4.2.3 Assessment Of A Country As A Production Location Flashcards
-9 factors#
what are the 9 factors to consider when assessing a country as a production location?
1.) Costs of production
2.) Skills and availability of labour force
3.) Infrastructure
4.) Location in trade bloc
5.) Government incentives
6.) Ease of doing business
7.) Political stability
8.) Natural resources
9.) Likely return on investment
How does the cost of production affect a business?
Businesses that want to compete will move their production to a country where costs such as wages are low.
What is the main cost of production?
Wages of employees, therefore countries which pays lower wages would be more attractive as a product location.
What does large unemployment rates in a country mean for a business?
A large unemployed population means a large pool of candidates for every position.
Why would a business look at global school rankings?
A business may need a skilled labour force and one of the ways to assess if a country has this is to look at the global school rankings.
Why would a business care about skills of workforce?
Skills of the locals, as well as access to raw materials may give a business comparative advantage.
Why would a business consider infrastructure when deciding where to locate production?
1.) A business will need to assess if the country have adequate road, rail, sea and air transport systems so goods can be exported and imported easily.
2.) If the country has suitable buildings for the goods to be manufactured.
Why would location in a trade bloc be of interest to a business when deciding on production location?
Some businesses may start production in a country as a way into a trade bloc.
How would government incentives effect a businesses choice on production location?
-The government of a country may offer incentives for businesses to set up there.
-Tax incentives are given to companies in the hope that foreign investors will bring in capital to support economic development and create local employment.
What is the importance of ‘ease of doing business’ when deciding where to manufacture?
+ EODB rank will help a business to find out the time period required to start a business and the number of paperwork obstacles to be overcome.
-Location may however depend on access to raw materials, infrastructure, labour etc.
Why would a business consider natural resources when deciding where to locate production?
-Some countries have an advantage that they have natural resources that are not found elsewhere.
-You may need to set up production in another country because the raw materials that you need do not naturally occur in the UK.
Why is setting up production in another country expensive?
-Moving factory
-Setting up new production
-Buying machinery
-Hiring staff
-Moving operations such as HR
-Hiring key staff, e.g. managers
Why would a business look at likely return on investment?
Investors will need to know that these expenses will be returned with profits.
