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ENTERPRISE AND STEPS IN
LOCATION OF AN ENTERPRISE
AND STEPS IN SETTING SSI
“The Choice of the place (location) where an
industrial undertaking (unit) started has a
efficiency and profitability of the enterprise”.
study of industrial locations forms an
important branch of economic geography
which has engaged the attention of both
economists and geographers. Economists
judge from the point of view of profit,
productivity and growth.
NEED FOR ENTERPRISE LOCATION
When a new enterprise is to be established.
In the case of established enterprise, the need
for enterprise location arises when expansion,
decentralization and diversification is undertaken
to meet the increased demand for its products.
When a new branch or branches are to be
opened for increasing the volume of productions
or distribution or both.
When an undesirable location is to be
Whenever the existing factory is not in a position
to obtain renewal of lease.
6. When the tendency of shifting the
market , depletion of raw materials,
changes in transportation facilities,
new processes requiring a different
location are observed in a factory.
IMPORTANCE OF ENTERPRISE
The selection of an enterprise location enables the
enterprise to operate smoothly, efficiently, and with
the minimum cost.
The location of an enterprise has a great effect on
the success or failure of that plant.
While selecting a site, the owner must consider
technical, commercial, and financial aspects.
Location is also an important factor determining the
ultimate success or failure.
STEPS IN ENTERPRISE LOCATION
Selection of the region.
Selection of the locality or
Selection of the exact site.
Selection of the optimum
WEBER’S THEORY OF INDUSTRIAL
The Weber’s theory of industrial location is based on the following
The materials can be
Ubiquitous(being or seeming to be everywhere at the same time)
weight – losing or gross materials
The situation and size of places of consumption are given ,with the
market comprising a number of separate points.
Fixed labour locations ,labour is immobile
Weber’s theory divides the factors influencing industrial location
into the following two:
Transport and labour cost-affecting industrial location.
together) or deglomerative
(away from the areas of
responsible for redistribution for industries.
The limitations of the Weber's theory:
1. The theory is based on the three wrong assumption about labour supply.
2. Transport cost depend on the mode of transport,nature of goods etc.
3. Location and size of markets may vary with change in economy.
4. Non economic factors also exert important influence on industrial
5. The theory ignores the role of capital and entrepreneurship in
6. The classification of materials not proper.
SELECTING GENERAL AREA
The important factors consider in the selection of a site:
• availability of raw materials
• Availability of skilled and unskilled labour
• Nearness to the source of motive power
• Nearness to market
• Availability of transport facilities
• Nuisance problems
• Suitability of climate
The other important features to be considered are:
• Topography –flat ,cheap or
marshy land ,sea ,lake or river
location ,vegetation ,sea level
• Soil conditions –corrosion to underground pipes drianage
requirement, quality and cost of fill required.
• Water supply –quality of water is important.
• Waste disposal-treatment of effluents prior to discharge to the main
• Position of plant to local transport facilities-nearness to railway or
• Availability of homes for workers
• Local legislations and municipal laws including sanitation air&
steam pollution and others.
• Living conditions for labour and management – climate
,recreational facilities ,quality of schools etc.
• Community directives ,attitude towards manufacturing
activities and outside investors.
• Tax concessions and other incentives applicable to area/site.
Factors taken into consideration in the selection of site:
Soil test indicating type and load bearing capacity of the soil
at various depths ,water table ,terrain ,etc.
Extent of site development required;
Climatic conditions ,namely ,temperature ,rainfall
Presence of mineral deposits;
Proneness to natural &structural disturbances;
Leasehold or freehold nature of land ,price/compensation
,mode of acquisition ,etc.
Each project , there
exists a certain
economic size below which the project will not be a
It may so happen that in the case of some acute
scarcity products ,a project even below the
economic size may appear
immediate future ,
to be viable in the
If a long-term view is taken if may not be so,
• This size various from industry to industry , depending upon
the nature of product to be manufactured , complexity of
the manufacturing process, factory of production ,
particularly capital & labor .
• This concept is also linked with inflationary pressure on the
unit cost of investment and technology adopting .
In a continuous processing unit , minimum
of a plants
1. size of the plant
2. Available in a jobbing unit
3. Product mix
4. Project size
availability of skilled labor
6. Cost of infrastructural inputs
7. Quantum of
semi-finished components .
• The scale of a project is,
• Examined keeping in view technological efficiency,
• Cost of production ,
• Size of the targeted market &capital cost .
these factors may, however, be
and .:. While deciding on the scale of operation,
certain compromises may have to be made .
• When the excepted demand for the
to justify the size of the project.
• it would be necessary to compromise on
the technology efficient criteria and choose
a lower scale of operation sacrificing
thereby part of technological efficient .
Various alternatives are often
evaluated for project
phasing in team of either the size of the plant or the
extent of instigation .
When eventually the market develops, the project size
can be increased appropriately by either backward or
forward integration .
an important bearing on the
economic size of the project are:
• the cost structure and availability of infrastructure facilities .
With this ,it might often be necessary to compromise
with project smaller, with this shorter gestation period
investment and long gestation periods.
All economic size case’s are analyzed carefully by the
appraising financial institution and its ensured neither
the project is too smaller nor too ambitious .
Cont. . .
a project is found to uneconomic size, the
barrower advised at the initial stage to modify
his scheme and make it economic viable and
may be mentioned here that the institutions
also ensure that the licensed capacity of a plant
expressed in terms of physical quantities and
not in terms of the central government .
SELECTION OF MOST ECONOMIC
According to Kimball and Kimball ,
“most advantageous location is that at which the
cost of gathering material and fabrication it plus
the cost of distributing the finished product to the
customer will be a minimum .”
SELECTION OF MOST ECONOMIC SITE
A,B- SOURDE OF
SELECTION OF ACTUAL SITE
FACTORS INFLUENCING THE
LOCATION OF PROJECT
Two types of measures that may be advocated or
adopted to influence the location of project .
1. The first set of measures refers to the
various inducements extended to the industrialists
to set up their projects in certain specified areas.
2. The second set measures imposes
restrictions on the location of project in certain
Cont. . .
resources available for industrial projects , for instance ,
were limited .
If more resource are invested in projects in one region , less
resources will be available for investigation of resource in
projects in some regions of the country .
If a policy of industrial
location with a view to achieving
decentralization and a dispersal is accepted on economic, social,
political& environmental grounds, there is a strong
setting up a machinery for the administration of the policy.
The machinery should exist at central ,regional and local level
The objective of state
facilities to allure and motivate
generation entrepreneurs to locate their venture in
their region .
The nature of assistance ,however, varies from state
to state .
Medium & large scale
1) Feasibility study
2) Investment subsidy
Subsidy to a ceiling of 75% Loan of 75% of the cost of
of the cost of operating
preparing feasibility report
the report up to a
upto a maximum of
maximum of Rs 5,000
10% of value of fixed
10% of the value of fixed
assets, subject to a ceiling assets subject to a ceiling
3) Development loan
of Rs 10,00,000
Overall ceiling of 25% of
For zone II,10% of the
the value of fixed assets
value fixed assets to a
maximum of Rs50,00,000
& III & IV,15% of the value
of fixed assets, subject to
a maximum of
4) Working capital loan
Interest-free loan offered , Interest-free loan ,subject
subject to a ceiling of 25% to a maximum of
of the value of fixed assets Rs50,00,000,
or t he development loan
taken which ever is less
5) Procurement of know- It shall be reimbursed in
50% of fee paid by new
full, subject to maximum of units for procurement of
know-how shall be
subsidized upto a ceiling
6) Stamp duty exemption Exemption on a stamp duty Same as in the case of
and reduction in
for execution agreement
with KSFC. There is also
reduction fee of Re.1 per
Rs1,00 for registering the
agreement deeds .
small –scale industry
Location policy has been significantly amended .
in location other than cities of more than one
million population, there is no requirement of
obligation industrial licensing .
In respect of cities with population greater than one
million ,industries other printing , may be located
Of periphery of urban areas, except if they are
located in designated industrial area, prior
Zoning and land use regulation and environmental
legislation continuous to regulate industrial location.
STEPS FOR STARTING A SSI
The development of small-scale industries
has been one of the most significant and
development in India.
To create broader employment opportunity
Assist entrepreneur skill and technology
And ensure to better use of scares financial
resources and appropriate technology.
development of small and medium scale
industries are the increase in the supply of
manufactured goods. The promotion of
indigenous entrepreneurial talents and skills
and the creation of broader employment
STEPS TO SET A SSI
Analyze yourself and your objectives
Date with yourself for newer ideas
Consult publication and agencies
Discuss with all around you and with SISI &DI office
Date with yourself for a decision
Choose a line
Decide whether to purchase a going concern or to start
a new one
Obtain the project report from SISI or elsewhere or
prepare it yourself
Decide on location and site
Arrange the work shed with facilities(preferably on
Make sure what laws will particularly affect you
Obtain clearance from central state & local authorities
and SSI REGN.no .
Plan source of machinery
Place order of machinery(on hire purchase)
Apply for materials(if imported or controlled)
Decide on pricing policy
Plan out record –keeping
Plough back profits
Compete with others
FORMALITIES FOR SETTING UP OF
A SMALL BUSINESS ENTERPRISE
a.Product or service selection
c.Project feasibility study
d.Business plan preparation
3. Obtain SSI
10. a. Proceed to
b. Obtain the final
SELECTION OF A SMALL SCALE
Various stages for setting up small-scale unit
(1) Decision to be self-employment
(2) Identification of opportunities
(a) Idea generation
(b) Screening product/service idea
(c) Concept testing
(3) Selection of the line of business
PROCESS OF SETTING UP A SMALLSCALE INDUSTRY
For Chart refer Vasant Desai P.No: 665
STARTING A SMALL SCALE INDUSTRY
Project objectives P.No: 668 (Vasant Desai)
Process of starting a small enterprise P.No:
Vasant Desai P.No: P.No: (650-682)
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