Factors that affect the location of a business.

Many factors will have influenced where a firm is located. These factors have changed in relative importance in recent years; for example, the quality of modern-day transport and communications means that it is less important nowadays for a firm to be based either near the source of its raw materials or very close to the market for its finished products.

Land and the Site

It is often said that there is no perfect for a factory, there is always room for improvement. Rent is obviously an important factor but first the company has to consider the new premises, whether the building is correct type or it is large enough. A small manufacture will need 60% to 70% of the floor space for production, 20% for storage and 10% to 15% for offices. The site also must have easy access for lorries and the privilege of allowing lorries to turn easily on the site and for staff and visitors to park their cars outside.

Labour

Owners of a firm will be encouraged to locate it where there is an available, adequately skilled workforce. The business- person will need to consider whether the right kind of skilled or semi-skilled labour is available, or grants for retraining are available, what the local wage rates are like and whether the housing, school and leisure facilities will attract and keep labour in the area.

Raw Materials

Nearness to sources of raw materials is still important, but much less so important than it used to be. New technology and improved communications by road, rail, air and sea have changed the pattern of modern industry. Modern manufactures, apart from those who need heavy cumbersome raw materials, have a much greater freedom of choice as where to locate their business. To save on transport costs, they may set up near a major supplier of raw materials; but there is less need to do so of there are good motorway and railway connections.

Market

Nearness to markets is more important than nearness to the raw material. Nearness to a market is more important in the services sector than in manufacturing. Even this factor is less important that it used to be. It is never easy to find the correct site. Often one large company will pick an area that is highly adequate and then other large firms will follow, i.e. Silicon Valley.

Enterprise

Companies will prefer to move to an area where not very many if any, companies are producing the same genre of product. This is because the ...

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Market

Enterprise

Companies will prefer to move to an area where not very many if any, companies are producing the same genre of product. This is because the companies do not want much competition so they can have relatively high prices for their product. Also without much competition there will be less need to take risks.

Government

The government can offer financial incentives to business people to move to certain areas. The government can also offer these incentives to encourage firms to be set up in particular regions of the country; typically regions which have suffered high levels of unemployment due to the run-down of their traditional industries (e.g. the North East and Shipbuilding)

The best location for the steelworks is Port File. This is

because of the good transport links; the steel could be transported to the customer via the sea or the railway. Also there is a coalfield near by which will fuel the furnace to melt the steel.

Port File again is the ideal location for a firm concerned with freezing and processing fresh fish. This is due to its excellent transport links, enabling the fish to be transported to the customer and consumer. Also the close proximity to the sea aids the firm by presenting a close raw material.

A light engineering firm requiring a large, flat site and good road communications to obtain its components and to transport its finished products would be preferable situated in New Berkley. This is because New Berkley has several industrial estates with a range of modern factory accommodation. Also New Berkley has relatively good road communications, assisting the firm to obtain its components and to transport its finished goods.

Lodwick would be the best location for a firm offering a range of personal financial services. It has the largest population of the four locations, giving the firm much more business. Also, as Lodwick is the centre of trade more business people will need more financial advice.

A DIY hypermarket would be best located in New Berkley. Being the closet to the raw material from the National Park of the four is a large advantage.

Seaton is a good location for a craft shop. As Seaton is a retirement town, more of the older generations will be interested in various types of crafts as they have more time than the working population. Seaton is not particularly near to the National Park that may be a source of raw materials for the craft shop. However, its good road communications counteract this disability.

Three locations where a firm producing chemicals will not

be allowed to locate are first of all Lodwick. Being the main town in the area with a population of 500,000 and being the centre for trade and commerce, it can not afford to be polluted with toxic chemicals, which will endanger public health. Seaton would also not be a location allowed by the authority. This is due to Seaton being a popular holiday resort and a retirement town. If the firm were situated there less retired residents would move there due to the lower life expectancy, often expected with a firm producing chemicals. Also it makes the site less appealing to holidaymakers. New Berkley is a suitable place for the firm however the local authority would still, most likely disallow it from that location, probably because of the chemical waste endangering the wildlife from the National Park.

Port File would be ideal for the location of a firm producing chemicals, primarily because the firm could excrete its chemical waste into the sea. Port File’s good transporting network, via the sea or by rail enable the firm to transport its chemicals with ease. However, situating the firm by the sea so that it can excrete its waste into the sea will affect the business of the fishing fleet, but the firm will probably say as many other waste producing firms say “there are more fish in the sea.”

A firm that might be situated in Port File is a ship building

firm, most likely because of the proximity to the sea. Also there is a high probability there being a steelworks in Port File, benefiting the Ship building firm because of the closeness to their component suppliers and the steelworks by giving them lots of business.

A firm that might be situated in Seaton is a golf course,

this is an ideal location as it will attract retirees who have lots of spare time and holidaymakers who want golfing trips.

A firm that might be situated in New Berkley is a paper manufacture; this is because of its range of modern factory accommodation and its nearness to the National Park that hosts its raw material.

A firm that might be situated in Lodwick is a car manufacture. This is because of its large population and the fact that it is the centre for trade and commerce. Most business people in this area will commute to work by car, due to the area’s lack of a wide spread railway system.

The British Steelworks is situated at Port Talbot in South

Wales because of its excellent transport communications via the sea and the road. This enables the company to export its products to its customers and assist the company in accessing its component supplier. The lack of other firms nearby gives the opportunity to the Steelworks to have a relatively high price without any competition. The nearby houses indicate a large workforce for the steelworks. The large area also benefits the company giving it the ability to expand.

In the past thirty years the transport communications

will have changed. Larger ships will give the ability to transport more produce to its customers and the road network will have increased. The climate will have changed slightly, for the worst i.e. raining and more fog. The excelled road network will have encouraged some of the labour of the steel works to commute to other jobs in the city. The land on which the steelworks is situated will have decreased in value. The steelworks market will have changed, as will have some government policies.

In my project I have found that many factors affect the location of a business. Many of these factors have changed over recent years due to excelled transport communications. For example nearness to the raw material might not be a necessity due to the increased road network in the surrounding area. The main things that affect the location of a business are markets, raw materials, other firms, transport, labour, communications, climate and government policies. Each one of these factors must be carefully assessed and agreed on before a firm would move sites or establish a new site.

There are various “push”/“pull” factors affecting where a firm locates itself. A “push” factor may be that the company is expanding and needs more land to produce on. A “pull” factor may be that there is higher unemployment rate in a certain area and the firm thinks that it can obtain easy labour. The location of a firm is an important factor in the firms business; it reflects the image of the business and what the business is trying to achieve. These factors may attract and repel customers and consumers away from a business, hopefully for the firm, it a more of an attract attitude.