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Chapter 8

SMG OM 323 Chapter 8: OM6 - Location

Operations & Technology Management
Course Code
SMG OM 323
Justin Ren

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Identifying a country, region, community and site
· Identifying a country every country carries its own sets of benefits and risk, and decision
makers need to be clear on what their benefits and risks are as well as their likelihood of
occurrence so they can make an informed judgement on whether locating in that country is
o Government- policies on foreign ownership, import restrictions
o Labor wages rates, work ethic, labor productivity
o Resources availability and quality of raw materials, energy
o Financial incentives financial incentives, tax rate
o Market potential - competition
o Cultural differences religious holidays
o Safety terrorism
· Identifying a region involves raw materials, markets, and labor considerations
o Location of raw materials for necessity, perishability, and transportation costs
o Location of markets profit-oriented firms locate near markets they intend to serve as
part of their competitive strategy, whereas non-profit is for the needs of users
o Cost and availability of labor very important for labor-intensive organizations, worker
attitudes are different among different locations
o Taxes
o Climate
· Identifying community communities actively try to attract businesses, offering financial and
other incentives, because they are viewed as potential sources of tax revenues and new job
o Do not want firms that pollute or lessen quality of life
o Taxes and environmental regulations
o Enticements (tax abatements, low cost loans)
o Attitude toward type of business
o Quality of life (schools, cost of living, recreation)
o Services (medical, fire, police)
o Cost and availability of utilities
· Identifying a site - considerations: land, transportation, and zoning restrictions
o Land (cost, conditions)
o Room for future expansion
o Transportation (access roads, rail spurs)
o Zoning restrictions
o Customer-presence:
o Convenience, distance
o Parking
o Driving, transportation
o Attractiveness
o Crime, disorder, etc
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