Where to locate a business Cambridge IGCSE Business Studies (9–1) revision
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In plain words
A steelworks wants to be near its iron ore and a port. A café wants to be where people walk past. An online shop can be almost anywhere with a good road and cheap rent.
The right place depends on what the business does, and getting it wrong is expensive to undo.
5 things to know
- Manufacturing businesses consider: nearness to raw materials and to their market, transport links, the availability, skills and cost of labour, the cost of land, and government grants.
- Service and retail businesses consider: nearness to customers, how many people pass by, the rent, parking and access, and where competitors are.
- Choosing a country: wage costs, the size of the market, trade barriers and membership of trading blocs, exchange rates, taxes and grants, and political stability.
- Legal controls restrict location: planning permission is needed, and some areas are closed to industry to protect people and the environment.
- The internet has weakened the pull of the customer: an e-commerce business needs a warehouse and delivery links, not a shop in the high street.
Tips and tricks
- Fit the factor to the business. "Near raw materials" matters to a cement works, not to a hairdresser.
- Being near competitors can help a shop: customers come to an area where they can compare. It is not always something to avoid.
It lands in your notebook with its questions as flashcards.
Where to locate a business: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
Which factor matters most to a business selling fresh sandwiches at lunchtime?
People buy lunch close to where they work.
Why might a manufacturer of heavy bricks locate near its customers?
Transport costs for heavy, bulky goods are high.
How do legal controls affect location decisions?
Permission may be refused in some areas.
Which is a reason to locate a factory inside a trading bloc?
Goods made inside the bloc move freely between its members.
How has the internet changed location decisions for retailers?
Online orders can be delivered from anywhere.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
3 questions, 8 marks. Write your answers on paper, then check them.
Where to locate a business
Cambridge IGCSE Business Studies (9–1) 0986 · 8 marks · papermunch.org
Name ______________________________ Date ______________
State two factors a manufacturing business would consider when choosing a location.[2]
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Any two of: nearness to raw materials, nearness to the market, transport links, availability and cost of labour, cost of land, government grants.
Explain two factors a clothes shop should consider when deciding where to locate.[3]
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It needs to be where many potential customers pass, such as a shopping centre, to get enough sales. It must also weigh that against the rent, which is highest in the busiest places.
Explain why a business might locate a new factory in another country.[3]
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Wages or other costs may be lower there, which reduces the cost of production. Producing inside the country may also avoid tariffs on imports and put the factory close to a large new market.
Answers: Where to locate a business
- 1. Any two of: nearness to raw materials, nearness to the market, transport links, availability and cost of labour, cost of land, government grants.
- 2. It needs to be where many potential customers pass, such as a shopping centre, to get enough sales. It must also weigh that against the rent, which is highest in the busiest places.
- 3. Wages or other costs may be lower there, which reduces the cost of production. Producing inside the country may also avoid tariffs on imports and put the factory close to a large new market.