Scarborough 10e PPT ch16

Location, Layout,
and Physical
Facilities
Chapter 16 Location and Layout Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 16-1
16-1
Business location
 Location is the place where a firm decides to site
its operations. Location decisions can have a big
impact on costs and revenues. A business needs
to decide on the best location taking into account
factors such as: Customers - is
the location convenient for customers?
Chapter 16 Location and Layout Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 16-2
Business layout
 The basic objective of layout is to ensure a smooth
flow of work, material, and information through a
system. ... The layout and design of that space
impact greatly how the work is done—the flow of
work, materials, and information through the system
Choosing a Location
 The right region of the country

 The right state in the region
 The right city in the state
 The right site in the city
16-4
Logic of Choosing a Location
Copyright ©2012 Pearson Education, Inc.

publishing as Prentice Hall 16-3
Choosing the Region:
Sources of Information
 U.S. Census Bureau - www.census.gov/
 American Community Survey
 American Fact Finder
16-6
 ZoomProspector
 Population Reference Bureau
 Demographics USA
 Lifestyle Market Analyst
 Rand McNally's Commercial Atlas and
Marketing Guide
16-7
 Sales and Marketing Management’s Survey
of Buying Power
 Editor and Publisher Market Guide
 Small Business Development Centers
 American Marketplace: Demographics and
Spending Patterns
 Commercial Atlas and Marketing Guide
 Site Selection
16-8
Geographic Information
Systems (GIS)
 Computerized programs combining map-
drawing with database management capability
 Example: Census Bureau’s TIGER file
 Search through a database and then plot the
results on a map
 Visual display reveals otherwise hidden trends
16-9
Most and Least Friendly States for Small Businesses
90
80
70
60
50 East
40 West
30 North
20
10
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Selecting the State
Factors to consider:
 Proximity to markets
 Proximity to needed raw materials
 Labor supply
 Wage rates
 Business climate
 Tax rates
 Internet access
16-11
Sample State Evaluation Matrix
Weight Score
Location Criterion 10-high 5-high Weighted Score (weight x score)
1-low 1-low
Total Score Florida Georgia South Carolina
Quality of labor force
Wage rates
Union activity
Energy costs
Tax burden
Educational/ Training
Assistance
Start-up incentives
Quality of life
Availability of raw
materials
Other
Assign
Assign toto each
each location
location criterion
criterion aa weight
weight that
that reflects
reflects its
its relative
relative importance
importance (10(10 high
high to
to 11 low).
low). Then
Then score
score each
each state
state on
on aa
scale
scale of
of 11 (low)
(low) toto 55 (high).
(high). Calculate
Calculate the
the weighted
weighted score
score (weight
(weight xx score)
score) for
for each
each state.
state. Finally,
Finally, add
add up
up the
the total
total weighted
weighted
score for each state. The state with the highest total weighted score is the best location for
score for each state. The state with the highest total weighted score is the best location for your business. your business.
16-12
Selecting the City
 Population trends
 Population density
 Competition
 Clustering
 Costs
 Local laws and regulations
 Zoning
 Compatibility or suitability with
community
16-13
Selecting the City
 Quality of life
 Transportation networks
 Police and fire protection
 Public services
 Incentives
16-14
Retail and Service
Location Considerations
 Trade area size
 Retail compatibility
 Degree of competition
 Transportation network
 Physical, cultural, or
emotional barriers
 Political barriers
16-15
Retail and Service
Location Considerations
Continued
 Customer traffic
 Adequate parking
 Expansion potential
 Visibility
16-16
Index of Retail Saturation
 It measures the level of demand in a

particular market on the basis of the
population, consumer expenditure,
competing retail space and a
particular product or product area.
Index of Retail Saturation
A measure of the potential sales per square foot of
store space for a given product within a specific
trading area
C  RE
IRS 
RF
where C = Number of customers in the trading area
RE = Average expenditure per person for the product
RF = Total square feet of selling space allocated to the
product
16-18
Reilly’s Law of Retail
Gravitation
An estimate of a site’s ability to attract customers
d
BP 
Pb
1
Pa
where BP = Distance in miles from location A to break point
d = Distance in miles between locations A and B
Pa = Population surrounding location A
Pb = Population surrounding location B
16-19
Retail and Service
Location Options
16-20
Neighborhood locations:
Shopping centers and
malls
Shopping Centers and
Malls
16-23
Shopping Centers and
Malls
 Outlet Centers
 Rather than use anchor stores, rely on
manufacturer’s and retailers’ outlet stores to
draw shoppers
 Lifestyle Centers
 Anchor is upscale specialty chain store;
designed to emulate a village main street
 Regional Shopping Malls
 50 to 100 stores; anchor is one or more major
department stores
 Super-regional Shopping Malls
 Trade area stretches up to 25 miles
16-24
Retail and Service
Location Options
Continued
 Near competitors
 Outlying or remote areas
 Home-based businesses
 52% of U.S. businesses are run from
home
16-25
Manufacturing Locations
 Foreign trade zones are secure areas under U.S. Customs
and Border Protection (CBP) supervision that are generally considered
outside CBP territory upon activation. Located in or near CBP ports of
entry, they are the United States' version of what are known
internationally as free-trade zones.
16-26
How a Foreign Trade Zone (FTZ) Works
Small
Company
P aid U.S.
u ty
D Sales
Without FTZ Duty No
Du
Paid ty P
ai d
Store
Imported Parts Exports
Assemble
and Materials Pa id U.S.
t y
Package Du Sales
No No
With FTZ Du
Duty Manufacture ty P
ai d
Paid
Process
Exports
Mix
Manufacturing Locations
 Empowerment zones
are economically
distressed communities designated by government for aid
—but this aid is intended primarily to lift the communities
out of poverty by stimulating business enterprise and
creating jobs. "Empowerment" is thus a somewhat
euphemistic or hopeful term
16-28
Business incubators
 An incubator is an organization designed to

help startup businesses grow and succeed by
providing free or low-cost workspace
Business Incubators
 Locations that combine low-cost,

flexible rental space with a multitude of
support services for their small business
residents
 1,200 incubators operate across the
U.S.
 They work!! Firms that “graduate” from
incubators have a success rate of 87%
16-30
Business Incubators by Industry
90
80
70
60
50 East
40 West
30 North
20
10
0
Source: National Business Incubation Association
Layout:
External Factors
 Size and adaptability
 External appearance
 Create proper image or “personality” in
customers’ eyes
 Entrances
 Invite customers to come in
 Americans with Disabilities Act
 Signage
16-32
A Business Sign
 Tells potential customers who you are

and what you're selling
 Must comply with local sign ordinances
 Should be visible, simple, and clear
 Should be changed periodically to avoid
becoming part of the background
 Should be legible both day and night
 Must be maintained properly
16-33
Building Interiors
16-34
Building Interiors
16-35
Layout for Retailers
16-36
Layout for Retailers Continued
16-37
Layout for Retailers Continued
16-38
Space Value for a Small Store
90
80
70
60
50 East
40 West
30 North
20
10
0
Source: National Business Incubation Association
Factors to Consider in
Manufacturing Layouts
 Type of product
 Type of production process
 Ergonomic or easy of use
considerations
 Space availability within the facility
16-40
 Product layout
16-41
Product Layout
Chapter 16 Location and Layout Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
16-36
 Product layout
 Process layout
16-43
Process Layout
 Product layout
 Process layout
 Fixed position layout
16-45

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Location, Layout,

 The right region of the country

Copyright ©2012 Pearson Education, Inc.

 It measures the level of demand in a

 An incubator is an organization designed to

 Locations that combine low-cost,

 Tells potential customers who you are

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