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Choosing the Right Location and Layout. a decision is the action an executive must take when he has information so incomplete that the answer does not suggest itself …Admiral Radford. SCORE Business Plan.

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choosing the right location and layout

Choosing the Right Location and Layout

a decision is the action an executive must take when he has information so incomplete that the answer does not suggest itself…Admiral Radford

score business plan
SCORE Business Plan
  • Marketing Plan Market research Economics Product Customers Competition Niche Strategy Promotion Promotional Budget Pricing Sales Forecast
score business plan1
SCORE Business Plan

II. Operational Plan



Legal Environment




Credit Policies

Managing Your Accounts Receivable

Managing Your Accounts Payable

location source of competitive advantage
Location- Source of Competitive Advantage
  • Choosing the Region
  • Choosing the State

Proximity to markets

Proximity to needed

Raw materials

Wage Rates

Labor Supply Needs

Business Climate

Tax Rates

Internet Access

Total Operating Costs

location cont d
Location (cont’d)
  • Choosing the City

Population Trends


Clustering (concentrations of interconnected companies, specialized suppliers, and service providers)

Compatibility with the community

Local laws and regulations (zoning: a system that divides a city into small cells or districts to control the use of land, buildings and sites)

Transportation networks

Police and fire protection

Cost of utilities and public services

Quality of life

  • Choosing the Site
location cont d1
Criteria for Retail and Service Businesses

Trade area size

Retail compatibility

Degree of competition

Index of retail saturation

Reilly’s Law of Retail Gravitation

Transportation network

Physical, racial, or emotional barriers

Political barriers

Customer traffic

Adequate parking


Room for expansion


Location (cont’d)
location cont d2
Location (cont’d)

Retail compatibility: the benefits a company receives by locating near other businesses that sell complementary products and services or generate high volumes of traffic

location cont d3
Location (cont’d)

Index of retail saturation: a measure of the potential sales per square foot of store space for a given product within a specific trading area: ratio of a trading area’s sales potential for a product or service to its sales capacity

IRS= (CxRE)/RF, where

IRS is index of retail saturation

C is number of customers in trading area

RE is average retail expenditure per person

for the product in the trading area

RF is total square feet of selling space

allocated to the product in the trading area

location cont d4
Location (cont’d)

Reilly’s Law of Retail Gravitation: a business’ ability to draw customers is directly related to the extent to which customers see it as a ‘destination’ and is inversely related to the distance customers must travel to reach it.

BP=d/1+SQRPb/Pa, where

BP, distance from location A to break pt

d, distance between locations A and B

Pb, population surrounding B

Pa, population surrounding A

location cont d5
Location (cont’d)

Location Options for Retail and Service Businesses

  • Central Business District
  • Neighborhood locations
  • Shopping Centers and Malls
  • Near Competitors
  • Outlying Areas
  • Home-Based Businesses
location cont d6
Shopping Centers and Malls

Neighborhood shopping centers

Community shopping centers

Power centers

Theme or festival centers

Outlet centers

Lifestyle centers

Regional shopping malls

Super regional shopping malls

Location (cont’d)
location cont d7
Location (cont’d)

Evaluation criteria for mall:

  • Is there a good fit with other products sold in the mall?
  • Who are other tenants? Which are anchor stores?
  • Demographically, is the center a good fit for your products/services?
  • How much foot traffic does the mall generate? The specific site?
  • How much vehicle traffic does the mall generate? (major population center, volume of tourists, volume of drive-by traffic)
  • What is mall’s vacancy rate? Turnover rate?
  • How much is rent and how is it calculated?
  • Is the mall successful?
location cont d8
Location (cont’d)

Location Decision For Manufacturers

  • Foreign Trade Zones: specially designated area in or near a customs port of entry that allows resident companies to import materials and components from foreign countries; assemble, process, manufacture or package them and then ship the finished product back out while either reducing or eliminating tariffs and duties.
  • Empowerment Zones: an area designated as economically disadvantaged in which businesses get 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 itssmall business residents
layout and design considerations
Layout and Design Considerations
  • Size
  • Construction and External Appearance (simple, clean and current, variety)
  • Entrances
  • Americans with Disabilities Act
  • Signs
  • Building Interiors-ergonomics: the science of adapting work and the environment to complement employees’ strengths and to suit customers’ needs
  • Lighting and Scent
layout maximizing revenues increasing efficiency or reducing costs
Layout: Maximizing Revenues, Increasing Efficiency or Reducing Costs

Retailers grid layout

layout cont d
Layout (cont’d)

Retailers free-form layout

layout cont d1
Layout (cont’d)

Retailers boutique layout

layout cont d2
Layout (cont’d)

Retailers Space Values for a Small Store

layout for manufacturers
Layout for Manufacturers

Factors in Manufacturing Layout:

  • Type of product
  • Type of production process
  • Ergonomic considerations
  • Economic considerations
  • Space availability within the facility
layout cont d3
Layout (cont’d)

Types of Manufacturing Layouts

  • Product Layouts: according to the sequence of operations performed on a product
  • Process Layouts: according to the general function they perform, without any regard to the particular product or customer
  • Fixed-Position Layouts: in which materials do not move down a production line but rather, because of size or bulk, are assembled on the spot
  • Functional Layouts: combinations
layouts cont d
Principles of Lean Manufacturing

Planned materials flow pattern

Straight-line layout whenever possible

Straight, clearly marked aisles

Backtracking kept to a minimum

Related operations located close together

Minimum amount of in-process inventory on hand

Easy adjustment to changing conditions

Minimum materials handling distances

Minimum of manual handling of materials and products

Ergonomic work centers

Minimum distances between work stations and processes

No unnecessary rehandling of materials

Minimum handling between operations

Minimum storage

Materials delivered just in time

Materials efficiently removed from the work area

Maximum visibility to spot problems and improve safety

Orderly materials handling and storage

Good housekeeping; minimum clutter

Maximum flexibility

Maximum communication

Layouts (cont’d)
layout cont d4

Heavy lifting

Flexible manufacturing


Speed testing

Lean inventory

Victoria’s Secret

‘Landing Strip’

Central hub

Classier color scheme

Bring catalog to life

A menu of choices

Layout (cont’d)