krm8_ism_ch11 - 11 Chapter Location DISCUSSION QUESTIONS 1....

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Chapter 11 Location DISCUSSION QUESTIONS 1. Answers depend on the specific organizations and industries selected by the teams. Some expected tendencies for manufacturers are: Favorable labor climate Textiles, furniture, consumer electronics Proximity to markets Paper, plastic pipe, cars, heavy metals, and food processing Quality of life High technology and research firms Proximity to suppliers and resources Paper mills, food processors, and cement manufacturers Proximity to company’s other facilities Feeder plants and certain product lines in computer manufacturing industry For service providers , the usually dominant location factor is proximity to customers, which is related to revenues. Other factors that also can be crucial are transportation costs and proximity to markets (such as for distribution centers and warehouses), location of competitors, and site-specific factors such as retail activity and residential density for retailers. Data collection relates to the factors selected, which can be collected with on- site visits or from consultants, chambers of commerce, governmental agencies, banks, and the like. For locations in other countries, additional information is needed about differences in political differences, labor laws, tax laws, regulatory requirements, and cultural differences. It is also important to assess how much control the home office should retain, and the extent to which new techniques will be accepted. 2. The “rust belt” city has made long-term investments in the stadium, roads, zoning, and planning to the benefit of the baseball team (an entertainment service). Leaving the rust belt city leaves the city with these long-term obligations with no means to pay for them. For example, when General Motors closed a large facility in a small community, the results were so devastating that the community sued GM for damages. Retailers in the vicinity have built facilities and operate stores that may not be viable any longer if the team moves. Baseball fans also may not be too sympathetic with the baseball owner.
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17 l PART 3 l Managing Value Chains PROBLEMS 1. Preference matrix location for A, B, C, or D Factor Factor Score for Each Location Location Factor Weight A B C D 1. Labor climate 5 5 25 4 20 3 15 5 25 2. Quality of life 30 2 60 3 90 5 150 1 30 3. Transportation system 5 3 15 4 20 3 15 5 25 4. Proximity to markets 25 5 125 3 75 4 100 4 100 5. Proximity to materials 5 3 15 2 10 3 15 5 25 6. Taxes 15 2 30 5 75 5 75 4 60 7. Utilities 15 5 75 4 60 2 30 1 15 Total 100 345 350 400 280 Location C, with 400 points. 2. John and Jane Darling Factor Factor Score for Each Location Location Factor Weight A B C D 1. Rent 25 3 75 1 25 2 50 5 125 2. Quality of life 20 2 40 5 100 5 100 4 80 3. Schools 5 3 15 5 25 3 15 1 5 4. Proximity to work 10 5 50 3 30 4 40 3 30 5. Proximity to recreation 15 4 60 4 60 5 75 2 30 6. Neighborhood security 15 2 30 4 60 4 60 4 60 7. Utilities 10 4 40 2 20 3 30 5 50 Total 100 310 320 370 380 Location D, the in-laws’ downstairs apartment, is indicated by the highest score. This points out a criticism of the technique: the Darlings did not include or give weight to a relevant factor.
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This note was uploaded on 12/19/2009 for the course MANAGEMENT 00123 taught by Professor Ahmed during the Spring '09 term at Albany College of Pharmacy and Health Sciences.

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krm8_ism_ch11 - 11 Chapter Location DISCUSSION QUESTIONS 1....

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