Macrolocation: Factors, What It Is For And Example

The macro-location of a project or company consists of deciding the most advantageous region where a company or business will be located; describes the general geographic area in which a project is to be located. Cities and regions emerge through the symbiosis of benefits that are generated from the grouping of companies and people.

Therefore, a functional macroeconomic situation serves as the basis for making property locations attractive and is therefore a prerequisite for an investment. For this reason, macro-location analysis is extremely important.

Macro-location of a project or company

Analysis is not only useful in the context of the investment decision to be made. Rather, it is advisable to do constant macro-location reviews for investors and owners. 

Generally, the relative importance of macrolocation to microlocation increases as the size of the project and ownership increases.

Factors

In the macro-location of a project or company, the following factors should be taken into account:

Geographic

They are those related to the natural circumstances that prevail in the different regions of the country, such as climatic conditions, levels of environmental waste and pollution, and actions to avoid pollution of the environment.

They also include the characteristics and availability of the communication routes (air routes, roads and highways, railways, etc.), as well as the state of these routes.

Likewise, it takes into account the availability of the land, insofar as it has an adequate surface due to its topographic characteristics and whose costs are reasonable.

Social

They are related to the adaptation of the project to the community and the environment. These factors are seldom addressed, but they are no less important for that.

Specifically, they refer to development trends in the region, the general level of social services and living conditions that the community has, such as hospitals, schools, cultural facilities, recreational centers and for employee training.

The attitude of the community towards the establishment of the company and the interest of social and community forces are also taken into account.

Economical

They correspond to the costs of inputs and supplies in that place, such as raw materials, labor, electricity, water and fuels.

On the other hand, it considers usable infrastructure, as well as the proximity of raw materials and consumer markets.

The availability of the different means of transport (vehicles, buses, trains) must be taken into account, as well as their costs, as well as the availability of communications, in terms of telephone lines and Internet access.

Institutional

They are related to the strategies, plans or development programs, rules, regulations and specific regulations on industrial decentralization.

It takes into consideration regional laws and policies, infrastructure of public services, the impact of the project on the environment and the approval of the corresponding institutions for the license.

Tangible and intangible factors

A distinction must be made between tangible and intangible location factors. After determining the structure of the macro-location, which depends on the location and the corresponding type of use, the following key location factors are analyzed.

– Population structure (eg migration trends).

– Age, income and structure of the household.

– Employment and economic development.

– Degree of diversification of the local economic structure.

– Public institutions (ministries, courts, etc.).

In addition to tangible location factors, the results of which can often be objectified, intangibles are also important. For example, people’s image of the location should also be examined in the analysis.

What is it for?

The macro-location of a project or company aims to find the most favorable location for the project, determining the most relevant socio-economic indicators and physical characteristics, in such a way that it meets the requirements or demands that help reduce investment costs.

Likewise, this location found should help to minimize operating expenses and costs throughout the productive period of the project.

The previously arduous process of evaluating possible country locations has become more and more of objective data analysis and less of field work.

Very specific criteria can be set for the site search. For example, you can define a site in a community where the workforce is made up of at least 25% young people under 30 years of age, but not more than 50%.

You can specify a site that is no more than 10 kilometers from a certain provider or that is no more than a day away from at least four customers. Much of this relevant information is available from public sources.

Select the optimal location

After the data from all available sites is analyzed, using the specified criteria, a list can be generated that ranks the sites based on a score, basically rating how well each site matches the criteria.

The locations with the best ratings will make up a short list of the best options. From there, the localization team can evaluate them and use other resources to help select the optimal location from the list.

Example

The factors that were taken into account when deciding where to install the project of a restaurant in the Aragua region, in the city of Cagua, were the following in terms of macro-location:

Type of place

Based on a previously carried out investigation, it was concluded that the city of Cagua does not have a restaurant that offers the typical gastronomy of the region.

Investment amount

The amount of the investment is $ 30,000. This amount will be used to equip the property. It is not necessary to spend on the purchase or rental of the land, as it is owned by the restaurant.

State of the communication routes

The main access road to the city of Cagua is the national highway, which is in good condition.

There is also the intercommunal highway, where you can get to the city of Cagua through the city of Turmero. This road is dirt, which makes it passable but going slowly and with great care.

Another access to Cagua is also by the intercommunal road, but from the city of La Villa. This road is paved, which makes it passable.

The tourist destination of La Victoria is located 10 kms away from Cagua, and Maracay is 18 kms.

Services

The city has electricity, drinking water, telephone communication and fairly stable Internet access.

References

  1. Corpus Sireo (2018). Macro Location. Taken from: corpussireo.com.
  2. David Verner (2018). A More Focused Approach to the Industrial Location & Evaluation Process. Area Development. Taken from: areadevelopment.com.
  3. Juan Carlos (2013). Micro location and macro location. Blogspot. Taken from: cuadromicroymacrolocalizacion.blogspot.com.
  4. Delicias Puntanas Typical food restaurant (2018). Macro and Micro location of the Project. Taken from: sites.google.com.
  5. Baca Urbina (1990). Project evaluation. Editorial McGraw-Hill, 2nd. Edition.

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