Analysis of Facility Relocation Strategies

Topics: Variable cost, Strategic management, Business process reengineering Pages: 9 (2198 words) Published: February 1, 2008


Author: Tafadzwa Magejo, MSc MSOM (UZ), BTech (Hons) Prod Eng, GradZweIE Softex Tissue Products 202 Seke rd graniteside Harare
Mobile: +263 11 455 916 Tel: +263 4 770097 ext Email:,

This paper presents an analysis of facility relocation strategies. The stimulants of facility relocation (what gives birth to facility relocation strategies) are presented. The various considerations that Production or operations managers (P/OMs) should make when taking a strategy to relocate their facilities. The various tools used by the P/OMs are stated but not discussed. This is a foundational guide to analyzing relocation strategies. Facility relocation strategies are considered as those decisions made by P/OM to move an existing facility to a new area due to the various reasons that may stimulate that movement. The conclusion of this paper is that the analysis of facility relocation strategies is important for business success and as such P/OMs must take time to analyze these strategies.


Fixed capacity planning (FCP) is the first long term question with which production management is faced . This planning needs to be done thoroughly from the start. Fixed capacity planning involves the following issues: Identifying a suitable location

Determining the size of the productive facility
Layout of the productive unit
Occupational safety etc
The issue of location strategies becomes a continuous problem to be addressed at every strategy session, even after setting up the facility. This is because the stimulants or the basis for facility location analysis are dynamic and business perspective changes along the way as well. As shall be seen later business strategy and facility location are heavily intertwined that is a change in strategy may mean a change in location. [Radical strategy formulations and radical innovations are examples of such strategies]. This continual evaluation of facility location strategies gives birth to facility relocation strategies. As indicated by Botes . It is of cardinal importance for any business that its production units or productive units be correctly located.

A wrong location can result in the business suffering for the rest of its existence or until a strategy to relocate is made. In the past many businesses have failed because a wrong location was chosen. As such a question of whether a productive unit is functioning in the correct location or not should be given constant attention. If it is not correctly located, new locations must be considered.

The biggest myth of the new economy is that location no longer matters. Most believe that as our business world becomes smaller due to technological innovation, boarders of regional and international industry will continue to disappear, business cycles will continue to speed up and the world will become a huge homogenous market place market place .

Economic changes in various regions and countries have been forcing many firms to reconsider their locations. Companies have shifted their headquarters from Zimbabwe to other regional countries some of these moves have been successful whilst others have been major flops. The P/OM in Zimbabwe or anywhere else is faced by the challenge of analyzing and coming up with a successful relocation strategy.

The investigation of new locations is the formulation of relocation strategies and measures to be taken during relocation. The subject of facility relocation should not be taken for granted in business. Thorough analysis criteria for facility relocation should be developed. These are some of the issues that have been drivers to the compilation of this research paper.

Key Words
Fixed Capacity Planning (FCP), Facility Re/location Planning (FRP), Re/Location analysis, New Economy

Research objectives

References: J Arangies, P Boks ( 1995): Production and Operations Management a Practical approach
Turban (1992): An Investigation of factors influencing a relocation decision, ERIC
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S Owen (1998): Strategic Facility Location: A Review; European Journal of Operational Research
M Daskin (1998): Stochastic, Deterministic and Static Models for Facilities Location, North Western University
R Schmenner (1980) Choosing new Industrial Capacity: On site expansion, Branching and Relocation, Quarterly journal of Economics
M.E Porter 1998) competitive Advantage, (New York, Simon Schuster)
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