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Managing a Business/Value of location


Dr. Thompson,

This may sound a philosophical question, but what is the value of location in prices/quantities for a business? Let´s imagine a city center versus some suburb of that same city.
Usually, in city centers rents are higher. So, businesses there tend to charge higher prices or, on the other hand, have a higher likelihood of "selling" more than in suburbs. Which one, or both, do you think is the likeliest cause for the higher value of some locations in relation to others? Can I expect that, if I travel to a city center, I will probably end up by paying more than by going to some other store which sells the same product, but placed further from the center?


Hello Luis

Location, as they say, is everything. This doesn't mean every business needs to crowd into the city centre. One must examine the demographics associated with the products and services for example a senior lawyer would do well to locate close to the law courts.

I have personally found that many retail businesses in the city centre charge less because they have greater volume of customers and because they have greater competition. High rents are driven by land prices and prestige of the location but you may find that certain business remote from the city centre will change less to attract customers.

Prices are driven by factors such as turnover, obsolescence and the economic circumstance of the market. Fashion goods, for example, have a short shelf life. It is useless locating a high end boutique in a low income surburb or a huge supermarket where there is small population, there may be some pull factors but they work better for the larger population area

I hope I have helped you

Managing a Business

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Brian Thompson


My expertise extends to general management, financial management, corporate govenance and everyday managerial problem solving


I have in excess of 30 years experience in the management of public and private organisations

Revival ~ a different perspective


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