Location Decisions (Quick Revision)

Question 1

Define: Location Decisions

Answer 1

Location decisions is a choice of where to base the firm’s facilities.

Question 2

State two quantitative methods that a firm might use to choose a location.

Answer 2

• Investment appraisal

* Break-even

Question 3

State four qualitative factors that might affect a firm’s location decision.

Answer 3

• Reaction of employees
• Quality of life
• Image of the area
• Ease of access to resources

Question 4

State three reasons why the choice of location might be important to a firm.

Answer 4

• May affect image (e.g. perfume companies)
• May affect costs
• May affect likely demand (e.g. hotels)

Question 5

State two reasons why a firm may choose to move location.

Answer 5

• Change in cost conditions at original location

* Need for more space or different facilities

Question 6

What is the Examiner’s note for Location Decisions?

Answer 6

The location decision will be influenced by a range of factors, such as:

• Costs
• Closeness of customers
• Image

And…

• Infrastructure

Question 7

What is the Evaluation point for Location Decisions?

Answer 7

The importance of location depends on the business. It is critical for firms such as retailers and hotels that need to attract customers to their location.