6.3 Globalisation Practice Questions

Answer all parts. For each part, choose one answer only.

Text 2 — Orrinstone Audio Ltd

Orrinstone Audio Ltd designs and manufactures wireless headphones. It was set up in Sheffield in 2016 and still has its head office and design team there, employing 45 staff in the UK.

In 2023 the business opened its own factory in Vietnam, where wages are much lower than in the UK. It now employs 180 production staff there. Finished headphones are packed into shipping containers and sent to distribution centres in Germany and the USA. A free trade agreement has removed import taxes on some of the electronic components Orrinstone Audio Ltd buys in from Asia.

The business sells through its own website, which is translated into six languages, and now delivers to customers in 38 countries. UK sales have fallen each year as cheaper rival headphones have entered the market.

Year	UK sales revenue (£m)	Overseas sales revenue (£m)
2022	4.20	1.80
2023	4.05	2.46
2024	3.90	3.15

Calderbrook Cutlery plc

Calderbrook Cutlery plc designs and manufactures kitchen knives. It was founded in Sheffield in 1998 and became a public limited company in 2019.

All its knives are made at its Sheffield factory, which employs 220 people. Calderbrook sells its knives in 22 countries under the same brand name and the slogan 'British made to last a lifetime'. Abroad it competes with large rivals that make their knives in Asia and sell them at lower prices.

The board must decide whether to open a new factory in Vietnam or keep all production in Sheffield. Average labour costs in Vietnam are £2.10 per hour, compared with £12.60 per hour in Sheffield. Around 160 Sheffield jobs would go, although design and marketing would stay in the UK. Shareholders have been told that the move should reduce the cost of making each knife by about 20%. A pressure group campaigning for UK manufacturing jobs has written to the national press about the plan.

Table 1: Calderbrook Cutlery plc sales revenue by region, 2025

Region	Sales revenue (£m)
United Kingdom	18.4
European Union	9.2
North America	6.5
Rest of the world	1.9

Kelderby Dairy plc

Kelderby Dairy plc makes mature cheddar cheese and natural yoghurt at a creamery in North Yorkshire. It was founded in 1978 and became a public limited company in 2016. It buys milk from 140 British dairy farms and employs 620 people.

Kelderby now sells to 22 countries. Its cheddar has sold particularly well in Germany and Poland, where demand for British cheese has grown. Everything is produced in North Yorkshire and taken abroad by refrigerated lorry, which is expensive and limits how fresh the yoghurt is when it arrives.

The directors are considering opening a second creamery in Poland. The land and machinery would cost £18 million. Labour costs in Poland are lower than in the UK and the creamery would be close to Kelderby's European customers. However, Polish milk would have to be used, and the directors are unsure whether customers who buy the cheese because it is British would accept this.

Table 1: Kelderby Dairy plc sales revenue, 2024

Market	Sales revenue (£m)
UK	84
Republic of Ireland	15
Rest of Europe	12
Asia	9

Ravenstride plc

Ravenstride plc designs and sells running shoes and sportswear in 30 countries. It makes 60% of its running shoes at its own factory in Leicester, which employs 400 people; the rest are made by a supplier in Portugal. A pair of Ravenstride running shoes sells for £95.

Wages at the Leicester factory average £13.00 per hour. A manufacturer in Vietnam has offered to make all of Ravenstride's running shoes at a labour cost of £2.40 per hour. Ravenstride's directors have accepted the offer. The Leicester factory will close in 18 months and 400 jobs will be lost.

Shoes made in Vietnam will take six weeks to arrive by ship, compared with three days from Leicester.

Ravenstride's advertising has always used the phrase 'designed and made in Britain'. A pressure group, Fair Factory Watch, has written to newspapers claiming that workers at the Vietnamese factory work 60-hour weeks. Ravenstride says it will inspect the factory twice a year.

Mazaro Foods Ltd

Mazaro Foods Ltd manufactures cooking sauces at a factory in Leicester. It began by selling only to UK supermarkets and now exports to Germany, Japan and the United Arab Emirates (UAE). Exports account for 38% of its £22 million sales revenue.

Mazaro changes its products for each market. The chilli content of its sauces is reduced for Japanese customers, and the jars sold in Japan are smaller because many shoppers there have less storage space at home. All products sold in the UAE are halal certified. Labels are translated into German, Japanese and Arabic.

A 400g jar sells for £2.80 in the UK, while the smaller jar sold in Japan sells for the equivalent of £4.10, as there is less competition in the premium sauce market there. In Germany, Mazaro sells through a wholesaler and promotes its sauces on social media.

The production manager points out that 14 different recipes are now made at the factory. The founder, Dev Raval, is deciding whether to keep adapting products for each country or to sell one standard range, with the same recipes and label design, in every market.