Download Industrial location 2

3.4
What are the location factors of the IT industry?
A
What is the information technology (IT) industry? Where is the IT
industry in the USA?
1
Which of the following descriptions about the IT industry are correct? Tick () the correct
answers.
2

It is a kind of raw material-oriented industries.

It manufactures computers, related electronic products and communication equipment,
etc.

It develops computer software and various related services.

It is a type of high-tech industry.

It requires little investment.
Refer to Figure 1, briefly describe the distribution pattern of the IT industries in the USA.
Figure 1
Distribution of the IT industries and large cities in the USA
In the USA, the IT industries form ____clusters____ in a ( concentrated / dispersed )
pattern. They are located in the suburbs of ( small / large ) cities.
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B
3
What are the characteristics of the IT industry?
Figure 2 shows the manufacturing system of the IT industry.
Inputs
Raw materials
Power supply
Manufacturing processes
such as design, research
and development,
manufacturing,
assembling and packaging
Outputs
such as
computers,
MP3, PDAs,
etc.
Skilled and
semi-skilled labour
Technology
Capital
Figure 2
Cash
____Global____
markets
The manufacturing system of the IT industry
a
Complete Figure 2.
b
Which TWO are the most important inputs to the IT industry?
Capital and technology.
c
Explain your answer in Question b.
The IT industry has to use the latest technologies to produce ( low-value / high-value )
products. To design a product, IT firms have to invest a large amount of capital on
___________research and development (R&D)____________. Therefore, the IT industry
depends heavily on the inputs of ____technology____ and ______capital______.
d
Which type of industry does the IT industry belong? Tick () the correct answers.
 Capital-intensive
 Research and development-intensive
 Technology-intensive
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4
Figure 3 shows the product life-cycle model for IT products.
Figure 3
Describe the life-cycle of IT products.
The life-cycle of IT products is ( long / short ). It may take only a few years from the
development stage to the decline stage.
5
Figure 4 shows the distribution of the headquarters, regional headquarters and manufacturing
plants of a famous US IT firm.
Figure 4
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a
i
Where did headquarters, regional headquarters and manufacturing plants of the IT
firm locate respectively?
•
Headquarters and regional headquarters: Mostly located in ( less / more )
developed countries.
•
ii
Manufacturing plants: Mostly located in ( less / more ) developed countries.
Which mode of production does the IT firm adopt?
Multinational and multi-point production.
b
The mode of production of the IT industry is closely related to its production
requirements at different stage. Complete Table 1 to show the production requirements at
different stage.
Table 1
Stage of
production
Production requirements
•
Stage 1:
Development
•
Stage 2:
Growth
Stage 3:
Maturity
Location of
production
The IT industry in development stage is ____research
In headquarters
and development_____________________-intensive.
located in
A ( small / large ) number of scientists and engineers to
high-wage, more
carry out research and development and ( unskilled /
developed
semi-skilled / skilled ) workers to produce the products. countries.
•
Efficient management and shared basic infrastructure
•
The IT industry in these stages is __labour__-intensive.
In manufacturing
•
Abundant ____cheap____ and ( skilled / semi-skilled )
plants located in
workers to carry out standardized production processes. low-wage, less
developed
Stage 4:
Decline
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countries.
Complete Figure 5 (p. 37) to show the distribution pattern of the IT industry in the R&D stage
and standardized production stage and the benefits brought by such distribution pattern.
In the R&D stage
In the standardized production stage
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Distribution
pattern
Concentration in _____clusters______
Enjoy _____agglomeration____
economies
•
Induces _____innovation_____
•
Facilitates exchange of __market__
and ___technical____ information
•
Benefits
brought by
cluster
pattern
•
•
_____infrastructure_____
•
Helps cut costs and increases
_____competitiveness_____
Provides technical, financial and
____networking____ services
•
Attracts ____labour____
Establishes ____business contacts
•
Enjoys ____low____ rents provided
___________
•
Shares basic social facilities and
by the local government
Creates a distinct ___innovative__
culture and business climate
•
Attracts further __agglomeration__
of IT firms
Figure 5
7
Explain why global markets are important to the IT industry.
The IT industry invests a ____large____ amount of capital on _____research_____ and
development to produce a product. The products are sold in global markets so as to bring ( less
/ more ) profit to cover the huge amounts of money spent on research and development.
8
Figure 6 (p. 38) shows an IT industrial landscape.
37
Figure 6
a
What do we call such industrial landscape?
Green field site.
b
Briefly describe the industrial landscape in the following aspects.
•
Buildings (types, height, density, etc):
Low, modern, dispersed office-plant-laboratory buildings.
•
Location characteristics:
-
Availability of _____venture_____ capital
-
Near major ______universities______ and research institutes
-
____Abundant____ supply of scientists and researchers
-
In the _____suburbs_____ of large cities
-
( Small / Large ) green areas
-
Nice living environment with ( serious / less serious ) pollution
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9
Complete the chart below to summarize the characteristics of the IT industry.
Green field sites
Short product
life-cycle
Cluster pattern
Characteristics of the
IT industry
Research and
development-intensive
Global markets
Multinational and
multi-point production
C
What are the location factors affecting the location of the IT
industry?
10
Complete Table 2 to show the location factors of the IT industry at different stages.
Table 2
Location
factor
Development stage
Green field site in more developed
countries.
Maturity stage
Manufacturing area in less developed
countries.
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Table 2 (continued)
Labour
Site
Good access to researchers, technicians
Abundant supply of cheap and
and scientists
semi-skilled labour
•
•
____Headquarters____, R&D and
pilot production activities are
_______less developed________
located in ___more developed_____
countries
•
countries
•
•
Production plants are located in
____Cheap____ land site in an
In the ___suburan areas/suburbs___
industrial cluster with good
of large cities with good amenities
infrastructure
Near __________universities or
research institutes____________
Access to high levels of technology
Technology
Ready to receive transferred technology
from high-technology regions
Availability of venture capital
Availability of capital in the form of
Capital
foreign direct investment (FDI)
Favourable government policies to
Favourable government policies to
provide ____financial____ support for
provide infrastructure and communal
Government R&D, maintain a favourable business
policy
climate and an __innovative__ culture
services
within the community
Market
D
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Large global markets
Does the same group of factors that affect the location of the iron
and steel industry apply to the location of the IT industry in the
USA?
Complete Table 3 (p. 41) to show the difference of the iron and steel industry in China and the
IT industry in the USA.
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Table 3
Iron and steel industry in China
Type of
industry
IT industry in the USA
•
____Heavy____ industry
•
_____High-tech_____ industry
•
_______Raw material______ and
•
____Research____ and
Characteristics
____power_____-oriented
____development___-intensive
Mode of
production
Mostly single-point production
Mostly multinational and multi-point
production
Industrial
landscape
Traditional industrial landscape/Brown
field site
Green field site
Local
Global
From the 1950s to 1970s: Inland shift
Development stage: R&D in local
industrial clusters
Government policies
•
Technology: ( high / low )
•
Labour: ( unskilled / skilled )
•
Availability of ____venture____
Market
capital
Important
location factors
•
Site: suburbs of ____large____
cities and near universities
1980s onwards: Coastal shift
Maturity stage: production overseas
Government policies and technology
•
Labour: abundant, ___cheap___
and ______semi-skilled_____
•
E
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Site: ____cheap____ land site
What impact has globalization had on the location of the IT
industry?
In order to maximize profits, the IT industry adopted the following strategies:
I
Globalization in marketing
II
Globalization in production
III
Globalization in sourcing inputs
a
How does the IT industry carry out globalization in marketing? With reference to the
41
figures, describe each of the method.
I
Manufacture a product in
Production plant
of Firm A
the home country and sell it
Manufacture
Headquarters
of Firm A
II
Products
sold
overseas
Home country
Headquarters
of Firm A
Grant a license to foreign
Products sold in
foreign country
Grant a license
Manufacture
Production plant of
foreign producer
Headquarters
of Firm A
producer to manufacture the
product and sell it in the
Home country
III
in the foreign market/export.
foreign country/market.
Foreign country
Set up a production plant in
Products sold in
foreign country
Set up
foreign country as ‘foreign
direct investment’ and sell
Manufacture
Home country
products there.
Production plant of
Firm A
b
Foreign country
How does the IT industry carry out globalization in production? Which of the following
descriptions about global production strategy are correct? Tick () the correct answers.
 Headquarters is kept in home country.  Standardized production processes
are outsourced.
 R&D departments are moved to areas
with low level of technology.
c
 Production plants are moved to areas
with low production costs.
What are the advantages of having globalization in sourcing inputs?
If an IT firm have global sourcing inputs, the firm can obtain ____cheaper____ and
_____better_____ quality components elsewhere. This can help ____cut___ costs and
therefore ____increase____ profits.
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3.5
What is the impact of changes in industrial
location and modes of production?
A What are the benefits of having manufacturing industries in an
area?
1
Figure 1 shows the benefits brought by industrial development to an area.
Figure 1
a
Refer to Figure 1, write down how industrial development brought benefits to an area in
paragraph form.
When new industries are set up, jobs are created and people’s income will increase.
With higher income, more money can be spent in local shops and services. The local
economy starts to grow and this increases tax revenue for the local government. The
local government then have more money to improve the infrastructure. This attracts
more people to come and more new industries to set up in the area.
b
What do we call the effect brought by industrial development in an area?
Multiplier effect.
B Why do industries move away from an area?
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2
Figure 2 shows the changes in location factors of Place A.
In the 1950s
In the 2000s
 Low labour costs
 High labour costs
 Low taxes
 High taxes
Figure 2
a
A manufacturer has set up an electronics factory in Place A in the 1950s. What were the
favourable location factors for setting up the factory there?
The labour costs and taxes were low, therefore the production costs were greatly
reduced.
b
In the 2000s, the manufacturer has moved the factory away from Place A. Why?
The manufacturer has moved the factory away from Place A because the location factors
are no longer ( unfavourable / favourable ). ______Labour costs_______ and
_____taxes_____ were high which greatly _____increased_____ the production costs.
3
Figure 3 shows the locations of the headquarters and production plant of an IT firm in the
1970s and 2000s respectively.
In the 1970s: Poor telecommunication network
Headquarters
Production plant
Country A
In the 2000s: Well-developed telecommunication network
Satellite
Headquarters
Production plant
Note: Country A is a more
developed country and Country
B is a less developed country
Flow of information
Country A
Country B
Figure 3
a
Describe the locations of the headquarters and production plant of Firm A in the 1970s
and 2000s.
44
Headquarters and production plant were located in the same country
In the 1970s
/Country A.
Headquarters and production plants are located in different
In the 2000s
countries/Headquarters is located in Country A while production plant
is located in Country B.
b
Complete the flow chart below to show the reasons for the changes in the location of
production plant of Firm A.
____Advancements____ in telecommunication technologies
Flow of information between the headquarters and production plant in
different countries is ( efficient / inefficient ) and the cost of
communications is ___low___.
Production plant can be located away from headquarters to the less
developed country to tap the advantages of _____low wage_____ and
___rents___.
Appearance of new production mode:
_____Multi-point_____ production
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4
Figure 4 shows a simplified manufacturing system of a semiconductor chips production plant.
Table 1 shows some information about Places A and B.
Semiconductor chips
Inputs
Outputs
Toxic materials such
as mercury
Figure 4
Table 1
Place A
Place B
Environmental awareness of
the people
High
Low
Pollution control
Strict
Less strict
a
If you were a manufacturer of semiconductor chips, where will you set up your
production plant in terms of economic consideration only?
Place B.
b
Explain your answer in a.
The production plant not only produces useful outputs, but also harmful outputs such as
toxic materials. These harmful outputs will pollute the surrounding environment.
People in Place A may protest against the set up of the plant as their environmental
awareness is high. In addition, the pollution control is strict and this increases
production costs. In contrast, it is easier to set up the plant in Place B as
environmental awareness of the people there is low and pollution control is less strict
which can lower production costs.
C What is the impact of industrial relocation and the appearance of
new modes of production?
5
Complete the flow chart on p. 47 to show how the relocation of industry affects the flow of
labour.
46
Relocation of industry
affects
______Job opportunities______ in both old and new industrial areas
Examples
The IT industry in the USA
The iron and steel industry in
China in the 1960s
 Production plants are
 Factory workers were

 Research and development
relocated to less developed_
centres are relocated to the
encouraged to move to the
countries so as to enjoy
____suburbs____ of large
____inland____ as the
___lower production costs__
cities  attracts scientists
central government has
_______ some managerial
and engineers to move from
relocated the iron and steel
personnel and __specialists_
____urban____ areas to
industry there.
in the USA are sent to less
____suburban____ areas
This creates an
developed countries

This creates an
 intra-urban flow of labour
 international flow of labour
 inter-region flow of labour
 international flow of labour
6

 inter-region flow of labour
 international flow of labour
This creates an
Figure 5 shows how the relocation of industries causes the decline of local economies.
Relocation
New investment
____shrinks____
Factories are forced to close
Job losses
___Less___ money to spend
in local shops and services
Failure in subsidiary
industry
____Decline____ in the quality of
infrastructure for the local community
and industrial development
People move
away
Local economy declines
___Less___ tax income
for local government
Figure 5
a
Complete Figure 5 on p. 47.
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b
Briefly describe how the relocation of industries give rise to unemployment in China and
the USA.
Iron and steel works have to adopt new modes of production in order
to be competitive. This has forced many outdated iron and steel works
to close or merge into larger ones. Restructuring of the iron and steel
In China
works has caused many workers to lose their jobs.
As more and more IT firms relocate their production bases and
software services to the less developed regions, a large number of
IT-related jobs have moved overseas. Many unskilled and semi-skilled
In the USA
c
workers have become unemployed.
What adverse effects will unemployment cause?
Unemployment will cause social problems such as drug addiction, drunkenness and
family abuse.
7
What is the impact of the relocation of factories to the Zhujiang Delta Region on the economy
and employment structure of Hong Kong?

Economy
_________Scale of production_________ has enlarged as firms moved their factories to
the Region. While headquarters remain in Hong Kong, businesses between the Region
and Hong Kong ( decreased / increased ). This has lead to an ( decreasing / increasing )
demand for producer services such as finance, banking, logistics, etc. and this caused a
______restructuring_____ of our economy. The land in ________old industrial
areas_______ can be used for commercial, high-tech industries, etc. and this may lead to
further change of the economy.

Employment structure
As the demand for producer services increased, more and more people work in the
48
tertiary sector in Hong Kong.
8
What is the impact of relocation of computer manufacturing from more developed countries to
less developed countries have on the environment?
_________Toxic chemicals_________ such as mercury are used in computer manufacturing.
When these materials are not treated or disposed of properly, it may cause serious
_________water pollution________ and ________health hazards________. As more and
more IT firms set up computer manufacturing factories in ( more / less ) developed countries,
pollution will become more serious as environmental protection laws are ( strict / not strict )
there.
The life-cycle of IT products is ___short___, many IT products become outdated within a
few years and this generates a large amount of _____e-waste_____ every year. As most of the
e-waste is shipped to ( more / less ) developed countries for ____disassembly____ and
disposal, the ____improper____ dismantling methods has caused serious environmental
problems there.
9
Complete the flow chart below to summarize the impact of industrial relocation and the
appearance of new modes of production.
Flow of labour
Socio-economic impact

_____Intra-urban____,
inter-region and
Relocation of industries
and appearance of new
production modes
Environmental impact
_____international_____
flow of labour
Unemployment
Restructuring the economy
D What measures can be taken to ease problems caused by changing
industrial locations and modes of production?
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10
a
What are the advantages of adopting the principle of eco-efficiency in production?
More goods and services can be created by using less materials and energy. This can
increase profits on one hand and reduce waste and pollution on the other hand.
b
Which of the following are measures of eco-efficiency in production? Tick () the
correct answers.
11
 Reduce material use
 Reduce energy use
 Recycle material
 Extend the life-cycle of the products
 Use non-renewable resources

Increase energy-efficiency of the products
 Make products more durable

Create more demand for products
Table 2 shows some suggested measures to ease problems caused by industrial relocation and
the changing modes of production in Hong Kong. Figure 6 shows the advantages and
disadvantages of these measures.
Table 2
Advantages
Disadvantages
Setting minimum wage
D
G, H
Improve social security system
F
B
Lower tax
E, I
A
Retraining programme for laid-off workers
C, J
B
A Reduce government revenue
B
F Provide a safety net for the
unemployed and the poor
Increase government expenses
G Factories may move out
C
Increase the
competitiveness of workers
H
Discourage new investment
I
D Protect worker’s income
E
Help to keep existing firm
J
Attract new investment
Reduce unemployment rate
Figure 6
a
What are the advantages and disadvantages of the measures shown in Table 2? Write
down the letters in the appropriate column.
b
Why is it not easy to build a sustainable economy?
50
It is because there are ______diversified______ interests among different social groups in
a community. _____Conflict_____ may arise as policies or programmes cannot satisfy all
social groups.
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