Choosing a Production Location (DP IB Business Management): Revision Note

Factors influencing the production location

• Choosing a good production location can have significant impacts on a business.

• A range of factors influence the location a business chooses for production

Factors affecting business location

Proximity to the market

• This refers to how close the business is to its target customers

• Being near the market can reduce transport costs and make it easier for customers to access the business

Proximity to labour

• This means being located near areas where skilled and qualified workers are available

• Businesses often choose locations with a strong local workforce to make it easier to hire the right people and run operations efficiently

Proximity to materials

• This refers to how close a business is to the raw materials or supplies it needs

• Being near materials helps reduce transportation costs and ensures a steady supply

Proximity to competitors

• Some businesses choose to locate near competitors to attract the same customer base or to offer something different

• Others may avoid locating near competitors to reduce direct competition

The nature of the business activity

• Different types of businesses have different location needs based on what they do

• For example, a manufacturing plant may need large space and delivery access, while a law firm may need a smaller, more central office

• E.g. A factory needs room for machinery and deliveries, while a law office needs a professional, easy-to-access location

Infrastructure

• This includes transport links and electronic networks like internet connections

• Good transport is essential for businesses that deliver physical goods

• Fast and reliable internet is key for online businesses

• E.g. An online fashion retailer needs a location close to the motorway for quick delivery and fast service, helping it compete in the market