Assessing Industrial Locational Advantage Across Residential Neighbourhoods Based on Spatial Margin to Profitability Method

"Selection of industrial location is normally based on the physical rather than the economic characteristics of a particular geographic area such as the relative distance to various market segments within residential areas. Economic criteria are seldom used for their apparent sensitivity to market and economic factors. However, economic criteria for industrial site selection have an advantage of efficiency on the basis of maximization principles. In this context, geographic locations can be ranked according to the relative size of business profit that can be generated from certain industrial activities. This paper attempts to demonstrate the application of spatial to margin profitability (SMTP) principles for such a purpose. Fourteen planning blocks within the jurisdiction of Johor Bahru City Council were selected for the study whereby industrial locations were ranked based on the level of per capita profit generated from bread manufacturing industry. Questionnaires were distributed to respondents in the study area to gather data on revenues and costs of raw materials, operation, management, marketing, and transportation in the bread-making industry. Network analysis was performed using a Geographic Information System software - ArcView 3.3 - to determine the cost of distributing bread to various residential neighbourhoods in the study area. It was found that the existing bread-making industry in the study area was located not at the most profitable sites although it was located within planned industrial zones. The analysis also showed zones of more profitable locations where bread-making industry can be better sited. The recommendation for future research was to integrate physical characteristics and SMTP capacity of particular geographic areas in industrial location planning.""