Guidelines and Structure
Business Management Internal Assessment
1. Nature of the IA:
It must address a real issue facing a real business organization or real decision that has
yet to be made. Hence, do emphasise the forward-looking nature of the HL IA.
Students must analyze the causes and implications of the issue or problem, and then
prepare and evaluate a plan to address this. The problem or issue has to be related to the
IB Business Management syllabus.
2. Sections:
● An executive summary (of up to 200 words)
● A research proposal (which includes an action plan, up to 500 words in total.
● The written report (of up to 2,000 words)
3. Total word count: 2700 max. Moderators will not read beyond the word limit.
4. Grade: The IA is marked out of 25 marks. With a weighting of 35% of the
overall assessment for the course, the HL IA can be the difference between a
Level 5 and a Level 7 grade in the final examination for a student.
*From now and on, modify/delete everything in red.
TEMPLATE
IB Business Management HL
Internal Assessment
Research Proposal
(A total of 495 to 500 words)
Research question: How can Duolingo Inc. improve their learning platform in order to
gain more paid subscribers hence increase the revenue margin?
Word count:2200
Session: November 2022
The research proposal section is written in the future tense.
Include:
1.
Research Question: How can Duolingo Inc. improve their learning platform in
order to gain more paid subscribers hence increase the revenue margin?
2.
Rationale:
Duolingo is a US-based Ed tech company. Its main product is language learning apps and
certifications. It’s a Public Company with its headquarters in Pittsburgh, Pennsylvania,
founded by Louis Bom Ahn (current CEO) and Severin Hacker, in 2011. The business
model is based on a free-to-use app with the option of paid subscription that unlocks
additional features. They also run advertisements and have their own Duolingo English
Test which cost $49.00. Even though their marketing strategy, which is focused on social
media apps such as TikTok, gave Duolingo a wider audience and made them grow
exponentially, there has been much criticism about its effectiveness. Duolingo is focused
on gaining more paid subscribers, nonetheless, the lack of effectiveness in areas such as
learning pronunciation and verb tenses has undermined this effort.
According to a Forbes article titled “Game of Tongues: How Duolingo Built A $700
Million Business With Its Addictive Language-Learning App”, written by Susan Adams
and published in 2019, Duolingo’s CEO and Founder stated, “We are going to continue
with languages until most everybody in the world who is trying to learn a language is
using one of our products.” Bom Ahn, has publicly stated that Duolingo is focused on
taking a beginner to an intermediate level in any language, which could be the main
limitation to their potential growth.
3.
Theoretical Framework
The analysis is going to be made by using tools such as SWOT analysis, to
determine which are the main aspects that make Duolingo strong and the things
that must be improved. Also, PEST analysis is going to be used to determine what
external factors are affecting Duolingo's performance.
i. Areas of the syllabus to be covered
● Introduction to Business Management
● Organizational objectives
● Organizational planning tools
● The 4 P´s
● E-commerce
● App Evaluation
● Comparative analysis of past revenues, profit and loss margins
Course sections (i.e. chapters), use 4 areas of the syllabus. Examples:
● Force Field Analysis
● Break Even Analysis
● Profit & Loss Account
● Cash flow forecasting
● Market research
● Pricing
● Promotion
ii. Possible sources of information
Duolingo INC. (2022, May 12). Duolingo Announces Record Bookings in First
Quarter 2022 and Raises Full Year Guidance. GlobeNewswire News Room;
Duolingo,
Inc.
https://www.globenewswire.com/news-
release/2022/05/12/2442428/0/en/Duolingo-Announces-Record-Bookingsin-First-Quarter-2022-and-Raises-Full-Year-Guidance.html
How Duolingo Built a $700 Million Company Without Charging Users. (2018,
February 19). Product Habits. https://producthabits.com/duolingo-built-700million-company-without-charging-users/
Duolingo. (2022, May 12). Craft.co. https://craft.co/duolingo
Any financial statement or any other document provided by the company.
Secondary sources?? ONLY IF RELEVANT AND APPROPRIATE
iii. Methodology
Organizations and individuals to be approached:
Primary research
●
Series of interviews with Spanish A and English A teachers, due to the fact that
a language teacher can clarify what are the best methods to learn a new
language, and provide an insight on details that Duolingo may lack.
●
Conduct a survey of 100 high school students, which the main goal is going to
be to know what percentage of these students are interested in learning new
languages using an app. Also if they are Duolingo users, inquire about their
experiences and achievements made with the app.
●
Focus groups were directed to 6 Duolingo Users to gather information about
their personal experiences with the app and the aspects that they think should be
improved to give a better learning experience. Also, inquire about pricing and
other possible sources of income for the app.
●
Focus group to 6 Individuals interested in learning a new language online to
understand which are the limitations and aspects that a potential user analyzes
before subscribing to an app. What does Duolingo have that makes them more
willing to use it, or what aspects the app should improve to convince them.
Secondary Research
● Information on Duolingo Website and secondary sources such as Forbes.
● Statistical information about Duolingo
● Studies made by other universities about Duolingo
Interview? who? provide the name and job position: why? (for each person/source)
Another interview? who? provide name and job position: why?
Surveys? who? How many?: why?
Focus group? who?: why?
Observation? what?: why?
*Include a variety of primary sources
4. Anticipated Difficulties
Potential biases? BE A CRITICAL THINKER
List them and give a solution per each
Possible problem
Possible solution
Most of the people targeted in the
research are bilingual, and even know a
third language.
Focus on desired languages to learn that
are more difficult to access locally.
Most of the people targeted in the
research have access to bilingual
education in private schools, and private
courses.
Focus on the free-to-use version and the
accessibility of the internet.
Self- reported surveys could not reflect
reality due to subjectivism
Closed questions with Likert-scales that
will standardize opinions and emotions
Small sample size
Establish a minimum of 100 surveyed
people
(In a table shape explain some possible problems you will likely face, the reasons for
these difficulties and how you plan to deal with them. Try to go beyond the obvious
ones, such as bias and access to information. Tell us why some of the information
you need could be hard to get or unreliable)
4.
Action Plan
Date
Activities
22 June, 2022
Research and analyze
the financial
performance of
Duolingo
23 June, 2022
Analyze their marketing
strategies
24 June, 2022
Interview Spanish A
teacher
28 June, 2022
Interview English A
teacher
29 June, 2022
Meeting with supervisor
30 June, 2022
Develop Survey and
Modifications
send survey link to high
school students
1st July, 2022
Select candidates for the
focus group for
Duolingo’s users and
organize the focus group
(date, time, location,
length)
5th July, 2022
Conduct the focus group
12 July, 2022
Analyze and summarize
data retrieved from the
focus group, surveys
and interviews
13 July, 202215 July, 2022
Write introduction and
methodology
16 July, 202222 Julu, 2022
Write analysis,
discussion, conclusion
and recommendations
22 July, 2022
29 July, 2022
2 August,
2022
1st draft due date
Check for plagiarism
and submit the final
document
1 August, 2022
Final version
(Action plan includes dates and also a section where you show modifications you've
made, as you complete your work. This shows that you actually used your action
plan during your IA. Also, at least one of these modifications should show that you
actually learned something (or realized something related to business) and that's
why you made the change. This again shows that you were growing as a result of
your work --which starts to build the case for Criterion I (Reflective Thinking).
(Add the Gantt Chart showing the activities and due dates, there are online web sites
that allows you to prepare a proper Gantt Chart including milestones)
(At the end of the Research Proposal, on the right side write the following)
Suggested tool: ClickUp
References
Adams, S. (2019, July 23). Game of Tongues: How Duolingo Built A $700 Million
Business
With
Its
Addictive
Language-Learning
App.
Forbes.
https://www.forbes.com/sites/susanadams/2019/07/16/game-of-tongueshow-duolingo-built-a-700-million-business-with-its-addictive-languagelearning-app/?sh=623036134634
Word count: 482
IB Business Management HL
Internal Assessment
Research Question: How can Duolingo Inc. improve their learning platform in order to
gain more paid subscribers hence increase the revenue margin?
Session: November 2022
Executive summary: 200
Written report: 2200
Authorization letter
To whom it may concern,
Through this authorization letter, the CFO of Duolingo Inc. allows the student to
develop his Business Internal Assessment, using the financial information from our
company. In addition, the student is allowed to use information about the organizational
structure of the company, its mission, vision, values and the main goals that the
company wants to accomplish.
The student, in exchange of our openness, commits himself to make a transparent
evaluation and analysis, with integrity, and keeping all the sensible information
confidential.
Wishing the student, the very best in the IA,
Sincerely,
CFO Duolingo Inc.
Acknowledgements
In order to develop this research-based assessment, I would like to thank in first place
Duolingo’s CFO, for the opportunity to access to the information needed to make this
project.
I’d also like to thank my family for their support and guidance, and my teachers for
their knowledge and experience.
Table of contents
Acknowledgements 13
Executive summary 15
Introduction 16
Methodology 17
Main results and findings 18
Analysis and evaluation 19
Conclusions 23
Recommendations 24
Limitations 24
Bibliography 25
Appendices 26
Appendix #1: Interview English A teacher
Appendix #2: Interview Spanish A teacher
Appendix #3: Marketing Mix
Appendix #4: Survey
Appendix #5: SWOT Analysis
Appendix #6: PEST Analysis
Appendix #7: Financial statements
Executive summary
Duolingo is an US-based Ed tech company. Its main product is language learning apps
and certifications. The business model is based on a free-to-use app with the option of
paid subscription that unlocks additional features. The situation it’s that the company has
received a lot of criticism regarding its effectiveness when learning a language. The main
line of investigation is focused on how can Duolingo Inc. improve their learning platform
in order to gain more paid subscribers hence increase revenue margin? The tools used
were the PEST and SWOT analysis, also the marketing mix and Ratio analysis while
taking into consideration the financial overview. The main sources were the financial
statements provided directly by Duolingo. Also interviews and surveys were made to
answer the main research question. The major finding was that most of the people who
took part in this investigation did not consider Duolingo to be enough to learn a language
and that they should improve their learning experience incorporating new technology that
could provide a more immersive experience and that could adapt to each user needs. The
main limitation was that most of the people weren’t active Duolingo users, that would
rather pay a course to learn.
1. Introduction
Duolingo is an US-based Ed tech company. Its main product is language learning apps
and certifications. It’s a Public Company with its headquarters in Pittsburgh,
Pennsylvania, founded by Louis Bom Ahn (current CEO) and Severin Hacker, in 2011.
The business model is based on a free-to-use app with the option of paid subscription that
unlocks additional features. They also run advertisements and have their own Duolingo
English Test which cost $49.00.
Duolingo’s marketing strategy, which is focused on social media apps such as TikTok,
gave Duolingo a wider audience and made them grow exponentially. A person inside the
Duolingo Mascot Costume, a green owl named “Duo” (which is also it’s iconography)
has been the sensation of their videos, especially for its love to the music of pop singer
Dua Lipa. Despite its success in social media, there has been much criticism about its the
app effectiveness, especially in the language pronunciation learning. Now, Duolingo is
focused on gaining more paid subscribers, and as its CEO, Louis Bom Ahn, stated in a
Forbes article titled “Game of Tongues: How Duolingo Built A $700 Million Business
with Its Addictive Language-Learning App”, written by Susan Adams and published in
2019: “We are going to continue with languages until most everybody in the world who
is trying to learn a language is using one of our products.”
The analysis is going to be made by using tools such as SWOT analysis, to determine
which are the main aspects that make Duolingo strong and the things that must be
improved. Also, PEST analysis is going to be used to determine what external factors are
affecting Duolingo's performance. Some specific areas of the syllabus that would be
covered are introduction to Business Management, organizational objectives,
organizational planning tools, The 4 P´s, E-commerce, App Evaluation and Comparative
analysis of past revenues, profit and loss margins.
The main research was focused on strategies that Duolingo Inc. could implement to
improve their learning platform, especially in the pronunciation area, and how to these
strategies could help them to gain more paid subscribers and app users.
2. Methodology
In order to gather information from primary sources a series of interviews with Spanish
A and English A teachers, due to the fact that a language teacher can clarify what are
the best methods to learn a new language and provide an insight on details that
Duolingo may lack. Moreover, a survey of 100 high school students was conducted in
order to gain significant data like what percentage of these students are interested in
learning new languages using an app, and if they were Duolingo users, inquire about
their experiences and achievements made with the app.
The secondary sources used for this project were financial documents, found online, and
articles from renown entities such as Forbes. Also, statistical information about Duolingo,
and reports from websites.
The benefit of using these sources, is that it allows to have an opinion from a direct
experience with the app from different perspectives. An interview with teachers gives
you a different perspective from the opinion that you might get from a student that is a
user of the app. This range of opinions allows the researcher to have a full specter of the
topic and find better solutions.
The main tools used for this project were SWOT and PEST analysis. Some specific areas
of the syllabus that would be covered are introduction to Business Management,
organizational objectives, organizational planning tools, The 4 P´s, E-commerce, App
Evaluation and Comparative analysis of past revenues, profit, and loss margins. The main
purpose of these tools was to show if Duolingo was using the right strategy to reach
potential customers, and how they are performing financially.
There was room for bias answers due to the fact that some of the people interviewed were
Duolingo’s users, so their opinion might be related to their direct experience with the app.
Other aspect is how easy or difficult it was to learn a language for each person.
The main change that the IA had, was that at the beginning it was focused of how to gain
more paid subscribers through enhancing the language pronunciation part, but as more
information was gathered, it was clear that learning a language its more than just knowing
tenses and words, it demands interaction, so the focus of language pronunciation as an
addition to the app melted, leaving the real solution at sight, and immerse and complete
experience that needs human interaction.
3. Main Results and Findings
●
According to the interviews conducted to English A and Spanish A teachers,
Duolingo it’s a magnificent app to learn vocabulary, spelling and some tenses,
nonetheless its limited and it’s not enough to learn a language.
●
57% of people that participated in the survey believe they cannot learn a new a
whole new language using the app.
●
Most of the students in the interview stated that if they were really interested in
learning a language, they would rather pay a course or a private teacher, than use
Duolingo.
●
Most of the people that took part of the survey consider that Duolingo online
marketing strategy its good and successful.
●
30% of students believe that Duolingo has helped them to give their first steps in
learning a language, claiming that only with what they have learned in the app
they have been able to have a basic conversation in the language they´re learning.
●
The teachers that took part of the interview stated that interaction with other
students and listening specific sounds and pronunciation from a real voice makes
the process of learning better. It is also important to have homework and a lot of
reading, so what is learned in the course isn’t easily forgotten.
●
More than half of students think that the solution for a more immersive learning
experience, in a way it keeps its online status, is the implementation of new
technology like VR, and Artificial Intelligence, that adapts to the users.
4. Analysis and discussion
SWOT:
Using SWOT analysis allows to determine which are the main aspects that make
Duolingo strong and the things that must be improved, allowing to see clearly how the
app can be better and ultimate reach more paid subscribers. In the SWOT analysis we can
observe that Duolingo has a lot of advantages, since it is the most famous app to learn
languages. This added with the opportunities, leaves Duolingo with a huge market they
can bring to the app, since the preference of many people to learn online. Nonetheless this
could only be possible if they improve their fluency aspect in the app and focus on a more
immersive learning experience. If Duolingo doesn’t innovate, their competitors will, and
one of them, specifically Babbel, another language learning app, has become quite
popular, which is a real threat for Duolingo. Finally, Duolingo has nowadays the head
start, and has received several awards like Apple App of the Year, and Forbes recognition,
which has made the app more recognizable. They need to improve their courses and how
they educate people, in order to take full advantage of the opportunities that the market is
offering.
PEST:
PEST analysis is used to determine what external factors are affecting Duolingo's
performance, and how they can me minimize certain risks and take advantage of
external opportunities. In the political field there has been some unrest, with Russia
invasion of Ukraine, but in every situation, there is an opportunity which in this case
could be people around the world that want to help Ukrainians therefore want to learn
basics of Ukrainian language. Economically speaking, due to the pandemic and the
ongoing war there could be expected a recession due to high prices for certain goods
that were supplied from countries affected by the war. This could stop people from
non-essential expenses, like monthly subscriptions. In the other hand, nowadays
people trust more online paid subscriptions thanks to streaming services, which makes
easier to a potential user to buy the subscription. Technology has played an elemental
role in this progress, allowing to have faster internet connectivity, hence making
online learning a much better experience than years ago, and also it has a lot of tools
that if added to the main product, could take Duolingo to a higher level. In the social
aspect, COVID pandemic really changed the perspective of people, and nowadays
there are a lot of people that prefer online education for the comfort of not living your
home to gain knowledge.
4Ps:
The Marketing Mix is one of the basic analyses that all business should have,
nonetheless it’s one of the core indicators if the business has the right focus according
to what they are offering and the goals they want to accomplish. In product we can
identify that basically Duolingo has one product in different presentations, because
it’s the same learning app, only that the free one is run by ads, while Duolingo Plus is
based on a monthly subscription, and Duolingo ABC is focused on kids, as a starter
to learn vocabulary, letters, and sounds. The additional product is the English Test,
which has become very popular. In pricing we find that Duolingo monthly
subscription cost $6.99, while the English Test cost $49.00. The place is a nonphysical since it is an app and a website, which can be found in the app stores of
smartphones and the internet. Promotion is one of the key aspects of Duolingo, they
have reached a lot of new users by their online marketing strategy in TikTok, and the
inclusion of a mascot named Duo, that has become a symbol and a comedic element.
Ratio analysis and financial overview:
The current ratio of Duolingo is 4.72, which is considered good. With a debt / equity
ratio of 0.05, this is due to the fact that companies that offer services have fewer assets
to leverage.
Additionally, the Return on equity is 16.20% which is between the margins, but its
considered low for a technology firm which is normally considered a good ROE
around 18% or more. Furthermore, it has a return on assets of 11%.
It has to be noted that Duolingo performance has been growing for the past years, and
in the last 12-month period it has a $17.80 Million free cash flow, which indicates
that the company is generating more cash than is used to run the business. This
indicates that Duolingo is in excellent financial health.
Nonetheless it is important to mention that the operating margin has increased to
21.23%, which means that the profit margin could decrease if they don’t add up new
paid users.
5. Conclusions
In conclusion, Duolingo has been doing a great job in creating a global presence and
community, using technology, experiences, and very successful marketing strategies.
They have grown exponentially in few years, having more than half of the market share,
and receiving multiple awards. This recognition has translated in more users, and paid
users, in addition to their strategic move of implementing their own English Standarized
Test at an affordable price. Based on the information of the company, and the perspectives
retrieved from primary sources, Duolingo’s main problem it the fluency and lack of
immersive experience, that is associated with better pronunciation and comprehension of
the language. By implementing new technology such as VR lenses, and Artificial
intelligence, that adapts to every user way of learning, the app could take a leap forward
in innovation, creating an enhanced and immersive experience, for which users would be
willing to pay.
This might seem like a huge investment for the company, but based on their income, they
are capable of taking a part of that to enhance the app and the learning program, which
it’s not only going to translate in more users and more credibility, but it also is going to
make Duolingo, a relevant tech company, that has a new approach that nobody else has
taken yet.
Some limitations of this research, is that most of the people that was part of the enquires,
aren’t Duolingo’s users. They know what it is, and how it works, but due to their
economical background, most of them are capable of hiring a teacher or go to an academy
to learn a new language. Something that was really outstanding was how familiarized
they were with AI and VR concepts that in the past there was a handful of people who
could really understand how this tech worked.
6. Recommendations
The recommendations for this project would be to implement new technology to create a
more immersive experience for the users. Integrate AI for learning, since every person
has a unique way of learning, and finally integrate the course in order to create a
community that can help students around the world practice their language, by homework,
recommended books, cellphone conversations, and more.
It could have been better if there were more Duolingo users and paid users to have a
broader perspective, and also to interview experts in language learning and tech learning,
so it could be more precise on what must be enhanced and how to specifically benefit
from the implementation of VR and AI.
It would be very prolific to investigate how AI can adapt to the user’s needs, due to the
fact that since school, the education is standardized, and it doesn’t adapt to the different
ways of learning. So, it could integrate concepts of Theory of Knowledge and new
technology that is been developed, and applied to a business.
7. References
Adams, S. (2019, July 23). Game of Tongues: How Duolingo Built A $700 Million
Business
With
Its
Addictive
Language-Learning
App.
Forbes.
https://www.forbes.com/sites/susanadams/2019/07/16/game-of-tongues-howduolingo-built-a-700-million-business-with-its-addictive-language-learningapp/?sh=623036134634
Duolingo INC. (2022, May 12). Duolingo Announces Record Bookings in First Quarter
2022 and Raises Full Year Guidance. GlobeNewswire News Room; Duolingo,
Inc.
https://www.globenewswire.com/news-
release/2022/05/12/2442428/0/en/Duolingo-Announces-Record-Bookings-inFirst-Quarter-2022-and-Raises-Full-Year-Guidance.html
How Duolingo Built a $700 Million Company Without Charging Users. (2018, February
19).
Product
Habits.
https://producthabits.com/duolingo-built-700-million-
company-without-charging-users/
Duolingo. (2022, May 12). Craft.co. https://craft.co/duolingo
Van Deusen-Scholl, N., Lubrano, M., & Sporn, Z. (2019, July). Measuring Babbel’s
Efficacy in Developing Oral Proficiency (Rep.). https://uk.babbel.com/whybabbel-works#core-content-body
Duolingo
Shareholder
letter
Q1
2022.
Published
on
https://investors.duolingo.com/static-files/d667f9d1-8f7f-418c-b116e699a30a9826
2022.
8. Appendices
Appendix #1: Interview English A teacher
1.-Do you know what Duolingo is?
Yes, I’ve heard about it, it’s a mobile app related to learning and practicing new
languages.
2.-Duolingo it’s a language learning app, that allows free courses for a variety of
languages, what do you think about this approach?
I think it’s awesome that you can learn directly from your smartphone, and it’s almost
unbelievable that they run a free version, because I’ve have been an user and I find it very
helpful.
3.- One problem that the app is facing, is that it’s hard to reach fluency and
pronunciation. What do you think this happens?
As a Language teacher I could tell you right away that learning a new language from the
basic to fluently requires a lot of time and practice. You cannot expect to be fluent just
by using an app just when you feel like it. You have to be disciplined and practice every
day. Also the immersive experience of a classroom, where you can hear and ask your
teacher makes it a different experience that you could never get with an app.
4.- How could they enhance the learning experience?
I think that they could improve the experience that the students have, with a more dynamic
way of learning. Users should be able to practice reading comprehension and
pronunciation, as well as conversations with others so they can develop de fluency.
5.- Would you recommend this type of apps for learning a language?
Off course, I’ve used it to learn some word from languages I wanted to learn, like French
for example, but it’s just a complementary tool. To learn a new language, you have to be
in course that provides you with all the different aspects to understand, read, write and
speak that language.
Appendix #2: Interview Spanish A teacher
Interview #2 Spanish A Teacher
1.-Do you know what Duolingo is?
Yes, I have used sometimes but I heard from it firstly from my son that was obsessed to
learn Italian but we couldn’t afford a course.
2.-Duolingo it’s a language learning app, that allows free courses for a variety of
languages, what do you think about this approach?
It’s a very helpful tool for someone who is a beginner on learning a language. In my
opinion it’s not enough for learning a language completely, but it can be helpful to
understand certain words and have a little bit of vocabulary.
3.- One problems that the app is facing, is that it’s hard to reach fluency and
pronunciation. What do you think this happens?
Yes, this is due to the fact that learning a language requires a total investment of the
student, that why you receive English and Spanish classes almost every day, because there
are a lot of aspects to really dominate a language.
4.- How could they enhance the learning experience?
As I always tell my students, technology is a tool that should be used for many other
things than just social media. This app could include videos, book recommendations, and
speaking exercises.
5.- Would you recommend this type of apps for learning a language?
I believe that the teachers role in learning a language can’t be replaced, nonetheless it can
be very helpful for practicing what has been learnt in class.
Appendix #3: Marketing Mix
Appendix #4: Survey
Appendix #5: SWOT Analysis
Appendix #6: PEST Analysis
Appendix #7: Financial statements