Business Management Unit 5 Chapter 5.4 Location PDF

5.4 LOCATION MTRO IAN M. GUILLEN ORTEGA LOCATION OF PRODUCTION  Businesses consider many factors when choosing a location.  For a physical retailer, one of the most important factors is the amount of foot traffic and the demographics of potential customers in the area.  Retailers that sell ex...

5.4 LOCATION MTRO IAN M. GUILLEN ORTEGA LOCATION OF PRODUCTION  Businesses consider many factors when choosing a location.  For a physical retailer, one of the most important factors is the amount of foot traffic and the demographics of potential customers in the area.  Retailers that sell expensive clothing and accessories, for example, will want to sell in a location where high-income customers are likely to go.  So, it makes sense that many of these retailers would locate near each other, to take advantage of the customers that are already there. THERE ARE MANY REASONS sociocultural factors WHY A BUSINESS technological factors WOULD CHOOSE ONE economic factors LOCATION OVER environmental and ethical ANOTHER, factors INCLUDING: political and legal factors APPLY THE STEPPLE ANALYSIS TO FIND 3 APPROPRIATE LOCATIONS FOR DIFFERENT INDUSTRIES FOR EACH CHARACTERISTIC.  Example: (they need to be more elaborated)  Sociocultural: High-end brands on the most expensive street of the city  Technological: Working from home instead of an office  Economic: Low cost of labor in Mexico/China for manufacturing  Environmental: Low environmental protection or guidelines on a specific country  Ethical: high unemployment region, bringing fair wages and conditions  Political: DT’s decisions on Chinese products  Legal: Tax benefits for an industry on a certain region SOCIOCULTURAL FACTORS  Sociocultural factors relate to the way people live and what they believe and value, including religion, cuisine, family life, demographics, health education and leisure.  These factors will affect what people choose to buy and how they choose to spend their time.  Businesses need to be aware of the current and changing sociocultural context so that they can ensure that their location gives them access to the target market that is most interested in their product.  Locating near the target market with the right sociocultural (demographic) characteristics should improve marketing and reduce costs of transportation. TECHNOLOGICAL FACTORS Access to efficient transport networks allows customers to visit It is common to find businesses stores and suppliers to deliver raw clustering at the intersections of materials. This has the double major roads in areas where cars advantage of increasing potential dominate transport. sales while reducing costs. In city centres, however, While you might think that this infrastructure that supports foot would make those areas less and bicycle traffic may be more attractive to businesses, research important. More and more cities shows that customer access are changing the infrastructure actually improves for businesses within their city centres, making it with such changes, making difficult to drive and easier to walk pedestrian and bicycle-friendly or cycle. areas very attractive to businesses. TECHNOLOGICAL FACTORS Technological changes related to remote working and e-commerce have had a huge impact on the location decisions of businesses. Some businesses no longer need offices, and the COVID-19 pandemic has accelerated the trend towards remote working. Businesses can avoid the high cost of office space if they can adapt to remote working patterns, as Airbnb has done. Technology affects e-commerce location decisions, because orders can be placed from anywhere and can be delivered to anywhere. However, if the business needs to hold stock (inventory), there will be a variety of factors affecting the location of those facilities.