5.4 Location

Question 1

What are the factors in locating a business?

Answer 1

FLIMSTCCG
-Familiarity with the area
-Labour pool
-Infrastructure
-Markets
-Suppliers
-Type of land
-Costs
-Competition
-Government

Question 2

What is a pull factor

Answer 2

Pull factors are external factors that make it attractive for a business to set up or relocate abroad

Question 3

What are the 4 pull factors?

Answer 3

DDII
-Dismantling of trade barriers
-Deregulation of the world’s financial markets
-Increasing size of multinational companies
-Improved communications

Question 4

Why is dismantling of trade barriers a pull factor?

Answer 4

Reduction of trade barriers makes it easier to trade across borders

Question 5

Why is deregulation of the world’s financial markets a pull factor

Answer 5

Deregulation of the worlds financial markets is a pull factor because it makes it easy for large transctios to be made

Question 6

Why is increasing the size of multinational companies a pull factor?

Answer 6

The size of multinational companies makes it easy for them to persuade countries to allow them to set up new operations there

Question 7

Why are improved communications a pull factor?

Answer 7

It is easier to transport products around the world & communicate with suppliers, customers etc.

Question 8

What is a push factor?

Answer 8

Push factors are internal factors that make it attractive for a business to operate abroad

Question 9

What are the 4 push factors?

Answer 9

RIUU
-Reducing costs
-Increasing market share
-Using extensions strategies
-Using defensive strategies

Question 10

How could relocating abroad reduce costs?

Answer 10

Relocating abroad could reduce costs since labour might be cheaper, might be closer to suppliers or tax rates might be lower

Question 11

How could relocating abroad increase market share?

Answer 11

Relocating abroad could increase market share since there may be more customers abroad

Question 12

How could relocating abroad allow businesses to use extension strategies?

Answer 12

Relocating abroad could allow businesses to use extension strategies because they may be able to extend the life cycle of their products elsewhere

Question 13

What are defensive strategies in terms of relocating?

Answer 13

A defensive strategy in terms of relocating is when you relocate abroad preventing your competitors from doing so first

Question 14

What is outsourcing?

Answer 14

Outsourcing is when a business contracts another business to do part of the work

Question 15

What are 3 examples of outsourcing?

Answer 15

-Transport
-Cleaning
-Security

Question 16

What are 3 ADV of outsourcing?

Answer 16

-Business can focus on their core activities
-Reduces costs
-Reduces delivery time

Question 17

What are 3 DIS of outsourcing?

Answer 17

-Business loses control of end product
-Business can become dependent of the supplier
-Dilution of the brand can be a problem

Question 18

What is offshoring?

Answer 18

Offshoring refers to contracting an external business outside of the home country to do part of the work

Question 19

What are 3 ADV of offshoring?

Answer 19

-Business can focus on their core activities
-Reduces costs
-Reduces delivery time

Question 20

What are 3 DIS of offshoring?

Answer 20

-Cultural differences
-Communication can be difficult due to time zones
-Issues of quality and ethics

Question 21

What is insourcing?

Answer 21

Insourcing refers to contracting an external business to do part of the work in the home country after doing it from another country

Question 22

What are 2 reasons why businesses insource?

Answer 22

-To gain control of end product
-Reduce costs of taxes

Question 23

What is reshoring?

Answer 23

Reshoring refers to when businesess decide to due part of their work instead of contracting an external business