08 Identify and explain two factors (other than exchange rates and import tariffs) that KLG should consider when.....[6]

[BASEL Moderator]

KLG is based in country X. It specialises in making electrical parts which it sells to washing machine manufacturers in country X. The Managing Director is planning to relocate to country Y, which is a low-cost country. She said: ‘This will allow us to pay employees low wages for working long hours as there are few legal controls on employment and health and safety. KLG cannot be both ethical and profitable. Changes in exchange rates and import tariffs might cause us problems when we start exporting.’

08 Identify and explain two factors (other than exchange rates and import tariffs) that KLG should consider
when deciding where to relocate. [6]

Possible KN Points:
• Infrastructure (accept only once) e.g. Utilities, communications
• Close to market
• Land issues e.g. Availability/cost of suitable land
• Government e.g. Regulations, taxes, quotas, assistance
• Competitors
• Transport links
• Labour issues e.g. Cost/access to suitable/skilled /enough employees
• Language problems
• Lack of local knowledge/cultural issues
• Access to raw materials/components