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Location Strategies Chapter 8

Location Strategies Chapter 8. M. Dohan. Agenda. Strategic Importance of Location. Freight contributes a lot to cost Raw Materials Finished Product Other factors Taxes Fuel Infrastructure Population Size activities. Location Decisions – Key Success Factors.

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Location Strategies Chapter 8

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  1. Location StrategiesChapter 8 M. Dohan

  2. Agenda

  3. Strategic Importance of Location • Freight contributes a lot to cost • Raw Materials • Finished Product • Other factors • Taxes • Fuel • Infrastructure • Population • Size • activities

  4. Location Decisions – Key Success Factors • What are the Key Success Factors (KSFs) that are in play?

  5. Some Key Success Factors • Labour Productivity • Exchange Rates and Currency Risk • Costs • Political Risks, Values and Culture • Proximity to Markets • Proximity to Suppliers • Proximity to Competitors

  6. Location Evaluation Methods - Factor Rating • Purpose is to determine important factors in selecting a location, according to managers

  7. LocationalEvaluation Methods - Cost-Volume Analysis • Compares Locational alternatives • Determine F+V costs for each loc’n • Plot each loc’n on a graph • Select based on volume

  8. Location Evaluation Methods: Center-of-Gravity • Used to find location of a distribution center that will minimize costs • Only factors are distance and quantity, therefore not so useful.

  9. Location Evaluation Methods - Transportation Model • Objective – Find the pattern to ship from several supply areas to several demand areas, via several transport hubs, • Minimize cost

  10. Other Considerations • Service Location Strategy • Focus is on maximizing revenue, as opposed to minimizing cost • For services, cost tend to vary less for location • Geographic Information Systems

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