Access to markets
Businesses need to find a good location for their business. This is because if they fail to find a good location, they won’t attract many customers. The fixed costs have to be paid each month. This includes rent/mortgage, bills and wages. This means that the business is paying money for something that is of no use to them. Relocation and transferring goods to it are costly and not easy. Rent is also expensive and businesses need to make sure that they get it right the first time. All these factors will result in their business failing, causing their investment to go to waste.
There are many factors affecting a business. These include: Transport links 80% of deliveries are made by road. This is also the most common way businesses receive their raw materials. Air and rail transport are also under this category. However, air transport is quick but too expensive and rail transport is cheap but also unreliable in this country. Many Safeway store can be located near a train station but mostly get their deliveries by transport vans. Nearness to markets Safeway stores locate their business near their target market. This will increase their chances of attracting customers and, therefore, increasing sales revenue.
Transport links Safeway stores make sure that their business is easily accessible, both for customers and staff. This is because a deprivation of either factor will cause the business to not run smoothly. Access to markets Some businesses need an awful lot of raw materials. This is called a Bulk Gaining Process. They need to locate near their supplier. An example of this is Vauxhall in Birmingham. Their supplier is across the road. This is because the cost of transporting the raw materials is quite high, as they need a substantial amount.
Cost of land Businesses need to consider how much the land costs where they are going to locate. It makes no sense for a small shop selling toilet tissue to pay 3,000 a month as rent just to get a location in the town center. Rent/mortgage is also a fixed cost. This means that businesses will have to pay these costs whether they make a profit or not. They should also consider the desirability of the area in case they want to sell it/relocate later. The two businesses I am investigating did probably consider this situation and had come to assumption that they will make enough money for the running cost and profit.
Visibility My two businesses are located somewhere people can see it. This will also increase the chances of attracting more customers, therefore increasing sale revenue. It will also help to widen the appeal to their secondary target market. A prime location is at the corner as it has bigger frontage. Competition The tourist shop I am investigating is located near is competition. It will not be wise for a small start-up to locate near big, established businesses that sell the same or similar product. However, this will allow businesses to benefit from economies of scale. Electrical companies usually do this. It gives the business an access to a major customer base and can reduce the cost of deliveries.
Local environment Businesses need to locate in or near their desired environment. Local environment has an effect in consumer physcology. It also determines if the consumer will travel to the business to purchase the required product. A pleasant atmosphere will influence the purchase of goods. Locating in an area of high unemployment is also of no use, as very little people will have disposable income. An area of high crime will also raise the cost of insurance. Banks will also be reluctant to provide loans for companies who want to set up in these areas.
Grants Government or city councils usually provide grants for businesses that will locate in a “run-down area”; areas with high unemployment. It is worthwhile for big manufacturing businesses as this will decrease start up capital and they will have access to a large labour base. Stakeholders Safeway has a number of stakeholders associated to the company, all of whom have a vested interest in the performance and overall running of the organisation. I feel that the four most important stakeholders associated with Safeway are:
1. The customers. 2. The general public. (Community) 4. Shareholders. 5. The management. The customers are by far the most important stakeholders connected to the company. Each customer plays a vital part in the running of Safeway. Apart from the fact that they supply the business, without which Safeway wouldn’t exist, they provide many other contributing factors. For example, they finance for capital, budget and so on.
The general public are the second most influential factor associated to the company. Safeway needs to market and advertise their product – in such a way that it appeals to the public. Providing services to the community/ Awareness of environmental issues. Community Companies increasingly recognise their responsibilities to the communities in which they operate. In the case of Safeway Plc a key point of their strategy is their “Best at fresh” this means that they will work with their suppliers (farmers + fruit etc) in order to promote best practise and subsequently prime produce for Safeway customers.
This degree of teamwork provides employment far beyond the actual stores. Thereby involving communities across the country and beyond with a vested interest in the Safeway brand. On a local basis individual stores get involved in local activities. Sponsorships of a wide variety of projects for hospitals, schools, disabled sports, and student work placements for example a feature in Safeway’s local community activity. Safeway Plc made contributions in excess of 100k in the year 2001, to a wide range of charities.
The last two stakeholders, shareholders and management, don’t hold such an important key to the success of Safeway as the others do. The shareholders are important to some extent, as they are the capital behind Safeway, but could easily want to sell their shares at any minute. Fortunately this is not a major issue because someone else will purchase the shares and come into the company. The management is a similar situation as most people work at their best when they feel secure and content with their pay and conditions. Should an employee not be happy with any aspect of their job and feels it is best if they leave the company then a replacement is found and the company will continue towards its objectives with the minimum amount of disruption.
The Industrial Sectors The Primary Sector The primary sector is concerned with the extraction of raw materials and focuses around the following areas: 1. Mining and quarrying 2. Mineral oil and gas extraction 3. Agriculture, forestry and fishing The primary sector has generally declined since the 1960’s. In 1964 it provided 5.8% of the UK’s total output but by 1999 it produced only 3.8%, of which nearly half was provided by oil and gas extraction. In terms of employment it created 5.1% of all jobs in 1964 with over 1.2 million employed. By 1999 this had fell to just 1.4% of all jobs, just 318 000 people employed.
Agriculture, forestry and fishing has been in steady decline since the 1960’s. By 2000 it contributed less than 2% of the countries GDP (Gross Domestic Product). The Secondary Sector Output from the secondary sector has grown slowly in recent years but its relative share of the GDP has fallen from 40.4% in 1964 to 26.8% by 1999. In 1964 the secondary sector provided around 47% of all employment, 11 million jobs. By 1999 this had fallen below 22%, just under 5 million.
Not all areas have been in decline within the secondary sector. Industries supplying chemicals and electrical equipment have seen output grow while those in traditional manufacturing have experienced a rapid decline falling from 38% employment in 1964, (9 million jobs) to 18% employed in 1999 ( 4 million jobs). The Tertiary Sector In 1964 the tertiary sector accounted for almost 54% of the UK output. By 1999 this had grown to over 69%.
This trend is identified through employment figures. In 1964 tertiary employment stood at 11 million jobs but by 1999 this had grow to 17 million. The major expansion to this sector can be attributed to the growth in the ‘communications’ and ‘finance, insurance and banking’ sectors. The finance industry now accounts for almost 20% of the UK’s output. Beware! There is often talk about a quaternary sector. This is sometimes used to group together the jobs working in the communications and information processing area. This sector has grown with the advances in technology.