Section 4

𝙿𝚛𝚘𝚍𝚞𝚌𝚝𝚒𝚘𝚗 𝚘𝚏 𝙶𝚘𝚘𝚍𝚜 𝚊𝚗𝚍 𝚂𝚎𝚛𝚟𝚒𝚌𝚎𝚜

𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣: Production is about managing resources well to make goods and

services.

𝙊𝙥𝙚𝙧𝙖𝙩𝙞𝙤𝙣𝙨 𝙙𝙚𝙥𝙖𝙧𝙩𝙢𝙚𝙣𝙩: The operations department of a company makes sure the

production process runs smoothly by using resources efficiently, managing inventory
well, meeting customer demand, and ensuring the products meet quality standards.

𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙫𝙞𝙩𝙮: Productivity is how efficient the company is in producing goods

using the inputs (like labor and materials). It’s measured by comparing the output
(how much is produced) to the inputs used. If a company increases productivity, it
can produce more, lower costs, and sell more at lower prices.
The formula is:

Businesses often measure the labour productivity to see how efficient their
employees are in producing output.
The formula for it is:

𝙏𝙤 𝙞𝙣𝙘𝙧𝙚𝙖𝙨𝙚 𝙥𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙫𝙞𝙩𝙮, 𝙘𝙤𝙢𝙥𝙖𝙣𝙞𝙚𝙨 𝙘𝙖𝙣:

~ Train employees to work more efficiently.

~ Use machines or technology to speed up production.
~ Motivate workers so they work harder and better.
~ Improve quality checks to avoid wasting resources.

𝙄𝙣𝙫𝙚𝙣𝙩𝙤𝙧𝙮 𝙈𝙖𝙣𝙖𝙜𝙚𝙢𝙚𝙣𝙩: Inventory Management is about managing raw materials,

unfinished goods, and finished products.

Companies reorder stock when it reaches a certain low level 𝙍𝙚𝙤𝙧𝙙𝙚𝙧 𝙡𝙚𝙫𝙚𝙡, and

the reorder supply to arrive is known as 𝙇𝙚𝙖𝙙 𝙩𝙞𝙢𝙚. 𝙏𝙝𝙚 𝙗𝙪𝙛𝙛𝙚𝙧 𝙞𝙣𝙫𝙚𝙣𝙩𝙤𝙧𝙮
they must consider the time it takes for new stock to arrive. The time it takes for

𝙡𝙚𝙫𝙚𝙡 is the minimum amount of stock a business should always have to meet
customer demand at all times. During the lead time the inventory will have hit the
buffer level and as reorder arrives. This way, businesses avoid running out of
stock and losing sales.

𝙇𝙚𝙖𝙣 𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣: Lean Production means reducing waste and improving efficiency.

𝙏𝙝𝙚 𝙨𝙚𝙫𝙚𝙣 𝙩𝙮𝙥𝙚𝙨 𝙤𝙛 𝙬𝙖𝙨𝙩𝙖𝙜𝙚 𝙩𝙝𝙖𝙩 𝙘𝙖𝙣 𝙤𝙘𝙘𝙪𝙧 𝙞𝙣 𝙖 𝙛𝙞𝙧𝙢:

𝙊𝙫𝙚𝙧𝙥𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣: producing goods before they have been ordered by customers.

This results in too much output and so high inventory costs

𝙒𝙖𝙞𝙩𝙞𝙣𝙜: When products are not moving or being worked on, valuable time is
wasted.

𝙏𝙧𝙖𝙣𝙨𝙥𝙤𝙧𝙩𝙖𝙩𝙞𝙤𝙣: Moving goods unnecessarily wastes time and can cause damage.
Unnecessary inventory: Keeping too much stock takes up space and costs money to
store.

𝙈𝙤𝙩𝙞𝙤𝙣: Employees or machines moving around unnecessarily wastes time and energy.

𝙊𝙫𝙚𝙧-𝙥𝙧𝙤𝙘𝙚𝙨𝙨𝙞𝙣𝙜: Using complicated machines or steps for simple tasks wastes

time, effort, and money.

𝘿𝙚𝙛𝙚𝙘𝙩𝙨: Faulty equipment or products cause delays and need to be fixed, wasting
time and money.

𝙃𝙤𝙬 𝙩𝙤 𝙞𝙢𝙥𝙡𝙚𝙢𝙚𝙣𝙩 𝙡𝙚𝙖𝙣 𝙥𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣? 𝙏𝙝𝙚 𝙙𝙞𝙛𝙛𝙚𝙧𝙚𝙣𝙩 𝙢𝙚𝙩𝙝𝙤𝙙𝙨 𝙖𝙧𝙚:

𝙆𝙖𝙞𝙯𝙚𝙣: Continuous improvement where workers suggest solutions to problems.

𝙅𝙪𝙨𝙩-𝙞𝙣-𝙏𝙞𝙢𝙚 (𝙅𝙄𝙏): Keeping no inventory, just ordering what’s needed when it’s
needed.

𝘾𝙚𝙡𝙡 𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣: Workers are put into teams to focus on one part of production,
which improves morale and efficiency.

𝙈𝙚𝙩𝙝𝙤𝙙𝙨 𝙤𝙛 𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣

𝙅𝙤𝙗 𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣: products are made specifically to order, customized for each
customer. Eg: wedding cakes

𝘼𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨: Most suitable for one-off products and personal services

𝘿𝙞𝙨𝙖𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨: Skilled labour will often be required which is expensive

Batch Production: Producing products in small batches. Eg: cookies

𝘼𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨:Even if one product’s machinery breaks down, other products can still
be made

𝘿𝙞𝙨𝙖𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨: Lots of raw materials will be needed for different product

batches, which can be expensive

Flow Production: large quantities of products are produced. Eg: a soft drinks
factory.

𝘼𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨: Goods are produced quickly and cheaply

𝘿𝙞𝙨𝙖𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨: If one machinery breaks down, entire production will be affected

𝙁𝙖𝙘𝙩𝙤𝙧𝙨 𝙩𝙝𝙖𝙩 𝙖𝙛𝙛𝙚𝙘𝙩 𝙬𝙝𝙞𝙘𝙝 𝙥𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣 𝙢𝙚𝙩𝙝𝙤𝙙 𝙩𝙤 𝙪𝙨𝙚:

𝙉𝙖𝙩𝙪𝙧𝙚 𝙤𝙛 𝙩𝙝𝙚 𝙥𝙧𝙤𝙙𝙪𝙘𝙩: If a product is highly customized (like handmade items

or bespoke goods), job production is preferred because it allows for
personalization and flexibility. However, for mass-produced items (like soft drinks
or smartphones), flow production is ideal as it focuses on efficiency and large-
scale output.

𝙎𝙞𝙯𝙚 𝙤𝙛 𝙩𝙝𝙚 𝙢𝙖𝙧𝙠𝙚𝙩: Large markets with high demand for standardized products
require flow production to produce items quickly and in large quantities. Smaller
or niche markets, where demand fluctuates or variety is needed, can use batch
production to switch between different products.

𝙉𝙖𝙩𝙪𝙧𝙚 𝙤𝙛 𝙙𝙚𝙢𝙖𝙣𝙙: If demand is consistent, flow production helps to

continuously produce goods efficiently. In contrast, job or batch production is
better suited for products with irregular or low demand, allowing the business to
adjust production volumes without excess inventory.

𝙎𝙞𝙯𝙚 𝙤𝙛 𝙩𝙝𝙚 𝙗𝙪𝙨𝙞𝙣𝙚𝙨𝙨: Small businesses with limited funds often cannot afford
the expensive machinery and systems required for flow production, so they rely on
job or batch production, which requires less capital investment and is more
flexible for smaller-scale operations. Larger businesses with more capital can
automate and scale up production through flow methods.

𝙏𝙚𝙘𝙝𝙣𝙤𝙡𝙤𝙜𝙮 𝙞𝙣 𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣:

𝘼𝙪𝙩𝙤𝙢𝙖𝙩𝙞𝙤𝙣: Machines controlled by computers perform tasks automatically.

𝙈𝙚𝙘𝙝𝙖𝙣𝙞𝙨𝙖𝙩𝙞𝙤𝙣: Machines help with production but are operated by people.

𝘾𝘼𝘿/𝘾𝘼𝙈/𝘾𝙄𝙈: These technologies help design and manufacture products using

computers, streamlining the process.

𝙀𝙋𝙊𝙎: Scans products at checkout, showing prices, printing receipts, and managing
stock levels.

𝙀𝙁𝙏𝙋𝙊𝙎: Processes card payments by connecting the register to banks.

𝘼𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨 𝙤𝙛 𝙩𝙚𝙘𝙝𝙣𝙤𝙡𝙤𝙜𝙮 𝙞𝙣 𝙥𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣

~ Better quality products

~ Greater job satisfaction among workers as boring, routine jobs are done by
machines

𝘿𝙞𝙨𝙖𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨 𝙤𝙛 𝙩𝙚𝙘𝙝𝙣𝙤𝙡𝙤𝙜𝙮 𝙞𝙣 𝙥𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣

~ Unemployment rises as machines and computers replace human labour

~ Expensive to set up
~ New technology quickly becomes outdated and frequent updating of systems will be
needed- this is expensive and time-consuming.

𝙲𝚘𝚜𝚝𝚜, 𝚂𝚌𝚊𝚕𝚎 𝚘𝚏 𝙿𝚛𝚘𝚍𝚞𝚌𝚝𝚒𝚘𝚗 𝚊𝚗𝚍 𝙱𝚛𝚎𝚊𝚔-𝚎𝚟𝚎𝚗 𝙰𝚗𝚊𝚕𝚢𝚜𝚒𝚜

𝙁𝙞𝙭𝙚𝙙 𝙘𝙤𝙨𝙩: These are costs that stay the same even if no goods are produced,
like rent. They don’t change in the short term but might change in the long term.

𝙫𝙖𝙧𝙞𝙖𝙗𝙡𝙚 𝙘𝙤𝙨𝙩: These change depending on how much you produce. For example,
materials and wages that increase with more production.

Total Cost is the sum of both fixed and variable costs.

𝘼𝙫𝙚𝙧𝙖𝙜𝙚 𝘾𝙤𝙨𝙩 is the total cost divided by the number of goods produced.
Businesses use this cost data to make decisions, such as setting prices or choosing
a location.

TOTAL COST = TOTAL FIXED COSTS + TOTAL VARIABLE COSTS

TOTAL COST = AVERAGE COST x OUTPUT

AVERAGE COST (unit cost) = TOTAL COST/ TOTAL OUTPUT

𝙎𝙘𝙖𝙡𝙚 𝙤𝙛 𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣:

𝙀𝙘𝙤𝙣𝙤𝙢𝙞𝙚𝙨 𝙤𝙛 𝙎𝙘𝙖𝙡𝙚: As businesses grow and produce more, they can lower their
average costs. For example, they get discounts on bulk purchases, reduce marketing
costs, get better interest rates from banks, hire specialist managers, and afford
better machinery.

𝘿𝙞𝙨𝙚𝙘𝙤𝙣𝙤𝙢𝙞𝙚𝙨 𝙤𝙛 𝙎𝙘𝙖𝙡𝙚: If a business grows too large, costs can increase.

Communication may become inefficient, workers may feel less valued, and decision-
making can slow down, raising average costs.

𝘽𝙧𝙚𝙖𝙠 𝙀𝙫𝙚𝙣

The break-even level of output is the number of units a business must sell to cover
all its costs. At this point, the business makes no profit but also no loss—it
simply covers its expenses.

The break-even point is when total costs and total revenue are equal.

A break-even chart shows at what level of production costs and revenue are equal.
Anything above this point is profit.

Margin of Safety is the difference between the actual units sold and the break-even
point. It shows how much sales can drop before the business starts making a loss.

𝘽𝙧𝙚𝙖𝙠-𝙚𝙫𝙚𝙣 𝙘𝙖𝙣 𝙖𝙡𝙨𝙤 𝙗𝙚 𝙘𝙖𝙡𝙘𝙪𝙡𝙖𝙩𝙚𝙙 𝙬𝙞𝙩𝙝𝙤𝙪𝙩 𝙙𝙧𝙖𝙬𝙞𝙣𝙜 𝙖 𝙘𝙝𝙖𝙧𝙩.

A formula can be used:

Break-even level of production =Total fixed costs/ Contribution per unit

Contribution = Selling price – Variable cost per unit

In the above example, the contribution is $8 -$3 =$5, so the break-even level is:
$5000/$5 = 1000 units!

𝙰𝚌𝚑𝚒𝚎𝚟𝚒𝚗𝚐 𝚀𝚞𝚊𝚕𝚒𝚝𝚢 𝙿𝚛𝚘𝚍𝚞𝚌𝚝𝚒𝚘𝚗

𝙒𝙝𝙖𝙩 𝙞𝙨 𝙌𝙪𝙖𝙡𝙞𝙩𝙮?
Quality means making a product or service that meets customer expectations. It
should be free from defects or problems.

𝙃𝙖𝙫𝙞𝙣𝙜 𝙜𝙤𝙤𝙙 𝙦𝙪𝙖𝙡𝙞𝙩𝙮 𝙞𝙨 𝙞𝙢𝙥𝙤𝙧𝙩𝙖𝙣𝙩 𝙗𝙚𝙘𝙖𝙪𝙨𝙚 𝙞𝙩:

Builds a strong brand image.
Creates customer loyalty.
Maintains a good reputation.
Increases sales.
Attracts new customers.

𝙄𝙛 𝙖 𝙗𝙪𝙨𝙞𝙣𝙚𝙨𝙨 𝙛𝙖𝙞𝙡𝙨 𝙩𝙤 𝙢𝙖𝙞𝙣𝙩𝙖𝙞𝙣 𝙦𝙪𝙖𝙡𝙞𝙩𝙮, 𝙞𝙩 𝙢𝙖𝙮:

Lose customers to competitors.
Face higher costs due to having to replace faulty products or provide poor service.
Damage its reputation, leading to lower sales and profits.

𝙈𝙚𝙩𝙝𝙤𝙙𝙨 𝙩𝙤 𝘼𝙘𝙝𝙞𝙚𝙫𝙚 𝙌𝙪𝙖𝙡𝙞𝙩𝙮

There are three main methods businesses use to ensure quality: Quality Control,
Quality Assurance, and Total Quality Management (TQM).

𝙌𝙪𝙖𝙡𝙞𝙩𝙮 𝘾𝙤𝙣𝙩𝙧𝙤𝙡

This method checks the quality of products after they are made.

𝘼𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨:

~ It helps fix defects before customers receive the products, leading to better
satisfaction.
~ Requires less training for employees who check the quality.
𝘿𝙞𝙨𝙖𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨:

~ Hiring people to check quality can be expensive.

~ It identifies problems but doesn’t find out why they occurred, making it hard to
fix them.
~ Replacing or reworking defective products can be costly.

𝙌𝙪𝙖𝙡𝙞𝙩𝙮 𝘼𝙨𝙨𝙪𝙧𝙖𝙣𝙘𝙚

This method checks the quality during the entire production process.

𝘼𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨:

~ It ensures defects are fixed early, improving customer satisfaction.

~ Problems can be easily identified and resolved during production.

𝘿𝙞𝙨𝙖𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨:

~ It can be costly since quality checks are needed at every stage, requiring more
staff and technology.
~ The business must ensure that all employees follow quality standards
consistently.

𝙏𝙤𝙩𝙖𝙡 𝙌𝙪𝙖𝙡𝙞𝙩𝙮 𝙈𝙖𝙣𝙖𝙜𝙚𝙢𝙚𝙣𝙩 (𝙏𝙌𝙈)

TQM focuses on continuous improvement in quality throughout the entire production

process. Everyone involved in production is responsible for maintaining quality.

𝘼𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨:

~ Quality becomes a priority for everyone involved in production.

~ Eliminates faults before the product reaches customers, leading to fewer
complaints and a better brand image.
~ Improves efficiency by reducing waste.

𝘿𝙞𝙨𝙖𝙙𝙫𝙖𝙣𝙩𝙖𝙜𝙚𝙨:

~ Training all employees can be expensive.

~ Success relies on all employees being motivated to follow TQM practices.

𝙃𝙤𝙬 𝘾𝙖𝙣 𝘾𝙪𝙨𝙩𝙤𝙢𝙚𝙧𝙨 𝙆𝙣𝙤𝙬 𝙖 𝙋𝙧𝙤𝙙𝙪𝙘𝙩 𝙤𝙧 𝙎𝙚𝙧𝙫𝙞𝙘𝙚 𝙞𝙨 𝙃𝙞𝙜𝙝 𝙌𝙪𝙖𝙡𝙞𝙩𝙮?

Customers can look for quality marks, like the ISO (International Organization for
Standardization) label, which shows the company follows certain quality standards.
For services, a good reputation and positive customer reviews are also good signs
of quality.

𝙇𝙤𝙘𝙖𝙩𝙞𝙤𝙣 𝙙𝙚𝙘𝙞𝙨𝙞𝙤𝙣𝙨

𝙄𝙢𝙥𝙤𝙧𝙩𝙖𝙣𝙘𝙚 𝙤𝙛 𝙇𝙤𝙘𝙖𝙩𝙞𝙤𝙣
The location of a business is crucial because it can impact costs, profits,
efficiency, and the customer base. Owners must consider where to set up or expand
their business

𝙁𝙖𝙘𝙩𝙤𝙧𝙨 𝘼𝙛𝙛𝙚𝙘𝙩𝙞𝙣𝙜 𝙇𝙤𝙘𝙖𝙩𝙞𝙤𝙣 𝘿𝙚𝙘𝙞𝙨𝙞𝙤𝙣𝙨:

𝙈𝙖𝙣𝙪𝙛𝙖𝙘𝙩𝙪𝙧𝙞𝙣𝙜 𝙁𝙞𝙧𝙢𝙨
𝙋𝙧𝙤𝙙𝙪𝙘𝙩𝙞𝙤𝙣 𝙈𝙚𝙩𝙝𝙤𝙙: Small-scale production doesn’t require closeness to raw
materials, but large-scale production does to reduce transport costs.

𝙈𝙖𝙧𝙠𝙚𝙩: Factories making perishable goods should be near markets to sell quickly.

𝙍𝙖𝙬 𝙈𝙖𝙩𝙚𝙧𝙞𝙖𝙡𝙨: Factories should be close to fresh raw materials, like fruits for
juice production.

𝙀𝙭𝙩𝙚𝙧𝙣𝙖𝙡 𝙎𝙪𝙥𝙥𝙤𝙧𝙩: Being near businesses that offer support services, like
equipment maintenance, can help.

𝙇𝙖𝙗𝙤𝙧 𝘼𝙫𝙖𝙞𝙡𝙖𝙗𝙞𝙡𝙞𝙩𝙮: Factories need to be in areas with the right skills or where
wages are low.

𝙂𝙤𝙫𝙚𝙧𝙣𝙢𝙚𝙣𝙩 𝙄𝙣𝙛𝙡𝙪𝙚𝙣𝙘𝙚: Incentives may be offered for setting up in

underdeveloped areas; there may also be restrictions in certain locations.

𝙏𝙧𝙖𝙣𝙨𝙥𝙤𝙧𝙩 & 𝘾𝙤𝙢𝙢𝙪𝙣𝙞𝙘𝙖𝙩𝙞𝙤𝙣: Factories should have access to good roads,

railways, or ports, especially if exporting.

𝙋𝙤𝙬𝙚𝙧 & 𝙒𝙖𝙩𝙚𝙧: A steady supply of both is essential for operations.

𝘾𝙡𝙞𝙢𝙖𝙩𝙚: Important in certain industries, like chip manufacturing.

𝙊𝙬𝙣𝙚𝙧’𝙨 𝙋𝙧𝙚𝙛𝙚𝙧𝙚𝙣𝙘𝙚: Personal choice may influence the decision.

𝙎𝙚𝙧𝙫𝙞𝙘𝙚-𝙎𝙚𝙘𝙩𝙤𝙧 𝙁𝙞𝙧𝙢𝙨

𝘾𝙪𝙨𝙩𝙤𝙢𝙚𝙧𝙨: Businesses needing direct contact with customers (like restaurants)

should be in accessible locations.

𝙏𝙚𝙘𝙝𝙣𝙤𝙡𝙤𝙜𝙮: Online services (like banks) can locate in cheaper areas away from
customers.

𝙇𝙖𝙗𝙤𝙧 𝘼𝙫𝙖𝙞𝙡𝙖𝙗𝙞𝙡𝙞𝙩𝙮: Some services may need to be near workers, but remote work
is making this less important.

𝘾𝙡𝙞𝙢𝙖𝙩𝙚: Relevant for tourism services.

𝙉𝙚𝙖𝙧 𝙊𝙩𝙝𝙚𝙧 𝘽𝙪𝙨𝙞𝙣𝙚𝙨𝙨𝙚𝙨: Some services benefit from being near large companies
or competitors.

𝙍𝙚𝙣𝙩/𝙏𝙖𝙭𝙚𝙨: Costs need to be affordable.

𝙊𝙬𝙣𝙚𝙧’𝙨 𝙋𝙧𝙚𝙛𝙚𝙧𝙚𝙣𝙘𝙚: Personal choice also plays a role.

𝙍𝙚𝙩𝙖𝙞𝙡𝙞𝙣𝙜 𝙁𝙞𝙧𝙢𝙨

𝙎𝙝𝙤𝙥𝙥𝙚𝙧𝙨: Retailers should be in busy areas, like malls, to attract customers.

𝙉𝙚𝙖𝙧𝙗𝙮 𝙎𝙝𝙤𝙥𝙨: Being near other shops draws in more customers.

𝙋𝙖𝙧𝙠𝙞𝙣𝙜: Convenient parking makes it easier for customers to visit.

𝘼𝙘𝙘𝙚𝙨𝙨 𝙛𝙤𝙧 𝘿𝙚𝙡𝙞𝙫𝙚𝙧𝙮: Retailers offering delivery services need access for
vehicles.

𝙎𝙚𝙘𝙪𝙧𝙞𝙩𝙮: Safe areas with good security are preferred to avoid theft.
𝙒𝙝𝙮 𝙗𝙪𝙨𝙞𝙣𝙚𝙨𝙨𝙚𝙨 𝙡𝙤𝙘𝙖𝙩𝙚 𝙞𝙣 𝙙𝙞𝙛𝙛𝙚𝙧𝙚𝙣𝙩 𝙘𝙤𝙪𝙣𝙩𝙧𝙞𝙚𝙨?

~ New markets overseas.

~ Cheaper or new raw materials available in other countries.
~ Cheaper and/or skilled workers are available overseas.
~ Rent/ taxes are lower..
~ Availability of government grants and other incentives

𝙏𝙝𝙚 𝙧𝙤𝙡𝙚 𝙤𝙛 𝙡𝙚𝙜𝙖𝙡 𝙘𝙤𝙣𝙩𝙧𝙤𝙡𝙨 𝙤𝙣 𝙡𝙤𝙘𝙖𝙩𝙞𝙤𝙣 𝙙𝙚𝙘𝙞𝙨𝙞𝙤𝙣𝙨

Governments influence location decisions:

to encourage businesses to set up and expand in areas of high unemployment and

under-development. Grants and subsidies can be given to businesses that set up in
such areas.

to discourage firms from setting in areas of that are overcrowded or renowned for
natural beauty. Planning restrictions can be put into place to do so.