06 Identify and explain two factors that QCH should consider when deciding the location of the new factory. [6]

[BASEL Moderator]

QCH is a multinational company which makes a range of luxury cars. Last year it made a profit of $700m. One of QCH’s objectives is to enter new markets. QCH wants to start producing cars in country C, a fast growing economy. The Finance Director said: ‘Meeting customer needs is important. We could form a joint venture or set up our own factory. Both options will be expensive, costing $800m.'

06 Identify and explain two factors that QCH should consider when deciding the location of the new factory. [6]

Possible KN Points:
• Demand / customers
• Amount of rent
• Lower cost of labour OR availability of labour OR access to suitable employees
• Lower raw materials cost OR availability of materials
• Access to transport networks OR access to water OR power
• Access to subsidies or grants
• Possible external economies of scale
• Enough space
• Environmental considerations
• Legal considerations