Choose an operations location
Compare local, national and international location choices, including offshoring, reshoring and globalisation effects.
Cambridge International AS & A Level Business 9609, 2026–2028 syllabus and 2029 syllabus, section 9.1.1. Operations examples and project estimates depend on the stated industry, site and period. Written practice is self-checked. Specialist review has not been completed for this lesson; these exercises do not award an official mark or establish exam readiness.
Before you begin
- Apply the operational concept to the stated process, product or project and identify the assumptions behind any comparison or calculation.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
What is offshoring?
What you will learn
- Assess factors that determine location or relocation
- Distinguish local, national and international decisions
- Explain reasons and effects of offshoring and reshoring
Location affects cost, capability and customers
A location decision can depend on customer access, labour skills and cost, supplier proximity, transport, infrastructure, utilities, land, regulation, tax, incentives, political stability and environmental exposure. The importance of each factor varies with whether the business produces goods, stores inventory or delivers a service.
Local decisions may optimise access to one community or site; national decisions compare regions and policy conditions; international decisions add currency, language, trade rules, political risk and cross-border coordination.
Offshoring and reshoring change a supply chain
Offshoring moves an activity to another country, potentially to reach skills, capacity or lower input cost. It can also add transport time, coordination difficulty, exposure to disruption and reputational or compliance risks.
Reshoring returns an activity to the home country or closer location. It may improve control, resilience or delivery speed but can raise labour or setup cost and may require new capability. Globalisation can expand supplier and customer options while increasing interdependence; compare total cost and resilience rather than wage cost alone.
Pause and explain
Which cost should be included when comparing overseas and domestic production?
Worked example
A clothing company considers moving production abroad to reduce sewing costs. Explain two benefits and two location risks it should compare.
Show the worked solution
- Lower labour or input costs could reduce unit cost.
- A new site may provide capacity or market access.
- Include delivery time, quality, labour availability, rules and disruption exposure.
Answer Offshoring could reduce some labour costs and add capacity or access to suppliers. The company should also compare shipping time and cost, quality control, labour availability, local requirements and disruption risk. Lower wages alone do not establish lower total cost or a better location.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A food processor is choosing between a rural site near farms and a city site near customers. Explain which factors could favour each location.
Give me a hint
Match each site to inbound supply, labour, delivery and infrastructure.
Compare my reasoning
- The rural site may reduce farm-input travel and secure supply relationships.
- The city site may improve customer access and recruit from a larger workforce.
- Compare utilities, transport, labour, land and delivery costs for the actual process.
The rural site may be close to farms and reduce the time or cost of collecting perishable inputs. The city may provide a larger labour pool, customer access and transport links. The processor should compare total logistics, utilities, land, skills and delivery reliability using its actual production and customer locations.
Look for these in your work
- Each location's fit is linked to operations
- Customer and supplier access are considered
- Total costs and capability are compared
A firm is considering reshoring a component after repeated overseas delivery delays. Explain one benefit and one risk of the move.
Give me a hint
Compare control and lead time with domestic capacity and cost.
Compare my reasoning
- Shorter or more controllable supply may reduce delay exposure.
- Domestic production may have higher cost or lack specialist capacity.
- Check supplier qualification, investment and customer service effects.
Reshoring may shorten lead times and improve visibility or control, reducing some disruption exposure. Domestic suppliers may charge more or lack the required capacity and skill. The firm should test quality, capacity, investment, lead time and full cost before moving production.
Look for these in your work
- Resilience benefit is identified
- Capacity or cost risk is included
- Evidence before relocation is proposed
A company serves customers in three countries and must choose between one central distribution site and three national sites. Recommend evidence for the decision.
Give me a hint
Compare scale economies with service, transport and market differences.
Compare my reasoning
- Estimate order volume and transport cost to each market.
- Check delivery-time expectations, customs and return routes.
- Compare inventory pooling with local availability and disruption risk.
A central site may pool inventory and reduce duplicated facilities, while national sites may shorten delivery and returns and handle local requirements. The company should model volumes, transport, inventory, delivery expectations, customs and disruption exposure by market, then compare total cost and service performance under each design.
Look for these in your work
- Scale and service are compared
- Country differences are included
- Recommendation is evidence-based
Common mistakes
- Comparing wage rates rather than total delivered cost
- Assuming reshoring always improves resilience
- Ignoring the different needs of service and manufacturing locations
What can you explain now?
What is offshoring?
Compare with the explanation
Moving a business activity to another country
The activity is relocated internationally; ownership may or may not change.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
How do location choices affect total cost, capability, customer service and supply-chain resilience?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.