Location Decisions (Copy)
4.4.1 The main factors influencing the location and relocation decisions of a business
- Location factors for manufacturing businesses
- Production costs: proximity to raw materials, energy supply, transport costs.
- Labour supply: availability of skilled/unskilled workers, wage levels.
- Transport & logistics: access to roads, ports, airports, railways.
- Market proximity: closeness to customers to reduce delivery times and costs.
- Government incentives: subsidies, tax breaks, low land costs.
- Economies of concentration: benefits of locating near similar industries.
- Location factors for service businesses
- Customer accessibility: busy high streets, online presence, convenience.
- Proximity to competitors: can be beneficial (fast food chains) or harmful (too much competition).
- Labour supply: skilled staff availability, e.g. IT specialists for tech firms.
- Technology & infrastructure: internet, communication networks.
- Image & prestige: some businesses (law firms, consultancies) choose prestigious city centres.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
- Factors when deciding which country to locate in
- Labour: cost, skills, productivity, labour laws.
- Market size & growth: demand potential.
- Government regulations: ease of doing business, bureaucracy.
- Taxation policies: corporate tax rates, incentives.
- Political stability & security: risk of conflict, corruption levels.
- Infrastructure: roads, ports, electricity, internet.
- Exchange rates & trade barriers: tariffs, quotas, currency fluctuations.
- Role of legal controls on location decisions
- Zoning laws: restrict where businesses can operate (e.g. factories not near residential areas).
- Environmental regulations: pollution limits, waste management rules.
- Labour laws: restrictions on working hours, minimum wage.
- Health & safety laws: requirements for workplace safety standards.
- Recommending and justifying location
- Manufacturing business example:
- Heavy industry (e.g. steel) → near raw materials and transport routes.
- Light assembly (e.g. electronics) → near skilled workers and suppliers.
- Service business example:
- Retail shop → busy high-street with high footfall.
- Call centre → country with low labour costs and good English skills.
- Must balance costs, market access, labour, regulations, long-term growth.
- Manufacturing business example:
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
Quick Recap Keywords
- Manufacturing location: raw materials, labour, transport, costs.
- Service location: customers, accessibility, image.
- Country choice: labour, market size, taxes, infrastructure, politics.
- Legal controls: zoning, environment, labour, safety.
- Recommendation: depends on type of business and strategic goals.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course