Dhaka, Bangladesh Colombo, Sri Lanka Average monthly wage per worker $180 $260 Number of workers needed 150 150 Annual factory rent $32 000 $51 000 Distance...

(a) Two factors other than those in the table that might influence factory location [2]

1. Proximity to raw materials (e.g. cotton or fabric suppliers), which affects transport costs and the speed of restocking. [1]
2. Quality of transport infrastructure (ports, roads, airports), which is critical for a business that exports finished garments to Europe and North America. [1]

(Other valid factors include: government incentives or grants, political stability, language and cultural considerations, availability of utilities such as electricity and water.)

(b) Two advantages of choosing Dhaka over Colombo [6]

1. Lower labour costs [3]: Monthly wages in Dhaka are $180 compared to $260 in Colombo. With 150 workers, the annual wage bill in Dhaka would be $180 x 150 x 12 = $324,000, versus $260 x 150 x 12 = $468,000 in Colombo. This saving of $144,000 per year would reduce the cost per garment and improve profit margins on exports.
2. Larger available workforce [3]: There are 85,000 garment workers in the Dhaka area compared to 40,000 in Colombo. This more than double-sized labour pool makes it easier to recruit experienced staff quickly and scale up production to meet export orders. If BrightThread wins large contracts, having access to additional workers in the local area provides flexibility that Colombo cannot match.

(A third valid advantage: lower factory rent at $32,000 vs $51,000, saving $19,000 per year; or lower corporate tax at 25% vs 28%.)

(c) Analysis: risks of locating a factory in a different country from headquarters [6]

• Communication and management difficulties: Managing a factory in Bangladesh or Sri Lanka from Mumbai involves potential language barriers, different time zones, and the challenge of maintaining quality standards across two sites in two countries. Physical visits by Priya or senior managers would require international travel, adding cost and time.
• Legal and regulatory differences: Employment law, tax regulations, and import/export rules will differ between India and the chosen country. Complying with a second country's legal framework requires specialist legal advice, adds administrative costs, and increases the risk of unintentional violations.
• Currency exchange rate fluctuations: Costs in the host country (wages, rent) are denominated in a different currency from BrightThread's home currency. Exchange rate movements could unexpectedly increase the real cost of operating the factory, reducing the wage and rent advantages that motivated the move.
• Supply chain complexity: Moving raw materials, semi-finished goods, or finished garments between two countries may involve customs procedures, tariffs, and longer transit times. This adds complexity to BrightThread's logistics and increases the risk of delays.

[6]

(d) Recommendation: which location should Priya choose? [6]

Dhaka is the stronger choice for BrightThread's second factory. The significant cost advantages are the primary reason: wages are 31% lower ($180 vs $260 per month), factory rent is 37% lower ($32,000 vs $51,000 per year), and the corporate tax rate is lower (25% vs 28%). Across 150 workers, the wage saving alone amounts to $144,000 per year, which directly improves the profitability of every garment exported.

The much larger pool of garment workers in the Dhaka area (85,000 vs 40,000) also supports BrightThread's core business. Bangladesh has an established garment export industry with existing port infrastructure, supplier networks, and a workforce experienced in mass garment production. This reduces the start-up risk of the new factory.

Dhaka is also closer to Mumbai (1,900 km vs 2,400 km), making management visits easier and less costly.

However, Priya must invest in robust management systems to oversee a factory 1,900 km from headquarters. Ensuring compliance with Bangladeshi labour laws, maintaining quality standards consistent with BrightThread's existing output, and managing cross-border logistics will all require attention and investment. [6]