Location or Something Else?

"Location has traditionally been one of the most important determinants of a business’s success. The importance of location is not likely to change, no matter how advanced the development of computer communications and others kinds of technology becomes."

Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

Traditionally, indeed location has been one of the most important determinants of a business's success. This could be being located near raw materials required for the industry, proximity to a port or being situated near a city which has a lot of talented people required to run the industry on day-to-day basis. Have the things changed now with development of technology? I think they have.

In the past, most of the traditional businesses did need an appropriate location to survive. A good example is Jamshedpur, a steel plant/city in India founded way back in 1800s by the founder of the Tata group, Jamshedji Tata. The steel plant was immensely successful as it was located very near to an iron-ore mining site and a limestone-ore mining site besides being extremely near the railway track. The cost advantage enabled Jamshedji Tata to lay foundation for what is now the most respectable business house in India. The strategic choice of location played a pivotal role in the same. The same logic holds true for most of the businesses  founded then.

Nevertheless, technology and emerging ways of doing business are increasingly reducing the importance of location. Even though location may still prove to be fundamental to industries like manufacturing, retail, energy, metals and housing; it is not as important to most technology and service-oriented businesses. Considering that they are a significant part of most developed economies, this cannot be ignored. In these sectors the business defines the location instead of the other way round. A good example of this is the Silicon Valley. All the technology companies that opened offices there have made it a hot-bed of technology. There were no special resources that dictated the location of companies. 

In the same way, a service company may be located anywhere in the world and would not face any location disadvantage. This is clearly seen in the case of companies catering to outsourcing demands for legal, knowledge and business processes. 

Another factor that has undermined the importance of location is the concept of specialized production that has come up with improved technology. No longer a car company tries to produce all the parts on its own. In fact, the parts are tendered off to specialized vendors to save significant costs to the company. This acts as a substitute to any advantage a manufacturing company may hope to derive from location. 

Concluding, the location used to be the most important determinant of a business's success as in the past technology and services did not form a significant part of the economy. However, with the growth of technology and services, especially after the IT revolution, it no longer holds true. Even though location continues to be important, it is no longer the most important determinant of a business's success.