Operational Location Planning and Analysis SAMANTHA JOHNSON: Hi, my name is Samantha Johnson. I will be reviewing the operational location planning and analysis. It's about the importance of business location decisions. In the business world, there are many factors that come into a successful business, factors such as overall management, financial strategies, networking, production, and distribution, and finally, its location. For this reason, it is important for an organization to plan accordingly to make viable location decisions. Much of planning means looking towards the future because of the consistent change in marketplace competition and existing technological advancements. The decision making into choosing a business location is determined by many factors as well. A lot of it has to do with what is needed, and this requires lots of research and planning. It involves including looking at demographics, assessing your supply chain, scoping the competition, staying on budget, understanding state laws and taxes, and much more. While these are some of the recognizable items on the list to consider, there are some unnoticeable factors that serve just as much importance. Brand imaging, competition, local labor market, plan for future growth, proximity for suppliers, safety and zoning regulations confirms the necessity to building a successful business location. Brand imaging is about maintaining what the business represents. Is the business competing or does it complement with the other businesses around? Will there be opportunity for employees to commute and stay. Can suppliers reach the business without any issues? Is the business safe for everyone including staff and customers? The ideal location business will require the need to take into account the financial wallet, too. Besides determining what one can afford, there is a need to be aware of other financial considerations. Once all things are considered, anything can happen, but it's pertinent to acknowledge everything before moving to great lengths in a short duration. There are exceptions to everything, but there are always going to be strict guidelines. Before choosing the perfect business location, a business owner must figure out how a location will or won't contribute to the success of business and choose a spot accordingly. Though there are many issues to consider when you're looking for a space to house your business, make sure you ask yourself these four important location questions. Is location important for the success of your business? What type of location is best for your business? How much rent can you afford? Is your proposed location appropriate for what you plan to do there? Thinking about these types of businesses can make decision-making process a little bit easier. For example, some businesses may not need a specific business location. A lot of the work depends on going on the customer's home or place to provide their services. Like roofers, plumbers, or other house business services, it's not all about the specific location needs. Then there are businesses that have no public communication, like mail order companies. Some examples include optional monthly subscription companies like Birchbox, which sends samples of makeup and other cosmetic materials. Another is IPSY, whom competes with selling similar products. This is also interested-- excuse me, this is also an internet-based business too, but since the internet has been a great place for businesses, it's not a new trend that these kind of businesses have been successful without a definite location. Some online businesses still try to have a location, however. Location is everything. Presentation can make or break your business. It doesn't matter if you manage 95% of your business from online, or if you're a sales or marketing company that takes inbound calls and never speaks with customers face to face. If one does not have the right location, they won't get the business, definitely. There are five reasons businesses still choose to have location. The first reason is visibility. And I really wanted to talk more about online business, because that's where we actually are in today's market. A lot of people are going towards online because that's where everything is now. That's where all the young people are. It's where everyone has decided to put their business on. And the first reason is viability. Many people rely on evidence. While the internet is convenient, people want to see past the internet. We want to have options. For example, Amazon.com is a big internet company that has been reputable because of their fast services and convenience. However, not all businesses have reached that size and reputability. A startup company or a company that does not have a name brand yet would do well with something visible to make it successful and effective. The second reason is sociability. Even if your small business is mostly online, you'll still have to have desk jobs that need filling. Your employees are your most important business asset and they need to be taken care of just like your company's equipment, property, and financial assets. It is important to take care of the business location by cleaning an office thoroughly to make it attractive too. Customers remember what a messy desk or area looks like, so an organized location, even hiring or bringing in hiring professionals, helps make a huge difference. The third reason is reputation. The best way to advertise business products is to ensure employees know how to advertise with the latest trending styles to keep the business running. Again, it does not matter if most of the products are available online. A lot goes into reputation, especially location. There are studies that show that poor location is one of the chief reasons that small businesses fail. So it's pertinent that location is not chosen because how much cheaper the rent is. First impressions is what makes customers appeal to the product and business itself. The fourth reason for the online business location is serendipity. Serendipity means to make an accidental discovery that can attract customers to buy that product they didn't think about before. It's certainly important to realize that having a location in greater popular areas will attract more customers. The online community is a larger one, which can make it harder to find specific products, especially if there is competition. Both ways, having business online and a physical location, will grant accessibility for business services and products. Lastly, I wanted to clue in tacit knowledge. It's important to have tacit knowledge. It's something that you don't really acquire from a book or from any word of mouth or manual. It's just something that is important, like body language, intuition, humor. Something that represents the company. And these are all abilities shared from knowledge and experience that no manual or word of mouth can offer. After all, location will assist in all those areas in more ways than one. So while all my business is a booming sensation today, what about the ones that rely heavily on a physical location? What other location types of businesses are there? Fortunately, there are retail and mobile, commercial, and industrial locations. Retail space comes in a variety of shapes and sizes. It may be located in enclosed malls, strip shopping, centers, freestanding buildings, downtown shopping districts, or mixed-use facilities. Other retail space would include airports and other transportation facilities, hotel lobbies and more. Then there are mobile businesses, which would include taxi or moving services, where the ideal location may be by car, van, or truck. Commercial spaces are much more flexible than retail with location options. They have their commercial buildings, business parks, business districts, renting facility options and more. These are mainly for the for-profit companies that are considered commercial. And then lastly, we have industrial spaces, which will include any warehousing or plant facilities. Typically these industrial spaces can be located near rail or water port access. So preparing for a business location all depends on the desires, needs, and requirements. Location criteria can depend on where a business is on a supply chain. For instance, at the retail end of a chain, site selection tends to focus more on accessibility, consumer demographics like population density, age distribution, and average buyer income, traffic patterns, and local customs. Supply chain management is involved in strategizing where suppliers must go, where the distribution centers are, warehousing, and more. Business location means knowing where the supply distribution and warehousing centers are. A business in the beginning of the supply chain could be near raw materials. A business in the middle of the supply chain may be near suppliers. Again, everything depends on what the business needs are. These needs range from understanding what the costs are and where the customer markets can occur. These are the location factors and options that still need to be considered, especially for existing companies that may want to expand. This is because a lot of location decision making is due to its organizational strategies. Being able to expand an existing company allows attraction to the company, it gives more room, and is less costly than other options. Adding more locations while keeping existing locations is another option. There's a lot of competition out there in the marketplace. So adding new locations will attract customers in other areas, but can also prevent other businesses from entering the market. Sometimes a business may need to relocate entirely. If that means shutting down and opening to a new location, so be it. This organizational strategy is a serious one that must weigh the costs and benefits carefully. There may be a shift in economic and business industry where relocation is the best result to keep everyone in the company happy. I mean, it can be really quite costly too. And lastly, doing nothing may not be the best alternative, but sometimes doing nothing is the best way to go. To maintain the status quo would be ideal if nothing else can be done, while time determines the business's lifeline. Expansion may be a risky decision, but what about the businesses that decide to reach global and regional locations? Globalization has opened new markets and has meant increasing dispersion of manufacturing and service operations around the world. People are deciding to move to global locations for the profit. But if not managed correctly, this can be a great downfall in business operations. It is not a trick that it can be, but it can be complicated when businesses expand to that level. There are trade agreements and technology sources that is important to know before choosing the appropriate country business location. Barriers to international trade such as tariffs and quotas have been reduced with trade agreements such as the North American Free Trade Agreement, or aka NAFTA, the General Agreement on Tariffs and Trade, GATT, and the US-China Trade Relations Act. Also, the European Union has dropped many trade barriers and the World Trade Organization is helping to facilitate free trade. Technology also helps with globalization. Technology is advanced enough to communicate enough information through a variety of ways like emailing, faxing, all of which is manageable in today's times. The great benefits of globalizing operations are the markets, cost savings, legal, and regulatory financial and other sources. The marketplace has expanded, meaning more room for goods and services, while enabling opportunities to observe their own local needs in their hometown. There are also costs that can be saved. For example, labor costs, raw material costs, and taxes all contribute. Legally, liability and labor laws tend to be more lenient and less restrictive when it comes to various regulations. Financially, there are beneficial incentives. Companies can avoid the impact of currency changes that can occur when goods are produced in one country and sold to other countries. The disadvantages for global location are transportation, security costs, and unskilled labor, and import restrictions, criticisms, and productivity. High transportation due to shipping large distances can hurt labor material costs. Security costs are increased due to the international border laws. Unskilled labor means the way employees work in a different country can have a culture clash, impacting operations and extra money to train properly. While restrictions were mentioned as benefit, importing goods can be a challenge with restrictions. Criticism from others, like safety, environmental requirements because of different culture can be hard to accept. Productivity for labor can be low, which is truly hard on cost of labor. Then there will always be risks with global locations, too. There are terrorisms, cultural imbalance quality recalls, economic times may be rough, and more. Since these risks come into play, it is always important to manage organization locations efficiently. Typically, regional locations is a safer option for business owners. However, there are always going to be laws for any business location no matter where the business goes. Also, business owners that are just starting may need to understand everything before reaching a global level. With regional allocations, the benefits are that it is local. Worrying about transportation and other costs isn't as exponential as it is with global markets. So one of the benefits of choosing a regional location, [INAUDIBLE] a wide difference in choosing the perfect location. It is always important to investigate the location of raw materials, location of markets and labor factors. Location of materials is necessary for three reasons, and that is the necessity, transportation cost, and perishability. Mining operations, farming, forestry, and fishing fall under this necessity. Firms involved in canning or freezing of fresh fruits and vegetables, processing of dairy products and so on, must consider perishability when considering location. Transportation costs are so important in industries where processing eliminates much of the bulk connected with raw material, making it much less expensive to transport the product or material after processing. Moreover, regional warehouses are used by supermarkets and other retail operations to supply multiple outlets. Often the choice of new locations and additional warehouses reflect the locations of existing warehouses or retail outlets. Location of markets really stem from the current marketing trends. Typically, small businesses may anchor on larger businesses for help. Healthcare facilities are connected on locating next to where the community is, where community needs are common. Everything depends on where the trends and needs are. Moreover, there are labor factors that need to be considered. The wage rates and cost and availability are all part of location decisions. Other factors that should be considered is the weather and other climates, as they could play a role in taxes. Choosing the perfect location for a business can be a little bit easier, especially with today's technology advancements. Industry analyses are suggesting that the demand for mapping and geographic intelligence is emerging as an important segment of the business analytics software technology. Also known as ESR, there is a software technology called ESR, delving into design marketing operations and strategy. It assists with using up-to-date demographics, business traffic, and competitive information. It helps save time, money, and risk reduction towards business locations. As you can see, there's the demographics, consumer lifestyles, natural hazards, and your data right there just on the screen just for you to help you out with the business. There are also other location alternative techniques, such as locational profit, cost-profile volume analysis. They evaluate locations in economic term, numerically or graphically. [INAUDIBLE] transportation model, which analyzes the minimum transportation costs and what they can provide. Then there's the factor rating, which is a six step procedure to determine what factors are relevant like water supply, location parking. And then the center of gravity method, which determines using formulas the location of a facility that will minimize shipping costs or travel time to various destinations. And that's a little more complicated because it uses formulas. In conclusion, there will be disadvantages, advantages, and risk. Opportunity research can help best determine the perfect business location. Thanks so much.