Choose a location for operations
Compare manufacturing, service and country-level location factors using the business's priorities.
Cambridge IGCSE Business 0264, 2027–2029 syllabus, Topic 4. Show working for calculations and state the assumptions behind production or cost decisions. Written practice is self-checked and does not certify exam readiness
Before you begin
- No previous operations study is assumed. Read the time period, output unit, cost data and operating constraints before calculating or recommending.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Which factor may be especially important to a customer-facing service business?
What you will learn
- Identify location factors for manufacturers and services
- Compare country location considerations
- Recommend a location from case evidence
Different operations need different access
Manufacturers may consider land and building costs, access to raw materials, labour availability and cost, transport, energy, infrastructure, customers and relevant regulations.
Service businesses often depend more directly on access to customers, footfall, transport, skilled workers, competitors and suitable premises. The importance of each factor depends on the service.
A country choice adds further conditions
A business comparing countries may consider labour skills and cost, market size, infrastructure, transport, suppliers, stability, taxes and legal requirements. Low wages alone do not establish the best location.
A recommendation should weigh the most important factors and say what evidence could change it. Moving operations can involve substantial setup costs and risks to staff, suppliers and service continuity.
Pause and explain
Why is a low-wage country not automatically the best production location?
Worked example
A furniture manufacturer needs heavy timber deliveries and access to a port for exports. Which location factors deserve comparison?
Show the worked solution
- Transport access is relevant to both incoming timber and outgoing products.
- Compare land, labour and infrastructure costs.
- Check that logistics savings exceed any other site disadvantage.
Answer The business should compare port and road access, land and labour costs, infrastructure and supplier access. A convenient site is worthwhile if its logistics savings and capacity benefits exceed the full location cost.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A clinic is choosing between a low-rent site outside the city and a higher-rent site near public transport and customers. Recommend what it should compare.
Give me a hint
A service location depends on customer access as well as premises cost.
Compare my reasoning
- Compare rent with likely customer access and visit volume.
- Check transport, staff access and nearby services.
- Estimate whether extra visits or convenience justify higher rent.
The clinic should compare total premises cost with customer access, transport, staff availability and expected visits. The central site may be justified if convenience supports enough demand, but the evidence should show that added revenue or service value covers the higher rent.
Look for these in your work
- Cost and access compared
- Customers and employees considered
- Recommendation conditional
A food producer considers moving to a country with cheaper labour but longer delivery times and different food regulations. Explain two factors beyond wages to assess.
Give me a hint
Consider supply-chain cost and legal product requirements.
Compare my reasoning
- Longer delivery may raise transport cost and delay risk.
- The business must understand and meet local food rules.
- Check skills, supplier access and quality consistency too.
It should assess transport costs and reliability as well as food regulations, which may require product or process changes. Skills, supplier access and quality consistency also affect whether the wage saving reduces total operating cost.
Look for these in your work
- Two relevant factors explained
- Total cost considered
- Regulatory fit included
A retailer selects a site with high footfall but little storage space. Explain one benefit, one risk and a mitigation to investigate.
Give me a hint
High customer access helps sales, but storage limits may affect inventory and deliveries.
Compare my reasoning
- Footfall can expose the store to more potential customers.
- Limited storage may cause frequent deliveries or stockouts.
- Check delivery access and replenishment arrangements.
High footfall may support customer visits and sales, but little storage can increase delivery frequency or stockout risk. The retailer should check delivery access, supplier reliability and replenishment costs before signing the lease.
Look for these in your work
- Benefit described
- Operational risk stated
- Evidence for mitigation
Common mistakes
- Choosing the cheapest site without considering transport or customers
- Using manufacturing factors unchanged for every service
- Assuming a country has uniform labour, costs or rules
What can you explain now?
Which factor may be especially important to a customer-facing service business?
Compare with the explanation
Access to its customers
Many services need customers to reach or use them conveniently.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
How do the main location factors differ between a manufacturer and a customer-facing service?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.