1. IGCSE Business Studies
4.4 Location Decisions

2. LEARNING OBJECTIVES
To understand the relevant factors for manufacturing and service businesses when making location decisions
To understand the factors a business should consider when deciding which country to locate operations in
To understand the role of legal controls on location decisions
Evaluate and justify the most suitable location for a business in a particular scenario

3. Starter – 5 mins In Groups – Where should these businesses choose to locate and why?

4. Location factors Location Decisions Industrial Power and inertia
raw materials
Government
influence
Markets and
transport costs
Location
Decisions
Telecommunications
and I.T.
Communications
Labour
Environment
Geography
Land
The product

5. Location factors Geographical: Cost of the site
Waste disposal
Prevailing winds (location of a factory near a town)
Cost of the site
Infrastructure – road, rail, fibre-optical cabling, ancillary firms (support services – waste disposal, logistics etc.)
Labour
Power and water – e.g. steel production
The product – bulk increasing (cars) v bulk reducing (timber mill) products
Historical factors – E.g. car industry in Detroit
Environment
Government influence

6. Location of industry task
Business location
Location of industry task

7. Location of industry task
Needs plenty of labour
Your chance to play SimCity. You have to locate the following businesses on the map and can choose from any of the sites labelled A-F
Only one business can be located at each site
Give reasons for your decisions – reasons why a site was not considered as well as reasons why one was
Car manufacturer
Garage (car repairs)
Aluminium smelter
Ice cream manufacturer
Sheep farming
Computer manufacturer
Needs imported bauxite, fresh water and lots of power (one tonne of aluminium production requires the same amount of electricity as the average family uses in 20 years)
Needs plenty of labour and must be able to efficiently get its products to market
Needs labour and fast access to its markets
Needs to be close to its market

8. B C D E F A Hills Farm land Town/City Main road Motorway Inner city
River Toos
Motorway
River Wones
Airport
5km B C D E F
Lake Wones
(minor roads and villages are not shown)
Container port A
Hills
Farm land
Town/City
Main road
Motorway
Inner city
Railway line/station
Beach
River

9. Factors important for Secondary sector businesses
Location Factor
Secondary Sector
Scale of Production
The larger the scale the larger the land area required
Access to Supplies
Does the business need to be located near suppliers.
Perishability, JIT reasons
Access to Markets
Does the business need to be located near retailers.
Access To Labour
Labour intensive = locate near to populated area
Skill level – what skills are required
Cost of labour – can differ by region/country
Availability & Cost of Premises
Suitable size, meets all needs and within budget
Access to Transport & Infrastructure
Are special requirements needed e.g. refrigeration, rail, ship, air links?

10. Factors important for Tertiary sector businesses
Location Factor
Tertiary Sector
Scale of Production
The larger the store the larger the land area required (town centre vs. out of town?)
Access to Supplies
How frequent are supplies necessary. Depends on types of products sold also e.g. perishability
Access to Markets
Very important – customers will need easy access if only a physical business. Internet however allows for virtual presence.
Access To Labour
Labour required depends on service supplied. Financial advice will require skilled labour. Supermarkets unskilled.
Availability & Cost of Premises
The more popular a location the higher the cost (rent & taxes) and the less chance of availability. Parking required?
Access to Transport & Infrastructure
Employees need to get to work quickly. Customers need convenient access to purchase products/services. Businesses need efficient delivery of stock

11. Other Factors Being near other businesses Climate Security
Personal preference of owners
Government influence

12. Government intervention
£12bn is spent each year supporting small businesses in the UK
Assisted areas: Areas of the UK that have relatively little business/industry as well as high unemployment
The EU allows government to provide financial support to businesses in areas where the standard of living is abnormally low or where there is serious underemployment
In the UK this means Cornwall, West Wales and the Valleys, and the Highlands and Islands of Scotland
More limited help can be given to businesses in ‘intermediate areas’
e.g. parts of Yorkshire and the Humber, West Midlands, North West and North East England
The government is able to assist firms located in assisted areas through grants and loans

13. Which Country to Operate In?
Business location
Which Country to Operate In?
Read the
Dyson
Case Study. What did they move?

14. Which country to operate in?
Eton college wants to expand internationally. What are the factors it should consider when choosing a location?
Jollibee wants to expand operations to other countries. What are the factors it should consider when choosing a location?

15. Factors to Consider New / cheaper sources of materials
New / growing markets overseas – first mover advantage
Increasing wage costs at home
Tax considerations
Trade & Tariff barriers
Availability of Government grants or other incentives
Expanding the scale of production

16. Quiz time
Quiz 1 Grab the white boards!