Drivers for Location Planning?
1. Viewed as a marketing/operations strategy2. Growth in demand3. Depletion of basic inputs4. A shift in the market5. 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 Potential2. Balance cost and customer service
What options are there for Location Decisions?
1. Expand existing facilities2. Add new facilities3. Move
Give two short-term reasons NOT to make a location decision?
1. wage rates2. 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 value2. Identify capabilities needed (for a competitive advantage)3. Assess implications of location decision on development of capabilites (quality coils)4. Identify potential locations5. Evaluate locations6. Develop strategy for building network of locations
Levels of location decisions?
1. Continent/Country2. Region within a country3. Community / Locality4. Specific site
Factors affecting Regional & Country Level Decision?
1. Minimize transportation costs and provide acceptable service2. Proper supply of labor3. Wage rates4. Unions5. Regional taxes, regulations, trade barriers6. Political stability
Factors affecting Community Level Location Decision?
1. Availability of acceptable sites2. Local government attitudes3. Regulations, zoning, taxes, labor supply4. Tax incentives5. Community's attitude6. Amenities
Factors affecting Site Level Decision?
1. Size2. Adjoining land3. Zoning4. Drainage5. Soil6. Availability of water, sewers, utilities7. Development costs
List the considerations of manufacturing/distribution for location planning?
1. Cost focus2. Transportation modes/costs3. Energy availability costs4. Labor cost/availability/skills5. Building/leasing costs
List the considerations Service/Retail for location planning?
1. Revenue focus2. Demographics, age, income, etc.3. Population/drawing area4. Competition5. Traffic volume/patterns6. Customer access/parking
Cost volume profit analysis in evaluating locations?
1. Determine fixed and variable costs2. Plot total costs3. Determine lowest total costs
Cost Volume Profit Analysis: Lower volumes are best with lower _______Cost Higher volumes are best wtih lower _________Cost
FixedVariable
Three methods for evaluation Locations?
1. Transportation Model-Decision based on movement costs of raw materials of finished goods2. Factor Rating (most popular)- Decision based on quantitative and qualitative inputs3. 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