Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall 18-1

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall Chapter 18

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  The key to finding a suitable location is identifying the characteristics that can give a company a competitive edge and then searching out potential sites that meet those criteria  The location decision process resembles an inverted pyramid  The right region of the country  The right state in the region  The right city in the state  The right site in the city 18-3

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall The Location Decision

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Selecting the Region  Sources of information  U.S. Census Bureau  ProQuest Statistical Abstract of the United States  American Fact Finder  ZoomProspector  ePodunk 18-5

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Sources of information (continued)  Population Reference Bureau  Lifestyle Market Analyst  Nielsen Marketplace  Editor and Publisher Market Guide  The American Marketplace: Demographics and Spending Patterns  Zip Code Atlas and Market planner  Site Selection 18-6

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall Most and Least Small Business Friendly States

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Selecting the State  Factors to consider:  Proximity to markets  Proximity to needed raw materials  Labor supply  Wage rates  Business climate  Tax rates 18-8

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall State Business Tax Climate Index

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Selecting the State  Factors to consider:  Proximity to markets  Proximity to needed raw materials  Labor supply  Wage rates  Business climate  Tax rates  Internet access  Total operating costs 18-10

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall Entrepreneurial Activity by State

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Selecting the City  Population trends  Best cities for business 18-12

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall Fastest-Growing Metropolitan Areas, 2012–2017

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall Megaregions in the United States in 2050

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Selecting the City  Population trends  Population density  Competition  Clustering  Compatibility with the community  Local laws and regulations  Zoning  Appropriate infrastructure  Total operating costs  Incentives  Quality of life 18-15

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall Ten Lowest Cost Large and Midsize Cities in the United States

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  The Final Site Selection  After creating a short list, visit each site  Look at intangible aspects  Consider downsizing outlets to expand location options  Create the “right” impression  What does the location say about the business? 18-17

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Trade Area Size  Retail compatibility  Degree of competition  Transportation network  Physical and psychological barriers 18-18

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Customer traffic  Adequate parking  Reputation  Visibility  The Index of Retail Saturation 18-19

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall  The Index of Retail Saturation

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Reilly’s Law of Retail Gravitation 18-21

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Central Business Districts (CBDs)  Neighborhood Locations  Shopping Centers and Malls 18-22

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall  Neighborhood shopping centers  3 to 12 stores; anchor is supermarket or drugstore  Community shopping centers  12 to 50 stores; anchor is supermarket, super- drugstore, or discount department or variety store  Power centers  Combines drawing power of a mall with convenience of neighborhood shopping center  Theme/festival centers  Employ unifying theme (often entertainment) and frequently target tourists

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall  Outlet centers  Rather than use anchor stores, rely on manufacturer’s and retailers’ outlet stores to draw shoppers  Lifestyle centers  Anchor is upscale specialty chain store; designed to emulate a village main street  Regional shopping malls  50 to 100 stores; anchor is one or more major department stores  Super-regional shopping malls  Trade area stretches up to 25 miles

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Central Business Districts (CBDs)  Neighborhood Locations  Shopping Centers and Malls  Near Competitors  Be aware of the potential for cannibalization!  Shared Spaces  Inside Large Retail Stores  Nontraditional Locations  Airports, museums, and so on  Home-based businesses  52% of U.S. businesses are run from home  On the Road 18-25

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Consider:  Special needs  Zoning ordinances  Manufacturing process  Transportation needs  Fuel costs 18-26

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Foreign Trade Zones  A foreign trade zone is a specially designated area in or near a U.S. customs port of entry that allows resident companies to import materials and components from foreign countries; assemble, process, manufacture, or package them and then ship the finished product back out while either deferring, reducing, or eliminating completely tariffs and duties  More than 12% of foreign goods enter the U.S. through foreign trade zones 18-27

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall How a Foreign Trade Zone (FTZ) Works

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Business Incubators  A business incubator or accelerator is an organization that combines low-cost, flexible rental space with a multitude of support services for its small business residents  The goal is to nurture young companies during the start-up stage and help them survive until they are strong enough to go out alone  84% of the companies that graduate from incubators stay in the local community 18-29

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall Business Incubators by Industry Focus

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Layout is the logical arrangement of the physical facilities in a business that contributes to efficient operations, increased productivity, and higher sales 18-31

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Size and Adaptability  Many companies are reducing space for workers  External appearance  Create proper image or “personality” in customers’ eyes 18-32

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Create window displays that sell!  Keep displays simple  Keep displays clean and up to date  Promote local events  Change displays frequently  Get expert help, if necessary  Appeal to all of a customer’s senses  Contact the companies whose products you sell to see whether they offer design props and assistance 18-33

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Size and Adaptability  Many companies are reducing space for workers  External appearance  Create proper image or “personality” in customers’ eyes  Entrances  Invite customers to come in  Americans with Disabilities Act  Signs  Interiors 18-34

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Store interiors influence customer buying behavior  Modify stores to meet customer needs  Ergonomics: the science of adapting work and the work environment to complement employees’ strengths and to suit customers’ needs, is an integral part of any design  Proper layout and design pays off in higher productivity, efficiency, or sales  An ergonomically designed workplace can minimize the potential for repetitive strain injuries (RSIs) 18-35

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Size and Adaptability  Many companies are reducing space for workers  External appearance  Create proper image or “personality” in customers’ eyes  Entrances  Invite customers to come in  Americans with Disabilities Act  Signs  Interiors  Drive-Through Windows  Sight, Sound, Scent, and Lighting 18-36

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Sight  Careful selection of colors can create the desired impressions among customers and employees  Scent  Scents can have a powerful impact in retail stores  Classical music encourages shoppers to slow down and makes them feel more affluent  Scent marketing  Sound  Background music can be a selling tool  Lighting  Proper lighting is measured by what is ideal for the job being done 18-37

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall The Power of Color

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Size and Adaptability  External appearance  Entrances  Americans with Disabilities Act  Signs  Interiors  Drive-Through Windows  Sight, Sound, Scent, and Lighting  Sustainability and Environmentally Friendly Design  Environmentally-friendly design can boost productivity  LEED (Leadership in Energy and Environmental Design) 18-39

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Layout for Retailers  The right layout can boost sales significantly  66% of purchase decisions are made after a customer enters a store  Shoppers are influenced by in-store displays  Identify “hot spots” and “cold spots”  Experiment with traffic flow, lighting, aisle size, music type, signs, and colors  Display merchandise attractively 18-40

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  When planning in-store displays:  Make products easy to reach  Use wide aisles  Place shopping baskets in several areas  Make it easy to locate merchandise  Allow customers to touch the merchandise  Make check-out easy  Know the “retail sweet spot”! 18-41

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall The Space Value for a Small Store

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Layout for Manufacturers  Factors in manufacturing layout  Type of product  Type of production process  Ergonomic considerations  Economic considerations  Space availability within the facility 18-43

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Types of manufacturing layouts  Product layouts  In a product (or line) layout, a manufacturer arranges workers and equipment according to the sequence of operations performed on the product  Process layouts  In a process layout, a manufacturer groups workers and equipment according to the general function they perform without regard to any particular product  Fixed-Position Layouts  In a fixed position layout, materials do not move down a line as in a product layout 18-44

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.  Design Layouts  Create an overall picture of the manufacturing process using assembly charts and process flow charts  When selecting and designing layouts consider:  Worker productivity  Materials handling costs 18-45

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall