Location strategies ppt @ bec doms
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Location strategies ppt @ bec doms
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Location strategies ppt @ bec doms
- 7. Industrial Location Decisions Cost focus Revenue varies little between locations Location is a major cost factor Affects shipping & production costs (e.g., labor) Costs vary greatly between locations © 1995 Corel Corp.
- 10. Location Decision Sequence Country © 1995 Corel Corp. Region/Community © 1995 Corel Corp. Site © 1995 Corel Corp.
- 11. Factors That Affect Location Decisions
- 12. Factors Affecting Country Government rules, attitudes, political risk, incentives Culture & economy Market location Labor availability, attitudes, productivity, and cost Availability of supplies, communications, energy Exchange rates and currency risks © 1995 Corel Corp.
- 15. Location Decision Example BMW decided to build its first major manufacturing plant outside Germany in Spartanburg, South Carolina. © 1995 Corel Corp.
- 18. CSF in Location Analysis Critical Success Factors Country 1 Country 2 Country 3 Country 4 Technology Rate of technology change Innovations in process design 3 5 5 3 2 1 1 5 Level of education Number of skilled workers National education rate 5 4 4 1 3 1 4 2 Political and Legal Aspects Stability of government Product liability laws Export restrictions 5 4 4 5 3 3 2 3 3 5 5 1
- 19. CSF in Location Analysis - Continued Critical Success Factors Country 1 Country 2 Country 3 Country 4 Total Rating Points 50 43 35 48 Social and Cultural Aspects Similarity in language Work ethic 5 4 1 2 5 3 4 1 Economic factors Tax rates Inflation Availability of raw materials Interest rates 3 3 2 3 3 5 4 4 2 5 3 2 5 5 5 5
- 21. Ranking Corruption A score of 10 represents corruption free Rank Score 1 Finland 9.9 2 Denmark 9.5 3 New Zealand 9.4 4 Singapore 9.2 16 Israel & U.S.A (Tied) 7.6 21 Japan 7.1 57 China 3.5 79 Russia 2.3 90 Nigeria 1.0 91 Bangladesh 0.4
- 23. Location Evaluation Methods Factor-rating method Locational break-even analysis Center of gravity method Transportation model © 1995 Corel Corp.
- 30. Locational Break-Even Analysis Example You’re an analyst for AC Delco. You’re considering a new manufacturing plant in Akron, Bowling Green, or Chicago. Fixed costs per year are $30k , $60k , & $110k respectively. Variable costs per case are $75 , $45 , & $25 respectively. The price per case is $120 . What is the best location for an expected volume of 2,000 cases per year? © 1995 Corel Corp.
- 31. Locational Break-Even Crossover Chart 0 50000 100000 150000 200000 0 500 1000 1500 2000 2500 3000 Volume Annual Cost Akron Chicago Bowling Green Bowling Green lowest cost Chicago lowest cost Akron lowest cost
- 34. Center of Gravity Method Equations d ix = x coordinate of location i W i = Volume of goods moved to or from location i d iy = y coordinate of location i X Coordinate Y Coordinate
- 35. Coordinate Locations of Four Quain’s Department Stores and the Center of Gravity
- 37. Worldwide Distribution of Volkswagens and Parts
- 45. Final Thought The ideal location for many companies in the future will be a floating factory ship that will go from port to port, from country to country – wherever cost per unit is lowest. © 1995 Corel Corp.
Notas do Editor
- Students should be asked to suggest why the “hub” concept provides the advantages noted. They should also be asked to consider the limitations of the hub concept.
- It is helpful to begin this discussion by asking students how and under what conditions location impacts costs and revenues. Once they have begun to consider these issues, then the decision for industrial or service organizations can be explored.
- Stress that the location decision process is basically another process in which one attempts to continuously narrow the range of alternatives considered.
- Students, especially those from other countries, should be able to contribute significantly to a discussion of factors affecting one’s choice of country.
- Discussion of this slide might include comments on the impact of information technology on the priorities attached to the factors listed.
- What impact does the increasing rate of environmental change have on a firm’s site choice? For example, would one build a single site, or a collection of sites which might be tied together by technology? Does one have to choose a site near desired services, or can these services often be secured through technology?
- BMW’s decisions
- You might want to expand this CSF table to include weighting factors indicating the relative importance of each of the critical success factors.
- You might ask the students if they expected to find Japan ranked below the U.S., and how they believe the overall set of rankings is likely to change in the future. ranking is likely to change in the future.
- This slide suggests organizations which need to be physically close to their markets
- This slide can be used to frame a discussion of methods to evaluate location decisions.
- This technique might be viewed as an extension of the Critical Success Factors methodology where the factors are weighted and rated.
- One way to derive an example of this technique is to ask students to identify the factors which caused them to select your particular college or university, and work through the appropriate analysis.
- Basically breakeven where costs depend upon location.
- An example
- Graphical solution to the example
- This is a good point at which to raise the issue of choosing a decision methodology. Point out to students that the Center of Gravity method is helpful in a limited number of situations (where geography and transportation costs are important?)- where the critical factor methodology is more general. (but the critical factor method is more qualitative)
- Again, this method, while quantitative, is unable to handle many of the important factors.
- Which of the methodologies discussed should Volkswagen use to choose a new location?
- This slide makes the distinction between an industrial and a service organization. Students may be asked to cite examples for each of the qualities listed.
- This and the following slide can be used to summarize the service/industrial issues.
- This slide provides the basis for a summary of the techniques covered to this point.
- Given the significant impact of the World Wide Web, this slide should be discussed in detail.
- Students should asked to consider: - is this the ultimate in “locations”? - what are the implications of this idea?