Factors of Locations Decisions

Factors of Locations Decisions - Factors of Locations...

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Factors of Locations Decisions Justin R. Bryan Operations Management
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Justin Bryan Operation Management March 25 th , 2008 Research Paper Factors of Locations Decisions When a company is just starting out or deciding to expand, the company is face with many different situations to deal with. One of the most concentrated topics that are dealt with is location. Locations are the main factor that will either make or break a company. The location is the first step into development. In the earlier years of manufacturing, a plant was located in an area that had all the resources in a near area. Location to a rail-road was the main way of gaining resource outside of the area. In order for the company to produce their product with materials outside of their area, rail-roads were the only way of transportation. The locations of manufactures usually had a railway inside of the manufacturing facility. With later developments in technology, the shipping of material made it easier for companies to choose locations that are national. When choosing a location there are many factors that a company has to deal with. For instance, when a company is deciding to set a location in the United States, the company will have to deal with: governmental rules, economic issues, costs of materials, the availability of supplies, and currency risks. These factors are the common factors on selecting locations, but these issues are dealt
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location over seas, rather than in their home country. Expanding a company has its issues on location break down as well. For instance, when McDonald’s decided to expand globally, they ran into many issues that became a factor for production. The company decided to expand to Moscow, Russia. In doing so, McDonalds was face with the dilemma of building facilities for making their products. Warehouses were generated to process all of the food that were going to be served at all of the restaurants (This included making all of the French fries, having farms for all the produce and cattle that would later be turned into beef patties). Although, McDonalds had to spend a lump some of money to produce all the facilities, the company still generated a profit with the franchising of the restaurants. The company also had the situations of training the entire worker. The extensive training went from management training to how to serve the food. Exchange rates is one of the main reasons that companies choose to have manufacturing facilities in other parts of the world, and have their main head quarters in their home country. Having the manufacturing facility in the other country will cut the cost on a product and lower the wages of the workers. A worker that labors in a facility in the United States will make more money than a worker that labors in Mexico. The reasoning for the lower wages is the exchange rate of currency and also it is a cheaper cost for workers. The cost of resources to make the products is much cheap to produce the product as well. Considering
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This note was uploaded on 04/17/2008 for the course BUSINESS A 101 taught by Professor Gianinni during the Spring '08 term at Thiel.

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Factors of Locations Decisions - Factors of Locations...

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