10.4 Product factors
Two product features influence location decisions. They are:
- value-to-weight ratio
- universal needs.
Value-to-weight ratio
High value-to-weight ratio products such as electronic goods have low transportation costs and, other things being equal, it makes sense to produce them in one optimal location and serve world markets from there. Low value-weight ratio products such as sugar, bulk chemicals, paint and petroleum products have large transportation costs. Wherever possible after consideration of all issues, it makes sense to produce these goods in multiple locations close to their markets.
Universal needs
Products which satisfy common needs such as steel, bulk chemicals and personal computers are best produced at a single location because there is little need for local responsiveness.
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