Location decisions

Factors when deciding where to locate operations

• Distance from market — how close the business is to its customers
• Distance from suppliers — how close the business is to those who provide its resources
• Cost of rent — the cost of the premises the business operates from
• Availability of labour — whether suitable workers can be found in the area
• Location of competitors — where rival businesses are situated
• Transport links — how good the roads, rail and other connections are

Why businesses may want to locate operations overseas

• Cheaper labour costs
• Cheaper rent
• Availability of skilled labour
• To operate closer to its market (thus avoiding import tariffs and trade barriers)
• To locate closer to suppliers/resources
• To expand operations into a new market

The role of legal controls on location decisions

• Grants and subsidies — money paid to a business by the government for producing what is asked of it
• Some laws may not permit working near urban areas
• Some laws may not permit working near natural areas