why location choice is important for businessSolutionSelecti

why location choice is important for business?

Solution

Selection of a proper location for business is extremly important. some of the reasons are as follows:

1.Minimization of cost: Most crucial aspect is cost minimization.If business location is not properly selected, then it will increase cost. Example, Jute industries should be located in areas where jute are grown. In that case main raw materials will be available easily at a cheap rate. It will reduce cost of transportation as well. So manufacturing cost will be minimum.

2. Demand: If the business is established in a locality where demand of the product is negligible, then it will be vary dificult for the firm to sale. If a business of maufacturing and selling diswasher is established in India there is a maximum chance of its failure. In this countrty house mades are available at a very cheap rate. So investment of huge sum in dishwasher is not a good decision for most of the people.

3. Infrastructure facilities: No industry can suceed if adequate infrastructure facilities are not properly available. Adequate Road, bridges, transportation, banking and insurance facilities must exist, otherwise production cost will rise and business will not generate adequate profit.

4. Government rules and regulations: If government rules and regulation in connection with its establishment is very tight, then business may fail to get the required permission after spendig a lump sum amout. It is not goood for the concern.

5. Competitiveness: It is also a very crucial aspect. If already there is a stiff competition among existing firm, then firm has miimium chace of eanring desired profit.

6. Political unrest: Location should be free from social and political disturbace. Other wise uncertainty will crop up on the success of business.

Many more points are added here. It may include cheap labor facility, exchange rate stability, Easy availability of ivestmet fund etc.Thus main objective of the proper location choice is to achieve primary objective of maximizing profit through value addition in the concern. Thus it will provide benefit to owners and all stake holders of the concern.