Question

Explain how each of the factors listed below can influence the location of a manufacturing business.

• Visibility

• Cost of rent or purchase

• Proximity to customers and suppliers

• Proximity to competitors

• Complementary businesses

Answer 1

Manufacturing business is set in a location where every facility is available like those of water supply, transportation, good climate conditions , availability of labours etc. Apart from this there are few more factors which can influence the location of a manufacturing business which can be seen below:

• Visibility: The vital significance of supply chain for manufacturing sectors of an economy makes it foremost that organizations estimated their presentationg.Performance estimation with regards to the time, quality and cost are of high significance to manufacturing business. Each manufacturing company competes with large companies within different industries such as textile, cement, sports, garments, furniture, auto, electronics, and agriculture. Competitive advantage is a laborious assignment for organizations to pick up inside a serious situation. There is expanding consideration inside the ground of supply chain management. Besides, likewise attention has regarded towards the importance of infromation and data sharing. Here, information sharing about components or products is the visbility in supply chain. Visibility becomes an important factor in manufacturing business to have a clear supply chain process, detailed information about product, components or raw materials and the knowldesge about the process of manufacturing.

• Cost of rent or puchase:Usually manufacturing business are being operated on rented buldings. Rents or purchase can be huge depending upon the laction of the manufacturing organization. Government provides grants and other incentives to reduce the rent or land cost located in poor regions. In any business renting is considered as fixed cost. For manufacturing huge space is required for storage of raw materials, processing of the raw materials to finished goods, space for warehouse to store finished goods and for logistics. This may be a enormous cost for the company to bear.

• Proximity to customers and suppliers: Loction is a key factor to determine with how much ease a customer can carry its relationship with a firm. For any manufacturin business the custoers accessibility is important to carry out the business. The availability of goods/service to customers when and where they need.Here, the influence of of laction revenue tends to be a dominating factor. Incase of suppliers, they want to supply raw material in the minimum cost so the location and accessibility of your manufacturing industry is important. Suppliers have various other customers to switch.

• Proximity to competitors: One complexity in assessing the estimating sales and business potential at various location is the effect of competitors. Managemnt must think about the present location of the competitors as well as attempt to foresee their response to association's new location. Avoiding locations where competitors are now settled frequently pays. The technique is to make a minimum amount, where by a few competitor firms bunched in one location attracts a large number of customers than the total number who would shop at same store at dufferent locations. Some firms use leader strategy while selecting the location.

• Complementary businesses: Complementary businesses are the extra business activities a firm is operating. Customers may get attracted towards another businees due to one. A large/small business can both directly or indirectly affect the location of manufacturing business. Like if a company manufactures a product and complements its business by providing service of that particular business to customer we can take example of automobiles with service provided to customers. The complementary business has huge affect on the location of manufacturing business as customers would demand for location where they can acess easily.