Lesson 20 -Location decisions Flashcards
What are the factors affecting the location of a manufacturing business part 1
-Government influence :
• If an area has high unemployment rates the government may give money to businesses locating there
• Government may stop businesses from locating in some areas due to the business producing harmful waste
-Market, distance from market
What are the factors affecting the location of a manufacturing business part 2
-Climate: Silicon valley has a dry climate which aids the manufacture of silicon chips
-Availability of labor:
•If the manufacturing process requires a large number of unskilled workers a business should locate in a high an unemployment area
What are the factors affecting the location of a manufacturing business part 3
-Power and water supply:
•To some industries having a reliable source of power and therefore no regular power-cuts may be essential
•If large supplies of water are needed then business should locate near sea or river
-Production methods:
• If job production is used the nearness of components will be less important
•If production is on a large scale , location of components suppliers might be of a great importance.
What are the factors affecting the location of a manufacturing business part 4
- External economies of scale - firms which support the business in other way might need to be located nearby.
- Raw materials: If a business uses too many components and the suppliers of these components are near one another then the business should locate near them.
What are the factors affecting the location of a service sector business part 1
-Climate:
•Climate will affect businesses related to tourism
•Hotels will need to locate themselves where climate is good and near to a beach
-Rent: If the business does not need to be on the main street, it should locate on outskirts
-Availability of labour:
• If the business requires large number of employees, it cant locate in remote areas
•Particular skilled labour will move near to the business.
-Personal preference from the owners
What are the factors affecting the location of a service sector business part 2
- Customers: if a quick response time is needed then the business needs to be located nearby such as electricians and plumbers
- Near to other businesses: Firms serving other businesses should be near to them
- Technology - For service conducted via telephone they can locate anywhere
What are the factors affecting the location of a retailing business part 1
-Car parkings: Lack of customer car parkings may put off people from visiting the area and sales will be lower.
-Shoppers:
•Most retailers would want to locate in an area such as a shopping mall
•If the retailer sells expensive goods, it must locate in an area where people of high incomes live.
•If goods are small gift type products, retailer might want to be in an area visited by tourists.
What are the factors affecting the location of a retailing business part 2
-Nearby shops:
•locating near a popular fast-food outlet or a post office means a lot of people pass by your shop
•locating businesses near businesses in the same industry will attract people as there is lots of choice
-Access for delivery vehicles
What are the factors affecting the location of a retailing business part 3
- Rent: The more central the site of the premise, the higher the rent and taxes will usually be
- Legislation: In some countries there may be laws restricting the trading or marketing of goods in certain areas
- Security: Insurance companies may not want to give insurance to businesses located in areas of high crime
What are the factors affecting locating in another country part 1
-New markets: When a business sees a steady increase in its sales overseas it may decide to locate in that country instead of moving products from current country to that country since its more effective
-Trade and tariff barriers :
If there are trade barriers, such as tariffs or quotas often by locating in that country there will be no restrictions.
What are the factors affecting locating in another country part 2
- Cheaper or new source of materials: It is cheaper to use raw materials at their source than to transport them to other countries to process them
- Availability of government grants and other incentives: Governments may want to encourage foreign businesses to locate in their country to bring in investment and opportunities
What are the factors affecting locating in another country part 3
- Rent/taxes : If other costs such as rent and taxes keep increasing this might cause the businesses to relocate to countries.
- Difficulties with labour force and wage costs: If the business is located in a country where wage costs keep rising there may be a point at which the business decides to move
List 2 reasons why government influences location decision
- To encourage businesses to locate in areas of high unemployment
- To discourage firms from located in areas known for their natural beauty.
List 2 measures used by government to influence location
- Many governments provide grants or subsidies to encourage businesses to locate in undeveloped parts of the country.
- Planning regulations will legally restrict the business activities that can be done in certain areas.
