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LOCATION
All businesses have to decide where to locate their: <ul><li>factory </li></ul><ul><li>offices </li></ul><ul><li>shops </l...
Businesses need to think about the following factors when deciding where to locate: <ul><li>What type of  product  does it...
Availability of Labour Infrastructure Availability of Capital Government Loans and Grants Distance to Market Component Bus...
Location  costs  might include: Location  benefits  might include: <ul><li>Premises </li></ul><ul><li>Rates </li></ul><ul>...
WHERE DOES THE MONEY COME FROM TO FINANCE A BUSINESS? Sources of Finance Long-term (over 10 years) Medium-term (1-10 years...
Source of Finance – Business Type   Sole Trader Partnership Private Limited Company Public Limited Company Personal Saving...
The Government can influence where a business locates. CENTRAL GOVERNMENT SUPPORT <ul><li>The main central government poli...
LOCAL GOVERNMENT SUPPORT <ul><li>Promoting business is now a major objective of local councils.  The range of benefits on ...
The European Union (EU) can also affect where a business locates.
<ul><li>The EU provides one market of over 320 million potential customers.  Advantages include: </li></ul><ul><li>There a...
GLOBALISATION This has created a  single world wide market place  which is dominated by  multi-national businesses <ul><li...
MULTI-NATIONALS <ul><li>Multi-nationals operate overseas generally in a range of products.  Often their size is a result o...
<ul><li>Multi-nationals bring benefits to both developed and under developed countries by: </li></ul><ul><li>Investing in ...
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Standard Grade Business Management - Business Location

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Standard Grade Business Management - Business Location

  1. 1. LOCATION
  2. 2. All businesses have to decide where to locate their: <ul><li>factory </li></ul><ul><li>offices </li></ul><ul><li>shops </li></ul>The location which a business selects can affect its success or failure . A business which locates successfully can achieve: <ul><li>Higher sales </li></ul><ul><li>Lower costs; and therefore </li></ul><ul><li>Rising profits </li></ul>
  3. 3. Businesses need to think about the following factors when deciding where to locate: <ul><li>What type of product does it plan to produce and sell? </li></ul><ul><li>Is there any competition ? </li></ul><ul><li>What location criteria are relevant for the business activity to be undertaken? </li></ul>A business will fail if it does not address these issues + + Eg – near source of raw materials or specialised work force, availability of specialised workforce; availability of land; distance to market; transport costs and infrastructure; local, national and EU grants, laws and regulations; near to a component business. <ul><li>Are there any potential customers for the product? </li></ul><ul><li>Will the product sell in the proposed market place? </li></ul><ul><li>What are the set up and operational costs ? </li></ul><ul><li>Can it make a profit? </li></ul>+ + + +
  4. 4. Availability of Labour Infrastructure Availability of Capital Government Loans and Grants Distance to Market Component Businesses Factors Influencing Location Health and Safety Source of Raw Material Transport Costs EU Grant Telecommunications Information Costs
  5. 5. Location costs might include: Location benefits might include: <ul><li>Premises </li></ul><ul><li>Rates </li></ul><ul><li>Wages </li></ul><ul><li>Transport Costs </li></ul>Eg cost of renting or buying Eg local council charges Eg different parts of the world have different wage rates Eg cost of bringing in raw materials and of delivering goods to customers <ul><li>Market </li></ul>Eg some areas contain more people and businesses than others <ul><li>Wages </li></ul>Eg some areas have lower wage rates than others <ul><li>Rates </li></ul>Eg some areas charge businesses lower rates <ul><li>Premises </li></ul>Eg some areas have lower land prices and/or can provide land for future development <ul><li>Transport Costs </li></ul>Eg some areas offer access to faster or more convenient transport routes/services <ul><li>Financial Support </li></ul>Eg the local council or the government may offer companies special grants if they locate in certain areas of the country A business will normally only locate in a particular area if the benefits outweigh the costs
  6. 6. WHERE DOES THE MONEY COME FROM TO FINANCE A BUSINESS? Sources of Finance Long-term (over 10 years) Medium-term (1-10 years) Short-term (up to 1 year) Shares Leasing Overdraft Debentures Hire Purchase Trade Credit Loans Loans Factoring Mortgages    
  7. 7. Source of Finance – Business Type   Sole Trader Partnership Private Limited Company Public Limited Company Personal Savings     Ordinary shares     Preference Shares     Debentures     Loans     Mortgage     Leasing     Hire Purchase     Overdraft     Trade Credit     Factoring    
  8. 8. The Government can influence where a business locates. CENTRAL GOVERNMENT SUPPORT <ul><li>The main central government policies which provide public funding to aid depressed areas include: </li></ul><ul><li>Assisted Areas </li></ul><ul><li>Regional Selective Assistance </li></ul><ul><li>Regional Enterprise Grants </li></ul><ul><li>Enterprise Zones </li></ul><ul><li>Urban Development Corporations </li></ul><ul><li>Training and Enterprise Councils </li></ul>
  9. 9. LOCAL GOVERNMENT SUPPORT <ul><li>Promoting business is now a major objective of local councils. The range of benefits on offer to businesses by local councils include: </li></ul><ul><li>Grants for starting up a business </li></ul><ul><li>Grants for research and development </li></ul><ul><li>Job creation grants </li></ul><ul><li>Relocation grants </li></ul><ul><li>Free rent and/or rates </li></ul><ul><li>Business advice (Scottish Enterprise) </li></ul><ul><li>Loans with reduced interest charges </li></ul><ul><li>Help to find finance </li></ul><ul><li>Help to find premises </li></ul>
  10. 10. The European Union (EU) can also affect where a business locates.
  11. 11. <ul><li>The EU provides one market of over 320 million potential customers. Advantages include: </li></ul><ul><li>There are no limits to the number of goods they can sell in member countries; </li></ul><ul><li>There are no customs duties between member countries; </li></ul><ul><li>There is a larger choice of suppliers; </li></ul><ul><li>Competition will increase which should increase efficiency. </li></ul><ul><li>Disadvantages include: </li></ul><ul><li>Language barriers </li></ul><ul><li>Distance problems </li></ul><ul><li>Currency difficulties </li></ul>
  12. 12. GLOBALISATION This has created a single world wide market place which is dominated by multi-national businesses <ul><li>Globalisation is possible because of: </li></ul><ul><li>Developments in communications </li></ul><ul><li>Developments in transportation </li></ul><ul><li>Decline in barriers to trade </li></ul><ul><li>Developing markets </li></ul><ul><li>Pacific economies </li></ul><ul><li>The global market </li></ul>
  13. 13. MULTI-NATIONALS <ul><li>Multi-nationals operate overseas generally in a range of products. Often their size is a result of takeovers and mergers of businesses in other countries. This type of expansion is aimed at controlling: </li></ul><ul><li>Production facilities </li></ul><ul><li>Distribution outlets </li></ul><ul><li>Office space </li></ul><ul><li>Operating in a number of countries allows multi-nationals to: </li></ul><ul><li>Switch production from plant to plant and country to country when profit levels change </li></ul><ul><li>Move into production where cheap labour and materials are available </li></ul><ul><li>Locate where tax advantages can be gained </li></ul>
  14. 14. <ul><li>Multi-nationals bring benefits to both developed and under developed countries by: </li></ul><ul><li>Investing in plant and equipment </li></ul><ul><li>Introducing new technology </li></ul><ul><li>Employing new management techniques </li></ul><ul><li>Creating employment opportunities </li></ul><ul><li>Unfortunately, multi-nationals can also bring: </li></ul><ul><li>Unemployment – to uncompetitive businesses and to businesses they take over by downsizing and making redundancies </li></ul><ul><li>Exploitation – by paying low wages, failing to meet health and safety standards, producing and selling unsuitable products and by failing to train local staff. </li></ul>

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