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Location analysis is a dynamic process where organizations analyze and compare the appropriateness of alternative sites with the aim of selecting the best site. The need for the selection of the location may arise under any of the following conditions:
1. When the business in newly started
Site selection is the basic activity, wherever a new venture is started. It is a strategic decision that cannot be changed once taken e.g. any new business entity.
2. Expansion of existing business
When the existing business unit has outgrown its original facilities and expansion is not possible; hence, a new location has to be found e.g. Toyota. It has plants in Japan, SA, India and China.
3. Business uncertainties
The significant change in the existing demand, supply, and market location for product force organisation to change the location e.g. Neelkamal Plastics relocated from Nashik (Maharashtra) to Daman (UT).
4. Raw material cost
The significant change in cost and availability of inputs force organization to change the location, e.g. Oil refineries. Wrong location decisions have long-lasting consequences. Time and effort trying to “fix” wrong locations can never be recovered and not correcting them can be even worse.
5. Relocation of parent organization
The relocation of parent organization, major customer, associates industries and plants force organisation to change the location, e.g. Auto Ancillaries at Singur.
6. Change in technology
The significant change in technology, manufacturing process, and obsolete of existing system plants force organization to change the location, e.g. Chemical Plants
7. Government policy
The change in government policy and rules and regulations force organisation to change the location, e.g. Ghutka industries in Maharashtra
8. Lease renewal
A lease expires and the landlord does not renew the lease then the organisation have to relocate the existing plant.
9. Company policy
Company policy of diversification and change of working climate force organisation to change the location, e.g. cotton mills.
The social issues and wrong perceptions force organization to change the location, e.g. Auto Ancillaries at Singur, Windmills in Satara Districts in M Maharashtra.
Location of facilities is a problem associated with the planning phase of a factory or even a service sector. Hence plant location decision is a part of strategic planning process. In strategic plant location decision, new multi-plant locations organizations are particularly sensitive to urbanization economies, land costs, and local market, while single-plant locations organizations are more responsive to labour costs and agglomeration economies. Strategy is a tool to win the business, and the location is decision that can decide the success or failure of a business.
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