Companies focus activities in restricted number of locations

Question

What are the conditions when companies focus activities in a restricted number of locations?

Answer 1

Companies tend to focus their activities in a restricted number of locations in the given conditions:

i. When the costs of manufacturing or other activities are considerably lower in some geographic places than in others.

ii. When there are important scale economies.

iii. When there is a steep learning curve linked with performing an activity in a sole place.

iv. When certain locations have better resources, permit better coordination of related activities, or offer other important benefits.