The document discusses factors to consider when determining the location of facilities for an organization. Key factors include proximity to resources, long term commitments based on static geographic factors, qualitative and quantitative changes possible at a location, and how location is integral to organizational strategies and objectives. The choice of region and site depends on parameters like existing facilities, environmental considerations, and value added versus transportation costs. Location decisions can be for new or established organizations, and strategies may involve specialized plants, market area supply, or dividing processes across locations.
The document discusses factors to consider when determining the location of facilities for an organization. Key factors include proximity to resources, long term commitments based on static geographic factors, qualitative and quantitative changes possible at a location, and how location is integral to organizational strategies and objectives. The choice of region and site depends on parameters like existing facilities, environmental considerations, and value added versus transportation costs. Location decisions can be for new or established organizations, and strategies may involve specialized plants, market area supply, or dividing processes across locations.
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The document discusses factors to consider when determining the location of facilities for an organization. Key factors include proximity to resources, long term commitments based on static geographic factors, qualitative and quantitative changes possible at a location, and how location is integral to organizational strategies and objectives. The choice of region and site depends on parameters like existing facilities, environmental considerations, and value added versus transportation costs. Location decisions can be for new or established organizations, and strategies may involve specialized plants, market area supply, or dividing processes across locations.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online from Scribd
WHERE SHOULD BE THE MAIN OPERATION BASED PROXIMITY TO REQUIRED RESOURCES. LONG TERM COMMITMENT ABOUT GEOGRAPHICALLY STATIC FACTORS AFFECTING ORGANISATION. NOT EASY TO CHANGE LOCATION ONCE ESTABLISHED QUALITATIVE & QUANTITATIVE CHANGE AT LOCATION POSSIBLE. INTEGRAL PART OF ORGANISATIONAL STRATEGIES BASED ON ORGANISATION OBJECTIVES,GOALS AND STRATEGIES FOR LONG TERM FUTURE PLANT OR FACILITIES LOCATION IS PRODUCT OF MARKETING,TECHNOLOGY AND FINANCIAL STRATEGY VOLUMES,TECHNOLOGY,RESOURCES AND SOCIAL COST AMOUNT TO OPERATIONS STRATEGY CHOICE OF REGION AND SITE
CONSIDERATION OF REGION AND SITE DEPENDS
ON FOLLOWING PARAMETERS: ORGANISATIONAL STRATEGIES EXISTING OPERATING FACILITIES MANAGERIAL CONTROL IN HANDLING THESE FACILITIES ENVIROMENTAL CONSIDERATION ON SPECIFIC REGION CONSIDERATION ON VALUE ADDED AND TRANSPORTATION COST SITUATION INFLUENCE LOCATION DECISION LOCATION DECISION CAN BE OF TWO DIFFERENT SITUATION:
LOCATION CHOICE FOR THE FIRST TIME
LOCATION CHOICE FOR ESTABLISHED
ORGANISATION WITH ONE OR MORE FACILITIES EXISTING ALREADY ESTABLISHED ORGANISATION PLANTS MANUFACTURING DISTINCT PRODUCTS OR PRODUCT LINES EACH PLANT SERVICES THE ENTIRE MARKET AREA FOR THE ORGANISATION NECESSARY WHERE TECHNOLOGY AND RESOURCE INPUTS ARE SPECIALISED TOO MANY CONTRADICTION WOULD LEAD TO ROUGH HANDLING PRODUCT SPECIALISATION NECESSARY IN HIGHLY COMPETITIVE MARKET MANUFACTURING PLANTS SUPPLYING TO SPECIFIC MARKET AREA PLANT MANUFACTURE ALMOST ALL OF COMAPANY’S PRODUCT MARKET PROXIMITY CONDITION DOMINATES THE RESOURCES AND TECHNOLOGICAL CONSIDERATION REQUIRES GREAT DEAL OF COORDINATION FROM THE CORPORATE OFFICE MANUFACTURING PLANTS ACCORDING TO PRODUCT LINE LOCATED IN VARIOUS MARKET AREA
THIS TYPE OF COMBINATION STRATEGY
POSSIBLE FOR LARGE SCALE ORGANISATION PLANTS DIVIDED ON BASIS OF PROCESSES OR STAGES IN MANUFACTURING
EACH PROCESS REQUIRE DISTINCTIVELY
DIFFERENT EQUIPMENT CAPABILITIES THIS STRATEGY REQUIRE MUCH CENTRALIZED COORDINATION OF MANUFACTURING ACTIVITIES STRATEGY USED BECAUSE OF DEFENCE/NATIONAL SECURITY CONSIDERATION. FLEXIBILITY IN ADAPTING CONSTANT CHANGING PRODUCT NEEDS NEW FACILITY HAS TO FIT INTO EXISTING STRATEGY FREQUENT CHANGES TO IMPROVE THE EFFICIENCY NOT HEALTHY FOR ORGANISATION EXPANSION OF FACILITIES AT EXISTING SITE WITHOUT VIOLATING BUSINESS & MANAGERIAL OUTLINE RELOCATION OF FACILITIES ENTAILS CHANGES IN TECHNOLOGY AND RESOURCES. LOCATION CHOICE FOR FIRST TIME
ORGANISATIONAL STRATEGIES HAVE TO BE
DECIDED UPON BEFORE CHOICE OF LOCATION
IMPORTANCE OF LONG-TERM STRATEGIES
CANNOT BE OVER EMPHASIZED
COST ECONOMIES ARE ALWAYS IMPORTANT,NOT
AT THE COST OF LONG-TERM BUSINESS OBJECTIVES IDENTIFICATION OF REGION ORAGANISATION OBJECTIVES WITH VARIOUS LONG-TERM CONSIDERATION ABOUT MARKETING AND TECHNOLOGY SUGGEST REGION FOR FACILITY ORGANISATIONAL STRENGTH AND WEAKNESS ALSO DETERMINES SUITABLE LOCATION FOR FACILTY
SOCIAL,LEGAL,GEOGRAPHIC AND BUSINESS
ENVIRONMENT SUGGEST A SUITABLE REGION FOR LOCATING THE OPERATIONS FACILITY CHOICE OF SITE WITHIN A REGION
LESS DEPENDANT ON THE ORGANISATION
LONG-TERM STRATEGIES EVALUATING ALTERNATIVE SITE FOR TANGIBLE OR INTANGIBLE COST COST ECONOMIES FIGURE PROMINENTLY AT FINAL STAGE OF FACILITIES-LOCATION PROBLEM LOCATION PROBLEM CAN BE APPROACHED WITH COST-ORIENTED NON-INTERACTIVE MODELS GLOBAL LOCATION TRADE AND FLOWS OF CAPITAL ARE FREER THAN EARLIER DESPITE FEW HICCUPS MNC SETTING SHOPS IN INDIA INDIAN COMPANIES EXTENDING THEIR OPERATIONS IN OTHER COUNTRIES VIRTUAL PROXIMITY ADVANCES IN TELECOMMUNICATION TECHNOLOGY,FIRM CAN BE IN VIRTUAL PROXIMITY TO ITS CUSTOMER FIRMS USE THIS SERVICE FOR CONDUCTING LARGE BUSINESS TRANSACTION LOGISTICS A FACTOR IN DECIDING A LOCATION,MARKETS HAVE TO BE REACHED HENCE MARKET PRESENCE IN THE COUNTRY OF THE CUSTOMERS IS QUITE NECESSARY VIRTUAL FACTORY FIRMS OUTSOURCE PART OF THEIR BUSINESS PROCESS TO LOCATION SUCH AS INDIA
FIRMS USE ITS ASSOCIATE FOR OPERATION
FACILITIES
LOCATION DECISION NOT ALWAYS PERTAIN TO
OWN OPERATION
SUPPLY CHAIN ARE HAVE SPREAD TO COUNTRIES
ABROAD REASON FOR FOREIGN LOCATION REACHING THE CUSTOMER
CAPTURING SHARE OF MARKET
EXPANDING WORLDWIDE
PROVIDING SERVICE PROMPTLY &
ECONOMICALLY
COST & EASE OF LOGISTICS IS A REASON
FOR SETTING MANUFACTURING FACILITIES ABROAD TANGIBLE REASONS HOST COUNTRY MAY OFFER SUBSTANTIAL TAX ADVANTAGE COMPARE TO HOME COUNTRY
COST OF RUNNING OPERATION LESS IN
THAT FOREIGN COUNTRY COMPANY OVERCOME TARIFF BARRIER BY EXPORTING ITEMS TO THAT COUNTRY INTANGIBLE REASON CUSTOMER-RELATED REASONS ACCESIBILITY AN IMPORTANT “SERVICE QUALITY” DETERMINANT
FIRM MAY ABLE TO GIVE PERSONAL TOUCH
INTERACTY CLOSELY WITH CUSTOMER AND
UNDERSTAND THEIR REQUIREMENTS BETTER
DISCOVER OTHER POTENTIAL CUSTOMER IN
THE FOREIGN LOCATION. ORGANISATIONAL LEARNING RELATED REASON
FIRM CAN LEARN ADVANCE TECHNOLOGY
AVAILABLE IN THAT COUNTRY
FIRM CAN LEARN FROM CUSTOMERS ABROAD
FIRMS CAN LEARN FROM COMPETITORS
OPERATING IN THAT COUNTRY
FIRMS MAY ALSO LEARN FROM ITS SUPPLIERS
ABROAD STRATEGIC REASONS CAPACITY BUILT COULD BE EFFECTIVE DETERRENT FOR ENTRY OF COMPETITOR PHYSICALLY PRESENT IN HOST COUNTRY MAY GAIN LOCAL& PSYCHOLOGICAL ADVANTAGE AVOID POLITICAL RISK BY HAVING OPERATION IN MULTIPLE COUNTRIES FIRM CAN BUILD ALTERNATIVE SOURCE OF SUPPLY FIRM CAN HUNT FOR HUMAN CAPITAL CAN BE AN INTERNATIONAL BRAND