Amity Business School

Facilities Location
Growing importance
Factors promoting globalisation of operations
Regulatory & economic reforms Factor Cost Advantages Expanding markets in developing countries

Location issues have become more prominent in recent years due to globalisation Location decision pertains to the choice of appropriate geographical site for locating manufacturing & service facilities of an organisation

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Location Decision
Relevant Factors
Market related issues Cost related issues Market for products and services Wage rates Raw Material availability Transportation costs Number and proximity of suppliers Taxes and other tariff issues Availability of skilled labour Quality of Infrastructure Regulatory & Policy issues Other issues Government & Economic stability Culture Quality of legal and other institutions Climate Trading blocks and trading agreements Quality of Life

Amity Business School

Location Decisions
Critical Success Factors
1. Political risks, government rules, attitudes, incentives 2. Cultural and economic issues 3. Location of markets 4. Labour talent, attitudes, productivity, costs 5. Availability of supplies, communications, energy 6. Exchange rates and currency risks

Country Decision

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Location Decisions
Critical Success Factors
1. Corporate desires 2. Attractiveness of region 3. labour availability, costs, attitudes towards unions 4. Costs and availability of utilities 5. Environmental regulations 6. Government incentives and fiscal policies 7. Proximity to raw materials and customers 8. Land/construction costs

Region/ Community Decision

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Location Decisions
Critical Success Factors
1. Site size and cost 2. Air, rail, highway, and waterway systems 3. Zoning restrictions 4. Proximity of services/ supplies needed 5. Environmental impact issues

Site Decision

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Location Planning Methods

One facility Multiple Candidates
Location factor rating Centre of Gravity Method Load Distance Method

Multiple Facility Multiple Candidates

Transportation Model

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Other issues in location planning

Recent trends in the international markets point to a shift towards fewer facilities that could serve markets worldwide
Example HP Desk Jet Printer, Dell PC

These developments point to two areas which could affect the location planning problem very significantly
availability of good transportation infrastructure use of Internet and IT infrastructure

Location planning in the overall context of just-in-time manufacturing philosophy (suppliers located in the vicinity (20 40 Km radius) of the manufacturer) Service quality depends on responsiveness of service delivery system. Locating service outlets, close to the demand point is an important requirement in a service system

Amity Business School

Service Location Strategy

1. Purchasing power of customer-drawing area 2. Service and image compatibility with demographics of the customer-drawing area 3. Competition in the area 4. Quality of the competition 5. Uniqueness of the firms and competitors locations 6. Physical qualities of facilities and neighboring businesses 7. Operating policies of the firm 8. Quality of management