Why are some industries located near the source of raw materials, whereas some other industries are located near the market?
Answers
1. Availability of raw materials: In determining the location of an industry, nearness to sources of raw material is of vital importance. Nearness to the sources of raw materials would reduce the cost of production of the industry. For most of the major industries, the cost of raw materials form the bulk of the total cost. Therefore, most of the agro-based and forest-based industries are located in the vicinity of the sources of raw material supply.
2. Availability of Labour: Adequate supply of cheap and skilled labour is necessary for and industry. The attraction of an industry towards labour centres depends on the ratio of labour cost to the total cost of production which Weber calls Labour cost of Index. The availability of skilled workers in the interior parts of Bombay region was one of the factors responsible for the initial concentration of cotton textile industry in the region. 3. Proximity to Markets: Access to markets is an important factor which the entrepreneur must take into consideration. Industries producing perishable or bulky commodities which cannot be transported over long distance are generally located in close proximity to markets. Industries located near the markets could be able to reduce the costs of transport in distributing the finished product as in the case of bread and bakery, ice, tins, cans manufacturing, etc. Accessibility of markets is more important in the case of industries manufacturing consumer goods rather than producer goods.
4. Transport Facilities: Transport facilities, generally, influence the location of industry. The transportation with its three modes, i.e., water, road, and rail collectively plays an important role. So the junction points of water-ways, roadways and railways become humming centres of industrial activity. Further, the modes and rates of transport and transport policy of Government considerably affect the location of industrial units. The heavy concentration of cotton textile industry in Bombay has been due to the cheap and excellent transportation network both in regard to raw materials and markets.
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Concept introduction:
Placing industries near market or source of raw material is to reduce the transportation cost. Transportation cost also affects the cost of product.
Explanation:
Given that, some industries located near the source of raw materials whereas some other industries are located near the market.
We have to find, reason why some industries located near the source of raw materials whereas some other industries are located near the market.
According to the question,
The industry's manufacturing costs would be lower if it was closer to the raw material suppliers. The majority of the overall cost is made up of raw material costs for the majority of the major industries. Because of this, the majority of the agro-based and forest-based companies are situated close to the sources of raw material supply. Industries that produce goods for distribution in close proximity to markets, such those who produce bread, ice, tins, and cans, may be able to cut their transportation costs. The ability to access markets is more crucial for industries producing consumer products than producer goods.
Final Answer:
Placing industries near market or source of raw material is to reduce the transportation cost. Transportation cost also affects the cost of product.
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