Location Flashcards
location
long-term strategic goal that refers to the geographical position of a business
quantitative reasons for location of production
cost of land in particular areas
cost of labour
proximity to market and access to raw materials - transportation costs to consider
government incentives/limitations (grants & subsidies)
feasility of e-commerce
qualitative reasons for location of production
management preferences
local knowledge (culture)
infrastructure (transportation, comms, support network)
political stability (trade, law, exchange rate)
gov’t regulations
ethical issues (environmental issues)
comparative shopping (clustering)
outsourcing/subcontracting
transferring internal business activities to an external organisation to reduce costs and increase productivity
offshoring
extension of outsourcing involving relocating business functions/processes overseas
insourcing
use of an organization’s own people/resources to accomplish a certain ask which would otherwise have
been outsourced
reshoring
bringing back operations to home country from overseas due to rising labor costs and/or
higher cost of production
advantages of outsourcing
specialists are hired to carry out tasks (high quality), outsourced work is provided at competitive rates, reduce labour costs, allows firm to focus on core activities, improves workforce flexibility
disadvantages of outsourcing
must have mutual trust between business and subcontractor, challenges in quality management, subcontractors need to be monitored, cause redundancies, associated with unethical practices (long working hours & low pay)
advantages of offshoring
helps business avoid trade protectionist measures, reduce labour costs, higher quality of work (increased human capital in intended country)
disadvantages of offshoring
aassociated with unethical practices (exploitation of labour in low income countries), challenges in quality assurance, vulnerable to economic/plitical instability
assisted area
regions identified by
governments that have relatively high unemployment and
low incomes and are in need of regeneration through financial
assistance
bulk-increasing/weight gaining industry
involved with products that increase in weight during the production process, thus must be located near their customers to reduce costs
bulk-reducing/weight reducing industry
those that need to locate near the source of raw materials because they
are heavier and more costly to transport than the final product
clustering
a business lovates near others that operate in similar or complementary markets
