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S4 Geography > Ch 3.4 What are the location factors of the information technology industry? > Flashcards

Ch 3.4 What are the location factors of the information technology industry? Flashcards

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1
Q

What are the 4 categories that IT industry have?

A
  1. Hardware.
  2. Software.
  3. Communication equipment.
  4. Communication service.
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2
Q

What are the characteristics of the IT industry?

A
  1. Capital intensive, technology intensive, and R&D intensive.
  2. Short life cycle of IT products.
  3. Multi-point and multinational production.
  4. Concentration in clusters.
  5. Globalisation of marketing and production.
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3
Q

Elaborate on capital intensive, tech intensive and R&D intensive.

A
  • Adopts the latest technologies to produce high-value added products.
    -Invest a large amount of capital on R&D to design a product.
    -The products are sold in global markets so as to bring more profits to cover the huge amount of money spent on R&D.
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4
Q

Elaborate on short life cycle.

A

It may take only 5-7 years from the development stage to the decline stage. Many IT products become success within a few years. Thus, being a lead in technological advancement is essential to the success of the IT industries. That is why IT firms invest a huge money in R&D.

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5
Q

Elaborate on production requirement on development, introduction and growth stage of the point multipoint and multinational production.

A
  • R&D intensive.
    -Large number of scientists and engineers for carrying out R&D.
    -Large amount of skilled labour for pilot production.
    -High technological levels.
    -Good access to capital, particularly venture capital.
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6
Q

Elaborate on preferred location of production on development, introduction and growth stage of the point multipoint and multinational production.

A

Headquarters and R&D centres: MDC.

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7
Q

Elaborate on production requirement on maturity and decline stage of the point multipoint and multinational production.

A

-Labour intensive.
-Abundant cheap and semi-skilled labour for standardised production.

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8
Q

Elaborate on preferred location of production on maturity and decline stage of the point multipoint and multinational production.

A

Production plants: LDC.

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9
Q

Elaborate on the point of concentration in clusters.

A

IT firms can enjoy agglomeration economies.
R&D centre:
-Induce innovation
-Establish business contracts.
-Share infrastructure.
-Create innovative culture and business environment that further attract investment and talents.
-Build business reputation.
Production plant:
-Share infrastructure.
-Attract labour.
-Benefit from low land rents offered by the local governments.

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10
Q

Elaborate on the globalisation of marketing and production.

A

IT products are often produced for a global market, IT firms usually adopt a global system of marketing and production to maximise profit. So they become multinational enterprises or transnational corporations.

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11
Q

Describe location of the IT industry in USA.

A

In the USA, IT industries usually group together to form industrial clusters. They are in a dispersed pattern. They are usually location in and around the large cities.

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12
Q

Name the characteristics of IT sites.

A
  1. Near universities.
  2. Well developed transport infrastructure.
  3. Pleasant working environment.
  4. Convenient working environment.
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13
Q

Elaborate on near universities.

A

Collaborate with these academies in research, to get access to a large pool of IT professionals and facilitate the exchange of innovative ideas.

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14
Q

Elaborate on well developed transport infrastructure.

A

Good transport linkages with the city centre enable the firms to seek services conveniently. Proximity to airport facilitate the international flow of talents and managerial staff.

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15
Q

Elaborate on pleasant working environment.

A

IT talents are attracted by plenty of greenery, good community and ancillary services in the suburbs. Also, the low and dispersed office-plant laboratory buildings with modern designs look appealing.

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16
Q

Elaborate on convenient working environment.

A

Having the offices, pilot plonts and laboratories at the same location facilitates the flow of work.

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17
Q

What are the location factors of the IT industry?

A
  1. Access to labour.
  2. Access to capital.
  3. Government policies.
  4. Land attributes.
  5. Technology and innovation.
  6. Access to market and business partners.
  7. Transport and telecommunications.
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18
Q

Elaborate access to labour on R&D stage.

A

-Good access to researchers, scientists or technicians for carrying out R&D.
-Good access to skilled labour for pilot production.

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19
Q

Elaborate access to capital on R&D stage.

A

Good access to venture capital to support innovation and the development of new products.

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20
Q

Elaborate government policies on R&D stage.

A

-Providing financial support for R&D.
-Maintaining a favourable business environment and an innovative culture within the community.

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21
Q

Elaborate land attributes on R&D stage.

A

The suburbs of a large city with plenty of greenery and good communities.

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22
Q

Elaborate technology and innovation on R&D stage.

A

Good access to innovation and high levels of technology like locatiing R&D laboratories and pilot plants near universities/ research institutes.

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23
Q

Elaborate access to labour on production stage.

A

Required a large pool of semi-skilled labour for standardised production.

24
Q

Elaborate access to capital on production stage.

A

-Required a large amount of capital in the form of foreign direct investment to set up factories overseas.
-Required less capital if outsourcing is used.

25
Q

Elaborate government policies on production stage.

A

Provision of good infrastructure, amenities and various incentives by the government.

26
Q

Elaborate land attributes on production stage.

A

A cheap land site in an industrial cluster with good infrastructure.

27
Q

Elaborate technology and innovation on production stage.

A

Regions ready to receive transferred technology from high-tech regions.

28
Q

Elaborate access to market and business partners on both stages.

A

-Required the access to the global market.
-Good access to suppliers and customers for gathering information for improvement.

29
Q

Elaborate transport and telecommunications on both stages.

A

Well-developed transport networks and telecommunication infrastructure.

30
Q

What are the pull factors of India in outsourcing production operations?

A
  1. Government policy.
  2. Access to labour.
  3. Land attributes.
  4. Telecommunications.
31
Q

Elaborate on government policy as one of the pull factors of India in outsourcing production operations.

A

The Indian government offers financial incentives and infrastructure support to attract foreign direct investment.

32
Q

Elaborate on access to labour as one of the pull factors of India in outsourcing production operations.

A

-India has a large pool of well educated labour specialising the field of engineering and technology.
-The salary of a software developer in India is about one-eighteenth of that in the USA. Therefore, the labour costs in India are more competitive.
-The Indian workers are good at English.

33
Q

Elaborate on land attributes as one of the pull factors of India in outsourcing production operations.

A

The time difference between India and the USA is 13.5 hours. This means that when staff in the USA stop working in the evening, the staff in India start working. Therefore, the US IT firm can maximize productivity by operating 24 hours a day.

34
Q

Elaborate on telecommunications as one of the pull factors of India in outsourcing production operations.

A

The telecommunications infrastructure is well-developed in India. This facilitates long-distance communication between the headquarters in the USA and the branch offices in India.

35
Q

What does reshoring mean?

A

The phenomenon of moving back the outsourced production operations to the home country.

36
Q

What are the push factors of China since the 2010s?

A
  1. Increasing labour costs.
  2. Increasing land costs.
  3. Appreciation of currency.
  4. Insufficient legal protection against intellectual property.
37
Q

Elaborate on increasing labour costs as one of the push factors of China since the 2010s.

A

The costs are rapidly rising due to labour shortages and better labour protection.

38
Q

Elaborate on increasing land costs as one of the push factors of China since the 2010s.

A

The keen land use competition has driven up the land costs in the urban areas.

39
Q

Elaborate on appreciation of currency as one of the push factors of China since the 2010s.

A

RMB has risen more than 30% over the past decade.

40
Q

Elaborate on insufficient legal protection against intellectual property as one of the push factors of China since the 2010s.

A

The contracted companies may adapt the transferred technologies to establish their own businesses without the consent of the US firms.

41
Q

What are the pull factors of USA since the 2010s?

A
  1. Favourable government policies.
  2. Automation.
  3. Higher labour quality.
  4. Large domestic market for IT products.
  5. Better product quality and brand image.
42
Q

Elaborate on favourable government policies against intellectual property as one of the pull factors of USA since the 2010s.

A

-Local governments provide tax incentives and technical support to manufacturing firms that create jobs.
-The federal government has imposed high tariffs on some imported IT products.

43
Q

Elaborate on automation as one of the pull factors of USA since the 2010s.

A

Adopting automation can offset the high labour costs.

44
Q

Elaborate on higher labour quality as one of the pull factors of USA since the 2010s.

A

This means higher labour productivity.

45
Q

Elaborate on large domestic market for IT products as one of the pull factors of USA since the 2010s.

A

Locating the production operations in the USA can:
-Save transport costs of the finished products.
-Enable the IT firms to be more responsive to market changes.

46
Q

Elaborate on better product quality and brand image as one of the pull factors of USA since the 2010s.

A

‘Made in the USA’ means a better product quality. This help increase sales and establish a good brand image.

47
Q

Reasons why the scale of relocation remains limited nowadays.

A
  1. The US IT firms can still reduce production costs by relocating their production operations to other low-cost less developed countries.
  2. Relocation incurs high costs.
  3. Strong labour unions and frequent strikes in the USA may increase production costs.
  4. The labour regulations in the USA are strict which may increase labour costs.
  5. Locating the production operations in the US, the IT firms have to spend more money to comply with the environmental protection regulation.
  6. Moving the production operations away from China may weaken the competitiveness of the US IT firms in China, which is an emerging markets of IT products.
48
Q

Comparison of type of industry between Iron and steel industry in China, IT industry in USA, Manufacturing in HK.

A

Iron and steel industry in China:
-Heavy and bulky.
-Capital intensive.
-Raw material and power oriented
IT industry in USA:
-Capital intensive.
-R&D intensive
-High tech
-Light
Manufacturing in HK:
-Labour intensive.
-Light

49
Q

Comparison of mode of production between Iron and steel industry in China, IT industry in USA, Manufacturing in HK.

A

Iron and steel industry in China:
Single-point
IT industry in USA:
Multi-point
Manufacturing in HK:
Multi-point

50
Q

Comparison of industrial landscape between Iron and steel industry in China, IT industry in USA, Manufacturing in HK.

A

Iron and steel industry in China:
Traditional industries areas
IT industry in USA:
-R&D stage: Sites with pleasant environment in the suburbs in large cities
-Production stage: Traditional industries areas.
Manufacturing in HK:
Industrial areas.

51
Q

Comparison of pollution problems between Iron and steel industry in China, IT industry in USA, Manufacturing in HK.

A

Iron and steel industry in China:
Serious air pollution
IT industry in USA:
-R&D stage: nearly no pollution
-Production stage: Cause pollution
Manufacturing in HK:
Less serious compare to iron&steel production.

52
Q

Comparison of markets between Iron and steel industry in China, IT industry in USA, Manufacturing in HK.

A

Iron and steel industry in China:
Mainly local and domestic market
IT industry in USA:
Mainly global market
Manufacturing in HK:
Global market.

53
Q

What are the impacts of globalisation in market on location of IT industry?

A
  1. Export (Manufacturing products in the home country and selling them in the foreign market.)
  2. Licensing (Granting a license to a foreign producer to manufacture the products and sell them in a foreign market.)
  3. Foreign direct investment (Setting up a production plant in the foreign market as foreign direct investment and selling products there.)
54
Q

What are the impacts of globalisation in production of IT industry?

A

Headquarters is kept in the home country which production plants are moved to areas with low production costs.

55
Q

What are the impacts of globalisation in sourcing inputs of IT industry?

A

Purchasing component from different suppliers all over the world in bulk.

56
Q

What are the benefits of globalisation in sourcing inputs of IT industry?

A
  1. Have great bargaining power over their component suppliers.
  2. Choose the suppliers which provide the firm with reliable and quality inputs at low prices.

S4 Geography (21 decks)

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