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
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. Electricity, gas and water supply.
“ 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.”
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
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.
According to Weber the aim behind
establishing an industrial unit in a particular area is
to minimize the overall cost and maximize the
ASSUMPTIONS OF THE THEORY
a) Sources of raw material availability are known.
b) Situation of market or consumption centre is also
c) In the markets there is perfect-competition.
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.
1) Regional factors
Transportation cost Labour cost
- Weight to be transported - Labor cost index
- Distance to be covered t - Location weight
2) Secondary factors
- Agglomeration Tendencies
When many industrial units are established
at an extensive scale then external economies
- Deglomeration Tendencies
It is cheapening of production or reduction
in costs due to dispersal of industrial unit
from a particular area.
Raw material which are easily available every
where like brick, clay, water etc.
Raw material which are easily available only
at certain regions where like iron-ore, minerals
a) Pure(Localized) raw material
b) Weight-losing( Localized) raw
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
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
D) Other Factors
16) Personal considerations
17) Strategic factors
18) Government aid
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.