IB Business Management Paper 2 HL May 2025

IB Business Management Paper 2 HL - May 2025: Full Exam Analysis

Target Question:

What was the IB Business Management Paper 2 HL May 2025 about?

The IB Business Management HL Paper 2 May 2025 was a wide-ranging paper that tested quantitative and analytical skills across 105 minutes. Section A was compulsory and drew on three separate fictional business contexts - a potato chip manufacturer, a door-making company, and a toy producer - asking students to apply depreciation methods, ratio analysis, cost calculations, and decision-tree construction. Section B offered a choice between a Japanese mochi manufacturer and an airline in industrial dispute, with both extended-response questions centring on a ten-mark recommendation or discussion supported by specific analytical frameworks.

This page provides a full question-by-question breakdown using mark-scheme-informed guidance throughout.

No question wording is reproduced here. Topics are described so that students who sat the paper can review their performance and students preparing for future exams can understand what the paper tested and how examiners awarded marks.

Paper Format: HL Paper 2 at a Glance

IB Business Management HL Paper 2 is worth 50 marks and lasts 1 hour 45 minutes. A formulae sheet and calculator are both permitted and required. Section A (30 marks) is compulsory and includes three questions, each worth 10 marks. Section B (20 marks) asks students to answer one question from a choice of two, with each question structured as a 2 + 4 + 2 + 2 + 10 mark sequence. The 10-mark question is evaluated using the Section B 10 mark rubric and rewards balance, use of stimulus material, and limitations awareness.

Section A - Question 1: Hot Chips (HC)

Topic area: Module 2 - Human Resource Management / Module 3 - Finance and Accounts
Total marks: 10

This question was built around an imaginary potato chip (crisp) manufacturer that uses second-hand fryers and employs staff on a flexible working basis. The question moved through human resources, two different depreciation methods, net book value, and the advantages of building a customer database through a loyalty scheme.

Part (a) - State two features of flexi-time working [2 marks]

Command word: State - one-line answers only. No explanation required. Each feature earns one mark.

The mark scheme credited features including: employees choosing when to start and finish their working day within agreed limits; the ability to work outside a fixed office location; and the existence of a core period during which all employees must be present. The examiners explicitly noted that "autonomy" on its own was not acceptable as a feature - it is too vague and overlaps with the concept of flexibility itself rather than describing a specific characteristic of flexi-time arrangements.

Common error: Writing too much. This is a [1] per feature question. A sentence at most is needed. Students who wrote paragraphs wasted valuable exam time.

Part (b)(i) - Straight-line depreciation [2 marks]

Command word: Calculate (show all working) - method: mark plus answer mark. You must show the formula applied.

This tested the standard straight-line formula:

Annual depreciation = (Original cost − Residual value) ÷ Useful life

Applying the figures from Table 1: ($1,000,000 − $160,000) ÷ 4 years = $210,000 per year

One mark was awarded for the correct working (formula applied correctly) and one mark for the correct answer including a currency sign. The mark scheme noted that the dollar sign could appear in either the working or the final answer - not necessarily both - without penalty.

Part (b)(ii) - Units-of-production depreciation [2 marks]

Command word: Calculate (show all working)

This is the method the business was being advised to switch to, taking into consideration that its fryers operate at full capacity. The logic of the system: charge more depreciation in years of higher output, less in years of lower output. The calculation proceeds in two steps:

Step 1: Depreciation charge per unit produced
= (Original cost − Residual value) ÷ Total lifetime units
= ($1,000,000 − $160,000) ÷ 600,000 units = $1.40 per unit

Step 2: Depreciation expense for 2025
= Depreciation per unit × Units produced in 2025
= $1.40 × 120,000 = $168,000

The contrast with part (b)(i) is on purpose: the straight-line method produces $210,000 per year regardless of output. The units-of-production method produces $168,000 in 2025 because 120,000 units out of a total expected 600,000 is only 20% of lifetime production - meaning the asset itself is being used at below the "average" rate this year. In years of higher output, the amount would be higher. This is why it is considered a more accurate reflection of asset consumption.

Part (c) - Net book value after two years [2 marks]

Command word: Calculate (show all working) - using your answer from (b)(i)

The question explicitly linked back to the straight-line figure from (b)(i), which means the own figure rule (OFR) applied. If a student had an incorrect figure in (b)(i), they could still earn both marks here provided they applied the NBV formula correctly using their own figure.

Net book value = Original cost − Accumulated depreciation
= $1,000,000 − ($210,000 × 2 years)
= $1,000,000 − $420,000 = $580,000

Part (d) - One advantage of a customer loyalty programme [2 marks]

Command word: Explain - point plus development/application. One mark for the advantage, one for applying it to HC specifically.

The mark scheme credited a range of advantages, including: customer retention through better understanding of purchasing habits; building repeat purchase behaviour through incentives; attracting new customers via rewards schemes; and - importantly in the context of the stimulus - the ability to use the customer database generated by the programme to support future targeted marketing. That last point was particularly well-integrated with the stimulus, which explicitly mentioned that HC could benefit from the database created by the loyalty programme.

Lawrence's notes: For full marks, the answer needed to do more than just define the concept. It needed to connect the benefit to HC's specific situation - a manufacturer facing increased competition in the potato chip market. A response that simply said "loyalty programmes retain customers" without any reference to HC earned only [1].

Section A - Question 2: Qwest Ltd.

Topic area: Module 3 - Finance and Accounts / Module 5 - Operations Management
Total marks: 10

This question was organised around a door manufacturer operating with a 2% defect rate that receives an urgent new order it cannot fulfil within its usual lead time. Students were asked to define a key operations term, calculate the gearing ratio from a balance sheet extract, compare the cost of two fulfilment options, and evaluate the impact of a raw material cost increase.

Part (a) - Define defect rate [2 marks]

Command word: Define - a complete, standalone definition. No application required.

The defect rate is the proportion of units produced that fail to meet quality standards, typically expressed as a percentage. The formula for calculating the defect rate is: (Number of defective units ÷ Total units produced) × 100.

The mark scheme awarded [1] for partial understanding (e.g., "a measure of defective products") and [2] for a complete definition that included both the concept of proportion and the percentage expression. The examiners noted that students did not need to include the percentage to receive full marks.

Part (b) - Gearing ratio for 2024 [2 marks]

Command word: Calculate (show all working)

The gearing ratio measures the proportion of a business's capital employed funded by long-term (non-current) debt. A high gearing ratio indicates the business is heavily reliant on borrowed money, which increases financial risk, especially if interest rates rise.

Gearing ratio = (Non-current liabilities ÷ Capital employed) × 100

Capital employed = Non-current liabilities + Retained earnings + Share capital

Using the Table 2 figures (all in $000s):
Capital employed = 400 + 500 + 1,500 = $2,400,000
Gearing ratio = (400 ÷ 2,400) × 100 = 16.67%

The mark scheme accepted rounding to 16.7% or 17% but explicitly did not accept 16% - rounding down to a whole number without recognising the decimal actually lost the mark. The % sign was required in either the working or the final answer.

Interpretation: At 16.67%, Qwest is low-geared. Under 50% is generally considered safe. This means most of Qwest's long-term funding comes from shareholders' equity rather than debt, giving it financial stability and some borrowing capacity if needed.

Part (c)(i) - Cost to make 5,000 doors [3 marks]

Command word: Calculate (show all working) - this was a three-mark question requiring a multi-step approach.

The question required students to extract the variable cost per unit from Table 3, adjust it for the overtime premium, then calculate the total cost for the additional 5,000 doors including the fixed costs allocated to this option.

Step 1: Find the variable cost per unit from the standard production data
Total variable costs = Total costs − Total fixed costs = $3,700,000 − $300,000 = $3,400,000
Variable cost per unit = $3,400,000 ÷ 40,000 doors = $85 per door [1 mark]

Step 2: Adjust for overtime
Overtime increases the variable cost by $5 per door, so the adjusted variable cost = $85 + $5 = $90 per door

Step 3: Calculate total cost for the make option
Total cost = Fixed costs allocated + (5,000 × $90)
= $25,000 + $450,000 = $475,000 [1 mark for working, 1 mark for final answer]

Lawrence's notes: The most common error was failing to extract the variable cost correctly from the total cost figures. Students who misread the table or added the overtime to the total cost instead of the unit variable cost lost the first method mark and were locked out of the correct final answer.

Part (c)(ii) - Cost to buy from supplier [1 mark]

No working required.

Cost = 5,000 × $86 per door = $430,000

The buy option is cheaper by $45,000 ($475,000 − $430,000). However, the decision cannot depend on cost alone - buying involves relying on an external supplier to deliver within four weeks, which usually involves supply chain risk. The make option retains control but requires overtime and additional fixed costs.

Part (d) - One impact of a 10% raw material price increase [2 marks]

Command word: Explain - point plus contextual development. Application to Qwest required for the second mark.

The mark scheme credited a range of responses, including: increased variable cost per unit reducing contribution and profit margins; the likelihood that Qwest would pass the cost increase on to customers, reducing price competitiveness; the possible inability to reach the forecasted 40,000 door sales if prices rise above $100; and the potential to constrain employee wage increases as profit is squeezed.

Lawrence's notes: The examiners explicitly stated that "increase variable cost per unit" on its own was insufficient. The impact needed to be followed through - what does the increased cost mean for Qwest's revenue, margins, pricing, or competitiveness? The connection had to be made for the second mark.

Section A - Question 3: Dream Toys PLC (DT)

Topic area: Module 3 - Finance and Accounts / Module 4 - Marketing / Module 5 - Operations Management
Total marks: 10

This question was designed around a toy manufacturer facing increased competition that is considering two investment options to update its brand image: adding premium features to existing products, or launching a new virtual reality simulator range. The question covered sustainability concepts, decision-tree construction, and pricing strategy.

Part (a) - Two features of cradle-to-cradle design and manufacturing [2 marks]

Command word: State - one mark per feature, no description required.

Cradle-to-cradle (C2C) is a design philosophy that treats all materials as nutrients in a closed-loop system - nothing is wasted because everything is either returned to nature safely or recycled back into production. Features credited by the mark scheme include: products are safe and contribute to users or the environment; waste from one product becomes an input for another, leaving nothing for future generations; all energy used comes from renewable sources; and materials circulate indefinitely through biological or technical cycles.

The mark scheme noted that "higher costs" alone was not acceptable unless the answer specifically linked the cost to the research and design needed to repurpose or reuse materials.

Part (b) - Net predicted outcome X for Option 1 [2 marks]

Command word: Calculate (show all working)

Option 1 involves adding extra features to existing model airplanes at a forecasted cost of $6m. The two possible outcomes are a $8m return (probability 0.6) and a $13m return (probability 0.4).

Step 1: Expected value
= (0.6 × $8m) + (0.4 × $13m) = $4.8m + $5.2m = $10m

Step 2: Net predicted outcome
= Expected value − Cost of investment = $10m − $6m = $4 million

Part (c) - Construct a fully labelled decision tree [4 marks]

Command word: Construct - the most demanding command word in this paper. A decision tree must include: a decision node (square), chance nodes (circles), branch labels with probabilities, outcome values on each branch, expected values at each chance node, costs at each option branch, net predicted outcomes, a rejected option marker (double slash), and a key. All calculations must be shown.

Option 2 calculation (for students to complete the tree):
Expected value = (0.7 × $6m) + (0.3 × $20m) = $4.2m + $6m = $10.2m
Net predicted outcome = $10.2m − $10m = $0.2m

Best option: Option 1 (net predicted outcome of $4m vs $0.2m for Option 2)

The mark scheme awarded up to [4] for a decision tree that was accurately constructed, with correct calculations for both options, correct $ signs, a key, and the rejected option (Option 2) clearly marked. The examiners noted that full marks could be awarded even if column headings such as "net predicted outcome" or "forecasted cost" were not explicitly labelled on the tree itself. Own figure rule (OFR) applied from part (b).

Lawrence's notes: Many students lose marks on decision trees by omitting the key, forgetting to mark the rejected option, or writing the expected value at the end of the branch rather than in the chance node circle. You need to practise the construction of decision trees until they become second nature.

Part (d) - One disadvantage of competitive pricing [2 marks]

Command word: Explain - one mark for the disadvantage, one mark for applying it to DT specifically.

Competitive pricing sets prices with reference to what competitors are charging. The mark scheme noted that the main disadvantage for DT is that its products - particularly the premium-feature airplanes with radio control and positioning trackers - carry higher costs than standard competitors' products. Pricing competitively could squeeze margins below acceptable levels, especially since DT uses cradle-to-cradle manufacturing, which tends to carry higher production costs. Competitors not using C2C may have lower average costs and can sustain lower prices that DT simply cannot match without risking a loss.

Section B - Question 4: Very Mochi (VM)

Topic area: Module 2 - HRM / Unit 4 - Marketing / Module 5 - Operations Management
Total marks: 20

This question centred on a Japan-based manufacturer of traditional mochi desserts. The company uses JIT production with perishable ingredients, operates in a collectivist cultural setting (Hofstede), and is considering introducing new IoT-enabled equipment that would increase output but also monitor employees' health and productivity in real time.

Part (a) - Two features of continuous improvement (kaizen) [2 marks]

Command word: State - one mark per feature.

Kaizen is an umbrella philosophy of ongoing, incremental improvement involving all levels of the workforce. Features credited include: small, regular improvements to processes, products, or services; involvement of all employees, not just management; practices such as TQM, zero defects, kanban, and waste elimination; planned and controlled change to reach successive improvement targets; and efficient, flexible supply chain management to respond to demand changes. Full marks required two distinct features.

Part (b) - One advantage and one disadvantage of JIT production for VM [4 marks]

Command word: Explain - marked as 2+2. Each point requires a sentence explaining a concept plus application to VM specifically.

Advantages (mark-scheme credited):

JIT eliminates the need to store expensive, perishable ingredients. The mochi ingredients spoil quickly, so holding stock would create waste and require refrigeration facilities - costs that VM avoids entirely by using JIT. Additionally, JIT reduces the cash tied up in inventory. VM's ingredients are described as premium-quality and expensive, so not purchasing in advance preserves working capital. The mark scheme also noted that JIT removes the need for a warehouse, which VM confirms it does not currently have.

Disadvantages (mark-scheme credited):

JIT requires reliable suppliers. The mark scheme highlighted that VM has "few reliable suppliers" - and this is exactly the scenario that makes JIT risky. If a supplier fails to deliver on time or delivers incorrect quality, production is disrupted immediately because there is no buffer stock to turn to. The other credited disadvantage was the loss of bulk-purchasing economies of scale: because VM buys small quantities frequently rather than in bulk, its ingredient cost per unit is likely to be higher than it would be under a just-in-case system.

Lawrence's notes: Both the advantage and the disadvantage needed to move beyond the generic ("JIT saves money") to the specific context of VM. Answers that mentioned the perishable ingredients, the few reliable suppliers, or the absence of a warehouse were demonstrating exactly the kind of stimulus/reference material integration the mark scheme required.

Part (c) - Comment on market research findings with reference to the positioning map [2 marks]

Command word: Comment - this is a data-interpretation command. It asks for an observation that comes from the stimulus/reference material, not a general explanation.

The positioning map showed three brands in the mochi market. VM is positioned as a high-quality, high-price brand. Its closest competitor, AK, is also perceived as high quality but at a lower price - making AK the more immediate competitive threat. A third brand, IP, occupies a low-price, low-quality position and is not competing in the same market segment as VM.

Reference to actual data from the map is required to achieve full marks as stated from the mark scheme - competitor names, relative positioning on both axes, or the type of product. A comment that mentioned only VM without comparing it to the other brands or referencing its specific price-quality coordinates earned only [1].

Implication for VM: Consumers already associate VM with premium quality. The question is whether its premium price is justified in their eyes when compared to AK. The switch to dynamic pricing (question d) is seems directly relevant here - VM needs flexibility to compete more aggressively on price at certain times without permanently repositioning its brand.

Part (d) - One advantage of dynamic pricing for VM [2 marks]

Command word: Explain - point plus application to VM.

Dynamic pricing adjusts prices in real time according to shifts in demand.

The mark scheme credited two main applications to VM. First, VM's mochi demand is seasonal, peaking during traditional Japanese festivals - dynamic pricing allows VM to raise prices when demand is at its highest, maximising revenue at the exact moment customers are most willing to pay. Second, greater pricing control allows VM to compete more directly with AK (its closest high-quality rival) by lowering prices during quieter periods and without setting a permanently lower price point that would certainly undermine its premium positioning.

Important mark scheme note: The examiners stated that improving stock management or increasing capacity utilisation were not acceptable advantages for VM in this context, because VM uses JIT (no stored stock) and the question is about pricing, not production. This is a good reminder that the mark scheme always considers the specific context.

Part (e) - Recommend whether VM should introduce the new IoT equipment [10 marks]

Command word: Recommend - this is a high-level command that implies evaluation and critical thinking. The mark scheme required a balanced discussion of arguments for and against, use of all three stimulus sources (narrative, Table 5, Figure 2), and a justified conclusion. IB Business Management Section B mark bands apply.

Arguments for introducing the equipment (driving forces):

The new equipment increases output capacity by 30% (from 1,000 to 1,300 mochi per hour). In a competitive market where VM is already battling on price against AK, this productivity gain could reduce average costs and provide pricing flexibility. The real-time reporting capabilities - maintenance alerts, ingredient level monitoring, and production quality controls (weighing and shaping mochi) - directly address the problems that damaged VM's brand: a recent production delay caused by a miscalculation of strawberry filling and an equipment breakdown could both have been avoided with IoT monitoring. The system also aligns with VM's kaizen philosophy by providing data-driven insights for continuous improvement.

Arguments against (restraining forces):

The employee survey data in Figure 2 is the strongest restraining force and high scoring answers should be organised around this concept. Only 17% of employees prefer personal PRP bonuses over team bonuses. Only 45% agree to being monitored and measured. Only 20% are willing to provide sensitive personal health data (body temperature, heart rate). These figures are relevant for two reasons. First, Japan has a highly collectivist culture according to Hofstede's cultural dimensions - shifting from team-based to individual PRP is a significant cultural unbalance, not just a motivation policy change. Second, the health monitoring issue raises serious data privacy and legal concerns. Collecting biometric data without employee acceptance invites regulatory scrutiny and could damage the trust on which VM's kaizen culture depends.

Additionally, the new equipment requires an internet connection to operate. In a production environment using JIT with perishable ingredients, any connectivity disruption would halt production entirely - replacing one type of vulnerability (supplier reliability) with another (digital dependency).

Conclusion for a high-scoring response:

The equipment has genuine operational merit. The productivity gain and real-time data are valuable. However, the recommendation should be conditional: introduce the equipment for its production and quality monitoring functions, but do not implement the employee health monitoring or switch to individual PRP until the workforce is genuinely on board. Forcing these changes in a collectivist workplace with 83% opposition to individual PRP is not just a motivation risk - it threatens the kaizen culture that is central to VM's quality proposition.

Mark band guidance:

To reach [7–8]: balanced arguments with mostly accurate use of theory and generally good stimulus integration.
To reach [9–10]: effective integration of all three stimulus sources, consideration of the limitations of the data (e.g., the survey may not represent all employees; Table 5 gives no cost figures for the new equipment), and a clear, justified recommendation that goes beyond simply listing pros and cons.

Key mark scheme rule: If there is no reference to actual figures from Table 5 or Figure 2, the maximum mark is [6]. Citing the 17%, 45%, and 20% figures from the survey and the specific capabilities from Table 5 is not optional - it is required for full marks.

Section B - Question 5: AC Continental (AC)

Topic area: Module 2 - Human Resource Management
Total marks: 20

This question centred on a large airline that emerged from a merger with a smaller carrier and is now facing financial pressure, industrial action, and a deteriorating relationship with its unionised cabin crew workforce. The ten-mark question asked students to apply force field analysis to evaluate whether the cabin crews should accept a no-strike agreement and enter collective bargaining.

Part (a) - Define merger [2 marks]

Command word: Define - no application required. Two-mark answer.

A merger occurs when two or more businesses combine to form a single, new, larger business entity. For full marks, the mark scheme required a second element beyond the basic definition: for example, a form of external growth; that the aim is typically to achieve synergies, greater efficiency, or improved competitiveness; or that it differs from an acquisition in that the combining companies are theoretically treated as equals (though the practical reality often differs).

Common error: Defining a takeover or acquisition instead. The mark scheme explicitly stated that answers defining other growth methods received no marks.

Part (b) - Two sources of stakeholder conflict at AC [4 marks]

Command word: Explain - marked as 2+2. Each conflict requires identification plus explanation of why/how it creates conflict between stakeholders.

The mark scheme credited several sources found in the stimulus/reference material. The board cut cabin crew wages by 15% without consultation - this is in direct conflict with employees' financial interests, especially against a backdrop of rising living costs. The board also reduced the number of crew per flight, increasing workload for remaining staff. The decision to reduce employee benefits including health and life insurance further eroded the employment offer. Each of these created a clear conflict between management's goal of cost reduction and employees' interests in fair pay, reasonable workloads, and job security.

A further source of conflict noted in the mark scheme: reducing cabin crew per flight degrades in-flight service, which creates tension between AC's cost-cutting goals and passengers' expectations of service quality.

Examiner note: For the second mark on each conflict, the answer needed to explain how the stakeholder group was negatively impacted - not just identify the decision that caused the conflict.

Part (c) - Two disadvantages of the single-union agreement for AC [4 marks]

Command word: Explain - marked as 2+2.

The key insight here is the contrast with the fragmented multi-union past. Twelve years ago, when AC's cabin crews belonged to multiple unions with divergent interests, strike action caused only 1% of flight cancellations. Under the single-union agreement with FIST, the same workforce achieved 98% flight cancellations over an eight-day strike - demonstrating a catastrophic shift in industrial power.

The mark scheme credited: the unification of all 15,000 cabin crew employees behind one representative, dramatically amplifying their collective bargaining strength and strike effectiveness; AC's complete dependency on a single relationship with FIST, meaning if the relationship breaks down there is no alternative channel or way to move forward; the inflexibility created when the union takes a firm position AC cannot negotiate around; and the possible dissatisfaction of employees who feel a single union does not represent their specific interests or circumstances.

Part (d) - Discuss whether AC's cabin crews should sign a no-strike agreement and proceed to collective bargaining [10 marks]

Command word: Discuss using force field analysis - the framework must be used and the discussion must be balanced. The Section B mark bands apply.

Force field analysis, developed by Kurt Lewin, frames any decision as a balance between driving forces (pushing towards change) and restraining forces (resisting it).

Here, the "change" is the cabin crews accepting the no-strike agreement. The question is asked from the cabin crew's perspective - should they accept?

Driving forces - reasons the cabin crews should sign:

Signing would halt AC's threatened retaliatory actions: the recruitment of new cabin crews for a new fleet, the abolition of promotion based on seniority, increased workloads, and wage reductions to industry average. These are not empty threats - AC demonstrated willingness to take aggressive action by removing fringe payments and hiring replacement crews during the strike. Existing cabin crews face the risk of being displaced onto shorter, less desirable routes if new employees are recruited and assigned to the new fleet. Signing also opens the door to collective bargaining, which gives FIST a structured, legitimate channel to negotiate for improvements - including wages, conditions, and benefits - that industrial action has not secured.

Restraining forces - reasons the cabin crews should not sign:

AC's financial position is severely weakened. The company reported a pre-tax loss of $500m in 2023, and the eight-day strike cost an estimated $50m more. Shareholders are watching a share price that declined from $25 in December to $15 by April - a 40% fall. A business this financially exposed has limited capacity to follow through on its threats; recruiting and training a new cabin crew workforce and launching a new fleet requires substantial capital investment that AC may not be able to sustain. FIST's power is at its peak: it can unify 15,000 employees, has already demonstrated it can cancel 98% of flights, and another strike could be devastating for AC's brand and customer relationships. Signing a no-strike agreement permanently removes this leverage. Furthermore, collective bargaining is only as good as the good faith shown by both parties - and AC has already demonstrated a willingness to impose unilateral changes without consultation.

Conclusion for a high-scoring response:

The decision depends on whether the cabin crews believe AC will follow through on its threats given its financial fragility. A strong answer acknowledges that the stimulus information is limited - we do not know the current financial state of the broader aviation market, whether AC can access new capital, or how shareholders might respond to further disruption. The cabin crews have leverage now, but the no-strike agreement offers stability and a formal negotiation mechanism. A refined recommendation might suggest FIST negotiate the terms of the no-strike agreement carefully before signing - securing guarantees on pay floors, workload caps, and benefit protection as minimum conditions of the deal.

Mark band guidance:

To reach [7–8]: balanced driving and restraining forces with mostly accurate force field analysis and good use of stimulus.
To reach [9–10]: depth on both sides, effective stimulus integration (share price data, the $500m loss, the 98% cancellation rate), consideration of the limitations of the information provided, and a justified conclusion.
If no reference to force field analysis: maximum [6 marks].
If students only discussed one side: maximum [4–5 marks].

Frequently Asked Questions - IB BM HL Paper 2 May 2025

What topics came up in IB Business Management HL Paper 2 May 2025?
Section A covered flexi-time working features, straight-line and units-of-production depreciation, net book value, customer loyalty programmes, defect rate, gearing ratio, make-or-buy cost analysis, raw material cost impacts, cradle-to-cradle design, decision trees, and competitive pricing disadvantages. Section B covered kaizen, JIT production, positioning maps, dynamic pricing, IoT equipment evaluation (Very Mochi), merger definition, stakeholder conflict, single-union agreements, and force field analysis applied to collective bargaining (AC Continental).

How do you calculate units-of-production depreciation?
Divide the depreciable amount (cost minus residual value) by the total number of units the asset is expected to produce over its life. This gives a depreciation charge per unit. Then multiply that figure by the number of units actually produced in the period. This method charges more depreciation in high-output years and less in low-output years, reflecting actual asset usage more accurately than straight-line.

How do you calculate the gearing ratio?
Gearing ratio = (Non-current liabilities ÷ Capital employed) × 100. Capital employed equals non-current liabilities plus all equity (retained earnings plus share capital). A ratio below 50% is generally considered low-geared and financially stable.

What is the make-or-buy decision in IB Business Management?
A make-or-buy decision compares the full cost of producing units internally against the cost of purchasing them from an external supplier. The calculation must include all relevant costs: variable costs per unit, any overtime or labour adjustments, and any fixed costs specifically allocated to the internal production option.

What is force field analysis and how is it used in IB Business Management?
Force field analysis is a tool developed by Kurt Lewin that maps the driving forces supporting a change against the restraining forces opposing it. In Paper 2 Section B, it is used to structure discussion questions - students identify forces on both sides, weigh them, and arrive at a justified recommendation. Always label driving and restraining forces explicitly and reference the stimulus material on both sides.

Why did IB use a Japanese company for the Section B question?
The IB Business Management syllabus includes Hofstede's cultural dimensions as a topic, and Japan provides a strong real-world anchor for concepts like collectivism, kaizen, JIT, and the tension between individual and team-based performance management. The Very Mochi question was specifically designed to test whether students could connect cultural context (collectivism) to HR decisions (individual vs team PRP) - a sophisticated multi-unit link.

What is the difference between a merger and an acquisition?
In a merger, two companies of roughly equal standing combine to form a new entity, with both parties retaining some form of ownership stake in the combined business. In an acquisition, one company purchases a controlling interest in another. In practice the distinction can blur, but the IB Business Management mark scheme requires students to demonstrate understanding of the merger as a combination rather than a takeover.

Related IB Business Management Resources

Paper 2 draws from the entire syllabus. The following resources on The IB Trainer cover each unit, key theories, and the Business Management Toolkit in depth - use them to build the broad subject knowledge that Paper 2 demands.

Module 1 - Business Organisation & Environment

Module 2 - Human Resource Management

Module 3 - Finance & Accounts

Module 4 - Marketing

Module 5 - Operations Management

Business Management Toolkit

IB Business Management Activity Book case study exam practice and case study activities, including IB standard model answers and IB standard marking schemes covering the entire IB Business Management syllabus.

Quick access to:

IB Business Management Paper 2 Guide

IB Business Management paper 1 Guide

IB Business Management Paper 3 Guide