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Location factor

Location factor. Behavioural approach to industrial location. Who can influence the industrial location?. Types of industrialists ’ behaviour. Rational economic men have the bahaviour of profit maximization People with bounded rationality have the behaviour of profit satisfaction

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Location factor

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  1. Location factor Behavioural approach to industrial location

  2. Who can influence the industrial location?

  3. Types of industrialists’ behaviour • Rational economic men have the bahaviour of profit maximization • People with bounded rationality have the behaviour of profit satisfaction • But some industrialists have to consider social factors, political and environmental factors

  4. 浙江东阳爆发大规模警民冲突 • 据报，东阳市政府有意将化工厂和农药厂等污染大户，搬到东阳市南部的画溪镇，但当地居民强烈反对，部份老年居民开始在这些厂里驻扎，阻碍工厂运作。 • 上周六，市政府打算强行赶走占领工厂的居民，期间政府的车辆压死压伤几名居民，同时又派大批公安人员包围反对兴建工厂的村庄。政府的行动激怒了居民，由于当时天正下雨，在场的官方工作人员都穿著雨衣，数万居民见穿雨衣的人就打，据报很多官员被打伤。由于现场情况混乱，救护人员不敢贸然进入现场救援。 11.4.2005 自由亞洲電台

  5. Weber’s industrial location theory • Decision-maker is an optimizer • who has perfect knowledge to make a wise decision • aims at maximizing profits or minimizing costs • also called an economic man

  6. Reality • decision-maker is a satisfier • who may not have all the information required to make the best choice, i.e. they have bounded knowledge • aims at non-material goals/psychic income • influenced much by personal preferences and values as by profit

  7. Economic man & optimizer

  8. Behavioural Matrix

  9. Pred’s behavioural matrix

  10. Sole entrepreneurs • Financial incentives • Personal preferences • Risk-taking ability • Site preference (home-town effect, family and personal ties, sense of belonging) • Amount of perfect information about an industrial location and the ability to analyze it • Psychological reasons (mental images of industrial location • Chance factor

  11. Home town effect • The growth of the Ford Motor Co. in Detroit – Henry Ford (founder) happened to be born there and he set up the industry in his hometown. • William Morris’s pioneering of the car industry in Oxford in early 20th century.

  12. Corporate industrialists • to maintain certain amount of profit to please the shareholders • to minimize the risk and secure status and position in the company

  13. Decision-making process

  14. How does a TNC make a decision?

  15. TNCs • Toyota chose to set up a plant at Burnaston near Derby partly because of the co-operation and positive attitude of the local authority.

  16. Government & environmentalists • non-economic factors are more important than the economic factors • affected by social and environmental considerations

  17. References • Michael Raw, Manufacturing Industry: the impact of Change, Chapter 7, Decision-making • Roger Hayter, Dynamics of Industrial Location, Simon Fraser University, Chapter 6, The Location of Factories as a Decision Making Process

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