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5.4: Location (Factors Influencing Location Decision (Qualitative Factors,…

- - - - they vary with region
      - compare cost of building on greenfield site and adapting existing buildings
    - - depends on if the business is labour-intensive
      - low wage overseas moves operations to other countries
    - - transport costs are high if suppliers are far away
      - goods that increase in bulk should reduce transport costs by locating close to the market
      - service industries need to be conveniently located for customers and transport costs will be of less significance
    - - level of sales can depend on location
      - certain locations can add status and image and may allow value to be added in the eye of the customer
    - - keen to attract new businesses to locate in their country
      - they act as incentive
      - existing businesses can be provided with financial assistance to retain existing jobs or attract new employment to areas of high unemployment
    - - Profit Estimates: compare estimated revenues and costs of each location
      - Investment Appraisal: use investment appraisal methods to identify locations with the highest potential return
      - Break-even Analysis: method of comparing two or more possible locations; the lower the break-even level of output the better the site
  - - - to avoid potential risk to the public, industrial plants will be located in remote areas
    - - expensive to relocate growing business
    - - managers’ personal preferences regarding desirable work and home environments could influence location decisions
    - - availability or non-availability of workers with appropriate skills
    - - quality of the local infrastructure, especially transport and communication links
- - - - Reduction & control of operating costs
      - Increased flexibility
      - Improved company focus
      - Access to quality service or resources
      - Freed-up internal resources
    - - Loss of jobs
      - Quality issues
      - Customer resistance
      - Security
  - - - Language & communication barrier
      - Cultural differences
      - Level of service concerns
      - Supply-chain concerns
      - Ethical considerations