Podcast
Questions and Answers
What factor, according to the text, has a significant impact on costs in location decisions?
What factor, according to the text, has a significant impact on costs in location decisions?
Which of the following is NOT mentioned as a key success factor in the site decision process?
Which of the following is NOT mentioned as a key success factor in the site decision process?
What is the main reason that lower productivity may increase total cost?
What is the main reason that lower productivity may increase total cost?
What is the key factor that may drive the clustering of companies, according to the text?
What is the key factor that may drive the clustering of companies, according to the text?
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Which of the following is NOT listed as a key success factor in the region/community decision process?
Which of the following is NOT listed as a key success factor in the region/community decision process?
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What is the sixth step in the factor-rating method for evaluating location decisions?
What is the sixth step in the factor-rating method for evaluating location decisions?
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What is the main advantage of the FedEx central hub concept?
What is the main advantage of the FedEx central hub concept?
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Which of the following is NOT a key attribute for a location strategy based on innovation?
Which of the following is NOT a key attribute for a location strategy based on innovation?
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What is the primary objective of a firm's location strategy?
What is the primary objective of a firm's location strategy?
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Which of the following is NOT a key success factor for the country decision in location strategies?
Which of the following is NOT a key success factor for the country decision in location strategies?
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What is a potential drawback of a firm's location decision?
What is a potential drawback of a firm's location decision?
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Which of the following statements about location decisions is true?
Which of the following statements about location decisions is true?
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Study Notes
Location Strategies
- Federal Express's Central hub concept enables service to more locations with fewer aircraft, matching aircraft flights with package loads, and reducing mishandling and delay in transit.
Importance of Location Decisions
- Location decisions are one of the most important decisions a firm makes, with significant impact on fixed and variable costs.
- Decisions are increasingly global in nature and have a long-term impact, making it crucial to maximize the benefit of location to the firm.
Location and Costs
- Location decisions based on low cost require careful consideration, as once in place, location-related costs are fixed and difficult to reduce.
Location and Innovation
- Cost is not always the most important aspect of a strategic decision, and innovation-based strategies consider four key attributes: high-quality and specialized inputs, an environment that encourages investment and local rivalry, a sophisticated local market, and local presence of related and supporting industries.
Location Decisions
- Long-term decisions that are made infrequently, affecting both fixed and variable costs, with many resource and cost issues difficult to change once committed to a location.
Country Decision Key Success Factors
- Key factors to consider when making a country decision include:
- Political risks, government rules, attitudes, and incentives
- Cultural and economic issues
- Location of markets
- Labour talent, attitudes, productivity, and costs
- Availability of supplies, communications, and energy
- Exchange rates and currency risks
Region/Community Decision Key Success Factors
- Key factors to consider when making a region/community decision include:
- Corporate desires
- Attractiveness of region
- Labour availability and costs
- Costs and availability of utilities
- Environmental regulations
- Government incentives and fiscal policies
- Proximity to raw materials and customers
- Land/construction costs
Site Decision Key Success Factors
- Key factors to consider when making a site decision include:
- Site size and cost
- Air, rail, highway, and waterway systems
- Zoning restrictions
- Proximity of services/supplies needed
- Environmental impact issues
Factors That Affect Location Decisions
- Labour productivity and cost: wage rates are not the only cost, and lower productivity may increase total cost.
- Exchange rates and currency risks can have a significant impact on costs, and rates change over time.
- Intangible costs include education, public transportation, community, and quality-of-life.
- Political risk, values, and culture: national, state, and local governments' attitudes toward private and intellectual property, zoning, pollution, and employment stability may be in flux.
- Proximity to markets is very important to services and may be important to manufacturers due to JIT systems or high transportation costs.
- Proximity to suppliers is crucial for perishable goods, high transportation costs, and bulky products.
- Clustering of companies, driven by resources such as natural, information, capital, and talent, can be found in both manufacturing and service industries.
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Description
This quiz covers the concept of location strategies in logistics, focusing on how Federal Express uses its central hub concept to enable service to more locations with fewer aircraft. The importance, impact, and objectives of location strategy decisions are also discussed.
