Factors That Influence The Setting Up Of An Industry

Any industry is influenced by a number of factors:

• Location

Location is an important factor that can influence the setting up of an industry. The location is influenced by a number of non economic or economic considerations. The factor of profit maximization is very important of an industrial set up.

• Preferences

At times the entrepreneur may have personal prejudices and preferences while making a decision on the location of the industry. In such a case the other considerations could be dominated by a personal factor.

• Closeness To The Market Area

An important factor that needs to be taken into consideration by an entrepreneur is access, proximity or closeness to the market. It is difficult to transport bulky and perishable goods over a long distance and hence it is important for the industry to be situated close to the market area. Transportation costs can be reduced in the process of distribution. As compared to the producer goods industry, it is the consumer goods industry that needs to be closer to the market.

• Power Facility

In the location of an industry, another vital factor is power. The main sources of cheap power are electricity, oil, gas, coal, wind and water. A few years back the steam engines were in wide use. In the modern times, oil, gas and electricity are the important sources of power which has allowed industries to decentralize and disperse further.

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• Transportation

An important role is played by the transportation facility which generally includes three modes, including rail, road and rail. For any industrial activity, the railways, roadways and water ways are important junction points.

• Raw Material Availability

Of vital importance is the availability of raw materials for the industry to make the final product. If the raw materials are available at a close distance, the production costs can be reduced. In most industries, the major cost is the cost of raw materials. Hence it is seen that many of the forest based or the agro based industries are situated in close proximity of the supply of raw materials.

• Supply Of Labor

For any industry, the availability of skilled, cheap and adequate supply of labor is very necessary. If skilled labor is available then it can help in the faster development in the industry.

• Public Utility Services And Useful Sites

Location of the industry also gets influenced with how affordable the site is the presence of services for public utility, vegetation, ground level etc. For backward regions, financial provision, subsidies, affordable power supply, training and educational facilities are certain incentives provided to entrepreneurs.

• Climatic And Natural Conditions

Factors like waste product disposal, facilities for drainage, the region’s topography and the ground level are some of the climatic and natural considerations to keep in mind as they influence the location of the industry.

• Money

To set up an industry and its further expansion, adequate finance is required. If adequate amount of capital is available and that too at affordable interest rates then it proves to be helpful to the industry. Make sure that there are suppliers available to provide you the required financial resources to start the industry.