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 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