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Basics of production
This is the decision that a business or an industry makes concerning its geographical placing in a
country. There are many factors which influence the precise location of a business or an industry,
The cost and the availability of land. Land in an urban area is clearly less abundant (and
therefore more expensive) than land in rural locations or on the edge of towns and cities.
Therefore it would be advisable, and also more feasible, for a business which requires a
large amount of land to locate away from the center of an urban area.
The cost and the availability of labor. The unemployment rate varies in different areas of
the UK, and a business which is laborintensive may choose to locate near to an area of high
unemployment in order to take advantage of the availability of labor at a fairly low wage.
Communication links. Many businesses choose to locate near to motorways, rail links,
seaports or airports if they either have a significant amount of raw materials to receive, or a
significant number of products to distribute across a wide area of the country.
Transport costs/proximity to the market. Some businesses will locate in certain areas of
the country in order to minimize their transportation costs. For example, producers of
fastmoving consumer goods (f.m.c.gs) will often have to distribute their products
nationwide, and therefore will try to locate as near to the market as possible so their
transportation costs are not excessively high.
Availability of raw materials. Some businesses will try to locate near to their suppliers or
to the source of their raw materials. For example, businesses which require bulky raw
materials, such as timber, will often try to locate near their suppliers so to reduce the
leadtime between ordering and receiving the raw materials.
Government location incentives. The UK government has over the past 30 years offered
a range of incentives to businesses to locate in depressed areas of the UK, in order to
reduce the unemployment rates in those areas by creating jobs. The incentives (such as
grants, tax breaks, and reduced rent and rates) are offered both to existing businesses to
relocate to the depressed areas, as well as to new businesses which are about to set up.
Industrial inertia refers to the situation when a business or an industry decides to remain in its
original location and is very reluctant to relocate, even after the reasons for it locating there in the
first place are exhausted. Possible reasons for this include:
1. The cost of moving may be very large.
2. Strong links with the local community and with other local businesses may have been
developed and a move away from there may destroy those links.
3. Some areas and products have an international reputation which may be difficult to establish
if the business were to locate elsewhere (e.g. Scottish whisky).
However, industrial inertia can actually make an area become depressed if that area depends on a
particular industry or business for employment and wealthcreation. If the industry goes into decline
and no other industries or businesses wish to move to this area, then mass unemployment is created,
and many of these unemployed will not be trained to perform any other jobs.
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International location of industry is also a very important factor in today's global business
environment. As well as the reasons for location mentioned earlier, there are a number of other
factors that a business will need to consider before choosing a foreign country in which to locate.
These factors include:
the language spoken
the economic environment
The stability of the political structure.…read more
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This method of production involves the manufacture of an item being divided into a number of small
tasks. A collection (or 'batch') of items each have one of these tasks completed, and then the batch
moves onto the next manufacturing task.
In other words, several items have the same task performed on each of them and then they move
onto the next task together in a group.
This production method can result in the buildup of large amounts of stock and workinprogress.…read more
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All businesses need to develop longterm strategies, and an important part of this strategy must be
the continual development and launch of new products, or amendments made to existing products.
This is the purpose of research and development (R&D).
R&D can basically be defined as:
'Carrying out extensive scientific research into the product and its design, and then
developing a range of prototypes, each to a slightly different specification.…read more