The strategic nature of the decision on Plant location, require very detailed analysis due to several reasons.
for the plant location analysis
The strategic nature of the
decision on Plant location, require very detailed analysis due to several
reasons. But the choice is made only after considering various costs associated
and comparing the benefits of different alternative sites. It is a strategic
decision that cannot be changed once taken. If changed, it can happen at the
cost of huge cash outflow as well as considerable deployment of various firm’s
resources. Each individual plant is a case in itself. The major reasons are,
Wrong plant location generally
affects cost parameters i.e. poor location can act as a continuous stimulus of
higher cost. Marketing, transportation, quality, customer satisfaction are some
of the other factors which are greatly influenced by the plant location
decisions – hence these decisions require in-depth analysis.
Once a plant is set up at a
location which is not much suitable, it is a very disturbing as well as very
expensive process to shift works of a company to some other place, as it would
largely affect the cycle of production.
investments involved in the in setting up of the plant premises .buying of the land etc are very large and especially in the case of big
multinational companies, the investments can go into millions of rupees, so
economic factors of the location should be very minutely and carefully checked
and discussed in order to achieve good returns on the money which has been
Tags : Operations Management - Introduction to Operations Management
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