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Chapter 11 Copyright © 2010 by Nelson Education Ltd.
Selecting the
Location and
Planning the
Facilities
11
PowerPoint Presentation by
Ian Anderson, Algonquin College
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-2
Looking Ahead
After studying this chapter, you should be able to:
1. Describe the factors affecting the choice of a bricks-and-
mortar business location.
2. Discuss the challenges of designing and equipping a
physical facility.
3. Describe the attraction and challenges of a home-based
business.
4. Understand the potential benefits of locating a start-up on
the Internet.
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-3
Key Factors in the Location Decision
• Customer accessibility
–As a matter of access by target customers
–As a matter of customer convenience
–As a necessity to avoid shipping costs
• Environmental business conditions
–Climate-related factors
–Business environment factors
• Competitors, legal requirements, and tax structure
continued…
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-4
Key Factors in the Location Decision
• Resource Availability –Nearness to raw materials
–Availability of a suitable labour supply
–Access to adequate and reliable transportation
• Personal Preference of the Entrepreneur –Familiarity with home community
–Familiarity of community with
entrepreneur
…continued
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-5
Key Factors in the Location Decision
• Site Availability and Costs –Difficulty of locating a good site
• Business incubator provides shared space, services, and management assistance for new businesses
–Large costs for and commitment required to purchase site
outright.
–Leasing avoids a large cash outlay and allows the owners to
postpone committing to the site before the
business becomes a success.
Chapter 11 Copyright © 2010 by Nelson Education Ltd.
Five Key Factors in Determining
a Good Business Location
Exhibit 11-1
11-6
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-7
Designing the Physical Facilities
• Functional Requirements –Physical facilities should be of adequate size and
accommodation
–Ideal building is one that matches the functional requirements of the business
• Considerations include: • Age and condition of building
• Fire hazards
• Heating and air conditioning
• Lighting and restroom facilities
• Entrances and exits
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-8
Typical Process Layout
Exhibit 11-4
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-9
Factory Layout
• Factory Layout
–Process layout
• A factory design that groups similar machines together
– A machine shop with drill presses separate from lathes
–Product layout
• A factory design that arranges machines according to their roles
in the production process
– Product is moved progressively from one work station to the next
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-10
Grocery Store Layout
Exhibit 11-5
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-11
Retail Store Layout
• Retail Store Layout
–Grid pattern • A block-like layout that provides for good merchandise exposure
and simplifies security and cleaning
–Free-flow pattern • A flexible layout that is visually appealing and gives the
customers the freedom of movement
–Self-service layout • A design that gives customers direct access to merchandise
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-12
Retail Store Layout
Exhibit 11-6
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-13
Challenging in Equipping
the Physical Facilities
• Manufacturing Equipment
–General-purpose equipment • Machines that serve many
functions in the production system
–Special-purpose equipment • Machines designed to serve
specialized functions in the production process
…continued
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-14
Equipping the Physical Facilities
Special-Purpose
Equipment
• Low labour cost
• High hourly output
General-Purpose
Equipment
• Low purchase cost
• Flexible production
• Good resale value
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-15
Office Equipment
• Challenging to keep pace with technology
–Computers
• Networks, e-mail
–Fax machines
–Copiers and printers
–Telephone systems
• Voice mail
• Interactive voice response (IVR)
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-16
Home-Based Businesses
• Advantages
–Low start-up and overhead costs
–Convenience for family and lifestyle
•Technology
–Advances in office equipment
allow home-based business
to compete with commercial
sites
Chapter 11 Copyright © 2010 by Nelson Education Ltd. 11-17
Challenges of Home-Based Businesses
• Challenges
–Family and business conflicts • The need to observe regular business hours and establish spatial
boundaries (specific work areas) to avoid distractions.
–Business image of a home-based business • Professional image is difficult to maintain in a home environment.
–Legal considerations • Local laws and zoning ordinances prohibit many types of home-
based businesses.
Chapter 11 Copyright © 2010 by Nelson Education Ltd.
Locating on the Web:
E-Terms
• E-commerce
– The paperless exchange of business information via the
Internet
• eCRM (Electronic Customer Relationship Marketing)
– An electronically based system that emphasizes customer
relationships
– Utilizes a customer-centric database
• E-tailing
– Round the clock electronic access to products/services
11-18
Chapter 11 Copyright © 2010 by Nelson Education Ltd.
Benefits of E-Commerce
• Compete with bigger businesses on a level
playing field
• Access to worldwide customers
• Compresses the sales cycle
– great for cash flow
• Enhancing customer service and CRM
through technology
11-19
Chapter 11 Copyright © 2010 by Nelson Education Ltd.
Drawbacks of E-Commerce
• Technical limitations
– Cost of developing / maintaining website
– Bandwidth and access issues
– Changing software and hardware
• Nontechnical limitations
– Privacy and security
– Intangibility
– Global language/culture barriers
11-20
Chapter 11 Copyright © 2010 by Nelson Education Ltd.
E-Commerce Business Models
11-21
Exhibit 11-7
Chapter 11 Copyright © 2010 by Nelson Education Ltd.
B2B and B2C Business Models
11-22
• B2B – (business-to-business)
– based on selling to business customers
electronically
• B2C (business-to-consumer)
– based on having final consumers as customers
– 24/7 e-tailing provides round the clock access
to products and services
Chapter 11 Copyright © 2010 by Nelson Education Ltd.
Auction Sites
11-23
• Web-based businesses offering participants
the ability to list the products for bidding
• Examples include e-Bay, bidz.com, and
Yahoo auctions
Chapter 11 Copyright © 2010 by Nelson Education Ltd.
Selling an Item on e-Bay
11-24
Exhibit 11-8
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