Page 237 - Cambridge IGCSE Business Studies

18 Location decisions

Introduction

The decision about where to locate a new business, or relocate an existing business,
Objectives is one of the most important decisions most businesses make. The decision can be

the difference between business success or business failure. This is because the
In this chapter you will place where a business is located can affect its operation costs, as well as how it

learn about: makes sales and delivers customer service. Once a location decision is taken, it is

oft en difficult and costly for a business to change location.
■ what influences the location
decision of manufacturing In this chapter you will look at what influences location decisions and learn how
businesses and service businesses choose the right location.
businesses
■ why businesses may decide
Factors influencing location and
to locate their operations in
relocation decisions
another country
■ how legal controls aff ect
A supermarket chain plans to open a branch in your area. Is there a site where it
location decisions.
can be built? Where will its customers come from? Will it be able to attract people
to work at the supermarket? Are there good transport links to the site? Are there

other supermarkets nearby? These are some of the questions that the managers of the
business will need to answer before they can decide where to locate the supermarket in
KEY TERM your area, if at all. 235

From this, you can see that there are several factors that may influence the location
Infrastructure: the basic of a new business or the relocation of an existing business. Manufacturing businesses
facilities, services and installations

may have different questions to ask than the service business of the supermarket above.
needed for a business to function,
for example water, power, For example, they might need more and better infrastructure such as water, power
transport links. and telecommunications, as well as access to sea, air and rail links for transporting raw
materials and finished goods. They might also need a more skilled workforce.

Location decisions of manufacturing and service businesses
Businesses need to consider a variety of factors when choosing a location for a

new business or relocating an existing business. These factors can be divided into
quantitative factors and qualitative factors.

Figure 18.1 Location factors