Business Studies Collins Revision Guide. - StudyGuide.PK

●●LOCATION (2)The infrastructure is important. This means that there are suitablecommunications facilities available – both transport andpostal/delivery services. Other businesses that provide supportshould also be available such as those which perform routinemaintenance for machinery. If the infrastructure is not there costscan rise considerably, for example products may need to be flownin at a much higher cost than road transport.The nature of the product, whether it is bulk reducing or bulkincreasing will affect whether the production takes place near theraw materials or near the consumer. Bulk reducing means that alarge amount of raw materials are needed to produce a smallamount of finished goods. Bulk-increasing goods should be madenear to customers, for example car production takes place near tolarge centres of population.Inertia●●Some businesses were established in a certain area many years agofor sound reasons that are no longer relevant. These includeindustries located near to coalfields when coal was the main sourceof power available. Other businesses located by chance in an areabecause the founder had his home there, for example. If suchbusinesses refuse to re-locate they are said to be suffering frominertia and may not be able to benefit from many advantages ofcertain other areas.There may also be some reluctance on the part of the owner(s) ofsmall businesses to relocate to areas away from their family andfriends. Although the market research might suggest that it issensible to move, the owners may ignore this because of personalconsiderations.82