BU385 Chapter 8: Chapter 8 BU385.docx
Document Summary
They entail a long-term commitment that makes mistakes difficult to overcome. Location decisions impact investment requirements, operating costs, and revenues. Location decisions are important for the following reasons: No single location may be better than the others. Location factors can depend on where a business is in the supply chain. The way an organization approaches location decisions often depends on its size and the nature and scope of its operations. Large established companies tend to take a more formal approach to location. The process will typically take six months to a year. Often one or two factors dominate the decision. Companies locate near or at the source of their raw materials for three primary reasons: necessity, perishability, and transportation costs. Transportation costs are important in industries where processing eliminates much of the bulk in a raw material, making it much less expensive to transport after processing.
