5.4 Location Flashcards
What are the factors in locating a business?
FLIMSTCCG
-Familiarity with the area
-Labour pool
-Infrastructure
-Markets
-Suppliers
-Type of land
-Costs
-Competition
-Government
What is a pull factor
Pull factors are external factors that make it attractive for a business to set up or relocate abroad
What are the 4 pull factors?
DDII
-Dismantling of trade barriers
-Deregulation of the world’s financial markets
-Increasing size of multinational companies
-Improved communications
Why is dismantling of trade barriers a pull factor?
Reduction of trade barriers makes it easier to trade across borders
Why is deregulation of the world’s financial markets a pull factor
Deregulation of the worlds financial markets is a pull factor because it makes it easy for large transctios to be made
Why is increasing the size of multinational companies a pull factor?
The size of multinational companies makes it easy for them to persuade countries to allow them to set up new operations there
Why are improved communications a pull factor?
It is easier to transport products around the world & communicate with suppliers, customers etc.
What is a push factor?
Push factors are internal factors that make it attractive for a business to operate abroad
What are the 4 push factors?
RIUU
-Reducing costs
-Increasing market share
-Using extensions strategies
-Using defensive strategies
How could relocating abroad reduce costs?
Relocating abroad could reduce costs since labour might be cheaper, might be closer to suppliers or tax rates might be lower
How could relocating abroad increase market share?
Relocating abroad could increase market share since there may be more customers abroad
How could relocating abroad allow businesses to use extension strategies?
Relocating abroad could allow businesses to use extension strategies because they may be able to extend the life cycle of their products elsewhere
What are defensive strategies in terms of relocating?
A defensive strategy in terms of relocating is when you relocate abroad preventing your competitors from doing so first
What is outsourcing?
Outsourcing is when a business contracts another business to do part of the work
What are 3 examples of outsourcing?
-Transport
-Cleaning
-Security
What are 3 ADV of outsourcing?
-Business can focus on their core activities
-Reduces costs
-Reduces delivery time
What are 3 DIS of outsourcing?
-Business loses control of end product
-Business can become dependent of the supplier
-Dilution of the brand can be a problem
What is offshoring?
Offshoring refers to contracting an external business outside of the home country to do part of the work
What are 3 ADV of offshoring?
-Business can focus on their core activities
-Reduces costs
-Reduces delivery time
What are 3 DIS of offshoring?
-Cultural differences
-Communication can be difficult due to time zones
-Issues of quality and ethics
What is insourcing?
Insourcing refers to contracting an external business to do part of the work in the home country after doing it from another country
What are 2 reasons why businesses insource?
-To gain control of end product
-Reduce costs of taxes
What is reshoring?
Reshoring refers to when businesess decide to due part of their work instead of contracting an external business
