26.07

What is a common reason for a business to choose a specific location of production?

• Higher corporate taxes
• Lack of infrastructure
• Access to cheaper or better-quality resources
• Strict labor regulations

What is industrial inertia?

• Relocation due to better infrastructure
• Switching to offshoring to reduce costs
• Staying in the same location despite no financial advantage
• Outsourcing core business activities

Which of the following is a bulk-reducing industry likely to do?

• Locate near customers
• Use online distribution exclusively
• Relocate to urban centers
• Locate near the source of raw materials

What is offshoring?

• Hiring staff locally to reduce transportation costs
• Relocating business functions overseas
• Hiring third-party providers for non-core tasks
• Moving back production to the home country

A business outsourcing its IT services is likely doing so to:

• Increase in-house expertise
• Increase capital investment
• Reduce costs and gain specialized services
• Avoid labor laws

What is a disadvantage of offshoring?

• Higher wages
• Improved cultural relationships
• Unethical labor practices
• More domestic control

Which of the following is true about insourcing?

• It always involves external providers
• It uses the firm’s own resources for certain functions
• It always reduces costs
• It is suitable for international expansion

Why might a business choose to reshore?

• To increase supply chain risk
• To increase outsourcing
• To regain quality control
• To benefit from offshoring savings

What is a potential disadvantage of insourcing?

• Loss of control
• Unethical practices
• Lack of necessary skills internally
• Faster delivery times

Clustering refers to:

• Placing different types of unrelated businesses in one location
• A business locating near similar or complementary organizations
• Businesses avoiding urban centers
• Reducing the number of retail outlets