QP code: DP2122-S1-ES- BM HL
Name of the student: Class: 1st Year IBDP
THE INDIAN PUBLIC SCHOOL, CHENNAI
FIRST SEMESTER IBDP
END SEMESTER EXAMINATION – AUGUST 2021
Duration: 2 Hours 15 Minutes Business Management HL Date: 14.08.2021
(Maximum Marks: 75)
Answer all the questions
1. Aroma Corporation (AC)
Aroma Corporation (AC) is a mass-market cosmetics company that produces soaps.
Concerned about falling market share and profit, AC conducted new market research.
The senior management team is considering two strategic options.
• Option 1: research and develop new environmentally friendly soaps
• Option 2: buy new machinery to produce more of the current products
The probabilities, forecast costs and revenues of each option are given below:
(a). Construct a fully labelled decision tree, calculate the predicted outcome for each option and
identify the best option for AC (show all your working). [6]
(b) Explain two limitation of using a decision tree as a planning tool for AC. [4]
2. Out of India
The direction of globalization can change unexpectedly. India’s leading information and
communication technology (ICT) companies are under pressure to update their technology and
they also struggle to cope with rising global demand for their services. Indian universities cannot
keep up with the demand for new graduates, leading to wage inflation of about 15% a year.
Moreover, the Indian currency (rupee) has appreciated 9.2% against the US dollar during the
last year.
Number of pages in the question booklet: 3 1
QP code: DP2122-S1-ES- BM HL
The increasing cost of labour in India is forcing the country’s largest ICT companies such as
Tata Consultancy Services, Infosys and Wipro to resort to outsourcing their services to Mexico
and hiring Mexican employees at a more reasonable cost. The Mexicans are perceived as
professional and dedicated employees who are very keen to improve their managerial skills.
Some of the Indian ICT companies also set up operations in China where an excess supply of
well-trained ICT graduates has kept wage inflation under control. Economic liberalization and
rising industrialization make it even easier to operate in the country. However, the operation of
the Indian ICT companies in China have made it more difficult for some local ICT businesses to
compete.
In the USA, Indian-owned companies are hiring more Americans. Some of the reasons given by
Wipro are:
• the work that is done requires more and more knowledge of local customers’ needs and local
people do that better
• the US government made the application for temporary working visas to transfer Indian
workers to the US more complicated
• an office based in a closer time zone means that employees can offer customers a quicker
service.
(a) Define globalization [2]
(b) Use all of the PEST categories to explain four relevant external forces that may impact on
an outward-looking Indian ICT company. [4]
(c) Analyse the impact on a host country such as China of Indian ICT companies setting up
operations there. [6]
(d) Discuss the significance of the specified external forces and the responses of the Indian ICT
companies to such forces. [8]
3. Marketing in a new technological environment, Second Life
Second Life is an online, virtual (computer generated) world that exists only on the Internet.
Using a 3D virtual character, subscribers lead a second life, mimicking everything from visiting a
nightclub to a career in real estate. Millions of dollars change hands daily online as residents
create, buy and sell virtual products and services, which may include designer clothes, vehicles
or casinos.
Second Life registered its one millionth resident in late 2006 with one user making more than
US$1 million buying, selling and renting virtual property. Many companies such as Dell, IBM and
Kmart use Second Life to market products or services to a niche audience and to target younger
customers and technologically aware market segments.
Dell, for instance, has an “in-world island” with a virtual replica of the Dell factory and a retail
store where customers order PCs to be delivered to their virtual homes. On the island,
customers pay in Linden Dollars, the official Second Life currency. The Linden can be converted
into US Dollars and vice-versa. Rates fluctuate, but over the last few years have remained fairly
stable as 250 Linden Dollars (L$) to the US Dollar. Customers can also order a real Dell
computer that can be delivered to their real home and pay in US dollars. IBM recently
purchased 12 islands within Second Life for virtual business training and simulations.
Number of pages in the question booklet: 3 2
QP code: DP2122-S1-ES- BM HL
Musicians and news organizations, including the BBC and the Reuters news agency, have a
presence within Second Life. The BBC, which is frequently an early adopter, uses the island to
debut new bands at virtual rock festivals. According to Business Week, the biggest Second Life
design shops charge corporate clients between US$10 000 and US$200 000 to establish a
virtual world presence.
(a) Define the term niche market. [2]
(b) Explain the advantages to major corporations, like Dell and IBM, of market segmentation
and consumer targeting. [8]
(c) Discuss how firms may adapt their marketing strategies and marketing mixes to changes in
technology such as the growth of Second Life. [10]
4. TNPL
The table below shows the yearly sales figures of TNPL paper manufacturer over a period of ten
years.
Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Sales revenue ( $ 000) 200 350 400 600 500 750 900 1000 1050 1000
(a) Calculate three-year moving average and the variation. [6]
(b) Calculate four-year moving average and the variation. [6]
(c) Plot both trend lines and actual sales revenue on graph paper. [6]
(d) Comment on the relationships between the actual sales revenue and the trends noted. [3]
(e) Extrapolate the four year moving trend line and predict the likely sales revenue for 2014,
taking into account the average variation. [4]
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Number of pages in the question booklet: 3 3
