Chapter 21: Location Decisions Flashcards
Factors that influence where a manufacturing business sets up
Name 5 atl
Production method
Market
Raw materials/components
External Economies of Scale
Availability of Labour
Government influence
Transport and communication
Power and water supply
Climate
How does production method influence manufacturing business
Job production - smaller scale, less need to be closer to component supplier
Flow production - larger scale, the need to be closer to the components supplier is higher cuz large number of components
How does market influence location of manufacturing businesses
Perishable products - spoil quickly therefore need to be closer to where they are sold
Helps reduce transport costs if the products are closer to retail outlets
How does raw material/components influence location of manufacturing businesses
Raw materials may be heavier than finished products. Hence would be more expensive to transport. thats why businesses would probably want to locate near the raw material supplier to REDUCE TRANSPORT COSTS
If raw materials need to be processed quickly before they spoil or quality diminishes then also ud locate near the supplier
How do external EOS influence location of manufacturing businesses
External EOS would benefit firms without having to invest any money themselves. This would help reduce costs
Eg: Locate near an engineering schl and hire part-time student engineers or interns or sumn
How does availability of labour influence location of manufacturing businesses
Unskilled labour - set up in an area of high unemployment
Skilled labour - easier and cheaper if the business sets up in an area where people with the relevant skills live.
Also - wage rates paid to employees depend area to area, country to country. That also plays a role
How does ‘govt influence’ impact location decision of manufacturing businesses
Govts may offer businesses grants, subsidies or tax breaks if they set up in particular areas, etc.
Could also be negative - if govt regualations are very high in certain areas then businesses may not want set up production there
How does transport and communcation influence location decision of manufaturiung busineses
If it is an import/export business - setting up near a port would be imperative
Setting up near a highway may help speed up delivery and reduce transport costs
How does power and water supply influence location decision of manufacturing businesses
Locate in areas with a constant supply of electricity with no regular power cuts
If large supplies of water are needed - set up near a water body
What are the factors that influence the location decision of a service sector business
Customers
personal pref of owners
Availability of labour
Proximity to other businesses
Rent/taxes
How do customers influence where service sector businesses set up
for which businesses is it imp and which it isnt
Usually for business where there is direct contact between customers and company.
Quick response time
Increased convenience for customers - hair dressers, cafes, etc.
For businesses without direct contact (eg online service) they can locate wherever in the country they wish to
How does availability influence where service sector businesses set up
If business needs a large number of employees - has to locate in city or town not a village
Factors that influence the location of a retailing businesses
Shoppers
Nearby shops
Parking
Rent/taxes
Access for delivery vehicles
Security
Legislation
How do shoppers influence retailing businesses
Type of business - expensive products need high income, etc. Therefore locate in high income neighbourhood
How do nearby shops influence retailing businesses
Locate near to shops/businesses which are visited regularly, such
as a post office or popular fast-food outlet
will mean that a lot of potential consumers pass the shop on the way to other shops and businesses
If competitors are together - encourages people to visit that area for that particular good or service. Gives them more choice.
