Final answer:
To build competitive advantage through location, a company must evaluate labor and capital costs, supply and consumer proximity, infrastructure quality, taxes, and governance, rather than primarily focusing on environmental regulation costs. Embracing comparative advantage principles and considering globalization effects are also key.
Step-by-step explanation:
In order to use location to build competitive advantage when competing on both domestic and international levels, a company must consider a plethora of factors. These include the costs of labor and financial capital, proximity to reliable suppliers, proximity to customers, the quality of transportation, communication and electrical power networks, local tax levels, and the competence and integrity of the local government. Environmental regulation costs do play a role, albeit usually a small one, but they are not the main driving factor for location selection. The principle of comparative advantage suggests that locations should focus on producing goods they create most efficiently and import those which they do not. Additionally, the forces of globalization and advances in technology have intensified competition, making the choice of location even more strategic.