Operational Strategies - Location

A powerpoint presentation for operational strategies: location. Includes:

  • The main factors influencing business location
  • Factors influencing location decisions
  • Industrial Inertia
  • Methods of making location decisions
  • Benefits of optimal location
  • Multi-site locations
  • Issues relating to international location - Globalisation, cost reduction and avoidance of trade barriers. 
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MAIN FACTORS INFLUENCING BUSINESS
LOCATION
· Technology ­ allows businesses to be more flexible, operating
from a wider choice of locations. It has encouraged the use of
teleworking. Needs to be considered how technologically
advanced the country in which the location is planned.
· Costs of factors of production ­ land costs (rent), transport
costs and labour costs. Often to find the least cost site, allows
to minimise costs. Emerging economies have cheaper
manufacturing ­ China, Russia.
· Infrastructure ­ network of utilities such as transport links,
telecommunications systems and health and education
facilities.
· Qualitative factors ­ personal preference of directors or
owners.…read more

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FACTORS INFLUENCING LOCATION
DECISIONS INVOLVING
EXPANSION/RELOCATION
· Resources ­ location of raw materials and accessibility
in terms of wastage and transport. Location of suppliers
­ just in time methods.
· The market ­ UK economy is based on tertiary
production. Customers want convenience and easy
access . Transport costs are saved if they locate close to
the market.
· Government intervention ­ members of the EU must
regulate their regional policy within guidelines.
Assistance is provided in areas that have low levels of
economic activity and high unemployment.…read more

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INDUSTRIAL INERTIA
· The tendency to remain where a firm is even though the original reasons
for location no longer apply.
· Firms can benefit from external economies of scale e.g. a labour supply,
infrastructure, training, suppliers and customers, reputation of area.
· External diseconomies of scale e.g. congestion, pollution and shortages of
resources. These occur if one industry is concentrated in one area.
· Relocation can be disruptive despite a new location offering lower costs.
· Factors to consider if already has a base:
· Loss of skills developed in the existing workforce
· Lower morale and productivity
· Cost of relocation
· Redundancy payments
· Finding new suppliers and customers.…read more

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METHODS OF MAKING LOCATION
DECISIONS
· Investment appraisal ­ does the location provide a quick
payback, a high ARR or a positive NPV?
· Qualitative factors ­
· Accessibility to leisure facility
· Types of leisure facility
· Quality of life
· Accessibility to good transport links for personal use
· Geographical attractiveness
· Convenience
· Availability of housing
· Opportunity to make a difference to local community.…read more

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BENEFITS OF OPTIMAL LOCATION
· Improves competitiveness ­ least cost site can assist
marketing strategy. A low cost location can help a business to
survive in times of economic difficulty.
· Providing a unique selling point ­ using location to enhance
image e.g. Paris and Milan are attractive for fashion houses
because of their image.
· Increasing access to customers ­ giving consumers easy
access to the business. This is important for retailing.
· Increasing flexibility ­ suppliers located close to the
businesses requiring products or services. Companies
involved in lean production, time is important.…read more

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