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IB Business & Management 5.5 Business Location
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Location Decisions Deciding where to locate a new business is really important. What could happen if the wrong location is chosen?
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Location within a City/Country
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Task Watch the video clip about Tom Sutherland choosing a premises for his business. What considerations is he thinking about in choosing the location?
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Task – In pairs discuss 10 mins The following businesses want to open in the Shanghai area What factors do you think the following businesses would be important when deciding where to locate? Write down as many factors as possible What kind of areas in Shanghai would they be likely to locate?
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A new kebab shop
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A car component manufacturer who supplies to Toyota
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A Foxconn Factory to produce iPhones
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A new Ikea store
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An insurance company call centre
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A cosmetic surgery clinic
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A new H&M store
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A Travel Agency
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A boutique selling designer clothes
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Task Draw a diagram to show all of the different factors affecting location that we have discussed Business Location
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Factors affecting location decisions
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TASK Are the following statements true/false. Explain why….
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Businesses will always locate as far away from their competitors as possible
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The cheapest location is usually the best one to pick
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It is more important for tertiary sector businesses to locate near to their customers
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Manufacturing businesses must locate close to their suppliers so they can get their raw materials quicker
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International Location
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Multinational companies can operate all over the world There are some additional factors which firms might take into consideration in deciding which countries to locate in…. Can you think of any?
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Additional international factors……. Avoiding trade barriers Financial Incentives Cost of Labour Skill of labour Language barriers Proximity to markets Proximity to suppliers Political stability Infrastructure
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Task Look at the 2 examples of international business location decisions. Why might they have made this location decision?
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Nissan Locating in Sunderland UK
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HSBC locating their call centre in India
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Location and the changing environment…… How could these issues impact on business location decisions?
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The rise of E-Commerce
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Decrease in shipping costs
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Task Watch the video…… ‘How containerization shaped the modern world’
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Emerging Markets
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The rise of teleworking
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RELOCATION
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Think…. Industrial inertia describes a stage at which an industry prefers to run in its former location although the main alluring factors are gone. What factors might make a business consider relocation? Relocation is usually a decision that is costly in the short-term but cost saving in the long term
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Difficulties of Relocation: Physical Relocation costs Loss of skilled and loyal workers Possibly new customers and suppliers needed Potential damage to corporate image Redundancy payments Loss of production during transition phase
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