Exam code: J204
In the context of business operations, what does the phrase ‘proximity to market’ refer to?
Advertising the business specifically to those who live in the local area
Locating a business close to its potential customers
Only employing workers who are part of the local community
Working on a site that is close to a source of raw materials
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MD Sports Clinic
Martina Doyle currently works for the National Health Service (NHS). She has total savings of just over £5000 in her bank account. Martina is planning to leave the NHS and start up a private sports injury clinic. She intends to call her new business ‘MD Sports Clinic’.
Martina wishes to rent a property for her new business and expects to pay rent each month. She wants to take a monthly income from the business. She also wants to employ a part time receptionist.
Martina needs to buy some equipment to set up MD Sports Clinic. She has estimated the following figures for MD Sports Clinic’s first month of trading:
costs of £6000
variable costs of £5 per session
revenue of £30 per session.
Identify one factor that a new business like Martina’s should consider when choosing a location for its business.
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Which one of the following is the most likely reason for a greeting card manufacturer to locate its factory on an out-of-town industrial estate?
Council incentives offering reduced business rates
Greeting cards are destroyed if they get wet during transportation
Lots of people who work on the industrial estate will buy cards
The need to be close to the market because customers are unwilling to travel
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BP plc
BP plc is a UK energy company, which has its headquarters in London. BP produces oil, gas and petrol. It sells and distributes these products to customers all over the world. It also produces some environmentally friendly energy including biofuels, as well as wind- and solar-powered electrical energy.
The company’s finance function is critical in ensuring the business is managed efficiently. BP plc’s revenue increased from $245 billion in 2017 to $283 billion in 2019.
One of BP’s operations involves selling of petrol to the public. BP has 18 700 petrol stations around the globe, with 8500 in the UK. Another of BP’s operations involves extracting oil, using its oil rigs. These are located in the seas around the UK, Norway, Australia, Angola, the Gulf of Mexico (USA) and off the coast of many other countries. Once the oil is extracted it is then transported to refineries.
BP strives to be more sustainable. BP has the aim of cutting its carbon emissions by 2050 to help reduce the effects of climate change. It is installing electric charge points for Police Scotland’s electric vehicles and is developing wind farms in America in partnership with an American company.
Identify two reasons why a UK business might choose to locate in another country.
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Which one of the following is a benefit of locating a tomato farm near to a ready supply of labour?
Ease of recruitment of tomato pickers
Personal contact with supermarket buyers
Sales of fresh tomatoes are likely to increase
The tomatoes will not need to be transported
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Aston Martin plc
Aston Martin plc (AM plc) is a British manufacturer of luxury sports cars. It has more than 150 car dealerships in over 50 countries on six continents. Its globalised supply chain includes suppliers from the UK, EU and across the world. The company is also expanding its brand to include speed boats, submarines and property development.
Its headquarters and the main production site are centrally located in Warwickshire, England, on the site of a former RAF airbase. It employs over 3000 workers on this site, who are highly skilled engineers and who produce each car using the most up-to-date machinery. When the cars are finished, they are then transported from central England all over the UK and beyond. The demand for AM plc products is influenced by many factors, including UK unemployment rates and consumer income levels.
AM plc is proud of its commitment to the environment, which includes trying to produce goods sustainably. It also considers ethical issues in its decision making.
Analyse one possible factor that AM plc may have considered when choosing the location of its main production site.
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Costa Coffee
Costa Coffee is a British multinational coffee shop company owned by Coca-Cola. It is the second largest coffeehouse chain in the world behind Starbucks, and the largest in the UK. It has over 2100 branches in the UK and over 1200 branches in the rest of the world including Dubai, China and Poland.
Costa Coffee has recently opened a new branch in Welshpool. It is located in the town centre on the high street near lots of other businesses, including offices and shops. There were only two other coffee shops in the town before they opened.
Costa Coffee takes ethics very seriously and it has switched to environmentally-friendly coffee beans to make its supply chain more sustainable. Now all its stores worldwide use beans from Rainforest Alliance-certified suppliers, who meet ethical and environmental standards for the sustainable supply of coffee beans.
In order to be successful, Costa Coffee sells a wide range of products and constantly invests in updating this product range as well as refurbishing its shops. Recently it has invested heavily in updating its computer software to assist its many functional areas such as finance.
(i) Identify two factors that influence the location of a business.
Factor 1 .................................................................................................................
Factor 2 .................................................................................................................
[2]
(ii) Discuss the factors that may have influenced Costa Coffee’s decision to locate a new branch in Welshpool.
[7]
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