Business Management SL - 5.4 Location Vocabulary

Location

The geographical place where a business operates

• Ex: Disneyland’s location in Paris targets European tourists

Local Knowledge

Understanding of the local culture, laws, labor market, and consumer habits

• Ex: Starbucks adapts menus in Thailand (e.g., green tea lattes) based on local tastes

Infrastructure

Basic physical systems needed for business (transport, power, internet)

• Ex: Amazon relies on strong internet and road networks for deliveries in the US

Clustering

When similar businesses group in one area to benefit from shared resources

• Ex: Silicon Valley tech companies (Apple, Google, Meta) & Car manufacturers

Industrial Inertia

When a business stays in a location even if it’s no longer ideal

• Ex: Sheffield steel firms that stayed after the UK steel industry declined

Footloose Organizations

Businesses not tied to natural resources or markets; can locate anywhere

• Ex: Google’s offices can operate worldwide with internet and skilled labor

Greenfield Site

A location that has never been built on before, virgin land

• Ex: Tesla’s Gigafactory in Brandenburg, Germany was built on undeveloped land

Brownfield Site

Land previously used for industry, redeveloped for new business

• Ex: London Docklands redeveloped into offices and housing

Incentives/Subsidies

Financial or tax support from governments to attract firms

• Ex: Ireland offers low corporate tax rates to attract tech companies

Return on Investment (ROI)

Measure of profitability compared to money invested

• Ex: Apple earns high ROI from iPhone R&D

Outsourcing

Hiring another domestic company to do part of your business process

• Ex: Nike outsources shoe production to factories in Vietnam

Insourcing

Bringing a function back into the company; using an organization's own personnel or other resources to accomplish a task that was previously outsourced

• Ex: NIST catering and employment of own business workers

Offshoring

Moving production or services to another country to cut costs

• Ex: Dell shifted call centers to India

Reshoring

Bringing back production to the home country

• Ex: Ford reshored some car production from Mexico to the US

Near Shoring

Moving business processes to a nearby country (closer than offshoring)

• Ex: US firms shifting production from Asia to Mexico

Sunk Costs

Costs already spent that cannot be recovered

• Ex: R&D spending on a failed drug in the pharmaceutical industry & Furniture that can’t be moved for relocation

Market Proximity

Being close to customers to reduce costs and increase sales

• Ex: McDonald’s opens outlets near schools and malls

Bulk Reducing Business

Business where raw materials are heavier than final product; best near source

• Ex: Copper smelting located near mines & Sugar cane factories near fields

Bulk Increasing Industry

Business where final product is heavier/bigger than inputs; best near market

• Ex: Coca-Cola bottling plants located near cities

Enterprise Zones

Areas where governments offer incentives to attract businesses

• Ex: UK Enterprise Zones in Birmingham provide tax breaks

Industrial Park

Planned area for businesses with shared services and infrastructure

• Ex: Suzhou Industrial Park in China hosts international firms

STEEPLE Factors

Social, Technological, Economic, Environmental, Political, Legal, Ethical; external factors influencing business

• Ex: Tesla faces environmental pressure on sustainability

Logistics

Managing the movement of goods and resources

• Ex: DHL specializes in global logistics

Supply Chain

The complete system of how a product is made and delivered, from raw materials to the final customer. It includes suppliers, manufacturers, logistics, retailers, and distribution

• Ex: Apple’s supply chain: raw materials from Africa, assembly in China by Foxconn, global shipping, and sales in Apple Stores worldwide

Government Incentives

Benefits given by governments to attract investment

• Ex: Singapore offers tax breaks to biotech firms

Exchange Rates

The value of one currency compared to another

• Ex: A strong USD makes US exports more expensive

Trade Barriers

Restrictions on trade like tariffs and quotas

• Ex: US tariffs on Chinese steel

Taxation

Government levies on income, profits, or goods

• Ex: Amazon faces corporate tax in different countries

Agglomeration

Businesses benefit from being close together (shared labor, suppliers)

• Ex: Hollywood film studios and related businesses

Strategic Geographic Position

Advantage from being in a key global location

• Ex: Singapore benefits from its port location on major shipping routes

Talent Pool

Availability of skilled workers in an area

• Ex: Bangalore, India has a large IT talent pool

Export

Selling goods or services abroad

• Ex: Thailand exports rice globally

Economic Corridor

Area with strong transport and trade connections

• Ex: China–Pakistan Economic Corridor (CPEC)

Foreign Direct Investment (FDI)

Investment by one country’s company in another country’s business

• Ex: Toyota building factories in the UK

Decision Tree

Diagram showing possible outcomes of decisions and risks

• Ex: A firm deciding whether to launch a new product line