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Making the Business Effective

Business location

  • 3 things to know
  • Paper 1

Overview

Locating near the market, labour, materials or competitors, how the nature of the business decides location, and how trading online changes the decision.

What you need to know

Answer each one before you reveal it.

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Key term

How has the internet changed where a business chooses to locate?

Key term

Name the factors that influence where a business locates

Key term

Why might a business locate close to its market?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Name the factors that influence where a business locates.

    Model answer

    Location depends on proximity to the market, labour, materials and competitors. The nature of the business activity and the internet also matter.

  2. 2

    Why might a business locate close to its market?

    Model answer

    A location near customers is convenient for them and cuts delivery costs. Shops, cafés and hairdressers need to be where customers are.

  3. 3

    Why is proximity to labour important for some businesses?

    Model answer

    A business needs enough workers with the right skills nearby. A technology firm may locate near a university to recruit graduates.

  4. 4

    Why might a business locate close to its materials?

    Model answer

    Bulky or heavy materials are costly to transport. A business that uses them, such as a sawmill or quarry, saves costs by locating near its supply.

  5. 5

    Why might a business choose to locate near its competitors?

    Model answer

    A cluster of similar businesses attracts customers who want to compare. Restaurants and jewellers often gather in the same street for this reason.

  6. 6

    Why might a business avoid locating near competitors?

    Model answer

    A nearby rival would compete for the same local customers. A new café may do better where no other café is close by.

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