2. L.O
- Identify and explain the factors that influencing the location and
relocation decisions of a business
- Recommendation and justify appropriate location
- Method of Re-organising production
- Investment Appraisal
3. Mind-Map
Select one type of business –
Learners working in small groups decide on which factors might influence their choice of location and
explain why the factor is important? Is different sizes and types of business activity influenced the
location?
- A manufacturer or retailer,
- A café as a new start-up,
- A private limited company looking to open a new clothes shop,
- An international car manufacturer wanting a site for a new factory in another country.
Connect with reorganise its production facilities as a result of business growth, a changing external
environment or revised business objectives.
How might e-commerce affect the location decision?
5. peer-learning
Create Mind-Map:
1. What is meant by the location decision?
2. Outline qualitative and quantitative factors that affect the location decision.
3. Why might a location decision be said to be “irreversible” ?
4. What is the difference between outsourcing and offshoring?
5. What is meant by insourcing and reshoring?
6. How might e-commerce affect the location decision?
6. Top 5 Misconceptions About Offshoring
https://sourcingmag.com/2017/03/top-5-misconceptions-about-offshoring/
7. Definition
Location Decision in operation management is finding an ideal geographical
region to install a Facility or Plant. It is a vital component in facility planning as it
greatly impacts the organization’s Profitability, Cost and Success.
8. Reasons of Business choose location for its operation
Quantitative reasons:
- Availability, suitability, and cost of
land
- Availability, quality, and cost of
labor
- Proximity to the market (customers)
- Proximity and access to the raw
materials
- Government incentives and
limitation
- Feasibility of e-commerce
Qualitative reasons:
- Management preferences
- Local knowledge
- Infrastructure
- Political stability
- Government restrictions and
regulations
- Ethical issues
This is an excellent opportunity to use the STEEPLE
factors (Section 1.1.5). Using STEEPLE, you can
understand in greater detail how the external
environment can affect the business and its location
decisions .
9. Potential limitations in the International location
1. Regulations and legalities
2. Social responsibility - ethical and moral issues
3. Political environment and stability
4. Economic environment
5. Communications
6. Culture
7. languages
10. Outsourcing : transferring internal business activity to an external organization to
reduce costs and increase productivity
Offshoring: extension of outsourcing, which involves relocating business function
and processes overseas
Insourcing:
Insourcing assigns a project to a person or department within the company instead of
hiring an outside person or company. It utilizes developed resources within the
organization to perform tasks or to achieve a goal. For example, an organization might
insource technical support for a new product because the company already has existing
technical support for another product within the organization.
https://www.investopedia.com/ask/answers/032715/whats-difference-between-outsourcing-and-insourcing.asp#:~:text=Outsourci
ng%20is%20the%20process%20of,operational%20infrastructure%20of%20the%20organization.
11. To make such an investment, a business should carry out an investment appraisal.
(quantitative and qualitative evaluation of an investment decision based on profitability)
13. Rolls-Royce Goes for A Quality Location
Choosing the lowest-cost location for the Rolls-Royce was not a priority. When BMW moved production from industrial northern town of
Crewe, it chose one of the most crowded and expensive parts of the country - the south - east of England.
The goodwood factory has many advantages but low cost is not one of them. One of its main benefits is its proximity to a small airport
where the helicopters and executive jets of intending purchasers of Rolls-Royce card can arrive in style. Potential buyers are identified
by the company and invited to visit the factory and attend events held at the nearby exclusive Marina and horses-race and
motor-race courses. The area has been termed a “playground for the wealthy” and future customers often spent a day or two at the
races or a morning at the marina before browsing the cars - and more often than not, signing an order form.
Analyse the important of one qualitative factor affecting Roll-Royce’s
decision to locate in Goodwood
