Location

Location An organisation deciding on a location will have to consider a number of alternatives. The best location for a manufacturing organisation may be one where the overall costs are minimised. In a service organisation the customer is directly involved in the supply process , therefore issues such as ease of access and speed of delivery have to be considered along with costs. Naylor identifies three location strategies. ➢ Product-based location External and internal factors combine to influence facility location. Commonly used by large organisations. It reflects the product organisation structure in which different operating divisions are each responsible for limited product ranges. The company choose to locate divisions with product similarities close to each other. ➢ Market-based location With this strategy , a business places facilities to serve market areas:the company locates its facilities such that they are conveniently placed for customers. It reflects an organisation structure , this time one based on geographic divisions .Markets are the basic reasons for the location or retail outlets and distribution centres. Market based location allows quick response to customer. ➢ Vertically differentiated location Different stages of the supply process are in different place. Some industries have vertically integrated firms who combine several stages of the manufacturing cycle. Rather than locate the whole operation on one site , location decisions are made for each stage. Push and pull factors The decision to relocate is often made by small and medium-sized enterprises (SMEs) for a variety of reasons , which include the need for more space , increase in the scale of operations , and a reduction in unit costs. Larger organisations often relocate if more locations are required. The factors causing organisations to relocate can be categorised as push or pull factors. Push factors result from dissatisfaction with existing locations , hence causing the organisation to consider changing location. Push factors originate from a wide variety of issues , some of which are presented below. 1.Current location is inconvenient for current customers and makes providing a good service cumbersome. 2.Competitors have locations that offer competitive advantage. 3.Different facilities are required for changing product /service range. 4.Regulatory authorities impose constraints related to health and safety , effluent disposal or noise. 5.There is a shortage of appropriately skilled labour. 6.The cost of the current site is increasing , for example due to rising rent. In contrast, rather than purchasing an organisation out of an old location , the pull factors attract or pull it towards new location. For instance, an organisation may be pulled to locate in a particular region or country due to have availability of cheap skilled labour.