1. Location strategy
Summary
Being in the exact location is a key component in a business's triumph. If a company selects the
wrong location, it may have ample access to customers, workers, transportation, materials, and
so on. Therefore, location often plays an important role in a company's profit and overall
success. A location strategy is a plan to get hold of the best possible location for a company by
identifies company needs and purposes, and penetrating for locations with offerings that are
well-matched with these needs and objectives. Normally, this means the firm will endeavor to
make the most of opportunity while reducing the costs and risks.
A company's location strategy should conform with, and be part of, its overall corporate
strategy. When we examine a company’s potential fixed and variable costs the chosen location
is a immense forecaster of the productivity and overall risk of the company. An operations
manager has a innumerable of criteria that needs to be articulate in order to conclude where the
plant should be positioned nationally or globally. The cost drivers for this decision can range
from labor costs, transportation costs, strength of the economy, utility expenses, taxes,
demographics, etc. While adding up the type of company’s weight age criteria for the low cost
setup where to set up shop location. The location of a company has critical consequence if the
operation manager comes to a decision poorly in where to establish the company. It is a long-
term decision that is not easily reversed.
Formulation of location strategy typically involves the following features:
1. Facilities. It is a planning which determines what kind of space a company will require in its
short-term and long-term goals.

2. 2. Feasibility. An analysis of an assessment of the different operating costs and other factors
connected with different locations.
3. Logistics. An evaluated appraisal of the transportation options and costs for the potential
manufacturing and warehousing facilities.
4. Labor. An analysis to determine whether potential locations can meet a company's labor
requirements during its specified short-term and long-term goals.
5. Community and site. It involves examining whether a company and a eventual community
and site will be well-suited in the long-term.
6. Trade zones. Companies may want to consider the benefits offered by free-trade zones,
which are closed facilities monitored by customs service’s where goods can be brought
without the usual customs requirements.
7. Political risk. Companies allowing for expanding into other countries must take political risk
into contemplation when devising a location strategy. As some of the countries have
unstable political background so companies have to prepare themselves for the uncertain
situation.
8. Governmental regulation. Whiles expanding towards other countries companies must
examine their governmental as well as cultural obstructions when developing location
strategies.
9. Environmental regulation. It has an impact on the relationship between a company and the
community around a potential location. Companies should consider a variety of
environmental policies that might have an effect on their operations in different locations.
10. Incentives. It’s a negotiation process by which a company and a community negotiate
property and any benefits the company will get such as tax breaks. Incentives may place
an important role in a company's selection of a site.
Chapter also provides trends in location strategy, globalization and technology has been the
prime drivers of change in the location decision process more than last thirty years. Due to

3. technology improvements, economic growth, international expansion and globalization, and
corporate restructuring, mergers and acquisitions in recent decade’s location activity has
become very elevated.