Industrial location theories 2
•Download as PPTX, PDF•
1 like•1,015 views
This document discusses different forms of industrial agglomeration and clustering. It describes how industries can cluster in three main ways - through the enlargement of an individual industrial plant, clustering of related industries, or clustering of unrelated industries. It provides examples of each type of clustering. The document also discusses the internal and external economies of scale that industries gain from clustering in a particular area, such as access to shared infrastructure, labor pools, and ancillary services. Finally, it notes that once industries are established in a certain location, there is inertia to remaining there even if the original benefits disappear, due to costs of relocating.
More Related Content
What's hot
Viewers also liked
Viewers also liked (9)
Similar to Industrial location theories 2
Similar to Industrial location theories 2 (20)
More from StudsPlanet.com
More from StudsPlanet.com (20)
Recently uploaded
Recently uploaded (20)
Industrial location theories 2
- 1. C L U S T E R I N G O F I N D U S T R I A L A C T I V I T I E S I N A P A R T I C U L A R A R E A INDUSTRIAL AGGLOMERATION www.StudsPlanet.com
- 2. FORMS OF INDUSTRIAL AGGLOMERATION •Enlargement of an industrial plant •clustering of same/related industries •clustering of unrelated industries www.StudsPlanet.com
- 3. ENLARGEMENT OF INDUSTRIAL PLANT ironsmelting steel making steel rolling ironansteel plant www.StudsPlanet.com
- 4. INTERNAL ECONOMIES OF SCALE • Greater possibility of specialization • mass production • bulk purchasing • special transport rates • more efficient use of machines and labour • lower production cost www.StudsPlanet.com
- 5. CLUSTERING OF RELATED INDUSTRIES engineering ship-building car making ironandsteel plant www.StudsPlanet.com
- 6. EXTERNAL ECONOMIES OF SCALE • Inter-plant transport saving • access to common pool of skilled labour • presence of special training institutions • presence of ancillary services • research and development of collective facilities • sharing cost of certain operation www.StudsPlanet.com
- 7. CLUSTERING OF UNRELATED INDUSTRIES engineering ship-building metal fabricating car making ironandsteel plant Chemical plant Textile industry Electronics www.StudsPlanet.com
- 8. ADVANTAGES OF CLUSTERING • Enjoy an already well-developed infra-structure • enjoy a common pool of skilled labour and expertise • enjoy cheaper supplies of material inputs and ancillary services www.StudsPlanet.com
- 9. An industry set up in an area Same industries move in Related industries move in A number of unrelated industries move in An industrial district consisting different types of factories forms www.StudsPlanet.com
- 10. AGGLOMERATION Types of Linkage Material Linkages (Tangible) • Process Links • Sub-contract Links • Service Links • Marketing Links Information Linkages (Non-tangible) • Banks, stock-brokers, telephone and face to face contact between firms www.StudsPlanet.com
- 11. AGGLOMERATION Forms of Linkages I www.StudsPlanet.com
- 12. AGGLOMERATION Forms of Linkages II www.StudsPlanet.com
- 13. AGGLOMERATION Reasons for agglomeration (External Economies of Scale) • Transport savings • Access to skilled labour • Presence of ancillary services. • Possibility of internal economies • Infrastructure savings • Attract investment • Research and development www.StudsPlanet.com
- 14. AGGLOMERATION Industrial Inertia / Geographical Inertia Once a factory has been built on a particular site, it will tend to remain there even though the original factors no longer exist. It is a very important factor for hindering the movement of industries. www.StudsPlanet.com
- 15. AGGLOMERATION • Reasons for industrial inertia • Costs of moving • Presence of a pool of labour • Costly to move a skilled labour • Costly to train unskilled labour • Presence of associated industries • Infrastructure might not be a available in the new area • Reputation www.StudsPlanet.com
- 17. AGGLOMERATION Factors affecting decentralization • Expansion of firm • Redevelopment of inner cities • Inner city problems which hinder firms development • Demand for office space in the central city • Suburbanization (population & market) • Nature of industry • Government Encouragement www.StudsPlanet.com
- 18. AGGLOMERATION ECONOMIES • Savings an individual enterprise derived from locational association with a cluster of other similar economic activities… • Multiplier Effect: The cumulative processes by which a given change sets in motion a sequence of further industrial employment and infrastructure growth. www.StudsPlanet.com
- 19. AGGLOMERATION ECONOMIES • Work to minimize transaction costs (“Hidden costs”) • Agglomerations caused by: Localization Economies • Needs sufficient demand to justify or allow support networks to emerge. • Presence of skilled labor - attracts skilled labor to migrate • Technological spillovers - “being in the loop.” Ex. Silicon V. Urbanization Economies - Larger cities offer larger markets and offer business services • Others - Just-in-Time Manufacturing/Delivery • Allows producers to shift quickly and easily to differing levels of output (due to demand). • Eliminates need for large warehouses to store parts • Causes clustering of related industries www.StudsPlanet.com
- 20. LEAN PRODUCTION / JUST IN TIME www.StudsPlanet.com