¡Descarga lesson 5 production management y más Apuntes en PDF de Dirección de la Producción solo en Docsity! LESSON 5: LOCATION STRATEGY THE STRATEGIC IMPORTANCE OF LOCATION The objective of location strategy is to maximise the bene6it of location to the 6irm. It is one os the most important decisions a form makes. Its increasingly global in nature, it has a signi6icant impact on 6ixed and variable cost. The decision are made infrequently. The objective is to maximize the bene6it of location to the 6irm. Location decisions based on low cost require careful consideration. Once in place, location-related cost are 6ixed in place and dif6icult to reduce. Determining optimal facility location is a good investment. They are long-term decisions that are made infrequently, this decision greatly affects both 6ixed and variable cost. Once committed to a location, many resource and cost issues are dif6icult to change. Four key attributes when strategy is based on innovation • High-quality and specialized inputs • An environment that encourages investment and local rivalry • A sophisticated local market • Local presence of related and supporting industries Country decisions key success factors: Political risks, government rules, attitudes, incentives; Cultural and economic issues Location of markets; Labor talent, attitudes, productivity, costs; Availability of supplies, communications, energy; Exchange rates and currency risks. Region/community decisions key success factors: Corporate desires; Attractiveness of region; Labor availability and costs; Costs and availability of utilities; Environmental regulations; Government incentives and 6iscal policies; Proximity to raw materials and customers; Land/construction costs. Site decisions key success factors: Site size and cost; Air, rail, highway, and waterway systems; Zoning restrictions; Proximity of services/ supplies needed; Environmental impact issues. MAIN FACTORS THAT AFFECT LOCATION DECISIONS Labor productivity Wages rated are not only cost Lower productivity may increase total cost Exchange rates and currency risks Can have a signi6icant impact on cost Rates change over time Costs Tangible - easily measured cost such as utilities, labor, material, taxes Intangible - less easy to quantify and include education, public transportation, community, quality of life Political risk, values, and culture National, state, local governments attitudes toward private and intellectual property, zoning, pollution, employment stability Worker attitudes towards turnover, unions, absenteeism Globally cultures have different attitudes towards punctuality, legal, and ethical issues Proximity to markets Very important to services JIT systems or high transportation costs may make it important to manufacturers Proximity to suppliers Perishable goods, high transportation costs, bulky products Proximity to competitors Called clustering: the location of competing companies near each other, often because of a critical mass of information, talent, venture capital or natural resources. Often driven by resources such as natural, information, capital, talent Found in both manufacturing and service industries Clustering of companies
