Choosing the Right Choosing the Right Location and Location and

LayoutLayouta decision is the action an a decision is the action an

executive must take when he has executive must take when he has information so incomplete that the information so incomplete that the answer does not suggest itselfanswer does not suggest itself……

Admiral RadfordAdmiral Radford

SCORE Business SCORE Business PlanPlan

I.I. Marketing Plan Marketing Plan Market research Market research Economics Economics Product Product Customers Customers Competition Competition Niche Niche Strategy Strategy Promotion Promotion Promotional Budget Promotional Budget

Pricing Pricing

Sales Forecast Sales Forecast

SCORE Business SCORE Business PlanPlan

II. II. Operational PlanOperational Plan ProductionProduction LocationLocation Legal EnvironmentLegal Environment PersonnelPersonnel InventoryInventory SuppliersSuppliers Credit PoliciesCredit Policies Managing Your Accounts Managing Your Accounts

ReceivableReceivable Managing Your Accounts Managing Your Accounts

PayablePayable

Location- Source of Location- Source of Competitive Competitive AdvantageAdvantage Choosing the RegionChoosing the Region

Choosing the StateChoosing the State Proximity to marketsProximity to markets Proximity to needed Proximity to needed Raw materialsRaw materials Wage RatesWage Rates Labor Supply NeedsLabor Supply Needs Business ClimateBusiness Climate Tax RatesTax Rates Internet AccessInternet Access Total Operating CostsTotal Operating Costs

Location (cont’d)Location (cont’d) Choosing the CityChoosing the City Population TrendsPopulation Trends CompetitionCompetition Clustering Clustering (concentrations of (concentrations of

interconnected companies, interconnected companies, specialized suppliers, and service specialized suppliers, and service providers)providers)

Compatibility with the communityCompatibility with the community Local laws and regulations Local laws and regulations

(zoning: a system that divides a (zoning: a system that divides a city into small cells or districts to city into small cells or districts to control the use of land, buildings control the use of land, buildings and sites)and sites)

Transportation networksTransportation networks Police and fire protectionPolice and fire protection Cost of utilities and public Cost of utilities and public

servicesservices Quality of lifeQuality of life Choosing the SiteChoosing the Site

Location (cont’d)Location (cont’d)Criteria for Retail and Criteria for Retail and

Service BusinessesService Businesses Trade area sizeTrade area size Retail compatibilityRetail compatibility Degree of competitionDegree of competition Index of retail Index of retail

saturationsaturation Reilly’s Law of Retail Reilly’s Law of Retail

GravitationGravitation Transportation Transportation

networknetwork

Physical, racial, Physical, racial, or emotional or emotional barriersbarriers

Political barriersPolitical barriers Customer trafficCustomer traffic Adequate parkingAdequate parking ReputationReputation Room for Room for

expansionexpansion VisibilityVisibility

Location (cont’d)Location (cont’d)Retail compatibilityRetail compatibility: :

the benefits a the benefits a company receives company receives by locating near by locating near other businesses other businesses that sell that sell complementary complementary products and products and services or generate services or generate high volumes of high volumes of traffictraffic

Location (cont’d)Location (cont’d)Index of retail saturationIndex of retail saturation: a measure of : a measure of

the potential sales per square foot of the potential sales per square foot of store space for a given product within store space for a given product within a specific trading area: ratio of a a specific trading area: ratio of a trading area’s sales potential for a trading area’s sales potential for a product or service to its sales capacityproduct or service to its sales capacity

IRS= (CxRE)/RF, whereIRS= (CxRE)/RF, where IRS is index of retail saturationIRS is index of retail saturation C is number of customers in trading areaC is number of customers in trading area RE is average retail expenditure per person RE is average retail expenditure per person for the product in the trading areafor the product in the trading area RF is total square feet of selling space RF is total square feet of selling space allocated to the product in the trading area allocated to the product in the trading area

Location (cont’d)Location (cont’d)Reilly’s Law of Retail GravitationReilly’s Law of Retail Gravitation: a : a

business’ ability to draw customers is business’ ability to draw customers is directly related to the extent to which directly related to the extent to which customers see it as a ‘destination’ and is customers see it as a ‘destination’ and is inversely related to the distance inversely related to the distance customers must travel to reach it.customers must travel to reach it.

BP=d/1+SQRPb/Pa, whereBP=d/1+SQRPb/Pa, where BP, distance from location A to break ptBP, distance from location A to break pt d, distance between locations A and Bd, distance between locations A and B Pb, population surrounding BPb, population surrounding B Pa, population surrounding A Pa, population surrounding A

Location (cont’d)Location (cont’d)

Location Options for Location Options for Retail and Service Retail and Service BusinessesBusinessesCentral Business DistrictCentral Business District

Neighborhood locationsNeighborhood locationsShopping Centers and MallsShopping Centers and MallsNear CompetitorsNear CompetitorsOutlying AreasOutlying AreasHome-Based BusinessesHome-Based Businesses

Location Location (cont’d)(cont’d)

Shopping Shopping Centers and Centers and MallsMalls

Neighborhood Neighborhood shopping centersshopping centers

Community Community shopping centersshopping centers

Power centersPower centers

Theme or Theme or festival centersfestival centers

Outlet centersOutlet centers Lifestyle Lifestyle

centerscenters Regional Regional

shopping mallsshopping malls Super regional Super regional

shopping malls shopping malls

Location (cont’d)Location (cont’d)Evaluation criteria for mall:Evaluation criteria for mall: Is there a good fit with other products sold in Is there a good fit with other products sold in

the mall?the mall? Who are other tenants? Which are anchor Who are other tenants? Which are anchor

stores?stores? Demographically, is the center a good fit for Demographically, is the center a good fit for

your products/services?your products/services? How much foot traffic does the mall How much foot traffic does the mall

generate? The specific site?generate? The specific site? How much vehicle traffic does the mall How much vehicle traffic does the mall

generate? (major population center, volume generate? (major population center, volume of tourists, volume of drive-by traffic)of tourists, volume of drive-by traffic)

What is mall’s vacancy rate? Turnover rate?What is mall’s vacancy rate? Turnover rate? How much is rent and how is it calculated?How much is rent and how is it calculated? Is the mall successful? Is the mall successful?

Location (cont’d)Location (cont’d)Location Decision For ManufacturersLocation Decision For Manufacturers Foreign Trade ZonesForeign Trade Zones: specially designated : specially designated

area in or near a customs port of entry that area in or near a customs port of entry that allows resident companies to import materials allows resident companies to import materials and components from foreign countries; and components from foreign countries; assemble, process, manufacture or package assemble, process, manufacture or package them and then ship the finished product back them and then ship the finished product back out while either reducing or eliminating tariffs out while either reducing or eliminating tariffs and duties.and duties.

Empowerment ZonesEmpowerment Zones: an area designated as : an area designated as economically disadvantaged in which economically disadvantaged in which businesses get tax breaks on the investments businesses get tax breaks on the investments they make within zone boundaries. they make within zone boundaries.

Business IncubatorsBusiness Incubators:: an organization that an organization that combines low-cost, flexible rental space with a combines low-cost, flexible rental space with a multitude of support services for itsmultitude of support services for its small small business residentsbusiness residents

Layout and Design Layout and Design ConsiderationsConsiderations

SizeSize Construction and External Appearance Construction and External Appearance

(simple, clean and current, variety)(simple, clean and current, variety) EntrancesEntrances Americans with Disabilities ActAmericans with Disabilities Act SignsSigns Building InteriorsBuilding Interiors-ergonomics: the science of -ergonomics: the science of

adapting work and the environment to complement adapting work and the environment to complement employees’ strengths and to suit customers’ needsemployees’ strengths and to suit customers’ needs

Lighting and Scent Lighting and Scent

Layout: Layout: Maximizing Revenues, Maximizing Revenues, Increasing Efficiency or Increasing Efficiency or

Reducing CostsReducing Costs

Retailers Retailers grid grid layoutlayout

Layout (cont’d)Layout (cont’d)

RetailerRetailers s free-free-form form layoutlayout

Layout (cont’d)Layout (cont’d)

Retailers Retailers boutiquboutique layoute layout

Layout (cont’d)Layout (cont’d)

RetailerRetailers s Space Space Values Values for a for a Small Small StoreStore

Layout for Layout for ManufacturersManufacturers

Factors in Manufacturing Factors in Manufacturing Layout:Layout:

Type of productType of product Type of production processType of production process Ergonomic considerationsErgonomic considerations Economic considerationsEconomic considerations Space availability within the Space availability within the

facilityfacility

Layout (cont’d)Layout (cont’d)Types of Manufacturing LayoutsTypes of Manufacturing Layouts Product LayoutsProduct Layouts: according to the sequence : according to the sequence

of operations performed on a productof operations performed on a product Process LayoutsProcess Layouts: according to the general : according to the general

function they perform, without any regard to function they perform, without any regard to the particular product or customerthe particular product or customer

Fixed-Position LayoutsFixed-Position Layouts: in which materials do : in which materials do not move down a production line but rather, not move down a production line but rather, because of size or bulk, are assembled on the because of size or bulk, are assembled on the spotspot

Functional LayoutsFunctional Layouts: combinations: combinations

Layouts (cont’d)Layouts (cont’d) Principles of Lean Principles of Lean

ManufacturingManufacturing Planned materials flow patternPlanned materials flow pattern Straight-line layout whenever Straight-line layout whenever

possiblepossible Straight, clearly marked aislesStraight, clearly marked aisles Backtracking kept to a Backtracking kept to a

minimumminimum Related operations located Related operations located

close togetherclose together Minimum amount of in-process Minimum amount of in-process

inventory on handinventory on hand Easy adjustment to changing Easy adjustment to changing

conditionsconditions Minimum materials handling Minimum materials handling

distancesdistances Minimum of manual handling of Minimum of manual handling of

materials and productsmaterials and products Ergonomic work centersErgonomic work centers

Minimum distances between Minimum distances between work stations and processeswork stations and processes

No unnecessary rehandling of No unnecessary rehandling of materialsmaterials

Minimum handling between Minimum handling between operationsoperations

Minimum storageMinimum storage Materials delivered just in timeMaterials delivered just in time Materials efficiently removed Materials efficiently removed

from the work areafrom the work area Maximum visibility to spot Maximum visibility to spot

problems and improve safetyproblems and improve safety Orderly materials handling and Orderly materials handling and

storagestorage Good housekeeping; minimum Good housekeeping; minimum

clutterclutter Maximum flexibilityMaximum flexibility Maximum communicationMaximum communication

Layout (cont’d)Layout (cont’d)DellDell Heavy liftingHeavy lifting Flexible Flexible

manufacturingmanufacturing TeamworkTeamwork Speed testingSpeed testing Lean inventoryLean inventory

Victoria’s Victoria’s SecretSecret

‘‘Landing Strip’Landing Strip’ Central hubCentral hub Classier color Classier color

schemescheme Bring catalog to lifeBring catalog to life A menu of choicesA menu of choices