What are some of the factors that would influence a firm to locate close to its market?
What will be an ideal response?
Answer: For many firms, the optimal location is close to markets, where the product is sold. The cost of transporting goods to consumers is a critical location factor for three types of industries. These are bulk-gaining industries, single market manufacturers, and perishable goods.
Bulk-gaining industries make something that gains volume or weight during production. A prominent example is beverage bottling. Empty cans and bottles are brought to the bottler, filled with the soft drink or beer, and shipped to consumers. The principal input placed in the beverage container is water, which is relatively bulky, heavy, and expensive to transport.
Single-market manufacturers' products are sold primarily in one location, so they also cluster near their markets. For example, the makers of parts for motor vehicles are specialized manufacturers often with only one or two customers, the major carmakers such as GM and Toyota.
Perishable products must be located near their markets so their products can reach consumers as rapidly as possible.
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