This document discusses factors that affect the location decisions of different types of businesses. For manufacturing businesses, key factors include proximity to raw materials, markets, labor, transportation, and power sources. Retail businesses consider shopper traffic, nearby competitors, parking, and rent costs. A business may relocate due to expansion needs, rising costs, access to new markets or resources, or labor issues. For service businesses, customer convenience, availability of labor, and use of technology influence location selection. Location decisions impact long-term costs and require consideration of industry and economic conditions.

1. Plant location and layout of an
industry
Sri kala. kamireddy
Assistant professor,
Nirmala college of pharmacy

4. Introduction
Location of an industry is an important management
decision.
It is a two-step decision: first, choice of general area or
region and second, the choice of site within the area
selected.
Location decision is based on the organisations long-
term strategies such as technological, marketing,
resource availability and financial strategies.
The objective of plant location decision-making is to
minimise the sum of all costs affected by location.

6. Plant location is important because of the
following:
i) Location influences plant layout facilities needed.
(ii) Location influences capital investment and
operating costs.
•Location decisions are strategic, long-term and
non-repetitive in nature.
• Without sound and careful location planning in
the beginning itself, the new facilities may create
continuous operating problems in future.
• Location decision also affects the efficiency,
effectiveness, productivity and profitability.

7. The location decision should be taken very carefully,
as any mistake may cause
• poor location
• which could be a constant source of higher cost
higher investment
• difficult marketing and transportation
• dissatisfied and frustrated employees and consumers
• frequent interruptions of production
• abnormal wastages
• delays and substandard quality etc.
• Hence , The necessary factors in the selection of
plant location vary among industries and with
changing technical and economical conditions.

10. Factors affecting location
There are many factors that affect the location of
businesses, and these factors are different for each
business sector. We'll take a look at them below.
1.Factors affecting the location of a
manufacturing business
2.Factors affecting the location of a retailing
business
3. Factors that influence a business to relocate
either at home or abroad
4. Factors affecting the location of a service
sector business

11. •Factors affecting the location of a
manufacturing business
Production methods and location decisions
• Small scale: transport and location of suppliers are less
important.
•Large scale: transport and location of suppliers are more
important.
Market
Need to be near to transport perishable goods.
Need to be near to cut transportation expenses

12. Raw materials/components
Manufacturing units where there is the conversion of raw
materials into finished goods is the main task then such
organizations should be located in a place where the raw
materials availability is maximum and cheap.
External economies of scale
How good nearby businesses are.
For maintenance of equipments.
For training workers, etc…

13. Availability of labour
•Wages of the laborers.
•How skilled they are.
Government influence
•Grants/subsidies.
•Restrictions on dumping, etc…

14. Transport and
communication
•To be able to transport
product easily.
Power
•Need a reliable source of
power to operate
effectively.
Water supply
•A lot of water is needed in
the production process
(e.g. cooling, cleaning)
•Cost of water.

15. Personal preferences of the owners
•May locate in areas that:
They come from.
They like.
Pleasant weather, etc…
Climate
•E.g. to reduce heating costs in a warmer climate.
•Some climates are required to produce certain items.

16. Factors affecting the location of a retailing business
Shoppers
Do shoppers go there?
What kind of shoppers go there?
Nearby shops
Competitors.
Mass market.
Gap in the market.
Customer parking available/nearby
Convenience for the customer.

17. Availability of suitable
vacant premises]
•Goods sites (e.g. in
shopping centers) are in
short supply.
Rent/taxes
•The more popular the site,
the more expensive.
Access for delivery vehicles
•For delivering goods.

18. Security
•If the area is insecure
Goods will be stolen.
Insurance will be reluctant to insure the
shop.
Legislation
•Laws restricting the trade of goods in certain
areas.

19. Factors that influence a business to relocate either at
home or abroad
•The present site is not large enough for expansion.
If a business simply prefers to expand elsewhere, the factors
affecting location will have to be considered.
•Raw materials run out.
One alternative is to import raw materials from elsewhere.
Important for mining industries.
•Rents/taxes rising.

20. •New markets open up overseas.
Cuts transport costs.
Bypass trade barriers.
•Government grants
To attract businesses to locate in development
areas.
To attract foreign investment.
•To bypass trade barriers
Tariffs
Quotas
•Difficulties with the labour force
Wages are too high.
Need skilled labour.

21. Factors affecting the location of a service sector
business
Personal preference of owners
Near their homes.
Customers
Whether customers require:
Direct contact:
Is it convenient for customers to go the business?
Will the service arrive at customers' houses in time?
In direct contact :
o Mail
o Internet

22. Technology
Technology allows businesses to locate in cheaper
sites.
Telephone.
Internet.
Transport.
No need to be near customers.
Availability of labour
Need to locate to sites where skilled laborers
live.
Laborers may relocate to be near the business.

23. Climate
Important for tourism.
Near to other businesses
Businesses that supply or repair machinery to others need
to be near them to respond quickly.
Post office/banks need to be in busy areas for the
convenience of customers. That is, being near malls,
shops, etc…
Rent/taxes
If the business does not need direct contact with the
customer, then it could locate in cheaper areas.