Chapter I

Introduction

Location is the physical space where your business exists. The location of a

business is one of the most important variables in determining potential business’ success.

Businesses need to be establish in a location that generate the most customer traffic. The

best location is one that minimize the costs while maximizing income. Before establishing

a business, choosing a business location needs to be prioritize because this might lead to

the business’ success or failure. Choosing a location for a new business is one of the

important decisions entrepreneurs make during the planning phase of launching ventures.

The location of the business can affects many aspects; how it operates, its feasibility and

its accessibility. In choosing your business’ location you must consider many variables like

customer’s convenience, the expansion potential, potential revenues and cost of the

operation to oversee business’ success. This study will further elaborate how can a strategic

business location generates business success. This will also serve as a guide for young

entrepreneurs whose trying to build their own business establishment, this will help them

choose good business location. Different option suit different businesses. By taking into

account all the relevant factors, you can identify suitable location that meets the needs of

your business, your customers and staff.

“The three most important things in retailing are – location, location and location.”

Location is important for businesses in the retail and hospitality trades because they rely a

great deal on visibility and exposure to their target markets. But location is also important

for service and manufacturing ventures, which have such costs as advertising, promotion,

and distribution that are a direct result of where they’re located.

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Statement of the Problem

This research study aims to know “The Impact of a strategic business location in

business success”. This will also answer the question “How can a strategic business

location generate business success?” This will be guided by the following sub-problems:

 How to choose a good business location?

 What are the impacts of having a strategic location?

 What are the entrepreneur’s basis in choosing their business location?

Significance of the Study

This part of the study its relevance, “The Impact of a Strategic Business Location

in Business Success” is significant to the following:

To the Students. This will help them further understand on how can a location has

a great impact in starting a business. This will give them additional knowledge about the

topic. As a student it is also important to explore other things to help them decide for what

they want in the future. This study may catch their interest to pursue a business course.

Specifically for ABM students, some parts might help them answer their questions on how

can strategic business location contributes to business success.

To aspiring Entrepreneurs. As a part of starting a business, choosing a location is a

very important decision, this research will help aspiring entrepreneurs choose strategic

location that will match their business in minds. They can get enough information to decide

where to build their business.

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 To the Teachers. Informations from this research study might help them in teaching

lessons about Business or Marketing at school. They can get additional information from

this study that they can add to their lessons.

To Entrepreneurs. This study will help entrepreneurs to better understand the

importance of location. If they’re trying to build another business, it will help them decide

and choose a good business location.

Definition of Terms

Entrepreneur – a person who starts a business and is willing to risk loss in order to make
money, one who organizes, manages, and assume the risk of a business or enterprise
Profitability – producing or yielding advantageous returns or results
Profit – money that is made in business through investing, etc., the excess returns over
expenditure in a transaction or series of transaction.
Retail business - a business that sells products and services to consumers for their personal
or family use.

Suitability – having the qualities that are right, needed, or appropriate for something.

Reference: Merriam-Webster Dictionary

https://www.entrepreneur.com/encyclopedia

Scope and Delimitation

The main focus of this research is to show and identify the impact of a strategic

business location in business success. The research will study and will get information from

successful businesses within the municipality of Surallah. This will include careful

observations on what may be the reasons why did they chose to build/place their business

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in that certain place. The researcher will also interview few entrepreneurs to get

information about their decisions regarding the location of their business.

The respondents will be the owners of the businesses within Surallah, specifically

the public market of Surallah and some will be taken around it.

Conceptual Framework

Strategic Business Location

Customer Potential Expansion Site Few Direct

Convenience Revenues Potential Suitability Competitors

Owner’s and Customer’s

Satisfaction

Business
Success
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 Chapter II
Review of Related Literature

Location selection is one of the business decisions that have to be made carefully.

Past research has shown that business location have had relationship with business’ success

(e.g. Alli et al., 1991). In this context, measurement of business success can vary, but it is

most likely related to both subjective and objective data on multiple aspects of performance

such as sales growth, market share and profitability (Dawes, 1999).

According to Dicken (1971), the location decision can be defined as a part of the

objective environment which represents the total sum of information in the economy, either

globally or regionally, with which the firm receives and send information flows and signals

of one kind and another. The institutional (enterprise) theory interprets location as an

exercise in bargaining (Krumme, 1969). In more detail, location decision can be viewed as

a part of investment decisions that have strategic purposes, i.e. they are made to meet the

basic motivation of corporate strategy (such as growth, profits and security) by gaining

access to new markets or sources of supply in a way that makes sense to individual

corporation (Hayter, 1997, p. 170)

Recent studies of location decision have sought quantitative indicators of the

decision’s success by linking location selection decisions to enhanced business success.

Although the business’s success does not depend solely upon the location of business, but

the latter influences the former. Some scholars state that business location had relationship

with business’ success (Alli et al., 1991; Chan et al., 1995; Ghosh et al., 1995).

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 According to Juliet Alfred, et al (2015), Department of Marketing, University of

Calabar, “Choosing a business location require some serious work which include: Precise

planning and research, surveying the demographics, checking sources of material supplies,

doing competitors’ appraisal, being abreast of community issues, understanding the state

laws and taxes, and much more. Careful determination of new sites is critical for most retail

and consumer service businesses. A business's location is key to successful operations and

overall growth.” This implies that choosing rational business location attracts favorable

opportunities to the operators, long term success and goal achievement of the business.

Juliet Alfred, et al (2015) also wrote that “It is essential for business operators to

put location at the top of their minds. If you're preparing to open a food or retail business

with a storefront, putting your business in the proper location might be considered the most

important factor during startup. Of course you need a winning product, too, but how will

anyone know about that product unless you get them through the door? Hence, the three

most important decisions you'll make are: “location, location and location," affirms

Overbo. Careful determination of new sites is critical for most retail and consumer service

businesses. Locations of retailers must be accessible to the potential target group of

customers. A far distance has a negative effect on the selection of a retail store through

reducing frequency of customers visiting a store. Stores located in the centre of a city

benefit from their next door to remote customers. Therefore, distance from home and

distance from workplace would have a relationship with the amount of purchase from retail

stores”.

One early work by (Fox, Postrel and McLaughlin, 2007) states that “The occurrence

of stores locating near other retail stores is known as ‘agglomeration’. Stores of various

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types irrespective of their product line commonly co-locate in shopping centers and malls

and this is known as ‘inter-type agglomeration’ Also, stores carrying similar product lines,

as in the case of restaurants, hotels, furniture stores, and automobile dealerships frequently

locate closely to each other. This situation is known as ‘intra-type agglomeration’.

The best location for service business (i.e. retail business) or other consumer service

providers are in places with a high market density (Hanink, 1997). Other factors such as

traffic flows, population densities and local quality of life are also important in selecting

location for a new firm.

Schmenner (1994) introduces an approach to study the service business location.

His study approaches the location decision as an intuitively appealing two-step procedure,

which first chooses a general area for the service operation, and only then a particular site.

For each step in the decision, influences can be described as being “musts” or “wants”. The

decision maker is assumed to look first to “musts” and to satisfying them, and then to move

on to consider otherwise desirable features, termed “wants. for the location.

A classification of location factors has been made by Lloyd and Dicken (1977)

followed by Van Dijk and Pellenbarg (2000) which distinguish them between : “firm

internal” factors (e.g., quality of management, organizational goals, ownership structure,

growth rate of turnover, employment and profits), “location” factors (absolute and relative

characteristics of the location site, e.g. lot size and size of possible expansion space;

distance to customers and suppliers), and “firm external” factors (e.g., government policy,

regional economic structure, technological progress, etc.).

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Location Decision in Service Business

It is generally argued that the characteristic of service business and manufacturing

obviously differs. The main differences is regarding to time of production and consumption

considerations. Services businesses traditionally have been thought to be locationally

connected to markets, while the manufacturing firms (primary and/or secondary sectors) –

such as such as agriculture and other direct uses of natural resources or manufacturing –

are confined by supply considerations. Since one of the characteristics of service is that

service could not be stored, at least in the conventional sense, so they must be provided

where they are consumed (Hanink, 1997).

The service sectors can be divided into two major sectors: tertiary and quaternary

(Hanink, 1997). The tertiary sector consists of those activities such as transport,

government, wholesale and retail trade and the general business and personal services,

while the quaternary sectors which are sometimes called the information sector because

providing and managing information, consists of those activities such as banking,

insurance, and management service. Another important distinction between services is

defined not by what they provide, but by their market. They are consumer services and

producer services. Whether the service issues from the tertiary or the quaternary sector,

services sold to households are called consumer services. Those services sold or otherwise

provided to business are called producer services.

As mentioned in the previous section, the service business establishments in the

tertiary sector are almost always found in proximity to their market, due to the fact that

most service cannot be stored. Likewise, market accessibility is important for the service

business establishment in the quaternary sector that is characterized by frequency of

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purchases. Because their production and consumption take place simultaneously, the best

location for service business (i.e. retail business) or other consumer service providers are

in places with a high market density (Hanink, 1997). Other factors such as traffic flows,

population densities and local quality of life are also important in selecting location for a

new firm.

Schmenner (1994) introduces an approach to study the service business location.

His study approaches the location decision as an intuitively appealing two-step procedure,

which first chooses a general area for the service operation, and only then a particular site.

For each step in the decision, influences can be described as being “musts” or “wants”. The

decision maker is assumed to look first to “musts” and to satisfying them, and then to move

on to consider otherwise desirable features, termed “wants. for the location.

His study shows that labour issues, infrastructure and quality of life tended to be

more important for those firms located at more distance from the city centre. Proximity to

customers is valued by firms with several distinct characteristics: high employment, more

hours open per week, high capital/labour ratios, sites having always been in this vicinity,

strong local business ties, high value placed on particular sites. Many of these

characteristics apply also to the proximity to competitors influence. Low costs or rents

appeal most to large service firms and to those that draw on a wide market area for their

sales. In addition, they find that hospitals, education and social services, personal and

business services (e.g. direct mail, cleaning, graphic arts, and temporary employment

agencies) and utilities are relatively immune to many of the general area influences.

On the location of particular sites, their findings show that the importance of

adequate parking is relatively greater for those service operations whose sales are largely

9
local in origin, are open longer hours than other services, and relocate at some distance

from downtown. Also, the attractiveness of the building and high customer traffic area sites

is most important for those services that have greater interaction with the customer. Those

industries that are most affected by high customer traffic, adequate parking area, and

similar influences are the more retail-oriented services: retailing, restaurants, banking and

auto sales-services.

Location Decision in Retail Business

“Retailer as a business that sells products and services to consumers for their

personal or family use”. A retailer is the final business, after wholesaler, in a distribution

channel that links manufacturers with consumers

Furthermore, Levy and Weitz (1998) state that selecting retail location is one of the

retailing strategies, because of some reasons. First, location is typically the important

consideration in customer’s store choice. Second, location decision can be used to develop

a sustainable competitive advantage. In fact, retail location is not restricted to only new

retailers. Mazze (1972) mentions that population shifts, new modes of transportation,

changing consumer life styles and competitive conditions are often considered as factors

that make retailers to reevaluate their locations. He also states that location is one of the

factors that determine success of a retail store.

According to Levy and Weitz (1998), there are three general factors affecting the

attractiveness of market in retail business: demographics, business climate and

competition. Demographic factors relate to some conditions, such as population density,

education, income and family size (Mazze, 1972; Levy and Weitz, 1998). Demographic

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factors considered in retail business location are dependent on the target market of a

particular retailer. For example, an Internet café with student as its target market often

choose their location near to university, school or student dormitory. Business climate is

mainly considered to ensure strong retail environment in the future. This factor may include

market’s employment trends to guarantee availability of labour and availability of

necessary utilities. For instance, an Internet café relies on service from an ISP to provide

access to the Internet, hence, the availability of such service in the future should also be

guaranteed. The level of competition in an area also affects demand for a retailer’s products

or services. For example, if two convenient Internet cafés are too close together, their

market will shrink since they offer the same services.

In more detail, Mazze (1972) and Levy and Weitz (1998) mention several factors

that should be taken into account in selecting retail location: such as term of occupancy,

retail grouping or being in a centre, accessibility, and legal consideration. The term of

occupancy relates to the cost of renting/building and utilities, since most retailers prefer to

lease a building for their store rather than to be the owner of that. Hence, once a particular

location is chosen, retailers still face a multitude of decision, either will lease or buy. In

fact, most of the best locations such as in shopping malls are only available by leasing

(Levy and Weitz, 1998).

Retail grouping refers to a group of retailers that have the same target market

(Mazze, 1972). It is important for a store located in retail grouping or a centre of business

activities. The theory of cumulative attraction as formulated by Nelson (1958) suggested

that retailers indeed benefit from agglomeration. It means that a cluster of similar and

complementary retailing activities will generally have greater drawing power than isolated

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stores that engage in the same retailing activities (Levy and Weitz, 1998). For instance,

shoe stores, clothing stores, cosmetic and perfume shops seem to do better if they are close

to one another. Likewise, stationary shops, photocopying, computer rental and Internet café

seems to get more benefit if they are close to another.

Referring to Levy and Weitz (1998), the accessibility of a retail location is defined

as the ease with which a customer may get into and out of the store, and it can be analysed

into a macro analysis and a micro analysis. The macro analysis concentrates on the road

pattern or the position of retailers relatively to highway (Mazze, 1972) or freeway so that

customers can travel easily to the store. The micro analysis focuses on issues in the

immediate vicinity of the store such as visibility, vehicular traffic, availability of parking

area, congestion, transportation facilities, and ingress/regress (Levy and Weitz, 1998).

Legal consideration is also important factors in considering location of a store.

Legal issues that affect the location decision of a store include environmental issues,

zoning, building codes and signs and licensing requirement (Levy and Weitz, 1998). For

example, retailers must consider laws regarding how land is used when choosing a certain

location for their stores.

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 Chapter III

Methodology

This part of the research deals mainly with methods and procedures used by the

researcher. This includes the research method, respondents of the study, sampling

technique, instrument for data collection and data gathering procedure.

Research Method

The researcher used a descriptive method of research and was focused at

respondent’s opinions and thought about the given topic. The researcher used

questionnaires and had done interviews to collect data and to further understand the said

topic of the study.

Respondents of the Study

The respondents of the study were the owners of businesses within Surallah, South

Cotabato. Any kind of business was considered by the researcher because the study was

focused on business location and its success, regardless of what kind of business it is. The

respondents was mainly from the Public Market of Surallah and was composed of 10

owners of different business. Only owners are applicable to answer the questions given. In

addition to it, the researcher also had done observations to some thriving businesses within

the town to widen its scope and discover possibilities.

Sampling Technique

Simple random sampling was used in collecting data. The respondents were

selected giving each unit an equal frame of being selected in the sample.

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Research Instruments

The researcher constructed sets of questions to gather data needed. The

questionnaires were composed of questions that will help the research gather informations

to answer its problems.

Data Gathering Procedure

As said above, the researcher used questionnaires as an instrument to collect data

and information about the study. The study took place within the town of Surallah,

questionnaires was given to the owners of the business to be answered. Before doing the

survey, the researcher cited establishments that can be a source of information. The

questionnaires were administered directly to the chosen sample of the study and were

successfully gathered with precise answers. Observation was also made to some successful

establishments, observing its surrounding, the response of its customers and the advantages

of their locations.

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 Chapter IV
Data Presentation and Analysis
This part of the research will presents the data and information gathered from the
survey. The data will be presented and will be analyzed
Presentation
The following are the information given by the respondents as they answer the
given set of questions to them. There 10 respondents in total.
Below are the responses of the respondents:
1. Did you personally decide to choose this location?
Frequency Percent
Yes 8 80%
No 2 20%
Total 10 100%1
The table above shows that most location of the respondent’s business were decided by
them personally. The remaining 20% were influence by someone close to them, mother
and mother-in-law in specific
2. In choosing this location, did you consider this things?
Frequency Percent
Consumer Convenience 10 !00%
Expansion Potential 1 10%
Site Suitability 7 70%
Few Direct Competitors 2 20%
Potential Revenues 1 10%
The respondents may choose multiple answers in this given question. 100% answered that
they considered customer convenience in choosing their location, 70% considered site
suitability, 20% considered few direct competitors, 10% considered expansion potential
and another 10% for potential revenues. Before starting their business, they considered
things that will help them in the future.
3. How long does your business stand here?
Frequency Percent
0-1 year 1 10%
2-4 years 1 10%
4-5 years 0 0%
6 years above 8 80%
Total 10 100%
The information above shows that 80% of the respondents already in that certain location
for 6 years and above, 10% answered 2-4 years and another 10% for 0-1 year. As the
researcher gathered their opinions, they explained that their location was good enough.
15
 4. Does this location helps you to generate your desired profit?
Frequency Percent
Yes 10 100%
No 0 0%
Total 10 100%1
In this table, 100% of the respondents agreed and confirmed that their current location
helps them to generate their desired profit.
5. Do you think that this location will contribute to generate your success?
Frequency Percent
Yes 10 100%
No 0 0%
Total 10 100%1
The respondents are all positive that their current location will contribute to generate their
success in business.

Data analysis

The data and information gathered proves that location has an important role in

business success. That all entrepreneurs are also concerned about the standings of their

businesses. Most of them are staying in one location for years and had gained their desired

profit. According to them, they are contented and are willing to stay. Some wished to move

their business due to some circumstances, but then staying at a place with enough customer

to generate profit is good enough for them.

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 Chapter V
Summary

The location of a person’s business is one of the important variables in potential

business success. This research study shows that most business location that was planned

thoroughly are highly to have a good result and once you've already started your business

moving it somewhere else would be difficult. Settling in one place means that your

business is gaining its desired profit and owners are satisfied on their current situation.

Conclusion

In starting a business there are lot of things to be considered and deciding about

the location is one of the important decision a proprietor should make. Base on the

information gathered, there’s an appropriate location for every kind of business. Once

you’ve decided about your chosen location and had started your business it is hard to

undo your decision. A business needs to be located in an appealing area that is accessible

for most transportation and mass transit. Respondents proved that, location is one of the

profit generator in business.

Recommendation

The researcher is highly recommending that before starting a business,

brainstorming about the location is needed. Considering about many things or

circumstances about unforeseen events is also strategic. You must analyze first the nature

of your business and then find the proper place or the most appropriate location for it to

be build. A business must be located in desirable area for it to benefit the exposure and

foot traffic of other neighborhood business.

17
References

http://smallbusiness.chron.com/effect-business-location-business-success-596.html
https://www.researchgate.net/publication/264455817_Evaluating_the_Importance_of_Bu
siness_Location_Factors_The_Influence_of_Facility_Type
https://www.tutor2u.net/business/reference/business-location-introduction
http://businesscasestudies.co.uk/business-theory/operations/location-of-business.html
https://hbswk.hbs.edu/item/location-location-location-the-strategy-of-place
http://businesscasestudies.co.uk/business-theory/strategy/business-strategy.html
https://www.tutor2u.net/business/reference/business-location-introduction
https://www.entrepreneur.com/encyclopedia/location
https://thesbhub.com.au/start-a-business/launch/choose-the-right-location-for-your-
business.html
https://businesswales.gov.wales/choose-right-premises-your-business-startup
https://www.thebalance.com/choosing-a-location-for-your-business-1201032
https://yourbusiness.azcentral.com/business-location-important-3566.html
https://bizfluent.com/facts-5859788-impact-location-business-success.html
http://invest.ashfield-mansfield.com/5-ways-location-can-affect-business-success/
http:///D:/GIJBBusinesssuccessInternetCafeIndarti2004.pdf

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 Curriculum Vitae

Name: Kezia Mae G. Dones

Age: 18 yrs. old

Birthday: September 19, 1999

Address: Prk. Asparagus, Colongulo, Surallah, So. Cot.

Mobile: 09755510030

e-mail: keziamaed@yahoo.com

Educational Background Awards Received

Elementary
 Colongulo Elementary School -Second Honors
(2006-2012) -Best in Science and Hekasi
Junior High School
 Libertad Nat’l High School -Tenth Honors
(2012-2013) (2015-2016) -Advance Proficiency Awardee
 Saskatchewan Adventist Academy -Unit Captain (Pathfinder)
of Luhib Inc.
Senior High School
 Libertad National High School -With Honors (G11)
(2016-2018) -With High Honors (G12)

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