The document discusses the relative importance of location factors for setting up a business or factory. It identifies key location factors including proximity to raw materials and markets, transportation and utility infrastructure, availability of labor, land, and incentives. The factors can impact production costs and ability to access customers. An ideal location minimizes costs while maximizing market access and social benefits. The conclusion emphasizes the importance of effective location planning and analysis for a business to expand and maintain competitiveness.

1. INSTITUTE OF
MANAGEMENT STUDIES
SAGE UNIVERCITY
Relative Importance Of
Location Factors
PRESENTED BY: Aishvi Chopra
Amisha
Mukherjee
Vanshika Jain
Deepak Kharka
UNDER THE GUIDANCE OF:
Prof.Rishabh Pare
Subject:
Operations
Management

2. CONTENTS
 Definition
 Introduction
 Relative Importance Of Location Factors
 Advantage And Disadvantage Of location
factors
 Conclusion

3. DEFINITION
location factor is an overall total project factor for
translating all of the project cost elements of a
defined construction project scope of work from one
geographic location to another.
The location factors consider capital availability,
(investment capital, venture capital, exchange
rates), subsidies and incentives, regulations,
taxation, and available technology.

4. INTRODUCTION
 location refers to the choice of region and the
selection of a particular site for setting up a
business or factory.
An ideal location is one where.
I. Cost of the product is kept to minimum
II. With a large market share
III. Least risk & maximum social gain
IV.It is the place of maximum net advantage or
which gives lowest unit cost of production and
distribution

5. FACTORS AFFECTING THE PLANT
LOCATION
• Nearness to raw materials.
•Transport facilities
•Nearness to market
•Availability of labour Availability of fuel &
power
•Availability of water
•Climatic condition
•Financial & other aids
•Land
•Community attitude

6. •Presence of related industries
•Existence of hospital, marketing centres,
schools, banks post offices, etc
•Local bye-laws, taxes, building ordinance, etc
•Housing facilities
•Facilities for expansion
•Security

7. NEARNESS TO RAW MATERIALS
•It will reduce the cost of transportation of
raw materials from the vendors end to the
plant
•When the supplier of raw material is near
the facility, then the immediate supply of the
raw materials will be available

8. TRANSPORT FACILITIES
•Money is spent in transporting raw material as well as
finished goods
•Depending on the size of a raw materials and finished
goods
•A suitable method of transportation such a road, rail,
water or air is selected & accordingly plant location is
decided
•The cost of transportation must be fairly
small compared to the total cost

9. NEARNESS TO MARKET
•It reduces the cost of transportation as well
as the chances the finished products getting
damage to the goods while transport
•Moreover a plant being near to the market
can catch a big share of the market & can
render quick service to the customers

10. AVAILABILITY OF LABOUR
• The labour should be stable, with proper
attitude towards work and available at
reasonable rates.
•Should be managed in such a way that the
chances of boycotts, strikes or lockouts are
less and the facility is able to achieve low
labour cost per unit production.

11. AVAILABILITY OF FUEL & POWER
•Because of the wide spread use of electric
power, in most cases fuel has not remained
a leading factor for plant location
•Electric power should be available
continuously, in proper quantity and at
reasonable rates.

12. AVAILABILITY OF WATER
•Water is used for processing, drinking, and
sanitary purposes
•For a pharmaceutical industry, water should be
available in adequate quantity and should be of
proper quality
•Pharmaceutical industry should
Not be located in an area known
for its water shortage.

13. •Due to development of HVAC (heating,
ventilation & air conditioning), climate of a
region doesn’t present much of a problem.
However, usage of HVAC needs capital.
•Facilities located in humid areas should
consider the relative humidity of the place & its
effects on the product. Thus regulating the
relative
humidity is also important.
CLIMATIC CONDITION

14. FINANCIAL & OTHER AIDS
•Some states gives aids in the form of loans, feed
money, subsides, machinery, etc to attract
industrialists
•Special economic zone has economic law which is
different from typical country’s economic laws
•SEZ offer tax breaks to foreign investors
•SEZs are located within country’s national borders
aims to increase trade, increase investments,
job creation & effective administration.

15. LAND
Topography, area, shape of the site,
cost, drainage and other facilities as
well as the probability of floods and
earthquake influence the selection of
site.

16. PRESENCE OF RELATED INDUSTRIES
Like packaging industry or a firm which
produces raw materials could be
helpful to the new industry which could
get the raw materials from the nearby
firm.

17. EXISTENCE OF HOSPITALS,
MARKETING CENTERS, SCHOOLS ,
BANKS ETC
For the future benefits of the staffs and
their family.

18. HOUSING FACILITIES
Accommodations are given to the
employees of higher rank, thus there
should be housing facilities in the
selected site.
While selecting the land for a plant
site, it should be seen that there’s
plenty of land for future expansion
of the industry.
FACILITIES FOR EXPANSION

19. LOCATION OF A FACTORY IN A BIG
CITY
•Generally factories are located in big cities for
obvious reasons of skilled labour, market for both
raw material and end products
ADVANTAGES:
•All types of skilled man power is available
•Repair, maintenance and service facilities for
various utilities are available in abundance
•Big markets for sale of products available
•Many similar industries /plants exist in nearby
areas.
•Housing facilities for workers and employees .

20. •Police and fire protection facilities available in
near by areas.
•DISADVANTAGES:
•Insurance and taxation rates are high
•Due to higher living standards, cost of
consumer goods and wages rates are high
•Cost of land is more if needed for expansion of
the plant etc
•Possibilities of expansion are minimum due to
scarcity of land

21. LOCATION OF AN INDUSTRY IN SMALL
TOWN
ADVANTAGES:
•Less labour trouble
•Lower rents in
comparison to big
cities and urban
areas
•Noise not much
problems
DISADVANTAGES:
•Lack of skilled labour
•Lack of facilities for
staffs
•Police and fire
protection less
satisfactory
•Transportation &
marketing facilities not
satisfactory as required

22. location planning and analysis is the process where an
organization conducts assessment of a new business
location before making a decision on whether to, or not
relocate their business. Effective location planning enables
a business to expand and gain competitiveness. Location
planning also involves evaluating the costs incurred in
setting up a business, and new opportunities and threats in
a new location. These would enable business owners to
come up with effective strategies to combat potential
threats and succeed in their businesses. In my opinion,
because location planning and analysis has direct impact
on the success and failure of a business, it is important for
organizations to plan effectively so that they can succeed
and maintain competitiveness.
CONCLUSION

23. THANKYOU!