Business location (12) Flashcards
What are the 3 main factors of business location
Access to customers
Access to factors of production
Minimisation of costs
What are all the factors of business location
Costs
Market & Competition
Infrastructure
Labour
Government influences
Social reasons
Increased choice of international location
Why is costs a factor when picking location
planning permission – When building a new building
- purchasing or rental/leasing - buildings or places to work
- refurbishment – Refurbishing the inside of the facility to create suitable working conditions for your business.
- business rates
- labour costs
- transport costs.
New businesses, especially sole traders, have limited capital to start off with therefore they may not be able to afford the ideal of their choice
Why is social reasons a factor when choosing a location
Managers want to live in an environment that suits them and their families.
- Managers can often retain a commitment to their existing workforce, even when it makes economic and business sense to relocate a business.
- Employees want to be able to access have easy access to the location they don’t want to commute long distances everyday etc
Why is market (D&S) a factor when choosing a location
Most commercial exchanges buying and selling in consumer markets still take place face-to-face, so a physical location is required so you want an accessible place.
Customer potential is a factor as if there is huge potential for a lot of customers business will likely look into purchasing the location.
Supply is important when choosing a location as it will be a lot cheaper and efficient if the manufacturer is close to the users of their product this matters to both the user and manufacturer.
Geographical segmentation – Depends on what the firm is doing may determine where it will be based as where is there a dense population where people are interested in your product
Why is competition a factor to choosing location
Being in close proximity to competitors, a business can benefit from their marketing efforts, on the other hand the competitor may benefit more.
Why is labour a factor when choosing location
By labour, its meant cost of labour, availability of labour, and the skills of labour.
The cost of labour is also a determining factor. International location has a habit of following low-cost labour to wherever it is available. Many UK manufacturing businesses have relocated to the far East and China, where labour costs are very low.
Businesses can be attracted to certain areas by the skilled labour that may be available, like Silicon Valley where there is a lot of skilled labour in tech at that location.
Why is government influence a factor of choosing a location
Cost of labour can be affected by the availability of government grants and government taxation policies.
The availability of low cost and suitable land resources can also be an important factor when determining location.
Governments often ensure that planning permission is available to allow large developments to proceed.
Also, Governments offer incentives like tax breaks and help with recruitment and training of workers.
Why is infrastructure a factor when choosing a location
An efficient transport network enables staff to get to work easily. It also allows supplies to be brought in from far afield and permits finished products to be moved to market cheaply and quickly, easy accessible roads for customers, employees and production to move through
For e-commerce businesses good communication is key for the business to grow.
