Professional Documents
Culture Documents
© 2014
© 2014
Pearson
Pearson
Education,
Education,
Inc.Inc. 8-1
Outline
► Global Company Profile:
FedEx
► The Strategic Importance of Location
► Factors That Affect Location
Decisions
► Methods of Evaluating Location
Alternatives
► Service Location Strategy
► Geographic Information Systems
© 2014 Pearson Education, Inc. 8-2
Location Provides Competitive
Advantage for FedEx
▶ Central hub concept
Why was Memphis picked as FedEx’s central
location?
(1) It is located in the middle of the U.S.
(2) It has very few hours of bad weather closures,
perhaps contributing to the firm’s excellent flight-
safety record.
(3) It provided FedEx with generous tax incentives.
© 2014
© 2014
Pearson
Pearson
Education,
Education,
Inc.Inc. 8-3
Location Provides Competitive
Advantage for FedEx
© 2014
© 2014
Pearson
Pearson
Education,
Education,
Inc.Inc. 8-4
The Strategic Importance of
Location
► One of the most important decisions
a firm makes
► Increasingly global in nature
► Significant impact on fixed and
variable costs
► Decisions made relatively
infrequently
Figure 8.1
Global
Competitiveness of 142 Selected
Countries
2011-2012
Competitiveness COUNTRY
Switzerland
RANKING
1
Index of
Singapore 2
Sweden 3
Countries
Finland 4
USA 5
Japan 9
UK 10
Canada 12
Israel 22
China 26
Mexico 58
Vietnam 65
Russia 66
Haiti 141
Chad 142
$70 $25
= $1.17 per unit = $1.25 per unit
60 units 20 units
SCORES
(OUT OF 100) WEIGHTED SCORES
KSF WEIGHT FRANCE DENMARK FRANCE DENMARK
Labor availability
.25 70 60 (.25)(70) = 17.5 (.25)(60) = 15.0
and attitude
Education and
.21 60 70 (.21)(60) = 12.6 (.21)(70) = 14.7
health
Totals 1.00 70.4 68.0
–
$110,000 –
– ls
s s e rv e
– Bru t cu
s
$80,000 – co
–
$60,000 – e ns ve
th ur
– A tc
s
– co
$30,000 – Athens Lisbon
Brussels
– lowest lowest
lowest cost
cost cost
$10,000 –
–
| | | | | | |
y-coordinate of the
center of gravity
90 –
d1x = 30
60 –
d1y = 120
30 – Atlanta (60, 40)
Q1 = 2,000
| | | | | |
– East-West
30 60 90 120 150
Arbitrary
origin
© 2014 Pearson Education, Inc. 8 - 34
Center-of-Gravity Method
60 –
| | | | | |
– East-West
30 60 90 120 150
Arbitrary
origin
© 2014 Pearson Education, Inc. 8 - 36
Transportation Model