Choosing
Choosing the
the
Right
Right Location
Location
and
and Layout
Layout
Chapter 14: Location & Layout Copyright 2008 Prentice Hall Publishing Company 1
Location: A Source of
Competitive Advantage
Entrepreneurs who choose their location
wisely over their competitors can
establish an important competitive
advantage
Availability of workers, tax rates, quality
of infrastructures vary from one site to
another.
Chapter 14: Location & Layout Copyright 2008 Prentice Hall Publishing Company 2
Choosing a Location
The right region of the country
The right state in the region
The right city in the state
The right site in the city
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Choosing the Right Region
Which region of the country has the
characteristics necessary for a new business
to succeed?
If your primary customers are bargain-
hunting tourists, then the best location will be
where such people gather.
Facts and Figures should lead entrepreneurs
to the best location for the specific type of
business not their personal preference.
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Geographic Information Systems
(GIS)
Computerized programs combining map-drawing
with database management capability.
Search through virtually any database and then
plot the results on a map.
Visual display reveals otherwise hidden trends.
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Choosing the State
Proximity to markets
Proximity to needed raw materials
Wage rates
Labor supply needs
Business climate
Tax rates
Internet access
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State Evaluation Matrix
State Weighted Score (Weight x Score )
Score (Low =
Location Criterion Weight 1, High = 5) State 1 State 2 State 3
Quality of labor force
Wage rates
Union activity
Property/building costs
Utility costs
Transportation costs
Tax burden
Educational/training assistance
Start-up incentives
Raw material availability
Quality of life
Other:
Other
Total Score
Choosing the City
Population trends
Competition
Auto Hub in Butwal where auto repairing firms locate next
to one another trying to create a shopping magnet for
customers.
Clustering
Some cities have characteristics that attract certain
industries
Silicon Valley in the United States
Compatibility with community
Companies should be compatible with the community
Emergence of Restaurant & Pub in Lakeside Pokhara
Local laws and regulations
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Choosing the City
Transportation networks
Police and fire protection
Cost of utilities and public services
Ease of access to water, sewer service, trash and garage
collection at a reasonable cost
If these utilities are not under the jurisdiction of a
municipality than it provides additional cost to business.
Quality of life
Comfortable weather, colleges and universities,
museums, outdoor activities, unique restaurants.
Chapter 14: Location & Layout Copyright 2008 Prentice Hall Publishing Company 9
Retail and Service Location
Considerations
Every retail and service business should determine the extent
of its trading area.
Trade area – the region from which a business can expect to
draw customers.
Type and size of the business is the primary variable to
influence the trade area.
The convenience store with a general line of merchandise may
have a small trade area because it is unlikely to attract
customers
The larger the store , the greater its selection, and the better
its service, the broader is its trading area.
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Factors influencing Trade Area
Size
Retail Compatibility
The benefits a company receives by locating near other
businesses that sell complementary products and services
or generate high volumes of traffic.
Example:- Shopping Malls
Degree of Competition
Transportation network
Physical, racial or emotional barrier
Visibility
Adequate Parking
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Manufacturing Locations
Foreign trade zones
A special area that allows resident companies to import
materials and components from foreign countries process
them and ship the finished product either reducing or
eliminating tariffs and duties.
Empowerment zones
An area designed as economically disadvantaged in which
businesses gets tax breaks on the investments they make
within zone boundaries.
Business incubators
An organization that combines low-cost, flexible rental space
with a multitude of support services for its small business
residents.
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Layout
Layout – the logical arrangement of the physical
facilities of a business that contributes to
efficient operations, increased productivity, and
higher sales.
Study: Look and feel of employees’ work spaces
is third most important consideration (after
salary and benefits) when deciding whether or
not to accept or to quit a job.
Chapter 14: Location & Layout Copyright 2008 Prentice Hall Publishing Company 13
Layout:
External Factors
Size must be adequate to accommodate
business needs.
Ambience.
Entrances must invite customers to come
in.
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Layout:
External Factors
(Continued)
Create effective window displays and
change them often; they can be powerful
sales tools.
Pay attention to the business sign, the most
direct method of reaching potential
customers.
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A Business Sign
Tells potential customers who you are and
what you’re selling.
Must comply with local sign ordinances.
Should be visible, simple, and clear.
Should be changed periodically to avoid
becoming part of the background.
Should be legible both day and night.
Must be maintained properly.
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Building Interiors
Ergonomics is an integral part of any design.
Proper layout and design pays off in higher
productivity, efficiency, or sales.
Proper lighting is measured by what is ideal for
the job being done.
Use of natural light can increase retail sales.
Careful selection of colors can create the
desired impressions among customers and
employees.
Appealing to all of the customer’s senses can
boost sales.
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Three Retail Layout Patterns
Grid
Rectangular with parallel aisles;
formal; controls traffic flow; uses
selling space efficiently.
Supermarkets and self-service discount
stores.
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Three Retail Layout Patterns
Free-Form
Free-flowing; informal; creates
“friendly” environment; flexible.
Small specialty shops.
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Three Retail Layout Patterns
Boutique
Divides store into a series of individual
shopping areas, each with its own theme;
unique shopping environment.
Small department stores.
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Layout Guidelines
Know your customers buying habits and
plan your layout accordingly.
Display merchandise as attractively as your
budget will allow.
Display complementary items together.
Recognize the value of floor space; never
waste valuable selling space with nonselling
functions.
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Factors to Consider in
Manufacturing Layouts
Type of product
Type of production process
Ergonomic considerations
Economic considerations
Space availability within the facility
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Manufacturing
Layouts
Product layout
Process layout
Fixed position layout
Functional layout
Chapter 14: Location & Layout Copyright 2008 Prentice Hall Publishing Company 23
THANK YOU
Chapter 14: Location & Layout Copyright 2008 Prentice Hall Publishing Company 24
