CAIE IGCSE Business Studies 4.6 Location Decisions Questions
Use this location page to explain site advantages or problems and justify country, city-centre or relocation choices from case data.
- Syllabus
- 2027–2029
- Course
- Business 0264
Exam points
- Explain location advantages and disadvantages such as labour, rent, customers or transport.
- Apply overseas relocation problems to language, culture, costs or legal controls.
- Justify the best location by weighing Appendix data and business priorities.
Covered syllabus points
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].
Question 2
[Maximum number: 6]
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.
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:
Award 1 mark for identification of each relevant reason (max 2).
Award 1 mark for each relevant reference to this business (max 2).
Award 1 mark for each relevant explanation (max 2).
Points might include:
Suppliers:
- Distance [k] if closer to the factory [app] may reduce transport costs/may be able to get resources quicker [an]
- May need to change supplier/can they still use current supplier [k] leading to delays [an] so cannot meet increase in demand [app]
- Quality/range of materials [k] could damage its reputation [an] of its cups/plates [app]
- Cost [k] which could lower its profit margin [an]
Suitability of land:
- May need a large area/space [k] otherwise this could limit production/so able to expand [an] for its exports [app]
- Access to power/water/electricity [k] as using flow production [app] so need continuous supply to operate 24 hours a day [an]
- Cost of land/rent [k] as may increase fixed costs [an]
- Links to transport/accessible [k] to ensure deliveries can be made on time [an]
- Environmental impact [k]
- Government influence or examples such as taxes [k]
Other appropriate responses should be credited
To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made.
The following words are likely to be appropriate for this question:
- Cups/plates
- Flow production
- (30\%) exported
- Factory
- 75 employees
- Increased demand (for its products)
Other appropriate examples can be credited.
Question 3
[Maximum number: 6]
Caleb wants to be an entrepreneur. He plans to start up a business selling handmade furniture including tables and chairs. He will sell his products to a niche market. Having a good brand image will be important. Caleb knows there are many legal controls that can impact his marketing strategy. He is considering selling his products using e-commerce. Caleb also has to decide on a suitable location for the business.
Explain two factors a service business should consider when deciding on a suitable location. Which factor do you think is more 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 2 marks for a justified decision as to which is the most important factor for a service sector business to consider when deciding on a suitable location.
Points might include:
- Availability of suitable premises / cost of site [k] as high rent will increase (fixed) costs [an] which business might not be able to afford [an]
- Access to customers / demand / sales [k] to increase revenue [an]
- Government influence / grants / legal controls [k] which may influence or restrict where / how the business can operate [an]
- Competitors [k] where there are many competitors it could mean high footfall [an]
- Access to employees [k] as might need trained workers to offer good level of service / may not be suitable workers nearby [an]
Other appropriate responses should also be credited.
Justification might include:
The cost of rent [k] is important as high rent will increase fixed costs [an] which the business may not be able to afford [an]. Another factor is access to customers [k]. Overall, I think customers is likely to be more important as a business has limited influence over the cost of rent whereas it can influence its sales [eval]. If it locates where there are many customers, the business has a better chance to gain enough revenue to pay its rent even if this is higher than in quieter locations. [eval]
This is a general question so there are no marks for application.
Some points of analysis could apply to several points but only award once.
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