Location
From WikiTextbook
When deciding upon where to locate the business will have to take into account many different factors:
How easily accessible are the customers?
There is no point in a shop locating a long way from its customers or where it is difficult to find. This may not matter so much for businesses that deliver their goods and receive their orders via mail, telephone or internet. However it is important to remember that the farther away you are from your customers, the more expensive it will be to transport the goods to them. This will have the effect of having to increase the price to cover the higher costs;
Cost and availability of land.
Many businesses used to locate in the centre of towns and cities where land is expensive and in short supply. There has been a trend in recent years for companies to build on out of town sites. It is also becoming more commonplace for companies that used to locate in London, where land and rent is very expensive, to move to towns and cities where it is far cheaper;
Cost and availability of labour.
It is important to choose a location where there will be a ready supply of relatively cheap labour. Businesses can substantially reduce their costs by locating in an area where wages are lower. It would also be unwise to open in an area where unemployment is low because it would be difficult to fill all of the jobs. Similarly to the cost of land, businesses are moving out of London, where wages are relatively high, to towns and cities where it is far cheaper. It is also important to locate in an area where people have the skills you require. This may require locating in an area where wages are slightly higher;
How close suppliers are.
It will benefit some businesses to be located close to their suppliers; this is because if they need some parts or raw materials urgently it will not take very long for the delivery to arrive;
Availability of utilities and communications.
It is important to locate near roads, railway, airport or seaport depending on how you intend to take delivery of raw materials or parts, deliver your product and how you want customers to visit you. It is important the site has electricity, gas, water and telecommunications connected; (these are known as utilities.)
The image and history of the area
Examples of where different industries have located in the past are, fashion in Milan, financial in London and whiskey in Scotland. There can be historical reasons for the locating in particular areas, for example, textiles, pottery, steel located in particular areas because of the availability of raw materials and transport links. The image then attracts further businesses of the same type because there is a local supply of labour that is skilled and knowledgeable in that industry. The local education systems may even be geared to that industry.
Businesses are also attracted by the proximity of competitors. If customers already visit a retail park for the Dixons, then it is a good place to put a Comet. This is the reason why you will often find McDonalds and Burger King close to each other in town centers.
Regional Aid
Governments and local authorities spend large amounts of money advertising the benefits of locating in their particular country/region. If this does not persuade businesses to locate in a particular area it is possible for the region to apply for regional aid.
Regional aid may be given to businesses to encourage them to locate in areas of high unemployment and/or high poverty. This is because the business will employ people from the area and the wages they pay will help improve the welfare of the community. The two main types of regional aid are from the Government and the European Regional Development Fund (ERDF)
From the Government
Enterprise zones
Enterprise zones are areas where there is high unemployment. They are usually inner city locations, however the Rhondda Valley in Wales is one example of a rural enterprise zone. The government will offer businesses reduced rent and taxes in return for them locating here.
The Department for Trade and Industry (DTI)
The Department of Trade and Industry can provide various forms of financial help for businesses in the assisted areas. The size of the grants that the DTI will give is linked to the number of jobs that will be created or safeguarded.
The Rural Development Commission (RDC)
They support businesses with between 5 and 50 employees in manufacturing, service, tourism and some forms of retailing. The support the offer can include training courses on both rural and business skills.
The European Regional Development Fund (ERDF)
The European Union provides assistance for areas of relative poverty. The European Regional Development Fund (ERDF) offers cheap loans to help build essential infrastructure, e.g., railways and roads. The European Social Fund provides money to help retrain people who are out of work.
