IB DP Business Management: International marketing (HL only) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – the IB holds copyright in its own papers. Use these alongside the official past papers available through your school or the IB store.

These questions cover section 4.6, International marketing, of the IB Business management guide (first assessment 2024). The section is HL only, so every question is HL. Read the study guide and revision notes first. The course hub is IB DP Business Management and the printable list is the syllabus checklist. All businesses and figures are invented. The free diagnostics are linked again at the end.

Questions

1. Define the term exchange rate. [2]

2. State two opportunities that a business may gain by entering an international market. [2]

3. Outline two threats that a business may face when operating internationally. [4]

4. Distinguish between standardization and adaptation of a marketing mix. [3]

5. Oxlip Audio sells headphones from a country that uses the US dollar (USD) at USD 120.00 each. The importing country charges a tariff of 8% of this price. Shipping and handling is USD 14.00 per pair. A local rival sells a similar pair in the importing country for the equivalent of USD 138.00.

(a) Calculate the tariff per pair. [1] (b) Calculate the landed cost per pair in USD. [1] (c) Calculate by how much, and by what percentage, the landed cost exceeds the rival’s price. Give the percentage to one decimal place. [2] (d) Explain one response Oxlip could make to this price gap. [3]

6. Moonwick Skincare sells 18,000 units a year in a market that uses the euro (EUR) at EUR 25.00 each. At the start of the year EUR 1 = USD 1.10. By the end of the year EUR 1 = USD 1.00.

(a) Calculate the USD received per unit at each exchange rate. [2] (b) Calculate the fall in USD revenue for the year, assuming 18,000 units are sold at EUR 25.00 at the new rate. [1] (c) Calculate the percentage fall in the USD value of each unit’s sales price. Give your answer to one decimal place. [2]

7. Explain two ways in which cultural differences between countries may lead a business to adapt its marketing mix. [4]

8. Eldermoor Furniture plans to sell flat-pack bookcases abroad. To meet local room sizes and labeling needs, it must change the design. This costs USD 60,000 once. Each bookcase sold earns a contribution of USD 40. Forecast sales with the change are 800 units in year 1, 1,100 in year 2 and 1,400 in year 3. Without the change, Eldermoor expects its distributor to sell 300 units a year.

(a) Calculate the number of bookcases Eldermoor must sell to recover the cost of the change. [2] (b) Calculate the total contribution after the cost of the change over the three years, and state in which year the cost is recovered. [3] (c) Evaluate whether Eldermoor should make the change. [6]

9. Gallowby Bakery, a successful business in its home country, plans to sell frozen pastries to a country 9 days away by sea freight. Its brand name is unknown there. Local bakeries are popular and trusted. Ingredient labeling rules differ from those at home, and Gallowby’s packs would need to be redesigned and printed in another language.

Analyse three threats that Gallowby faces in this plan. [6]

10. Kelpie Cove Seafood sells canned fish at USD 10.00 a can in its home market. Variable cost is USD 6.50 a can. It is choosing one of two new markets to enter. Entry cost is a one-off figure.

	Market A	Market B
Target consumers	12 million	30 million
Expected market growth a year	4%	9%
Tariff on imports	None	18% of price
Share held by largest local rival	55%	20%
Currency of buyers over last two years	Stable	Fell 14% against USD
Entry cost	USD 1,100,000	USD 1,900,000
Expected year 1 share of target consumers who buy one can	3%	2%

(a) For each market, calculate the expected year 1 units, the contribution and the contribution less entry cost. [4] (b) Recommend which market Kelpie Cove should enter first. [6]

11. Explain one reason why a business with a strong brand at home may find that brand a weaker asset abroad. [3]

Answers

1. The rate at which one currency can be swapped for another [1], for example the number of euros received for one dollar [1]. [2] Examiner insight: A definition that only says “the value of money” is vague; saying that it links two currencies shows the idea.

2. Any two of: a larger customer base; spreading risk across markets; economies of scale; lower costs of labour or materials; a longer product life. One mark each [1] [1]. [2] Examiner insight: “State” asks for brief points with no explanation, so two clear named opportunities are enough.

3. Threat 1, for example exchange rate movements [1], which can reduce the home-currency value of foreign revenue [1]. Threat 2, for example cultural differences [1], which can make a product name or advert unsuitable [1]. [4] Examiner insight: “Outline” is a brief account, so name each threat and add one short line of what it does; a bare list is likely to earn less.

4. Standardization means using the same marketing mix in every market [1]. Adaptation means changing parts of the mix to suit each market [1]. Distinction: standardizing keeps costs lower, while adapting fits local needs better [1]. [3] Examiner insight: “Distinguish” needs the difference stated, so use a link word such as “whereas”.

5. (a) 8% x 120.00 = USD 9.60 [1]. [1] (b) 120.00 + 9.60 + 14.00 = USD 143.60 [1]. [1] (c) 143.60 - 138.00 = USD 5.60 [1]. 5.60 / 138.00 x 100 = 4.1% [1]. [2] (d) Oxlip could accept a lower margin and cut its own price [1]; this would close the USD 5.60 gap [1] but lower profit per pair, so volume would need to rise [1]. [3] Examiner insight: A calculation answer should show the three cost elements added; a response in (d) is stronger when it uses the USD 5.60 figure from your own working.

6. (a) Start: 25.00 x 1.10 = USD 27.50 [1]. End: 25.00 x 1.00 = USD 25.00 [1]. [2] (b) (27.50 - 25.00) x 18,000 = 2.50 x 18,000 = USD 45,000 [1]. [1] (c) 2.50 / 27.50 x 100 = 9.1% [1] fall. The base is the original value, 27.50 [1]. [2] Examiner insight: Use the earlier value as the base for a percentage fall; using the new value gives a different answer.

7. First way: language and meaning [1]. A brand name or slogan may be unsuitable or confusing in another language, so promotion and packaging need to be changed [1]. Second way: tastes and customs [1]. For example, flavours, sizes or colors may differ by culture, so the product itself may need changing to meet local demand [1]. [4] Examiner insight: Two developed points usually score better than four undeveloped ones, so link each cultural difference to a named part of the mix.

8. (a) 60,000 / 40 [1] = 1,500 bookcases [1]. [2] (b) Total units = 800 + 1,100 + 1,400 = 3,300 [1]. Contribution = 3,300 x 40 = USD 132,000, less 60,000 = USD 72,000 [1]. Cumulative units: 800 after year 1, 1,900 after year 2, so 1,500 is passed in year 2 [1]. [3] (c) For: the change pays back during year 2 [1]. Net contribution is USD 72,000, against 300 x 3 x 40 = USD 36,000 without the change, so the change adds USD 36,000 over three years [1]. Sales also grow each year, which suggests the product suits the market [1]. Against: the figures are forecasts, so lower sales would delay recovery [1]. Year 1 shows a loss of USD 28,000 after the cost (32,000 - 60,000), so the firm needs cash to cover it [1]. Judgment with a reason, for example that Eldermoor should make the change if it can fund the first-year shortfall, because the gain is positive and growing, but it should first test the forecast with market research [1]. [6] Examiner insight: “Evaluate” needs both sides and a reasoned conclusion; a strong answer uses the without-change comparison rather than judging the USD 72,000 on its own.

9. Any three, each developed in context. Cultural and language difference: new packs in another language [1] raise cost and risk poor translation of the brand name [1]. Local competition: popular, trusted local bakeries [1] mean Gallowby, with an unknown brand, may find it hard to win customers [1]. Legal and logistics: different labeling rules [1] may need new packs, and a 9-day sea journey for frozen goods [1] raises the cost and risk of spoilage. [6] Examiner insight: “Analyse” rewards cause and effect tied to the case details such as the 9-day journey, so avoid a general list of threats.

10. (a) Contribution per can = 10.00 - 6.50 = USD 3.50 [1]. Market A: 12m x 3% = 360,000 units; contribution 360,000 x 3.50 = USD 1,260,000; less 1,100,000 = USD 160,000 [1]. Market B: 30m x 2% = 600,000 units; contribution 600,000 x 3.50 = USD 2,100,000; less 1,900,000 = USD 200,000 [1]. Both sets of three figures are shown [1]. [4] (b) For B: higher year 1 net figure (USD 200,000 against 160,000) [1]; a much larger and faster-growing market (9% against 4%) [1]; a weaker top rival (20% share against 55%) [1]. Against B: the 18% tariff makes the price USD 11.80 to the buyer, which explains the lower expected take-up [1], and the buyers’ currency has fallen 14%, so prices may rise further [1]. Recommendation with a reason, for example that Kelpie Cove should enter B first if it can absorb a larger USD 1,900,000 entry cost, because the gap in year 1 is small but the growth and rival position are better, while monitoring the currency; if cash is tight or risk is a concern, A is safer [1]. [6] Examiner insight: A “recommend” answer should choose one option and say what the choice depends on; the year 1 figures alone do not settle it.

11. A strong brand at home depends on customers knowing and trusting it [1]. Abroad, customers may not know the brand [1], so the business must spend on promotion again before the brand gives a price or loyalty advantage [1]. [3] Examiner insight: Show a cause and a result, namely why the brand does not travel and what that costs, rather than only saying brand awareness is lower.

Where marks are usually lost

• Giving a general list of opportunities and threats that does not use the case.
• Missing the shipping or tariff when finding a landed cost.
• Using the new value as the base of a percentage fall.
• Quoting an exchange rate the wrong way round when converting.
• Treating a bigger market as a guaranteed gain.
• Judging an adaptation without comparing it with doing nothing.
• Recommending an option with no stated reason or condition.
• Giving an “evaluate” answer with one side only.

Next steps

• Review the revision notes and the study guide.
• Open the IB DP Business Management hub and the syllabus checklist.
• Take all free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

Is international marketing examined at SL in IB Business Management? No. Section 4.6, International marketing, is HL only in the IB Business management guide, first assessment 2024, and the guide’s assessment outline places HL extension topics in Paper 2 and Paper 3 at HL rather than Paper 1.

How do you calculate a landed cost in an international marketing question? Landed cost is the firm’s price plus the tariff plus shipping and handling. Missing the tariff or the shipping is a common way to lose marks.

What mistakes do students make with exchange rate calculations? Common errors are quoting the exchange rate the wrong way round when converting and using the new value instead of the original value as the base of a percentage fall. State the direction of the currency move and show each step.

How do you evaluate whether a business should go international? Weigh opportunities and threats from the case using its figures, compare the decision with doing nothing, and look at short run and long run. End with a judgement that states what it depends on, since treating a bigger market as a guaranteed gain loses marks.

Official syllabus

IB Diploma Programme Business management guide (first assessment 2024), International Baccalaureate Organization, Unit 4, section 4.6 International marketing (HL only).