Question

What motivations typically cause firms to initiate a facilities location or relocation project?

Short answer

There can be various reasons to decide on a particular locality for their business that may ultimately result in their benefits.

Some reasons are as follows:

Presence of customers, business climate, infrastructure, labor quality, presence of suppliers, environmental factors, and other facilities

Step-by-step solution

Need for the firms to relocate a project

An important component in planning or structuring a company’s supply chain is the location of its facilities where it will provide its service or product to its customers. In any business’s logistics section, the locality plays an important role because thelocality will decide the profits or revenuesfor that particularfirm. The decision of a company’s location depends on various factors such as competitive obligatory.

Motivations that typically cause firms to initiate a facilities location or relocation project are

1. Presence of customers: Customersare the priority for any business. This means the “closeness to the customer,” i.e., the location of any business should be decided by keeping in mind the availability of their customers.
2. Climate factor of business:A good business climate for any businesslocality is the presence of similar-sized businesses, i.e., the presence of business in the same industry.
3. Infrastructure:It includes raw materialsthat are required during the process of manufacturing as well as other materials that are involved in it. The materials may involve soil, air, water transportation, and some additional energies.
4. Labor quality:Good quality of labor means the relevant skills and knowledge of the work. Labors should be willing to learn, and they must be quick learners.
5. Presence of suppliers:High-quality competitivesuppliersshould be available at the given locality of the firms. Suppliers should be available at a proper budget.
6. Environmental factor:Environmentalregulation should be included in the locality decision as it has a great impact on the business. It helps establish and maintain the relationship with the public of the locality. It also helps in the cost implications.
7. Other facilities or factors:Other factors may involve the availability of the distribution channels and the competitors of the business. Distribution channels will be the ultimate way to deliver the product to its consumer. The competitors will make survival difficult for their rivals.