Page 2: Factors affecting the location of a business
There are several reasons why an organisation might decide to open new branches or relocate its existing operations. It might want to expand the business, so it will open branches in cities where the organisation did not previously have a presence.
A business might also want to restructure or modernise its operations. It might do this by bringing together some existing departments into new purpose built premises. It might decide to shut its less profitable operations and open branches in locations that offer more business potential.
A business will have to consider many factors when determining where to locate a new branch or operation. Usually, it will have to balance several factors in making a decision. Sometimes one factor may sway the decision:
- It may choose a site with the cheapest land or buildings.
- It might decide on a location that is convenient for key employees. A business needs to be able to recruit staff with the right skills base.
- It might choose a site that has easy access to raw materials. For example, many frozen food factories are located near fishing ports to reduce transport time taken and to keep fish fresh.
- The key factor could be the transport and service infrastructure. Many businesses require easy access to good road and railway links and modern telecommunication services. These ensure that they can meet service or delivery deadlines.
Enterprise Rent-A-Car is a service business. Its customers include:
- businesses, who may require regular car rentals for their staff or visitors
- individual customers, who may want to hire a car when they are on holiday or if their own vehicle has been involved in an accident.
Enterprise makes it as easy as possible for customers to use its services. For example, business customers may need a car delivered to their doorstep. Alternatively, retail customers can use Enterprise’s unique pick-up service, where the customer will be collected from their location and taken back to the branch to collect the car.
Customers can also pick up cars direct from branches, so all Enterprise sites need to have good transportation links and easy access. They also need to be close to their customers. This helps to ensure Enterprise can keep its promise to customers on the speed and efficiency of its service.
Types of locations:
Enterprise has branches in two types of locations:
- First, there are ‘home/city’ branches. These are located in areas close to long-term business partners, as well as to a large market for personal customers. These branches meet the demand for car rental from businesses and individuals wanting a car for accident cover or for leisure purposes and represent 95% of all Enterprise’s locations.
- Second, there are branches at airport locations. These provide a service for people flying into or out of a region.
By locating branches in busy areas and near to its customers, Enterprise can also increase awareness of its services by using its premises to project a strong visual brand. The signs and fittings at each branch premises display the Enterprise corporate logo and reflect the company’s colours and branding.
Enterprise also needs to be open to changing customer demand. For example, a major new housing development may generate a new source of customers in an area. The growth of residential housing could also encourage new businesses, such as shops and offices, to open nearby to provide services and goods to this new market. Enterprise needs to be in a position to adapt its locations to meet any changes in its market efficiently.