4.4 - location decisions

Question 1

5 factors influencing the location of a manufacturing business

Answer 1

• proximity to suppliers/raw materials– Being close to your raw materials is important to reduce transport cost ​
• proximity to customers: Locating a factory close to its customers reduces transportation costs, increases convenience. needs to be close to customers if they produce perishable goods so they don’t expire while being transported e.g. milk​
• government influence- Firms may move their factory to a certain country/region because they can receive a grant for locating there or they have fewer laws and and legislation e.g., minimum wage and environmental laws ​
• availability of skilled labour and the wage rate of the labour ​
• being close to effective transport and hubs to reduce transportation time e.g. being close to motorways and ports.

Question 2

5 factors influencing the location of a service sector business

Answer 2

• proximity to customers- important that there’s lots of footfall in the area for certain stores so they can attract customers. it is important for some businesses that they are close to customers so it is convenient for customers
• availability of labour- Businesses will have to check if there is skilled and available labour in the area ​
• cost of rent​
• available parking nearby for customers ​
• if there are competitors nearby

Question 3

5 factors to consider when deciding which country to operate in

Answer 3

• new markets overseas- A firm may notice sales increasing in a certain country/continent and so want to open a branch in that area to be close to their customers and reduce transport Costs
• wage rates in that country and availability of skilled labour ​
• rent and corporation taxes in that Country ​
• availability of Government Grants ​
• tariffs and Quotas- A company may move their operations to a country where they sell a lot of their products to to avoid import tariffs,

Question 4

2 legal controls on location decisions

Answer 4

• grants may be offered by the government to encourage firms to locate in a certain area ​
• having planning permission regulations so firms have to apply for permission to build. This will restrict certain buildings from being approved s not to damage nature/beauty area/residential areas