Business – 9.1 Location and scale – Location | e-Consult

Model Answer:

Reductions in transport costs, such as lower fuel prices or improved logistics networks, can make distant locations more viable for service firms that rely on the movement of personnel or equipment. For example, a consulting firm may relocate to a regional hub where cheaper air travel enables consultants to reach clients across a wider area without significantly increasing travel expenses.

Technological advancements, particularly in digital communication, can diminish the need for physical proximity to clients. The rise of high‑speed internet and cloud‑based collaboration tools allows firms like IT support or financial advisory services to operate from locations with lower overheads. A call centre might move from a city centre to a smaller town where office rents are cheaper, while still maintaining service quality through VoIP and remote monitoring systems.

Both factors often interact: improved transport infrastructure (e.g., high‑speed rail) combined with remote working technologies can enable a firm to relocate to a location that offers a better quality of life for staff, lower costs, and access to new talent pools, thereby enhancing competitiveness.