1. Chapter 11Copyright © 2010 by Nelson Education Ltd. Selecting the Location and Planning the Facilities 11 PowerPoint Presentation by Ian Anderson, Algonquin College

2. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-2 Looking Ahead After studying this chapter, you should be able to: 1.Describe the factors affecting the choice of a bricks-and- mortar business location. 2. Discuss the challenges of designing and equipping a physical facility. 3.Describe the attraction and challenges of a home-based business. 4.Understand the potential benefits of locating a start-up on the Internet.

3. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-3 Key Factors in the Location Decision Customer accessibility –As a matter of access by target customers –As a matter of customer convenience –As a necessity to avoid shipping costs Environmental business conditions –Climate-related factors –Business environment factors Competitors, legal requirements, and tax structure continued…

4. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-4 Key Factors in the Location Decision Resource Availability –Nearness to raw materials –Availability of a suitable labour supply –Access to adequate and reliable transportation Personal Preference of the Entrepreneur –Familiarity with home community –Familiarity of community with entrepreneur …continued

5. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-5 Key Factors in the Location Decision Site Availability and Costs –Difficulty of locating a good site Business incubator provides shared space, services, and management assistance for new businesses –Large costs for and commitment required to purchase site outright. –Leasing avoids a large cash outlay and allows the owners to postpone committing to the site before the business becomes a success.

6. Chapter 11Copyright © 2010 by Nelson Education Ltd. Five Key Factors in Determining a Good Business Location Exhibit 11-1 11-6

7. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-7 Designing the Physical Facilities Functional Requirements –Physical facilities should be of adequate size and accommodation –Ideal building is one that matches the functional requirements of the business Considerations include: Age and condition of building Fire hazards Heating and air conditioning Lighting and restroom facilities Entrances and exits

8. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-8 Typical Process Layout Exhibit 11-4

9. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-9 Factory Layout –Process layout A factory design that groups similar machines together –A machine shop with drill presses separate from lathes –Product layout A factory design that arranges machines according to their roles in the production process –Product is moved progressively from one work station to the next

10. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-10 Grocery Store Layout Exhibit 11-5

11. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-11 Retail Store Layout –Grid pattern A block-like layout that provides for good merchandise exposure and simplifies security and cleaning –Free-flow pattern A flexible layout that is visually appealing and gives the customers the freedom of movement –Self-service layout A design that gives customers direct access to merchandise

12. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-12 Retail Store Layout Exhibit 11-6

13. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-13 Challenging in Equipping the Physical Facilities Manufacturing Equipment –General-purpose equipment Machines that serve many functions in the production system –Special-purpose equipment Machines designed to serve specialized functions in the production process …continued

14. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-14 Equipping the Physical Facilities Special-Purpose Equipment Low labour cost High hourly output General-Purpose Equipment Low purchase cost Flexible production Good resale value HANDLE WITH CARE

15. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-15 Office Equipment Challenging to keep pace with technology –Computers Networks, e-mail –Fax machines –Copiers and printers –Telephone systems Voice mail Interactive voice response (IVR)

16. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-16 Home-Based Businesses Advantages –Low start-up and overhead costs –Convenience for family and lifestyle Technology –Advances in office equipment allow home-based business to compete with commercial sites

17. Chapter 11Copyright © 2010 by Nelson Education Ltd. 11-17 Challenges of Home-Based Businesses Challenges –Family and business conflicts The need to observe regular business hours and establish spatial boundaries (specific work areas) to avoid distractions. –Business image of a home-based business Professional image is difficult to maintain in a home environment. –Legal considerations Local laws and zoning ordinances prohibit many types of home- based businesses.

18. Chapter 11Copyright © 2010 by Nelson Education Ltd. Locating on the Web: E-Terms E-commerce –The paperless exchange of business information via the Internet eCRM (Electronic Customer Relationship Marketing) –An electronically based system that emphasizes customer relationships –Utilizes a customer-centric database E-tailing –Round the clock electronic access to products/services 11-18

19. Chapter 11Copyright © 2010 by Nelson Education Ltd. Benefits of E-Commerce Compete with bigger businesses on a level playing field Access to worldwide customers Compresses the sales cycle –great for cash flow Enhancing customer service and CRM through technology 11-19

20. Chapter 11Copyright © 2010 by Nelson Education Ltd. Drawbacks of E-Commerce Technical limitations –Cost of developing / maintaining website –Bandwidth and access issues –Changing software and hardware Nontechnical limitations –Privacy and security –Intangibility –Global language/culture barriers 11-20

21. Chapter 11Copyright © 2010 by Nelson Education Ltd. E-Commerce Business Models 11-21 Exhibit 11-7

22. Chapter 11Copyright © 2010 by Nelson Education Ltd. B2B and B2C Business Models 11-22 B2B – (business-to-business) –based on selling to business customers electronically B2C (business-to-consumer) –based on having final consumers as customers –24/7 e-tailing provides round the clock access to products and services

23. Chapter 11Copyright © 2010 by Nelson Education Ltd. Auction Sites 11-23 Web-based businesses offering participants the ability to list the products for bidding Examples include e-Bay, bidz.com, and Yahoo auctions

24. Chapter 11Copyright © 2010 by Nelson Education Ltd. Selling an Item on e-Bay 11-24 Exhibit 11-8