Answer to Question #244543 in Management for Madhu

Question

Location decision for a manufacturing plant has a significant influence towards the success of the business. Imagine that you are going to establish a production plant for a furniture industry in Sri Lanka. Analyze the aspects that need to be considered when establishing the plant using appropriate examples.

Answer 1

Ideal location of industries is the first fundamental aspect that entrepreneurs ought to consider before deciding on the location of plants. The factors that they ought to consider are: accessibility to raw materials, road and transport network in the area, security, availability of markets, accessibility to the required labour, and other pertinent social amenities.

Accessibility to raw materials

This is the most important requirement that must be met on the first instance. The furniture industry will mostly depend on timber as the raw materials in its processes. Therefore the entrepreneur must consider whether timber, as a major raw material, is available before setting up the industry in any place in Sri Lanka.

Road, transport and communication network

Transportation and communication are equally vital to ensure proper running of the plant. The raw materials need to be transported from their location to the factory. Equally processed furniture need to be transported to the market. Availability of the transport and communication network will proof to be very key in ensuring that the processes are effectively done.

Availability of market

Market for the processed furniture is essential in ensuring that the plant keeps up and running. Before the industry's location is decided market analysis should be done in order to map out the areas where there is ready market for processed furniture.

Security

Security is another integral requirement in ensuring safety of the industry and the processed furniture including the unprocessed raw materials. Before a plant is located in an area security analysis should be done so as to ensure that the plant is located in a secure environment.

Accessibility to the required labour

Labour is an essential ingredient in the process of production. It is a critical factor in the factors of production. Before the location of the plant is decided there should be a greenlight that labour in that area is in abundance.