The situation that influence location decisions

The location decisions can be far two different situations

(a) Location choice for the first time

(b) Location on choice for an already established organisation for one or more facilities existing.

               Both the cases involves the kind of strategic consideration, however the first case may be the simpler of the two, where the second case involved fitting of a new operational facility in a mosaic of the already existing facilities,an operational strategy that we have to seriously consider the legacy of the past traditions value, system customer profile, customer and societal conception, geographical and time phoged plant's drawn earlier etc and also the multiplicity of the existing realities and future possibilities. So the second case may be little more complex.

                However it is also possible that the unknown may be more in the decision made for the first time. In any case it needs to be understood that the two cases are different for a small company having a small presence in the middle east it may make more sense to locate an additional facility in the same region of the world in order to strengthen and bring in more focus. A high technology hospital chain for the metro politian of market may be better of by the adding the next hospital facility in a similar metropolitan market segment.

1. Location choice for the first time.

           In this case, there is no prevailing strategy to which one need to confirm. However, the organisation strategy have to be first decided upon before embarking upon the choice of the location of the operating facilities. The importance of the long term strategies cannot be over emphasisied cost economist are always important by not at the cost of long term organisation objectives.

           Identification of the region:

    The organisational objectives along with the various long term consideration about marketing, technology, internal organisational strength and weakness region specific resources and business environment, legal goverenmental environment suggest a suitable region for locating the operations facility.

         Choice of a site within a region:

          Once the situation region is identified, the next step is that of choosing the best site from an available set choice of a site is less dependent on the organisation long term strategy. It is more a question of evaluating alternative sites for that tangible and intangible cost of the operations were located their cost economist new figure prominently and at this final steps of facilities location problems.

                 Even in the earlier stage of region identification,east were important but not explicitly, because they are the long term cost ( perhaps transportation cost would have been one category of cost which might have an explicit interest).

                Case of the already established organisation or location choice for an already:

              A new manufacturing branch has to fit into a multiple operation strategies. The different organisation operation strategies could be :

(I) Plant manufacturing distinct products or product lines:

This strategy is necessary where the needs of technological and resources inputs has specialised or distinct will be different for the different products. For instance,a high quality precision product line should preferably not be located along with other product line requiring little emphasis on precision. It may not be proper to have too long contradiction such as sophisticated and old equipment, highly skilled and semi skilled personnel, delicate processes and those that could permit rough handling all under one roof and one set up manager. Such a setting leads to much confusion regarding the required emphasis and the management policies, product specialisation may be necessary in a highly competitive market, it may also be necessary in order to fully exploit the special resource potential of a particular geographical area. 

(II) Manufacturing plants each supplying to a specific market area:

      Here each plant manufacturers almost one of the company's products. This type of strategy is useful where market proximity consideration considerates dominates the resources and technology considerations. The strategy requires a great deal of coordination from the corporate office an extreme examples of this category is that soft drinks bottling plants.

(III) Manufacturing plants divided according to the product or product line being manufacturing and being specific product line located in specific market areas. This type of combination strategy may be possible for a large organisation.

(IV) Plants regarded on the basis of the processes or stages in manufacturing: 

Each production process or stages of manufacturing may require a distinctively different equipment capabilities, labour skills, technologies and managerial policies and emphasis. Since the products of one plant feed into the other plants,this strategy requires much centralised coordination of the manufacturing activities from the corporate office who are expected to understand the various technologies and resources nuisance of all the plants. Some times such a strategy is used because of the different of national security. For instance, the ordinance factories in India. 

(V) Plant emphasising flexibility in adapting to constantly changing products needs:

This requires much coordination between plants to meet the changing needs and at the same time ensure efficient use of the facility and resources.

                      The new plant or branch facility has to fit into the organisation existing strategy, may be because the letter has been the product of deep thinking about the long term prospects and problems and strangth and weakness for the organisation as a whole. 

                  Frequent changes in the long term strategy in order to either elevate temporary problems or improve the efficiency temporarily are not healthy for the organisation. Rather such temporary solution may give rise to much complications in the future.

           It may also be noted that for an established organisation in order to art into the capacity, there can be ways other than opening, up new operations facilities:

(a) Expansion of the facility of the existing site.

(b) Realocation of the facility ( Closing down the existing one) 

         The procedure (a) is acceptable until it doesn't violate it the basis business and managerial outlines, that philosophies purpose strategies and capabilities. For instances, expansion should not compromise an quality, delivery or customer service. If it does, it is an indication of that the discourage of scale such as incompatibilities loosing of the manufacturing control and inflexibility have required into the system. It is than appropriate to look for a new location for the expanded portion of the activity.

        The procedure (b) is a drastic step which can be called as unprooting and transplanting. Unless there are very compelling reasons, are almost level of increasing plant size but those of either bringing radical changes in technology or other destabilisation. There have been instances in the past at large plant of shifting their plants and headquarters from Kolkata to Hyderabad and Bangalore.