opeational strategies: location


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  • Created by: Natasha
  • Created on: 14-01-10 16:09

Operational strategies: location

the main factors influencing bus location:

  • technology
  • cost of factors of production
  • infrastructure
  • qualitative factors

factors influencing location decision involving expansion and/or relocation:

  • resources
  • market
  • government intervention
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industrial inertia - is another factor that can influence location. once established, firms may be reluctant to relocate elsewhere. one reason for this is that established firms can benefit from external economies of scale, which are:

  • a labour supply with the skills needed by firms in that industry
  • specialists training facilities in the region
  • suppliers and customer based locally
  • an infrastructure that is geared towards the needs of that industry, such as specialist transport facilties

main external diseconomies of scale:

  • congestion
  • pollution
  • shortages of resources

other factors to consider if relocating:

  • loss of skills developed in existing workforce
  • lower morale and productivity
  • the break up of working groups
  • findings new customers and suppliers
  • cost of relocation
  • redundancy payments
  • potential damage to firms image
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methods of making location decision

  • investment appraisal - to see if a location decision provides a quick payment, yields a high average rate of return percentages or gives a positive net present value
  • qualitative factors
    • accessibility to lesiure facilities
    • quality of life
    • convenience of access to other places
    • geographical attractiveness

benefits of optimal location

  • improving competiveness
  • providing a USP
  • increasing access to customers
  • increasing flexibilty
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multi site locations

+ lower costs

+ improved market focus

+ avoidance of trade barriers

+ increased flexibility

+ overcoming cultural barriers

+ regional specialisation


- increased unit costs

- increased risk

- loss of control

- cultural differences

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issues relating to international location

  • global market
  • avoidance of trade barriers
  • cost reduction
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