Location

Question 1

quantitative factors for location decisions

Answer 1

GERC

government grants
external EOS
revenue potential (footfall and demograhic)
costs - fixed, transport (inputs and to market), labour

Question 2

quantitative methods for location decisions

Answer 2

1. investment appraisal
2. profit estimates
3. breakeven analysis - fixed costs

Question 3

qualitative factors for location decisions

Answer 3

SEE SIR

Safety (public)
ethical - e.g. relocation causing redundancies
environment

space (Expansion)
infra - communication; transport
restrictions

Question 4

what did bizconsesh say?!

Answer 4

Raw materials
Employment
Competition
Infra
Proximity to target market
F_ inance of business (can they afford site)

*greenfield sites cheaper than brownfield

Question 5

advantages of multi-site locations

Answer 5

1. convenience for customer - satisfaction
2. wider brand presence
3. efficiency of operations - e.g. transport of inputs and finished goods to market
4. availability of inputs
5. spreading risk!

Question 6

reasons for offshoring

some business activities or processes are carried out overseas (DO NOT confuse with outsourcing - you could outsource to another country which is also offshoring)

Answer 6

REASONS ARE EITHER COST OR REVENUE RELATED

COSTS:
1. raw material
2. labour
3. capital/land
4. labour skills - higher quality = lower costs!

REVENUES:

1. overcome protectionist barriers
2. overcome ER volatility - easier pricing decisions
3. access rapidly growing countries with growing income and demand
   protectionism

Question 7

reasons for reshoring

Answer 7

SEQCC

supply chain concerns - less reliability; higher lead times
ethics - loss of jobs; unethical sourcing/practices (impact on CSR objective)
quality - poor customer service (e.g. time differences, language barriers), product standards
communication barriers - less face to face, language barriers (affects employees, customers and suppliers)
cultural differences - e.g. in the workplace, culture of independence may hinder work requiring teamwork, so training is needed to overcome these

1) reduces feasibility of JIT approach; not feasible if business requires great flexibility e.g. fashion
2)

Question 8

internal diseconomies of scale

Answer 8

3 Cs and an M

Control - slack off
Coordination - mistakes and costs
Communication - chain of command reduces productivity
Motivation - dispensible, higher turnover

Question 9

how to avoid internal diseconomies of scale

Answer 9

1. MBO to avoid coordination issues
2. decentralisation to overcome bureaucracy and communication issues
3. reduce diversification or demerge to reduce coordination and communication issues

Question 10

external diseconomies of scale

Answer 10

factors causing unit costs to rise as an industry expands

• increased demand for land/property
• increased demand for labour - higher wages
• road congestion - higher transport costs
• more expensive raw materials due to higher demand for thme