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2. LOCATION DECISIONS
• Owners need to decide a location for their firm to operate in, at the time of setting
up, when it needs to expand operations, and when the current location proves
unsatisfactory for some reason. Location is important because it can affect the firm’s
costs, profits, efficiency and the market base it reaches out to.

5. Activity 20.1 answers.
a)Factors: market, availability of water,
raw materials, transport and
communication, availability of skilled
labour, power.
b)Raw materials or availability of water are
likely to be the most important to the location
decision.

8. Activity 20.2 Answers.
a) and b)
Electrician, discussion of:
needs to be near to local customers; personal preference of
owner; rent/taxes on premises; possibly availability of labour;
competition from other electricians.
Computer software firm, discussion of:
personal preference of owners; customers do not need direct
contact; availability of labour; rent/taxes on premises; possibly
technology.
Scuba training centre, discussion of:
needs direct contact with customers; needs to be sited near
suitable dive sites where the customers will go; near to other
businesses, such as in holiday resorts; climate; rent/taxes on
premises; personal preference of owners.

12. Activity20.3
a) Yourownanswer.
b) Theadditionalinformationmightberentoftheshops,taxestopay,
male/femaleratio,andcompetition.

15. The role of legal controls on location decisions
:
Main reasons Governments influences location
decisions
 To encourage businesses to set up and
expand in areas of high unemployment
and under-development.
 To discourage firms from setting in areas
of that are overcrowded or renowned for
natural beauty.
Types of measures to regulate
location
• Grants and subsidies can be given
to businesses that set up in such
areas.
• . Planning restrictions/regulations
can be put into place to do so

17. Activity 20.5
a) Local community and residents; suppliers; customers; government; workers.
b) Local residents: likely to oppose danger from new plant and extra traffic it may cause.
Suppliers: will support it as it could lead to additional orders from DEF.
Workers: likely to support it as there should be additional chances of
employment.
Customers: likely to support it as it may lead to lower prices if the plant is
efficient.
Government: will need to consider all of the wider employment and
environmental issues before deciding.
a) Three reasons:
 May wish to encourage creation of new jobs;
 May want to see additional exports from the country;
 May wish to control the exact location and method of manufacture to protect the environment.