Business Location
Overview
Smelting aluminium takes an enormous amount of electricity. So much, in fact, that the cost of the power matters more than the cost of the ore, which is why aluminium smelters are built beside cheap hydroelectric dams and the bauxite is shipped thousands of kilometres to reach them. Meanwhile a sandwich shop cannot survive two streets away from the office block that feeds it. Same decision, opposite logic.
Choosing where to put a business is one of the few decisions that is genuinely hard to undo. A wrong price can be changed next week and a wrong advertisement can be pulled, but a factory on the wrong side of a country is there for a generation. In this lesson you will work through the six factors the specification names, learn why they rank differently for a manufacturer, a retailer and a service business, see how governments use money and rules to pull businesses towards particular places, and practise weighing two possible sites against each other with the figures in front of you.
Objectives
- Factors influencing the location decision of a business.
Mind map
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Flashcards
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Business Location. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- Which one of the following businesses is most likely to locate close to its customers? A. An aluminium smelter B. A fish canning factory at a port C. A quarry crushing stone D. A ready-mixed concrete plant Answer: D
- Which one of the following is a government influence on where a business locates? A. The cost of raw materials B. The number of competitors nearby C. The refusal of planning permission D. The wage rate paid by other employers Answer: C
- A site costs 40,000 a year in rent and 260,000 a year in wages. A second site costs 70,000 in rent and 215,000 in wages. Which site has the lower total annual cost, and by how much? A. The first, by 15,000 B. The first, by 30,000 C. The second, by 15,000 D. The second, by 45,000 Answer: C
- Which one of the following best explains why car showrooms often locate next to each other? A. Rents are lower where competitors are already trading B. Customers travel in order to compare several cars in one visit C. Governments require car dealers to be grouped together D. Cars are cheaper to transport in large quantities Answer: B
- Which one of the following is most likely to reduce the importance of a high street location for a retailer? A. A rise in local wage rates B. Selling through a website with national delivery C. An increase in the rent of out-of-town units D. A competitor opening on the same street Answer: B
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Recommended Books
Further learning from open sources
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Textbook section
Location, Location, Location: Where Do We Make It?
How do organizations decide where to put their production facilities? What choices must be made in designing the facility?
"Introduction to Business: Location, Location, Location: Where Do We Make It?" by OpenStax, OpenStax, Rice University, licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). Source: https://openstax.org/books/introduction-business/pages/10-3-location-location-location-where-do-we-make-it. Access for free at https://openstax.org/books/introduction-business/pages/1-introduction
Published by other organisations under open licences, credited as they ask. Links open their websites.
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