Chapter 21 - Location Decisions

Question 1

Factors affecting the location of a manufacturing business (9)

Answer 1

Market
Climate
Power+water supply
Availability of labour
Government influence
Transport and communications
External economies of scale
Raw materials + components
Production methods

Question 2

How production methods affect the location of a manufacturing business

Answer 2

If flow production is used, the location of the component supplier will be a greater influence as it is expensive to transport high amounts of components for the scale of production.
If job production is used nearness of components is less important

Question 3

How the market can affect the location of a manufacturing business

Answer 3

If it’s fresh or “gains weight”, the factory should be near retail outlets/consumers

Question 4

How raw materials/components affect the location of a manufacturing business

Answer 4

Raw materials may be heavier/more expensive to transport than the finished product, so it is cheaper to locate near the source, or near the sources if a business has many

Question 5

How external economies of scale affect the location of a manufacturing business

Answer 5

Firms which support the business needs to be nearby, so that they can install/maintain equipment and quickly respond to any problems

Question 6

How availability of labour can affect the location of a manufacturing business

Answer 6

If particular skilled labour is needed, it is cheaper to set up factory in an area where the people live. If a business needs a large number of unskilled workers, a high unemployment area would be best.

Question 7

How government influence can affect the location of a manufacturing business

Answer 7

Governments often state-funded grants to encourage a business to locate in a particular area, however this may lead to them regulating business activities. Governments will stop polluting businesses from setting up in areas where the waste product is very harmful (communities/rivers etc)

Question 8

How transport and communications affect the location of a manufacturing business

Answer 8

Businesses need to locate near to a transport system such as a port for exports or a road.

Question 9

How power and water supply affect the location of a manufacturing business

Answer 9

If a large reliable supply of water/ power is needed a business must locate near one, such as a dam or river if water is used for cooling in the manufacturing process

Question 10

How climate can affect the location of a manufacturing business

Answer 10

Doesn’t affect most but eg. Silicon Valley is very dry which aids in producing silicon chips

Question 11

Factors affecting the location of a service sector business (7)

Answer 11

Customers
Personal preference of the owners
Technology
Availability of labour
Climate
Near to other businesses
Rent/taxes

Question 12

How customers affect the location of a service sector business

Answer 12

Very important if direct contact is required or if a quick response time is needed. Mainly personal services or things like plumbing, electricians etc.
Businesses that don’t require direct contact can locate in multiple locations anywhere and operate via the internet

Question 13

How technology can affect the location of a service sector business

Answer 13

Allows services to be conducted electronically, so the business can locate anywhere and possibly take advantage of cheaper rent

Question 14

How availability of labour can affect the location of a service sector business

Answer 14

If the business needs large labour numbers they need to locate near a town/city/ in areas where the required skill is found

Question 15

How climate can affect the location of a service sector business

Answer 15

Mainly tourism, diving etc, if business operations rely on a certain climate then they should locate there

Question 16

How other businesses affect the location of a service sector business

Answer 16

They want to be close to quickly receive aid, but this is becoming less important with modern technology

Question 17

How rent/taxes affect the location of a service sector business

Answer 17

If the business doesn’t need to be in the main areas, they should locate on the outskirts of town to take advantage of lower rent and taxes

Question 18

Factors affecting the location of a retailing business (8)

Answer 18

Shoppers
Nearby shops
Customer parking
Availability of suitable vacant premises
Rent/taxes
Access for delivery vehicles
Security
Legislation

Question 19

How shoppers affect the location of a retailing business

Answer 19

Retailers need to be in an area that is frequently popular, such as a mall. If it sells high priced goods, it needs to be where people with high income shop etc.

Question 20

How nearby shops affect the location of a retailing business

Answer 20

Being able to locate near places that are frequently visited allows a lot of potential customers to pass the shop and possibly lure them in. On the other hand it’s not good to locate near competitors, but being located near a bunch of similar businesses encourages customers to visit due to the vast options.

Question 21

How customer parking can affect the location of a retailing business

Answer 21

It needs to be convenient or customers will be put off

Question 22

How availability of suitable vacant premises can affect the location of a retailing business

Answer 22

The business can’t locate in its desired area if there’s no place to set up

Question 23

How rent/taxes affect the location of a retailing business

Answer 23

The more central the location, the higher the cost. The business needs to decide whether it is worth the demand.

Question 24

How access for delivery vehicles affect the location of a retailing business

Answer 24

A big problem for some businesses if they can’t gain access to the premises

Question 25

How security can affect the location of a retailing business

Answer 25

If it is a dangerous area a retailer won’t locate there and insurance companies won’t insure, forcing a business to move

Question 26

How legislation affects the location of a retailing business

Answer 26

There may be laws restricting the trading/marketing of goods in particular areas.

Question 27

Factors to consider when deciding in which country to locate operations (6)

Answer 27

New markets overseas
Cheaper/new sources of materials
Difficulties with the labour force and wage costs
Rents/taxes considerations
Availability of government grants and other incentives
Trade and tariff barriers

Question 28

Why governments try to influence location decisions (2)

Answer 28

To encourage a business to set up and expand in areas of high unemployment (development areas)
To discourage firms from locating in overcrowded areas/sites which are noted for natural beauty

Question 29

How governments influence where firms locate (2)

Answer 29

Planning regulations - legal restrictions on business activities in certain areas
Government grants/subsidies - encourage the business to locate elsewhere