Location Planning

Topics: Management, Economics, Strategic planning Pages: 3 (887 words) Published: October 16, 2012
Location Planning

Basically, location is where the business situated at. According to the book, Operations Management: An Asian Perspective, by William Stevenson and Sum Chee Choung (2010), Location decisions for many types of organizations are not are frequently, but location decisions tend to have a significant impact on the organization. Thus, location plays a vital part in the organization. So why do organizations need to make location decisions? First is that they may be a change in their marketing strategy. Location decision is closely tied to the strategies of an organization. Like for example, the company is a low-cost producer, of course they want a location where labor and cost of materials are low. Other reasons for location decisions are cost of doing business, growth or expansion and depletion of resources in the current location. As a general rule, profit-oriented organizations base their decisions on profit potential. No single location may be better than the others so organizations should identify several locations from which to choose from. An organization has 4 location options to choose from; expand existing facilities, add new facilities, move to another facility or do nothing. In making location decisions, regional factors, community considerations, multiple plant strategies and site-related factors should be regarded.

Primary regional factors involve location of raw materials, location of markets and labor factors. Firms locate near or at the source of raw materials for three primary reasons; necessity, perishability and transportation costs. Location of market is part of the organization’s competitive advantage and strategy. The closer they are to the market, the easier they can reach the market. In terms of labor factors, the organization should consider the potential employees available in that certain region as well as their attitude and skills. They should also consider the cost of labor. Another important things are the climate...
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