CAIE IGCSE Business Studies 4.6.1 location decision factors
Practise location-factor questions by applying labour, suppliers, transport, demand and cost data before justifying a site.
- Syllabus
- 2027–2029
- Course
- Business 0264
Exam points
- Explain service-location factors such as customer access, rent, labour or competitors.
- Apply overseas-location problems such as distance, language, transport or legal rules.
- Justify country or site choice by comparing advantages and disadvantages from the case.
4.6.1—Main factors which influence location decisions question 1
[Maximum number: 6]
WMH is a business which operates in the secondary sector. It makes furniture including tables and chairs. WMH's employees are all members of a trade union. The Managing Director knows the business is likely to remain small. She is considering introducing new technology into WMH's factory. She also knows it is important for a manufacturing business to choose a suitable location for a factory.
Explain two factors a manufacturing business should consider when deciding on a suitable location for a factory. Which factor is likely to be the most important? Justify your answer.
Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for justified decision as to which location factor is likely to be the most important for a manufacturing business.
This is a general question so there are no marks for
application
1(e)
Points might include:
- Access to skilled labour [k] as may be difficult to find/recruit/ could increase recruitment/labour costs [an]
- Access to raw materials/components [k] so production is not delayed [an]
- Availability / rent of suitable land [k] which could restrict size of factory / increase fixed costs [an]
- Good transport links [k] to ensure materials arrive / products sent when needed [an]
- Proximity to market [k] to ensure sales/revenue can be made [an]
- Type of product [k] a fragile/heavy product may need to be closer to customers to reduce risk of damage/cost [an]
- Government grants [k] which could help reduce costs [an]
- Legal controls [k] which may prevent the business from locating in certain areas [an]
- Access to utilities/power/water [k] as needed for production [an]
- Trade barriers [k]
- Security of the area/level of crime [k]
Other appropriate responses should be credited.
Justification might include:
Skilled labour [k] if difficult to find could increase recruitment costs [an]. Another factor is availability of suitable land [k] which could restrict the size of the factory [an]. Having suitable land is more important because this might limit output which could reduce its ability to meet demand [eval] whereas a business can train employees, and the extra cost might be covered by the additional revenue gained [eval].
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