Topic 4.

Choosing Business Location

• The Importance of Business Location

• Types of Business Location

1.Attached in the nature
2.Based on business history
3.Regulated by Government
4.Influenced by Economic Factors

 Closed to raw material

 Closed to market
 Closed to labour supply
 Closed to energy supply
 Because of climate compatibility
 Transportation easiness
 Easiness of capital supply
 Topic 4. Choosing Business Location (Contnd)
• Method in Choosing Business Location

Qualitative: Choosing location by measuring qualitatively the candidate locations based on

important factors needed by the business.
Quantitative: Quantify the result of locations candidate qualitative measure

The Theory of Alfred Weber

 Types of raw material:

1. Absolute Ubiquity

2. Relative Ubiquity
 No salvage value
 With salvage value

3. The product needs more than one raw materials located in different locations.
 Topic 4. Choosing Business Location (Contnd)
• Material Index (MI)

• Formula:
• MI = a + b
c IF MI>1, BL is at the raw material location -TBM
IF MI = 1, BL is at the market-DK