PLANT LOCATION


Plant location:

Plant locations refer to the place of manufacturing or the place of industry.


Types of locations:

  1. Village – Rural Location.

  2. Suburban – In between Village & City.

  3. Urban – City.

Ideal Location:

It is defined as the one where the cost/unit manufacturing is low and high profit are experience.

Factors governing location:

  1. Availability of raw materials and accessories.

  2. Nearness to market.

  3. Availability of labor.

  4. Availability of power (regular and supplementary)

  5. Government rules and regulations.

  6. Presence of competitors.


Location analysis:

Demographic Analysis:

It involves study of population in the area in terms of total population (in no.), age composition, per capita income, educational level, occupational structure etc.

Trade Area Analysis:

It is an analysis of the geographic area that provides continued clientele to the firm. He would also see the feasibility of accessing the trade area from alternative sites.

Competitive Analysis:

It helps to judge the nature, location, size, and quality of competition in each trade area.

Traffic analysis:

To have a rough idea about the number of potential customers passing by the proposed site during the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of pedestrian and vehicular traffic passing a site.

Site economics:

Alternative sites are evaluated in terms of establishment costs and operational costs under this. Costs of establishment is basically cost incurred for permanent physical facilities, but operational costs are incurred for running business on day-to-day basis, they are also called as running costs.


Selection Criteria:

  1. Natural or climatic conditions.

  2. Availability and nearness to the sources of raw material.

  3. Transport costs-in obtaining raw material and distribution or marketing finished products to the ultimate users.

  4. Access to market: small businesses in retail or wholesale or services should be located within the vicinity of densely populated areas.

  5. Availability of Infrastructural facilities such as developed industrial sheds or sites, link roads, nearness to railway stations, airports or seaports, availability of electricity, water, public utilities, civil amenities and means of communication are important, especially for small scale businesses.

  6. Availability of skilled and non-skilled labor and technically qualified and trained managers.

  7. Banking and financial institutions are located nearby.

  8. Locations with links: to develop industrial areas or business centers result in savings and cost reductions in transport overheads, miscellaneous expenses.

  9. Strategic considerations of safety and security should be given due importance.

  10. Government influences: Both positive and negative incentives to motivate an entrepreneur to choose a particular location are made available. Positive includes cheap overhead facilities like electricity, banking transport, tax relief, subsidies, and liberalization. Negative incentives are in form of restrictions for setting up industries in urban areas for reasons of pollution control and decentralization of industries.

  11. Residence of small business entrepreneurs want to set up nearby their homelands


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