Factors Affecting the Choice of Business Location
- Business location is where a business establishes and runs its operations
- Some businesses operate from a single location where it combines production, administration, sales and logistics
- Others distribute operations across multiple locations to take advantage of factors such as wage costs, skill availability and levels of taxation
- Remote businesses may not operate from any single location
- They use online technologies to link dispersed staff and resources
Diagram: The Factors Affecting the Choice of Business Location
Businesses consider factors such as proximity to the market, labour, suppliers and competitors when choosing a suitable location
- In many cases, businesses remain in the location in which they were initially set up
- Business owners want to remain loyal to the communities in which their business were able to grow
- Moving the business could involve significant upheaval and affect business continuity
- Incentives may be available to remain operating in a particular location, e.g. subsidies, grants or tax benefits
Explanation of Factors Influencing the Choice of Business Location
Factor |
Explanation |
Examples |
Proximity to the market |
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Proximity to labour |
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Proximity to materials |
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Proximity to competition |
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Nature of business activity |
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Infrastructure |
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Exam Tip
You may be asked to analyse factors that determine the choice of location for a given business. You should consider those factors listed above and you must ensure that you relate your answer to the business in the question. This is the skill of application and it is required in all longer responses.