Chapter 8 Location Strategies
Chapter 8 Location Strategies
What are the Seven Major Factors that affect location decisions?
Location is one of the most important decisions a firm makes
➔ Significantly impacts on fixed and variable costs
➔ Decisions are made relatively infrequently
➔ Objective: maximize the benefit of location to the firm
➔ Increasingly global in nature
➔ Long term decision
➔ Once committed → many resource and cost issues are difficult to change
1. Country 1. Political risks, government rules, attitudes, incentives (gov’t stability - political risk)
Decision 2. Cultural and economic issues
3. Location of markets
4. Labour talent, attitudes, productivity, costs
5. Availability of supplies, communications, energy
6. Exchange rates and currency risks
● Transportation costs, attitude towards foreign investors/incentives. Tariffs, taxes, legal
system
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2. Exchange rates and currency risks ➔ Can have a significant impact on costs
➔ Rates change over time
4. Political risk, values, and culture ➔ National, state, local government attitudes toward
private and intellectual property, zoning,
pollution, employment stability may be in flux
➔ Worker attitudes towards turnover, unions,
absenteeism
➔ Globally cultures have different attitudes towards
punctuality, legal, and ethical issues
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What is the
differences between service- and industrial-sector location analysis
Service Location Strategy
1. Purchasing power of customer-drawing area
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Transportation Model Hotel Chains - Site Location Call Centre Industry Geographic Information
Process Systems (GIS)
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