Business location

Question 1

What are the 5 factors that influence the location of a business?

Answer 1

• Cost
• Proximity to market
• Proximity to labour
• Proximity to materials
• Government

Question 2

What does ‘Proximity’ mean?

Answer 2

Nearness

Question 3

Explain why costs influence business location?

Answer 3

• The premises, land, and labour should be
  cheap in the area
• transportation of materials should be done cheaply
• Access to cheap ICT communications

Question 4

Explain why proximity to market influence business location?

Answer 4

• Service business should locate near their
  target customers
• Business that manufacture goods should
  locate near their customers fore easier
  communication
• cost of transportation may be reduced if
  business locate near their customers

Question 5

Explain why proximity to labour influence business location?

Answer 5

• Business must make sure they locate their
  business where they will get a supply of
  skilled workers.
• A business that need unskilled workers
  may locate their business in an area of
  high population

Question 6

Explain how proximity to materials influence business location?

Answer 6

• A business that locates nearer to their
  source of raw materials will reduce their
  transportation costs
• Shorter transport journey can reduce
  carbon emission making the business
  environmentally friendly

Question 7

Explain how the government influences the business location ?

Answer 7

The government may reduce corporation tax if the business locates in an area where the rate of unemployment is high.