5.4 - Location

Question 1

What 10 factors have to be taken into consideration when deciding to locate or relocate a business

Answer 1

Costs, Competition, Type of land, Markets, Familiarity with the area, Labour Pool, Infrastructure, Suppliers, Government and National, Regional and International factors.

Question 2

Why are costs important

Answer 2

a key factor that will arise from the cost of : Land, Labour and Transport.

Question 3

Why is competition important

Answer 3

Location of Competition is key to locate or relocate a business. There is a balance between a “gap” in the market and be near competitors. The Concept of Cannibalistic Marketing lies in this category.

Question 4

What is cannibalistic marketing

Answer 4

the practice of slashing the price of a product or introducing a new product into a market of established product categories (i.e. Mc Donald’s) .

Question 5

Why is the type of land important

Answer 5

different types of land are suited for different business (i.e. ski resorts)

Question 6

Why are markets important

Answer 6

a place where most products are traded. This of course changed with the introduction of e-commerce.

Question 7

Why is familiarity with the area important

Answer 7

could help with network in the area but also can miss a better or more appropriate location.

Question 8

Why is labour pool important

Answer 8

what type of workers are needed for a specific business (i.e. university graduates or school leavers). It also refers to places with a high level of unemployment, that will help create more jobs in the area (i.e. Amazon)

Question 9

Why is infastructure important

Answer 9

refers to infrastructure such as telephone, electricity, internet etc. Also, how accessible services are, depending of the type of business (i.e. schools and hospitals for oil engineers)

Question 10

Why are suppliers important

Answer 10

how close and available suppliers are. For different types of business this is key (i.e. seafood restaurant)

Question 11

Why is government important

Answer 11

the role of the Government is crucial for some business that might consider relocating to a deprived area. The Government might offer help in the form of Subsidies or grants. It’s “win-win” situation“. The Government can also offer “tax relief” in some cases

Question 12

Why are national, regional and international factors important

Answer 12

nowadays business do not need to be located near the immediate vicinity. Sources of communication changed immensely (i.e. call centres). This also refers to the fact that Trading Blocs such as EU or NAFTA might have influence in opening a business that serves the whole market (i.e. Nissan’s car factory in France to serve all Europe. Nissan’s factory was originally in England but had to relocate due to Brexit )

Question 13

What is a pull factor

Answer 13

how to attract a company towards a specific location. For the company it might me attractive to relocate abroad due to:
•Improved communications
•Dismantling of trade barriers
•Deregulation of the worlds financial markets
•Increasing size of multinational companies.

Question 14

What is a push factor

Answer 14

how to push a company to relocate overseas. There are some internal factors that may drive the companies to move overseas, such as:
•Reduce Costs
•Increase market share
•Use extension strategies
•Use defensive strategies

Question 15

What is outsourcing

Answer 15

Transferring some of the operations to another organisation

E.g. call centers, audit

Question 16

What are some positive and negatives of outsourcing

Answer 16

P - cost reduction, reliance on professionals, oppertunity to focus on core
N - having to rely on subcontractors, threat to brand value

Question 17

What is insourcing

Answer 17

Brining operations back

E.g. firing an ad agency in favor of a internal marketing department

Question 18

What are some positive and negatives of insourcing

Answer 18

P - full control of operations
N - having to deal with new tasks

Question 19

What is offshoring

Answer 19

Transferring some of operations abroad
Not necessarily to another organisation

E.g. manufacturing goods in china, call center in india

Question 20

What is a positive and negative of offshoring

Answer 20

P - cost reduction, avoiding protectionism
N - exchange rates not in favor, communication barriers, cultural gap/clash

Question 21

What is resharing

Question 22

What is reshoring

Answer 22

Brining offshoring operations back to home country

Question 23

What is a positive and negative of reshoring

Answer 23

P - enhanced brand image
N - having to deal with new tasks

Question 24

What BMT can be used to chose location or relocation

Answer 24

• desition trees
• force field analysis

Question 25

What is force field analysis

Answer 25

method for listing, discussing, and evaluating the various forces for and against a proposed change. When a change is planned, Force Field Analysis helps you look at the big picture by analysing all of the forces impacting the change and weighing the pros and cons.

Question 26

What are the 4 steps involved in a FFA

Answer 26

1.Determine the change factor and highlight it.
2.After brainstorming ideas for the change, they are listed in a positive and negative manner. That is, driving forces (positive) and restraining forces (negative).
3.Each factors is given a weight corresponding to the factor’s importance, from 1 (weak) to 5 (strong). Arrows maybe used her for simplicity.
4.The forces then are all added up , totalling the scores for each of the forces. Of course, the highest value is the best decision

Question 27

What are the 3 benefits of a FFA

Answer 27

• gives a clear answer to a dificultades decision
• flexible - can be applied to many situations
• simple and visually attractive

Question 28

What are 3 limitations of a FFA

Answer 28

• is based on qualities data, not quantative issues
• involves interpretation in determining which factos to include
• is based on estimates of the value of each individual factor