3.2.8+Location


 *  3.2.8 Location decisions **
 * **The location of a manufacturing business **
 * **Location of services **
 * **International Location **


 * Read Ch 24 in the textbook and produce mindmaps to note the various factors affecting location of manufactures, services and MNCs. **
 * The notes below can also be used **

Industrial Location Summary notes This is the decision that a business or an industry makes concerning its geographical placing in a country. There are many factors which influence the precise location of a business or an industry, including: ** - The cost and the availability of land **. Land in an urban area is clearly less abundant (and therefore more expensive) than land in rural locations or on the edge of towns and cities. Therefore it would be advisable, and also more feasible, for a business which requires a large amount of land to locate away from the centre of an urban area. ** - The cost and the availability of labour **. The unemployment rate varies in different areas of the UK, and a business which is labour-intensive may choose to locate near to an area of high unemployment in order to take advantage of the availability of labour at a fairly low wage. ** - Communication links **. Many businesses choose to locate near to motorways, rail links, seaports or airports if they either have a significant amount of raw materials to receive, or a significant number of products to distribute across a wide area of the country. ** - Transport costs/proximity to the market **. Some businesses will locate in certain areas of the country in order to minimise their transportation costs. For example, producers of fast-moving consumer goods (f.m.c.gs) will often have to distribute their products nationwide, and therefore will try to locate as near to the market as possible so their transportation costs are not excessively high. ** - Availability of raw materials **. Some businesses will try to locate near to their suppliers or to the source of their raw materials. For example, businesses which require bulky raw materials, such as timber, will often try to locate near their suppliers so to reduce the lead-time between ordering and receiving the raw materials. ** - Government location incentives **. The UK government has over the past 30 years offered a range of incentives to businesses to locate in depressed areas of the UK, in order to reduce the unemployment rates in those areas by creating jobs. The incentives (such as grants, tax breaks, and reduced rent and rates) are offered both to existing businesses to relocate to the depressed areas, as well as to new businesses which are about to set up. ** Industrial inertia ** refers to the situation when a business or an industry decides to remain in its original location and is very reluctant to relocate, even after the reasons for it locating there in the first place are exhausted. **Possible reasons for this include:** ** 1) ** The cost of moving may be very large. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** 2) ** Strong links with the local community and with other local businesses may have been developed and a move away from there may destroy those links. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** 3) ** Some areas and products have an international reputation which may be difficult to establish if the business were to locate elsewhere (e.g. Scottish whisky). <span style="color: windowtext; font-family: Arial,Helvetica,sans-serif; font-size: 120%;">However, industrial inertia can actually make an area become depressed if that area depends on a particular industry or business for employment and wealth-creation. If the industry goes into decline and no other industries or businesses wish to move to this area, then mass unemployment is created, and many of these unemployed will not be trained to perform any other jobs.
 * <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">When you have finished the mind maps undertake activity 24.4 in the textbook on P 369 **

<span style="color: windowtext; font-family: Arial,Helvetica,sans-serif; font-size: 120%;">International location
<span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** International location ** of industry is also a very important factor in today’s global business environment. As well as the reasons for location mentioned earlier, there are a number of other factors that a business will need to consider before choosing a foreign country in which to locate. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** These factors include: ** <span style="color: windowtext; font-family: Arial,Helvetica,sans-serif; font-size: 120%;">- the language spoken

<span style="color: windowtext; font-family: Arial,Helvetica,sans-serif; font-size: 120%;">- legal differences

<span style="color: windowtext; font-family: Arial,Helvetica,sans-serif; font-size: 120%;">- the economic environment

<span style="color: windowtext; font-family: Arial,Helvetica,sans-serif; font-size: 120%;">- the stability of the political structure. <span style="color: windowtext; font-family: Arial,Helvetica,sans-serif; font-size: 120%;">Over the past 25 years, the UK government has encouraged much foreign investment into the UK from outside Europe - specifically from Japan. These Japanese companies (e.g. Nissan, Sony) create wealth for the UK by providing employment and income to workers, and paying tax to the UK government. They can help to rejuvenate depressed areas and often purchase their supplies and raw materials from other UK businesses. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** The Japanese companies are enticed to locate in the UK through a number of factors: ** <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** 1) ** English is the first foreign language taught in Japan. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** 2) ** Low wage rates in the UK. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** 3) ** Government incentives to locate in the UK (e.g. cheap rent, rates, etc). <span style="font-family: Arial,Helvetica,sans-serif; font-size: 120%;">** 4) ** Gateway for selling goods to other EU countries.