unstable political environments, companies must be prepared for upheaval and turmoil if they plan long-term operations in such countries.8.
Governmental regulation. Companies also may face government barriers and heavyrestrictions and regulation if they intend to expand into other countries. Therefore,companies must examine governmental²as well as cultural²obstacles in other countrieswhen developing location strategies.9.
Environmental regulation. Companies should consider the various environmentalregulations that might affect their operations in different locations. Environmentalregulation also may have an impact on the relationship between a company and thecommunity around a prospective location.10.
Incentives. Incentive negotiation is the process by which a company and a communitynegotiate property and any benefits the company will receive, such as tax breaks.Incentives may place a significant role in a company's selection of a site.Depending on the type of business, companies also may have to examine other aspects of prospective locations and communities. Based on these considerations, companies are able tochoose a site that will best serve their needs and help them achieve their goalsThe initial part of developing a location strategy is determining what a company will require of its locations. These needs then serve as some of the primary criteria a company uses to evaluatedifferent options. Some of the basic requirements a company must consider are:
Size. A company must determine what size property or facility it needs.
Traffic. If it is in the service business, a company must obtain statistics on the amount of traffic or the number of pedestrians that pass by a prospective location each day.
Population. Whether a service or manufacturing operation, a company must examine the population of prospective locations to ensure that there is a sufficient number of potentialcustomers (if a service business) or a sufficient number of skilled or trainable workers. Inaddition, manufacturers also benefit from being close to their customers, because proximity to customers reduces shipment time and increases company responsiveness tocustomers.
Total costs. Companies must determine the maximum total costs they are willing to payfor a new location. Total costs include distribution, land, labor, taxes, utilities, andconstruction costs. More obscure costs also should be considered, such as transportationcosts to ship materials and supplies, and the loss of customer responsiveness if movingfurther away from the customer base.