Business – 1.1 Enterprise – The nature of business activity | e-Consult
1.1 Enterprise – The nature of business activity (1 questions)
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When land is scarce, businesses face higher costs for acquiring or leasing suitable sites, which can lead to several strategic adjustments:
- Increased production costs: Higher rent or purchase prices raise the overall cost base, potentially reducing profit margins.
- Location‑based competitive advantage: Firms may relocate to areas with better access to raw materials or transport links to minimise logistics expenses.
- Scale limitation: Limited space can restrict the size of plant and machinery, capping output capacity.
These impacts can be summarised as follows:
| Impact | Business response |
| Higher land costs | Raise product prices or seek cost efficiencies elsewhere. |
| Limited space | Adopt vertical integration or outsource parts of production. |