Factors Affecting Location Decisions

Factors Affecting Location Decisions

Facility Location usually involves a sequence of decisions.  National decisions  Regional decisions  Community decisions and  Site decisions

Issues in Facility Location  The

problem of Facility Location is faced by both new and existing businesses, and its solution is critical to a company’s eventual success.  An important element in designing a company’s supply chain is the location of its facilities.

Criteria Influencing Facility Location 

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Proximity to customers: helps ensure that customer needs are incorporated into products being developed and built. Business climate: may include the presence of similar size business, presence of companies in the same industry etc. Total costs: the objective is to select a site with the lowest total cost Infrastructure: Adequate road, rail and sea transports are vital. Energy and telecom requirements must me met and local govt’s willingness to invest in such plans.

Continued… 

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Quality of labor: The educational& skills levels of the labor pool must match the company’s needs. Suppliers: A high-quality & competitive supplier base makes a given location suitable . Political Risk: the fast changing geopolitical scenes in numerous nations present exciting, challenging opportunities. Political risks in both the country of location & the host country influence the location decisions. Envtmental Regulations: These regulations influence the relationship with the local community.

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Host Community: the host community’s interest in having the plant in its midst is required. Local educational facilities and the broader issue of quality of life are also important.