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Location Decision

Essay by   •  December 20, 2011  •  Essay  •  452 Words (2 Pages)  •  1,622 Views

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Location Decision is a crucial part of strategic, planning and marketing decision making in every organization. In every strategy the company follows, location decision will have a big impact. Whether the organization needed to open a new branch or a plant, to know the whereabouts of it sets the basis for many different factors which have a big impact on the organization's deals and performances.

Transportation to and from the location is one major consideration for the decision makers. How easy the customers can come and go to it? How easy would the trucks transport our goods from the new factory? Do I need to penetrate the market? Then I would relocate, or open a new branch, where the high volume of traffic is. Do I need to be more competitive and increase the market share? I may probably pick a place right next to my competitors in order to increase my number and to decrease my competitors'. Several important factors are crucial to determine the place I would want to make business in.

Location decision is strongly related to the supply chain management. There should be taken into consideration the number of suppliers in the upstream, and the number of distributors in the downstream. Such a decision has a significant impact on costs, revenues and how responsive the branch is for all situations.

In the case of a new branch or a factory at a new site, decision makers begin the analyzing process then decide based on that analysis where to start the company or where to build a new plant. Usually, small companies are opened in a place near to where the owner lives. In the case of big organizations, after making the analysis and decide based on it that there are good benefits on there and a need to expand the current business, then there are several options the organization could choose one from. First option is to expand an existing facility. Second option is to open a new location in addition to the existing one. The third is to open a new location while shutting down another, this case the company will be 'shifting' or 'moving' the place of business rather than expanding. The analysis that should be made in order to decide how good a location is usually includes a series of steps. First perspective that the analysis is focused on is the criteria to use in order to evaluate the choices they have, such a increased revenue or community service. After that, they identify important factors such as raw materials and transportation on location. When decided, a number of alternatives are listed which will listed then evaluated in order to select which location is the best for the organization.

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