Drivers for Location Planning?
- 1. Viewed as a marketing/operations strategy
- 2. Growth in demand
- 3. Depletion of basic inputs
- 4. A shift in the market
- 5. Closts of doing business at a particular location
Why are location decisions so important?
They are long term committments with large costs.
What are the objectives of Location Decisions?
- 1. Profit Potential
- 2. Balance cost and customer service
What options are there for Location Decisions?
- 1. Expand existing facilities
- 2. Add new facilities
- 3. Move
Give two short-term reasons NOT to make a location decision?
- 1. wage rates
- 2. exchange rates
Best approach to location decision?
Consider how location impacts development of long-term capabilities.
Six Step Process for Location Decision?
- 1. Identify sources of value
- 2. Identify capabilities needed (for a competitive advantage)
- 3. Assess implications of location decision on development of capabilites (quality coils)
- 4. Identify potential locations
- 5. Evaluate locations
- 6. Develop strategy for building network of locations
Levels of location decisions?
- 1. Continent/Country
- 2. Region within a country
- 3. Community / Locality
- 4. Specific site
Factors affecting Regional & Country Level Decision?
- 1. Minimize transportation costs and provide acceptable service
- 2. Proper supply of labor
- 3. Wage rates
- 4. Unions
- 5. Regional taxes, regulations, trade barriers
- 6. Political stability
Factors affecting Community Level Location Decision?
- 1. Availability of acceptable sites
- 2. Local government attitudes
- 3. Regulations, zoning, taxes, labor supply
- 4. Tax incentives
- 5. Community's attitude
- 6. Amenities
Factors affecting Site Level Decision?
- 1. Size
- 2. Adjoining land
- 3. Zoning
- 4. Drainage
- 5. Soil
- 6. Availability of water, sewers, utilities
- 7. Development costs
List the considerations of manufacturing/distribution for location planning?
- 1. Cost focus
- 2. Transportation modes/costs
- 3. Energy availability costs
- 4. Labor cost/availability/skills
- 5. Building/leasing costs
List the considerations Service/Retail for location planning?
- 1. Revenue focus
- 2. Demographics, age, income, etc.
- 3. Population/drawing area
- 4. Competition
- 5. Traffic volume/patterns
- 6. Customer access/parking
Cost volume profit analysis in evaluating locations?
- 1. Determine fixed and variable costs
- 2. Plot total costs
- 3. Determine lowest total costs
Cost Volume Profit Analysis:
Lower volumes are best with lower _______Cost
Higher volumes are best wtih lower _________Cost
Three methods for evaluation Locations?
- 1. Transportation Model
- -Decision based on movement costs of raw materials of finished goods
- 2. Factor Rating (most popular)
- - Decision based on quantitative and qualitative inputs
- 3. Center of Gravity Method
- Decision based on minimum distribution costs
Using the Factor Rating Method for Location decisions, the best alternative is the one with?
Higher composit score