© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 3.4What are the location factors of

© Oxford University Press 2009

Part 3 Changing industrial location─How and why does it change over space and time?

3.43.4 What are the locationWhat are the location factors of the ITfactors of the IT industry?industry?



Information technology (IT) industry is a type of __________ industry which produces products involving IT.high-tech

Information technology (IT) industryInformation technology (IT) industry

Manufacturing of hardware and

equipment

Manufacturing of hardware and

equipment

Development of software and related services

Development of software and related services

What is the information technology (IT) industry?

iPods and laptop

computers

Online games and e-shopping



Where is the IT industry in the USA?

Silicon Valley

Can you name a famous IT

industrial cluster in the USA?

Can you name a famous IT

industrial cluster in the USA?

The IT clusters are mainly found in the suburbs of ______ cities.large

Cities (population)



Where is the IT industry in the USA?

Where are the two IT firms,

Dell and AMD, located?

Where are the two IT firms,

Dell and AMD, located?

Why is the distribution of IT

industry like this?

Why is the distribution of IT

industry like this?

Before answering this question, we

should learn about the characteristics of

the IT industry.



What are the characteristics of the IT industry?1 Research and development-intensive

ProcessesInputs

Cash Global markets

OutputsRaw materials

Powersupply

Skilled and unskilled labour

Technology

Capital

Design

Research and development

Manufacturing

Assembly

Packaging

IT equipment products

Which two inputs do you think are the most

important ones for the IT industry?



What are the characteristics of the IT industry?1 Research and development-intensive

We can see that the IT industry have to invest huge

sums of money on ________________________.research and development

Total R&D funds on manufacturing industries in the USASince the IT manufacturing system depends heavily on the inputs of technology and capital. Therefore, the IT industry is a ___________- and _________-intensive industry.

technology capital



Only in a few years

Development Growth Maturity DeclineStage of production

Much work on R&D

Market grows rapidly

Market levels off

Market drops rapidly

How often do you change your IT products such as

mobile phones, PCs, etc.?

How often do you change your IT products such as

mobile phones, PCs, etc.?

What are the characteristics of the IT industry?2 Short life-cycle of IT products

The product life-cycle of IT products is short.



Development Growth Maturity DeclineStage of production

Production requirement

Location of production

A large number of scientists and engineers are engaged in ______

- Skilled labour

Location which helps to lower the costs, e.g. location with cheap ________ (like less developed countries)

- _________ workers

- Standardized production line

- Near market, e.g. ___________

R&D

Unskilled

metropolislabour

- Efficient management

- Shared basic ____________helps costsinfrastructure

- High-wage, more developed regions

What are the characteristics of the IT industry?3 Multinational and multi-point production



What are the characteristics of the IT industry?3 Multinational and multi-point production

This mode of production is known as multinational and multi-point production.

The USA

Major city

Headquarters(Decision-making)

R&D centres(Research and developing new

products)

Suburb

Manufacturing plants

(Factories producing standardized products)

Less developed countries



What are the characteristics of the IT industry?4 Concentration in clusters

The IT industry in Silicon Valley in the USA shows a

cluster pattern, forming industrial agglomeration.

What are the advantages of

industrial agglomeration?

What are the advantages of

industrial agglomeration?

In the development / R&D stageIn the development / R&D stage

Inducing innovation

Facilitating exchange of market and technical information

Providing technical, financial and networking services

Establishing business contacts

Creating a distinct innovative culture and business climate which can further attract other IT firms to agglomerate



What are the characteristics of the IT industry?4 Concentration in clustersIn the production stageIn the production stage

By sharing basic social facilities and infrastructure, the firms can

cut costs;

increase competitiveness;

attract labour;

enjoy low rents offered by the local government.



What are the characteristics of the IT industry?5 Importance of global markets

A lot of money for

R&D

A lot of money for

R&D

PlayStation Portable

Suiting the taste of customers of global markets

Making money

Covering the huge amounts of money spent on R&D



What are the characteristics of the IT industry?6 An IT industrial landscape University Located in

__________ area

Low, modern, dispersed office-plant-

laboratory buildings

Near to ___________ or research institutes

A large pool of scientific and technically skill

ed labour

Venture capital is available

suburban

universities City centre

This new kind of industrial

landscape is called a

___________ site.

This new kind of industrial

landscape is called a

___________ site.green field



What are the characteristics of the IT industry?6 An IT industrial landscape

A green field site does not have massive mills, assembly plants, dense transport networks and storage areas.

IT industrial landscape (green field site)

Traditional industrial landscape (brown field site)

Silicon Valley, the U

SABy comparing the two photos, what are the characteristics of a

green field site?

By comparing the two photos, what are the characteristics of a

green field site?

(Credit: Ed Kashi/Corbis) (Credit: Andre Maslennikov/Still Pictures)



What are the location factors affecting the location of the IT industry?In the development stageIn the development stage

Researchers, scientists and technicians

Labour

‧( LDCs / MDCs )

‧( City centre / suburb ) with good amenities

‧Near universities or research institutes

Site

Large amount of __________ capital

‧Providing financial support‧Maintaining a favourable bus

iness climate and an innovative culture within the community

Market_______ markets

‧Near to suppliers

Others

venture

Global

Regions with good innovative climate and good access to high levels of technology

Technology

Capital

Government policy

‧Good social and cultural quality‧Good transport networks



What are the location factors affecting the location of the IT industry?In the maturity stageIn the maturity stage

Abundant of _______ and semi-skilled labour

Labour

‧( LDCs / MDCs )‧( Cheap /

Expensive ) land site

‧Good infrastructure

Site

Large amount of capital for setting up factories overseas

‧Providing a good infrastructure

‧Providing good communal services

MarketGlobal markets

‧Near to suppliers

Others

Regions which are ready to receive transferred technology from high-technology regions

Technology

Capital

Government policy

‧Good social and cultural quality‧Good transport networks

cheap



Are the factors affecting the locations of the iron and steel industry in China and the IT industry in the USA the same?

Iron and steel industry in China IT industry in the USA

Characteristics

Industrial landscape

Market

Pollution problems

Heavy industryHeavy industry High-technology industryHigh-technology industry

Consumes a large amount of _____________ and _______

Consumes a large amount of _____________ and _______

_________ and development-intensive

_________ and development-intensive

Mostly _______-point production

Mostly _______-point production

Most are multinational companies and adopt _____

_-point production

Most are multinational companies and adopt _____

_-point production

powerResearch

multi

Traditional industrial landscapeTraditional industrial landscape Green field siteGreen field site

Mainly _____ marketsMainly _____ marketslocal ________ markets________ marketsGlobal

Very serious air pollutionVery serious air pollution Less serious air pollutionLess serious air pollution

raw materials

single



What are the location factors affecting the

locations of these two industries?

What are the location factors affecting the

locations of these two industries?

Government and technology The development stage: ___________, labour quality and the site, which is near universities and large cities

The maturity stage: Cheap ________ supply

Technology

labour

Are the factors affecting the locations of the iron and steel industry in China and the IT industry in the USA the same?



What is globalization?

What is globalization?

Globalization refers to the process which leads to a faster and increasingly free flow of capital, goods, technology,

ideas and people among countries.

There is an integration of markets of manufactured products.

There is a rise and expansion of multinational firms.

In industrial geography, globalization has two major implications:

The development of the IT industry is very much in line with the development of globalization.

What impact has globalization had on the location of the IT industry?



Foreign market

Foreign market

Many IT firms expand their market to overseas countries through one or more of the following ways:

1 Export1 Export

Foreign marketExport products directly

2 License2 LicenseGrant a license overseas

Home country

Home country Produce and sell overseas

Set up a plant overseas

Produce locally

Home country

3 Foreign direct investment (FDI)

3 Foreign direct investment (FDI)

Sell overseas

Produce and sell overseas

1 Globalization in marketing




Home countryOverseas

Headquarters and R&D in …

Headquarters and R&D in …

Standardized production bases in …

Standardized production bases in …

(Regions with lower production costs)

_____________ productionMulti-point

2 Globalization in production




If an IT firm can obtain cheaper and better quality components elsewher

e

If an IT firm can obtain cheaper and better quality components elsewher

e

The firm can cut costs and earn mor

e

The firm can cut costs and earn mor

e

What is the spatial distribution of the HP product materials and component suppliers?

What is the spatial distribution of the HP product materials and component suppliers?

Adopt a worldwide supplier network for parts and components.

3 Globalization in sourcing inputs


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© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 3.4What are the location factors of