Transcript ###Business Location - PowerPoint Presentation

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Business Location
Copyright 2006 – Biz/ed
http://www.bized.co.uk
Business Location
Copyright 2006 – Biz/ed
http://www.bized.co.uk
Business Location
• In general a business will look to locate
its activities where the costs
of production are minimised
• The nature of the business
will heavily influence location decisions:
– Type and nature of market
– Type of business – production of goods
or services, retail, wholesale?
– Sector – primary, secondary, tertiary,
quaternary?
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Quantitative Factors
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Quantitative Factors
• Factors that can be measured
using quantitative techniques:
– Decision trees
– Investment appraisal
– Critical Path Analysis, etc.
• Generally associated with the costs
of production:
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Cost
• Fixed Costs
–
–
–
–
–
–
Site costs
Availability of grants/subsidies
Cost of loans associated with set up
Cost of utilities - gas, water, electricity
Cost of hiring fixed salaried staff
Cost/availability of technology
• Variable Costs
–
–
–
–
Nearness to market
Cost of raw materials
Cost of sourcing supplies
Transportation costs
• Bulk increasing
• Bulk reducing
– Nearness to a supply of skilled/unskilled labour
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Location
• Some
Othersbusinesses
may depend
have
in
little choice
some
cases where
on specific
they
locate – a–coal
locations
in busy
mine has
to beshopping
city
near a source
areas,of
coalexample
for
but transporting
– but could
the
coal to
have
a virtual
where it
location
is
needed can
through
developments
be expensive
in
technology
Image copyright: Joshua Argeliss, http://www.sxc.hu
Copyright 2006 – Biz/ed
http://www.bized.co.uk
Qualitative Factors
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Qualitative Factors
• Factors that cannot be quantified
but which may have a significant
impact on the location decision
• May influence the long term
outcome of the location decision
• Need to consider impact on and
response from stakeholders in the
business
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International Location
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International Location
• Many qualitative factors will have
to be considered in seeking
to locate internationally
• How easy is it to get in to the
country (for example, locating in
China can present many problems,
not least of which are the language
and cultural barriers that exist)
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