Location Flashcards
Determinants of Location (Regional)
Access to Markets
Cost and nature of factors of production
Social Reasons
Historical Reasons
Access to Markets (Regional)
Brick-and-Mortar retailers benefit from being near their customer base.
Infrastructure needs to be appropriate
Manufacture can benefit from being close to the point of sale. (import/export tariffs) (operate within a trading bloc)
Cost and Nature of Factors of Production (Regional)
Raw Materials benefit from being close to the point of manufacture, especially when they are bulky or difficult to handle
Availability of labour
Availability of Land
Social Reasons (Regional)
Managers may want to operate in an area that suits them and their families making it difficult to attract business to deprived regions.
Historical Reasons (Regional)
The business may have been established long ago and desire to stay operating in the same area that those who founded it did.
Determinants of International Location
Maximising Economies of Scale
Accessing International Markets
Tax Advantages
Freedom from Restrictions
Footloose Business
Maximising Economies of Scale (International)
A single plant to produce all the business needs would allow for significant economies of scale
Access to International Markets (International)
Trade Blocs - setting up production within trade blocs is good for business as they can avoid tariffs.
Freedom from Restrictions (International)
Operating in nations where employment law is more flexible (typically less developed nations) can be a way to cut costs for businesses.
Tax Advantages (International)
Companies establish themselves in countries were tax is charged significantly lower - these are known as tax havens.
(Ireland and Hungary)
Footloose Business (International)
This is a business that is not tied to a location or country and will move according to current economic conditions
