IB UNIT 5.4

What is a key reason for a business to locate production near its customers?

• To increase transportation costs
• To reduce transportation costs
• To avoid government incentives
• To reduce labor costs

Which of the following is a reason for a business to locate near raw materials?

• To reduce bulk transportation costs
• To increase labor costs
• To avoid clustering
• To reduce customer proximity

What is industrial inertia?

• The tendency to relocate frequently
• The tendency to stay in the same location despite no financial benefit
• The tendency to avoid clustering
• The tendency to outsource all operations

What is clustering in business location decisions?

• Locating far from competitors
• Locating near complementary businesses
• Avoiding government incentives
• Reducing labor costs

Which of the following is a qualitative factor in location decisions?

• Labor costs
• Management preferences
• Transportation costs
• Raw material costs

What is a footloose organization?

• A business that must locate near raw materials
• A business that must locate near customers
• A business with no advantage to being in any particular location
• A business that avoids clustering

What is outsourcing?

• Subcontracting non-core activities to external providers
• Relocating production overseas
• Bringing production back to the home country
• Using internal resources for all tasks

Which of the following is an advantage of outsourcing?

• Increased control over operations
• Reduced costs and access to specialized expertise
• Higher labor costs
• Increased employee motivation

What is offshoring?

• Relocating business functions overseas
• Subcontracting non-core activities
• Bringing production back to the home country
• Using internal resources for all tasks

Which of the following is a disadvantage of offshoring?

• Lower labor costs
• Ethical concerns, such as child labor
• Improved customer relationships
• Reduced transportation costs