LOCATION ANALYSIS

In Partial Fulfillment of one of the requirements in

Business Administration 10

Submitted by:
Bangot, Irene Nicole A.
BA10- I

Submitted to:
Mr. Brian Alcordo
October 06, 2016
I.

INTRODUCTION

In starting a business, may it be a large or small one, choosing the

right location is critically important. If you get the location wrong, it can have
a serious and often disastrous effect on the business because the location is
one of the factors that determine the success of the business. Also, once
location decisions are made, it will be difficult and costly to undo. The costs
of moving an operation are often significant for the convenience of the
customers and staffs depends on this. It is always the best to get the location
decision right first before putting up a business to avoid undesirable
problems in the process.
The type of location you choose depends largely on the type of
business you are in and there several factors that are need to be considered.
One is that an ideal location would be the one where costs are highly
minimized. The company must think of the benefits that each specific area
offers as well any government help that can be available during the run of
the business.
The researchers business is a cupcake shop named Cupcake Mania. This
shop sells various cupcakes with different flavors combined with squash. The
cupcakes are not the usual cupcakes that is already sold in the market,
because it gives health benefits to the consumers. The appearance of the
cupcakes is pleasing to the eyes; the frosting is mixed with different colors
and designs. The shop has an ambiance like that of a cafe/ It has comfortable
tables and chairs that the customers will surely like. It caters dine-in and
take-out services.
The target markets are the college students and young professionals.
The target location should be at the center of the city. The researchers came
up with three different locations to choose from; Pabayo Street, Tiano
Brothers Street, and Grand Central.

II.

LOCATION

Location 1:
Pabayo Street, specifically the Nummies Sweet Shop is a shop with the
pale blue picket fence. It is a cozy and relaxing place serving variety of sweet
products like shakes, cakes, and ice cream. It is an ideal place for hanging
and chilling out. The stores interior design was obviously made to cater the
young which is a good business move since it is only a ride away from
several schools like Corpus Christi School, Xavier University and Lourdes
College.

Location 2:
The former Tea-mptation located along Tiano Brothers Street is the
second prospective place for the business. It is a good and has high potential
factors because it is also located around Divisoria. It is also a tea shop with
cooland nice ambience that is intentionally designed for its target market.

Location 3:
Grand Central located at Hayes St. near Divisoria is a five-storey
commercial building that caters various food stalls and restaurants, spa,
movie caf, fitness gym, business offices and a hotel owned by AISSBS
Realty Corporation. It is also an ideal location for the business because it
already established a good background to the local neighborhood.

III.

ANALYSIS

Factor Rating Method

SCORES

WEIGHTED SCORES

KSF

WEIGH
T

PABAYO
ST.

Labor

.10

60

TIANO
BROS
ST.
50

Income

.30

70

80

Land

.20

50

60

Tax

.15

40

50

Availabil
ity of
Supplies
Rental

.20

85

80

.25

60

50

TOTAL:

1.2

GRAND PABAYO
CENTRA ST.
L
60
(.10)
(60) =
6
80
(.30)
(70) =
21
60
(.20)
(50) =
10
60
(.15)
(40) =
6
90
(.20)
(85) =
17
60
(.25)
(60) =
15
75

TIANO
BROS
ST.
(.10)
(50) =
5
(.30)
(80) =
24
(.20)
(60) =
12
(.15)
(50) =
7.5
(.20)
(80) =
16
(.25)
(50) =
12.5
77

GRAND
CENTRA
L
(.10)
(60) =
6
(.30)
(80) =
24
(.20)
(60) =
12
(.15)
(60) =
9
(.20)
(90) =
18
(.25)
(60) =
15
84

Cost Volume Analysis

Three Locations:
Selling Price: PHP30
Expected Volume: 2000 units
Total Cost= Fixed Cost + (Variable Cost*2000 units)
SITE
Pabayo St.
Tiano Bros St.
Grand Central

FIXED COST
Php20 000
Php30 000
Php35 000

VARIABLE COST
15.00
15.00
15.00

TOTAL COST
Php55 000
Php60 000
Php65 000

Transportation Model

Center of Gravity Method

600
500
400
Pabayo St.
Tiano Brothers St.

300

Grand Central
Center of Gravity

200
100
0
50

100

150

200

250

300

350

COORDINATES
STORE LOCATION

Pabayo St.
Tiano Brothers St.
Grand Central

100
300
150

Center-of-Gravity coordinates:

250
500
200

NO. OFCUPCAKES
SHIPPED PER
MONTH
1000
800
1200

xcoordinate=

( 100 ) ( 1000 ) + ( 300 ) ( 800 ) + ( 150 ) (1200)

1000+800+ 1200
= 173.33

ycoordinate=

( 250 )( 1000 ) + ( 500 ) ( 800 ) + ( 200 ) (1200)

1000+ 800+1200
= 296.67

IV.

CONCLUSION

Upon conducting the analysis, the most feasible location for the said
business is in Pabayo Street. Even though the site does not have the
highest weighted score for the Factor Rating Method, still it is the most
cost-effective site among the three. The site is Php5000 less costly than
Tiano Brothers St and Php10,000 less costly thatn Grand Central. It is also
considerable since Tiano Brothers St. is only 2 points ahead of Pabayo St.
Also, in the graph shown in the Center of Gravity Method, Pabayo St. is
the nearest compared to the other two sites. It is mostly visited by the
people in the loacal vicinity.

V.

RECOMMENDATION

The researcher further recommends considering the most important

factors in choosing a location for a business because it is the most crucial
part of the establishing process. It should be thoroughly reviewed and done
for it requires precise planning and research and it involves facing

demographics, supply chains, competition and more. Therefore, it is very

essential to give it the utmost attention.