(PAPER 3) 4.2.3 assessment of a country as a production location

Question 1

9 factors a business should consider when assessing a country as a production location

Answer 1

1. cost of production
2. skills and availability of labour
3. infrastructure
4. location in the trade block
5. government incentives
6. ease of doing business
7. political stability
8. natural resources
9. likely return on investment

Question 2

why are costs of production an important factor in a businesses assessment of a country as a production location

Answer 2

gain a competitive edge with lower costs to increase profit margins

Question 3

why would a business need to consider the skills and availability of labour in the potential country

Answer 3

does the country have the skills required to maintain quality standards and will the business have to invest money in training?

Question 4

reshoring definition

Answer 4

moving production back to the home country

Question 5

infrastructure issues that may prevent a business from setting up in certain countries

Answer 5

1. poor roads- longer transportation times

2. lack of investment in education

Question 6

reasons why a business may choose to locate production in a trade block

Answer 6

avoid protectionist measures such as tariffs and quotas- reducing costs- allowing a more competitive price to be charged

Question 7

3 financial incentives a government may use to influence the location of businesses

Answer 7

1. tax rates
2. lower rates of corporation tax
3. interest free loans

Question 8

bureaucracy definition

Answer 8

lots of rules and paperwork making it difficult to be entrepreneurial and difficult to do business

Question 9

why would the availability of natural resources be the most important factor for a mining firms assessment of a country

Answer 9

can only choose locations where minimal deposit exists e.g. Africa

Question 10

what is meant by likely return of investment

Answer 10

how much profit would be made on a likely project

Question 11

3 quantitative methods a business can use to help evaluate the financial costs and benefits of investing in a particular location

Answer 11

1. payback
2. average rate of return
3. net present value

Question 12

potential 10 marker question: asses weather setting up a production location in _______ is suitable for the business

Answer 12

EXAMPLE: the infrastructure in the UK is good but the young employment rate is bigger than average

the UK would be good for the business because the infrastructure is very good so…. HOWEVER, the young employment rate is bigger than average so…..
in conclusion I think it is a good/bad idea because…