These activities are all integrated by their functions and this is designated as the 'functional linkage'
The raw materials needed for an industry come from another industry. Similarly, the products manufactured by one industry is marketed by another industry. Thus, any industry has at the least two such linkages and they are termed: Input linkage and Output linkage.
Input Linkage. This relates to a function in which the input for one industry is got from another. For example, a small iron lathe works obtains the iron it needs from another smelting industry. This linkage is known as 'input linkage'.
Output Linkage. The iron that was shaped in the lathe is then transformed into a product for consumption. Then, it is sold in the market through another institutional arrangement, say, dealers. The linkage so developed is called the 'output linkage'. When obtaining its inputs and when marketing its output, an industrial unit is in need of, integrally, functioning with the transport, bank, telecommunications and other institutions.
An industry is not generally linked with its allied industries in the same way. It is strong and necessary, with some of them. And, with others, it may be weak.
Strong Linkages. Industries are linked with one another purely in response to the needs to be in such links. The change that occurs in one such link could cause further, more stronger changes in other links. For example, for iron and steel, the important raw materials are those of the iron ores and the coal. Therefore, the iron and steel industry and the mining units of iron ores and coal are inter-linked. If either raw material is not available, it would be difficult for the iron and steel industry to carry on. Further, there is no substitute for either iron ore or coal in smelting iron. Thus, some industries are very strongly linked with some other industries.
Weak Linkages. There are instances where one industry is less strongly linked to others. For instance, steel industries depend on banks for their day-to-day transactions. But, if banks are affected for some reasons, it might not result in any big difficulty for the steel industry. The industry could make alternative arrangements for financial transactions.
As the industries are dependent on each other, their locations are structured in a certain way. As primary industries are dependent on natural resources, they are structured in accordance with their locations. For example, agriculture, mining and fishing can only operate in places appropriate to themselves. As the secondary industries are dependent on the primary industries, they are also located nearer to the locations of the primary industries. Industries separating the metals from their ores are generally located near about the locations of ore mines. Similarly, the textile industries are located in the midst of cotton growing areas. In recent times, however, secondary industries are located even away from industrial raw materials, as a consequence of rapid and cheap transport over long distances. For example, the iron ores mined in Indian mines are being used in the manufacture of steel in Japanese industries.
Tertiary and quaternary industries are located either in or near the urban centres. Thus, location of industries is influenced by raw material locations or transport facilities. In some places, industries are in a cluster. There are linkages between the industries that are found in a cluster. Such clustered areas are known as the 'industrial regions'. The Chotanagpur plateau region of Bihar, Orissa and West Bengal is an example of such a region. There is a large number of iron and steel industrial units in this region. In Coimbatore and Madurai of Tamil Nadu, there is a concentration of textile units.
In several countries of the world, there are industrial systems and industrial regions. Examples are the Ruhr industrial region in Germany and the Great Lakes industrial regions of the United States of America. Let us now examine the reason why industries are found in certain regions.