Location factor

Location factors are key criteria in market strategy and marketing that are important when deciding on a company location or opening branches or branches .

General

Location factors are largely responsible for the attractiveness of (potential or already used) company locations and thus influence them when choosing a location. If the location factors have changed, a decision about leaving a location must also be made. The spatial differences in the characteristics of location factors lead to a spatial differentiation of location qualities, in particular to a spatial differentiation of costs and / or revenues from an economic activity. There are clear differences in the assessment of the importance of the individual location factors by the companies (industry and size-specific differences).

species

Exemplary representation of hard and soft location factors

A distinction is made between hard and soft location factors:

• Hard location factors (eg. As taxes , levies , subsidies , market , infrastructure , labor force , resource availability or public transport ) are quantifiable and can go directly to the market and location analysis for a company to be included. They can be used to determine the economic viability of locations, as they contain closer economic cost and sales ratios. In some cases, the hard location factors are also an indispensable prerequisite for setting up a company (for example the proximity of a sufficiently large body of water as a coolant supplier for a power plant ).
• Soft location factors (e.g. cultural offerings , shopping opportunities , rental prices , location , leisure opportunities and educational offerings , which can be decisive for the recruitment of highly qualified employees) cannot be integrated into the cost accounting of a company, but they appear more and more in the choice of location.

In the increasing European competition between the regions , municipalities in a living or economic area (e.g. the Rhine-Main area ) are faced with the challenge of promoting their own attractive location factors through regionally coordinated economic development measures . Since the hard location factors are usually not or only to a limited extent subject to their influence, economic development is increasingly concentrating on the soft location factors.

This term is also used in ecology (especially vegetation ecology), although it is referred to as an ecological location factor.

Hard location factors

• Infrastructure
  • Transport links
  • Transport costs, modes of transport, reloading (broken traffic), containers
  • Energy prices (e.g. electricity price , oil price )
  • Communication network (broadband availability, reliability)
  • Energy supply (capacity of the power grid, availability of district heating, legal and practical option for self-sufficiency)
  • Waste disposal
• state funding ( subsidies )
• Amount of taxes and duties
• Proximity, size and access to production factor markets
  • Availability of raw materials (weight loss / pure materials)
  • Availability of suitable, developed areas, expansion options
  • Transaction costs
  • Land prices / rental costs
  • Access to the capital market
  • Manpower
    • Labor costs ( wage level )
    • Level of training
    • Quantitative availability
    • Qualitative availability
  • Unemployment rate
• Import duties
• Purchasing power
• Protection against dismissal
• Unit labor costs
• legal and collective bargaining conditions (working hours, social insurance, approval process)
• Labor costs
• Proximity, size and access to the relevant sales market (of the company)
• Market transparency
• Barriers to market entry
• Competitive intensity
• Proximity to suppliers
• Proximity to research, education and development facilities
• Environmental protection requirements
• Climate (if it has a direct influence on the company, e.g. agriculture, tourism)
• Number of customers

Soft location factors

• Research and development facilities
• bureaucracy
  • Willingness of the authorities to cooperate
• Political conditions
  • Establishing democracy and the rule of law
  • Respect for human rights
  • Welfare state
• Company-related factors
  • Economic climate at the location
  • Existence of an innovative social milieu, e.g. B. in the form of a creative class
  • Image of the location and the region (location prestige)
  • Competition or tactile advantages (network of relationships, agglomeration , agglomeration effects )
  • Economic blocks
• Personal location factors
  • Living environment, mentality of the local population
  • Environmental quality
  • Medical care, welfare institutions
  • Educational offer
  • Recreational, cultural and leisure activities
  • Shopping
  • Housing options
  • Amusement opportunities

Customer potential

The market potential represented by customers is an essential location factor . Pedestrian frequency , target group agglomeration and competition agglomeration characterize the individual locations. McDonald’s uses the following location factors when choosing a location at train stations and airports:

• Size at least 250 m²,
• large number of travelers ,
• large number of collectors and deliverers,
• very high footfall and
• large number of visitors .

The market potential for casual customer-oriented companies must be sufficiently high so that an appropriate turnover rate can be achieved. Locations with a high number of pedestrians during the day and a high level of inner-city leisure time in the evenings and weekends are the ideal locations. Fast food must catch the eye or be on the way to important destinations. Branches create spatial preferences for customers (location advantage through short distances from the apartment to the branch), this applies in particular to regular customers . The random walk-in customers , on the other hand, only reach branches through locations where there is a high footfall ( shopping centers , pedestrian zones , train stations , ports or airports ).

See also

• Location theory
• Globalization of labor markets

literature

• Thomas Glatte: How BASF navigates China Site Selection Magazine, Vol. 49, No.4, July 2004
• Thomas Glatte: The international production location search in the real estate industry context Expert Verlag, Renningen 2012, ISBN 978-3-8169-3086-0
• Thomas Glatte: Development of operational real estate - Procurement & utilization of real estate in corporate real estate management Springer Vieweg, Wiesbaden 2014, ISBN 978-3-658-05686-5
• Martin Godau: The importance of soft location factors for foreign investments with special consideration of the case study Thailand Dimplomica-Verlag, Hamburg, 2006
• Peter Goette: Location Policy of International Companies Deutscher Universitätsverlag, Wiesbaden, 1994
• Theodor Sabathil : Location Problems of International Industrial Enterprises Dissertation, University of Erlangen-Nuremberg, 1969
• Karl-Werner Schulte , Stephan Bone-Winkel (eds.): Handbook of real estate project development Rudolf Müller, Cologne 2002, ISBN 978-3899841671
• Peter Tesch: The determinants of international trade and direct investment Dissertation, Free University of Berlin, 1980

Web links

• Detailed definition of location factors
• Extensive treatise on the subject from a business perspective
• Important location factors (income, unemployment, trade tax, etc.) from the 150 largest German cities

Individual evidence

1. ^ Walter Freyer, Location Factor Tourism and Science , p. 49
2. ↑ Burkhard Strobel, location-specific business types in specialist retailers , in: Volker Trommsdorf (Ed.), Handelsforschung, 1988, p. 103
3. ^ Friedrich W. Tucher von Simmelsdorf, The expansion of McDonald's Germany Inc. , 1994, p. 46
4. ↑ Friedrich W. Tucher von Simmelsdorf, The Expansion of McDonald's Deutschland Inc. , 1994, p. 44
5. ↑ Fast Food Practice, 1982, p. 41