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Selection of a Suitable Site: 10 Factors to Consider


The following points highlight the ten main factors to be considered in selection of suitable site.

Some of the factors are: 1. Availability of Raw-materials 2. Nearness to the Market 3. Nearness to Sources of Operating Power 4. Labour Supplies 5. Transportation 6. Finance 7. Climate 8. Industrial Inertia and Others.

Selection of Suitable Site Factor # 1. Availability of Raw-Materials:

The place selected should be such where the raw materials are available easily. There should be an easy approach to the place of raw-materials.


For example:

(i) Iron and steel industry in Bihar,

(ii) Textile factories in Gujarat and Maharashtra,

(iii) Jute works in Bengal owe their success on account of easy availability of raw-materials. It reduces the cost of transportation.

Selection of Suitable Site Factor # 2. Nearness to the Market:


Manufacturing a thing successfully is not sufficient. It is also necessary that the output should find ready market and that the product is sold at a price to yield reasonable profit. This is possible only when the market is not far away. Nearness of the market ensures transportation costless and minimum wastage.

Selection of Suitable Site Factor # 3. Nearness to Sources of Operating Power:

Every industry requires fuel for working the machinery and unless the region has rich fuel resources of power now available are coal, hydro-electricity and oil etc. Coal is the cheapest source of power, but it is very bulky and involves high transportation costs.

Selection of Suitable Site Factor # 4. Labour Supplies:

For the successful and un-interrupted working of a factory, availability of adequate supply of labour of the right type at reasonable wages is also very essential. There are some industries in which the inherited skill of the workers in an important factor in the process of manufacturing.

For example—The development of the dying and printing industry in Farukhabad and the glass industry in Ferozabad d have been mainly located there due to the availability of skilled labour in these towns.

Selection of Suitable Site Factor # 5. Transportation:


Every manufacturing industry requires cheap and efficient means of transportation for the movement of both raw-materials from the source of supply to the factory and finished product from the factory to the markets or the centres of consumption. The location of the plant, should therefore be at a place where adequate transport facilities are available at cheaper rate.

Selection of Suitable Site Factor # 6. Finance:

No productive activity is possible without the availability of adequate capital. Banks, stock exchanges and other similar institutions help in capital formation and expansion of industry by providing financial help to it from time to time.

Selection of Suitable Site Factor # 7. Climate:

Certain industries for their successful working require a special type of climate. For example—Cotton textile industry requires humid climate while the photographic goods industry flourishes best in regions of dry climate. Climate also affects the efficiency of labour.

Selection of Suitable Site Factor # 8. Momentum of Early Start or Industrial Inertia:

There is a tendency for an established industry to remain localised in a particular areas in which it arose even after some of the original advantages possessed by that area for such work have lost their previous importance. If however, the entrepreneur acts rationally and his necessary knowledge he will choose the location which offers the lowest cost per unit of output.

Selection of Suitable Site Factor # 9. Personal Preferences:

Location of any industry may sometimes be decided accord­ing to the personal preferences and prejudices of the industrial enterprises.

Selection of Suitable Site Factor # 10. Government Policy:

These days the government plays an important role in determining the location of new industries.

In addition to the factors discussed above cost of land and building for setting up the factory topography of the area; the possibilities of future expansion etc., are some other factors which influence the decision-making regarding location of industry.

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