Factors Affecting

Location Decisions
Facility Location usually involves a sequence of
decisions.
 National decisions

 Regional decisions

 Community decisions and

 Site decisions
Issues in Facility Location
 The problem of Facility Location is faced by
both new and existing businesses, and its
solution is critical to a company’s eventual
success.
 An important element in designing a
company’s supply chain is the location of its
facilities.
 Criteria Influencing Facility
Location
 Proximity to customers: helps ensure that customer
needs are incorporated into products being developed
and built.
 Business climate: may include the presence of similar
size business, presence of companies in the same
industry etc.
 Total costs: the objective is to select a site with the
lowest total cost
 Infrastructure: Adequate road, rail and sea transports
are vital. Energy and telecom requirements must me met
and local govt’s willingness to invest in such plans.
Continued…
 Quality of labor: The educational& skills levels of the
labor pool must match the company’s needs.
 Suppliers: A high-quality & competitive supplier base
makes a given location suitable .
 Political Risk: the fast changing geopolitical scenes in
numerous nations present exciting, challenging
opportunities. Political risks in both the country of
location & the host country influence the location
decisions.
 Envtmental Regulations: These regulations influence
the relationship with the local community.
Contd…
 Host Community: the host community’s interest in
having the plant in its midst is required. Local
educational facilities and the broader issue of quality of
life are also important.