BUSINESS MANAGEMENT

1. BUSINESS MANAGEMENT 3.1 Why do Businesses Locate where they do? Business Location

2. What Influences Location? • Raw Materials (eg pulp mill near forest) • Labour (electronics firm locates where there are skilled workers) • Proximity to market (for selling goods) • Infrastructure (eg roads/railways to allow transport of goods) • Cost of land, premises (eg out of town is cheaper) • Competition (eg lots of shoe shops together) • Central and Local Government Assistance (financial help for firms locating in particular areas) • Costs of Labour (eg cheaper labourforce in developing parts of the world like India)

3. Braehead Shopping Centre • Why is Braehead where it is?

5. Disneyland, Paris • Opened in 1992 • An estimated 17 million people could drive there within 2 hours • 300 million could fly there within a few hours

6. Government Assistance • Both the Scottish Government and the UK Government provide assistance to businesses • Local Government also helps

7. Regional Selective Assistance(Scottish Enterprise) Click for website • RSA encourages businesses to undertake investment that will directly result in the creation or safeguarding of jobs in Scotland. Both indigenous (Scottish) and foreign companies can apply helping to ensure Scotland’s economy remains globally competitive. • There are a number of criteria to be met for an application to be successful. The amount offered is dependant on the size of your business, location of the project and our assessment of how much is needed for the project go ahead.

8. To qualify for RSA grants, companies must be located in Assisted Areas (EU) usually areas of high unemployment

9. Assisted Areas

10. Click for Website Scotland attracts investment from leading global companies looking for the ideal destination for business investment and a premier location for research and development.

11. Enterprise Zones(Decided by Central Government) • A new generation of Enterprise Zones (EZs) are expected to be launched in the latest bid to revive the economy. The would provide big breaks on tax and business rates

12. Local Government can also help .. • Advertise on the internet • Give detailed information to businesses about getting grants and aid • Give information to businesses about local sites and premises • Provide grants for starting up in their area • Provide grants for research and development

13. BUSINESS MANAGEMENT 3.1 Why do Businesses Locate where they do? Locating Internationally

14. The European Union – 27 member states

15. What is the Single Market • The EU provides one market of over 320 million potential customers. • Advantages include: • There are no limits to the number of goods they can sell in member countries; • There are no customs duties between member countries; • There is a larger choice of suppliers; • Competition will increase which should increase efficiency • Free movement of workers between countries

16. The Single Market • Disadvantages include: • Language barriers– can cause communication problems • Distance problems – add to the sales cost • Currency difficulties – overcome in some countries by the introduction of the euro(€)

17. The Single Market Who Benefits? Consumers: Lower prices, greater choice of goods and services, work within EU Businesses: fair competition, economies of scale, expand to global markets

18. Single Currency – the Euro € • One single common currency used throughout the EU states introduced in January 2002. • Not all countries have joined the single currency. • Removes barriers to free movement of capital. • European Central Bank - fixes interest rates • Cheaper exchange/transaction costs. • Transparency of pricing allows easier comparisons to be made.

19. Globalisation • This has created a single world wide market place which is dominated by multi-national businesses Globalisation is possible because of: • Developments in ICT – satellite, • cable, mobile phones, www • Developments in transportation – containerisation, infrastructure for roads, rail, air • Decline in barriers to trade

20. Multi-Nationals • Multi-nationals operate overseas generally in a range of products. Often their size is a result of takeovers and mergers of businesses in other countries. This allows: • Use of the same brand name worldwide • Using the same advertising • Using the same procedures/practices • Operating in a number of countries allows multi-nationals to: • Reduce the cost of transporting the goods overseas • Switch production from plant to plant and country to country when profit levels change • Move into production where cheap labour and materials are available • Locate where tax advantages can be gained

21. Advantages of Globalisation • Vast market of consumers • Reduction in some trade and cultural barriers • Locate where costs are lowest • Greater choice for consumer • Communications easy • Better awareness of how to deal with businesses and customers • Better choice of resources

22. Disadvantages of Globalisation • Language barriers, cultural differences, different time zones, technology failures can lead to communication problems • Different tax laws in different countries • Currency differences

23. ICT in Globalisation • ICT allows information to be transmitted quickly • Relocation of staff not necessary – interact with other staff using technology

25. Source of Finance – Business Type Sole Trader Partnership Private Limited Company Public Limited Company Personal Savings     Ordinary shares     Preference Shares     Debentures – long term loans for PLCs     Loans from Banks etc     Mortgage     Leasing - timed rental agreement     Hire Purchase – paying up over time.     Overdraft     Trade Credit – from suppliers     Factoring – selling debt to third party    

26. Suggest Sources of Finance