Business Location

1. Business Location A2 Business Studies

2. Aims and Objectives Aim: • Understand the quantitative and qualitative location factors Objectives: • Explain quantitative and qualitative location factors • Analyse why some industries decide not to move to more optimal locations. • Evaluate what the success of location decisions may depend on.

3. Starter Give three demand and three supply factors which influence location decision making.

4. Three Key Location Factors

5. Making a Balanced Location Decision • Are cost (supply) issues more important than customers and revenues (demand)? • Is the decision strategically important (could it affect the achievement of corporate objectives) or is it a minor decision? • Can quantitative methods be used to evaluate alternative location e.g. investment appraisal • Do qualitative factors including senior management preferences, outweigh the financial considerations?

6. Qualitative Vs Quantitative

7. Benefits of Good Location In groups decide on the benefits of a good business location.

8. Benefits of Good Location • Competitive unit costs – through a combination of a productive and efficient labour supply, acceptable location overheads and cost effective access to raw materials • Optimal revenue opportunities – customer service is not inconvenienced through a choice of location. • An acceptable rate of return on investment – all business projects compete for uses of cash, business location is no different. • Sufficient production capacity – to meet demand and future flexibility in capacity management decisions. • Access to labour force – which enables the business to achieve the objectives of its workforce planning.

9. Industrial Inertia Where a business, once established, decides to stay in its original location even if other factors suggest a new location would be beneficial.

10. Industrial Inertia Why might a business decide to do this?

11. Industrial Inertia • A positive reason is that the existing location provides advantages from economies of scale. • Over a long period of time, a location or region that has become associated with a particular industry develops specialist skills and experience. E.g. West Midlands and Car Manufacture • The pool of potential recruits is likely to contain many people with relevant training and experience. • Specialist suppliers are also likely to be nearby.

12. Industrial Inertia What costs may be involved in the relocation of a business?

13. Costs of Relocation • Recruiting and training staff in the new location. • Duplicated property costs – e.g. remaining period on the original lease + upfront payments on new lease. • Costs of physical transfer – moving of assets and stocks.

14. Jaguar Land Rover - TATA • Why do you feel JLR have decided to keep their production in the UK? • Why might JLR have reversed its decision to close one of its West Midlands factories? • Do you feel that supply or demand factors played a greater role in the decision to stay in the UK? • What may the long term success of JLR’s decision depend on? • http://www.bbc.co.uk/news/uk-england-birmingham-14968779