Thursday, August 2, 2012

Chapter 24: Factors affecting location


Location of industry
The location of a business is considered when it starts-up or when its present location is unsatisfactory. The business's objectives as well as the conditions of the environment change, so the business may need to look for a new location once in a while.

There are many factors that affect the location of businesses, and these factors are different for each business sector. We'll take a look at them below.


Factors affecting the location of a manufacturing business

Production methods and location decisions

  • Small
    scale: transport and location of suppliers are less important.
  • Large
    scale: transport and location of suppliers are more important.
Market

  • Need to be near to transport perishable goods.
  • Need to be near to cut transportation expenses.
Raw materials/components

  • Need to be near to transport perishable goods.
  • Need to be near to cut transportation expenses.
External economies of scale

  • How good nearby businesses are.
    • For maintenance of equipments.
    • For training workers, etc…
Availability of labour

  • Wages of the labourers.
  • How skilled they are.
Government influence

  • Grants/subsidies.
  • Restrictions on dumping, etc…
Transport and communication

  • To be able to transport product easily.
Power

  • Need a reliable source of power to operate effectively.
Water supply

  • A lot of water is needed in the production process (e.g. cooling, cleaning)
  • Cost of water.
Personal preferences of the owners

  • May locate in areas that:
    • They come from.
    • They like.
    • Pleasant weather, etc…
Climate

  • E.g. to reduce heating costs in a warmer climate.
  • Some climates are required to produce certain items.

Factors affecting the location of a retailing business

Shoppers

  • Do shoppers go there?
  • What kind of shoppers go there?
Nearby shops

  • Competitors.
  • Mass market.
  • Gap in the market.
Customer parking available/nearby

  • Convenience for the customer.
Availability of suitable vacant premises]

  • Goods sites (e.g. in shopping centres) are in short supply.
Rent/taxes

  • The more popular the site, the more expensive.
Access for delivery vehicles

  • For delivering goods.
Security

  • If the area is insecure
    • Goods will be stolen.
    • Insurance will be reluctant to insure the shop.
Legislation

  • Laws restricting the trade of goods in certain areas.

Factors that influence a business to relocate either at home or abroad

  • The present site is not large enough for expansion.
    • If a business simply prefers to expand elsewhere, the factors affecting location will have to be considered.
  • Raw materials run out.
    • One alternative is to import raw materials from elsewhere.
    • Important for mining industries.
  • Difficulties with the labour force
    • Wages are too high.
    • Need skilled labour.
  • Rents/taxes rising.
  • New markets open up overseas.
    • Cuts transport costs.
    • Bypass trade barriers.
  • Government grants
    • To attract businesses to locate in development areas.
    • To attract foreign investment.
  • To bypass trade barriers
    • Tariffs
    • Quotas

Factors affecting the location of a service sector business

Customers

  • Whether customers require:
    • Direct contact.
      • Is it convenient for customers to go the business?
      • Will the service arrive at customers' houses in time?
    • No direct contact needed.
      • Mail
      • Internet
Personal preference of owners

  • Near their homes.
Technology

  • Technology allows businesses to locate in cheaper sites.
    • Telephone.
    • Internet.
    • Transport.
  • No need to be near customers.
Availability of labour

  • Need to locate to sites where skilled labourers live.
    • Labourers may relocate to be near the business.
Climate

  • Important for tourism.
Near to other businesses

  • Businesses that supply or repair machinery to others need to be near them to respond quickly.
  • Post office/banks need to be in busy areas for the convenience of customers. That is, being near malls, shops, etc…
Rent/taxes

  • If the business does not need direct contact with the customer, then it could locate in cheaper areas.
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57 comments:

  1. Wow, thank you so much. I have a mock exam tomorrow and you just saved my life!

    ReplyDelete
    Replies
    1. U didn't pass?????

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    2. Actually i did pass :D

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    3. jst pass dude

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    4. sad story bra

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  2. 89/100 paper 1

    92/100 paper 2

    181/200 = 90.5% = A* Grade in my Mock exam of Business studies :) :)
    Thanks spitfire I dedicate my grade to your notes :) :)

    Ya Ya Ya Ya

    ReplyDelete
    Replies
    1. 92/100 paper 2? wtf are you god?

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    2. nope hes morgan freeman

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    3. hey need advice for p2pls help

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  3. Spitfire, you're really helping alot of people! Thanks alot! God bless you! =D

    ReplyDelete
    Replies
    1. arey chengappa what is up???

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  4. I appreciate your great efforts man. Those notes are excellent. In fact, you are excellent. Keep on the good work dude. Thanks a lot! Wish me luck this year, it's vital!

    ReplyDelete
  5. This is AWESOME I have a test tomorrow hoping this will stay in my head! These notes are so USEFUL!! :) :) amazing work! keep going!

    ReplyDelete
  6. Saving my life is what you do Spitfire :D

    ReplyDelete
  7. I find you made excellent decision when you selected this subject of the blog article. Do you as a rule create your entries on your own or maybe you have a business partner or even a helper?

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  8. Nah so far I have been doing this as a sole trader :)

    ReplyDelete
  9. chapters 24 and 25 comes mostly in which papers?

    ReplyDelete
  10. Replies
    1. I Love you too, what's your name? <3 <3 <3

      Delete
  11. Thank you for making my life so much easier :') God bless you in everything you do and I wish you a wonderful life ({})

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  12. you are brilliant.Thankyou

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  13. i so amire what ur doing 4 us....

    thankx

    ReplyDelete
  14. Hi! This is excellent! But can you answer the activities 24.1 to 24.4 in this chapter, please? I know the book has the answers at the back but some say Student's own answer and others are not fully explained as it should be. I want them fully explained. I have to do a presentation on this topic and my teacher asked me to explain the activities as well as the revision questions of this chapter in the book. PLEASE!! Thank you

    ReplyDelete
    Replies
    1. For 24.1, the main factors could be Power, since the factory is far away from the cities, it'll be hard to get electricity from a region which is far away from the city, same goes for the Water Supply. And Transport and communication is also a factor since it won't be easy to contact the business, thus the business will have trouble getting their products from the supplier. That's all I know XD

      Delete
  15. I need to raise up business, thanks 4 the help

    ReplyDelete
  16. I love these notes dude, you're awesome.

    ReplyDelete
  17. i hav an exam tomorrow...nd u just saved my life..!!
    best work ever :)

    ReplyDelete
  18. do we have to knw all the factors and knw how to explain them?

    ReplyDelete
    Replies
    1. It would help if you knew them, its possible that it asks you to name and explain and maybe also examples

      Delete
  19. wow..u realy helped me....i sooo like this information

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  20. very interesting and helping also mr spitfire????/ frankioooo

    ReplyDelete
  21. Thank you so much Mr. Spitfire! I needed help studying this chapter... You helped quite a lot!! It must've taken a long time to do a summary of each chapter huh?

    ReplyDelete
  22. oooh thanks a lot i have an assignment to collect tomorrow morning,, you have helped me a lot.. i love you,, mwaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaah

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  23. These notes are fantastic

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  24. excellent , really excellent research on this topic you have done . I am pretty impressed with your post and thanks . It passes a huge information about the location
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  25. Hello everyone,

    My name is Courtney Bieneman and am talking as the happiest person in the whole wide world today and i told my self that any lender that rescue my family from our poor situation, i will tell the name to the whole wild world and i am so happy to say that my family is back for good because i was in need of $186,000.00 USD loan to start my life all over as i am a single mum with 2 kids and the whole world seemed like it was hanging on me until i met this GOD sent loan lender that changed my life and that of my family, a GOD fearing lender, Mr Mason Diego, he was the Savior GOD sent to rescue my family and at first i thought it was not going to be possible until i received my loan of $186,000.00 USD from him; so am advising anyone of you genuinely in need of loan to contact Mr. Mason Diego via email: ( diegoloancompany@yahoo.com ) or reach him through the company website: http://diegoloancompany.wix.com/loans for a quick and secure loan.

    ReplyDelete
  26. What if i learn this is it enough ??? Or should learn more in detail ......plz tell me as i have to give IG's this year

    ReplyDelete
  27. What if i learn this is it enough ??? Or should learn more in detail ......plz tell me as i have to give IG's this year

    ReplyDelete
  28. How I Was Rescued By A God Fearing Lender (Lexieloancompany@yahoo.com)

    Hello,

    I am Andrew Thompson by Name currently living in CT USA, God has bless me with two kids and a lovely Wife, I promise to share this Testimony because of God favor in my life, 2days ago I was in desperate need of money so I thought of having a loan then I ran into wrong hands who claimed to be loan lender not knowing he was a scam. he collected 1,500.00 USD from me and refuse to email me since then I was confuse, but God came to my rescue, one faithful day I went to church after the service I share idea with a friend and she introduce me to LEXIE LOAN COMPANY, she said she was given 98,000.00 USD by MR LEXIE , THE MANAGING DIRECTOR OF LEXIE LOAN COMPANY. So I collected his email Address , he told me the rules and regulation and I followed, then after processing of the Documents, he gave me my loan of 55,000.00 USD... So if you are interested in a loan you can as well contact him on this Email: Lexieloancompany@yahoo.com or call +1(406)946-0675 thanks, I am sure he will also help you.

    ReplyDelete
  29. Well I have the exam tomorrow let's see if I pass...

    ReplyDelete
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