CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE
26 Location and scale
Teaching plan
Topic
Approximate
number of
learning
hours
Learning content
Resources
26.1 Location
and scale
8 hours
Factors that determine
location and relocation
Coursebook
Business in context
Business in action: 26.1–26.5
Activities: 26.1–26.7
Exam-style decision-making questions
Global factors
influencing location
decisions
Internal and external
economies of scale
Workbook
Key skills exercises: 1–20
Exam-style questions
Topic worksheet 26.1
BACKGROUND KNOWLEDGE
•
Learners would benefit from coverage of the AS Level operations management chapters to gain
an understanding of the functions involved in operations (Chapters 23−25).
•
Economies of scale relate to the increasing size of business. Learners may need to revise business
size and growth (Chapter 3). There is a starter activity to support this.
•
Locations decisions often involve financial implications, and links can be made between
location and investment appraisal (Chapter 35) as well as break-even when used location
decisions (Chapter 34).
•
Economies of scale relate directly with costs and average costs (Chapter 31) and this needs to be
taught before this chapter.
LANGUAGE SUPPORT
1
•
The different types of economies of scale (both internal and external) can be difficult topics
for some learners. This is addressed in the main activity section and the learners should be
encouraged to produce a set of flashcards detailing each individual economy of scale.
•
Learners can find the difference between place and location challenging. Place is an element
of the marketing mix concerned with how the product gets to the customer (through a shop
or a wholesaler). Location refers to where that shop or wholesaler is. Learners should answer
the knowledge Questions 1−8 in Chapter 26 of the workbook to support their understanding
of location.
Cambridge International AS & A Level Business – Chalk & Malpas © Cambridge University Press 2021
CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE
Common misconceptions
Misconception
How to elicit
How to overcome
Learners sometimes substitute
place as an element of the
marketing mix and location,
believing they are the
same thing.
You can provide learners
with an example of a product
or service and ask them to
determine factors that they
would determine the place of its
marketing mix to see if learners
suggest any factors that are
actually location-based.
Learners should create a table
and list the location factors on
one side and the place factors on
another to show the distinction
between the two concepts.
Learners often assume firms
should always grow in order
to access the lower potential
unit costs that come with
increased scale.
Ask learners if firms should
increase their scale to gain
cost saving benefits and
assess their answers.
Learners should consider the
implications of increasing scale.
E.g. with purchasing economies
of scale, if demand does not exist,
then there will be a cost of unsold
stock that may counteract any
savings that are made. This will not
be financially viable for all firms.
Demand should exist first before a
firm considers increasing scale.
26.1 Location and scale
LEARNING PLAN
Syllabus learning objectives
Learning intentions
Success criteria
9.1.1 Location
• Assess the importance
of location decisions
to the success of
a business.
• Analyse the factors that
determine business
location and relocation.
• the factors that determine location
and relocation
• the differences between local, national
and international location decisions
• the reasons for and impact of
offshoring and reshoring
• the impact of globalisation on location
and relocation decisions
9.1.2 Scale of operations
• the factors that influence the scale
of a business
• causes and examples of internal and
external economies and diseconomies
of scale
• the links between economies and
diseconomies of scale and unit costs
2
• Evaluate the factors
that influence location
and relocation
decisions.
• Analyse why
businesses may want
to increase scale of
production.
• Analyse the importance
of economies and
diseconomies of
scale and impact
on unit costs.
• Evaluate the impact of
offshoring and reshoring.
• Evaluate the impact of
globalisation on location
and relocation decisions.
• Analyse the factors that
influence the scale of
operations of a business.
• Analyse the causes of
internal and external
economies and
diseconomies of scale.
• Evaluate the links
between economies and
diseconomies of scale
and unit costs.
Cambridge International AS & A Level Business – Chalk & Malpas © Cambridge University Press 2021
CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE
Starter ideas
1
Locating in Trinidad and Tobago (10 minutes)
Resources: Coursebook Chapter 26: Business in context
Description and purpose: Ask learners to consider any infrastructure projects that might be taking place in
their local area or country. Ask the learners to explain why they think the projects are taking place: what
benefits will they bring to businesses, the economy and the country as a whole? Discuss these ideas as a
class and write down the learners’ ideas on the whiteboard. If there are no major projects currently, you
could discuss past projects or ask the learners what projects they think should take place. The discussion
will allow learners to consider economic development and the impact of infrastructure on business location.
What to do next: Learners should read through the Business in context case study and discuss the questions
with a partner.
2
Measuring size (10 minutes)
Resources: None
Description and purpose: In Chapter 3, learners looked at ways of measuring size and business growth.
Learners will need to remember what they learnt in Chapter 3 in order to understand scale. This activity
will provide you with a way to review their learning of Chapter 3. Ask the learners to write down the
answers to the following questions:
a
How do you measure the size of a business?
b
How can a business grow?
c
Why might a business decide to grow?
d
Why might a business decide not to grow?
What to do next: You should discuss the answers with the learners before moving on to look at the impact
of scale.
Answers:
Answers could include:
a
number of employees, revenue, profits, market capitalisation, capital employed, market share
borganically: more branches, factories or shops; or externally: merger, takeover, horizontal/vertical/
conglomerate integration
c
to meet objectives, meet growing demand, increase brand awareness, move into a new market
dcurrent objectives may not be focused on growth, may not have the capital, demand may not exist,
owners might be happy as a smaller, possibly family-owned, firm.
Main teaching ideas
1
Location factors (50 minutes)
Learning outcome: Understand the factors that determine location and relocation
Resources: Cut-out location factor cards and a list of business examples
Description and purpose: This activity will help learners to apply the most appropriate location factors
when presented with a case study. Give the learners a selection of cards with location factors on them: site
costs, labour costs, availability of large land space, transport costs, access to grants, proximity to customers,
proximity to other similar businesses , fixed costs such as rent, infrastructure. They can work in small
groups. Then display an image or a description of a business on the whiteboard (e.g. a dentist, restaurant,
school, factory, etc.) and learners need to select five location factor cards and rank them in order of
importance for the business. There should then be a short class discussion where learners can discuss their
rankings and as a class try to decide on the three most important factors for each business.
3
Cambridge International AS & A Level Business – Chalk & Malpas © Cambridge University Press 2021
CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE
Answers:
Learners’ own answers.
Differentiation ideas:
•
Support: As an alternative version of the task, you could ask the learners to work in pairs. For each
business you give them, they should select the two factors that would be the most important to
consider. They should also explain why they have selected these two factors.
•
Challenge: Provide learners with a blank card and for each business they have to select four cards from
the ones provided. Learners then have to suggest their own factor of location and include that in the
rank. For the blank cards, learners could use pieces of paper or mini-whiteboards that could be cleared
after each discussion.
Assessment ideas: After you display each business, ask the learners to write down one sentence to explain
the most important location factor in that case. This means that at the end of the activity, learners should
have a selection of sentences explaining the most appropriate location factor (with reasons) for a selection
of different businesses. This will allow learners to assess their own learning of the activity.
2
Location leaflet (60 minutes)
Learning outcome: Evaluate the impact of globalisation on location and relocation decisions
Resources: None
Description and purpose: Learners should create a leaflet to encourage a business to locate in your country.
The leaflets should include key features that businesses would be looking for when locating or relocating
in a new country. It is important you do not provide any examples of these key features to the learners,
as the task is centred around what factors the learners think will be important to include in the leaflet,
encouraging them to consider factors of location in a wider sense.
Answers:
Learners’ answers might include: population size, average wage, cost of living, availability of grants,
infrastructure, skills of workforce, competition, availability of raw materials, trade tariffs, taxes and any
other relevant pieces of information.
Differentiation ideas:
•
Support: Topic worksheet 26.1 can be used as an alternative activity. It encourages learners to
think about the some of the different factors to consider when a business is looking to locate in a
new country.
•
Challenge: Learners could produce a leaflet providing information on two countries. They should
provide a comparison between the features of the two countries in relation to factors of location;
for example Country A has a population of X and Country B has a population of Y. This should be
written in a way that would allow a business to make a fair choice between the two countries, so the
data should not be misleading or biased.
Assessment ideas: You can assess the quality of the leaflets they have produced, and feedback on these
based on how well they have met the requirements of the task using WWW (What Went Well) and EBI
(Even Better If) points.
3
Economies of scale flashcards (40 minutes)
Learning outcome: Understand examples of internal and external economies and diseconomies of scale
Resources: A list of business examples
Description and purpose: Ask learners to create a set of flashcards for each of the internal and external
economies of scale. On one side, they should write the name of the economy of scale and on the other side,
learners should write down a brief definition and some notes about the economy of scale. You should have
a list of business examples ready to display on the whiteboard. Ask learners to hold any one flashcard in
4
Cambridge International AS & A Level Business – Chalk & Malpas © Cambridge University Press 2021
CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE
the air with the type of economy of scale facing you. You then need to display a business example (e.g. a
dentist, global restaurant chain, school, car manufacturer) on the whiteboard and then select a few learners
to explain how the business could gain the economy of scale the learner has displayed on their card. They
must refer to the business example in their answer to develop their application skills. Remind them that
economies of scale are benefits of expanding operations, so these should be large or growing firms that are
being referenced. You should try to select learners who have held up different economies of scale to obtain
wider development of learning. This activity encourages the learners to make links between the theory of
economies of scale and the real-world application of the concept.
Answers:
Learners’ own answers. Some suggested answers include:
•
Airline: purchasing economies (buying fight meals in bulk), financial economies (large amounts of
finance are needed to purchase aeroplanes and they may get better rates of interest on loans to do this).
•
Soft-drink manufacturer: technical economies (producing drinks at a high capacity they would be
able to justify large technology costs for production lines), marketing economies (if they are a drinks
company known by name around the world, they can save on marketing costs by having the same
advert in every country).
•
Hotel: purchasing economies (as a hotel becomes larger, e.g. adding more rooms or another site, they
may need to purchase more bed linens so may gain a discount).
•
Dentist: purchasing economies (if a dentist increased their scale by treating more patients, they will
need to buy more equipment so may be able to gain bulk purchasing discounts).
•
Global restaurant chain: technical economies (they can afford to have the most advanced technology
such as cooking equipment or serving tools such as self-serve apps).
•
School/college: managerial economies (a large school/college that could have locations around the
world, could employ specialist managers, such as a finance director); purchasing economies (schools
often buy items in larger quantities than households – such as paper, computers, etc. – so may get a
discount on large orders).
•
Car manufacturer: financial economies (car manufacturers are often large companies with large
investment costs so benefit from better interest rates than smaller firms).
Differentiation ideas:
•
Support: You could provide the learners with the business example before they hold up a card, which
will give them time to select an economy of scale. They will be more confident when discussing as they
will be able to think about the links beforehand.
•
Challenge: After questioning learners about how the economy of scale could be achieved by the
business example, you could ask the learners to give you an example of how the business may also
experience diseconomies of scale.
Assessment ideas: You will be able to assess the quality of the learners’ answers. Have they provided
suitable reasons for their selection? If a learner is finding it difficult to relate their chosen economy of
scale to the business example, open up the discussion to the class as a way of making sure you get an
answer each time.
Plenary ideas
1
Synoptic subject (10 minutes)
Resources: None
Description and purpose: Learners need to have an appreciation that each chapter is not standalone and
that they should bring together ideas from across the syllabus. Ask learners whether they can apply their
learning from this lesson to any other areas of the course. They should write these areas down and explain
how they link to the current topic. For example, economies of scale can link to business ownership as sole
5
Cambridge International AS & A Level Business – Chalk & Malpas © Cambridge University Press 2021
CAMBRIDGE INTERNATIONAL AS & A LEVEL BUSINESS: TEACHER’S RESOURCE
traders are unlikely to gain from managerial economies of scale, whereas a public limited company would.
You might want to write that example on the whiteboard at the start of the task to explain the task to
the learners.
Assessment ideas: This activity requires limited assessment. Learners should feedback their answers and
you could write these on the whiteboard. If there are any areas missing, you could support learners in
adding these. Additionally, to add some challenge, you could award a prize to the learner who makes the
most links or the learner who creates the most unusual but correct link.
2
What have you learnt? (10 minutes)
Resources: None
Description and purpose: This task allows learners to evaluate what they have learnt in this lesson. Ask
learners to write down three things they have learnt in today’s lesson that they did not know at the start of
the lesson.
Assessment ideas: You should collect these answers in at the end, and by reading through the learners’
comments you will be able to assess if they have learnt what you had intended them to in your
learning outcomes.
Downloadable resources
Topic worksheet
26.1 Location
A Topic worksheet to support learners with their application of numerical data to location decisions. This can be
used within the main teaching idea ‘Location leaflet’ of as a standalone activity worksheet.
6
Cambridge International AS & A Level Business – Chalk & Malpas © Cambridge University Press 2021