36 exam-style questions on Growth and evolution — topic 1.5 of Introduction to business management in the IB Business Management syllabus — with answers and explanations. Samples below; the full set is free with an account.
A coffee producer buys a chain of retail coffee shops that sell its coffee. This is an example of:
Answer: forward vertical integration
Forward vertical integration is a merger/takeover with a business further forward in the supply chain (closer to the customer); backward integration moves towards suppliers.
According to the Ansoff matrix, which growth strategy carries the LOWEST risk for a business?
Answer: Market penetration
Market penetration sells existing products in existing markets, so the firm operates entirely on familiar ground; diversification (new product, new market) carries the highest risk.
Which of the following is an advantage TO THE FRANCHISOR of growing through franchising?
Answer: It can expand rapidly using capital invested by franchisees
Franchisees finance their own outlets and pay fees and royalties, allowing the franchisor to grow quickly with limited capital; in return the franchisor gives up some control and most outlet profit.
Two rival airlines operating in the same market and at the same stage of production agree to combine into a single company. This is an example of:
Answer: Horizontal integration
Horizontal integration joins firms in the same industry at the same stage of production; vertical integration would involve a different stage of the supply chain.
A joint venture differs from a strategic alliance mainly because a joint venture:
Answer: Creates a new, separate entity owned by the partners
In a joint venture the partners set up and jointly own a distinct new legal entity, whereas in a strategic alliance the firms cooperate while remaining fully independent.
A supermarket chain negotiates lower unit prices from producers by buying its stock in very large quantities. This is an example of which internal economy of scale?
Answer: Purchasing economies
Purchasing (bulk-buying) economies arise when large orders earn discounts that reduce the average cost per unit; financial economies concern cheaper borrowing, technical economies concern efficient machinery.
That was 6 of 36 Growth and evolution questions.
Practise all 36 freeDistinguishAO2 · 4–6 marks
Make the difference clear for BOTH terms — a definition of one of them is only half an answer.
StateAO1 · 2 marks
One word or one short sentence. No explanation, no working: the mark is for the fact itself.
CompleteAO4 · 2–4 marks
Fill in what is missing in the table, diagram or calculation — check every blank.
36 Growth and evolution questions — free with an account. Spaced repetition, streaks and full exam simulations included.
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