Business Location

Question 1

what is location determined by

Answer 1

•access to customers
•access to factors of production
•minimisation of costs

Question 2

what are location costs

Answer 2

•planning permission
•purchasing or rental/leasing
•refurbishment
•business rates
•labour costs
•transport costs

Question 3

social reasons for location

Answer 3

•managers want to live in an environment that suits them and their families
•managers often retain a commitment to their existing workforce , even though it makes sense to relocate

Question 4

Labour reasons for location

Answer 4

•cost of labour, availability of labour, and the skills of labour
•attracted to certain areas by the skilled labour that may be available
•International location has a habit of following low-cost labour to wherever it is available

Question 5

Government influence on location

Answer 5

•availability of government grants and government of taxation policies affects the cost of labour
•national governments often ensure that planning permission is available for allow large developments to proceed
•offer incentives like tax breaks and help with recruitment and training of employees

Question 6

footloose businesses

Answer 6

those that move from location to location, basing themselves wherever best suits their needs at a particular point in time
•changing patterns of trade
•improved communications
•freer flows of capital

Question 7

what influence does economies have scale have on international location

Answer 7

if businesses are able to have a single plant supplying all their requirements for a type of product or range of components, then the businesses average costs of production can fall

Question 8

what influence do political factors have on international location

Answer 8

tariff and quota-free access to trading blocs such as the EU or NAFTA may depend on setting up a production facility within that trading bloc

Question 9

what influence does taxation levels have on international location

Answer 9

Companies sometimes establish head office operations where tax levels are lower than their home base which allows transfer costing to take place

Question 10

what influence does comparative international wage levels have on international location

Answer 10

high-tech industries can often choose from willing and skilled workforces from many different global locations

Question 11

what influence does freedom from restrictions have on international policy

Answer 11

businesses can reduce their costs if they locate operations in countries where red tape is less present or employment law is less strict