4.4. Location decisions
A subsection of Business Studies, 0450, through 4. Operations management
Listing 6 of 6 questions
Kyle is an entrepreneur. He plans to buy a Frydays franchise. Frydays is a leading fast food (take-away) business. Each franchise costs $100 000. Frydays would provide some promotion. ‘I only need to find the right location, hire some people and raise the finance’ said Kyle. ‘I am certain to make a profit.’ What is meant by an ‘entrepreneur’? Identify two methods of promotion Frydays might use. Method 1: Method 2: Identify and explain two factors that would affect Kyle’s choice of source of finance. Factor 1: Explanation: Factor 2: Explanation: Identify and explain two factors that Kyle should consider when choosing a suitable location for his business. Factor 1: Explanation: Factor 2: Explanation: Do you think that owning a franchise would mean Kyle is ‘certain to make a profit’? Justify your answer.
0450_s14_qp_13
THEORY
2014
Paper 1, Variant 3
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Cheung owns a small retail shop in the city centre selling fashion clothing for children. As it is a competitive market, Cheung knows market research is important. Cheung is worried about the effect of an increase in shop rent on his costs. Cheung said: ‘I will have to pay this higher rent as it is a good location. I need to increase revenue or reduce other costs.’ Cheung buys all his supplies from a wholesaler located in a nearby town. He is thinking of buying directly from a clothing manufacturer in another country. What is meant by ‘market research’? Identify what will happen to each of the following when Cheung’s shop rent increases. Variable cost: Fixed cost: Identify and explain two possible reasons why Cheung thinks the shop is in a good location. Reason 1: Explanation: Reason 2: Explanation: 1 2 Identify and explain two ways Cheung could increase revenue. Way 1: Explanation: Way 2: Explanation: Do you think Cheung should change his supplier? Justify your answer. [ 1 2
0450_s17_qp_12
THEORY
2017
Paper 1, Variant 2
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KLG is based in country X. It specialises in making electrical parts which it sells to washing machine manufacturers in country X. The Managing Director is planning to relocate to country Y, which is a low-cost country. She said: ‘This will allow us to pay employees low wages for working long hours as there are few legal controls on employment and health and safety. KLG cannot be both ethical and profitable. Changes in exchange rates and import tariffs might cause us problems when we start exporting.’ What is meant by ‘import tariff’? Identify two benefits to KLG of specialisation. Benefit 1: Benefit 2: Explain how a change in exchange rates might affect KLG when exporting. 1 17 Identify and explain two factors (other than exchange rates and import tariffs) that KLG should consider when deciding where to relocate. Factor 1: Explanation: Factor 2: Explanation: The Managing Director believes that ‘KLG cannot be both ethical and profitable.’ Do you agree? Justify your answer. 1 17
0450_s16_qp_12
THEORY
2016
Paper 1, Variant 2
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The Government in country Y wants to encourage more secondary sector business activity to help reduce unemployment. It has announced a reduction in taxes and plans to remove some legal controls over business activity. Kasper Construction is a multinational company based in country X which wants to expand. It plans to build a brick-making factory in country Y if it can find a suitable location. Some pressure groups are against this plan as Kasper Construction has a bad reputation for environmental damage. Fig. 1: Employment in country Y Total number of people employed in 2015 = 20 000 000 primary sector 60% tertiary sector 25% secondary sector 15% What is meant by the ‘primary sector’? Calculate the number of people employed in secondary sector businesses in country Y. Identify and explain two benefits to Kasper Construction of a reduction in taxes. Benefit 1: Explanation: Benefit 2: Explanation: 1 21 Identify and explain two factors (other than taxes) that Kasper Construction should consider before making a location decision. Factor 1: Explanation: Factor 2: Explanation: Do you think that the Government of country Y should encourage Kasper Construction to locate in country Y? Justify your answer. [ 1 21
0450_s16_qp_13
THEORY
2016
Paper 1, Variant 3
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Alex started APB as a sole trader business 4 years ago. APB provide printing services for local businesses such as leaflets and brochures. Alex thinks having a good location is important to any business. All APB’s 6 employees receive on-the-job training. Alex has a democratic leadership style and uses job rotation to help keep employees motivated. To meet an increase in demand, Alex plans to buy an additional printing machine. This will cost $1800. Alex has to decide on an appropriate source of finance. Define ‘job rotation’. State two factors that a service sector business should consider when deciding where to locate. Factor 1: Factor 2: Outline one advantage and one disadvantage to APB of using on-the-job training. Advantage: Disadvantage: 1 9 Explain one advantage and one disadvantage of Alex having a democratic leadership style. Advantage: Explanation: Disadvantage: Explanation: Do you think the amount of money needed is the most important factor for a sole trader to consider when deciding on an appropriate source of finance? Justify your answer. [ 1 9
0450_s21_qp_11
THEORY
2021
Paper 1, Variant 1
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DLT manufactures cups and plates in country X. Its factory uses flow production and has 75 employees. The Human Resources Director is aware that there are many legal controls over employment. DLT exports 30% of its products to country Y where it benefits from lower rates of taxation and no import quotas. DLT’s Managing Director is considering relocating its factory to another part of country X to meet the increased demand for its exports. Define ‘import quota’. Identify two benefits to a business of lower rates of taxation. Benefit 1: Benefit 2: Identify four legal controls over employment. Legal control 1: Legal control 2: Legal control 3: Legal control 4: Explain one reason why DLT needs to consider each of the following factors when deciding where to relocate in country X: Suppliers: Explanation: Suitability of land: Explanation: Do you think the advantages for a manufacturing business of using flow production are greater than the disadvantages? Justify your answer. ,    ,
0450_s24_qp_12
THEORY
2024
Paper 1, Variant 2
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Questions Discovered
6