The selection of a proper site for a business facility is important in the production and operations management processes. Identify and discuss three factors that influence the selection of a site.

Question

What will be an ideal response?

Answer 1

Students can select from the following:
(A) Firms often choose to locate in an area because it has inexpensive labor, or labor with the right kinds of skills. Even though labor costs are becoming a smaller percentage of total costs in highly automated industries, they are a key reason why a company may choose to move their plants.
(B) Availability of nonlabor resources can also be a major reason cited for a move. Most companies need access to inputs such as water, electricity, wood, coal, and other basic resources. Some industries can cut their costs significantly by moving to areas where such resources are abundant and inexpensive.
(C) Companies often choose to locate near good transportation facilities, such as highways, rail lines, or airports in order to reduce time-to-market. They may also remain in certain areas or locate to specific areas where their customers primarily reside for the same reason.
(D) Government support and tax situations can sway the decision to locate or relocate to different areas. Some states have higher taxes than others, some give tax incentives or subsidies to businesses, and others provide zoning privileges or other forms of assistance.
(E) Climate, educational facilities, recreational opportunities, and other factors that influence the quality of life can also influence the decision to locate or relocate a particular enterprise.