Business Location Flashcards
Business Location
Location for new and existing businesses is still largely determined by
- access to customers
- access to factors of production
- minimisation of costs
Factors considered when choosing location
Costs
Social reasons
The market and competition
Government influence
Labour
Infrastructure
Costs
Most important location factor is likely to be the cost. The setting up of a new business will incur a number of location costs including
- planning permission
- purchasing or rental/leasing
- refurbishment
- business rates
- labour costs
- transport costs
New businesses, especially sole traders, have limited capital to start of with therefore they may not be able to afford the ideal of their choose
Social reasons
Managers want to live in an environment that suits them and their families
Managers can often retain commitment to their existing location, even when it makes economic and business sense to relocate a business
The market and competition
The market is the place where buyers and sellers meet, most exchanges take place face to face, so a physical location is required
Retail location should be driven by access to customers
Being in close proximity to competitors, a business can benefit from their marketing efforts
Manufactures of component’s in many industries need to be located close to the users of their products
Labour
It can be a deciding factor in determining location. By Labour it meant cost of Labour, availability of labour and the skills of labour.
Businesses can be attracted to certain area by the skilled labour that may be available
The cost of labour is also a determining factor. Many UK manufacturing businesses have relocated to the far east and China, where labour costs are very low
Government Influence
Cost of labour can be affected by the availability of government grants and government taxation policies.
The availability of low cost and suitable land resources can be an important factor when determining location.
Infrastructure
The type and quality of infrastructure also effects access to markets. Infrastructure used to main roads, rail and shipping. However, a more modern definition includes electronic communication systems.
