1. Location Strategy

2. Introduction What – Location Decisions Where – Important to company
Why – Costly to change

3. Why is Location Important?
Affects costs
Costs of inputs depend on region
Characteristics of labour force depend on region
Difficult to change once decision made
Objective: maximize benefits of location to the firm

4. Factors Labour Productivity Exchange Rates Tangible Costs
Intangible Costs
Attitudes
Proximity to Markets
Proximity to Suppliers
Proximity to Competitors

5. Choosing a Country Government Culture and economics Market locations
Labour
Availability of Inputs
Exchange rate

6. Choosing a Community Corporate desires Attractiveness Labour Utilities
Environmental Regulations
Government Incentives
Proximity
Land and Construction Costs

7. Choosing a Site Size and Cost Air, rail, highway, waterway systems
Zoning restrictions
Nearness of services and suppliers
Environmental impact

8. Evaluating Location Alternatives
How do we choose between locations?

9. Factor Rating Develop list of factors Weight each factor
Develop scale for each factor
Score each location for each factor
Multiply score by weights
Sum points

10. Break-Even Analysis
Determine fixed and variable costs for each location
Plot costs vs volume
Select location with lowest total cost for expected production volume

11. Break-Even Analysis 200000 150000 Annual Cost 100000 50000 500 1000
Akron
150000
Chicago
Bowling Green
Akron lowest cost
Bowling Green lowest cost
Chicago lowest cost
Annual Cost
100000
50000
500
1000
1500
2000
2500
3000
Volume

12. Center of Gravity Method

13. Transportation Model

14. Service Location Strategy
Maximize volume of business and revenue
Purchasing Power
Compatibility with demographics
Competition
Quality of Competition
Uniqueness of location
Physical qualities of facilities
Operating Policies
Quality of Management