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Unit 1 gsi

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Unit 1 gsi

  1. 1. By the word Industry, we mean the economic activity which creates forms utility. In other words, it creates economic value through the transformation of raw materials into finished products. In fact one of the dictionary meaning of the word „ INDUSTRY‟ is diligence or assiduous activity at any work or task.
  2. 2. Industrialization is a system of economic development in which the major part of the national resources are used to develop a technically up-to-date, diversified national capable of assuring a high rate of growth for the economy as a whole and overcoming economic and social backwardness.
  3. 3. 1. Mining 2. Manufacturing 3. Electricity, gas and water supply.
  4. 4. “ The ideal location is that which permits the lowest cost in production and distribution of a product or a service.” John A. Shubin “ Considers it an ideal location where all type of costs of business activities are the minimum.” Shri F.G.Moore
  5. 5.  The aim of any industry is primarily to earn profits.  Profit depends largely on cost of production.  Cost of production depends largely on manufacturing and distribution costs.  An ideal location of industry can economize on these costs.  A wrong or improper location would adversely affect the cost structure and profit.  From national point of view, a balanced growth is essential hence proper location of the industry.  For future expansion of industry, location is equally important where sufficient land and infrastructure would be available.
  6. 6. According to Weber the aim behind establishing an industrial unit in a particular area is to minimize the overall cost and maximize the profits.  ASSUMPTIONS OF THE THEORY a) Sources of raw material availability are known. b) Situation of market or consumption centre is also known. c) In the markets there is perfect-competition.
  7. 7. d) Labor concentration centres are fixed and labor is immobile. e) Institutional factors such as interest rate, insurance cost and tax rate are neglected. f) The political, cultural and economic system remains the same.
  8. 8. 1) Regional factors Transportation cost Labour cost - Weight to be transported - Labor cost index - Distance to be covered t - Location weight
  9. 9. 2) Secondary factors - Agglomeration Tendencies When many industrial units are established at an extensive scale then external economies are realized. - Deglomeration Tendencies It is cheapening of production or reduction in costs due to dispersal of industrial unit from a particular area.
  10. 10.  UBIQUITOUS Raw material which are easily available every where like brick, clay, water etc.  LOCALIZED Raw material which are easily available only at certain regions where like iron-ore, minerals etc. a) Pure(Localized) raw material b) Weight-losing( Localized) raw material
  11. 11. SEASONAL CHANGES CYCLICAL CHANGES SECULAR CHANGES STRUCTURAL CHANGES
  12. 12. A) Factors relating to production 1) Availability of raw materials 2) Availability of labour supply 3) Availability of power supply 4) Transport facilities 5) State control 6) Labour laws and labour unions 7) Financial facilities 8) Cost of land and building 9) Suitable climate
  13. 13. B) Association with other industries 10) Complementary industries 11) Competing industries 12) Momentum of an early start C) Factors relating to selling 13) Nearness to market 14) Population 15) Fashions
  14. 14. D) Other Factors 16) Personal considerations 17) Strategic factors 18) Government aid
  15. 15.  Scientific selection of industry is very important in entrepreneurship development hence various factors affecting must be considered well before the selection is done. As the main aim of any industry is to achieve profits and maintain the same, cost of production has to be kept under check. Location has a very significant role to play in checking the various types of costs.

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