IB Business Management HLTopic 6 — The Toolkit in PracticePapers 1, 2 & 3Exam skill~11 min read
Applying Business Plans and Descriptive Statistics
This kind of case study hands you charts and tables and expects you to do two things: calculate the right figures, and then use them to argue about a business plan and a loan. The calculations are worth a few marks. What you say about them is worth far more.
📘 What you need to know
Read every chart before you start: what is on each axis, what units, what time period.
Common calculations: weighted mean from a ratings chart, median from a price table, standard deviation from monthly figures.
Every figure needs a sentence saying what it means for planning: cash, staff, stock or price.
A business plan is judged on whether the forecasts are believable, not on how neat it looks.
A lender wants to know if the business can repay, and looks at credit history and security too.
Evaluation means questioning the sample: how big, chosen how, and how recent.
The mini case: Harbour Sail Tours
Harbour Sail Tours has run small catamaran trips from one harbour town since 2007, using two boats. It plans to add larger corporate group trips and needs a bigger boat, so the owners have written a business plan and approached their bank for $340,000. Its review scores up to last season were: 120 excellent, 40 very good, 15 average, 10 poor and 15 terrible. Nearly-new boats on the market are priced at $390,000, $430,000, $450,000 and $520,000. Confirmed corporate bookings at local hotels over the last five months ran 300, 1,100, 1,500, 1,900 and 2,700.
What the bookings data really shows
The shaded band covers 700 to 2,300 bookings. Two of the five months fall outside it entirely, which is exactly the point.
The calculations
WORKED EXAMPLE
Calculate the mean review rating for Harbour Sail Tours to one decimal place. [2 marks]
Step 1: count the reviews120 + 40 + 15 + 10 + 15 = 200Step 2: total the score(5 × 120) + (4 × 40) + (3 × 15) + (2 × 10) + (1 × 15)600 + 160 + 45 + 20 + 15 = 840Step 3: divide840 ÷ 200 = 4.2Mean rating = 4.2 out of 5divide by 200 reviews, not by 5 categories
WORKED EXAMPLE
Calculate the median price of the nearly-new boats available. [2 marks]
Step 1: put them in order$390,000 $430,000 $450,000 $520,000Step 2: four values, so take the two in the middle$430,000 and $450,000Step 3: find the halfway point($430,000 + $450,000) ÷ 2Median price = $440,000note this is $100,000 above the loan Harbour Sail asked for — that is a real problem worth raising
That last note is the difference between a calculation and an answer. The bank is being asked for $340,000 and the middle boat on the market costs $440,000. Somebody has to explain the gap, and spotting it is worth more than the median itself.
WORKED EXAMPLE
Explain one advantage and one disadvantage to Harbour Sail Tours of calculating the standard deviation of corporate bookings. [4 marks]
Advantage, appliedA standard deviation of 800 on a mean of 1,500 shows how far a typical month sits from the average [1], so Harbour Sail can plan crew and cash for a 300-booking month rather than assuming every month behaves like the average one [1].Disadvantage, appliedIt is more complex than a simple average and needs care to interpret [1], and a family business with a handful of staff is unlikely to employ anyone able to use it properly without paying for advice [1].4 marksfive months is also a very small sample — worth a sentence if there is room
Turning the data into a plan argument
Figure
What it says
What it means for the plan
Mean rating 4.2 / 5
Guests are generally very happy
Strong evidence of demand and service quality for the plan’s market section
15 terrible reviews out of 200
Around 7% had a bad experience
Scaling up to larger groups could make that worse, not better
Median boat $440,000
The typical boat costs more than the loan
Either the loan is too small or the owners are adding their own funds
Bookings mean 1,500, sd 800
Demand swings hugely month to month
The cash flow forecast must survive a 300-booking month
Only five months of data
A very small, recent sample
Forecasts in the plan rest on thin evidence
WORKED EXAMPLE
Discuss the implications for Harbour Sail Tours of producing a business plan. [10 marks — extract]
The case forA detailed plan is what gets the bank to look seriously at $340,000. It would set the mean rating of 4.2 and the strong corporate booking trend alongside forecast repayments, letting the lender judge whether Harbour Sail can service the debt and whether the idea has commercial merit.The case againstThe forecasts rest on five months of local hotel data with a standard deviation of 800 on a mean of 1,500. That is a small, volatile sample, and Harbour Sail has never served corporate groups, so demand for its own trips is an assumption rather than a finding. Writing the plan also takes owner time away from running the season.A gap the plan must closeThe median boat price is $440,000 against a $340,000 request. Unless the owners are contributing the difference, the plan does not yet fund what it proposes, and a lender will spot that immediately.JudgementThe plan is worth producing, mainly because no bank will release the money without one, but it should be treated as a working document rather than a finished case. Harbour Sail should widen the booking data beyond five months, state clearly where the remaining $100,000 comes from, and revise the forecasts after one corporate season. Other factors, including the owners’ credit history and how convincingly they present, will influence the bank as much as the document itself.Produce it, but fix the funding gap and the sample firstthe strongest answers use the numbers they calculated earlier in the judgement
💡 Exam tips
Reuse your own calculations later in the paper. The 10-mark answer should quote the figures from parts (b) and (c).
Round only at the end, and to the precision the question asks for.
Always compare the standard deviation to the mean. 800 against 1,500 is enormous; 800 against 50,000 is nothing.
Question the sample size out loud. Five months is a legitimate criticism.
Mention that the bank also weighs credit history and security, not just the plan.
Look for a mismatch between the numbers, like a loan that does not cover the asset. Spotting it is high-level application.
⚠ Common mix-ups
Dividing by the number of categories instead of the number of reviews.
Forgetting to sort before taking a median.
Quoting a figure with no interpretation. A naked number scores the calculation mark only.
Treating the plan as a guarantee that the loan will be approved.
Confusing profit with cash. A profitable season can still run out of money in a 300-booking month.
Ignoring the charts and answering from general knowledge about business plans.
That completes Topic 6. Up next: Using SWOT Analysis — go back to the start of the toolkit and run every tool against one business you actually know. Doing that once is worth more than reading these pages three times.
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