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Location Planning

This document discusses factors to consider when making location decisions for businesses. It identifies the need for location decisions due to marketing strategy, costs, growth, and resource depletion. Location decisions are strategic and long-term, with the objectives being potential profit and identifying multiple options. Factors to evaluate include regional factors, community considerations, site-related issues, and strategies for multiple plants. Service and retail locations prioritize revenue and consider traffic, demographics, transportation, and customer access. Manufacturing focuses more on costs like transportation, energy, labor, and facilities. The document outlines methods for evaluating locations, including cost-profit-volume analysis, transportation modeling, factor rating, and center of gravity analysis.

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Raj Paroha
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© Attribution Non-Commercial (BY-NC)
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134 views

Location Planning

This document discusses factors to consider when making location decisions for businesses. It identifies the need for location decisions due to marketing strategy, costs, growth, and resource depletion. Location decisions are strategic and long-term, with the objectives being potential profit and identifying multiple options. Factors to evaluate include regional factors, community considerations, site-related issues, and strategies for multiple plants. Service and retail locations prioritize revenue and consider traffic, demographics, transportation, and customer access. Manufacturing focuses more on costs like transportation, energy, labor, and facilities. The document outlines methods for evaluating locations, including cost-profit-volume analysis, transportation modeling, factor rating, and center of gravity analysis.

Uploaded by

Raj Paroha
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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LOCATION PLANNING & ANALYSIS

8-2

NEED FOR LOCATION DECISIONS


Marketing Strategy Cost of Doing Business Growth Depletion of Resources

8-3

NATURE OF LOCATION DECISIONS

Strategic Importance of location decisions


Long term commitment/costs Impact on investments, revenues, and operations Supply chains

Objectives of location decisions


Profit potential No single location may be better than others Identify several locations from which to choose

Location Options
Expand existing facilities Add new facilities Move

8-4

MAKING LOCATION DECISIONS


Decide on the criteria Identify the important factors Develop location alternatives Evaluate the alternatives

Identify

general region Identify a small number of community alternatives Identify site alternatives

Evaluate and make selection

8-5

LOCATION DECISION FACTORS


Regional Factors Community Considerations

Multiple Plant Strategies

Site-related Factors

8-6

REGIONAL FACTORS Location of raw materials Location of markets Labor factors Climate and taxes

8-7

COMMUNITY CONSIDERATIONS Quality of life Services Attitudes Taxes Environmental regulations Utilities Developer support

8-8

SITE RELATED FACTORS Land Transportation Environmental Legal

8-9

MULTIPLE PLANT STRATEGIES Product plant strategy Market area plant strategy Process plant strategy

8-10

SERVICE AND RETAIL LOCATIONS


Manufacturers cost focused Service and retail revenue focused

Traffic volume and convenience most important Demographics

Age Income Education

Location, location, location Good transportation Customer safety

COMPARISON OF SERVICE AND MANUFACTURING CONSIDERATIONS


Manufacturing/Distribution
Cost Focus Transportation modes/costs Energy availability, costs Labor cost/availability/skills Building/leasing costs

Service/Retail
Revenue focus Demographics: age,income,etc Population/drawing area Competition Traffic volume/patterns Customer access/parking

8-11

8-12

EVALUATI

LOCATIONS

Cost-Profit-Volume Analysis
Determine fixed Plot

and variable costs total costs

total costs

Determine lowest

8-13

LOCATION COST-VOLUME ANALYSIS

Assumptions
Fixed

costs are constant Variable costs are linear Output can be closely estimated Only one product involved

8-14

EVALUATING LOCATIONS

Transportation Model
Decision based

on movement costs of raw materials or finished goods on quantitative and qualitative

Factor Rating
Decision based

inputs

Center of Gravity Method


Decision based

on minimum distribution costs

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