CHAPTER 7

(1)

HAYVANCILIK EKONOMİSİ DERS NOTLARI HAYVANCILIK EKONOMİSİ DERS NOTLARI

Prof. Dr. Yılmaz ARAL Prof. Dr. Yılmaz ARAL

CHAPTER 7

(2)

Selection of Establisment Place in Enterprises

Location problem in terms of business economics; to determine the optimum location of an enterprise.

Scientific studies on this subject are summarized below:

RİCARDO; With his theory of comparative advantage in foreign trade, he also put forward an important theory about spatial economic order.

(3)

Production costs, distribution of raw materials and energy resources; It shows differences as a result of the effects of many natural factors such as climate, nature, transportation routes.

As a result of this, production factors shift to the place where the conditions of establishment in question are best met in accordance with the theory of comparative advantages.

Consequently, the location of the production branch will be collected at certain geographical points and agglomeration will occur.

(4)

According to THUNEN theory; (It is considered the first scientific study.) It emphasizes the importance of economic factors (cost and duration of transport) as well as the subject factors in the production of agricultural products. The most important contribution of the German economist WEBER to the theory of establishment is the concept of foundation factor. In addition, the analysis and classification of materials related to transportation costs are still valid today.

LIZARD is the determinant of the select of contemporary establishment.

This economist has demonstrated that economic factors have individual and dynamic relationships at the social level, and that the factors of time and space are in close relationship with each other and determined its importance.

(5)

Factors Affecting Selection of Place of Establishment in Businesses and Pre-Establishment Studies

• Each entrepreneur has to choose a place of establishment suitable for economic purposes for the enterprise to be established.

* The most appropriate place means the place that will bring the highest profit if the business is established there. Above all, the height of the profit is provided by low cost costs.

* The reason for choosing the place of establishment in the enterprise under optimum conditions is to prevent waste of resources, to ensure efficiency in resource utilization and to work at low cost and to make more profit.

(6)

• The level of development of a country's economy is an

important factor determining the location of its establishment.

Businesses in countries with underdeveloped economies are more dependent on natural conditions. Therefore, enterprises must be established close to the source (nature).

• With the development of economies, this commitment to nature is gradually diminishing, and with the advancement of technology, artificial nature conditions can be created and the enterprise can be established away from the source (eg close to the market).

(7)

The necessity to consider the criteria to be taken into consideration in the selection of the place of establishment, which is of great importance for the enterprises, is also applicable for the livestock subsectors and enterprises.

In this context, besides natural factors, factors such as feed sources and livestock material in the region, current operating densities and capacities, level of organization, distance to market and consumption regions, labor force status, existence of industrial enterprises based on animal husbandry, cost structure and course of product prices are the first factors for livestock enterprises. It can be expressed as the location of the organization that comes to mind.

(8)

In case of not selecting an optimum place of establishment;

Production costs of enterprises are increasing, Product quality and efficiency decreases.

Therefore, there may be significant reductions in the profitability of enterprises facing narrow straits in comparison to competing

companies in the version of the products.

A number of studies are needed to select the location of the

establishment of the enterprises. These studies; Pre-establishment technical, economic, financial and legal feasibility studies.

(9)

Pre-Establishment Work in Business

Establishment of the business requires a number of economic, technical, financial and legal studies before the establishment.

In order to establish a successful business, it is necessary to carry out planning, continuous monitoring and research to the finest

points in every step of the organization in accordance with a number of main principles.

In order to make an investment decision, the entrepreneur must have preliminary knowledge of the subjects closest to him and where he wants to invest.

(10)

For this purpose, taking into account the aforementioned organization problems;

1. The raw material required for investment,

2. Domestic and foreign market situation of investment goods, 3. The cost of the goods to be manufactured,

4. Price flexibility of goods,

5. The size and location of the project 6. Required capacities

7. Investment amount

8. Compile information on the financing of the investment. In the light of this information, one of the investment topics can be selected.

(11)

Such studies, which are mentioned briefly, are called feasibility studies (feasibility studies or preliminary project studies). Feasibility studies are the economic, technical and financial studies carried out before entering the final project preparation.

The project is a plan for future forecasting of the investments to be made to minimize the risks that may arise in the future and the benefits they will produce.

The proper establishment of an enterprise and the efficient operation at full capacity during the operation period depend on the effective conduct of these activities.

Otherwise, if the preliminary project studies show that the enterprise to be established cannot provide the expected economic efficiency, the project is abandoned.

Such studies, which are mentioned briefly, are called feasibility studies (feasibility studies or preliminary project studies). Feasibility studies are the economic, technical and financial studies carried out before entering the final project preparation.

The project is a plan for future forecasting of the investments to be made to minimize the risks that may arise in the future and the benefits they will produce.

The proper establishment of an enterprise and the efficient operation at full capacity during the operation period depend on the effective conduct of these activities.

Otherwise, if the preliminary project studies show that the enterprise to be established cannot provide the expected economic efficiency, the project is abandoned.

(12)

The main benefits of preliminary project studies can be listed under the following headings:

1.Deciding on the establishment of a firm,

2. Determining the size and location of the enterprise,

3. To determine the internal and external financing needs for the establishment of the enterprise and to present the preliminary project to the banks and other institutions related to the financing,

4. To introduce the project to the related institution (SPO) if the enterprise will benefit from investment discounts, credit and foreign currency allocations,

5. To anticipate the difficulties to be faced during the implementation of the project and to take necessary measures

(13)

The studies for the preparation of a project are not only preliminary project studies. A project consists of 7 stages:

1* The project normally starts with the idea that any activity will be technically feasible and profitable.

2* To make a cost-benefit comparison of the activity considered by using some technical economic and financial preliminary information.

3* Preparation of preliminary project.

4* Making investment decisions with various evaluations

(14)

5* Final project preparations (the legal form of the enterprise to be

established at this stage, the precise detailed technical calculations and costs of the structures to be constructed) must be known.

6* Project implementation period (investment is physically realized during

this period).

7* Completion of the investment scheme with the end of trial production and the beginning of the production period.

(15)

Any Questions?!?