What is Location
What is location?
refers to the geographical position of a business,
i.e., where it is sited.
What causes land in cities to be more expensive?
Higher demand and lower supply
What is management preference?
This qualitative factor explains why a founder might locate a business in their hometown, even if another area is cheaper.
This method of reorganizing production involves hiring an external firm to perform non-core activities, often to reduce costs or access specialist expertise.
Outsourcing
To solve rising production costs and declining flexibility, a company adopts this key concept by redesigning its supply chain, experimenting with hybrid models that combine automation, modular outsourcing, and small-batch local production.
creativity
A major reason moving location later is difficult.
High unrecoverable costs
Businesses operating in the _______ sector tend to be located near their customers to ensure convenience.
What is local knowledge?
A business expanding into another country avoids failure by understanding cultural norms, consumer behaviour, and even product sizing standards.
This strategy is no longer used solely for cheap labor; firms today also pursue it to access clusters of innovation, specialized skills, or emerging market knowledge—even though it may increase cultural, logistical, and legal complexity.
offshoring
A firm abandons long-distance offshoring because the environmental impact of transport and non-renewable energy use threatens its ESG goals. This key concept guides the shift toward localized or regionalized production.
sustainability
2 things the location of a business influences:
Any of the three below:
- success
- costs
- ability to attract new customers or employees
Hypermarkets and vehicle manufacturers for instance locate _____ central city areas.
Far away from
What is infrastructure?
A company chooses a site near an international airport and major highways because these non-financial networks help operations run efficiently.
A company adopts this method when quality variations, supply chain unreliability, or brand reputation risks from external suppliers become significant enough to justify higher internal costs and investment in capacity.
insourcing
Employee resistance, new training requirements, and revised workflows are all internal challenges that emerge when a business undergoes this key concept while transitioning from outsourced production to insourced digital manufacturing.
change
What is 1 situation that can lead a business to make a location decision?
Any one of these:
- A new business choosing its first location
- An established business looking for cheaper rent or more space
- A company expanding into new regions or countries
State 2 tools that the government uses to incentive businesses to locate somewhere:
tax allowances, grants, subsidies, low-interest/interest-free loans
The business is avoiding expansion due to insufficient cultural and market understanding.
What qualitative reason are they considering?
Local knowledge?
This modern production shift is increasingly driven by ESG pressures, carbon-intensive global transport, and consumer demand for ethical sourcing—causing firms to reverse earlier offshore decisions despite higher domestic factor costs.
reshoring
A business hesitates to offshore production to a country with weak labor protections, recognizing that lower costs cannot justify potential reputation damage or worker exploitation. This key concept is most directly influencing the decision.
ethics
Who typically decides the decision of location and why?
Entrepreneurs or the board of directors, as the location decision can have profound implications on the profitability and survival of a business. The decision is so important that it is classed as a long-term strategic goal.
What is one example of a type of business that should consider the suitability of land in determining their location, not just the cost of land.
Agricultural businesses: fertilility and climate
Facilities with toxic waste products: far away from populations
The firms are taking advantage of customer traffic created when similar businesses cluster together.
What qualitative reason of location are they using?
What is clustering (comparative shopping)?
A firm experiencing high defect rates from an overseas supplier and facing geopolitical instability is considering four production strategies. The option that maximizes control and reduces supply chain exposure, but also requires the greatest investment in internal capabilities, is this one.
What is local knowledge?
A firm redesigns its global production network using low-emission technologies, partners with innovative local micro-factories, prepares staff for new processes, and ensures fair supplier labour standards. What concepts are being demonstrated here?
all four