Location Decision

Factors influencing location decision:

 Communications
 Environment
 Geography
 Land
 The product
 Labor
 Telecommunications and I.T
 Government Influence
 Market and transport costs
 Power and Raw materials
 Industrial Inertia
Why is choosing the correct location important in business?
Choosing the correct location is an important decision for any
business. Making the wrong decision about location could result in
business failure, especially if customers struggle to find the new
business or do not know that it exists.
Analysis:
Trade Bloc:
A trade bloc is a group of countries situated in the same region that
enjoy trade free of barriers e.g.
• The EU
• ASEAN
Being part of these trade blocs will mean that the member
countries do not have to pay to sell their goods to other member
countries.
Advantages:
 Trade with no costs
 Easier for government
 Low transportation costs
Disadvantages:
 Must be 1 region
 Trust will be needed
E-commerce:
E-commerce refers to buyers and sellers trading online. This means
that fixed costs are reduced drastically as businesses do not need
to pay for furnishings, rent or buildings insurance if operating
online. A business may not even need its own website as they can
trade on eBay until they become established
Local and national governments may try to influence
business location. Why? How?
• Minimize the impact on local communities
• Encourage businesses to locate in areas of high
unemployment
• Financial aid (lower rates and rent or tax breaks) to locate in
assisted areas
• Attract foreign businesses

Globalisation:
What is it? The process which businesses operate on an
international scale: selling to, buying from, and operating in
multiple countries. This has led to growth of multinationals, which
often take a great deal of international influence.
Effects of Globalisation: Imports, exports, and business location
Imports: These are goods brought into a country from abroad
meaning that money moves out of the country.
Advantages: No time and other hidden charges are involved
Disadvantages: Money moving out of country and unemployment
Exports: Goods that are produced in a country and sold abroad
meaning that money flows into the country
Advantages:
 Unemployment solved
 Cash flow into country
 Gain popularity to country/company
Disadvantages:
 Lose you resources
 This can cause financial problem to country
 Lose opportunity to use your valuable assets

Globalization:
Advantages:
 Publicity for company
 Higher sales
 More profit
 Market share
 Wider costumer base
 Reduced costs
Disadvantages:
 Harder to manage
 Higher costs
 Laws to be followed
 Language barrier
 Time zone issues
 Worker exploitation