Location

Location

Understanding Location

  • Location refers to the geographical place where a business decides to site its operations.
  • The location decision is crucial as it impacts the business’s costs, revenues, and overall success.

Factors Affecting Location Choice

  • Costs can strongly influence a business’s location choice. These may include property rental or purchase prices, labour costs, and transport costs. A business will ideally want to minimise these costs.
  • The market is another important consideration. This refers to where the customers are. Businesses often choose locations near to their target market to reduce distribution costs and provide better customer service.
  • An available labour force is crucial, especially for businesses that require specific skills. Ensuring easy access to a pool of potential employees is a significant factor.
  • Infrastructure can impact a business’s location choice. Good road, rail and air transport links and reliable communication and energy networks are important for efficient operations.
  • Government policy can also significantly affect a business’s location choices. Policies such as taxation, grants for business development in certain regions, or planning restrictions can influence where a business chooses to locate.

Implications of Location

  • A bad location decision can lead to increased costs, poor access to markets and even business failure, while a good location choice can enhance visibility, attract potential customers and provide opportunities for growth.
  • Location can also impact a business’s brand image. For instance, a high-end retailer may choose to locate in an affluent area or a popular shopping district to project a luxury image.

Relocation

  • Relocation refers to the process of moving a business from one place to another. It is a significant decision that can be costly and disruptive, but it may be necessary due to changes in the business environment.

It is important to remember that each business is unique and the importance of different location factors can vary greatly from one business to another. It’s about finding the perfect balance for each specific company.