Why do shops and cafés pay high rents for city-centre sites?

High demand for city-centre space pushes rents up. Shops and cafés accept those rents because of the heavy footfall of passing customers.

What does proximity to the market mean in location decisions?

Proximity to the market means being close to the customers who buy the product. Proximity matters most where customers must visit in person.

Why must a hairdresser be located near its customers?

Customers use the service in person and will not travel far for a haircut. A site with plenty of passing trade brings in more customers.

Why might a manufacturer of heavy, bulky products locate near its market?

Finished goods that are costly to transport are cheaper to deliver over a short distance. A nearby factory can also deliver to customers more quickly.

OCR GCSE Business J204

Business Activity

Topic overview Enterprise and entrepreneurship Business planning and the business plan Sole traders, partnerships and limited companies Business aims and objectives Internal and external stakeholders Organic and external growth How business functions depend on each other

Marketing

Topic overview The purpose of marketing Primary and secondary market research Market segmentation Product design and the product life cycle Pricing methods Point of sale promotion and advertising Place and the marketing mix

People

Topic overview The role of human resources Organisational structures and ways of working Communication in business Recruitment and selection Employee motivation and retention Training and staff development Employment law

Operations

Topic overview Production processes Quality of goods and services The sales process and customer service Consumer law Business location Procurement and choosing suppliers Logistics and supply chains

Finance

Topic overview The role of the finance function Sources of finance Revenue, costs, profit and loss Break-even Cash, liquidity and profit Cash flow forecasts

Influences on Business

Topic overview Ethical and environmental considerations The economic climate Globalisation and multinational companies International branding and competition

Operations

Business location

3 things to know
Component 02

Overview

Costs, proximity to the market, labour and raw materials, transport links, clustering near competitors, how e-commerce changed location decisions, and trading off one factor against another.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

Why does being near the market matter so much for a hairdresser?

Key term

Why is choosing the right location important for a business?

Key term

How do costs influence where a business locates?

Questions from this subtopic

Each one with the model answer underneath.

1
Why is choosing the right location important for a business?
Model answer
Location affects a business's costs, its access to customers and the workers it can recruit. A poor choice is expensive and difficult to reverse.
2
How do costs influence where a business locates?
Model answer
Rent, land prices, business rates and local wages vary widely between areas. A business looks for a site where these costs are low enough to stay profitable.
3
Why do shops and cafés pay high rents for city-centre sites?
Model answer
High demand for city-centre space pushes rents up. Shops and cafés accept those rents because of the heavy footfall of passing customers.
4
What does proximity to the market mean in location decisions?
Model answer
Proximity to the market means being close to the customers who buy the product. Proximity matters most where customers must visit in person.
5
Why must a hairdresser be located near its customers?
Model answer
Customers use the service in person and will not travel far for a haircut. A site with plenty of passing trade brings in more customers.
6
Why might a manufacturer of heavy, bulky products locate near its market?
Model answer
Finished goods that are costly to transport are cheaper to deliver over a short distance. A nearby factory can also deliver to customers more quickly.

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Business Activity

Marketing

People

Operations

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Customers may receive quality.

poorerbetterhigher

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AOwners may gain from higher profit.

BEmployees may lose jobs or face lower pay.

CCustomers may receive poorer quality.

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Assemble a full-mark answer from its marking points, in the order an examiner wants them.

Aim means a broad long-term goal of a business.

TrueFalse

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