Question: Why Is Plant Location Decision Important?

What is plant location decision?

Location decision is based on the organizations long-term strategies such as technological, marketing, resource availability and financial strategies.

Plant location refers to the choice of the region where men, materials, money, machinery, and equipment are brought together for setting up a business or factory..

Why is it important to choose a strategic location when it comes to expanding or relocating a facility?

Being in the right location is a key ingredient in a business’s success. If a company selects the wrong location, it may have adequate access to customers, workers, transportation, materials, and so on. Consequently, location often plays a significant role in a company’s profit and overall success.

What are the objectives of plant location?

The basic objective of plant location decision is to determine the minimum cost level in keeping view of all input costs. The chosen location decision should permit minimization of both long-term and short- term costs. No location can be considered to be unique and can remain competitive indefinitely.

What are the different factors that affect the location of a plant?

1. Selection of Region:Availability of Raw Materials: … Proximity to Markets: … Transport Facilities: … Availability of Power, Fuel or Gas: … Water Supply: … Disposal Facility for Waste Products: … Climatic and Atmospheric Conditions: … Availability of Labour:More items…

What are the three main factors that affect the decision of locating production?

The main factors that affect location decisions include regional factors, community considerations, and site-related factors.

What is a location advantage?

Location-specific advantages. Location-specific advantages or LSAs are those location-specific market features and/or factors of production that enable a firm to achieve an improved financial outcome from the provision of the same product or service relative to alternative locations.

Why might a company relocate?

The main reason why a company chooses to relocate is because their current facility no longer has enough space to meet their requirements. Any future office space consideration needs to factor in enough room for company growth and expansion. This will ensure you don’t outgrow the space before the lease expires.

Why is location planning important?

Location decisions are often important – to both large and small businesses. The location decision has a direct effect on an operation’s costs as well as its ability to serve customers (and therefore its revenues). Also, location decisions, once made, are difficult and costly to undo.

What are the advantages of having the plant location near to the market?

Industries using such materials tend to be located at the source to save on the cost of transportation. Since the goods are produced for sale they should be near the market. The cost of reduction in the cost of transporting finished goods depends upon the likes and dislikes of the consumers.

What are the factors that affect location decisions?

The top five major factors identified that may strongly influence international location decisions generally were: costs, infrastructure, labour characteristics, government and political factors and economic factors.

How do you select a plant location?

Primary factorsAvailability of raw materials. Availability of raw materials is the most important factor in plant location decisions. … Nearness to the market. … Availability of labor. … Transport facilities. … Availability of fuel and power. … Availability of water. … Suitability of climate. … Government policies.More items…•

What is meant by location planning?

A location plan is a supporting document that may be required by a planning authority as part of a planning application. … This enables the planning authority to properly identify the land to which the application refers, and is typically based on an up-to-date Ordnance Survey (or similar) map.

What are the objectives of plant layout?

The primary objective of plant layout is to maximize production at minimum cost. The layout should be designed in such a way that it is flexible to change according to new processes and production techniques.

What are location factors?

Include a number of opportunity factors related to a location, mainly labor (average wages, availability, level of qualification), materials (mainly for raw materials dependent activities), energy, markets (local, regional and global), and accessibility to suppliers and customers (important for intermediate activities) …