MLC makes motorcycles. The Managing Director has been analysing MLC’s costs. An extract of this information is shown in the Table. To reduce average costs, MLC plans to close its factory and relocate production to another country. Only 50 of the existing employees will be offered jobs at the new location. The trade union has been informed. All the new employees will be given either on-the-job training or off-the-job training. This planned relocation will have an impact on MLC’s income statement.
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05 Explain two possible problems for MLC of relocating its operations to another country. [6]
Possible KN Points:
• Access to suitable employees/not
easy to find employees
• Access to/cost of suitable land
• Different legal controls/standards
• Could be further away from market/suppliers/need to find new
suppliers
• Communication problems