3 Types of industrialists’ behaviour Rational economic men have the bahaviour of profit maximizationPeople with bounded rationality have the behaviour of profit satisfactionBut some industrialists have to consider social factors, political and environmental factors
5 Weber’s industrial location theory Decision-maker is an optimizerwho has perfect knowledge to make a wise decisionaims at maximizing profits or minimizing costsalso called an economic man
6 Reality decision-maker is a satisfier who may not have all the information required to make the best choice, i.e. they have bounded knowledgeaims at non-material goals/psychic incomeinfluenced much by personal preferences and values as by profit
11 Sole entrepreneurs Financial incentives Personal preferences Risk-taking abilitySite preference (home-town effect, family and personal ties, sense of belonging)Amount of perfect information about an industrial location and the ability to analyze itPsychological reasons (mental images of industrial locationChance factor
12 Home town effectThe growth of the Ford Motor Co. in Detroit – Henry Ford (founder) happened to be born there and he set up the industry in his hometown.William Morris’s pioneering of the car industry in Oxford in early 20th century.
13 Corporate industrialists to maintain certain amount of profit to please the shareholdersto minimize the risk and secure status and position in the company
16 TNCsToyota chose to set up a plant at Burnaston near Derby partly because of the co-operation and positive attitude of the local authority.
17 Government & environmentalists non-economic factors are more important than the economic factorsaffected by social and environmental considerations
18 ReferencesMichael Raw, Manufacturing Industry: the impact of Change, Chapter 7, Decision-makingRoger Hayter, Dynamics of Industrial Location, Simon Fraser University, Chapter 6, The Location of Factories as a Decision Making Process