location os Production
Production activity should be located where a firm can be most productive, and yield the highest revenues per unit of investment.
A highly productive plant:
Is one that is near to the market, so that the demand for units of output (and hence price) is high relative to costs of making that input.
Is one that is close to a skilled labour force. The easier it is for the firm to attract labour with appropriate skills the more likely it is to produce high value outputs and low costs per unit of output.
One that locates close to high value raw materials. The further materials have to travel the lower the productivity of the plant will be.