Krajewski IN Chapter 11 - Chapter 11 Location TEACHING TIP...

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Chapter 11 Location TEACHING TIP Ask students to give an example where a facility's location makes a difference, or introduce with examples, such as Starbucks and White Castle. Discuss the importance of location choices and how these choices impact a firm’s value chain in terms of the Supplier Relationship Process and the Customer Relationship Process. Stress that the location of facilities has a significant impact on the firm’s operating costs, the prices it charges for services and goods, and its ability to compete in the marketplace and penetrate new customer segments. Information technology and the Internet can help overcome the disadvantages related to a firm’s location. An important trend discussed in this chapter is the use of geographic information systems (GIS), used to identify market segments and how serving each of the segments can profitability affect the firm’s location strategy. A. Location Decisions across the Organization 1. Location decisions affect processes and departments throughout the organization. a. Marketing must assess how the location will appeal to customers and possibly open up new markets. b. Human resources must be attuned to the firm’s hiring and training needs. c. Accounting and finance must evaluate costing. d. Operations needs to be able to meet current customer demand and provide the right amount of customer contact. B. Factors Affecting Location Decisions 1. Managers of both service and manufacturing organizations must weigh many factors when assessing the desirability of particular locations, including the proximity to customers and suppliers, labor costs, and transportation costs. a. The factor must be sensitive to location. b. The factor must have a high impact on the company’s ability to meet its goals. c. Managers can divide location factors into dominant factors and secondary factors. Dominant factors are derived from competitive priorities (costs, quality, time, and flexibility) and have a particularly impact on sales or costs. 2. Dominant factors in manufacturing a. Favorable labor climate Most important for labor-intensive firms such as textiles, furniture, and consumer electronics. 11-1
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11-2 Chapter 11: Location Labor climate is a function of wage rates, training requirements, attitudes toward work, worker productivity, and union strength. TEACHING TIP Mention Managerial Practice 11.1, where having a favorable climate not only applies to the workforce already on site, but as illustrated by General Electric’s Energy Division relocation also applies to the employees that a firm hopes will transfer to or will be attracted to the new site. b. Proximity to markets Locating near markets is particularly important when goods are bulky or heavy and outbound transportation rates are high. c.
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Krajewski IN Chapter 11 - Chapter 11 Location TEACHING TIP...

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