Framework
Five groups of location criteria
The question it answers
A business owner choosing a site for a new plant, shop or office needs to know which groups of criteria to compare the candidates on, and whether staying put is an option.
- Origin
- Slack et al., 2022, ch. 5
- Diagram type
- Hub diagram
- Level of analysis
- Firm
Diagram
Five groups of location criteria
Location decision
Capital requirements (site cost or lease, access, utilities, cost of the move)
Market factors (image, service level, labour market)
Cost factors (production, community factors such as tax and policy, transport)
Future flexibility (room to expand, adapting if suppliers or customers relocate)
Risk factors (transition risk, long-term risk such as exchange rates, labour cost, security)
Pitfalls
Pitfall
Looking at one site only, or forgetting the option of staying put. Slack et al. advise always keeping 'do nothing' as the base case, because the cost of moving and the risk of inconveniencing customers are high, and a location decision is hard to undo once taken.
Sources
References
Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.
- Slack, N., Brandon-Jones, A. and Burgess, N. (2022) Operations Management (10th edn). Harlow: Pearson.No DOIpearson.comCited in 3 articles