Theory of Alfred Weber: Definition, Features and CriticismAlfred Weber's Theory of Industrial location is a model of industrial location.

Dr. Loy has degrees in economics, human resources, and safety, as well as a PhD in Resource Economics.

Chris was asked to figure out where to put his company's new plant.He knows he needs to find the most cost effective location.Chris considers the transportation of tractor seats from the plant to where they will be sold as part of his formula.He decided to use Weber's model of industrial location as a guide to find the perfect plant location.

Weber's model of industrial location is a theory based on sociology and geography.Theory of the location of industries was published in German in 1909.He called it the location triangle.The theory of the best location for producing a good based on this triangle took hold after Weber's book was published in English in 1929.

The fixed location of the market was included in the location triangle.His goal was to determine.

Region and transportation are two factors affecting these costs.He looks at the effects of agglomerative factors.Let's take a closer look in more detail.

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Weber looked at regional factors in his model.The cost of production in a region depends on labor and transportation.If labor costs have a greater effect on production costs than transportation costs, the plant should be located in a location with less influence.If transportation costs affect the cost of production more than labor costs, the plant should be located in areas with less of an effect.Weber uses two coefficients to determine the influence of labor and transportation.

If the material index is greater than 1, the industry should move closer to the raw material sites.The plant should be located near the market if it is less than 1.The company's discretion is on where to locate if the formula is 1The final location may be affected by less influential factors.

The closer the plant is to lower wage earners, the higher the labor cost index is.Both skilled and unskilled labor are included in labor.The location of the plant should be influenced by the labor cost index.Bargaining, competition, education level, and skill-set are some of the factors that affect labor costs.There is a material and labor cost index at work.

Regional factors influence the location of Chris' company.Chris starts by looking at the material index.2500 / 3000 is calculated by Chris.The plant has a low material index and is not material oriented.

The labor cost index is calculated by Chris.He has two plans for his company's wages and organizational structure.He gets 3000 for Plan A.2000 is 0.67 for Plan B.Labor costs should affect the location more than location costs if Plan A is chosen.The plant should locate closer to the raw material sites if Plan B is chosen.

Weber notes the effect of agglomeration in his theory.Companies all locate in the same area.They can take advantage of rare products and services in areas where many firms cluster together.The more companies Chris locates around, the more likely he will have easy access to unique machining, marketing, and transportation services.

Companies abandon areas because of intense concentration.Companies operate at an optimal size.Deglomeration occurs when a company grows too big for an area and location incentives are removed.Chris needs to find a location that will allow his company to receive the benefits of agglomeration.

Let's review what we've learned.The model of industrial location Builderalld by Weber guides decision-makers on how to locate the perfect plant location.The location triangle is where Weber bases his theory.The location of the market and two raw material sources are encompassed by the triangle.His theory uses these.

The cost of production in a region is different from other regions based on labor and transportation.The material and labor cost indexes were included in the regional factors we looked at.

Agglomeration occurs when companies all locate within relatively the same area, and deglomeratION occurs if companies abandon areas because of intense concentration.When finding a location, the goal of the business owner should be to maximize the benefits of agglomeration and minimize the costs.

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