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Factors Affecting Location of Manufacturing a Business - Coggle Diagram
Factors Affecting Location of Manufacturing a Business
external economies of scale
firms which support the business in other ways might need to be located nearby
support businesses which install and maintain equipment may be better nearby so they can respond quickly to breakdowns
market
important when product gained weight but nowadays less important
if product perishes quickly --> closer to retailers but ways to preserve food nowadays have reduced this factor
raw materials/components
may be heavier --> more expensive to transport than product
if particular process use many different components business may be very careful
government influence
government offer state-funded grants to encourage firms to move there
if an area has high unemployment rate government may give money to the business to move there
government influence may be negative --> might have regulations or restrictions on what businesses can do
power&water supply
to some industries having a reliable source of power, and therefore no regular power cuts may be essential
for water a reliable source is also needed
if large supplies of water is needed for a part in the manufacturing process then being near a water supply will be important
production methods&location decisions
job production used --> likely small scale --> influence of the nearness of components
flow production --> larger scale --> location of component suppliers might be greater importance because transport is expensive
availability of labour
wage rates paid to employees might vary, area where wages are lower might be preferable
if particular skilled labour is needed, may be easier and cheaper to recruit these employees if the business sets up in an area where people with these relevant skills live
if manufacturing process is long, an area where there is a high unemployment rate may be more suitable
transport & communications
being close to transport systems can reduce costs by speeding up the time spent delivering the products to market even when the market is quite a distance away
businesses usually need to be near to a transport system
where the product is for export, the ability to easily get to a port will be important
climate
occasionally climate may be important