business Cents

business Cents
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  • So today we will be talking about business Cents, Ha see what I did there 
  • Lets say you want to start a business making cars, but you don't know where to put your plant 
  • Well Weber's least cost theory of industrial location has your back. Weber's theory states that in order to determine location manufacturing you need to consider 3 things. Transportation ( the most important ), labor, and agglomeration.
  • We also have to take into consideration weather you are a bulk gaining or reducing company. Well, since your product weighs more than your initial inputs and gains weight over production process, it  would be safe to say that you have a bulk gaining industry. Weber's theory states that you want to focus more on the transportation aspect.
  • Bulk gaining
  • Bulk reducing 
  • This means that you would want to build your manufacturing plant near your resources and inputs. This will reduce the cost of shipping those big heavy materials, like iron and plastic which you will need. You also need to put it relatively close to your markets. That will also help with shipping costs. Just don't forget about your labor and agglomeration.
  • And that is how you evaluate where you should locate your business. Don't thank me, thank Alfred Weber. 
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