This document discusses factors that companies consider when evaluating location alternatives. It provides examples of companies that considered factors like labor costs, productivity, currency exchange rates, political risks, proximity to markets and suppliers, and more when deciding on a location strategy. Advanced techniques for evaluating locations are also presented, such as the factor-rating method, break-even analysis, center-of-gravity method, and transportation modeling.

2. 1. The Strategic Importance of Location
2. Factors That Affect Location Decision
3. Methods of Evaluating Location Alternatives
4. Service Location Strategy

3. Location Strategy
Maximize The Benefit Of
Location To The Firm
Location
and
Innovation
Location
and
Cost

4.  Nike had chosen China as one of their long-term most
low-cost suppliers and labor capability.
 Cheaper raw material and labor cost.
 Labor cost = 2-5% of the retail price.

7.  Quality Coils Inc
› Opened its new plant in U.S
› Even though the cost of labor in U.S is high, its less
important than such factors as the skill of the
workplace, the quality of transportation and access to
technology.

8. COUNTRY
REGION /
COMMUNITY
SITE

9. Yue Yuen
Manufacturing company
 Country - China
 As a second world country with foreseeable future.
 Region - Guangdong
 China’s largest provincial economy. It is the center of
China’s export-led manufacturing industries.
 Site – Dongguan
 Connected with convenient transportation. The town forms part
of the modern transportation network. The result is a connection
with Guangzhou, Shenzen, Huizhou and surrounding towns,
creating the vision of a one hour economic circle.
 HOME

10. Labor
Productivity
Exchange
Rates &
Currency Risk
Costs
Political Risk,
Values &
Culture
Proximity to
Markets
Proximity to
Suppliers
Proximity to
Competitors

11.  Genpact (New York) is a business processing and
technology management company which mainly deals
with outsourcing and technology services.
› India has many prestigious technical universities and
the Indian Institute of Technology stands apart as one
of the world's best. India produces over 75,000 IT
graduates.

12.  Toyota feels exchange-rate pinch as
Hyundai gain.
 In the United States, the weak Won
(South Korea) has allowed Hyundai to
offer much more aggressive sales
incentives than Toyota, allowing it to
chip away at Toyota’s market share.

13.  In Nigeria, acts of sabotage directed against the oil
industry by rebel groups constitute the main risk.
› Nigerian militants had sabotaged an oil pipeline
belonging to Royal Dutch Shell.

14. "We are confident that more than 100,000 opportunities will
be given in the coming years,"
-Laurent Freixe, CEO of Nestle Europe-
 Europe face crisis due to government debt and cause
unemployed to the youngster.
 Nestle create new work and training opportunities for
Europe's young jobseekers.
 By bringing along younger workers, it can help boost
Nestle's productivity in Europe.
 They just grab the opportunities without consider about
the benefit they will receive.

15.  The aim target consumers are the youngster who are
fashionable with the special ice-cream.
 Haagen-Dazs cooperate with many upscale restaurants, to
let Haagen-Dazs ice cream printed on the advanced
restaurant menu.

16.  The company opened its first retail outlet in Indonesia in 2002.
Since then, they opening more than 70 stores.
 Indonesia developed as well-known coffee industry.
 Indonesia become the third-largest supplier of green coffee for
Starbucks.

17.  Target builds a location across the street from Walmart,
literally just hundreds of feet away.
 All customers want options. If they don't like an option
from one competitor, they'll move to the next.
 That's why Target had no problem plopping themselves
next to giant Walmart. They were creating a mall.
 HOME

18. Factor-Rating
Method
Locational
Break-Even
Analysis
Center-of-Gravity
Method
Transportation
Model

19.  Simply consist of a weighted list of the factors
a company considers the most important and
a range of values for each factor
 This technique enables a company to choose a
location systematically based on the best
rating.

21.  A cost-volume analysis to make an economic
comparison of location alternatives
“It is difficult to overstate the importance of
break-even analysis to sound business
management and decision making”
-Ian Benoliel, CEO of NumberCruncher.com-

22.  Software developer company
 Wholesaler rely on NC’s software to solve
their daily business activity.

23.  To find the best location of a distribution
center that will minimize distribution costs.
 Richmond Metropolitan
› The multihospital want to locate their supply
system warehouse in a community that will
minimize the distribution from this warehouse to
each hospital.
› The method works with coordinates on map and
show existing community to the proposed new
facility

25.  It’s minimizing the cost of shipping products from a
series of sources to a series of destinations.
 Avis Budget Group
› The manager needs to decide how many rentals should be
trucked from each city with excess capacity to each city that
needs more rentals.
 HOME

26. BACK

27. How Hotel Chains
Select Sites
Geographic
Information
Systems
The Call
Center
Industry

28.  Open in May 2003,
 December 2007, opened 130 more hotel chains, in 50
other cities.
 Large demand because it situated in the city centre.
 Motel 168 Pudong Airport :
 Short walk to Yuandong Avenue Station
 6.3 kilometres from Pudong International Airport.

29. BACK

30. American Express
“We recognized that the people in our call centers
are the front line of our business and interact
with customers every day”
-Jim Bush, The Executive Vice President of
American Express-
 American Express contact centre operations typically
based in India or Manila.

31. BACK

32. Michels Corporation
“GIS technology has helped Michels plan and
execute projects for our customers”
-Pat Michels,
Chief Executive Officer-
 For example, it uses GIS to find out how
future growth of a community will affect the
pattern of streets and community services.