Business & ManagementIB

Reasons for location choice

Reasons for location choice...Availability, sustainability and cost of land.Availability, suitability and cost of labour...Different countries have differently skilled labour...
Reasons for location choice

Quantitative reasons

  1. Availability, sustainability and cost of land.
  2. Availability, suitability and cost of labour.
    • Different countries have differently skilled labour (e.g., Germany has lots of engineers), low socio-economic countries have cheaper labour.
  3. Proximity to the market.
    • For heavy/large products it is inconvenient to have to transport them very far.
  4. Proximity and access to raw materials.
    • If the raw materials are the heavy part, then it’s inconvenient to transport them very far.
  5. Government incentives and limitations.
    • Government may subsidise businesses opening in rural areas.
  6. Feasibility of e-commerce.

Qualitative reasons

  1. Management preferences.
  2. Local knowledge.
  3. Infrastructure.
    • Is the area supported by transportation, communication and support networks.
  4. Political stability.
  5. Government restrictions and regulations.
  6. Ethical issues.
    • Pollution, noise etc. may affect location.
  7. Comparative shopping (clustering).
    • As a grocery store, having a competitor right by your store can help/hinder sales.

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