Competitiveness of a Location - Essay Example

Running header: Competitiveness of a location Student’s name: Name of institution: Instructor’s name: Course code: Date of submission: Competitiveness of a location Introduction In business, the competitiveness of a location is a comparative concept about the ability if a location, either a city or a region, to attract investors to undertake business ventures in that particular location (Almond & Ferner 2006). Competitiveness of a location has to do with its attractiveness to potential local businesses and multinationals. Location is one of the key factors to consider in the setting up of any business. It is one of the 7 basic Ps of marketing that is discussed under ‘place’. The term location basically refers to the point where customers receive the products and services being offered by a particular business (Bernard & Jensen 1999). This essay will assess the importance of competitiveness of a location (i.e. city or region) for the attraction of foreign multinationals into the United Kingdom. Meaning of location The term location may basically be defined as a specific point or position in the physical space of the universe. Generally, the term may be used in reference to the geographical site that a business is found (Bhagwati 2004). In business, location has to do with the point where the customers and the business interact. Business location refers to the point where a business offers its products and services to the customers. As mentioned above, business location is one of the key factors that determines the survival and profitability of a business (Brakman, Garretsen & Marrewijk 2001). Businesses have to choose their locations wisely by considering a number of factors such as the competitiveness of a particular location. Location is a major factor to be considered when starting a business or investment because it will determine the success or failure of that business. If a business is not sited or located at the best possible place, it will not have the ability to attract and retain viable customers. A location may either be a city or a particular region within a given area (Buckley & Casson 1998). Meaning of competitiveness of a location Competitiveness of a business location has to do with how attractive or not a business location is. A location can either be a city or a region. It may have certain attractive features such as a large customer base, less competition from other businesses, good infrastructural network such as the availability of good roads, electricity supply, water, transport network and communication channels among many other factors (Dunning 1993). It is these factors that can either attract or discourage a business from being set up at a particular place. When a location has several features that are highly attractive for setting up and operating a business, then the location can be said to be highly competitive. If a location does not have a lot of factors such as the ones mentioned above that may attract a business, then the location cannot be said to be competitive (Conyon, Girma, Thompson & Wright 2002). Importance of the competitiveness of a location Competitive business locations are those that have the ability to attract businesses of various kinds to start operating on them. Competitiveness of a location has to do with the attractive features that a location has which will provide an ideal business environment. The competitiveness of a location is important because it will determine whether or not businesses choose to operate in that location (Bhagwati 2004). The competitiveness of a location plays a major role in the attraction of multinational corporations in the United Kingdom. It is the competitiveness of a location that will determine whether multinationals choose to invest in the United Kingdom or not. It is therefore up to the administration to ensure that most locations are made favorable for business so as to attract multinationals which bring a lot of foreign direct investments into the region (Thompson 2004). Competitiveness of locations in the United Kingdom The main rational for many regions to attract foreign investments is because of the advantages that are realized by the host country. These include intangible assets that are known to increase the productivity of these countries. There have been numerous recent developments and changes that have occurred in international trade theory (Bhagwati 2004). One of these developments is the improved competitiveness of various locations which is seen as a reflection of the availability of resources in these particular locations. Contemporary patterns of world trade and contemporary theories of trade dictate that location plays a key role in the success of a business (Conyon, Girma, Thompson & Wright 2002). International trade may be explained as the exchange of services and goods across borders. Contrary to local or domestic trade, international trade involves the development of exports and imports because different countries jointly participate in trade and other commercial activities (Bhagwati 2004). The factors that would influence domestic investors to invest in a particular region are not necessarily the same factors that would influence the decisions made by multinationals to invest in a particular city or region (Navaretti & Venables 2004). The resources available in the United Kingdom will determine whether multinational corporations choose to invest in a particular area or not. These resources could be human resources such as the availability of human labor, natural resources such as the availability of raw materials for production and material resources such as the availability of capital. Other resources could include intangible factors such as the levels of technology of a given area. Several locations across the United Kingdom have competitive advantage over others. These advantages arise from the availability of resources that one location has and another does not (Thompson 2004). For instance, the locations in the United Kingdom that are more technologically advanced than other attract more foreign multinationals that those cities that have lower levels of technological advancements (Conyon, Girma, Thompson & Wright 2002). This can be illustrated by examining two very contrasting cities in the United Kingdom, namely, London and St Davids. The city of London is much more technologically advanced than the city of St Davids. This is evident in levels of infrastructural developments, industrial developments and many other forms of development. That is why London has larger number of foreign businesses that operate in it than compared to St Davids (Pitelis & Sugden 2000). Another factor that can be used to determine the competitiveness of locations in the United Kingdom is the population of cities. Cities that are more populated have been seen to attract more multinational corporations than those cities that are not densely populated. Population census reports of the United Kingdom show that the cities that have large number of people such as London, Birmingham and Leeds have a larger number of multinational investments compared to cities with very little populations such as Truro, Ely, Wells and St Davids (Navaretti & Venables 2004). This can be attributed to a number of reasons. First, a large number of people in a given area can be interpreted to mean that multinational corporations have access to sufficient labor and manpower for their businesses. This is because the people located in these cities may be provided with employment opportunities at these multinational corporations (Frenz & Letto 2003). Both the people and the multinational corporations are set to benefit from such arrangements. Second, a large population of people also means that multinational corporations that operate in these locations will have readily available customers to consume their products and services (Conyon, Girma, Thompson & Wright 2002). Locations with more number of people have therefore been found to be more competitive and attractive to multinational corporations who wish to open up their businesses in the United Kingdom. The main factors that have been identified for this attractiveness and competiveness of locations are not limited to population. Huge populations are advantageous because they ensure that customers are available and also aid in the provision of adequate labor for multinational corporations (Frenz & Letto 2003). Other factors that have been seen to make cities in the United Kingdom more competitive than others include the levels of development. Development may be discussed in terms of technological, infrastructural or industrial terms. In the United Kingdom, there are cities that are more developed than other in terms of technology, industries and infrastructure. There are both rural and urban cities which have varied levels of development (Thompson 2004). Examples of urban cities in the United Kingdom include London, Birmingham, Leeds, Glasgow, Sheffield, Bradford, Edinburg, Liverpool, Manchester, Bristol and Wakefield among others. A census report reveals that these cities are also the most populated in the United Kingdom in the order in which they appear above. Most of these cities have more advanced levels of technology compared to other less populated and developed cities such as Ely and Ripon. The number of industrial activities in the developed and highly populated cities supersedes those in the less developed cities (Navaretti & Venables 2004). The information above shows that there are cities which are more attractive to multinational corporations than others. This is what is referred to as the competitiveness of a location. The factors that make a city of location more competitive than others include population, infrastructural development, levels of technology and industrial developments among others (Bhagwati 2004). It is therefore evident that locations or cities that have access to more resources than others have a competitive advantage over the rest when it comes to being selected as locations for business. Those cities that are less developed and have fewer resources are less likely to attract multinational companies. This is because multinational companies mostly choose to operate in regions or cities that have favorable conditions such as high levels of technology, availability of adequate manpower, availability of customers and favorable business laws among other reasons (Marrewijk 2002). An analysis of large multinational companies in the United Kingdom shows that most of them are located in large and busy cities. This is because the large and busy cities are more convenient in terms of customers and labor force. These cities also have access to the latest technologies that are necessary for these multinationals to flourish. Cities such as London are known to host a huge number of multinational corporations, both of British and non-British origin (Harris & Robinson 2002). For example, a company such as GlaxoSmithKline has its headquarters in London. GlaxoSmithKline is the third largest global pharmaceutical and consumer healthcare company in the world. The company chose to operate in London as its headquarters because of the availability of resources that the city of London has, compared to other cities. London has a lot of customers and a huge population that will provide both professional and manual labor necessary for the operations of this firm (Frenz & Letto 2003). In fact, London is the most populated city in the United Kingdom, with the latest population census results revealing that it has more than 7.2 million people. This makes it a very favorable condition for the company to thrive. Such a population means that any company is more likely to have a lot of customers as long as it offers goods and services that satisfy the needs of these people (Fujita, Krugman & Venables 1999). The above factors show that other multinational corporations will be attracted to various locations across the United Kingdom for the same reasons. Multinational companies will target cities that offer greater opportunities for them to thrive. Across the United Kingdom, scales of economies, geography, factor endowments and technology are among the key factors that determine the location advantages. If location factors are ignored, multinationals may be faced with drastic effects because location of a business determines whether the business will be effective or not. Good locations not only raise the chances of businesses having customers and workers but also variety, market access and proximity (Frenz & Letto 2003). Conclusion In conclusion, it is clear that cities which have readily available resources on their locations have a competitive advantage over other cities when it comes to attracting of foreign multinational corporations. Competitiveness of cities can be measured in terms of the availability of resources and other attractive features that may make a multinational business to want to operate in one location and not another location. The interest in the extent of location advantages and the intensity of competition between firms that is relative to market size has taken a new twist. This is because the location of business and industrial activities has been found to be a determinant of the life of many businesses and industries. In the United Kingdom, there are locations that are more competitive than others in terms of being selected by multinational corporations to operate their businesses. References Almond, P & Ferner, A 2006, American multinationals in Europe: managing employment relations across national borders, Oxford University Press, Oxford. Bernard, A & Jensen, JB 1999, ‘Exceptional exporters performance: cause, effect or both?’, Journal of International Economics, vol. 47, pp. 1-25. Bhagwati, J 2004, In defense of globalization, Oxford University Press, Oxford. Brakman, S, Garretsen, H & Marrewijk, C 2001, An introduction to geographical economics, Cambridge University Press, Cambridge. 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