4 location decisions proximity to suppliers being in

This preview shows page 4 - 7 out of 8 pages.

4
LOCATION DECISIONS Proximity to suppliers Being in proximity to suppliers means locating near the suppliers of the company. Locating near suppliers can bring about benefits such as increasing the perishability of the products, lowered transportation costs, and ability to purchase in bulk (Heizer, Render, & Munson, 2017, pp. 344). However, being near to suppliers also has its disadvantages such as implications of factors such as weather, natural disasters politics, where both parties may be affected at the same time. Also, companies may also have complacency to not stock up due to the short waiting time of the product. Thus, when there is an emergency, it will be difficult for the supplier to provide the company with the quantity required in a short time. Proximity to competitors Being in proximity to competitors mean locating near the competitors, which is also known as clustering. Clustering occurs when a resource is found in a particular region in abundance, attracting companies to cluster around the region to enjoy the resource. Advantages of clustering includes getting in healthy competition which encourages innovation due to the fact that companies want to differentiate themselves in the market. It also helps companies to gain business insights, and know what can or cannot work. Companies can also collaborate with their competitors to share information and leverage the economies of scale (“Proximity To Competitors”, 2018). However, being too close to competitors also has disadvantages like decreasing of market share due to the number of market players. The competitive market can also force companies to bring down their prices in order to stay competitive, thus reducing the profits of the companies (Shoenberger, 2018). Another disadvantage would be that companies may resort to unscrupulous moves to force their rival companies out of the market. Conclusion and recommendation 5
LOCATION DECISIONS Before deciding on a location for expansion, companies should consider the seven major factors that affect location decisions, which are labor productivity; exchange rates and currency risk; costs; political risk, values, and culture; proximity to markets; proximity to suppliers; and proximity to competitors. In the event that Apple is expanding, it is recommended to locate the company to Singapore. This is due to the fact that Singapore is one of the most productive countries in Asia, and provides world-class education for its citizens (Mourdoukoutas, 2018). In terms of exchange rates and currency risks, Singapore has one of the lowest risk currencies in the world, and is just behind Tunisia, Puerto Rico, Panama, and United States. It is also the lowest risk currency in Asia (“The risk of”, 2015). Singapore is also financially resilience based on resistance tests done by the Monetary Authority of Singapore (MAS). In terms of

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture