Location Decision:

Factors Affecting Location Decision

Because of the globalisation and intense competition, a decision about the facility location is not an easy task for management. Products life cycles are becoming shorter. Now Organisations are capable of developing new and innovative products due to following reasons :

• Effective & efficient use of IT tools.
• Better modes of transport and shipment.
• Easy cash flow.
• Availability of skilled labour.

Because of aforementioned factors facility location decision involves long and expensive studies of locations. In general, in the selection procedure several sites come before the decision maker each with its strengths and weaknesses. Thus, selection of the final location is usually a trade off decision that includes long and careful weighing of the pros and cons of each alternative location.

Location decision may be better understood by checking the factors that commonly affect the final selection of the facility location. Selection of location involves a sequence of decisions comprising nation decision, region decision, community decision and ultimately the site decision respectively. In the straining, management should take the decision regarding the domestic or international location of the facility. Only a few decades ago few firms has taken this choice into consideration. After resolving the international- versus-domestic issue, management decides the general geographic region within the country where the facility is to be placed. Once the geographical region decision has been taken, then the management judges the communities among several communities within the region. Several factors affecting the community decision are given in Table. At last, the decision about the selection within the community is made depend on various factors such as size and cost of each site, proximity to transportation systems & various other factors given in Table

Table: Factors Affecting the Location Decision

The above table lists the factors affecting the location decision. But along with these factors, one main factor affecting the location of the firm is the type of the firm going to be placed. The two examples are given to illustrate to consideration of these factors.