Determinants of plant location

     People who wants build a house will first think of where to build the house. The cost of the site, transportation, water, electricity and other accessibility are the factors to be checked and the decision will be taken.  Likewise a business concern especially a manufacturing concern has to check different factors before selecting a plant. This is one of the crucial decisions for any organization. This serves the center of control. They are:

    Cost of the site is the first determinant which talks about the cost of land. Any manufacturing concern makes an allocation of money for purchasing land, if it is higher than the allocated; they will look for another. The organization decides the site should be somewhere on the middle of the city, of course they have to pay a lot to get the desired one. It will become a center of attraction.  Another important factor is the access to its market. This should be very near which enables the market to understand the demand and supply of the product. According to the demand and supply the marketer can supply goods. Especially the goods which are in perishable goods need to sell it fast. Also the industrial goods production should be located to near to the related industries to sell the products.

Transportation facilities play a crucial role while selecting a location. It is known as the nervous system of business.  Because from the day of beginning construction of building the transportation takes all the machines and materials till the end of the organization. Efficient and smooth transportation system makes a clear functioning of the organization. The block in the transportation system leads to huge loss of money and consumers. Also the power sources are a necessary factor that needed to run business vehicle. Available of electricity, fuels, coals are very necessary for a manufacturing concern. Fuels available near to the manufacturing concern reduce the cost of bringing it. Power interruption leads to the interruption of total concern.

  Climate condition is another factor that decides to select a location. The climate conditions which are not suited for certain industries will effect inversely. Because chemical products very not need too much hot situation, agricultural products need moderate climate. Climate which is against the industry to run affects the business. Continuous rainfall, snowfall places are hazardous to business. The immediate labor availability of labor is a critical factor too. Because without labor no organization can work. The labor should be available at an adequate payment. Most of the organization recruits employees from the local area where the plant located. This helps the employees to get the job near to their family.