PLANT LOCATION

ITM Malad SMBA-18ITM Malad SMBA-18Group No. 04 - MembersGroup No. 04 - Members

ANKITA BHALERAOANKITA BHALERAO FAIZA DARBARFAIZA DARBAR SHRADDHA KADAMSHRADDHA KADAM JAY SANGHRAJKAJAY SANGHRAJKA PRIYANKA BHAYANIPRIYANKA BHAYANI HIREN SAGARHIREN SAGAR SUJIT SURENDRANSUJIT SURENDRAN

PLANT LOCATIONMeaning-the establishment of an industry at a Meaning-the establishment of an industry at a

particular place.particular place.

It types-It types- Localization /centralization-Localization /centralization-

means concentration of similar type of means concentration of similar type of industries at some particular place. E.g. industries at some particular place. E.g. textile in Mumbai.textile in Mumbai.

Delocalization /Decentralization-Delocalization /Decentralization-

means spreading of similar type of industries means spreading of similar type of industries at different places. E.g. banking industries.at different places. E.g. banking industries.

PLANT LOCATION

Site selection is an important activity as it decides the fate of the business.

A good location will reduce the cost of production &distribution to a large extent. The reduction of cost of distribution helps in elevating either the competitive strength or the profit margin of business.

Locating of business involves large & relatively permanent investment.

PLANT LOCATION

If the site selection is not done properly, all the money spent on factory building, machinery & their installation will go in waste & the owner has to suffer great loss.

Therefore the site for factory should be selected very carefully. While selecting a site it is necessary to consider technical, commercial, & financial aspects & then select a site that may provide maximum profit.

Steps in Selecting Location

National DecisionNational DecisionNational DecisionNational Decision

Regional DecisionRegional DecisionRegional DecisionRegional Decision

Community DecisionCommunity DecisionCommunity DecisionCommunity Decision

Site DecisionSite DecisionSite DecisionSite Decision

Political, social, economic stability;Political, social, economic stability;Currency exchange rates; . . . . .Currency exchange rates; . . . . .

Climate; Customer concentrations;Climate; Customer concentrations;Degree of unionization; . . . . .Degree of unionization; . . . . .

Transportation system availability;Transportation system availability;Preference of management; . . . . .Preference of management; . . . . .

Site size/cost; Environmental impact; Site size/cost; Environmental impact; Zoning restrictions; . . . . .Zoning restrictions; . . . . .

FACTORS AFFECTINGFACTORS AFFECTING PLANT LOCATION

Selection of Region – FactorsSelection of Region – Factors Availability of raw materialsAvailability of raw materials Nearness to marketNearness to market Availability of powerAvailability of power Transport facilitiesTransport facilities Suitability of climateSuitability of climate Govt. policyGovt. policy Competition between statesCompetition between states

FACTORS AFFECTINGFACTORS AFFECTING PLANT LOCATION

Selection of Community / LocalitySelection of Community / LocalityAvailability of labourAvailability of labourCivic amenities for workersCivic amenities for workersExistence of complementary & competing industriesExistence of complementary & competing industriesFinance & research facilitiesFinance & research facilitiesAvailability of water & fire-fighting facilitiesAvailability of water & fire-fighting facilitiesLocal taxes & restrictionsLocal taxes & restrictionsMomentum of early startMomentum of early startPersonal factorsPersonal factorsDisposal of wasteDisposal of waste

Analyzing Location DecisionsAnalyzing Location Decisions

Quantitative Approaches- Break-even analysisQuantitative Approaches- Break-even analysis

Qualitative Approaches-factor rating & point Qualitative Approaches-factor rating & point rating methodsrating methods

Quantitative ApproachesQuantitative ApproachesBreak Even Analysis.Break Even Analysis.

The measures of evaluating & making competing sites The measures of evaluating & making competing sites are team appraisal system. Multidisciplinary teams are team appraisal system. Multidisciplinary teams comprises of operations manager, town planners, comprises of operations manager, town planners, project managers, lawyers, marketing managers, project managers, lawyers, marketing managers, financial experts, etc. they visit sites & carry out their financial experts, etc. they visit sites & carry out their assessment of factors chosen to form the basis of assessment of factors chosen to form the basis of evaluation.evaluation.

All the competing sites are evaluated & their overall All the competing sites are evaluated & their overall weighted average is arrived atweighted average is arrived at

Quantitative ApproachesQuantitative ApproachesBreak Even Analysis.Break Even Analysis.

It is easy to understand that decision in site selection is It is easy to understand that decision in site selection is an economic one. The site that offers least cost of an economic one. The site that offers least cost of operations should be the one selected for operations should be the one selected for implementation Total operation cost can be classified implementation Total operation cost can be classified in two broad categories.in two broad categories.

- Fixed Costs- Fixed Costs

- Variable Costs.- Variable Costs.

BEP are drawn for different locations to compare the BEP are drawn for different locations to compare the sites. Fixed Costs, Variable Costs & Revenue / Output sites. Fixed Costs, Variable Costs & Revenue / Output are taken into account to do so. Mathematically,are taken into account to do so. Mathematically,

BE Volume: FC / Contribution.BE Volume: FC / Contribution.

Subjective ApproachesSubjective Approaches

Precedence:Precedence: Assumption is that if a particular Assumption is that if a particular location was suitable to similar firms in the past, location was suitable to similar firms in the past, it would be a preferable site too. The decision is it would be a preferable site too. The decision is guided by the principal of precedence.guided by the principal of precedence.

Preference:Preference: The decision is based on personal The decision is based on personal preferences. It is entirely dependent on owners preferences. It is entirely dependent on owners whims & preferences. These are not based on whims & preferences. These are not based on cost or profits.cost or profits.

Dominant factor:Dominant factor: Site selection can sometimes Site selection can sometimes be reduced to an exercise based on a single but be reduced to an exercise based on a single but most dominant factor. most dominant factor.

RECENT TRENDS IN THE RECENT TRENDS IN THE LOCATION OF INDUSTRYLOCATION OF INDUSTRY

Priority for sub-urban areasPriority for sub-urban areas Industrial development in notified backward Industrial development in notified backward

areasareas Establishment of Industrial estateEstablishment of Industrial estate Decentralization of industriesDecentralization of industries Increased role of government in the decision of Increased role of government in the decision of

location of industrieslocation of industries Competition between Government & Competition between Government &

IndustriesIndustries

BISLERI – PLANT - MUMBAIRAIN-WATER HARVESTING

BISLERI – PLANT - MUMBAI Service to Indian Consumer Last 40yearsService to Indian Consumer Last 40years Proximity to Thane & Other Major Area Proximity to Thane & Other Major Area

Conected to MumbaiConected to Mumbai Minimum Transportation CostMinimum Transportation Cost Availability of LabourAvailability of Labour Momentum of early startMomentum of early start Disposal of waste – Bottle Recycling Disposal of waste – Bottle Recycling Low Production Cost – Natural ResourceLow Production Cost – Natural Resource Rain Water Harvesting – Capacity – 5Million Rain Water Harvesting – Capacity – 5Million

Ltr. Ltr.

REFERENCEREFERENCE

Bisleri.com/ Livemint.com Wikipedia.org Wall Street Journal Hindustan Times Authorstream.com