5.4 Location

Question 1

Location of production

Answer 1

the geographical place where a business chooses to operate, which can affect costs, customer accessibility, and overall success

Question 2

Factors in locating a business

Answer 2

1. costs (land, labour, transport)
2. competition
3. type of land
4. markets
5. familiarity with the area
6. labour pool
7. infrastructure
8. suppliers
9. government (laws, taxes)
10. national, regional or international ambition

Question 3

The impact of globalization on location

Answer 3

1. pull factors
2. push factors

Question 4

Pull factors

Answer 4

external factors
1. improved communication
2. dismantiling of trade barriers
3. deregulation of the worl’d financial markets
4. increasing size of multinational companies

Question 5

Push factors

Answer 5

internal factors “to push”
1. reducing costs
2. increasing market share
3. using extension strategies
4. using defensive strategies

Question 6

Ways of reorganizing production

Answer 6

1. outsourcing
2. offshoring
3. insourcing
4. reshoring

Question 7

Outsourcing

Answer 7

when a business contracts out certain operations or services to external suppliers, often to reduce costs or focus on core activities
examples are catering, transport, administrative duties, excursions, visits, security, staff recruitment and training, cleaning and maintenance

Question 8

Advantages of outsourcing

Answer 8

1. reduces costs
2. allows a focus on core activities, improving its quality
3. improved capacity utilization
4. reduced delivery time
5. transfer of expertise

Question 9

Disadvantages of outsourcing

Answer 9

1. risk of becoming dependent
2. less control of final product
3. dilution of the brand

Question 10

Offshoring

Answer 10

relocating part of a business’s operations to another country, usually to benefit from lower labor costs or favorable regulatory conditions

Question 11

Advantages + disadvantages of offshoring

Answer 11

advantages and disadvantages are the same as outsourcing, additional disadvantages are:
1. cultural differences
2. communication is difficult (time zones)
3. issues of quality and ethics

Question 12

Insourcing / inhousing / inshoring

Answer 12

performing peripheral activities internally, within the organization (opposite of outsourcing), motivated by the desire of regaining full control on their activities

Question 12

Reshoring

Answer 12

bringing back business functions (jobs and operations) to the home country (opposite of offshoring)

Question 12

Force field analysis

Answer 12

tool used to compare the driving forces and the restraining forces for and against a specific desicion, which is written at the centre of the diagram