1. Ch. 12 Services
Key Issue3-4

2. Warm Up
The transfer of an automobile from a train to a truck at a distribution point is a good example of a(n)
A. Gross national product
B. Growth pole
C. Outsourcing
D. Break-of-bulk point
E. Carrier efficiency

3. Market-Area Analysis Profitability of a location is determined by
Compute the range
Compute the threshold
Draw the market area
The gravity model predicts that the optimal location of a service is directly related to the number of people in the area and inversely related to the distance people must travel to access it. The 2 rules to the gravity model are
The greater the number of people living in a particular place, the greater is the number of potential customers for a service.
The farther people are from a particular service, the less likely they are to use it.

4. Market-Area Analysis Linear Settlement Nonlinear Settlement
Gravity Model
Nonlinear Settlement
Comparison of all possible locations

5. Optimal Location (for Pizza-Delivery Service)
Why is this the best location?
Fig. 12-6: The optimal location for a pizza delivery shop with seven potential customers in a linear settlement (top) and with 99 families in apartment buildings (bottom).
In a linear settlement, the best location for a service is the median

6. Rank-Size Distribution
Rank-size rule—second largest city is ½ the size of the largest, fourth largest city is ¼ the size of the largest, etc.
Forms a straight line when graphed
Very common in US, and several MDCs in Europe

7. Rank-Size Distribution of Cities
Fig. 12-9: Cities in the U.S. closely follow the rank-size distribution, as indicated by the almost straight line on this log scale. In Romania, there are few settlements in two size ranges.

8. Primate City Rule
The largest city has more than twice as many people as the second-ranking city
Several MDCs in Europe (Denmark, United Kingdom)
Common in LDCs
What are the effects of Rank Size or Primate City patterns?

9. Periodic Markets
Collection of individual vendors who come together to offer goods and services on a specific day
Farmer’s Markets
Flea Markets
Food vendors/tail gating

10. Why do Business Services Locate in Large Settlements?
World Cities
Hierarchy of Business Services
Economic base of settlements

11. Modern World Cities
World cities have emerged where a high percentage of the world’s business is transacted and political power is concentrated.
With inventions in transportation and communications, world cities have had even more impact on the global economy.

12. Business Services in World Cities
What caused the clustering of business services in the modern world city?
The Industrial Revolution
Corporate headquarters, financial services, banks, insurance, law firms, advertising and transportation are some of the types of business services found in world cities.
These services are large in scale and serve both national and global markets.

13. Consumer Services in World Cities
What drives the market for consumer services in world cities?
Large size and high incomes
What type of consumer services are found in a world city versus a rural community?

14. Public Services in World Cities
What public service is found in most world cities?
National capitals
What type of international public service is found in the world city of New York and Brussels?
The United Nations and the European Union

15. Hierarchy of Business Services/Cities
World Cities
Command & Control Centers
Specialized Producer-Service Centers
Dependent Centers

16. World Cities
Part of the global economic system because they are centers for the flow of information and capital.
Most important are London, New York and Tokyo.
Each is the largest city in its respective regions and operates the world’s most important stock exchanges.
There are lesser world cities and examples include Los Angeles, Paris, Singapore, Mexico City and Houston.

17. Command and Control Centers
Contain the headquarters of many large corporations, well-developed banking facilities, other business services.
Can be categorized as regional and subregional.

18. Specialized Producer-Service Centers
Specialize in offering a more narrow and highly specialized variety of services.
Examples include research and development for motor vehicles in Detroit or major university cities.

19. Dependent Centers
Provide relatively unskilled jobs and depend for their economic health on decision made in the other types of cities.
Examples include resort centers such as Las Vegas, Manufacturing centers, Military centers such as San Diego, and Mining centers.

20. Business Service Cities in the U.S.
Fig : Below the world cities in the hierarchy of U.S. cities are command & control centers, specialized producer-service centers, and dependent centers.

21. Economic Base of Settlements
Basic Industries – export primarily to consumers outside the settlement.
Nonbasic Industries – enterprises whose customers live in the same community.
Economic Base – a community’s unique collection of basic industries.
To determine a community’s basic industry, the percentage of workers employed in a particular industry is compared to the percentage of all workers in the country employed in that industry.
New basic industries lead to stimulating new non basic industries

22. Economic Base of U.S. Cities
Fig : Cities that have a high proportion of their labor force engaged in the specified economic activity shown.

23. CBD Clustering of Services
Retail/Business services
High threshold—department stores
High range—luxury stores
Serving CBD workers—lunch, office supplies
Business services—advertising, banking, law
High land costs due to competition for limited space
Activities excluded from the CBD
Manufacturing
Fewer residential areas
Results in lots of commuting!
Central Business District: area of the city where retail and office activities historically cluster

24. Suburbanization of Businesses
Suburbanization of retailing
Planned shopping centers or malls
Serve as community facilities
Suburbanization of factories and offices
Cheap land
Better truck access

25. Business Services in LDCs
Off-Shore Financial Services
Usually islands and microstates
Taxes-low income taxes. US loses $70 billion a year because companies hide their assets in offshore tax havens
Privacy-People can hide their money in case of bankruptcy, divorce, or malpractice law suit from creditors
Back-office Functions
Business Process Outsourcing
Insurance, Payroll, Transcription and other clerical work
LDCs provide low wages, so payroll and paperwork can be done in another country for cheap
LDCs that have a large number of English speakers attract back office jobs

26. China, India and the US China—manufacturing—why?
India—growing service sector—why?
US—service jobs tied to an urban settlement—why?