Explains a valid reason such as retaining personal control and a close relationship with customers and staff.
- Identifies the missing requirement: Explains a second valid reason such as avoiding the financial risk, debt and complexity of expansion, or the niche market being too small to support growth.
Examiner tip: Treat each marking point as a separate requirement. Do not award the same idea twice, and do not infer work the learner did not show.