BUSINESS LOCATION DECISIONS. Labour regulations Environmental factors Transport Infrastructure...

WHERE TO POSITION YOUR BUSINESS???

BUSINESS LOCATION DECISIONS

Factors that impact on business location Labour regulations Environmental factors Transport Infrastructure and availability of electricity and

water Potential market (Consumers) Raw materials Labour markets Climate Government and local regulations and taxes Competition Crime

Labour regulations

Labour Relations Act(66 of 1995) – regulates communication and negotiation between employees and employer. Promotes economic development, social justice and labour peace.

Basic Conditions of Employment Act(77 of 1997) – improves working condition.

Employment Equity Act (55 of 1998)- affirmative action in areas of employment, training, promotion and pay

RESULTS: Increase in cost of labour Ask more for products and services

Environmental factors

Transport

Brings raw materials, employees and consumers within reach of business

Air Quick but expensive

Railway More cost effective , but business should be close to railway

Sea Close to seaport (import and exports)

Road Suitable for products and raw materials transported domestically

Infrastructure and availability of electricity and water Business will not be able to operate

effectively and efficiently without proper infrastructure

Electricity expensive (High demand and scarcity)

Investigate ways in which electricity can be saved e.g. Solar geyser, energy saving globes, switch off computers at night

Potential markets (Consumers) Share similar characteristics Location must attract potential

consumers Must be accessible

Raw materials

Especially in manufacturing businesses

Iron = heavy and take a lot of space Costly and time consuming to

transport Better if business is located close to

source of supply especially if: Transport costs are high Raw materials are perishable (milk or

veggies)

Labour markets

People who are capable and available to work

Cost of labour

Climate

Businesses in agriculture and tourism depend on climate

Government and local regulations and taxes Must comply with local and national

laws Taxes influences profits Free trade zone : where taxes are

eliminated and regulations reduced to attract new business and foreign investors

Competition

Difficult to survive unless there is a huge and growing demand

Crime

Harmful – consumers will be hesitant crime stricken areas

Burglars and theft will lead to financial losses

Strengthen security