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Fall 2013 smu assignments of MB0044 Q1 State the important considerations for locating an automobile plant.

Factors influencing an automobile plant are General factors and Special factors
1) General factors are:
  • Availability of land
  • Availability of inputs
  • Closeness to market places
  • Communication facilities
  • Infrastructure
  • Transport
  • Government support
  • Housing and recreation

Availability of landAvailability of land plays an important role in determining the plant location. On several occasions, our plans, calculations and forecasts suggest a particular area as the
best to start an organisation..
Availability of inputsWhile choosing a plant location, it is very important for the organisation to get the labour at the right time and good quality raw materials. The plant should be located:
  • Near to the raw material source
  • At the market place
  • Close to the market when universally available,
Closeness to market placesOrganisations can choose to locate the plant near to the customers’ market or far from them, depending upon the product they produce.
The advantages of locating the plant near to the market place are:
  • Consistent supply of goods to the customers
  • Reduction of the cost of transportation
Communication facilitiesCommunication facility is also an important factor which influences the location of a plant. Regions with good communication facilities namely postal and tele communication links should be given priority for the selection of sites.
Infrastructure Infrastructure plays a prominent role in deciding the location. The basic infrastructure needed in any organisation are:
  • Power – For example, industries which run day and night require continuous power supply.
  • Water – For example, process industries such as, paper, chemical, and cement, require continuous water supply in large amount.
  • Waste disposalFor example, for process industries such as, paper and sugarcane industries, facility for disposal of waste is the key factor.
Transport – Transport facility is a must for facility location and layout of location of the plant. The basic modes of transportation are by air, road, rail, water, and pipeline.
Government support – The factors that demand additional attention for plant location are the policies of the state governments and local bodies concerning labour laws, building codes, and safety.
Housing and recreation. Locating a plant with or near to the facilities of good schools, housing and recreation for employees will have a greater impact on the organisation. These factors seem to be unimportant, but there is a difference as they motivate the employees and hence the location decisions.
2) Special factors
The special factors that influence the plant location are:
  • Economic stability – outside investments
  • Cultural factors
  • Wages
Joint ventures – support of big time players


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