plant location strategies basics and examples

1. PLANT
LOCATION
Presented by :
Monika garg
Ayush gupta
Anish gupta

2. Topics to be covered:
• Decision for plant location
• Factors considered by the company for plant
location
• Methods used by the company to evaluate
plant location
• Examples of plant location

5. Decisions for plant location
• Factors that influence location decisions are:
Manufacturing :
o Availability of energy and water
o Proximity to raw materials
o Transportation cost
Service:
o Traffic patterns
o Proximity to markets
o Location of competitors

7. Factors affecting plant location
• The ten main factors that affect a plant location are discussed briefly
below :
• Law and order situation: If a state has bad law and order situation,
then the business must not be located within that state.
• Availability of infrastructure facilities: The infrastructure facilities are
the backbone of all industries .
• Good industrial relations :Industrial relations become bad, because of
militant and selfish trade unions.
• Availability of skilled workforce: Most businesses require skilled-labor
force such as engineers, management experts, computer
programmers, etc.
• Social infrastructure : The availability of social-infrastructure will
increase the employees' welfare.

8. • Investor friendly attitude : An investor-friendly attitude will
not only attract investment, but will also result in the
overall development.
• Nearness to market : Locating a plant near the market is
preferred, when the product is fragile (easily breakable),
perishable, heavy or bulky and when quick service is
required.
• Nearness to the raw material : Raw-materials' costs are
about 50% of the total cost.
• Nearness to supporting industries : It will be difficult, to
control the quality of the spare parts because of the distant
location.
• Must meet safety requirements : Safety of environment
must also be given priority in this regards.

9. EVALUATING LOCATION
ALTERNATIVES
There are three specific analytical techniques available to aid in evaluating
location alternatives:
• Location cost volume profit analysis : there are four assumptions one
must keep in mind when using this method :
• Fixed costs are constant.
• Variable costs are linear.
• Required level of output can be closely estimated.
• There is only one product involved.
• Total cost
• Factor Rating This method involves qualitative and quantitative inputs,
and evaluates alternatives based on comparison after establishing a
composite value for each alternative.

10. • Center of Gravity Method This technique is used in determining the
location of a facility which will either reduce travel time or lower
shipping costs
• IDENTIFYING A COUNTRY, REGION, COMMUNITY, AND SITE
• IDENTIFYING A COUNTRY
o A decision maker must understand the benefits and risks as well
• IDENTIFYING A REGION- 4 major considerations
o Location to Raw Materials
o Location to Markets
o Labor Factors
o Other : Climate is sometimes a consideration because bad weather
can disrupt operations. Taxes are also an important factor due to the
fact that taxes affect the bottom line in some financial statements. as
the probabilities of them occurring.
• IDENTIFYING A COMMUNITY
o There are many important factors for deciding upon the community
in which move a business. They include facilities for education,
shopping, recreation and transportation etc.

11. Examples of plant location
Vadodara, Gujarat, India Plant : Caustic Oxidation
Unit (Process: Wet Air Oxidation process by Linde-
KCA-Dresden GmbH for Oxidation

12. Indian Oil's refinery, at Panipat, Haryana