1. Location selection is a strategic decision that impacts costs, operations, and profits. Key factors include availability of resources like materials, labor, utilities, and transportation access. 2. The document outlines various primary and secondary factors to consider, like raw materials, labor, climate, utilities, land, and government policies. 3. Effective evaluation of location options requires identifying criteria, alternatives, and analyzing each based on attractiveness, resources, utilities, and site-specific considerations. Quantitative techniques can aid the evaluation.

3. Content:-
• Introduction
• Why location selection is an important decision
• Factors affecting the plant location
• Nature of location decision
• Taking a location selection decision
• Factors of location selection
• Selection of site area
• Reasons for selecting a foreign location
• Expansion of new plant
• Techniques for evaluating location selection

4. • Plant :- A plant is a place
where men, material, money,
machinery, equipments etc.
are bought together for the
manufacturing of products.
• Plant Location :- A plant
location mean that where a
plant is located where all
needed resources are easily
available.

5. Location selection is an important decision because of following
reasons. These are –
a. It reduces the cost of production.
b. It effects the plant layout decision.
c. It helps in timely completion of production of products.
d. It helps in manufacturing good quality of products due to
availability of resources (such as men, material, machinery etc.).
e. It indirectly increases the customer satisfaction.
f. In this decision, the large amount of money blocked for a long
time.
g. And so on…….

6. • There are two types of factors affecting the plant location
decision. These are –
1. Primary factors – which are directly related to the location
decision.
2. Secondary factors – which are indirectly related to the
location decision.

7. • Availability of raw materials – easily availability of good quality raw
materials at low price.
• Nearness to the market – it reduces the cost of
transportation and also more customer
satisfaction due to quick services.

8. Continue…..
• Availability of labour – it is also an important
factor that easily availability of skilled labour.
• Transport facilities – it is very important factor that right transport
facilities are available at low price.

9. Continue….
• Availability of fuel and power – fuel and power are necessary factors for
any manufacturing units so plant location must be located near coal beds
and power industries.
• Availability of water – it is an important factor
like the fuel and water.

10. Continue….
• Suitability of land – it is very important factor that land is
suitable for the plant or not.
• And so on…..

11. • Government polices – while selecting a
location for the plant, it is very important
to know the local existed government
policies such as licensing policies,
government subsidies, government
benefits associated with establishing a
unit in rural or urban areas.
• Suitability of climate – climate is very
influencing factor for industries such as
agriculture, leather and textiles, etc. For
such industries extreme humid
or dry conditions are not suitable for plant
location.

12. Continue…..
• Availability of finance – finance is most
important factor for the smooth running
of any business; it also affects the decision of
plant location.
• Competition between states – in order to
attract the investment and large scale
industries various states offer subsidies,
benefits, etc. However, the incentives may
not be big but it can help the firms
during its startup stages.

13. Continue….
• Availability of facilities – Availability of
basic facilities such as schools, hospitals,
housing, and recreation clubs etc. can
motivate the workers to stick to the jobs.
So while selecting the plant location,
organisation must give preference to the
location where it is suitable for providing
other facilities also.
• Disposal of waste – it is a major problem
for industries such as chemical, sugar, and
leather etc. So that the selected plant location
should have provision for the disposal of waste.

14. 1. Strategic Importance –
• Long-term commitment/costs
• Impact on investments, revenues, and operations.
• Supply chain
2. Objective –
• Profit potential
• Identify several locations from which to choose
3. Options
• Expand existing facilities
• Add
• Move

15. i. Decide on the criteria
ii. Identify the important factors
iii. Develop the alternatives
iv. Evaluate the alternatives
v. Make selection

17. 1. Attractiveness of region (culture, taxes, climate).
2. Labour availability
3. Availability of raw materials
4. Location of market
5. Availabilities of utilities
6. Government incentives
and policies

18. • Quality of life
• Attitudes
• Services
• Taxes
• Environmental regulation
• Utilities
• Developer supports

19. • Product plant strategy – entire products or product lines are
produced in separated plants. Each plant supplies to entire
market. The strategy often result in economies of scale.
• Market area plant strategy – plants are designed to serve a
particular geographic segment of a market. Individual plant
produce most products. This strategy significantly saves on
shipping costs.
• Process plant strategy – different plants concentrate on different
aspects of a process. This strategy best suited for products that
have numerous components.

20. IV. Site-related factors -
1. Land
2. Transportation
3. Environment
4. Legal

21. Urban/City area Rural/Village area

22. Advantage & Disadvantage of the urban area
S.
no.
Advantage Disadvantage
1. Good transport facilities are available.
Cost of land is very high.
2.
Ample available of skilled and unskilled
workers
Even at high cost sufficient land is not
available
3.
Medical facility, hospital facility are
available.
The cost of labour is high, due to high
standard of living in city area.
4.
Municipal services like water, drainage, fire
fighting, and also electricity facility are
available.
The rate of labour turnover is high.
5.
Sufficient protection of police. Some municipal restriction.

23. Advantage & Disadvantage of the rural area
S.
no.
Advantage Disadvantage
1.
Land is available at cheaper rates.
Better transportation facilities are not available
2. Large plots of lands are available
High cost of distribution of finished goods.
3.
Due to lower standard of living the rates of
labour are relatively lower
Sometimes municipal facilities are not available
4.
Ease from municipal restriction.
Medical facility, hospital facility are not available.

24. 1. Reaching to more customer
2. Technology
3. Availability of resources
4. Lower cost of manufacturing
5. Tax advantage
6. Political risk
7. International brand

25. Expansion of new plant
• Expansion
• Cost advantages
• Discover of raw material
• Additional facilities
• Mergers
• Political and social changes
• Increasing product demand

26. Techniques for evaluating location selection
 FACTOR RATING METHOD
COST-PROFIT-VOLUME ANALYSIS
TRANSPORTATION MODEL