Industrial landscapes

Revision

Distribution pattern of the bottling

• uneven distribution• agglomerated in south-western part• according to the population

distribution• because bottling is a weight-gain

industry which means there is heavy and fragile products

• Market oriented

• Location X

• there are already a few bottling factories near X

• there will be strong competition • Location Y

• the population density near Y is low / far from large urban centre

• small local market / population size is smaller than the market threshold

Impact of Aluminum Can

• the number of factory decreases• but the scale of production will

become larger• the distribution becomes more

uneven• they will be agglomerated in large

metropolitan with high population density

Impact of Aluminum Can

• because aluminum cans are much less fragile and lighter in weight

• therefore, longer distance of transport is no longer a problem

• large scale production can enjoy greater economies of scale

• metropolitan location will enjoy greater urbanization economies

Comment on the graphic method

• it can show the location clearly• distribution pattern is clearly shown• the correlation between population

size/city size and distribution of bottling factories is clearly shown

• but the scale of operation of bottling factory cannot be shown

Only population size cannot explain the distribution

• demand of soft drink is not always direct proportional to population size

• the living standard and purchasing power of the people should be considered

• The diet and taste of the people will affect the demand

COME TOSINGAPORE

In Singapore your expatriate managers will enjoy the low cost of living in South East Asia, amongst one of the friendliest and well-order societies of the region. In Singapore, crime, drug taking and vandalism are rare enough to make front page news!

Your managers will enjoy living in our luxury apartments and have access to excellent sporting and leisure facilities. Domestic staff are honest and reliable. A maid can be hired for ￡ 10 per week, a live-in cook for ￡ 50 per month and a gardener/handyman for ￡ 10 per week.

In Singapore, your company will enjoy excellent labour relations with local workforce. Strikes are almost unheard of and cuts, announced in April 1986, in the employer’s contribution to the state welfare and housing system from 25% to 10% of an employee’s wages, had the overall effect of reducing wages costs to an employer by 12%. In addition, corporation tax has been cut from 40% to 33% and tax incentives for business increased.

Singapore has an excellent international airport, airline, postal and telecommunications services. The markets of Asia and Australasia will be on your doorstep.

Singapore welcomes multinationals. That’s why, for instance, Matsushita opened their S$30 million audio equipment motors factory here in August 1986, and Sanyo have moved part of their television manufacturing from Osaka, Japan to Singapore. Why not join them, and make Singapore your base in the Far East?

Favourable Factors for Multinationals

• raised living standards for managers moving to Singapore

• low cost of living• stable political and social situation• low labour cost and cooperative local

workforce• company tax incentive• good communication

Benefits from Multinationals • multinationals bring investment funds

and foreign exchange• advanced technology and training• More employment opportunities and

increases in personal income• ‘Multiplier effects’ to the rest of the

economy increasing the demand for goods and services

• revenue to the state through corporate and personal income tax

Problems Brought by Multinationals • After the initial investment, more capit

al may flow out of a country as profits to shareholders, royalties and the repayment on loans than flows in as investment. This can drain a country’s foreign currency reserves.

• The multinational is not dependent on that location and will leave if labour costs rise significantly or there is political and civil unrest.

• The benefit of cheap manufacturing is of little value to local people who cannot afford the products.

• The multinational buys its components, raw materials and machinery abroad so exporting the potential ‘multiplier effects’ to other countries.

Problems Brought by Multinationals

• If a multinational sells locally, it may drive out a number of local suppliers and increase unemployment. Due to the use of mechanized process, the multinational may not increase job opportunities significantly.

• Environmental problems

• Highly-skilled and trained jobs may be reserved for expatriates.

Problems Brought by Multinationals

• provides tax incentive to attract investment• controls inflation to lower the cost of living

and cost of production• improves the environmental quality in order

to maintain a good living environment• allows the import of experts from mainland

China• develops science parks to provide land for

high-tech manufacturing• improves infrastructure

How to keep Multinationals stay?