1.5 Location

Question 1

Costs - cost of premises

Answer 1

• Cost of rent for shops in town centres and shopping centres will be higher than elsewhere
• Premises are often the second largest cost after wages
• Small businesses that can start from home can make a huge cost saving

Question 2

Costs - grants

Answer 2

• Some businesses may decide to open in a certain location because they have been given a government grant
• Government grants do not need to be paid back, they are given to businesses to encourage them to set up in areas which have high unemployment

Question 3

Proximity to market 1

Answer 3

The location will depend on the type of goods:
– bulky or perishable goods manufacturers need to be close to their customers as the goods cannot be transported long distances e.g. abroad
– consumer goods manufacturers can reduce the costs of transport by locating close to customers

Question 4

Proximity to market 2

Answer 4

• Location close to customer traffic is important as it is good for the customers (convenience) and good for the business as it may need more sales
• There may be other services nearby that will be useful for the businesses employees, such as:
– Children’s nurseries
– Shops and services for employees E.g. Greggs for

Question 5

Proximity to competitors

Answer 5

• Some businesses choose to locate in a certain area which is well known for their products
• This will draw customers to a certain area and if they don’t find the product they are looking for in one shop they may try another close by
• This is the cluster concept

Question 6

Labour

Answer 6

• Adequatesupplyof cheap and skilled labour is necessary for businesses
• Some businesses may move to areas of high unemployment so there is a large pool of applicants for any jobs they advertise
• Some businesses may decide to set up near a cluster of other similar businesses or close to very skilled staff

Question 7

Proximity to materials

Answer 7

• A business start-up will need to think about its location in terms of proximity to materials
• The closer a business can be to the raw materials it needs for production, the lower the costs of production will be

Question 8

Retail

Answer 8

• A retail business will want to locate close to where shoppers go
• They will look for good parking
• They will need to consider the rent or rates that they will need to pay on the shops
• Rentsintheshopping centres will be higher

Question 9

Service

Answer 9

• A service business may need to locate close to customers, but might not need a premises
• For example, a gardener may work from home, but will need to travel to their customers
• Services rely heavily on people and so may look to locate close to a good supply of labour

Question 10

Manufacturing

Answer 10

• Businesses that produce goods will look to locate close to good transport links such as roads, ports and airports
• Manufacturers may need to locate close to a good supply of skilled labour
• Businesses may choose to set up in a certain location because a government grant is available e.g. Toyota Derby