Location Decision

Prof. Winfred S. William

Xavier Institute of Management
Bhubaneswar
 Objective of this Session
By the end of this session , you should
be able to:

 Define objective of location strategy

 Describe various methods of solving the location problem
 Topics Covered
Introduction
The strategic importance of location
Factors that affect location decisions
Methods of evaluating location alternatives
 Services location strategy
Conclusion
 Why Location Strategy

 One of the most important decisions a firm

makes
 Increasingly global in nature
 Significant impact on fixed and variable costs
 Decisions made relatively infrequently
 The objective is to maximize the benefit of
location to the firm
Critical Success Factors
of Location Decisions
 Factors That Affect
Location Decisions
• Proximity to markets
• Proximity to suppliers
• Proximity to competitors
• Favouable labour climate
• Political risk, values, and culture
• Utilities , taxes, real estate costs etc.
• Finalcial incentives
• Air and rail connectivity
• Community attitude
 Major Methods of Solving
Location Problems
 Factor Rating Method
Assign weights and points to various factors
 Center of Gravity Method
Find best distribution center location
 Location breakeven methods
 Transportation method
 Multi-attribute ( Brown- Gibson Method)