Chapter 8

Location Planning and Analysis

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2 Learning objectives

1. List some of the main reasons organisations need to make location decisions

2. Explain why locations are important

3. Discuss the options that are available for location decisions

4. Describe some of the major factors that affect location decisions

5. Outline the decision process for making these kinds of decisions

6. Use the techniques presented to solve typical problems

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3 The Nature of Location Decisions

1. Strategic Importance of location decisions

2. Objectives of location decisions

3. Location option

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4 1. Strategic Importance of Location Decisions

Closely tied to an organisation strategies

Entail a long term commitments

Impact on investment requirements , operating cost and revenue

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5 2. Objectives of Location Decisions

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6 Location options
1. Expand existing facility

2. Add new location to the existing facilities

3. Shut down on one location and move to another location

4. Doing nothing

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7 Factors that affect location decisions

1. Regional Factors

2. Community consideration

3. Site Related Factors

4. Multiple Plant Manufacturing Strategies

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8 1. Regional Factors

1. Location of Raw Materials

2. Location of Markets

3. Climate and Taxes

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9 2. Community Consideration
1. Quality of life
a. Schools, churches, shopping, housing, transportation,
2. Services
3. Attitudes
4. Taxes
5. Environmental regulation
6. Utilities
7. Development support

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10 3. Site Related Factors

1. Land

2. Transportation

3. Zoning

4. Other restrictions

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11 Multiple Plant Manufacturing Strategies

1. Product plant strategy

2. Market Area Plant Strategy

3. Process Plant Strategy

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12 Service and Retail Locations

Revenue focus

1. Demographics: age, income, education

2. Population /drawing area

3. Competition

4. Traffic volume/pattern

5. Customer access/parking

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13 Global Locations
1. Facilitating factors

2. Benefits

3. Disadvantages

4. Risks

5. Issues related to managing global locations

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14 1. Facilitating Factors

1. Trade agreements

2. Technological advances

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15 2. Benefits

1. Markets

2. Cost savings

3. Legal and regulatory

4. Financial (exchange rate)

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16 3. Disadvantages

1. Transportation costs

2. Security costs

3. Unskilled labour

4. Import restrictions

5. Criticisms

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17 4. Risks

1. Political

2. Terrorism

3. Economic

4. Legal

5. Cultural

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18 5. Issues related to Managing Global Operations
1. Language and cultural differences

2. Management styles

3. Increased travel distances

4. Face to face meeting may not happen

5. Managing from a distance

6. Differences in work ethics

7. Level of technology

8. Resistance to relocation (employees)

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19 Evaluating Location Alternatives

1. Locational Cost-Profit-Volume Analysis

2. The transportation Model

3. Factor Rating

4. The Centre of Gravity Method

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