Waterloo EDC Blog

What are location advantages and how can they help my company?

Posted by Waterloo EDC on July 9, 2020

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This is the fifth part in our "Guide to Foreign Business Expansion" series tackling the 12 questions every business needs to ask. Download the full guide now.

Expansion to a new location is unlikely to make sense unless the new location provides tangible advantages over your current location, or provides concrete solutions to challenges facing your current location. There are a wide variety of location advantages that may tip the scale when deciding whether to expand to a new country and which country (or location within a new country) best fits your needs.

Five location advantages you should consider are trade access, consumer/market proximity, adjacent business communities, proximity to talent sources and lower costs.

Trade Access

One of the biggest location advantages for a company that sells physical products is access to a comprehensive trade network. Trade agreements can reduce tariffs, making it cost-effective to enter new markets and making your products cost-competitive with similar offerings. Canada has the world’s most comprehensive trade network. We have trade agreements with more than 40 countries representing 1.6 billion customers and more than 60% of the global economy. This makes our country a one-stop shop for access to some of the world’s largest economies, including Japan, the United States of America and the European Union.Click here to download the guide to foreign business expansion

Consumer/Market Proximity

Like trade access, strategic consumer/market proximity is about moving product, but the objective is to minimize travel time while maximizing the number of potential customers. For example, if your company sells automotive parts or products, it is advantageous to locate near automotive manufacturers and suppliers. If you sell consumer goods, you’ll want to locate within a short distance of large population centres.

Waterloo is located a very short distance from Canada’s largest consumer market (Toronto), and within North America’s largest automotive corridor and Canada’s largest manufacturing corridor. We’re also within a one day drive (1200km/745mi) of 150+ million consumers in cities like New York, Chicago, Boston, and Montreal.

Business Community and Culture

A strong local ecosystem that supports your type of business is invaluable and can be a primary reason for expanding to a particular community. Do they have similar businesses? Is the culture cutthroat, collaborative, or somewhere in between? What kinds of support organizations – accelerators, research supports, etc. – are available? The answers to these questions can have a strong correlation to your ability to find experienced talent, innovate new products and, ultimately, grow your business.

In addition to having customers in close proximity, and a local ecosystem that can help a company grow, many businesses should also consider the
communities that are adjacent to their target location. Industries aren’t often contained within a single community, so proximity and access to related business communities and ecosystems should interest businesses looking to expand to a new location. For example, Waterloo is part of Canada’s largest manufacturing corridor, North America’s largest automotive corridor and North America’s second largest tech cluster. While these entire industries aren’t contained within Waterloo, they are within close enough proximity to spur partnerships, ensure talent/workforce availability, etc. for businesses working in any one of those areas.

Proximity to Talent Sources 

You can’t have a successful expansion – or a successful business – if you don’t have access to talent. Expanding to improve talent attraction and retention through greater proximity to existing workforces or strong talent pipelines is the primary location advantage for many companies. Communities that have a strong existing workforce have demonstrated that they can retain talent. Strong talent pipelines are built on excellent post-secondary education. When looking at potential locations for expansion, consider the quality of the educational institutions in the area, including the programs they’re best known for.

The Toronto-Waterloo Corridor – the second largest tech cluster in North America – has nearly 300,000 tech workers, many of Canada’s top universities and 10,000 tech companies. Google, Apple, SAP and IBM have located in the Toronto-Waterloo Corridor as a result of our high-quality tech talent.

Lower Costs 

This is very likely the most obvious location advantage – lower costs. Cost savings come in all shapes and sizes, including labour costs, office rental, energy rates, business taxes, etc., and each one of these types of costs differ between countries.


Click here to download the  Guide to Foreign Business Expansion


Topics: talent, strategic location, cost advantages