Professional Documents
Culture Documents
Chapter 8 - Business Location
Chapter 8 - Business Location
PROXIMITY TO LABOUR
1
Hashan Siriwardane
BA(Hons) International Business and Finance
vary in different regions and large companies may also consider locating in countries
where labor is very cheap.
PROXIMITY TO MATERIALS
Businesses that use large amounts of raw materials
that ae difficult to transport may choose to locate
their premises very close to their sources. For
example , some type of business activity use up large
quantities of water and therefore might choose to
locate close to rivers, lakes or the coast. Here energy
prices have been falling owing mainly to an increase
in supply of oil and gas resulting from fracking. They
look to minimize land and property costs.
Business rates (a tax paid by business to the local authorities) are low
Land has been allocated for business development such as brownfield sites or
greenfield sites.
PROXIMITY TO COMPETITORS
SERVICES
2
Hashan Siriwardane
BA(Hons) International Business and Finance
Increasingly, when choosing a suitable location, business have to take into account the ease
of the access and parking facilities. Traffic congestion is a growing problem in many parts of
the world and businesses need to choose locations where there is less chance of delays.
AGRICULTURE
Most farmers require large areas of land for their business. However, not all land is the
same and some farming activity needs a particular type of land. For example, dairy farmers
need land where grass can grow effectively so that cows can get access to a good food
source. In the fishing industry, business will tend to be located on the coast.
LEGAL CONTROLS
3
Hashan Siriwardane
BA(Hons) International Business and Finance
Governments, both local and national, may try to influence location decisions for
several reasons.
To avoid congestion where is already enough or too much development. This will
reduce the strain on existing infrastructure such as roads , schools and hospitals.
Minimize the impact businesses might have on local communities. For example,
most people would object if a business opened a noisy night club in a highly
residential area or if a large petrochemical company established a refinery in a
national park.
To encourage manufactures to locate where unemployment is high. This will help to
improve the distribution of jobs around a country.
Government often use financial incentives to influence business choice of location.
For example, the government can offer low rates, tax breaks and low rents if they
locate in areas preferred by the government (assisted areas).
To attract foreign manufactures into the country. Many countries rely inward
investment to help create employment and work for domestic suppliers.
TRADE BLOCS
4
Hashan Siriwardane
BA(Hons) International Business and Finance