IGCSE, A Level Business Student Forum

Q6 Analyse the disadvantages of deindustrialization. [6]

Possible Structure:
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

[KN] Loss of jobs.
[AN] Deindustrialization can often lead to the complete closure of factories and manufacturing businesses.
[AN+] Many people will lose jobs as businesses will shut down leading to income disparities among workers.

[KN] Skill mismatch.
[AN] The skills required in the service sector may not always match those of the deindustrialized workforce.
[AN+] Workers with specialized manufacturing skills may find it challenging to transition to service-oriented careers, leading to skill mismatches and underemployment and businesses will find it difficult to find their required workers.

[KN] Increase in unemployment
[AN] Loss of jobs especially in regions which are heavily reliant on manufacturing.
[AN+] Leads to Income inequalities and social disparities.
[KN] Economic Decline
[AN] Deindustrialization can lead to economic decline in affected regions, resulting in lower income levels, reduced economic activity, and weaker local economies.
[AN+] The economic output and contributions of these sectors decrease, which can have a adverse effect on the entire economy.

[KN] Lower customer satisfaction
{AN} Due to the capital shifting from capital-intensive towards labour-intensive methods there is a high chance that the product that is made by the labour has some defect in them
[AN+] Thus this leads to a lower quality good being produced and dissatisfaction among the customer further leading to a loss of customer loyalty as well

{KN} High cost
{AN} Because of the labour-intensive method being used more and more people would be likely to get employed by the firm and so now the firm has to hire more people and so increasing their labour cost
{AN+} Thus due to higher production costs, the business cannot maintain the quality leading to a loss of brand image.

[KN] lower employment rates
[AN] people working in manufacturng industries would lose their job and thus stable income asw
[AN+] this leads to worse standards of living

[KN] it would cause a lack of manufactured goods being produced
[AN] this doesnt meet customer demands and higher chances of problems
[AN+] which ultimately decreases customer loyalty and sales of the company

[KN] Chances of errors
[AN] machines work continuously in the same way as they are instructed but humans sometimes get tired and so throw tantrums which may cause mistakes leading to loss of customer satisfaction.
[AN+] thus this will reduce productive efficiency of the business which can result in deteriorating the quality of output hence questioning the business growth.


[KN] High cost for the business
[AN] Firstly hiring labor will bring factors like their salaries and additional wages [ depending on their performance] can result in an increase in costs specially if they do not perform up to the mark but demand higher wages, bonuses etc.
[AN+] Thus, businesses may get less profit margin as more will be used to cover such holes.

(Kn)unemployment increases (an) with an increase in deindustrialisation factories will have to be closed and and people will in turn lose their jobs (An+) this will lower the standard of living as they will now have to look for other jobs to get money
(Kn)reduces gdp of the economy (an) secondary sector produces manufactured goods which are of high value due to their value addition and hence contribute highly to the GDP (an+) but since there is deindustrialization there GDP will be reduced and many firms will be reluctant to start there operations here

[KN] Increase in unemployment
[AN] deindustrialization means an decrease in industrial sector of the economy which means that many factories would be closing
[AN+] The worker in those factories would be left unemployed

[KN] decreases in GDP
[AN] Many of finished goods could be contributing to GDP as they would be exported
[AN+] As the amount of goods produced is declined it would lead to negative effect to GDP

[kn] more firms entering the tertiary sector, increasing competitors and breaking monopolies
[an] forcing already existent firms to increase quality and decrease prices due to more options to consumers
[an+] reducing thier profits
[kn] difficult for many firms to change fom manufacturing to service sector businesses due to lower occupational mobility
[an] therefore they do not adapt to changes in market demand and remain outdated
[an+] reduced demand for such products lead to very less or no sales

[kn] increase in unemployment
[an] a decrease in the industries would make people lose their jobs in those industries
[an+] hence making the people working in those industries jobless and unemployed.

[kn] decrease in productivity
[an] which means customer demands are not fulfilled
[an+] this decreases the total revenue and profits.

[kn] deindustrialization can lead to increased unemployment as by deterioration of the manufacturing sector
[an] job losses will occur for people who were skilled in such areas
[an+] therefore causing social problems like poverty
[kn] decline in manufacturing sector can increase income inequality
[an] as low skilled workers are more likely to lose there jobs then high skilled workers
[an+] such problems would lead to reduction in economic growth and lower GDP

[KN] Reduced Innovation
[AN] which may cause a decline in manufacturing
[AN+] which may cause less jobs

[KN] loss of jobs in renewable energy and environmentally friendly industries
[AN] potentially slowing the transition to a more sustainable economy.
[AN+]reducing productivity decreasing their chance of setting up competitive prices

[kn] fall in job opportunities
[an] since industries wont be present anymore to hire more people
[an+] purchasing power decreases since people cant earn anymore that leads to lower revenue for some businesses

[kn] difficulty in transitioning into another sector for a business
[an] expenses for a business will be high
[an+] decreased outputs by businesses lowering gdp

[kn] decrease in employment
[an] a fall in industries would make people lose their jobs as they will be removed
[an+] This will decrease SoLs
[kn] more firms will enter into the tertiary sector
[an] this will increase competition, forcing firms to lower prices and increase quality
[an+] thus reducing profits

[KN] Workers may become structurally unemployed
[AN] There may be a gap in skills required by manufacturing and tertiary sector thus it may not be possible for most of the workers to work for a service sector business therefore to make them productive, service sector businesses might have to train workers accordingly
[AN] leading to high costs which might result in low profit margins in a short run.


[KN] Issues in supply of raw material for services sector businesses
[AN] Some businesses in service sector may rely on raw material from manufacturing businesses, if these businesses shut down due to deindustrialisation then service sector businesses may also suffer from losses eg poor quality supplies which can worsen quality of its services
[AN] As a result, brand image may deteriorate