Location decisions

WHERE TO LOCATE THE BUSINESS

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The decision about where to locate is crucial to many businesses. It can affect their sales, costs, profitability and perhaps even their survival. For example, a firm which is located too far away from its market may incur extra transport costs which reduce profits. Why might a company need to make a decision about where to locate?

· New businesses will need to carefully consider where to locate their initial premises.

· Existing businesses may need to expand, but may be unable to do so on their present sites.

· The modernization of a business may involve moving to more up-to-date premises.

· A business aiming to cut its costs might achieve this by re-locating.

· A multinational company aiming to set up a new plant in another country for the first time may evaluate a variety of possible locations worldwide.

There are many factors which will influence a business’s decision about where to locate. It is likely that any location decision will be influenced by a few or many of these factors. When deciding where to locate its premises, a business usually weighs up all potential costs and benefits of setting up in a particular area. This may be carried out with the use of cost-benefit analysis.

Дата добавления: 2014-11-29