An organisation deciding on a location will have to consider a number of
alternatives. The best location for a manufacturing organisation may be
one where the overall costs are minimised. In a service organisation the
customer is directly involved in the supply process , therefore issues such
as ease of access and speed of delivery have to be considered along with
Naylor identifies three location strategies.
➢ Product-based location
External and internal factors combine to influence facility location.
Commonly used by large organisations. It reflects the product
organisation structure in which different operating divisions are each
responsible for limited product ranges.
The company choose to locate divisions with product similarities close to
each other.
➢ Market-based location
With this strategy , a business places facilities to serve market areas:the
company locates its facilities such that they are conveniently placed for
customers. It reflects an organisation structure , this time one based on
geographic divisions .Markets are the basic reasons for the location or
retail outlets and distribution centres. Market based location allows
quick response to customer.
➢ Vertically differentiated location
Different stages of the supply process are in different place. Some
industries have vertically integrated firms who combine several
stages of the manufacturing cycle. Rather than locate the whole
operation on one site , location decisions are made for each stage.
Push and pull factors
The decision to relocate is often made by small and medium-sized
enterprises (SMEs) for a variety of reasons , which include the need for
more space , increase in the scale of operations , and a reduction in unit
costs. Larger organisations often relocate if more locations are required.
The factors causing organisations to relocate can be categorised as push or
pull factors.
Push factors result from dissatisfaction with existing locations...