Explain The Factors That Should Be Taken In To Account In Deciding The Location Of A Steel Factory

Submitted By abraham1979
Words: 3262
Pages: 14

1. List out and explain the factors that should be taken in to account in deciding the location of a steel factory?

An entrepreneur conducts the detailed analysis comprising of technical, financial, economic and market study before laying down a comprehensive business plan. For implementation of this plan, he has to take various crucial decisions namely location of business, layout (the arrangement of physical facilities), designing the product, production planning and control and maintaining good quality of product.

Here we are going to discuss various aspects of plant location and layout. Investment in analyzing the aspects of plant location and the appropriate plant layout can help an entrepreneur achieve economic efficiencies in business operations. These decisions lay the foundation of the business of small entrepreneurs.

Every entrepreneur is faced with the problem of deciding the best site for location of his plant or factory.
What is plant location?
Plant location refers to the choice of region and the selection of a particular site for setting up a business or factory.
But the choice is made only after considering cost and benefits of different alternative sites. It is a strategic decision that cannot be changed once taken. If at all changed only at considerable loss, the location should be selected as per its own requirements and circumstances. Each individual plant is a case in itself.
Businessman should try to make an attempt for optimum or ideal location.
What is an ideal location?
An ideal location is one where the cost of the product is kept to minimum, with a large market share, the least risk and the maximum social gain. It is the place of maximum net advantage or which gives lowest unit cost of production and distribution. For achieving this objective, small-scale entrepreneur can make use of locational analysis for this purpose.

Location Analysis

Every entrepreneur is faced with the problem of deciding the best site for location of his plant or factory.
What is plant location?
Plant location refers to the choice of region and the selection of a particular site for setting up a business or factory.
But the choice is made only after considering cost and benefits of different alternative sites. It is a strategic decision that cannot be changed once taken. If at all changed only at considerable loss, the location should be selected as per its own requirements and circumstances. Each individual plant is a case in itself.
Businessman should try to make an attempt for optimum or ideal location.
What is an ideal location?
An ideal location is one where the cost of the product is kept to minimum, with a large market share, the least risk and the maximum social gain. It is the place of maximum net advantage or which gives lowest unit cost of production and distribution. For achieving this objective, small-scale entrepreneur can make use of locational analysis for this purpose.

Selection Criteria

The important considerations for selecting a suitable location are given as follows: a) Natural or climatic conditions.
b) Availability and nearness to the sources of raw material.
c) Transport costs-in obtaining raw material and also distribution or marketing finished products to the ultimate users.
d) Access to market: small businesses in retail or wholesale or services should be located within the vicinity of densely populated areas.
e) Availability of Infrastructural facilities such as developed industrial sheds or sites, link roads, nearness to railway stations, airports or sea ports, availability of electricity, water, public utilities, civil amenities and means of communication are important, especially for small scale businesses.
f) Availability of skilled and non-skilled labour and technically qualified and trained managers.
g) Banking and financial institutions are located nearby.
h) Locations with links: to develop industrial areas or