Place, location of production/distribution factors

Question 1

Place definition?

Answer 1

• refers to the location of the business and the location of the costumers
• distribution
• use of intermediaries such as wholesalers and other retailers
• aggregators

Question 2

what is an aggregator?

Answer 2

sites on the internet that are used as a bridge from retailers to costumers
pl. alza.hu, emag.hu, amazon, ebay

Question 3

costs(3)

Answer 3

• land/office space: buying renting or leasing
• labour: different countries, different costs
• transport

USUALLY NO FACTORIES/OFFICES NEAR CAPITAL CITIES -> because of the higher land and labor costs

Question 4

what is bulk increasing and decreasing industry?

Answer 4

• bulk increasing: buying components and creating products, the finished outputs are bigger than the inputs (better to set the business close to the distributors or market)
• bulk decreasing: buying raw materials and creating stg smaller, those whose finished products are lighter/have less volume than inputs (better to set the business close to the resource gathering)

Question 5

what is leasing?

Answer 5

kind of like buying and kind of like renting
pl. leqasing cars: pay a leasing fee for years (renting) then you can buy it for cheaper but you don’t have to

Question 6

competition(3)

Answer 6

• exclusivity: pl. where there is no gas station but there is need for it
• clustering: setting up near the competitors (pl. Váci utca, Andrássy utca, the food segments in malls)
• cannibalistic marketing: pl. zara, stradivarius, bershka at the same place so you enter one of them at least OR the starbucks map of New York - they are on top of each other

Question 7

important factors when deciding location of production (7)

Answer 7

• type of land: find a place that fits
• markets: location of costumers and distribution
• familiarity with the area
• labor pool: are there enough people? (győr university - Audi, engineers)
• infrastructure: transportation (highway network), internet (better in capital cities)
• supplier availability: automotive companies in Hungary and Chech republic
• Government: signal if they are friendly or unfriendly with some businesses, laws - strict, can make things difficult, taxes!!

Question 8

types of distribution channels (3)

Answer 8

• zero intermediary (direct sale): + : low cost and fast, ideal for perishable goods, producer decides everything, - : promotion costs borne by producer
• one intermediary (retailers-MediaMarkt, or agent-Avon): +: promotion and costumer service done by retailer, inventory costs held by retailer, retailer may have better locations, -: markup prices are included so the prices may be higher, producer may not know promotional strategies of the retailer
• two intermediary (wholesalers, retailers): +: wholesaler takes on storege costs, wholesaler breaks bulk for retailers and buy in smaller batches, good for long distance businesses, -: two-profit markups can price goods out of a market, further controll over marketing is reduced or impossible for the producer