Modern society has three aspects – social, economic, and political. The social aspect deals with association between some social group/institution (such as family, school, collage, mosque, etc.) and individual, economic aspect deals with interactive relationships between firm/industry and economic agents, and political aspect is dynamic combination of parliament, executive, judiciary, media, civil society, political parties and voters. The economic aspect has three sectors – product sector, service sector, and financial sector. Business Location is important for product sector due to concerns about availability of raw material, it is vital for services sector in order to provide convenience to customers, and it is central for financial sector for efficient communication links. Thus, business location is vital for every sector of modern economy.
Determinants of Business Location
Business growth and survival is based on multiple demand and supply factors. We may group these factors into two categories – tangible and intangible. The tangible factors can be felt with five senses, while, intangible factors cannot be felt with five senses. The prominent tangible factors are capital, land, physical convenience to customers, and cash in hand, while the prominent intangible factors are entrepreneurship, organizational behaviour, consumer tastes, and social links. At production level, after capital, the possession of land and its suitable location is the most important tangible factor that fortify and maintains manager’s stability towards business struggle. At consumption level, customers have great attraction towards easy attainment of product or service. The physical convenience to customer is an important tangible factor that shapes demand-pattern of product or service, so that business location easily accessible to customers is vital for stable customer account. Thus, the most important demand and supply factors for business survival and growth – i.e., stable customer and stable entrepreneur – are strongly linked with business location.
There may be another division of decisive ingredients of business location, input and output elements. The prominent input elements are – convenience to entrepreneur, convenience to work force, cost of transportation, efficient communication links (i.e., phone, internet, wireless, mobile, etc.), government incentives, availability of raw material, availability of cheap labour force, and operational efficiency. On the other hand, the prominent output elements are – convenience to customer, distributional ease, and business effectiveness. The optimal availability and utilization of input elements are beneficial for cost minimization, while the optimal availability and utilization of output elements is beneficial for sales maximization, thus, the combined effect of input-output elements enhances the net return of business struggle, and both are strongly linked with business location. It is noteworthy that the input-output analysis may also include the social dimensions of business location.
Business Location & Taxonomy of Business