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3.14 oprational strategies - location - moodle

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  • Use lolly sticks to choose students.
  • http://www.metro.co.uk/news/434025-primark-workers-earn-7p-an-hourKerboodle Case Study – Making location decisions (Time Permitting)
  • Kerboodle – Innovation Case Study: How 3M do it!AQA Question Sheet
  • Offshoring – transfer aspects of operations from high-cost countries to low-cost countries.India, China, Brazil, Poland, South Africa, Brazil (India produces over 2 million English speaking graduates per year).Trade Tariffs (Taxes)/ Quotas
  • Table – Comparative pay rates between India and the UK.
  • Kerboodle – Case Study: The Toyota Way
  • Kerboodle – Test Yourself: Operational Strategies: Location
  • Transcript

    • 1. Do Now:Innovation Re-cap1. What is meant by the term innovation? 5 minutes2. Why are patents often associated with investment in R&D?3. Explain one benefit of investment in R&D.4. If R&D is high risk then why do firms undertake it? End
    • 2. Operational Strategies: Location
    • 3. Learning ObjectivesBy the end of the lesson you should be able to:1. Understand the importance of an optimal location to the success of a business.2. Apply quantitative and qualitative decisions-making techniques when making location decisions.3. Analyse and evaluate the advantages and disadvantages of multisite locations.4. Analyse and evaluate important issues relating to international location.
    • 4. What is meant by Optimal Location?Optimal location – a business location thatgives the best combination of quantitative aqualitative factors.Choosing the right location has significanteffects on functional areas, profitability andchances of success.Three key characteristics: Strategic in nature Difficult to reverse Managed by senior leaders/ members of staff
    • 5. What is the impact of location on the following? Low High variable costs unemployment Close to High fixed costs Rural area competitors Minimum Wage
    • 6. Quantitative or Qualitative methods of deciding upon locationWhat is meant by Quantitative andQualitative Factors?Quantitative Factors – These aremeasureable on financial terms andwill have a direct impact on either thecosts of a site, revenue from it orprofitability.Qualitative Factors – Non-measureable factors that mayinfluence business decisions.
    • 7. Westfield Shopping Centre Choose and one qualitative and one quantitative reason why Westfield located in West London. Justify your answer.
    • 8. Sellafield Nuclear Power Station Choose and one qualitative and one quantitative reason why Sellafield located in Cumbria. Justify your answer.
    • 9. Primark Production Choose and one qualitative and one quantitative reason why Primark had chosen to produce in otherPrimark – countries such asethical or China and India.unethicalpractice? Justify your answer.
    • 10. What quantitative techniques can also be used assist in the location decision ?Profit Estimates Investment Break-even AnalysisFirm may compare Appraisal Calculating the break- even point will tell a firmestimated revenue and Location decisions will how much it needs tocosts for each location. involve substantial produce and sell in order capital investment. to avoid making a loss. Therefore Payback, ARRComplete the Profit and NPV can be used.Estimates task in your Use the break-even point formula to decide if Site Ctextbook (P105) Use investment or Site D is most viable appraisal techniques to (P106).Q1 and Q2 decide if Site X or Site Y is most viable (P105). Q1, Q2 and Q3.
    • 11. Multisite LocationsThis is when a businessoperates from more than onelocation.List as many multisitebusinesses that you can thinkof and note what sector theyoperate in… 2 minutes
    • 12. What are the advantages anddisadvantages of multisite locations? Advantages DisadvantagesConvenient for customers. Co-ordination problems.Delegation of tasks from If branches or stores are too close to each otherHO. could be risk of competition.Cost advantages of set-upin other countries. Lack of control from HO.
    • 13. International Location DecisionsOne of the main features ofglobalisation is the growingtrend for businesses torelocate completely toanother country or set up newoperating bases abroad.Write down 3 reasons why abusiness may decide to dothis….
    • 14. International Location Decisions Access to growing marketsBenefits from greater Minimise impact economies of scale of exchange rates Off-shoring Government incentives Avoid trade barriers
    • 15. International Location DecisionsOccupation Salary in India % of UK salaryCall centre operator 90p to £1.25 per hour 13-20%Top law graduate £4,700 per year 11-14%Farm worker £500 per year 5%
    • 16. What are the potential problems of international location?1. Language and cultural differences: E.g. - Working week, public holidays etc2. Economic and political stability: Firms will choose countries with history of stability.3. Impact on public image: Unethical practices such as child labour.4. Diseconomies of scale: Loss of co-ordination, control, communication.
    • 17. Re-cap Learning ObjectivesYou should now be able to:1. Understand the importance of an optimal location to the success of a business.2. Apply quantitative and qualitative decisions-making techniques when making location decisions.3. Analyse and evaluate the advantages and disadvantages of multisite locations.4. Analyse and evaluate important issues relating to international location.