IBBusinessandManagement.

com Summary
Disadvantages to a business of non-optimal location notes

Problem Disadvantages to business

High fixed site costs High break-even level of production

Low profits or even losses
If operating at low-capacity utilisation, unit fixed costs will be high

High variable costs, Low contribution per unit produced or sold

e.g. labour Low profits or even losses
High unit variable costs reduce competitiveness

Low unemployment Problems with recruiting suitable staff

rate Staff turnover likely to be a problem
Pay levels may have to be raised to attract and retain staff

High unemployment Average consumer disposable incomes may be low leading to

rate relatively low demand for income elastic products

Poor transport Raises transport costs for both materials and finished products
infrastructure Relatively inaccessible to customers
Difficult to operate a just-in-time (JIT) stock management system
due to unreliable deliveries

Source: www.IBBusinessandManagement.com