Starbuck focuses on densely populated areas for
its 10,000 stores, e.g. it has 124 stores in 24 square
mile area of Manhattan, NYC.
 Toyota has Manufacturing and assembly plant in
12 different countries.
 3M has moved a part of it manufacturing unit
including R&D in Texas where temperature is more.
 Toys ‘R’ Us open a new store in Tokyo Japan.
 Disney world chooses Paris, to start its operations in
France.
 National Bank of Pakistan has more than 900
branches in Pakistan.
 BMW has 16 manufacturing facilities all around the
world, 5 in the US.

Refers to the process of determining
geographic sites for a firm’s operations.
 Location choice can be critically important
for firm’s performance.
Location choice have a profound impact
on the firm’s ability to:

1.
2.
3.
4.
5.
6.
Improve productivity and quality
Reduce costs
Identify quality materials and vendors
Identify required Technology
Serve customers in a better way
Find required labor skills
 Location
decisions affect processes and
departments
› Marketing
› Human resources
› Accounting and finance
› Production & Operations
› Research & Development
› International operations

Location decisions vary over industry
type and nature of business. E.g. Choice
of location has different implications for:
Manufacturing Firms
Service & Retailing Firms
Please see page 424
(book-1)for details

Favorable labor climate

Proximity to markets

Quality of life (for staff & workers)

Proximity to suppliers and resources

Proximity to the parent company’s facilities

Utilities, taxes, and real estate costs

Other factors
•
Investment requirement for Construction & Set-up
•
Available Technology
•
Available modes of Transportation & Infrastructure
•
Community attitude
•
Local & regional Laws & legislation
Please see page 426
(book-1)for details
› Proximity to customers
› Transportation costs and proximity to markets
› Location of competitors
› Site-specific factors



Traffic flows & visibility
Availability of parking facility
Population density
•
•
GIS is a system of
computer software,
hardware, and data
Use to manipulate, analyze,
and present information
relevant to a location
decision
•
Create a visual
representation of a firm’s
location choices
•
Useful decision-making
tool
Step 1:Identify the important location factors
and categorize them as dominant or
secondary
Step 2:Consider alternative regions; then
narrow to alternative communities and
finally specific sites
Step 3:Collect data on the alternatives
Step 4:Analyze the data by quantitative
Factors Evaluation Matrix or Preference
Matrix
Step 5:Bring the qualitative factors pertaining
to each site into the evaluation
Five-Step process:
1.
2.
3.
List key factors (10-20)
Assign weight to each showing relative important
of each factor over others (0 to 1.0)
› Sum of all weights = 1.0
Assign a Rating (1-4) to each factor based on the
attractiveness or the suitability of each factor for
the firm.
1 = not attractive at all
2 = Average attractiveness
3 = Above average attractiveness
4 = very attractive
4.
Multiply each factor’s weight by its rating
 Produces a weighted score
5.
Sum the weighted scores for each
 Determines the total weighted score for each
site.
•
Highest possible weighted score for the
organization is 4.0; the lowest, 1.0. Average = 2.5
Weight
Site – A
Rating
Weighted
score
Site – B
Rating
Weighted
score
Total patients
per month
.25
4
1
3
.75
Facility distance
from city center
.20
3
.60
2
.40
Average time
per emergency
trip
.20
3
.60
3
.60
Access ease
.15
3
.45
2
.30
Land and
construction
costs
.10
2
.20
3
.30
Employee
preferences
.10
2
.20
2
.20
Location Factor
3.05
2.55