AS Business Resource

1. Do Now:
Innovation Re-cap
1. What is meant by the term
innovation?
5 minutes
2. Why are patents often associated
with investment in R&D?
3. Explain one benefit of investment in
R&D.
4. If R&D is high risk then why do firms
undertake it?
End

2. Operational Strategies: Location

3. Learning Objectives
By the end of the lesson you should be able to:
1. Understand the importance of an optimal location to the
success of a business.
2. Apply quantitative and qualitative decisions-making techniques
when making location decisions.
3. Analyse and evaluate the advantages and disadvantages of
multisite locations.
4. Analyse and evaluate important issues relating to international
location.

4. What is meant by Optimal Location?
Optimal location – a business location that
gives the best combination of quantitative a
qualitative factors.
Choosing the right location has significant
effects on functional areas, profitability and
chances of success.
Three key characteristics:
Strategic in nature
Difficult to reverse
Managed by senior leaders/ members of staff

5. What is the impact of location on the
following?
Low
High variable costs unemployment
Close to High fixed costs Rural area
competitors
Minimum Wage

6. Quantitative or Qualitative methods
of deciding upon location
What is meant by Quantitative and
Qualitative Factors?
Quantitative Factors – These are
measureable on financial terms and
will have a direct impact on either the
costs of a site, revenue from it or
profitability.
Qualitative Factors – Non-
measureable factors that may
influence business decisions.

7. Westfield Shopping Centre
Choose and one
qualitative and
one quantitative
reason why
Westfield located
in West London.
Justify your
answer.

8. Sellafield Nuclear Power Station
Choose and one
qualitative and
one quantitative
reason why
Sellafield located
in Cumbria.
Justify your
answer.

9. Primark Production
Choose and one
qualitative and
one quantitative
reason why
Primark had
chosen to
produce in other
Primark – countries such as
ethical or China and India.
unethical
practice?
Justify your
answer.

10. What quantitative techniques can also be
used assist in the location decision ?
Profit Estimates Investment Break-even Analysis
Firm may compare Appraisal Calculating the break-
even point will tell a firm
estimated revenue and Location decisions will how much it needs to
costs for each location. involve substantial produce and sell in order
capital investment. to avoid making a loss.
Therefore Payback, ARR
Complete the Profit and NPV can be used.
Estimates task in your Use the break-even point
formula to decide if Site C
textbook (P105) Use investment or Site D is most viable
appraisal techniques to (P106).
Q1 and Q2 decide if Site X or Site Y
is most viable (P105). Q1, Q2 and Q3.

11. Multisite Locations
This is when a business
operates from more than one
location.
List as many multisite
businesses that you can think
of and note what sector they
operate in…
2 minutes

12. What are the advantages and
disadvantages of multisite locations?
Advantages Disadvantages
Convenient for customers. Co-ordination problems.
Delegation of tasks from If branches or stores are
too close to each other
HO.
could be risk of
competition.
Cost advantages of set-up
in other countries. Lack of control from HO.

13. International Location Decisions
One of the main features of
globalisation is the growing
trend for businesses to
relocate completely to
another country or set up new
operating bases abroad.
Write down 3 reasons why a
business may decide to do
this….

14. International Location Decisions
Access to
growing markets
Benefits from greater Minimise impact
economies of scale of exchange rates
Off-shoring Government
incentives
Avoid trade barriers

15. International Location Decisions
Occupation Salary in India % of UK salary
Call centre operator 90p to £1.25 per hour 13-20%
Top law graduate £4,700 per year 11-14%
Farm worker £500 per year 5%

16. What are the potential problems of
international location?
1. Language and cultural differences:
E.g. - Working week, public holidays etc
2. Economic and political stability:
Firms will choose countries with history of stability.
3. Impact on public image:
Unethical practices such as child labour.
4. Diseconomies of scale:
Loss of co-ordination, control, communication.

17. Re-cap Learning Objectives
You should now be able to:
1. Understand the importance of an optimal location to the
success of a business.
2. Apply quantitative and qualitative decisions-making techniques
when making location decisions.
3. Analyse and evaluate the advantages and disadvantages of
multisite locations.
4. Analyse and evaluate important issues relating to international
location.