MAR. Location of b.can have profound implications on the profitability and survival of the firm.The decision is so important that it is classed as a long-term strategic goal and the decision is only made by senior management.Relocation is possible,but the costs of doing so can be extremely high. QUANTITATIVE FACTORS AFFECTING LOCATION DECISIONS 1.Availability,suitability and cost of land The quantity,quality and cost of land are all important factors when choosing a location.The busier the area,the higher the earning potential,but the higher the cost of land. 2 main reasons why the value of land in city centres is more expensive than land elsewhere.First,there is more demand for land in city centres,largely due to the convenience it provides for customers,suppliers and employees.Second,the supply of land is very limited in these areas. The suitability of land must also be considered(e.g. agriculture-suitable climate) The opportunities found in lower-cost locations abroad have led many b.to move their operations overseas.The cost of land is a highly important consideration for such b.that require a large amount of space LOCATION

O.M 2.Availability,quality and cost of labour Availability and quality will affect the level of wages paid to workers and will therefore be critical in any location decision.The supply and quality of labour will vary even within a country,affected by factors such as the quality of local schools,socio-economic dynamics and local unemployment rates 3.Proximity and access to raw materials The nearness to and availability of raw materials is a major factor in determining the location of many firms that operate in the primary and manufacturing industries.Bulk-reducing businesses also known as weight-losing industries,locate near the source of raw materials that are more heavy and costly to transport than the final product. 4.Proximity to the market Certain products will increase in weight during the production process.These are known as bulk-increasing or weight-gaining industries and are commonly found in b.that assemble components.It makes more sense for these firms to locate nearer to their markets instead. 5.Government incentives and policies Governments may offer incentives to attract b.to locate in,or relocate to,a certain region.This could be due to the relatively high unemployment that exists in those areas.Although the government may offer incentives,it can also impose limitations that affect b.location.

MAR. 6.Feasibility of using e-commerce E-commerce can have a huge impact on reducing the financial cost of location. QUALITATIVE FACTORS AFFECTING LOCATION DECISIONS Those that deal with the psychological and emotional aspects of location or relocation,such as familiarity with an area or consideration for the welfare of workers in the local community 1.Management preferences 2.Local knowledge(e.g. culture) 3.Infrastructure The availability of infrastructure: -transportation networks include links to roads,rail,sea and air -communication networks refers to access to telephone lines and mobile phone coverage -support networks refers to the support and complementary services that are essential for running a b.,such utility firms that provide fuel and power or other maintenance and back- up services

MAR. 4.Political and economic factors Countries that can offer political harmony free from corruption,a good law and order system,a stable exchange rate and low rates of taxation will tend to be more attractive to b. 5.Government restrictions and regulations Administrative and bureaucratic processes vary from country to country.The difficulty in obtaining licences,permits and copyright or planning permission may lead to b.looking to locate in alternative countries 6.Ethical issues Decisions regarding the international location or relocation of a b.often include an ethical element. 7.Comparative shopping(clustering) Clustering means that b.locate near other organizations that provide for similar or complementary markets.Fast-food chains locate in busy shopping malls to take advantage of people who will need to eat and drink whilst at the mall.Shoes and clothes also locate near one another.

MAR. LOCATION VERSUS RELOCATION From time to time,b.may need to consider relocation.This might be due to higher rents being demanded or more attractive locations becoming available,especially in overseas areas where production costs are lower. The reluctance to relocate may come from the existence of external economies of scale caused by b.being highly concentrated in a particular region. Potential limitations of relocation: -relocation costs -lower morale and higher anxiety caused to the workforce -the potential need to find new customers and suppliers -strong links with the existing local community will be lost -potential damage to corporate image -redundancy payments -problems encountered during the transition phase whilst adjusting to the new location

MAR. In deciding whether to relocate,managers are likely to conduct quantitative analysis of how profits will be affected: -Fixed costs,e.g.the cost of land(rental or purchase)in different locations -Variable costs,e.g.the costs of labour,raw materials and distribution in different locations -Revenue,e.g.the income of customers and forecasts of the price elasticity of demand in different locations Two recent developments in the relocation decision concern the development of the internet and globalization.Internet technology has meant that e-commerce b.are no so restricted to certain locations. Globalization has meant that an increasing number of org.must consider both domestic and international location decisions.(external factors to consider-language and cultural issues,fluctuating exchange rates and the political stability of the country)

MAR. LOCATION AND BUSINESS STRATEGY The location decision is one of the most important strategic decisions of all b.Good location decisions require significant planning and quantitative analysis of the costs and benefits of alternative options.Some managers may also wish to use qualitative factors in their assessment of the location decision. 2 commonly used quantitative methods are investment appraisal and break-even analysis. Changes in workforce planning have meant a larger pool of flexible staff that work from their own home.This has help in the relocation decision of many firms since they no longer need such large premises.It may also be possible to relocate to less expensive areas if staff do not have an issue with transportation and access to the new site. Finally,with developments in internet technology,the location decision becomes less of an issue for many b.Indeed,many e-commerce b.can be described as operating in footloose industries.Nevertheless,for the vast majority of b.,the location decision is crucial to their long-term prosperity and survival