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 Form 3 Business Studies: Size and location of a firm lessons

Factors that determine location of a firm

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Answer Text:
Location of a firm.
- Factors that determine location of a firm include:
- Nearness to the source of raw materials – A firm will be located near the source of raw materials if they are bulky, perishable or weight losing.
- Sources of power – Firms which have lots of plant will locate near the source of energy needed by the firm.
- Availability of the appropriate type of labour – Labour intensive firms will locate in areas where the labour is cheaply available.
- Availability and accessibility to the
market – Firms will locate closer to the market if they manufacture perishable, fragile or weight gaining goods.
- Availability of water – Some firms require a lot of water in the production process. Such firms would be located closer to the water source like a river or an ocean.
-Government policy and political consideration – Firms will establish in areas where government policies do not interfere with the processes.
-Cost of land and room for future expansion of the firm.