Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall 18-1

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall 18-1

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall. 18-2

Chapter 18

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.

The key to finding a suitable location is identifying the characteristics that can give a company a competitive edge and then searching out potential sites that meet those criteria

The location decision process resembles an inverted pyramidThe right region of the countryThe right state in the regionThe right city in the stateThe right site in the city

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The Location Decision


Selecting the RegionSources of information

U.S. Census Bureau ProQuest Statistical Abstract of the United

StatesAmerican Fact Finder

ZoomProspectorePodunk

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Sources of information (continued)

Population Reference BureauLifestyle Market Analyst Nielsen MarketplaceEditor and Publisher Market GuideThe American Marketplace: Demographics and

Spending PatternsZip Code Atlas and Market plannerSite Selection

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Most and Least Small Business Friendly States


Selecting the StateFactors to consider:

Proximity to marketsProximity to needed raw materialsLabor supplyWage ratesBusiness climateTax rates

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State Business Tax Climate Index


Selecting the StateFactors to consider:

Proximity to marketsProximity to needed raw materialsLabor supplyWage ratesBusiness climateTax ratesInternet accessTotal operating costs

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Entrepreneurial Activity by State


Selecting the CityPopulation trends

Best cities for business

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Fastest-Growing Metropolitan Areas, 2012–2017


Megaregions in the United States in 2050


Selecting the CityPopulation trends Population densityCompetitionClusteringCompatibility with the communityLocal laws and regulations

ZoningAppropriate infrastructureTotal operating costs

IncentivesQuality of life

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Ten Lowest Cost Large and Midsize Cities in the United States


The Final Site SelectionAfter creating a short list, visit each site

Look at intangible aspectsConsider downsizing outlets to expand location

optionsCreate the “right” impression

What does the location say about the business?

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Trade Area SizeRetail compatibilityDegree of competitionTransportation networkPhysical and psychological barriers

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Customer trafficAdequate parkingReputationVisibilityThe Index of Retail Saturation

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The Index of Retail Saturation


Reilly’s Law of Retail Gravitation

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Central Business Districts (CBDs)Neighborhood LocationsShopping Centers and Malls

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Neighborhood shopping centers3 to 12 stores; anchor is supermarket or drugstore

Community shopping centers12 to 50 stores; anchor is supermarket, super-

drugstore, or discount department or variety storePower centers

Combines drawing power of a mall with convenience of neighborhood shopping center

Theme/festival centersEmploy unifying theme (often entertainment) and

frequently target tourists


Outlet centersRather than use anchor stores, rely on manufacturer’s

and retailers’ outlet stores to draw shoppers Lifestyle centers

Anchor is upscale specialty chain store; designed to emulate a village main street

Regional shopping malls50 to 100 stores; anchor is one or more major

department storesSuper-regional shopping malls

Trade area stretches up to 25 miles


Central Business Districts (CBDs)Neighborhood LocationsShopping Centers and MallsNear Competitors

Be aware of the potential for cannibalization!Shared SpacesInside Large Retail StoresNontraditional Locations

Airports, museums, and so onHome-based businesses

52% of U.S. businesses are run from home On the Road

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Consider:Special needsZoning ordinancesManufacturing processTransportation needsFuel costs

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Foreign Trade ZonesA foreign trade zone is a specially designated area

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

More than 12% of foreign goods enter the U.S. through foreign trade zones

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How a Foreign Trade Zone (FTZ) Works


Business IncubatorsA business incubator or accelerator is an

organization that combines low-cost, flexible rental space with a multitude of support services for its small business residents

The goal is to nurture young companies during the start-up stage and help them survive until they are strong enough to go out alone84% of the companies that graduate from

incubators stay in the local community

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Business Incubators by Industry Focus


Layout is the logical arrangement of the physical facilities in a business that contributes to efficient operations, increased productivity, and higher sales

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Size and AdaptabilityMany companies are reducing space for workers

External appearanceCreate proper image or “personality” in customers’

eyes

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Create window displays that sell!Keep displays simpleKeep displays clean and up to datePromote local eventsChange displays frequentlyGet expert help, if necessaryAppeal to all of a customer’s sensesContact the companies whose products you sell to see

whether they offer design props and assistance

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eyesEntrances

Invite customers to come inAmericans with Disabilities ActSignsInteriors

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Store interiors influence customer buying behaviorModify stores to meet customer needs

Ergonomics: the science of adapting work and the work environment to complement employees’ strengths and to suit customers’ needs, is an integral part of any designProper layout and design pays off in higher

productivity, efficiency, or salesAn ergonomically designed workplace can minimize the

potential for repetitive strain injuries (RSIs)

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eyesEntrances

Invite customers to come inAmericans with Disabilities ActSignsInteriorsDrive-Through WindowsSight, Sound, Scent, and Lighting

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SightCareful selection of colors can create the desired

impressions among customers and employeesScent

Scents can have a powerful impact in retail stores Classical music encourages shoppers to slow down

and makes them feel more affluent Scent marketing

SoundBackground music can be a selling tool

LightingProper lighting is measured by what is ideal for the job

being done

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The Power of Color


Size and AdaptabilityExternal appearanceEntrances Americans with Disabilities ActSignsInteriorsDrive-Through WindowsSight, Sound, Scent, and LightingSustainability and Environmentally Friendly Design

Environmentally-friendly design can boost productivityLEED (Leadership in Energy and Environmental

Design)

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Layout for RetailersThe right layout can boost sales significantly

66% of purchase decisions are made after a customer enters a store

Shoppers are influenced by in-store displaysIdentify “hot spots” and “cold spots”Experiment with traffic flow, lighting, aisle size, music

type, signs, and colorsDisplay merchandise attractively

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When planning in-store displays:Make products easy to reachUse wide aislesPlace shopping baskets in several areasMake it easy to locate merchandiseAllow customers to touch the merchandise

Make check-out easyKnow the “retail sweet spot”!

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The Space Value for a Small Store


Layout for ManufacturersFactors in manufacturing layout

Type of productType of production processErgonomic considerationsEconomic considerationsSpace availability within the facility

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Types of manufacturing layoutsProduct layouts

In a product (or line) layout, a manufacturer arranges workers and equipment according to the sequence of operations performed on the product

Process layoutsIn a process layout, a manufacturer groups workers

and equipment according to the general function they perform without regard to any particular product

Fixed-Position LayoutsIn a fixed position layout, materials do not move

down a line as in a product layout

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Design LayoutsCreate an overall picture of the manufacturing

process using assembly charts and process flow charts

When selecting and designing layouts consider: Worker productivityMaterials handling costs

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Documents

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall 18-1