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P3

Paper 3: the social enterprise paper

Assessment · Higher level only

Paper 3 is higher level only. It presents a social enterprise trying to meet a human need, through an introduction, a picture of its product and five or six short documents. You describe the need, explain the challenges, and write a plan of action with a recommendation. This page explains the three questions and the four criteria used for the plan, then works through a practice paper.

🎯What this page covers

  • HL The structure, timing and weighting of Paper 3.
  • HL What questions 1 and 2 ask for and how they are marked.
  • HL The four assessment criteria for the 17-mark plan of action, and how to structure it.
  • HL A practice paper with a model answer plan.

📚The paper

Format
1 hour 15 minutes plus 5 minutes’ reading. 25 marks. Three compulsory questions on unseen stimulus material. Units 1 to 5, including HL content.
Weighting
25% of the HL grade.
Question 1 (2 marks, AO1)
describe the human need the social enterprise is trying to meet.
Question 2 (6 marks, AO2)
explain the challenges facing the social entrepreneur or social enterprise.
Question 3 (17 marks, AO3/AO4)
recommend a plan of action for the organization to meet the human need, as a decision-making document.
Marking
questions 1 and 2: analytic markscheme. Question 3: four criteria, A to D.

The stimulus

A short introduction to the organization, a visual of its product (a photo or drawing), and five or six excerpts from documents such as emails, social media posts, news articles, interview notes, financial data or survey results. Read every excerpt: criterion A rewards using all of them.

Questions 1 and 2

  • Q1: say precisely what the need is and whose need it is, using the stimulus (for example, safe, affordable housing for coastal families). A human need is more basic than a product: people need clean water, not “a filter”.
  • Q2: identify challenges (finance, scaling, staffing, pricing for poor customers, competition, regulation, mission drift, measuring impact), explain why each is a problem, and anchor each in a specific excerpt. Two or three well-developed challenges beat a long list.

Question 3: the four criteria (17 marks)

  • A: Use of resource materials (4). Top level: reference to all the resource materials, used effectively to support the plan.
  • B: Business management tools and theories (4). Top level: appropriate tools and theories effectively applied (SWOT, STEEPLE, Ansoff, force field, sources of finance, break-even, the marketing mix, motivation theory, and so on).
  • C: Evaluation (6). Top level: the expected impact of the plan on the relevant areas of the business (finance, HR, marketing, operations) is evaluated, including the trade-offs between those areas.
  • D: Sequencing of ideas and plan of action (3). Top level: ideas and the plan are sequenced in a clear, coherent order.

A structure that meets all four:

  1. Recommendation in one or two sentences at the start.
  2. Situation analysis using a tool or two (SWOT or STEEPLE) built from the excerpts.
  3. The plan, step by step, in time order (first months, first year, later), each step linked to an excerpt and a tool.
  4. Impact on each area (finance, HR, marketing, operations) and the trade-offs between them, plus risks and how to reduce them.
  5. Conclusion: why this plan best meets the human need, and what further information would help.

Timing: 10 minutes reading and annotating (tag each excerpt with the areas it affects), 3 minutes for Q1, 12 for Q2, and about 50 for Q3.

✏️Worked example: a practice paper

Batu Bumi is a social enterprise in Lombok founded in 2024 by Rina Hartati. It collects plastic waste from beaches and villages and presses it, with sand, into paving blocks and bricks. It employs 15 women from fishing villages, paying above the local minimum wage.

[Product visual: a grey paving block with a speckled, multicoloured surface, shown next to a traditional clay brick.]

Excerpt 1 (email from Rina to her mentor): “Our blocks are 20% stronger than concrete paving, but they cost us Rp 9000 each to make, and builders pay Rp 7000 for concrete blocks. We cover the gap with grants, which end next year.”

Excerpt 2 (news article): After storms, many coastal families in Lombok still live in damaged homes. Building materials have risen in price by 25% in two years.

Excerpt 3 (Instagram comments): “Love the mission!” “Would these be safe to live in? Plastic in my walls?” “Hotels in Senggigi should use these for their paths.”

Excerpt 4 (meeting notes): The production manager reports that the press breaks down about once a week. Output is 800 blocks a day; capacity is 1200. Two workers are leaving to care for family members.

Excerpt 5 (letter from the regency government): The government is considering a tender for 200 000 paving blocks for village roads, with preference for local, sustainable suppliers. Certification of strength is required.

Questions

  1. Describe the human need that Batu Bumi is trying to meet. [2]
  2. Explain two challenges facing Batu Bumi. [6]
  3. Recommend a plan of action for Batu Bumi to meet the human need you identified. [17]

Markscheme and model answer plan

Q1 (2): affordable, safe housing and infrastructure for poor coastal families (excerpt 2), and, secondly, a clean environment free of plastic waste and stable income for village women. 1 for identifying the need, 1 for describing it from the stimulus.

Q2 (6): 3 marks per challenge (identify, explain, apply). Finance: each block costs Rp 9000 but sells against Rp 7000 concrete; grants end next year, so without higher prices, lower costs or new revenue it will make losses (excerpt 1). Operations: weekly breakdowns and 67% capacity utilization (800 ÷ 1200) raise unit costs and threaten the delivery reliability a government contract needs (excerpts 4, 5). Also valid: customer perception of safety (excerpt 3); staff retention.

Q3 (17): model plan.

  1. Recommendation: move from grant dependence to a mixed model: win the government tender and sell premium blocks to hotels, using the profit to subsidize low-cost bricks for coastal families.
  2. Situation (SWOT): strengths: stronger product, social story (excerpts 1, 3). Weaknesses: unit cost above the market, unreliable press (1, 4). Opportunities: tender, hotels, rising material prices make alternatives attractive (2, 3, 5). Threats: safety doubts, grants ending (1, 3).
  3. Months 0–3: get strength and safety certification (needed for the tender and to answer excerpt 3’s doubts); repair or replace the press with a short-term loan or impact investor, raising output towards 1200 a day and cutting unit cost (fixed costs spread over more blocks).
  4. Months 3–6: bid for the tender (200 000 blocks, about 170 working days at 1200 a day); market to Senggigi hotels using differentiation (Porter): strength, eco-credentials for their CSR reports, a price above concrete.
  5. Year 1 onwards: cross-subsidize bricks for families; retain workers with flexible hours (Herzberg; excerpt 4); report plastic collected and homes repaired to keep the mission visible.
  6. Impact and trade-offs: finance: loan raises gearing but higher output and prices close the Rp 2000 gap; operations: the tender could absorb all capacity, leaving none for families, a trade-off between financial survival and the mission; HR: more shifts need more workers, training and childcare flexibility; marketing: premium pricing to hotels versus the affordable image.
  7. Conclusion: the plan uses all five excerpts, fixes the cost problem before grants end and keeps the human need central; more data on tender prices and hotel demand would test it.
Check it (criterion A). Count your references: excerpt 1 (costs, grants), 2 (housing need), 3 (safety, hotels), 4 (press, capacity, staff), 5 (tender). All five are used.
Forgetting the human need in Q3. A plan that makes Batu Bumi profitable by selling only to hotels abandons the families it exists to serve. Show how the plan meets the need, and weigh that against financial survival.

📝Practise

More questions on the same stimulus. Work through them, then reveal the answer.

1. [2 marks] Calculate Batu Bumi’s capacity utilization.
800 ÷ 1200 × 100 = 66.7%.
2. [2 marks] Calculate the loss per block when selling at the price of concrete blocks.
7000 − 9000 = −Rp 2000 per block.
3. [4 marks] Explain how higher capacity utilization could reduce Batu Bumi’s unit costs.
Fixed costs (the press, premises, managers) are spread over more blocks: raising output from 800 to 1200 a day cuts fixed cost per block by a third. Fewer breakdowns also reduce wasted labour time and materials, lowering variable cost per block.
4. [4 marks] Explain two sources of finance suitable for Batu Bumi once its grants end.
(1) Impact investors or social investment, who accept lower returns for social and environmental impact. (2) Crowdfunding or pre-sales, drawing on its social media following (excerpt 3). Bank loans are possible if the government contract gives secure future revenue.
5. [4 marks] Using force field analysis, explain whether Batu Bumi should bid for the government tender.
Driving forces: large, secure order; preference for local sustainable suppliers; credibility; economies of scale. Restraining forces: certification needed; unreliable press; capacity may be tied up for months; staff shortages. If the press and certification problems can be solved first, driving forces are likely to outweigh restraining ones.
6. [6 marks] Explain two ways Batu Bumi could respond to customers’ doubts about safety (excerpt 3).
(1) Independent certification of strength, fire resistance and chemical safety, published on its website and packaging, turning a doubt into a selling point. (2) Physical evidence and people (the extended marketing mix): demonstration paths at hotels, a model house, and testimonials from engineers and families, building trust before selling for homes.

🔗Go deeper — other people’s work

These are external resources, not mine. If one stops working, tell me and everything above it on this page still stands.

  • The IB Business management guide (first assessment 2024) — the Paper 3 criteria in full.
  • Your teacher and the IB programme resource centre — specimen Paper 3 with markscheme.
  • Social enterprise case studies: British Council Indonesia’s social enterprise research, and B Lab’s directory of certified B Corps.