Factors to Consider for Choosing Business Location - Book Report/Review Example

Factors to Consider for Choosing Business Location The selection of appropriate and suitable business location is very critical and tough decision for the businesses because any mistake made in location selection could strongly affect the progression of the business whereas the selection of appropriate location significantly contributes towards the business success. There are certain important factors that have to be kept in mind while selecting the business location because this strategic decision has the potential to determine the future dimensions of the entire business activities (Goldstein, p60) It is not possible to initiate or run a business without deciding and setting a location even if there are few people involved in the business. The key issues involved in the selection of the business location include the consideration of business type and cost that the business could afford to spend for getting the location. Along with budget and business’s requirement there are several other important factors like availability of labours, quick access to related markers, access of means of communication, government assistance, environmental stability and expected time to retain the business at that place. The important factors to be considered while selecting the business are discussed below in detail. Location Budget Usually there are several suitable options for locating business available however it is not possible for all the businesses to attain most suitable business because they also have to keep in view their budget for location. There is usually specific among decided in the business budget that could be spend to cover the cost of location and the business has to choose the location keeping in view its cost. All the suitable locations must be listed out according to their cost and then the company has to decide which location they could afford in their budget and it is also suitable for them keeping in view the business activities and availability of labour, communication and transportation means (Roger, p43). Sometimes, the businesses have to expand their budgets to get some space in the prestigious business place because they have to built their brand name and corporate image by occupying some space in the business class where their competitors exist. They have to spend more money to show their presence in the business community otherwise they would not be able to gain the required exposure and attention from the business world and related people. Type of Business Activity At first the company has to determine the type of business activities to be conducted from that location and depending upon the activities’ type the location has to be selected. If the business deals with the customer directly then it must be at the centre of the city whereas if it is manufacturing unit then the industrial areas would be better choice for them. The company has to consider the suitability of location with the business activity to avoid any environmental or workforce availability problem. The retail businesses are usually set up in the residential or near the residential areas where the customer can come easily walking or driving shortly (Goldstein, p60). The malls and shopping centres are also suitable locations for the retail businesses. If the business requires dealing with the foreign delegations and experts then it is better to select the location at some central point of the city so that the people could easily come to the office. If business requires dealing with the local manufacturers than the place near the industrial area would be more suitable for the business. Competitors The location selection decision is also influenced from the information about the competitors of the business. In most of the situations, operating the businesses near to the competitors is regarded beneficial like in the retail business because the customers could have choice of selection in front of them. If the retailer is not present in the marketplace along with the competitors then the customer might not know about the option of buying the same type of product from them. The products specific shopping centres like gold soaks, cloths markets and jewellery centres are examples of the business location that are selected keeping in view the presence of the competitors (Roger, p43). At these locations the businesses could easily attract the potential customers and could inform them about the availability of same category of products. When the customers come in the market place they must know about the availability of variety of products and services so that they can compare the product value and make their decision. However, it would not be possible for the customers to know about the product and make decision in its favour (Bruce, 74). Communication Infrastructure The availability of required communication sources at the business place is very important. While selecting the location it is critical to consider that the information and communication infrastructure of the place is up to date and complying with the requirement of the business. Almost all the businesses necessarily require communication means like telephone and internet etc. Hence, it is important to check the adequacy of communication infrastructure of the area before choosing it as business location. Now a days, it has become critical to have access to internet and other means of advances communication for carrying the business activities. The location must be selected after assuring that it is under the coverage area of major mobile phone companies and all the internet based services could be easily used from this location. Transportation Infrastructure The transportation infrastructure is another important factor to consider for selection of the business location. It includes different means of transport like air, rail and road. The area must be easily connected to the other parts of the city, country and world via these transportation means. Especially, the business dealing in import export, marketing and direct sales require easy access of transportation means to run the business activities (Hoover, p165). The connection of the business with the outer world is very important. If the business deals locally then the road transport should be easily accessible however, if the business have branches across the country and in other countries than the railways and air transport would also be easily accessible. The transport would also be easily accessible for the labour and staff members so that they could easily reach the office without facing difficulty on the daily basis. Labour Competent and skilled employees play vital role in the success of the business. The location must be selected keeping in view that from that place the firm would be able to have access to a reliable and skilled pool of staff. The labour intensive businesses usually locate at the areas with traditionally low wages whereas the corporates requiring high levelled qualified people usually locate them at the business centres of the cities. The manufacturing companies are usually set up in the areas where the semi-skilled and low paid labour could be employed easily. The cosporate offices usually need highly qualified workforce for which any location at the center of the city would be suitable selection for the business (Bruce, 74). Customer and Population The target customers of the business must be identified before the selection of the business location so that areas heavy populated with that specific type of customers could be selected for the business. For instance, if the business deals in the direct sales of everyday use consumer products then it is better to select the areas near the residential localities to make it easy for the staff to access the people and carry on their job. The population characteristics of the location must be analysed and matched with the business requirement to make the right decision for business location. The characteristics of the potential customers must also be define before selecting the location. If the product is high cost luxury product than its retail outlet must be chosen near the localities of high income population whereas the consumer products of medium prices could be located in the residential areas of the middle income population or in the shopping malls where the people of middle class commonly come for shopping. The product category and its price also determines the selection of the location for the retail outlet (Carleton, p83). Government Assistance There are different business areas set up in different cities are government assisted area, free zone and business bay etc. that indicate the availability of government assistance for the businesses. If the business requires the assistance of the business like loans and business grants etc. then these areas should be considered to avail the benefits of the government. There are also some areas where the governments have made different visa and work permit related policies specially to encourage different types of business activities. These areas could also be selected if the business has to care of the issues like business taxes, visas and work permit policies etc. (Carleton, p83) Zoning and Laws The rules of the country and the trading authorities have also to be kept in view while selecting the business location. There are some areas where the trading rules are stricter or there are some restrictions about some type of business activities due to environmental, social or economic factors. The business must not be set up in the areas where there are chances of barriers in later stage due to rules restrictions and laws (Hoover, p165). Some zones also pose certain specific taxes upon the business so these must be kept in view that they would be able to pay those taxes and could comply with those rules and regulations that must be followed by locating in that area. If it is found that the business could not easily follow the rules and could not comply with the taxes and duties structure then it must not be chosen as the business location to avoid problems in the later stages. There are also some restrictions of sizes of business signs etc. that also have to be considered at the initial stage (Carleton, p83). Home-Based Business The trend of home based business is getting momentum however, it is also a fact that home based business is not meant for everyone. If someone wants to start the business on small scale from his home even then he has to look towards the rules of the state. There are usually laws that prohibit the commercial activities in the residential areas, so selecting home for business also requires study of rules and laws of the state and related authorities. Selecting home as the business location is a convenient and low cost start of the business that suits certain types of business activities. However, this is suitable for small scale businesses only and in long run home based businesses could not be continued easily and any expansion will need setting the business at some purely business location. Product Dependency upon Location The dependency of product upon the location also makes difference in the selection of the location for the business. There are some products that must be places near the industrial areas like raw material and manufacturing pieces etc. For such products, the location must be selected near the factories and manufacturing plants so that the products could be sold to the relevant manufacturers easily. Similarly, if the product poses some threats to the public safety then it must be placed away from the residential and populated areas to avoid any danger (Carleton, p83). The retail consumer products are usually places near the residential areas and shopping areas. It implies the dependency of product upon the location is also considered while choosing the location for businesses. If the product depends upon the supply of raw material or other by products then the location should be chosen near the areas where the supplied could be accessed easily (Hoover, p165). The above discussion unveils that there are several important factors that must be kept in consideration before selecting the business location. All of these factors possess great importance for the success of the business and neglecting any of these factors could strongly affect the success of the business. The nature of the business, budget and type of the product could be regarded as the critical factor for selecting business location. Location is one of the most important factors behind the success of the businesses and at the same time it is also among the factors that could contribute towards the failure of any business. Work Cited Bruce N. Wardrep (1995). "Factors Which Play Major Roles in Location Decisions," Industrial Development, July/August, pp. 73-74. D. Carleton (1993), "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," Review of Economics and Statistics, 65: 440-49. Edgar M. Hoover, (2001). The Location of Economic Activity, New York: McGraw-Hill Mark L. Goldstein. (1999) "Choosing the Right Site," Industry Week, 15 April, p. 57. Roger W. Schmenner (2000). Making Business Location Decisions, Englewood Cliffs, NJ: Prentice-Hall Read More