InThinking Business Management
May 2024 Paper 1 Mock Exam – Before One PLC (BON)
Deborah Kelly
https://www.thinkib.net/businessmanagement
Business management
Higher level and standard level
Paper 1
1 hour 30 minutes
Instructions to candidates
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Do not open this assessment paper until instructed to do so.
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Read the case study carefully.
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Section A: answer all questions.
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Section B: answer one question.
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A calculator is permitted for this examination paper.
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The maximum mark for this examination paper is [30 marks].
For Examiner Use
Paper 1
A
all
B
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Total
Points
IB
Grade
4 pages (including the cover page)
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Before One PLC (BON)
Music festivals are growing in number globally. Festivals vary in location, size, and music genre.
They include commercial multiple-day events on farmland and community-led events in publicowned parks.
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Before One PLC (BON), a European company, has organized music festivals since 2001.
In 2016, BON converted from a private limited company to a public limited company to raise
finance for expansion. BON has 60 permanent employees but also relies on temporary workers
and freelancers.
BON organizes five music festivals each year and has contracts with five farmers to use their
farmland for an average fee of $100 000. BON must clean up after a festival at an average
cost of $250 000 per festival. BON’s directors regard environmental sustainability as a
significant challenge.
BON’s festival season runs from May to August. Each music festival runs from Friday to
Sunday. Each festival site:
• takes two weeks to set up and one week to dismantle.
• requires security fencing, 60 stages, enough space for camping, 3000 toilets, and 25 000
waste bins.
The global music festival size was valued at almost $25 billion in 2022 and is expected to grow
at a rate of an annual rate of 22.89% by 2028. The US has the highest revenue in the music
festivals market, and showed resilience and adaptability during the global pandemic through
innovation and the rise of virtual concerts and livestreaming platforms. The European annual
growth rate is expected to be 6.1%.
The COVID-19 pandemic negatively impacted BON’s profitability because of festival
cancellations due to health and safety concerns. BON survived the pandemic through
government grants, and used the company’s credit card for bill payments despite the high
interest rate. In 2022, BON was profitable for the first time since the pandemic with 400 000
attendees. This increased to 496 000 in 2023, which surpassed its pre-pandemic numbers.
BON is conscious of the important role it plays in reducing the impact on the environment. All of
its food vendors must use bamboo plates and cutlery. BON also uses solar power and makes
every effort to ensure that the amount of garbage that goes to a local landfill site is minimal.
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Fifty percent of music festival attendees are between the ages of 18-34. This age group values
experiences beyond the advertised music and entertainment features. This segment regularly
attends music festivals and are willing to spend money to see their favourite music performers.
These people like a variety of music genres and place value on environmental initiatives.
Despite BON’s approach to environmental sustainability, many of the attendees posted photos
after one of the festivals in 2023 that depicted a large amount of waste from the festival in a
nearby reservoir. This went viral on social media and BON was accused of greenwashing.
Merchandise sales are a large part of music festivals and are an additional revenue stream for
BON. The firm uses a sustainable UK supplier that uses quality organic cotton, designed to be
remade into new products. It uses plastic-free packaging and the factory is powered by
renewable energy. The goods are made in batches for each of BON’s music festivals.
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The board of directors oversee the operations of BON, but it is the senior managers who are
directly involved in the daily operations and are in charge of the various functions. The senior
managers were instrumental in the founding of BON in 2001. They oversee the functional line
managers. There have been recent complaints from some of the freelancers that the
predominately autocratic leadership style of the senior managers does not match the music
industry vibe.
Many of the freelancers travel the world and work at several music festival venues globally
over the course of a year. It is a lifestyle they value, but due to the worldwide increase in costs,
they are finding it more difficult to earn enough money to live on.
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Overall, the music festival sector is facing increased costs, and that is putting strain on event
organizers like BON. The costs of energy (even solar energy), employees, purchasing, and
artists have all increased significantly. In particular, the shift to streaming in the music industry
has resulted in more artists touring and performing in music festivals to earn the money they
used to make from releasing music albums. As a result, the fees of well-known music
performers are high, yet they are needed to appeal to their fan base and attendees. To
overcome this, the ticket prices for BON’s music events continue to rise.
As music festivals become more popular, the industry has become much more competitive.
BON’s directors were cautious during the pandemic but are now focused on growth and
increasing BON’s profitability. There has also been pressure from BON’s shareholders
for increased dividends. The directors have come up with two options that they are
considering in an attempt to cut costs and increase profitability:
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Option 1 – There is an opportunity for a joint venture with a US music festival organizer that
would offer four mixed genre festivals together in America. However, this organizer does
not have a strong environmental focus, but does donate a portion of its profits to a NGO
that supports artists from less economically developed countries.
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Option 2 – There is an opportunity for BON to discontinue using the UK manufacturer of
the merchandise goods for its music festival and to offshore the production to a supplier in
Vietnam. Unlike the UK manufacturer, the supplier in Vietnam does not use a resource
recovery circular business model, although it does use recycled materials.
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Companies, products, or individuals named in this case study are fictitious and any similarities with
actual entities are purely coincidental.
Sources:
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Global Music Festival Market Insights and Trends, Forecasts to 2029 |Industry
Research Biz https://www.linkedin.com/pulse/global-music-festival-market-insightstrends-forecasts
Must-Know Festival Attendance Statistics GITNUX Market Dat Report 2024 13 Dec 2023
https://gitnux.org/music-festival-statistics/
This Is Music 2023 Economic Report | UK Music|
https://www.ukmusic.org/wp- content/uploads/2023/10/This-Is-Music2023-Economic-Report.pdf
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Section A
Answer all questions from this section.
1.
Define the term environmental sustainability (line 10).
[2]
2.
Define the term leadership style (lines 45-46).
[2]
3.
Explain one advantage and one disadvantage to BON of changing the form of
business ownership from a private limited company (privately held company) to a
public limited company (publicly held company) in 2016 (line 5).
[4]
4.
Explain two external factors that could impact BON’s operations.
[4]
5.
Calculate BON’s market growth from 2022 to 2023 (lines 25-26).
[2]
6.
Explain two potential sources of conflict that may arise between BON’s stakeholder
groups.
[6]
Section B
Answer one question from this section.
7.
Recommend whether BON should offshore its production to Vietnam.
[10]
8.
Discuss whether BON should accept or reject the joint venture opportunity in the US.
[10]
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