industrial location

industrial location

the geographical site or sites selected by a firm to perform its economic functions. The choice of an appropriate location is influenced by a range of considerations but two are particularly important:
  1. the nature and characteristics of the industrial activity that the firm performs (for example raw material extraction or crop cultivation, the manufacture of intermediate or final products, the provision of a service) and
  2. the relative costs of production at different locations balanced against the cost of physical distribution to target markets, and the importance of closeness to customers as a basis for establishing COMPETITIVE ADVANTAGES over rival suppliers.

Some activities are highly location-specific. For example, the extraction of iron ore can only occur where there are deposits of the metal. Likewise many service activities, for example retailing, have to be located in and around customer catchment areas, while some suppliers of components may find it advantageous to operate alongside their key customers in order to synchronize better the latter's input-production requirements. The manufacture of final products tends to be more ‘footloose’. Certain locations may be preferred for their production advantages, because of, for example, lower labour costs, or the availability of investment subsidies (see REGIONAL POLICY) or the supply of skilled workers and access to related facilities. On the other hand, high distribution costs, especially in the case of bulky, low value added products, or, in the international context, the imposition of tariffs and quotas on imports, tend to favour a market-orientated location. See GREENFIELD LOCATION, BROWNFIELD LOCATION, INDUSTRIAL ESTATE, MULTINATIONAL ENTERPRISE.

industrial location

the geographical site or sites selected by a firm to perform its economic function. The choice of an appropriate location is influenced by a range of considerations but two are particularly important:
  1. the nature and characteristics of the industrial activity that the firm performs (raw material extraction or crop cultivation, the manufacture of intermediate or final products, the provision of a service), and
  2. the relative costs of production at different locations ‘balanced’ against the cost of physical distribution to target markets and the importance of ‘closeness’ to customers as a basis for establishing COMPETITIVE ADVANTAGES over rival suppliers.

Some activities are highly location-specific. For example, the extraction of iron ore can occur only where there are deposits of the metal. Likewise, many service activities, for example retailing, have to be located in and around customer catchment areas, while some suppliers of components may find it advantageous to operate alongside their key customers in order better to synchronize the latter's input-production requirements. The manufacture of final products tends to be more ‘footloose’. Certain locations may be preferred because of their production advantages, either because, for example, of lower labour costs or the availability of investment subsidies (see REGIONAL POLICY) or because of the availability of skilled workers and access to related facilities. On the other hand, high distribution costs, especially in the case of bulky, low value-added products, or in the international context, the imposition of tariffs and quotas on imports, tend to favour a market-oriented location. See GREENFIELD INVESTMENT, INDUSTRIAL ESTATE, MULTINATIONAL COMPANY, LOCATION OF INDUSTRY.

Full browser ?