Factors affecting the location of firms

1. Availability of raw materials. In situations where the raw materials are bulky the firm finds it cheaper to be near the source of raw materials. For example the location of cement factory in Tororo was due to the presence of limestone rocks.
2. Availability of power supply. Industries  which require a lot of power are located near source   of power,   for   example,   industries    manufacturing     metal   products    like   steel   rolling   mills.    This explains   why Jinja became   the industrial   town of Uganda   due to the presence   of hydroelectric power source.
3. Availability of market. Industries  or firms producing   perishable   commodities   like  flowers,   bread etc. are  located  near  the market  to avoid  their  products   from  getting  spoilt  or damaged   while  in transit.  In addition, industries producing   fragile and bulky commodities   like glass and bricks need to be located near market areas.
4. Availability of transport facilities. There is need   to locate   a firm where   transport    is  readily available  and  cheap  .For example  along  railway  lines,  good  road  networks,   water  ways  etc.  This helps to minimize on the transport costs.
5. Availability of water supply. Some   firms  require   water   as  a  raw  material   in  the  production process,   for  example,   water  is used  as  an input  in  the  brewery   industry   and  it can  be  used   for waste  disproval   by many  industries.   Therefore,   it is economical   for some industries   to be located near a water source.
6. Availability of land. Land provides a site where a production unit can be established.  Therefore   it is economical   for firms to be located in areas where land as available   and cheap so as to provide room for industrial expansion.
7. Availability of cheap labour. Firms are located in areas where labour is cheap and is in enough supply. This is true with firms which are labour intensive.
8. Government policy. The   government     may   be   aiming    at   balanced    regional    development, employment creation,   controlling    rural urban   migration   which   may   force the government     to locate a firm in a certain area.
9. Political climate. The location of a firm is determined  by political   stability (security)   of the area. This is because   a politically   stable area provides   a conducive   investment   climate which   attracts firms to be located in a certain area.
10. Availability of economic infrastructure. For example  banks,   insurance companies, advertising companies   etc. may force firms to concentrate   in an area.

11. Availability   of suitable climate.  Firms   are located   in areas   where   the climate   is generally favorable   for their activities.   For example   it is not advisable   to locate   a paper   industry   in a swampy area.