Production LOCATION

Lesson Objectives C Grade: Identify and explain factors relevant to the location decisions of a manufacturing business Identify and explain factors relevant to the location of a service based business B Grade: Can do the above & ….. Show awareness of factors that a business considers in determining which country to locate itself A Grade: Can do the above &…. Recommend and justify an appropriate location for a business in a given situation

The importance of location Location can be: critically important quite important unimportant Why is there a difference?

Factors which influence choice of location Labour – cost and skills Cost of premises Financial assistance and local government charges (ie business rates) Transport links (for supplies/distribution) The need to be near customers History and tradition Sales techniques (phone/internet/mail order)

Factors which influence the importance of location The business activity The number/location of competitors Reliance on personal visits by customers The methods used to contact customers Reliance on local supplies Reliance on specialised labour skills

Positive effects of good location on business operations Additional sales opportunities (through passing trade, faster responsiveness) = increased income Lower total costs of running the business (rent, rates, wages and salaries, transport etc) = reduced costs = HIGHER PROFITS

Relocating = moving May be necessary if key factors change, eg New shopping centre opens and competitors relocate New motorway opens and diverts trade/provides new opportunities Methods of contacting customers change (from personal visits to mail order or Internet) New methods of production changes reliance on suppliers Costs increase on existing premises/alternatives would save money

Assessing location If so: Is it appropriate? What are the specific benefits? Where are competitors located – and does it matter? What are the costs? What are the alternatives? What would be the costs/benefits of relocating? First question – does location matter to this business?

Summary Location matters more to some businesses than others Various factors influence location – identify those which apply Could there be greater benefits in relocating? Important to identify the changes that could affect location in the future – if any.

Assignment: Location -Chapter 32 (& help sheet) Where will you set up your business? Why did you choose this area? (AO4) Describe the area in detail – can include maps and photos Extension: Research the demographics of the area, using it for your target market. What is the infrastructure like in the area? (AO2) What are the transport links? Extension: Research potential costs for renting What are the advantages/benefits of the location of your business? (AO3) What are the disadvantages/costs of the location of your business? (AO3 )

Identify and explain factors relevant to the location decisions of a manufacturing business Identify and explain factors relevant to the location of a service based business Pg 179 Look at the different factors affecting the location, for each one link to manufacturing & the service (in a table) Extension: Show awareness of factors that a business considers in determining which country to locate itself