Business location — Edexcel GCSE Business
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Business location explained
Choosing a business location requires balancing multiple factors.
Read the full explanation
Proximity to the market is vital for retail to ensure high footfall, whereas manufacturing prioritises proximity to raw materials to minimise transport costs. Access to suitable labour ensures the business can hire skilled staff, while proximity to competitors can either be beneficial (creating a shopping hub) or detrimental (losing sales). The nature of the business activity dictates these priorities; a service business needs different premises than a factory. Furthermore, the internet has revolutionised location decisions. E-commerce allows businesses to operate from cheaper, remote warehouses rather than expensive high-street fixed premises, as physical customer access is no longer required.
Your focus
- Identify the key factors that influence where a business chooses to locate.
- Explain how the nature of a business activity changes its location requirements.
- Assess the impact of the internet and e-commerce on traditional location decisions.
Business location flashcards
Card 1 of 11
Proximity to the market
Business location exam tips
Marking Points
- Explain how proximity to raw materials reduces transport costs for manufacturing businesses.
- Analyse why retail businesses often prioritise proximity to the market to maximise customer footfall and sales.
- Discuss how the nature of the business activity determines whether a fixed high-street premises or an industrial estate is more appropriate.
- Evaluate the impact of e-commerce on location, specifically how it enables businesses to choose cheaper locations because physical proximity to customers is unnecessary.
Examiner Tips
- 💡Always link the location factor directly to the specific type of business provided in the case study.
- 💡When discussing e-commerce, contrast the high fixed costs of high-street premises with the lower costs of remote warehousing.
- 💡Use the concept of transport costs when explaining why a business might locate near its raw materials.
Common Mistakes
- Assuming all businesses need to be close to their customers; correction: recognise that manufacturing or e-commerce businesses often prioritise cheaper land or proximity to materials over customer footfall.
- Stating that being close to competitors is always a disadvantage; correction: explain that clustering near competitors can attract a larger pool of customers to the area, benefiting all businesses.
- Confusing the need for labour with the cost of labour; correction: specify whether the location is chosen for access to a large pool of unskilled workers or a specific hub of highly skilled professionals.