Factors influencing business location, including costs, market, labour, infrastructure and the option of e-commerce; the meaning of stakeholders; the main stakeholder groups and their objectives; and managing stakeholder conflict.

What this theme is asking

Eduqas expects you to know the factors that influence where a business locates, including the way e-commerce can reduce the need for a physical site, and the concept of stakeholders: who they are, what they want, and how their interests can conflict. Location and stakeholders are practical start-up issues that also recur in strategy and the external environment.

Factors influencing location

The right balance depends on the business. A retailer prioritises footfall even at high rent; a warehouse or factory prioritises space, transport links and low cost over passing trade; a digital business may prioritise broadband and skilled labour over any high-street presence.

E-commerce and the falling weight of physical location

E-commerce (selling online) has changed the location decision. A business can reach national or global customers from a low-cost unit or even from home, cutting the need for expensive high-street premises and widening the market far beyond a local catchment. Many firms now run a hybrid model (a website plus a few physical outlets). E-commerce reduces some location pressures but raises others: reliable broadband, efficient delivery and warehousing, and the cost of returns. For some start-ups, "location" is now mainly a question of logistics and digital reach rather than a shop front.

What stakeholders are

The main stakeholder groups and their objectives

Because these objectives differ, decisions create winners and losers among stakeholders.

Stakeholder conflict and how it is managed

The relative power of each group matters. A large customer or a major lender has more influence than a small supplier, so its interests tend to weigh more heavily. Good stakeholder management seeks long-term relationships and reputation, recognising that ignoring an important group (mistreating staff, polluting a community) can damage the business later.

Examples in context

A coffee chain pays a premium for high-footfall sites because the extra customers justify the rent. An online-only clothing brand locates a warehouse near a motorway and a courier hub, with no shop front. When a supermarket plans a new store, shareholders want the profit, the community worries about traffic, employees want the jobs, and the council weighs tax and local impact, a textbook stakeholder conflict the firm must manage.

Try this

Q1. State two stakeholder groups of a supermarket and one objective for each. [4 marks]

• Cue. For example: shareholders (profit and return), employees (fair pay and security), customers (value for money), community (jobs, minimal disruption).

Q2. Explain one way e-commerce can reduce a start-up's location costs. [3 marks]

• Cue. Selling online lets the firm reach customers nationally from a low-cost unit or home, avoiding the high rent of a town-centre shop while still reaching a wide market.