8 Decisions on location Flashcards
What are the ‘proximities’ to consider when locating a business?
- Proximity to market
- Proximity to labour
- Proximity to materials
- Proximity to competitors
Explain the impact of a business locating close to the market
Increases demand
Because target customers are located nearby
Leads to increased chance of customers finding business
Therefore more sales and revenue
Explain why a business might decide to locate close to labour?
Keeps labour costs down
Because business is close to workers with particular skills needed for company
Leads to no need for business to employ workers from overseas
Therefore no need to spend money on researching for skilled workers and paying for transport costs
Why might a business decide to locate close to materials?
Keeps transport costs down
Because business can get raw materials needed closeby
Leads to being able to directly get raw materials to use for manufacturing
Therefore no need to pay for transporters, transporting trucks
Why might a business decide to locate close to competitors?
Could gain more customers
Because it may be possible to catch the excess demand from existing businesses
Leads to customers being interested in products and buying them
Therefore more sales and revenue
Define brownfield sites
Areas of land that were once used for urban development (relating to towns and cities)
Define greenfield sites
Previously undeveloped area of land, usually on the outskirts of towns and cities
What would a business with services need to consider when locating?
Traffic cogestion needs to be considered, business needs to choose locations where there is less chance of delays
Might use drive-through to overcome parking problems
What would an office-based business need to consider when locating?
- If large number of people employed in offices, there needs to be sufficient facilities nearby
- Also needs area with great network speed
- Locating in high profile city (e.g. London, Dubai) will improve image
What would an agriculture business need to consider when locating?
Some farming activity needs a particular type of land, fertile soil
Explain the impact of the internet on location decisions (3)
Businesses don’t need fixed premises
Because the business could be run from anywhere with good internet connection
Leads to customers being able to access business from anywhere
Therefore increase in demand from more areas and countries and more sales
Why might governments try to influence the location of businesses?
How might they do this?
- To avoid congestion where there is already enough or too much development - reduces strain on existing infrastructure e.g. roads, schools, hospitals
- To minimise the impact businesses might make on local communities - e.g. most people would object if a business opened a noisy night club in a highly residential area
- Use regional policy to locate in areas with unemployment
Use of financial areas to influence business location - e.g. can offer low rates, tax breaks in assisted areas
Define assisted areas
Areas that are designated by a government as having economic problems and are targeted to receive support in a variety of forms
Define viability studies
Careful study of how a panned acticity will work, how much it will cost, and what income it is likely to produce
Define trade bloc
Group of countries situated in the same region that join together and enjoy trade free of barriers
