Business Location
Past examination questions (2011 sample) and excellence-level answers from NZQA
Not assessed in 3.1 paper in 2012
2011 Sample paper
Q
Perceived advantages of locating a business in Tianjin have resulted in an influx of financial
businesses flocking to Tianjin. Explain one factor that might encourage financial companies
to cluster.
A
only one needed
 Clustering may lead to an excellent supply of human resources that will encourage fast
growth
 There may be large demand for the financial products provided by these businesses
 As clustering occurs, other industries may develop to support finance
Q
Fully explain the impact on NZ Pure of locating their production facility in Tianjin by
explaining one advantage and one disadvantage of this strategy
A
Advantages only one needed
 Near to the market, in this case its customers in Beijing, because this will reduce
transport costs for finished products and therefore increase profits
 Nearness to the port will allow easy access to raw materials; this will reduce transport
costs for inputs and therefore increase profits
 Availability of skilled or low cost labour because this will increase productivity or reduce
costs of production
 Cost of land because this will keep overheads down low
Disadvantage
 Distance to Shanghai because this will increase transport costs for finished products
and therefore decrease profits
Q
Global businesses take great care when deciding where to site sales or production facilities
Evaluate in detail an international location of a NZ registered business you have studied in
depth. In your answer you should
 Describe the business and the international location at which it decided to set up the
production
 Fully explain two advantages of the location
 Fully explain two disadvantages of the location
 Draw conclusions on which are the most significant factors in making the decision
about location
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A
Advantages of an international location may include:
 A large cheap or skilled labour force which will increase productivity
 An accessible place to sell the product
 A good transport network helps reduce costs and make the movement of materials and
products easier
 Low cost property is available
 The factory is close to raw materials if they are heavy and bulky to transport
 Large accessible areas of cheap land on which to build the factory
 Government policies supportive of industrial development
The converses are disadvantages
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