Why are many offices being built as multi-storey buildings whereas single-storey factories are more common ?
Location decisions are affected by many factors, both internal and external to the organization's operations. Internal factors include the technology used, the capacity, the financial position, and the work force required. External factors include the economic political and social conditions in the various localities. Most of the fixed and some of the variable costs are determined by the location decision. The efficiency, effectiveness, productivity and profitability of the facility are also affected by the location decision. Location decisions are based on a host of factors; some subjective, qualitative and intangible while some others are objective, quantitative and tangible.
Territory selection
Now I n step (1) for the general territory/ region/area selection, the following are some of the important factors that influence the selection decision.
Markets: there has to be some customer/ market for your product/ service. The market growth potential and the location of competitors are important factors that could influence the location. Locating a plant or facility nearer to the market is preferred if promptness of service required, if the product is fragile , or is susceptible to spoilage. Moreover, if the product is relatively inexpensive and transportation costs add substantially to the cost, a location close to the markets is desirable. Assembly type industries also tend to locate near markets.
Raw Materials and Supplies: Sometimes accessibility to vendors/suppliers of raw materials, parts supplies, tools, equipment etc. may be very important. The issue here is promptness and regularity of delivery and inward freight cost minimization. If the raw material is bulky or low in cost, or if it is greatly reduced in bulk viz. transformed into various products and by- products of it is perishable and processing makes it less so, then location near raw materials sources is important. If as to minimize total transportation costs. The costs vary depending upon specific routes, mode of transportation and specific Products classification.
Transportation Facilities: Adequate transportation facilities are essential for the economic operations of a production system. For companies that produce or buy heavy bulky and low value per ton commodities, water transportation could be an important factor in locating plants. It can be seen that civilizations grew along rivers/ waterways etc. Many facilities/ plants are located along riverbanks.
Manpower Supply: The availability of skilled manpower, the prevailing wage pattern, living costs and the industrial relations situation influence the location.
Infrastructure: This factors refers to the availability and reliability of power , water, fuel and communication facilities in addition to transportation facilities.
Legislation and Taxation: Factors such as financial and other incentives fro new industries in backward areas or no-industry -district centers, exemption from certain state and local taxes, octroi etc. are important.
Climate: Climatic factors could dictate the location of certain type of industries like textile industry, which requires high humidity zones.
Site/ Community selection: Having selected the general territory/ region, next we would have to go in for site/ community selection. Let us discuss some factors relevant for this stage.
Community Facilities: these involve factors such as quality of life which in turn depends on availability of facilities like schools, places of worship, medical services, police and fire stations, cultural, social, and recreation opportunities, housing, good streets and good communication and transportation facilities.
Community attitudes: These can be difficult to evaluate. Most communities usually welcome setting up of a new industry especially since it would provide opportunities to the local people directly or in directly. However, in case of polluting, or 'dirty' industries, they would try their utmost to locate them as far away as possible.
Sometimes because of prevailing lav/ and order situation, companies have been forced to relocate their units. The attitudes of the people as well as the state government have an impact on industrial location.
Waste Disposal: The facilities required for the disposal of process waste including solid, liquid and gaseous effluents need to be considered. The plant should be positioned so that prevailing winds carry any fumes away from populated areas and so that waste may be disposed off properly and at reasonable expense.
Ecology and Pollution: These days there is a great deal of awareness towards maintenance of natural ecological balance, There are quite a few agencies propagating the concepts to make the society at large more conscious of the dangers of certain avoidable actions.
Site size: The plot of land must be large enough to hold the proposed plant and parking and access facilities and provide room for future expansion. These days a lot of industrial Areas/ parks are being earmarked in which certain standard sheds are being provided to entrepreneurs.
Topography: the topography, soil structure and • drainage must be suitable. If considerable land improvement is required, low priced land might turn out to be expensive.
Transportation Facilities: The site should be accessible by road and rail preferably. The dependability and character of the available transport carriers, frequency of service and freight and terminal facilities is also worth considering.
Supporting Industries and Services: the availability of supporting services such as tool rooms, plant services etc. need to be considered.
Land costs: These are generally of lesser importance as they are recurring and possibly make up a relatively small proportion of the total cost .of locating a new plant. Generally speaking, the site will be in a city, suburb or country location. In general, the location for large-scale industries should be in rural areas, which helps in regional developments also. It is seen that once a large industry is set up, a lot of infrastructure develops around it as a result of the location decision. As for the location of medium scale industries, these could be preferably in the suburb urban/ semi- urban areas were the advantages of urban and rural areas are available. For the small -scale industries, the location could be urban areas where the infrastructural facilities are already available.
