1. Section 4 – Possible location change for Holden plc

2. Lesson objectives To be able to discuss methods of increasing the efficiency of production - potentially through a move of Holden plc’s production back to Bowton To be able to reach reasoned conclusions and make recommendations on section 4 of the case study To be able to calculate production costs To be able to answer quiz questions based on the case study

3. Starter How would you like to work in a cushion factory? How would you feel if your job was to produce 1,000 cushions a week? What do you think working in the factory would be like?

4. Read section 4 lines 45-53 Pairs activity Draw up a table of the advantages of moving production back to Bowton There are 6 reasons – can you find them all? Get ready to share your lists

5. Moving production back to Advantages 1.Fabric costs per cushion are likely to be cheaper in Bowton than China, – this will keep Holden plc’s total production costs down 2.This is due to less wastage, – indicating that the Bowton fabric cutters may be more skilled than the Chinese workers 3.Cost of buying fabrics on the world market would not be affected – so production costs for raw materials would stay the same

6. Moving production back to More advantages 4. Productivity of the Chinese workers is lower than UK workers employed before the move to China – – which means they have concrete data on which to base this observation 5. Chinese sewing machine workers are slower and less accurate than UK workers – But quality is important to the company and their reputation (section 2) 6. Wage rates have started to increase in China- which was the reason they moved production to begin with – there is no longer a competitive advantage for the company in producing their goods in China 4. Productivity of the Chinese workers is lower than UK workers employed before the move to China – – which means they have concrete data on which to base this observation 5. Chinese sewing machine workers are slower and less accurate than UK workers – But quality is important to the company and their reputation (section 2) 6. Wage rates have started to increase in China- which was the reason they moved production to begin with – there is no longer a competitive advantage for the company in producing their goods in China

7. Conclusions In teams come up with a conclusion about Holden plc and if they should move production back to the UK. Give your 3 strongest reasons why they should What would you recommend that they do?

8. Video time (15 mins)

9. Production costs of the Sobek Sobek? He was the ancient god of crocodiles. He is first mentioned in the Pyramid Texts and his worship continued until the Roman period. Some sects believed that Sobek was the creator of the world who arose from the "Dark Water" and created the order in the universe. Sobek was a god of the Nile who brought fertility to the land. As the "Lord of the Waters" he was thought to have risen from the primeval waters of Nun to create the world and made the Nile from his sweat. One creation myth stated that Sobek laid eggs on the bank of the waters of Nun thus creating the world. However, as well as being a force for creation, he was seen as an unpredictable deity who sometimes allied himself with the forces of Chaos.

10. Grab a calculator for the next activity

11. Production costs - China Look Total cost of producing a Sobek cushion in China is £20 All calculations must be based on percentages of £20

12. Calculate production costs of one Sobek cushion in China Expenses20%£20 x 0.2£4 Cushion Pad Make-up cost Fabric cost

13. China - answers Expenses20%£20 x 0.2£4.00 Cushion Pad22%£20 x 0.22£4.40 Make-up cost 30%£20 x 0.3£6.00 Fabric cost28%£20 x 0.28£5.60

14. Production in the UK Total cost of producing a Sobek cushion in UK is £19.50 All calculations must be based on percentages of £19.50

15. Calculate production costs of one Sobek cushion in UK Expenses21%£19.50 x 0.21 £4.10 (rounded up) Cushion Pad Make-up cost Fabric cost

16. UK answers Expenses21%£19.50 x 0.21 £4.10 (rounded up) Cushion Pad23%£19.50 x 0.23 £4.49 (rounded up) Make-up cost 30%£19.50 x 0.30 £5.85 Fabric cost26%£19.50 x 0.26 £5.07

17. Comparison In pairs now compare the cost of production in China to the cost of production in UK What are your observations? What are your conclusions? What are your recommendations to Holden plc? Be prepared to share your thoughts with your group.

18. Comparison of UK and China Expenses£4.00 Cushion Pad£4.40 Make-up cost £6.00 Fabric cost£5.60 £4.10 (rounded up) £4.49 (rounded up) £5.85 £5.07 UK more expensive UK cheaper

19. Quiz on section 4 1.Who is the Production Director? 2.Why are fabric costs per cushion lower in Bowton than in China? 3.What has started to increase in China? 4.What is the name of the cushion that is mentioned in the case? 5.Why is the Production Director comparing production costs?

20. Answers to section 4 quiz 1.Martin Holden 2.Less wastage 3.Wage rates 4.The Sobek 5.He is investigating the possibility of moving production back to Bowton