Business Location (Edexcel GCSE Business)
Revision Note
Written by: Steve Vorster
Reviewed by: Jenna Quinn
Factors Influencing Business Location
Choosing a good location can have significant impacts on a business, such as attracting customers, reducing costs, accessing skilled labor, remaining competitive, and enhancing its reputation
Business locations are affected by multiple factors and if a business chooses the wrong location, it can fail
Proximity to market, labour, materials, and competitors influence the location decisions of a business
Proximity to the market refers to the distance between the business location and the target market. Locating near the market reduces transportation costs and increases its accessibility to potential customers
Proximity to labour refers to the availability of qualified and skilled workers in the area. Businesses often locate in areas with a high concentration of skilled labour to ensure that they have access to the necessary workforce to run their operations efficiently
Proximity to materials refers to the availability of raw materials and supplies needed for the business which will help to minimise transportation costs
Proximity to competitors may be desired (or not) to take advantage of a shared customer base or to differentiate themselves by offering unique products or services
The nature of the business activity is also an important factor in location decisions
Different types of businesses have different requirements in terms of space, infrastructure, and accessibility
E.g. A manufacturing plant may require a large space for equipment and a loading dock for shipping and receiving goods, while a service business such as a law firm may require less space and more accessible office locations
The impact of the internet means businesses can reach customers from anywhere and physical location may not be as important as it once was
E-commerce businesses may choose to operate from a fixed location, but their location may not be as critical as it is for traditional brick-and-mortar businesses that rely on foot traffic
Providing customers with the opportunity to book services or purchase products online offers convenience and is likely to reduce business costs as premises in non-high profile areas are usually cheaper to rent or buy than high street or other busy areas
For businesses that offer a combination of online and in-person services (restaurants or retail stores), location remains an important factor in their success
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