Business Location

1. Business Location A2 Business Studies

2. Aims and Objectives Aim: • Understand the demand and supply factors influencing location decisions. Objectives: • Explain demand and supply factors • Analyse how demand and supply factors influence business location • Evaluate what the success of location decisions may depend on.

3. Starter Why is a businesses location important?

4. Why Location Matters • Choice of location has a direct effect on operational costs. • Location also potentially affects ability to generate sales and deliver customer service. • A poor choice of location is costly to change.

5. Three Key Location Factors

6. Supply Factors • In groups brainstorm supply factors of location. • Remember they will be mainly concerned with the operating costs of the location!

7. Location Supply Factors

8. Labour Costs • Often a major factors especially between the decision to locate in the UK or overseas. • Minimum Wage Rates Globally: http://www.bbc.co.uk/news/magazine-17543356

9. Land and Building Costs • Usually premises are rented. • Rentals vary enormously depending on location. • Government grants reduce the land costs of locating in poorer regions.

10. Energy Costs • http://www.bbc.co.uk/news/business-19924010 • What do energy providers blame their price rises on? • Businesses are more concerned with security of supply, unless reliant on electricity.

11. Transport Costs • Costs of getting inputs to the business. • Location needs to be close to the source of supply if the cost of transporting raw materials is high or difficult. • E.g. food processing carried out close to farms.

12. Community Factors • Costs of a location can be influenced by: • Surrounding schools • Language and political stability • Government attitude towards enterprise • For each of the above factors how may location costs be affected?

13. Demand Factors • In groups brainstorm demand factors of location. • Remember they will mainly affect customer service and revenues.

14. Location Demand Factors

15. Customer Convenience • Many business need to locate where their customers find it quick, easy and cheap to access the service being provided. • Footfall is very important to retail businesses.

16. 527 Oxford Street • 4.5m sqft of shopping • 5.95m weekly footfall • 10% footfall growth • http://www.527oxfordstreet.com/experience/EnlargedVideo/

17. Labour Skills • Firms sometimes need to locate near areas of specialist labour. • E.g. technology firms locating themselves in Sillicon Valley • http://www.youtube.com/watch?v=RlMFkSt9rAU

18. Site Suitability • A site may need to have particular characteristics to maximise revenues. • E.g. a luxury restaurant or hotel needs to be located in a central area near tourist attractions. • E.g. Witchery/Secret Garden located near Edinburgh Castle.

19. Image • Some customers prefer to buy from a particular location. • E.g. a walking equipment business in Peak District may do better than one in Milton Keynes.

20. Expansion Potential • Businesses must consider future production capacity. • Needs to be scope for potential expansion. • Location needs not to restrict output and therefore revenues.

21. Toyota & Location • Highlight the demand and supply factors in the article. • Which factors were important in Toyota’s decision to locate in Derby? • What was more significant? Demand or Supply factors? • What may the long run success of Toyota decision to locate in Derby depend on?