Unit 18 Flashcards
Qualitative factors of business location:
○ Size of site.
○ Legal controls.
○ Infrastructure.
○ Ethical.
Explain qualitative factor: Size of site.
Large enough for current needs of business.
Explain qualitative factor: Ethical.
Effect on workforce due to relocation.
Explain qualitative factor: Legal controls.
Restrictions in certain locations.
Explain qualitative factor: Infrastructure.
Transport links: water, power and telecoms.
What are the reasons and benefits of relocating to another country?
1) Achieve growth.
2) Reduce production costs.
3) Locate production closer to market.
4) Removed legal barriers and import tariffs.
5) Government incentives.
Explain reason and benefits of relocating to another country: Achieve growth.
Sales may have reached maximum level in home market.
Explain reason and benefits of relocating to another country: Reduce production cost.
Labor costs are less in third world countries.
Explain reason and benefits of relocating to another country: locate closer to market.
Reduces delivery time to customers.
Explain reason and benefits of relocating to another country: Removed legal barriers and import tariffs.
If a business has a branch in another country, import and export tariffs may be removed.
Explain reason and benefits of relocating to another country: Government incentives.
Governments around the world support businesses from overseas allowing businesses to grow and also helping the economy.
Factors of choosing location:
1) cost of land.
2) Distance from workforce.
3) Distance from customers.
Quantitative factors of business production.
1) Cost of site.
2) Availability and cost of labor.
3) Transport cost.
4) Market potential.
5) Government incentive.
Explain Quantitative factor of business production: cost of sales
Cost of rent.
Explain Quantitative factor of business production: Transport cost.
How close the site is to the suppliers.
Explain Quantitative factor of business production: Market potential.
Tertiary sector businesses need to be close to their customers.
Explain Quantitative factor of business production: Government incentives
Incentives can allow businesses to set up branches for significantly lower prices.
Limitations of relocating business to another country?
1) Cultural differences.
2) Communication problems.
3) Ethical concerns.
4) Quality issues.
Explain limitation of relocating to another country: cultural differences
Product popularity may be different.
Explain limitation of relocating to another country: communication problem
Language barrier and distance from head office may make communication difficult.
Explain limitation of relocating to another country: ethical concern
Decision to relocate may affect workplace in home country, causing high levels of redundancy. Exploitation, child labor, low cost economies may also be caused.
Explain limitation of relocating to another country: quality issues
Difficult to find quality of supplies and finished products in international markets.
Role of legal controls?
When a business goes to a new country to start activities, there are some laws which the business may need to investigate and understand.
Types of legal controls:
○ Building new premises requires planning permission from local government.
○ Areas away from local housing set up for businesses to be used, so that the businesses does not affect residents with noise or traffic.
○ Businesses are required to monitor and control the amount of pollution caused by its activities.
○ Businesses need to understand the laws set for employees to work in a business.
Define: infrastructure
Basic facilities, services and installations needed for a business to function. Ex: water, electricity.
Define: Government incentive
Actions taken by the government that help new businesses execute business activities.
