英语论文网

It is clear that there are many various factors that contribute to the decision-making regarding location. These factors also mainly reflect upon competitive advantage because without it location will not be motivated amongst firms. Below is a figure that concludes the various elements that contribute to the location of firms:

Adding to the above Visser et al (2004:18) also states that firm decisions are influenced by basic conditions such as trade, labour and industrial policies. On the other hand, once the restrictions wherein firms have to operate have been defined, changing market processes and the behaviour of firms (based on the level of competition and demand-side requirements) also start to shape the existing market structure.

Urban Econ (2008:9) used the Porter Diamond approach to explain competitive advantage: the competitive advantage of a locality is founded on 4 pillars, as indicated below. Competitive advantage is at the root of business retention, expansion and attraction. When an area possesses such an advantage, it becomes highly attractive as an industrial location.

For the remainder of this section more attributes will be discussed that firms take into consideration when making decisions about the location of their business:

Cost Variables:

Cost variables are those that directly affect firm cost. Given the same amenities/facilities/services, a firm will choose a location which provides a lower wage rate. However, a higher wage may be accepted if the firm chooses to have an enhanced quality of labour skill, infrastructure service and access to markets. (Kuncoro, 2000:4)

Kuncoro (2000:4) also states that small and medium scale firms that are labour-intensive struggle more when higher wage rates apply. Thus, the degree of substitutability between capital and labor may be of low significance as the lower wage incentive already suggests that they could not afford the cost of capital investment. All these statements follow the assumption that any individual firm, when choosing location, tries to maximize nominal profit.

Glen (2008:40) also mentions that the key cost factors to be considered include the cost of labour, the cost of the facility, depreciation charges of property, plant and equipment, financing costs (including interest), transportation costs, utility costs and taxes (direct and indirect taxes). The cost of industrial land and construction will be more of a factor for a firm wishing to relocate. The cost of leasing office space will also impact on the overall investment decision. Therefore, ensuring that industrial land is available for development would certainly be an advantage in business location decisions.

沪ICP备10026080号-1