What are some key factors firms consider when deciding where to locate a facility?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are many factors that firms will consider when deciding where to locate facilities.  Some of them include:

  • Availability of workers.  Firms need to locate facilities in places that have sufficient numbers of workers with the proper level of education.
  • Cost of labor.  Firms often locate in places where they can get cheap labor.
  • Geographical location.  Firms will consider how far the facility will be from the resources it needs and from the customers it serves.
  • Cost of resources like electricity or water.  This is very important for firms that use large amounts of such things.  For example, a company like Microsoft will want to locate huge data centers (which use tremendous amounts of power) in places where electricity is cheap.

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