Essay Plan for Question 6, Section B from the Case Paper 6th May 2008
The development of tertiary and quaternary activities within a country suggests an
advanced economy.
(a) Explain what is meant by this statement. (6)
(b) Using an economic activity you have studied, describe the reasons for its
location and the changes which have taken place in recent years. (12)
(c) Has the growth of your economic activity been helpful or not to the growth of
other economic activities in the area studied? (7)
For the first part of this question (a) you will need to provide definitions for Tertiary and
Quaternary activities:-
Tertiary or Service Activities are activities that meet peoples’ needs but produce ne end
product. For example shop workers provide a service but do not make the goods they
sell. Similarly Doctors help us get well but do not make the medicines they use.
Quaternary Activities are high-tech services that provide information or expertise. For
example a Bio-tech company located in Cambridge may provide expertise for the
Pharmaceutical industry. Another example would be a Polling Company providing
information on voting trends to the Government.
Both these activities require medium to high skill levels in order to function properly. This
requires advanced education facilities which are widely available in the advanced
economies of North America and Europe but are only partly present in the poorer
economies of Africa and Asia.
In the second part of the question (b) you could use the Nike case study. You have to
give reasons for its location. Nike is a global company with offices and factories in many
countries throughout the world. The table below gives reasons for locating in MEDCs
(such as the USA and European countries e.g. UK, France, Italy) and LEDCs (such as
Vietnam and China):-
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Headquarters in Texas – most
employees are highly skilled and
well paid (Marketing and
Advertising in particular)
Most of Nike’s shops are located in
MEDCs where most customers are
based.
European Headquarters located in
London, Paris and Rome – keep up
to date with trends in the market
(the EU is still the biggest market)
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Land for large factories is cheaper
to buy in LEDCs.
Workforce is much cheaper than in
MEDCs
Workforce is more flexible – willing
to work longer hours and unions are
weak.
Access to new global markets in
South East Asia e.g. China.
Competitors have re-located to
LEDCs which means their shoes and
clothing has become cheaper (Nike
had no choice)
New pollution legislation in MEDCs
means that it would be far more
expensive to retain manufacturing
in the MEDCs.
Nike has and is investing heavily in
manufacturing and sales in China –
as sales increase (Nike is one of the
sponsors of the Beijing Olympics),
wage demands increase.
The final part of the question (c) asks you to assess the economic impacts in ‘the area
you have studied.’ Here you need to focus on Nike’s influence in the USA and in
Indonesia. From a small sports shoe manufacturing plant in Texas, Nike has expanded to
become one of the biggest shoe and clothing companies in the world with a turnover of
millions of dollars. In order to grow as a business, Nike has had to adapt to changing
economic trends. The biggest change has been the location of the majority of its
manufacturing plants to LEDCs. The company still retains the marketing and
development arms of its business in MEDCs.
Impacts on other economic activities in Indonesia:Setting up manufacturing in Indonesia and other LEDCs has brought jobs to people in the
transport and energy industries. These facilities have had to expand to meet demand
from the Nike factories.
Nike makes sports shoes and clothes – it needs raw materials from Indonesia in order to
make these products. Cotton farmers and rubber plant farmers benefit from the business
Nike brings.
Nike has encouraged other big global companies to locate in Indonesia and other LEDCs.
This has brought more business to these countries.
Nike increases exports for Indonesia so more people will be employed in the main ports
e.g. Jakarta.
In some ways Nike has slowed down the development of Indonesia’s own industry. There
are very few sports shoe/clothing companies with their Headquarters in Indonesia.
Impacts on other economic activities in the USA:There has been a large negative impact on manufacturing jobs in the USA. Because Nike
has moved production to Indonesia and other LEDCs there has been huge job losses
within the company in the USA as well as job losses amongst the companies that
supplied Nike with its raw materials e.g. leather from cattle farmers in the Mid-West of
the USA.
Most jobs within the company in the USA are in Research and Development and the
shops selling Nike Footwear and clothing (these shops are in virtually every town/city in
the USA). Nike state that if the company had not re=located their manufacturing base,
then there would be little by way of expansion in this retailing sector.
The USA has gained many service jobs through Nike but lost many manufacturing jobs.
Remember that you have 30 minutes only to answer this question in the Examination.
Answer all parts of the question and try to develop your points.