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

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

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

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

8. 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

9. 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

10. Break-Even Analysis 0 50000 100000 150000 200000 050010001500200025003000 Volume Annual Cost Akron Chicago Bowling Green Akron lowest cost Bowling Green lowest cost Chicago lowest cost

11. Center of Gravity Method

12. 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