Page 241 - Cambridge IGCSE Business Studies

18: Location decisions

ACTIVITY 18.1

Imagine that you have been employed as a consultant for a large international mobile phone manufacturer which is
considering your country for the location of a new factory.
Write a report to the CEO of the company highlighting the benefits and drawbacks of the company locating its new
factory in your country.

The role of legal controls
When considering its location, a business may also need to think about possible
legal controls. For example, building new premises such as a factory or supermarket
may require planning permission from local government or other government
agencies. Local and national government will want to attract businesses to locate
in their country, or in particular areas of the country, as they provide employment
for the population. However, they may also want to protect the environment so do
not want businesses to locate in areas which may cause damage to wildlife, rivers,
woodland or other open spaces that are enjoyed by the local community.
In many countries there are areas that have been set up for businesses to use.

These areas are usually located away from local housing so that residents are not

affected by any noise, air or traffic pollution from manufacturing activities.

Governments are now much more aware of the problems caused by pollution,
especially from manufacturing. In some countries there are laws which require
businesses to control the amount of pollution their activities cause. Any business

found breaking these laws might be fined or closed down.
239
There are often legal controls concerning the employment of workers such as

discrimination laws and minimum wage laws.

The legal controls placed on businesses will not be the same for every country.
Employment legal controls:
A business that is thinking of relocating to another country will have to investigate
see Chapter 8, page 118.
the laws of that country and make sure that these are considered along with other
location factors.
Choosing a location

The task of owners or managers is to select the best location. This is never easy

because every location will have factors which are a benefit and others which are a
limitation. For example, the land on which to build a factory might be very cheap
because it is located some distance from the nearest town. However, the business

might find it difficult to recruit a workforce because of the distance workers would

have to travel to get to work. Similarly, a business looking to relocate to a low labour

cost country might need to balance the benefit of lower production costs with
increased transportation costs for raw materials and fi nished goods.

Those faced with making the decision must balance location factors and

choose the location where the benefits outweigh the limitations so that future

profits are maximised.
ACTIVITY 18.2
Working in small groups, consider the following:
A fast-food take-away business is considering locating near to your school. The owners of the business have asked your
group to identify the benefits and drawbacks of this location for their business.
1 On a sheet of paper write the heading ‘Benefits’ and on another sheet of paper write the heading ‘Drawbacks’.