Studio North produces short promotional videos for local businesses. Its current office is above a noisy workshop and clients find it difficult to park. The...
Question 1 Report
Studio North produces short promotional videos for local businesses. Its current office is above a noisy workshop and clients find it difficult to park. The owners are considering a new location in a creative district where there are other media businesses, cafés and frequent bus services. Rent would rise by $800 per month. The creative district may help Studio North recruit freelance editors, but some existing employees would have a longer journey. The owners have carried out market research and need to decide if the location change will increase profit over the next three years.
(a) Which location factor is shown by the availability of bus services? [2]
(b) Calculate the extra annual rent if monthly rent increases by $800. [3]
(c) Analyse one benefit and one drawback of moving Studio North to the creative district. [7]
Answer Details
(a) Bus services are a location factor called transport links or accessibility. They affect how easily employees and customers can reach the business. [2]
(b) Annual extra rent is:
\[\$800\times12=\$9\,600\]
The rent increases by $9,600 per year. [3]
(c) Moving to the creative district could place Studio North near other media businesses, creating access to skilled freelance editors and networking opportunities. This may improve video quality or allow more work to be completed, increasing sales. Better parking and bus services may also make visits easier for clients and staff. However, the extra annual rent of $9,600 increases fixed costs and reduces profit if sales do not rise. Some current employees may leave because of longer travel, creating recruitment and training costs. The move is worthwhile only if the likely extra sales exceed these added costs. [7]
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