HKDSE Geography/M3/Situation Factors

Factors Related to Inputs

Access to Labour

Related industry type: Labour-oriented industry, labour-intensive industry

• Suburbs have better access to quality labour.
• Labour-intensive industries - Industrial areas near residential ones have access to a large amount of labour.

Access to Raw Materials

Related industry type: Raw material-oriented industry

• Industries for which raw materials are important include metal refining, etc.

Access to Power

Related industry type: Power-oriented industry Industries that need a huge amount of energy for daily operations tend to be located near to the source of energy to reduce energy loss and leakage during transport and reduce costs. Coal, in particular, is heavy and bulky and thus coal-based industries tend to locate near power sources. Oil and natural gases can be transported by oil tankers and pipelines. Other sources of electricity may be transported through power lines or even the electricity grid.

Factors Related to Markets

Proximity to Markets

Related industry type: Market-oriented industry Industries that tend to be located near markets include:

• Perishable products, e.g. fresh food
• Fragile products, e.g. expensive vases
• Timely products that go out of date quickly, e.g. newspapers
• Heavy and bulky products, e.g. iron and coal

The significance of market depends on:

• Individual demand of consumers (incl. their purchasing power)
• Number of consumers

Proximity to Clients

Some industries need to be close to the clients to meet their needs individually, e.g. property agencies and insurance companies.

Proximity to Suppliers

Some industries need close connections with suppliers to tell them their needs, e.g. fashion outlets.

Access to Management

Some industries need efficient management to run effectively. Functions of management including:

• Planning production methods and locations
• Organising workers and assigning posts
• Coordinating various departments in the firm
• Monitoring other departments
• Formulating strategies, such as expansion, integration or changing plant location

Inputs vs. Markets: Which is more important?

• Procurement costs are the costs of transporting inputs (raw materials and power) to the plant.
• Distribution costs are the costs of distributing final outputs to the markets.

• When procurement costs exceed distribution costs, the firm is raw-material- or power-oriented.
• When distribution costs exceed procurement costs, the firm is market-oriented.

• In general, weight-losing industries such as processing are raw-material or power-oriented because procurement costs exceed distribution costs. (e.g. sugar cane, iron and steel, copper smelting...)
• In general, weight-gaining industries such as assembly are market-oriented because distribution costs exceed procurement costs. (e.g. car manufacturing...)