Importance of location planning
Location planning decisions are rattling of import for all types of concern units. This is because it affects the cost, selling price, as well as need of the product. It is a non-recurring heavy expenditure. Large companies accept the assist of dissimilar professionals similar lawyers, accountants, environmentalist, etc. for selecting the proper location of plant.
Following ikon lists 8 points that pick out out importance of location planning.
Image credits © Prof. Mudit Katyani.
There is a take away or importance of location planning because it aids in:
- Expansion,
- Cost advantages,
- Discovery of raw-material,
- Additional facilities,
- Mergers,
- Political as well as social changes,
- Increasing production demand, and
- Avail taxation benefits.
Now let's hash out higher upward points highlighting importance of location planning.
- Expansion : If the companionship wants to expand as well as diversify its activities, it volition possess got to search for a new-location for setting upward its novel concern unit. In this case, it volition take away a location planning.
- Cost advantages : If an existing flora is non nigh a marketplace place, it volition growth the carry cost. This volition every bit good growth the cost of the product. So, to avoid this, the companionship volition search for a novel flora location which is nigh the market. Such location of flora must live on convenient to the employees as well as must possess got a regular provide of H2O as well as electricity. Overall, this volition result inwards reduction of the cost of production.
- Discovery of raw-material : Generally, a flora must live on located at a house where raw-material is available. For example, if petroleum as well as gas are constitute at around place, thence a novel petrochemical flora has to live on railroad train in that location for processing purpose.
- Additional facilities : Plant location-related decisions volition possess got to live on taken if the organization wants additional facilities. New facilities may live on necessary to ameliorate the lineament of work, to come across ascent demands, etc.
- Mergers : Mergers, joint-ventures, as well as Amalgamations may Pb to laid out a novel unit of measurement at a new-location. It may fifty-fifty require closure of an existing flora unit. In mergers, production is to a greater extent than ofttimes than non started at a novel house every bit per the new-agreement.
- Political as well as social changes : Each political political party has its ain philosophy. Political changes tin Pb to changes inwards economical policies of the government. This may brand the existing location unattractive for doing business. Social changes may require production of eco-friendly goods. This may require a alter inwards location.
- Increasing production demand : Demand for the company's production may growth at other places, specially inwards abroad countries. So, the companionship volition possess got to laid out a branch inwards around other acre or inwards unusual countries. This would Pb to a search for novel location of plant.
- Avail taxation benefits : Government may denote around taxation benefits for starting a concern inwards rural areas. This may motivate entrepreneurs to laid out their concern units inwards remote areas.
