Location strategies

1. The Strategic Importance of Location

2. Factors That Affect Location Decision

3. Methods of Evaluating Location Alternatives

4. Service Location Strategy

Location Strategy

Maximize The Benefit Of Location To The Firm

Location and

Innovation

Location

and

Cost

Nike had chosen China as one of their long-term most

low-cost suppliers and labor capability.

Cheaper raw material and labor cost.

Labor cost = 2-5% of the retail price.

Quality Coils Inc

› Opened its new plant in U.S

› Even though the cost of labor in U.S is high, its less

important than such factors as the skill of the

workplace, the quality of transportation and access to

technology.

COUNTRY

REGION / COMMUNITY

SITE

Yue Yuen

Manufacturing company

Country - China

As a second world country with foreseeable future.

Region - Guangdong

China’s largest provincial economy. It is the center of China’s export-led manufacturing industries.

Site – Dongguan

Connected with convenient transportation. The town forms part of the modern transportation network. The result is a connection with Guangzhou, Shenzen, Huizhou and surrounding towns, creating the vision of a one hour economic circle.

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Labor Productivity

Exchange Rates &

Currency Risk

Costs

Political Risk, Values & Culture

Proximity to Markets

Proximity to Suppliers

Proximity to Competitors

Genpact (New York) is a business processing and

technology management company which mainly deals

with outsourcing and technology services.

› India has many prestigious technical universities and

the Indian Institute of Technology stands apart as one

of the world's best. India produces over 75,000 IT

graduates.

Toyota feels exchange-rate pinch as

Hyundai gain.

In the United States, the weak Won

(South Korea) has allowed Hyundai to

offer much more aggressive sales

incentives than Toyota, allowing it to

chip away at Toyota’s market share.

In Nigeria, acts of sabotage directed against the oil

industry by rebel groups constitute the main risk.

› Nigerian militants had sabotaged an oil pipeline

belonging to Royal Dutch Shell.

"We are confident that more than 100,000 opportunities will

be given in the coming years,"

-Laurent Freixe, CEO of Nestle Europe-

Europe face crisis due to government debt and cause

unemployed to the youngster.

Nestle create new work and training opportunities for

Europe's young jobseekers.

By bringing along younger workers, it can help boost

Nestle's productivity in Europe.

They just grab the opportunities without consider about

the benefit they will receive.

The aim target consumers are the youngster who are

fashionable with the special ice-cream.

Haagen-Dazs cooperate with many upscale restaurants, to

let Haagen-Dazs ice cream printed on the advanced

restaurant menu.

The company opened its first retail outlet in Indonesia in 2002. Since then, they opening more than 70 stores.

Indonesia developed as well-known coffee industry.

Indonesia become the third-largest supplier of green coffee for Starbucks.

Target builds a location across the street from Walmart,

literally just hundreds of feet away.

All customers want options. If they don't like an option

from one competitor, they'll move to the next.

That's why Target had no problem plopping themselves

next to giant Walmart. They were creating a mall.

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Factor-Rating Method

LocationalBreak-Even

Analysis

Center-of-Gravity Method

Transportation Model

Simply consist of a weighted list of the factors

a company considers the most important and

a range of values for each factor

This technique enables a company to choose a

location systematically based on the best

rating.

A cost-volume analysis to make an economic

comparison of location alternatives

“It is difficult to overstate the importance of

break-even analysis to sound business

management and decision making”

-Ian Benoliel, CEO of NumberCruncher.com-

Software developer company

Wholesaler rely on NC’s software to solve

their daily business activity.

To find the best location of a distribution

center that will minimize distribution costs.

Richmond Metropolitan

› The multihospital want to locate their supply

system warehouse in a community that will

minimize the distribution from this warehouse to

each hospital.

› The method works with coordinates on map and

show existing community to the proposed new

facility

It’s minimizing the cost of shipping products from a

series of sources to a series of destinations.

Avis Budget Group

› The manager needs to decide how many rentals should be

trucked from each city with excess capacity to each city that

needs more rentals.

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BACK

How Hotel Chains Select Sites

Geographic Information

Systems

The Call Center

Industry

Open in May 2003,

December 2007, opened 130 more hotel chains, in 50

other cities.

Large demand because it situated in the city centre.

Motel 168 Pudong Airport :

Short walk to Yuandong Avenue Station

6.3 kilometres from Pudong International Airport.

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American Express

“We recognized that the people in our call centers

are the front line of our business and interact

with customers every day”

-Jim Bush, The Executive Vice President of

American Express-

American Express contact centre operations typically

based in India or Manila.

BACK

Michels Corporation

“GIS technology has helped Michels plan and

execute projects for our customers”

-Pat Michels,

Chief Executive Officer-

For example, it uses GIS to find out how

future growth of a community will affect the

pattern of streets and community services.