POM-7 Loc.Strategy - Copy

Location Strategy
A M M A R A U M A R AWA N
Location
Food for Thought Strategy
Overview
 FedEx delivers in 230 destinations, having fleet of 667 planes
Factors for
 FedEx owns 80,000 trucks and controls 39% of the China-to- Location
U.S. air express market. Decision
How
 Why was Mem-phis picked as FedEx’s central location? Location
Decision
Methods of
Evaluating
 Bcz of its location in the middle of the U.S…. has very few Locations
hours of bad weather closures. Alternative
s
Service
 Airline flight operation HUB? Citrus polishing u unit? Banana Location
ripening unit? Strategy
Video Case
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Location
Country Level Strategy
Overview
 Country Level.
Factors for
-Political risks, government rules, attitudes, incentives Location
Decision
-Cultural and economic issues

How
Location
-Location of markets Decision
Methods of
Evaluating
Locations
Alternative
-Labor talent, attitudes, productivity, costs s
-Availability of supplies, communications, energy Service

Location
Strategy
-Exchange rates and currency risk
Video Case

Location
Region Decision Strategy
Overview
-Corporate desires.
Factors for
Location
-Attractiveness of region (culture, taxes, climate, etc.) Decision
-Labor availability, costs, attitudes toward unions.

How
Location
Decision
-Cost and availability of utilities.
Methods of
-Environmental regulations of state and town. Evaluating
Locations
Alternative
s
-Government incentives and fiscal policies.
Service
-Proximity to raw materials and customers. Location
Strategy
-Land/construction costs.
Video Case

Location
Site- Decision Strategy
Overview
-Site size and cost

Factors for
Location
Decision
-Air, rail, highway, and waterway systems.
How
-Zoning restrictions. Location
Decision
Methods of
-Proximity of services/supplies needed. Evaluating
Locations
Alternative
s
-Environmental (PEST) impact issues.
Service
-Customer density and demographics Location
Strategy
Video Case

Location
Evaluation Factors Strategy
Overview
Factors for
Location
Decision
How
Location
Decision
Methods of
Evaluating
Locations
Alternative
s
Service
Location
Strategy
Video Case

Location
How Location Decision? Strategy
Overview
Factors for
Location
Decision
How
Location
Decision
Methods of
Evaluating
Locations
Alternative
s
Service
Location
Strategy
Video Case

Location
The Factor-Rating Method Strategy
It comprises of six steps. Overview
-Develop a list of key success factors. Factors for

Location
Decision
-Assign a weight to each factor to reflect its relative
importance’.
How Location
-Develop a scale for each factor (for example, 1 to 10 or 1 to Decision
100 points).
Methods of
-Have management score each location for each factor. Evaluating
Locations
Alternatives
-Multiply the score by the weights for each factor and total the
score for each location. Service
Location
Strategy
-Make a recommendation based on the maximum point score,
considering the results of
Video Case

Location
The Factor-Rating Method Strategy
Five Flags over Florida, a U.S. chain of 10 family-

Overview
oriented theme parks, has decided to expand overseas
by opening its first park in Europe. It wishes to select
between France and Denmark.
Factors for
Location
Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

Locational Cost–Volume Analysis Location
Strategy
Technique for making an economic comparison of Overview
location alternatives.
Factors for
-Lowest cost= Fixed & variable cost. Location
Decision
-Determine the fixed and variable cost for each location.

How Location
Decision
-Plot the costs for each location, with costs on the Methods of
vertical axis of the graph and annual volume on the Evaluating
Locations
horizontal axis. Alternatives
-Select the location that has the lowest total cost for the Service
Location
expected production volume. Strategy
Video Case

Strategy
Esmail Mohebbi, owner of European Ignitions

Manufacturing, needs to expand his capacity . He is Overview
considering three locations—Athens, Brussels, and
Lisbon—for a new plant. The company wishes to find the
most economical location for an expected volume of Factors for
Location
2,000 units per year. Decision
-Mohebbi conducts locational cost–volume analysis. To How Location

do so, he determines that fixed costs per year at the Decision
sites are $30,000, $60,000, and $110,000, respectively;
and variable costs are $75 per unit, $45 per unit, and Methods of
$25 per unit, respectively. The expected selling price of Evaluating
Locations
each ignition system produced is $120. Alternatives
-Select the location that has the lowest total cost for the
expected production volume. Service
Location
Strategy
Total cost=(fixed costs + variable costs)
Video Case

Strategy
Total cost=(fixed costs + variable costs) Overview
Factors for
Location
Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

Strategy
Total cost =(fixed costs + variable costs) Overview
Factors for
Location
Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

Center-of-Gravity Method Location
Strategy
Focus point is on distribution cost Overview
-Account the location of markets Factors for

-Volume of goods shipped to those markets Location
Decision
-shipping costs.
How Location
- Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

Strategy
Overview
Factors for
Location
Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case
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Strategy
Overview
Factors for
Location
Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

Strategy
Overview
Factors for
Location
Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

Strategy
Overview
Factors for
Location
Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

Location
Transportation Model Strategy
The objective of the transportation model is to

determine the best pattern of shipments from several Overview
points of supply (sources) to several points of demand

(destinations) so as to minimize total production and
transportation costs. Factors for
Location
- Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

Location
8-Steps Strategy
-Purchasing power of the customer-

Overview
-Service and image compatibility with demographics of

the customer-drawing area.
Factors for
Location
Decision
-Competition in the area.
-Quality of the competition. How Location

Decision
-Uniqueness of the firm’s and competitors’ locations. Methods of

Evaluating
Locations
-Physical qualities of facilities and neighboring Alternatives
businesses.
Service
Location
-Operating policies of the firm. Strategy
-Quality of management
Video Case

Services Vs Goods Location
Strategy
-
Overview
Factors for
Location
Decision
How Location
Decision
Methods of
Evaluating
Locations
Alternatives
Service
Location
Strategy
Video Case

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Location Strategy

COMPILED @ TANWEER ASCEM KHARRAL 2

-Cultural and economic issues

-Availability of supplies, communications, energy Service

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-Labor availability, costs, attitudes toward unions.

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-Site size and cost

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It comprises of six steps. Overview

-Develop a list of key success factors. Factors for

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Five Flags over Florida, a U.S. chain of 10 family-

COMPILED @ TANWEER ASCEM KHARRAL 9

Technique for making an economic comparison of Overview

-Determine the fixed and variable cost for each location.

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Esmail Mohebbi, owner of European Ignitions

-Mohebbi conducts locational cost–volume analysis. To How Location

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Total cost=(fixed costs + variable costs) Overview

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Total cost =(fixed costs + variable costs) Overview

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Focus point is on distribution cost Overview

-Account the location of markets Factors for

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The objective of the transportation model is to

points of supply (sources) to several points of demand

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-Purchasing power of the customer-

-Service and image compatibility with demographics of

-Quality of the competition. How Location

-Uniqueness of the firm’s and competitors’ locations. Methods of

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