Professional Documents
Culture Documents
Who are the key competitors at each target market? Identify constraints on available capital Key mechanisms that will support growth
Reuse of existing facilities Build new facilities Partner with other companies (mergers and acquisitions are potential options here)
Regional demand
Forecast the demand on a region by region basis Need to study its size homogeneity Non-homogeneous demand will require a more localized network Frequently the final customization of a product for a particular market is done at a local distribution center
Labeling Manuals etc.
Quotas: Limits on import volumes placed by different countries in an effort to protect their local industry. Sometimes there is also some requirement on minimum local content.
Infrastructure factors
Availability of skilled labor Availability of transportation facilities
Ports Airports Rail Highways Power Water Sewage Telecommunications / IT
Exchange rate risks: This risk arises from the fact that companies might incur their costs in one currency and collect their revenues in other currencies. (e.g., Japanese production under an expensive Yen in the late 80s / early 90s; the role of an expensive EURO these days for the American economy) Potential protection to exchange rate risk: Build some flexible over-capacity to the regional facilities so that production is shifted to the lower-cost regions. Demand risk: Comes from extensive demand fluctuation due to regional economic crises (e.g., Asia markets between 1996-1998) Plant flexibility is also a potential protection to this type of risk.
Competitive factors
Positive Externalities: Instances where collocation of multiple firms benefits all of them, since They share the cost of the necessary infrastructure And the collocation can stimulate demand for all of them Examples: a mall, silicon valley, industrial parks Locating to split the market: For companies that
Do not have price control, and try to maximize their market share by minimizing their distance from the customer,
collocation can allow each competing party to maximize their market share.
a b
=>
a = b = 1/2