Three Considerations Managers Must Address When Selecting Specific Production Locations.
The identification of a productive and sustainable company production location is a major responsibility of modern managers. To succeed in the contemporary market, managers have a responsibility of selecting suitable places of selling and producing the company’s products. Although there are numerous aspects to consider in the identification of business location, three main factors are vital in locating an appropriate business production location. The government initiatives, the location of the business competitors’ production units, and the available resources are some of the key factors considered before selecting an appropriate company production location (Daniels, Radebaugh, & Sullivan, 2001).
The availability and cost of resources
To attain the set business objectives, modern managers locate their company production unit in areas near to potential customers. The location of company production near the target market plays a critical role in reducing the business distribution and production costs. Business managers also prefer locating their businesses in places where the production cost is realistic and cheap. The location of business production in places that have low production cost increases the business sales and profitability. Recent studies further assert that modern company locates their production units near the location of their raw materials. However, prior to locating the company production business managers should evaluate the existing political policies and risks. The understanding of the existing political risks helps business managers in adopting realistic policies of dealing with the identified political and social challenges. Labour compensation is also another vital consideration before deciding on the most appropriate and suitable business location. In most instances, business managers prefer locating their business in areas that have low labour costs. A company production should also be located in regions that have employees with the required skills and competence (Meredith and Mantel, 2003).
Modern managers prefer locating their production units nears the company potential customers and suppliers. To minimise the distribution cost, business managers need to locate a business production in areas that have good and reliable communication and transportation infrastructures. Reliable infrastructures facilitate quick and cheap distribution of products from the manufacturing centre to the company potential market. With an aim of reducing the production cost, business production plants need to be located near the company suppliers. The location of a business in the market that has numerous competitors helps in attracting multiple employees and suppliers. The location of a business near many suppliers reduces over dependant on single suppliers. Numerous suppliers also helps in the reduction incurred in the purchase of raw products. Furthermore, the location of company production in areas that have specialised public and private institutions is also useful in increasing the number of business potential customers. The location of company production in regions that have productive and popular institutions such as insurance companies, banks, customs brokers and public accountants increase access to business resources and capital (Niar, 1996).
The location of company productions in areas supported by government initiatives plays a critical role in facilitating the reduction production expenses. To attract investors, government offers numerous incentives to potential investors. In most instances, government incentives include construction of communication and transportation infrastructures, exemption of business from taxes and import duties, provision of trained professionals and facilitation of access to low interest on loans. Although government incentives advance the competition level, the government initiatives are helpful in reducing investment and management cost. The location of a business production plant in regions that have adequate security also guarantees the chances of improvement of the business development and profitability (Lehtonen, 2001).
Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2001). Globalization and Business. New York, NY: Prentice Hall.
Lehtonen, M. (2001). Management: Strategic Management Through Projects. Helsinki: Project Management Association
Meredith, J. R. and Mantel, Jr., S. J. (2003), Project Management, 5th ed. New York, NY: Wiley
Murthy, P. R. (2005). Production and operations management. New Delhi: New Age International (P) Ltd. Publishers
Niar, N. G. (1996). Production and operations management. New Delhi: Tata McGraw-Hill
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