Bulk-increasing industries

Describes the businesses that need to be located near to their customer as the final product (such as hand-made home furniture) is bulkier and heavier than the raw materials used to make it.

Bulk-reducing industries

Describes the businesses that need to be located near to the raw materials needed to produce a certain good, e.g. breweries should locate where there is a readily available supply of barley and water, as the weight of the final output is less than that of the raw materials.

Clustering

This occurs when businesses choose to locate near other firms operating in related industries in order to benefit from passing trade and demand for products in complementary markets.

Footloose organizations

These businesses do not have to locate in any particular area, i.e. they can choose to locate almost anywhere as there are no cost advantages of any particular location.

Government incentives

Financial motivators offered by the state to businesses to locate in a particular area or regions, perhaps due to high unemployment. Examples of such incentives include: grants, subsidies, tax allowances and interest-free loans.

Industrial inertia

This exists when a business chooses to remain in the same location although there are no cost advantages in doing so.

Infrastructure

Refers to the physical and organizational structures and systems necessary for society to function, such as transportation facilities, motorways (highways), road networks, and communications networks.

Insourcing

This refers to the use of an organization’s own resources in order to fulfil a specific job, function or project instead of it being outsourced to a third party provider.

Offshoring

This is an extension of outsourcing but involves relocating part of or all of an organization’s functions and processes overseas.

Outsourcing

This is the use of third-party subcontractors for carrying out non-core activities of an organization in order to improve operational efficiency and reduce production costs.

Subcontractors

These outsourced firms perform non-core activities for an organization. They are used for their expertise and the cost advantages they bring.