Factors that may influence a business in its decision upon a location for its operations.

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Factors that may influence a business in its decision upon a location for its operations

There are many factors a business will have to consider.  On the next page is a list of some of the major and influential factors.


There are many factors to consider when locating a new business.  These factors all play an important part in the successful sale of a product or service.  For some firms only a few factors will be important.  Other firms may need to consider and balance a complex mixture of location factors.  One very important factor to consider however is the infrastructure of business site:

1) The business needs very good transport systems for the site.  The most common forms of transport are by road, by rail, by river, and by canal.  For a company that receives a lot of raw materials, proximity to a port would also be helpful.

2) The business needs good communication systems such telephone systems, fax, e-mail, etc.

3) Production is important to a business so a firm needs to know whether there are secondary firms in the area to help deal with waste disposal, repair machinery and to transport the finished good.

Is there labour available?

The supply of labour is another important factor to consider.  The business person will need to consider whether the right kind of skilled, or semi skilled labour is available or grants for retraining if not; What the local wage rates are like; whether the housing school, and leisure facilities will attract and keep labour in the area.  How much government, local authority, and EC aid is available.

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Cost of the site

The firm will need to find out
How long the site will be needed?
Should it be rented or purchased?
Will the site need to be drained and levelled?  
What is the level of rates payable to the local council?
Is there room for expansion?
Are there any risks with the site will this raise the insurance premiums?

Geographical factors

The business needs to locate near water supplies especially paper manufacturers, pharmaceuticals, and electricity generation.
Waste disposal is also important for the business as some firms produce a great deal of waste during production there are various laws, ...

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