Location & Scale (A Level) (Cambridge (CIE) A Level Business): Flashcards
Exam code: 9609
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Why does proximity to the market influence a business's location?
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Why does proximity to the market influence a business's location?
Being near the market can reduce transport costs and make it easier for customers to access the business.
How does the nature of the business activity affect location?
Different businesses have different location needs. A manufacturing plant may need large space and delivery access, while a law firm may need a smaller, central office.
Transport links and electronic networks, such as internet connections, are part of a location's ____________.
Transport links and electronic networks, such as internet connections, are part of a location's infrastructure.
True or False?
Some businesses deliberately choose to locate near their competitors.
True.
Locating near competitors can help a business attract the same customer base or offer something different.
What is a local location decision?
A local location decision involves choosing where in a particular town or city to place the business, such as the city centre or an industrial estate.
What are regional incentives in national location decisions?
Regional incentives are grants or tax breaks that governments offer to attract businesses to poorer areas, aiming to reduce unemployment.
Locating within a country can help a business avoid ____________, such as tariffs and quotas.
Locating within a country can help a business avoid trade barriers, such as tariffs and quotas.
Define offshoring.
Offshoring occurs when a business sets up operations in another country to carry out certain business processes.
True or False?
Offshoring removes concerns about data security and confidentiality.
False.
Offshoring involves sharing sensitive information and intellectual property with external parties, which can raise data security concerns.
Define reshoring.
Reshoring occurs when a business brings its production activities back to its home country from abroad.
How can reshoring improve supply chain resilience?
Reshoring reduces dependence on foreign suppliers, so the business is less exposed to disruptions in global transport and trade.
Define globalisation.
Globalisation is the growing integration of economies, markets and people across the world.
Why do cultural and language factors influence international location decisions?
Understanding local customs and languages is key to operating abroad. Some businesses locate where suitable language skills and cultural understanding exist.
Define scale of operations.
The scale of operations is the size and extent of a business's activities, including how much it produces, how widely it sells and how many resources it uses.
How do the objectives of business owners affect the scale of operations?
Some owners keep their businesses small for easier control, a better work-life balance or to maintain quality. Others want rapid growth, high profits or global expansion.
True or False?
A business in a niche or local market will find it easy to grow very large.
False.
Niche or local markets have fewer potential customers, which limits how large a firm can become.
Define economies of scale.
Economies of scale are the efficiencies generated as a firm increases its scale of output, which lower its average costs of production.
What is a purchasing economy of scale?
A purchasing economy of scale occurs when large firms buy raw materials in greater volumes and receive a bulk purchase discount.
Large firms often receive lower ____________ on loans than smaller firms, as they are perceived as less risky.
Large firms often receive lower interest rates on loans than smaller firms, as they are perceived as less risky.
What is a technical economy of scale?
A technical economy of scale occurs when a firm uses its machinery at a higher level of capacity, spreading the cost of the machinery over more units.
Define external economies of scale.
External economies of scale occur when there is an increase in the size of the industry in which the firm operates.
How can a geographic cluster lower a firm's costs?
As an industry grows, ancillary firms move closer to major manufacturers. A larger cluster also creates a larger pool of skilled labour.
Define diseconomies of scale.
Diseconomies of scale occur when a business grows too large, causing its average costs per unit to increase as output rises.
True or False?
Diseconomies of scale can be caused by a lack of commitment from employees.
True.
As a business grows, workers may feel less valued because their interaction with management is limited. They may become demotivated, leading to a fall in output.
How might a very large business respond to diseconomies of scale?
It may reconsider its organisational structure, often breaking itself up into autonomous smaller units that can communicate more effectively.
The level of output on the long-run average cost curve at which a business cannot reduce its average costs any further is called ___________________.
The level of output on the long-run average cost curve at which a business cannot reduce its average costs any further is called productive efficiency.
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