4.4. Location decisions
A subsection of Business Studies, 7115, through 4. Operations management
Listing 4 of 4 questions
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 1 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 1
7115_s16_qp_12
THEORY
2016
Paper 1, Variant 2
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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 3 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 3
7115_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: 1 1 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. 1 1
7115_s24_qp_12
THEORY
2024
Paper 1, Variant 2
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TYA is a limited company which manufactures 300000 cars a year. It has 600 employees. TYA has high fixed costs. The Managing Director wants to improve efficiency in the factory. He said: ‘Globalisation is changing how businesses operate. Many manufacturing businesses are considering whether to relocate their operations to other countries.’ Define ‘globalisation’. Identify two examples of fixed costs. Example 1: Example 2: Outline, with reference to TYA, the difference between a limited company and an unincorporated business. 1 2 Explain two methods TYA could use to increase efficiency. Method 1: Explanation: Method 2: Explanation: Do you think legal controls are the most important factor for a manufacturing business to consider when deciding which country to locate its operations in? Justify your answer. 1 2
7115_w22_qp_12
THEORY
2022
Paper 1, Variant 2
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Questions Discovered
4