11
Selecting the
Location and
Planning the
Facilities
PowerPoint Presentation by
Ian Anderson, Algonquin College
Chapter 11
Copyright © 2010 by Nelson Education Ltd.
Looking Ahead
After studying this chapter, you should be able to:
1. Describe the factors affecting the choice of a bricks-andmortar business location.
2. Discuss the challenges of designing and equipping a
physical facility.
3. Describe the attraction and challenges of a home-based
business.
4. Understand the potential benefits of locating a start-up on
the Internet.
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Key Factors in the Location Decision
• Customer accessibility
–As a matter of access by target customers
–As a matter of customer convenience
–As a necessity to avoid shipping costs
• Environmental business conditions
–Climate-related factors
–Business environment factors
• Competitors, legal requirements, and tax structure
continued…
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Key Factors in the Location Decision
• Resource Availability
–Nearness to raw materials
–Availability of a suitable labour supply
–Access to adequate and reliable transportation
• Personal Preference of the Entrepreneur
–Familiarity with home community
–Familiarity of community with
entrepreneur
…continued
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Key Factors in the Location Decision
• Site Availability and Costs
– Difficulty of locating a good site
• Business incubator provides shared space, services, and management
assistance for new businesses
– Large costs for and commitment required to purchase site
outright.
– Leasing avoids a large cash outlay and allows the owners to
postpone committing to the site before the
business becomes a success.
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Five Key Factors in Determining
a Good Business Location
Exhibit 11-1
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Designing the Physical Facilities
• Functional Requirements
–Physical facilities should be of adequate size and
accommodation
–Ideal building is one that matches the functional
requirements of the business
• Considerations include:
•
•
•
•
•
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Age and condition of building
Fire hazards
Heating and air conditioning
Lighting and restroom facilities
Entrances and exits
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Typical Process Layout
Exhibit 11-4
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Factory Layout
• Factory Layout
–Process layout
• A factory design that groups similar machines together
– A machine shop with drill presses separate from lathes
–Product layout
• A factory design that arranges machines according to their roles
in the production process
– Product is moved progressively from one work station to the next
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Grocery Store Layout
Exhibit 11-5
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Retail Store Layout
• Retail Store Layout
–Grid pattern
• A block-like layout that provides for good merchandise exposure
and simplifies security and cleaning
–Free-flow pattern
• A flexible layout that is visually appealing and gives the
customers the freedom of movement
–Self-service layout
• A design that gives customers direct access to merchandise
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Retail Store Layout
Exhibit 11-6
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Challenging in Equipping
the Physical Facilities
• Manufacturing Equipment
–General-purpose equipment
• Machines that serve many
functions in the production
system
–Special-purpose equipment
• Machines designed to serve
specialized functions in
the production process
…continued
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Equipping the Physical Facilities
General-Purpose
Equipment
Special-Purpose
Equipment
• Low purchase cost
• Low labour cost
• Flexible production
• High hourly output
• Good resale value
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Office Equipment
• Challenging to keep pace with technology
–Computers
• Networks, e-mail
–Fax machines
–Copiers and printers
–Telephone systems
• Voice mail
• Interactive voice response (IVR)
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Home-Based Businesses
• Advantages
–Low start-up and overhead costs
–Convenience for family and lifestyle
•Technology
–Advances in office equipment
allow home-based business
to compete with commercial
sites
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Challenges of Home-Based Businesses
• Challenges
–Family and business conflicts
• The need to observe regular business hours and establish spatial
boundaries (specific work areas) to avoid distractions.
–Business image of a home-based business
• Professional image is difficult to maintain in a home environment.
–Legal considerations
• Local laws and zoning ordinances prohibit many types of homebased businesses.
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Locating on the Web:
E-Terms
• E-commerce
– The paperless exchange of business information via the
Internet
• eCRM (Electronic Customer Relationship Marketing)
– An electronically based system that emphasizes customer
relationships
– Utilizes a customer-centric database
• E-tailing
– Round the clock electronic access to products/services
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Benefits of E-Commerce
• Compete with bigger businesses on a level
playing field
• Access to worldwide customers
• Compresses the sales cycle
– great for cash flow
• Enhancing customer service and CRM
through technology
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Drawbacks of E-Commerce
• Technical limitations
– Cost of developing / maintaining website
– Bandwidth and access issues
– Changing software and hardware
• Nontechnical limitations
– Privacy and security
– Intangibility
– Global language/culture barriers
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E-Commerce Business Models
Exhibit 11-7
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B2B and B2C Business Models
• B2B – (business-to-business)
– based on selling to business customers
electronically
• B2C (business-to-consumer)
– based on having final consumers as customers
– 24/7 e-tailing provides round the clock access
to products and services
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Auction Sites
• Web-based businesses offering participants
the ability to list the products for bidding
• Examples include e-Bay, bidz.com, and
Yahoo auctions
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Selling an Item on e-Bay
Exhibit 11-8
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