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5.7 Crisis management and contingency planning

Practice exam-style IB Business and Management questions for Crisis management and contingency planning, aligned with the syllabus and grouped by topic.

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Paper
Difficulty
Status
Level
Question 1
HL • Paper 1
Medium
Calculator Permitted
HL • Paper 1
Medium
Calculator Permitted

FreshCrust is a small bakery chain with six shops in one city. A power failure at its central kitchen stopped production for a day, causing lost sales and complaints from supermarket customers. The managing director now wants managers to understand the distinction between responding to crises and preparing for possible future disruptions.

A

Define the term crisis management.

[2]
B

Explain the difference between crisis management and contingency planning with reference to FreshCrust.

[4]
Question 2
HL • Paper 1
Medium
Calculator Permitted
HL • Paper 1
Medium
Calculator Permitted

PureSip produces bottled fruit drinks for supermarkets. Several customers posted photos online of bottles with damaged seals. PureSip is investigating whether one batch may have been contaminated. The operations director must decide how to manage communication with customers, supermarkets and regulators.

A

Explain how transparency and communication could affect PureSip’s crisis management.

[4]
Question 3
HL • Paper 1
Medium
Calculator Permitted
HL • Paper 1
Medium
Calculator Permitted

Hilltop Events organizes outdoor music festivals. After heavy rain forced the cancellation of its largest festival, the owners are considering a contingency plan that would include emergency shelter, alternative suppliers, staff training and a system for notifying ticket holders.

A

Explain one cost impact and one time impact of contingency planning for Hilltop Events.

[4]
Question 4
HL • Paper 1
Medium
Calculator Permitted
HL • Paper 1
Medium
Calculator Permitted

GreenCart is an online grocery retailer. A warehouse refrigeration failure spoiled fresh food and delayed deliveries. The customer service team responded slowly because managers had not agreed who could authorize refunds or communicate with customers. GreenCart is reviewing the factors that affect effective crisis management.

A

Explain how communication and control could improve GreenCart’s crisis management.

[4]

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Question 5
HL • Paper 2
Medium
Calculator Permitted
HL • Paper 2
Medium
Calculator Permitted

MediQuick, a courier business delivering medicines to pharmacies, is considering a contingency plan for storm damage at its main depot. Without the plan, managers would have to rely mainly on crisis management after a storm occurs.

Measure

Value

Average orders delivered per day

1200 orders

Contribution per order

USD 8

Expected downtime after a serious storm without a standby depot

3.5 days

Expected downtime after a serious storm with a standby depot

1.0 day

Monthly standby depot fee

USD 6000

A

Calculate the reduction in lost contribution from using the standby depot for one serious storm. Show all your working.

[2]
B

Comment on whether the standby depot is financially justified for MediQuick if one serious storm occurs in the month.

[2]
Question 6
HL • Paper 1
Medium
Calculator Permitted
HL • Paper 1
Medium
Calculator Permitted

MedixLab manufactures specialist diagnostic kits for hospitals. Its main supplier of sterile plastic tubes recently warned of possible delivery delays. MedixLab is considering holding more inventory and approving a second supplier as part of a contingency plan, but its finance manager is worried about higher costs.

A

Outline two possible contingency planning actions MedixLab could take.

[2]
B

Explain one benefit and one limitation of these contingency planning actions for MedixLab.

[4]
Question 7
HL • Paper 2
Medium
Calculator Permitted
HL • Paper 2
Medium
Calculator Permitted

PureBite, a yoghurt manufacturer, discovered possible contamination in one product line. Senior managers compared an improvised crisis response with an existing recall contingency protocol.

Item

Improvised crisis response

Recall contingency protocol

Time between discovery and first public recall notice / hours

30

6

Estimated affected units sold during the delay / units

22000

4000

Compensation cost per affected unit sold / USD

1.50

1.50

One-off product testing cost under the protocol / USD

0

12500

A

Calculate the reduction in compensation cost from using the recall contingency protocol, before taking the testing cost into account. Show all your working.

[2]
B

Comment on the likely impact of speed and public communication on PureBite's crisis management.

[3]
Question 8
HL • Paper 2
Medium
Calculator Permitted
HL • Paper 2
Medium
Calculator Permitted

BlueHarbour Hotel is deciding whether to introduce an annual emergency evacuation contingency plan. The plan includes training, updated signage and evacuation drills. Managers estimate that the plan will reduce the time the hotel is closed during each emergency or serious false alarm.

Item

Figure

Staff training cost per year

USD 9600

Emergency signage cost per year

USD 2400

Paid staff time for drills per year

USD 3000

Average closure time per incident without the plan

6 hours

Average closure time per incident with the plan

2 hours

Expected number of incidents per year

4 incidents

Contribution lost per closure hour

USD 1100

A

Calculate the total annual cost of BlueHarbour Hotel's evacuation contingency plan. Show all your working.

[2]
B

Calculate the net annual financial impact of the plan, using the expected reduction in closure time. Show all your working.

[2]
C

Comment on one non-financial impact of the contingency plan for BlueHarbour Hotel.

[2]

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Question 9
HL • Paper 2
Medium
Calculator Permitted
HL • Paper 2
Medium
Calculator Permitted

TerraRide manufactures electric bicycles. It has received reports that some batteries may overheat. Managers must decide whether to make an immediate voluntary recall announcement or delay the announcement while they investigate.

Item

Immediate voluntary recall

Delayed announcement

E-bikes sold

12000

12000

Proportion of e-bikes potentially affected

8%

8%

Proportion of potentially affected e-bikes returned

65%

75%

Repair or refund cost per returned e-bike

USD 85

USD 85

Estimated injury claims

0

90

Average cost per injury claim

USD 0

USD 1200

A

Calculate the repair or refund cost of the immediate voluntary recall. Show all your working.

[2]
B

Calculate the estimated injury claim cost if TerraRide delays the announcement. Show all your working.

[1]
C

Comment on the importance of transparency and control in TerraRide's crisis management.

[2]
Question 10
HL • Paper 2
Medium
Calculator Permitted
HL • Paper 2
Medium
Calculator Permitted

MetroMed, a private clinic, is considering a contingency plan for sudden staff illness. The plan uses a bank of temporary nurses. The finance manager is concerned that the plan may not be financially worthwhile in months with only one staff illness incident.

Item

Without bank staff plan

With bank staff plan

Appointments cancelled per staff illness incident

45 appointments

10 appointments

Contribution per appointment

USD 35

USD 35

Compensation cost per cancelled appointment

USD 20

USD 20

Bank staff retainer per month

USD 0

USD 4000

Bank nurse shifts used per incident

0 shifts

5 shifts

Cost per bank nurse shift

USD 0

USD 220

A

Calculate the reduction in cancellation cost from using the bank staff plan for one staff illness incident. Show all your working.

[2]
B

Calculate the net financial impact of the bank staff plan in a month with one staff illness incident. Show all your working.

[2]
C

Comment on one non-financial reason why MetroMed might still keep the bank staff plan.

[1]
Question 11
HL • Paper 1
Medium
Calculator Permitted
HL • Paper 1
Medium
Calculator Permitted

SkyTrail is a regional airline. A software failure in its booking system led to cancelled flights and long queues at airports. Some airport staff gave passengers different information, and rumours spread on social media that SkyTrail had lost all customer data. Senior managers are trying to regain control of the situation.

A

Analyse the importance of speed and control in SkyTrail’s crisis management.

[6]
Question 12
HL • Paper 1
Medium
Calculator Permitted
HL • Paper 1
Medium
Calculator Permitted

UrbanClimb operates indoor climbing centres. A minor accident at one centre revealed that some staff were unsure how to evacuate injured customers and contact emergency services. The operations manager proposes a contingency plan including risk assessments, first-aid training, equipment checks and clearer shutdown procedures for climbing walls.

A

Analyse the impact of contingency planning on risks and safety at UrbanClimb.

[6]

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Question 13
HL • Paper 1
Medium
Calculator Permitted
HL • Paper 1
Medium
Calculator Permitted

RiverCare runs residential care homes for elderly people. A nearby river sometimes floods after storms. The board is considering a detailed contingency plan including evacuation transport, backup medicine storage, staff drills and agreements with another care provider to house residents temporarily. Some directors argue that the plan will be expensive and may never be needed.

A

Analyse the impact of contingency planning for RiverCare in terms of cost, time, risks and safety.

[6]
Question 14
HL • Paper 2
Medium
Calculator Permitted
HL • Paper 2
Medium
Calculator Permitted

SwitchWare, an online electronics retailer, is considering a cloud backup contingency plan to reduce the impact of cyber outages. The operations director is concerned about the monthly cost because outages are not frequent.

ItemWithout cloud backupWith cloud backup
Time to restore online sales system after an outage18 hours5 hours
Contribution lost per hour of outageUSD 900USD 900
Emergency IT consultancy cost per outageUSD 7000USD 2000
Monthly cloud backup feeUSD 0USD 4800

Item

Unit

Without cloud backup

With cloud backup

Time to restore online sales system after an outage

hours

18

5

Contribution lost per hour of outage

USD/hour

900

900

Emergency IT consultancy cost per outage

USD

7000

2000

Monthly cloud backup fee

USD/month

0

4800

A

Calculate the total saving from one cyber outage if SwitchWare uses the cloud backup, before taking the monthly backup fee into account. Show all your working.

[3]
B

Calculate the minimum number of cyber outages per year needed for the cloud backup to cover its annual fee. Show all your working.

[2]
C

Comment on one risk-related reason why SwitchWare might still choose the cloud backup even if fewer than four outages are expected.

[1]
Question 15
HL • Paper 2
Medium
Calculator Permitted
HL • Paper 2
Medium
Calculator Permitted

GulfLink Ferries is considering a contingency contract for a replacement vessel if one of its ferries has engine failure. The replacement vessel would reduce cancellations but requires a quarterly retainer.

Item

Without replacement vessel contract

With replacement vessel contract

Average cancellations after engine failure / days

2.0

0.5

Passengers per day

700

700

Average contribution per passenger / USD

12

12

Refund and goodwill cost per cancelled passenger / USD

8

8

Activation cost per incident / USD

0

6000

Quarterly retainer / USD

0

18000

A

Calculate the contribution revenue saved per engine failure incident by using the replacement vessel contract. Show all your working.

[2]
B

Calculate the net financial effect of using the replacement vessel contract for one engine failure incident in a quarter. Show all your working.

[3]
C

Comment on one reason why GulfLink Ferries might still use the replacement vessel contract.

[1]
Question 16
HL • Paper 2
Medium
Calculator Permitted
HL • Paper 2
Medium
Calculator Permitted

GreenGrid Farms, a vertical farming business, is deciding whether to introduce a water quality contingency plan. A recent contamination incident showed the difference between managing a crisis after contaminated produce reaches retailers and planning to detect contamination before delivery.

Item

No water quality contingency plan

Water quality contingency plan

Recall cost if contaminated produce reaches retailers

14,000 units × USD 2.20 per unit

USD 0

Shutdown time after contamination

3 days

1 day

Contribution lost per shutdown day

USD 2,800

USD 2,800

Emergency public relations cost

USD 5,000

USD 0

Disposal cost for isolated produce

USD 0

USD 3,000

Monthly water testing cost

USD 0

USD 1,200

A

Calculate the total cost of the contamination crisis if GreenGrid Farms has no water quality contingency plan. Show all your working.

[3]
B

Calculate the monthly net saving if the water quality contingency plan prevents one such crisis in that month. Show all your working.

[2]
C

Comment on the difference between crisis management and contingency planning in this situation.

[1]

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Question 17
HL • Paper 1
Hard
Calculator Permitted
HL • Paper 1
Hard
Calculator Permitted

CalmWave is a medium-sized manufacturer of baby skincare products. It sells mainly through pharmacies and online retailers. A small number of parents have complained on social media that one batch of baby lotion caused skin irritation. CalmWave has not yet confirmed whether the lotion is unsafe, but two major pharmacy chains have asked for an urgent explanation.

CalmWave has a basic quality control system but no detailed recall contingency plan. The operations director wants to create a plan that includes batch-tracing procedures, pre-approved communication templates, staff training, agreements with a product testing laboratory and a reserve fund for possible product recalls. The finance director argues that serious product safety problems are rare and that managers should deal with such events through crisis management if and when they happen.

A

Discuss whether CalmWave should develop a detailed recall contingency plan rather than rely mainly on crisis management.

[10]
Question 18
HL • Paper 2
Hard
Calculator Permitted
HL • Paper 2
Hard
Calculator Permitted

PolarPack Ltd manufactures insulated packaging for seafood exporters. A two-day port closure last year caused missed deliveries and spoiled customer orders. The operations director argues that PolarPack should create a contingency plan that includes a pre-approved road freight contract, emergency cold-storage space and named managers with authority to contact customers. The finance director argues that PolarPack should not commit funds before a disruption occurs and should manage any future crisis reactively.

PolarPack's managers have prepared estimated financial and operational data comparing the two approaches.

Metric

Reactive crisis management

Contingency plan

Annual preparation cost / US$

0

32,000

Extra delay after port reopens / days

1.5

0.5

Lost contribution per day / US$

20,000

20,000

Spoilage / compensation cost per disruption / US$

36,000

8,000

Named manager authorised to contact customers

No

Yes

Customer communication response time (hours)

12

1

Repeat orders from affected customers / %

68

88

A

Recommend whether PolarPack Ltd should introduce the contingency plan rather than rely mainly on crisis management after a disruption occurs. Use the data to make a conditional recommendation based on the expected frequency of similar closures; if this frequency is unknown, state the break-even frequency and explain how the customer-service benefits affect the decision.

[10]
Question 19
HL • Paper 1
Hard
Calculator Permitted
HL • Paper 1
Hard
Calculator Permitted

MetroFit operates 28 low-cost gyms in large cities. During a busy evening, a fire alarm failed at one gym and members were evacuated only after staff noticed smoke from an electrical fault. Nobody was seriously injured, but videos of confused employees and angry customers were widely shared online. A local newspaper reported that some staff told members the gym would reopen the next morning, while the head office later announced that the site would remain closed for safety checks.

The chief executive wants to lead the response personally. The operations manager argues that MetroFit’s crisis management should focus mainly on regaining control of the site and reopening quickly. The marketing manager argues that transparency and communication with members, staff, landlords and regulators are more important because the brand depends on trust.

A

Evaluate the importance of transparency, communication, speed and control in MetroFit’s crisis management.

[10]
Question 20
HL • Paper 1
Hard
Calculator Permitted
HL • Paper 1
Hard
Calculator Permitted

NorthPeak Adventures operates guided mountain cycling holidays. It has grown rapidly by promoting challenging routes in remote areas. Most customers are experienced cyclists, but some are international tourists unfamiliar with local weather conditions. Recently, a sudden storm caused a group to be stranded for six hours with limited phone signal. No one was injured, but customers complained that guides did not have enough emergency equipment and that families were not kept informed.

NorthPeak is considering a contingency plan for extreme weather and remote-route incidents. The plan would include satellite phones, emergency shelters at two key locations, guide training, revised risk assessments, a customer contact system and agreements with a local rescue service. The founder is concerned that the plan would be costly, take time away from selling holidays and make the business appear less adventurous.

A

Evaluate the impact of contingency planning on NorthPeak Adventures in terms of cost, time, risks and safety.

[10]

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Question 21
HL • Paper 2
Hard
Calculator Permitted
HL • Paper 2
Hard
Calculator Permitted

AssessPro is a private online assessment platform used by schools to run timed examinations. During a peak examination week, a software update caused some students to lose access to the platform. Within two hours, students and teachers were posting complaints on social media. Senior managers disagreed about the crisis response: the marketing director wanted to wait until the technical fault was fully understood before making a public statement, while the operations director wanted an immediate update, a temporary manual submission system and a named spokesperson.

AssessPro's managers have collected estimated data on the likely effects of alternative crisis responses.

Crisis-response approach

Time to first update (h)

Exam sessions affected

Service-credit cost (US$)

Support requests

Expected renewals (%)

Recovery time (h)

Delay until verified

6.0

58

24,000

420

71

36

Immediate update

0.5

34

18,000

260

83

22

Immediate + manual/spk

0.5

16

12,000

140

91

24

A

Evaluate the importance of transparency, communication, speed and control in AssessPro's crisis management.

[10]
Question 22
HL • Paper 3
Hard
Calculator Permitted
HL • Paper 3
Hard
Calculator Permitted

ReNet Works (RW) – a social enterprise recycling discarded fishing nets

Read the resources and answer the questions that follow.

Resource 1 — Background

ReNet Works (RW) is a social enterprise based in a coastal city. It collects discarded fishing nets from ports and converts them into storage crates sold to schools and small retailers. RW employs and trains former fishers whose incomes have fallen because of declining fish stocks. Any surplus is reinvested into beach clean-up programmes and safety training for fishing communities.

RW has grown quickly and recently won a three-year contract to supply 18 local schools. Its operations depend on one shredding machine, one rented workshop and a small team of 22 employees. The founder, Maia, has always focused on social impact and has not developed a detailed contingency plan.

Resource 2 — The crisis

A minor fire started in RW's shredding room after plastic dust overheated near the machine. No employees were seriously injured, but the workshop was closed by the landlord pending a safety inspection. Two school deliveries were delayed. A local news website reported that 'toxic smoke from recycled waste' had spread near homes, although the fire service has not confirmed this.

Resource 3 — Selected operational and financial information

ItemFigure
Average weekly sales revenueUSD 26 000
Contribution lost for each day the workshop is closedUSD 3 200
Estimated repair and deep-cleaning costUSD 18 500
Cash reservesUSD 21 000
Cost of annual safety audit and staff fire drillsUSD 7 800
Time required to approve a backup subcontractor6 weeks

Resource 4 — Social media statistic

A video of smoke outside RW's workshop received 310 000 views in 24 hours. RW has 42 000 followers on its main social-media account, but it has not posted an update since the fire.

Resource 5 — Quotation from Maia, founder of RW

'Our mission is to protect the sea and create meaningful work. I am worried that spending scarce funds on backup systems and safety drills will reduce the money available for community projects, but I also know that parents, schools and employees need reassurance.'

Resource

Key information

Figure / detail

1

Social enterprise in a coastal city; collects discarded fishing nets and converts them into storage crates; trains former fishers; surplus reinvested into beach clean-up and safety training; one shredding machine, one rented workshop, 22 employees.

Background

2

Minor fire in the shredding room after plastic dust overheated near the machine; no serious injuries; workshop closed by landlord pending safety inspection; two school deliveries delayed; local report claimed toxic smoke, but fire service has not confirmed this.

Crisis details

3

Average weekly sales revenue

USD 26,000

3

Contribution lost for each day the workshop is closed

USD 3,200

3

Estimated repair and deep-cleaning cost

USD 18,500

3

Cash reserves

USD 21,000

3

Cost of annual safety audit and staff fire drills

USD 7,800

3

Time required to approve a backup subcontractor

6 weeks

4

Smoke video views in 24 hours

310,000

4

Followers on main social-media account

42,000

4

Main social-media account update since fire

No update posted

5

Founder quotation

"Our mission is to protect the sea and create meaningful work. I am worried that spending scarce funds on backup systems and safety drills will reduce the money available for community projects, but I also know that parents, schools and employees need reassurance."

A

Explain the difference between crisis management and contingency planning with reference to RW.

[2]
B

Analyse the importance of speed and transparency in RW's crisis management.

[6]
C

Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for RW over the next 12 months.

[17]
Question 23
HL • Paper 3
Hard
Calculator Permitted
HL • Paper 3
Hard
Calculator Permitted

BridgeBytes (BB) – a social enterprise providing refurbished laptops

Read the resources and answer the questions that follow.

Resource 1 — Background

BridgeBytes (BB) collects donated laptops from companies, refurbishes them and provides them at very low prices to refugees, unemployed adults and students from low-income families. BB also runs free digital skills workshops. It is legally a private limited company but operates as a social enterprise: 70 percent of any surplus is reinvested into training and device donations.

BB relies on 65 volunteers and 11 paid employees. Its reputation depends on trust because some donated laptops previously held confidential corporate data. BB uses a basic checklist for wiping devices but has no formal contingency plan for data security failure or for communicating with donors if something goes wrong.

Resource 2 — The crisis

A school reported that a refurbished laptop supplied by BB still contained old files from a donor business. The files did not include customer bank details, but they included employee names and salary information. The donor business has suspended further donations and is considering legal action. BB's staff disagree about whether to issue a public apology before the investigation is complete.

Resource 3 — Extract from BB's draft risk register

RiskCurrent controlProposed contingency action
Data not fully removed from donated devicesVolunteer checklistPaid external audit every quarter
Loss of donor confidenceInformal emails from founderNamed spokesperson and donor update schedule
Volunteer error during refurbishmentOne-day inductionRefresher training and sign-off by paid technician
Sudden shortage of usable laptopsNoneAgreements with two backup donors

Resource 4 — Selected data

ItemFigure
Average number of laptops supplied per month480
Average contribution per laptopUSD 24
Estimated quarterly external audit costUSD 4 500
Estimated cost of volunteer refresher training each yearUSD 6 000
Expected time to create and test a data-breach contingency plan10 weeks

Resource 5 — Social media statistic and quotation

A post by a technology journalist about the data error has been shared 8 600 times. One donor manager wrote: 'We support BB's mission, but we cannot risk our employees' data being mishandled.'

Section

Item

Detail

Background

Organisation

Private limited company; social enterprise; 70% of any surplus reinvested in training and device donations

Background

Workforce

65 volunteers and 11 paid employees

Background

Trust context

Some donated laptops previously held confidential corporate data

Background

Current control

Basic device-wipe checklist; no formal contingency plan for data-security failure or donor communication

Crisis

Incident

Refurbished laptop still contained old files from a donor business

Crisis

Data involved

Employee names and salary information; no customer bank details

Crisis

Donor response

Further donations suspended; legal action being considered

Risk register

Data not fully removed

Current control: volunteer checklist; proposed contingency: paid external audit every quarter

Risk register

Loss of donor confidence

Current control: informal emails from founder; proposed contingency: named spokesperson and donor update schedule

Risk register

Volunteer error

Current control: one-day induction; proposed contingency: refresher training and sign-off by paid technician

Risk register

Usable laptop shortage

Current control: none; proposed contingency: agreements with two backup donors

Selected data

Laptops supplied per month

480

Selected data

Average contribution per laptop

USD 24

Selected data

Quarterly external audit cost

USD 4,500

Selected data

Volunteer refresher training cost per year

USD 6,000

Selected data

Time to create and test contingency plan

10 weeks

Social media

Post reach

Shared 8,600 times

Social media

Donor manager quote

"We support BB's mission, but we cannot risk our employees' data being mishandled."

A

Explain one way in which BB's current situation shows the difference between crisis management and contingency planning.

[2]
B

Analyse two possible impacts of contingency planning for BB in terms of cost, time, risks or safety.

[6]
C

Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for BB for the next two years.

[17]
Question 24
HL • Paper 2
Hard
Calculator Permitted
HL • Paper 2
Hard
Calculator Permitted

VeloChem Ltd manufactures specialist cleaning chemicals for bicycle repair shops. Its production site is close to a residential area. A recent minor leak was contained quickly, but it revealed that some employees were unsure of the evacuation procedure and that the emergency contact list was out of date. The production manager proposes a comprehensive contingency plan including annual safety drills, upgraded sensors, emergency containment equipment, extra insurance and a contract with a specialist clean-up company. The finance manager is concerned about the cost and the time required to train staff and test the plan.

VeloChem's board has been given estimates of the likely costs and operational effects of the proposed contingency plan.

Indicator

Current position

With contingency plan

Total extra annual spend (£/year)

£0

£46,000 total (drills £6k; sensors £9k; equipment £11k; contract £12k; ins +£8k)

Staff training/testing time (hours/year)

0

36

Serious leak probability (% per year)

10%

6%

Shutdown after serious leak (days)

6

2

Clean-up + compensation after serious leak (£)

£280,000

£110,000

Evacuation time after alarm (minutes)

9

4

Reportable injuries in serious leak (number)

3

1

A

To what extent should VeloChem Ltd implement the comprehensive contingency plan?

[10]

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Question 25
HL • Paper 3
Hard
Calculator Permitted
HL • Paper 3
Hard
Calculator Permitted

SafePlate Collective (SPC) – a social enterprise providing affordable meals

Read the resources and answer the questions that follow.

Resource 1 — Background

SafePlate Collective (SPC) is a social enterprise that prepares affordable ready meals for elderly people and families on low incomes. It buys imperfect vegetables from local farms and receives donated dry ingredients from supermarkets. SPC sells meals through community centres and delivers some meals free to people referred by charities.

SPC's mission is to reduce food waste and improve nutrition. It has expanded from 1 200 meals per week to 5 500 meals per week in two years. Most food preparation is carried out by paid staff, but labelling and packing are supported by volunteers. SPC has basic food hygiene procedures but no fully tested contingency plan for allergen labelling errors.

Resource 2 — The crisis

A customer with a severe nut allergy was admitted to hospital after eating an SPC vegetable curry. The meal label did not list nuts, but one donated ingredient may have been processed in a facility handling nuts. SPC stopped production of the curry but continued producing other meals. Community centres are asking whether all SPC meals are safe. Some volunteers are unsure what to tell customers.

Resource 3 — Selected data

ItemFigure
Meals currently prepared each week5 500
Proportion of meals supplied free to referred users28 percent
Average contribution per paid mealUSD 1.10
Estimated cost of a full allergen auditUSD 9 200
Estimated time for staff and volunteer retraining4 weeks
Current cash reservesUSD 14 500

Resource 4 — Social media statistic

A community centre's post asking whether SPC meals are safe has received 2 400 comments, many from relatives of elderly customers. SPC's own update only stated: 'We are looking into the issue.'

Resource 5 — Quotation from SPC's operations manager

'Stopping all meal production would protect us while we investigate, but it would also leave hundreds of vulnerable people without affordable meals this week. We need a plan that protects safety without abandoning our mission.'

Resource

Information

  1. Background

SafePlate Collective (SPC) prepares affordable ready meals for elderly people and low-income families; it buys imperfect vegetables and donated dry ingredients; sells through community centres and delivers some meals free to people referred by charities; mission is to reduce food waste and improve nutrition; output has grown from 1,200 meals/week to 5,500 meals/week in two years; volunteers help with labelling and packing; no fully tested contingency plan for allergen labelling errors.

  1. Crisis

A customer with a severe nut allergy was admitted to hospital after eating SPC vegetable curry; the meal label did not list nuts; one donated ingredient may have been processed in a facility handling nuts; SPC stopped production of the curry but continued producing other meals; community centres are asking whether all SPC meals are safe; some volunteers are unsure what to tell customers.

  1. Selected data

Meals currently prepared each week: 5,500; proportion supplied free to referred users: 28%; average contribution per paid meal: USD 1.10; estimated cost of a full allergen audit: USD 9,200; estimated time for staff and volunteer retraining: 4 weeks; current cash reserves: USD 14,500.

  1. Social media statistic

A community centre post asking whether SPC meals are safe has received 2,400 comments, many from relatives of elderly customers; SPC’s own update only stated: “We are looking into the issue.”

  1. Operations manager quotation

“Stopping all meal production would protect us while we investigate, but it would also leave hundreds of vulnerable people without affordable meals this week. We need a plan that protects safety without abandoning our mission.”

A

Describe one stakeholder safety risk that SPC should consider in contingency planning.

[2]
B

Analyse the importance of communication and control in SPC's crisis management.

[6]
C

Using all the resources provided and your knowledge of business management tools and theories, recommend a possible plan of action for SPC over the next 18 months.

[17]

5.6 Production planning

5.8 Research and development