How to Use Location Quotient Calculators to Your Benefit


Data-driven decision-making isn’t just a passing trend you can overlook. It’s a critical business process you’ll need to commit to before making any strategic move. 

Actively or passively, your business already relies on data every day. Product data informs you about the success of your new product launches – customer data guides your marketing campaigns, employee data leads to positive changes in the workplace. However, if you want to drive business growth, you’ll need to look into industry data, and the best way to do it is with the help of a location quotient calculator. 

The location quotient is a valuable tool for measuring an industry’s competitiveness and identifying new business opportunities. Learn how you can use it to your advantage. 

Location Quotient in a Nutshell 

To use it to your advantage, you first need to know what it is. Often referred to as LQ, the location quotient is a simple equation that helps you determine how concentrated a specific industry is within a region compared to your chosen benchmark region. Most commonly, you’d be comparing the dominance of an industry within a city or state to the national average. 

However, it’s not always necessary to compare the concentration to a larger benchmark (in a city vs the whole country). You can use any reference point that suits your unique needs. As long as you follow the formula, you’ll receive insightful data: 

Location quotient = Regional asset concentration ÷ Benchmark asset concentration 

Needless to say, the location quotient calculator isn’t useful solely for determining the concentration of an industry. You can use the same formula to calculate regional employment rates, determine the local specialization, and more. 

Types of Data You Need For Calculating The Location Quotient 

To perform accurate LQ calculations, you’ll first need to gather all the relevant regional and national metrics, job market data, and specific firmographic data. You’ll need insights into the state of the regional and national economies, their employment rates, and even import and export rates across different industries. 

Many import industries in a region, for instance, signify that the supply of products or services doesn’t meet the local needs, so they’d be considered low LQ. On the other hand, many export industries signify a surcharge in supply – hence, they’re considered competitive, high LQ industries. 

Only once you’ve ensured that you’ve collected accurate data should you start using your location quotient calculator. 

Collecting Data For Your LQ Formula 

Collecting relevant LQ data can be an arduous process that should never be done manually. Manual data collection methods are time-consuming, expensive, and have higher risks of human error that could compromise data quality and accuracy. 

Fortunately, you can automate the process using web scraping technology. There are plenty of valuable online sources (such as the US Bureau of Labor Statistics) where you can gather an abundance of valuable information within moments using an automated scraper. However, remember that your access to such content could be restricted. 

If you want to maximize your efficiency, it’s best to use alternative data sources. You’ll gain access to real-time data and won’t have to search for ways to bypass any restrictions. 

Using LQ to Your Advantage 

The local quotient offers unique insights that can help you set your business on a path to success. Take a look at just some of its numerous advantages. 

Conducting Competitor Research 

If you want to expand your business to new markets, the LQ can help you conduct competitor research and learn more about the strength of your industry within a specific region.

Industries with high LQ are generally considered to be saturated and highly competitive, meaning that you’ll have to develop a strong strategy to become the top performer in the area. 

Assessing Talent Pools in a Region 

The LQ can also be valuable in helping you assess the available talent pools, allowing you to determine whether a region has the type of employees you need. If you’re searching for new employees, look for regions with high LQ – it’s a sign that there are enough skilled employees who could become a good fit for your company.

Low LQ could signify that there’s a lack of available talent. 

Identifying Industry Gaps 

Using your location quotient calculator, you can discern whether a region has any industry gaps you could fill. It can help you perfect your market research and offer you valuable insights into the realistic state of your industry and niche within an area. 

Finding Lucrative Investment Opportunities 

Although the LQ is indispensable to businesses, it can also prove to be a valuable tool for investors. You can use the formula to identify endangered and pinpoint growing industries and make data-driven investment decisions. 

The location quotient is a powerful tool to help you perfect your expansion strategy. However, to take full advantage of it, you’ll need to ensure the utmost accuracy in your data collection methods.



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