Location

The geographical position of a business.

Strategic decision- very important -> If the decision is incorrect it is
very difficult to put right. (sunk cost)
Things that will dictate the choice of location :
- Nature of business
- Nature of product
- Nature of resource
Quantitative factors
Availability + suitability of Land (weather)
Labour
Access to raw materials
Proximity to customers (suppliers)
Government incentives
What
-

business tools can help ?

SWOT
PEST
COST BENEFIT
PESTLE
CASHFLOW FORECAST
BREAKEVEN ANALYSIS
RATIO ANALYSIS
PAYBACK PERIOD
Average rate of return
Net Present Value

Investment
Appraisal

Qualitative factors
- Management preference
- Local knowledge
- Infrastructure
- Political stability + economic factors
- Government restrictions + legislation
- Ethical issues
- Clustering
Potential limitations of relocation
- Relocation costs, e.g : transportation and insurance fees
- Lower morale and higher anxiety caused to the workforce
- Loss of skilled and loyal (but geographically immobile) workers
- The potential need to find new customers and suppliers
- Loss of strong links with the existing local community
- Potential damage to corporate image (if the business is seen
to value profits over its people)

Redundancy payments to retrenched employees

Problems encountered during the transition phase whilst
adjusting to the new location