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