Practice Flashcards
Name four international location factors
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All Flashcards in Topic 5.4
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5.4.125 cards
Name four international location factors
Lower labour costs, access to new markets, fewer regulations/lower taxes, language/cultural barriers, political risk, exchange rates, trade agreements.
Cost, markets, regulations, barriers
Location affects costs, revenue, ___ and ___
Operations and recruitment.
Operations + recruitment
Name six key location factors
Proximity to market, proximity to materials, labour availability, land/rent costs, transport links, government incentives.
Market, materials, labour, cost, transport, incentives
Why is location a critical business decision?
It's long-term and expensive to change — affects costs, revenue, operations and recruitment.
Hard to reverse
Quantitative location factors are ___
Measurable — rent costs, wage rates, transport costs, government grants.
Measurable numbers
Why move production to a developing country?
Lower wages — but must consider quality control, shipping costs and reputational risks.
Lower wages + trade-offs
Qualitative location factors are ___
Harder to measure — quality of life, brand image, manager preference, ethics.
Harder to measure
Location affects four things:
Costs (rent, wages), revenue (customer access), operations (supply chain), recruitment (skilled workers).
Costs, revenue, ops, recruitment
Key factors: market, materials, labour, costs, transport, ___
Government incentives.
Incentives
'Proximity to market' matters most for ___
Retail and service businesses — being close to customers is vital.
Retail + services
Good location decisions balance ___
Both quantitative (numbers) AND qualitative (intangible) factors.
Both quant + qual
Why is it hard to change location once chosen?
Expensive to move, disrupts operations, may lose staff and customers — a long-term commitment.
Expensive + disruptive
'Proximity to raw materials' matters most for ___
Manufacturing and primary sector — reduces transport costs for heavy/bulky inputs.
Manufacturing + primary
Political risk affects international location because ___
Unstable governments can change laws, seize assets or create uncertainty.
Uncertainty + asset risk
Always apply location factors to ___
The specific business in the exam — don't just list generic factors.
The specific business
International adds: political risk, exchange rates, ___
Language/cultural barriers and trade agreements/tariffs.
Barriers + trade
A factory cares about different location factors than ___
A coffee shop — always apply factors to the specific business type.
Different businesses = different factors
Exchange rate fluctuations matter because ___
Currency changes can make costs or revenues unpredictable in international locations.
Unpredictable costs/revenue
Quality of life affects location because ___
It influences the business's ability to attract talented staff.
Attract talent
Name three 'other' location factors
Infrastructure (power, internet), legal regulations, competitor proximity, quality of life, climate/natural risks.
Infrastructure, regulations, competitors
Manager's personal preference is a ___ factor
Qualitative — hard to measure but can influence the final decision.
Qualitative
International location trade-off: lower costs vs ___
Quality control challenges, shipping costs, cultural barriers and reputational risks.
Quality + shipping + reputation
Location affects costs like ___
Rent, wages and transport — cheaper locations reduce fixed costs.
Rent, wages, transport
Quick: Quantitative = measurable. Qualitative = ___
Harder to measure but still important (quality of life, ethics, preference).
Hard to measure
Being near competitors can be ___ or ___
Good (footfall/clustering benefits) or bad (increased rivalry).
Good or bad
5.4.220 cards
Outsourcing = another ___. Offshoring = another ___
Company; country.
Company vs country
What is outsourcing?
Hiring another company to do a task or process you used to do yourself.
Another company does it
What is offshoring?
Moving part of a business's operations to another country, usually to reduce costs.
Operations → another country
Two advantages of outsourcing?
Lower costs + access to specialists; business focuses on core activities; flexible scaling.
Costs + specialists + focus + flex
Both aim to cut ___ and improve ___
Costs; efficiency.
Costs + efficiency
Two disadvantages of outsourcing?
Loss of quality control; communication difficulties; risk of data/security breaches.
Quality + comms + security
Outsourcing = giving work to ___. Offshoring = moving work to ___
Another company; another country. They can overlap ('offshore outsourcing').
Company vs country
Name three reasons to outsource
Reduce costs, focus on core competency, access specialist skills/technology, increase flexibility.
Cost, focus, skills, flex
Why is offshoring common in manufacturing, IT and customer service?
These tasks can be done remotely or in lower-wage countries — significant cost savings.
Lower wages + remote possible
What is a core competency?
What the business does best — outsourcing non-core tasks lets it focus on its strengths.
Best at + focus
Two advantages of offshoring?
Significant cost savings (lower wages); access to new markets/talent; 24/7 production across time zones.
Costs + markets + 24/7
Risks include loss of ___, communication problems and ___
Quality control; reputation damage.
Quality + reputation
In exams, evaluate whether ___ outweigh the ___
Benefits; risks — for the specific business in the case study.
Benefits vs risks
Outsourcing example?
Tech company outsources customer service to a call centre — focuses on software development.
Tech + call centre
What is 'offshore outsourcing'?
Giving work to another company that is based in another country — combining both concepts.
Another company + another country
Two disadvantages of offshoring?
Language/cultural barriers; quality harder to control; negative publicity (job losses at home); political risk.
Barriers + quality + publicity + risk
Outsourcing increases flexibility because ___
Easy to scale up or down — just adjust the contract rather than hiring/firing staff.
Scale via contract
Offshoring can enable 24/7 production by ___
Operating across different time zones — when one country sleeps, the other works.
Time zone advantage
Offshoring can cause negative publicity because ___
Domestic job losses — customers and media may criticise the company for moving jobs overseas.
Job losses at home
Quick: Can outsourcing and offshoring overlap?
Yes — 'offshore outsourcing' = hiring another company in another country.
Yes, offshore outsourcing
5.4.320 cards
Name three methods for evaluating location options
Cost-benefit analysis, quantitative scoring, break-even analysis, investment appraisal (payback/ARR).
CBA, scoring, break-even, appraisal
Name three reasons a business might relocate
Closer to customers/growing market, reduce costs, better infrastructure, forced by external factors.
Customers, costs, infrastructure, forced
How to structure a location comparison exam answer?
Identify key factors → Argue FOR Option A → Argue FOR Option B → Evaluate → Justified conclusion.
A → B → Evaluate → Conclude
Methods: cost-benefit, scoring, break-even, ___
Investment appraisal (payback/ARR) — comparing long-term returns.
Investment appraisal
Relocation: can cut costs + access new markets but is ___ and ___
Risky and expensive — disrupts operations and may lose staff/customers.
Risky + expensive
Name three risks of relocation
High moving costs/disruption, loss of skilled staff, loss of customers, time to establish in new area.
Costs, staff loss, customer loss, time
When comparing locations, use both ___ and ___ arguments
Quantitative (numbers) and qualitative (judgement) — for a balanced answer.
Quant + qual
Common exam mistake with location questions?
Listing generic factors without linking them to the specific business in the case study.
Must apply to the business
Location exam: always use ___ and give a ___
Case study data; justified conclusion.
Data + conclusion
Relocation is a ___ risk, ___ reward decision
High risk, high reward — must be justified by long-term benefits outweighing short-term costs.
High-high
Stakeholder analysis for location asks ___
How will each option affect employees, customers, shareholders and the local community?
Impact on each stakeholder
Quantitative scoring for location works by ___
Assigning numerical scores to key factors for each option and comparing totals.
Score + compare totals
Break-even analysis for location calculates ___
How many sales are needed at each location to cover costs — lower BEP = safer.
Sales to cover costs
External factors forcing relocation include ___
Lease expiry, natural disaster, government policy changes.
Lease, disaster, policy
A justified conclusion is essential for ___
Top marks in 10-mark questions — state which option and explain WHY.
10-mark top marks
Compare locations using both ___ and ___ factors
Quantitative and qualitative — numbers AND judgement.
Quant + qual
Always use ___ data in location exam answers
Case study data — specific numbers and facts from the scenario, not generic knowledge.
Case study data
Quick: Relocation = high ___, high ___
Risk, reward.
Risk + reward
Loss of skilled staff during relocation happens because ___
Some employees cannot or will not move to the new location — losing experience and knowledge.
Won't/can't move
Investment appraisal for location uses ___ or ___
Payback period or ARR — comparing long-term returns from different locations.
Payback or ARR
Topic 5.4 study notes
Full notes & explanations for Location
BM exam skills
Paper structures, command terms & tips
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