Unit 4.4 Location decisions Flashcards
(36 cards)
Definition of footfall
The measurement of the number of people entering or shopping in a business.
Definition of proximity
This is a term given to a certain nearness to time, space or order.
Definition of infrastructure
This is the name given to the road, rail and airlinks, sewage and telephone systems and other basic utilities which provide a network which benefits to the community and other businesses.
Definition of passing trade
When people go into a shop to buy something when they are walking pass it. They had not intended to go there.
Definition of relocation
The movement of a business from one region or location to another
Definition of a manufacturing business
Any business that uses raw materials, parts and components to assemble finished goods through the production process.
e.g food processing companies, car manufacturers,…
Definition of a service sector business
The one that offers services to consumers or other businesses, rather than manufacturing goods or extracting raw materials
e.g hospitality industry, transportation, travel, entertainment
Definition of a retail business
A business that purchases from a manufacturer or from a wholesaler and sells them in small quantities to end customers or shoppers.
e.g co-op, starbucks, department stores, supermarkets
Factors that influence location of a manufacturing business
Production method used, market, raw materials or components, external economies of scale, availability of labour, government influence, transport & communications, power and water supply, climate
How can production method used affect manufacturing businesses ?
- If job production used => business operates in small scale => influence of nearness of components will be less important
- If flow production used => operates in large scale => location of component suppliers is at greater importance as large number of components and materials will need to be transported => Should locate close or costs can be very high
How the market can influences location of manufacturing businesses
- Locating factory near the market for its product used to be thought important => especially if products gain weight and cost more to transport
- Today, transport links are much improved => Being near to the market is less important even for weight-gaining products
- If products perish quickly (milk, bread) should consider to locate near the market, but there are ways to preserve them
How raw materials / components affect the location of manufacturing business
- Often cheaper to locate ore-processing factory near to the mining site than to transport long distances
- If a particular process uses many different components => business wants to locate near these suppliers if they are near to each other
- If raw material need to be processed quickly => should locate near to the raw material source
How external economies of scale affect the location of manufacturing business
- Apart from component suppliers, firms support businesses in other ways might need to be located nearby (like businesses help maintenance) => Respond quickly to breakdown
- Universities might have research departments that work with them on developing new products => being in close contact can be more effective
How availability of labour affect the location of manufacturing business
- If particular skilled labour is needed => easier and cheaper to recruit employees if business sets up in area where people with relevant skills live
- If manufacturing process requires large amount of unskilled workers => Area of high unemployment maybe more suitable, areas where wages are paid lower
How government influence affect the location of manufacturing business
- Government might give money (grant) to businesses to locate in area that has high unemployment rate; however can have negative influences through regulations or restrictions on business
- Government can refuse to allow a business to set up altogether; especially where businesses produce harmful products like nuclear waste or gases to surrounding
How transport and communications affect the location of manufacturing business
- Business usually need to be near a transport system (road, rail, inland waterway) => product can be export and the ability to get to port is important
- A nearby motorway can reduce costs by speeding up the time spent delivering the products to market, especially if market is quite a distance away
How power and water supply affect the location of manufacturing businesses
- To some industries, having a reliable source of power or no regular power cuts maybe essential
- If large supplies of water are needed as part of the manufacturing process (cooling purposes in power station) => being near to a water supply (sea/river) is important
How climate affects the location of manufacturing businesses
- Climate can be important, for e.g of Silicon Valley in USA, have very dry climate => Aids in the production of silicon chips
- However, this will not influence most manufacturing businesses
- Important factor for primary sector businesses
Factors affecting the location of a service sector business ?
Customers, personal preference of owners, technology, availability of labour, near to other businesses, rent/taxes
How customers affect service sector business
- Locating near customers will be very important; especially in services where direct contact between the business and customer is required.
- If a quick response time is required to serve customers e.g electricians and plumbers
e.g hairdressers, beauticians, caterers, restaurants, cafes
How can personal preference of the owners can affect service sector business
Business owners can influence where to locate the service centre
=> Often locate their business near to where they live
How can technology affect service sector business
- Technology allowed some services to locate away from the customers
=> Some services are conducted by telephone / via the internet => business does not need to be near to customers - Can choose to locate on the outskirts of cities or even in some remote areas => can take advantage of cheaper rent
How can availability of labour affect service sector business
- Requires a large number of employees => Cannot locate in remote areas; need to locate to large town or city
- If particular type of skilled labour is required => have to located near to where these labours are living
- However, skilled labour will move to near the business to work instead the business move
How can climate affect service sector businesses
- Businesses linked to tourism will be affected by climate
- Hotels often need to locate themselves where climate is good and near to a beach
