Sharma Machine manufactures motorcycles. The company is product orientated. Sharma Machine holds a lot of stock. The owner, Ishant, wants to increase productivity. Also the company plans to open an additional factory to satisfy increased demand. ‘Expansion should mean economies of scale' said Ishant. ‘The right location for the new factory is going to be important if the business is to remain competitive.'

1. (a)What is meant by ‘product orientated'?[2]
2. (b)Identify two possible economies of scale the business might benefit from if it expands.[2]
3. (c)Identify and explain two possible problems for Sharma Machine of holding a lot of stock.[4]
4. (d)Identify and explain three methods that Ishant could use to increase productivity.[6]
5. (e)How important is the right location for the new factory in helping Sharma Machine to remain competitive? Justify your answer.[6]