Decisions on Location 

Proximity to the Market 

The term market refers to the customers and consumers of a company. Takeaways, corner shops, clothing stores, pop-up food enterprises, and hairdressers all benefit from being close to their target clientele. If these firms were not close to their target market, they would lose sales since they would be difficult to reach. Other businesses, such as online design companies, garment manufacturers, and automobile manufacturers, do not place a premium on closeness to their target consumer. This is due to the fact that internet retailers and automobile manufacturers can sell their products almost everywhere and can usually deliver to the customer’s home or a local car dealership. 

Proximity to Labour 

The term “labour” refers to persons who work for a company or who might work for it in the future. For most businesses, access to high-quality labour or a place to which employees are willing to go is important. 

Businesses must ensure that they are located in an area where people with the necessary abilities are available. In general, a business would only need to be placed near any populated location to be able to hire personnel for occupations with low skill requirements. Businesses may need to be placed near big cities, university towns, or other areas that attract more highly-skilled workers for occupations that need a high level of skill, such as design engineer, computer scientist, or lawyer. 

Proximity to Materials 

For some products, closeness to the raw materials is essential for cost savings. Other items benefit from being close to the market and having the raw materials transported further. 

It makes sense for a firm to be placed near its market for bulk-gaining products, where the final product is larger than the raw materials used to produce it (e.g., a bike), so that it does not have to transport the finished product very far. In this case, transporting raw materials is less expensive than transporting the finished product. 

Proximity to Competitors 

Many companies choose to be positioned far away from their competitors in order to gain access to more clients without having to compete with them. This works exceptionally well for companies such as gas stations, corner stores, and barbershops. Customers are only likely to visit one of these sorts 

of businesses, frequently the one nearest to their house or in the most convenient location, hence these firms prefer to be far away from competitors. 

Other firms may find that being close to their competition is beneficial to their success. Car dealerships and clothes stores are two examples of businesses that are frequently found in close proximity to one another. 

Customers are likely to shop around when purchasing a car or item of clothes, thus these firms are delighted to be close to their rivals. Due to their proximity to competitors, these firms are more likely to be considered by customers. The fact that they are so far apart could limit their sales.

The Nature of Business Activity 

➔ Services 

➔ Office-Based Business 

➔ Manufacturing and processing 

➔ Agriculture 

The Impact of the Internet on Location Decision 

Instead of travelling to stores, many individuals are turning to the internet to shop. E-commerce has exploded in popularity, and this has had a significant impact on business location. Because of the growth of internet businesses, many entrepreneurs now have a lot more options when it comes to choosing a location. This means that shops, for example, can serve national markets while operating at locations far from where their actual customers are. For example, an online clothing company may serve a national market from a warehouse along a highway. 

Influence of Legal Controls and Trade blocs on Location 

Legal Controls – Governments, both local and national, may try to influence location decisions for several reasons such as to avoid congestion, minimise the impact businesses might have on local communities, to encourage manufactures to locate where unemployment is high, and attract foreign manufactures into the country. 

Trade Blocs – Group of countries situated in the same region that together enjoy trade free of barriers.