Factors that affect the location of a business

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Many factors will have influenced where a firm is located. These factors have changed in relative importance in recent years; for example, the quality of modern-day transport and communications means that it is less important nowadays for a firm to be based either near the source of its raw materials or very close to the market for its finished products. Land and the Site It is often said that there is no perfect for a factory, there is always room for improvement. Rent is obviously an important factor but first the company has to consider the new premises, whether the building is correct type or it is large enough. A small manufacture will need 60% to 70% of the floor space for production, 20% for storage and 10% to 15% for offices. The site also must have easy access for lorries and the privilege of allowing lorries to turn easily on the site and for staff and visitors to park their cars outside.

Labour Owners of a firm will be encouraged to locate it where there is an available, adequately skilled workforce. The business- person will need to consider whether the right kind of skilled or semi-skilled labour is available, or grants for retraining are available, what the local wage rates are like and whether the housing, school and leisure facilities will attract and keep labour in the area. Raw Materials Nearness to sources of raw materials is still important, but much less so important than it used to be. New technology and improved communications by road, rail, air and sea have changed the pattern of modern industry. Modern manufactures, apart from those who need heavy cumbersome raw materials, have a much greater freedom of choice as where to locate their business. To save on transport costs, they may set up near a major supplier of raw materials; but there is less need to do so of there are good motorway and railway connections.

Market Nearness to markets is more important than nearness to the raw material. Nearness to a market is more important in the services sector than in manufacturing. Even this factor is less important that it used to be. It is never easy to find the correct site. Often one large company will pick an area that is highly adequate and then other large firms will follow, i.e. Silicon Valley. Enterprise Companies will prefer to move to an area where not very many if any, companies are producing the same genre of product. This is because the companies do not want much competition so they can have relatively high prices for their product. Also without much competition there will be less need to take risks.

Government The government can offer financial incentives to business people to move to certain areas. The government can also offer these incentives to encourage firms to be set up in particular regions of the country; typically regions which have suffered high levels of unemployment due to the run-down of their traditional industries (e.g. the North East and Shipbuilding) The best location for the steelworks is Port File. This is because of the good transport links; the steel could be transported to the customer via the sea or the railway. Also there is a coalfield near by which will fuel the furnace to melt the steel.

Port File again is the ideal location for a firm concerned with freezing and processing fresh fish. This is due to its excellent transport links, enabling the fish to be transported to the customer and consumer. Also the close proximity to the sea aids the firm by presenting a close raw material. A light engineering firm requiring a large, flat site and good road communications to obtain its components and to transport its finished products would be preferable situated in New Berkley. This is because New Berkley has several industrial estates with a range of modern factory accommodation. Also New Berkley has relatively good road communications, assisting the firm to obtain its components and to transport its finished goods.

Lodwick would be the best location for a firm offering a range of personal financial services. It has the largest population of the four locations, giving the firm much more business. Also, as Lodwick is the centre of trade more business people will need more financial advice. A DIY hypermarket would be best located in New Berkley. Being the closet to the raw material from the National Park of the four is a large advantage.

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