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Chapter 8 Business Edexcel IGCSE

The document discusses factors that affect the location of businesses including proximity to markets, labor, and competitors. It also covers the nature of different business activities and how the internet and legal/trade issues can influence location decisions.

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Haya Mouftah
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75 views4 pages

Chapter 8 Business Edexcel IGCSE

The document discusses factors that affect the location of businesses including proximity to markets, labor, and competitors. It also covers the nature of different business activities and how the internet and legal/trade issues can influence location decisions.

Uploaded by

Haya Mouftah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Business revision notes

Chapter 8

Factors affecting the location of businesses


1. Proximity to the market
 Businesses that make large or heavy products may be located
close to their customers to keep transport costs down
 The manufacturers of parts often locate close to their customers
where components are assembled into final products (E.g.
restaurants, cafes, shops, hair salons)

2. Proximity to labour
 Businesses that use large amounts of raw materials that are
difficult to transport may choose to locate their premises very
close to their sources
 Some businesses (e.g. large manufacturers & supermarkets)
require large areas of land to locate buildings, staff car parks
and other facilities.
 As a result, they look to minimise land and property costs
 They may set up in areas where:
 Premises are cheap
 Business rates are cheap
 Land has been allocated for business development

3. Proximity to competitors
 Most service providers will choose to locate where competition
Is minimised
 Some businesses deliberately choose locations where
competitors are closely concentrated
 This might be important in industries where comparison
shopping is popular
 It might also be to catch excess demand from existing
businesses
The nature of business activity
1. Services
 When choosing a suitable location, businesses have to consider
the ease of access and parking facilities
 If there are no convenient parking spots customers will try to
find alternatives
 Some service providers locate in specialist shopping areas (e.g.,
shopping malls or retail parks) which are usually designed for
easy access

2. Office-based businesses
 In some fields of businesses such as (Creative marketing,
consultancy, financial services) Business activity is office –
based
 If large number of people have to be employed in offices,
businesses need to ensure that there are sufficient facilities such
as restaurants, cafes, and hotels nearby
 Many businesses locate their head offices in large high-profile
cities to:
 Access a wide range of other facilities
 Improve the image of a business

3. Manufacturing and processing


 Locations chosen by manufacturers may vary because different
types of manufacturers have different needs
 For example:
 manufacturing that is labour intensive will need to
locate where there is a good supply of skilled and
relatively cheap labour
 Coal-fired power generators are likely to be located very
close to the coal mines or access to coal imports
 Manufacturers that need very large areas of land may
choose locations where land is cheap + lots of space
4. Agriculture
 Most farmers require large areas of land for their businesses
 Not all land is the same and some farming activity needs a
particular type of land
 In the fishing industry, businesses will tend to be located on
the coast
 However, different types of fish and shellfish live in different
environments

The impact of the internet on location decisions


 Many people are switching to the Internet when shopping rather
than going to stores
 there has been a huge growth in e-commerce which has had a
massive impact on business locations
 the development of online businesses means that many
entrepreneurs have a lot more flexibility when choosing a location
 this means that retailers can serve national markets an operate in
premises far away from the actual customers
 also, businesses do not need to have fixed premises
 as the importance of electronic data continues to grow businesses
will require greater network speeds and capacity in order to
operate effectively

Influence of legal
controls on businesses location
 governments may try to influence location decisions to:
1. avoid congestion in places where there is already too much
development
2. minimise the impact businesses might have on local communities
3. encourage manufacturers to locate where unemployment is high
(to help improve the distribution of jobs around a country)
4. using financial incentives (low rates, tax breaks and low rents)

 the easiest way to control the location of businesses to apply strict


planning controls
 this means that the business will need to gain official permission from
the authorities before it can begin trading in a particular location
 The location of some large-scale business operations, such as airports
and power stations, require lengthy periods of consultation and
viability studies before planning permission is finally given
 this means a delay for businesses

Influence of trade blocs on business location


 many countries use trade barriers to control the level of imports into
their country
 these trade barriers can have an impact on location decisions for
businesses
 to avoid trade barriers, such as tariffs, a business might decide to
locate inside the trade bloc
 a trade block is a group of countries situated in the same region that
join together and enjoy trade free of barriers
 the output of the business located inside the trade bloc will be free
from trade barriers when selling its products any member of that
trade bloc

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