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Chapter
Location Strategies
Discussion Questions
1. FedEx’s key location concept is the central hub concept, with Memphis selected for several reasons, including its being in the middle of the country and having very few hours of bad weather closures.
2. The major reason for U.S. firms to locate overseas is often lower labor costs, but as this chapter, Chapter 2, and
Supplement 11 suggest, there are a number of considerations.
3. The major reason foreign firms build in the U.S. is to satisfy the demand for foreign goods in the United States while reducing transportation cost and foreign exchange risk; in addition, U.S. locations allow foreign firms to circumvent quotas and/or tariffs.
4. Clustering is the tendency of firms to locate near competitors.
5. Different weights can be given to different factors. Personal preferences are included.
6. The qualitative approach usually considers many more factors, but its results are less exact.
7. Clustering examples in the service sector include fast-food restaurants, shoe and jewelry stores in a shopping mall, and theme parks.
8. Factors to consider when choosing a country:
Exchange rates
Government stability (political risk)
Communications systems within the country and to the home office
Wage rates
Productivity
Transportation costs
Language
Tariffs
Taxes
Attitude towards foreign investors/incentives
Legal system
Ethical standards
Cultural issues
Supplies availability
Market locations
9. Factors to consider in a region/community decision:
Corporate desires
Attractiveness of region
Labor issue
Utilities
Environmental regulations
Incentives
Proximity to raw materials/customers
Land/construction costs
10. Franchise operations may add new units per year; Exxon, McDonald’s, and Wal-Mart add hundreds of units per year, almost a daily location decision. For such organizations, the location decision becomes more structured, more routine. Perhaps by repeating this process they discover what
Location Strategies
Discussion Questions
1. FedEx’s key location concept is the central hub concept, with Memphis selected for several reasons, including its being in the middle of the country and having very few hours of bad weather closures.
2. The major reason for U.S. firms to locate overseas is often lower labor costs, but as this chapter, Chapter 2, and
Supplement 11 suggest, there are a number of considerations.
3. The major reason foreign firms build in the U.S. is to satisfy the demand for foreign goods in the United States while reducing transportation cost and foreign exchange risk; in addition, U.S. locations allow foreign firms to circumvent quotas and/or tariffs.
4. Clustering is the tendency of firms to locate near competitors.
5. Different weights can be given to different factors. Personal preferences are included.
6. The qualitative approach usually considers many more factors, but its results are less exact.
7. Clustering examples in the service sector include fast-food restaurants, shoe and jewelry stores in a shopping mall, and theme parks.
8. Factors to consider when choosing a country:
Exchange rates
Government stability (political risk)
Communications systems within the country and to the home office
Wage rates
Productivity
Transportation costs
Language
Tariffs
Taxes
Attitude towards foreign investors/incentives
Legal system
Ethical standards
Cultural issues
Supplies availability
Market locations
9. Factors to consider in a region/community decision:
Corporate desires
Attractiveness of region
Labor issue
Utilities
Environmental regulations
Incentives
Proximity to raw materials/customers
Land/construction costs
10. Franchise operations may add new units per year; Exxon, McDonald’s, and Wal-Mart add hundreds of units per year, almost a daily location decision. For such organizations, the location decision becomes more structured, more routine. Perhaps by repeating this process they discover what