Imaginative Toys
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The choice of a location for an organisation is very important. Location decisions even though not made often are very important to the growth of an organisation. Location decisions are made for various reasons like expanding an organisation’s customer base and or building the capacity to absorb the growing demand for an organisation’s goods or services. If an organisation is strategically located in terms of say the availability of resources it is able to gain a competitive advantage over its competitors. This decision is however not limited to new organisations, existing organisations also have to make location decisions if an expansion of the old facility is simply not enough.
There are four location options an organisation considers in making the location decision. The first is to expand the existing facility; if there is space available the viable option is to expand the existing facility to absorb the growing capacity, this eliminates the cost of acquiring a new site and employing labour. The second option is to acquire a new facility in addition to the already existing facility.
This option is especially attractive for organisations who would want to expand their market share and also venture into a different environment. This is so because this option usually involves the organisation locating the facility outside the parent company’s home country. It involves a lot of starting capital since a favourable site has to be acquired and labour employed for the facility. The third option involves shutting down the existing facility and building a new one that would have the capacity to absorb products.
This third option requires the organisation to look outside its current location for a suitable location that would have the necessary space for the expansion of the facility. The final location option is to do nothing; that is maintain the status quo. This final option has the potential of causing financial loss to the
The choice of a location for an organisation is very important. Location decisions even though not made often are very important to the growth of an organisation. Location decisions are made for various reasons like expanding an organisation’s customer base and or building the capacity to absorb the growing demand for an organisation’s goods or services. If an organisation is strategically located in terms of say the availability of resources it is able to gain a competitive advantage over its competitors. This decision is however not limited to new organisations, existing organisations also have to make location decisions if an expansion of the old facility is simply not enough.
There are four location options an organisation considers in making the location decision. The first is to expand the existing facility; if there is space available the viable option is to expand the existing facility to absorb the growing capacity, this eliminates the cost of acquiring a new site and employing labour. The second option is to acquire a new facility in addition to the already existing facility.
This option is especially attractive for organisations who would want to expand their market share and also venture into a different environment. This is so because this option usually involves the organisation locating the facility outside the parent company’s home country. It involves a lot of starting capital since a favourable site has to be acquired and labour employed for the facility. The third option involves shutting down the existing facility and building a new one that would have the capacity to absorb products.
This third option requires the organisation to look outside its current location for a suitable location that would have the necessary space for the expansion of the facility. The final location option is to do nothing; that is maintain the status quo. This final option has the potential of causing financial loss to the
References: Porter, M.E., (1980) "Competitive Strategy: Techniques for analyzing industries and competitors" New York: The Free Press Heizer J. & Render B., (2011) Operations Management, 10th Edition, Prentice Hall. William J. Stevenson, (2012) Operations Management, 11th Edition, McGraw-Hill.