Business management
Higher level
Paper 3
Specimen paper
1 hour 15 minutes
Instructions to candidates
y Do not open this examination paper until instructed to do so.
y Read the stimulus material carefully.
y Answer all questions.
y You are permitted access to a calculator for this paper.
y The maximum mark for this examination paper is [25 marks].
0000 – 5013
4 pages © International Baccalaureate Organization 2021
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Share My Lunch (SML)
Read the resources and answer the questions that follow.
Resource 1 – News article
Share My Lunch claims it has served 100 000 free school meals over
the last four years, but is everything okay?
buy one
give on
e
SML’s promise: you buy one meal, they’ll donate another!
Share My Lunch (SML), a privately owned social enterprise, has just shared its 100 000 th healthy free
meal with local school children.
SML’s vision statement is, “To ensure that no child goes hungry at school by providing healthy free meals
to those in need”. The Global Health Organization’s recent data (Table 1), which is based on schools in
42 countries, provides evidence of the positive impact of healthy meals.
Table 1: The impact on schools of introducing healthy meals
Percentage (%) of schools Impact on schools
62 Improved student attendance
69 Improved student behavior
89 Improved student wellbeing
SML was created by a group of students who were volunteering at a shelter providing free breakfasts to
homeless people, during which they realized that many recipients were school-aged children. The central
idea of the enterprise is that, for each lunch produced by SML and purchased by a customer, a free
healthy lunch is donated to a school child in a lower-than-average income area in that community. The
free lunches are delivered to the schools on a daily basis.
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As a start-up, SML was financed in 2018 through donations and staffed mostly by volunteers. Today,
it has 10 paid managers and a chief executive officer (CEO). The launch of SML was accompanied by
a significant media event supported by the government and a number of well-known sport and media
celebrities. Now, SML generates 80 % of its revenue through sales of its lunches.
Despite its enormous success, SML has recently had some issues with negative publicity and
uncertainty over its new strategic direction. A number of dissatisfied volunteers have collectively and
anonymously written several negative posts on social media referring to:
y the very high salaries of the CEO, while volunteers receive no pay
y the reduction of the budget for providing healthy free meals to school children, which comes at a
time when the prices for SML’s paid-for lunches have increased and concerns over food quality
have arisen
y the poor working conditions and declining motivation of SML’s volunteers.
The management of SML have not replied to media requests to confirm or deny these accusations.
Resource 2 – Social media posts from a dissatisfied volunteer
SML is lying. What happened to their ethical objectives and business transparency*?
I have just finished a four-hour shift making lunches for school kids and had to eat
some of the food because I cannot afford to buy my own lunch. Today, I found out
that the CEO is paid a very high salary. The food I am preparing is increasingly poor
quality because food costs are rising. I will share some figures in my next post.
SML’s management do not want you to see these.
[1/2]
Financial figures from 2022
Price of lunch to paying customer: $20
Cost of providing free lunch to school children: $6 including delivery
Average number of meals sold
to paying customers per year since 2018: 80 000
CEO salary: $400 000 per year
Donations to SML: Approximately $1 million
per year
Number of volunteers: 80–100
SML’s profit for 2021: Unavailable because
SML is a private
limited company
[2/2]
* business transparency: the open sharing of information
from a business to its consumers
Turn over
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Resource 3 – Internal email from SML’s CEO to all managers regarding the enterprise’s
new strategic direction
• CEO@sharemylunch.com
To: volunteers@sharemylunch.com
Dear all,
Please note that it is against our company policy for volunteers to post about
SML on social media, and we will find those responsible for the recent posts.
Now we must focus on our next strategic direction. It was noted in our last
meeting that:
y our food costs are rising and, given our growth, we will have to pay our volunteers
a wage if we want to increase production
y if we want to continue to be sustainable and ethical and remain true to our vision,
we will need to find new sources of finance
y we have been approached by one of our fast-food competitors, a large publicly
owned multinational company (MNC), about a possible joint venture. We would
benefit from significant internal and external economies of scale if we partnered
with this company.
A possible way forward is to use Porter’s generic strategies, adopting either a cost
focus strategy (if we stay in our narrow market) or a differentiation strategy (if we
decide to try and increase market growth). Other strategies could also be used.
However, we need to make a quick decision, as this will affect SML for the next five
years at least.
CEO, Share My Lunch
CONFIDENTIAL: This email and any files transmitted with it are confidential and
intended solely for the use of the individual or entity to whom they are addressed.
1. Using an appropriate business management theory, describe a human need that SML meets
by donating free healthy lunches to school children. [2]
2. Explain two possible challenges facing SML.[6]
3. Using all the resources provided and your knowledge of business management, recommend
a possible plan of action to ensure the sustainability of SML for the next five years. [17]
References:
Resource 1. [left] Daderot, 2016. Lunch - Hessisches Landesmuseum Darmstadt [online] Available at: https://commons.
wikimedia.org/wiki/File:Lunch_-_Hessisches_Landesmuseum_Darmstadt_-_Darmstadt,_Germany_-_DSC00671.
jpg [Accessed 10 May 2021]. source adapted.
[right] Steffen, 2006. Meal in Taizé with the new cup [image online] Available at: https://commons.wikimedia.org/
wiki/File:Taize-meal-new_cup.jpg [Accessed July 9, 2021]. source adapted.
