1.4.2 Business Location Flashcards
1
Q
Factors influencing business location:
A
- proximity to: market, labour, (raw) materials, competition, transport links, gov assistance
- nature of business activity
- impact of technology on marketing mix: e-commerce, digital communication
2
Q
How does proximity to the market affect a business’s location?
A
- market: refers to a business’ customers andconsumers
- For businesses such as takeaways, corner shops, clothes shops, pop-up food businesses and hairdressers, beingclose to their marketis extremely important
- If these businesses were not close to their market, they would miss out on sales as they would not be easily accessible to theirtarget market
- For other businesses, such as online design businesses, clothing manufacturers and car manufacturers, being close to their market isn’t an important factor
- as online companies and car manufacturers are able to sell their products anywhere and they can usually deliver to the customer’s house or a local car dealership
3
Q
How does proximity to labour affect a business’s location?
A
- labour: people whom a business employs or would potentially want to employ
- for most companies, it is important to be close to high-quality labour or to be located in an area to which employees are willing to travel
- businesses need to make sure they are located in area that has people with skills relevant to the job role. e.g. for roles with a low requirement for skills, a business would just need to be located near any populated area to ensure it can hire employees
- for roles that require a high level of skill, such as a design engineer, computer scientist or solicitor, businesses may need to be located close to big cities, university towns or other areas that attract more highly-skilled people
4
Q
How does proximity to materials affect a business’s location?
A
- for some products, being close to theraw materialsis extremely important for saving money
- for other products, it often makes more sense to be located close to the market and transport the raw materials further
- forbulk-gaining products, where the product is larger than the raw materials used to produce it (eg a bike), it makes sense for a business to be located near its market so that it doesn’t have to transport the finished product very far —> in this situation, the raw materials are cheaper to transport than the final finished item
- forbulk-reducing products, where the product is smaller than the raw materials used to produce it (eg bottles of smoothie), it makes sense for a business to be located close to the raw materials -in this situation, transporting bottles of smoothie is more convenient than transporting all of the individual raw materials —> therefore, being located close to its raw materials allows a business using bulk-reducing products to save on transportation costs
5
Q
How does proximity to competitors affect a business’s location?
A
- many businesses like to be located far away from their competitors so that they have access to more customers without having to fight off competition.
- for businesses such as petrol stations, corner shops and barber shops, this works extremely well
- these types of business like to be far away from competitors because customers are only likely to visit one of that type of business, often the one closest to their home or in the most convenient location
- for other businesses, being close to their competitors can be important to help them succeed
- examples are car dealerships and clothing shops, which are often found in close proximity to one another
- these types of business are happy to be located close to their competition because customers are likely to shop around when purchasing a car or item of clothing. Being close to competition means these businesses are more likely to be considered by people making a purchase
- being far away from each other could limit sales for such businesses
6
Q
How does nature of a business (e.g. retail) affect a business’s location?
A
- retail companies generally want to be located as close to their customers as possible. Retailers sell products directly to customers so are most likely to be located in busy areas and around other retail outlets
- exception to this is where a retail business only sells products through the internet
7
Q
How does nature of a business (e.g. service companies) affect a business’s location?
A
- service companiessometimes need to be located near their customers but sometimes they can be located anywhere
- Examples of service companies that need to be near their customers: train operators, taxi companies
- Examples of service companies that can be located anywhere: contact centres, web designers
8
Q
How does nature of a business (e.g. manufacturing) affect a business’s location?
A
- manufacturing companies generally prefer locations with cheaper rent rather than being close to their customers
- many manufacturing companies transport products around the country or even further
- business location for these companies generally is decided by costs, especially for small businesses
- if a product is bulk gaining, the manufacturer may consider being located close to its market, depending on cost
- if a product is bulk reducing, it usually makes sense for the manufacturer to be located closer to its raw materials
- manufacturing companies generally prefer locations with cheaper rent rather than being close to their customers
9
Q
How does infrastructure affect a business’s location?
A
- impact oflocation depends on the type of business
- E.g. it is important for shops and restaurants to be conveniently located for customers
- a delivery-only takeaway may prefer to be located in cheap premises on the edge of town, close to good transport links
10
Q
E-commerce
A
E-commerceis any transaction that takes place through the internet
11
Q
M-commerce:
A
M-commerceis any transaction that takes place using mobile technologies, e.g. a mobile phone app
12
Q
How do E-commerce and M-commerce affect a business’s location?
A
- E-commerce and m-commerce allow businesses to choose cheap locations, because there is no requirement to be located near to customers
- these businesses are able to sell items online and then send them to customers usingcouriers
- common examples of businesses that operate online: clothing companies, designers, bloggers and influencers
- some companies choose to have both an online business and a fixed retail premises - common in retail industries such as clothing shops
- many new, small businesses focus on e-commerce and m-commerce when they are starting out in order to keep their costs low
13
Q
Main benefits of E-commerce & M-commerce:
A
- lower costs
- flexible working hours
- access to a much larger market of potential customers
- ability to be open 24 hours a day, seven days a week
- relatively low-price marketing and promotion
14
Q
How does nature of a business (e.g. tourism) affect a business’s location?
A
may need to be near popular tourist attractions such as beaches and famous landmarks
15
Q
How does nature of a business (e.g. exporting) affect a business’s location?
A
may need access to docks, rail or airports in order to gain benefits from passing trade and being located in an area where customers tend to shop
