Why Are Technological Factors Important?
Firms should consider
1.The level of fixed costs
if fixed costs are high, produce in a single location or a few locations
when fixed costs are low, multiple production plants may be possible – allows firms to respond to local demands
2.The minimum efficient scale
when minimum efficient scale (the level of output at which most plant-level scale economies are exhausted) is high, choose centralized production in a single location or a limited number of locations
when minimum efficient scale is low, respond to local market demands and hedge against currency risk by operating in multiple locations