Syllabus: Cambridge - IGCSE Business Studies
Module: 4.4 Location decisions
Lesson: 4.4.1 The Main Factors Influencing the Location and Relocation Decisions of a Business

Introduction

This article supports the delivery of the Cambridge IGCSE Business Studies syllabus, focusing on section 4.4.1 – The Main Factors Influencing the Location and Relocation Decisions of a Business. This unit is critical for developing commercial awareness and strategic thinking — key components of workplace readiness. Understanding location choices helps students see how businesses navigate cost, customer access, and operational efficiency — topics that span across curriculum and career preparation.

Mapped directly to the Cambridge IGCSE specification, this topic builds student confidence in applying real-world criteria to business decision-making, fostering higher-order thinking that is both examinable and employability-aligned.

Key Concepts

According to the Cambridge IGCSE specification, students should understand:

• The main factors influencing business location:

  • Costs (e.g. rent, labour, transport)

  • Proximity to markets, labour, materials, competitors

  • Legal controls or government incentives

  • Infrastructure and availability of utilities

• The difference between locating in production vs retail/service sectors

• The concept of relocation and why businesses may move:

  • Expansion

  • Cost savings

  • Access to new markets

  • Government regulations or incentives

• Evaluation of competing priorities (e.g. low cost vs market access)

Students should also be able to justify location decisions based on given business scenarios and assess the relative importance of different factors.

Real-World Relevance

The concepts covered in this unit are highly transferable to real business decisions. For instance:

• Amazon has chosen logistics hubs near key transport links (e.g. Doncaster and Tilbury) to optimise distribution. Their priorities include proximity to markets, road infrastructure, and skilled labour availability.

• McDonald’s considers foot traffic, accessibility, and local demographics when choosing new outlet locations — showing a clear service-sector contrast.

• Dyson’s relocation of manufacturing to Malaysia was driven by lower labour costs and supply chain efficiencies, but also faced reputational risks — ideal for classroom discussion.

Bringing in such examples helps students understand that location decisions are not formulaic — they are strategic, contextual, and often require trade-offs.

How It’s Assessed

In the IGCSE Business Studies exam, this topic may be assessed via:

• Short-answer knowledge recall questions, e.g. “State two factors that may influence the location of a manufacturing business.”

• Case-based application questions, where students must analyse a scenario and justify a location decision.

• Extended response questions, requiring evaluation of multiple location factors with context-specific recommendations.

Command words like “identify”, “explain”, “analyse”, and “evaluate” are commonly used, and students must be able to structure answers clearly, referencing case material where appropriate.

Tip: Encourage students to use a structured framework when justifying decisions (e.g. COSTS, MARKET, INFRASTRUCTURE, LABOUR) and to weigh pros and cons when asked to evaluate.

Enterprise Skills Integration

This topic is rich in decision-making, critical thinking, and problem-solving — three pillars of the Enterprise Skills thematic framework:

• Commercial Awareness: Students explore real-world cost structures, supply chains, and market proximity considerations.

• Strategic Decision-Making: They are encouraged to assess competing priorities and consider long-term implications.

• Evidence-Based Problem Solving: Skills Hub simulations allow students to role-play as business decision-makers choosing between urban vs rural setups or domestic vs overseas options.

Using Skills Hub Futures, teachers can access location decision scenarios with employer validation, helping students experience the real pressures businesses face.

Careers Links

This unit directly supports Gatsby Benchmark 4 (linking curriculum to careers) by showing how location decisions affect real job roles such as:

• Operations managers (choosing efficient factory locations)

• Marketing analysts (evaluating customer proximity and demographics)

• Supply chain/logistics coordinators (assessing distribution feasibility)

With Skills Hub Futures, students engage in sector-specific scenarios tied to roles in retail, manufacturing, and services, aligned with Gatsby Benchmarks 4, 5, and 6. Students also develop employer-valued competencies like data-informed decision-making and risk assessment.

Teaching Notes

Tips for Effective Delivery:

• Use local business case studies where students assess why a store opened in their area.

• Run a mock boardroom challenge: students compare two locations for a start-up and pitch their decision.

• Integrate Skills Hub simulation tools, where students take on the role of a growing business expanding into new regions.

• Encourage cross-subject collaboration with geography or economics to explore location dynamics.

Common Pitfalls:

• Students often overlook qualitative factors (e.g. brand perception, ethical concerns).

• They may list factors without evaluating their relative importance in a given context.

• They may confuse location for production businesses vs retail/service operations — be sure to highlight this distinction.

Extension Ideas:

• Introduce global location factors such as tariffs, political stability, and currency exchange rates for more advanced learners.

• Use mapping tools or interactive business planning software to visualise location options.