Fig. 1 shows part of the supply chain used by a bicycle business based in the Netherlands. It sells finished bicycles in Canada. The manager is reviewing wh...
Question 1 Report
Fig. 1 shows part of the supply chain used by a bicycle business based in the Netherlands. It sells finished bicycles in Canada. The manager is reviewing whether this global structure gives the business a cost advantage.
(a) Identify the country where bicycle assembly takes place. [1]
(b) Explain one reason why the business might buy steel from Turkey rather than from the Netherlands. [2]
(c) Explain one disadvantage of this global supply chain for the production manager. [2]
(d) Which one factor could delay delivery of steel to the assembly plant? [1]
Answer Details
(a) Bicycle assembly takes place in the Netherlands. [1]
(b) The business may buy steel from Turkey because Turkish steel may have a lower price or lower production cost. This reduces material costs for each bicycle, increasing profit or allowing the business to charge a lower selling price. [2]
(c) Steel must travel a longer distance to the Netherlands. A transport disruption or delay could therefore prevent assembly, reducing output and causing lost sales. [2]
(d) A port strike could delay steel delivery. Shipping delays, customs checks, severe weather and transport breakdowns are also acceptable. [1]
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