Different Location Needs for Manufacturing & Service Businesses | Business Studies for GCSE/IGCSE - Year 11 PDF Download

Location Decisions

• Location is the site where a business chooses to operate.
• A business might seek a new location when starting up or if the current site no longer meets its requirements. For instance, a more appealing site could become available, offering amenities like a larger staff car park or space for future expansion.
• Businesses may consider establishing sites within their home country or internationally. Major corporations like Apple or Nike often place their factories where labor and material costs are lower.
• Opting for a strategic location can result in various advantages for the business.

Diagram: The Impact of a Good Location

Numerous businesses have faced failure as a result of choosing an unfavorable location for their operations.

• Opting for a prime location can lead to cost savings, while selecting a subpar location can escalate expenses.
• A favorable location ensures easy access to a large customer base, whereas an unsuitable location restricts opportunities for customer engagement.
• A strategic location facilitates access to a proficient workforce, whereas a less advantageous location hinders access to necessary human resources.

Factors Affecting the Location of a Manufacturing Business

The choice of business location is influenced by the nature of the business and its products/services. 

• Manufacturing enterprises prioritize different factors compared to service-oriented businesses. 
• For instance, while business-to-business (B2B) companies may not require a location near high foot traffic, business-to-consumer (B2C) establishments may opt for areas with substantial customer presence.

Diagram of Factors Affecting the Manufacturing Location

Explanation of Factors Affecting the Location of a Manufacturing Business

Factors Affecting the Location of a Service Business

• Proximity to Customers: Being close to customers is crucial for retail businesses. Accessible premises with amenities like parking or proximity to transportation hubs play a significant role.
• High Footfall Locations: Businesses often choose locations with high foot traffic, such as high streets or shopping malls, to capitalize on customer presence and reputation.
• Specialization and Climate: Certain service providers, like ski instruction businesses in snowy regions, base their location on climate and geographical suitability.
• Out-of-Town Premises: Service businesses not reliant on walk-in customers might opt for out-of-town locations due to lower rent and business rates.
• Financial Incentives: Local authorities may offer grants for job creation, influencing businesses' location decisions.
• Security and Crime Rates: Businesses generally avoid areas with high crime rates to mitigate insurance costs and ensure safety.