Aims and Objectives Aim: Understand the factors influencing
location decisions. Objectives: Explain demand and supply factors
Analyse the benefits of choosing the right business location.
Evaluate what the success of location decisions may depend on.
Slide 3
Starter Why is a businesses location important?
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Why Location Matters Choice of location has a direct effect on
costs. Location also potentially affects ability to generate sales
and deliver customer service. A poor choice of location is costly
to change.
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Location Factors What factors would affect a businesses
location decision?
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Three Key Location Factors Costs of The Operation Desired
Customer Service Level Potential Revenues Supply FactorsThese are
mainly concerned with the operating costs of the location. Demand
FactorsThese factors mainly affect customer service and
revenues.
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Location Supply Factors Labour Costs Land and Building Costs
Energy Costs Transport Costs http://www.bbc.co.uk/new
s/magazine-17543356 http://www.bbc.co.uk/new
s/business-19924010
Slide 8
Location Demand Factors Customer Convenience Labour Skills Site
Suitability Image Expansion Potential http://www.527o
xfordstreet.com/e xperience/Enlarge dVideo/ http://www.yout
ube.com/watch? v=RlMFkSt9rAU
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Qualitative and Quantitative Qualitative Factors Image
Tradition Personal preferences Quantitative Factors Costs Customers
Size of market Suppliers
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Benefits of Good Location In groups decide on the benefits of a
good business location.
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Benefits of Good Location Optimal revenue opportunities
customer service is not inconvenienced through a choice of
location. An acceptable rate of return on investment all business
projects compete for uses of cash, business location is no
different. Access to labour force which enables the business to
achieve the objectives of the firm through production and raising
revenues.
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Costs of Relocating What costs may be involved in the
relocation of a business?
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Costs of Relocation Recruiting and training staff in the new
location. Duplicated property costs e.g. remaining period on the
original lease + upfront payments on new lease. Costs of physical
transfer moving of assets and stocks.
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Multi Site Locations Multi-Site: where a business operates from
more than one location.
Slide 15
Examples of Multi-Site Businesses
Slide 16
Examples of Multi-Site Growth Retailer expands by launching the
same format in other locations nearby and then across the UK.
Manufacturer establishes regional distribution centres. Franchisor
expands by selling geographical territories to franchisees. UK bank
opens a call centre operation overseas.
Slide 17
Examples of Multi-Site Growth
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Examples of Multi-Site Retrenchment
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Depends on. What does the success of locating successfully
depend on? Target market is right? Research conducted into location
Costs of the location being manageable
Slide 20
January 2011 Plan your answer first using the planning
sheet