Choosing a Production Location (SL IB Business Management)

Proximity to the market

• Refers to the distance between the business location and the target market
   
• Locating near the market reduces transportation costs and increases its accessibility to potential customers

Proximity to labour

•  Refers to the availability of qualified and skilled workers in the area
   
• Businesses often locate in areas with a high concentration of skilled labour to ensure that they have access to the necessary workforce to run their operations efficiently

Proximity to materials

• Refers to the availability of raw materials and supplies needed for the business which will help to minimise transportation costs

Proximity to competitors

• May be desired (or not) to take advantage of a shared customer base or to differentiate themselves by offering unique products or services

The nature of the business activity

• Different types of businesses have different requirements in terms of space, infrastructure, and accessibility
   
• E.g. A manufacturing plant may require a large space for equipment and a loading dock for shipping and receiving goods, while a service business such as a law firm may require less space and more accessible office locations

Infrastructure

• Includes transport and electronic networks that allow for products to be supplied either physically or online
   
• Online businesses rely on a fast and reliable internet connection
   
• Good transport links provided by major trunk roads and efficient rail links are particularly important for businesses that require an effective logistics network
   
• E.g. An online fashion retailer will gain a competitive advantage if it is able to deliver products quickly to customers so the location of its distribution hub is likely to be close to the motorway network