business in the real world - business location Flashcards
What are the 5 factors which influence the location of a business?
- Proximity to the market
- Availability of raw materials
- Labour
- Competition
- Costs
What does proximity to the market mean?
How close a business is to its customers.
Why might a tertiary sector business take into account proximity to the market when locating?
They often rely on being in an area where there is a large footfall.
Why might a business which trades internationally take into account proximity to the market when locating?
They may set up production sites in countries where they have a large market. This reduces transport costs and means they won’t have to pay import taxes in these countries.
What are raw materials?
The physical inputs that go into producing a good or providing a service.
Why might a business take into account availablity of raw materials when locating?
To base themselves close to their raw materials and reduce transport costs.
Why might a business locate in an area of high unemployment? (link to labour)
Wage costs are likely to be lower/there firm should be able to find enough workers.
Give 2 reasons whya business might locate near competitors?
- To make it easier to find skilled labour
- Already local suppliers
- Customers will already be attracted to area
Why might a business locate away from competitors?
So they don’t lose sales.
Why might a business take into account labour costs when locating?
The cost of labour/wage rates varies in different regions/countries
Why might a business locate in an area of high unemployment? (link to cost not labour)
The government sometimes gives grants or tax breaks to firms who locate in areas of high unemployment, which lowers their total expenditure.
Why might a business take into account cost when locating?
They have to compromise between producing where its cheapest and being where it would generate the most income.
